01.27.11 | Most popular student loans for college

Not everyone is aware of all the loan options available to pay for college. Here are just a few to consider:

1) Federal Stafford Loans – These are federally guaranteed student loans. You can apply for subsidized Stafford loans and the government will pay the interest for you while you are enrolled. This is a great option for students and the most popular loan program available.

2) Parent PLUS Loans – The Parent Loan for Undergraduate Students allows parents to borrow through the federal loan program to pay for their child’s education. The loan is in the parent’s name.

3) Private Student Loans – Private college loans are not sponsored by the government but offer an alternative sources of funds for those that may not qualify for federal aid or who need additional funds. Private school loans are often in the students name with the parent acting as a cosigner.

4) Perkins Loan – Perkins loans are another federal loan for low income students based on eligibility. These loan funds are limited so apply early.

5) Credit Cards – Believe it or not, approximately 30% of students/parents put a portion of the tuition bill on their credit card. While we don’t recommend this option, it is a reality. Once you graduate, consider consolidating your student loans to lower your monthly payment. The downside is you will pay more interest over the life of the loan by extending your repayment period. For additional resources, visit: www.studentloans.com, www.collegeloansolutions.com and www.gradloans.com.

09.22.10 | Reluctant Cosigner? There’s a solution for that.

Posted in Private Student Loans by Evan Jacobs

The most common things we see in our Financial Aid Forum every day is, “what loans can I get without a cosigner?” or “My parents don’t want to cosign because they don’t want another loan over their head.” It’s a prevalent and enduring problem, made worse by the economy and anxiety about job security.

However, the reality of the situation is the fact that most students simply can not afford college without the help of student loans. In some cases, federal student loans can be enough to cover your tuition (mostly for in-state public schools or two-year institutions), but affording private college and out of state schools can be much more difficult.

As I mentioned earlier this week in a blog about saving money through loan repayment incentives, there are a lot of different rewards, benefits, and marketing techniques that private lenders use to try and prove their product is better than the competitor next door. However, one benefit that I didn’t mention that has become popular lately is cosigner release.

Cosigner release basically means that once you graduate from your degree program, you can request to have whomever cosigned on your loan released from their financial obligation. This is big. Cosigner release makes all of those “I don’t want to be ‘on the hook’ for your loan” arguments invalid, assuming you make sure to finish school of course.

If you’re interested in checking out who offers this, have a look at our private lender comparison tool. It lists some popular lenders and their various perks and quirks for student loan offerings. As always, I recommend going federal before going private, but cosigner release definitely makes the prospect of a private student loan less uneasy for whomever you ask to help pay for school.

If you have a co-signer ready to go, apply for a private student loan today!

ScholarshipPoints Code: COSIGNRELEASE

Image Credit to lost in pixels on Flickr

09.21.10 | Why Pick a Graduate PLUS Loan?

Posted in Graduate Loans, PLUS Loans, Student Loans by Evan Jacobs

As a graduate student, the pressure is higher than ever and of course, your classes are likely more expensive than your undergraduate career. The majority of loan products available to you are graduate Stafford loans, graduate PLUS loans and private student loans.

Getting back to the primary question, why pick a graduate PLUS loan?

There are some differing schools of thought on this, but I’ll break down the benefits and differences so you can decide which makes more sense for your financial information.

Graduate PLUS Loans vs. Private Student Loans

Interest Rate

  • Grad PLUS = 7.9% fixed
  • Private = variable, based on the Prime or LIBOR + X%; can be very low with good credit or a creditworthy cosigner

Repayment Terms

  • Grad PLUS = several repayment options including: Standard, Graduated, Income Based Repayment, Income Contingent Repayment and Extended Repayment
  • Private = Generally 1 or 2 standard repayment plans; often 15 years

Incentives / Benefits

  • Grad PLUS = interest rebate for one year’s worth if you make every payment on time during the first year; 0.25% APR reduction for auto-debit payments
  • Private = a variety of different options depending on the lender such as: APR reductions, graduation rewards, co-signer release and more

To learn more about the differences between graduate PLUS loans and private student loans, check out GradLoans.com’s “Comparing Graduate PLUS and Graduate Private Loans” page.

08.12.10 | From Our Forums: GradPLUS or a Private Student Loan?

On Tuesday, one of our financial aid forum users, Scarab790, asked this question:

I am starting grad school next week and my cost of attendance is $74,347 with a grant of $10,000. With no personal funds to reduce the cost, I have the option of taking a federal grad stafford loan, grad plus loan or a private loan. which of the loans is better to take? the fed loans or private? If a federal one, I will have to take both grad stafford and grad plus loans to make up my bill.I want to reduce my debt burden by all means possible. What do you advise?

