Student Loan News, Updates and Blog Posts

I’m sure the title of this blog alone has fired up some staunch federal student loan supporters.  In fact, when I told my friends I was going with a private student loan even they called me an idiot and told me that anyone in their right mind knows that federal student loans are the way to go.  But by the end of my defense, they were the ones on the defensive.

There is a student loan myth out there that you should ALWAYS get a federal loan first (after you exhaust grants, scholarships, and work-study dollars of course).  But that way of thinking is not practical at all.  We go to college to exercise and educate our minds.  We are told to ask questions and inquire why it’s so, but then when it comes to paying for education we are directed to ”fill this form out.”  Sometimes it feels like a bother to ask the simplest question to a financial aid officer too.  The fact of the matter is for some students a private student loan is the smart choice.  Let us examine five reasons why private student loans may be right for you.

Interest rates: Did you know that undergraduate students taking out an unsubsidized Stafford loan and graduate students are subjected to a 6.8% fixed interest rare?  In today’s market that is absurd.  Furthermore, there is no way to lower that rate.  You are stuck with that rate for a lifetime.  No thanks.

Flexibility: Your student loan dollars are not restricted like with federal student loans. You can use your dollars on a wide gamut of expenses such as transportation, books, lab fees, and computers.

No Deadline: You don’t have to get your paperwork in by January 1.  Funds are there for you when you need them 365 days a year.

No Annual Loan Limits: Federal loans have annual caps that you can not exceed.  In most instances students still need to seek a private student loan to make up the shortfall.

No lengthy application: Private students loans do not require lengthy applications, as is the case with federal loans and the FAFSA.  No 100 question FAFSA form sounds fine by me.

So now you have some ready knowledge about private student loans.  And whether you choose a federal student loan, private student loan, or both, the important thing is that you are now educated. And isn’t that what school is all about?

GET A PRIVATE STUDENT LOAN TODAY

ScholarshipPoints code: PRIVSLOAN

Before you apply for a private student loan to help fund your undergraduate education it is important to think about where you will be after graduation. If you see yourself taking on more education, and do not think you will be able to start paying your loans back, you might want to think twice before taking on a private student loan.

Unlike federal student loans, private student loan payments cannot be deferred while you are in grad school. Deferment is at the discretion of the lender and they are not required to extend any kind of help to borrowers who are either unemployed or in school.

While in school students often find themselves in need of funds quickly. Private student loans are great because you can use them for any education-related expense, however you should not sign off on them hastily to get money for books right away. Make sure you research and compare private student loan options. You should know when you will be expected to start paying the loan back, what the interest rate is, how much you will pay in the long run, and what the other terms of the loan are. You do not want to be kicking yourself and wishing you had made a different financial decision down the road.

Many students become frustrated when they learn a cosigner is required when completing an application for a private student loan. Some because they’ve been on their own for a while now and don’t feel the need for a “babysitter” while others feel trapped because their co-signer options are severely limited. So why do lenders require a co-signer anyway? It’s simple, they want that warm and fuzzy feeling.

I guess the best comparison I can make is if your brother or sister ask to borrow a $100 bucks from you. That can be a risky proposition, right?  Now say Mom or Dad tell you they will guarantee that you’ll get your money back over a certain period of time, say 2 weeks with an additional $10 bucks in interest for fronting the money.  Wouldn’t that make you feel more secure?  Wouldn’t you lend those dollars with more confidence?  A bank works the same way.  A co-signer is the banks safeguard to ensure repayment, but a co-signer can also be your best friend too.

Co-signers often reduce the cost of borrowing.  An individual with strong credit history can help you receive better pricing.  Obviously the lower the interest rate that gets extended to you the better off you’ll be.  You’ll just want to make sure that both you and your co-signer do a credit check before you apply.  It always makes sense to review and fix your credit prior to applying for a private student loan to ensure you get the best rate available.

Review and Improve Your Credit Score

APPLY for a Private Student Loan

If I had a dime every time I heard someone say, “I need more funds for school,” I would easily be able to send my entire family to Harvard…TWICE.  It’s just the way it is these days.  We’re turning over those stones, calling our rich uncle, and exhausting every avenue we know of to find those extra dollars.  Perhaps that classic Ben Franklin quote which reads, “The only thing in life that is certain is death and taxes,” should be amended to include running out of money for school.  But there is hope.  Private student loans do not have a yearly borrowing cap like federal Stafford loans do.

Now let me first start off by saying that federal Stafford loans are the bomb.  Max those out first.  The problem, however, is that there isn’t much to max out.  Depending on your grade level you are capped at a certain borrowing threshold.  Is it just me or does that sound absurd?  In fact, let me just go on record now and say that I think that is the lamest rule I have ever heard!  The cost of tuition is the same for a freshman as it is for a junior!  Why the disparity?!?  Ok, that is a different blog for a different day.  Back to private student loans.  Private student loans allow you to fill in the gap that federal loans leave, and that gap is extremely wide for some.

