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Getting Student Loan in Tough Economic Times
The toddling down economy has not only rendered numerous people bankrupt but also has imposed higher interest rates to add to the financial uneasiness. A vast division of the recession victims include the students; who in worse cases scenarios have even been forced to sit at home altogether. With the rising cost of living away from family and augmenting tuition fee, campus survival has fallen in the hands of the indispensable student loans.
Although there are federal loans and scholarships to back students up but the replicating costs overdo their assistance, triggering dependability on student loans. However these loans have their own downside.
Whether federal or private, these loans have an incumbent interest rate; however fortunately the interest rate for federal loans is fixed and relatively low. But their availability is subject to qualification. The federal loans have been divided in to two segments the need based loans and the non need based loans to instill a smooth study pattern across the US. However the non need based loans cringe a higher percentage of interest away from the borrowers which is still relatively lower than the interest rate imposed by the private loans.
Not only are the private loans subject to higher interests but in addition to that they tend to be more complicated. In a recession stimulated economy already prone to bankruptcy and bad credit the private loans give toll to lending complications and interest rates. The interest rate sanctioned can vary significantly depending on the financial state of the borrower, and in some cases, the applicants can even be refused.
It is very likely in a scenario like this that the student loan given doesn't make its way back to the lender. The lenders therefore may inculcate the additive condition of a cosigner if the bank statements of the borrower do not suffice as satisfactory. The cosigner acts as a guarantee on behalf of the borrower and provides an assurance to the bank/lender that their investment is not completely established at risk; a clause that can be of great inconvenience to the students with an independent mindset.
Getting a student loan when a bankruptcy has been filed may also be a hectic excursion. The amount of student loan allotted and the interest rate made applicable is vulnerable to a set of changes; taking in to consideration factors like the type of bankruptcy filed and provision of payment of debt.
Another prevalent consequence of the economy crises, impeding the acquisition of student loans, is bad credit. Bad credit is the red alert to banks and puts the lender in to a skeptic state of mind about the borrower's ability to pay back. The guarantee obligation is therefore brought to parallel with higher interest rates.
If the borrower cannot provide the guarantee of a cosigner, sound credit history or rich financial report he/she still stands a promising chance to qualify for a student loan however the conditions may be considerably strict, including reduced support in case of non-payment and the interest rate imposed could be high.