Professor of Entrepreneurship and Director of the Centre for Applied Economics at the Lagos Business School ((Pan African University), Prof. Pat Utomi, agreed that the on-going reforms in the Nigerian banking system by the apex bank is a good initiative but stressed that it should be carefully carried out so as to avoid complicating the issues in a bid to correcting them. He spoke to JUMOBI ADEGBITE. Excerpts.
How would you assess the on-going reforms in the Central Bank of Nigeria?
AS you know, the process of reforming the country is very dear to me. I believe that any process that strengthens our institutions in the direction of reforms is a direction that must be supported by all. My take has always been on how the Nigerian economy could be a sustained performance, and this depends on how we strengthen several institutions among which is the financial system. So, every attempt to strengthen it should be welcomed by well-meaning people.
Of course, there would always be matters of differences in style and general thrust of reform initiatives. What is important, at this point, is to always bear in mind the capacity issues in the system. There is need for us to ensure that we have capacity to sustain whatever we are doing without creating circumstances that are worse than what we are trying to solve. This is a delicate balance in political issues that I think many countries have been challenged with.
I would like to state a particular example of a great policy student, Daniel Patrick Moynihan - a professor in Harvard University and a former Senator in the United States of America, who preceded Hilary Clinton in the U.S Senate. When he was a professor at Harvard, he used to make a point about the need for care to avoid Heterogenic Policy. Heterogenic is a term used in medicine, where a doctor tries to treat a disease and the treatment itself becomes worse than the disease, which eventually, leads to the death of the patient. In other words, the patient dies as a result of the treatment and not the disease. This is usually what happens to our policies. Public policies, therefore, need to be sensitive to the possibility of Heterogenic complications. Taking a cue from this, I fully support the goals and thrust of making the system more transparent and predictable - the foundation upon which stability is built.
However, we must not give the impression that entrepreneurial banking should be feared, as it could frighten people out of being entrepreneurial, and consequently lead to lesser wealth.
The most important thing behind reforms is the motive of the lenders and borrowers. When there is a motive of tracking the intention to abuse the system, such system must have adequate arrangements to deal with it strictly. Undoubtedly, banking business is risk-taking and there are going to be risks that would fail. It, therefore, becomes imperative for us to understand that the fact that a loan went sour is not a crime of its own.
If we make people believe that a wry loan is a crime, then, no real entrepreneur will dare a loan, and no growth would take place. That is why we should have capacity development issues to enable regulators ensure that what is going on is not abused, and that the risk appetite is within some context. Without this, some people, of course, could be wild in the kind of risk they take.
One reason I was very thrilled to see Lamido Sanusi become governor of Central Bank, is that he came from a risk management tradition and that he would do things that would emphasise a greater focus on risk management. I am, therefore, not surprised that he has done this because it is the direction I thought he would go.
Source
Wednesday, October 28, 2009
Thursday, October 15, 2009
Rudd demeans himself over history
They were financial deregulation, fundamental taxation reform, dismantling of high tariff protection, privatisation of government-owned commercial bodies and a freer labour market.
The blueprint for financial reform came from the Campbell inquiry, set up by me, as treasurer. The reform process here started with the Fraser government, through the introduction of a tender system for the sale of Treasury notes and Treasury bonds, described by the former Reserve Bank Governor Ian Macfarlane, in his 2006 Boyer lectures, as "second only in importance to the float of the Australian dollar in 1983".
The Fraser government also began the politically difficult task of deregulating interest rates, by removing all interest-rate ceilings on bank deposits.
Reversing Labor's pre-1983 opposition to financial deregulation, the Hawke government floated the dollar, admitted foreign banks and otherwise broadly implemented Campbell's recommendations. The float of the dollar was driven by Bob Hawke as prime minister and the then governor of the Reserve Bank, Bob Johnston. Treasury, at that time, opposed the float.
After a number of false starts fundamental taxation reform, involving as it had to the introduction of a broad based goods and services tax, was finally achieved by the Howard government in 2000.
