Dec 17

Having Trouble With your Student Loan Payments? Look Into your Deferment and Forbearance Options

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If you just graduated in May with federal Stafford student loans, you may be having to adjust your monthly budget to accommodate new student loan payments as your Stafford six-month grace periods end sometime this month. If you’re still looking for a job, or if you’re at an entry-level salary right now, you may not have the money you’re going to need to meet a new monthly student loan expense.

Whether you’re a recent graduate or any parent or student loan borrower, if you’re having trouble meeting your student loan payments each month, NextStudent, a leading Phoenix-based education funding company, urges you to contact your lenders about your deferment and forbearance options. Deferment and forbearance periods can allow you to temporarily reduce or postpone the monthly payments on your student loans without putting yourself at risk for damaging your credit score or defaulting on you student loans.

 

What are deferment and forbearance benefits?

Deferment allows you to temporarily stop making payments on your student loans. If you’re unemployed or experiencing financial hardship, you may be able to request a deferment, for up to a year at a time, up to a total of three years over the life of the student loan. You must contact your lender to request an unemployment or hardship deferment, and you may need to fill out a deferment request form.

Forbearance allows you to temporarily reduce or postpone payments on your student loans. You may be able to request a forbearance if you’re unemployed or experiencing financial hardship. You must contact your lender to request a hardship forbearance, and you’ll typically need to complete a forbearance request form. You may also need to submit supporting documentation.

Generally, a lender can grant a forbearance for up to a year at a time. Unlike unemployment or hardship deferments, there is no three-year cumulative limit on discretionary forbearance periods granted due to financial hardship.

 

Which student loans are eligible for deferment and forbearance?

Most federal student loans Student Loan Consolidation, Stafford loans, PLUS loans, and Grad PLUS loans) are eligible for deferment and forbearance benefits.

Some private student loans may also offer deferment or forbearance benefits—you should contact your private student loan lender.

Keep in mind that if you’re considering an economic hardship deferment or forbearance, you need to contact your lender, even for your federal student loans. Hardship deferments and discretionary forbearances are generally not automatic.

 

Am I being charged interest while my student loans are in deferment or forbearance?

Yes. Interest charges continue to accrue on your student loans even if they’re in deferment or forbearance. You’ll be responsible for the interest on your unsubsidized student loans (such as unsubsidized Stafford loans) that are in deferment and on any of your student loans, whether subsidized or unsubsidized, that are in forbearance. The government will pay the interest on any of your subsidized student loans (such as Perkins or subsidized Stafford loans) that you have in deferment.

Any unpaid interest that accrues during a deferment or forbearance period will be capitalized and added to your principal student loan balance for you to repay once you go back into repayment. Even if your payments are postponed during a deferment or forbearance period, you can always choose to make interest payments to avoid having accrued interest added to your principal student loan balance and capitalized.

NextStudent believes that getting an education is the best investment you can make, and we’re dedicated to helping you pursue your education dreams by making college funding simple. Learn more about Student Loans, Private Student Loans and Student Loan Consolidation at NextStudent.com.



By: Jeff Mictabor

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Dec 10

Understanding Private Loans For Education

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Private loans – students hear about them but sometimes do not quite understand exactly what they are, what they are for, or what they entail. Basically, private loans for education can make up the difference between the amount a student receives from federal financial aid and the actual cost of his or her college education. If a student’s financial aid package does not quite meet their needs and he or she has gotten all the grants and scholarships he or she possibly can, private loans can be a saving grace.

Unlike with federal financial aid, a student’s eligibility for private loans for education depends on his or her credit score – or the credit score of his or her parents. Private loans offer more flexible repayment options than some federal loans, especially when it comes to parent loans. In general, private loans are more expensive than federal loans, but they cost less than credit card debt. Federal loans also offer lower interest rates, so students are always encouraged to get as many federal loans as they can before looking into private loans for education.

Private loans do have their merits, however. As mentioned, they are sometimes the saving grace when a student has exhausted the federal amount he or she is allowed but still has need of financial aid. Parents are often better off with borrowing private loans as well, namely because they can defer payments until their child graduates (for instance, if their child has promised to pay off his or her own school debts, but needs help with getting a loan in the first place) – however, the interest does build up over this time. Looking at it one way, this is really no different than what can happen with unsubsidized federal loans.

The good news is that if a student – or his or her parents – has a decent credit score, it can significantly affect the interest rates for a particular private loan for education. In general, the better the credit score, the lower the interested rate. As such, it is better to apply for a private loan with a cosigner. After all, a student may have a bad – or nonexistent – credit score, while his or her parents have an excellent one. The parents can cosign, defer the payments until their child graduates, and not be responsible for the payments themselves. This is an excellent way to help a child keep their educational debt down, if only for a small amount.

Private loans for education are unquestionable helpful when federal aid simply does not grant enough money to a student. However, they should really be considered a last resort, as federal loans do offer better interest rates. Conversely, private loans often offer better, much more flexible repayment plans, so it all truly depends on an individual student’s needs, means, and financial status. Parents should only consider cosigning a private loan for their child if they are first certain that, should anything happen to make the child unable to pay for the loan, they can afford to, and secondly, if they know they can trust their child to begin paying back the loan after he or she graduates.

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Nov 27

Private Loans for Students – What You Need to Know

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For the majority of young people, it is a dream to get into a great college. They want to do this as an accomplishment for themselves, as well as a way to make a living as an adult. The problem that many students face though, is the inability to get student loans. This is where private loans for students come into play. Because they are designed for students, you will not have to worry about having a bad credit score, or no credit whatsoever. For many students, this is the first type of loan they are getting, so their credit score is not even a factor.

The great thing about these private loans that students use is that they can use them for anything school related. If your actual schooling already is paid for but you are lacking the funds for everything else, you can use these loans. They can pay for your room and board or even just for your books and supplies. In the past, most students had to work long hours at little pay to afford to pay for all these things. All that work usually got in the way of their school work, which causes a big problem. With the loans, you do not have to worry about work getting in the way of school.

Another reason why private loans for students is a good idea is because it is a great way to establish credit. You will be getting the money that you need, so that is good. But you also will be paying back your loan, which means that your credit score will increase. Getting this type of loan as a student actually makes it easier to get a larger loan in the future because you have a good credit score established.

You should not put off going to school because you cannot afford it. If you do not qualify for the larger loans, consider taking out private loans for students. They will get you the money that you need to pay for school, which in turn will help get you a better job upon graduation. The better your education, the better job you will be able to get, which will mean that you will be making more money. All this is possible because you got out a loan to help you when you were in college.



By: Title Loans

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