03.20.09 | OBAMA: Federal Aid, Tax Cuts, & Nurse Visits?

Posted in FAFSA, Financial Aid, Private Student Loans by Student Loan Network Staff

President Obama is pushing his budget proposal to overhaul the entire education system throughout the U.Sschool-bus-cartoon-7. 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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03.13.09 | Why You Should Invest In Education

Posted in Financial Aid by Student Loan Network Staff

For those of you who think that college is a waste of time and that you can find a job without a college degree, I can not disagree.

The fact is most of you will find a job, but what kind is the real question. Odds are your job will hold limited compensation potential and little chance of advancement without that piece of paper. And before you start saying, well my father didn’t go to college and he did pretty well, my answer to that is, it’s a different era now! My Dad bought his first new car for $1,400, but that’s not happening in 2009.

If you want to get ahead a bachelors degree is the bare minimum you need these days (unless you are handed the keys to the family business or have a fat trust fund to live off). Not to mention the more education you have the more likely you are to keep or find employment.

The chart below, with 2007 numbers from the U.S. Bureau of Labor Statistics, shows a clear correlation between eduction,employment, and compensation.

Unemployment Rate in 2007 Level of Education completed Median earnings in 2007
7.1% Less than a High School diploma $22,256
4.4% High School graduate $31,408
3.8% Some college, no degree $35,516
3.0% Associate degree $38,480
2.2% Bachelor’s degree $51,324
1.8% Master’s degree $60,580
1.4% Doctoral degree $77,844
1.3% Professional degree $74,204

You can debate the merits of going to school vs. not going to school if you’d like, but the unabashed truth is starring you right in the face. Don’t lie to yourself, you know the numbers don’t lie.

For information on federal Stafford loans (click here).

For information on private student loans (click here).


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03.06.09 | FAFSA Applications Are Up Significantly

Posted in FAFSA, Financial Aid by Student Loan Network Staff

It’s no surprise that when the economy is flat lining that many retreat back to school. It’s a warm sanctuary in a cold cold world.

The problem, as I have previously discussed, is that federal aid goes quickly. The Department of Education reported a 20 percent increase in the number of FAFSA applications submitted for the 2009-2010 processing year over the 2008-2009 year. More students, young and old, are lining up to exercise their mind.

Understandably loan volume has also increased with more students seeking aid. The Direct Loan program alone has increased by more than 7 billion so far this academic year, compared to the same time period in the 2007-08 academic year. FFELP loans are also up despite the fact that 59 schools have moved from the FFELP program to the Direct Loan program.

So what does all this mean? It is always better to get your FAFSA application done early. The closer to January 1 you can complete your application each year the better the chances of maximizing your financial aid package. Keep that in mind as you move forward, and come back to read up on all our helpful FAFSA hints.


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03.05.09 | Cost Of Education Up 439%

Posted in Financial Aid by Student Loan Network Staff

Want to hear a frightening statistic? According to the National Center for Public Policy and Education the cost of attending college has risen 439 percent from 1982 to 2006. 439 percent!!!

Now I know I’m singing to the choir here, and that all of you are well aware how much education costs these days, but even I was shocked by this outrageous statistic and felt obliged to pass it on. It really makes you wonder, doesn’t it? I mean real estate, automobiles, the Dow, and all kinds of merchandise has dropped in price over the past several months, but not the price of education. In fact, it’s news worthy when an institution just freezes tuition rates.

I will say this though, in defense of the colleges, many are allocating more funds to financial aid during these difficult times, but how about a tuition break too? Not all students qualify for financial aid.

What do you think about this outrageous statistic? Let your voice be heard.


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03.03.09 | I’ve Filed My FAFSA, Now What?

Posted in FAFSA, Federal Work-Study, Financial Aid, Stafford Loan by Student Loan Network Staff

It was Benjamin Franklin that quipped, nothing is certain but death and taxes, but in the world of financial aid the student_aidFAFSA 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 Expected Family Contribution 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.

studentsUnsubsidized 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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03.02.09 | School Remains Your Gateway To A Brighter Tomorrow

Posted in Financial Aid by Student Loan Network Staff

navy_logoI remember it like it was yesterday. I was 17 years young and had enlisted in the Navy. I had it all figured out. I would graduate High School in June and then ship out to the Great Lakes for boot camp that October. Yep, no college for this kid, no soiree. Then, in a flash, everything changed the day I was scheduled to leave on October 4.

Somehow the 80-year old doctor picked up on the fact that my circulation was less than stellar that fateful day. Back in May, when the weather was warmer, I did not exhibit any such symptoms during my first in-depth physical, but this day was different.

There must have been at least a hundred of us standing around in our underwear at the MEPS building in Boston. I recall being chilled to the bone as I stood there on that concrete floor. Unfortunately for me there was visual evidence to confirm this fact. My digits, as it turns out, revealed a secret that I myself didn’t realize I was keeping.

The purplish hue that glossed over my hands was completely normal to me, but was anything but normal. The doctor ordered blood tests where it was discovered I had a circulation problem called Reynaud’s, which happend to be a disqualifying condition for the military. I was medically discharged 24 hours later.

I was absolutely devastated. Now what I wondered? I ended up going to work for a few years after that. I worked at Stop & Shop supermarket before landing a warehouse job at a company called New England Frozen Foods where I worked in a freezer (12 below zero weather) for 10 hours a day. I was just drifting. It took me three years before I finally woke up from my slumber. That’s when I decided to go back to school.

I started at a community college before moving on to a four year state school. While in school I did internships at Walt Disney World and the WB56 news station before landing jobs at the Boston Globe, John Hancock, and a private jet company. Now I work for the Student Loan Network, where I educate the minds of tomorrow about the financial aid process, and help locate funding solutions for school.

