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Running Out of Time for the FAFSA
5 Mar 2010 at 2:33pm
Attention parents! Today marks March 5, and school financial aid deadlines are here, or very close. The majority of schools require all paperwork to be in during this month in order to fairly distribute financial aid and have plenty of time to assemble students’ award packages.
So, what can you do to make sure it all goes smoothly'
1. Make sure your taxes are filed.
This may be a “what'” moment if you are new to the FAFSA process and/or this blog, but in order for your child or ward to file their FAFSA, they need information from you. Specifically, they need your Annual Gross Income figure from your 1040 or 1040EZ form.
If you are the type to hold off on filing taxes until April’s cutoff date, you are putting the student in a diminished position to get the maximum amount of aid possible for the upcoming school year. If you absolutely must hold off, have them file with the previous year’s numbers and then submit an amended FAFSA as soon as your taxes are complete. You can find all the relevant forms and processes on FAFSAOnline.com.
2. Gently, but firmly remind your child.
Nobody likes paperwork. However, if you and your family need aid money from the government or school to pay for your child’s education, you can’t afford to let the FAFSA sit on the back burner. If necessary, you should put a day on your calendar (in the very near future) to sit down with them and help them complete it; this will ensure it gets done, and is filled out correctly.
If you need any advice, or would like to know more about how the FAFSA works, check out the FAFSAOnline.com blog for lots of relevant and interesting posts.
     
A Parent?s FAFSA Checklist
7 Jan 2010 at 3:14pm
As a parent in the midst of FAFSA season you are probably wondering what your role in the financial aid process should be. Here is a quick checklist to make sure you are on the right track:
- Obtain your own FAFSA PIN number at www.pin.ed.gov. Your PIN will act as your electronic signature on your child’s online FAFSA.
- File your taxes as early as possible, but do not delay the FAFSA due to your taxes not being done. You can estimate your financial information on the FAFSA, but you will have to finalize it later.
- Help your child complete everything on their “to do” list.
- File the FAFSA online- it is much easier and faster and your information is 100% safe.
- Examine the bill from the school your child chooses and make she you understand all of the fees and how they will be paid.
     
Use Christmas to teach your children about budgeting
22 Dec 2009 at 2:49pm
This morning I read an interesting article on CNNmoney.com about using Christmas as an opportunity to teach children about budgeting. In my opinion, budgeting is a skill that far too many kids go to college without.
Many children off all ages believe that Christmas is a time to get everything and anything they want. However, it is important to instill the concept of limits in them. Children should know that their parents do not have an unlimited amount of money and they will probably not get everything on their Christmas. Teach them how to prioritize what they really want.
You can also teach your kids how to budget their money when buying gifts for others. Teach them to set aside an ultimate amount of money they can spend and divide it among the people they want to buy for.
Hopefully after years of Christmas budgeting they will take the lessons of moderation with them to college and into their adult life.
     
Are you ready for the FAFSA?
21 Dec 2009 at 12:47pm
 FAFSA season is right around the corner! Are you ready' If not FAFSA4caster is a website that will help you prepare. FAFSA4caster allows you to essentially do a test run of the real FAFSA. After you have gathered and submitted all of your information it will give you an estimate of your eligibility for financial aid. This FAFSA trial will help you cut down on costly FAFSA errors. After January 1, 2010 when you are ready to apply or you can conveniently transfer all of your information over to FAFSA on the Web. FAFSA4caster also gives you the option to apply for a FAFSA PIN and helps you increase your knowledge of the financial aid process.
     
Take Advantage of Financial Aid Workshops
15 Dec 2009 at 12:52pm
 The 2010-2011 FAFSA will be available after January 1st. That is just two weeks away! If you are the parent of a high school senior it is important for you to take some time out of your schedule to learn about financial aid and how to properly fill out the FAFSA.
Mistakes on the FAFSA can cost you thousands of dollars in financial aid. If you have lingering questions about how it works make sure you talk to people who have been through it or financial aid experts. Luckily, this is the time of year when high school and communities hold financial aid workshops to help families of prospective college students understand the process better.
Contact you child’s high school guidance department to find out when they are holding a workshop. After you attend you will feel a lot more confident about the process and ready to help your child obtain financial aid for college.
     
Can I Cancel My Parent Plus Loan?
3 Dec 2009 at 11:54am
YES. You can cancel a PLUS loan the same way a borrower would cancel a Perkins or a Stafford loan. In fact, even after the funds have been disbursed to the school you can still cancel your loan. You would just contact a financial aid officer at the school and let them know that they can send the funds directly back to the lender, provided your request is received within the designated add/drop period. Keep in mind, however, that in some instances you can not get back the origination and default fee of 4% back.
     
Does A Parent Plus Loan Have Fees?
3 Dec 2009 at 11:02am
YES. Parent Plus loans do have fees.
The standard fees attached to a federal Parent Plus loan include a 3% origination and a 1% default fee. That 4% can be quite significant too if you are taking out a great deal of money for your student. It’s also important to note that those fees are taken right off the top as well. So if you need $10,000 you should apply for $10,400. That way $10,000 will make it’s way over to the school.