The Hawke government, with Paul Keating as treasurer, was responsible for largely dismantling Australia's system of protective tariffs. The Keating government privatised Qantas and commenced the privatisation of the Commonwealth Bank. The Howard government privatised Telstra.
In the early 1990s the Keating government introduced a limited form of enterprise bargaining. I say limited because under these changes an enterprise agreement concluded between an employer and its non-union workforce still had to run the gauntlet of the Industrial Relations Commission, where any union having coverage in the relevant workforce area could oppose the agreement, even if none of its members were parties to the agreement.
The legislation giving effect to this change also introduced the unfair dismissal law, constantly criticised by small businesses in Australia.
The Howard government greatly expanded deregulation of the labour market; first through the introduction of Australian Workplace Agreements in 1996, and in 2005 with the removal of unfair dismissal entitlements affecting firms employing fewer than 100 people and the streamlining of the agreement making process.
Importantly, in 1996 it restored Sections 45D and E to the Trade Practices Act. These provided protection to businesses against predatory secondary-boycott union behaviour.
The Rudd government has not only overturned the Howard government's industrial relations changes (excepting the restoration of Sections 45D and E), but has also imposed a further level of regulation, taking our workplace relations system back to the late 1980s.
The other highly relevant fact, in this almost 30-year reform process, was the different responses of the two sides of politics when they were in opposition.
The Liberal and National parties supported the reforms initiated by the Hawke and Keating governments.
When the dollar was floated, I, as opposition treasury spokesman, described that decision as "correct and courageous". The then opposition strongly supported the Hawke government's tariff reduction program.
As prime minister I would, from time to time, praise what the Hawke government had done with financial deregulation and tariff reform.
Privatisation of Qantas and the Commonwealth Bank became Coalition policy in the mid 1980s, and, as both Keating and Kim Beazley will know, the legislation privatising the bank would not have passed through the Senate in 1995 without Coalition support.
By contrast the Labor Party, in opposition, fought tooth and nail against the reform attempts of the Coalition. Kevin Rudd called the introduction of the GST a "day of fundamental injustice".
Having promoted the privatisation of Qantas and the Commonwealth Bank in government, Labor in opposition consistently opposed the privatisation of Telstra, which was not finally achieved until after the Coalition won control of the Senate following the 2004 election.
Predictably, Labor opposed all of the Coalition's industrial relations changes.
Labor negativity in opposition was not confined to the five major reforms I have cited. It also tried to thwart the fiscal consolidation process, commenced in Peter Costello's first budget in 1996.
That budget, the best and most courageous in a generation, imposed real reductions in government spending. Opportunistically, Labor opposed most of these measures.
That fiscal consolidation process, which totally eliminated net Commonwealth debt and produced a string of budget surpluses, has proved critical to Australia escaping the worst effects of the global financial plunge.
Surely not even Rudd will dispute that he inherited from the former government a fiscal position and a framework for prudential regulation of the banking system second to none in the western world.
It is tempting for a political leader such as Rudd to highlight his party's virtues and ignore those of other parties. Last Monday, however, the Prime Minister carried political mendacity to new heights, when he launched Paul Kelly's book The March of Patriots.
His analysis of the economic reform process in Australia since 1980 was partisan, inaccurate and lacked any semblance of objectivity.
In one fashion or another we are all political warriors, but we have a superior obligation to the national interest. That obligation obtains in opposition as well as in government.
No side of Australian politics has a monopoly of either virtue or merit. Each according to its own value system has attempted to improve the lot of Australians.
In failing to acknowledge this last Monday, my successor diminished himself, and not the Liberal and National Parties.
Source
The blueprint for financial reform came from the Campbell inquiry, set up by me, as treasurer. The reform process here started with the Fraser government, through the introduction of a tender system for the sale of Treasury notes and Treasury bonds, described by the former Reserve Bank Governor Ian Macfarlane, in his 2006 Boyer lectures, as "second only in importance to the float of the Australian dollar in 1983".
