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Private Student Loan – Pros and Cons, Plus a Few Extra Tips

admin — Wed, 10 Mar 2010 19:04:15 +0000

Thinking about getting a private student loan? These loans have some pros and cons, good points and bad points. Take a look below for the reasons for and against getting one of them to help you fund your college degree.

Also, at the end, you’ll find a few extra tips on how to pay for college and what to avoid.

Pros and Cons of Private Student Loans

1. Pro: Easy to Get

One of the reasons students like loans is that you can almost always find one. These loans come from banks and other lenders, and they don’t have the same deadlines that government loans have. That means that you can apply for one of these any time.

2. Con: Higher Interest Rates

When you get a private student loan, you will probably pay higher rates than if you got a Stafford or a Perkins loan, two loan programs sponsored by the government.

Private banks can charge any interest rate they want for student loans, while the government programs have a cap that they stay under, around 8%.

Bottom line: you will pay more to borrow money when you get a private loan instead of a government guaranteed loan.

3. Pro and Con: No Limit

The government has set up limits on student loans. Undergrads can only borrow so much, and then grad students more, and so on. A private student loan doesn’t have the same limits. You are only limited by your credit score and your lender – the bank.

This one resembles a double edged sword. You can borrow more, like a student I read about who borrowed over $120,000 on privates loans for a photography degree. But that’s a huge debt to pay back, with large payments.

The government limits try to keep you out of that situation with your degree. This one is big. Try to avoid going deep into debt to pay for your education. You will be better off with less debt of any kind.

4. Pro: Less Paperwork

It’s true: the private student loan will have a shorter form. The FAFSA can take some time to fill out to get a government student loan.

Usually, it’s worth the time. You will save on your student loan debt. And if you need a loan next year, the time to fill it our will be much less.

5. Con: Fewer Other Benefits – Like Deferment

Private loans usually don’t offer much in the way of deferment for job loss, low pay, while you find a job after college, or if you go back to college later. This feature can help you make those payments.

Private lenders just don’t give the same benefits because they cost serious money. And if they do, watch out. You might be making your loan much bigger on the back end. Some lenders will offer the benefits by increasing your loan amounts, sort of like interest on interest.

3 Extra Tips on Paying For College

Go to a cheap school. I know, your school produces huge salaries. But if your field has an average wage, you probably won’t be far off that salary when you graduate. Think about a less expensive school unless you have tons of scholarships. How old are you? When you get to 24, get married, or if you have served in a war, you probably can apply for a Pell grant without your parents’ tax information on the FAFSA. Usually, poor students qualify for more than if you have to include your mom or dad’s income. Share. This can save you thousands. Share a room. Share a car. And if you can, share your food purchases. It helps you avoid living on ramen all through your studies.

By: Kevin Ihrig

Back to the Drawing Board for Home Loan Modifications – Loan Modification Help Center

admin — Wed, 30 Dec 2009 14:36:59 +0000

A growing recognition that the Obama Administration’s Home Affordability and Stability Program (HASP) is not working in its current design has fingers pointed all over Washington D.C. trying to place blame on mortgage servicers, investors and the administration itself. At hearings this week in Washington, comments ranged from encouraging to total frustration as expressed by Senator Jeff Merkley (D-Ore.) who said, “It’s just hard to explain to the working families in America how it is we could move so fast with extraordinarily complicated deals with the huge financial institutions, and we are moving so incredibly slowly, mired in paperwork, in rules, in talking to banks back home.”

With predictions for 3.5 million foreclosures by the end of this year and 9 million by the end of 2012, the fact that the program has initiated less than 150,000 loan modifications as it enters its fifth month has industry experts trying to figure out what went wrong and what can done to fix it. While there isn’t yet a full spectrum solution to the issue, the problems of the program have become well defined. They include:

1)   When the program was announced in February, there was little to motivate lenders and servicers to hire staff, provide training to processors in the nuances of the program’s guidelines, and build infrastructure to support the flood of requests. While it’s true that the plan provides incentive payments to lenders and servicers, at $1,000 per year for a successful loan modification, the incentives aren’t enough to offset the costs of implementing a full scale department which, in effect, generates only losses.

2)   Executing loan modifications results in recordable losses for lenders and investors. In the Spring Congress, hearing the pleas from the mortgage industry, ended the long standing requirement that mortgages be marked to market periodically to reflect losses on the books of lenders and investors. If loan modifications were being handled quickly and efficiently the resulting losses would leave many in the industry short on capital requirements and/or struggling for survival.

3)   Investors, even with the passage of the safe harbor bill, can still stand in the way of modifications. Congress passed the bill in May to give servicers more freedom in choosing the concessions they grant in a loan modification and to protect them from lawsuits served by the investors that actually own the mortgages. The problem is that the pooling and stripping of mortgages by insurance companies, pensions and Wall Street institutions can make determining who owns what a job in itself. Even when ownership is clearly defined, servicers and their investors are trying to avoid adversarial relationships as much as possible so getting a sign off on loan modifications can either bog down the process or result in non-approval of the loan modification.

4)   The defeat of the cramdown provision in the administration’s foreclosure initiative, which would have allowed judges in bankruptcy court to decide on principle reductions, gives lenders and investors the last word on a modification. Had the provision passed, the threat of having principle balances reduced by an uninterested third party would encourage more approvals and greater concessions in loan modifications. “You have got to have some leverage, something to hold people’s feet to the fire,” said Center for Responsible Lending spokeswoman Kathleen Day. “If you tell the industry this [judge] can do the loan mod if you don’t, that is going to get their attention.” Defeated in the Senate, revisiting cramdowns is seen as a political nonstarter but other actions like the threat of the repeal of certain tax advantages could prove to be a motivator for getting loan modifications done.

