The education offered in the United States may be envied by many, but is it really worth the price? The United States is currently in $1.2 trillion of outstanding student loan debt. Approximately 40,000,000 Americans owe about $30,000 each in student loans. Education should be strengthening our economy,not weakening it. Senator Elizabeth Warren led 22 democratic senators in passing the Bank on Students Emergency Loan Refinancing Act. The Act allows students with outstanding loans to refinance at the lower rates being offered today.
The Bank on Students Emergency Loan Act works hand and hand with the legislation passed last year after the Federal Student Loan rates almost doubled. Although there is an increase expected for the next calendar school year of 0.8% for both subsidized and unsubsidized loans, the legislation regulates the federal student loan interest by a 10 year yield. It also places a limit to the maximum interest rate that can be collected.
Types of Loans
Stafford Loan - federal financial assistance for undergraduate students
Stafford Loan - federal financial assistance for graduate students
Direct Plus - federal financial assistance for parents and students
Cap for Federal Student Loan Interest Rates after 10 year yield
8.25% for undergraduate Stafford Loans
9.5% for graduate Stafford Loans
10.5% for Direct Plus Loans
The Increased Rates Expected for July 1, 2014 through June 30, 2015
Stafford undergraduate loan: 3.86% to 4.66%
Stafford graduate loan: 5.41% to 6.21%
Direct Plus: 6.41% to 7.21%
In order to make it through college, most students have to take out several loans to meet all of their personal and academic needs. There is a 6 month grace period after graduation, before they have to begin paying off the loans. This kind of debt can be overwhelming to someone fresh out of college.
Some Debt consolidation companies take advantage of students during this time. They charge them a fee for consolidating all of their loan payments into one and lowering the amount needed to be paid. Some are scams and some are legit so you have to be careful and do your research before doing business with any of them. Check reviews. Check the BBB. Talk to others who have consolidated their debt. Anyone can apply for student loan or debt consolidation for free online in approximately 20 minutes. . Many recommend the the Federal Direct Consolidation program, but there are others out there as well.
Tips for Paying Off Your Student Loan Debt
Know the names and types of loans you have
Know how much is owed for each loan
Know the grace period allowed after graduation, it may be more than 6 months if not a Stafford loan.
If you are having trouble making the initial payments set. You can submit proof of your income so that the payments will be set in accordance.
If you’re unable to make payments due to financial hardship you can request deferment or forbearance by submitting a letter of request with supporting evidence. This will pause payments and not allow it to tarnish your credit report.
There are several Loan Forgiveness programs available for a variety of professions dependent on years of service, that should definitely be utilized.
Education is a necessary tool for life. Which means that for many of us a student loan debt cannot be avoided. You must also educate yourself on the obstacles you will face with the loans you select and the best methods to get out of debt. Seek a financial consultation before you make unsure decisions that could affect the rest of your life.
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