College Student Loan News and Info

Although there can be many differences between adults returning to college and the traditional student, as far as financial aid is concerned, the steps are very much the same.

Whether this will be your first time filing for financial aid and you need to know how to get things rolling, or it is just one more thing on your need to do list, I can certainly help you find your way! Believe it or not, obtaining money for college is not as confusing or complicated as one would think.

The financial aid process can be, however, a little bit different for each and every student, but there are a few things that will remain the same for just about everyone. First of all, apply even if you think you do not qualify. There are also many variables involved in determining eligibility, there is just no way to know for sure, and that is to apply.

Second, the Free Application for Federal Student Aid (FAFSA) will determine eligibility for Federal Student Aid loan programs as well as eligibility for many private grant and scholarship programs. Filing the FAFSA will be essential even if you do not think you will qualify for federal financial aid.

While many people do hate the paperwork that will be involved, you should still file a FAFSA even if you do not think you are eligible for federal aid assistance. Why? Because many non-government financial aid programs in order to determine your eligibility for any kind of scholarships, student loans, and other programs use the FAFSA to determine eligibility. Of course, the FAFSA is also used to find out if you do qualify for federal college student loans. Because of this, completing the FAFSA will give you two big advantages. First, you might be eligible for many of the non-federal aid. And second, even if you do not want a college student loan now, the paperwork is already done just in case you change your mind.

Filing the Free Application for Federal College Student Aid (FAFSA)

The fastest way to file the Free Application for Federal College Student Aid (FAFSA) is online at FAFSA on the Web.

Complete the FAFSA application as soon as possible after January 1st of the year in which you will need the funding. Filling out the FAFSA will be easier if you have these items handy:

• Your Social Security card and driver’s license
• Your W-2 Forms or other tax records of earned-income (and your spouse’s, if you are married) federal income tax return.
• Your federal income tax return
• Records of other untaxed income you have received, including welfare benefits, social security benefits, TANF, veteran’s benefits, and military or clergy allowances
• Your current bank statements and records of stocks, bonds, and other investments
• Your business or farm records, if applicable
• Your alien registration card (if you are not a U.S. citizen)

If you or your spouse have not completed federal income tax returns yet, you may use estimates from pay stubs and bank statements. However, you will probably have to show proof of those estimates some time down the road.

The federal financial aid award notification is basically for your records. You want to review your Award Notification and return it only for the following reasons:

1. the determining factors in section A are incorrect,
2. you will receive other financial aid not listed on the front of the Award Notification (complete Section E of the Award Notification),
3. you have reduced or declined any award(s). (Complete Section G of the award notification.) If you decline a college student loan, do not return the student loan promissory note to our office. (Declining financial aid for the current year will not affect your eligibility for financial aid in future years.),
4. you have been awarded for the academic year and will only enroll for one semester.

If the Determining Factors are not correct or if you have receive other financial aid or college student loans not listed on the front of your award notification, adjustments will need to be made to the financial aid that was awarded by the Office of Student Financial Aid. Most financial aid reductions are made in the following order: need based college student loans, Work Study, need based grants. However, need based grants and scholarships may be reduced first if a student has reduces registration hours.

If you have been awarded, but have not yet accepted the William D. Ford Federal Direct Student Loans (you have not yet completed the promissory note) and that student loan is reduced, you probably will not be notified that the loan has been reduced. If you receive other financial aid not listed on the front of your Award Notification and it has been more than three months since the master promissory notes were printed, the student loans may have been cancelled. If you accept the William D. Ford Federal Direct Student Loans (you have completed and returned the Master Promissory Note) and that college student loan as well as other aid will be reduced, you should receive a revised Award Notification and an explanation of why the financial aid was changed.

The Student Financial Aid Office will award the maximum college student loan amount that you are eligible to borrow and these maximum amount(s) will be listed on your Award Notification. It is encouraged to carefully review your expenses and resources and only borrow what you need. The cost of attendance will include personal and transportation expenses; therefore, you may not actually need to borrow the full amount listed.

