Saturday, May 25 2019

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Student Loan Options

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It’s no secret that college in the 21st century is impossible for most people to afford without financial assistance. While scholarships and grants are ideal, the truth is that there just isn’t enough free money to go around. Even those who do manage to obtain financial assistance often need additional resources to afford their education. This is where student loans come into play. As a rule of thumb, all college-bound students needing loans should first look into federal loans, such as the Stafford Loan. These loans are ideal because they have low interest rates, are insured by the U.S. Government and have flexible repayment plans. Private loans should be a last resort. If a student finds themselves in need of a private loan they should at least check out the top three companies.

When it comes to private student loans, there are a plethora to choose from. Nevertheless, students must be careful and make sure they are only going with reputable private student loan companies. While best known for its credit cards, Discover also happens to be one of today’s top private student loan providers. Perhaps the first thing that should be pointed out about Discover is that unlike most private student loans, these come without fees (yes, that means not even an origination fee, insufficient funds fee or late payment fee, etc.). And for students who maintain a 3.0 GPA or better throughout their college career, Discover also offers the opportunity to get 1 percent “cash back” on every academic term period. This allows students to potentially lower the amount they will owe back. On top of this, Discover will also offer a 25 percent reduction on its interest rate for those who make automatic debit payments. So overall, Discover stands out as a great option for student loans because of its lack of fees, its cash back bonus and its general flexibility with repayment.

Sallie Mae is the most popular student loan provider. While like most it does include fees where Discover does not, Sallie Mae is a great option for those who may need a lot of flexibility when it comes time for repayment. Sallie Mae offers more deferment options than most of its competitors, and borrowers can delay payments at any point they go back to school. Borrowers can also choose to make only interest payments (rather than principal ones) during the first 12 months after the grace period ends, which allows them to buy more time. Worth mentioning is that Sallie Mae co-signers can be released from the contract if the principal signer has graduated, kept up with payments and has a good credit score. This is important because many parents find themselves trapped as co-signers to their child’s student loans for years, affecting their own credit scores while giving them little control over it. Finally, Sallie Mae also stands out by being available for not just tuition and regular college expenses, but also for things like career training programs, residential costs, the bar exam, etc.

Last but not least, Ascent Independent student loans are worth looking into for those who do not have an established credit score and / or do not have someone available to cosign. A lot of private lenders out there will advertise this, but many of them come with additional hidden fees and can wreak havoc on future credit scores. Ascent is far more established and while it does have some higher interest rates, it also comes with more repayment flexibility. For example, Ascent offers a much longer forbearance period than most (up to 24 months, whereas Sallie Mae and Discover only offer up to 12 months), and those who are projected to become high-earners post college can qualify for significantly lower interest rates early on. Ascent also provides very flexible repayment plans and allows borrowers to tailor it more to their personal needs than most lenders will.

Remember that while private student loans may not be the best choice for affording college, they do make affording a good education possible.

 

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