Finance & Stock market

Binadroid review | neo2

July 1 2006 is D day for Federal Student Loans




July 1, 2006 is D-day for Federal Student Loans

Mark the date – if you have student loans or plan to take out student loans, major changes are in the works that will impact you on July 1, 2006. Every July 1st, the Federal Government resets the interest rates on Federal student loans, but this year is different. Not only will the rates on popular Stafford student loans increase from the current variable rate of 4.7% to a fixed 6.8% rate, but the government has enacted a handful of other laws that mean big changes for future and current students as well as students who have yet to consolidate their loans.

Which student loans are affected?

The student loans that will be affected are those that are part of the Federal

Student Loan program such as the Stafford Loan, the PLUS (Parent Loan for

Undergraduate Students) loan, the Consolidation Loan, and the Perkins Loan. Each loan type has a cap on the rate of interest that can be charged. While not at their federally enforced cap, interest rates on student loans will hover dangerously close after July 1st, 2006. PLUS loan rates will jump from a variable 6.1% interest rate to a much less attractive fixed rate of 8.5%, just half a point below the interest rate cap of 9%.

Why are student loan rates increasing?

The rate increase for student loans is part of the Senate's $40 billion deficit reduction plan. The largest single spending cut comes from; you guessed it, federal student loans. With nearly 11 million students expected to take out $108 billion in federal student loans in the 2006-2007 school year, the impact has a dramatic effect on the nation’s budget.

How will higher federal student loan interest rates impact me?

These changes won’t limit the number of loans that will be available. Instead, those who do secure student loans to pay for education will pay back more money in interest over the lifetime of their loan. Most students use federal loans to finance their education. The rate hikes come at a time when students and parents are already struggling to adjust to the drastic increases in tuition and fees over the past ten years.

How can I minimize the financial impact of these changes?

If you're out of school, consolidating your loans now will allow you to lock in the pre July 1st interest rates. Those in school or in their post-graduation grace period can still take advantage of loan consolidation before the "in school" consolidation opportunity is eliminated by the new Senate bill. Current and prospective students should be conscious of borrowing only what is needed to pay for school.

Now is the time to consolidate student loans

If you have not consolidated your loans, now is the time to do it. By refinancing before July 1st, 2006 you can lock in your repayment rates at historically low amounts while enjoying all of the other benefits of refinancing such as a lower monthly bill, a single monthly payment, and a more attractive credit score as a result of fewer open accounts.

Consolidation Options for Current Students

Until July 1st current students still have the option to lock in the lower interest

rates by consolidating their loans. After July 1st, in-school consolidation won't be an option any longer under the new law. Students opting for an in-school consolidation before July 1st must waive the 6 month grace period following graduation, but will be locked in to today's historically low interest rates throughout the lifetime of their loan.

What other changes are taking place?

Not all of the changes are bad, although they all involve higher interest payments. Students can now take out PLUS loans for themselves as another option for financing graduate school. Borrower fees will decrease across the board. The current FFELP fee is set to be completely phased out by 2010 and Direct Loan fees will incrementally reduce from the current 4.0% to 1.0% by 2010.

Where can I get help to ensure that I suffer the least amount of impact from these changes?

The complete impact of these changes can be difficult to understand at best. Student Loan specialist companies like ScholarPoint offer experts to talk with and access to online guidance, loan calculators, and information needed to potentially save thousands of dollars. Those who are in the dark about the changes and fail to consolidate will unfortunately suddenly find themselves owing much more than they originally bargained for. With a little insight and a few good strategic moves, you can save quite a bit of money by consolidating your student loans before July 1st 2006.

Loans Perfectly For You




Loans Perfectly For You

In this article, securedloanspark is going to spill the beans, and reveal some of the secrets the banking industry has been keeping from us far too long! If you want to pay off your mortgage as fast as possible, in Secured Loans UK, it benefits you a great deal to find a way to put extra funds toward the outstanding balance as soon as possible. But to do this doesn't mean you have to spend more than you already spend per month. It's actually the method of payment that will save you the most money! And we're talking about huge savings! Even a little extra money paid in the beginning pays huge dividends in the long run; because the huge interest charges early in the loans really cause whirlpools in the bottom line! Most home buyers aren't aware that they can easily lower their interest cost, and apply a lot more to the principal instead. Far too many home buyers fail to make the simple corrections! Although once we see the significance of paying down the principal, and follow our proven method, they get on track to pay off their mortgage very early; often in as little as 8 1/2 years. Front-Loaded Interest: A Big Reason You Haven’t Been Able to Pay off Your advance quickly. If you take a look at your mortgage amortization table, you'll discover something very interesting. I'll just lay out the facts for you here, using the example of a $150,000 30-year fixed-rate mortgage at 6% APR. In the first year of your mortgage, you pay $10,791.96 (12 monthly payments at $899.33), and a whopping $8,949.89 of that goes to the bank for interest, NOT the principal. That's a whopping 82.93% of your payments that went to interest... flushed down the toilet, and into the banks' pockets. That's your hard-earned money going bye-bye, since it doesn't pay off your loans at all!

Of your first year payments, only 17.07 % applies toward the real problem - the principal, which stands in your way of paying off your loans. The sad thing is, even though you paid $10,791.98 on your $150,000 mortgage, the principal still stands at $148,157.98.In Secured Loans UK you got all the benefits according to your choice but only guaranteed of property.

mygov