College and University Blog
The Lo-down on Student Loans, Direct Student Loans and Bad-Debt Student Loans
Student loans of many kinds exist to assist low-income students with the financial means of their education. Among these are Direct Student Loans and Bad-Debt Student Loans for ease and convenience. At one time, one’s credit affected eligibility, but now with certain loan programs, such as those mentioned above, gaining at least some financial assistance proves to be more of a certainty for most prospects. Bad-Credit student Loans and subsidized Stafford Loans allow students and their parents to work around iffy credit and the trouble with unmanageable interest. In this way, financial aid can work for students and not against them.
Below is a list of important information on student loans, applying, and other aspects of the process. Although each type of loan has different requirements—some requirements indigenous to only that particular type loan—the information provided is common to all types of student loans, including Direct Student Loans, Bad-Credit Student Loans and Stafford.
When applying, every prospective student should consider the repayment options at that time, as the type of student loans one receives—whether Direct Student Loans, Subsidized or un-subsidized—and the amount received, will make a difference as to how the loans should be repaid. Knowing which student loans have high interest rates and which have lower or subsidized rates can help students calculate what payments will be and how much monthly interest will be applied to each payment. This is important so students don’t eventually get buried in unmanageable debt.
Direct Student Loans, however, have interest, but the award limit his greater than many other loans. This offers student more assurance that rising tuition rates can be covered. Bad-Credit Student Loans such as PLUS (see below) can offer this, too, and with flexible payments. Not only can Direct Student Loans cover college expenses, but also account for the contingency of post-graduate repayment, so loan agencies are thinking ahead for the students’ sake.
Private student loans have greater interest rates, but they equally boast higher loan amounts than many other student loans. In light of the fact that students need as much funding as possible with the rising costs of living and tuition, not to mention the added fact that they will be able to consolidate loans after graduation and thus minimize those interest rates, many private loans are preferred. However, since these loans are private, they are not regulated by federal FA standards and can be conducted in accordance with the lender’s own repayment conditions, so long as such conditions are legally warranted.
Parent loans, such as PLUS (Parent Loans for Undergraduate Students), allows parents to help out. They have a subsidized interest rate, which means the government pays them, but repayment, though flexible, must be started right away instead of after graduation. These are considered Bad-Credit student loans, although the focus is placed on the parents’ or guardians’ financial capabilities.
Many federal loans award in accordance with need and eligibility, so approval is usually guaranteed, especially for low-income applicants. The needier, the better! These include Bad-Credit student loans, which are awarded regardless of credit rating or status.
Consolidation is the process whereby student loans are gathered together in one larger loan account for the purposes of easier management and lower interest. When loans are consolidated, all of the involved loans’ interest rates are merged together, ultimately reducing overall interest. This is definitely what every student should do as soon as possible after graduation, especial with regards to Direct Student Loans and non-subsidized student loans.
After graduation, student loans should be paid promptly and on time. Lenders understand financial hardship, so deferment and/or forbearance can eliminate increased interest, late fees, or prevent loans going into default. If the latter occurs, serious consequence can result, such as garnished employment wages, tax liens and, ultimately, damaged credit reports. This is why applicants should stay on top of their loans and remain in constant communication with all lenders.