Report On Private Student Loans: Fill & Download for Free

When it comes to consumer debt, it’s not uncommon to feel fixated on making it go away fast. High interest rates can make it feel like your minimum payments are doing nothing toward paying down the principal, and somehow, each monthly bill looks larger than the last. Whether you’ve leaned on credit cards to cover you between paychecks or took out a personal loan for an emergency, debt can feel all-consuming.You may be thinking of creative fixes for how to lose the debt — and the accompanying stress. And if you’re a college student, lower student loan interest rates are probably starting to look pretty good. You may be wondering, could you use your student loans to pay off debt, such as credit cards or personal loans?The biggest regret most student loan borrowers have is using their student loans for fun stuff like spring break or for what seemed like unnecessary expenses. Part of my $65,000 in student loan debt came from ordering pizza way too often. I could have borrowed less and avoided still paying off the interest on pizza. But sometimes using student loans for non-school expenses can actually help you afford to go to school.Here are four questions you need to ask yourself before you use your student loans to pay off other debt:1. How Is the Amount You're Allowed to Borrow for Student Loans Calculated?Your total financial aid, including scholarships and student loans, can be awarded up to the "cost of attendance." This is a number the school calculates that includes room and board, tuition and fees, textbooks and other expenses involved in attending one academic year of college.Thus, if you manage to pay less for any of those expenses than what's expected, you won't need to borrow that much in financial aid. Some people decide they won't take on any additional debt which they don't immediately need for school, while others opt to use that "extra" money to pay off higher interest debt such as credit cards.When you apply for financial aid, you'll have to fill out a form called the Free Application for Federal Financial Aid, a.k.a. FAFSA.2. How Does Your Other Debt Affect Your Budget?Credit card payments are due immediately while your student loan payments generally don't have to start paying them back until after you graduate. Thus if you have $100 payment on your credit card, not only does it delete $100 from your budget but you are also generally paying a much higher interest rate.In the case of federal student loans, the current interest rate is 4.45% subsidized and unsubsidized loans for undergraduates. Credit card interest rates can be much higher—sometimes as high as 20% or even close to 30%. So, often people think it makes sense to use low-interest student loans to pay off high-interest credit cards, especially when they just don't have the cash on hand to pay off the cards. In some ways, it makes sense and it may even work to your benefit. But there are some things to consider when it comes to those interest rates.First, it's so important to note the difference between subsidized and unsubsidized student loans. When the government subsidizes your student loans, it means they are paying the interest while you are in school at least part-time. In the case of unsubsidized student loans, you still don't have to pay while you're in school, but the interest accrues each month and rolls into the loan.So if you use a subsidized loan to pay off your credit cards (which would be unusual because subsidized loans typically go right to the school to pay for tuition), then you've got an interest free loan for the four years you are in school. But again, that's not likely.On the other hand, let's say you use an unsubsidized federal loan or even a private student loan to pay off $5,000 in credit card debt, and you defer payment while you are in school. At a 4.45% APR, your loan will go from $5,000 to nearly $6,000 after four years, and then you'll have to begin paying it off, all while it continues to accrue interest.So, if you're going to use your student loans to pay off your credit cards—especially while you are still in school, and even more especially if you plan on using unsubsidized student loans to do it—be careful. You may be scoring a lower interest rate, but you could end up paying plenty in the long run.The numbers: Interest rates for student loans vs. credit cards and personal loansUsing student loans to pay off credit cards or other high-interest debts may seem like a good idea when it comes to saving on interest.Federal student loan interest rates are generally designed to keep college affordable and accessible. Currently, the fixed interest rate for undergraduate Direct Loans (subsidized and unsubsidized) is set at 5.05%. That is likely significantly lower than the interest rates most college students would qualify for on credit cards or personal loans.A typical credit card interest rate is 16.91%, but some evidence suggests that the average APR of a student credit card may be even higher. That’s more than three times higher than federal student loan interest rates, which means these balances will grow three times faster than student loans.The average credit card balance for a college student is $1,183, according to a 2019 Sallie Mae report. With a 17% APR, if you paid $100 a year toward the principle, you would accrue $121 in interest in a year. If it were switched to a student loan, however, and you paid $100 toward the principle, the annual interest charge would be $33.Should you use student loans to pay off debt?While the numbers may seem convincing, there are reasons to hold off on using student loans to pay down consumer debt — that’s because there are some key differences between credit cards, personal loans and student debt.Federal student loans offer some unique perks. They offer options like income-driven repayment plans that can help keep payments affordable if your income is low. Interest paid on student debts is also tax-deductible, saving you more money in the long-run.On the other hand, student loans are much more difficult to discharge in bankruptcy than consumer debts. This means that student loans are more likely to follow you throughout your life, as turning consumer debt into student loan debt may make it harder for you to ever get out of debt if you need to turn to bankruptcy as a last resort.Additionally, sticking with a credit card or personal loan and working to pay it off could be a more effective way to build credit. Rather than moving debt, it may be a smarter strategy to focus on paying down consumer debt, and then coming up with ways to pay down your student loan as well. Low interest is still interest, and that interest will accumulate over time. While using student loans to pay off debts may seem like a smart short-term strategy, you’re still dealing with debt and a large balance can quickly become overwhelming.Using student loans to pay off debts could be considered misuse of student loan fundsAdditionally, there are legal guidelines for how student loans may be used. The Federal Student Aid (FSA) Offices directs students that loan funds are “only to pay for education expenses at the school that awarded your loan.” Educational expenses include a wide range of costs, such as tuition, room and board, transportation and a personal computer — debts, however, are not mentioned.This means that using student loans to pay down debt may technically fall under the categorization of misuse of student loans. That said, misuse of student loans is difficult to track and enforce. But if your loan originator finds out that this is how you’ve used your loans, you might get in trouble for violating your lending agreement.Consequences could include fines and being liable to the school for any funds that are retroactively taken back. Misusing student loans can also have a negative effect on other students, as they may be missing out on funding they need for their education because of the funds you requested to cover your bills.Note that there might be some gray area if your debt was incurred during college while paying for expenses that could fall under the FSA’s definition of educational expenses, such as travel related to school or a car used to get to class. But if you want to stay on the safe side, it’s probably best to limit your student loan use to covering these kinds of debts.Alternatives ways to pay down high-interest debtsPaying down high-interest debts now, with cash, could save you more in the long-run than just bumping it over to your student loan balance. There are a number of ways you could work toward paying off your debts.One option is to get a side job and put the extra funds you earn towards paying off your debt. Or, depending on your relationship, you could consider asking relatives for an interest-free loan. If graduation is around the corner, it may be a good idea to earmark any financial gifts toward paying down credit card debt. You could also look into transferring the balance to a new credit card with a 0% introductory rate.If you are able to pay down those debts, try and work toward pre-paying your student debt once you’ve graduated. Getting ahead on payments will help you save on interest so you can work toward being completely debt-free.In the meantime, suss out what got you into debt in the first place. A budget can help you stay on track and avoid these issues in the future. It also may be a good idea to come up with a plan to build an emergency savings account to cover unexpected expenses. While you may have been on a tight budget as a student, having good financial habits can help you manage a salary and stop debt from spiraling out of control in the future.

