The idea of applying for loans has become more popular than ever before.
Student loans, in particular, seem to be a hot topic of discussion in this day and age, where thousands of students journey to different countries to admit themselves to the universities that they want. However, most students do not plan appropriately for significant expenditures like this that can very likely put them in jeopardy.
Fortunately, there exists a variety of resources online and offline that you can use to carefully plan for something like this.
Types of Student Loans
To start with, you ought to know the two primary types of loans that you can borrow. These are federal loans and private loans.
The government sanctions federal loans. They are generally authorized at low, fixed rates of interest, and often have flexible repayment plans. If you borrow a federal loan, you may defer your repayments until you graduate or leave university or change your enrollment status. Federal loans have rates of interest that are lower than those of private loans and credit cards. You can avail student loan forgiveness on your federal loans, which means that you can have a part of your loan or your entire loan forgiven if you manage to qualify.
If you are planning to borrow a federal student loan, be sure to look up the National Student Loan Data System (NSLDS). The NSLDS enables you to identify the rudimentary information on the federal loan that you are borrowing.
You can apply for private loans from numerous sources like credit unions, banks, and so forth. If you get a private loan, you will be asked to make repayments while still in university. Some private lenders may allow you to stall your repayments for some time, depending on your circumstances. Private loans are known to have variable interest rates. These interest rates may be higher or lower than federal interest rates. They are generally higher.
National Student Loan Data System
The National Student Loan Data System, in a nutshell, is a database that the U.S. Department of Education maintains to collect and organize all the information on loans and grants for students who make use of federal funds to finance their university fees, while in university and after graduation.
It enables borrowers to view their federal loan and grant information. When you sign in, you will be able to view the types of loans you qualify for, the amount you have borrowed for different loans, your outstanding loan balances, statuses, and so forth.
Here are a few things you ought to know about the NSLDS:
- Private loans are not reported. If you have taken a federal loan, they will be shown on the database.
- The database does not show refinanced loans either. You may have initially had federal loans that you refinanced with a private lender. They still will not show up on the NSLDS.
Student Loan Refinancing
Student loan refinancing is defined as the process of clearing your old loans and acquiring a new loan with brand new repayment terms and a different interest rate. Student loan refinancing has proven to become a viable option for many students who are struggling with student loan debt.
Student loan refinancing can be an excellent option in certain scenarios. If you happen to have borrowed student loans at awfully high-interest rates, it is probably a good idea to refinance those loans and save yourself a considerable amount of money and time. Another instance where student loan refinancing makes sense is when you have managed to maintain an excellent credit score. Most student borrowers tend to have a mediocre credit score, and as a result, miss out on loans with reasonable interest rates. However, having an impressive credit score can do you wonders as it gives the edge over your competition.
Which student loan refinancing options should I consider?
There are a bunch of viable student loan refinancing options at your disposal. You will have to do your research and choose the right one based on your priorities, circumstances, goals, and eligibility. You need to make sure you select a lender that explicitly allows loans to be used for educational expenses. Make sure you do not confuse personal loan lenders like one main with lenders that provide loans to cover your educational costs. Here are a few:
Earnest manages to find itself on just about every list of best student loan refinancing options. It happens to one of the best choices for student loan refinancing. Earnest offers you the choice to choose any payment term between five and twenty years. Aside from this, you can change your loan if required. You may refinance your student loan free of charge, skip a repayment once a year and cover it later, or change your dates for repayment.
SoFi is another excellent student loan refinancing option. SoFi offers student loan refinancing for borrowers who have a debt of $5,000 or more. SoFi boasts one of the lowest late fees with a mere $5. You will have to pay this $5 only if you are 15 days late. You may receive up to $300 for every new referral that you make.
There you have it – this should help you get a decent grasp on loans, student loans, and refinancing, and in turn, a viable gameplan to fend off your student loan debt.
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