Graduate Stafford Loans

Posted on December 23, 2010 by admin

Graduate Stafford LoansFor graduate school students seeking to finance their education, a Graduate Stafford Loan can be an advantageous loan because of its low interest and easy obtainability.

College tuition for undergraduate studies has risen astronomically in the last decade, and graduate school tuition has also risen, albeit not at the same pace. The vast majority of graduate students will leave school having had to borrow funds to pay for the cost of their education. Finding low-interest loans with easy repayment terms is imperative for students who need to borrow, but want a secure financial future not drug down by a millstone of debt once they graduate.

What are Stafford Loans?

Graduate Stafford Loans can help. Stafford Loans are federally backed, low-interest loans (currently set at a fixed rate of 6.8 percent) available to qualifying students. The interest rates on these loans are among some of the lowest available, but the eligibility requirements for obtaining a Stafford Loan are strict.

Eligibility

To be eligible for a Graduate Stafford Loan, the student must fill out the FASFA (an application for federal student aid), the student must have financial need, as defined by the student’s school, the student must be a U.S. citizen or eligible non-resident, the student must be enrolled at least half-time and the student must attend a school that participates in the Federal Family Education Loan Program.

While the student is in school, he or she will not have to make payments on the loan, as it will be in in-school deferment. During this time, however, the student’s Stafford Loans may or may not accrue interest, depending on what type of Stafford Loan the student has obtained.

Types of Stafford Loans

In general, there are two types of Graduate Stafford Loans.

Subsidized Graduate Stafford Loans are loans in which the interest does not begin to accrue until the student leaves school and the loan enters into repayment, typically after a six month grace period following the student’s graduation. While the student is in school, interest on the money borrowed is paid by the federal government.

Unsubsidized Graduate Stafford Loans are loans in which interest begins to accrue at the time of disbursement. This means that while the student may not have to make payments while he or she is in school, interest on the money borrowed to finance the student’s education is being calculated, and will have to be paid once the student begins repayment.

When borrowing money under the Stafford Loan program, a portion of the funds you borrow may come in subsidized loans, while another portion may consist of unsubsidized loans.

Some more recent Stafford Loans may carry a one percent origination fee.

Limits

When borrowing via the Graduate Stafford Loan program, you’ll only be able to borrow the estimated cost of attendance for your institution minus any other financial aid you receive. Other factors influencing the amount you’re able to borrow include your student status and how many years you have been in school. Students whose parents are not expected to contribute to their education, or independent students as they are called, are likely to be able to borrow more than dependent students.

In general, students can borrow up to a maximum of $20,500 per year in Graduate Stafford Loans. The maximum students may borrow under the program is $138,000, including any Stafford Loans they may have borrowed for undergraduate studies. These maximums may be lower for some students, depending on their status. Only $8,500 per year and $65,000 total in Stafford Loans may come from unsubsidized loans.

Students’ whose needs exceed the amount they are allowed to borrow under the Stafford Loan program may be able to borrow funds from other federal or private lenders.

Repayment

Once the student graduates, after about six months the loan will enter into repayment. Students have a variety of options, including standard repayment, extended repayment and repayment schedules based on income in order to make repayment less financially burdensome. To further ease repayment, if the student has multiple Stafford or other federal loans, he or she may be able to consolidate them to lower monthly payments on the loans.

Because of their low interest rates and convenience, Stafford Loans are among the most popular student loans. More than 5 million college students take out Stafford Loans each year, including many graduate students. To find out whether you are eligible for a Graduate Stafford Loan, fill out the FASFA and talk to your school’s financial aid office.

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Repaying graduate school loans

Posted on December 23, 2010 by admin

Repaying graduate school loansAn estimated more than two-thirds of graduate school students borrow to finance the cost of obtaining a master’s, doctorate or professional degree. Because graduate school costs range between $30,000 and $100,000, and because many graduate students already have loans from undergraduate school, they may be in for a shock when the bills for repayment begin after they leave school.

The average graduate student leaves school with an estimated $40,000 in student loan debt, although graduates with degrees in professions such as law or medicine may have more than $100,000 in student loan debt. Nearly 40 percent of all graduates report having student loan debt that is “unmanageable,” meaning that 8 percent of their monthly income goes to student loan repayment.
For students seeking to repay their student loans, there are a number of options available to help make repayment easier and to help students avoid default on their loans.

Federal loans

Students with federally backed loans have the best set of options for repayment, which is why if possible, students should do most of their borrowing from federal programs and avoid private loans if at all possible.

For starters, federal loans offer students a six-month grace period after graduation before payments become due. This gives students time to find jobs and get their finances in order before making payments on their student loans.

Federal loans also have a number of repayment options, including:

Standard repayment, which sets a 10-year-period for repayment of the loan.

Extended repayment, which can be used to stretch the repayment period, thus lowering monthly payment amounts, but racking up more interest, thus giving the student short-term relief at a higher price over the long term.

Graduated repayment, which starts monthly payments out low and gradually increases them over time.

Income based or contingent repayment, which sets monthly payment amounts based on a formula that takes the student debtor’s family size and income into account.

