Student Loans: Collections Differ From Other Unsecured Loans

Loans fall into two categories, secure and unsecured. A secure loan is money which is tied to property such as a home or car used as collateral. This practice gives the lender more security. If you do not pay the lender back, your property will be seized. An unsecured loan does not use property for security, rather, it is based on your credit history and good faith that the money will be repaid. Lenders of unsecured loans scrutinize the applicants more closely because of the risk involved.

Student loans fall under the unsecured loan definition as it has no property tied to it as collateral. Defaulting on a student loan can bring many more problems than an unsecured bank loan would bring.

Defaulting on a regular unsecured loan will damage your credit history. If the lender sells your debt to a collections agency, you will receive letters and phone calls trying to put pressure on you to pay back the debt. During this time, a collections representative may not threaten to take away your property, garnish your wages or place a freeze on your bank account. There would need to be a court judgement for these matters. Every state has a statute of limitations, the amount of years vary on each state, but the results are the same. There is a set limit of years that the collections agencies can come after you to repay the debt.

Student loans are processed through the Department of Education which has no statute of limitations. With this unlimited time, there are many different ways that the Department of Education can retrieve their money. They can take money from your tax refunds or Social Security payments and the have the right to garnish wages if you are in default with the student loan. They may also take you to court and get a judgement against you. There are times that the loan will be sold to outside collections agencies. These agencies get to keep a larger percentage of the money they collect verses regular loans. Collectors have more incentive to recover the money, but are required to follow the same guidelines, under the Fair Debt Collection Practices Act, as when collecting on other loans.

Bankruptcy is a last resort option for people who have gotten themselves way over their head with debt. Defaulted student loans are not like other loans which can be included in Chapter 7 bankruptcy. Your student loan will not be discharged by filing for bankruptcy unless you can prove extreme financial hardship.

If you are not obliged to pay for the loan due to the listed reasons, you can dispute the loan obligation.

• the loan not being yours
• identity fraud
• the promissory note was not signed
• you have proof that you already paid
• the loan amount is incorrect
• claim financial hardship

There are collection attorneys who work with student loan debt. Since you are obligated to prove your case, having a lawyer involved might be critical.

Receiving a student loan is crucial to many people in order to further educate themselves for the workforce. The Department of Education provides these loans for that reason. There are no payments while you are attending school. Once you finish, you will have only a certain amount of time, as stated in the contract, to get yourself a job and start paying back your loans. No matter what kind of financial contract, you will want to read and understand your role in the contract before you sign.

How to Get Student Loans For Parents With Bad Credit

Parents always desire to create the best future for their children. Obtaining a college degree is one way to provide the best options for receiving a great paying job or starting a business. Education costs are often not always in the monthly budget while the child was growing up. Some education accounts simply may not have enough money to meet all of the student's needs. Loans are a good way to make sure that education expenses can be paid. Student loans can be used for college courses, trade schools, and certificate programs that help students find gainful employment that pays far above minimum wage. Here are a few tips on how to get student loans for parents with bad credit.

Seeking out financial institutions that check multiple lenders for the best rate can be done easily online. Look for lenders that offer student loans specifically for parents. The loan many times will not go under the student's name. The repayment amount is the sole responsibility of the parents. Many parents do not want their children to assess any debt to attend school. Lenders that understand this often market exclusively to parents and not young adults.

There are lenders that choose to work strictly with people with bad credit. Financial institutions understand the needs of people with less than perfect credit. Bad credit many times is due to uncontrollable circumstances. Examples of these issues are divorce, death in the family, or obtaining an on the job injury. Use truthful information on the application. Lenders usually will confirm references of employment and relatives. Inaccuracies may delay the approval time.

Take time to read through the details before committing to the terms of a loan. Always ask questions if any parts of the terms are unclear. There are no dumb questions when it pertains to financial documents. Clearing up things that are not understood is essential to protect ones credit rating.

Do not be afraid to apply for more than one loan. Sometimes multiple loans may be needed to ensure that all expenses are paid for. Examples of expenses are tuition, books, meal plan costs, living expenses, transportation, personal care items, and rooming costs. It is always better to have a bit more than is needed to not have enough cash on hand. Any loan funds that are not used during the semester can be set aside for emergencies. Preparing a list of all expenses is the best way to have an accurate estimate of costs. If it is the students first semester all of the costs may not be known. Contacting the schools financial aid office is one way to obtain an accurate estimate of expenses.

