Saturday, May 28, 2016

Why you should pay off your student loan early

Money for college student expenses can seem to be just about impossible to find, but there are ways of obtaining finance if you can qualify, and if you are fast enough. Most of the money which is available for college students under these schemes is only available in a limited quantity. Once it has gone, that is it. There will be no more until the next batch of students is ready to enter college. A lot of the free money which is available to students is given out based on the means of the family, but not all. If you are looking to work in certain areas or are studying certain subjects, you may still qualify.

There are also grants available at State and college level, and these can give you a greater degree of freedom. Not all of these grants are available based purely on the financial resources of the family concerned. In some areas, there are shortages for certain types of workers, and if you can fill one of those positions the State will help you qualify for it. This will vary from area to area, so carry out some research into what is available.

It is vital to raise as much money for college student expenses as you can, because the only alternatives in most cases are student loans and working part time. Student loans represent an incredibly high risk, as they cannot even be discharged through bankruptcy should you end up in serious financial trouble. Be absolutely sure that the course is right for you before you take a risk of this magnitude. Any work you can get during college time is likely to be brief and low paid. Make sure you take advantage of every opportunity to raise grant money for college.

Why you should pay off early
The cost of education is sky-rocketing, and no one can deny that. Tuition has consistently increased at rates well above that of inflation each year. Just 50 years ago when someone went to college, it might cost them about $300.00. Now it's costing people $40,000 to go to college, and that's at subsidized in-state tuition rates. For more expensive programs, it's costing upwards of $100,000! For some of these programs, there is not enough financial aid in the world to pay for. Inevitably, most college students end up with some sort of student loan. Most of the time students get federal Stafford loans to help pay for their school, and often times get private loans on top of that to pay the remaining cost.

Recently there was an article telling you that you shouldn't ever pay off your student loans early. They had a couple of rather thought provoking reasons for this. Their primary motivation was that in the event that you become permanently disabled or die before your student loans, you or your estate will not have to pay off your loans before you die. The article claimed that it was essentially a free disability and life insurance policy.

Is this a good reason to not pay off your student loans? The answer is no. The fact is that you are paying a lot of money for the privilege of this disability and life insurance policy. Let's say you have $25,000 in student loans at the current federal rate of 6.8% This means that you are paying $1700 a year or $141.67 a month for a $25,000 life insurance policy. Not even term insurance is that bad! If term policies were offered for that little amount of money, you could get it for just a few dollars a month. In essence, you are paying 70 times the going rate for this term and life insurance policy!

If instead you pay off your student loans you are getting a guaranteed 7% rate of return on your money, and that's a very good investment. Most other guaranteed investments are currently offering 4% or 5%, you are getting an addition 2% to 3% compared to any other guaranteed investments. It gets even better than that. You are not getting 7% back, you are getting 7% back per year for the life of your loan! This can often be ten or twenty years! The 7% turned into 386% after 20 years! When you pay money down on a loan, it is like you are saving the interest for the entire term of the loan!

Don't fall for the myth that you should not pay on your student loan so that you can get some sort of interest rate on your money! I disagree,the interst rates for school loans are alot lower than other interest rates of credit cards, cars, home loans etc.Why not milk the low rates while paying off other items?

I do agree however that education is sky-rocketing,the richer get richer and more educated , and the poor get poorer making (too)much to qualify for great student loans ,but not making enough too pay for the outrageous costs.

My hubby's student loan has $3,000.00 left on it,and by calling the loan company got the interest rate dropped from 5.4% to 1.7% just by having it automatically deducted from the account.

Student loans are the only loans that can not be defaulted on due to bankruptcy etc,but they can be defferred which means if you decide to re-enroll to further your education the payments can be put on hold while locked in at a great rate.

If grasping on to the locked low rates in order to try to gain some tread above water while you are trying to situate yourself ,life after college why not..

Source of the subsidized Federal Student Loans is the US

One source of the subsidized Federal Student Loans is the US federal government through the Federal Direct Loans program. Under the Federal Direct Loans program, there are both subsidized and unsubsidized loans. The subsidized loans are subsidized by the US federal government and offered to students who have demonstrable financial need.

