Pursuant to the announcement made by the Federal Finance Minister in his 2009-2010budget speech, a STUDENTS LOAN SCHEME (SLS) for Education was launched by the Government of Pakistan in collaboration with major commercial banks of Pakistan (NBP, HBL, UBL, MCB and ABL). Under the Scheme, financial assistance is provided by way of Interest Free Loans to the meritorious students who have financial constraints for pursuing their studies in Scientific, Technical and Professional education within Pakistan.
The Scheme is being administered by a high powered committee comprising Deputy Governor, State Bank of Pakistan, Presidents of the commercial banks and representative of Ministry of Finance, Government of Pakistan.
ADMINISTRATOR OF THE SCHEME National Bank of Pakistan ELIGIBILITY
Under the scheme the students are eligible to apply for loans provided:
He/She has obtained admission on merit through normal course/procedure in the approved Universities/Colleges of the public sector mentioned hereunder.
He/She falls at the time of admission within the age bracket of:-
For Graduation
Not exceeding 21 Years
For Post-Graduation
Not exceeding 31 Years
For Ph.D
Not exceeding 36 Years
He/She has secured 70% marks in the last public examination. He/She has undertaken the study of the subjects given below. He/She is unable to pursue studies due to financial constraints.
TYPES OF LOAN
The loan facility will be available for entire duration of the study for:-
Procurement of textbooks--- Disbursed directly to the student
REPAYMENT
The maximum period of repayment of loan is 10-Years from the date of disbursement of first installment. The borrower shall repay the loan in monthly installment after six months from the date of first employment or one year from the date of completion of studies, which ever is earlier.
The students desirous of availing loan under the Scheme may apply on prescribed form for financial assistance subject to he or she has got admission on merit through normal procedure in the Universities/ Colleges afore-mentioned.
Applicants are required to submit/send their applications on the prescribed form, duly completed in all respect, to the designated branches indicated against each University/College by the given date. Incomplete application shall not be entertained.
Students who have availed this facility in the last / previous year(s) need not to apply.
If you are preparing to start school and know you must rely on student loans to close the gap between what you can afford and the cost of your education, it's crucial to make informed choices. The loans you take out today will be with you for years to come, and if interest rates soar, your student loan debt could compromise your professional choices, your lifestyle and important financial decisions in your future.
Continue reading to learn how to comparison shop for student loans, the differences between federal and private student loans and the pros and cons of having a parent co-sign.
It’s not surprising that you didn’t realize what you were getting into with your student loan. You were just barely out of your teen years when you signed the paperwork. If you’re like most people, you probably had little understanding of what it means to incur debt and were lulled into a false sense of security with the knowledge that payments will be deferred for years to come. The language can throw you too. What’s the difference between a subsidized and an unsubsidized loan? What about federal vs private loans?, and so on. This lack of understanding can make you the victim of predatory interest rates from private student loan providers. But walking away from your student loan isn’t the same thing as walking away from your home loans. You’d better be aware of the consequences before you decide not to pay.
Put simply, the only way to absolve yourself of your responsibility to pay back your student loan is to die, or to become unable to work due to a serious disability.
From the government’s perspective, defaulting on an obligation to pay back a student loan, which in the case of federal loans, is lent with taxpayers’ dollars is almost as serious as not paying your taxes. While it’s not a federal offense to fail to repay these loans, the government, and government-approved student loan companies have ways of getting money that is owed. That said, what can you do when the debt seems to be too much to bear?
Student Loan Consolidation and Refinance
Federal student loans are locked in based on current rates at the time of each disbursement. This can vary when the loan documents are signed. Private loans typically have a higher rate, and are usually tied to an index such as the Prime Rate or Treasury averages, much like a credit card. These are typically locked in at a fixed rate, and also vary depending on what federal rates are in place.
As a result of loans being disbursed each semester, many students will find themselves with multiple loans at multiple rates. For students wishing to consolidate their loans, they must apply for this with each lender. This will generally result in say, four loans, with varying interest rates, being consolidated into one amount with a common rate.
