Loans For People With Bad Credit

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Realistic Loan Options for People with Bad Credit

Daniel Boortins, a well-respected historian once said, “it is hardly an exaggeration to say that the American standard of living was bought on installment plan”.  What happens to that standard of living when a consumer’s credit rating is so bad that lender’s refuse to give any more credit? Simple, the consumer uses another financial tool known as a loan. But first the consumer must be familiar with loans for people with bad credit, because those will be the only type of loans that the consumer will qualify for.

A loan is an agreement that can be entered into by natural or juridical entities, whereby money, property or any other type of asset is given at a predetermined or determinable future date by a lender to a borrower. The latter agrees to return the thing borrowed or its equivalent usually along with interest at some future time and in most cases on installment.  For example Mr. C lends five hundred dollars ($500.00) to Mr. B. with the understanding that the latter will pay the former the entire amount with ten percent (10%) interest, in five (5) monthly and equal installments starting January 1, 2012.  Therefore Mr. B has to pay Mr. C. one hundred ten dollars ($110) on the first of each month for five (5) months, starting January 1, 2012.

Consumer Credit is an indicator used by creditors to determine how much of a risk a consumer is in defaulting on a loan.  A poor credit rating indicates a high risk, and lead to higher interest rates, or the denial of a loan application. Therefore, loans for people with bad credit are limited by the calculated amount of risk a lender or creditor might be willing to accept.

Borrowers have to accept the reality that the provisos contained on loans for people with bad credit will not be as favorable to them as opposed to loan options for people with excellent or good credit. For example, Mr. A and Mr. B each take out a three hundred thousand dollar ($300,000.00) thirty (30) year fixed rate loan. Mr. A with excellent credit, which means a credit score of around seven hundred sixty (760) to eight hundred fifty (850) can expect to pay around five point seven percent (5.7%) interest, amounting to more than seventeen thousand dollars ($17,000.00) in interest payment. Mr. B who is a consumer with damaged credit, around five hundred (500) to five hundred seventy nine (579) can expect to pay nine point five percent (9.5%) in interest, amounting to around twenty eight thousand dollars ($28,000.00) in interest payment.

There are only a few types of loans for people with bad credit. First would be repairing their credit rating before taking out a loan.  This option is only available consumers whose credit rating is within reach of the required credit rating and who still have enough time.  For example, Mr. A has a five hundred seventy five (575) credit score and he applies for a car loan from Bank of B.  The latter is requiring a five hundred eighty (580) credit score at the very least.  Since the difference is only five (5) points and Mr. A has several disputes on his credit report, plus several bills due which he can pay on time, then it is worthwhile for Mr. A to repair his credit rating first. A delay of a few months may be better than a loan denial since this might also be taken into consideration by other lenders in the future.

Another one of the loans for people with bad credit would be to take out a loan with a cosigner who has excellent credit.  A cosigner is a person who signs the contract of loan together with the principal borrower and is considered a co borrower on the loan.  The excellent credit rating of the cosigner may be enough to compensate for the poor credit rating of the principal borrower.  This option is considered by some as one of the better loans for people with bad credit but is only realistic if the principal borrower can find a willing and sufficient cosigner for a loan.

A third loan option for people with bad credit is to consolidate and negotiate all debts and take out a single loan to pay off all overdue bills.  While most people will question the wisdom of taking out another loan and incurring another debt to pay off other debts, this is a viable option if the debt consolidation is done properly.

First, the consumer has to research lenders who are reliable and whose loan terms fit the earning capacity of the consumer.  Reliability is the key because some lenders will offer loan terms that are unrealistic and may even force a consumer to pay off only the interest while leaving out the principal amount. Reliability can be done thru research and cross referencing lenders with government and non government agencies that monitor lending institutions like the fraud department of a county or the Better Business Bureau (BBB). Second, the consumer must make a realistic calculation of their monthly income and expenses including emergency expenses for at least six months.  Whatever amount is left is the monthly loan amortization than the consumer can afford.  This will be the only time a consumer researches for reliable lenders.  Third, negotiate for a reduction of the principal amount and the condoning of interest and penalties.  Oftentimes all it takes to reduce a debt is to write a simple hardship letter or to plead with the debt evaluator.

