Student Loans Zero Interest

Student Loans Zero Interest

7 min read


Student loans are not only the leading cause of consumer debt, they are also a barrier for students who want to pursue higher education. As of 2015, the average student loan balance was at $37,200, while the median monthly payment was at $321. That means that many of us have student loans for the rest of our lives. But what about interest? What if student loans were free! Well, according to the US government’s budget office, the answer is yes.

If you borrowed money to go to college (and we hope you did), you may be eligible for a zero-interest federal student loan program. In fact, the Consumer Financial Protection Bureau (CFPB) says that you probably qualify right now. There are currently seven types of government-backed student loan programs, including Stafford loans, PLUS loans and parent loans. Under these plans, borrowers don’t pay any interest while their federal student loan is in repayment period. They’re called grace periods and they vary based on the type of plan you have. They last anywhere from six months to 20 years, depending on the type of loan you’ve taken out. Once you’ve repaid your federal student loan, you’ll still have to make payments on whatever private student loan you took out before starting school — but those can often be much lower than federal loans, especially if you paid off your private student loans early. And, unlike some private lenders, the federal government won’t charge you fees in addition to its low-rate loans.

Government Grants

Government grants are generally offered in two forms: Direct Subsidized Loan Program and Direct Unsubsidized Loan Program. These loans offer the lowest interest rates and are given to people who meet certain eligibility requirements. However, not everyone qualifies for government aid. If you are interested in taking advantage of this benefit, you will need to complete the Free Application for Federal Student Aid (FAFSA). You should fill it out even if you think you may not receive any financial assistance. Your FAFSA application will help determine whether or not you are eligible for any grant funds. It will also help you find scholarships and other types of affordable financing.

State Grants & Scholarships

The state governments provide numerous funding opportunities for students attending schools. Most states offer grants and scholarships, either directly or through various organizations. Students can learn about these grants and scholarships by contacting their local government agencies, as well as online. Generally speaking, the bigger the institution you attend, the greater amount of funding is available. Many state governments also award grants based on merit, so check with your high school counselor to see what scholarship options are available. Also, you may want to consider applying for private scholarships.

Bank Loans

Private banks offer several different types of lending products, including personal unsecured loans, home equity lines of credit, and auto loans. Personal loans are available in amounts ranging from five hundred dollars to fifty thousand dollars. Home equity lines of credit allow you to borrow up to 80 percent of the value of your home. Auto loans are available for both cars and trucks, and range between ten thousand dollars and tens of thousands of dollars. All three of these products require borrowers to put down a security deposit. As soon as the loan becomes delinquent, the bank will take possession of the vehicle until the loan is paid back.

College Savings Accounts

Financial experts recommend putting away 10 to 25 percent of each paycheck toward retirement savings if you expect to spend a long time out of work. College can consume a lot of time and money in the beginning of your career, so saving money now can make it easier to get ahead later. An alternative to investing your own money is to open a 529 College Savings Plan. Like regular investment accounts, 529 plans accumulate tax-free earnings, and you use them to pay tuition costs. Funds do not stay in the account; instead, they are withdrawn tax free for qualified educational expenses. Unlike traditional college savings plans, 529 plans give parents flexibility over how the money is spent. A few states offer special tax breaks to encourage people to save for college. Check your state’s official website to see what incentives are available.

Student Loans Zero Interest

There’s no doubt that student loans have become a major problem in our country. One thing I’ve noticed about student loan debt though, is how many people don’t seem to really understand exactly what they’re getting themselves into when taking out these types of loans.

I get asked all the time, “What should I do if I’m having trouble paying off my Student Loan?” My first reaction is always, “How much is your total amount due?” If you’re like most people, you probably think you’re going to pay 100% of your total balance right away. But in reality…it doesn’t work that way. Most banks require that you pay at least 10-12% of your original loan balance each month just to keep yourself current. Once you start making your payments, your interest rate drops down to 0%. So instead of using your money to cover your entire debt, you’ll use your payment to actually pay off some of the principal!

