Sunday, December 19, 2010
Tuesday, March 24, 2009
Navigating the private student loans sector reminds me of trying to walk across a mine field blindfolded. You'd think that the interest rates for private student loans would be dropping since the prime rate is or at near zero. Nothing is further from the truth.
Re-read this article many times, take notes and use this criteria the next time you sit down and discuss private student loans with your lender. Please make your lender explain the following terms that will be used a lot.
- Prime Lending Rate
- LIBOR Index (London Interbank Offered Rate)
- Annual Percentage Rate (APR)
Top 7 Questions You Need to Ask Your Lender
1. Which index will you be using to determine my interest rate. The two major index lenders used to determine your interest rates are the LIBOR index and the prime lending rate. Make them show you why the rate they use is better than the other one.
The LIBOR index (London Interbank Offered Rate) starts with how much your lender has to pay on the money borrowed. Then they will add a buffer to it to help them make money. Over the past several years the spread between the LIBOR and the Prime lending rate has increased which means it is better to go after the LIBOR because the interest rates move upwards more slowly, thus saving you more money on the entire loan.
However as you have read in the papers and heard on TV, interest rates are falling so that is why you need them to compare both methods.
2. How much will my co-signers credit rating influence the interest rate?
Most college student use their parents or other family member as their co-signer. If you are going to shop for the best interest rates you should also shop for the best co-signers. They can either make or break you.
3. What fees are associated with this loan?
Lenders are notorious for adding fees to the loans. Application fees are the most common fees. Any fee that falls in the range of 3% to 4% is just about the same as adding 1% to your interest rate.
4. Can I repay this loan faster and exactly what are your payment options?
Any time you owe money and interest accrues you need to eliminate that debt as soon as possible. Some private lenders want to squeeze all the money they can out of that loan. The only way they can do that is by charging you a fee for paying off your student loan early. A good lender will provide several options to meet your repayment needs.
5. Can I get a graduation discount?
If you show proof that you graduate, some institutions will offer you a discount on your student loan.
6. What kind of tax break can I expect?
Once you begin to pay off your student loans you will be able to write off the interest on your student loans. For my nephew it is substantial. Make sure and have your lender show you these advantages and combine them with this next question.
7. Please show me on paper, exactly how much I will be paying by the end of my loan.
These pieces of paper will helped us tremendously when it's time to finally make a decision on who we borrow money from. You'll love the ease of comparing when you have each paper sitting side by side.
A few other facts you should know:
- use private student loans as a last resort after you have failed to get a federal student loan.
- these loans are also good as a supplement but only borrow what you absolutely need.
- they are not your last option when it comes to finding a student loan, but they are better than the other options available to you.
- once you are approved for the loan you can expect to see the money in as little as 14 days.
- unlike federal student loans, you don't have apply through FAFSA first, you can get these loans at any time.
Ryan has a wealth of hidden secret treasures for college bound students and parents. Visit his site now and learn what to expect after you start paying your off Private Student Loans Want to know the exact step by step formula that guarantees you will secure your loan? Click this link now: Student Loans Secrets
Article Source: http://EzineArticles.com/?expert=Ryan_Hogaboom
Monday, March 23, 2009
College costs continue to rise, but through regular saving and investing for growth, you can help a child realize his or her goals.
- Planning for the Cost of Higher Education
- A Sound Strategy
- Goal: Final Tuition Bill Due in 12 to 22 Years
- Goal: Final Tuition Bill Due in 8 to 11 Years
- Goal: Final Tuition Bill Due in Less Than 8 Years
- Other Financing Options
Planning for the Cost of Higher Education
On average, college graduates with a bachelor's degree earn 62% more per year than high school graduates. Clearly, one of the best investments you can make for your children is an investment in their educational future.
You may think that setting up a bank savings account for your newborn's education will get him or her off to a great start. You might, however, want to think again. According to 2005 data from The College Board and Standard & Poor's, the projected average cost for your newborn's four-year degree at a public college could total $151,425. You would have to sock away $5,126 per year in a savings account, assuming it earns interest at an average rate of 5% per year, to equal that amount by his or her freshman year. And should your child decide to attend a private college, tack on about $211,012 more to your savings goal, bringing your savings account annual contribution to $12,270.
But don't despair yet. Even without time on your side -- if your children are teenagers, for example -- a sound investment strategy, coupled with knowledge of other college financing options, may put your children on the road to a valuable four-year college degree.
A Sound Strategy
As with any large savings goal, it's best to start investing early and often for college. First, set your goal: Figure out how much you will need to save for each child based on his or her age (see accompanying chart). Then, develop an investment plan and stick with it. Consider discussing the following guidelines with your financial advisor when developing your plan.