In closing, there are still a few available loans for people with bad credit and these loan options can actually work, but the consumer must make sure to be religious in following a set income and expense, then properly researching the loan terms then asking for consideration from creditors. This is because being smart and choosing the right partner can spell the difference between being debt free or filing for bankruptcy.


Loans For People With Bad Credit

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What is a Good Credit Score

  • What is a Good Credit Score?
  • What is The Credit Score Range?
  • What is The Credit Score Scale?
  • What is The Average Credit Score?

Let’s take a look at the credit score breakdown

Most people know that their credit score plays an important role in their lives. This is the easy part, the more difficult part is actually understanding the credit score breakdown, or what goes into a credit score. There are a few different methods for calculating credit scores but the most commonly used is the FICO method that has been used since the 1980’s. The FICO method was developed by the Fair Isaac Corporation and the three big credit bureaus, TransUnion, Equifax and Experian, all worked together with Fair Isaac to develop this method.

For more information on FICO credit score please read here

FICOFICO credit score range


A persons credit score can range anywhere between 300 and 850. The average American score is around 690 which is a reasonably good score. Having the average score of 690 will enable you to secure a loan, however it will not get you the best interest rate on your loans.

Let’s take a look at the credit score breakdown.

The first factor is payment history. Payment history makes up 35% of the credit score. This is calculated based on whether you pay your bills on time or not and how many late or missed payments have been forwarded to collection agencies. It also considers if you have had any bankruptcies or tax liens. It can be difficult sometimes to meet financial deadlines if you get a heap of bills all come in at once but just remember that a missed payment is much worse than a late payment regarding your credit score. Missing a mortgage payment will affect your credit score much worse than missing a bill payment or credit card payment so always have your mortgage payment as first priority.

Next there is outstanding debt to consider and this accounts for 30% of your credit score. If you have a number of credit cards and they are all maxed out then this will have a very negative effect on your score, but if you have a number of credits that all have a lot of credit still available then this will work in your favor. Outstanding debt considers the amount of credit outstanding in relation to the amount of credit available to you. It can help your credit score to have a few credit cards that are not being used but simply to give you available credit to increase your score.

Credit Longevity is the next point that is considered when determining your credit score. How long you have established credit counts for 15% of your score. The longer you can maintain good credit and continue to pay your bills on time then the better it is for your credit rating.

Next there are the types of credit to consider. Around 10% of the score is related to the number of different types of credit that you have. If you have multiple types of credit, such as mortgage, car loan and credit card, and all are managed well then this will help with your credit score.

Amount of activity is the last factor to consider. Opening new credits card accounts to leave unused to increase your credit score is good, but not if you open too many new accounts at once. If you have too much activity happening in a short period of time this will negatively affect your score.

When you understand what is involved in the credit score breakdown then you can take steps to improve your score.


What is a Good Credit Score

Loans For People With Bad Credit

The Truth About Debt Consolidation Loans


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Category: student loans

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There are a wide variety of reasons why you could be considering student loan bankruptcy as a solution to your student loan debts. Even though this should be your last resort to paying off your student loans, you might find yourself in a situation that could require you to file for student loan bankruptcy.

Can You Declare Bankruptcy For Student Loans?

You can, but there are certain laws, rules and policies that you must follow. There are also certain qualifications that you must be able to prove in order to even qualify for a student loan bankruptcy. As far as qualifying to declare bankruptcy, this could be different for almost everyone.

Undue Hardship: You must be able to show that you have an undue hardship in order to qualify for this type of bankruptcy. The only way you can prove an undue hardship to declare bankruptcy for your student loans is if you are physically unable to work and you will not be able to work for the rest of your life. This is a rare occurrence, and difficult to prove to a court. You should choose this method of applying for bankruptcy if you meet the qualifications for it.

Chapter 13 Bankruptcy: You shouldn’t expect to be able to get rid of all of your student loan debts by filing under a chapter 13 bankruptcy, but you could get rid of some or most of it. The best way to apply for this one will be to expect to have your student loan debt consolidated, because that is likely what the court will do (as well as eliminate some of it). To qualify for chapter 13 you will need to prove that you have the disposable income available to pay back at least most of your student loan debt.

