• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

National Debt Relief

National Debt Relief - A+ BBB Accredited Business - Get Relief From Credit Card Debt, Medical Bills And Unsecured Loans

Talk to a debt counselor toll free:

800-300-9550

Get Relief From Credit Card Debt

Medical Bills and Unsecured Loans

  • Apply Now
    • Qualifications
    • Is This Right For Me?
  • Proven Results
    • Debt Relief Benefits
    • Credit Card Debt Relief
  • Debt Relief
  • Credit Card Debt Relief
  • Debt Consolidation
  • Login
HomeBlog Student LoansTips For Picking The Best Student Loan
Video Transcript

Free Debt Consolidation Quote

By clicking "Get Free Quote", you agree that the phone number you are providing may be used to contact you by National Debt Relief (including autodialed and prerecorded calls, as well as text/SMS messages). Msg. and data rates apply, and your consent to such contact is not required for purchase.
  • National Debt Relief, LLC BBB Business Review
  • McAfee SECURE sites help keep you safe from identity theft, credit card fraud, spyware, spam, viruses and online scams

Tips For Picking The Best Student Loan

February 3, 2015 by National Debt Relief

student loan debtIf your child is a senior in high school we don’t have to tell you that it’s now the season for college financial aid. This means that among other things if you haven’t yet completed and submitted your FAFSA (Free Application for Federal Student Aid), you need to get cracking – even if you’re not yet sure whether or not federal aid will be the best option for your child. Most students do choose to get federal aid because the loans provided by the US Department of Education generally have the best interest rates and offer a number of attractive repayment options. But today, some of the banks that provide private student loans have made changes that make their loans more appealing. This can be especially true if you or your parents are creditworthy. In this case a private loan might have a better interest rate than those of federal loans.

Note: If you’d like more information on filling out a FAFSA and what to do to get the maximum amount of federal student aid, watch this brief video courtesy of National Debt Relief.

Why have the private lenders made changes in their loans?

There are several reasons for this. First, there has been a lot of pressure on these lenders to make changes. Second, it’s because they are looking to attract young customers that may be with them for their lifetimes and will eventually need mortgages and other financial products. Some of these lenders are now offering refinancing options that can actually lower the interest rate on student loans as well as modifications designed to help those of their borrowers that are having a tough time making their payments.

When you should get federal loans

If you’re borrowing on your own with no help from your parents, your best bet will always be federal loans. They’re cheaper because everyone gets the same fixed rate. Also, as mentioned above they have better repayment terms. If after you graduate you find that you are unable to repay your loans because you’re unemployed or have a low salary, you could qualify for repayment options that would keep you out of default. Also, federal loans could be a much better choice if you find you need to modify your payments after you graduate. Are you going to school to become a teacher or social worker? Federal loans offer a number of benefits including loan forgiveness in public-service jobs. With this translates into is that you would not have to pay back the full amount of whatever you borrow.

Hope you’ll get subsidized loans

The best federal loans are those that are subsidized. This means that while you’re in school the federal government will pay the interest on them. This includes both Stafford loans and Perkins loans. However, they are needs based meaning that you will have to demonstrate a financial need. If you qualify you could get a subsidized Stafford loan for the next school year where your interest rate would be just 4.66% plus an origination fee. However, be aware that there will probably be an interest increase on Stafford loans so that Perkins loans may once again be the cheapest federal education loan.

When a private loan might make sense

If your parents have a credit score of around 740 on the FICO scale a private loan might make sense. The reason for this is that if your parents were to get a Parents PLUS loan or if you’re a graduate student and need one of these loans the interest rate will be 7.21% plus an origination fee. If you go to a private lender you should qualify for a better rate. Be sure to note whether the loan has a fixed or variable interest rate. One of the best things about federal loans is that their rates are fixed. On the other hand, loans from private lender have both fixed and variable rates. The variable rates are the lowest just as they are with variable rate mortgages. However, this means the interest rate could increase in the years ahead. If you want a ballpark estimate of the interest rate you would pay over the lifetime of the loan just add four percentage points to the variable interest rate you’re being offered.

Compare the fees

There is currently a 1.073% origination fee for Stafford loans and the origination fee for a Federal PLUS loan is 4.29%. In comparison, most private loans don’t charge any fees these days. So if you were to amortize 4% in fees over a 10-year period, it will come out about the same as if you were to pay a 1% higher interest rate.

Things to keep in mind about federal loans and their repayment options

If you get a federal loan, you may be able to postpone repayment for three years or longer through what’s called deferment or forbearance – assuming you have a financial hardship such as medical expenses or unemployment. If you are unable to pay your monthly bills in full because of low income, you could apply for Income-based repayment or Pay As You Earn repayment. Income-based repayment would cap your monthly payments at 15% of your discretionary income while Pay As You Earn would cap them at 10% of your discretionary income. For that matter, if were unemployed, your monthly payment would be zero because 10% of nothing is nothing.