Goal: Final Tuition Bill Due in 12 to 22 years
With time on your side, your portfolio can potentially withstand a bit of volatility in your quest for higher returns. You might want to consider investing the majority of your college savings assets in stocks, as these investments have historically provided the greatest long-term growth potential. For example, a one-dollar investment made in the Standard & Poor's Composite Index of 500 Stocks (an unmanaged index of common stocks generally considered representative of the U.S. stock market) at the end of 1985 would have grown to $9.55 by year-end 2005. Compare that to an equal amount invested in lower-risk, lower-returning money market investments over the same period of time; your investment would have amounted to only $2.57. Of course, past performance can't guarantee future results. You must remember the volatility involved in stock investing and consider your ability to wait out potential fluctuations in the value of your child's college savings.
Goal: Final Tuition Bill Due in 8 to 11 Years
In addition to keeping your portfolio aimed toward growth with stocks and stock mutual funds, you might want to add or increase a fixed-income element to balance risk. Also, now is probably a good time to teach your child about investing -- by encouraging that a portion of the dollars earned through paper routes and babysitting be contributed to the college savings plan.
Goal: Final Tuition Bill Due in Less Than 8 Years
You may start allocating more of your portfolio to fixed-income and money market investments. If you have virtually nothing saved, you have a challenge ahead of you, but some cost-cutting in other areas of your life might allow you to make substantial monthly investments. The less you have saved, the more you may need to be aggressive in your investments in seeking higher returns, as long as you have the appropriate risk tolerance.
Although many investments, including stocks and bonds, have traditionally outpaced savings accounts in terms of performance, past performance cannot guarantee future results. Bear in mind, too, that unlike savings accounts, investments are not insured by the Federal Deposit Insurance Corporation (FDIC); therefore, your investments' value may fluctuate a great deal over time and could even result in a loss. Also remember that any investment plan needs a fresh look every year or so to determine if adjustments need to be made. Generally, changes should be made as your time horizon narrows, the day nears when you will send your child off to college, and preservation of principal becomes a primary concern.
Other Financing Options
Beginning your investment plan by considering the time frame available to you is probably your best bet in seeking to meet college costs. In addition, consider these options:
- Encourage savings gifts: When relatives ask what your children want for birthdays or holidays, encourage gifts that will help finance their education. Though it may not be a child's first choice now, they'll thank you later. Such gifts include Series EE Savings Bonds; shares of a mutual fund given through the Uniform Gifts/Transfers to Minors Acts (UGMA/UTMA); and zero-coupon bonds that mature in a given year around college enrollment. Parents or others can contribute up to $2,000 annually (per child) to a Coverdell Education Savings Account (formerly called the Education IRA) where any earnings can accumulate tax free and withdrawals can be made tax free for qualified education expenses. An individual can make annual gifts of up to $12,000, gift tax free, to a minor under UGMA/UTMA. And friends and family can pay any amount directly to a youngster's college for tuition and fees, with no gift tax consequences. Remember to brief yourself on the tax considerations of each of these gifts so you're not caught off guard by Uncle Sam.
- Section 529 Plans: These state-sponsored plans allow individuals to invest in a predetermined investment pool and offer some flexibility on when you can contribute. All qualified higher education expenses are federally tax free. Withdrawals may also be free of state taxes for residents of states that allow this benefit.
- Apply for financial aid: Even if you think you're ineligible for financial aid, complete the applications and mail them in on time. According to a 2005 College Board study, there was more than $129 billion in financial aid available during the 2004-2005 school year, the most recent year studied.
- Don't rule out less expensive schools: Public universities and community colleges can be among the best options. Higher education is certainly one area where most expensive does not necessarily mean best.
- Develop networks and ask questions: High school guidance counselors, religious and civic organizations, and the colleges your child applies to can all provide good leads for additional sources of scholarships, grants, and loans.
Together, time and a smart investing strategy comprise your best bet for meeting the rising costs of higher education. Combine that bet with a little creativity and a lot of information, and you can help provide your children with an investment that no one can take away: a college education.
- On average, college graduates earn about twice as much per year as high school graduates.
- To help meet rising college costs, build an investment strategy: Determine how much you'll need, choose proper investments, and invest regularly.
- Longer time horizons are an opportunity to potentially benefit from growth stock and stock fund investments.
- As your time horizon shortens, adjustments may need to be made in your college savings portfolio.
- Encourage savings gifts from friends and relatives.
- Apply for financial aid, even if you don't think you're eligible.
- Don't rule out less expensive schools.
Sunday, March 22, 2009
The Federal Perkins Student Loans Program provides low-interest loans to help needy students finance the costs of postsecondary education. Students can receive Perkins loans at any one of approximately 1,800 participating postsecondary institutions. However, recipients of Federal Pell Grants receive priority for Perkins Loans.
What Are the Terms of the Federal Perkins Student Loans.
