As you may recall, last year, Congress voted on whether to raise the subsidized Stafford loan interest rate to 6.8%, or keep it at 3.4%.  Congress decided to prolong the decision for another year and keep the subsidized interest rate at 3.4%.  However, a year has gone by, and it is once again time for Congress to vote.  If Congress fails to come to a consensus by July 1, the interest rate on subsidized loans will automatically double to 6.8%.

In response to this impending decision, several politicians have put forth ideas of what they deem to be the best solution.  On May 1, Senator Elizabeth Warren proposed the Bank on Students Loan Fairness Act, which sought to lower the interest rate on subsidized loans to just under 1%, which she described as the equivalent rate for which banks qualify.
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In today’s economy, students need to submit their resumes to employers early to land a job after graduation. Resume and application forms provide employers with written evidence of a prospective employees’ qualifications and skills. Generally, a resume contains all of the information acquired on an application form, except that it usually fits onto one page with various templates. Some employers prefer a resume over an application form while others require an applicant to fill out both. Not every job requires a resume; therefore, inquire with the employer about their requirements before submitting anything. A resume represents the applicant, which means it should be presented in the utmost fashion.

Follow the basic guide below to gain a clearer perspective on how to write an effective resume to prospective employers.
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Books and supplies add about $600 to $1,200 to your college costs each year. At lower-cost colleges buying books can bust your budget, sometimes even exceeding the cost of tuition and fees. Unlike tuition and fees, however, textbook costs are something you can control by buying and selling cheap textbooks.

Two of the best methods of saving money on textbooks include buying used textbooks and selling your books back to the college bookstore at the end of the semester. Each approach can save you as much as half of the cost of buying new textbooks, so if you combine them and are lucky, you could pay next to nothing for your textbooks. Unfortunately, faculty change editions periodically, so you won’t always be able to sell all of your textbooks.

Buying used textbooks isn’t as icky as it sounds. Often the used textbooks will have notes in the margins and highlighted passages that can help you understand the material and study for exams.

An alternative is to rent your textbooks. This doesn’t save you as much as buying used textbooks and reselling them after the final exams, but it guarantees that you’ll be able to earn some cash by returning the textbooks. As with reselling your textbooks, the main drawback is you don’t get to keep the textbooks.

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Last year at this time, the big issue in the news was the impending doubling of student loan interest rates. The interest rates of Subsidized Stafford Loans were set to double from 3.4% to 6.8%. Before this could happen, Congress stepped in, temporarily lowering them for another full year.

That extra year of low rates is now coming to a close, and rates are once again set to double. This is why Senator Elizabeth Warren has introduced the Bank on Students Loan Fairness Act. This act would allow students to borrow at the same rate as banks, which is about “one-ninth the amount that students are asked to pay”.

Here is a quick list of what this bill seeks to do:

• The bill would charge students a rate equal to the rates banks are getting from the government (for subsidized loans only)—a rate of less than 1%.
• Loans would be funded through the federal reserve, with administration by the Department of Education

Senator Warren gives an excellent overview in her introduction of the bill to the Senate Committee. Watch it below.

Parent PLUS loans are just one option for parents to help cover the costs of college. To help you decide if this is a good option for your family, take a look at the following tips on applying for and managing your Parent PLUS loan.

1. Determine if it’s the right choice for you

What I mean by this is, Parent PLUS loans are solely in the name of the parent, and cannot be transferred to the student. Before applying, make sure you know that you’ll be responsible for paying it back. If you’d rather be a cosigner on a loan in the student’s name, then your best option would be for your student to apply for a private student loan.

2. Don’t stress about credit

PLUS loans have minimal credit requirements when compared with private loans. The check does not take credit score into account, and only looks back 5 years to determine if there are any adverse credit issues during that time.

If you did have an issue during that time, don’t fret! You have the ability to appeal a declined PLUS loan if you have extenuating circumstances. For more on what constitutes an extenuating circumstance, read A Parent’s Credit and PLUS Loans.

If you’re still declined for credit reasons, your student becomes eligible for more Direct Stafford Loans, increasing to the independent student loan limits.
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Mistake #1: Not comparing college costs

Colleges all write their financial aid award letters differently. Some count student loans as self help, others may include it in your financial aid total. Comparing your awards, item to item, can give you a better picture of where you stand financially with a school. Feeling ambitious? Figure out how much student loan interest will accrue over 4 years at each school to see how your choice can affect you when you graduate.

Mistake #2: Not applying for scholarships throughout college

The biggest student loan mistake you can make is taking out more than you need to. Many students stop searching for scholarships after their freshman year, but by applying regularly, you’re more likely to win money for school and need to take out less loans over your college career.
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Families everywhere are currently sweating over financial aid award letters, trying to decipher aid and make the huge decision about which school is the right choice for both the student, and family finances. However, once the college decision is made, there is still a lot to do, including applying for student loans!

To help families through this award letter season, here is a breakdown of how and when to accept—or apply for—all types of student loans.

Perkins and Stafford Loans

When to Accept: April-May for Fall semester
How: For these loans, students can simply accept their loan amounts through the financial aid office. To finalize the acceptance and before they can receive the loan funds, students must complete a Master Promissory Note (MPN) online at StudentLoans.gov and complete an entrance counseling session as directed by the school.
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As a parent, you are faced with one of life’s greatest challenges: preparing your child for financial responsibility. When your child leaves home for college, they will explore their independence in more ways than one. Learning the financial facts of life can be confusing and can take years. You can help prepare your child for financial independence by sharing these important lessons.

