08.07.13 | Student Loan Servicer Transfer

Posted in Financial Aid, News, Repayment, Student Loans by Student Loan Network Staff

Federal Student Loan Servicer Transfer

Last week, the United States Department of Education released a newsletter informing students and their schools that federal student loans handled by four nonprofit servicers would soon be transferred to new servicers. Over the next two months, the majority of loans that are currently serviced by COSTEP, EDGEucation, and EdManage will be transferred to MOHELA, while those serviced by KSA Servicing will be transferred to Aspire Resources Inc.

What is a Loan Servicer?

To provide a little background, your loan servicer is assigned to you by the Department of Education after your loan has been fully disbursed. This company processes your payments and works as your customer service representative while you repay your student loans. For additional information on loan servicers, try visiting StudentAid.ed.gov.

Transfer Process

You will receive either an email or a letter in the mail prior to the transfer to inform you if your servicer will change, as well as an additional notification once the transfer is complete. These notifications will provide information on your new servicer, along with a statement that they will be servicing the loan on behalf of the the Department of Education.

You will need to contact the new servicer to activate features such as electronic billing and automatic loan payments. In addition, both MOHELA and Aspire Resources claim that students will not need to reapply for deferment or forbearance if their previous servicer already reviewed their application, but you should contact your new servicer just to make sure that this information carries over. (more…)

08.02.13 | The Usual Mistrust or a Preview of More Bipartisanship?

Posted in Financial Aid, News, Stafford Loan, Student Loans by David Levy

Federal Student Loan Compromise

This content was updated on 7/9 to reflect the passage of the Smarter Solutions for Students Act

With bipartisan support, on July 31, 2013, the House of Representatives passed H.R. 1911, the Smarter Solutions for Students Act (also known as the Bipartisan Student Loan Certainty Act, as amended by the Senate), by a vote of 392 to 31.

President Obama  signed the legislation into law on August 9, 2013.

Under the new law, interest rates on new loans each July 1 will be based on the last 10-year Treasury auction in the previous May. The specific interest rates will be as follows:

  • Undergraduate Students (Subsidized and Unsubsidized Federal Stafford Loans): 10-year Treasury + 2.05% with an 8.25% cap
  • Graduate and Professional School Students ( Federal Stafford Loans): 10-year Treasury + 3.6% with a 9.5% cap
  • Parents and Graduate/Professional School Students (Federal Parent and Federal Grad PLUS Loans): 10-year Treasury + 4.6% with a 10.5% cap

Based on the current 10-year Treasury rate, this will yield interest rates of 3.86%, 5.41% and 6.41%, respectively, for new loans this year, made after July 1, 2013. (more…)

06.26.13 | Will Student Loan Interest Rates Double on July 1?

Posted in Financial Aid, News, Stafford Loan by Mark Kantrowitz

If Congress does not act, interest rates on new subsidized Stafford loans will double from 3.4% to 6.8% on July 1, 2013. Previously originated subsidized Stafford loans and all other education loans will not be affected.

Doubling of the interest rates certainly sounds dramatic, but the actual impact on students will be more muted.

Each year, less than a third of undergraduate students receive federal subsidized Stafford loans. The average subsidized Stafford loan is $3,357, based on data from the 2007-08 National Postsecondary Student Aid Study (NPSAS), with average subsidized Stafford loan debt at graduation of $9,008 ($11,329 for Bachelor’s degree recipients). Only 3% of subsidized Stafford loan borrowers graduate with debt equal to the aggregate limit of $23,000.

Assuming a 10-year repayment term, doubling of the interest rate on $3,357 in debt increases the monthly loan payment by less than $7. On $9,008 in debt, the increase is less than $18; on $11,329 the increase is less than $24; and on $23,000 the increase is less than $48.

Doubling the interest rate does not double the monthly payment. Most of the monthly payment goes to principal, not interest. For example, on a 10-year term, increasing the interest rate from 3.4% to 6.8% increases the monthly payment by about one sixth (16.9%).

So while the interest rate increase will increase borrowing costs, it is not a major disaster.

Focusing on the interest rates, on the other hand, is a distraction from the real problem (more…)

06.06.12 | UPDATE: Stafford Loan Interest Rates

Posted in Financial Aid, News, Stafford Loan, Student Loans by Student Loan Network Staff

Recently, the U.S. Senate rejected President Barack Obama’s plan to maintain the 3.4% interest rates on federal student loans. If both parties are unable to agree on terms by the July 1 deadline, the rate will jump to 6.8%.

Both parties agree that the rates should remain at 3.4%, but paying for an extension of this proposal would cost $6 billion. So the question is, where will this money come from?

The Democrats are proposing the money come from shutting down a Medicare loophole that business partners can currently use to save money, while the Republicans suggest that eliminating a preventative health fund could provide the funding.


In 2007, when interest rates on subsidized Stafford loans were 6.8%, the Senate approved a law that temporarily reduced the rates to 3.4% for low and middle-income students. While the rates are expected to return to 6.8% on July 1, President Obama is urging legislators to keep those rates at a more affordable level for students and their families.

Learn more about Stafford loans so you can prepare for the upcoming semester.

04.26.12 | President Obama slow jams the student loan news

Posted in College Life, Financial Aid, News, Stafford Loan, Student Loans by Student Loan Network Staff

I’m pretty sure the title of this post just about says everything I need to say about the following video. Obama + Student loans + music + Jimmy Fallon = Magic. Pure magic. Oh, and what’s even better? It’s actually informative if you want to know more about what’s happening in the world of Stafford Loans right now.

Well done Sirs, well done.

10.12.10 | What is capitalized interest?

