Student Loan Help

By: EconomyWatch Content   Date: 3 December 2009

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A student loan is not only a vital financing tool, but an important debt obligation. Due to the abundance of student loan options, the students may find themselves overwhelmed and confused.

However, a wrong credit decision may lead to long-term, detrimental repercussions. From application to repayment, every aspect pertaining to a student loan must be undertaken with utmost care.  

Student Loan Help for Application

A student loan must be applied for only when other funding options, such as scholarships and grants are exhausted. Though the interest rates on education loans are lower in comparison to other debt instruments, it is a long-term debt nonetheless.

While considering a student loan application, a borrower must primarily search for federal student loans. These loans have very flexible repayment terms. These are totally backed by the federal government. This backing enables a borrower to benefit from a repayment grace period after graduation. Where under subsidized federal student loan programs are concerned, a borrower is freed from the obligation of interest payments during the duration of the study. The burden is borne by the government, from the commencement of the course till the termination of the grace period.  

Submitting the Free Application for Federal Student Aid (FAFSA) form is mandatory to obtain a federal student loan, including Stafford Loan and Perkins Loan. The FAFSA form is intended primarily for determining the Expected Family Contribution (EFC) of the applicant. Low EFC, meritorious students are given preference for federal student loans.   

A student must apply for a private education loan, only when s/he fails to qualify for a federal loan. Private loan application is carried out separately with individual lenders. Often private lenders associate with private colleges/universities, facilitating speedier loan procurement. 

Student Loan Help for Repayment and Debt Management

Student loans, both private and federal, offer multiple repayment options. It is necessary to close the student loan account at the earliest.

When faced with a tough credit crunch, it is vital to shift to more flexible payment plans, such as:

  • Income-sensitive

  • Extended

  • Graduated repayment

When struggling to meet repayment obligations even after switching loan programs, one can consider loan deferment and forbearance. These provisions enable to postpone payments for a specific period. It also helps to accumulate funds for loan repayments effectively.


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