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Students (and parents!) with bad credit or no credit at all have a few options about how they get their hands on the money to pay for college. If you’re an out-of-state student, your access to loans may depend on where you attend school. But what if you want to go to a private university? Are you out of luck? That could change thanks to a brand new federal law passed this year.
The American Dream was always tied to getting a good education. There were stories of people who came here without homes or jobs because they wanted to start a new life in a new city and work hard enough to send themselves to school. But today’s students would do well to remember a story our own President told a group of college graduates — a story he repeated several times throughout his career.
In 2008, then-candidate Barack Obama went to Kent State University in Ohio to give a speech to graduating seniors. He talked about his grandmother, a single mother who worked two jobs just to make sure her son had clothes and food. “That kind of commitment should be rewarded, not punished,” he said before explaining his plan to help young Americans afford school. “I believe we need to reward those who serve the country,” Obama declared. “If you are willing to teach in a public school, or care for a senior citizen, or volunteer at a soup kitchen, you shouldn’t be denied the chance to earn a college degree because of the debts you accumulated while earning yourself a high school diploma or learning caring for children or serving your neighbors.”
Obama’s message got students thinking about their financial future. A year later, Congress followed suit, passing a bill that allowed students who completed certain programs to receive government aid without having to repay their student loan debt.
But now, that program is set to expire after nearly 10 years. And Congress isn’t likely to reauthorize it anytime soon. As a result, some students might have to continue repaying their loans even though they’ve already earned degrees.
Repayment rates for federally-backed loans range anywhere from 4.66 percent to 5.84 percent. So for someone paying back $50 a month, that could cost them hundreds of dollars. And that amount doesn’t count interest accrued during that time. In fact, the average rate of return on federal loans is 9.65 percent.
So many students are worried about being able to stay in school, especially since tuition continues to rise. According to the New America Foundation, the price of bachelor’s degrees increased by almost 30 percent between 2010 and 2014. As The Washington Post reported, the median annual cost for tuition, fees, room and board at a public four-year institution rose from $10,938 to $12,562 over that same period.
With the expiration of the law, students who have been granted deferrals under the William D. Ford Federal Direct Loan Program will no longer qualify for extended repayment plans. Repayments of these loans will begin 120 days after the date the borrower begins making payments, rather than the current six months.
It’s understandable that when lawmakers took action on this issue, they didn’t anticipate these types of consequences. But for students who rely on student loans to finance their higher education, this means they won’t have the option to delay payment until they graduate.
It’ll be interesting to see what happens in the near future. We don’t know yet whether students will take advantage of the new law to file for forgiveness early, or simply wait until graduation day to seek relief. Either way, the impact on students will be significant.
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Student Loans For Students With No Credit
Student Loans Without A Credit Score
A student loan without a credit history is difficult to get approved for. Any student who wants to attend school should research their options before taking out any loans. There is no need to take out student loans if someone else pays for it. When applying for private student loans, the bank will look at credit scores to determine how likely they are to pay back the debt. If you have good credit history, then a student loan may be a viable option. However, if you have bad credit history, then getting a student loan is not possible.
Private Student Loans
Private student loans work similarly to federal student loans. In order to apply for them, you just need to fill out an application online and wait for approval. You will receive the money directly deposited into your checking account once the lender approves your request. Lenders will want to know what type of education you plan on pursuing, your income level, and your monthly expenses.
Federal Direct Student Loan
The government offers a variety of different types of student loans. One of these includes a Federal Direct Loan. These are great for students who do not qualify for a private loan but do have a decent credit score. Getting a Federal Direct Loan requires filling out a FAFSA (Free Application for Federal Student Aid) first. Then, you can apply for financial aid using this number. You will need to provide proof of income, tax returns, and a copy of your W-2 form. Your parents’ mortgage information will also be requested. After everything is submitted, you can expect to hear back within two weeks.
Another federal loan program is called a Stafford loan. These loans are often used for higher education costs. Unlike a Federal Direct Loan, you do not have to complete a FAFSA first. Instead, you can simply go straight to the website for the Department of Education. On the site, you will find different types of student loans that range from unsubsidized to subsidized. Once you select the right package, you will need to provide documents proving your eligibility. These documents include your tax return and proof of income. You cannot borrow more than $23,000 per year, unless you are attending graduate school. You can choose between direct lending or indirect lending.
Perkins Loans are offered by private lenders. They are similar to the traditional Stafford Loan provided by the U.S. Department of Education. To apply, you just need to visit the website and follow the instructions. All applications require documentation showing proof of income and assets. Your parents’ tax records will also be reviewed. Once everything is submitted, you will receive a decision within 14 days. Like the other federal loans, you can only borrow up to $23,000 per academic year.
Parent PLUS Loan
If you are borrowing money from your parents, then a parent PLUS loan could help cover the remaining cost of tuition. Parents are allowed to borrow up to $31,500 per year. You should think about whether it makes sense for you to borrow from your parents before starting college. While many people consider these loans the best way to borrow money, some experts believe that they are not the safest way to finance your education. You could end up paying higher interest rates or even defaulting on the debt. You will also need to repay the entire amount before graduation.
Graduate Plus Loan
Graduate PLUS loans work differently than a regular parent PLUS loan. You will not have to repay anything until after you have graduated and started making payments. You will still have to show that you meet certain requirements including having enough money to pay for school and maintaining a minimum grade point average.
Student Loans For Students With No Credit
Student loans for students with no credit
Students looking to get student loans have three options: federal student loans, private student loans, and bank loans. Each of these options has its advantages and disadvantages.
