Guaranteed Student Loans
Guaranteed student loans sound ideal for most young people preparing to head off into the wide world of higher education. Instead of fretting about rejection, due to prior credit troubles or difficulties with cosigners, they can simply sign up for a guaranteed student loan and get the money they need, no questions asked.
While there are companies that are willing to provide guaranteed college loans, those private loans can come with some pretty big drawbacks, and sometimes, the price a student has to pay is a little too steep. Thankfully, there are other options available for students who need this kind of funding.
Loans that originate with the U.S. Department of Education are often considered the safest, most affordable form of guaranteed student loan available in the marketplace today. These loans come with a variety of protections, including:
- Flexible payback options
- Limitations on payment size
- Debt forgiveness options
- Locked interest rates
According to documents produced by The Obama administration, two-thirds of those graduating from college have debts of more than $23,000. These guaranteed student loans are designed to reduce the debt burden, as payments are small and forgiveness of the balance can come after a borrower pays on time for a specific number of years.
Loans weren’t always processed in this way. Prior to 2010, in fact, guaranteed student loans originating from private lenders were common, and they were backed by the federal government. The private bank originated the loan, but the government would step in if the student defaulted. When this program was eliminated in 2010, some elected officials claimed that the work would eliminate all banks in the country, but that hasn’t happened.
Some banks now offer guaranteed private student loans, but the word “guaranteed” now refers to the bank’s inability to turn a student down. In the past, that word referred to the role of the government, but now, that word refers to the product the bank offers. Often, these products are enticing to students who have poor credit.
Guaranteed bad credit student loans are products that students can apply for in order to get funding for school, and the bank promises not to turn the student down for that help. What the bank can do, however, is charge a higher interest rate and charge fees. The student might get the loan, but guaranteed bad credit private student loans can be expensive, simply because of the risk a bank is taking in providing that loan.
In some cases, students just don’t have a choice, and they need to take out these loans in order to stay in school. It’s best for students like this to borrow the smallest amount of money possible, and attempt to pay it off as quickly as possible. If quick payment isn’t possible, students should consider consolidating these loans with other loans, so they can reduce the interest rate they’re paying and save a little money down the line.
Types of Student Loans