Today, two-thirds of college students leave school with at least some debt from college loans. The average debt is approaching $25,000, a figure that includes not just the original amounts borrowed but, for most students, accumulated interest as well.For students who hold government-issued federal student loans, repayment on those loans won’t begin until six months after graduation, at which point most students will enter a standard 10-year loan repayment period.Loans That Sit, Getting BiggerWhile a student is enrolled in school at least half-time and during the six-month grace period after the student leaves school, even though payments on federal school loans aren’t required, interest on the loans continues to accrue.If the loans are unsubsidized, the accrued interest will be added to the loan balance and capitalized, and the student will be responsible for paying that interest.With subsidized federal college loans – which have smaller award amounts than unsubsidized loans and which are awarded only to those students who demonstrate financial need – the government will make the interest payments while the student is in school, in a grace period, or in another authorized period of deferment.The bulk of most students’ college loan debt will consist of unsubsidized loans – loans that get larger as time goes by and you make your way through college, simply because of the buildup of interest.Preventing Interest BloatAs a college student, there are steps you can take, however, to counteract this ballooning of your school loans. There are several ways that you can manage your student loan debt and rein in the added burden of accrued interest charges, both while you’re in school and after graduation.Seemingly small steps can help you significantly reduce the amount of college loan debt you’re carrying at graduation and could shorten the amount of time it will take you to repay those loans from a decade to seven years or less.1) Make interest-only paymentsMost student borrowers choose not to make any payments on their student loans while in school, which leads to the loans getting larger as interest charges accumulate and get tacked on to the original loan balance.But you can easily prevent this “interest bloat” simply by making monthly interest-only payments, paying just enough to cover all the accrued interest charges each month.The interest rate on unsubsidized federal undergraduate loans is low, fixed at just 6.8 percent. Even on a $10,000 loan, the interest that accumulates each month is just $56.67. By paying $57 a month while you’re in school, you’ll keep your loan balance from getting bigger than what you originally borrowed.2) Make small, even tiny, payments on your principalBeyond keeping your loan balances in check while you’re in school, you can actually reduce your debt load by paying a little bit more each month, so that you’re not just covering interest charges but also making payments toward your loan principal (the original loan balance).Loan payments are typically applied first to any interest you owe and then to the principal. Payments that exceed the amount of accumulated interest will be used to reduce your principal balance. By paying down your principal balance while you’re still in school or in your grace period – even if it’s only by $10 or $15 a month -you’ll reduce the size of your college loan debt load by at least a few hundred dollars.And by reducing your total debt amount, you’re also reducing the size of your monthly loan payment that’s going to be required once you leave school, as well as the amount of time it’s going to take you to repay the remaining loan balance.3) Don’t ignore your private student loansIf you’re carrying any non-federal private student loans, use this prepayment strategy on those loans as well.A few private education loan programs already require interest-only payments while you’re in school, but most private loans, like federal loans, allow you to defer making any payments until after graduation. As with federal loans, however, interest will continue to accrue.Private student loans generally have less flexible repayment terms than federal loans and higher, variable interest rates, so your private loan balances may balloon much more quickly than your federal loans and can quickly spiral into the tens of thousands of dollars. Making interest-only or principal-and-interest payments will help you keep your private loan debt under control.4) Look for non-loan sources of student aidAs you make your way through your second, third, and fourth years of college, if you find that your monthly student loan interest payments are creeping up beyond what you can comfortably pay, that may be a sign that you’re relying too much on college loans and your debt load is becoming more than you can manage.Take steps to reduce borrowing by seeking out scholarships and grants, cutting down on living expenses, or finding part-time work.As a student borrower, you should never lose track of how much you owe in school loans. By maintaining a continual connection to your student loan balances through monthly prepayments, you’ll have a better sense of where you stand financially throughout college and after you graduate.A sound prepayment strategy will also help you establish good credit and plan for your financial future, knowing that your college loan balances are manageable and your school debt is under control.