Advantages of Federal Student Loans – Federal loans have low interest rates, flexible repayment terms, and they do not require a co-signer. If you have never had any type of loan before, then starting off with a federal loan will probably be the best option for you.
Disadvantages of Federal Student Loans – You may run into problems paying back your student loans if you default on them. Your interest rate could jump up after a few years if you make late payments. Also, you may need to pay some of your loan back while still working. The amount that you can deduct from your paycheck is capped at 10% of your adjusted gross income (AGI). If your AGI exceeds $80,000, then you are capped out at $8,000. If you find yourself unable to work due to injury, illness, or maternity leave, then you may be subject to garnishment. You cannot discharge your loans in bankruptcy either.
Advantage of Private Student Loans – Private student loans tend to offer lower interest rates than federal loans, but they almost always require a cosigner. You also have to wait until you graduate before you can start making payments. Your monthly payment can be quite high, but you can choose to spread the payments out over a longer period of time.
Advantage of Bank Loans – A bank loan provides cash immediately, and you can use the money for anything. However, interest rates on bank loans are much higher than those charged by private lenders. In addition, banks often require collateral. You can’t go anywhere without your phone, laptop, or car, so if you want to buy something expensive, then you should look elsewhere. Banks also charge prepayment penalties.
If you decide to take out a student loan, it would be best to talk to someone who has experience dealing with student loans. An adviser can help you figure out what kind of loan makes sense for you based on your situation, your future plans, and how much money you plan on borrowing.
Student Loan Forgiveness Programs
The Department of Education recently announced a program where eligible students can receive forgiveness under certain circumstances. To be considered for the program a student must meet two of the following requirements:
Pay Direct Unsubsidized Stafford Loan balances in full upon completion of study;
Complete 120 hours; or
Obtain a degree;
Student Loans For Students With No Credit
Student loans are the way students get money for college. However, some people have a hard time paying their student loans back after they graduate. You may not think about how much money you owe right now, but if you have a lot of debt, you could end up having to pay a lot more than expected. If you don’t want to go into massive amounts of debt, then here’s what you need to know.
There are different types of student loan programs out there. In fact, each school offers its own type of program. Your best bet is to find out about these options before you enroll at any schools. Most schools offer financial aid to help cover costs, and you should always look to take advantage of that. If you’re lucky enough to have scholarships that apply to your area of study, make sure you use them! There are government-sponsored programs available too. These are called Stafford loans and Perkins loans. Keep reading to learn more.
When you decide to borrow money, you might hear things like private loans and federal grants. Private loans are loans that you borrow directly from a bank. Federal grants are provided by the United States government. Both have pros and cons, so make sure you do your research. There are also private scholarship funds that give out grants specifically for education purposes. Find out where your local colleges and universities stand on providing financial assistance.
One thing you’ll definitely want to keep in mind is interest rates. As mentioned earlier, there are many different types of student loans. Each lender gives you a different rate based on the type of loan you choose. To save money, choose a fixed-rate loan instead of an adjustable-rate loan. If possible, take on only one loan for undergraduate school. Don’t take out two separate loans unless you absolutely need to. That would just make matters worse.
Before you start looking at schools, you should start saving up some cash. Try and put away a few hundred dollars per month. If you don’t have a job yet, try working a little bit. But keep in mind that jobs aren’t going to fall off trees. So make sure you really want to work before you commit to anything.
While you’re looking at schools, figure out how much you’d like to spend per year. Schools vary from place to place. Keep in mind that cheaper schools won’t necessarily mean a lower quality of education. If you’re going to school online, factor in the cost of internet access.
Another big consideration is whether or not you plan on staying close to home while attending school. If you’ve got family nearby, consider moving closer to them. Otherwise, you might want to move across country. A long commute can eat up a huge chunk of your monthly paycheck. Plus, it could be difficult to meet people for school.
Make sure you understand all the rules associated with getting a student loan. Many banks charge extra fees for late payments. Also, some lenders require credit checks, even if you already have good credit. Look over your contract thoroughly before signing it. Be aware that you might not receive any information about your loan until after you sign it.
Finally, you have to look at how much money you end up owing once you finish school. Once you graduate, you’ll likely be able to write off your student loans as an expense. Make sure you budget properly to account for your financial obligations.
After graduation, you’ll probably be eligible for a consolidation loan. By consolidating your various loans into one, you can reduce the amount of interest you pay. Just remember that you’ll have to pay additional fees to consolidate.
Do your research before borrowing money. Get everything figured out ahead of time so you can avoid any unnecessary surprises.
If you do run into trouble, don’t panic. Talk to someone who knows something about student loans. Hopefully, they’ll be able to help you fix whatever problems you encounter.
Use all of the tips above to ensure you get a great deal on your student loans. You might not end up owing quite as much as you thought you would!
Student Loans For Students With No Credit
What Is Student Loan Consolidation?
Consolidating private student loans can be a great solution if you have had trouble managing all of them. When you consolidate your student loans, you’ll reduce how much money you owe on each loan, pay off the smallest possible balance first, and ultimately increase the length of time until you’re required to make payments again.
Should You Consolidate Your Private Student Loans?
If your private student loans are current and you don’t qualify for any federal student loan consolidation programs, then consolidating might be an option. However, before doing anything else consider what steps you can take to get yourself out of debt now. In addition, think about whether you would benefit from getting a lower rate student loan. If you do decide to consolidate, here’s some things to keep in mind.
How Do You Know If Consolidation Is Right For You?
As long as you’ve been making monthly payments on your student loans, they should already be on your credit report. So, you won’t need to submit any additional information. Instead, just look at your credit score. If you find that it’s low enough, you may want to consider consolidating your private student loans.
What Are Some Of The Benefits Of Consol…
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