The Fraser government also began the politically difficult task of deregulating interest rates, by removing all interest-rate ceilings on bank deposits.
Reversing Labor's pre-1983 opposition to financial deregulation, the Hawke government floated the dollar, admitted foreign banks and otherwise broadly implemented Campbell's recommendations. The float of the dollar was driven by Bob Hawke as prime minister and the then governor of the Reserve Bank, Bob Johnston. Treasury, at that time, opposed the float.
After a number of false starts fundamental taxation reform, involving as it had to the introduction of a broad based goods and services tax, was finally achieved by the Howard government in 2000.
The Hawke government, with Paul Keating as treasurer, was responsible for largely dismantling Australia's system of protective tariffs. The Keating government privatised Qantas and commenced the privatisation of the Commonwealth Bank. The Howard government privatised Telstra.
In the early 1990s the Keating government introduced a limited form of enterprise bargaining. I say limited because under these changes an enterprise agreement concluded between an employer and its non-union workforce still had to run the gauntlet of the Industrial Relations Commission, where any union having coverage in the relevant workforce area could oppose the agreement, even if none of its members were parties to the agreement.
The legislation giving effect to this change also introduced the unfair dismissal law, constantly criticised by small businesses in Australia.
The Howard government greatly expanded deregulation of the labour market; first through the introduction of Australian Workplace Agreements in 1996, and in 2005 with the removal of unfair dismissal entitlements affecting firms employing fewer than 100 people and the streamlining of the agreement making process.
Importantly, in 1996 it restored Sections 45D and E to the Trade Practices Act. These provided protection to businesses against predatory secondary-boycott union behaviour.
The Rudd government has not only overturned the Howard government's industrial relations changes (excepting the restoration of Sections 45D and E), but has also imposed a further level of regulation, taking our workplace relations system back to the late 1980s.
The other highly relevant fact, in this almost 30-year reform process, was the different responses of the two sides of politics when they were in opposition.
The Liberal and National parties supported the reforms initiated by the Hawke and Keating governments.
When the dollar was floated, I, as opposition treasury spokesman, described that decision as "correct and courageous". The then opposition strongly supported the Hawke government's tariff reduction program.
As prime minister I would, from time to time, praise what the Hawke government had done with financial deregulation and tariff reform.
Privatisation of Qantas and the Commonwealth Bank became Coalition policy in the mid 1980s, and, as both Keating and Kim Beazley will know, the legislation privatising the bank would not have passed through the Senate in 1995 without Coalition support.
By contrast the Labor Party, in opposition, fought tooth and nail against the reform attempts of the Coalition. Kevin Rudd called the introduction of the GST a "day of fundamental injustice".
Having promoted the privatisation of Qantas and the Commonwealth Bank in government, Labor in opposition consistently opposed the privatisation of Telstra, which was not finally achieved until after the Coalition won control of the Senate following the 2004 election.
Predictably, Labor opposed all of the Coalition's industrial relations changes.
Labor negativity in opposition was not confined to the five major reforms I have cited. It also tried to thwart the fiscal consolidation process, commenced in Peter Costello's first budget in 1996.
That budget, the best and most courageous in a generation, imposed real reductions in government spending. Opportunistically, Labor opposed most of these measures.
That fiscal consolidation process, which totally eliminated net Commonwealth debt and produced a string of budget surpluses, has proved critical to Australia escaping the worst effects of the global financial plunge.
Surely not even Rudd will dispute that he inherited from the former government a fiscal position and a framework for prudential regulation of the banking system second to none in the western world.
It is tempting for a political leader such as Rudd to highlight his party's virtues and ignore those of other parties. Last Monday, however, the Prime Minister carried political mendacity to new heights, when he launched Paul Kelly's book The March of Patriots.
His analysis of the economic reform process in Australia since 1980 was partisan, inaccurate and lacked any semblance of objectivity.
