Student Loan Trends for 2009

Nearly every student needs financial assistance to achieve their academic goals. Very few people can avoid student loans. If you are headed to college in 2009, here are a few tips to help you secure the best options when it comes to financing your higher education.

The most important factor that is impacting the student financial aid industry in early 2009 is the global credit crisis. When the bank meltdown of late 2008 led to a lending freeze in United States markets, people across the country had a difficult time getting any kind of financing. A shadow of uncertainty was cast over the availability of funds for new students.

The good news is that the financing industry is slowly loosening its coffers and allowing money to flow more freely for student. The bad news is that many financial institutions that previously provided student loans at low interest rates have either raised their rates or stopped dealing in loans altogether. What is a student to do?

The best bet for your financial aid needs is the US government. The application process is more complicated than that of a traditional bank or private agency, but government funding has a set interest rate and the stability of the US Treasury to back up its funds. Government loans like Stafford Loans, PLUS Loans and other such programs are the safe bet in today’s economy.

Another big trend in student loans in 2009 is student loan consolidation. With the cost of living rising at an alarming rate and unemployment numbers climbing, many people are looking for ways to make their money go further. If a former student has more than one outstanding student loan, consolidation can save them time and money, freeing up cash every month for the payment of other bills.

Student loan consolidation is a great debt management technique. If you are having trouble paying your monthly bills because of the current economic climate, you are not alone. Consolidating your student loans will likely lower your monthly payment.

Be advised, though. Loan consolidation is not a magical cure to your debt. You will likely end up paying more over the course of your loan because you will incur more interest over the long term. But if you simply can’t pay your bills and you are in danger of losing your home or defaulting on your loans, consider student loan consolidation. It will preserve your credit rating, which will likely save you from paying high interest rates on every other loan you will need in the course of your lifetime.

Consider your consolidation options carefully. Find the best interest rate possible by shopping around and asking for the best offer possible. Try to also ask your current lender if they will offer you any incentives to keep you from consolidating with another company. It’s a long shot, but you never know what a bank has up their sleeve to keep your business.

The student loan market is in a state of flux. Like every other lending industry, they have been heavily impacted by the credit crunch. Be a smart consumer when you are hunting for financing to achieve your academic goals.