Student Loans Pheaa

9 min read

We’ve talked about student loans before. We’ll talk about them again — it’s time! As you know, student loans have been the bane of many people’s existence. I want to make sure you understand the situation today, and how we can help you in the future. Let me start with what you already know. Student loan debt can be a big problem. According to the New York Times, over 40 million Americans owe $1 trillion in student loans. That means about half of American households owe some sort of student loan. People often get stuck in debt just because they need education. And unfortunately, student loans are not dischargeable in bankruptcy. So if you default on your loan, you’re going to be stuck with it forever. You might think getting rid of your debt would be a good thing? Well, it really isn’t. In fact, if your loans aren’t paid off, you may actually end up paying MORE than the original amount.

Let’s take a look at the types of student loans out there. The first and probably most familiar type is called PLUS (Parental Loan for Undergraduate Students). These loans are designed specifically for parents who can only afford to pay their child’s college tuition. The government gives these loans at low rates, and then reaps the interest while your kid pays it back for you. Plus, the money doesn’t go directly towards your kids’ education; instead it goes towards paying for things like room and board, books, and fees. So your kid gets a degree and graduates, but he or she still owes YOU back the money. This is a huge mistake. If you don’t qualify for PLUS loans, the Parent Loan For College is your best option.

The federal Perkins Loan is used for students who can’t afford to attend private colleges or universities. Basically, it’s like a PLUS loan except it comes directly from the government. Federal Perkins Loans are based on financial need and can even cover private schools. Perkin Loans generally have lower interest rates compared to PLUS loans. Unfortunately, these loans expire after five years. But at least they’re a step up from regular PLUS loans. The last option is Stafford Loans. Stafford Loans are the most popular kind of student loans. They’re given to anyone studying at any publicly funded school. Like PLUS loans, Stafford Loans carry higher interest rates than Perkins Loans, and like PLUS loans, they’re not dischargeable in bankruptcy, meaning you could borrow tens of thousands of dollars and never be able to get out from under your payments.

All right, now let’s get to the good stuff. What can you do to get out of debt? First of all, you want to stop making payments on any loans. Why would you ever want to do that? Because once you stop paying, you lose your credit history. When you apply for jobs or anything else related to credit, the companies will check your credit report and pull your payment history.

Student Loans Pheaa

Student Loans

It’s no secret that student loans have become increasingly unsustainable over the years. In fact, according to statistics, student loan debt in America now stands at $1.5 trillion. That number is expected to keep growing throughout 2020. But even if you’re already strapped for cash, paying down student loans doesn’t necessarily mean you’ve escaped their grip. After all, those high-interest rates could continue long after graduation. So what options do students have? Well, luckily, there are some creative ways to tackle your student loan burden without completely ruining your finances. Here are three tips to get started on repaying your student loans…

Consolidate Your Debt

One way to get out of debt faster is to consolidate your existing credit card debts, student loan payments, and any loans you might have into just one monthly payment. Not only does it simplify your budgeting, it makes it easier to pay off all your bills at once. Plus, consolidation means you’ll be able to negotiate lower interest rates. Check out these student loan payment comparison charts to get a good idea of how much you may save.

Consolidating student loans isn’t always possible, though. If consolidation would put your monthly payment above 8% APR (which is the typical threshold), then it won’t work for you. However, if you can find a private company willing to take a look at your financial situation, they may still offer you a low rate. Just make sure that before taking their advice, you’ve done everything else possible to reduce the amount of money owed.

Ask for a Refund

If you’re having trouble making ends meet due to mounting student loans, you might consider asking for a refund instead. After all, many universities give back a portion of tuition each year. Most schools will automatically apply this money toward your loans, meaning you don’t actually need to ask them about it. And while it won’t eliminate the entire amount owed, it can certainly help balance things out. While it’s not guaranteed that your university will grant you a refund, they’re required to return funds to you under certain circumstances.

Student Loans Pheaa

Student loans aren’t bad…

Most people get student loan debt and they’re not bad at all if you manage them correctly. I mean, $50-60k isn’t much. If you work hard and save money (which you shouldn’t have to do) then you’ll easily be able to pay off your student loans.

2….but they stink

The problem is, many people don’t know how to handle their student loans. They may think that paying them back isn’t going to make a difference, but it does! You should always try to pay down your student loans as soon as possible. Not only does it help decrease interest rates, but it increases your credit score. There’s no downside to doing this!

Don’t use student loans to fund your dream

If you want something really badly, you need to go out there and get it. Otherwise, you’ll never get it. Work hard in school so you can obtain real world experience and once you graduate, apply for jobs that match what you’ve learned. Many companies won’t mind giving scholarships or loans to students who show that they love what they are studying.

Get a job before starting college

This seems obvious, but a lot of people don’t realize just how much money you need to live while you’re in school. Make sure that you have enough money saved up to last until graduation. Also, if you start working right away, you won’t have to worry about paying any tuition costs.

Start saving now

You should always start putting money aside. At first, you might find it difficult to save anything since you’re busy trying to afford things, but over time you’ll become accustomed to the idea and it won’t seem like a chore anymore.

