The problem that most parents face is the prospect of paying for a child’s education; lets be realistic, most parents are not that fortunate to have been born into wealth.
We encourage our children to seek a higher education all of their lives, and rightly so, but while we are encouraging them, we also need to be planning for a way to pay for that higher education. Simply putting a few dollars away on a regular basis probably won’t cover the cost. The cost of college is rising every single year at an even greater rate than inflation.
The problems caused by sub-prime lending issues and the “credit crunch” should now be focusing our minds even more. We should all actively aspire to get out of the ghettos we may find our selves in whether in our minds, or real.
One of the better ways to fund a child’s college education is through the use of what has come to be known as “529 plans.” A 529 plan is an investment plan operated by individual states that provides families an opportunity to save money for college. These plans are also known as qualified tuition programs (QTPs), but they are commonly referred to as “529 plans,” “state 529 plans,” or “section 529 plans” because that is the number of the section of the IRS code that provides the plans’ tax breaks. Congress authorized QTPs in 1996.
There are two kinds of 529 plans available – college savings plans, and prepaid tuition plans:
* College Savings Plans: College savings plans allow parents to use the plan funds for college expenses at any college. (The advantage is that the child can select the college he or she wishes to got to.)
* Prepaid Tuition Plans: Prepaid tuition plans allow parents to lock in future tuition at public state colleges at current rates. (The advantage is a greatly reduced total cost.)
Every state in the union has at least one of these options, and most states make both options available.
There are advantages to both kinds of 529 plans. Parents need to investigate and understand and purse each option. It’s to everybody’s advantage to make a choice and start the plan as early as possible in a child’s life.
There was a time when credit was not very easy to get. Borrowing money for any reason was actually considered shameful, and being “in debt” was simply scandalous. If people wanted to buy things that they wanted or needed they simply SAVED; they did without those things until they could afford to pay for them in cash. Isn’t It kind of strange, how things have changed in the span short of a life time!
In pursuit of mammon, those banks have used every marketing strategy possible to make you want something now, not later, after all why wait a lifetime when you can have it now!
Simply put, anybody who wants one can get a credit card. Apparently you don’t even need a social security number and to prove the point, one man in California answered one of those “pre-approved” ads that came in his email and applied for a credit card in his dog’s name.
Under the “age” section he inserted the number “3″ and where it asked for the social security number he entered 000-00-0000. The card was produced.
It’s alarming that people have become brain washed into not thinking about the consequences of borrowing money using credit cards. It is so, so very easy for people to get into spiralling debt with credit cards.
The marketing men in the financial institutions do their jobs well, they make you believe that using a credit card is not like you are borrowing money, but that is exactly what you are doing. If you use a credit card to pay for your dinner and a movie, you’ve borrowed money to pay for the dinner and a movie, and the bill will come due at the end of the month. If you don’t pay the balance on a credit card in full when payment falls due, then every item that you purchased just cost more because you’ll be charged interest. As they say it is easy to borrow – but wait … paying back what you have borrowed is never easy.
Or looking at it another way, if you fail to make the minimum payment on time, you’ll be charged penalties and additional fees.
I know – I don’t sound like I am crazy about credit cards. I’m really not, but they are a necessary evil in today’s mobile world. You can hardly make an online purchase without using one.
So where’s the solution? Well here are some suggestions:
The answer is to get ONE credit card. At the end of each month, pay the entire credit card balance.
Do NOTuse credit cards for everyday expenses.
Don’t buy your weekly groceries or pay for the dinner and movie with a credit card.
Almost all bankruptcies filed today are directly related to credit card abuse. You can overcome that. Students beware of this pitful
The sad thing is that my 7 year old son recently said to me, dad why don’t you buy me the computer game using your credit card – I had to take him to one side and give him a simple explanation of the dangers of borrowing and the fact that you have to pay it back.
It is with much regret that some of us will wonder where did it all go wrong – the lessons of our parent’s generation we have failed to heed – live within your means.
Meanwhile, the shareholders of these financial institutions and there directors continue to become richer at the expense of those who fall into the debt trap.
To avoid a poor credit rating which can last for some time, don’t default on your student loan. There are serious implications when you default on your student loan as it can affect your wages and possible tax refunds in addition to a poor credit rating. There is no need to default on your student loan if you remember to carry out some easy steps. The first step to avoiding defaulted student loans is to keep the lines of communication open with your lender.
You may find it nearly impossible to go default if you immediately contact your lending institution once you face serious financial problems. I remember when I was finding it increasingly difficult to maintain my monthly debt repayments accumulated at college. My education was not a tangible product but service so how would they try and take that back? This kind of attitude towards these debts for college tuition is what usually leads to a student loan default.
I really didn’t want an adverse credit rating by defaulting so the first thing I did was to contact my lender before it was too late. Getting stresses over the situation is stupid because getting a deferment was easy. Suspending the payments until my situation improved was how my lenders helped me, they were very helpful.
It only took a week to have the payments suspended until I could re-commence at a later date. I knew that some of my other commitments would not be so easily rearranged and this deferment would help me get started again. I managed to avoid a defaulted student loan but I knew that many of my other creditors would not be so helpful.
Deferring your debt can be a little expensive in the long run because you still accumulate interest on the account which will cause you to pay more over the extent of the payment plan. Anything is preferable to a defaulted student loan though. Partial payments are sometimes possible.
It is not uncommon for banks to allow you to make interest payments only if you have financial problems. Banks can agree, on occasion, to arrange an interest only payment on a loan to help alleviate financial worries. So the amount you owe will remain the same during this ‘holiday’ period but you will avoid a defaulted student loan.