In one fashion or another we are all political warriors, but we have a superior obligation to the national interest. That obligation obtains in opposition as well as in government.
No side of Australian politics has a monopoly of either virtue or merit. Each according to its own value system has attempted to improve the lot of Australians.
In failing to acknowledge this last Monday, my successor diminished himself, and not the Liberal and National Parties.
Source
Monday, September 28, 2009
Bad Credit Mortgage Refinance - Consolidate Debts and Improve Credit
Homeowners apply for a mortgage refinance for two primary purposes: to lower interest rate and debt consolidation. If choosing the second option, a cash-out refinance will provide the money needed.
With a cash-out refinance option, homeowners may refinance their mortgage, while borrowing extra money from their equity. The borrowed money is wrapped into the new mortgage amount, which increases the principle balance. At closing, the homeowner receives a lump sum of money for paying off debts.
Benefits of Consolidating Debts with a Refinance
If attempting to payoff credit cards and other debts, it can take several years. Because of high finance fees, it may also take a long time for balances to reduce. In many cases, a lump sum is necessary for quick repayment.
The money received from the refinancing could be used to eliminate credit card balances, payoff auto loans, reduce student loans, and so forth. Once consumer debts are paid in full, homeowners will also notice a credit improvement. Of course, simply paying off debts will not result in an immediate credit improvement, especially if the repayment followed a bad credit history. Nonetheless, if the homeowner adopts new credit habits, their credit score will gradually improve.
Finding a Bad Credit Refinance Lender
When shopping for a refinance lender, contact your existing mortgage lender and request a quote. Depending on the level of bad credit, current mortgage lender may not approve your request. Nevertheless, sub prime lenders are eager to assist. By means of a mortgage broker request information and quotes from sub prime lenders. Compare and contrast quotes, and then choose the lender offering the lowest rate. Here is a recommended Bad Credit Mortgage Refinance Lender online. It's important to use a reputable lender online to make sure your personal information is secure.
With a cash-out refinance option, homeowners may refinance their mortgage, while borrowing extra money from their equity. The borrowed money is wrapped into the new mortgage amount, which increases the principle balance. At closing, the homeowner receives a lump sum of money for paying off debts.
Benefits of Consolidating Debts with a Refinance
If attempting to payoff credit cards and other debts, it can take several years. Because of high finance fees, it may also take a long time for balances to reduce. In many cases, a lump sum is necessary for quick repayment.
The money received from the refinancing could be used to eliminate credit card balances, payoff auto loans, reduce student loans, and so forth. Once consumer debts are paid in full, homeowners will also notice a credit improvement. Of course, simply paying off debts will not result in an immediate credit improvement, especially if the repayment followed a bad credit history. Nonetheless, if the homeowner adopts new credit habits, their credit score will gradually improve.
Finding a Bad Credit Refinance Lender
When shopping for a refinance lender, contact your existing mortgage lender and request a quote. Depending on the level of bad credit, current mortgage lender may not approve your request. Nevertheless, sub prime lenders are eager to assist. By means of a mortgage broker request information and quotes from sub prime lenders. Compare and contrast quotes, and then choose the lender offering the lowest rate. Here is a recommended Bad Credit Mortgage Refinance Lender online. It's important to use a reputable lender online to make sure your personal information is secure.
Tuesday, September 1, 2009
Coming up Short for Fall's Tuition Bill? Sallie Mae OffersLast-Minute Options to Help Families Pay for College
RESTON, Va., Aug 03, 2009 (BUSINESS WIRE) ----In these economic times, families of college students might find themselves with less money in their pockets to pay this fall's college tuition. Sallie Mae, the nation's leading saving, planning and paying for education company, offers several affordable options available in time to meet the cost of higher education.
"When times are tight, a college degree continues to pay long-lasting dividends," said Albert L. Lord, vice chairman and CEO, Sallie Mae. "With unemployment for college graduates at half that of the population at large, a college degree remains one of the best investments a family can make. The good news is that there is a variety of options to help cover the cost."
