Student Loan Limits: What You Should Know

When looking for student loans, there are a number of things to compare, and loan limits is just one example. Because of low loan limits, students often have to get multiple loans to cover all of their expenses. We suggest getting a federal loan first, if eligible, because they offer better borrower benefits, such as deferment and income based repayment plans. However, if you’ve hit your federal limit and still come up short on funds, private loans can be a good way to fill the gap.

Federal loan limits change depending on year of school, as well as whether a student is dependent or independent. Check out the table below for the complete loan limit information.

Loan TypeAnnual Loan LimitLifetime Limit$5,500 Undergrad.
$8,000 Grad.$27,500 Undergrad.
$60,000 Undergrad. & Grad.Year 1: $3,500
Year 2: $4,500
Year 3+: $5,500Year 1: $3,500
Year 2: $4,500
Year 3+: $5,500
Grad: $6,500Year 1: $6,000
Year 2: $6,000
Year 3+: $7,000
Grad: $12,000

While federal loans have some stricter limits, most private loans allow students to take out up to the cost of attendance, minus whatever other aid the student receives (though this can be flexible). Private loans can be used for just about any school-related expense, such as housing, computers, tuition, and even food. If your federal aid did not cover all school expenses, then private loans can be a great way to pick up the slack.

Compare your private loan options today!

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Poll Results: Student Loan Debt

Now that graduation season is upon us, we asked students to share with us the amount of debt they have accumulated (and will soon need to repay). Here are the results of our poll:

It’s awesome, albeit surprising, to see the number of students graduating debt free- conGRADulations! For everyone else, loan repayment might be a growing concern as that 6 month date draws nearer. If you’re concerned about making payments for whatever reason, there are some steps you can take to either lower or postpone your repayment.

First, I would suggest consolidating your loans. Consolidation offers a number of benefits including lower monthly payments; Plus, it makes keeping track of multiple loans easier. To defer federal loans, you will need to contact the Department of Education Direct Consolidation department. To consolidate private loans, grads will need to contact a consolidation lender. Interested? Read more about consolidation in our blog, From our Archives: Consolidation.

If you are unemployed or do not make enough money to repay loans, I suggest looking into an Unemployment Deferment or Economic Hardship Deferment. Deferments allow you to postpone payment for a certain amount of time, allowing grads a little extra time to get on their feet financially. While available for most federal loans, deferment options vary by private lender, so make sure to ask if this option is available for you!

Here is a link to the Poll – Click Here and Show us your Debt!

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Poll Results: Student Loan Debt

Now that graduation season is upon us, we asked students to share with us the amount of debt they have accumulated (and will soon need to repay). Here are the results of our poll:

It’s awesome, albeit surprising, to see the number of students graduating debt free- conGRADulations! For everyone else, loan repayment might be a growing concern as that 6 month date draws nearer. If you’re concerned about making payments for whatever reason, there are some steps you can take to either lower or postpone your repayment.

First, I would suggest consolidating your loans. Consolidation offers a number of benefits including lower monthly payments; Plus, it makes keeping track of multiple loans easier. To defer federal loans, you will need to contact the Department of Education Direct Consolidation department. To consolidate private loans, grads will need to contact a consolidation lender. Interested? Read more about consolidation in our blog, From our Archives: Consolidation.

If you are unemployed or do not make enough money to repay loans, I suggest looking into an Unemployment Deferment or Economic Hardship Deferment. Deferments allow you to postpone payment for a certain amount of time, allowing grads a little extra time to get on their feet financially. While available for most federal loans, deferment options vary by private lender, so make sure to ask if this option is available for you!

Here is a link to the Poll – Click Here and Show us your Debt!

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Compare Private Student Loans

There are a lot of private student loans out there, so finding the best one for you can be a difficult and confusing experience. Taking out a student loan is a big decision, and like all big financial decisions, you must be well informed before applying.

A tool that could prove very helpful to you in your search for a good deal is our private loan comparison tool. It allows you to compare some of the most popular lenders and review what benefits their loans offer. Plus, if you find a good option, you can apply for a private loan right there, making it a much simpler process. While the comparison tool is a great help, you also have to know what to look for. To help with this, make of list of what loan benefits are most important to you, that way, you can more easily narrow down your choices.

Some things to consider include:

FeesInterest RatesRepayment OptionsDeferment optionsCosigner requirements and release options

If you’re worried about taking out private loans because of your credit score, then a good option is to apply with a cosigner. While not always required, apply with a cosigner can do two things. First, it can help to qualify you for a loan as most first-time students haven’t built up enough credit yet. Second, it can potentially lower your loan interest rate, giving you a better deal over the term of the loan.

Shopping for student loans can be confusing, but it doesn’t have to be. Comparing private student loans is easier than ever with this tool, so hopefully, everyone the loan they need!