Refinancing typically means reduced monthly payments with a longer repayment period – usually at a lower interest rate. If you have federal student loans, and private loans, the interest rates will most likely vary greatly, and must be refinanced separately as you cannot combine your federal student loan debt with private student loans. To get the best rate with either type, make sure your credit is in good shape before applying. Your credit will be referenced, and will play a role in refinancing at a preferred rate.
Deferment
Deferring the repayment of loans is typically granted for a number of valid reasons. This postpones the repayment of principal for a specific period of time. This is typically for people who continue to be enrolled in school, disabled students that are undergoing some type of rehabilitation, or those individuals that have left school and are either unemployed, or able to display a marked financial hardship. For subsidized loans, no interest accrues during this time. For private loans, interest will accrue and will be recapitalized (added to the loan balance), thus increasing the size of the loan.
Forbearance
Those without an approved reason for deferment, but are still unable or unwilling to pay, they may be granted forbearance. During this period, payments can be postponed or reduced, but interest will continue to accrue. Interest is not subsidized during a forbearance, as it’s viewed as a voluntary postponement by the debtor. As a result you are responsible for the additional interest accrued while payments to the principal are not being made and it’s added to the loan balance. These are typically granted in twelve month intervals, but can be made in shorter ones such as three or six month intervals.
Alternate Payment Options
As with any debt, there are always options based on an individual’s specific circumstances. Federal lenders are typically easier to work with than private lenders, but there are always options. For the former the options include: extended repayment, graduated repayment, income sensitive repayment, income contingent repayment, and income-based repayment. For more information on these options it’s best to contact your lender and ask about what they can do for you. As with a deferment or forbearance, it is extremely important to contact your lender to discuss this option while your account is in good standing. Should you allow your account to go into default, many of the above options will cease to be available.
Declaring Bankruptcy?
Nope. In nearly every circumstance, student loans are non-dischargeable. Walking away from student loans is not like walking away from a credit card, mortgage or car loan.
So, What are the Consequences?
Collections
Like any substantial debt, the companies you borrowed from will hound you if you stop paying. Then your account will probably be sent to collections. They will call, send letters, and in many cases start contacting your family if you fail to respond to their attempts. If you were a minor when applying for your student loans and your parents co-signed for you, then they can start calling them as well and put pressure on them to make your payments. Additionally, if your account goes to a collections agency, you will be liable for any legal and court costs associated with collection attempts.
Lawsuits
This is more common with private lenders, but students that default on their student loans may be sued for the full amount of their debt owed. Courts will typically enforce this via wage garnishments.
Job Hunting
These days, many companies run a background and credit check during the application process. This is increasingly popular for positions that require even a modest level of responsibility, especially financial responsibility. While bad credit is not always enough to bar getting hired, having defaulted on student loans is typically a red flag. In short, it can communicate a lot to an employer about an applicants’ ethics and track record.
Default Interest Rates
If you neglect to pay your student loans, you will accrue penalties, fees and interest. Your account will eventually adjust to a default rate, and it will continue to accrue interest until action is taken. The process and rates for each type of loan varies. For more information visit the Federal Financial Aid website
Damaged Credit
Going thirty days past due on your student loans will have a negative impact on your credit. So, you can imagine that walking away from your student loans will carry far greater consequences. Most estimate the credit impact of defaulting on student loans to be similar to the hit for a real-estate foreclosure. While debtors’ prisons have not existed for over a century here in the US, defaulting can haunt you and your credit report for around a decade. To make matters worse, if you had a co-signer on your loans, their credit will be similarly affected, unless they make the payments for you. This, of course, could then put a huge strain on personal relationships.
Wage Garnishments
Here’s the biggest difference between other debts (mortgage, auto, and credit cards, for example) and student loan debt: if you fail to pay your student loans, your lender can garnish your wages. Many people move abroad as an attempt to avoid repaying their student loans. For those with an excess of $100k, this can make sense at first. If you move to the EU and find employment there, and pay taxes there, there is no way the US government can garnish these foreign-based earnings. The problem is, if you want to return to the US and work one day, you’ll return to the unsavory reality of a much higher balance – due to accrued fees, penalties and compounded interest – and very likely, a wage garnishment.