Sallie Mae's free Education Investment Planner, available at www.SallieMae.com/invest, can help college-bound students and their families compare the costs of 5,500 colleges and universities, build a customized plan to pay for college, and explore various funding options.
After maximizing scholarships, grants and federal student loans, Sallie Mae advises families to consider these solutions to a last-minute college financing gap:
-- Tuition Payment Plans
Tuition payment plans are available at hundreds of college campuses and offer families an alternative to making a large, lump-sum payment due at the start of the term. Sallie Mae's TuitionPay is an interest-free, monthly installment option that saves families money by reducing the amount they need to borrow and allows families to more easily use their current income for education expenses. Visit www.SallieMae.com/tuitionpay for more information.
Source
"When times are tight, a college degree continues to pay long-lasting dividends," said Albert L. Lord, vice chairman and CEO, Sallie Mae. "With unemployment for college graduates at half that of the population at large, a college degree remains one of the best investments a family can make. The good news is that there is a variety of options to help cover the cost."
Sallie Mae's free Education Investment Planner, available at www.SallieMae.com/invest, can help college-bound students and their families compare the costs of 5,500 colleges and universities, build a customized plan to pay for college, and explore various funding options.
After maximizing scholarships, grants and federal student loans, Sallie Mae advises families to consider these solutions to a last-minute college financing gap:
-- Tuition Payment Plans
Tuition payment plans are available at hundreds of college campuses and offer families an alternative to making a large, lump-sum payment due at the start of the term. Sallie Mae's TuitionPay is an interest-free, monthly installment option that saves families money by reducing the amount they need to borrow and allows families to more easily use their current income for education expenses. Visit www.SallieMae.com/tuitionpay for more information.
Source
Bulk Of TALF Eligible Deals Sold Ahead Of Loan Deadline
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- The bulk of the deals that emerged ahead of a loan application deadline for a Federal Reserve program have sold, according to people familiar with the bonds.
Issuers including General Electric Co. (GE), SLM Corp. (SLM), Wheels Inc. and First National Bank of Omaha sold newly created bonds backed by loans for education, credit card debt and fleet leases.
The Fed's Term Asset-Backed Securities Loan Facility, or TALF, launched in March, offers investors loans at attractive rates to buy newly created asset- backed securities. Over $8 billion in deals surfaced ahead of the sixth loan deadline on Thursday. Last month, that figure was a little over $12 billion and in June, it was $16.4 billion.
The slight dip can be attributed to the traditional summer lull, said Jim Harrington, a senior portfolio manager at Ryan Labs Asset Management in New York.
Most of the consumer loan-backed deals sold this year were eligible for TALF, which helped revitalize the securitization market and improved the availability of credit for consumers.
Initially, the program was viewed as being user-unfriendly but the Fed's cheap loans drew investors who overcame lengthy documentation and other implementation issues to participate. Now, many hope it is extended past its scheduled expiration at the end of this year.
The Fed has recently also begun to offer attractive financing for new and existing commercial mortgage-backed loans in an effort to revive the commercial real estate sector. The next loan application deadline for the commercial- property portion is Aug. 20.
"Many of the TALF funds are re-allocating their dollars to CMBS," said Dan Nigro, senior portfolio manager at Dynamic Credit Partners in New York.
That said, no new CMBS deals have emerged in more than a year, though some are in the works.
On Wednesday, General Electric sold two deals eligible for TALF financing: a $ 1.75 billion credit card loan-backed deal dubbed GEMNT 2009-2, was originally $ 1.25 billion. The single-tranche deal, with a duration of 2.93 years, sold at 155 basis points over a short-term benchmark. Joint leads on the bond are RBS and Credit Suisse.
The other deal, a $500 million deal, backed by dealer floorplans and dubbed GE Dealer Floorplan Master Note Trust 2009-1, has a duration of 2.94 years. The single-tranche deal sold at 168 basis points over one-month London Interbank Offered Rate, or Libor.
