Student Loan Help

So, your child wants to go to that private University costing $45,000 per year and you’re wondering how on earth you’re going to pay for it. 

They have worked hard thru High School, received a merit scholarship, have taken their PSAT, SAT, & ACT exams to prepare themselves and are excited about this new chapter in their young adult lives. 

You on the other hand are a little less excited, and not because empty nest syndrome has set in prematurely.  How am I going to pay for this you are thinking to yourself?  It is the million dollar question.  I just hope the million dollar question doesn’t cost me a million when my son is of age in 18 years.

Here are a few things to consider.  FFELP Parent Plus loans are currently fixed at 8.5% which is really high in relation to private student loans, which many can get in the mid 6% range with good credit these days.  The fed funds rate has dropped precipitously over the past several months which have spurred these lower private interest rates and has swung the pendulum in favor of private loans for many.

Both loans can be repaid after the student graduates, which are nice benefits, but you are only delaying the inevitable while interest continues to capitalize.  If you can at least afford to make interest only payments while the student is in school it would certainly be in your best interest.

Another thing parents often ask me is who is responsible for the payment on these loans when the student graduates?  The parent plus loan is linked to the parent’s social security number, so the parent is responsible for that one.  The private student loans are generally in the students name with the parent listed as a co-signer.  This would be the student’s responsibility and after 36-48 months of on-time payments you can get your named removed as a co-signer.

The parent plus loan also holds a tax benefit.  You can write off the interest provided you do not earn more than $70,000 if you are single and $140,000 for joint filing.  On a side note many parents with a joint income exceeding $140K are actually looking at home equity loans.  Interest rates are so low on equity loans currently and they can write off the interest at the end of the year. 

As you can see you have a few options, but only you know what is right for you.  Happy spending.

Last month I blogged about the 529 college savings plan and received some excellent questions that I felt would be beneficial to share with everyone (along with the answers of course). 

I pretty much just gave a snapshot overview of what a 529 plan was , but I’m going to get down to the nuts and bolts of it for you today.

Q: David, you are obviously very smart on financial matters and I would appreciate more details about the 529 plan if you get a chance.  I live in Vermont; do I have a good plan here?  If not, can I get into another state plan?

A: You’re right, I am a financial master, and semi-good looking too – ha-ha.  To answer your question Vermont is a Top 5 plan based on performance over the past 3 years.  They even offer a tax credit to the residents of the great state of Vermont.  Your state’s 529 plan is certainly solid, however, it is perfectly within your province to open a 529 plan in another state if you’d like.  Just because you live in Vermont doesn’t mean you can not open a 529 plan in Oregon.  Also, your child would not then be required to attend a school in Oregon either as many assume – this would simply mean your 529 account was located in that state.

Q: What are some of the main differences between state plans?

A:  One of the biggest differences between plans is who is running the plan.  For example in Massachusetts you have but one option, Fidelity.  In Nebraska it’s the Union Bank and Trust Company of Lincoln, Nebraska, and in Indiana it’s JP Morgan. 

Another thing to keep in mind is what types of fees are involved with each plan.  Are there monthly/yearly maintenance fees, program management fees, or start-up fees?  Obviously the higher the fees the less desirable the plan, unless of course that plan is performing at a very high level to overcome said fees.

Q: Is their a contribution minimum?  I can only afford to put $50 per month away?

A: These differ greatly from plan to plan and for residents vs. non-residents.  For example in Kansas the minimum contribution is $1,000, but only $250 for a Kansas residence.  Each subsequent contribution is $50 per month, but just $25 for Kansas residence.  In Louisiana it’s just $10 total to open an account while in Illinois, Nebraska, & Utah there are no minimum payments at all!  Keep in mind that some states also offer lower contribution minimums if you set up ACH.

Other things to keep in mind are state tax deductions.  For example, residents of Arkansas have a deductible in computing Arkansas taxable income up to $5,000 ($10,000 for married taxpayers) when they contribute to their state 529 plan. 

Also, about half of the state 529 plans offer rewards programs as well.  For example, Massachusetts has partnered up with American Express and offers rewards points that go directly into your child’s 529 plan.

