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Tips for Spotting a Student Loan Scam

July 24, 2014 by penn

With the rise in student loan debt, there has also been a rise in student loan scam. In increasing numbers and amounts, people are finding it difficult to pay their student loans in a timely fashion, causing many to default on their debt. As with any time a person is in a bind, people come out of the woodwork to take advantage of their misfortune. We’ll talk about some tips for spotting student loan scam.

Student Loan Scam

Upfront Funds and Student Loan Scam

Current federal lending law prohibits any institution from asking for upfront fees. Legitimate private lenders may have fees associated, but these are generally deducted when the funds are disbursed. Loan consolidation services have no need to charge upfront fees as their payments are based on performance. Financial experts explain that many companies running a student loan scam will suddenly become unavailable once they have received the funds and that law enforcement has a difficult time tracking them down.

 Information Phishing

When an individual contacts you offering you funds of some sort, but begins attempts to gain sensitive and personal information from you, this is sure sign they are running a student loan scam. You should never be required to supply credit card or bank account information to anyone over the phone or through the internet. This is the equivalent of identity theft and your information can be used to open credit accounts, or worse, to withdraw funds from your bank.

Free Money

Free money is that which does not require repayment, such as scholarships or grants. There should not be any type of fee required to receive or apply for one of these. From beginning to end, the entire process of applying or receiving a scholarship or grant should not cost you a penny. Beware of situations that ask for a fee – you are looking at a student loan scam.

Contact Information

It is critical that you have all phone and contact information for the lender that manages your student loan. Student loan scam companies will either list false contact information, or no information at all. Be suspicious of post office boxes. Even if payments are mailed to a PO Box, you should still be able to find a physical address for any legitimate company.

Interest Rates

This particular student loan scam targets those individuals with private loans that carry higher interest rates. The borrower is contacted with the opportunity to transfer their student loan debt at a lower interest rate, but fees are associated with the transfer. Once the fee has been submitted, the scam company disappears and the loan is still owed to the original lender.

Privately Held Student Loans

The largest majority of student loans are federal, but there are still a great number that are held by private institutions. When you are researching student loan options, you need to keep a few things in mind before you decide which direction is the best option for your circumstances.

  • Interest. You may see advertisements for private lenders that offer student loans at lower interest rates, but this only applies to a very small percentage of people. If you have pristine credit, you could be approved, but most people are not. This is a trick that lenders will use to get you in the door.
  • Repayment. The best thing you can do for your student loan debt is to make your payments. Every financial advisor will tell you to make more than the minimum payments on any loan you have in order to gain freedom as quickly as possible. But before you do, make sure that the extra money goes toward the account you intended – many lenders may apply the excess toward other accounts owed. While this isn’t a student loan scam, it could present a nasty surprise.
  • Co-signers. In many cases, private lenders require a co-signer on student loans. This arrangement means the person that is co-signing is accepting equal responsibility for the debt. The student’s parents are usually the ones who function in this capacity. Should you fall behind on or default on the student loan, the person who co-signed will also fall under any debt collection efforts and suffer a poor reflection in their credit score, unless they are willing and able to re-pay the loan themselves.

Student borrowers need to be vigilant and mindful of how they deal with companies that offer student loan services. Ensure that you are dealing with a legitimate lender and not a group of thieves operating a student loan scam. Because of the higher amount of debt attributed to student loans, and the frequent difficulty encountered when repaying, the number of scams are ever increasing. Be mindful of the warning signs that point to an unscrupulous organization that could be making false promises with not intent of giving you the assistance you’re expecting.

Filed Under: debt relief Tagged With: Best Student Loan Consolidation, Student Loan, student loan debt, Student Loan Scam

The Best Student Loan Consolidation Options

October 18, 2013 by penn

The Best Student Loan Consolidation Options

You are finished with college, have a degree and a career. Along comes the family and there is a hardship that makes it impossible for you to pay the student loans. Your options can include student loan consolidation. This puts you on the search for the best student loan consolidation company.

To think of consolidations you need to have an outstanding balance on your loan. Student loans consolidation programs can help to reduce the interest so that you are not paying on it for many years. Student loan consolidation repayment plans are set up for people who have more than one loan and with multiple lenders.

The programs are designed to work similar to other debt consolidation programs. You are able to take all the loans and pay them off at once. This can only be done because you will be replacing it with a larger single loan.

Benefits for Consolidation

There are many benefits to student loan consolidation programs; one is the convenience of the programs. You are able to only make one payment a month, only have one due date, and are unlikely to be late.

The ability to have flexible payment options can be important to an individual in a consolidation program. There might even be options to defer the payments, as well as many different options to repay the loans when you fall under financial hardships.

It is also important to know that you are able to save money when you are using a consolidation program. They are able to negotiate with the creditors in order to reduce your balance as well as adjust your interest rates. That can help you to have less monetary obligation in the end.

The student loans that you have currently are under most circumstances at a very high interest rate, as are many of the loans that we get for the purpose of education.

Where Do I Go?

There are several different places that a person can search out for the best student loan consolidation options.

The federal government offers some repayment programs for student loans. These loans tend to have a much lower interest rate than traditional loans. This can be beneficial because in the end you will be paying less money.

When looking into the best student loan consolidation you might want to look into your bank for a private loan. This can be an option because they currently hold your accounts and you may be able to find good interest rates through them. Many banks will hold discounted rates for those individuals who already have bank accounts through them.