SLM Corp., better known as Sallie Mae, sold its $1.68 billion deal Wednesday. The student loan-backed deal sold at 25 basis points over prime rate, a benchmark. The single-tranche deal has a duration of 3.86 years. Joint leads are Barclays, Bank of America and JP Morgan.
CNH Capital America LLC sold a dealer floorplan-backed deal on Wednesday, according to a person familiar with the matter. The $583.25 million deal sold at 170 basis points over one-month Libor. The bond was led by RBS and Banc of America Securities.
World Financial Network sold three deals on Wednesday. The first, a $500 million deal of which the top-rated tranche is worth $395 million, sold at 165 basis points over a short-term benchmark. This portion is eligible for TALF loans.
Source
NEW YORK -(Dow Jones)- The bulk of the deals that emerged ahead of a loan application deadline for a Federal Reserve program have sold, according to people familiar with the bonds.
Issuers including General Electric Co. (GE), SLM Corp. (SLM), Wheels Inc. and First National Bank of Omaha sold newly created bonds backed by loans for education, credit card debt and fleet leases.
The Fed's Term Asset-Backed Securities Loan Facility, or TALF, launched in March, offers investors loans at attractive rates to buy newly created asset- backed securities. Over $8 billion in deals surfaced ahead of the sixth loan deadline on Thursday. Last month, that figure was a little over $12 billion and in June, it was $16.4 billion.
The slight dip can be attributed to the traditional summer lull, said Jim Harrington, a senior portfolio manager at Ryan Labs Asset Management in New York.
Most of the consumer loan-backed deals sold this year were eligible for TALF, which helped revitalize the securitization market and improved the availability of credit for consumers.
Initially, the program was viewed as being user-unfriendly but the Fed's cheap loans drew investors who overcame lengthy documentation and other implementation issues to participate. Now, many hope it is extended past its scheduled expiration at the end of this year.
The Fed has recently also begun to offer attractive financing for new and existing commercial mortgage-backed loans in an effort to revive the commercial real estate sector. The next loan application deadline for the commercial- property portion is Aug. 20.
"Many of the TALF funds are re-allocating their dollars to CMBS," said Dan Nigro, senior portfolio manager at Dynamic Credit Partners in New York.
That said, no new CMBS deals have emerged in more than a year, though some are in the works.
On Wednesday, General Electric sold two deals eligible for TALF financing: a $ 1.75 billion credit card loan-backed deal dubbed GEMNT 2009-2, was originally $ 1.25 billion. The single-tranche deal, with a duration of 2.93 years, sold at 155 basis points over a short-term benchmark. Joint leads on the bond are RBS and Credit Suisse.
The other deal, a $500 million deal, backed by dealer floorplans and dubbed GE Dealer Floorplan Master Note Trust 2009-1, has a duration of 2.94 years. The single-tranche deal sold at 168 basis points over one-month London Interbank Offered Rate, or Libor.
SLM Corp., better known as Sallie Mae, sold its $1.68 billion deal Wednesday. The student loan-backed deal sold at 25 basis points over prime rate, a benchmark. The single-tranche deal has a duration of 3.86 years. Joint leads are Barclays, Bank of America and JP Morgan.
CNH Capital America LLC sold a dealer floorplan-backed deal on Wednesday, according to a person familiar with the matter. The $583.25 million deal sold at 170 basis points over one-month Libor. The bond was led by RBS and Banc of America Securities.
World Financial Network sold three deals on Wednesday. The first, a $500 million deal of which the top-rated tranche is worth $395 million, sold at 165 basis points over a short-term benchmark. This portion is eligible for TALF loans.
Source
Thursday, August 20, 2009
Find Out How Student Loan Consolidation Can Help You
College education as we all know can get expensive, which is why many students pursuing higher education turn to student loans for funds. Although this will get you through college, the bad news is that once you graduate you have to pay all the loans back. This is where student loan consolidation can help you.