You may also find that some lenders are willing to waive the default fee. If this is the case jump on that deal. A 3% fee is obviously better than a 4% one.
     
Parent Plus Loan Tax Exemption
24 Nov 2009 at 1:23pm
Did you know that any federal loan, including Parent Plus loans which are used to pay for postsecondary education costs, are eligible for tax exemptions' Qualified borrowers are allowed to deduct the loan interest. The maximum education loan interest deduction is $2,500.
There are conditions like income limits that apply to the education loan interest deduction. Consult your tax advisor for more details to see if you qualify.
     
Signing off
24 Nov 2009 at 8:41am
Well, after 4.5 years I’m leaving the Student Loan Network to pursue other career opportunities. Dave and Kristin and possibly a few others will continue to post and provide you with the best info possible on how to survive the student loan process.
I wish all of you the best of luck in your endeavors. It’s been a pleasure gathering and presenting information to you for the last 4 years.
Monique
     
Substitues for a Parents Signature
23 Nov 2009 at 9:50am
Although parent information must be provided for a dependent student when completing the FAFSA, a high school counselor or a college aid administrator may sign the application in place of a parent if:
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the parents are not currently in the United States andcannot be contacted by normal means,
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the current address of the parents is not known, or
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the parents have been determined physically or mentally incapable of providing a signature
The signer must provide his or her title in parentheses next to their signature and briefly state the reason (only one is needed) why they are signing for the parents. The signer assures a minimum level of credibility in the data submitted, however, they do not assume any responsibility or liability in this process.
     
What would you do with extra money every month?
11 Mar 2010 at 9:49am
One of the major benefits of student loan consolidation is that in most cases, it can lower your monthly payments and make repaying your loans much more affordable. In some cases, you can see reductions of up to half your monthly payment (estimated on the consolidation of $100,000 in federal loans.)
So, assuming you go out [...]
Ways to Save on Private Student Loan Repayment
9 Mar 2010 at 4:03pm
When it comes to private student loans, one tense topic among students and parents is, “how are you going to pay for it'” Between often needing a cosigner and qualifying for a relatively high interest rate, there are a lot of considerations that go into choosing a private student loan that are not necessarily present [...]
Consolidate or Separate? That is the question.
23 Feb 2010 at 8:56am
Shakespeare aside, figuring out if student loan consolidation is right for you can be a tricky question. It largely depends on your income and loan interest rates, and isn’t always the right choice for every student.
Currently, both federal and private loans can be consolidated by their separate types. The point of it all is kind [...]
Consolidation not enough to lower your monthly student loan payments?
8 Jan 2010 at 9:52am
If you have tens of thousands of dollars in federal loans there is no question that consolidation will help you lower your monthly payments. When you consolidate your loans you roll all of your individual loans into one. This means you only have to worry about making payments to one lender. Consolidation also extends the life of your loans so that your monthly payments are significantly lower. However, for some people consolidation might not be enough to get your monthly payments where you need them to be.
Consolidating Your Parent Plus Loan
12 Nov 2009 at 10:21am
Yes, you may consolidate a Parent Plus Loan, but there a few things you should know.
Stafford Loan Consolidation Rates
11 Nov 2009 at 3:32pm
Here is my no fluff, naked truth blog stating the cold hard facts surrounding Stafford loans and federal consolidation interest rates.
Why Federal Loan Consolidation is Wrong for You
5 Nov 2009 at 10:51am
Consolidation is not always the right move for students, yet they do it anyway. I believe the reason for this is because many students assume consolidation is just part of the financial aid process; that consolidation is the final stop on their debt filled journey. The truth, however, is that consolidation is not for everyone.
My Grace is Almost Up, When Should I Consolidate?
4 Nov 2009 at 9:57am
Ah yes, the dreaded panic button has officially been pressed. Those of you who graduated in May are now approaching repayment at mach one speed.
Service Deferment and Forgiveness
2 Nov 2009 at 12:25pm
When many college seniors graduate in May they will be facing a tough job market and student loan bills. Because of this, many soon-to-be college graduates are considering alternative post-graduate options. For students who decide to engage in post-graduate volunteer service there are a few student loan benefits.
Do Not Dig Yourself A Deep Debt Hole
27 Oct 2009 at 10:35am
Try saying that five times fast!
Do you know what happens when you do not make your student loan payments' Ideally you should take repayment into consideration before you sign off on a loan, however most people do not really think about it until the bills start coming in. The worst thing you can do is [...]
Need Money for College? Attend ?Cash for College? at GCCC - WJHG-TV
11 Mar 2010 at 9:22am
Financial aid deadline just hours away - WISH
10 Mar 2010 at 12:20pm
Why Europe's monetary union faces its biggest crisis - Financial Times
11 Mar 2010 at 1:26pm
Regents Approve 2010-11 Tuition, Fees - UA News (press release)
11 Mar 2010 at 5:23pm
Financial aid gap alters college choice - Tri State Defender
11 Mar 2010 at 2:20pm
Health Care and Student Loan Programs Collide - New York Times
11 Mar 2010 at 3:55pm
Nixon proposes major changes to edcuation to address budget shortfall - Kirks...