So let me show you some real numbers here. Here’s the situation of someone who took out $20,000 in Stafford Loans back in 2006. That person was supposed to pay them back over 20 years, and since their interest rate was 4%, they only had to make monthly payments of $300. Here’s where things went wrong… By 2011, the person had already paid back 17 years worth of payments, but they still owed $8,500 – which means that they were now carrying an additional $9,500 in unpaid interest charges. As you can imagine, that person was pretty upset!

Luckily for them, they did something smart. Instead of continuing to send in those $300 payments, they contacted US Bankruptcy Attorney Mike Spero. He told them to stop sending the payments, and he would file a Chapter 13 bankruptcy petition on their behalf. In a chapter 13 bankruptcy, the creditor agrees not to sue the debtor until after the court case is complete. At the end of the proceedings, the court will release the person from their personal obligation to the bank.

Here’s what happened next… When the borrower filed their motion to modify his/her repayment plan, it came to the attention of the Judge overseeing the case that the lender wasn’t giving him/her any relief from their interest rates. Since the bank couldn’t prove that it gave the borrower proper notice before increasing the interest rate, the judge granted the borrower’s motion and ordered the bank to lower the interest rate to 5.75%.

Now, as you might expect, the bank didn’t take this well. They appealed the decision, and we ended up filing a lawsuit against them. After a couple months, we reached a settlement with the bank. We agreed to drop the case if the bank would agree to give the borrower a full discharge of his/her remaining balance. So the bank dropped the appeal, and gave us the requested paperwork. On August 1st 2014, the borrower received a letter saying that he/she could finally walk free from the burden of the student loan. Their remaining balance was completely discharged! And best of all, they never had to pay a dime in legal fees!

We know that student loans can be hard to deal with, and if you ever find yourself stuck, there’s hope. You shouldn’t have to spend thousands of dollars in legal fees trying to figure out how to handle your financial problems. Just contact us, and we’ll help you sort everything out.

It looks like you may simply need some extra cash in order to pay off that student loan. Then again…we all know that it takes a lot more than just a few thousand dollars to pay off a huge amount of debt.

If you’re interested in learning more about the different ways we can help you solve your student loan problem, visit us online today! For more information, please feel free to contact me directly at


Twitter: @MSperoLaw

Student Loans Zero Interest


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Student Loans Zero Interest

Student Loans Zero Interest

Student loans are generally not paid off until after 30 years of repayment. If you want to get ahead financially, take out student loans only if they have zero interest. Even if you pay back the loan, you are still paying interest, which adds up over time.

Refinance Student Loans

If you are currently making payments on student loans, refinancing them means you can benefit from lower rates while keeping the same terms. Take advantage of low-interest rates by refinancing your loans now.

Pay Off Student Loans Early

If you have some extra money, you could use it to pay off your student loans faster, which would save you money on interest charges. You could also choose to pay off smaller amounts at a time instead of waiting to pay off the whole amount at once.

Consolidate Your Loan Payments

Consolidating your student loans means you’re taking out one loan and paying it off over several months or years rather than having separate monthly installments. You may find this option makes sense considering how much money you need to borrow and your long-term plan for paying off debts.

Consider Other Debt Options

It might make sense to consolidate your student loan debt into a different loan type. For example, you could consolidate your federal Stafford student loan into a private student loan, reducing costs, increasing flexibility, and lowering rates.

Student Loans Zero Interest

A student loan interest rate of zero percent is a great way to make sure students don’t have to think about their loans while they study. However, if you do not pay back your loans on time, you might get hit with a late fee or even a higher interest rate.

studentloans zerointerestrate

Students who borrow money through the federal government’s subsidized lending programs are missing out on valuable tax breaks, according to U.S. Rep.Blaine Luetkemeyer, R-Mo. In an interview with CFPN, he discussed ways to make college more affordable, including providing financial aid to those with high interest rates. Video courtesy of FoxNews.

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