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Low Interest Student Loans – Both Federal & Private

March 9, 2012

Low Interest Student Loans

Low Interest Student Loans

Low interest student loans can be obtained, both federal as well as private, which we shall delve into the topic of how to get low interest federal loans first. The most sure fired way of getting low interest student loans for government lending is filling out a Free Application for Federal Student Aid (FAFSA), which by doing so you will be apply for a host of different student loan programs at the same time, two of which include:

  • The Perkins Loan which offers a fixed interest rate of 5%.
  • As well as the Stafford Loan which offers one a chance to get an interest rate as low as 3.4 % and also comes in the form of a fixed rate.

Now filling out a FAFSA will benefit you in more ways than just getting low interest student loans, which the first one is that your credit score doesn’t dictate your eligibility for both the Stafford and Perkins Loans, what determines it is your financial need, as these are needs based loans, which the more you need money the more you will be lended. The other main benefit that comes with filling out a FAFSA is the fact that you will also be applying for federal grant programs, like the Pell Grant among others, which can offer eligible applicants the opportunity to get free money to use towards their tuition and never have to pay it back.

These drawback of these loans programs is that they come with lending limits, which differ for dependant and independent students, which the minimum can range anywhere from $5,500 for undergraduate students to around $20,000 a year for graduate students. Which this may seem like a lot, but remember lending is based off of your financial need, which the amount you altimately qualify for can be a lot lower.

As far as filling out a FAFSA goes, you can start applying for these low interest rate student loans as soon as Janurary 1st of the year that you are looking to get financial aid for. You also need to keep in mind that the FAFSA needs to be filled out every year that you are in school and are looking to get federal financial aid. Even if you feel that you won’t be eligible for federal loans because you think you can prove great financial need, do so anyways as it is shown the a large percentage of those who didn’t fill out the FAFSA because they thought they wouldn’t get any money, would have been eligible if they have submitted a FAFSA.

Not only will federal lending provide you with private student loans, but they come with a lot more flexible repayment terms, compared to the likes of private loans. They have introduced the repayment program called Income Based Repayment (IBR) which offers an option for those stuggling with money to be able to pay around 15% of what they are making as a loan payment, which the payment can be as low as $5. The last great benefit of obtaining federal student loans is that the interest is fixed on the Perkins and Stafford, meaning the interest rate will never change once you obtain the loan, unlike private loans where they APR rates always fluctuate.

Private Low Interest Student Loans

Now the words low interest and private student loans are rarely used together, but this should deter your from considering the option of using private lending when your federal lending has not provided enough to cover your tution and other related expenses. Which before we go into how to get low interest student loans, we want to advise you to only apply for private student loans as a last resort, meaning always utilize federal financial aid first and other sources, as private student loans are known to come with substantially higher interest rates as well as shorter repayment terms. Now how can you get low ineterest student loans from private lenders? Well the most sure fired way of doing so is to borrow from:

  • Credit Unions – Credit unions are known to offer student loans with comparable interest rates and repayment terms of the likes of federal student loans. They are also more lenient in providing better chances of eligibility to those who have bad credit scores as well.

To start applying for low interest student loans through credit unions, you need to visit your local credit union and become a member.

As far as other private student loans go, those which can be attained through large and small banks and other private lending companies, the positive aspect of borrowing this way is that these corporations will be able to provide you with a much larger sum than what federal loans can offer. The amount that is offered by private lenders will be the amount you need to cover your tution minus whatever federal student aid and other financial aid sources have provided you.

Low Interest Student Loans Through Charities

There are a host of different charities out there that offer either low interest student loans, or absolutely no interest student loans, which these programs are non-profit and offer those a chance to attain education and not be burdened by high interest rates when the payoff period begins.

Student Loan Interest Rates – What Rates Are Currently At

November 25, 2011

Student Loan Interest Rates

student loan interest rates

Student loan interest rates can vary, but the general rule of thumb when it comes to the subject is that federal student loan interest rates are most always lower than private student loan interest rates. To give you an idea for what your interst rate might look like for federal student loans, below are the top 3 most used federal loan programs as well as their interest rates, which are based of of numbers in late 2011:

  • Federal Stafford Loans – Interest rates start as low as 3.4 % and are available for both undergraduate and graduate students.
  • Federal Perkins Loans – 5 % Fixed Interest Rate. These loans are based off the financial need of the applicant and have a 9 month grace period.
  • Federal PLUS Loans – Interest rates are fixed at 7.9 %. These loans are applied for by parents who are taking out loans for dependent children.

As far as private student loan interest rates go, rates are constantly fluctuating, and can be any number at any time, but to give you an idea for what interest loans may look like when applying for private student loans, here are a few lenders and their student loan interest rates:

  • Sallie Mae – Interest rates are capped at 9.875 LIBOR (London International Bank Offer Rate), which is basically the interest rate that is charged between a different bank or lender for student loans.
  • Citibank – Interest rates tend to range anywhere from 3.125 to 9.375 percent.

The other benefit that comes with federal student loans interest rates are that they are fixed on both Perkins Loans as well as PLUS Loans, which means they are not variable, or do not change throughout the life of your repayment term. Applying for federal student loans means that you fill out a Free Application for Federal Student Aid (FAFSA), which you will also find out if you qualify for federal loan programs which can help with your tuition as well. As with private loans, there rates are always variable meaning they can change anytime. Federal loans also have more lenient repayment terms, allowing one up to 25 years to pay off their loan debt, whereas private lenders usually give one up to 12 years.

