Student Loan Help
What is a Student Loan
Student loan help. Unlike credit card debt, student loans should be seen in a much better light. For one, they represent an important investment into one’s own education. Furthermore, interest payments on student loans are usually tax deductible to a certain extent. Interest rates on student loans have also declined significantly over the past years, with some banks now offering just 4 percent interest.
However, just like credit card debt, student loans are another form of debt, and it would definitely be in your best interest to pay as much of it off as soon as possible.
Types of Student Loans
Private loans versus Government-backed loans
What’s the difference? If you receive federal aid (government backed loans), you get a short break upon graduation before interest begins accruing on your loan. On the other hand, if you receive private loans, interest usually begins accruing right away, and you need a co-signer in order to secure a loan.
Stafford loans – these are loans from the government, and can be split into two types. Subsidized loans are need-based, and usually have very good interest rates. The fed pays the interest on the loan all the way till your grace period after graduation expires. Unsubsidized loans are open to all, but interest begins accruing right away.
Perkins loans – these are loans from your school. They usually have very good interest rates as well, and grace periods can be as long as nine months post-graduation.
Consolidate Private Student Loans
Consolidate Federal Student Loans
To consolidate your loans means to combine all your loans and to obtain a new fixed rate, with a longer repayment schedule. You should take advantage of the former but not the latter. Use the savings from the lower interest rates to pay off your remaining debt as soon as possible.
Is there a best time to consolidate?
Waiting would be advisable if you are confident that interest rates would continue to decline. This is especially true if you are considering a consolidation early in the year, as interest rates on student loans are set on July 1 every year. They are closely tied to Treasury bill rates; specific formulae can be used to determine loan interest rates.
For example, Stafford Loan rates during the deferment period are equal to 1.7% above the 91-day T-bill rates, while rates during the repayment period are equal to 2.3% above the 91-day T-bill rates.
Student Loan Help – the most urgent question for many people is: how do I repay student loans? Important advice and help on how to pay off student loans.