Qualifying for student loans is not a big deal for most people, but being able to pay them back after graduation can be another story. In many cases, graduates barely earn enough income from their first job to cover rent and food never mind loan payments. Recent changes by the Obama Administration to graduate student loan programs make it even tougher. There is another cost effective way to get a college loan. Here is a low pressure solution that could be a win-win for both borrower and lender.
Retirees On Fixed Income Seek Higher Returns
Although the historically low interest rate environment in the United States has been great for first time homebuyers and existing homeowners to refinance their mortgages, it has been a hurt for those living on interest earnings and fixed incomes. Today’s grandparents worked hard for decades to stash away retirement money. But interest rates hovering close to zero percent on savings accounts and barely any higher on certificates of deposit are crippling the monthly incomes of our seniors. As a result, many seniors are open minded to opportunities to earn higher rates of return on their money.
Need Cash For College?
Readers that want to finish a college degree to be eligible for promotion at their current company or simply advance into another career have access to many online services that provide free financial aid information. Working adults that choose to pursue a college degree face the challenge of balancing their time between and education, their job and their family. Shop several sources for private student loans all in one convenient place at these online services to find financial aid that is right for you.
Obama Administration Cuts Student Loan Subsidy
Part of the deficit cutting effort undertaken by the Obama Administration included the elimination of graduate student loan subsidies. Prior to this change, the government paid the interest accrued on needs-based student loans taken out by graduate students while they were still enrolled in school. Now, that interest must be paid by the student even while they are still attending classes. This change makes student loans through the government more expensive.
Who Said Never Do Business With Family?
Whoever said that you should never do business with friends and family didn’t have to survive the Great Recession that Americans have suffered through since the economic collapse began in 2008. Although the U.S. government statistics indicate that the recession has officially ended, times are still tough. Many people are relying more on family resources to get by. This includes intrafamily loans for everything from housing, cars and even education.
Student Loans From Family Is Win-Win
The combination of people seeking higher returns on their money with students seeking more affordable and flexible student loans is creating a potential match. Is your grandfather or rich Uncle Joe complaining about the ridiculously low interest they are earning from their bank? It can be embarrassing to turn to family for financial help, especially a hand-out, but structuring a student loan through family can help you pay for school and help a family member earn a higher interest rate on their money.
Pay A Reasonable Interest Rate
The Internal Revenue Service (IRS) has rules in place about personal loans. A minimum interest rate charge must be in place. Student loans through the government can cost around 7% plus origination fees. However, loans through family can pass IRS guidelines as low as about 3%. The interest can accrue while you are still in school and then begin payments once you start working. You can negotiate those terms with your family. Put everything in writing and sign the documents to commemorate the agreement. This cost effective way to get a college loan helps both family members address a financial challenge.
What Is The Most Cost Effective Way To Get A College Loan?