Here is a list of what we believe are the ten best free resources on the Web about federal student loans. These web sites will provide you with all the information you need to obtain federal student aid.
This web site is the Free Application for Federal Student Aid. Borrowers of all need levels should apply. This is the first step in the process of funding your college education.
A portal with free information from the U.S. Department of Education on preparing for and funding higher education. There is a ton of information here, with links to various student aid programs, lists of colleges, a scholarship wizard, and much more.
The government recommends that students apply for a PIN before applying for federal student aid. Your PIN serves as your electronic signature that allows you access to your personal records.
This web site is the National Student Loan Database. It is the Department of Education's database of student loan data for borrowers of government-backed loans. If you have old student loans and need some information about them, you can look it up here.
The home page for the U.S. Department of Education's Direct Loan Program. The site contains information for students on applying for direct loans, loan calculators, and information for financial aid professionals.
This site contains information about your existing direct Federal student loans. You can make a direct loan payment, view your payment history, change billing options, set up recurring payments, and download your 1098-E tax document.
This site lets you get an early start on the financial aid process by providing an early estimate of a student's eligibility for student aid. Much of the information used in the form on this site automatically populates the same fields on the FAFSA, so you will save some time when you get to the point of actually applying for student aid.
Not really about student loans, this site is very valuable nonetheless because it provides information about job categories with the highest growth potential. It can help you decide what careers provide the most opportunity. The site is a collaboration between the U.S. Department of Labor and U.S. Department of Education.
After you graduate from high school, your prior care-free days are over. This is the start of the real world; yet if you can't make it to college, there are few chances you’ll land a good job in the future.
Freshman or not, most college students have troubles in dealing with their financial matters. Most of them are doing everything they can to survive their college life, and one of the better ways is by getting a student loan consolidation program.
For those who have no idea of what student loan consolidation is, by definition, it is converting your current multiple student loans to only one manageable loan and hopefully one lower payment.
Student loan consolidation is a major public concern which often leads to private anxiety for most students. The high stress of a college education can be softened by loan consolidation because they greatly help students.
However, these programs are only available to students who have a lot of educational loan debt. Before accepting any financial aid, you should first ask about the options available. After that, then you can decide if you can qualify for a guaranteed state loan, a plus loan, or a private student loan.
When you're in college, you usually incur additional costs like housing, transportation, medical, and other costs which pile up in your mail box immediately after earning your degree. But if you have a student consolidation loan, then you’ll have only one manageable payment required every month.
Student loans differ from other debts like credit card debt. If you don’t want your credit rating that will be affected by your existing loans, then student loan consolidation is one way to organize and manage this debt.
If you have several student loans, you should consolidate them all together. Your remaining balance with other student loans will be paid off, and you will then have one outstanding loan amount with a single lender thereby reducing the number of your monthly loan bills into one.
Here are a few of the benefits that a student loan consolidation program can give you:
you will have a much lower interest rate, that is fixed until the loan is paid off
your monthly payment is usually lowered
flexible options are available for repayment with no fees, pre-payment penalties or extra charges
If you're student loans are nearly paid off, then a consolidation loan is no longer recommended. But if you're re-payment will still take place over a long time, then perhaps it's time to seriously consider a student loan consolidation program.
You can also save money when you choose a loan consolidation. But this really depends on the interest rates and your decision whether to extend the plan or not. You can usually reduce your monthly payment by 54% when you decide to lengthen the repayment plan. Repayment plans can be extended for a maximum period of 30 years but this will primarily depend on the amount of your loan.
The large number of students having problems in repaying their student loans is growing every year. This is the reason why student loan consolidation is the best alternative for most of them. Shouldering debt after graduation and facing up with other financial challenges can be very difficult for the graduates, especially if they are still job-hunting.
Remember that it’s always better to know your responsibilities as part of today’s financial consumer society. And it's not just about your personal rights, but also about the best way you can handle your debt payment responsibilities.
For more money saving advice and tips on finding the best college student loan deals from the top student loan company resources, please visit 1stStudentLoans.com where you will find more information about student loan debt consolidation, getting federal student loans and bad credit student loans
