By Jennifer Ng
Students are always worrying about two things when they are in college, their grades and how they are going to pay back their loans. But it seems now that worrying about repayment will become much more stressful than keeping grades up. The default interest rates on student loans are rising at an alarmingly fast rate despite a weak job market for graduates and increasing tuition costs. Federally guaranteed student loans are expected to reach 6.9% for the fiscal year 2007, from 4.6% two years ago according to the U.S. Department of Education. Lenders say that more are asking for help as unemployment gets worse and debt levels rise among graduates. Borrowers struggling to repay their federally backed loans can call their lender to request holds on their payments until they are able to pay back. Many types of federal loans qualify for forbearance and certain need-based loans qualify for deferment. But for borrowers with private loans there are fewer options. Borrowers for private loans have rapidly risen recently because limits on federal borrowing haven’t kept up with rising college costs. In the past getting forbearance on a private loan was not too difficult for lenders gave loans to people who were struggling and kept giving forbearances. But as the economy has worsened and more borrowers are in trouble, lenders have to adopt a stricter policy. Many private lenders are working with students help pay back loans by offering forbearances but only with limits on how long it will cover and how much. Student loans and in particular private loans are seeing a struggle now but although the options of repayment are hard to keep up, private lenders are offering their assistance.
Sources:
http://online.wsj.com/article/SB124027600001437467.html
http://www.finaid.org/loans/
http://www.chasestudentloans.com/student-loans/faq-federal-stafford.html
Students are always worrying about two things when they are in college, their grades and how they are going to pay back their loans. But it seems now that worrying about repayment will become much more stressful than keeping grades up. The default interest rates on student loans are rising at an alarmingly fast rate despite a weak job market for graduates and increasing tuition costs. Federally guaranteed student loans are expected to reach 6.9% for the fiscal year 2007, from 4.6% two years ago according to the U.S. Department of Education. Lenders say that more are asking for help as unemployment gets worse and debt levels rise among graduates. Borrowers struggling to repay their federally backed loans can call their lender to request holds on their payments until they are able to pay back. Many types of federal loans qualify for forbearance and certain need-based loans qualify for deferment. But for borrowers with private loans there are fewer options. Borrowers for private loans have rapidly risen recently because limits on federal borrowing haven’t kept up with rising college costs. In the past getting forbearance on a private loan was not too difficult for lenders gave loans to people who were struggling and kept giving forbearances. But as the economy has worsened and more borrowers are in trouble, lenders have to adopt a stricter policy. Many private lenders are working with students help pay back loans by offering forbearances but only with limits on how long it will cover and how much. Student loans and in particular private loans are seeing a struggle now but although the options of repayment are hard to keep up, private lenders are offering their assistance.
Sources:
http://online.wsj.com/article/SB124027600001437467.html
http://www.finaid.org/loans/
http://www.chasestudentloans.com/student-loans/faq-federal-stafford.html
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