Managing Student Loans

Embarking on college life often involves taking on debt in the form of student loans. Whilst Federal student loans, scholarships and grants can cover most of the necessary costs of a college education, there is often a shortfall between these and the full amount of funds needed for  school. If the parental coffers aren’t adequate enough to fulfill the difference, then students need to look to private student loans. Chase offers private student loans which are a viable option.

This could well be the first time you have ventured into the financial institutions or banks needing a loan, but it needn’t be a daunting prospect. You will find that loans are easy to come by, as students have the potential for high salaries after graduation, which will make students generally good borrowers.

For the first time borrower it cannot be stressed enough that you must understand the details of any loan you undertake, as a student loan will be a long one, and not one you want to regret signing. It is essential that you read and understand the small print, ask questions and seek advice if necessary.

Chase is one of the largest lenders of student loans and their documentation is easily understandable. The details are not hidden away in the small print. Just as with the federal loans you will have applied for first, there are certain conditions the student must meet to obtain a Chase private loan. Proof of school accreditation is required, and proof of at least half time enrollment in a course. The funds will be paid directly to the school and the school will be the one to determine the amount you can borrow privately.

The big difference between a private and federal loan is that the private one is subject to a credit check. Unless the student has already been able to establish a good credit history of their own then a Chase loan will require the loan endorsing by a co-signer. A parent or relative usually undertakes to do this but they should also know exactly what endorsing a loan means.

A Chase loan is very explicit in spelling out terms for a co-signer. Once the student has graduated and made 36 consecutive uninterrupted payments then the co-signer can be released from the loan obligation, thus they are not looking at a commitment for the full term of the loan if conditions are met. The benefit of having a co-signer is that it will also give the student a lower interest rate on the loan. If the agreed payments are met promptly with an automated debit payment then the student will receive a further 0.25 percent discount on the interest payable.

The two main things to consider when making your decision on a private student loan are the costs of borrowing, and the terms of repayment. Some loans have fees which are added to the loan whilst Chase does not. There are no origination fees, no disbursement fees and no penalty fees for early payment. This is one aspect of a loan which can often be overlooked when working out the total costs. Knowing that there are no fees to be added is a great bonus.

With a Chase private student loan you are responsible for repaying the principal loaned amount, plus interest. The interest rate is variable and is based on the LIBOR interest rate system, often used for student loans. Up to date rates can be obtained from Chase.

When it comes to repaying a Chase loan the company offers a choice of repayment methods. All payments can be deferred until six months after graduation, giving you the opportunity to concentrate on college without worrying about the loan until later. Be aware though that will this method the interest will accrue on the loan so the total amount to be repaid will be higher than if the interest payments were made immediately from the disbursement of the loan.

This is another option which Chase offers. You can choose to pay interest monthly on the loan, which means it is not added to the principal.  A third option is to start repaying both the principal and interest immediately. Obviously to do this you would need to be confident that this is an affordable option. One excellent feature of the Chase loan is that you can prepay or pay the loan early, with no penalties for doing so. If for instance you worked in vacation time and chose to make a payment towards the loan, then the principal would then be subject to less interest.

You should give a lot of thought to the choice of payment options available and work out which one appears most realistic and manageable for you. There is going to be a lot of debt which will need servicing after graduation, when you consider the total amount of borrowing that student days are going to leave you with. Although obtaining loans now are a necessary part of college, and are easy to obtain, never forget that they will need to be paid back in a responsible manner.