Are There Any Alternatives To Bankruptcy?

There are many alternatives available to you instead of filing for bankruptcy. Here is an outline of those alternatives:

Repayment Plan: Work out a payment plan with your current lender that will help lower your monthly payments now and increase as your income does. Your lender wants to work with you and would be happy to help you find a repayment plan that will work for both of you.

Payment Deferment: Contact your lender to ask for an application to apply for payment deferment. If you qualify this will put off any payments you would otherwise have to make and keep you out of collections until you are able to make the monthly payments.

Student Loan Consolidation: Work with another lender to get all of your student loans put into one loan with one monthly payment to make. This will decrease your monthly payments and your interest rate, saving you money now and later.

As mentioned before, applying for student loan bankruptcy should be considered as a last resort if you can’t simply find anything else that will work for you and your financial situation. There are many alternatives to filing for bankruptcy and your lenders can help you with this as they do want you to pay back the loan even if they have to make some adjustments.

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Category: student loans

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A government student loan consolidation is a program that allows students to consolidate outstanding education loans into a single new loan. This is not limited to only one lender. Even if many lenders hold the loans, you can still opt for the consolidated loan. The government student loan consolidation is beneficial because it will lower your monthly payments since the terms of payment will be extended. The government student loan consolidation is convenient to students and parents since it simplifies the repayment of loan. The monthly amortization will also be lower since the repayment can be spread at a longer period. The interest rate will also be reduced since the borrower will have a lot of benefits plan options. The best time to consolidate loans is right after graduation before the grace period ends. This will allow the borrower to lock in the lowest interest rate possible on the loans.

Government consolidation loans have lower monthly payments and have flexible terms and conditions for repayment. The rates may be as low as 3.5% and are computed at a fix rate. This will also benefit you if you would like to get rid of releasing many checks. With the government consolidated student loans, you will have a single and easy repayment since you only have to sign one check each month. Students with more than $10,000 outstanding student loans are eligible on this program. The borrower should also no longer be in school halftime or even more. There are many types of loans that can be consolidated with this program. They are Stafford Loans, Federal Consolidation Loans, Perkins Loans, Parent Plus Loans, HEAL/HPSL Student Loans, Federal Direct Consolidation Loans and many more.

Private student loans can also be consolidated. However, you should not consolidate federal and a private student loan. That is because you are not able to defer payments on private loan consolidation but you can with the federal loan consolidation if you want to go back to school. With the private loan consolidation, you cannot forbear payments if you ever have economic hardships. Private loans are not eligible in claiming for tax deductions. Also, if the borrowers passed away, federal loans are forgiven while with the private loans, loans are passed to the next kin.

It is important to consolidate federal student loans since it reduces the number of credit loans you may have. This will also create a good credit score that will enable you to better terms for private loan consolidation. Credit check is also not required with the government student loan consolidation since the US government guarantees federal student loans. Application for government student loan consolidation is very easy. Loan Counselors on your schools will be able to advise you of the procedures. You may apply online, via mail or telephone. It will only take 1 to 3 months to consolidate.

If however, you will not be eligible you may consider refinancing your home or investment property to pay off your loans. You may also consider a personal line of credit from the bank or consider a private loan consolidation. Repayment has different terms. For borrowers with $10,000 to $19,999 loan balances have a repayment period of 15 years. Twenty years is allotted for those with $20,000 to $39,999 loan balances. There is a 24 year repayment term for those with $40,000 to $59,999 loan balances. If your loan balance is $60,000 or more, the 30 year program will cover it.

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Category: student loans

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All across the United States many people, young and more mature are choosing to continue with their education. For the most part, that results in applying for a student loan in order to pay the exorbitant costs of higher education. After all, college fees have risen significantly over the past few years. It has now become the question of everyone, can I afford to continue with further education?

If this is a question that you have asked yourself, then please continue to read this article.

The cost of university or college has risen drastically over the past few decades, leaving many students with the stress and strain of worrying how they are going to pay for their education.

This normally means that for a large number of students it is necessary that they require more than one loan. This will result, in most cases, with students having these debts to pay once they have graduated. Often, the employment that is found after graduation is entry level or low paying, therefore the student is left with huge debts that leave them not knowing which way to turn and causing worry and stress which can in effect make a difference with their concentration levels whilst working.

