STUDENT LOAN RATE: Factors In Its Rise And Fall

2007-03-08 10:33:40

( Financial )



For a lot of people, education can be a financially challenging endeavor that may require years of preparation. Should you fall short on your savings or simply cannot afford the required fees for a degree, several institutions offer student loans. There are generally two types of student loans – federal student loans and private student loans.

The federal student loan can be subsidized or unsubsidized and both can be acquired for the same period of enrollment. One difference between a subsidized and unsubsidized loan is the time when they start charging you with interest although the student loan rate may be the same.

Subsidized loans are awarded based on your financial needs. The interest for subsidized loans is charged only after your repayment period begins. On the other hand, interest charges for unsubsidized student loans begin the moment the full amount of your loan is disbursed. Should you allow the interests to accumulate, the unpaid interest for unsubsidized loan is added to the principal amount of your loan. Extra interest will then be added to your loan based on the higher amount.

Student loan rate depends on the type of loan you acquired. Federal rate loans vary per type although there is a maximum rate prescribed. For private student loans, the rates and fees vary according to your credit history and the school you attend.

If your have several loans and decided to merge them into one consolidated loan, the student loan rate applicable for the new consolidated loan is calculated by weighing the average of the consolidated loans.

Federal loans can be consolidated during grace periods like the time between your graduation or date of dropping before mid-terms and the commencement date for your loan repayment. Consolidation of your student loans is also allowed when you’re already paying actively for your loans.

Loan consolidation is also allowed during periods when you get qualified to suspend your loan payments or when your payments or smaller payments are temporarily postponed. Periods when your loan account becomes delinquent are also periods when you can consolidate your loans.

While rates do vary from time to time, student loan rate given are historically low although they may rise and fall based on economic factors. Student loans are given to make education accessible to all. It is important though that when you decide to take advantage of available student loans, you are aware of the financial commitment you are getting into.


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