Taming Student Loan Debt With Prepayments
The E-Z Guide To Student Loans (Stafford Loans)
Student Loans are a bit overwhelming at first. Especially when you’ve just graduated high school and you have so much other stuff on your plate.I remember when I graduated high school, the only thing I wanted to know was “What will it take for me to get a college degree”. Whatever it was, I was prepared to do it. So I applied for financial assistance using FAFSA (the letters stand for Free Application for Federal Assistance in case you were wondering). Then once I actually got to college, I was ushered into a room and made to sign all this paperwork with the underlining idea being: Unless you’re going to pay your tuition cash or through some scholarship fund, you need to sign these student loan documents. I ended up signing and practically forgot about my student loans until I graduated. Then I got the bill…. OH BOY!I believe everyone should know something about student loans before signing your life away… I mean the loan documents. Not to say that student loans are BAD per say, just that an informed person is more prepared to deal with something than someone who doesn’t know their hands from their feet.So let’s get into it!What kind of Student Loans are there?The first one we’ll discuss is: The Direct Stafford LoanThe money being borrowed from this loan comes directly from your good ol’ Uncle Sam. Yes, Uncle Sam cares about you too! Direct Stafford Loans are “low-interest loans for eligible students to help cover the cost of higher education at a four-year college or university, community college, or trade, career, or technical school.” I’m sure you’re asking what the requirement is to receive the Direct Stafford Loan and as with all complicated questions, the answer is, IT DEPENDS.There’s two types of Stafford Student LoansThere’s the Subsidized Stafford Loan and then there’s the Unsubsidized Stafford Loan.With the Subsidized Stafford Loan, you are not charged interest as long as you’re enrolled into school at least half-time and during grace periods and deferment periods. The Federal Government actually pays the interest for you while you’re still in school. So the loan value is actually the same amount you really borrowed. Sounds great right? Well there’s a catch. The catch is that this loan is dependent on the financial needs of the student. This loan isn’t available to everyone, its availability actually dependent on what tax bracket you and your parents fall into. Another catch is that your school actually determines how much you can barrow.The second type of Stafford Loan is Unsubsidized Stafford Loan. This type of loan is geared toward those who are qualified for Subsidized Stafford Loans, but need a little more money to pay their tuition as well as those that aren’t qualified for Subsidized Stafford Loans but still need money to pay their tuition. Just about every household is eligible for Unsubsidized Stafford Loans.How is that possible? Well for Unsubsidized Stafford Loans interest begins accumulating from the first time money is paid out. So the very first semester that your Unsubsidized Stafford Loan is applied to is also the beginning of interest accumulation on your loan. What that also means is the longer you decide to stay in college, the more interest will accumulate on your loan.What a great way to motivate you to complete your degree in 4 years right? Well, not really, but it’s definitely worth keeping in mind. However, as a word of advice, you should try paying at least your accumulated interest while your still in school to avoid blowing up your loan even further. By doing so, you could get the same benefit that Subsidized Stafford Loans give by only being responsible for the amount of your loan by the time you graduate. If you decide not to pay anything towards your loan while still in school, you’ll end up with a hefty bill by the time you graduate since your accumulated interest ends up accumulating its own interest as well.Another important point about Unsubsidized Stafford Loans is that, like Subsidized Stafford Loans, your school decides on the amount you receive. The Unsubsidized Stafford Loan isn’t quite the blank check you wished for, but it does help take care of those semesters at more expensive schools.How much money can you barrow with the Stafford Student Loan?Well as I mentioned above, ultimately your school decides that, but they also have to work within the limits set by the loan. The maximum amounts your school could allow you to barrow are listed below:Dependent Undergraduate Student (except students whose parents are unable to obtain PLUS Loans)First Year: $5,500- No more than $3,500 of this amount may be in subsidized loans.Second Year: $6,500- No more than $4,500 of this amount may be in subsidized loans.Third Year: $7,500- No more than $5,500 of this amount may be in subsidized loans.Maximum Total Debt from Stafford Loans When You Graduate* (aggregate loan limits): $31,000-No more than $23,000 of this amount may be in subsidized loans.Independent Undergraduate Student (and dependent students whose parents are unable to obtain PLUS Loans)First Year: $9,500-No more than $3,500 of this amount may be in subsidized loans.Second Year: $10,500-No more than $4,500 of this amount may be in subsidized loans.Third Year: $12,500-No more than $5,500 of this amount may be in subsidized loans.Maximum Total Debt from Stafford Loans When You Graduate* (aggregate loan limits): $57,500-No more than $23,000 of this amount may be in subsidized loans.Graduate and Professional Degree StudentFirst, Second, and Third Years: $20,500-No more than $8,500 of this amount may be in subsidized loans.Maximum Total Debt from Stafford Loans When You Graduate* (aggregate loan limits): $138,500-No more than $65,500 of this amount may be in subsidized loans. The graduate debt limit includes Stafford Loans received for undergraduate study.* You can spend more than 4 years in college but the maximum total amount you barrow from the Stafford Loan cannot exceed the limit above.Here’s an interesting fact: Outstanding Student Loan Debt in the USA is about $850 Billion and growing while consumers owe about $828 billion in revolving credit, including credit card debt.