Refinancing federal loans

A few banks and non-banks are now offering to refinance any combination of private and federal loans. But if you were to consolidate your federal and private loans into one of these new loans you would give up all the benefits offered by federal loans such as debt forgiveness for public service jobs and income-based repayment programs. The upside is that you might be able to get a better interest rate by consolidating federal student loans through a private lender than with a Federal Direct Consolidation Loan.

Consumer running while carrying a briefcaseWhich makes the most sense if you’re a parent?

It doesn’t make much difference whether you cosign on a private loan for your child or get a parent’s PLUS Loan, you’ll still be required to take over the loan or loans if your child can’t or doesn’t make the payments. So that means as a parent you would be on the hook either way. On the other hand if your child takes out federal student loans only he or she will be responsible for repaying them and you as the parent will be off the hook. So no matter how tempted you might be to cosign on a loan or take out a Parent PLUS loan, it’s really better for you financially to let your child get the loans. This can be especially true if you’re nearing retirement. Students today are graduating with an average of nearly $30,000 in student loan debts and that’s probably a burden you might not want to assume as you near those golden years. You could always choose to help your child repay his or her federal loans when and if it makes sense to you financially. But you would not be committed to repaying that $30,000 or whatever.

Do you qualify for debt consolidation?

National Debt Relief
National Debt Relief

National Debt Relief is one of the largest and best-rated debt settlement companies in the country. In addition to providing excellent, 5-star services to our clients, we also focus on educating consumers across America on how to best manage their money. Our posts cover topics around personal finance, saving tips, and much more. We’ve served thousands of clients, settled over $1 billion in consumer debt, and our services have been featured on sites like NerdWallet, Mashable, HuffPost, and Glamour.

Follow National Debt Relief: Facebook Twitter Instagram Linkedin

Primary Sidebar

Consolidate Your Debt!
Find out how NDR could help.
  • Get one low monthly payment
  • Avoid bankruptcy
  • Get out of debt in 24-48 months
Get Your Free evaluation
Free Debt Consolidation Quote
By clicking "Get Free Quote", you agree that the phone number you are providing may be used to contact you by National Debt Relief (including autodialed and prerecorded calls, as well as text/SMS messages). Msg. and data rates apply, and your consent to such contact is not required for purchase.
 Trusted By Our Clients

"I had a lot of credit card debt and a family member recommend..."

Easy National Debt Relief Caller: Lauren B Transcribed WE 1/24/2021 Lauren B: I do want to let you know the call may be recorded. Should what was it that originally led you to seek out National Debt Relief’s services? CAROL: Just a lot of credit card debt. Lauren B: And was there any certain reason you had chosen National Debt Relief over a different company? CAROL: A family member recommended them. Lauren B: Can you tell me about your interaction with the negotiator there? CAROL: It's been a while. Everything went smoothly. They were very helpful. They provided all the information that I needed. Lauren B: And how were they able to work with you on the payment plan? CAROL: That was great. It was what we needed. Lauren B: So how has working with National Debt Relief impacted your life so far? CAROL: It's been good. We're almost at the end. I think we're within a year now of our payment plan. Lauren B: So have you noticed any differences in your life since you started with them? CAROL: It's just a little less stress monthly. It's just one payment. Lauren B: So overall, what would you rate your experience on a scale of one to five stars? Five means you recommend to a friend and one means you're very dissatisfied. CAROL: 5. Lauren B: And would it be okay to post your comments as a review on our public website for National Debt Relief and help other consumers make good choices? CAROL: Sure. Lauren B: I have your email here of cdunphey@gmail.com. Is that right? CAROL: Yes.

Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating

Carol Dunphey
ConsumerAffairs Reviews

Latest Student Loans Posts

  • Are We Headed Towards Free College Tuition?
  • Creative Ways to Start Paying Off Student Loans
  • Will Loan Forgiveness Work For Me?
  • Easy Ways To Make Student Loan Payments Work On A Budget
  • How Does Paying For College Actually Work?
National Debt Relief, LLC BBB Business Review AFCC Top Ten Reviews Gold Top Consumer Reviews Consumers Advocate Trust Pilot
Company
  • About Us
  • Contact Us
  • Blog
  • Careers
  • Corporate
  • Privacy Policies
  • Terms Of Site
  • Disclaimer
  • Sitemap
Products
  • Debt Relief
  • Credit Card Debt Relief
  • Debt Consolidation
  • Debt Settlement
  • Calculators
  • FAQs
Debt Resources
  • Credit Card Debt
  • Medical Debt
  • Personal Loan Debt
  • Unemployment
  • Divorce Debt
  • Retiree Debt
  • Veteran Debt
  • Business Debt
  • Personal Finance
Follow Us
  • Facebook
  • Twitter
  • Linkedin
  • Instagram
  • Pinterest

© 2021, National Debt Relief, All Rights Reserved.

Disclaimer
Disclaimer
Disclaimer