11 Mar 2010 at 3:50pm
Duo wants to change culture of SGA - The Daily Cougar
11 Mar 2010 at 4:38am
Greece May Seek EU Aid If Spreads Don't Narrow - Wall Street Journal
10 Mar 2010 at 2:42am
Comparing Apples to Apples: College Financial Aid Offers - Duluth Weekly
10 Mar 2010 at 12:18pm
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Student Loan Advice: Consolidation - Myth vs. Reality
19 Nov 2009 at 11:34am
Good stuff from blog.studentloannetwork.com:
There has been a lot written and said about federal student loan consolidation over the years. The point of this blog is to debunk three common mythes floating around the Internet about consolidation benefits.
The consolidated interest rate changes every July 1.
MYTH. The reality is variable rate Stafford loan rates are subject to change each July 1, which directly impacts your consolidated interest rates.
Like a home mortgage I can refinance my student loans multiple times
MYTH. The realty is that it's a one shot deal. When you consolidate your federal loans you are locked in for life at the interest rate. I know, seems pretty ridiculous doesn't it'
I need to consolidate within six months of leaving school or I'll lose my eligibility
MYTH: Consolidating within six months may be beneficial to students with variable interest rate Stafford loans due to the fact that a lower interest rate is extended to you during that six month window (2% versus 2.5%). However, it is not required that you consolidate within six months. You have an indefinite time frame in which to consolidate your student loans.
Quick Student Loans - Don't be Hasty
17 Sep 2009 at 6:09pm
Google "fast student loans" or "quick student loans" and you'll find a link to thinkfinancial(dot)com as your # 1 result at the time of this writing. Go to that site and you'll only find a link to a SunTrust private student loan application page. Think about it. You're in a hurry to get money to go to college as soon as possible and before you know it; you are likely to be looking at SunTrust student loan application. Is SunTrust your best option in this situation' Let's investigate.
Looking at an August 2009 review of student private loan providers, SunTrust ranked right in the center with 5 lenders below them and 5 rated above them. The best loans were all from federal credit unions. Before turning to a bank, definitely check out your neighborhood federal credit union for quick student loans.
Before making this crucial money decision, there are other important issues you must consider. Try getting someone with a good credit score to co-sign the loan with you. Traditional wisdom says never to co-sign a loan because of the risks. Still, if you have proven yourself to be a responsible individual in the past, maybe you can sweet talk a relative into "partnering" the loan with you. Even without a co-signer, quick student loans can be obtained but at a price. That price is a larger rate of interest and big time consequences due to missed payments. So, count the cost before you dive in too deep.
Be certain all other streams of money have been found before turning to quick student loans. Among these are college scholarships, federal loans, work study opportunities, and federal grants. There really is free money out there for college if you search for it.
Make sure you make a smart choice for your major. History degrees usually don't serve people for paying off quick student loans. You have to go after a degree that will land you a high paying job. A business degree is about the lowest you should go if a student loan is supporting your education. I'm even a little leery of that. Engineering, law, and of course medicine are your best money making degrees.
Lastly, think about starting out at community college for the first half of your schooling. The first two years of school are generally the same whether you are at a four year university or a two year community school. The price is a lot cheaper and often you receive better individual attention in your classes at a community college.
For good or bad, quick student loans are usually life changers. Be very careful before committing to one. Being impulsive has the potential of destroying your life for years to come.
Tips To Help You Apply For A Federal Student Loan
2 Sep 2009 at 5:07pm
1) Apply online using www.fafsa.ed.gov.
2) Check deadlines. Be aware of your state's and your school's application deadlines. While there is no deadline for applying for federal student aid, you should apply as early as possible after January 1 of each year that you will attend college. Some state and school aid is awarded on a first-come, first-served basis.
3) Collect the information you need to complete the FAFSA:
* Your Social Security number and your parents' Social Security numbers;
* Your driver's license number, if you have one;
* Your alien registration number, if you are not a U.S. citizen; and
* Your federal tax returns and income information
4) Check your FAFSA. After you complete the FAFSA, you will receive a Student Aid Report (SAR). Review the information carefully and make any necessary corrections.
5) Respond immediately to any request from your school for additional information.
(Source: federalstudentaid.ed.gov)
FFEL and Direct Loan Interest Rates Effective July 1, 2009
2 Sep 2009 at 4:15pm
Fixed Rates for Loans First Disbursed on or After July 1, 2006
Subsidized Undergraduate Loan: First Disbursed 7/1/2008 to 6/30/2009: 6.00%
Subsidized Undergraduate Loan: First Disbursed 7/1/2009 to 6/30/2010: 5.60%
Subsidized Graduate Loan: 6.80%
Unsubsidized Undergraduate Loan: 6.80%
Unsubsidized Graduate Loan: 6.80%
Direct PLUS Parent Loan: 7.90%
Direct PLUS Graduate Student Loan: 7.90%
FFEL PLUS Parent Loan: 8.50%
FFEL PLUS Graduate Student Loan: 8.50%
Variable Rates for Loans First Disbursed Between July 1, 1998 and June 30, 2006
These rates were calculated based upon statutory formulas and equal the bond equivalent rate of the 91-day Treasury bills auctioned on May 26, 2009, plus certain statutory percentage add-ons. The 91-day Treasury bills were auctioned at 0.178 percent, rounded to 0.18 percent.