Health Insurance Help to Lower Your Premium
Illness for non-work related injuries can be financially devastating. Insurance keeps you protected against disastrous health care expenses and lost wages. There are enormous health insurance plans available day-to-day, the insurance cost and its benefits vary from one plans to another. Before enrolling for a policy, an individual should consult with the insurance agencies, read the policy to get the complete information about the benefits and costs and also the way the plan works.Today, there are many more kinds of health insurance to choose from than were available just a few years ago. Traditional differences between and among plans do not longer any more. Also, there is been an increased emphasis on the role of consumers in managing their own health care and health care finances. There is a focus on providing information on the cost of care and health care quality-at the level of the physician, physician group, and hospital-to help consumers and employers choose among the many options available to them. The things have changed a lot, when most people in the United States had health insurance has indemnity insurance (also called as fee-for-service or traditional insurance). This type of insurance coverage assumed that the medical provider i.e. doctor or physicians will be paid a fee for each service provided to the patient.When we talk about health insurance, we usually mean the kind of insurance that pays medical bills, hospital bills, and typically, prescription drug costs. Nowadays, the insurance also covers Medicare and Mediaid that provides health insurance coverage for certain people, senior citizens, people with disabilities and also an individual and families with low income. Today, the online information helps an individual to compare two best insurance policies and choose best among it. The insurance help an individual for financial planning and accordingly choose the best suitable for the family. The policy helps to avoid the burden of expensive medical bills and ensure the penny paid in health plan is paid for your care. It protects you and your family financially in the event of an unexpected serious illness or injury that could be very expensive.In spite of available health insurance help online, unfortunately many Americans are still uninsured or underinsured. Some may be eligible for private or government but may have difficulty in finding the maze of complex rules and insurance jargons. Many more may not even have chosen the plans due to non-affordability coverage or may not be eligible for any. To help you choose right plan, we give you an overview of programs and strategies for seeking free or reduced-cost health care and managing medical debts.Why does an individual require health insurance?As the science and medical care advances, the ways of treatment are also increasing simultaneously. The main purpose of health insurance is to help in paying for care. It protects you and your family members in an unexpected serious illness and injury that may be high in cost. Additionally, you are more likely to get regular and routine checkups, if you have an insurance policy. Every individual requires insurance policy because you cannot predict your illness, injury and your high paying medical bills. One must seriously consider the need for health insurance for own and family. We also know that there is interlinking between having health insurance and getting protective health care. The research states that people having health insurance are more likely to have a regular doctor and get care when it is needed.How should one get health insurance?Most of the people get health insurance through their employers or company which they belong to. This is formerly known as group insurance. Some individuals don’t have access to group insurance. In this case, one may choose to purchase their own individual health insurance directly from public or privately owned insurance company. Most of the Americans in North America get health insurance through government programs that operate at National, State & Local Levels. Insurance- whether provided by your employer or purchased by you – can be both expensive and complex. To understand better option, you must take health insurance help from the experts and advisors.Group Insurance:
Group Insurance is basically offered by the employers or else by an organization of which you are a member of union, professional association wherein you may get group coverage. The employee has to choose between several plans been offered by an employer’s including both indemnity insurance and managed care. Some employer may only offer one single plan. Some group plans may also include dental care with the health and medical benefits. Hence, it is a very important decision to be taken by and employee before choosing any insurance benefits offered by employer or an organization. It is also essential to compare plans to find the one that offers the benefits as per your need. Once you choose an insurance plan, you usually cannot switch over to another plan until next open season, usually set once a year.In group health insurance, employer usually pays portion or all of the premiums. This means your costs for health insurance premiums will be lower than they would be if you paid the entire premium alone.If you are a member of group insurance offered by an organization, you are benefited from being a member of a large group. You will have to pay lesser premium than an individual would be paying. However, the organization often does not pay a share of premium, meaning you are responsible to pay complete premium by yourself.Individual Insurance:
In an individual Insurance, you get the coverage directly from the Insurance Company. You don’t have any access to the group insurance offered by an employer or an organization. When you buy you own insurance, you have to pay entire premium rather than sharing with an employer according to Group Insurance. In individual insurance, you do not share any cost of premium with your employer. You should analyze and choose an individual insurance plan that fits your needs at a price that you are willing to pay; you should also consult a tax advisor to find out whether you are eligible for any tax deduction as per the insurance plan.Insurance variably differs from one company to another within an insurance industry, from one plan to another and one product to another. Hence, choosing right company, right product, right plan are the important criteria before choosing any plans.Which type of health insurance is right for you?Whether you choose group insurance or an individual insurance plan, you must carefully compare coverage and costs. You should compare the following important aspects like coverage and benefits, premiums, exclusions and limitations, access to hospitals, doctors, and other providers etc…One must consider what kinds of services are covered by the plan? How are benefits being availed of health insurance plan; do you have to submit a claim? When do you need pre-approval to ensure coverage for care? What steps do you need to get the care of you and your family members need? You must ensure how does your insurance plan works. Don’t wait until you need emergency care to ask questions.