Many students are often aware that loans are one option that can help them pay college tuition costs, but there are some changes that may be on the horizon in terms of not only what private loans may be able to offer but how federal loans may change the repayment requirements regarding the interest rates that a student must deal with on this debt obligation. However, for those who are still looking for financing in August, student loans may be their only option if they have exhausted free sources of financial aid or may not have found enough funds to help them in the coming fall semester.
While it would benefit any student to continue to look for scholarship or grant resources that can be helpful when it comes to helping them pay for college, here in August it may be beyond a student’s ability to find funds that are still available, but for those who may still need a student loan, options may be open to help them pay for upcoming college costs. Obviously, students are aware that federal loans are, for the most part, seen to be superior in that they come with low, fixed interest rates and can have a variety of repayment or forgiveness options that may help graduates better manage their debt after school. Yet, students may face issues in terms of the subsidy that has been in place in the past which will allow students to forgo making interest payments on these loans while they are in school.
Recent talks in the debt ceiling debate led to funding improvements and sustained options within the Pell Grant program but student loans may suffer due to the fact that many officials felt that allowing interest to accrue while a student is in school can be more beneficial and be one cost-cutting method that will be helpful for our government’s debt. This may have some students looking at private loans, it needs to be understood that there are some private student loan lenders who do not have comparable options to even unsubsidized federal loans, and there are financial aid officials who feel students might still benefit from using federal loans in the future even if this subsidy is no longer available.
Yet, what students need to be careful of if they seek out a private student loan is the interest rate, any repayment options that may be available to financial hardships arise, and students also need to be aware of any plans that may be helpful with a private student loan lender’s program to offer forgiveness if a student happens to work in a specific career, like public service. There are some banks who are reportedly trying to tailor their private student loans in a way that will allow them to compete with federal loans by offering fixed interest rates, more affordable payment terms, and even programs that may forgive a student’s debt if they make their payments on time but this will depend on the lender a student uses.
However, students must also realize that federal loans typically do not factor a borrower’s financial life into the equation, and this is not the case on some student loans by private banks as the rate received on these loans could be a result of a student’s financial position and, as a result, lead to a higher interest rate and overall costs. While students should always seek to get as much financial aid from scholarships and grants as possible, if loans are necessary students must be cautious as to not only the type of loan they choose but the amount they borrow, since men and women may stand a chance of graduating college with debt that will take a substantial amount of time to repay and this can be a hindrance in the life of a recent graduate.