NEXT STUDENT LOAN CONSOLIDATION REVIEW
When a student searches for the best deal on student loans, it should require a great deal of investigative power, because it may not always be easy to ascertain the best student loan available until a person first understand, at least the basic understanding, of different varieties of student loans that exist. This type of broadening knowledge will help narrow the pool of possibilities down for any potential borrower looking to make a wise investment on their future.
WHAT ARE THE 2 BASIC LENDING MODELS FOR STUDENT LOANS?
There are really only 2 different lending models students can use to finance their education.
- The Federal College Loan Model
- The Private Student Loan Model
WHAT ARE FEDERAL COLLEGE LOANS?
Federal College Loans are educational loans provided to the student directly from the federal government. These types of loans are the most sought after, and are available to undergraduates, and graduate students, whether they are independent and dependent students. Unlike many private loans, most federal student loans are entirely need-based loans and therefore do not depend on a person’s credit history.
3 TYPES OF FEDERAL COLLEGE LOANS:
- Graduate students
- Parent PLUS
FEDERAL UNDERGRADUATE LOANS:
- Federal undergraduate student loans are predominately need based loans, particularly the Federal Perkins student loans that are offered. The Stafford student loans, however, are offer both subsidized and unsubsidized loans to students, the subsidized loans are need based loans whereas the unsubsidized loans are not.
FEDERAL GRADUATE STUDENT LOANS:
- The Federal Graduate Student Loans provide students the opportunity to borrow federal money in two ways. A Graduate student can borrow money using the Stafford graduate loans, where the subsidized loans are need-based and the non-subsidized loans are not. Beyond the Stafford graduate loans the Grad PLUS loan is also offered to graduates, but is not a need-based loan and instead depends upon the student’s credit history.
FEDERAL PARENTS PLUS LOANS:
- The Parents PLUS loans, are loans that provide the parents of undergraduate students an opportunity to borrow money if their income is too high for the children to qualify for with enough financial aid.
- Although the Parent PLUS loans are not need based, they are credit based. So, if the parent of an undergraduate, who is under the age of 24, applies for the Parent PLUS loan and is denied, the student will qualify for more federal financial aid.
WHAT ARE PRIVATE STUDENT LOANS?
- Private student loans are loans offered to students, or the parents of students, by companies such as credit unions, banks, or any of a number of other private lenders. Private student loans are almost always credit based, and therefore the borrower must focus diligently on maintaining a good credit score or they could lose their opportunity to pay for school.
WHAT IS STUDENT LOAN CONSOLIDATION?
- Once a student leaves school they may decide to consolidate all of the student loans they have accumulated. Sometimes a person’s decision to consolidate their student loans is based entirely on simplifying their lives and reducing their student loan payments to a single bill. Instead of merely reducing the number of times a person pays their student loans per month, some people consolidate their loans because they want to reduce the interest they are paying, or lower their monthly payment.
- One thing to be aware of, however, is that a Federal Loan cannot be consolidated with Private Loans and vice versa.
So before becoming involved in the tricky business of accepting student loans, potential borrowers should diligently attempt to understand the different options available to them, and then selecting the opportunity best suited for their future goals. Remember, paying for College is a serious lifetime investment and, therefore, a lender should never be chosen in haste.
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