Subsidized (Repayment/Forbearance): First Disbursed 7/1/08 to 6/30/09: 4.21%
Subsidized (Repayment/Forbearance): First Disbursed 7/1/09 to 6/30/10: 2.48%
Subsidized (In-school/Grace/Deferment): First Disbursed 7/1/08 to 6/30/09: 3.61%
Subsidized (In-school/Grace/Deferment): First Disbursed 7/1/09 to 6/30/10: 1.88%
Unsubsidized (Repayment/Forbearance): First Disbursed 7/1/08 to 6/30/09: 4.21%
Unsubsidized (Repayment/Forbearance): First Disbursed 7/1/09 to 6/30/10: 2.48%
Unsubsidized (In-school/Grace/Deferment): First Disbursed 7/1/08 to 6/30/09: 3.61%
Unsubsidized (In-school/Grace/Deferment): First Disbursed 7/1/09 to 6/30/10: 1.88%
PLUS Parent Loan: First Disbursed 7/1/08 to 6/30/09: 5.01%
PLUS Graduate Student Loan: First Disbursed 7/1/09 to 6/30/10: 3.28%
Notes:
*Interest rates on Stafford and PLUS loans disbursed before July 1, 1998, are calculated using different statutory formulas, percentage add-ons, or both.
*Generally, interest rates on Consolidation Loans are fixed rates calculated based on the weighted average of the loans being consolidated rounded up to the next higher 1/8 percent, not to exceed 8.25 percent.
(Source: studentaid.ed.gov)
Prioritizing your Debt
11 Apr 2009 at 12:06am
I saw a good foundational article today at MSNBC on their Today page.
If you have several different types of debt ' say, a credit card balance on a card with a 17% interest rate, a car loan with a 12% rate, and a student loan at 9% ' pay off the loan with the highest interest rate first. One strategy you may want to consider is stretching out your student loan payments over 15 years instead of 10 years by signing up for the Federal Direct Consolidation Loan program. (To see if you're eligible, call the Department of Education at 800-4FED-AID.) This will reduce your monthly student loan payment and leave you with extra cash. Use this money to pay off your credit card balance faster. Once you've gotten rid of your credit card debt, start paying off your auto loan faster. After you wipe out that loan, too, increase your student loan payments to at least their initial levels.
If you're looking at a lot of different types of debt, it's important to stay disciplined to these principals.
U.S. Secretary of Education Margaret Spellings Takes Steps to Ensure Students...
3 Feb 2009 at 8:00am
The U.S. Department of Education is ensuring students and their families continue to have uninterrupted and timely access to Federal student loans by taking steps to maintain stability in student lending through both the Federal Family Education Loan Program (FFELP) and Direct Loan Program.
"We recognize that the current economic situation has created real financial challenges for students and their families, who are increasingly concerned about how they can secure loans to help cover college costs," said Secretary Spellings. "I want to reassure students and their families that Federal student aid - both grants and loans - remains available to eligible students."
As credit markets for student loans continue to tighten, there is a growing concern among schools, students and lenders about the availability of funds for the 2009-10 academic year. With lenders currently committing loan volume to schools for the upcoming academic year, the Department of Education, in coordination with the Treasury Department and the Office of Management and Budget, is using the authority of the extended Ensuring Continued Access to Student Loans Act.
"The unprecedented credit market conditions throughout the past several months have clearly impacted the student loan market. These necessary measures will allow for more liquidity in this market and should help to prevent the financial turmoil from hurting opportunities for our students," said Treasury Secretary Henry M. Paulson, Jr.
The Department of Education will replicate for the 2009-10 academic year the successful loan purchase and participation interest programs announced in May 2008 for the 2008-09 school year. To date, these programs have supported nearly 50 percent - or $8.7 billion - of the FFELP loans disbursed thus far this year.
In addition, the Administration intends to provide liquidity support to one or more conforming Asset-Backed Commercial Paper (ABCP) conduits to purchase and provide longer-term financing for FFELP loans. While details of this conduit are forthcoming, it is intended that all fully-disbursed non-consolidation FFELP loans awarded between October 1, 2003 and July 1, 2009 will be eligible for inclusion. Loans in the conduit will be financed with new issues of Asset Backed Commercial Paper. Support for the program will come from the Department of Education, which will enter into a forward commitment to purchase eligible student loans from the conduit in the future at a prearranged price. These programs will protect taxpayers by ensuring there is no net cost to the Federal government.
The Administration is working diligently on these programs so that students and their families can be assured that Federal funds will continue to be available to help pay for higher education and ensure that our students will be better prepared to pursue their dreams in today's competitive global economy.
For more information on these programs, please view the fact sheet at http://www.ed.gov/students/college/aid/ecasla-facts.html.
Student loan woes
19 Nov 2008 at 10:16am
A survey administered by the scholarship-matching website FastWeb found that nearly half of student loan applications are being denied. According to the survey, one of the primary reasons students borrow private loans is because they have maxed out the federal Stafford Loan, a problem that has long been known to burden middle-income families. The survey shows that the government is failing to provide needed financial assistance.
