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Graduate Loans: Getting Finance After College

This fact is particularly important since student usually can´t provide either even if they were willing to. Another thing to point out is that student loans come with relatively low interest rates especially if you take into account that these loans are unsecured and unsecured loans usually come with very high interest rates. The only drawback is that given all the concessions the lender offers the applicant, the loan term tends to be extremely long and thus the loan will be paid off in many years. Students usually owe around $30000 when they graduate. However, since this debt comes in the form of student loans, it won´t start being repaid till the student joins the workforce.

Besides, the interest rate is low enough not to become an issue and comparatively it´s lower than credit cards, personal loans, and generally any other type of unsecured loan. These loans usually have an agreement as to the percentage of earnings above a certain minimum that will be destined to repay the loan. So, there is not much risk for the borrower, since till he joins the workforce and starts earning enough money, he won´t have to repay the loan. However, this also implies that the loan keeps accumulating interests and that his relation with the lender may last decades.

Posted in college student loan, loan rate, student loan debt consolidation, college finance, college loan consolidation, college loan, loan, student loan consolidation, loan calculator, student loan | Comments(0) February 2008

Student loans harm credit ratings

Large student debts will cost under-graduates well into their thirties, says Moneynet chief Richard Brown.He says that large student debts will make it harder for students to get mortgages and other loans in future and that IFAs should be encouraged to warn their customers of the danger of large student loans.He said: “IFAs will need to re-address the financial landscape.”Their traditional client base will have less money during their twenties and early thirties to put into pensions, investments and savings. But, there will always be a market for IFAs, as graduates will still tend to get married, buy a home and have children and therefore need products like life insurance, income protection and mortgages.”The warning coincides with the launch of Moneynet’s new section on debt consolidation loans in light of the country’s spiralling debt problem.Australian research last month found that graduates still repaying student loans were more likely to evade taxes by taking cash-in-hand jobs, or not declaring all of their earnings. Last month the government announced that after top-up fees come into force in 2005, the minimum debt for a graduate will be £15,000, and they will still be paying it off into their thirties.A survey by NatWest bank last month showed that almost half of sixth formers said they would be “less inclined” to go on to higher education because they were put off by new fees and the prospect of larger loans.Meanwhile, high street banks predicted that student debt will have doubled by 2009.

Posted in college loan consolidation, college student loan, loan rate, consolidate loan, college loan, consolidation loan, debt consolidation loan, consolidate loan student, loan calculator, loan | Comments(0) August 2007

Banks ‘have responsibility over student loans’

Financial institutions should act more responsibly when lending money to students, it has been claimed.They should look to help young people manage any financial difficulties they are experiencing, according to HSBC.Close to £3 billion was dished out to students over the last financial year, the Students Loans Company has estimated.It added that the balance of outstanding student loans in the UK currently totals £18 billion.And HSBC spokesperson James Thorpe revealed the difference between spending a bit and spending too much.”We would step in with any customer who is finding their borrowing difficult to deal with. A student is borrowing money from a bank because they are unlikely to have a strong income,” he said.HSBC is considered one of the big four high street banks.The financial institution has more than 10,000 offices across 82 countries around the world.

Posted in loan rate, loan officer, bank loan, college student loan, college loan consolidation, loan, student loan consolidation, college loan, student loan | Comments(0) August 2007

Loan repayment first step on the graduate journey

Learning to budget as soon as possible after leaving university can help recent graduates manage their student loan burden, Moneyextra.com has advised.As the latest generation of proud graduates enters the job market with a degree in hand and a debt burden totalling around £10,000, making careful financial calculations on the basis of past debt accrued is a crucial first step.Drawing up a comprehensive budget which covers everything from essentials such as rent and weekly shopping to luxuries such as nights out will protect you from unexpected shocks, advised Robin Amlot, spokesperson for the money site.Loans from the Student Loan Company, parents and credit card companies should be factored in, helping graduates calculate what they will need to earn and how to manage spending.But student debt should be pushed down the list of repayments, due to cheap interest rates, he urged, in addition to the fact that it only becomes payable when graduates earn over £15,000 a year.On the other hand, credit card debt repayment should take precedence, Mr Amlot advised.Last week, the incoming universities minister John Denham announced that more flexibility would soon be introduced into student loan repayments.

