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Student Loan Options for 2012
28 Dec 2011 at 12:32pm
Looking into our crystal ball, we see tuitions continuing to rise. At the same time, state and federal governments are reducing the amount of funding available to pay for college. For a quick refresher on your financial aid options, check out our Financial Aid Roadmap to get some insight.
The bottom line, you are going to have to be creative in funding your child’s education going forward. Search for scholarships, talk with your financial aid office, ask friends and family for help. As a last options, consider loans. Some tops student loan sites include:
- http://www.studentloannetwork.com/ – General information on financial aid and student loans
- http://www.staffordloan.com/ – Detailed information on the federal Stafford Loan
- http://www.parentPLUSloan.com/ – The federal Parent Loan for Undergraduate Students
- http://www.privatestudentloans.com/ – Private alternative loans for college
       
How do I Fill the Gap between what College Costs and the Financial Aid Awarded?
28 Aug 2011 at 12:48pm
Struggling with finding the last dollar to pay that college tuition bill''' Here is a good overview of the challenges and some options to manage them…
It is no secret that college is expensive and tuition costs are continuing to rise. We put together the infographic below to examine the costs associated with a college education, including the hidden costs you may not be factoring in like health fees, gas money, entertainment and all the Red Bull you’ll consume during finals. The graphic also outlines how funding occurs and how students can fill the gaps left in paying for college. Feel free to share with your fellow students, friends and family!
Link: http://www.privatestudentloans.com/fill-the-gap/
       
Parent PLUS or Private Loan: Which is Better?
10 Aug 2011 at 4:56pm
One question that comes up a lot from parents is how to fund the remainder of your child’s education, after federal loans of course. There are a variety of options out there including Parent PLUS loans and private student loans. It can be difficult to decide on which loan is right for your family, so to help you in the process, I’ve explained some of the major benefits and drawbacks of each below.
Parent PLUS Loans
Parent plus loans are available through the government and offer a variety of benefits. Benefits such as deferment, forbearance, and even some cancellation options are a perk of PLUS loans that are not always available with private loans. However, the interest rate is a fixed 7.9%, and higher than some private loans.
One of the most common questions from parents about the PLUS loan is in regards to the credit check. The credit check for PLUS loans is minimal and it’s mostly to make sure that there is no recent bankruptcy or adverse history on record within the past 5 years. If you’re still concerned that your credit will hinder your ability to receive the loan, you should continue with the application process, as students whose parent’s get denied a PLUS loan are entitled to further Stafford loans (at lower interest rates than the PLUS).
>>Read more answers to Parent PLUS loan FAQs
Private Loans
Private loans may actually be a better option than the PLUS loan for some families. Interest rates are now very competitive and come in both fixed and variable. This would allow for less interest over the lifetime of the loan than the Parent PLUS. You should also note that while the loan holder in this case is the student, most loans will suggest that a parent cosign for the student, which is generally a good idea anyway, as it improves approval chances and may lower the interest rate for the loan.
A downside of private loans is that many of the repayment benefits that you find with federal loans are not all available, however, the lower interest rates could outweigh this point. There are also other benefits of private loans to consider, such as the disbursal method. Unlike federal loans, private loans get disbursed directly to the student, so they can pay for immediate expenses such as books, or room and board.
>>Compare private student loan options
There is no real answer to “what is the best loan” because this is too subjective and is different for everyone. There are a lot of different factors to consider when looking into funding your child’s education and it comes down to not which loan is the best, but which is best for your family. To help you decide, you’ll simply have to weigh the pros and cons of each option.
       