Nearly half of Stafford Loan borrowers who said they maxed out their federal loan stated that they had to turn to private loans as result. These figures show that the average middle-income student is starting or has started to face obstacles in obtaining college funding.
Government has left the average middle-income family unable to finance higher education. Pell Grants are available for low-income students, but for middle-income students, the federal Stafford Loan has indeed become a scarce resource. Grants are often not offered to middle-income students, and when the Stafford Loans dry up, students are forced to turn to private loan alternatives.
The Department of Education needs to find a way to raise the allowed amount for a single student to borrow in Stafford Loan funding ' perhaps even high enough so private loans will no longer be needed. To increase the private student loan appeal, banks should be rewarded for offering often non-profitable student loans to needy students. If these actions are taken, middle-income families would sleep soundly knowing the government has invested in their children's futures ' and their futures, as well.
(mndaily)
Paulson and Spellings Joint Statement
11 Nov 2008 at 3:38pm
Continuing constraints in our capital markets have posed challenges for students and student lenders throughout the last year. We recognize that education is the foundation of a strong American workforce and we must not let challenges in our capital markets hinder our students' opportunities. Given these ongoing concerns, the Administration is taking a series of steps to support the student loan market.
Earlier this week, President George W. Bush signed H.R. 6889, the extension of the Ensuring Continued Access to Student Loans Act. We appreciate Congress providing the Department of Education, in coordination with the Treasury Department and the Office of Management and Budget, renewed temporary powers to use federal funds to ensure students and families continue to have access to student loans.
The loan purchase and participation interest programs implemented over the last few months have helped ensure that Federal student loans were available to students enrolling in postsecondary institutions for the 2008-2009 school year, and Federal student lending is exceeding last year's pace.
Our financing program has supported just over 40 percent of the Federal Family Education Loan Program (FFELP) loans that have been disbursed this year. Over 800 lenders have enrolled in our loan purchase program. Almost $51 billion of federally guaranteed loans have been originated for the current school year, up from approximately $45 billion for the same period last year.
Over the next few months, schools and lenders will be making decisions for the 2009-2010 school year. Using our newly extended authorities, the Administration is moving aggressively to support the continued availability of funding for federal student loans in the next school year with the goal of restoring the government guaranteed student loan market to normal operations. We are working on an expedited basis and will make further announcements in the coming weeks.
Students Expect 10+ Years of Student Loan Debt
29 Oct 2008 at 7:39am
CollegeGrad.com--the #1 entry level job site--today released its second annual survey results on how long college students anticipate it will take them to pay off their student loans. Fifty-one percent of student loan recipients say it will take them more than 10 years to pay off their student loans. Although last years numbers were similar, the 51 percent represents a five percent increase from three years ago.
Considering the increase in interest rates for federal student loans, combined with the ever-increasing sticker price of a college education and a faltering economy, it's not surprising that students are faced with larger student loan bills upon graduation, and a lengthier payback period.
"The financial pressures being placed on college graduates are growing each year," CollegeGrad.com Spokesperson, Adeola Ogunwole said. "Being weighed down with debt after college makes quickly finding a post-graduation job a priority for most students."
With only a six-month grace period before having to begin payments on their loans, it is critical for graduates to quickly begin earning a steady income. Graduates are faced early-on with some of the tough financial realities of the real world. Ogunwole points out, "finding a job that produces a steady income is very important in establishing the credit needed when applying for home and, or car loans."
(...More)
Community College Student Loan Rates
1 Aug 2008 at 11:51am
As college tuition rates have increased, many two-year college students have been forced to take out loans. Because about one-quarter of two-year colleges do not participate in the federal loan program, these students are forced to take out private loans, which are riskier and more expensive; work while attending school; use credit cards; or, drop out of school. Of those students who completed a community college degree in 2003-04, 33% had student loans; the average amount was $9,061, according to an analysis of federal data by the Project on Student Debt.
The American Association of Community Colleges, which represents 1,200 two-year institutions, claims that colleges do not participate in the federal loan program due to concern for the consequences of debt and default for students, especially those who take remedial classes, for whom dropout and default rates are higher. In addition, colleges participating in the program could be barred from other federal aid programs if too many of their students default. This is especially concerning for schools with a large number of low-income students.
(Source: http://www.aacrao.org/transcript/index.cfm'fuseaction=show_view&doc_id=3946)
Student Debt Q&A
15 Jul 2008 at 3:40am
How you are assessed as a credit risk will be based on whether you defaulted on your student loan. Government income tax refunds can stop and you may acquire wage attachments if you fail to take your student loan seriously and default on it. If you follow a few simple guidelines you can easily avoid defaulting on your student loan. You can avoid defaulting on your student loan if you just stay in contact with the lender.
If you let your lender know immediately you're having problems, it's unlikely you will need to default. I too had financial problems keeping up with the payments on loans I had acquired whilst a student. A few of my friends thought the situation was quite funny because they couldn't see how the finance company could reclaim an education. Defaulted student loans usually start with this type of glib attitude towards the debt.
To avoid defaulting on your loan, contact your lender before it gets to this stage. After everything, I just felt relief after the lender had agreed to a deferment. The company was very helpful and they assigned an agent to me who assisted me with the deferment process.
