Part IV: Cutting the cost of getting a college degree
Plan ahead if you hope to get a student loan.
The “credit crunch” has now spread from the mortgage industry into the student loan arena. Private lenders such as banks are raising the criteria for loans and becoming pickier about whom they lend to. Some lenders have either curtailed or completely stopped giving out student loans due to the higher risks of default. Also, the ability to sell these loans to investors, there by replenishing the supply of money available to lend, has dried up.
Sallie Mae, the largest lender of student loans reported a $1.6 billion lose during the last quarter of 2007. They are planning to set aside $700 million to cover possible defaults on loans in 2008. This means they will have less money to lend.
If you are planning to get a loan to cover next year’s tuition and fees for college apply as soon as possible. There is a chance that the lender you used last year is no longer offering student loans or has raised the criteria beyond your qualifications to obtain one.
The student loan that is the least expensive in the long run is one that is guaranteed by the federal government. It has a fixed interest rate that is usually quite low as opposed to private loans that are not fixed and the interest rate can adjust up to 19%.
Keep a close eye on your credit scores since many lenders have raised the required minimum score from 675 to 695. Borrowers who do not meet this standard are considered riskier and could end up paying additional fees ranging from 3% to 10% of the loan amount.
Line up a co-borrower with a good credit history just in case it will be needed to either obtain the loan or to avoid the additional “risk” fees.
Denise Wing, C.E.O.
Certified Mortgage Lender
Academy National Mortgage Corporation
303-987-0622
dwing@academynational.net
The “credit crunch” has now spread from the mortgage industry into the student loan arena. Private lenders such as banks are raising the criteria for loans and becoming pickier about whom they lend to. Some lenders have either curtailed or completely stopped giving out student loans due to the higher risks of default. Also, the ability to sell these loans to investors, there by replenishing the supply of money available to lend, has dried up.
Sallie Mae, the largest lender of student loans reported a $1.6 billion lose during the last quarter of 2007. They are planning to set aside $700 million to cover possible defaults on loans in 2008. This means they will have less money to lend.
If you are planning to get a loan to cover next year’s tuition and fees for college apply as soon as possible. There is a chance that the lender you used last year is no longer offering student loans or has raised the criteria beyond your qualifications to obtain one.
The student loan that is the least expensive in the long run is one that is guaranteed by the federal government. It has a fixed interest rate that is usually quite low as opposed to private loans that are not fixed and the interest rate can adjust up to 19%.
Keep a close eye on your credit scores since many lenders have raised the required minimum score from 675 to 695. Borrowers who do not meet this standard are considered riskier and could end up paying additional fees ranging from 3% to 10% of the loan amount.
Line up a co-borrower with a good credit history just in case it will be needed to either obtain the loan or to avoid the additional “risk” fees.
Denise Wing, C.E.O.
Certified Mortgage Lender
Academy National Mortgage Corporation
303-987-0622
dwing@academynational.net
posted by Academy National Mortgage at 11:49 AM
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