Student loans - Business and Financial News

Posted by admin on Jan 22, 2013

Nowadays your future directly depends on your education-that?s why so many people wish to continue their education by going to college. It is obvious that high-paying prestigious jobs will be offered to well-educated people. Barrack Obama said, ?The best jobs will go to the best educated- whether they live in the United States or India or China.?

A student loan is a great financial tool for getting a higher education if you have insufficient financial resources. Because of this, these loans have become so popular and important.

According to the New York Times, more than 37 million Americans have borrowed student loans and the average amount of student loan has risen by 5 percent from $25,350 in 2010 to $26,600 in 2011. Moreover, two-thirds of the American college students have graduated with loan debt in 2011, according to the Institute for College Access and Success (TICAS). According to the Consumer Financial Protection Bureau and the New York Federal Reserve?s report total student loan debt has increased from $833 billion in 2010 to $1 trillion in 2012.

But student loans aren?t all bad.

The benefits of student loans:

1. The student loan is an efficient and great solution if you want to get a higher education but cannot afford it.
2. You can easy apply for education loans by going to the bank in person or even online. Today many banks grant online application forms for student?s convenience.
3. After finishing your studies, banks provide you enough time to repay your loan. Moreover, the payment terms are flexible; repayment can be delayed for several years, until you find a good job and achieve financial freedom.
4. The education loans have lower interest rates than conventional loans.
5. The deferment or late payment of student loans doesn?t have an impact on your credit history. Student loans are intended to benefit and encourage young people, so even with bad credit history, they will hardly find worthy jobs and prosperous financial future.
6. The costs of class, food, books, supplies, even sometimes rents or bills can be covered by student loans.
7. Student loans help students handle their own finances. As a result, they will learn how to manage, distribute, and save their money.

In the United States, there are two types of student loans:

1. Federal student loans

a. Subsidized loans-interest-free while the process of education
b. Unsubsidized loans-interest accrues within education

2. Private student loans.

According to the Consumer Finance Protection Bureau, approximately $864 billion relate to federal student loan debt in comparison with $150 billion private student loans. The majority of students rely on the federal student loans. Despite your credit history, you can get the money you need for school by way of government loans. Moreover, you can if you need additional financial support for your education, federal loans with fixed interest rates will help you with the matters related to the education.

Problems arise when it is time to pay off the debt.

Several tips to reduce your student loan:

1. Choose an affordable college or university. You don?t necessarily have to go to a $150,000 private school.
2. Try to find part time job to pay for your education and work full time on holidays and in the summer and keep your expenses low.
3. You should avoid late payments on your student loans. If you have financial difficulties, inform the financial institute and ask for the extension.
4. Many universities and colleges have special programs for their students to pay off a student loan like a work study program.
5. Buy only the most essential things and cut down your expenses. So, don?t waste money on luxuries you don?t need.
6. The vast majority of colleges and universities offer many types of scholarships or grants.
7. Make a realistic plan and a timeline for repaying your student debt

These tips will help you to cope with your student debt. The student loans play an important role in the modern society. These loans give students with financial hardships the opportunity to get a degree.

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