Student Loan Help

Online education has undergone a metamorphoses in recent years, not unlike the ugly caterpillar that blossoms into a beautiful butterfly. The concerns once raised by skeptics centering around the validity and relevance of an online degree in the marketplace have since been quelled. Questions now tend to focused on payment options. I think you may be surprised to learn just how easy it is to finance your online education.

Many online schools participate in the Federal Student Aid grant and loan programs, just the same as any certified ground campus you may attend. That means for schools such as the University of Phoenix, Kaplan University, American Intercontinental University, Argosy University, Walden University, Keiser University, Capella University, Everest University, and Grand Canyon University, just to name a few, federal loans are at your disposal. They are all Title IV certified schools that offer federal aid to their students.

To qualify for federal aid you simply complete your FAFSA and list the school or schools (up to four) that you are interested in attending. The school(s) will then receive a copy of your student aid report from the Department of Education which they use to determine your federal aid eligibility. But for those who do not qualify for federal aid, or don’t qualify for enough, private loans are also available to you.

Private loans serve as a great supplement or alternative to federal loans. And with interest rates at historic lows there has literally never been a better time to borrow the funds needed to help cover the cost of tuition, books, and other direct educational needs.

It is also a good idea to sign-up for as many scholarships as possible. Here at the Student Loan Network we give away free scholarships every month ranging from $500 to $10,000 to eligible students. What students love most is that you don’t need to hold a certain GPA or submit an essay to qualify. If you attend a certified Title IV school located in the U.S. you are automatically qualified. Don’t miss out. To register (click here).

Follow your dreams and find the online degree program that’s right for you.

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The third semester, better known as summer school, has seen an increase in student attendance in recent years. That’s really not surprising when you consider each graduating class has been bigger than the last. The U.S. population is now over 304 million, up from 273 million just a decade ago.

With enrollment on the upswing and the same amount of seats available in the classroom students have been turning toward summer school more and more to fill the gap when classes have been filled to capacity during the fall and spring semesters.

Of course because the academic period for most schools begins in the fall and ends the following summer many have exhausted their federal Stafford loan funds already. The loan periods determine the timing and amount of disbursements. In this case the fall and spring semesters would have disbursements, assuming the student was enrolled both semesters, which most are.

The next best option, after you’ve exhausted your federal loan funds, is a private student loan. Private student loans are popular these days because of the low interest rates that many enjoy. Banks use two main indexes to determine a borrowers interest rate, LIBOR and Prime. Regardless of the index used the interest rate is low across the board at this time to encourage consumers to borrow. That means you and I are the winners.

Additional note: Private student loans are in a students name and do require a credit worthy co-signer.

To enter for a chance to win a monthly scholarship ranging from $500 to $10,000 (click here).

I’d say at least half the people I speak with have no idea who their lender is. And honestly, until you graduate and need to begin making payments it doesn’t matter. Those loans are out of sight and out of mind. But when the time comes when you need to be fiscally responsible or place your loans in a deferment it certainly helps to know who to contact.

If you have federal loans, such as the Perkins, Stafford, or Plus loan there are three different ways you can go about ascertaining who your lender is.

1. If you have your 4-digit FAFSA pin number you can go to www.nslds.ed.gov and follow the prompts.

2. You can contact the Department of Education at 800-433-3243 and request to speak with the borrower tracking department

3. You can contact your school’s financial aid office.

If you have private student loans you can request a free copy of your credit report at freecreditreport.com or annualcreditreport.com. There you will see the names of your lenders listed.

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Last November I wrote an article entitled, College Affordability, the Big Financial Aid Overhaul. The article discussed how Harvard University made a number of policy changes surrounding how they calculate financial-aid. Their aim was to focus on middle-class families by making tuition at Harvard more affordable. The net result was a record number of applications (29,112) from the class of 2013.

Unfortunately Harvard was only able to accept 7% of applicants this fall, down from 7.9% last year. The applicant pool reached an unprecedented level of achievement according to university officials. More than 2,900 scored a perfect 800 on their SAT critical reading test, and 3,500 scored perfect on the SAT Math portion.

“We had never had so many good choices.” said William Fitzsimmons, dean of admissions and financial aid. “Our new financial aid program encouraged so many people who might not have ever thought about applying to get into the pool.”

About a quarter of the admitted students come from families earning less than $80,000, making them eligible for nearly a free ride at the prestigious university.

It looks like Disney has some company under the making dreams come true umbrella.

