Paying off student loans requires smart decisions Pocono Record
Last June's college graduates face a tough choice this month. That's when the automatic six-month deferment on their student loans expires, forcing them to start repaying the money or beg for additional time.
Never have students been so deep in debt and so unprepared to pay.
The average student is carrying a record debt load of more than $23,000, according to a just-released report by the Project on Student Debt. Meanwhile, unemployment among college graduates ages 20 to 24 is the highest in recorded history, at 10.6 percent.
"With debt and unemployment at record levels, college graduates may feel stuck between a rock and a hard place," said Lauren Asher, president of the Institute for College Access and Success in Berkeley, Calif., a nonprofit advocacy group that is affiliated with the Project on Student Debt.
Graduates do have options that could make the debt more manageable, she added. But figuring out the best option with student loans, particularly loans with special bells and whistles, can be mind-boggling, said Lynn O'Shaughnessy, who writes the College Solution blog.
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What happens if I decide to repay my Federal Direct Student Loan early?
Yeah, you'll save yourself the interest on it. Fed direct loans also don't have a prepayment penalty, I don't think, though you should look into that.
Consider, however, what your interest rate is.....I have two sets of loans, one with a set rate of 6.65% and one with a rate of 2.85%. I'd pay off the 6.65% if i had the funds, but even if I won the lottery tomorrow I wouldn't pay off the ones at 2.85% because you can make a lot more by investing it. A lot of online banks will give you a 4-5% return on your deposits, so it makes more sense to take the money you'd use to pay off the loan and just deposit it (or even buy low-risk bonds, etc., if they have a higher return than your interest rate) because that will be more beneficial for you in the long run.
if your loan is unsubdized, then it is accruing interest while you are in school any payments received while your loan is in deferment would be first applied to interest charges and then to principal. as stated earlier, there is no penalty for prepayment.
Is consolidating my federal student loans with Direct Loan Servicing my best option?
Do they have the best rate? After all, THEY ARE the government, whom regulates rates, correct?
Direct Loan Servicing is definately an option for you when you are considering consolidating your Federal Student Loans. Also, yes the Federal Government are the ones who regulate the interest rate on Federal Student Loans. The interest rate is established every July 1st of the year and is regulated by the T-bill.
Keep in mind, because Direct Loan Servicing is, in essence, the Federal Government they rarely pursue someone to consolidate their Federal Student Loans since they are so overwhelmed with the process of issuing Federal Student Loans. Because of this they task other companies to deal with the consolidation volume. The other companies the Federal Government tasks to do this offer the FFELP Consolidation Loan Program which is also regulated by the Federal Government so these companies must all follow the same rules and regulations as Direct Loan Servicing.
One thing the FFELP Consolidation Loan Programs offers is additional Borrower Benefits for those who qualify. The FFELP Consolidation Loan Program companies also offer their assistance in filling out your paperwork, which can be difficult at times. For more information on borrower benefits please visit the source below.
How do i get my federal student aid direct loan audited?
I am disputing my billing history but have gotten no where with the "customer service" people on the phone. there has to be a way to get my loan audited. please, help!
To dispute any federal student loan issue, you'll probably get the best results from the FSA Ombudsman's office, which is sort of like the Department of Education's version of the Better Business Bureau. You can contact them at:
U.S. Department of Education
FSA Ombudsman
830 First Street, NE
Fourth Floor
Washington, DC 20202-5144
Phone: 1-877-557-2575
Fax: 202-275-0549
Online: http://www.ombudsman.ed.gov/about/contactus.html
Hope this helps!
Christopher S. Penn
Producer, the Financial Aid Podcast
Daily free financial aid internet radio, no iPod required
http://www.FinancialAidPodcast.com
FinancialAidPodcast [at] gmail [dot] com
I am a graduate student. If I am over awarded, do I need to pay back federal direct loan right away.?
I am a graduate student. I received federal loan at the begining of the semester and then I received fellowships which make the total aid more than cost of attendance. Do I need to pay back direct loan amount I received in this semester right away.
No, the loan is still yours. However, if you don't need the money it is best to pay it back before it accumulates interest.
I want to pay off a Federal Student Loan (Direct Loan) in one year. Any restrictions? Do I have to pay min?
No, there are no prepayment penalties on federal Stafford student loans. Based on your repayment plan, a minimum monthly payment will be assigned to you, but there are no consequences at all for paying more than that minimum payment (as their often is with other personal loans).
conservatives: why are you against the federal student loan program?
i thought you supported the average middle class family.
do you think it helps the students, just like how you think the lack of social programs helps the poor?
http://en.wikipedia.org/wiki/Federal_Direct_Student_Loan_Program
I'm not against it at all. In fact, I'm all for it. Perfect example of helping those who are willing to help themselves.