There is hope for those students that don’t know which bills to prioritize and pay first every month.

Federal student loan consolidation has been designed to assist the graduate by consolidating all of their student debts into one manageable fee to pay at the end of every month. This makes it much easier only having to write one check at the end of every month, instead of a quantity of checks to different companies.

There are different programs that meet the needs of almost everyone that should apply. Each of the programs also endeavor to have varying interest rate.

When it is first decided to apply for a federal student loan consolidation, it is highly important that you first of all research the subject as much as possible. Don’t rush into to a rash decision. Be sure that you can afford the repayments when the time comes and be sure to read all relevant information thoroughly before making the decision to continue with the application.

By going on-line and doing a simple Google search, you will find millions of links to relevant information regarding federal student loan consolidation. You will find millions of links that can assist you in making a decision.

Ask questions until only you are satisfied that you understand the process fully. Remember that once you have signed the papers to a loan agreement, it is a legal and binding contract that you will have to adhere to and that you will have great difficulty trying to back out of.

Never make an agreement that you can pay a certain amount of money each month, until you are 100% sure that you will be able to meet that obligation. Also be sure that the amount of your obligation will continue to allow you to pay your regular monthly bills.

There are many benefits to federal student loan consolidation. A much lower interest rate is offered in order to make is easier to undergo the repayment process. Also, when applying for this type of loan, you will not need any co-signers, nor is a credit check undertaken. It is normally a very efficient process, however it is important to remember that the interest rate will be higher.

UA federal student consolidation loan is not the same as any other type of loan, there are no fees or charges to apply. Also, there are no charges or penalties for early repayment. This is a welcome relief to many people who have sufficient monthly repayments.

It is possible to apply for a federal student consolidation loan with any lender of your choice. There are a quantity of different lenders that give most student loans. However, if all of your loans happen to be through just one lender, you must apply for your federal student consolidation loan with that same lender.

Federal student consolidation loans offer a way to make repayment easier for those graduates that already have sufficient stress, making it a little easier on life. Please remember to visit a reputable lending institution, whereby they can offer you different plans and much advice on which loan would be right for you. Never make the decision to apply for a Federal Student Consolidation Loan with doing your homework first. Be sure that it is the right decision for you.

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Category: student loans

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Many people are really not very experienced when it comes to investing for college. It does not have to be hard or confusing if you just follow some simple guidelines.

The first rule of the stock market is that it is going to fluctuate up and down. Most ordinary investors stick to mutual funds, which helps them spread their money around over many investments at once, keeping the eggs out of one basket, so to speak. Mutual funds are a fairly easy place to start learning how to invest.

Saving for college is a good way to learn how to invest as well, especially if you start early. Let’s say that you have fifteen years to save for that first year of college. That gives you almost twenty years before the last year. This is a very long time to invest. You will likely see the stock market jump around wildly, reaching new highs and new lows along the way. Your balance will reflect the fluctuations.

Some people have been scared to put money into their college investments lately, since the market is at a very low point. People generally get excited when their balance goes way up and they throw more money in. This is really the opposite of what would be the most profitable, so you have to learn to keep your head on straight in times of high and low markets.

If the market is up really high and the returns are looking incredible, this is also when the investment is at its most expensive, getting you less shares for more money. When it is really low and scaring people off, that is when it is at its cheapest. You have to keep your eye on the prize.

The market fluctuates with emotions as well as the economy. Even savvy investors find it hard to buy low and sell high. They may see numbers rising and want to get in on the action, driving it even higher. When a lot of them do it at once, they can inflate the value of something beyond what it is really worth. Then they all sell, sell, sell and drive it back down. If it goes wildly high when people are excited, this does not necessarily mean that the stocks are really worth what people are paying, and eventually there should be a correction. If it is really low because of fear, then eventually it may correct back to what it is really worth. That is, if investors pulling out do not bankrupt the company.

