The Function Of The Student Loan Corporation

The Function Of The Student Loan Corporation



The Function Of the​ Student Loan Corporation
Nowadays,​ few students go through college without some sort of​ financial assistance: about 65% of​ undergraduate students finish with debts owing .​
The average obligation is​ around $19,​000 but higher for graduate students ($27,​000 to​ $100,​000+.) .​
The causes are myriad,​ ranging from low family income,​ through high costs of​ education,​ to​ too expensive tastes of​ the​ individual .​
Whatever the​ reason or​ reasons,​ most students turn to​ a​ student loan corporation to​ finance the​ continuance of​ their education.
A Short Simplified History
It used to​ be that student loans are made only by the​ schools as​ an​ extension of​ their scholarship programs .​
Some students don’t qualify for scholarship grants because of​ economic capability,​ but nonetheless needed some financial assistance .​
These students or​ their families thus turn to​ formal and non-formal lending institutions such as​ banks,​ to​ obtain the​ necessary funds.
The Higher Student Act of​ 1965 mandated the​ Guaranteed Student Loan Program,​ so student loans came into vogue and student loan mechanisms were established in​ almost all reputable schools across the​ country .​
The student loan corporation was thus formed with the​ unification of​ the​ school’s loan portfolio with that of​ the​ government’s and of​ the​ private financing firms,​ wherever available.
Unified Lending
The sources of​ funds for a​ typical student loan corporation include: private investors such as​ philanthropic and private financing institutions,​ Stafford Parent Loans for Undergraduate Students (PLUS) Program,​ Stafford Loan Program (the erstwhile Guaranteed Student Loan Program) and the​ school student loan portfolio,​ if​ any.
The lending policies and guidelines of​ these sources are often streamlined and or​ modified to​ make it​ easier for students to​ apply and obtain loans from the​ student loan corporation.
Interest Rates
Interest rates for student loans granted by a​ typical student loan corporation range from 6.8 percent per annum for Stafford loans; to​ 8.5% for PLUS loans .​
However,​ a​ student loan corporation may offer interest charge discounts up to​ 1.5% to​ attract more clients.
Others offer rebates for up-to-date or​ prompt repayments; while still others grant additional payment deductions on​ systematized payments such as​ salary deduction schemes .​
Each student loan corporation has its own unique menu of​ options from shortened application process to​ repayment rebates .​
It thus pays to​ research a​ bit for the​ most favorable terms offered.
Basically,​ loan interest rates for a​ certain year are pegged July 1,​ largely determined by basing on​ the​ Federal loan rates,​ which in​ turn are based on​ the​ last 91-day Treasury auction rate in​ May and the​ average constant maturity Treasury yield (CMT) for that year.
The current rates projected for the​ School Year 2018-2008 in​ the​ United States are:
Stafford Loan (In-School Rate Projection): 6.77%
Stafford Loan (Repayment Rate Projection): 7.37%
PLUS Loan (Rate Projection): 8.17%
It’s Here to​ Stay
The student loan corporation is​ today a​ fixture in​ the​ educational landscape in​ the​ US and elsewhere .​
As the​ costs of​ living and that of​ education continue to​ rise every year,​ the​ necessity for student loan corporations will likewise increase .​
After all,​ an​ educated citizenry is​ an​ imperative for every country’s progress,​ and the​ student loan corporation is​ one method of​ achieving it​ year after year.




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