Student Loan News, Updates and Blog Posts

After you file your FAFSA and receive your financial aid package from your school either you or your parents might be unhappy with the results. When this happens your first instinct might be to write an appeal to the financial aid office. While this might be the right move in some situations other people should think twice before making a call to the college.

With so many families experiencing unemployment and salary reductions the number of appeals that financial aid offices are seeing is on the rise. Financial aid officers realize that this is a hard time for many families and they are doing everything they can to meet the need of every student. It is important to put your families’ financial situation in perspective. Although everyone has a different situation you should think about your income in the grand scheme of things. If you are a parent, see if there are places in their budget where they can make sacrifices to send their children to school. If you are a student, see if you can save a little bit of money from your summer job to put towards your education.

If you still need to make an appeal there are a few things you can do effectively communicate your situation. First, make sure you know what you are appealing. To some families an appeal is an automatic reflex. Often times parents do not know what they are appealing, they just know that the package is not enough. Secondly, try to peak with a financial aid officer over the phone Many schools encourage parent phone calls and will field as many calls as possible. This is much easier at smaller schools, but larger schools try to accommodate phone calls as well. A phone call will make it much easier for you to understand the financial aid officer and for them to understand you. Finally, make sure you have clear documentation as proof of your current income. A financial aid officer will not be able to guess your income so it is important to present your families’ current situation as clearly as possible.

If I had a dime every time I heard someone say, “I need more funds for school,” I would easily be able to send my entire family to Harvard…TWICE.  It’s just the way it is these days.  We’re turning over those stones, calling our rich uncle, and exhausting every avenue we know of to find those extra dollars.  Perhaps that classic Ben Franklin quote which reads, “The only thing in life that is certain is death and taxes,” should be amended to include running out of money for school.  But there is hope.  Private student loans do not have a yearly borrowing cap like federal Stafford loans do.

Now let me first start off by saying that federal Stafford loans are the bomb.  Max those out first.  The problem, however, is that there isn’t much to max out.  Depending on your grade level you are capped at a certain borrowing threshold.  Is it just me or does that sound absurd?  In fact, let me just go on record now and say that I think that is the lamest rule I have ever heard!  The cost of tuition is the same for a freshman as it is for a junior!  Why the disparity?!?  Ok, that is a different blog for a different day.  Back to private student loans.  Private student loans allow you to fill in the gap that federal loans leave, and that gap is extremely wide for some.

There is no FAFSA when you apply for a private student loan and no hassles whatsoever.  You can use your loan funds for tuition, room and board, a new laptop, you name it (assuming it is school related of course).  So don’t be discouraged.  There are options right at your finger tips.

APPLY FOR A PRIVATE STUDENT LOAN

Scholarship Points code: NOHANDS4U

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.  Here are a few reasons why you should turn your nose up at consolidation.

1. You can afford your monthly student loan payment just fine thank you very much.  Consolidation is used as a debt management tool to extend out your repayment terms and minimize your monthly payment, but in the process you actually end up paying back more than you owe.  Who wants that?

2. Sometimes borrowers will consolidate because they want to turn their low variable rate into a fixed one, but if your loans are already fixed there is no point. All federal loans disbursed after 7/1/06 are already fixed and can not be lowered.

3. You may have better borrower benefits with your current lender than with your consolidated one.  Ask your current lender what benefits you have now compared to what you will have if you consolidate.  Examples include: ACH rate reduction, rate reduction after 36 consecutive months of on time payments.

The LSAT, which is a half-day, standardized test administered four times each year is a test used as part of the admissions process to get into law school, but when should you take your LSAT?

You should take your test as early as possible before law school deadlines.  Many schools request that applicants take their exam by December for admission in the following fall’s entering class.

LSAT scores are valid for five years.

So you are a senior and college and you have decided that you are definitely going to go to grad school next year. The job market is tough and you figure with a little bit more education you can get into your field of choice and increase your earning potential. You know that between the Graduate Stafford loan, Graduate PlUS loan and alternative student loans you will be able to pay for tuition, books and any other living expenses. Now comes the hard part; deciding which school and program to enroll in.

