Student Loan Debt Consolidation |
Student Loan Options
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Wondering What Your Student Loan Options Are?
One of the things that goes over looked when student loan options are being discussed is the deferment part of the student loan.
A deferment is an intricate part of a student loan. This is because a deferment allows the student to graduate before he or she ever has to make a payment. Naturally, this is a very desirable situation because without it the student would have to be earning enough money while still in college to pay monthly obligations which could amount to several hundred dollars monthy!
It is normal to want to have a deferment as part of the loan, but the student should be aware he/she could be making payments before hand and doing so would save possibly $10,000's of thousands of dollars by not letting the entire principal compound interest monthly.
Another thing that goes unnoticed is the fact there such a thing as a subsidized deferred payment plan and, usually you will not find out about this if you don't ask about it!
With a subsidized loan, the government requires that the loan doesn't accrue interest in the months and years between the time the loan was secured and the time the first payment is due. Technically, interest is being accrued during this time but the government is paying for it.
Subsidized deferments are awarded on a need basis but in actual terms there are a certain amount of government funds available for this plan so it becomes a first come first served process. So get your request in early!
When the deferment is not subsidized there still are no payments due until after graduation. The difference is you will be charged interest on the loan while you are in college. Let's take a look at how much this can cost.
If you get a loan for $30,000 at 8% and and the term or length of the loan is 7 years but there 4 years deferred before the first payment is due, at the time of this first payment the total principal owed will have jumped to $41,269.98! So, you can see where this small, often overlooked subsidy can be very helpful.
By the way, the payments on this loan would be $624.34 a month for the following 7 years. If this loan was subsidized the payment would be $467.59. This is not at all an insignificant difference.
Bear in mind, these numbers amount to one year's education. Multiply these numbers by 4 and add a little more and you've figured about what the payments will be after graduation. At this time it becomes not only prudent but necessary to get a student consolidation loan so as to make the monthly payment reasonable.
This is after the fact though! Before you start is the time to plan. So, don't wait to find out if you qualify for a subsidized deferred payment plan and if they say no, come back latter and ask again. When it comes to student loans, knowing where to find the information to get grants and loans with favorable terms is the most important thing, but persistence is your greatest attribute!
Copyright Ed Lathrop, 2008
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 Student Loan Options |
