Posts published on February 26, 2019

Student Loans: A Basic Guide

BY SYLVIA KOHL

 

Student Loans: A Basic Guide

Only a small number of students are able to pay for college education and the fees related to this type of post-secondary education like supplies, books, and tuition as well as living expenses. But, this doesn’t mean that young people that don’t have money to pay these expenses should avoid college education. On the contrary, they have a few options, including student loans that can help them.

So, a student loan is a special type of loan which is designed for students that need financial aid in order to access and use higher education. According to some sources, there are more than 44 million Americans that have student loans.

How do student loans work?

Before we start explaining how student loans work, it’s good to know that there are two basic types of loans – federal student loans and private student loans. Most students are choosing federal student loans because it’s easy to get one and come with low-interest rates and fair terms. They are funded with taxpayers’ money. On the other hand, private student loans are issued by credit unions, banks, colleges, universities, and state agencies. Most banks have special student loan programs. In most cases, students opt for this solution when they are not eligible for federal student loans and when they need more money.

So, federal and private loans designed for students come with different characteristics, For instance, federal loans have fixed pre-determined interest rates while private student loans have variable or fixed interest rates. Private loans have specific repayment terms set by the financial institution.

Where to find the best student loans?

With so many interesting options out there, it’s quite logical to ask a question like this. The answer depends on a few different things, but generally speaking, there are a few options that have proven to be useful to thousands of students. In order to find the best student loans, you will have to conduct in-depth research with the help of the Internet. You can also use the experience of other students and ask your friends and family.

If you want to speed up things a little bit, then you can also use a comparison website like Hot5.com. This is a website where visitors can read reviews and descriptions of the best student loans written by experts in this field. The best student loan in 2019 may be just a few clicks away when you are using websites like this.

Why take a student loan?

It turns out that there is more than one good reason why students should consider taking student loans. We will use this basic guide to highlight a few of them.

You can get access to the college you’ve always wanted to enroll in

First and foremost, as you probably know, some colleges are more expensive than others. There are situations when students can join some colleges without getting a student loan, but they want to join another one even though they don’t have enough money. This is where student loans come into play. Some people may say that this is an expense that you can avoid, but don’t forget that you are investing in your future. In other words, this is a type of debt that pays off. In many cases, you can witness this right after you’ve finished college and you have a few offers for decent jobs.

Making a better credit score

Loans are not made just for students. In fact, there are many other types of loans and most people have at least one other type of loan in their lifetime. So, it’s a smart move to start building your credit score as early as possible. By taking a student loan, you will get a chance like this. Of course, you will have to pay the monthly installments on a regular basis, but this won’t be a problem for most students because the interest rates are low and there’s enough time to cover these installments.

Great repayment benefits

Due to the nature of student loans, many of them come with great repayment benefits. In most cases, these repayment benefits are associated with federal student loans, but it’s possible to find benefits like this in private student loans too. Basically, as a student, you may have a chance to postpone your payments for a month or two or even for a longer period of time. In some cases, you can also lower the amount of the monthly payment. Finally, there are situations when students were able to remove their debt. All these things make student loans a great tool in the hands of students.

Mistakes to avoid

In order to feel all the benefits of taking student loans and to avoid unpleasant experiences, you have to stay away from a few common mistakes. The following is a short list of mistakes to avoid.

Not reading the loan terms

You should never sign a student loan or any type of loan if you don’t understand how the loan works. In other words, you must be aware of all the loan terms before signing for a loan like this. Take some time and analyze the most important parts of the agreement like the repayment terms, a potential grace period, the penalties for late repayment, the type of interest rates (fixed or variable) etc.

Don’t borrow more than you need

Sometimes, you can borrow more than you actually need, but this is usually a bad decision. You need to be focused on getting the exact amount of money that you need to finish education. You can find extra funds by getting a job.

Not paying more when possible

If you want to save money, it is the best idea to pay more than you are asked for once you get the student loan. So, there’s no need for someone to remind you that you can pay more – you should do this on your own. In order to do this, you can use a tax refund, make interest payments even when you have not graduated yet and more.

Sylvia Kohl is an IT teacher with more than 8 years of professional experience. Her main spheres of interest are e-education and she convinced that learning process doesn’t stop after years in school and university.