For many students this type of financial arrangement enables them to complete their education and is a necessity. New students may not be able to have a loan if the percentage of defaulters is too high. Your debts do not have to become a burden if you just keep in contact with your lenders.
Making voluntary arrangements with your lender can help avoid a defaulted student loan. It could also help perspective college pupils get the funds they need to finance higher education costs.
For many college kids, federal student loans are totally essential. I was one of those kids. I came from a pretty poor background, and without a national student loan I wouldn’t have been able to get into college. Even greater than the national student loans, on the other hand, was the free central scholarship. It is amazing how much money you can get for college if you have the right knowledge of the system. My parents were not really knowledgeable about such things, coming from bucolic Virginia. Nonetheless, I had an uncle who knew all about it. He pointed me in the direction of a number of college scholarships and, after applying for a few, I finally struck it rich. I wasn’t able to get a full ride, but pretty nearly so.
There are many diverse student loan national programs out there. It all really depends on your background, education, and opportunities. It is unwise, on the other hand, to limit yourself simply to national student loans. A lot of times, the most excellent loans actually are based locally. For example, someone who goes to a particular high school, strikes it rich, and tries to give back to the community might make a student college loan available to low income residents in a particular city. There are other student college loans set up for folks from a particular race, ethnic background, or folks interested in a certain area of study. Keep an eye out there. Federal student loans are tangibly where to start looking, but they are not where to stop looking.
Of course, all of the advantages of national student loans can turn to disadvantages pretty quickly if you don’t repay them. Even federal loan repayments can be a pretty onerous burden on students after a while. This is why it is so tragic to get a good, high-paying job right out of college. Get the greatest thing that you can. You can always work a job that you enjoy more after you get ahead in your loan repayments. For first couple years, you need to simply concentrate on putting your nose to the grindstone and working as hard as you can.
Fortunately, if you’re having trouble paying your national student loans back, you can many times over negotiate a deal. For example, if you study further, or if you are able to show demonstrable economic hardship, you can many times over get federal loan refinancing. It doesn’t always work, but it is worth a try if you’re in a frantic situation.
Think About Student Loan Debt Consolidation After Graduation.
Once you come to the end of those college years, it will then be time for you to begin making payments on those student loans. People can feel overwhelmed by having many different bills all due to be payed around the same time. Often, this is quite hard to manage and even more difficult to afford. However, you should not give up until you take some time to consider student loan debt consolidation.
You have probably heard a great deal about consolidation loans, but you have no idea how these work. Well, simply put, student loan debt consolidation is a form of consolidation that takes all of your current loans and combines them into one payment, which you will actually be able to afford.
How student loan consolidation works.
What you currently owe in the form of student loans, will be paid by your bank or other financial institution. Giving a loan to you will do this, but you won’t get to look at or handle the money yourself. This money goes directly to the institution that loaned you the money in the first place. Once these institutions have been paid off you will then have to make a monthly payment to the institution that has handled your student loan debt consolidation for you. The one payment on a monthly basis should be easier for you to cover than several all at one time.
Of course, when you do this you will also get a new interest rate. This is an important factor to consider when going through this process, because you will not have to pay interest on some student loans. This should actually be your deciding factor right here as to whether or not this is the right process for you to undertake in order to pay off your student loans.
You also need to pay attention to what the lender is actually offering you. You will find that many lenders may offer you a fixed interest rate, while another lender may offer a variable interest rate. So, make sure that this is definitely something that you check whenever you are trying to choose which company you want to work with and help you with your student loan debt consolidation.
Yes, there are many other choices that you need to make, so to help make sure you make the right one please take your time.
Please check out our web site deptcare.com to learn more about student loan debt consolidation.
It is always a great feeling to finally complete your course of student and graduate. This is a time full of promise, hope and excitement about a new career, financial stability and new options, however it is also a time of having to start paying your student loans. Typically most students will owe a significant amount of money, for some graduate students their student loan debt may be over $150,000, however for undergraduates the debt is more typically closer to $20,000. In most cases this debt is spread out over several different lenders, with payments, interest rates and monthly payments all at various times of the month.
Consolidating student loans has been an option that has been available to students for many years. When consolidating student loans individuals are borrowing one larger sum of money that is then used to pay off all the smaller loans, resulting in one monthly payment that is stretched out over a longer time period. This is the biggest benefit to consolidating student loans for most individuals, a single, lower monthly payment that is easier to manage. However, it is also important to keep in mind that this stretches your payments from ten years with standard student loans to up to thirty years on a consolidated loan. Over those years the individual will continue to pay interest payments, which will add up to a considerable sum of money over the total life of the loan.
It is also essential for individuals and students to understand that consolidating student loans may not result in an overall lower interest rate. While most student loans will be variable, some will be fixed, and a consolidation loan rate may be higher than the fixed but lower than some of the variable rates. If consolidating student loans will actually increase your interest rate because of the amount of money in the various variable or fixed rate loans this may not be the best option for you.
It used to required that students considering consolidating student loans were restricted to doing business with a company or agency that they had the original loan with, this was known as the “single-holder” rule. New regulations now eliminated this rule, meaning that students are free to shop around with any company offering services of consolidating student loans to get the best interest rates, flexible options and deferments if possible. Since this policy has been in place more consolidating information is routinely provided to students through mail outs and other sources of advertising. Keep in mind that sticking with the same loan company for the consolidation may be a good idea, if you are getting a good interest rate and are able to make all the payments.
