While JP Morgan recently announced that they are officially getting out off the student loan debt business, other major banks like US Bancorp, SunTrust, and perhaps the biggest of private lenders- Wells Fargo- continue to provide educational loans. In fact, Wells Fargo is now the largest provider of student loans currently owning 25% of the business according to data provided by College Board Statistics. That puts them in the position to be the nation’s second-largest provider of privately funded student loans; Sallie Mae being the largest.
While borrower’s held over $1 trillion federally backed education loans at the end of 2012, private lenders held $6.4 billion in post-secondary loans. Currently that amount is about $8 billion. Most of the big banks are getting out of the student loan lending business for various reasons, perhaps a combination of a rise in default rates and the increasingly close attention paid by regulators who view these types of lending practices as”risky”. Meanwhile, Wells Fargo says they aren’t going anywhere. With student loan originations increasing by 50 percent since they acquired Wachovia, the bank plans on continued growth in the education loan lending industry.
Wells Fargo reports that they provide student loans primarily to consumers who have pristine credit scores (the average FICO score being 746) and most often have a co-signer to guarantee the loan. This is most likely why default rates with their student loan borrowers stay at a low 2 percent. Little more than 1% is charged off each quarter.
Although Wells Fargo seems to be doing fine, other banks feel that it’s just not worth it to continue lending for the sake of going to college. That’s OK because the majority of loans are held by the Federal Government who not only can handle the amount of outstanding debt, but is making billions in interest.
The price tag on student loan debt is currently toppled over $1 trillion. Borrowers are struggling to make their monthly payments while searching for viable jobs. Paying back student loans is not an opinion and certainly not something someone can walk away from; like credit cards, a mortgage, or a car payment. Student loan debt cannot be written off in bankruptcy nor will private lenders restructure your loans like they can with a house payment.
So where do borrowers turn when they need student loan relief? In the wake of defaults and late payments, the Department of Education has designed several repayment programs for borrower struggling to repay their loans. Student loan consolidation is on the rise as consumers find a way to lower their monthly payments through consolidating their federal loans (Private loans are not eligible). Income based repayment programs, “earn as you pay” and student loan forgiveness are all options for borrowers. The DOE is working to find ways to help college grads make their loan payments and find some relief from overwhelming student loan debt.
Finding student loan relief may come in the form of consolidated student loans. While Congress is in talks to double interest rates on newly taken out Stafford loans (rates would take affect after July 1st of this year) current loan holders are trying to figure how to pay off what they have already borrowed .
Finding student loan relief through loan consolidation offers borrowers with federal loans to combine multiple loans, obtain a lower monthly payment, and extend their loan terms. Currently, 1 in 5 Americans holds student loan debt. That may seem like a small number but translated into a dollar amount, the total amount owed is about $1.1 trillions dollars.
Graduates are having a more difficult time than ever trying to find jobs out of college while so many of those who do aren’t making enough to support their student loan payments. With the odds stacked against them, 60% of post-college job seekers (according to reports by Urban Institute and the FINRA Investor Education Foundation) are worried about repaying their loans. Even those borrowers who earn a “comfortable living” expressed concern about being able to make their monthly payments and find a resolution to their student loan debt. Those making less than $25,000 annually are in the toughest predicament, according the the survey’s findings. Seventy-two percent of these borrowers expressed dismay about being able to pay off their loans completely and within a reasonable amount of time.
Not only is it difficult for many to maintain a steady flow of payments, younger people are finding it harder and harder to pay other debts like car loans and mortgages/rent. In fact, these consumers say they will have to put off their goals of buying homes and going to graduate school. Without some form of student loan relief borrowers may never see a light at the end of the tunnel as far as their loans are concerned.
Refinancing and restructuring student loan debt by way of student loan consolidation is becoming more common as borrowers consider how their finances will support the financial aid that carried them through their scholarly journey. Those who are looking to consolidate can find one lower payment by combining their existing federal loan. This offers a more affordable approach to paying back what they owe.
Loan forgiveness programs are making headlines as the government offers to cancel all or a partial amounts of loans in the case of certain volunteer work, military service, teaching or practicing medicine in certain types of communities and other criteria specified by forgiveness programs. Consolidation and forgiveness are specific to federal loan, meaning privately held loans do not qualify.
In the brink of already troubling economic times, the average student loan is $26,000. For those who are already struggling for cost of living expenses, restructuring student loan debt via a student consolidation loan can offer borrowers the opportunity to focus on their futurenot their debt. Maybe then, and only then, can they find some student loan relief!
A chance to get lower consolidation rates means, that you can negotiate about longer payment time, even up to 30 years. Note, that you cannot include federal loans with the non federal consolidation.
