Federal Student Loans |
Private Student Loans |
Student Loan Consolidation |
Parent Loans | PLUS
Advantages
There are many types of education
/ student loans. Learn about federal and private education loans so that
you can find the right college loan to help pay for your education.
Federal education loans
Federal programs are the single
largest source of education loans. The two primary programs are the
Federal Family Education Loan Program (FFELP) and the William D. Ford
Federal Direct Loan Program (FDLP). The loans available through these
programs start with the same terms; however, in the FFELP, your bank,
credit union, or school is the lender, and in the FDLP, the U.S.
Department of Education is the lender.
Listed below are some of the more widely used federal education loans.
Student consolidation loans are
also available for those that want to reduce their monthly expenses. With
interest rates so low - it may be the perfect time.
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There are many types of college /
student loans. Learn about private education loans so that you can find
the right college loan to help pay for your education.
Private education loans
Private education loans are also
available from a variety of sources to provide supplemental funding when
other financial aid does not cover costs. These loans are not sponsored by
government agencies, and are offered by banks or other financial
institutions. Sallie Mae's private loan program for undergraduate and
graduate studies is the Signature Education Loan® Program, a comprehensive
source of funding whereby federal and private loans are offered as a
package from a single, convenient source.
Other private supplemental loans are available and in some cases are
tailored to specific courses of study. Some examples include:
-
LAWLOANSSM
-
MBA LOANSSM
-
MEDLOANS
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Signature Student Loans
Student consolidation loans are
also available for those that want to reduce their monthly expenses. With
interest rates so low - it may be the perfect time.
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Do you have high interest rates on
college loans? Or do you have multiple student loans? Consider
consolidation!
With interest rates so low you can save hundreds or even
thousands of dollars on your student loans.
Interest on student loans may be deductible on your tax return!
Generally, personal interest you pay, other than certain mortgage
interest, is not deductible on your tax return. However, there is a
special deduction allowed for paying interest on a student loan (also
known as an education loan). This deduction can reduce the amount of your
income subject to tax by up to $2,500 in 2003. The student loan interest
deduction is taken as an adjustment to income. This means you can claim
this deduction even if you do not itemize deductions on Schedule A (Form
1040). See your tax advisor for specific details.
Common Requirements for Federal Education Loan
Consolidation:
- Minimum amount outstanding of $10,000 in Federal
loans
- Students must be graduated/no longer in school before
applying
- If you have already consolidated, you can't refinance
that loan
These are just a few requirements for various loan
programs. Be sure to shop around for the best consolidation loan for your
situation.
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Parents can also take out
education loans to help pay for their child's education. Also called PLUS
loans.
To obtain this type of loan the student must also be a
dependant of the borrower.
The federal Parent Loan for Undergraduate Students, also known as PLUS,
lets parents borrow funds to cover any costs not already covered by the
student's financial aid, up to the full cost of attendance.
Like Stafford Loans, PLUS loans are either FFELP - which are provided by
private lenders, such as banks - or Direct - where funds are provided by
the government.
PLUS loans are based on the 1 year T-Bill + 3.10%, so the rates may vary.
PLUS loans are currently capped at 9%. The repayment of these loans begins
60 days after funds are released and the loans can have terms of up to 10
years.
The parent or guardian who obtains the PLUS loan is ultimately responsible
for the payment. Even if the student agrees to pay for it.
When considering PLUS loans you should always look at all your options and
make sure you make the best decision for your unique situation. Other
options may include : cash out refinance, home equity lines of credit, or
other types of loans. Be sure you take into consideration all the
different scenerios in relation to your tax situation as well. For more
information on loans in relation to your current tax situation please
consult your local advisor, CPA, or financial planner.
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Parent Loans for Undergraduate
Students (PLUS) can be great if it fits your situation. Here are
advantages and requirements.
Advantages of the PLUS loans:
- PLUS loans are not based on income or assets.
- PLUS borrowers do not need collateral.
- PLUS loans offer a low variable interest rate that
will never exceed 9%.
- PLUS loan interest may be tax deductible.
- Parents may take up to 10 years to repay the loan.
There is no pre-payment penalty.
- Automatic Debit (automatic payment) customers get a
.25 percentage point interest-rate cut. (Sallie Mae)
Requirements:
- U.S. citizen or permanent resident.
- Parent of a full-time or half-time undergraduate.
- No adverse credit.
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