With a general understanding of the market fluctuations, you will need to determine how much risk you are willing to take with your money. In general, the longer you have to save, the more risk you can afford to take. But, if you can’t sleep at night or it makes you sick to watch your balance plummet, then you may want to consider safer avenues that still have potential for growth. Mutual funds that have a balance between stocks and bonds can be a little more stable while still allowing growth. As you approach college, you may want to move into safer investments, such as all bond funds, getting you out of the fluctuation game all together.

Talk with a qualified financial advisor about the best way to put your children through college. Save as much as you can as often as you can. Keep your credit clean so that you can get the best terms and rates on student loans if they become necessary. Take the time to plan out college savings and it could really pay off.

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Category: student loans

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For students to finance their education, most must take on school loans. Student loans are money extended to students to help them pay for their professional education costs but they must pay this back after graduation. Usually government issued student loans have a lower interest rate than personal and other loans. To supplement their student loans income, many students also apply for grants and scholarships, which they do not pay back.

A student that gets a federal student loan made directly to them must be a half or full time student attending university or college. Payment does not start until they drop to less than a half time student or finish school. Loans that parents take have a much higher limit but payment for these federal student loans starts immediately. Interest begins to accrue immediately on private student loans made to parents or students but the limits are higher and after graduation, payments start. Between tuition, room and board, books, and other necessary items, many students find themselves short of the final total. One way to save money when searching for a college education is to choose the institution wisely. Financial note: Alternative college student loan financing is based largely on an individual’s and/or cosigner’s FICO score. Generally speaking, the higher the FICO score the lower the interest rate will likely be.

During college or university, student loans continue to accumulate posing a very unnerving picture when the time comes for the students to start paying them back. To overcome bad credit student loan, government give jobs to the student having bad credit and cut the amount from their salary .In this way bad credit student loan is avoided. But it is possible that a lender will terminate its discounts before the loan is funded (or worse, exit the federally-guaranteed student loan program entirely). Most graduates have to work their way up into high paying jobs but still need money during this time for accommodation, food, clothing, transport, other items and loan repayments. It is inconvenient, problematic, and expensive to make student loan repayments along with other debts such as other loans, overdraft and credit card debts.

One of the easiest and best alternatives for paying back several loans plus the interest is to consolidate all the loans and increase the repayment length. A student loans debt consolidation program helps a graduate by adding the loans together resulting in only one payment instead of three, four or more payments. This also drops the interest rate and reduces the payment amount. It is very difficult paying multiple lenders at once not only financially but because it is easier to miss a payment accidentally.

Consolidating your student loans generally means one lender will group together your various loans and lock them in at a new, fixed rate. Many people who consolidate their loans appreciate having only one bill to pay every month as well as the knowledge that their rates won’t change over time. Also, students loans are not enforceable when the school has closed prior to the student completing his education. These challenges could be raised in a Chapter 13 proceeding and decided by a bankruptcy judge. There’s just one number to call to change your address or student status, or request deferment forms. The variable interest rate will never exceed 8.25 percent and may be lower during in-school, grace and deferment periods.

Agencies may also use student loan repayment benefits in conjunction with a physicians’ comparability allowance (PCA). However, 5 CFR 595.105(e) requires that the amount of the PCA be reduced by the amount of the student loan repayment. A private student loan is in fact based on one’s credit history and needs to be taken seriously as it must be paid back. In this day and age, student loan debt consolidation isn’t just a good idea, it’s an essential part of managing your debt and maintaining a good credit score. It’s never too early to start thinking about your credit. Consolidate all your federal student loans first, then separately consolidate your private loans. If you were to mix the public and private loans you would have to take out a single private loan that loses all the benefits of the federal loans.

Our international student loan program requires a US co-signer and is available for both graduate and undergraduate study. The federal government sets the maximum interest rate for federal student loans, now 6.8%. But lenders are allowed to offer a lower rate. Student loan obligations, bloated with unpaid interest and penalties, hover like a raptor over the incomes of working Americans. You must consolidate during your grace period to avoid an interest rate increase of 0.60%. Compare and apply for student loans from multiple lenders to make the best education financing choice for you and your family. We understand that students need the most affordable student loan rates on the market, access to true professionals that enjoy helping others, and repayment flexibility. Join thousands of other students and graduates today and get the peace of mind that comes with financing your education through a world-class lender like ScholarPoint.