This is actually a very common question and the answer is by no means etched in stone.

Let’s outline some of the major details of each type of loan:

Graduate PLUS Loan

  • Fixed interest rate of 7.9% APR
  • Several generous repayment plans
  • 0.25% APR reduction for enrolling in auto-debit payments

Private Student Loan

  • Variable interest rate, based on an index such as LIBOR
  • Fewer repayment plans
  • A wide variety of benefits depending on the lender, ability to use a co-signer

The easy response to the question is the federal loans are a better deal. However, this may not be the case with all students. One important thing to consider is the credit aspect; if you have a good score, excellent history or creditworthy co-signer, you can potentially get a very low APR private student loan.

In addition, there are numerous benefits offered by private lenders. Some select examples are APR reductions, graduation rewards and co-signer release. Compare private student loans »

Thus, the decision rests more on the basis of credit. If yours is low, non-existent or troubled, always pick the federal option because it is far more lenient and there are repayment plans that take your income into account.

If your credit is good, or you have a good co-signer, pick a private student loan. I have seen rates as low as 2.80% APR with private loans; startlingly less than a Graduate PLUS’s 7.9% APR. Just keep in mind that private student loans have variable interest rates, so they can fluctuate during repayment.

05.11.10 | New Season, New Lender!

Posted in News, Private Student Loans by Evan Jacobs

Citizens Bank < Lenders | Private Student Loans

Hello everyone! The Private Student Loans team is proud to announce that we have added Citizens Bank to our rock-solid list of reputable and popular student lending partners.

If you are interested in learning more about their offerings, please head over to the Citizens Bank lender page or compare them instantly to their competition via our lender compare tool.

We thank you for your continued readership and patronage. As always, we will strive to bring you the widest assortment of reputable lenders and provide the tools and resources you need to choose one that is right for you.

If you have any questions about financial aid or private student loans, please feel free to post a question in our financial aid forum, or leave one below. Thank you!

05.10.10 | How Not to Get “Ripped Off” by a Lender

Posted in Private Student Loans by Evan Jacobs

Here is a complaint we hear all the time in our Financial Aid Forums and elsewhere on the site: “I took out a private student loan from Lender X. Now they are trying to steal money from me! I am being ripped off!” The fact of the matter is, it’s not in the best interest of loan companies to “steal money” and “rip off” a customer. Often, the problem between a borrower and lender stems from a simple miscommunication.

Here are some ways to avoid the drama that comes from fighting with a lender:

1. Before you take out a loan, do a little research. Look for online reviews and forum postings detailing experiences with lenders. If there are far more negative reviews than positive reviews, take it with a grain of salt. A large majority of people just go online to complain about things, and very few take the time to tell you how awesome their bank is.

With that said, look for overriding themes about each lender, namely customer service, extra fees, etc.

2. Find the loan that fits you. Taking out a private student loan is a big decision, and you should be very diligent about finding the right one. We recently unveiled a private loan comparison tool that lets you browse from a series of reputable lenders.  It’s a bad idea for a consumer to take the first offer, so don’t be afraid to shop around.

3. Use a co-signer. Chances are, you will need a co-signer anyway to take out a private student loan. One of the advantages of a co-signer, aside from their ability to assist you in getting the loan, is that you can share knowledge about the loan.

4. Read the fine print. Pay particular attentions to penalties, fees, deadlines, or any other factors that could affect your interest rate.

Click here to apply for a private student loan today!

ScholarshipPoints code: NORIPOFF

04.12.10 | Interest Rates: Is Private or Federal higher?

Posted in Financial Aid, Private Student Loans by Evan Jacobs

A frequent question I see through Twitter and our forums is that of interest rates: “where can I get the lowest one?”, “how are federal loan rates different than private ones?” Well, let’s walk through both and figure out exactly how it all shakes out.

Federal Student Loans

In general, federal loan interest rates are considered more attractive because they are all fixed. In a nutshell, this means that during the entire life of the loan (unless you are delinquent or default, aka miss a payment or two), your payments will be stable and never deviate from your repayment plan. There are no crazy jumps in payment amounts due to the economy or greedy banks trying to run you out of house and home to collect your payments. (more…)

04.08.10 | 4 Great Uses for a Private Student Loan

Posted in Private Student Loans by Evan Jacobs

When it comes to private student loans, many potential borrowers believe they only can be used on tuition. Thankfully, this assumption is false. In reality, a private student loan is a very flexible lending option that allows you to take out as much money as you need (based on creditworthiness) to cover expenses that federal products or scholarships may leave behind. Let’s take a look at some uses for a private student loan:

1) Books

Textbooks are extremely expensive, to put it mildly. On an average semester, I paid anywhere between $300-450 on textbooks for a five class load. I graduated this past year, so those numbers are current… in case you were wondering. This number can sometimes be reduced if you purchase used books online or rent them, but not all titles are available consistently.