Also, holders of federal student loans can suspend payments on their loans temporarily if they hit hard financial times. Deferment and forbearance options allow student debtors to suspend repayment for up to three years.

Loan forgiveness

There are many programs that will pay off a portion of a student’s graduate and undergraduate loans in return for working in a field or area for a specific amount of time. Many states and school districts have programs that will repay some education professionals’ student loans if they agree to serve in an inner-city school or work in a high demand area of education such as science or math. Your school’s financial aid office or the head of your department may be able to alert you to such opportunities.

Private student loans

Private student loans have less flexible repayment options than their federal counterparts. Although some of the generous terms offered by federal loan programs may not be available, there are a number of private lenders who offer some flexibility in repayment.

Depending on the lender, you may be able to obtain an hardship forbearance or deferment or work out a less burdensome repayment plan. When taking out a private student loan, you should ask about repayment options up front, because once you’ve borrowed the money and the loan enters into repayment, you’re responsible for making the payments.

Loan consolidation

Many graduate students have their undergraduate and graduate student loans spread out among several loan programs. This means that once the loans enter into repayment, the students will get monthly bills from multiple sources. By consolidating their student loans, student debtors can reduce the amount they must pay out monthly to their lenders. Although private and federally-backed loans cannot be consolidated together, by consolidating separately students can reduce their monthly debt burden. Also, when students consolidate their federal loans, they set the clock back to zero on their deferment and forbearance options.

When graduate school loans enter into repayment, it is vital that students make timely payments on the debt to avoid damage to their credit, incurring more interest and collection actions by the lenders. Federal and private lenders are willing to work with students facing financial hardship to make repayment easier and less burdensome. For students struggling with graduate school loan repayment, a simple conversation with your lender or financial aid office may help alleviate the burden of student debt payments.

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Graduate school loan consolidation

Posted on December 23, 2010 by admin

Graduate school loan consolidationThe cost of four-year college and then graduate school can be very expensive, forcing most students to take out student loans to pay for tuition, fees and living expenses. Repayment of these loans can be made easier by consolidating your student loans with your graduate school loans.

College students on average complete their four-year degree with $23,000 in debt. As the cost of graduate school ranges between $30,000 and $100,000, it’s obvious that graduate students will leave school with an even higher debt burden once they complete their advanced studies. Because most students take out multiple loans to cover the cost of their education, they can be left with multiple minimum monthly payments upon finishing their education, creating a financial burden as they start their careers.
Student loan consolidation allows student debtors to combine their loans together, creating one loan with one monthly payment. This makes repayment more convenient and usually reduced the amount of money student debtors must pay out each month in student loan repayments. It’s estimated that consolidating federal student loans, that is loans backed by the U.S. government, can reduce monthly payments by as much as 53 percent.

Loan consolidation is a little more tricky for graduate students than undergraduates, because of the increased number of loans, differences in status, and differences in terms.

When taking out graduate school loans it’s important to remember that you cannot consolidate federal and private loans. Students should do their best to limit their borrowing to one type of loan or the other to improve their consolidation options once they leave school.

Consolidating federal graduate school loans

There are a number of programs aimed at helping graduate students consolidate their loans to make repayment easier.

The great thing about federal consolidation loans is that students applying for them won’t be subjected to a credit check, will likely be able to consolidate both their graduate school and their four-year education loans, will have lower interest rates than private consolidation loans and will have easier repayment terms. A potential drawback to these loan programs is that there may be limits on how much you’re allowed to consolidate.

To find the federal loan program that’s best for you, you may want to visit the U.S. Department of Education’s Web site, as it has extensive information concerning student loan and graduate school loan consolidation.

Because there are several federal programs available to consolidate your student loans, you’ll need to shop around to find the one that is right for your individual financial circumstances, and appropriate to the student loans you have received. Work with your school’s financial aid office to find the plan that’s right for you.

Consolidating private graduate school loans

Students who borrowed money from private lenders to finance their education also have options to consolidate these loans. In most cases, consolidating private education loans is just a matter of finding a lender willing to loan the amount needed to handle the original loans.

When consolidating private loans, the student debtor should be mindful of a few things.

Interest rates – A consolidation loan may result in higher interest rates for the new loan. Students should examine loan agreements carefully to ensure they don’t end up paying a lot more in the long run thanks to their new loan.

Origination and other fees — Private lenders may attach origination or other fees to the new loan, making your total cost of repayment higher. When shopping for a consolidation loan, student debtors should inquire about any fees that may be attached to the loan.

Minimum account balances — Many lenders have a minimum amount that students must be in debt for before they will issue a consolidation loan. When shopping for a loan to consolidate your graduate school loans, check out each lender’s requirement with regard to minimum account balances to save yourself wasted time in filling out applications for loans you aren’t eligible for.

Credit checks — Many private lenders offering consolidation loans will run credit checks on applicants. If your credit is less than fabulous, you may want to work on improving it before applying for a graduate school consolidation loan.

Although you can’t combine private and federal loans, consolidating all your federal loans and all your private loans into two loans will still likely help your financial situation.

Graduate school loan consolidation can make repaying student loans less burdensome for student debtors. By carefully reading the terms of the loan agreements and shopping for the best possible loan, college graduates can find the deal that is most advantageous to them.

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