Thankfully, there is help available.
Both the federal government and private student loan lenders provide financial assistance to those seeking post-secondary educations. Most students take out federal loans before private loans as federal loans tend to be lower in interest rates and also qualify for Income Based Repayment (IBR). IBR allows students to not pay their federal loans if their income is below a designated threshold. Federal loans include low cost but scarce Perkins loans and the more popular and easily accessible Stafford loans. There are also federally guaranteed PLUS loans for the parents of students.
Subsidized Vs Unsubsidized
Federal loans are also favorable because they can be subsidized. This means that interest does not accumulate on the debt during the time period that student is in school. Private student loans should be avoided if possible for the reasons outlined above. While private loans are more profitable for the lenders, federal student loans still create billions of dollars in profits for the federal government on an annual basis. This is due to the interest on unsubsidized federal loans as well as subsidized loans that accumulate interest after the students exit school.
Private Student Loans
Even though private student loans are less desirable, lenders still do not allow anyone to secure this type of loan. Students usually do not qualify by themselves for large private student loans as they have not established a history of good credit. They’ll need a family member to co-sign on the loan. Yet there are also pitfalls with having family members co-sign for these debts. If the student debtor defaults, the lender will be able to pursue both the debtor and the co-signer for the balance of the debt.
If you are saddled with student loans, there are services available to help. Financial experts will help people struggling with debt consolidate their loans into fewer payments that are much more affordable. They also perform detailed analyses of the financial challenges that face debtors in order to create an optimal solution. Personal bankruptcy is not the only available option for those struggling with debts.
Student loan problems afflict more people than most would assume. While it seems unfair to punish someone for pursuing an advanced education, it is a fact of life. Reach out for help today to end your financial nightmare.
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