It only took a week to have the payments suspended until I could re-commence at a later date. Although defaulting on my student loan wasn't what I wanted, I knew that other financial institutions would not be quite as accommodating. I was aware that other agencies would not be so accommodating but I had managed to sort out my student loan.
(Source: cardprocredit.com)
Key Things To Consider Before Taking a Student Loan
14 Jul 2008 at 3:35pm
by Sarah Parker (www.oneiricissues.com)
The rising costs of college tuition have made it almost a necessity to apply for a student loan today. Students not only have tuition costs, but the cost of books, meals, gas, cell phones, recreation, etc. The variety of student loans enables students to take care of their varying college expenses. A student loan however, is a loan that must be repaid under specified circumstances.
The first thing you need to consider is your credit rating or credit history. A poor credit history can adversely affect your student loan application. Some lenders will look at your credit history; some don't. It all depends on what kind of student loan you apply for. Thus, if you have a poor credit history, look into student loans that don't consider your credit report or credit score a top requirement.
Guaranteed Student Loans, also known as Stafford Loans have a low interest rate. A student can apply for a subsidized or unsubsidized student loan. A subsidized loan means the government pays the interest for you while you are in school. The subsidized student loan is based on the students financial need. An unsubsidized student loan means you will be charged interest while you are attending school. The principal must start being paid after you have finished school. Both types of student loans need to start repayment six months after the student has finished college.
Federal Parent Loans or PLUS loans as they are known is a student loan not contingent on your income, but lenders do consider personal credit history. Parents or guardians who have a dependent child enrolled in college at least part-time are eligible for the PLUS loan. The interest rate is 9% or less.
Well the truth is student loan consolidation is not the answer for everyone who has a student loan. Federal loans should consolidated separately from private loans. It may be more beneficial in some cases not to consolidate student loans. Student loan consolidation counselors get paid the big bucks to help you figure out this information. However this article is designed to help you develop a better understanding of everything about getting a student loan including student loan consolidation.
Citigroup affiliate Student Loan Corp. to cut 89 jobs
11 Jul 2008 at 3:53pm
Student Loan Corp, a division of Citibank, plans to cut 89 jobs from its Perinton operation, the company said Thursday.
The jobs represent almost one-quarter of Student Loan's local employment and their elimination is part of a company-wide restructuring and cost-cutting effort. Overall, 174 jobs are being cut, including some at Student Loan headquarters in Stamford, Conn., and at Citibank in South Dakota.
Citibank's subsidiary is just one lender that is either slashing costs to stay in the student loan business or getting out of the business entirely because of new challenges in making a profit. Sallie Mae, the largest student lender, has already laid off about 1,000 employees.
A statement on the planned cutbacks said Student Loan Corp. remains committed to the business and will provide the "same level of superior customer service that schools and borrowers have come to expect ... over the past 50 years."
(more)
Debt Consolidation Overview
11 Jul 2008 at 2:50pm
If you're in way over your head, debt consolidation is a viable option.
You have to understand though that there is a tradeoff of easing your current pain.
http://banking.about.com/od/loans/a/debtconsolidate.htm
Debt Consolidation Programs
From Justin Pritchard,
Your Guide to Banking / Loans.
FREE Newsletter. Sign Up Now!
Overview of Debt Consolidation Programs
Readers are always asking about debt consolidation programs. What are they and what do you need to know about them'
Debt consolidation programs are usually just a big loan that pays off other smaller loans. They can be very beneficial to borrowers, but these programs also have their pitfalls.
When to Use Debt Consolidation Programs
Debt consolidation programs are good for a few situations. If you are paying several different loans off, your life may be easier if you consolidate everything into one loan. You'll only get one monthly statement and make one payment.
Also, you'll find that your monthly debt payments decrease if you use a debt consolidation program that stretches your payments out over a longer period of time. This means that you'll pay out less each month and you can free up some cash.
A tempting (and sometimes successful) strategy is to use a debt consolidation program to manage various high-rate revolving debts. As an example, you might have numerous credit card balances with high interest rates. With a debt consolidation program, you might be able to get a handle on that debt and lower the interest rate that you're paying. In general, credit cards have higher rates and secured loans (such home equity loans) have lower rates.
Things to Remember About Debt Consolidation Programs
Using debt consolidation programs can help you or hurt you. You should be very aware that all these programs do is shift your debt ' a debt consolidation program does not eliminate your debt. You owe the money and will have to pay it back sooner or later.
One pitfall of a debt consolidation program is that you may feel like you have less outstanding debt. For example, you'll notice that your credit cards once again have generous amounts of available credit. If you use this credit you'll only dig yourself into a deeper hole.
You should also be aware that you may end up paying more total interest if you use a debt consolidation loan. If you stretch out your payments over a longer period of time, it is possible that your total interest cost will be higher. Of course, it may be worth it to you if you can more easily manage your cash flow today.
Finally, remember what you're risking by using one of these programs. Often, you'll use a home equity loan or a home equity line of credit to consolidate your debt. The consequences of falling off the payment schedule can include the loss of your home in some cases. Credit card companies can't take your home. However, if you pledge your home as collateral in a debt consolidation program then your house is fair game.
