Student Loan - Loans and Debt Consolidation

STUDENT LOAN PROGRAM CHANGES AFFECT RATES REPAYMENT USA TODAY

In just a few weeks, thousands of recent high school graduates will pack up the minivan and head off to college. For many students, though, the thrill of embarking on a new adventure is tempered by the sobering reality of student debt.

More than 60% of students borrow money to pay for college. If youre one of them or youre the parent of a college student its important to understand some of the changes that took effect on July 1, including:

All federal student loans are now issued through the federal governments Direct Loan program. In the past, banks and other financial institutions provided federally guaranteed student loans through the Federal Family Education Loan Program, but the health care reform bill enacted in May ended subsidies for lenders.

Lenders can still offer private student loans. In recent months, some lenders, faced with the loss of billions in federal student loan subsidies, have lowered rates and fees for their private loans.

Because there are limits on federal student loans, borrowers who are attending high-cost schools often use private loans to bridge the gap between their federal student loans and the cost of college.

But before you even think about a private loan, make sure you have maxed out on your federal student loans. Federal student loans have fixed interest rates and more flexible repayment terms than private loans. If you have trouble making payments after you graduate, the federal government offers several pr...[more]