Student loans are some of the fastest growing loan categories in Jamaica. Student loans are designed to help students pay for college or university tuition, books, and living expenses. It may differ from other types of loans in that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in school (currently available through the student loans bureau – SLB).
While everybody would like to go to college debt-free, student loans are unfortunately a necessary evil in today’s educational world. You can make the process of taking out a student loan to pay for school less painful by educating yourself about the different types of student loans available.
Types of Student Loans
Student loans can be generally broken into the categories of secured and unsecured student loans. Secured student loans are loans students borrow from lending agencies, with credit requirements, interest rates and repayment schedules set by the lenders with a guarantor and/or with asset security.
Unsecured student loans, on the other hand, are available for both students and parents, and have uniform rates and requirements without a security or guarantor – these are often short term loans. The most common unsecured student loans are offered through the SLB or through some colleges.
The Student Loan Bureau (SLB)
The Students’ Loan Bureau offers student loan financing at the best rate of interest. With a 9% interest rate, long moratorium and full tuition financing. They can be classified are the premier student loan provider in Jamaica.
The SLB also allow students to benefit from grant assistance to help cover school related expenses. The student loan bureau states that they work in close partnership with local approved universities and colleges to ensure that students have less running around and more time to commit to your studies.
Student Loan Providers in Jamaica
- The Student Loan Bureau (SLB)
- CIBC First Caribbean International Bank
- National Commercial Bank (NCB)
- COK Sodality Credit Union Ltd
- JN Small Business Education Loan
- RBC Royal Bank
- Sagicor Jamaica Ltd
- Jamaica Loan Shop
Winning Student Loan Application Strategies
“A penny saved, is a penny earned!”
In today’s Jamaican economy, saving as many dollars as possible is more important than ever. Savvy consumers price shop for everything – even milk. The same should be true for education or student loans.
There are a number of banks and other lenders that make credit-based education loans available to students, but how do you actually get the best rate? Well, of course we’ll tell you the best place to start is by comparing student loans using Jamaica’s own Rate-Bee.com. However, we are leaving the choice of loan provider up to you, the borrower.
Compare Student Loans:
Student loan comparison is the first step you should take along the path to choosing a lender and loan program. It may not seem like much of a secret, but in actuality it turns out that it’s really hard to compare individual student loan programs without using a tool like a spread sheet or a online loan rate comparison services like Rate-Bee or Jamaica Loan Shop. The reason is that the questions asked during the comparison process helps in identifying the best programs that match your basic needs and determine your initial eligibility to apply to a particular program. Once matched, you will be able to more understand the cost of the program for the academic year in which you will borrow.
Apply with a Creditworthy Cosigner or guarantor
The most important factor in determining whether you will be approved for a private student loan is to determine your ability to repay the loan you wish to borrow. Most students don’t have a long enough credit history or high enough income to qualify on their own. That is where a cosigner can make a big difference in your student loan application.
A cosigner or guarantor is a person who agrees to repay the loan if the student loan borrower does not. As such, lenders look at the guarantor’s or cosigner’s credit worthiness, income, assets and other factors in determining whether or not to approve a loan. Plus, applying with a cosigner often means you may receive a much better rate even if you could be approved on your own.
Shop for the Best Rate
When you use any of the above listed student loan comparison resource to compare student loans or other loans, apply to each of the offers for which you’re eligible – not just one. It may be tempting to choose a lender you already have a banking relationship with or a lender that advertises the lowest interest rate or APR.
Since we can’t determine if you will be approved, let alone what terms you may be offered, we can only tell you if you may be eligible to apply for a given program and show you the range of rates offered by the banks and lenders. The final decision to approve a loan, and most important at what rate, is determined by the lender. So, you can’t simply pick the lender with the lowest advertised rate.
It’s OK to Apply to More than One Lender
Student loans can be difficult to get especially if you are enrolled full-time or unemployed. Therefore, we recommend that after comparing, apply fir the best three (3) options that you are qualified for. The aid of applying for several student loan options is to ensure that your financial needs are met and that if one should fail – you still will have the option of two loans to cover the cost of your tuition and living expenses. Pay Back? Why worry! Always try to apply for student loans that allow you to payback after completion of your course or with a set moratorium.
The Repayment Plan You Choose Could Affect Your Rate
Most private student loans will offer you three options when it comes to how you repay your student loans. You may either pay principal and interest immediately, pay interest only while you are in school, or defer payment of both principal and interest until after you graduate. First, the longer you take to repay, the higher your total cost of borrowing will be. Second, most lenders offer lower rates if you do not defer repayment.
Finally, some lenders may offer a slightly better rate if you make a small payment in school. Even if you can’t afford full payment while in school, see if making interest only payments is feasible. Each type of repayment plan may have a different interest rate. Be sure to note the differences when comparing your options and before applying. If the lender isn’t clear in their initial disclosures, call and talk to them directly to be sure you know whether how you decide to repay your student loan may affect your rate.
Take Advantage of Repayment Incentives
Every student loan lender in our database offers at least a 9% interest rate reduction if you have your payments made automatically from your bank account. Be sure to enroll in standing order or automatic payments to ensure you get the extra savings this incentive provides. Some lenders offer a rate reduction for being a current customer before applying. If you or your cosigner aren’t a customer and a customer discount is available, see what kind of account may qualify.
It may be as simple as opening a free chequing or savings account and then applying for the loan. Beyond those “automatic” discounts, be sure to look for other repayment incentives and weigh them as factors in your final decision. For additional tips you can read the 3 Ways to Pay Off Big Student Loan Debt Faster.
Variable Rate Student Loans Are Riskier but Cheaper
Many student loan lenders offer both variable and fixed rate student loans or reducing balance (offered by the SLB – interest charged on only the loan balance) . Variable rate loans’ interest rates may change over the life of the loan (from when it is first disbursed to when it is fully repaid), whereas fixed rate loans’ interest rates do not change.
The key factor is that when you choose a variable rate, you are essentially betting that your interest rate will not increase substantially over the course of repayment. You are now informed! What is your next Move?