Student Loan Help

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

StudentPlatinum.com has created a useful guide for those of us who don’t understand as much as they should about their credit. More importantly, the site guides you through the steps you will need to improve your credit score to insure you qualify for student loans. Visit:

http://www.studentplatinum.com/improve-credit-score/

Remember, when applying for private student loans, a qualified cosigner helps you to get approved with the best rates and lowest fees. And always maximize scholarships and federal student loans first!

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.

The Financial Aid Podcast is hosting a select group of financial aid, media and industry leaders to participate in a live podcast addressing the recent news regarding the credit crunch and student loans. Learn how you, as a student, parent, or family member can pay for college in 2008. Student questions such as the following will be addressed:

* What is the current status of the student lending market? Will loans be available to me?
* I keep hearing that loans might not be available from some lenders - what does that mean for my Stafford loan?
* What is the government doing - or what should they do - to help make paying for college a reality for most students?
* Where can I find scholarships, grants and other financial assistance?
* What do “tighter credit requirements” mean to me?

Show will air live April 9 at Noon EST.
Register Now to ask your questions in advance!

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.

Two things people do not always realize:

1) You must complete the Free Application for Federal Student Aid (FAFSA) in order to qualify for federal student aid, including the Stafford Loan. There is still time left so get it done online at www.fafsa.ed.gov.

2) You are not done once you complete the FAFSA. You then actually need to apply for a Stafford Loan - and any other aid you are interested in. Talk with your financial aid officer, seek other resources and apply as early as possible.

To find College Scholarships, visit www.StudentScholarshipSearch.com

Do you struggle to save money? If so you are certainly not alone. Saving money is challenging. I equate it to dieting, exercising, or not seeing your friends for an extended period of time.

Dieting. It is so hard to shed those pounds and so easy to put them on. One brownie sundae and months of hard work are just flushed down the toilet. A moment on the lips a lifetime on the hips certainly rings true. Comparatively when you put the effort into saving money, much like dieting, you want to be rewarded when you get to the other side of that speckled rainbow. Be strong my friends – don’t stop at the first taco stand. If you are saving to buy a new car – shop around. See what’s out there. If you’re going to indulge, after you’ve worked hard to save, do so with the knowledge that you’ve made a sound purchase. Obviously you will be spending those dollars eventually – just don’t do so frivolously on a brownie sundae.

Exercising. Once you stop it’s hard to go back, isn’t it? I once committed to a regiment which included 200 sit-ups, 100 push-ups, and a 2 mile jog per day. Then I went on vacation to Seattle Washington for a week and got out of the groove. That was 14 years ago and now I look like a baby cow that hasn’t milked for six months. Once you make a commitment to budgeting your money – stay on that wagon! If you fall off it’s that much harder to climb back on. My wife has fallen off several times to the point that she doesn’t even want to hold a credit card anymore because she doesn’t trust herself. Let’s just steer clear of the wagons all together gang. We can ride in style - a nice stagecoach perhaps?

“Now I look like a baby cow that hasn’t milked for six months.” David E. Bonvie

Not seeing your friends. The days, weeks, and months fly by so quickly without seeing your pals. That’s just the way it is these days. But just because you don’t see them doesn’t mean they’re not there. And just because you throw that credit card statement in your desk draw doesn’t mean it’s not there either. Don’t burry your finances in the Bermuda Triangle with your friends. Out of sight, out of mind doesn’t work in the world of finance. Tackle your issues head on as painful as it may be. Rip the band aid once and move on.

I want you all to be lean, mean, socialites with a few bucks in your pocket. I want you to dance like nobody is watching. Maybe then you can sit down and enjoy that brownie sundae without regret.