There are companies that are dedicated to only the handling of student loans. This can be very helpful when looking into the consolidation of some private student loans. When searching for the best student loan consolidation option remembers that these companies are designed to make a profit. So even though they are reducing your interest, they are also gaining a fee for handling your loans. There are times that one of these companies do offer the best option for your needs, just know that there is nothing wrong with being choosy.

Helping You Get Organized

Using some of the free online calculators you are able to determine the value of your current loan as well as any potential loans you may receive.

You are able to find the Prime Rates of interest online as well. This will let you know what that is being looked for interest during the time that you are trying to reorganize your loans. You can also use various search terms in your browsers search engine like “student loan consolidation and interest rates”.

Remember that if you have a federal loan you can only use a federal consolidation program. Whereas if you have private student loans they will need to be dealt with through a private student loan company.

Best Options for You

Once you have figured out what kind of loan you have, what the interest rates are you are able to look into the best loan consolidation for you. You are able to know what you are searching for when looking at each of the offers to determine what you need. It may be the lowest interest rate no matter the terms, or the least amount of repayment time no matter the rate is. For others it’s a mix of both, finding the right balance of interest rates and repayment time is what most individuals go after. Don’t count out the free programs, they can offer some low rates that can vary on terms as well.

The internet can be very helpful with looking into loan information. It can help you find the best student loan consolidation program or company. Don’t settle for anything more than what you are doing now. If you have trouble you can always for to a student loan counselor for help.

Filed Under: debt consolidation, debt consolidation loans Tagged With: Best Student Loan, Best Student Loan Consolidation, Loan Consolidation, Student Loan

Own Your Degree with a Federal Consolidation Loan

October 10, 2013 by penn

Own Your Degree with a Federal Consolidation Loan

Even wonder why you would need a Federal Consolidation Loan? Well, as each year dawns into a new one, higher education is costing that much more with each passing semester. Not only do universities find ways to increase yearly tuition despite objections from the student body, the cost of living rises and the cost of school supplies as well….students just don’t catch a break. By the time you are done with the last semester of your last year, you are neck deep in debt and faced with few job opportunities as a new grad. But, the government understands your pain (a little bit) and has come up with Federal Consolidation Loans to help pay off your education debts.

What is a Federal Consolidation Loan?

A Federal Consolidation Loan is built to help new graduates and their families pay off education loans. Most loans from the government- federal and state- as well as most private loans can be consolidated into one federal consolidation loan. With so few ineligible loans, it is very likely that many of your education loans can be neatly consolidated into one loan. Unfortunately, though, while you can apply with your parents to consolidate loans, you may not be able to consolidate loans with your wife as a married couple.

Why Federal Consolidation Loan?

There are several reasons you should consider a Federal Consolidation Loan:

  • Several Creditors: Many of us who have education loans know that you really have not one loan with one creditor, but several of them- all of which come due at the same time. With a consolidation loan, you can combine all of them into one loan. So, one monthly payment only- to one creditor. In addition, combining several loans may also reduce your monthly payments.
  • Interest Rates: Interest rates for education loans can be quite high and when several education loans come due at once, managing interest rates can be challenging. But, when you consolidate with Federal consolidation loans, you stand a good chance of getting a good interest rate for all your outstanding loans. Interest rates on education consolidation loans cannot exceed 8.25%
  • Length of Repayment: Well, the longer duration of your loan, the more money you will be paying your creditors. More monthly payments, more interest and more principal. So, if you’ve got a long way to go on your loan repayments, consider a federal consolidation loan to keep your payments, interest rates and debt to a minimum.
  • Flexible Repayment: We can’t always predict the future, so federal consolidation loans also have built in flexible repayment options to pay back your debt.

Where to Get a Federal Consolidation Loan?

It is fairly easy to apply for a federal consolidation loan. Visit http://loanconsolidation.ed.gov/borrower/bapply.html and get directions on how you can apply online, over the phone or using a paper application to apply for and find out if you are eligible for a consolidation loan. You can make changes to your application, and find your application’s status online.

When to Get a Federal Consolidation Loan?

While you can start looking at options while you are still in school, most federal consolidation loans require you to be out of school before loan consolidation can begin. In addition, most education loans also offer a grace period after you are out of school- a short period of time when you do not have to pay back your loan and concentrate on finding a job. In order to qualify for a consolidation loans, you also have to be past the grace period.

Who Qualifies for a Federal Consolidation Loan?

Here’s who can qualify for a federal consolidation loan:

  • You must have at least one Direct Loan or Federal Family Education Loan
  • You must have completed your education and graduated from school
  • Your loans must not be in ‘in school’ status- meaning, in the grace period of loan repayment
  • You must be able to make satisfactory repayment agreements
  • You also must not have another direct consolidation loan to your name.

Do you meet all these requirements? You may be eligible to apply. In addition, you have several other options if you are in the Armed forces- you may qualify for loan forgiveness or for no accrual of interest while you are in active duty.

Consider, though, that once you have approval for a consolidation loan, the consequences for defaulting on a federal consolidation loan can be severe too:

  • The department of Education can demand that you pay back what they paid out to cover your loans in full
  • The department would also be able to withhold any Federal income tax refunds you may be eligible for
  • It can have a detrimental effect on your credit rating as the department of education would report these defaults to all credit agencies

So, start owning more of the degree YOU worked so hard for with a Federal consolidation loan. With only one loan and reasonable interest rates, you’ll be on the way to being free of your education debt in no time.

Filed Under: debt consolidation loans Tagged With: Federal Consolidation Loan, pay off student loan, Student Loan

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