2) Apartment Rent

If you live off-campus, finding the money to pay the rent, utilities, food costs etc. can be a struggle while you are in school. During my time at college, my average rent was in the $550/month region (in Boston, MA), utilities averaged about $60/month, and I spent $60-80/week on food/groceries. That rent figure is based off living with multiple roommates; if I lived by myself, it would be more like $1100-1300/month.

Obviously, these numbers are a little overwhelming if you are trying to work during the school year and pay down at least some of your school costs. A private student loan can be useful in this situation by taking care of a large part of the costs, or all of them, depending on how much money you elect to borrow. I generally took out a $5,000 private student loan per year to cut down what I had to pay out of pocket on my rent to a much more manageable number.

3) Study Abroad

If you haven’t had a chance to read my blog on study abroad financing, I definitely would recommend it. It gives a couple little tips that make planning for the trip much easier and takes the stress off.

4) Clothing / Shopping Necessities

This may sound like a throw-away point, but it really isn’t. If you go to school in a climate that is dissimilar from what you are used to, buying clothes is inevitable. A few of my friends in various classes came to Boston to study from a variety of places such as California, the Dominican Republic, and Mexico. A month after arriving and settling in, they all had to work overtime at their jobs to save up money or beg their parents to send them some funds to buy Fall / Winter clothes due to Boston’s rather frigid climate.

There are other necessities you may not think of too. If you wear contact lenses, those are not cheap to buy when you need extra boxes. If you get sick, prescription medication and/or doctors fees may be more than you can afford to pay out of pocket. These are the types of unexpected expenses that pop up when you are in school, and having the extra cash available to you is extremely valuable and a frustration saver.

ScholarshipPoints Code: 4PRIVLOANUSES

03.25.10 | Parent PLUS vs. Private Student Loan, FIGHT!

Posted in Private Student Loans, Student Loans by Evan Jacobs

As a recent graduate, I know first hand how frustrating it can be to find out that there is a remaining balance on your tuition bill after your financial aid package is deducted. If you are going to a less expensive university of community college, the number may be more palatable… but if you go to a private four year, it could be will into the thousands.

During my junior year at Suffolk University, I found out that I had a $11,000 balance due on my student account. I came to find out this was because my parents’ income changed from the previous year. That’s a huge amount of money leftover to be paid through other means. Although scholarships and grants are definitely the preferred way to go when it comes to financial aid, sometimes you just can’t get enough of them.
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03.09.10 | Ways to Save on Private Student Loan Repayment

When it comes to private student loans, one tense topic among students and parents is, “how are you going to pay for it?” Between often needing a cosigner and qualifying for a relatively high interest rate, there are a lot of considerations that go into choosing a private student loan that are not necessarily present in the lending offerings of federal programs like Direct Loan and FFEL.

Save Money on Private Student LoansThat being said, many private lenders have systems, incentives, and educational materials on hand to make their loans as attractive as possible. These can include benefits like graduation rewards, conditional interest rate reductions, and deferments based on special circumstances.

Graduation Rewards

An example of a graduation reward would be knocking a fixed percentage off your loan after completion of your degree. Here is a short list of what some of the more popular private lenders are doing today for graduation rewards:

  • Discover Student Loans – 2% interest rate reduction
  • SunTrust – $300 balance reduction
  • Sallie Mae – Cosigner release

As you can see, each has their own little incentive for choosing their company over the competition. If you’re interested in reading up on more of these differences, check out our private loan comparison tool.

Rate Reductions

Interest rate reductions are another great way to save money. Many lenders offer these for becoming part of special programs or consistently making on-time payments.

For instance, the Federal Direct Loan program is currently offering an interest rate reduction for borrowers that join the auto-debit program for making monthly payments. In addition, it is not unheard of for lenders to offer a small rate reduction for participating in paperless billing systems. If you have a pre-existing loan(s), check with your lender to see if there are any opportunities available for interest rate reductions.

Consolidation

The topic of private student loan consolidation is tricky in the arena of saving money, because you realistically are not saving anything. When you consolidate one or more loans, you are essentially remortgaging them; it combines them into one bill, repackages them under a new interest rate, and extends the repayment terms. The end result is a lower monthly payment, but the long term effect is more interest being paid to the bank.

So now I ask you, what tips and tricks have worked to save you money during repayment?