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Category: student loans

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Millions of students throughout the USA today have utilized federal funding in one form or another and not given it a second thought. Many of these loans offer stipulation regarding the payments and when you are required to start paying your loans back. Although these types of federal student loans can help millions of students go to school that otherwise may not have been able to afford it, they are not without risk. The type of student debt many are experiencing is far too much after they graduate and the ability to find a high paying job in our economy today is not as easy as it once was. With these two factors working against students it can be easy to see why so many need assistance paying their federal student loans.

There are many aspects of a student’s life which make them eligible or not eligible for federal funding and these same factors are what may cause them to have problems paying off the loans once their education is completed. Studies have shown that over 50% of students today who attend College and University have relied on some from of federal funding combined with bank loans and otherwise to make it through their education years. When it comes time to pay all this money back, newly graduated and released students cannot find an employment opportunity that pays enough to apply to the monthly minimum payments and in the past this has led to numerous counts of bankruptcy and despair. Admitting that you need assistance paying for federal student loans is nothing to be ashamed of, every student runs into this problem after graduation or even before.

Because of these financial problems and increased bankruptcies in the past, congress created a Federal Loan Consolidation Program to help students overcome their financial struggles when they are first out of school and progress to more successful levels of finance, without need for bankruptcy or other desperate measures. With the ability to consolidate your federal student loans, students from across the country now have the ability to make affordable payments each month as well as get their debt down as quickly as possible; this is what students want to hear!

There are two different ways to consolidate your student debt, whether it is federal or private makes the difference. When you discover that you need assistance paying federal student loans, consolidation may be your best solution. It is a simple process but one that can save you a lot of money in the long run and keeps your credit in good standing along the way. The US Department of Education’s Federal Student Aid Programs can help you take the amount owing on your federal loans and consolidate them into a new, low interest loan with one low payment.

This type of assistance to pay off federal student loans has literally saved millions of students from financial ruin and admitting you need this help should not be something you are embarrassed by. Interest rates and high monthly payments can be completely overwhelming when you graduate from your educational years and into society with no employment. Don’t panic and allow the interest rates to cause late payments and bad credit that can be hard to redeem, allow the government to help you consolidate these bills and payments into something you can afford so you can maintain good credit and get out of debt as quickly as possible.

If you have found you need assistance paying federal student loans, look into student loan consolidation and allow the professionals to create a payment schedule you can not only afford but stick to for the long term until you are completely debt free!

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Category: student loans

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However, there are alternatives to get back on track and obtain rehabilitation of your student loans with proper negotiations with the lenders or collection agencies. Moreover, it is important to find a solution to your default in order to avoid negative consequences on your credit and raise your score again.

Finding Out Your Debt Status

The first step you need to take is to find out your current debt status. In order to do that you will need to contact the state department of education and inquire about your current debt situation. Once you have been told about the standing of your student loans, you will need to contact the lender or the collection agency depending on the condition informed by the state department of education.

Also, you may want to inquire about the Title IV student debt rehabilitation letter. This document will provide you a permit to continue with your studies. It is provided by the state department of education once the lender or collection agencies confirm that your student debt status is back to normal. The whole process can take between half to a whole year, so you may want to start as soon as possible.

Negotiating With Lenders Or Collectors

Collection agencies are usually willing to negotiate new terms on your debt and the actual lenders will also be willing to negotiate with you since they would otherwise have to sell the debt to collectors at a much lower price. Therefore, no matter who holds your debt, you just need a smart approach and to show that you are willing to get back on track with your student debt payments.

You will reach an agreement with the debt holder and you must make sure that you will be committed to repay your debt because you will not get another chance if you default again. Also, make sure that the state department of education is notified of the timely payments of your debt. Six consecutive and timely monthly payments are needed to obtain the rehabilitation but it may take a month or two more for the whole process to be finished.

Who Is Responsible For Paying Of Debt

This question often rises when it comes to married couples. If your spouse did not apply for the loan, he or she is not responsible for the repayment. The only chance that the lender has to hold someone else responsible for repayment is when the other person applies jointly or as a co-signer. Otherwise the cancellation of the student loan is a personal responsibility of the debt holder.

