Student Loans- A Comprehensive Look
There are many types of student loans available out there in the world and if you are one out of the thousands of students who graduate from high school hoping to join college every year, it is always wise to learn a thing or two about various loans and grants available at your disposal. Similarly, if you have just graduated from campus and you want to start repaying your loan, it is imperative to familiarize with various tips on how to schedule your payment installments to avoid risking your financial future.
We are going to take you through a comprehensive analysis of each type of student loan to provide you with a vivid image of the specific rules and regulations governing various loan puzzles.
Student Loan without a Cosigner
Student loans without a cosigner are built for the sole purpose of helping students to access financial assistance irrespective of their past financial records and without the involvement of a third-party (guarantor or co signer). They are availed in two different avenues namely: private and federal avenues.
Private loans without cosigner
Most loans falling under this package are normally presented by members of the corporate world e.g banks. Due to differences in structure and regulations for different offers available out there in the world, it is wise to get in touch with your preferred provider for deeper details on what you need to do to meet the set qualification criteria. Some well known private student loans lenders include: Wells Fargo, Discover Student Loan and Sun Trust.
Federal loans and grants
Certain federal loans bear the characteristics of no cosigner student loans. Such are normally offered based on other factors other than one’s credit history- N/B: factors such as financial need and academic performance take center stage. This basically means that a needy but bright student can still access funds without a guarantor.
Stafford and Perkins loans are among the most common examples of student loans that young citizens can avail without providing any details about their past or present credit backgrounds. These loans normally attract flexible repayment terms in addition to friendly interest rates.
With Stafford federal loans, a student can opt for subsidized or unsubsidized options. If you are particularly looking for a friendly source of funds, the former category is the best to try as it is awarded on the basis of one’s financial needs- the government subsidizes for the interest accrued before repayment.
Perkins loans are only offered to a limited category of people- those demonstrating extreme financial need and with excellent academic records. If you feel like you have what it takes to qualify for Perkins loans, it’s high time you started making plans to meet the strict qualification guidelines.
Such loans are highly beneficial in that they allow hard working and optimistic students to achieve their academic goals irrespective of their past credit records.
Unsecured Student Loans
Maybe you don’t have resources to use as collateral for loan, what next? Well, there is always light at the end of the tunnel for those who wish to overcome the barrier of financial impediments in their quest for academic excellence.
Unsecured loans are unique types of loans that are offered without the provision of any form of collateral. They can be utilized in the payment of specific school related expenses and as such offer wide flexibility to the beneficiary. Most private and federal institutions that offer student loans without collateral are known to determine one’s eligibility on an individual basis. It goes without saying that the terms and conditions offered by different institutions to different successful unsecured applicants are different.
One factor that differentiates this type of loan from others in the market is that it does not require one to put up any collateral or a prior credit history. This is to say, prospective aspirants face fewer hurdles while pursuing this form of financial assistance as opposed to when seeking for other types of student loans.
Unsecured student loans are normally repaid in small and flexible monthly installments. Some lenders may even offer you up to a period of 30 year to repay. On the flip side, due to their high risk nature, unsecured loans are known to attract huge interest rates. At times some lenders offer them at rates of above 10% per annul. Well, this is just to ensure that the borrower complies with the set rules and requirements to repay the loan in a timely manner. On average, you can borrow anything from $500 to $25,000.
Unsecured loan lenders are very particular when it comes to choosing their list of successful applicants. Sometimes they will even issue face-to-face interview sessions to determine your eligibility. Some private institutions may even run a brief credit check to determine your ability to repay the loan with interest.
Well, the risk of high interest rates under unsecured student loans is higher than with other basic lending structures. However, considering the added flexibility and friendly repayment terms in place; the real time merits of unsecured loans far outweigh the demerits.
Just as the name suggests, guaranteed loans are loans that are availed to the student by 3rd party lenders under the federal government’s watch. The federal government is charged with the overall responsibility of ensuring that these loans are repaid in a timely manner.
July 1 2010
Starting July 1 2010, the issuance of these types of loans was stopped. Today, if you want to access guaranteed loans, you’ll need to get in touch with the Federal Direct Lending Program which is the body charged with the disbursement of federal loans via the Department of Education. Due to the elimination of a third party lender, the whole idea of guaranteed student loans is now obsolete.
For general information purposes, we shall give you a sneak peak to some highlights that were closely linked to the issuance of guaranteed student loans.
