Category Archives: Student Loan Repayment Options

Get to Know Private Student Loan Repayment Options, Restrictions

Student Loan Repayment Options

College is something that every young adult strives for. But who can afford College these days? If you did not save up every dollar since you were born, then you would have to search for a Student Loan. A Student Loan is the future of money lending. Since you would only be using the funds to pay for school, books, etc. you would not need to borrow a significant amount of money.

Senator Elizabeth Warren was the individual who introduced the Bank on Students Emergency Loan Refinancing Act on 06/04/2014. This bill was to allow students to refinance their current student loan and receive today’s interest rate. In other words, you are acquiring today’s interest rate for a long you borrowed years ago. This bill coincides with the federal loan program which has its own federal loan rates. However, despite all efforts to help student loans, the bill failed. Needless to say, that is when private loan companies starting to become strict with their policies regarding student loans.

Having your student loan through a private company has its advantages as well as disadvantages. As a student with a loan, you know that it can be almost impossible to negotiate reasoning if you are not able to afford the payments. Which leaves many individuals wondering why private companies have such strict rules and regulations. Here are a few examples of why private lending companies have to be strict on student loans:

Retail Credit
Student loans with private lenders are categorized as a retail credit. With that said, federal regulators prohibit programs that allow the lending company to alter the terms of the retail credit loan. With these type of loans, you are only offered a six month repayment plan. That doesn’t seem like a long enough time to repay a loan worth a few thousand dollars. You would have to make double the amount of payments to pay the student loan off in the time frame given.

Ironically, a private lender is only allowed to offer any programs if you have defaulted on your student loan. This means your student loan would be 120 days or more past due. This is the only time you would be offered a differed program. However, it is not wise to allow your student loan to become delinquent. Not only does this how on your credit report but it is also available for all loan lending companies to view. Many companies sell their past due loans to a collection agency. These collection agencies buy the student loans from the original lender. Collection agencies know that they will receive more money than what they purchased your loan for.

More Options
The first thing you should do as a borrower would be to look at your financial situation. What can you take out of your finances that would provide you with extra money? If you have extra money, put it as a down payment towards your student loan. I know this sounds funny but it will lower your overall monthly payments. Also, look for a lower interest rate loan that could be consolidated. Since there are so many consolidated loan programs, you could combine all your debt into one monthly payment.

Even if you do default on your student loan, many collection agencies will have leniency towards your good-faith payments. That is why even if you send in a small amount, you are making an effort to exhaust your debt. These agencies will work out payment plans that can fit around your budget, as long as you pay something.

Getting a student loan can be a very helpful option. It is important to understand all rules and regulations that are involved with your student loan. Before you sign your name on the dotted line, ask as many questions as you can think of. This way there will be no surprises in the end. If you still have questions or concerns regarding student loans, feel free to contact us today. Our staff is always available to answer any questions you may have.