1. Main Terms.
When you think the features of the federal student loan consolidation, the benefits are many. It will be easier to manage one debt instead of several ones. There is no fees, credit check or application fees and you can cut your monthly payments up to 50 %.
2. Get The Payment Relief With The Federal DebtConsolidation.
This is the key benefit. By consolidating several debts into one debt and by renegotiating the terms, a borrower can save money. On the other hand the total costs of the loan during the total running time will grow, because the longer you pay, the more interests you pay. If you have a chance, you can make bigger payments as in the program without any penalties.
3. What The Consolidation Can Include?
Here is the list: Federal Stafford Loan, PLUS Loan, Direct Loan, Perkins Loans, HEAL Loans and all Federal FFELP and Direct Loans. Note, that if you consolidate federal debts with the private debts, you will lose the federal loan benefits.
4. How To Start?
When a graduate has trouble with the monthly payments, he or she should immediately contact the debt officer. Together you can research, if you can qualify to the deferment, forbearance or the repayment alternative, which is cheaper. It is wise to use the credit card as little as possible, because the limit usage can influence on your chances.
5. What Else The Loan Consolidation Can Bring?
If you go back to school, the loan deferment can be the solution. Additionally you can get tax reductions based on the paid interests and the forgiveness, if your economic situation does not allow payments. If you will pass away, the federal loan will be forgiven.
To be able to qualify, your loans amount must be at least $ 10.000 and you have to be at the grace or repayment period. If you consolidate after this,you have to pay higher interest rate. The U.S. citizenship is a must and you cannot be in a default status with any of the loans. Note, that you can consolidate the same loans only once. As to the payments, you can choose from four alternatives.
Many people who want to pursue their education further will not afford college expenses and will need a student loan. And finding the best student loan rate of interest is an important factor that needs to be taken into consideration when searching for a student loan.
Usually a student loan won’t have to be repaid until the student graduates and has finished his or her schooling. This will allow the student to concentrate on studying and not be concerned about any kind of repayment plan.
After the graduate finishes his or her studies, the student loan rates will be an important factor since the graduate will be starting a new job, possibly finding new accommodation, and have travel and living costs to cover as well. Every cent will count in the beginning and even a difference of one percent in the repayment plan will have an effect on one’s living standards.
Some lending institutions charge fees to set up a student loan, and this is one factor that can increase the cost of the loan. Often a lender will offer a low interest rate that seems very competitive, but these low rates are often offset or can actually cost more due to the fees that are charged. On the other hand lenders that don’t charge the fees will roll over the costs into the student loan interest rate. As a general rule of thumb, three to four percent in fees is about the same as a one percent higher interest rate.
Be sure to check to see if the student loan interest rate is fixed or variable, because a fixed loan may be more expensive than a variable rate at the time of application but if the variable rates are to rise in the future then the fixed loan would have been the best option.
For more resources about Federal Student Loan Consolidation or about Bad Credit Student Loan or even about Private Student Loan Consolidation please review these web pages.
So many students worry that if they go to off-campus housing then there will be issues on whether or not they will get the financial help that they need from their student loans to cover the cost of housing. I want all of you curious students out there to know that you are totally fine with using student loans to pay off off-campus housing and here is how.
So much of this has to do with what type of student loan you have and often a student loan will specify your circumstances on which you can use a student loan for. For instance a direct student loan will send a direct deposit to you and trust how you use this.
Sometimes you will probably need to go into the financial aid office and ask for some assistance and see if you can get your student loan adjusted to account for your rent. Make sure that you bring a list of reasons for the place that you are living and why it is the best for you financially, socially, scholastically, etc. These are all great reasons that can help with your cause for getting any rent added onto a student loan you may already have.
I suggest that you are very careful with where you live during your four years at school because often a financial aid office will take an average of what an expect rent cost would be. My suggestion is that you save as much money as you possibly can because it will save you time, paychecks, and interest down the road. You will thank yourself some day down the road when you can take money and put it into an investment instead of into a silly student loan payment.
Off-campus housing along with the many other natural school expenses are to be expected, but you can cut a lot of corners to make sure that you are not bucking for a promotion with the company you work for after you are done with school to try to pay this student loan debt off. If you can find off-campus housing with generous friends or family members that will let you live there for free then that would be beneficial, but you have to decide who you can spend that much time with or how much time you will be spending at home.
I know that where I lived in college didn’t matter other than making sure that I had a good bed because I was gone most of the time for activities, social events, and cramming for tests. If you feel the same way then try to find the cheapest place you can that is still suitable to your standards for you to live in.