The subsidies are applied to the interest payments of students so long as they remain in their degree program, for six months (also called the grace period) after they have left school, and while the payments are in repayment deferment status. Subsidized direct loans have a fixed interest rate of 3.4%. However, some changes have been made to this program – if your subsidized loan was issued following July 1, 2016, then there are no government interest payments for the duration of the grace period after the student has left college. If the student borrower has not paid for interest payments during this grace period, the unpaid interest is capitalized and needs to be repaid by the student in tandem with the loan principal.

One advantage of getting subsidized Federal Student Loans is that there are five payment options available to borrowers. Under the Standard Repayment Plan, the borrower has to be able to repay the loan within ten years so there are fixed monthly payments required (with each payment reaching a minimum of $50.)

 Under the Graduated Repayment Plan, payment can be done within ten years – graduates that are just getting started in their career can shoulder lesser payments for the first part of the payment period. Under the Extended Repayment Plan, the payment period can stretch to as long as 25 years with loan repayment either fixed or graduated. Under the Income-Based Repayment Plan, the income of each borrower is taken into account, with the payment period reaching up to 25 years per borrower.

The last payment option is known as the Pay As You Earn Repayment Plan which limits repayment by the borrower to a maximum of 10% of his discretionary income but extends the payment period to as long as 20 years.

As you can see, the US federal government has made it relatively easy for college students to borrow the subsidized Federal Student Loans. Since these loans have fixed terms and interest rates that are less burdensome for college students, borrowing from the subsidized Federal Student Loans makes getting a higher education a reality that is well within reach of college students in the US.

Taking out personal loans is a great way for a student to explore his or her financial capabilities

What exactly distinguishes bad credit student personal loans from other student loans? These two concepts are the same in the sense that they are both aimed at students. However, three words can make a lot of difference in the type of loans. Let us examine these differences by dissecting the words.

Bad credit ? these two words point out that bad credit student personal loans are obtainable even if you do not have a good credit record. Needless to say, this makes bad credit student personal loans very special.

Most student loans need proof that you can actually pay up the loan before you get the loan. In a sense, you would need to prove that you don’t need money in order to get some. You never thought of it that way, did you?

Companies that offer bad credit student personal loans know that you need money. That’s why they give you the opportunity to obtain money even if you have bad credit.
Personal ? the word “personal” in itself gives a whole new meaning to this phrase. Bad credit student personal loans can be taken out for purposes other than studies. While student loans are provided by different companies to pay for your study expenses, bad credit student personal loans can be used for your personal expenses.

While some people might find this a bit strange, students would agree to the fact that college involves a whole lot more activities than studying.

The average student also needs a lot more stuff than what is on the “federally approved” list of school expenses.

Taking out personal loans is a great way for a student to explore his or her financial capabilities and be able to learn what expenses to prioritize.

Bad credit student personal loans are also a way to put your record straight. If you have bad credit, this type of loan can help you put that to rest? providing you handle the loan correctly, of course.

Bad credit student personal loans can be obtained from bank and private companies. Most would require that you have a cosigner to attest to the fact that you will pay back the loan (or, at least, so they can have someone to go after incase you don’t pay).

If you are looking for more information on student personal loans, you can search the internet. It is, after all, the largest collection of information ever. You need to be careful, however, because the internet does contain some things which may hassle you or even cause your computer’s demise.

The best thing you can do is consult other people before applying for a bad credit student personal loan. You should consult:

1) Banks- to see if you are eligible for a loan and to find out the requirements for one.
2) People like you ? who have taken out bad credit student personal loans and see their opinion on where you should get yours.
3) Schools ? to see if they can recommend any companies which might give you bad credit student personal loans.
These are just some things you might like to know about bad credit student personal loans. In order to find out more about this type of loan, you should try researching on the internet or checking out the yellow pages of your phone book. Remember that your road to financial freedom can be just a click away.