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We have been hearing about student loans interest rates skyrocketing over the last few weeks.
For example, the average rate on federal Stafford loans increased by 0.21 percent from 3.86% at the end of July 2017 to 4.07% at the end of August.
Wells Fargo Bank released their own numbers today showing that the average interest rate of private student loans rose to 8.35% in August 2017, making it the highest since October 2013.
It makes sense though…student loan debt is now the second largest category in credit card debt after mortgages (at $1.5 trillion). We just got a glimpse of what’s coming down the pipeline!
The good news? There are some great options out there right now if you need help paying off those student loans – even if they’re not federally backed.
Here are the best options for managing student loan debt:
1: Paying Down Your Student Loan Debt
One of the worst things you can do with any type of debt is let it go unpaid. But unfortunately, that’s exactly what happens with student loans.
If you’ve had trouble getting ahead financially, finding ways to pay off the total amount owed could be difficult. However, there are several options out there that could make it easier for you to get back on track. You should contact your lender first before exploring these options. If you don’t know where to start, we have some tips below.
2: Consider a Consolidation Loan
A consolidation loan may sound like the perfect way to get out of your current situation. After all, you’ll only have one payment instead of many.
But keep in mind that consolidating doesn’t necessarily mean refinancing. Most of the time, you’ll still enter into a new loan agreement with a different set of terms. And while a single monthly statement might be nice, you’re actually doing yourself a disservice by consolidating. You might end up paying more than you would have under a traditional loan.
However, if you want to consolidate, you need to find a reputable company to help you. Unfortunately, not all companies offer good service. A legitimate organization will take care of you throughout the entire process and provide you with clear answers and guidance. That’s something you won’t find at many online sites.
3: Find an Alternative Payment Plan
Student Loans Wells Fargo Interest Rate
Wells Fargo’s interest rates on student loans have increased significantly over the past few years. Students who need financial assistance should seek out private lenders before taking out a loan through their bank. Student Loan Hero has some great information about different options for students including personal loans, government grants/loans, scholarships, and credit cards.
Student Loans Wells Fargo Interest Rate
The student loan industry is booming right now and students have had access to student loans for years. However, the interest rate of these loans have been skyrocketing over the past few years. In fact, the average student loan balance is $29,450 and the average interest rate is 4.43% according to StudentLoanJustice.org. These rates are extremely high compared to credit card and home mortgage rates. Fortunately, many companies offer 0% APR financing options if your goal is to pay off your student loan debt faster than expected. Here’s how to find student loans with 0% interest!
It’s no secret student loan companies have been raising their interest rates at a record pace. But now banks are going even further by using the same tactics they use to raise rates on credit cards. In fact, student loan interest rates have risen higher than the average rate charged by U.S. Bankcard issuers. If you think the last few years weren’t tough enough with skyrocketing tuition costs and mounting debt loads, it may get worse before it gets better.
What does this mean?
Well, if you’re already struggling to pay back your student loans, now you also have to worry about paying extra fees to make them affordable. And if you’re thinking about getting a student loan, now might not be the time to apply. While those with federal loans should still be able to get approved without trouble, anyone considering private loans should keep in mind the recent increases.
Who is affected?
With rising interest rates comes higher monthly payments for everyone who borrows money. Even though student loan companies claim to offer “affordable” options, they typically charge more than 10 percent in annual interest. That means that if you take out $10,000 over three years, you could end up having $360 more a year added onto your bill.
Where do I find help?
If you’ve fallen behind on your student loans or simply want to know how much payment you need to begin repaying your loans, check out our Debt Calculator. You can then fill in the information about your loan type and current balance and we’ll show you exactly what your payment amount will be. Plus, you can print out a copy of the calculation for quick reference later.
Student Loans Wells Fargo Interest Rate
Student loans have become a norm in our society today; however, they can often times be both an advantage and disadvantage for students. On one hand, student loan debt may allow young people to obtain higher education, which can lead to greater career opportunities and earning potential over time. On the other hand, student loan debt is often much larger than average salaries, making repayment difficult. However, some states require students to pay back their loans before graduating, meaning that even if payments are not due at the time of graduation, they still need to begin paying off their loans soon after.
In order to provide students with more information about student loans, the U.S. Department of Education launched a “Know Before You Owe” campaign encouraging students to educate themselves about the financial aspects of college. The department provides information regarding what federal loans are available for students as well as how to repay them, including monthly payment amounts, types of interest rates, and default options. Additionally, students should take a look at private loans that offer different repayment options.
Wells Fargo was named the number-one bank in student loan servicing in 2010 and 2012 by Consumer Reports magazine. In addition to being ranked first among banks in student loan services, Wells Fargo was also awarded silver for its customer service department. The company offers several ways to manage student loan balances and avoid negative situations. One way to do so is to set up automatic payments on a regular basis. Another option is to make extra payments every month. An additional solution is to utilize the student loan consolidation program—which is offered by Wells Fargo and many other lenders. More information regarding consolidation programs can be obtained from the Federal Student Aid website.
The interest rate paid on a student loan varies depending on whether the borrower is repaying an unsubsidized government loan or a subsidized private loan. A general rule of thumb says that borrowers who receive an unsubsidized direct loan will pay around 6% of the total amount borrowed each year, while those who receive a subsidized student loan, such as most Stafford loans, will only pay around 4%. Students who want to calculate how much money they will owe based on interest rates should use the online calculator provided by the US Department of Education. In addition to calculating how much students will pay, the calculator shows how long it will take to pay off the loan and lists all of the payment details that need to be entered.
If a borrower fails to make any payments on a student loan despite receiving three or four notifications, he or she could face a default situation. According to the Consumer Financial Protection Bureau (CFPB), a typical borrower who defaults faces a 20% loss on the original loan balance. If the borrower’s income increases considerably after receiving the third notice, a lender may consider extending the loan. Lenders also may grant forbearance—a temporary halt of all payments—if a borrower is having difficulty managing his or her finances. After six months of forbearance, the borrower can either resume current payments or enter into a deferment period where no payments are made until the end of the grace period. Borrowers who meet certain criteria may be eligible for a partial discharge of remaining debt. Once discharged, all remaining loan funds are returned to the government.
One of the best ways for a student to manage his or her student loans is to create an effective budget plan. When making plans, students should prioritize spending money on necessities rather than wants. Having a solid understanding of what items will be necessary throughout the school year can help students know exactly how much money they need to spend each month. To ensure that students stick to their budgets, some schools offer free workshops to teach students how to manage their finances. These workshops cover topics ranging from budgeting to credit management and are intended to provide students with useful tools to achieve personal success.
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