If you need a federal student loan for school (click here). For a private student loan (click here).

I’ve been feeling like the bearer of bad news lately. It seems every time I sit down to write a blog it’s about something negative going on in the market. And although this blog is no different, it does have a silver lining.

It was just announced last week that Sallie Mae, who provides 6 billion dollars per year in student loans, is discontinuing their private Signature loan product in favor of a short-term version that requires students to make interest only payments while in school. This is both good and bad news.

The good news is that a student will save thousands of dollars over the life of their loan as they will avoid negative amortization and will have a shorter loan term. The bad is that the borrower is still required to make monthly payments while in school.

The loan example that SLM likes to use is if a student borrows $17,000 over two years. For the first semester the student would be responsible for $40 per month, but that figure would rise each semester, reaching $160 by the second semester of the students sophomore year. After graduation the student would have a $328 monthly payment for six years. Under this new plan the student would repay about $28,000 total, opposed to the Signature loan program, which held a longer repayment term and would have cost about $45,000.

Still, while students “appreciate” the cost savings on the back end, is is the money on the front end that is the real killer. Not all students can afford to make payments while in school. For those students I am happy to report there are still options.

Fortunately not all lenders are forcing students to make payments while in school. If you are interested in taking out a private loan that still has a loan deferment benefit while in school (click here).

See, I told you I had a silver lining. I’m trying to shed my label as the grim reaper of student blogging.

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President Obama is pushing his budget proposal to overhaul the entire education system throughout the U.S. His plan would affect students of all ages with a goal of improving education levels all across the U.S. starting with preschool aged children. In a recent speech to the US Hispanic Chamber of Commerce, Obama began to divulge what exactly he has in mind for this giant overhaul. He spoke of a 5 tier reform plan that touches on what seems like every stage of the educational process. The President was quoted as saying, “We have let our grades slip, our schools crumble, our teacher quality fall short and other nations outpace us…The time for finger-pointing is over. The time for holding ourselves accountable is here.”

The 5 reform points that he spoke about are as follows:

1. Increase investments in early childhood programs such as Headstart etc.

2. Holding students accountable for higher/tougher testing standards

3. Increase teacher training and recruitment, and offer “merit pay” (teachers that produce more results will get paid more than others). Along with that, ineffective teachers would be let go if they fail to improve.

4. Renew his campaign for the support of charter schools. (definition of a charter school = Charter schools are elementary or secondary schools in the United States that receive public money but have been freed from some of the rules, regulations, and statutes that apply to other public schools in exchange for some type of accountability for producing certain results, which are set forth in each school’s charter). President Obama also proposed longer school days.

5. For Higher Education he wants to increase the annual Pell Grants maximum to $5550, and push for students from working families to receive a $2500 tax credit.

I can only imagine that the republicans must be reeling…especially about the money for Headstart. Also included in early investments was an idea to have registered nurses visit the homes of single moms regularly to make sure their children are healthy and ready for school life. Not a bad idea, but who will run this program? I will say that he has a point when it comes to holding students and teachers accountable for their performances. Have you ever had a bad teacher? I have, and it made me lose any interest I may have had in the subject at hand. Frankly our country collectively cannot really afford to have children caring less about school than some of them already do.

For those students that are fortunate enough to go on to college, Obama has some plans there as well. The Pell grant is a Federal grant given to students who exhibit more financial need than others; this “financial need” is determined when you fill out the FAFSA (Free Application for Federal Student Aid). Obama proposes to raise the annual maximum amounts on that grant from $4,731 for the 2008-2009 school year to $5350 for the 2009-2010 school year, and then increase it again to $5500 for the 2010-2011 school year. The unsubsidized loan amount for dependent students is currently $2,000, but Obama’s stimulus plan will add an additional $2000 to that, which will help a lot of students out whose parents cannot afford to help them through college. The President also proposes to eliminate the FFEL loan program (private lenders who lend Federal loans) and have all Federal loans run through Direct Loans (the U.S. Department of Education’s Loan program); but wait, there is more….the Perkins loan, which is another federal loan awarded based on need, is typically run through the college itself, but Obama is proposing to shift that loan program so it is run through the government. Now I have my loans from my undergraduate degree with Direct loans, and the customer service is definitely not top notch. I am wondering how the Department of Education is going to manage all the loans that are currently in the FFEL program AND all the Perkins loan and still make sure that those loan programs don’t fall at the waist side. I personally do not see it happening…and didn’t Clinton propose this at one point, but it failed?