We point this out because some collectors and lenders try to gather information about other members of the family for their collection practices. And you should be well aware of the fact that they cannot require that information as part of the agreement if the other person did not apply for the loan.

The only documentation that you may be required to submit is your own and is limited to proof of income, residence and other documentation to back up the information you provide like unemployment certificate or payment stubs from your employer.

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Category: student loans

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Lots of students graduate from colleges all over the country with lots of debt in the form of student loans. The primary strategy for saving money when paying back these loans is to consolidate multiple student loans into one loan with a (hopefully) lower interest rate which will reduce the amount of interest you are paying on the loan(s) and will also lower your monthly payment. You truly can save thousands of dollars by consolidating student loans.

But, there are other, lesser known ways to save even more money out of your pocket when paying back student loans.

Shrink Student Loans With Public Service

The biggest and most diverse program is AmeriCorps, which offers more than 75,000 positions each year. As a member of AmeriCorps, you can defer your student loans and receive a taxable grant of $4,725 per year for up to two years toward repaying them. AmeriCorps is a network of local, state, and national service programs that connects more than 70,000 Americans each year in intensive service to meet our country’s critical needs in education, public safety, health, and the environment.

The Peace Corps, AmeriCorps’ international cousin, has more than 7,000 volunteers working around the world in fields such as business development, health, agriculture and education. In return for a two-year commitment, you can defer your federal student loans. Perkins loan borrowers may have 15% of their loans forgiven for each year of service.


To recruit and retain highly skilled employees, some federal agencies, including the departments of State and Justice and the Securities and Exchange Commission, offer employees a maximum of $10,000 per year (up to a total of $60,000) in student-loan repayment. These government programs can be difficult to find and get accepted into.

But listen to this: enlisting in the Army National Guard qualifies you for $3,000 a year in student-loan forgiveness, up to a total of $20,000. Now almost anyone can avail themselves of this program.

Health Care

If you happen to be a new young doctor each year the National Health Service Corps pays 4,000 health-care professionals to work in underserved communities. Health-care professionals qualify for loan-repayment assistance of up to $50,000 for a two-year commitment.

If you are a newly graduated nurse, in return for a two-year commitment in areas where there’s a shortage of nurses, you can wipe out 60% of your student-loan balances with awards from the Nursing Education Loan Repayment Program. In addition, 38 states offer loan-repayment programs to retain primary-care personnel. And some private hospitals use loan repayment as a recruiting tool. For information on health-related programs, go to the Bureau of Health Professions.


About 90 law schools offer loan-repayment awards to graduates who work in public service or other low-paying fields. I found one example where a young law school graduate working for a Legal Assistance Foundation in Chicago received a fairly good salary plus $14,500 in assistance one year to help pay off her student loans.

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Category: student loans

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Most graduates don’t realize until it’s too late that there is a loophole in the federal student loan consolidation program that allows borrowers to lock in an interest rate that is 0.60% lower than standard repayment rates. Each year’s graduating class has a unique opportunity to take advantage of this loophole before it closes after the 6th month following their graduation. For students in the class of 2006, November marks the last opportunity to lock in their current low interest rate before it increases.

Why consolidating during the grace period makes such an impact on savings

The reason borrowers are able to save so much by consolidating college loans during the grace period has a two-part answer. First, the interest on a college loan during its six month grace period is up to 0.60% lower than when the loan enters repayment status. Add to this the current federal student loan consolidation rate guidelines that dictate the rate of the new consolidated loan using a weighted average of the current loan’s interest rates. Once college loans are consolidated, the lower repayment rate is fixed for the entire 10 to 30 year repayment period.

How student loan consolidation helps borrowers

If you miss the deadline, there are still ways to save with student loan consolidation. One of the benefits that many people say they enjoy most about consolidating student loans, is the ability to extend the repayment term from the standard 10 year period, up to as many as 30 years. By lengthening the repayment period, monthly payments are dramatically reduced.

When payments are spread out over a longer period of time, students will pay more in interest over the lifetime of the loan. But many students say that without this option, making the monthly payments on their student loans would be a larger burden than they could shoulder.

