USA Funds is headquartered in Indianapolis. It annually guarantees $9 billion in education loans in all fifty states. It is the guarantor for Alaska, Arizona, Hawaii, and the Pacific Islands, Indiana, Kansas, Mississippi, Nevada and Wyoming. USA Funds has a four step suggestion to repay the student loan. The USA Funds asks students to prepare themselves well in advance to repay their loans.

Students have a grace time of six months before their first loan payment is due. Students take loan from the Federal Family Education Loan Program. Carl C. Dalstrom USA Funds president and CEO says that a little planning and starting off on the right track makes loan repayment easy. The following four steps are suggested:

1. Find the right amount to be repaid. Students usually are not aware of the seriousness of a loan. A complete record has to be maintained. The lenders and the school do keep reminding the students about the loan. These papers have to be carefully filed. The right amount should be calculated.
2. Find the right amount of the monthly installment to be repaid. To calculate the amount to be paid monthly, the annual starting salary should be divided with 12, then multiply the result with 0.08 and also by 0.01. This will provide a maximum range for repayment. Graduates with a salary of $25,000 can afford to pay a monthly loan payment of not more than $167 to $208.
3. Plan and devise a repayment strategy. Many online student loan calculators are available. The student can take the help of these calculators and find the amount to be repaid every month. The standard repayment plan is generally taken up by many students. In this the entire amount is divided into equal 10 monthly installments. Flexible repayment loans are also available. Sometimes multiple loans are joined into one single loan and the repayment period is extended. In this case the rate of interest is definitely lower but the total interest calculated is actually more.
4. The students’ whereabouts should be known to the lender and the school. Students move away to another place where they are employed. The change of address should be notified to the lender and the school. This is to prevent the student –loan default. In the case of improper information, the notification of the lender does not reach the student concerned and this may lead to loan default.

READ MORE - Student Loan Repayment Tips

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America is awash in debt. The consumer-driven economy is driving consumers into bankruptcy, the average household owes more than $10,000 in high-interest credit card debt spanning six or more credit cards, and the Goverment recently announced that our national savings rate was negative. (Not that the Government has room to talk; the Government is exceeding its income so much that the new exciting goal in Washington is just to cut the deficit in half by the end of the decade.)

Amidst this sea of splurge-spending that has seen consumers trade their home equity in to pay off credit cards only to max-out those same cards in the same calendar year, there is a curious reluctance on the part of the American populace to borrow money for higher education through the Stafford loan program. In fact, the same students who eagerly sign up for card after card just to get free tacky t-shirts they'll never wear complain about the amount of student loan debt that they'll have when they graduate.

If only all of America's financial troubles were linked to student loans! These loans aren't as bad as parents and students seem to believe. In fact, they're among the best deals available today. Here's why.

Attractive Rates

For the last decade, interest rates on Stafford loans have been exceptionally low, getting down to as little as 3% or less during some years. The Stafford loan rate has traditionally been variable, fluctuating based on the prime rate; by law, however, the rate has been capped at less than 9%. That means that even in a bad year, the gross interest rate paid on those funds is a lot better than the rate on most credit cards (which average around 17% and can go upwards of 25%).

Moreover, even those attractive rates only apply to the unsubsidized portion of Stafford loan debt while a student is in school (defined as enrolled half-time in a degree-seeking status). Depending on a family's financial situation -- and the terms are pretty generous here, too -- a portion of the money for which students are eligible may be subsidized. The Government pays the interest for the subsidized portion of the loans while students are enrolled.

The amount that you can borrow is capped by school year (Fr., So., Jr., Sr., and Graduate) as well as a student's dependent status with regards to his or her parents, but for a quick example, let's assume that you are a graduate student who borrows the maximum annual amount of $18,500 and qualify for the maximum subsidized amount of $8,500. Your interest rate is 8.5%, but while you're in school, you only pay that 8.5% on the $10,000 in unsubsidized loans.

That means the effective interest rate for the entire $18,500 is only about 4.6% while the borrower is in school.

Attractive Terms

In addition to being relatively cheap versus other forms of borrowing, Stafford loans offer extremely attractive terms. No payments at all are required while the borrower is in school, although students may choose to pay the unsubsidized portion of their interest to reduce payments later on. When he or she does leave school and repayment begins, there are several payment options, including a graduated pay scale that assumes a low initial income growing over time or an extended term that gives up to 30 years to pay off the debt.