Give Your Grad a Hand: 5 ways to help your child post-graduation
18 Jul 2011 at 2:18pm
The first years after graduation can be stressful on students, but the stress cast on parents is often overlooked. Parents are faced with the ever-growing problem of how to help their kids land on their feet, and effectively start their own lives. While many are tempted to simply pay the student’s way, this is not always the best option for either parents or students. Parents need to start thinking about retirement, and may not be able to afford those extra years of financial support, and students need to learn financial independence. The problem is, what can parents do' Here are some ideas'
1. Teach Financial Literacy
It’s amazing how many students graduate without any idea what a 401K is or how to use a credit card correctly. These are some basic, teachable (and free) steps that can really provide a foundation for recent grads.
- Using basic accounts – Most students have checking/savings accounts well before college, but should still be aware of the basics. Are there minimum balances' What happens if you overdraft' Little tips like these can pay off big in the long run, and prevent avoidable fees while money is tight.
- Credit Cards – One thing my parents taught me when I got my first credit card was don’t buy anything that you can’t afford right now. This has been a huge help, and while I may not get everything I want right away, I have never had an outstanding balance on my card. People may think, “well, what’s the point of having one, then'” To this, I would answer, beginners should be exceptionally careful, using the card only for what’s affordable (except, of course, for an emergency). This will help set a good foundation for lifetime credit use and help grads to avoid even more debt.
- How to save – Students hear tons of financial terms thrown about, (ROTH IRAs, 401Ks, Savings Bonds, etc.) but in most cases, have no idea what any of these things are. Sitting down with your grad to talk about different savings/investing options can be a huge benefit in the long term.
2. Stop the Pressure
With the job market at a low point (though better than last year) finding a job is incredibly stressful for many students. It’s important to keep them motivated during their application process, but do not pressure them or force them to take a job they don’t want. This, of course, is easier said than done, with student loan payments looming on the horizon. To help motivate them, think about setting goals or time limits. Knowing that they have only a certain amount of time to find a job can really help speed the process along.
On a side note: Today, more recent grads than ever are living at home after graduation. If this happens, remember that the house rules in high school may no longer apply. Your child is more adult than kid, and many fights can be avoided by bending some of the old rules, and realizing that your grad may be frustrated with answering to parents again. While this may not help with the finances, it will make this stressful time easier on everyone!
3. Keep Them Healthy
Since the Obama Administration’s recent law, grads are able to remain on parents’ health insurance until the age of 26. Saving students from the high cost of health insurance (or accidents sans-insurance!) can help while they begin to get their life in order.
4. Give Them Credit
College graduates are faced with a lot of firsts – first car, first apartment, first student loan payments, and having a solid credit history can help their future. After teaching basic credit card usage, parents can help students and grads attain their first card, which can now happen in 2 ways:
Co-sign for a card – This provides independence, but with security. Just make sure that if you do co-sign, your child remains on top of payments, and be willing to help out a little should payments falter.
Obtain a secured credit card – These require an initial deposit, and the amount of the deposit becomes the credit limit. These are great because you cannot spend more than you have, and teaches smart charging! A downside is that it’s more expensive up front, but you may save in the long-term.
5. Teach Them to Cook
Yes, really. Buying takeout every night, besides being unhealthy, can also really impact your child’s wallet. By teaching your grad to cook, they could save a lot of money on expensive take-out once they’re on their own!
       
Where to find Student Loans
1 Jul 2011 at 9:07am
Usually at this time of the year, students have applied for all the scholarships, grants and federal loans they are going to get. There is often a gap between what they have received in aid and what they are going to pay. A last minute option are student loans. Before applying we suggest you do two things: Review our Lenders and compare student loan offers.
Surprisingly, many people are unaware that there are privately funded student loans to help pay for college. In short, they offer students the option of borrowing to cover the cost of education including tuition, fees, room and board as well as other related expenses.
       
Five websites to help pay for college
27 Jan 2011 at 8:35am
Here is a list of 5 useful websites from Edvisors that will help you pay for college:
1) www.StudentScholarshipSearch.com – Offers a free open directory of scholarships for college.
2) www.ScholarshipSearch.com – A college student membership rewards program; join, earn points, win free scholarships!
3) www.StudentLoanNetwork.com – Everything you need to know about student loans and a great overview of financial aid in general.
4) www.FinancialAidNews.com – Daily news updates on financial aid, scholarships and paying for college.
5) www.FinancialAidForum.com – A financial aid discussion board discussing all things relating to paying for college.
       
5 Financial Aid Tips for 2011
12 Jan 2011 at 12:19pm
Here is another list – this time about financial aid:
Complete the FAFSA application to qualify for federal and institutional financial aid. Applying early will increase your eligibility for aid. Those who wait may loose out.
Once you complete the FAFSA, apply for scholarships. There are thousands of private and free scholarship programs. Again, apply early to get the best chance of securing money for 2011.
Research and apply for federal student loans. These loans are great options. The Stafford loan has a low rate and interest as well as payments are deferred until after graduation for the “subsidized” Stafford loan.
Review private student loans and student loans from banks. These loans offer some different options and may be at lower (variable) rates compared to the fixed plus loan rate.
Dig deep into your savings – you’ll need it…
Good luck with funding the next year of school. The costs continue to rise.
       