By consolidating student loans and extending the repayment period, borrowers can keep monthly payments low during the early years of their budding career. Should they choose to do so, borrowers can contribute larger payments as their salaries increase in the future. Most lenders don’t charge any pre-payment penalties, meaning the choice about how long it will take to pay back loans is entirely up to the borrower, no matter how many years they spread out their consolidated loan.

Don’t forget to factor in opportunity costs

Though it would be ideal to have no debt at all, this simply isn’t an option for most people. New grads face a steep uphill battle. At this stage in life, graduates are juggling cash between buying homes, launching businesses, and starting a family. While a borrower could pay down their college loan in 10 years by paying $700 a month, rather than over 30 years at $258 a month, is it worth the opportunity cost?

For those earning enough to do both, the choice to pay off college loans sooner might be more beneficial. But others who are forced to make a choice about how to leverage a tight income must decide what is in line with their ultimate financial goals. Instead of being forced to save around the student loan repayment, borrowers can choose a feasible monthly repayment amount, and then determine the number of years required to repay the loan at that amount using a student loan consolidation calculator.

How to Save Even More with the PLUS Loan Consolidation Loophole

PLUS loans, once only for parents of undergraduate students, are now available for graduate students to fund their own educations as a result of the Higher Education Reconciliation Act July 1st changes. PLUS loans experienced a rate hike in July, from 6.1% to 8.5% but there is a silver lining to this cloud through a loophole in the Act.

Another one of the July 1st changes dictated that all consolidated loans would have a cap of 8.25%, a quarter of a percent lower than the rate of the PLUS loan. This means that any parent or graduate that has a PLUS loan will lower their interest rate, just by consolidating. PLUS loan borrowers can choose to extend the repayment period like any other federal student loan borrower to lower the monthly payment, but with this loophole, even if they make no changes to the 10 year repayment period, they will still save money just by consolidating.

Just as before the changes, the process of consolidating federal loans is still free and requires no credit checks and no collateral. As always, federal student loan consolidation neatly wraps up all outstanding federal loans tied together with one fixed rate. So while the rate increase made big news last July, there are still plenty of benefits and ways to save money by consolidating student loans.

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Do you find yourself wondering how you’re going to repay your student loans? These days, you simply must have a college education to get a good job and for most that means you’re going to have student loans. These various loans can often get unmanageable when you get behind on payments and entirely lose control of the situation. Fortunately, there are a couple of options out there that can help you out.


First, there is refinancing. Refinancing saves you money because you transfer your loan to another lender that will give you a lower APR (annual percentage rate). Your APR is the total cost of the credit the lender is giving you. It is a percentage of your total loan and the amount of money it represents decreases as your loan amount decreases when you make payments on it. Before you jump in, however, you should consider the cost of refinancing. While there are some lenders that won’t charge you a fee up front, there are some that will. Don’t use a lender that will charge you a fee that will end up costing you more on a monthly basis, for obvious reasons.

Should You Use Your Bank?

The place in which you do your personal banking is a great place to start when you want to refinance because you already have a relationship with them and they know you financially. They have records of all the business you’ve done with them in the past and have a fairly good idea of what you are about. Banks enjoy having customers attached to several of their “products,” as it gives them longer-lasting bonds with these individuals; individuals that are less likely to default on loans with a bank with which they have had a long-lasting relationship.


Another great option is consolidation. Consolidation simply means that all of your student loans are “bought out” by a lender (possibly even the lender that holds your current loans) and lumped together into one loan. You are then able to pay on all your loans in one monthly payment, rather than several smaller payments. You save money in the short term because you are making lower monthly payments, but over a longer period of time.

Word Of Warning

One factor you have to think about is that consolidation will cost more money in the long run. While you do save money immediately, the accumulated interest will ultimately cost you more on the back end of the loan. The smaller payments help you deal in the short term but interest will continue building on your loan. What this means is that you are only going to be paying a little bit at a time on the principal, i.e. the full amount of your loan, not counting interest or other fees. Most of your monthly payment will be applied to the interest on your loan, which means that it will take you longer to pay it off.


If you are a college graduate struggling with several student loans, you do have options. Don’t turn to bankruptcy just yet; first consider refinancing and consolidation. Both of these options make it a lot easier to repay student loans.