Do I Borrow Student Loans for One Year or All Years?

  7/18/2014 by    in Applying for Student Loans   Leave a Comment

student loans are borrowed one year at a timeNow that we are in peak borrowing season for private student loans, our customer service inbox is overflowing with your questions.  One question in particular keeps popping up so we’re going to address it quickly here and try to save some postage.

A recent email asked, “My daughter needs to borrow $10,000 this year to finance her costs.  Does she request $10,000 for just this year or $40,000 for all 4 years she will be in school?”

It might seem convenient or even cost-effective due to current low interest rates to finance an entire education up front.  However, the student would still be accruing or paying interest on the full amount borrowed while in school.  As you can imagine, the interest charges on $40,000 are much higher than on $10,000.  Let’s take a quick look at how eligibility is determined to see how the borrowing process works.

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Get Familiar With These 5 College Financial Aid Terms

  7/7/2014 by    in Financial Aid   Leave a Comment

college financial aidIf you’re the parent of a high school student, get ready to learn a new language very soon. I’m not talking about French or Spanish. The language you’ll need to be fluent in is financial aid. Although everything is in the English language, the terms and acronyms can all be a bit confusing, especially if this is your first time dipping your feet into the financial aid pool. If you’re not careful and don’t pay close attention, you could find yourself drowning in a sea of confusion and washing up on shore without any free money to help your child pay for college. But don’t worry, we’re here to throw you a life preserver and make sure you stay afloat. We’ve put together a list of five of the most common college financial aid terms you’ll come across during the college admissions process, and by the end of this post, we’re confident that you will know enough to keep your head above water and help your child sail smoothly through the college financial aid process.

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Does Applying for Multiple Student Loans Hurt My Credit?

  6/27/2014 by    in Applying for Student Loans   Leave a Comment

Student Loans and Credit ScoresWe get this question a lot. It’s nice to know that some borrowers and cosigners are concerned about the impact applying to multiple student loans may have on their credit. After all, our good credit allows us to finance important big ticket items like cars and homes and receive better rates on things like car insurance and credit cards. And, as anyone who has reviewed their credit score after applying for a loan can tell you, your score does decrease somewhat based on how recent the inquiry is. Whether it’s an auto loan or a student loan, credit scores are affected by inquiries. Fair Isaac, the company behind the FICO score, has a pretty good explanation about how borrowers should approach the problem and we’ll try to break it down here.

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Understanding Student Loan Borrower Benefits

  6/13/2014 by    in Applying for Student Loans   1 Comment

Borrower BenefitsIf you’ve exhausted your federal financial aid, and haven’t been lucky enough to win any scholarships to help cover your remaining expenses, chances are you are now researching private student loans to help pay for college. If so, there are several things you should consider before signing on the dotted line. First of all, you’ll most likely need a cosigner, especially if you are a younger student or haven’t been working at a stable job for several years. Approximately 90 percent of borrowers will need a cosigner, so don’t take it personally. Next, you’ll want to be sure that you borrow only what you absolutely need. Finally, consider the annual percentage rate being offered and any student loan borrower benefits that might be available. For those of you who may be unfamiliar with borrower benefits, these are perks you can earn based on a variety of factors. Let’s take a look at some of the current benefits being offered by private student loan lenders and how they can affect your bottom line.

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Student Loans: How Much is Too Much?

  6/3/2014 by    in Avoiding Student Loan Debt   Leave a Comment

Student LoansI recently came across an article about a couple who borrowed $500,000 in student loans to help three of their children attend college. Yes, you read that correctly – half a million dollars. Thankfully, each of their children agreed to pay back 75 percent of the money they borrowed, but the couple still has $150,000 in outstanding student loan debt and another child is about to enter college. Their monthly student loan payment is currently a whopping $1,700. They have no retirement savings and will be paying off the loans for the next 25 years. On what planet does this even make sense? I love my children and plan to help them with college, but there’s no way I could manage a loan balance that large without risking my own financial security. And to be quite honest, even if I could manage it, I don’t know that I would be willing to borrow that much for my child’s education.

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