Most Student Loan Debt Carries More Risk Than A Mortgage.

When the government shares the risk with the financial institutions lending 'government' student loans, this can help you avoid the need for short-term student loans at that time and result in you getting the money you need at the best interest rate possible.

Although the student runs a risk of debt with both options, government loans represent the least risk and offer greater opportunity for postponing payments. 

Most student loan debt is not bankruptable, so it actually carries more risk than a mortgage. Student loans cannot be dismissed in bankruptcy, so if they are at high interest or variable rate or if there is any issue of being unable to pay the premiums (e.g. loss of job), then they should be higher priority.

Concerns have surfaced over the Department of Education's role in overseeing lenders and schools that participate in the largest of the federal government's student loan programs, the Federal Family Education Loan Program. 

Student loans present a greater risk to loan providers, so they raise the interest rate and fees of student loans according to the credit score of the applicant. The risk premium was designed to compensate financial institutions for the high number of student loan defaults.  They suggested that students in financial difficulty should be seeking assistance under the debt relief provisions of the student loan program while coping with student loan garnishment before resorting to bankruptcy.

Lenders, on the other hand, want to have their interests protected and remain concerned that increased levels of student borrowing and higher student debt loads will lead to more bankruptcies and greater loan losses.

To avoid ending up as a bad credit risk, wrecking the monthly budget, and sacrificing peace of mind, many graduates would benefit by consolidating their student loans.  Again, the interest rate is likely to be better than the rate you can secure from a private lender for student loans, since the government takes much of the risk of default, thereby subsidizing your low rates.

Consolidating your student loans can help you lower your monthly payment and lock in an interest rate, so you are not exposed to a potential rise in rates which could affect your payment greatly. As time passes, managing student loan debt can seem insurmountable as life changes, and buying a home, affording transportation, raising a family, come into the game of life along with the requisite cash flow.

Another thing you might consider, once you are employed, would be to look for a bank loan with a better interest rate (or a more amenable repayment schedule) and use that to pay off the student loans.

References:

http://www.educationsector.org/publications/lowering-student-loan-default-rates

http://www.fafsa.ed.gov/

Seniors Are Using Finance Company Loans More Often

According to this Consumer Trends Report by the Canadian Office of Consumer Affairs (OCA) we are seeing an increasing use of finance company loans by seniors (and, to a lesser extent, by the general adult population).

An increasing prevalence of high interest rate loans with poor credit ratings could be an indication of potential financial distress for some seniors in the future.  

The number of finance company products increased at an average annual rate of 42.6 percent for seniors, from about 4700 loans in 1992 to 163 400 in 2002.  This compares with an average annual growth rate of 28.8 percent for the adult population as a whole, from approximately 268 500 to 3.4 million loans.

As the young adult population grew only very marginally over this period (at an average annual rate of 0.4 percent), this represents very significant growth in installment loans.

The number of loans from traditional financial institutions grew at an average annual rate of 16.2 percent over the decade (from approximately 487 000 to 2.2 million loans), while the number of installment loans from finance companies increased at an average annual rate of 37.6 percent (from approximately 14 300 to 348 900 loans).

Because finance companies generally charge a higher rate of interest on loans than do traditional financial institutions, this is generally bad news for these people.

The cost of paying back these more expensive loans means there is less money remaining for the good things in life or even for their basic needs.

source: http://www.ic.gc.ca/eic/site/oca-bc.nsf/eng/ca02114.html

More People Than Ever Before Have Credit Card Debt

More people than ever before have credit card debt and they are looking for solutions that will allow them to manage this debt in way that will finally help them to be debt free in a minimal amount of time.

Studies show that most people who are having bad credit histories manage their finances very poorly because they do not even know how much their debts are.

Sometimes debt consolidation is one of the best options for getting out from under high interest debt like credit card debt and arranging a single, lower monthly payment.

When debts begin to pile up around you and you can't make your regular monthly repayments on time or even at all, you may be faced with a very stressful situation. Finally it will catch up with you and may end in garnishment of your salary.

A credit card consolidation loan allows a consumer to clear any money owed over a defined period. A disadvantage is that it may be more expensive if the borrower has poor credit.

You always have to be careful when  thinking about solutions provided by debt-settlement companies. They are out there to make money too. 

Why not talk to a non-profit credit-counseling agency first?

Student Loan Defaults Will Continue To Climb

As one might expect, the trend in student loan debt is directly relative to the continued rise in college tuition and expenses. Student loan defaults will continue to climb according to Education Department projections.

Statistics reveal unexpected and dangerous trends: there are too many college students relying first on high interest, high limit alternative or private student loans than they are on low cost, low interest federal student loans.

An important factor in the accumulation of substantial amounts of debt by young family units is the rapid growth of outstanding student loans. Recent trends have dramatically impacted the number of private student loans available and the variety of terms and interest rates.

If your federal financial aid package does not cover everything, consider a private (alternative) student loan to cover the entire cost of education. But always consider federal loans and scholarships first.

Student Financial Services counselors work with students to help them develop financial plans or budgets to monitor their spending to avoid the necessity to borrow more loan funds than are required.

Are you considering consolidating bills to reduce monthly repayments?

Find out the advantages and disadvantages of credit card debt consolidation loans. Whilst it's important to understand the risks involved with debt consolidation, depending on your personal circumstances, consolidating your credit cards and other debts into one repayment may provide significant benefits in terms of savings and reducing the repayment term.

Other than being able to get a lower interest rate, debt consolidation also helps you process your payment in a much easier and convenient manner. With the presence of a number of reliable websites that offer free debt consolidation assessment, this process can become a lot easier.

Taking out a credit card debt consolidation loan is an effective way to pay off debt, provided existing credit arrangements are revised or closed down. Whilst credit card debt consolidation loans are an exceptional way to pay off debt, they can also exacerbate problems if existing agreements are left open.

You can seek help and take a Debt Consolidation Loan to settle multiple debts in an easy, manageable way. If you have outstanding debt and seek help, there is some debt consolidation management program or credit card debt settlement program available that could be the solution to your debt problem.

They can offer you a range of debt consolidation options to enable you to combine all your monthly outgoings into one lower affordable monthly payment.

This type of approach will ensure that when the final assessment is made, the person will be able to claim that they have used a debt consolidation service that meets all their basic needs and allows them to function in a logically consistent manner when it comes to the question of financial management.

Consolidation is usually a lengthy method, but if you receive the right debt consolidation data, you'll find a means to ease your financial troubles steadily and you will ultimately enjoy the advantages of your efforts whenever you last but not least turn out to be free of debt.
There are times when consolidation may not be the best option for dealing with high interest debts.

The most foreseen downfall of unsecured credit card debt consolidation is the payment of a higher interest as compared to the lower interest rate being offered by secured one.

If your debt history is complex, it may be worth the fees to let the credit consolidation company do what they do best, while you focus your energies on earning the money you need to meet your repayment schedule and other financial obligations to avoid credit card debt garnishment.