How to Find the Best Debt Consolidation Programs
There are a variety of choices, and you should shop around to find one that fits your needs. If you need some ideas on where to start, try this plan:
Local credit unions or banks that you already have a relationship with. These are reliable sources that are likely to give you a fair deal.
Banks that you don't already have a relationship with. They might offer you a good deal in order to win your business.
Mailers offering debt consolidation programs. These lenders already want your business ' they've mailed you an offer because something about you fits into their desired profile.
An internet search for 'debt consolidation'. Just be careful and be sure you don't get scammed.
In addition to shopping around, you can ensure that you get the best deal by managing your credit. Loans are hardest to get when you need them the most. I suggest visiting the Loans page if your credit needs any work.
More Resources
Build Credit
Simple Interest
Phishing Scams
Help With Debt Consolidation Programs
A Tax Break With Debt Consolidation Programs'
Using a Second Mortgage With Debt Consolidation Programs
2nd Mortgage Quick Tips
Beat the college loan crunch
8 Jul 2008 at 7:34am
(Money Magazine) -- For families with children heading off to college, this has been the year from hell. First, a record number of applicants made 2008 the most competitive year ever for college admissions. Then the credit crunch hit the college market in a big way, igniting fears of a drought in financing for all students this fall.
Spurred by dwindling demand for packaged loans from investors and cuts on federal subsidies, more than 100 lenders in the government college loan program have pulled out of the market. Private lenders are leaving the college market too - 27 so far. Those who remain are making it tougher to qualify for loans, while jacking up rates and reducing discounts.
The result: If you're counting on a loan to pay tuition bills this fall, you're probably anxiously holding your breath, waiting to see if you'll be able to borrow what you need at a rate you can afford.
Is it harder to get a student loan' Tell us.
Well, Mom and Dad, you can officially exhale now. You'll be fine, if you just play it right. Unlike the crisis in the mortgage market, where politicians continue to argue about how to help without actually doing much, Uncle Sam in recent weeks has swooped in with a practical damage-control plan for college borrowers.
(More from CNN)
Can a PLUS Loan be discharged (canceled)?
23 May 2008 at 10:30am
Yes, under certain conditions. A discharge (cancellation) releases your parents from all obligation to repay the loan.
Your parents' PLUS Loan can't be canceled for these reasons: You didn't complete your program of study at your school (unless you couldn't complete the program for a valid reason'because the school closed, for example), you didn't like the school or the program of study, or you didn't obtain employment after completing the program of study.
For more information about loan discharge or repayment: If your parents have a Direct PLUS Loan, they should contact the Direct Loan Servicing Center at 1-800-848-0979, or go to www.dl.ed.gov. If they have a FFEL PLUS Loan, they should contact the lender or agency holding the loan.
(Source: studentaid.ed.gov)
Is it ever possible to postpone repayment of a PLUS Loan?
21 May 2008 at 9:29am
Yes, under certain circumstances, your parents can receive a deferment on their loans.
If they temporarily can't meet the repayment schedule, they can also receive forbearance on their loan, as long as it isn't in default. During forbearance, their payments are postponed or reduced.
Generally, the conditions for eligibility and procedures for requesting a deferment or forbearance apply to both Stafford Loans and PLUS Loans. However, since all PLUS Loans are unsubsidized, your parents will be charged interest during periods of deferment or forbearance. If they don't pay the interest as it accrues, it will be capitalized (that is, added to the principal amount of the loan, and additional interest will be based on that higher amount).
How do my parents pay back these loans?
19 May 2008 at 9:29am
They'll repay a FFEL PLUS Loan to a private lender or loan servicer. They'll repay their Direct PLUS Loan to the U.S. Department of Education's Direct Loan Servicing Center. To read more about repayment options under both programs, read the PLUS Loans section in Funding Education Beyond High School: The Guide to Federal Student Aid.
When do my parents begin repaying the loan?
16 May 2008 at 10:27am
Generally, the first payment is due within 60 days after the loan is fully disbursed. There is no grace period for these loans. Interest begins to accumulate at the time the first disbursement is made. Your parents must begin repaying both principal and interest while you're in school.
Other than interest, is there a charge to get a PLUS Loan?
14 May 2008 at 11:27am
Your parents will pay a fee of up to 4 percent of the loan, deducted proportionately each time a loan disbursement is made. For a FFEL PLUS Loan, a portion of this fee goes to the federal government, and a portion goes to the guaranty agency (the organization that administers the PLUS Loan Program in your state) to help reduce the cost of the loans. For a Direct PLUS Loan, the entire fee goes to the government to help reduce the cost of the loans. Also, your parents may be charged collection costs and late fees if they don't make their loan payments when scheduled.
What's the PLUS loan interest rate?
12 May 2008 at 11:26am
For PLUS Loans disbursed on or after July 1, 2006, the interest rate is fixed (at 7.90 for Direct PLUS Loans and 8.50 percent for FFEL PLUS Loans). For PLUS Loans disbursed between July 1, 1998 and June 30, 2006, the interest rate is variable and is determined on July 1 of every year. For 2007-2008, the variable rate for these PLUS Loans (in both the Direct and FFEL programs) is 8.02 percent. Interest is charged on a PLUS Loan from the date of the first disbursement until the loan is paid in full.