The reason I’m sharing my story is because I want you to know that when all hope seems lost, like when I was discharged from the Navy, something great can still come from it. I just hope it doesn’t take you three years to wake up, like it did me, should you face calamity in your life.

School provides opportunities and opens doors that would otherwise be closed. I wouldn’t consider myself to be scholarly, but I was smart enough to get my butt back to school. Plus, nowadays you can go to school without even going to school.  You can enroll in a degree program right online.  You have more options at your disposal today than I had back in the mid-90′s.

It’s easy to make excuses why you can’t, but I’m here to tell you that you CAN.  You can make it happen, and I’m living proof.


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07.02.08 | Private Loans vs. Parent Plus Loans

Posted in FAFSA, Private Student Loans, Student Loans by Student Loan Network Staff

So, your child wants to go to that private University costing $45,000 per year and you’re wondering how on earth you’re going to pay for it.

They have worked hard thru High School, received a merit scholarship, have taken their PSAT, SAT, & ACT exams to prepare themselves and are excited about this new chapter in their young adult lives.

You on the other hand are a little less excited, and not because empty nest syndrome has set in prematurely. How am I going to pay for this you are thinking to yourself? It is the million dollar question. I just hope the million dollar question doesn’t cost me a million when my son is of age in 18 years.

Here are a few things to consider. FFELP Parent Plus loans are currently fixed at 8.5% which is really high in relation to private student loans, which many can get in the mid 6% range with good credit these days. The fed funds rate has dropped precipitously over the past several months which have spurred these lower private interest rates and has swung the pendulum in favor of private loans for many.

Both loans can be repaid after the student graduates, which are nice benefits, but you are only delaying the inevitable while interest continues to capitalize. If you can at least afford to make interest only payments while the student is in school it would certainly be in your best interest.

Another thing parents often ask me is who is responsible for the payment on these loans when the student graduates? The parent plus loan is linked to the parent’s social security number, so the parent is responsible for that one. The private student loans are generally in the students name with the parent listed as a co-signer. This would be the student’s responsibility and after 36-48 months of on-time payments you can get your named removed as a co-signer.

The parent plus loan also holds a tax benefit. You can write off the interest provided you do not earn more than $70,000 if you are single and $140,000 for joint filing. On a side note many parents with a joint income exceeding $140K are actually looking at home equity loans. Interest rates are so low on equity loans currently and they can write off the interest at the end of the year.

As you can see you have a few options, but only you know what is right for you. Happy spending.

06.13.08 | 529 College Savings Plan – Part II

Posted in Financial Aid by Student Loan Network Staff

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. 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.

*This information was accurate as of June 13, 2008 – but is subject to change.

04.22.08 | ~ Free Money – Scholarship Style ~

Posted in Scholarships by Student Loan Network Staff

HELP WANTED 3

HELP WANTED!

Are you a struggling student trying to make ends meet? Do you need money for school? Would you like the opportunity to win a $1,000 scholarship per month and a $10,000 scholarship in October no strings attached??? If you meet this needy criteria you’re search is over. We are the perfect fit for you.

The perfect candidate will also enjoy sleeping late, going to parties, playing video games, exercising their mind, and most importantly receiving free money!

Guaranteed: Someone is going to walk away with $1,000 per month and $10,000 in October just for signing up. Sign up takes all of thirty seconds. I wish I knew about this site when I was going to school.

How to register: go to www.scholarshippoints.com click on Login/Register. That’s it.

Now here is the coolest part. You can accrue points like a lottery to increase your chances of winning the monthly scholarship awards! You can take surveys, post blogs, do a scavenger hunt on the website; the list goes on and on. You can also elect to do none of the above and just register once and be done with it. It’s completely up to you.

We all want something for nothing, and some of us will get it.  Will you be one of them?

11.28.07 | Stafford Loans = Your $$$$

Posted in Student Loan Links by Student Loan Network Staff

For prospective or current college students, it is important to know the 2 different types of the Stafford loan. It is not news that if you are going to take out a loan, you should be well educated about the loan, for obvious reasons….but equally as important is realizing what these loans mean for your financial future. Remember it’s your Education and your money…two things that have extreme importance in todays world. Ok so here goes: Subsidized Stafford loan means that no interest accrues on this loan while you are in school at least part time. Interest starts accrueing on it 6 months after you graduate, or withdraw from school…or 6 months after you drop below part time. The goverment puts limits on how much you can borrow, because they are the ones paying the interest for you to the lenders.

Unsubsidized Stafford loan are a bit different. They accrue interest from the moment it is disbursed. You, the borrower, have the option to pay the interest monthly, or let the interest accrue and be capitilized. For a 3500 Unsub Stafford loan, with a rate of 6.8% – this will accrue about $20 per month in interest. So $20 a month for four years will add about $1000 to your original loan balance by the time you graduate….and this will increase if you have the interest capitlized.

So here is the big picture….

Four years of school…you take out as much Sub as you can….you also take out some Unsub to help cover tuition costs….so you have $17125 in subsidized Stafford, and 10,500 in unsubsidized Stafford

Scenario # 1 (you paid the interest monthly for 4 years)

Total loan debt: $27,625

Monthly Payment: $ 318/ month for 10 years

Total Interest Paid: $10,535

Scenario # 2 (you did not pay your interest)

Total loan debt: $29,605

Monthly Payment: #341/ month for 10 years

Total Interest paid: $11,315

As you can see, it is wiser to pay the interest monthly, if you can afford it. If you cannot afford it, thats ok…you can make up for it later by paying not taking the full 10 years to pay the loan. Federal loans have no prepayment penalties. So the sooner you pay them off, the less you will end up paying in interest. Got Questions or Comments…..

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