5)   The program is now being criticized for being too complex and for not strongly emphasizing principal reductions. There is talk now of abandoning the original guidelines and replacing them with blanket programs intended for any one that originated a mortgage that they clearly couldn’t afford between 2005 and 2008. The simplified plan would focus on principle reductions to bring home values closer to the principle balances of the mortgages on the properties. Despite its simplification, the tentative design of that plan has its own issues as well. The first is that statistics are already showing that buyers that clearly couldn’t afford their homes have already been foreclosed. The second is that a massive round of write-downs on properties and mortgages would devastate the financial industry.

6)   The program is fighting the wrong battle. According to Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies, the original plan was well designed for the issues that started crisis but the cause behind most foreclosures has now changed. The original targets of the program including stated income, negative amortization, and other loans that buried homeowners have largely run their course while growing unemployment is now the fuel behind foreclosures occurring on prime, jumbo prime, and fixed interest loans. “The issues have changed, and in some ways the solutions haven’t kept up with the problems,” Retsinas summarized. “The most effective intervention would be to put people back to work.”

Another mistake made by the administration was the dismissal of private efforts by law firms that negotiate loan modifications on behalf of homeowners. By encouraging homeowners to take on the labor intensive and complex task of doing home loan modifications on their own the administration put thousands of people in a position where they were negotiating terms on mortgages that they didn’t understand in the first place. With untrained and overworked processors on the other end of the phone it’s no wonder many loan modifications never got off the ground.

By: Loan Modification Help Center

Auto Title Cash Loans – Car Pawn Alternative by Fast Cash Personal Loans

admin — Thu, 24 Dec 2009 14:18:47 +0000

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Auto title loans on our site are easy to request. We don’t make it difficult to borrow money. Our application asks for your vehicle information, income information and how to contact you. We can have you approved within an hour of receiving your request. Our loan terms are simple: You may pay off or extend your loan when it comes due. If you either cannot or choose not to pay it off at that time, you may pay only the interest to extend the loan until your next payday. It is always your choice. You can pay it off at any time – there’s no penalty for early payoff. We place a lien on your vehicle until the loan is paid. You get to keep and drive the vehicle while you are paying.

You can call us at (888) 309-3278 or go online to find out how much you can borrow, based on your vehicle’s value and your income. On our site, you can view our chart that explains loan costs based on the amount you borrow. Other loan companies may ask a lot of questions and take too long to send your cash. You’ll get your money fast when you apply with us. We can deposit the money directly into your checking or savings account, or send a check overnight to your home or work. We can also send the cash to any Western Union or Money Gram location.

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By: Payday Loans, Cash Advances and Auto Title Loans

Federal School Loans vs. Private Loans – Which is Better?

admin — Fri, 13 Nov 2009 13:57:28 +0000

Most people need some sort of outside funding to help pay for their college education. When looking for student loans, you have two choices. You can apply for federal loans which are backed by the government or you can seek money from a private lender.

Each method comes with benefits and drawbacks, so it’s hard to say which one is better. This article will explain the benefits of each and help you decide which is right for you.

Federal School Loans

Federal school loans are government regulated. This means that the lenders have to abide by strict rules when it comes to repayment terms on your loans.

For example, interest rates on federal school loans are set at a ceiling by the government and the lender cannot exceed that rate. They can go lower than that, and in some cases they do in order to stay competitive with other lenders, but they must stay below the max. This is good for the borrower because when they take out a federal loan they know what to expect with their interest rate.

Federal loans are typically fixed rates as well, which means the interest rate is set at a specific percentage and won’t change for the entire life of the loan. Fixed rates mean there won’t be any surprises in your payments from month to month. They should be almost exactly the same each month.

The interest you pay on your loans each year on federal loans is tax deductible, too. If you owe a lot of money, you can claim a nice chunk of your payments as deductions.

One final advantage of federal school loans is the flexibility of repayment you’re allowed. If you’d like you can arrange for your loan to be a 10, 20, or even 30 year loan, which will lower your monthly payments and make them more affordable.

Private School Loans

Perhaps the best part of private school loans is the ability to apply for one whenever the need arises. With federal loans you have to fill out the required paperwork ahead of deadlines in order to receive a loan for a given semester. When requesting private loans you can apply at any time.

Another great thing about private loans is they can be used for fringe school expenses, such as books and transportation. Federal loans must be applied to specific expenses, such as tuition and room and board, but private loans can be used for just about anything not covered by federal loans.

Private loans are not need-based, either. This means that no matter your or your parent’s financial situation, you are eligible for private loans. Financial aid and many federal loans consider your financial need before you receive money, and sometimes the amount is reflective of your need. Private loans, on the other hand, will give you the amount you request, provided you meet their credit check criteria.

Which is Better?

Which type of loan is better depends entirely on your personal situation, however, knowing the facts will help you make the best choice for you. This article addresses some of those facts but be sure to discuss the options with your school financial aid office as well.

For more about school loans consolidation visit School Loans Consolidation Guide where you’ll get free student loan advice and a student loan consolidation comparison.

By: RJ Licata

Federal School Loans vs. Private Loans – Which is Better?

admin — Sun, 01 Nov 2009 11:06:39 +0000

By: RJ Licata