I hope this information is helpful!  If you still have further questions or just want to tell me how fabulous I am, fire away!  I love to hear that I am a financial mastermind, look out Bernanke – I have some thoughts on this countries monetary policy too.  Happy Saving.

I speak to parents every day who call me trying to figure out how they’re going to pay for college for their kin. It’s a heavy cross to bear. “Should we take a home equity line? What about the Parent Plus loan? Do you think I should just co-sign for a private student loan for my child and keep the loan in their name?” These are the most common questions I help them work thru.

From a students perspective they’re just trying to get to school and are less concerned with the financials. They don’t fully understand the financial ramifications that go along with the cost of education. Whether it’s $5,000 or $50,000 it doesn’t really matter to them; at least not while they’re in school. These serve as arbitrary numbers. But those numbers become their foe when it’s payback time.

The purpose of this blog is to introduce a 529 savings plan to you. This education savings plan is most useful to those parents having students several years away from college.

Here is a quick cliff note style overview for you.

- Every state has at least one 529 plan available.

- Two general types of 529 plans exist: prepaid programs and savings programs (prepaid tuition plans allow you to lock in future tuition rates at current prices while savings plan do not offer that same guarantee).

- Your investment grows tax-deferred, and distributions of the funds come out federally tax-free when you are paying for college.

- You are in control of the funds, and can even change the name of the recipient to another child or even yourself.

- 529 plans are viewed as a parental asset which is only assessed a maximum of 5.64% in determining a students Expected Family Contribution (EFC) on their FAFSA, opposed to a whopping 20% on non-529 assets that students hold.

As you can see 529 plans have great benefits and are a terrific way to save for your child’s college. I want you to save now and pay less later.  If you plant it - it will grow.

Student Loan Network serves hundreds of thousands of students from more than 6,000 colleges across the United States . However, we do see some states and colleges where we get more applications than others. If you are interested, here is a list of the popular states where we are making loans.

Michigan Student Loans

New York Student Loans

Pennsylvania Student Loans

Texas Student Loans

Arizona Student Loans

California Student Loans

Florida Student Loans

Illinois Student Loans

Iowa Student Loans

Massachusetts Student Loans

HELP WANTED!

Are you a struggling student trying to make ends meet? Do you need money for school? Would you like the opportunity to win a $1,000 scholarship per month and a $10,000 scholarship in October no strings attached??? If you meet this needy criteria you’re search is over. We are the perfect fit for you.

The perfect candidate will also enjoy sleeping late, going to parties, playing video games, exercising their mind, and most importantly receiving free money!

Guaranteed: Someone is going to walk away with $1,000 per month and $10,000 in October just for signing up. Sign up takes all of thirty seconds. I wish I knew about this site when I was going to school.

How to register: go to www.scholarshippoints.com click on Login/Register. That’s it.

Now here is the coolest part. You can accrue points like a lottery to increase your chances of winning the monthly scholarship awards! You can take surveys, post blogs, do a scavenger hunt on the website; the list goes on and on. You can also elect to do none of the above and just register once and be done with it. It’s completely up to you.

We all want something for nothing, and some of us will get it.  Will you be one of them?

One of the most common questions I receive is, “Am I eligible for a federal loan?” The following eligibility criteria comes directly from the Department of Education.

U.S. Citizen

U.S. national (includes natives of American Samona or Swain’s Island)

U.S. Permanent resident who has an I-151, I-551, or I-551C (Permanent Resident Card)

If you’re not in one of these categories, you must have an Arrival-Departure Record (I-94) from U.S. Citizenship and Immigration Services (USCIS) showing one of the following designations:

“Refugee”

“Asylum Granted”

“Cuban-Haitian Entrant, Status Pending”

“Conditional Entrant” (valid only if issued before April 1, 1980)

Victims of human trafficking, T-visa (T-2, T-3, or T-4, etc) holder

“Parolee” (You must be paroled into the United States for at least one year and you must be able to provide evidence from the USCIS that you are in the United States for other than a temporary purpose and that you intend to become a U.S. citizen or permanent resident).

If you have only a Notice of Approval to Apply for Permanent Residence (I-171 or I-464), you’re not eligible for federal student financial aid.

If you’re in the United States on certain visas, including an F1 or F2 student visa, or a J1 or J2 exchange visitor visa, you’re not eligible for federal student financial aid.