Now, I'm against government grants, as if the student drops out, all that money is wasted. But loans have to be payed back, encouraging students to stay in school, and/or getting jobs to pay off the loans.
Here's a tidbit of information for you. It is still possible to graduate college without scholarships, without any form of government help including ROTC, without grants, without loans, without family money, and without borrowing any money at all. All you have to do is work.
There are some federal direct loans under the Higher Education Act of 1965, but in most cases it isn't cost effective to let the government administer all aspects of the loaning process.
Since Cons are always speaking for Liberals on this board, I thought that I would speak for cons.
I do not believe that the children of wealthy people should be the only ones allowed an education. I had such loans to get me through college and they have all been paid back with interest.
which loan is better the Federal Direct Subsidized Loan to meet need or the Federal Perkins Loan?
these are the terms
William D. Ford Federal Direct Subsidized Loan to meet need :
The William D. Ford Federal Direct Loan program is available to undergraduate, graduate, and medical students based on financial aid eligibility. The federal government will pay interest on this loan while you are enrolled in college at least half-time. The application will not be processed through a bank, but rather through UCI and the U.S. Department of Education.The guarantee and origination fee will be deducted from the loan amount you borrow. You will be charged a 2.0-percent origination fee. A rebate of 1.5 percent of the loan amount will be included in each disbursement.
If you advance a grade level during the academic year you may be eligible for a higher maximum annual loan limit. Otherwise, you must wait until the period of time equal to an academic year elapses to borrow again under the William D. Ford Federal Direct Student Loan Programs (subsidized and unsubsidized).
Interest Rates are
fixed at 6.0 percent.
the second loan is:
Federal Perkins Loan
The Federal Perkins Loan is a long-term federal loan for students who demonstrate financial aid eligibility. Cumulative totals for the full term of college attendance may not exceed $20,000 for undergraduates and $40,000 for graduate students.
Interest rate 5 percent per year during repayment
Deferment period before repayment Information regarding deferments will be provided at your exit interview.
Also, you may refer to your promissory note for the information.
Full repayment up to 10 years
Minimum payment $120 per quarter
If you are thinking about getting a loan, then you should know about the basics before you get started. If you understand the basic dos and don’ts of loans, then you will be better equipped to find the best loan for your needs. Whatever type of loan you are applying for, you should follow these basic rules to help you find the best deal<!--when searching for a loan, it pays to do your research. Look for as many suitable lenders as you can, so that you can find the very best deal. There are many online pages that allow you to compare loan rates from a variety of lenders. As well as looking online, check out your high street banks and mortgage lenders for deals too. You may find the loan that you need here,
http://best-loans.awardspace.com/
If possible, try and avoid taking out secured loans. If the amount you need to borrow is small or you have good enough credit to borrow without collateral, then do so. Although unsecured loans have higher rates, they are less risky because your home will not be at risk if you cannot make the payments.Try and take a loan out over the shortest period-->you can afford. Taking loans out over 10 years or more can be risky, and you cannot be sure what your financial situation will be at that time.
Is there any way to consolidate federal student loans with a private student loan before the july 1 deadline?
I have 3 student loans through the federal gov't (perkins, federal direct and a "GATE" - AES loan). I also have a small private student loan through citibank. I want to consolidate all 4 by the July 1 deadline but no one will combine private and federal. I get ads in the but they all seem like scams to me. Any financial experts have any ideas?
As far as I know consolidation is only on govt loans you cant consolidate a private loan.
can the state revenue take money from refund for federal student loan or just federel return?
will the state of mass take from my state refund for a direct student loan or will it be from the federal return or can both deduct from my returns
Dear T: If it's a Federal loan they will not take it. See www.mass.gov and search federal loan offset. Also most states have a toll free offset phone number which could tell you.
This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provide. Click on my profile to read more.
Errol Quinn Enrolled Agent Master Tax Advisor
How often is interest compounded or capitalized onto a federal direct stafford student loan?
For example, if I have a student loan of $5000, and the interest rate is fixed at 6.0%. How often is the 6.0% added onto the principle? Do I add on 6.0% after every month or is it every year?
For example, by month:
First month: $5000
Second month: $5000 + 6.0% = $5300
Third month: $5300 + 6.0% = $5618
etc.
By year the amount of interest would just be $300, but I'm not sure if that is the case. I can't find anywhere where it says how often interest is added either.
you actually have the answers right there. you actually got the correct % in your question.the interest % is added each month.
the good thing about this particular loan (stafford) is they have two types. One is the unsub and the other is sub. unsub you pay interest while attending school. the sub you dont have to pay interest till after you graduate, and to top it off the gov pays all accumulating interest while you are enrolled in a school till you graduate.
student loans are different from regular loans. not often will it have a escrow on the interest. the interest normally stays the same for the lifetime of the loan.
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