And if the borrower decides to return to school? The loan can be deferred again as in-school status. Try telling a mortgage company that you won't be living in your house for a few months so you'd like to defer the mortgage!

Consolidation

At the moment, consolidating student loans remains a very powerful option for borrowers. When loans are consolidated, they shift from a variable interest rate to a fixed rate calculated as a weighted average. The average is based on the rates of each loan consolidated -- and someone who consolidated once could borrow more and then consolidate again. (Consolidation loans can also be deferred if the borrower returns to school.)

Consolidation was particularly valuable in the early part of the decade when interest rates bottomed out, giving students a chance to lock in a fixed rate of 3% or less for the life of the consolidated loan. These days, with interest rates edging up, the locked-in rate would probably be between 5% and 6%.

Tax Advantages

The last of the four key strengths of student loans is their tax treatment. Interest paid towards student loans is tax-deductible up to a certain cap. While it does phase out based on household income, the phase-out levels are fairly high and most likely don't affect many recent graduates (especially married couples).

What about grants?

In their eagerness to shun loans, Americans clamor about grant programs, particularly the Pell program. Grants are basically free money; the funds are given based on certain criteria but generally do not have to be repaid. Don't get me wrong, either: if someone offers you a grant, take it.

That being said, education is an investment in your own future. Sure, the nation has a vested interest in having an educated population, but that interest is only met if its citizens succeed in the courses that they take and actually get educated.

Grants are fine as part of the mix, perhaps, but anyone who is planning to attend a college or university should go into it confident that he or she will make enough money when it's all over to be able to repay money borrowed to finance the costs of education. I understand that there are exceptions -- some of the arts, in particular, never pay well -- and these are areas where grants make sense (though even here, I favor merit-based scholarships).

Too often, people are going to college without the slightest idea of why they are there and failing to learn anything at all. If they do that with borrowed money, fine; if they do it with tax dollars given in the form of grants, perhaps not so fine. Either way, grant money rarely covers the entire cost of education. That takes us back to Stafford loans.

Changes are coming (but it's still a good deal)

One little-noticed aspect of the recently passed Deficit Reduction Act is a provision that changes Stafford loans from variable rates to a fixed rate of a little under 7%. The Government likes this change because it makes loan interest predictable. In the long term, students will like it as interest rates get higher.

In the short term, though, this shift is bad news for borrowers who have enjoyed exceptionally low rates. My advice to borrowers? Consolidate now and lock in a fixed rate that will still be a bit lower than the new rate. Once the changes take effect in July 2006, consolidation will just create one account number without impacting interest rates.

Yet even with these changes, the Stafford loan program remains an exceptionally good deal for Americans. Sure, there's a case to be made that debt is never a good thing, but in the United States, we all too willingly embrace debt. And as far as debts go, Stafford loans are among the best debts one could have: the rates are low, the interest is tax-deductible, and the terms are generous. If the choice comes down to a Stafford loan or a credit card, ditch the lousy t-shirt and borrow from the Government.

Long live the Stafford!

READ MORE - Student loans: A good deal

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If you are about to start University, then it pays to know about the student loan process. Most students take out some form of student loan during their study to help them pay for their fees and living expenses. If you are unsure about how student loans work, then this guide will be able to help you.

How are loans paid?

Student loans are paid in three instalments each year, usually once each term. The first payment is usually made by cheque, and then after that payments will go straight into your bank account.

How much can I receive?

The amount you will receive depends on where in the country you are going to attend University, as well as the financial status of you and your family. You can opt to get a fixed amount per year, or you can be income assessed and the maximum amount you can receive will be determined. You can take as little or as much of this amount as you want. On average the amount you can receive ranges from £1,500 to £4,500 each year, depending on your financial status.

How do I pay back the loan?

After you have finished University, you will begin paying back the loan. Repayments will start from the April after you graduate, although you only need to repay money after you start earning above £15,000 per year, calculated on a monthly basis. The amount you pay back will be taken out of your wages just like tax, at a sliding rate. You can also pay back more than this if you wish, by sending money to the appropriate authority.