Can I transfer a Parent PLUS Loan?
30 Jul 2010 at 2:10pm
Many parents, who take out the Parent PLUS Loan, believe they could always transfer the loan to the child, once he or she has graduated and secured a reasonable income. Unfortunately, that is not the case. The PLUS Loan is the responsibility solely of the parent, and is taken out in the parent’s name. He or she is the borrower, not the student.
One option, if finances become an issue for the parent, is to simply have the student reimburse the parent for the cost of the monthly payment, but continue to make the payments in the parent's name.
If, as a parent, you would prefer a loan that allows you to eventually transfer the repayment obligation, consider a private student loan. These loans are in the student’s name, and depending on the lender, generally have a cosigner release option. After a certain number of consecutive on time payments, the parent (as a co-signer) can apply to be released from the loan, making it entirely the student’s obligation for repayment.
       
Repayment Options for the Parent PLUS loan
3 Jun 2010 at 2:46pm
If you are a parent who has taken out a PLUS loan to cover some of your child's education, you might be wondering what methods of repayment are available to you. While many parents opt for standard repayment, there are other options as well:
The Graduated Repayment Plan allows you to start out with lower monthly payments that gradually increase over time until the loan is paid in full. The required monthly payment is calculated based on your loan debt and interest rate.
The Income-Sensitive Repayment Plan bases your monthly payment on your yearly income and your loan amount. You are eligible for this plan only if you monthly loan payment is greater than ten percent of your annual gross income.
The Extended Repayment Plan provides eligible loan borrowers with payment relief through an expanded repayment term of up to 25 years.
Visit ParentPLUSLoan.com for more information on repayment, and don’t forget to consolidate if you have more than one federal loan.
       
Parent PLUS or a Private Student Loan? What should I pick?
6 May 2010 at 1:38pm
If your child received their financial aid award letter and there weren’t enough digits on the page to cover tuition, you are definitely not alone. The cost of college continues to steadily grow every year, but financial aid has not kept the same pace. As a result, the gap between aid and cost continues to grow.
Once your child has exhausted the annual maximum for Stafford loans, the next step is to look at credit-based options to bridge the financial aid gap. Fortunately for you, there are quite a few lenders that all must compete with each other to make money and therefore give you an opportunity to minimize the interest rate on a new loan.
If you’ve read a few posts on this blog, you know the score on Parent PLUS loans, but what about private student loans' There are a few notable differences' and in some cases they can become more attractive than their federal counterpart.
Major Differences:
- Private student loans have variable interest rates (meaning they change with the index they are associated with' most commonly LIBOR or the Prime)
- They come from banks instead of the Department of Education
- Many banks offer special incentives to make a private student loan more worthwhile
At the moment, interest rates are quite low due to the Fed attempting to put the economy back on a growth track out of the recession. This means that the indices are at historical lows and with a creditworthy borrower, you can secure a great interest rate that can be as much as 5% lower than a Parent PLUS loan.
If you want to learn more about some of the incentives that private lenders offer, check out this blog on the Student Loan Network.
The bottom line is just do some research before you take out a loan. In many cases, you can save thousands of dollars in interest if you shop around.
       