A Federal Perkins loan is a low interest (5%) loan. The maximum amount for the Federal Perkins Student Loans to an undergraduate student is $4,000 per year, up to a total of $20,000 over the course of an undergraduate program. For graduate students, the max amount is higher at $6,000 per year and $40,000 over the course of the graduate studies.
Perkins loan qualification requirements
- Enrollment in an eligible school at least half-time in a degree program
- U.S. citizenship, permanent residency, or eligible non-citizen status
- Satisfactory academic progress
- No unresolved defaults or overpayments owed on Title IV education loans and grants
- Satisfaction of all Selective Service requirements
The U.S. Department of Education provides a programmed amount of funding to the school. In turn, the school determines which students have the greatest need. The school combines federal funds with some of its own funds for loans to qualifying students.
If you're offered a Federal Perkins Student Loan, you'd be wise to take the full amount you are eligible for. With a low interest rate of 5%, a Stafford Loan, private loan or any other loan product won't be able to compete. There are also grants and work study programs that prospective students will want to check out.
By Ricky Lim
The best tool for managing a few debts is the student loan consolidation. This helps you mix all your private or federal student loans into a single one with longer terms and affordable payment.
In the US, there are two types of student loan categories available: the federal student loans and the private student loans.
The federal student loan consolidation will help a student combine all his loans into a single one with a very low interest rate. Also the length of the payment term can be set according to his needs. A student can ask for a federal consolidation loan from various financial institutions each offering great loan packages.
On the downside, the low monthly payments will help increasing the full total amount to be repaid. Even so the federal consolidation student loans offer the following beneficial features:
- Interest rate - the rates offered by the federal consolidation student loan is considerably lower than any other private loan plan.
- Monthly payments - the monthly payments are now affordable and won't endanger your budget
- Single loan - each month you'll have only one payment to make.
If a student is not enrolled in any school and has repaid any other previous loans in time or he is in grace period after post graduation then he is eligible for federal consolidation loans. The minimum amount is $10,000 or more.
The students that already have federal educational loans are eligible also for consolidation loans. The student debt consolidation loan doesn't include the private education loans.
A student can apply for a federal consolidation loan at several companies and institutions such as: secondary markets, banks and credit unions.
The federal loan interest amount is tax deductible and that's why it would be best not to mix federal and private loans. If the student does that, he'll only lose its advantages offered by a federal consolidation loan.
By Jason Davis
Do you want to go to college, but you just can't afford to? There are too many people that have this same problem. The best way to achieve this goal is to apply for free college grants. There are two different ways that you can use to apply for college grants. It is not hard to do, but it will take time.
Here are the best two ways that you can use to apply for free college grants.
One: You can use the internet to find applications for college grants. There are many sites online that offer this. You will have to search until you find a good site that will help you get the free college grants that you need. It may take you some time to apply for and get the grant because you will basically be doing this all on your own. There will be help for you to find online if needed, but you will still have to do all the work yourself.
Two: Go to the student office of the college that you are going to attend. They will have someone that can help you apply for free college grants. Colleges help students get college grants every day, so they can be a huge help. You will have to do your part, but you won't be alone.
So, you need to decide which way you are going to use to apply for free college grants and then just do it. The only way you will be able to get the college grants that you need is to take action and make it happen. Anyone can get a grant if they just do the work needed and apply.
By Eric Banks
Many students have aspirations to attend graduate schools or college but do not possess enough income sources to afford their education. But one thing that they can surely afford is a subsidized federal loan. Subsidized federal loans are specially designed for students who do not have a strong financial back ground or means of income. The best part about this loan is that you do not have to pay any interest on this loan till the time you complete your course.
Subsidized Federal Loans can be financed only by federal government and are meant for low income group students. If you have enrolled in a school that takes part in federal family education loan program and are not in default with any other education, then you are eligible for a subsidized federal loan. You must also be attending at least half time school when you apply for the loan.
Here are the steps that need to be followed in order to apply for Subsidized Federal Loan:
· The first most important step is to fill up FAFSA also known as free application for federal student aid and process the case. After some time you can check the status and see the amount of loan for which you are eligible. You can also make corrections in a processed FAFSA and review the changed results. One more thing to be kept in mind is that you have to apply for loan every year as federal student loans are not renewed automatically.
· You school will now send an award letter mentioning your eligibility for loan. After you receive the award letter, you can apply for "Stafford loan". The federal Stafford loan is relatively cheap and the interest rate is fixed.
· You should also look for other federal student loans available in the market and apply. You should not be dependent on just one option. Try and search several options that are offered by the government and see for yourself what suits you the best.
Subsidized loans are interest free till you complete your education and because they are offered on a real low rate of 6.8%, it is easy for students to repay the loan back.
To know more about Subsidized Government Loans and to check if you qualify
Click Here --> Federal Grant Programs
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Article Source: http://EzineArticles.com/?expert=Eric_Banks