Student Loan News, Updates and Blog Posts

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

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

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!

You can not take out any amount you want in private student loans unfortunately, though that would be great if you could.  Imagine being able to pull out $25,000 when you only need $10,000 and then buying a car.  How cool would that be?

Here is how the school certified private student loan works.  The financial aid officer determines the total financial aid package for each student and calculates the student’s unmet financial need by using the Cost of Attendance (COA) and deducting from this figure the Expected Family Contribution (EFC) and any grants, scholarships, and federal loans the student will be receiving for the current enrollment period.

The lender contacts the financial aid officer for certification of the loan amount requested, the financial aid officer can then increase or decrease the loan amount based on the COA calculation.

One of the many benefits of private student loans is that the application process is painless.

To qualify for a federal student loans one must complete the lengthy FAFSA, which is worth it, but it can be quite cumbersome.   The FAFSA asks for everything short of the clothes off your back to calculate a students financial need.

Private student loans, in addition to having a simply application process,  are not need-based either, which means that anyone can take out a private student loan who is credit worthy.

Apply now for a Private Student Loan

Are your Mom and Dad not willing to file the FAFSA with you because they don’t want people knowing their earnings? Are they instead willing to co-sign on a private student loan?  If this is the case the logic behind their actions is illogical.  In fact, you should direct them toward this blog as I will chronicle why their judgment is severely lacking and will only hurt you in the long run.

• By filing the FAFSA you open yourself up for all types of financial aid which includes scholarships, grants, and work-study programs.
• When you file your FAFSA you become eligible for a federal Stafford loan which is in the students name only.  Mom and Dad do not need to co-sign for a Stafford loan like they would for a private student loan.
• You enjoy the security of a fixed interest rate
• You have three years worth of deferment time attached to a federal loan opposed to 1-year on average for private loans
• You may be eligible for 100 percent loan forgiveness if you work in certain fields. Private student loans do not offer forgiveness potential.

The one thing I will say about private loans is that interest rates are very low at this time which is one reason some parents prefer the private student loan to the federal, and if this is your logic it makes good sense.  In fact, after federal aid options are tapped many parents end up subsidizing the rest of their students education with a private loan.  This too is smart. But the parents who are steadfast on protecting their private information are doing so at the detriment of their child.

Did you know that many private lenders offer income contingent repayment plans?  It’s something you should keep in mind if you are turned down for loan forbearance.

Income Sensitive Repayment plans are designed to help students with low salaries as well as those working at nonprofit organizations or in the public service sector.

How it works is that it tailors your monthly payment based on your income, family size, and amount borrowed. The repayment plan is also recalculated each year as your financial landscape changes.

In today’s market it is important to know your credit score. Lenders, understandably, are nervous to lend funds these days for fear they will not get them back. That is why they are so fixated on your credit score.  Your credit score is the only barometer they have to go on to gauge your payback worthiness.

If you are in need of improving your credit score before applying for a private student loan there are resources available to you.  Build your credit score the right way and get the funds you need for school.

Improve Your Credit Score

Private loan companies use two financial indexes to determine the interest rate they extend to their borrowers, the Prime Rate and LIBOR Index.  The Prime and LIBOR are the two most common benchmark interest rate indexes used in the market today.  Let’s quickly breakdown what each is.

What is the Prime Rate?

The prime rate, which is currently 3.25%, is based on the fed funds rate. The fed funds rate is the interest rate at which a depository institution lends immediately available funds to another depository institution overnight.

What is the LIBOR Index?

LIBOR stands for London Inter-Bank Offer Rate.  It is the interest rate that banks charge each other for loans.

You can not choose which index you want your lender to use, but you can certainly ask beforehand if they use the Prime or LIBOR.  If you are not happy with the rate that has been extended to you I would suggest completing a second application with a different financial institution.  It is not uncommon to be extended a different rate from a lender using the opposite interest rate index.  Be sure to cover all your bases.

Compare Private Student Loans

Did you know that you do not need to demonstrate financial need to qualify for a work study at school?  Both federal and non-federal work-study programs exist.

Federal work-study programs are based on demonstrated financial need.  An individual must meet certain eligibility requirements and complete a FAFSA.  On your FAFSA you will want to make sure you mark “yes” to the question asking if you are interested in student employment.  If you are eligible your FWS award will be listed on your awards letter from the school.  If you did not qualify for any reason but are still interested you may be able to scoop up a non-federal work-study job.

The Non-Federal Work Study is not based on financial need which means any student is eligible.  You should inquire with your school about any available opportunities on campus.  It is generally advisable to seek employment on campus before seeking any off-campus job as on-campus employers tend to be more understanding to your class schedule and school commitments.

If you are still short on funds after grants, scholarships, or federal loans like the Stafford loan you may also want to consider a private student loan.  With interest rates at historic lows there has never been a better time to take out a private student loan.

- Complete Your FAFSA

- Apply for a Private Student Loan