Stafford Guaranteed Loans
There were two types of Stafford guaranteed loans- subsidized and unsubsidized. Currently, the basic idea behind the issuance of these loans is embedded in the federal Stafford loans.
Subsidized Stafford guaranteed loans used to work in almost a similar way to their successor- subsidized federal Stafford loans (discussed earlier in the article) with the only difference being the inclusion of a third party in the former case. Similarly, the philosophy behind modern-day federal Stafford loans is also quite similar with that of the defunct secured Stafford guaranteed loans with the channel of wiring funds being the main difference.
PLUS Guaranteed Loans
PLUS loans used to be availed to undergraduate students’ parents through a third party channel. Though still on offer to-date, the channel of distribution has undergone a series of changes to eliminate the need for the inclusion of a third force.
PLUS loans offer fixed interest rates and are repaid after the student completes their undergraduate studies. Flexibility and convenience are two of the notable benefits that come packaged with PLUS loans.
How to get student loans when you have bad credit
Credit cards keep a comprehensive list of all your financial transactions. As such, a person (or an organization) can use your past credit card records to judge your financial potential and behavior. Well, when it comes to securing student loans, most lenders tend to overlook the aspects of the applicants credit ratings. They instead choose to focus on one’s academic potential and financial needs.
However, your credit card report is still of importance to private lenders. So if you are planning to venture into the private lending world, you have to be adequately prepared to overcome the question of bad credit.
What loan options for student with bad credit are there? One may want to ask. Well here is a look at some top options that you take to escape the trap of bad credit history.
Stick to federal loans
This is by far the safest way to avoid being questioned about your financial character while seeking loans. All you need is to prove to the government that you have what it takes to perform well in school. Proof of your financial needs is also mandatory. You can also advise your parents to take a PLUS loan to cater to your needs while in campus.
Visit the financial aid office at your campus
Most institutions of higher learning always have special departments to attend to students with special needs. You can take advantage of your school financial aid office to access internal bursary funds and school fees waivers. Also, you can use your college aid office to learn more about special grants issued to your faculty by welfare organizations and partners.
Look for a co-signer
You can look for a co-signer to escape the question of poor credit ratings. All you need to do is to find a close friend (with a good credit history) to sign your loan documents. In that case, your friends will help soften the lenders heart.
Alternative Non-Credit Based Loans
If you are pursuing a degree related to any common faculty, you are likely to get financial assistance from the alumni community and well-wishers without presenting any form of credit history proof.
For instance, if you are pursuing a health science profession, you can access financial assistance from the Department of Health and Human Services. Nursing students are provided with an average amount of up to $40,000 per academic year by various nursing education program authorities. Also, student specializing in primary care (medical degree) can receive subsidiary financial back up with no credit check from the responsible authorities.
As you can see, the doors to accessing student loan assistance with bad credit are wide open. It’s upon you to explore them to secure your academic and professional future.
Private student loans are a category of loans offered by private lenders notably banks and corporate organizations with the sole intention of helping you (the student) to better meet your financial obligations while in campus. Most are known to attract favorable terms and interest rates and as such you can rest assured of finding quite a few suitable options to take in the market.
While resorting to these types of loans, it is important that you do a lot of market research before settling for a particular lender. Simply to say, you don’t want to bury your financial future by over-borrowing during your days in campus. Also important, you should learn to desist from the habit of misappropriating such funds. Most students who make this common mistake end up destroying their financial future only to realize the impact of their mistakes in the very long run.
While sampling various private loan alternatives in the market, it is important that you place great emphasis on the question of APR (annual percentage rate). Make sure to understand the total cost of the entire loan by doing your own calculations and taking important factors such as interest rates, amount borrowed and repayment timelines into consideration.
While forwarding your application forms, make sure to read every of information provided therein. Do not rush to append your signature on the dotted line without first understanding all the terms and conditions listed.
When all is said and done, the benefits of private loans are beyond doubt quite realistic. If you’re worried about raising enough funds to meet your specific needs while pursuing your undergraduate program, you can opt for them for additional assistance (keeping in mind the tips discussed above).
Education is one of the most important things that you can choose to invest in in life. However, without the right kind of financial assistance, the dream to acquiring good education cannot in any way materialize. On that note, it is essential to identify the best sources of educational funding as a step to bettering your academic and professional future.