Improve Your Chances of Getting a Student Loan

Now that most of this year's pomp and circumstance, cap-tossing, and graduation parties are in the memory banks, the actuality of paying for college or graduate college is setting in. According to FinAid, two thirds of college kids borrow to pay for faculty - with a standard loan debt of nearly $20,000. Ten p.c of parents borrow for their students' education, borrowing a median of $16,218. And those figures account only for undergraduate education. Graduate degrees can pack on a further $27,000 to $114,000 in student debt.

Most US people with student loan debt most likely saw the flood of news items over the past few weeks inspiring borrowers to consolidate their student loans by the cutoff date - June 30 - before the annual interest-rate increase on July 1. On that date, thanks to the rising IR environment in the united states, rates on Fed student loan debt increased by an important 1.84 %. Now that student loan rates are now not at the three p.c rates they hit during the economy's slowest days, it pays even more to be savvy about borrowing for school or returning to college.

And this year, borrowers also could notice the effects of two new rules that took effect July 1, making it all the more important to pay attention to smart financing options for student loans.

IRs on new Stafford Loans may not be variable, but will be locked at 6.8 p.c.

Formerly, if borrowers had multiple loans with one lender, they could only consolidate with the same lender, but as of mid-June, they can consolidate with any one bank.

If you missed the June 30 consolidation deadline, it is too late for this year. But for those that did - or who are taking a look at borrowing for varsity or graduate faculty via new student loans starting this year or later - these steps will help ensure you find your best financing mechanism for student loans.

Try again next year. If you have older student loans that you haven't consolidated, jot down a note on your calendar to check rates before next year's June 30 consolidation deadline. The maximum rate allowed for federal Stafford loans is 8.25 percent. For 2006-2007, the rate will be 7.14 p.c for those in repayment, or 6.84 p.c for those with in-school deferment. It is possible that rates still will not have hit the maximum by next June 30, and you then might be in a position to lock in lower rates.

Compare rates. Whether you are looking at new loans or old ones, check to make certain you are getting the hottest deal.

Check your options. A few career fields - like teaching and emergency services in high-need areas - are fit for loan forgiveness or debt reduction of student loans obtained to enter that field. Check with your faculty, professional organization or lender to determine if you are fit for any of these programs.

Get aid if you can't pay. If you are unable to make payments on your bad credit loans, contact a debt resolution professional or get other reputable assistance. Student loan debt generally is not eliminated by declaring bankruptcy, but you may be able to work out a repayment schedule with your lender if you do not have the earnings to pay the debt according to the original schedule. Student loans represent a significant finance commitment, and avoiding repayment has major repercussions.

Student loan debt is one of the few'healthy' types of debt, as it helps individuals better themselves, further their careers and society, and generate larger long term earnings. With a little bit of research, you can make the most of your student loans and your education - and even raise your money knowledge on the way. And in borrowing, as in education, there's always next year to boost your situation.

Posted in: Chances of Getting a Student Loan