Who gets my parents' loan money?
9 May 2008 at 3:25pm
Either the U.S. Department of Education (for a Direct PLUS Loan) or your parents' lender (for a FFEL PLUS Loan) will send the loan funds to your school. Your school might require your parents to endorse a disbursement check and send it back to the school. In most cases, the loan will be disbursed in at least two installments, and no installment will be greater than half the loan amount. The funds will first be applied to your tuition, fees, room and board, and other school charges. If any loan funds remain, your parents will receive the amount as a check or in cash, unless they authorize the amount to be released to you or to be put into your school account. Any remaining loan funds must be used for your education expenses.
How much can my parents borrow?
7 May 2008 at 10:24am
The yearly limit on a PLUS Loan is equal to your cost of attendance minus any other financial aid you receive. If your cost of attendance is $6,000, for example, and you receive $4,000 in other financial aid, your parents can borrow up to $2,000.
How do my parents get a loan?
5 May 2008 at 10:32am
For a Direct PLUS Loan, your parents must complete a Direct PLUS Loan application and promissory note, contained in a single form that you get from your school's financial aid office.
For a FFEL PLUS Loan, your parents must complete and submit a PLUS Loan application, available from your school, lender, or your state guaranty agency. After the school completes its portion of the application, it must be sent to a lender for evaluation.
Also, your parents generally will be required to pass a credit check. If your parents don't pass the credit check, they might still be able to receive a loan if someone, such as a relative or friend who is able to pass the credit check, agrees to endorse the loan. An endorser promises to repay the loan if your parents fail to do so. Your parents might also qualify for a loan without passing the credit check if they can demonstrate that extenuating circumstances exist. You and your parents must also meet other general eligibility requirements for federal student financial aid.
PLUS Loans (Parent Loans)
4 May 2008 at 5:21pm
Parents can borrow a PLUS Loan to help pay your education expenses if you are a dependent undergraduate student enrolled at least half time in an eligible program at an eligible school. PLUS Loans are available through the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Loan (Direct Loan) Program. Your parents can get either loan, but not both, for you during the same enrollment period. They also must have an acceptable credit history.
(Source: studentaid.ed.gov)
Borrowing Limits for Stafford Loans (2010-2011)
10 Mar 2010 at 4:54pm
One question we often receive is how much a student can take out per year in federal Stafford loans. I’ve gone ahead and compiled all that information for you here.
Note that these figures are the totals, including subsidized and unsubsidized Stafford loans. They must also obey the lifetime limit for federal loans:
Dependent Undergraduate: $31,000
Independent Undergraduate: [...]
What happens to your federal loans in the summer?
8 Mar 2010 at 9:12am
One question we get a lot in our financial aid forums concerns Stafford loans and the summer. And really there are two possible answers.
Stafford Loan Interest is Tax Deductible
5 Mar 2010 at 3:39pm
Did you know that the interest you pay on your Stafford loan may be tax deductible. The interest you pay on the Stafford loan money that you borrowed is tax deductible up to $2,500 per year. This can be a huge that you should definitely take advantage of if you qualify!
Why get a Federal Stafford Loan?
2 Mar 2010 at 12:14pm
First off, if you haven’t filed your FAFSA yet' get on it! Many schools’ deadlines have already arrived for financial aid, and the rest are all due within the next month. Without the information contained in your Student Aid Report (SAR) submitted to your school, they can’t begin to put together your aid package.
OK — [...]
What happens to my Stafford loan if I leave school?
1 Mar 2010 at 9:03am
There are many reasons why you may decide to leave your college or university, financial or otherwise. So what happens to your federal Stafford loan then'
The perks of an unsubsidized Stafford loan
25 Feb 2010 at 12:32pm
At first glance, taking out an unsubsidized Stafford loan might not seem like such a great idea. Unlike subsidized loans, interest begins to accrue right away, meaning it costs more in the long run. But in some cases, going the unsubsidized route can be useful, and give you a more proactive approach to paying off your education.
Stafford Loans, in Plain English
22 Feb 2010 at 1:57pm
Now that it’s FAFSA time, I thought that the second installment of this blog should focus on a piece of federal aid that many students receive as part of their award: the federal Stafford loan. Read on to find answers to questions like: “What is it'”, “What does it do for me'”, and “What is [...]
Demystifying Federal Student Loans
11 Feb 2010 at 5:04pm
If you’re like me, you probably were at least somewhat confused the first time you looked at your financial award letter. “Stafford Loans”, “Perkins Loans”, “PLUS Loans”, what does it all mean'! Well friend, I’m glad you asked!
Each type of loan has a special purpose, so I’d like to break it all down for you [...]
Financial aid and a college food budget
2 Feb 2010 at 3:11pm
If you live on a college campus you probably have a meal plan which you pay for as part of your room and board fees. However, if you live off campus you are probably responsible for buying your own food and cooling for yourself.
Requesting Additional Financial Aid
27 Jan 2010 at 2:17pm
Is your school financial aid package the be-all and end-all of financial assistance for college' No. If your financial aid package does not meet your needs there is always an opportunity to appeal and request additional funds.
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