08 Apr

Tips For Managing Student Loans

Student education loan debt has surpassed credit card debt and will most likely continue to rise through tough economic times and increases in the cost of higher education. According to data from the Federal Reserve, consumer credit card debt reached $826.5 billion dollars and student loan debt beat that mark by more than 3 billion dollars at $829.7 billion dollars. There are numerous factors that have lead to this result and the increase in the number of student loan defaults. Below is a list of some of the reasons and some options to prevent defaulting on student loans and you can also read about these reasons in detail on hjemmeside along with professional insight on these matters. That will give you a better understanding of these topics.

The higher cost of education and inflation causes students to borrow more money to pay for the cost of education and living expenses as well. The Department of Education statistics reports a 46.1% increase in the average tuition and required fees for in-state students and a 34.3% increase for out-of-state students attending a 4-year public institution for the 2000-2001 academic year to the 2009-2010 academic years. The same numbers for private not-for-profit 4-year and private for-profit 4 year institutions were 30.8% and 20% respectively. There were increases in average tuition and required fees throughout many of the various educational institutions. Inflation has also produced a rise in the cost of other educational expenses such as books and supplies, room and board, and other expenses that many students pay for with federal and private student loans.

Lack of knowledge also leads to higher student loan debts and many individuals do not take advantage of some of the options available. When borrowing student loans, students should be aware of the difference between terms such as federal and private loans, Perkins loans and grants, and subsidized and unsubsidized. Knowing these terms allows students to borrow or receive the most amount of money that will cost them the least to pay back. For example, for federally subsidized loans, the accrued interest is paid by the government but for unsubsidized federal loans, the interest is either paid by the student or added to the loan which increases the principal and further interest earned on the loan. With many students attending at least 2 years of school after high school, the total loan amount can increase greatly. The site http://www.finaid.org/ has many explanations for the terms used for student loans.

The economy and job growth are also vital factors for increased student loan debt and defaults. When the economy is on a downturn, there are fewer jobs because companies are not hiring, an increase in unemployment, and more competition for the few job openings that come up. This leaves students who have just graduated stuck in a time crunch with finding a job and having to pay back their student loans. Deferment and forbearance are two options that may be available to borrowers. Deferment suspends student loan payments for those who meet the criteria while forbearance allows the suspension of payments but the accrual of interest. Other options for borrowers looking to lower or extend repayment of their student loans include student loan consolidation and different payment plans. Consolidation combines all federal student loans into one single loan or all private student loans into one single loan with an extended repayment plan and lower monthly payments. However, student loan consolidation does result in higher amounts paid in interest. Many repayment options are offered by lenders to help meet the specific needs of borrowers and include income-sensitive, income-contingent, and graduated payments. The site http://www.studentloansconsolidation.net is a good resource for learning about student loan consolidation.