Nowadays, few students go through college without some sort of financial assistance: about 65% of undergraduate students finish with debts owing. The average obligation is around $19,000 but higher for graduate students ($27,000 to $100,000+.). The causes are myriad, ranging from low family income, through high costs of education, to too expensive tastes of the individual. Whatever the reason or reasons, most students turn to a student loan corporation to finance the continuance of their education.
A Short Simplified History
It used to be that student loans are made only by the schools as an extension of their scholarship programs. Some students don't qualify for scholarship grants because of economic capability, but nonetheless needed some financial assistance. These students or their families thus turn to formal and non-formal lending institutions such as banks, to obtain the necessary funds.
The Higher Student Act of 1965 mandated the Guaranteed Student Loan Program, so student loans came into vogue and student loan mechanisms were established in almost all reputable schools across the country. The student loan corporation was thus formed with the unification of the school's loan portfolio with that of the government's and of the private financing firms, wherever available.
Unified Lending
The sources of funds for a typical student loan corporation include: private investors such as philanthropic and private financing institutions, Stafford Parent Loans for Undergraduate Students (PLUS) Program, Stafford Loan Program (the erstwhile Guaranteed Student Loan Program) and the school student loan portfolio, if any.
The lending policies and guidelines of these sources are often streamlined and or modified to make it easier for students to apply and obtain loans from the student loan corporation.
Interest Rates
Interest rates for student loans granted by a typical student loan corporation range from 6.8 percent per annum for Stafford loans; to 8.5% for PLUS loans. However, a student loan corporation may offer interest charge discounts up to 1.5% to attract more clients.
Others offer rebates for up-to-date or prompt repayments; while still others grant additional payment deductions on systematized payments such as salary deduction schemes. Each student loan corporation has its own unique menu of options from shortened application process to repayment rebates. It thus pays to research a bit for the most favorable terms offered.
Basically, loan interest rates for a certain year are pegged July 1, largely determined by basing on the Federal loan rates, which in turn are based on the last 91-day Treasury auction rate in May and the average constant maturity Treasury yield (CMT) for that year.
The current rates projected for the School Year 2007-2008 in the United States are:
Stafford Loan (In-School Rate Projection): 6.77%
Stafford Loan (Repayment Rate Projection): 7.37%
PLUS Loan (Rate Projection): 8.17%
It's Here To Stay
The student loan corporation is today a fixture in the educational landscape in the US and elsewhere. As the costs of living and that of education continue to rise every year, the necessity for student loan corporations will likewise increase. After all, an educated citizenry is an imperative for every country's progress, and the student loan corporation is one method of achieving it year after year.
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Frequently Asked Questions
How to get student funding when student loan said no
By: lorraine217 | 11-06-2008
when i was 16 i took a student loan out and i didn't pay it back as i thought you had to earn 17000 a year to pay it back, i am now 28 three kids and have just finished my 1st year business degree i would like to go on and do my HND in business and have been told i will not get the funding as i owed this loan previous when i said i would pay it back monthly if they would fund i also suggested a guarantor for the payments this was also refused said i had to pay this in full. could any one else help
Flight School Might Be Going Out Of Business What Happens To My Sallie Mae Loaned Money?
By: po5423 | 21-05-2008
I enrolled in a Flight School last year and took out a 25k loan to cover my tuition. Sallie Mae disbursed the money directly to the school within a week. After several weeks of delays in getting of the ground because of planes and instructor shortages I realized that I wanted to withdraw from this particular flight school and go elsewhere so I asked to have my loaned money returned to Sallie Mae. After several months of contacting the school and Sallie Mae, Better Business Bureau, Attorneys Generals Office I have not yet have the money returned to Sallie Mae and continue making payments. Looks like the school might be going out of business since I cant get a hold of anyone there and no one ever returns my phone calls.Anyone out there please let me know what are if any measures can be taken to get the money back or if Sallie Mae will go after myself or the school if I default on the Loan since I dont want to make a 25k donation to school owners vacation fund. Thank you for responses.
Student loan
By: judy | 17-05-2008
anyone know of anyways to get to get out of paying a student loan
Personal Case
By: AnonymousMiss | 08-05-2008
I am attempting to sue a former friend for a student loan in my name. I have proof of a contract not signed, i have witness and i have proof that there was a verbal agreement(that they would be responsible for paying it all back, so to speak. I know my case is solid without a signature on the contract and was wondering, what category of civil law this falls under. How do i find a lawyer and approximately how much will this cost me? I would also like my court costs to be paid by the person I'm suing once i win.How do i go about all of this?
Is a student loan dischargeable in bankruptcy ...
By: terryla | 07-04-2008
is a student loan dischargeable in bankruptcy court?
What affect does a default on a USA mortgage have ...
By: occasions | 19-10-2007
What affect does a default on a USA mortgage have on UK credit rating, if any? RW
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