ScholarshipPoints members, login to ScholarshipPoints now to redeem the code COMPARETOOL for 15 scholarship points. Code expires on Tuesday, May 24th, 2011.

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Poll Results: Student Loan Debt

Now that graduation season is upon us, we asked students to share with us the amount of debt they have accumulated (and will soon need to repay). Here are the results of our poll:

It’s awesome, albeit surprising, to see the number of students graduating debt free- conGRADulations! For everyone else, loan repayment might be a growing concern as that 6 month date draws nearer. If you’re concerned about making payments for whatever reason, there are some steps you can take to either lower or postpone your repayment.

First, I would suggest consolidating your loans. Consolidation offers a number of benefits including lower monthly payments; Plus, it makes keeping track of multiple loans easier. To defer federal loans, you will need to contact the Department of Education Direct Consolidation department. To consolidate private loans, grads will need to contact a consolidation lender. Interested? Read more about consolidation in our blog, From our Archives: Consolidation.

If you are unemployed or do not make enough money to repay loans, I suggest looking into an Unemployment Deferment or Economic Hardship Deferment. Deferments allow you to postpone payment for a certain amount of time, allowing grads a little extra time to get on their feet financially. While available for most federal loans, deferment options vary by private lender, so make sure to ask if this option is available for you!

View the original article here

Student Loan Options for Canadian Students (and CanHelp)

For foreign students, searching for loans to attend American universities can be difficult. In previous years, students could apply for the CanHelp student loan, but unfortunately, CanHelp loans were discontinued in 2008. Instead, through the Canadian Student Loan Program, students have the option to apply for a Smart Option loan through Sallie Mae.

The Canadian Student Loan Program allows students to take out a loan up to the cost of education. What’s great about this loan is that there are no early repayment penalties and students don’t need to start repayment until 6 months after they graduate. However, it’s important to note that any student who wishes to apply for a loan, must have a US cosigner.

Additionally, StudentScholarshipSearch has a number of scholarship listings for international students and would be a great place to search for a little extra money for school.

>>To apply for a Canadian Student Loan, visit InternationalStudentLoans.com.

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Community College vs. Student Loan Debt

One of the articles in our special section on Money Through the Ages (produced in partnership with the public radio program Marketplace Money) is about an 18-year-old high school senior with a choice to make. Should he go into at least $6,500 in debt each year to attend a private college or university like Juniata or Clark, or is he better off working part time and attending community college for two years before transferring to one of those colleges?

Zac Bissonnette, the author of Debt-Free U and a senior in college himself, encourages students and families to take on as little debt as possible. He urged the subject of our profile, Mino Caulton of Shutesbury, Mass., to consider the University of Massachusetts, though Mr. Caulton was worried that he wouldn’t get enough individual attention there.

Mr. Caulton is leaning toward community college, and at the risk of leaning too heavily on what Mr. Bissonnette refers to as the “tyranny of the anecdote,” I’d be curious to hear from young adults who did (and did not) choose community college. How did it work out for you?

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Most popular student loans for college

Not everyone is aware of all the loan options available to pay for college. Here are just a few to consider:

1) Federal Stafford Loans – These are federally guaranteed student loans. You can apply for subsidized Stafford loans and the government will pay the interest for you while you are enrolled. This is a great option for students and the most popular loan program available.

2) Parent PLUS Loans – The Parent Loan for Undergraduate Students allows parents to borrow through the federal loan program to pay for their child’s education. The loan is in the parent’s name.

3) Private Student Loans – Private college loans are not sponsored by the government but offer an alternative sources of funds for those that may not qualify for federal aid or who need additional funds. Private school loans are often in the students name with the parent acting as a cosigner.

4) Perkins Loan – Perkins loans are another federal loan for low income students based on eligibility. These loan funds are limited so apply early.

5) Credit Cards – Believe it or not, approximately 30% of students/parents put a portion of the tuition bill on their credit card. While we don’t recommend this option, it is a reality. To find and compare the best student credit cards, visit www.StudentPlatinum.com.

Once you graduate, consider consolidating your student loans to lower your monthly payment. The downside is you will pay more interest over the life of the loan by extending your repayment period. For additional resources, visit: www.studentloans.com, www.collegeloansolutions.com and www.gradloans.com.

