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

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!

One of the biggest shows for college students this fall is the new Melrose Place series. On the show actress Stephanie Jacobsen plays Lauren Yung, a medical student who is forced to come up with some unconventional ways to pay her tuition. Early in the season Yung finds out that her father has lost his job and will no longer be able to help her pay for school. To start making money quickly, Yung becomes a high-end call girl. She finds out that spending time with wealthy men is an extremely lucrative business and an easy way to pay off her medical school debt.

In my opinion, this plot line sends a horrible message to the show’s key demographic of young college women.  I have to admit that I do watch the show but I always find myself wanting to scream “student loans” and “scholarships” every time the story turns to Yung’s problems. Most college students are familiar with the hardships of making college payments; however there are ways to quickly get tuition money that are far less humiliating.  Private Student Loans are a simple, flexible way to get the exact amount of money that you need when you need it. Since circumstances can change quickly, private student loans can be borrowed at any time during the semester. As long as you and your co-signer have a healthy credit score you should be able to borrow up to the true cost of your education. The best part is that you can use private loan money for more than just tuition. The Student Loan Network can connect you with private lenders and even help you apply.

If you are frustrated with your financial situation know that there are plenty of resources out there can help you pay for your education. Do not put yourself in danger or disrespect yourself to make money quickly.  If you are just starting to explore your financial options visit the Student Loan Network for information on federal student loans, private student loans and scholarships. Finally, will someone please tell Miss Yung the same thing!

When it comes to free money for college most students will take what they can get, but how would you feel about accepting a scholarship from a chewing tobacco company? Scholarships are often given out by companies to improve their corporate image, but if a tobacco company shells out scholarship money is that sending the wrong message to college students?

This issue has recently been brought to the forefront at Cal Poly. The school is taking a lot of heat for allowing students to accept scholarships from the smokeless tobacco industry as prize awards in collegiate rodeo events. Doctors are upset that the tobacco companies are promoting their products to students so aggressively, but is it a problem if a student takes the money and is not swayed to become a consumer?

Many students do not receive enough federal financial aid to be able to afford college on their own. Scholarships are the ideal option for these students because unlike federal student loans and alternative student loans they do not have to be repaid. Most people would probably argue that college students are mature enough to make responsible life decisions and that they should accept whatever scholarship money they can get.  However, in this age of student activism, some students really do worry about where their scholarship money is coming from and what message it is sending.

If you are weary about where your scholarship money comes from we promise that Student Scholarship Search will only connect you with scholarships that we would be proud to represent. Also do not forget that Scholarship Points gives out scholarships (some as big as $10,000) to students every month.

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 miss payments. Missing payments kills your credit score. A bad credit score makes it impossible to obtain a mortgage, buy a car, and take out any other loans in the future. If you miss payments you will also end up getting slammed with interest in the long run. Paying at least the minimum amount every month is key to staying on top of your debt.

If you are in a position where you really cannot make your payments there are steps you can take to avoid being severely penalized. One option is to apply for income-based repayment. This is a new payment option for federal student loans. With this option your monthly payment is calculated based on your income and family size. The IBR loan payments will usually be less than 10% of your income.

Loan consolidation is another option that will help you minimize your monthly payments. When you consolidate your federal student loans your loan term is extended and you end up with one smaller monthly payment. The new interest rate is a weighted average of all of your previous loans. Before considering consolidation you should know that does not necessarily cut down your interest and you will be paying off your loans for a longer period of time.

Loan deferment options are also available in certain situations. Deferment does not excuse you from ever paying off your loans, rather it temporarily suspends payments. You may be eligible for deferment if you are in school at least half time, unemployed or have experienced an extreme economic hardship.

Finally, in rare situations a person might be eligible for student loan forgiveness. Forgiveness means that all or part of a person’s student loans are cancelled. You would qualify for loan forgiveness if you enter into public service, perform volunteer work, perform military service, or if you become permanently disabled.

If you are a parent of a prospective college student, or a prospective college student yourself, you should be starting to think about financial aid. You have probably heard people around you talking about FAFSA, Stafford loans, Pell Grants, scholarships, and alternative student loans. It might seem like you are the only one who does not know what is going on, but trust me you are not alone in your confusion. Applying for financial aid can be very stressful for families and filing the FAFSA is a task that most people dread.

In order to be eligible for any kind of Federal student loans or grants you must file the FAFSA. Many people play down the importance of the FAFSA, but it should not be taken lightly.  Mistakes on this form can end up costing you thousands of dollars in aid. Luckily there are people out there who know a lot about financial aid and might even be able to help you with the application process.

Many high schools and communities host financial aid and FAFSA workshops. These are usually free sessions run by the high school guidance department, a local college or outside consulting group. These workshops usually go over a general look at financial aid, applying for student aid, why you should file the FAFSA, determining financial need, and tips and techniques for filling out the FAFSA.

If you are perplexed by the financial aid process make sure you find out if your town is holding a workshop. If they are not planning one it may be beneficial to suggest it to the high school principal or guidance department. The U.S. department of education even provides resources and presentation materials that make hosting a financial aid night more manageable. After attending a financial aid or FAFSA session you will probably find out that you are not the only one who feels lost, but you will also probably feel more confident and ready to tackle the application process.

The day you can hoist your graduate degree overhead will be a proud day no doubt, but then the reality sets in.  How much did I borrow for this piece of paper exactly?

The truth is most students have no idea how much they borrowed.    Grants, federal loans, private loans, work-study, and scholarships fall under one giant umbrella to most.  Their philosophy is simple, why worry about it today when I can worry about it tomorrow?

Well, when tomorrow comes knocking it will serve you well to have a game plan.  Today we shall focus on federal loan deferment. Keep in mind that deferment is not a means to an end, but rather, a way to stay afloat if you are having trouble making your monthly loan payment.

There are two common deferment types that are utilized.  The first one is the Economic hardship deferment.  In order to qualify for this deferment type you must fall into one of the following categories:

• You are receiving payment under a federal or state public assistance program, such as Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Food Stamps, or state general public assistance.
• You are serving as a Peace Corps volunteer.
• You are working full-time and your total monthly gross income from employment must be less than or equal to the larger of (A) the monthly minimum wage rate or (B) 150% of the Poverty Guideline amount for your family size and state.

The second deferment type is loan forbearance which anyone can basically receive.   The big distinction between the two deferment types is that while in forbearance interest accrues on the principal and any capitalized interest. Your debt will continually increase while in deferment making your repayment period longer.  When you are in an economic hardship deferment no interest accrues on your subsidized loan portion.

You have 36 months of federal loan deferment entitlement regardless of which deferment you take advantage of and must reapply every 12 months if you wish to continue in your deferment state.

Yes, a third party with power of attorney for the borrower may sign a Stafford promissory note if the borrower is unable to sign.

Use of a power of attorney when signing an MPN limits the use of the MPN to
one loan. If the borrower submits his or her MPN through the school, the school must retain a copy of the original power of attorney and submit a copy with the MPN to the loan holder. A photocopy or a fax of the power of attorney is acceptable.

If the note is signed with a power of attorney, the student must authorize the
school in writing to credit the loan funds to his or her account at the school. In addition, the school must pay any remaining balance to the student for living expenses.