Alternative Student Loans

admin — Mon, 08 Mar 2010 14:15:15 +0000

Education is highly expensive in today’s world. However that should not be the reason why higher qualification becomes a dream for many. Scholarships and grants do help but only a little. Still, to make ends meet, they do require student loans. The first option everyone opts for is federal aid. Though this is a good option, it still leaves a gap between the costs of education of money-at-hand. Alternative student loans have arrived just to bridge this gap.

These refer to private student loans that are provided by banks and other non-profit organizations. The main benefits of these loans are listed below:

1. Availability: Federal Aid is not keeping up with the rising cost of tuitions and fees. The appropriation made by the government for federal aids are not bridging the gap; private loans are a big helping hand in these situations. They help the students tide over financial crunches.

2. Flexibility: Alternative loans are highly flexible. In federal aid, there are lots of deadlines and conditions you have to comply with. There is lots of paperwork involved and that too has to be filed within a deadline. However, in private aid, you can get your money in your hands within as few as five business days after you have submitted your application.

3. Options: Private loans do not have a lot of paperwork involved. Scholarships and federal aids are shelled out only to the needy but the alternative loans are not based on needs. They are given to anyone who requests for the same.

The above points highlight the benefits of these loans and how they make college education an easy breeze.

By: Steven Copper

The Benefits of Federal Loans Vs the Benefits of Private Loans

admin — Fri, 13 Nov 2009 07:38:46 +0000

There are some very significant difference between federal loans and private loans, and students who think they are the same simply because they are both loans and both types have to be paid back the same way are making a potentially grave mistake. While it is true that private loans can be very beneficial, it is vitally important to understand the difference between the two types of loans before making a decision concerning what type of loan to choose. Consider this: if given the choice to pay someone twenty dollars or fifty dollars, which is better? The repayment rate for some private loans can be substantially higher than the payback rate for federal loans. That is why it is crucial for students to complete the FAFSA form, which can be filled out right online. By doing so, students can find out whether or not they are eligible to receive federal loans such as the federal Stafford loan, which has a lower fixed interest rate than most private loans. This is not to say that private loans are not without benefits as well, simply that it is important to compare the two of them and decide what will be best from there.

One of the more prominent differences between federal loans and private loans is the fact that, in order to qualify for federal loans, a student must fill out and submit the FAFSA form, while students applying for private loans do not have to submit the FAFSA. Furthermore, most of the federal loans offered are need based scholarships, meaning that only students who demonstrate acceptable levels of financial need can receive them. Private loans, however, are generally awarded based on the potential borrower’s credit history; a cosigner may be necessary to receive a private loan.

Federal loans are disbursed directly to the student’s school and thus have to be used only for the COA. With private loans, the funds go straight to the recipient of the loan, usually within five business days. The things for which the money is used is left up to the borrower’s discretion.

There is a cap on how much money the federal government will allow a student to have for any given loan each year so there are no guarantees that a student’s financial aid package will meet all of his or her college expenses and needs. In general, borrowers can receive substantially more money from private loans, as there is no annual cap.

With federal loans, students are guaranteed a grace period of six months following graduation or withdrawal from an institution. If necessary, there are other opportunities for deferral as well, provided that deferment is approved. Conversely, the recipients of private loans can seek deferment only while they are in school. Private lenders offer no grace period and it is much more difficult to receive a deferment after the borrower has finished with school.

There are circumstances under which federal loans can be forgiven, canceled, or discharged. Furthermore, in cases of financial and economic hardship or of the student going back to school, federal loans offer the opportunity for substantial deferments. With private loans, there are no opportunities for forgiveness; requirements for deferment options are much more strict and tightly regulated.

With federal Perkins loans, federal Stafford loans, and PLUS loans for parents, there are fixed interest rates. Private loans, on the other hand, come with variable interest rates, which can be as much as five percent higher than the interest rates offered by federal loans.

Lastly, the average repayment term for federal loans is ten years. Private loans determine the repayment term according to how much money the loan recipient has borrowed.

By: Gary Marjani

Private loan » Business Days

Alternative Student Loans

The Benefits of Federal Loans Vs the Benefits of Private Loans