A student tax credit is also part of this the Presidents budget proposal, which would put an extra $2500 in students’ pockets. This is definitely helpful to any student in school, and it can also serve as an incentive for someone to go back to school and finish their education.

This new budget proposal has a lot of big ideas, some of which already have the necessary platforms to execute the new plans. Others however do not. It seems like all the ideas would help to improve the education system in the US, but the road to get there might be a long and bumpy one.

Code: EDUCATIONOVERHAUL

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The youth of today is far more in-tune with what’s going on in the world than my generation ever was (geesh, I sound like my Dad now). It’s all linked to technology. Cell phones, blackberries, Internet, and 24/7 programming are all contributing factors. When I was thirteen I was completely naive. The biggest conundrum in my life came on Friday evenings when I was forced to decide between a hostess apple pie or some Andy Cap hot fries to go along with my pepsi-cola. Yes, it was the best of times.

I worked seven days a week (if you want to call it work). I had a paper route on Indian Trail in my home town and made about $40 bucks per week. I spent my money on baseball cards, food, comic books, and even managed to save enough one time to buy a really nice digital watch with a built-in calculator. Nowadays, however, many kids don’t have the option of spending their money so frivolously. Money management is a skill many need to master at an early age if they want to get ahead.

And while I certainly endorse saving, I refuse to toss around outdated cliches like “a penny saved is a penny earned”. It’s not. Inflation, as you probably know, will far out pace any menial interest you accrue on your money in a savings account. What I will say is this however; if you save a portion of your money now, even if it’s just 20% of your earnings, you may wind up saving yourself thousands of dollars down the road.

If you read my blog Why You Should Invest In Education you will see the clear correlation between a college education and the amount of money you can earn. That said, a college education is costly and most students will need to take out a federal Stafford loan, a private student loan, or both to finance their education.

The interest rate on federal Stafford loans currently ranges from 6-6.8%, while private loans vary greatly depending on your FICO score. Obviously the more you owe, the more interest accrues, and the more you pay back, which is why I want you to minimize the amount of funds you need to borrower by beginning the savings process now. I’d much rather you collect 1% interest on your savings now than have 6% interest count against you later.

Start out by setting a modest goal for yourself. If you can mange to save just $39 bucks a week that adds up to $2K per year! The power of discipline the rewards of time.

Remember, it’s never too early to start saving. Perhaps if I saved a few dollars I would have reaped the secondary benefit of saving a few pounds too. But those sweet apple pies were a little slice of heaven.

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At this time last year the prime rate, which is the benchmark widely used to determine the interest rate on a number of loans, was a respectable 6%. Today, that rate is a jaw dropping 3.25%, the lowest it’s been since 1955. To put that in perspective Dwight Eisenhower was our President, a first class postage stamp cost 3 cents, and Marty McFly was desperately trying to get back to the future. I guess the more things change the more they stay the same. But how can you benefit from a low prime rate?

Many private student loans are tied to the prime rate index, and since the prime is at historic lows the cost of borrowing is significantly lower than it has been in years. This fact has parents and students debating whether they should take out a private or federal student loan. Undoubtedly your qualifications and priorities will serve as your guide when making this important decision, but there are some key factors and benefits to consider during your deliberation process.

Information provided by the Student Loan Network for general information purposes only.

As you can see, variable interest rates for private student loans start at 2.75% (because the prime is 3.25% and rates start 1/2 point below prime). However, the catch-22 for many Americans is that while this favorable rate exists it is not attainable.

Low interest rates are reserved for those with strong FICO scores, an endangered group which dwindles by the day. Millions of Americans have been defaulting on loans over the past 18-months sending their credit score into a damning abyss. A compromised credit score essentially disqualifies you from the most salutary interest rate in the market. And it’s not just the borrowers with a scar on their credit history that are facing new hurdles; the pinch is being felt across the board. Those with stellar credit are adjusting to new requirements as well.

Most lenders, regardless of the individuals credit score, are requiring a co-signer on all applications to protect themselves. But finding two credit worthy applicants is a harrowing task in today’s market, which makes federal loans the only realistic option for many desperate students.

Federal loans serve as a dynamite need-based option for those seeking funds for school. You don’t need a co-signer, and eligible students can actually qualify for more funds if their parent or guardian has poor credit. To qualify for a federal loan you must complete a FAFSA, and must also attend a qualified Title IV school. That said, federal loans do have a few drawbacks.