Try not to max out your student loans

When you borrow money to finance your education, make sure that you don’t max out all of your options. A lot of lenders will offer special rate structures on certain types of loans, so take advantage of those if you can. Don’t give your parents money unless absolutely necessary.

Try to keep your payments low

Your monthly payments should be less than 25% of your income. That way, even if your interest rate goes up, you’ll still be able to stay current. When you’re looking for a job after graduating, remember to tell potential employers about your student loans. They may consider it a positive thing instead of a negative one.

Student Loans Pheaa

Student Loans

In order to get a student loan, you need to have financial aid available. You don’t necessarily need to work if you’re getting financial aid. Financial aid comes in many forms, including grants, scholarships, federal loans, private lenders, and even parents giving money directly to their children. If you do work while you’re taking out loans, you might not receive any extra money since that is considered income in the eyes of the feds. Remember that you can only have a certain amount of debt before your credit becomes damaged and you’ll find yourself having trouble borrowing money in the future.

Borrowing Money

Borrowing money is when you take out a loan to pay for something. When you borrow money, you give someone else the right to use some of your money. You might borrow $500 to buy a computer. You wouldn’t want to borrow $500 though, because if you don’t pay back the loan, then they would take away your computer. There are different types of loans, such as consumer loans, business loans, and home loans. A consumer loan is when you borrow money to buy things for yourself. For example, let’s say you wanted to buy a car. You could go to a bank and ask them to lend you money. They’d give you a loan on the car, which means you’d pay them back over time. Interest rates vary depending on the lender and your credit history, so shop around and compare interest rates. People who borrow money often take jobs that require them to travel a lot, because traveling makes it easier to repay the loan.

Repayment Period

Repayment is when you make sure you pay off a loan. Each year, you have to make payments towards your loan until it is paid off completely. Most people plan to pay off their loans at least three times per month, although that may not happen. In case of default, lenders have the right to seize all the items you bought with the loan money. Sometimes lenders will sell these items at auction. If you fail to make your payment, you may lose your house. Because lenders can come after your home, paying off your loan is important. Your credit score can change if you miss payments, and you don’t want to mess that up. It’s best to keep your payments low. Make sure you know what the repayment period is before you start making monthly payments.

Repayment Options

There are two kinds of repayment options: fixed-rate and variable-rate. With a fixed-rate option, you choose a set interest rate and it stays the same throughout the duration of the loan. You can make higher or lower payments than the minimum but you won’t increase your risk of losing your house. Since your interest rate never changes, it’s hard to avoid paying more than you should. With a variable-rate option, you pay a specific interest rate today, but the interest rate might change over time. If you’re worried about the potential interest rate hike, consider a 0% intro APR offer. Once you settle your balance, your introductory APR ends and your regular interest rate could apply. You might end up saving a lot of money over the long term.

Default

Default is when you owe more money than you originally borrowed. You can’t just ignore your loan and expect everything to be okay. If you don’t pay back your loan, you’ll lose the item you purchased with the loan money. If you have consumer debt, lenders can file lawsuits against you. Lenders can seize your property, garnish your wages, and put a lien on your property. They can even report you to government agencies. Even if you’ve done nothing wrong, they might file charges against you. If your credit gets ruined, it will negatively affect your ability to borrow money and secure credit cards in the future. You can stay out of jail by making your payments but it’s going to be much harder to pay off your debts. If you defaulted on your loans, make sure you contact your creditors immediately.

Balance Transfer Credit Cards

A balance transfer card is a great way to save money. Many retailers offer balance transfer promotions where you can transfer your balances from high-interest, existing accounts to a 0% APR balance transfer card account. These offers are ideal for those looking to consolidate debt or to reduce monthly expenses without having to spend hours each month repaying old, high-interest credit card bills. Check with your current credit card company to see if they offer promotional offers.

Debt Consolidation Loan

Debt consolidation loans refer to a single loan that combines several outstanding credit obligations into a single loan. Instead of paying off several individual credit cards, you could combine them into a single credit card payment. By consolidating your debts, you can eliminate late fees and interest costs. The problem with debt consolidation loans is that they charge a fee for doing so. Before you decide to apply for one, check to see whether your current credit card company already has a program that suits your situation.

Student Loans Pheaa

Why do people borrow money?

There are many reasons why students borrow money. One may need it to pay tuition fees at university or college. Another could be to buy books for school or get clothes. Students might want to take out personal loans to help fund their move to a different country. Whatever the cause, student loans are considered to be one of the best ways to make ends meet if you have no savings.

What are the pros and cons of borrowing money?

The positives of taking out student loans are that they allow students to complete their studies without worrying about paying high debts immediately after graduation. However, the negatives of borrowing money are how difficult it is to repay them once you graduate. Many students struggle to keep up with the payments and end up falling into debt even further. In addition, once you have borrowed money, you cannot change your mind and give it back. If you decide you don’t want to use the loan, you will have to find somewhere else to put the money. So, if you decide you’re going to borrow money, try to figure out what you intend to spend it on before you start spending it in case you realise later that it’s not what you thought it was!

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