Your Questions About Save Loan Program

Robert asks…

My community loan program?

I’m trying to figure out if we might qualify for a mycommunity loan? My husband has a middle score of 555 and income of 45,000. My scores are lower and our income would be too much to qualify. We also have about $3,000 to put down. We have both raised our scores over 75 points in last 6 months and will continue to do so, we paid off all our collections and have paid everything on time for the last 6 months.

Please don’t anyone tell me I am in no position to buy a house!
Thanks for your time.

John answers:

With your credit scores that low you will not be able to find a lender that will give you the mortgage. You need to get your scores up above 580 at the VERY minimum but the magic number to underwriting is 620. Keep saving for your house and work on your credit a bit longer. By the way you will need much more than $3000 for down payment because that amount probably wont even cover closing costs.

Lizzie asks…

Unsubsidized vs. Subsidized Student Loans?

I found out that I could get a Subsidized loan at a lesser interest rate than an Unsubsidized loan. Which of these loans has flexable interest rate? i.e. if the rates go up – I will be responsible for paying that high rate? Are any of these choices at a fixed rate of interest? Which type of loan is the best to get?

John answers:


If you are like most students, your school offered you BOTH a subsidized and an unsubsidized loan. Chances are that they believe that you will need both of them.

The Stafford lending program has two annual maximums, a maximum total amount you can borrow, and a maximum amount that can be subsidized each year. You didn’t mention what year of school you are in, but if you’re a dependent freshman, you can borrow a maximum of $5500, of which only the first $3500 can be subsidized.

Many freshman students are offered a $3500 subsidized Stafford and a $2000 unsubsidized loan, providing the total maximum borrowing limit of $5500. You don’t HAVE to take both, but your school expects you to.

The difference between the subsidized and the unsubsidized loan is the interest. All Stafford interest rates are fixed for the life of the loan – for the unsubsidized, the rate is 6.8%, for the subsidized, the rate is 6.0%

Not only is the rate a little lower on the subsidized, but it’s also a form of need-based financial aid. To help save you some money, the government will pay all of the interest on your subsidized loan for as long as you remain in school – and for 6 months after you leave school. That may save you quite a bit of money when it comes time to repay the loan.

The interest on the unsubsidized portion of your loans will “accrue”, and be added to the money that you owe – you’ll start paying the interest when you begin making your monthly loan payments – again – 6 months after you leave school.

If you can get by without taking both of the Stafford loans you were offered – take the subsidized, and reject the unsubsidized. But I suspect (and so does your school), that you’ll need both.

Good luck to you – I hope that helps.

Linda asks…

How do loans work need help?

decided that I want to ask my bank for a loan of $856 to buy a
MacBook how dose it work and when do I have to pay them back please help.

John answers:

That’s a pretty small amount, I would suggest saving up for it instead of getting a loan, but here’s some info about how loans work:
First, you will need to go to your bank and ask a teller or customer service person how to apply. They’ll want to know things like how much money you make, what you want the loan for, if you have any credit cards or other loans. They will also run a credit report to see your credit history.
If they approve your loan, they will likely deposit the money into your bank account. This should be done as soon as the loan is approved which could take couple of days or longer (sometimes a week or two). The bank will want to set up monthly automatic payments from your bank account. This will be a set amount and they will tell you how many months it will take to pay it off. Remember, they will charge you interest so you will in the end pay more money back to them then they lent you, but your monthly payments will include interest.
The interest rate they will offer you will depend on your credit history and how much of a risk they think you are. If you can afford to pay more than the set amount of monthly payments you should ask to set up a shorter term so that you will pay less interest.
Also, some banks won’t give loans for small amounts like you want for your computer (my bank does minimum loans of $5000) so they may suggest you apply for a credit card to buy it instead. This would be ok, but be careful, the interest rates on credit cards are very high and if you don’t pay it off as fast as you can you will waste ALOT of money on the interest.
You could also see if they will give you a line of credit instead. This would have a minimum monthly payment, but are usually more flexible when you want to make extra payments. Sometimes over paying on a loan can cause penalties in the form of extra fees. Lines of credit generally have lower interest rates than credit cards.
If you are a college or university student you could also inquire if your bank offers a Student Credit Card program which usually doesn’t require you to start making payments until after you are finished school, but you can only use it to buy things you need for school.

