Wednesday, April 21, 2010

Students Loans are now all Federal

Because the Student Loan Overhaul bill was attached to the health care bill, and it passed, student loans have changed.

They are no longer being offered through private banks. Only the federal government is now issuing student loans. One reason for the move, was to avoid paying banks to administer loans and collect fees. In theory, it should make the student loan process easier and quicker.

There are some good things about making student loans federal only. You get a fixed percentage and never need to have the interest rate raised.

You are allowed to defer making payments if you are attending school at least half time. Remember that interest may still accrue.

If you get a low paying job after graduation, you can get a lower payment. It cannot be more than 15 percent of your income. This is certainly a better deal than you could get with a private loan company.

Your student loan is insured for free. If for some reason like death or disability, your debt is canceled.

After you start paying on your student loan, there are various forgiveness programs. If you work in a public service job, some of your loan will be forgiven after a certain number of years worked. Also, if you make on time payments on your student loan, you can get the rest wiped out after 25 years.

If you pay your loan off early, you never have to worry about a penalty.

Even though it may seem that your options on student loans are now fewer, there are some bright spots about a federal only student loan program.

>>30 ways to save money in college.

>>Financial aid secrets.

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