Private student loans should be used to cover the cost of your entire tution minus whatever else you are receiving in the form of both federal loans and any other financial aid. Private loans can come with lower student loan interest rates in the event that one either has excellent credit or finds a co-signer that does, which private loan lenders low applicants that have credit scores higher than 750. It is also suggested that you apply with great credit as low credit applicants can find themselves with interest rates that are up to 6 % higher than great credit applicants.

 

Can One Lower Their Student Loan Interest Rates?

Being that when you go to apply for a student loan, you will need to sign a promissory note which is a statement one signs which they are promising that they will repay their debt as well as the interest under the terms that were agreed upon. Due to this fact, student loan interest rates can’t necessarily be decreased through the lender, but the possiblity for dropping your student loan interest rate can be done through consolidation, which can be an great option to consider when you have multiple student loans. The process of student loan consolidation can drop interest rates because the loan repayment term will be extended resulting in one having to pay more in interest, but if you can find a consolidation company that doesn’t have any repayment fees, meaning they don’t charge a fee to pay off your debt early, you can enjoy lower interest rates and pay your debt off faster when you have the funds to do so.

 

Deduct Student Loan Interest Overview

November 16, 2011

Deduct Student Loan Interest

Deduct Student Loan Interest

If you are looking to deduct student loan interest, the first thing that you want to note is that you must fill out either a 1040 or 1040A From, where the student loan interst deduction section is the section called “adjustments to income”, or line 18 on the 1040A and line 33 on the 1040 Form.  To figure out how much interest that you paid on your student loans throughout the year, you will need a Form-1098 E which you can get by requesting one from the lender of your school loans, in which you will fill out Box 1 if in fact they did not send it to you, which is the case most of the time.

This form allow an individual to claim up to $2,500 in interest paid on student loans as you tax deduction. This student loan interest deduction rule currently applies to every person that is paying student loan debt to lenders, but as of the beginning of 2013, individuals with student loan debt will only be able to use student loan interested deduction during the first 5 years of repayment, which after this 60 month timeframe is over, one cannot file for student loan interest rate deduction anymore.

Deduct Student Loan Interest Rule

The above is a general overview of how to deduct student loan interest as well as what it can do for those who have compiled student loan debt. There are other certain rules and restrictions that apply, depending on what you annual income is. Below are the following rules for incomes:

  • If you are earning above 75,000 dollars per year, you can not use student loan interested deduction.
  • For those earning anywhere between $60,000 to $75,000 per year, then the interested that you have on your student loans will be what is called “prorated” which is where you will be partially eligbile to deduct student loan interest.
  • If you earn any amount less that $60,000 per year, than you are eligible to deduct interest amounts as high as $2,500. It is important to not file for any amount higher than $2,500.

If you happen to be a couple that is filing for student loan interest deduction, the same rules apply above where you will just add up the amount of income that the each one earns. For example say the couples income totals up to 130,000 per year, then they will be able to use the second option above. It should also be noted that you do not have to be the user of the loan funds to file, as you can file to deduct student loan interest for a spouse in the case that you are doing a joint deduction, or a dependent and of course yourself.

NOTE: You can also deduct student loan interest if you have either other itemized deductions or have not used any itemized deductions at all. If you are not sure what an itemized deduction is, they are essentially expenses that a US taxpayer can report when filling out their tax returns which allow a decrease in the persons taxible income.

 

Student Loan Interest Deduction Major Overview

August 28, 2011

Student Loan Interest Deduction

If you have came to this page looking for information on student loan interest deduction, then you are in the right spot as we will provide you with all the details needed to make yourself familiar with the subject. To give you a feel for what we will be getting into, student loan interest deduction can equate to you being able to use the money you paid on interest as a tax deduction, meaning that it can save you hundreds or thousands. For all the major details on student loan interest deduction, read on the next sections will go into deep detail about it.

student loan interest deduction

Student Loan Interest Deduction – Major Overview

The Tax Relief Act states that you are able to deduct up to 2,500 dollars in the interest that you paid on your student loans each year, meaning that if you spent over that, then you are limited to getting 2,500 dollars back, which you can turn around and drop a large payment on your student loans, getting out of debt faster, and remember, you can do this every year.. A quick note to remember is to use either a 1040A or 1040 form for this, avoid using a 1040EZ tax form as this doesn’t allow student loan interest deduction. As a way for you to get the most information, the main details will be in bulet point form:

  • If you happen to be married and both you and your spouse have student loans, then you will need to fill out a joint form for both of you to qualify for student loan interest deduction.
  • You cannot qualify for student loan interest deduction if you make 70,000 + individually or  140,000 + as a couple.
  • The three categories which make you eligible for student loan interest deduction are that you are paying for your student loan, paying for your spouses loan or paying on a person whom was dependent on you when taking out the loan
  • You also must have been enrolled in school at least in a half time basis as well as graduated or completed the education you set out to get, like colleges or vocational studies.
  • The qualified expenditures aren’t limited to just tuition costs, others that are qualied are living expenses, your textbooks, school supplies as well as your transportation going to and from school. When it comes to deduction for these categories, you must prove to the IRS where and how you spent money on them.
  • Student loan interest deduction can only be used for student loans.

Student Loan Interest Deduction – Conclusion

Now that you know the basics to student loan interest deduction, you can now apply it to your student loan situation to get big money back that you can use towards living expenses or towards paying off your debt a lot quicker than normal. For more information, the best thing to do now would be to contact either your personal tax preparer, or find one in your loacal area as they will be able to get you going, and provide you with the most up to date information on student loan interest deduction.