Student Loans in Hawaii
Finance at the Lowest Possible Cost
**Please Note**: the Federal Family Education Loan Program and the Stafford Loan Program have been eliminated by the federal government and replaced with the Direct Consolidation Loan Program and the Direct Loan Program. This content has been kept for archival reference.
Even though Hawaii is diminutive in size, the state government works overtime to create the big-time style of student loans available to students anywhere else in the country. SMS Hawaii is the premier lender of the Federal Family Education Loan Program (FFELP). The company is a subsidiary of USA Funds, one of the nation’s leading student loan guarantors.
How SMS Works
SMS Hawaii works independently of its parent company to effectively and efficiently extend federal loans in specially packaged versions designed to offer Hawaii students the best savings possible. The Stafford Loans are often cited as the single most popular student loan in existence, but they fall quite short of providing all the funds necessary to actually pay for college.
FFEL Products and Benefits
SMS Hawaii extends a low-interest, low fee Stafford Loan that is purported to be one of the most attractive in the country. Other borrower benefits kick in when payments commence through an automated payment process.
The PLUS Loans provide borrowers with incentive interest rate reductions for on-time payments and automated payments. Another perk is the modest credit applied to the borrower after the loan monies are doled out to the college in whatever increments apply.
Using a Lender
SMS Hawaii packages the FFEL program, but is not a lender, per se. Instead SMS partners with about a dozen lenders in Hawaii that directly lend the Stafford and PLUS Loans and offer their own benefits in some circumstances. The list of lenders is exclusively limited to Hawaii lenders.
Finding an Alternative Loan
When your Stafford Loan funds are not enough, you will likely be wooed to apply for student alternative loans. This option is far wiser than pulling out your credit card to finish paying your tuition. Alternative loans are marketed and managed by private lenders, like those who will also be offering your FFEL loans. So you may be able to borrow both your Stafford Loan and an alternative loan through the same student loan lender.
As a borrower for an alternative loan you will be required to submit to a credit check. If you have no credit or it is not in good shape you can apply with a co-borrower. Many students choose a creditworthy parent, other relative or even a close and trusted friend. In some cases it may even be to your benefit, regardless of your credit situation, to apply in tandem with a co-borrower.
Understanding the Terms of Your Alternative Loan
Your lender will also have repayment terms you must understand. So you get to borrow the balance remaining on your tuition, but the bank may expect you to begin paying on the interest immediately. Can you do this? If not, ask about their deferral program. Will they allow you to apply for a consolidation loan once your repayment begins?
Repayment of Loans
Repayment of almost all loans begins six months or so after you graduate. At this point you are expected to be able to make your monthly payments and on time. If you are unable because of unemployment or because you cannot manage multiple loans you are advised to consult with your lender regarding deferral of loans and consolidation. Don’t let your credit suffer.