Student Loans to go to College
With the advent of the Direct Loan program on July 1, 2010, students and parents no longer need to go through private lenders to apply for federal student loans. All federal loans are being lent directly through the federal government.
This program, part of President Obama's Health Care and Education Reconciliation Act of March 2010, was not popular with Republicans and did not garner one vote from them. They warned that banks would lose billions of dollars in federal subsidies and that banking jobs would be lost. The bad news is that banking jobs were lost.
The good news is that private lenders are getting back into the business and this may be a good thing for students and their parents who are hoping to borrow private money to supplement their federal loans, once they've utilized their federal loan capacity.. It looks like interest rates on private loans are dropping and that there's still plenty of private money out there for students in need of those loans.
On the other hand, federal student loans are still the best money for prospective and current college students. The interest rate on Subsidized Stafford Loans for the 2010 – 2011 school year is a low 4.5%. These loans go to students who show financial need. The interest rate on Unsubsidized Stafford Loans for the 2010-2011 is still a low 6.8%. These low interest loans are available to students whether they display financial need or not. Parent PLUS loans carry an interest rate of 7.9%. This may sound like a lot but it's not too bad when compared to private parent loans which carry an interest rate of around 8.5%.
The good news about federal student loans is that the rates on these loans stay the same for the duration of the loans. This is not necessarily true for private loans. Additionally, federal loans are also sometimes forgiven for students who work in public sector jobs.
If a graduating student cannot immediately find a job, or cannot find a job that pays enough for a student to start repaying federal loans immediately, the federal government will allow the student to either pay reduced payments or give students the leeway to put off payments.
Even though it is possible that students could make a deal with private sector lenders that might allow them reduced payments or to put off beginning repayment it is certainly not a given.
Any student applying for any loan, scholarship, grant or any other form of student aid, would be smart to look into TuitionChart.com, a student loan solution. Finding the best deals for college money can be challenging. TuitionChart.com uses the student's information to find the very best lenders, as well as scholarship and grant opportunities for students. Once the student receives the information they're free to contact whatever lenders they prefer.
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