There is no FAFSA when you apply for a private student loan and no hassles whatsoever.  You can use your loan funds for tuition, room and board, a new laptop, you name it (assuming it is school related of course).  So don’t be discouraged.  There are options right at your finger tips.

APPLY FOR A PRIVATE STUDENT LOAN

Scholarship Points code: NOHANDS4U

While federal loans are designed to go toward your cost of attendance private student loans can be used in a wide variety of ways like for housing expenses.

Financial aid office administrators understand the financial challenges students face today, and that many students needs funds to cover costs that fall outside of COA.

Transportation, books, supplies, lab fees, computers, or housing can all be covered with a private student loan.  And the time has never been better to secure a private student loan with rates near historic lows for qualified applicants.

TAKE OUT A PRIVATE STUDENT LOAN TODAY

One of the biggest shows for college students this fall is the new Melrose Place series. On the show actress Stephanie Jacobsen plays Lauren Yung, a medical student who is forced to come up with some unconventional ways to pay her tuition. Early in the season Yung finds out that her father has lost his job and will no longer be able to help her pay for school. To start making money quickly, Yung becomes a high-end call girl. She finds out that spending time with wealthy men is an extremely lucrative business and an easy way to pay off her medical school debt.

In my opinion, this plot line sends a horrible message to the show’s key demographic of young college women.  I have to admit that I do watch the show but I always find myself wanting to scream “student loans” and “scholarships” every time the story turns to Yung’s problems. Most college students are familiar with the hardships of making college payments; however there are ways to quickly get tuition money that are far less humiliating.  Private Student Loans are a simple, flexible way to get the exact amount of money that you need when you need it. Since circumstances can change quickly, private student loans can be borrowed at any time during the semester. As long as you and your co-signer have a healthy credit score you should be able to borrow up to the true cost of your education. The best part is that you can use private loan money for more than just tuition. The Student Loan Network can connect you with private lenders and even help you apply.

If you are frustrated with your financial situation know that there are plenty of resources out there can help you pay for your education. Do not put yourself in danger or disrespect yourself to make money quickly.  If you are just starting to explore your financial options visit the Student Loan Network for information on federal student loans, private student loans and scholarships. Finally, will someone please tell Miss Yung the same thing!

You can not take out any amount you want in private student loans unfortunately, though that would be great if you could.  Imagine being able to pull out $25,000 when you only need $10,000 and then buying a car.  How cool would that be?

Here is how the school certified private student loan works.  The financial aid officer determines the total financial aid package for each student and calculates the student’s unmet financial need by using the Cost of Attendance (COA) and deducting from this figure the Expected Family Contribution (EFC) and any grants, scholarships, and federal loans the student will be receiving for the current enrollment period.

The lender contacts the financial aid officer for certification of the loan amount requested, the financial aid officer can then increase or decrease the loan amount based on the COA calculation.

One of the many benefits of private student loans is that the application process is painless.

To qualify for a federal student loans one must complete the lengthy FAFSA, which is worth it, but it can be quite cumbersome.   The FAFSA asks for everything short of the clothes off your back to calculate a students financial need.

Private student loans, in addition to having a simply application process,  are not need-based either, which means that anyone can take out a private student loan who is credit worthy.

Apply now for a Private Student Loan

Are your Mom and Dad not willing to file the FAFSA with you because they don’t want people knowing their earnings? Are they instead willing to co-sign on a private student loan?  If this is the case the logic behind their actions is illogical.  In fact, you should direct them toward this blog as I will chronicle why their judgment is severely lacking and will only hurt you in the long run.

• By filing the FAFSA you open yourself up for all types of financial aid which includes scholarships, grants, and work-study programs.
• When you file your FAFSA you become eligible for a federal Stafford loan which is in the students name only.  Mom and Dad do not need to co-sign for a Stafford loan like they would for a private student loan.
• You enjoy the security of a fixed interest rate
• You have three years worth of deferment time attached to a federal loan opposed to 1-year on average for private loans
• You may be eligible for 100 percent loan forgiveness if you work in certain fields. Private student loans do not offer forgiveness potential.

The one thing I will say about private loans is that interest rates are very low at this time which is one reason some parents prefer the private student loan to the federal, and if this is your logic it makes good sense.  In fact, after federal aid options are tapped many parents end up subsidizing the rest of their students education with a private loan.  This too is smart. But the parents who are steadfast on protecting their private information are doing so at the detriment of their child.

Are your Mom and Dad not willing to file the FAFSA with you because they don’t want people knowing their earnings? Are they instead willing to co-sign on a private student loan? If this is the case the logic behind their actions is illogical.