How to Take Advantage of Students Loans

2007-03-08 10:33:40

( Financial )



Students loans fall into two main categories, which are federal students loans and private students loans.

Federal students loans are the easiest way to obtain; a Federal Student Aid Program grants them.

Financial companies grant private students loans but charge a very high interest.

One can apply for both a federal loan and a private loan, and combine the funds to pay for one’s education. However, in repaying both loans, a student may not consolidate both types of loans together.

Students may apply for multiple federal and private loans. Repayment can be done through a student loan debt consolidation program wherein the multiple loans of the same type are combined and considered settled in full. A new loan is then granted from the total outstanding amount due (which is usually less than if paying two or three loans separately) and paid in equal installments per month. The fear of having to miss a payment with one of the loans is eliminated here, because the loans are now consolidated. Student loan consolidations also provide students a chance to negotiate for flexible repayment schedules.

With student federal consolidated loans, there are no fees charged to the student. The federal government can offer you another loan or using a financial company at a consolidated interest rate. Consolidated loans have a low interest rate and are fixed during the life of the student loan.

Students should note that loans vary depending on the amount of loan required and the student’s credit history.

To apply for students loans, obtain the necessary forms and gather the needed documentation. Documentation usually includes proof of residency, last year’s income tax return, social security number and proof that you have attended secondary school.

Once the federal government or financial institution approves your loan, you will need to sign a promissory note, which is an agreement to pay back the loan amount within a specified period.

Before you even consider about taking on a students loan, you should note that students loans could affect your credit background. Any loan exceeding 8% of your income can have a negative effect towards future loan applications especially when there is a record for non-payment.


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