 

 

 

Goal of getting more Americans through college is way behind schedule

Budget cuts, high tuition, public disillusion have slowed progress while employers struggle to find skilled workers

President Barack Obama delivers a speech at Macomb County Community College July 14, 2009 in Warren, Michigan. Obama set a goal of increasing the proportion of the population with degrees and certificates, and returning the nation to first in the world in this measure by next year. A decade later, progress has been slow.

President Barack Obama delivers a speech at Macomb County Community College July 14, 2009 in Warren, Michigan. Obama set a goal of increasing the proportion of the population with degrees and certificates, and returning the nation to first in the world in this measure by next year. A decade later, progress has been slow. 

When then-President Barack Obama stood before a friendly and enthusiastic crowd at Macomb Community College, near Detroit, 10 years ago this year, the goals he set out were — as the president himself said — historic.

Within a decade, he said on that day in 2009, community colleges like Macomb would collectively boost their number of graduates by five million. That would help return the United States to first in the world in the proportion of its population with the credentials needed to sustain an economy increasingly dependent on highly educated workers.

“Time and again, when we placed our bet for the future on education, we have prospered as a result,” Obama said in announcing his American Graduation Initiative

Now it’s 2019, and after federal and state budget cuts, spiraling tuition, political distraction and increasing public skepticism about the value of a higher education, the nation is far behind schedule in realizing this goal.

Obama called for raising to 60 percent the proportion of 25- to 34-year-olds with college degrees or certificates by next year; that number has instead crawled from about 39 percent to just under 48 percent. At this rate, the target won’t be met until at least 2041, the research arm of the nonprofit Educational Testing Service, or ETS, predicts.

And the United States remains stubbornly in 13th place in the world in the proportion of its 25- to 34-year-olds with degrees, according to the Organization of Economic Cooperation and Development, behind South Korea, Canada, Japan, Russia, Ireland, Lithuania, Norway and other countries.

Related: How failing to get more Hispanics to college could drag down all Americans’ income

The repercussions of this could be as enormous as they have been overlooked, said Ted Mitchell, who was Obama’s undersecretary of education overseeing higher education.

“The polar icecap we’re seeing melting in higher education is right in front of us,” said Mitchell, who now is president of the largest national association of colleges and universities, the American Council on Education, and who compared the situation to the slow-moving impacts of changes in environmental policies.

“The real downside comes in 10 years or 20 years, when this incredible human capital engine that has fueled our economy over the last century starts to sputter,” he said.

It might not even take that long. Forty-six percent of American employers already can’t find the workers they need, according to ManpowerGroup.  The U.S. Chamber of Commerce says this is keeping 40 percent of businesses from taking on more work.

“That suggests that this is hindering growth,” said Cheryl Oldham, the chamber’s vice president of education policy and the former acting assistant secretary for postsecondary education in the George W. Bush administration, who remembers efforts to raise the proportion of Americans with degrees even before Obama tried to do it.

“We make a big announcement, we make a promise, then we move onto something else,” Oldham said.

The Trump Administration Department of Education did not respond to repeated requests to discuss this topic, and references to the American Graduation Initiative have been deleted from the White House website.

To produce more graduates, colleges first need students. But the number of students on the path to degrees is not up. It’s down.

Community colleges, which were the focus of the American Graduation Initiative, have in the last 10 years lost nearly 20 percent of their enrollment, the U.S. Department of Education reports. At Macomb Community College, Obama’s backdrop for his announcement, the number has students has fallen by more than 10 percent, state and college figures show.

Higher education institutions of all kinds have two million fewer students now than they did in 2009.

That’s partly because the number of 18- to 24-year-olds who comprise traditional college students is declining, even as an improving economy has drawn more people straight into the job market, without stopping to get degrees.

Related: New data show some colleges are definitively unaffordable for many

But federal and state budget cuts for higher education also haven’t matched the aspirations of ambitious targets like Obama’s; most of the $12 billion he promised to help community colleges fell through, and states are spending an inflation-adjusted $7 billion less on public universities and colleges than they did in 2008, according to the Center on Budget and Policy Priorities. That’s a cut of 16 percent, on average, pushing up tuition faster than family incomes,