The first decision you need to make is whether you want to pursue a traditional graduate degree or an online degree. If an online degree is something the piques your interest Edvisors.com can help you learn more about this possibility and connect you with the best online schools and programs. If you decide to go the more traditional route GraduateCenter.com can help you explore your options and search for the perfect school.

Another great resource is the school you are attending now for your undergraduate degree. Many schools host graduate school fairs or graduate school information sessions. Your school’s career services office can also help you greatly in your decision.

Choosing a graduate school program is an extremely important decision and it should not be taken lightly. When making your decision you should consider the cost of attendance, cost of living, length of the program, whether or not you will be able to work while you are in school, and admission requirements. Remember that this decision will greatly impact your future career so make sure you choose a program you are going to enjoy.

While federal loans are designed to go toward your cost of attendance private student loans can be used in a wide variety of ways like for housing expenses.

Financial aid office administrators understand the financial challenges students face today, and that many students needs funds to cover costs that fall outside of COA.

Transportation, books, supplies, lab fees, computers, or housing can all be covered with a private student loan.  And the time has never been better to secure a private student loan with rates near historic lows for qualified applicants.

TAKE OUT A PRIVATE STUDENT LOAN TODAY

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.  Yikes! I think I can hear your heart pounding out of your chest from here.  Ok, fear not – this can still work, but you’ll need to get started right away.  Once you START the consolidation process your application is date stamped on that date which is mundo important because you want to consolidate your loans before your grace period expires.

If you have any federal loans which were disbursed prior to July 1, 2006 that have not previously been consolidated it is important to consolidate your federal loans ASAP!  The reason being is because the rates on those loans will jump from 1.88% to 2.48% after your grace period expires.

If all of your loans were dispersed AFTER 7/1/06 then you can take a deep breath.  Your loans are already fixed and their is no rate benefit to consolidation.  Consolidation for you is just about extending your loan terms and minimizing your monthly payment.

APPLY FOR FEDERAL CONSOLIDATION NOW

Did you know the Stafford loan has fees attached to it?  There are two different fees attached to Stafford loans, an origination fee and a default fee.  Now here is the good news – those fees are coming down.

The Stafford loan program instituted a three year program back in 2008 to dissolve the origination fee’s completely and bring down the default rate.  In 2008 the origination fee was 1%, in 2009 it went down to 0.5%, and beginning 7/1/10 it will be 0%.  That’s sweet for students! Now what about the default fee?

The default fee is also coming down from 2% and will land at 1% beginning 7/1/10.  By the way, the default fee is not an absolute charge.  Lenders / guarantors are permitted to waive the default fee as part of their incentive package. This is important to know if you are attending a FFELP school.  FFELP schools allow you to choose your lender.

Last week I chronicled the various ways you can complete your FAFSA in a blog entitled FAFSA Applications.  One of those ways was mailing in your FAFSA.  But what happens next?  How long does it normally take to process when you mail in your FAFSA application?

Your FAFSA will be processed in two to three weeks. But, before mailing it, you should check to see if your school, or a school that you’re interested in, would submit your FAFSA electronically for you to speed up that process.

If you do not hear anything within three weeks of the date you submitted your application, check your status through FAFSA on the Web. You can also check your status by contacting the Federal Student Aid Information Center at 800-4-FED-AID.

File your FAFSA today!

There are two primary differences between the subsidized and unsubsidized Stafford loan, the interest rate and when the interest begins accruing on the loan.

First off, you can not choose which type of Stafford loan you want.  It is all based on need after you complete your FAFSA.  Some students end up taking out both kinds of Stafford loans, especially in graduate school when the tuition costs soar.

Right now if you were to qualify for a subsidized Stafford loan for undergraduate study your rate would be 5.6% for the 2009-2010 academic year.  The unsubsidized rate is 6.8% as is the graduate Stafford loan rate (both sub and unsub).

As for the interest rates, the federal government defers interest payments on subsidized Stafford loans, which are available to students based on low family income. Unsubsidized loans, on which interest begins accruing while the student is in college, are available to students regardless of income.