From our Archives: Consolidation
22 Mar 2011 at 9:41am
For upcoming college graduates, the daunting task of paying off students loans is not far away. In a mere six months after graduation, paying off these loans will become a reality. That makes it the perfect time to begin to consider student loan consolidation. Here are some great articles from our archives with tips and tricks to guide you in the consolidation process.
Most popular student loans for college
27 Jan 2011 at 1:32pm
Not everyone is aware of all the loan options available to pay for college. For an overview of federal and private sources of credit used to pay for college, view these links! Here are just a few options to consider...
How to Avoid Student Loan Defualt
19 Jan 2011 at 12:27pm
Navigating student loan payments can seem daunting. Before you know it, you've graduated and need to start making payments. So what happens if you are unable to make your monthly payments' You can soon find yourself in default. Learn how to avoid this dilemma.
What Will My Student Loan Consolidation Rate Be?
22 Sep 2010 at 3:56pm
TweetDepending on the type of student loans you will be consolidating, the interest rate can vary greatly. For instance, federal student loan consolidation allows you to obtain a fixed interest rate based on the weighted averages of your existing loans. Private student loan consolidation is much harder to nail down. Federal Student Loan Consolidation Rates [...]
It?s July 23rd, Do you know where your loans are?
23 Jul 2010 at 3:07pm
Did you know that because nearly all private student loans have variable APRs, your interest rate could have changed several times in the past 2 years'
Confused about reform and consolidation?
17 Jun 2010 at 4:40pm
TweetIf you’ve heard the word about the reform currently in progress across the country, you probably are aware of the end of the FFEL program and exclusive federal consolidation returning to the Department of Education. If not, read this page on upcoming changes to get acclimated. One question we get a lot is, “If FFEL [...]
New Grads, Start Thinking About Consolidation
9 Jun 2010 at 3:30pm
Consolidation has two main benefits that can be of enormous financial help to you both in the present and the future: the improvement of your credit rating and lower net monthly payments.
What NOT to do when Consolidating your Student Loans
27 May 2010 at 1:31pm
There are a great many benefits to consolidating your student loans, such as the convenience of making one or two monthly payments as opposed to six or seven, the lower monthly payment. But there are some cases where you have to be careful.
Graduating? Consider student loan consolidation.
19 May 2010 at 3:32pm
Depending on the amount (and type) of loans you took out for school and the repayment plan you selected, the monthly payments may still be out of your reach by the end of your grace period.
Should I Consolidate my Private Student Loans?
7 May 2010 at 2:21pm
Federal student loan consolidation is fast, easy, free and highly recommended to lower your monthly payment. Private student loan consolidation is a bit trickier. Here are some notes to remember if you choose to go down this road.
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Update on Student Loan Programs
20 May 2011 at 4:10pm
Before July 1, 2010, Stafford, PLUS, and Consolidation Loans were also made by private lenders under the Federal Family Education Loan (FFELSM) Program. As a result of the SAFRA Act, which was part of the Health Care and Education Reconciliation Act, no further loans will be made under the FFEL Program beginning July 1, 2010. All new Stafford, PLUS, and Consolidation Loans will come directly from the U.S. Department of Education under the Direct Loan ProgramSM.
Students who have previously received a federal student loan from a private lender under the FFEL Program will need to complete a new promissory note to receive loans under the Direct Loan Program. Please check with the financial aid office at your school for specific instructions.
If you're a student attending an institution located outside of the United States, your school is now able to participate in the Direct Loan Program. Please check with the financial aid representative at your school for specific instructions on how to obtain a Direct Loan for your next term.
This change does not impact the process of applying for federal grants, loans and work-study or the amount of federal aid that students are eligible to receive. Students interested in receiving federal student aid should continue to complete a Free Application for Federal Student Aid (FAFSASM) for each school year that they wish to be considered for aid. If you have any questions about applying for federal student aid, please contact
1-800-4-FED-AID.
(Source: http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloansupdate.jsp)
Education Reconciliation: The Student Aid and Fiscal Responsibility Act
22 Jul 2010 at 3:24pm
Now more than ever, Americans need affordable, quality education opportunities to help make our economy strong and competitive again. President Obama has identified an opportunity to make historic investments in our economic future by making college dramatically more affordable ' at no cost to taxpayers.
The Student Aid and Fiscal Responsibility Act, which was included in the health care reconciliation bill that passed on March 21, 2010 by a vote of 220-211 and signed into law on March 30, 2010, embraces the president's challenge. It will help us reach his goal of producing the most college graduates by 2020 by making the single largest investment in federal student aid ever. Specifically, these provisions will:
Invest the bill's savings to make college affordable and help more Americans graduate
* Invests $36 billion over 10 years to increase the maximum annual Pell Grant scholarship to $5,550 in 2010 and to $5,975 by 2017. Starting in 2013, the scholarship will be linked to match rising costs-of-living by indexing it to the Consumer Price Index. This includes an investment of $13.5 billion to fund a shortfall in the Pell Grant scholarship program due to increased demand for the scholarship.
* Invests $750 million to bolster college access and completion support for students. It will increase funding for the College Access Challenge Grant program, and will also fund innovative programs at states and institutions that focus on increasing financial literacy and helping retain and graduate students.