After graduation, you will have to put all your energy into finding a job that is preferably in your major area of study. You might even need to relocate for that new job which means more work including finding a proper place to stay. And it might become difficult for you to focus on your work, when at the back of your mind you know that you will need to pay back your student loan.
When you are still in college, you need not worry about paying back the loans but it is always wise to have an idea about how you can repay the loans once you are out of college.
For those who are thinking about filing for bankruptcy, well you might want to think again. Federal student loans are excused from being discharged when the borrower files for bankruptcy. Your student loans are still going to exist after declaring bankruptcy and you will need to pay them back one way or the other.
A student loan consolidation program will take your student loans as well as any other bills such as outstanding credit card bills and put them into a lump sum, which you can take to a student loan consolidation company. This is also referred to as debt consolidation. The company then will work out a definite payment plan according to your present budget. If you dont already have a proper budget, they will help you make one.
You will have to make one payment to the company every month and the company will in turn make the payments to your creditors as well as towards your student loans. When you are considering consolidation, keep in mind that its always wiser to go for fixed rate interests rather than floating rate.
Doing this will help reduce the risk of uncertainty and this way you will have a clear idea about the amount of money you will have to repay. This is why you should always find a lender who is offering low fixed prices. It is also important to fix proper payment periods that will not put any pressures on you.
It is recommended that a student who has already paid half their debts should refrain from opting for a consolidation as it can reset the loan process and can make him pay more than what was preplanned. If you are uncertain about this aspect of it, you should contact the source of your student loan to find out how this might work with your current loan and situation.
Student loan consolidation is not exactly a loan; they dont give you a lump sum to pay off your student loans. What they do is to distribute the money you send every month to make the necessary payments. However, it is important not to miss payments because this will put in an even worse state than before.
So, to conclude, consider a student loan consolidation program, especially if you are still in college, so that when you graduate, you can plan your future without having to deal with any messy loan repayment hassles.
Source
After graduation, you will have to put all your energy into finding a job that is preferably in your major area of study. You might even need to relocate for that new job which means more work including finding a proper place to stay. And it might become difficult for you to focus on your work, when at the back of your mind you know that you will need to pay back your student loan.
When you are still in college, you need not worry about paying back the loans but it is always wise to have an idea about how you can repay the loans once you are out of college.
For those who are thinking about filing for bankruptcy, well you might want to think again. Federal student loans are excused from being discharged when the borrower files for bankruptcy. Your student loans are still going to exist after declaring bankruptcy and you will need to pay them back one way or the other.
A student loan consolidation program will take your student loans as well as any other bills such as outstanding credit card bills and put them into a lump sum, which you can take to a student loan consolidation company. This is also referred to as debt consolidation. The company then will work out a definite payment plan according to your present budget. If you dont already have a proper budget, they will help you make one.
You will have to make one payment to the company every month and the company will in turn make the payments to your creditors as well as towards your student loans. When you are considering consolidation, keep in mind that its always wiser to go for fixed rate interests rather than floating rate.
Doing this will help reduce the risk of uncertainty and this way you will have a clear idea about the amount of money you will have to repay. This is why you should always find a lender who is offering low fixed prices. It is also important to fix proper payment periods that will not put any pressures on you.
It is recommended that a student who has already paid half their debts should refrain from opting for a consolidation as it can reset the loan process and can make him pay more than what was preplanned. If you are uncertain about this aspect of it, you should contact the source of your student loan to find out how this might work with your current loan and situation.
Student loan consolidation is not exactly a loan; they dont give you a lump sum to pay off your student loans. What they do is to distribute the money you send every month to make the necessary payments. However, it is important not to miss payments because this will put in an even worse state than before.
So, to conclude, consider a student loan consolidation program, especially if you are still in college, so that when you graduate, you can plan your future without having to deal with any messy loan repayment hassles.
Source
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