First off, the maximum yearly allotment is relatively small in relation to the cost of tuition, and will most likely only cover a fraction of the tuition cost. Next, the interest rate is fixed and can not be decreased for the life of the loan. Third, some lenders charge a 1% origination fee off the topic. And lastly, many feel the current Stafford loan rates, which range from 6% to 6.8%, are outlandishly high in this market.

As you can see each loan type has its advantages and disadvantages.  Just be sure to do your homework before you sign on the dotted line.  If you do you’ll be sure to ace your tests inside and outside of the classroom.

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It was Benjamin Franklin that quipped, nothing is certain but death and taxes, but in the world of financial aid the FAFSA is at the top of that short list. Completing your FAFSA is an absolute must. Without it I can tell you with great certainty that you will not receive federal grants or loans, so kudos to you for getting that done.

For those who have not yet completed the FAFSA, or wish to review our tips for effectively filing your FAFSA, in order to maximize your financial aid benefit package, (click here). Remember, you can always resubmit your FAFSA with updated data, which may lower your EFC (we’ll discuss EFC in greater detail shortly).

For the rest of you that completed and submitted your FAFSA and are wondering what to do next; you’ll have to wait as the Department of Education processes your application. When they’re finished they will send both you and the schools you highlighted on the FAFSA a three page report called a Student Aid Report (SAR).

The SAR is a report of what the government believes you can afford to pay out of pocket for college in the form of EFC, or Expected Family Contribution. This number is located in the top right hand corner. The lower the EFC number the greater the financial need.

As mentioned, the SAR is also sent to the colleges of your choice (up to six schools max), from which they create a financial aid awards letter detailing what aid they’re able to offer you. You will most likely receive this awards letter in the mail.

The awards letter is a comprehensive breakdown of all school related expenses, scholarship and grant money you qualify to receive, work-study eligibility, as well as the financial resources the school feels you have at your disposal to pay for one year of attendance. They also give recommendations as to the best loan options available.

The most common loan option students take advantage of when paying for school is the Stafford loan, which is divided into two categories, subsidized and unsubsidized.

Subsidized Stafford loans are awarded based on financial need. You will not be charged interest before you begin repayment or during periods of deferment. The federal government “subsidizes” (or pays) the interest during these times. No payments are expected on the loan while you are enrolled as a full or half time student.

Unsubsidized Stafford loans are not awarded based on financial need. Any eligible student can take out Unsubsidized Stafford Loans. You will be charged interest from the time the loan is disbursed, to the time the loan is repaid in full. No payments are expected on the loan while you are enrolled as a full or half time student.

Learn more about Stafford Loans.

For the upcoming 2009-2010 academic year the interest rate for subsidized Stafford loans, for undergraduate students, is fixed at 5.6%. If you fall into the unsubsidized category you will be extended a 6.8% fixed interest rate.

Private loans have also become a very attractive alternative these days with the prime rate at a 55-year low. Most private loans do require a co-signer. But the key is to send your FAFSA to as many schools as possible in hopes of fielding some attractive offers and limiting the amount of funds you need to borrow.

If you list multiple schools on your FAFSA you can use one school’s offer (awards letter) against another to try and land a better deal. Most schools generally set a May 1 deadline, which is why the financial aid officers refer to April as haggle month. Students and parents generally try to haggle for a better deal before the May 1 deadline.

So as you can see the FAFSA is just the beginning of the financial aid process, with many more steps in tow. But unlike the little engine that could, which repeated its motto I-think-I-can, as it climbed over that mountain top, I-know-you can! I know you can get thru the financial aid process, although sometimes it can seem daunting and overwhelming. You can do it, I just know you can.

Apply for a Federal Stafford Loan Now.

For all you hungry scholarshippoints members out there enjoy this code worth 10 points, FAFSADONE.

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Deion Sanders was known as “prime time” back in the day; a name the self-absorbed NFL star actually gave himself. But when people speak of prime time these days they are usually referring to the widely used benchmark which determines the interest rate on a number of loans. Strike now while the kettle is hot is my advice.

I’ve been beating the private student loan drum for the past few weeks, and with good reason. It is a great time to take out a private student loan for school. With the prime rate at 3.25% and Stafford loan rates ranging between 6% and 6.8% it’s just good business acumen.

Whether you are looking to cover a portion of your student loans or fund your entire education with private loans one thing is certain, the rates have never been better. Apply today.