* Makes federal loans more affordable for borrowers to repay by investing $1.5 billion to strengthen an Income-Based Repayment program that currently allows borrowers to cap their monthly federal student loan payments at 15 percent of their discretionary income. These new provisions would lower this monthly cap to just 10 percent for new borrowers after 2014.
* Invests $2.55 billion in Historically Black Colleges and Universities and Minority-Serving Institutions to provide students with the support they need to stay in school and graduate.
* Invests $2 billion in a competitive grant program for community colleges to develop and improve educational or career training programs.
Provide reliable, affordable, high-quality Federal student loans for all families
* Converts all new federal student lending to the stable, effective and cost-efficient Direct Loan program. Beginning July 1, 2010, all new federal student loans will be originated through the Direct Loan program, instead of through the federally-guaranteed student loan program. The Direct Loan program is a more reliable lender for students and more cost-effective for taxpayers.
* Keeps jobs in America. Under the bill, 100 percent of Direct Loans will be serviced by private lenders. Lenders will compete for contracts to service all federal student loans, which will guarantee borrowers high quality customer service and preserve jobs. Unlike loans made by banks, Direct Loans can only be serviced by workers in the U.S. Last year, Sallie Mae was forced to bring 2,000 jobs back to U.S. soil to win a direct loan servicing contract. Sallie Mae is now one of four private banks servicing 4.4 million direct loans.
Meet Pay-As-You-Go fiscally responsible principles and reduce the deficit
* Saves taxpayers $61 billion over the 10 years by switching to the cheaper Direct Loan program, according to the Congressional Budget Office. In addition to investing in college aid, these provisions will also reduce the deficit by at least $10 billion over 10 years.
(Source: http://edlabor.house.gov/)
Obama Cuts Out the Student Loan Middleman
30 Mar 2010 at 12:31pm
Today, we mark an important milestone on the road to health insurance reform and higher education reform ... With the bill I signed last week, we finally undertook meaningful reform of our health care system. With this bill, and other steps we've pursued over the last year, we are finally undertaking meaningful reform in our higher education system ... By cutting out the middleman, we'll save American taxpayers $68 billion in the coming years. That's real money -- real savings that we'll reinvest to help improve the quality of higher education and make it more affordable. President Obama
Today, President Obama signed into law the Health Care and Education Reconciliation Act. What does this mean' It's an overhaul of the student aid system. Students can now take out loans directly with the fedral government. This ends the subsidized program for the student loan industry that banks and other financial institutions have been enjoying for a long time. All new federal student loans will be direct loans from private intitutions but under control by the Department of Education through performance-based contracts.
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.
Public Service Loan Forgiveness? Yes please!
31 Jan 2012 at 4:36pm
The Department of Education has recently made improvements to the PSLF process. While the requirements remain the same, they are more clear, and there's a variety of new documentation to help get you through the application process.
Contacting your Student Loan Lender
1 Sep 2011 at 10:49am
But if you have recently graduated college and are interested in consolidation or deferment of your student loans, you may have to contact your lender. So let's talk about how to do that.
Poll Results: Student Loan Debt
16 May 2011 at 10:13am
It's awesome, albeit surprising, to see the number of students graduating debt free- conGRADulations! For everyone else, loan repayment might be a growing concern as that 6 month date draws nearer. If you're concerned about making payments for whatever reason, there are some steps you can take to either lower or postpone your repayment.
When do I Receive my Stafford Loan?
4 May 2011 at 12:00am
Wondering when you actually receive your federal Stafford loan. Here is a look at how these loans are disbursed.
Seniors, graduating with debt?
28 Apr 2011 at 4:00am
For seniors, graduation is quickly approaching! Unfortunately, so are those pesky loan repayments, yikes! Complete our online poll and share how much debt you will be graduating with - and see how you compare to your peers!
Appealing a Financial Aid Offer ? Can it be Done?
26 Apr 2011 at 9:32am
Your financial aid offer letter will show how much a college or university is willing to offer in the way of student loans and scholarships. But what happens when that figure is too low' How can you appeal'
Selective Service and Financial Aid
11 Apr 2011 at 2:07pm
Guys, I'm sure most of you are well aware of the option to register for Selective Service once you turn 18; but did you know that it could have severe financial repercussions if you don't'
Freshmen: How to Get Your Stafford Loans
17 Mar 2011 at 4:59pm
TweetWhile high school seniors are receiving their acceptance letters and financial aid award packages, they might be exploring the differences between the loans they are eligible for and wondering how to actually acquire these loans. Many students are lucky enough to qualify for Subsidized Stafford Loans, which have a lower interest rate than unsubsidized ones. [...]
Applying for Federal Grants
8 Feb 2011 at 9:45am
Applying for federal loans is a common task for most college students, but did you know that when you file your FAFSA you're automatically applying for federal grants as well' Unlike loans, federal grants do not need to be paid back and are both tax and interest-free.
Stafford Loan Interest Rates Lowered
1 Feb 2011 at 8:28am
As I'm sure many of our readers out there know, the interest rate for subsidized undergraduate Stafford Loans was lowered last year from 5.6% to 4.5% which was a major step forward for federal loans. Well, the interest rate has dropped again!
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