Pay attention to the repayment schedule to ensure that each payment is paid as agreed. Paying on time is the best way to rebuild personal credit. It will be easier to obtain a loan in the future when there is a positive record of multiple on time payments. Use these tips when applying for bad credit student loans for parents.

What One Should Know About Uncertified Student Loans

If you find the rules governing certified student loans are too restrictive, you have a way out. There are student loans which are not governed by federal law.

The law in the US requires that the Federal funding for direct student financing are used exclusively for education and other related expenses. The loan amount has to be certified by the school before it is disbursed, that is, the educational institution has to verify that the amount borrowed is required to meet only expenses related to education.

Certified loans are cleared through a centralized clearing house called the National Student Loan Clearinghouse. Schools and lenders who qualify have access to this protected database. Lenders can check out the course which the student has enrolled for and ensure that the loan amount is not more than the cost of program at this particular school. Lenders can also check up whether the student is receiving any other funding and that the funding received is only used for the purpose of education.

The main difference between uncertified and certified student loans is that in the case of the latter, the money is not released to the student, who is the borrower, but to the school. The school, in turn, remits the money into the student's account. If there is any money left over, it is passed on to the student for education related expenses such as other fees, supplies and books. In the case of the uncertified student loan, the student can utilize the money for these expenses whenever he or she wants to.

Another advantage in the uncertified loan is that the limits are higher than that of the certified loan. The student can avail of the funds at one go and the school or university will have no say in how much the student is borrowing.

On the flip side, uncertified student loans come at interest rates that are higher. However, students opt for these loans when they have exhausted all other options, especially since scholarships and grants are not easy these days. This would be attractive for students who, in most cases, find the restrictions on the federal student loans irksome.

The first thing to remember when you are applying for an uncertified student loan is not to borrow too much. The school has no role to play in this transaction and the student will get the money directly from the lender. The onus is on the student to use the funds for the purpose for which they have been borrowed, that is, for the payment of tuition fees first and then, use the money left over for expenses connected with the course, such as books, buying a laptop and living expenses. Students are advised not to misuse these funds or delay the paying of fees.

So how does one get the uncertified student loan? The student will need a person to co-sign the loan and both will have to have a credible credit history. The school should be an accredited American institution. These loans are governed by very strict rules and regulations so it's best the borrower understands the conditions before applying for such a loan.

Private Vs Federal Student Loans

Getting through college without a job and very little money can be stressful. I know I've been there. In the end I was forced to take a job at the local pizza place just to make ends meet. Studying all day then working late into the night is definitely not fun. I studied business and dreamed of financial freedom. Making plans for the future seemed to get me through those dreary days that seemed like they wouldn't end. For many finding a part time job while they study just isn't possible, that's why finding a good student loan to ease the financial burden is critical.

There are many kinds of student loans with varying rates of interest, conditions and repayment schedules we'll have a look at a few of these below.

There are two major sources for student loans, the Federal Government and private lending institutions. A Federal loan is the cheapest way to fund your college degree but these loans generally only provide enough to pay for your basic college expenses. There are a few different types of Government loans and the school where you are attending should be able to help you find a loan that suits you. Some loans will require interest payments to be made immediately while others are interest free until you complete your college degree.

Make sure you are aware of all of these details before signing up for a loan. You need to be confident that you can make the repayments if and when they are due. While Government loans generally make things easier for students they only provide for the bare necessities; that's why many students turn to private lending institutions for addition funds. This is where things get a little bit complicated and some students find themselves in difficult situations with loans they just can't repay.

Private institutions, such as banks and other lending companies do not give charity, they are out for a profit. This means before giving a loan they will check your credit score and most likely will require a co-signer to verify that the loan will be repaid. Interest rates will vary depending on your credit score and the credit rating of your co-signer. If you have no-one to act as a co-signer it may be very difficult to get a loan. If you do bear in mind that the interest rates will be much higher to take into account the perceived additional risk.

Before applying for a student loan make sure you look at reviews from other students to see if they have any bad dealings with the company. You can also look up the company at the Better Business Bureau to see if they have any information. Lastly, don't forget to consult with your school as they should have a wealth of information about finding the best student loans for your situation.