graduation

Age Limit for Student Loans

To obtain a student loan you must be older than 18 years of age. Even if you are 18 years old, some banks and financial institutions will require you to have a co-signor on the loan. Many states in America do not permit issuance of loans to individuals 18 years or lesser.

This is because loans have an added charge in the form of interest that has to be paid over and above the principal component. Further, when a bank or financial institution lends you money, they need comfort over the fact that they will be getting it back. Therefore, there is a mandatory requirement of a co-signor or a security (if you are over 18 years of age).

The age limit of above 18 years of age applies to federal loans as well. That is why the federal government has Stafford loans that are issued to the parents of dependent students.

Age Limit for Grants

Grants are, literally, free money. They never have to be repaid. The various grants offered by the federal government are-

1. The Pell grant
2. The FSEOG
3. The FWS grant
4. The Teach grant

For these grants there is no age limit. These are all for graduate or post secondary educational levels.

However, for the children of military personnel killed in Iraq or Afghanistan after September 11, 2011, there is a criterion that states that at the time of death of their parent or legal guardian, the child must be below the age of 24 years or must be enrolled at a higher education institution on part time basis.

The age limit for private grants offered by many colleges and universities needs to be identified by the students. Every college or university has a specified age limit to qualify for the grant. Enquire with the admissions office about the same or the information would also be available on their website.

Consolidating your private student loans or any student loans for that matter can make financial sense if you get a better rate of interest and your term of the loan remains unchanged or better is reduced. This is a crucial factor in deciding if consolidating your loans is worth it and if it makes financial sense.

If however your consolidating company offers to lower your monthly payments but increase your repayment term then purely from a financial perspective this does not make it a good deal for you. You don’t know have to know much about loans to understand what this means – the longer you stretch your repayment, the more interest you pay on your loan.

For the sake of argument, let’s assume that you are hoping to consolidate $30,000 of private loans that will enter a 10-year repayment at 8.9% interest. Right now, you would be looking at 120 payments of $378.41 a month. Consolidate that $30,000 into a 20-year loan at the same interest rate, and your payment drops to $267.99 a month – a savings of $110.42 a month. I’m sure you could put that extra $110 to good use.

But here’s the catch – over 10 years, your total payments will be $45,408.36. How’s that compare to 20 years, where your total payments will be $64,318.53?

What’s the privilege of cutting your monthly payment by $110 going to cost you? $19,000. Wow, that’s the list price on a Honda Civic, a Mini or a Pontiac G5.

Make that same deal on your government loans, and you’re looking at another $15,000 in extra interest. That’s quite a lot to pay. Before you consider consolidation, take a look at your lender’s other options, including Income Contingent Repayment, extended repayment, graduated repayment, and the brand new Income-Based Repayment. Do the math, and see which of these might make the most sense for you.

Don’t be in a hurry to consolidate or consolidate for the sake of it, there are several options available to you and unless you do your due diligence, it will prove to be a very costly decision.