What is the interest?

The interest on student loans is subsidised by the Government, and so you only pay back the same amount that you borrowed, adjusted for inflation. However long it takes you to pay back the loan, you will only pay back the same amount in real terms that you borrowed.

What are the advantages of taking out a loan?

The advantages of taking out a loan are that you have money in order to pay for your living costs whilst at University, meaning that you can concentrate on your studies rather than having to work to earn money. This will help you to achieve better grades and give you more free time. Also, taking out an interest free loan is better than getting into debt on high interest credit cards. These debts are more serious and have to be paid back or they will keep increasing.

Are there any disadvantages?

Obviously, the major disadvantage of taking out student loans is that you will come out of University with a large amount of debt. This can seem troubling at first, but you should remember that most students have the same problem, and because you are not paying interest the debt is not going to rise. You should think of the student loans as an investment in your future that will help you to achieve your career goals.

READ MORE - Student Loans Guide And Advice

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For many students in the UK their only option is to fund their studies with student loans. A company has been set up specifically for this reason and is logically called the Student Loan Company.

Now that students do not get grants and have to pay their own tuition fees, a change which has only happened in the past few years, most students end up in a significant amount of debt by the time they graduate.

The interest rates on these loans are very high and are not set to make a huge profit but purely to cover the interest rate on the open market. In addition to this, the repayments are not due until the borrower is earning a set salary. Once a year the Student Loan Company contact all of their borrowers and inform them of the minimum salary requirement in order to be eligible to start making loan repayments. The borrower then states their income and has to provide proof of it by way of wage slips covering the previous three months. The Student Loan Company then assess whether they are required to make repayments or not and if they aren’t the loan is deferred for another year and the cycle repeats itself. The beauty of this system is that all of the loans held by the borrower, which can be up to four in most cases as that works out to one per year of study, are held in the same place. The interest rates are calculated on each loan individually as the first one has been held longer than the fourth and the loans would be for different amounts, but the repayment would be calculated to cover all four. This would mean that only one sum would be paid per month rather than four separate ones.

Should a borrower fail to reach the minimum salary requirement within a set number of years, the loans are cleared and the debt written off. This is done because the majority of university graduates will go on to earn higher than average salaries and so will pay off their loans. It also gives a safety net to those who fail to earn high wages as repayments can be quite high given the total sum many students borrow.

READ MORE - Student Loans In The UK

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The statistics show that more and more students are graduating from university with significant debt. The debt levels are growing year on year and many students will be paying them off for years after they graduate. It seems that the consumer addiction to credit and spending has effected the student population just as much as every one else. The fact that most students are not earning anything, and are living either on funds provided by their parents, or on money borrowed, they continue to spend millions each year.

These costs are spread over a variety of areas. Accommodation and other living expenses represent the largest portion of the expenditure. Added to this is travel to and from university, holiday and summer travel expenses, and entertainment. While students are generally financially responsible and not as out of control as many patents would have you think, they do continue to spend a huge proportion of their money on entertainment and socialising.

Employment

Many students will also be working part time during their studies. There are a lot of jobs available and finding one is not a problem for most students who genuinely want one. Employers recognise their flexibility and willingness to work unsociable hours and also that they will generally be happy to accept minimum or close to minimum wage. Therefore, while the jobs are there, they generally pay little, and students who work more than 10-20 hours a week are probably putting a serious strain on their studies and risking their future chances of success.

Most student debt is comprised of student loans. The student loans company based on eligibility criteria provides these. These loans are cheaper than credit that is available on the market from high street banks and have other significant advantages for students. Firstly, students will not have to start repaying the loans until they are earning a set minimum amount, currently around the £15,000 mark. Then there is also the fact that loan repayments are calculated according to earnings levels and are therefore always reasonably affordable. Students are giving as much time as they need to repay the loans and the interest rates, as said before, are very favourable.

Overdrafts

As well as these student loans however, many students will also have other forms of debt. Most banks are offering interest free student overdrafts of up to £2,000 and there are not many students who do not use this up pretty quickly. Then there are bank loans, store cards and credit cards. All of these represent a significant amount of debt that most students are living with.

READ MORE - Student Debt and Student Loans

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