Posted in college loan consolidation, college student loan, loan rate, college loan, loan calculator, loan, student loan consolidation, student loan | Comments(0) August 2007

Credit Action warns student loans feed ‘debt culture’

As undergraduate students across the country sit their final exams, they are preparing to emerge into the working world with an average debt burden of around £13,500, a debt charity has warned.The debt incurred in their student years may not impede their finances in later years, Credit Action’s spokesperson Chris Tapp said, but it does embed a “culture of debt” which students can find hard to shake off.Financial experts stress that debt per se is not necessarily a problem and well-managed borrowing teaches individuals good financial management.But, as “government-endorsed debt on a massive scale”, taking out a student loan is “feeding into debt culture”, Chris Tapp warned.What is more, a “rising percentage” of graduates may be falling into insolvency after finding their accumulating debt impossible to manage, he stressed.A damaged credit rating can affect graduates’ ability to obtain a mortgage or loan for the next six years, as well as limiting their employment options, with a history of insolvency barring candidates from professions such as law or accountancy, he noted.

Posted in college loan consolidation, college student loan, loan rate, college loan, loan calculator, loan, student loan consolidation, student loan | Comments(0) August 2007

New Factors for Consolidating Student Loans

Last year at this time, money mavens were exhorting college students and recent graduates to run right out and refinance their loans before the big July 1 rate hike, which took the rates on those loans from the neighborhood of 4.7 percent to 6.54 percent. This year, rates are again going up, but only by a little — to 6.62 percent.Other factors about the way college loans are managed have also changed in ways that might make consolidation less attractive for some borrowers. So instead of racing to the bank, new grads should take some time to figure out whether consolidation works for them, and approach it carefully
Here are some considerations.

– What’s your rate, and is it fixed? In a college loan consolidation, your original loans are paid off and bundled together in a new loan, much as a mortgage and a home equity line might be bundled together into a new mortgage with a home refinancing. The rate on the new loan is fixed. It’s a weighted average of the interest rates of the loans being consolidated, rounded up to the nearest 0.125 percent. Students who graduated this spring are most likely to have a mix of variable and fixed-rate loans. Students who already did loan consolidations in the last two years while they were still in college, might already have a portfolio of low-cost fixed-rate loans and not find it worthwhile to reconsolidate just to get everything wrapped up into one loan, says Dan Thibeault, president of Graduate Leverage lenders in Waltham, Massachusetts.

– Timing matters. New graduates will find some advantages in consolidating if they do it within six months of getting their diploma. They are in what’s called a grace period that gives them a price break and six months to start repaying their loans. For these new graduates, the variable-rate loans are at 6.54 percent and the fixed-rate loan is at 6.8 percent. On July 1, their variable rate goes up to 6.62 percent. But when they move out of the grace period and start repayment, their loan rates will adjust up to 7.22 percent. By consolidating before then, they can lock in the lower rate. Typically, repayment starts immediately on consolidated loans, but borrowers can ask the lender to hold the loan package until the end of the 6-month grace period.

– The bottom line matters, too. New grads like to consolidate because it can stretch out their repayment period for as long as 20 years and cut as much as 50 percent off of their monthly payments. That might be especially useful for grads who are entering low-paying professions, but in the long run a longer loan can cost a lot more in interest payments, even if the rates are lower. To figure out your bottom line, ask your lender to estimate your total interest payments on your loans or do it yourself with an online loan calculator (you can find a slew of them at http://www.finaid.org/calculators/, or check http://www.salliemae.com/repaymentoptimizer). Do a similar calculation on the proposed loan consolidation.

“The best thing for the borrower to do is say ’show me the money,’” says Patricia Scherschel of megalender Sallie Mae. Once you’ve seen total costs, decide whether you’d rather burn that debt faster and cheaper, or longer and slower.

– Competition matters. While rates on these federally backed loans are fixed, lenders do have leeway to offer incentives, and most do. Some cut your rate if you agree to have payments automatically debited from your checking account, or if you establish a history of paying on time. That later break often doesn’t kick in for three or four years, though, so remember to discount its value. No lenders are allowed to charge fees on federal student loan consolidations and none are permitted to have prepayment penalties, so shop around for the best discounts and services. Some places to price consolidation loans are http://www.salliemae.com/consolidation; http://www.myrichuncle.com, and http://www.graduateleverage.com.

Posted in college loan consolidation, college student loan, consolidate loan, college loan, consolidation loan, loan, student loan consolidation, consolidate loan student, student loan | Comments(0) June 2007

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