Gathering funds for an education can be done in many ways. There are a few federal loans available and there are any number of financial aid services for students who qualify. Your school’s financial aid office can help you figure out which financial aid, grants, or scholarships you may receive. This may not cover your education on its own, and you may need a private loan but do not know what to expect. Chase student loans can be used as a reference point.
Private student loan providers, including Chase, often offer to help you get federal Stafford loans, for undergraduate students, and PLUS loans, for graduate students. Chase offers a slightly lower rate than the standard federal rate for these loans; monthly rates will remain the same but the overall payment time will be lower. Chase and other private lenders can also help with federal student loan consolidation.
These federal services generally don’t pay the entire cost of going to college, so students often have to turn to private lenders to cover additional expenses. The program offered by Chase can be used as a case study, as they are industry-standard. This will give you an idea of what to expect.
Students can borrow up to $40,000 per year with Chase’s private student loans; the interest rate will be different for each student based on their credit rating. Chase recommends using a cosigner, which can help lower the interest assigned to the loan, but they do not require a cosigner, they only require that one of the applicants be creditworthy. Payment on these loans is due to begin almost immediately, 45 days after receiving the money, but these payments can be deferred until graduation. Ideally you can pay interest only while studying, if not, you can choose to defer interest and principle, but interest will continue to accumulate.
Graduate and undergraduate students can cover their COA-Aid (the cost of attendance minus financial aid) with a Chase Select loan for expenses enumerated by the college.
The Chase Medical Education Program is a package of federal and private loans for medical students, including PLUS graduate student loans, Stafford medical loans, private medical loans, and medical residence loans.
Lending specialists are available by phone or internet to help you compare loan options, with Chase and with most lenders. Chase offers loan payment rate and cost of living calculators as well as individual borrowers’ loan information on their website.
The examples used here are based on Chase student loans for the purpose of providing a baseline industry standard so you know what to expect when you start looking for private student loans. Compare options with multiple lenders to get the best rates and service.
By: Adam Hefner
Posts Tagged ‘Federal Student Loan’
Chase Student Loans As a Base Model for Student Loans Expectations
February 1st, 2010Private Student Loans – The Pros and Cons
January 20th, 2010
Federal student loans provide college students will money for tuition, books, and living expenses. Yet, it can take months to process a loan request. If you need money for college, and there isnt enough time to apply for a Federal student loan, consider a private student loan and get the cash you need in as little as five days.
What is a Private Student Loan?
A large number of college students receive financial assistance from a grant, work-study program, or Federal student loan. However, due to rising college tuition, traditional financial aid doesnt always the expense. When there is a difference between the education costs and financial aid received, students must find a way to pay the excess. Some people choose to use personal savings or a credit card. When neither option is available, a private student loan from a private bank can fill in the gap.
Advantages of a Private Student Loan
Private student loans are beneficial because they provide a quick solution to a tuition problem. Unlike Federal student loans, which can take several months to process and disburse, private student loans offer quick processing, and the money is normally distributed to the student within five business days. Once the student acquires the funds, the money can be used for multiple purposes such as tuition and books. Federal student loans place limits on how disbursed money is used. However, a private student loan can pay for a variety of education-related expenses such as a laptop, rent, transportation, etc.
Disadvantages of a Private Student Loan
While private student loans offer flexibility and quick processing, getting approved for such loans is no easy task. Federal student loans and grants do not require good credit, which is a nice feature since many college students have little or no credit history. Private student loans are quite the opposite. Because private banks approve the funds, loan requirements include a solid credit history and verifiable income. Plus, the interest rate on a private student loan is generally higher than a Federal student loan, which can equal a higher monthly payment.
By: Lynn Haehl
Converting Loans Into Fixed Rate Student Loans
January 17th, 2010
The only fixed rate student loans available are federal loans, and even those can change based on federal law. However, if you want to lock in your interest rate, you can do so after you finish school.
Federal student loans offer a more stable rate; even though changing laws can change the interest rate on these loans, it is not going to happen from one day to the next, which is a possibility with private loans. Private loans should only be considered when federal loans and financial aid do not cover the costs of your education.
Education costs are rising faster than federal student loan amounts, so many students are finding themselves in a situation where they need extra funding. Lenders take advantage of this situation and stepping in to fill the gap.
If you have excellent credit, you are eligible for loans which offer Prime interest rates. Good credit takes time to build up, however, and if you’re a young student, if you don’t have bad credit, you probably have no credit or a very short credit history. This doesn’t make it impossible to get a loan, but you may need a cosigner or be charged higher fees and interest rates.
This puts you in an even more precarious situation than other sub-prime borrowers, because unless bankruptcy laws change, you will not be able to have your student loan debt excused by declaring bankruptcy unless you have extreme economic difficulties and, according to current precedence, absolutely no chance of future improvement.
You do have the option of consolidating student loan debts. This will give you the chance to freeze the interest rate for the life of the loan. The downside of this is that, while you will also pay less per month, you will be paying off your debt over a longer period of time and in the end, it will cost more. Having a fixed interest rate and lower payments now may be worth the future increase in total cost.
Consolidating student loan debts also allows you different payment options. You can pay interest-only for up to four years with some lenders, allowing you to get a head-start on a career, or you can take advantage of a graduated repayment plan to start paying off the debt now. You can switch payment options, so if you ever suffer financial difficulties, you can switch to an income-based plan. And you can always make early payments on the principle.
Students wishing to convert their private student loans into fixed rate student loans should consider consolidation. It offers a locked interest rate but allows borrowers the chance to use varying payment plans to make student loan payment easier.
By: Adam Hefner