1. Create a budget
The first step to financial responsibly is by making sure you do not spend more than you have. You can empower your child by helping him/her establish a budget for college. Consider how much income the student has (including loans, scholarships and financial aid), then add up the items you are budgeting for to see if the student can afford them. Here are some things to consider budgeting for:

• Tuition
• Food
• School supplies
• Laundry
• Phone
• Entertainment
• Transportation (cabs/bus)

Managing and sticking to a budget will teach your child to make good financial decisions and will provide them with a sense of control.

2. Keep track

Creating a budget is half the battle – sticking to it can be the hardest part. A good tip to share with your child for sticking to their budget is to keep track of all spending. There are a variety of tools available besides bank accounts that can help with money management. Mint.com and LearnVest are two great tools that allow you to organize your finances, set a budget and alert you when you’re getting off track.

3. Be smart about plastic

If your child does not already have his/her own bank account, this will be the first step. Once they establish their own checking account, they are ready to determine how they will pay their bills. There are a variety of different payment options. The most commonly used payment method for college students are debit cards, since there is debt risk associated with credit cards. Take the time to explain the advantages and disadvantages to using both:

Learn more about student banking at studentplatinum.com.

3. Pay bills on time

It is important to explain to your child that not paying bills on time can have a negative impact on their financial future. Explaining the importance of establishing a good credit history early in life is an invaluable lesson.  Your child will need to have good credit history in order to qualify for a private student loan if they need more funds for college, buy a new car, apply for a job or take out a mortgage for a house later in life. It is important to explain to your child that in order to establish good credit, they must pay their bills on time and in full.  Even a late phone bill can negatively affect their credit score.

5. Borrow what you need

If your child has taken out a loan for college, it is important to stress that they will need to pay back that money, along with the interest accrued, once they graduate.  With that said, it is key to emphasize that they should only borrow what they need or they will quickly find themselves under mountains of student-loan-debt situation after graduation. If your child finds him/herself in a situation where they need more money for school, there are other ways to fund their education than borrowing such as finding a job and applying for scholarships. If they do borrow, make sure to exhaust all federal loan options first, especially subsidized Stafford loans, which do not accrue interest while a student is in school.

2012 Interest Rate Increase

Last year around this same time, a hot story in the media was the impending interest rate increase for Federal Direct Stafford Loans. Subsidized loans were at 3.4%, and with legislation running out, were set to double to 6.8% — the same as their unsubsidized counterparts. Luckily for students, Congress extended the lower interest rate for another year.

Projected Rates for 2013–2014

Once again, subsidized student loan interest rates are facing an impending increase, and are still up in the air. Without action, students may see an increase to 6.8% for the 2013–2014 academic year. This means that the only difference between subsidized loans and unsubsidized student loans would be that the former will not accrue interest while in school or in a grace period.

At this time it is unclear what actions may be taken to prevent student loan interest increases. We could see another one-year extension of the lower rate, or a system overhaul may even be possible. However, if nothing is done by July 1, 2013, students can expect to see the higher rate take effect for all new subsidized loans.

The Future of Federal Student Loan Rates

Private student loan rates are currently based on an index rate (such as the Prime or LIBOR indeces) plus a set margin. This allows for flexibility based on the current market. Federal student loan rates do not follow this structure, and are not tied to any economic factors, making it difficult to set competitive and affordable rates for borrowers.

To rectify this, organizations such as the New America Foundation have submitted proposals for better ways to handle federal loan interest rates. The proposals include tying interest rates to 10-year treasury notes and securities. Rates would be determined similarly to private student loans, with a variable base, plus a proposed margin of 3.0%.

While it is unclear which, if any, of these proposals will be enacted, it’s possible that borrowers could see more affordable rates in the near future.

For more information on interest rate proposals, read Solving the Interest Rate Quandary: Two Feasible Proposals on NASFAA.org.

Did you know that April is Financial Literacy Month? With the recent economic struggles, it’s clearer than ever that many students (and even parents) need some personal finance training, stat! According to the National Financial Educator’s Council:

“About thirty-four percent of parents have taught their teen how to balance a checkbook, and less than that has explained how credit card interest and fees work and ninety-three percent American parents with teenagers report worrying that their children might make financial missteps such as: overspending or living beyond their means.”

While parents can be a good starting point, “Around sixty-nine percent of parents admit to feeling less prepared to give their teenager guidance about investing than they do having the ‘sex talk’ with them.” Yikes!

In the spirit of Financial Literacy Month, we want to help you learn to manage your money! To kick things off, here’s a list of some great websites designed to teach you those much-needed money skills!

• 360 Degrees of Financial Literacy
• Practical Money Skills for Life
• MyMoney.gov
• Jump$tart.org
• National Financial Educator’s Council
• Schwab MoneyWise
• LearnVest
• Loyola University’s Financial Literacy Month Page

My mother always told me, “Don’t put it on a credit card if you can’t afford it in cash” and I’m free of credit card debt to this day! Share your wisdom and tell us some of your own personal finance tips by leaving a comment below!

Don’t forget to be on the lookout for more personal finance posts in the coming weeks or check out last year’s Financial Literacy Blog Series!

Source: http://www.financialeducatorscouncil.org/financial-literacy-statistics.html