Since the beginning of 2010, the emphasis of loan business has shifted to the consumer. It is because more credit unions and community banks enter the loan business realm, including the student loan. In the past, the students were dependent upon the loan mechanisms offered by the government institutions, but during the last two years, the students have had more options of loan schemes. Of course, the fact brings out several implications on the students and families.
More Loan Options
With more participants in the business, the students and families have more loan options to consider. The community banks and credit unions offer different loan schemes. The advantage is that the students can compare the rates from some lenders in a simultaneously and choose one with the most competitive offer.
Friendlier Loan Rates
The tighter the competition is, the harder the lenders try to attract the prospective consumers and to build a long-term relationship with the existing ones. Consequently, they offer student loan at lower rates to the students and families. Lowering the loan rates is a logical response to the increasing competition.
Handy Search Tools
Calculating the total loan repayment and monthly payment in a manual way is certainly confusing. Since the booming of loan business industry, more search tools come to help the students and families discover an appropriate loan program. They include loan marketplace site.
The student loan marketplace offers a wide variety of services. They range from loan reviews, loan calculators, to loan guide forums. These are important resources for the students, particularly when they have to select one from hundreds of lenders.
On the other hand, the increasing competition in student loan business and the increasingly reduced rates have brought about some adverse implications. The most important pitfall is the higher risk for loan default. Market research has shown that the number of loan delinquency has been increasing during the last few years, because the students can access the loans easier than they once could.
One of the recently popular options to minimize the risk of loan default is flexible repayment methods, as also found in mortgages. Some lenders allow the students to pay the monthly principal and pay the interests in a bunch after they have been employed. Some others offer the students to pay based on their monthly or annual earnings, namely, income-based loan. Still some others let the student repay the total amount of loan at a certain point of time in the future.
Overall, the students and families still have to consider all of the options carefully. Every student loan scheme has its own advantages and disadvantages. Therefore, they must be able to make a precise decision.