The first order of business is to get educated and organized. Figure out who your loan servicers are. Confusingly, your loan servicer may not be the same organization as the original lender. You might have received a student loan from the Department of Education, but the servicer could be Nelnet, for example. You can track down most of your student loans via your credit report or the National Student Loan Data System.Second, make sure all of your contact information is accurate (phone, email, mailing address) with all your servicers. If the loan servicer can’t track you down, you could miss important information and run the risk of missing payments and going into default.This unfortunately happened to me. I graduated with 16 student loans and ended up moving overseas for work. Along the way I lost track of 2 loans. Unfortunately, I didn’t get calls or emails from my servicer until it was too late and they were in default.Between that and choices like deferment, my student debt ballooned to $107,000 before I was able to tackle it. So, learn from my mistakes, and make sure you understand who, what, and when you’re supposed to pay.Third, learn the details of your repayment plans and options. This is when you start to build out your short-term and long-term plan. The standard repayment plan for federal loans gives you 10 years to repay your loans. If you have more than $30,000, you could extend your repayment term up to 25 years. The Department of Education also offers income-driven repayment plans if you can’t afford to pay the monthly minimums.Keep in mind, income-driven programs apply only to federal student loans. If you have private student loans, the typical options include deferment, forbearance, interest only payments, and refinancing.Lastly, repaying student loans is a huge pain when you’re fresh out of college. But, whatever you do, don’t bury your head in the sand and ignore your loan servicer, or you’ll likely end up in a tough spot. And at the end of the day remember that repaying student loan debt is often a marathon, not a sprint. Keep your head up, work hard, and things will work themselves out.

If an individual defaults on a private student loan, the lender can turn over the account to debt collections and/or sue for breach of contract. Defaulting on a student loan has serious financial repercussions that will take a long time to correct, it will be a bad record on your credit report. Private student loans are usually not dischargeable in bankruptcy. The chances of discharging private student loans are very slim and the debtor still has to pay any remaining amount after the bankruptcy.Source:http://www.tomhoganlaw.com/ask-a-lawyer/bankruptcy/student-loans