SOURCE: NextStudent

September 27, 2007 14:28 ET

Even as Private Student Loan Lenders Eliminate Rate Discount Programs, NextStudent Consolidation Loans Could Still Cut Student Loan Payments Nearly in Half

PHOENIX, AZ--(Marketwire - September 27, 2007) - The recently passed College Cost Reduction Act of 2007, which cuts some $21 billion in subsidies to private student loan lenders, has many private lenders like NextStudent, a leading Phoenix-based education funding company, scaling back or eliminating their rate reduction incentives on federal student loans. Even though new federal loans (those disbursed on or after October 1, 2007) will no longer qualify for NextStudent's previously available rate discount packages, borrowers can still take advantage of the financial benefits offered by federal student loans.

Federal student loans like Stafford loans, Grad PLUS loans for graduate students, and PLUS loans for parents all offer low, fixed interest rates, flexible repayment options, and no application fees. These federal loans are also all eligible for student loan consolidation. By consolidating their federal education loans, students and parents could cut their monthly student loan payments almost in half. A consolidation loan could also give student loan borrowers up to 20 more years to repay, with the added convenience of replacing multiple student loans and monthly bills with one easy-to-manage loan and a single monthly payment.

As private lenders change or eliminate their borrower benefits on federal student loans, NextStudent encourages all student loan borrowers to stay informed about lender rate changes and to explore all their financial aid options. To help parents and students with their questions about what kinds of financial aid may be available to them, NextStudent offers a free online guide to understanding the different types of financial aid, both private and federal, that can help students looking to finance their college or graduate school education.

Students and parents looking for educational financial aid will find two main categories: need-based and non-need-based aid.

Need-based aid -- financial aid that's awarded on the basis of financial need -- is given out according to a student's financial situation. For dependent undergraduate students, a determination of financial need includes consideration of their parents' financial situation as well as their own. Need-based aid includes the Federal Work-Study Program, Federal Pell Grants, Federal Perkins Loans and subsidized Federal Stafford Loans.

Non-need-based aid is awarded without consideration given to the student's financial situation. If students meet the eligibility requirements, they can qualify for non-need-based aid, regardless of their own or their parents' income. Merit-based scholarships and credit-based loans (which require a review of the borrower's credit history) are examples of non-need-based aid. Non-need-based federal aid programs include unsubsidized Stafford loans, PLUS loans for parents and Grad PLUS loans for graduate students.

Private loans, like NextStudent's Private Student Loans, which are available year-round, are also a form of non-need-based aid. But NextStudent reminds borrowers that federal student loans usually have more attractive terms than private student loans, so students and their parents should look into their federal financing options first.

For non-need-based student loans that are credit-based (like PLUS, Grad PLUS, and NextStudent Private Student Loans), although applicants won't be disqualified for earning too much income, they may need to meet minimum income requirements to qualify.

The money students receive in student loans, whether need-based or non-need-based, will need to be repaid, with interest. NextStudent encourages families to also look into their students' scholarship and work-study opportunities for both need-based and non-need-based financing options that do not need to be repaid. The NextStudent Scholarship Search Engine, an online database of over 5.9 million scholarships worth over $16 billion, is completely free of charge and offers an excellent starting point for students wanting to find free scholarship money.

About NextStudent

NextStudent, Federal Lender Code 834051, is dedicated to helping students and their families find affordable ways to pay for college. NextStudent offers one-on-one education finance counseling and has a portfolio of highly competitive education finance products and services, including a free online scholarship search engine, federally guaranteed parent and student loans, private student loans, both federal and private student loan consolidation programs, and college savings plans.

For more information about NextStudent and its student loan programs, please visit the NextStudent website at

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