Also, people with G series visas (pertaining to international organization) are not eligible for federal student financial aid.

A helpful article on College affordability - How are you going to pay for it all??? Please take some time to 1) read it and 2) Digg it:

Digg: Choosing a College and How to Pay for it

We will see what kind of visibility we can get with your help!

Does money really make the world go around, because I was under the belief it circled on its rotational axis at a 23.5 degree angle from vertical at 1000 miles per hour with no monetary influence, but that’s just me. Others have theorized that money actually makes the world go down like the Dow on black Tuesday. So which is it? Does it make the world go down or around? I guess it all depends on your vantage point and wallet size. The bigger your wallet, the greater your chance of motion sickness.

My goal is simple; find a way to beef up that wallet of yours devoid of any dizzy spells. The number one way to turn your paper thin wallet into a certified Jenny Craig candidate is to take someone else’s money! Scholarships provide the perfect gateway to which I speak.

You would be astounded at the number of scholarships you actually qualify for, and you don’t need to be Deans list to qualify either. I can not possibly stress enough that you need to take the time to look. I’ve even created a top 5 list to help streamline your search.

I get calls from desperate college graduates all the time who inform me they are in over their head with their student loan payments. And as sure as the sun rises in the east I’ll be fielding calls once again this May from despairing students who just graduated looking for advice, but at that point the damage is already done. The point of this blog is to put you in front of the 8-ball instead of behind it

Being proactive about the cost of your college education opposed to reactive can save you thousands of dollars and a whole lot of stress in the long run. And I promise it won’t be long before you’re spinning around the sun with your Ray-Ban sunglasses and calling Jenny Craig to let her know that big is beautiful. Student loan debt is the only thing you need to lose.

As we all know debt is a liability or obligation to pay or render something. Unfortunately many of us find ourselves biting off more than we can chew in this regard. In fact, some friends told me recently they are so far in debt with their student loans they have just stopped paying them all together, because in their words, “It was hopeless.” I can’t image feeling that level of despair, although I have my fair share of debt as well. I don’t want anyone to feel that way.

If you’re considering going to school, and I believe you should, than you should have an entrance and exit strategy so not to end up like my friends. And contrary to popular belief entrance and exit strategies do work, the key is actually having one to begin with.

Did you know the average cost of tuition, over a 4-year span, ranges from $12,500 in public schools to $27,000 for private institutions per year? That’s a lot or debt one can amass in a relatively short period of time. Can you handle a $100K student loan repayment? I know I couldn’t swing it, nor would I want to. So let’s come up with a creative solution to help you avoid an insurmountable mountain of student loan debt on graduation day. This article will focus on an entrance strategy.

Consider a Community College for the first couple of years. Why? It is far more economical. I am currently attending Massasoit Community College in Brockton, Massachusetts and the cost is $111.00 per credit. I am taking two three credit courses this semester which is costing me $666.00. Next year I will be transferring over to Bridgewater State College to finish my degree program and earn my Bachelors degree. The current cost at BSC is $333.00 per credit hour. Simple arithmetic shows I would have been spending $1,998.00 for the same amount of credit hours this semester if I took them at BSC. That is a 3:1 ratio and a savings of $1,332. You don’t need to be an economics major to appreciate that savings. In addition, many of the professors which teach at my college also teach at BSC. The only disclaimer is that you will want to make sure the classes you are taking are transferable; so check with your school’s Admissions office.

If you fore fill your core requirements at a Community college, like I did, you may save yourself thousands of dollars by graduation day.

Just remember each individual needs to chart his or her own course. What is right for you isn’t always right for someone else. But one thing we can all agree on is money.  We all need it.  They say money talks, and it’s true.  When it talks to me it says, “David, you are wise and practical.” What does your money say to you?

Your college or university will generally publish on its Web site or in its financial aid office the college’s cost of attendance. This is an estimate of how much money will be required to attend school for one year at that college, including all reasonable expenses. Most people, when budgeting for college, look at the tuition and assume that tuition is more or less the “price tag” for that school, when the reality is that tuition may be as little as 50% of the overall budget.

Click Here to Read more - Determining EFC and Cost of Attendance