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Choosing a Student Loan: Parent PLUS vs Private

Deciding on which student loan to apply for can be a headache for both parents and students. With so many aspects to consider, such as repayment plans, interest rates, and loan benefits, deciding on the best loan for you can be both confusing and difficult.
If a student is not eligible for federal loans, or is already taking the maximum, there are other loan options to consider. There is a variety of private student loans to choose from, or you and your parents may consider a Parent PLUS loan. However, these loans have some important differences to be aware of.
The most important aspect when choosing between a parent PLUS loan and a private loan is the borrower. A parent PLUS loan is taken out in the parent’s name and the responsibility legally rests on the parent to repay it. A student and parent can have an agreement where the student pays the loan, but remember, if it were to go into default, it is under the parent’s name not the student’s and is therefore the parent’s responsibility. Private loans, however, will be taken out in the student’s name and all repayment responsibility falls upon the student.
Another important difference to consider is financial disclosure. Private student loans do not require any parent or student information like which you would put on your FAFSA. On the other hand, Parent PLUS Loans require you to file a FAFSA which means you will have to provide financial information.
There are a number of other options to consider when deciding on a loan. Visit StudentLoans.com for more information on this differences between Private Student Loans vs Parent PLUS Loans.
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Supplemental Student Loans for College

Often times, federal loans just aren’t enough to pay for the full gamut of education expenses in college. In my personal experience, federal aid usually covered about 70% of my tuition/fees, but I had to seek alternative financing for the other 30%.
A supplemental student loan (also known as a private loan) can help in this department by covering up to your full cost of attendance. This can include costs such as off-campus housing rent, books, lab fees, a computer and of course, your tuition.
A supplemental loan is different from federal loans because it has a variable interest rate, usually based on the LIBOR index or Prime Interest Rate. The vast majority of loans fall between 2.8% – 10% APR*.
In addition, to be competitive with federal loans, many private lenders offer specialized incentives to make their products more enticing to borrowers. Some select examples of these would be co-signer release, graduation rewards and interest rate reductions.
We always recommend that you pursue federal options first, but if you still need more money for school, compare your private student loan options.
*This range is completely dependent on how each bank calculates its rates. Your milage may vary.
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Parent PLUS or a Private Student Loan? What should I pick?

Posted in Parent PLUS Loans, Private Loans tagged parent plus loan, private student loan at 1:38 pm by plusloans
If your child received their financial aid award letter and there weren’t enough digits on the page to cover tuition, you are definitely not alone. The cost of college continues to steadily grow every year, but financial aid has not kept the same pace. As a result, the gap between aid and cost continues to grow.
Once your child has exhausted the annual maximum for Stafford loans, the next step is to look at credit-based options to bridge the financial aid gap. Fortunately for you, there are quite a few lenders that all must compete with each other to make money and therefore give you an opportunity to minimize the interest rate on a new loan.
If you’ve read a few posts on this blog, you know the score on Parent PLUS loans, but what about private student loans? There are a few notable differences… and in some cases they can become more attractive than their federal counterpart.
Major Differences:
Private student loans have variable interest rates (meaning they change with the index they are associated with… most commonly LIBOR or the Prime)They come from banks instead of the Department of EducationMany banks offer special incentives to make a private student loan more worthwhile
At the moment, interest rates are quite low due to the Fed attempting to put the economy back on a growth track out of the recession. This means that the indices are at historical lows and with a creditworthy borrower, you can secure a great interest rate that can be as much as 5% lower than a Parent PLUS loan.
If you want to learn more about some of the incentives that private lenders offer, check out this blog on the Student Loan Network.
The bottom line is just do some research before you take out a loan. In many cases, you can save thousands of dollars in interest if you shop around.
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3 Student Debt Reduction Strategies

Thanks to the credit crunch, the recent economic recession and the rising cost of education, student debt is more prevalent than ever. Between credit cards and student loans, many graduating seniors will have as much as $50,000 to $60,000 in debt that has to be repaid.
Here are a few strategies that can be used separately or together to curb your debt and get you on track to financial stability and better quality of life.
There are tons of services such as Credit.com’s free debt consultation service that match you up with a licensed and certified financial professional. We always recommend that you consult with an industry professional because they will know all options available to help you get control of your debt.
While most of us have a negative knee-jerk reaction to the word “budget”, the truth is it is ESSENTIAL to managing and reducing debt. Even something as simple as plotting out how much money you are willing to spend on basics like food and entertainment can free up a surprising amount of money in a month to go toward your debt.
To give a quick example, I recently decided that I would buy lunch no more than 3 times per week (I usually buy every day.) I’ve already saved about $50 per week (more if you don’t count groceries) — that’s $200+ a month!
If you aren’t familiar with loan jargon, “principal” is the physical amount of money you borrowed. Interest is figured out based on how much principal you have remaining, multiplied by the interest rate.
Thus, if you pay more than your minimum, the raw total the interest is based on goes down quicker and you pay less money overall. It’s a win-win.
Note — always specify that you want extra money going directly to principal. Otherwise, some banks will sneakily apply it to “future interest” and you won’t be slimming down your payments like you want to.
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