Sandra asks…

payoff fee for student loan with william d ford?

I need to know my payoff fee for my student loan with william d ford

John answers:

If you saved the paper documentation of the loan, which most likely would have a “contact us” phone number of the lender, William B. Ford Direct Student Loan Program (through the U.S. Dept. Of Education), then look through the papers, find the phone number, telephone it, and ask a real person your questions.

Online, I did find a 2010 PDF form document for a William B. Ford Direct Loan. The toll-free number I saw: 800-557-7392

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Best wishes

Richard asks…

Can anyone estimate what I will be paying monthly for student loans?

My fiance has a student loan of about $90-95,000. His parents are not being strait forward with him and saying that they are paying on the interest at the moment ( he graduates in April of 09) but they have not said how much they are paying. When we asked about how much him and I will be paying monthly they said there is no way for them to know until the final bill is sent to them?

This is frustrating to me, I feel like it is our right to know especially if we will be paying it back!!! Can anyone guesstimate about how much a student loan would be monthly? it is a Sallie-Mae loan if that serves any helpful information.

He is actuallyat Full Sail in Orlando getting his BA in Game Art and Design

John answers:

Ouch, ouch, ouch!

That’s an exceptional amount of money for a student to be in debt – please tell me that your fiance is a graduate in a professional program (law, medicine) and not an undergraduate.

If your fiance’s parents are paying the interest, that’s a great thing, because the accrual of interest on a student loan can really drive up the balance. If they’re actually paying the interest as it becomes due (and they’ve been doing it since the loans were first disbursed), your fiance still owes only the amount that he originally borrowed. That’s going to save him thousands and thousands of dollars on these loans.

As the other respondent suggested, it’s impossible to tell you exactly what the monthly payments on going to be on this debt, because the monthly payments are determined by several factors, not just the amount that you owe.

To give you an accurate number, we’d have to know the interest rate that your fiance is paying on his loans (which probably differs from one loan to the next), we’d need to know if the rate was variable, and if so, how often the rate resets, and at what formula, and most of all, we’d absolutely have to know his payment term. A student loan could have a payment term of anywhere from 10 to 30 years, and that would make a huge difference in determining his monthly payment.

I can tell you this – if your fiance owed $95,000 in Stafford loan debt (and Staffords only), those loans would have a low and fixed interest rate – in fact, the lowest of any regularly encountered educational loans. Cover your eyes, because this “cheapest” form of educational borrowing would carry a monthly payment of $1093 for 10 years.

HOWEVER – keep in mind that that’s a scenario where the interest has been accruing from day one. How much interest? Oh, about $36,000. See? I told you that if mom and dad have been paying the interest, this will save your fiance a ton of money. Depending on whether they’ve faithfully paid the interest, and how much they’ve paid, your actual payment could be several hundred dollars lower.

Remember, though, I warned you that that example was based on a very low fixed interest rate Stafford loan. If your fiance has private loans, his interest rate would be considerably higher.

Remember, also, that the longer the payment period, the less you pay every month – however, you’ll pay it a lot longer, and a lot more interest will accrue as a result.

Sallie Mae can help you estimate the eventual payment on his loans – but as I noted, if they’re variable rate loans, no one can predict where the prime rate is going, so it will be impossible to come up with anything more than an educated guess.

Borrowing $95,000 is a tremendous gamble that the education that you’re buying with that money will pay you a return that will allow you to service that kind of debt. I hope your fiance chose wisely, with a wary eye turned to the likely income that he will earn when he gets out of school. If he’s finishing his residency in anesthesiology, he’s probably okay, but if he’s getting ready to graduate with a bachelor’s in American history, um…well…I don’t want to judge people I don’t know.

Good luck to you and to your fiance. I hope it all works out for you in the end.

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