Posted in Financial Aid, Repayment, Stafford Loan, Student Loans by Student Loan Network Staff

To begin let’s first delineate the difference between subsidized and unsubsidized Stafford loans.  If you received a subsidized loan for school NO interest will accrue while you are in school, sweet! If however you have an unsubsidized loan than you are not so lucky.  Granted you could elect to make interest only payments if you so choose while in school, but if you don’t that interest will later be added onto your principal amount, and overall will increase your debt.  Let’s take a look how.

So what is capitalized interest exactly?  When the interest is not paid during college, it is accrued and added to the principle balance. Capitalization occurs the day the deferment period is over and the interest accrued over the loan period is added to the original amount of the loan. This additional amount subsequently accrues interest, adding an additional expense to the loan.

Here is an example.

Loan amount: $6,000.

Interest per month: $20

Loan balance after 1 year: $6,240

Loan principal upon capitalization (let’s say after 2.5 years): $6,600

Then that $6,600 loan balance is used as the new benchmark instead of  $6,000.  Now the monthly interest may go up to $21.78.

This was just a very basic visual used to demonstrate the capitalization concept.  Actual balances and interest rate calculations may vary.

Confused about any other terms.  Check out the Student Loan Network Glossary.

Also, find more information on the Difference Between Subsidized and Unsubsidized Loans.

09.13.10 | What the FAFSA? Words of Wisdom about the Financial Aid Form

Posted in FAFSA, Financial Aid, Stafford Loan by Student Loan Network Staff

In my previous post, I gave a quick run down of the types of financial aid that I can apply for to help finance my education. Applying for federal aid will be my first step, so I want to start preparing my FAFSA form.

Why do I need to fill out a FAFSA form?

In order to qualify for federal aid for students, you must complete and submit the Free Application for Federal Student Aid (FAFSA) to the U.S. Department of Education. This form is used to calculate your financial aid eligibility based on the financial and demographic information for you and your family.

Once complete, the Department of Education will forward a record of the application to the school/schools you specify.

What can I do now to prepare my FAFSA?

While the FAFSA needs to be filed with your 2010 tax information (which you won’t get until at least January of next year), it is recommended that you get a head start on gathering the right information now. In fact, most of what you’ll need for the FAFSA can be taken care of now. You can also estimate your tax information based on this years forms, however, this is only recommended if you can make a very accurate guess.

Below is a check list for what you and your family can do now to prepare early for the college financial aid application process:

Financial Aid Deadlines: Begin gathering the deadlines for your financial aid applications. Each school may have different deadlines.

Tax Information: Grab your 2010 tax forms, and anything else you are preparing for 2011 as well. You’ll receive your W2′s in February of next year and you may want to update your FAFSA when that information arrives.

Asset and Demographic Information: This where you list the financial details about you and your family, including your assets and demographic information. For help with what this will entail, visit FAFSAOnline.com and send your parents here.

School List: You can tell the Department of Education to send your results to a maximum of 10 schools. You will have to list the schools by their school code, which can be found here: FAFSAOnline.com – School Code List. When you’re looking into schools and noting their deadlines, make sure you find their code as well.

FAFSA Pin: Both you and your parents need to sign up for a FAFSA Pin #. This number will be used to identify you throughout the application process, and you can get it early and put it away in a safe place!

Ok, now go! You can download the FAFSA form now. You may file it early, but you will have to then update the forms next year with your new tax information.

08.31.10 | Crash Course in Financial Aid for a Newbie

Posted in Financial Aid, Stafford Loan, Student Loans by Student Loan Network Staff

My mission: In one month, learn everything there is to know about the financial aid process, and federal student aid programs so that I can get a jump start on my applications.

Armed with: ejacobs (Student Advocate from FinancialAidForum.com), a variety of web resources that I found from the Student Loan Network, some books and packets, federal student aid guides, the web-o-sphere, and my peers.

Reason: I’d like to go back to school, but I’m not swimming in cash. I recently read that incoming students often underestimate how much financial aid they will get from the government and fail to take advantage of it. I’m determined to find the maximum amount of aid possible for my situation.

There are a variety of online resources I found helpful in the start of my learning process, and I will share some of them with you below. (more…)

08.06.10 | Should I Repay my Stafford Loans Early?

Posted in Repayment, Stafford Loan by Student Loan Network Staff

For many recent graduates, the grace period before they must begin repaying their Stafford Loans won’t come to a close until the fall, most likely in November. But for the lucky few who have already secured a job and an income, there might be a temptation to start repayment a few months early. So should they do it?

First, you must know that early repayment will immediately end your grace period. So if your grace period is scheduled to end in November and you decide to make a payment now, you won’t be able to wait around until November to make another one. You will have begun the monthly repayment process and must pay the minimum amount owed toward your loan every 30 days.

While you should take that into consideration, the loss of your grace period is really the only apparent downside to early repayment. There are no fees or penalties if you decide to repay early and doing so will only benefit you in the long run. The sooner you start repayment, the shorter the life of the loan and the less interest you will ultimately owe.

06.18.10 | Get Info on your Federal Loans Online

Posted in Graduate Loans, PLUS Loans, Stafford Loan by Student Loan Network Staff

Can’t remember how much of your graduate school tuition will be covered by a Stafford Loan? Want to know when your next PLUS loan disbursement will arrive? You can access all of your federal loan details online through the Department of Education’s National Student Loan Data System (NSLDS) database.

The NSLDS database contains all of the information on your loans when funds have been disbursed. You can find details on  Stafford loan,Perkins loans, Pell grants and Plus loans. Simply log on to http://www.nslds.ed.gov/. To enter the database, you will need your four digit FAFSA pin.