If you decide you want to reduce or cancel the amount you have been awarded, you should complete the appropriate section on the backside of the Award Notification and submit it to the Student Financial Aid Office. If you are reducing a college student loan, include the completed promissory note. If you no longer have your Award Notification, you can obtain a copy through your financial aid office. If you cancel or reduce your college student loans now and you decide at a later date that you need the loans or want to reduced the amount of the student loan to be reinstated, contact the Student Financial Aid Office.

If you are one of those that believe a college education is out of your reach, you really need to think again. A tremendous number of financial aid resources can help fulfill your dream of a college degree a reality. The key is educating yourself about the financial aid programs and the process you need to take to obtain them.

Start with familiarizing yourself with some of the most common kinds of financial aid. There are two basic categories; gift financial aid assistance in the form of scholarships and grants; and self help financial aid assistance in the form of college student loans and work study programs. Financial aid assistance can be federal or campus based. Most college students use a combination of the two.

How do you Apply for Financial Aid Assistance?

If you are in need of Uncle Sam or your college to help you pay for your education, you will have to complete the Free Application for Federal Student Aid (FAFSA). When a college has accepted you, they will use this application to put together a personalized Financial Aid Package.

Once you have received your financial aid assistance award letter and have made your decision about which school you will attend, you can accept the financial aid offer as is, reject it entirely, or accept some features and reject others. You can also request a reevaluation of the financial aid package.

Why Types of Financial Aid Are Offered

Federal and campus based college student financial aid consists of:

• grants, free money that does not need to be paid back
• college student loans, which allow you to borrow money for school under federal aid loan programs
• work study programs, which allow you to earn money while attending school.

Grants

• Federal Pell Grants are based on a combination of financial aid need, college costs, and your enrollment status (full or part time). Pell Grants will not have to be paid back.
• Federal Supplemental Educational Opportunity Grants (FSEOG) are campus based grants awarded to college students with exceptional need. They range between $100 and $4,000 per year and do will not need to be paid back.

Loans

The US Department of Education administers Stafford College Student Loans and Federal Perkins College Student Loans (for students), and PLUS Loans (for parents of the college student). Some college student loan funds come directly from the federal government and others will come from a bank, credit union, or other lending institution.

1. Stafford College Student Loans can be subsidized or unsubsidized. You can receive both types of Stafford College Student Loans for the same school year, but the total is limited based on what year you are in and whether you are a dependent or an independent college student. The interest rate on Stafford College Student loan will never exceed 8.25%.

2. PLUS Loans will allow a parent with good credit to borrow money at a favorable interest rate to help pay for there students educational. PLUS Loans are limited to your cost of attending college minus your other financial aid assistance. They are not based on financial aid need.

3. Federal Perkins College Student Loans are campus based, low interest, fixed rate college student loans of up to $4,000 per year for those with exceptional financial aid need. As long as you are attending school at least half time, you will not have to begin repayment for nine months after you have graduated, leave school, or drop below half time status. No interest will be charged until repayment has begun.

4. Private College Student Loans are obtained from a private lender or financial institution for college costs not covered by federal and campus based financial aid. They will usually include higher interest rates than federal student loans and they do not require federal forms (FASFA).

Parents of dependent college students can borrow a PLUS Loan to help pay for educational expenses of an undergraduate college student enrolled at least half time in an eligible program at an eligible school. PLUS Student Loans are available through the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Student Loan (Direct Student Loan) Program. An acceptable credit history is mandatory to receive a PLUS loan.

While filing a Free Application for Federal Student Aid (FAFSA) is generally not a requirement to receive a PLUS loan, most schools will require a FAFSA to be filed before they will certify a PLUS loan. I would always recommend families to file a FAFSA whether you believe you will qualify for federal assistance or not.

If your chosen school is a Direct Student Loan school, a parent must contact the school directly in order to receive the student loan. Funds for Direct Student Loans will come directly from the federal government.

If the school is a FFEL school, you must obtain your student loan through a bank or financial institution. Your school may be able to provide a list of lenders to help you narrow your choices down. However, you can choose any lender or financial institution you wish. It is important to compare your options before you sign. There are many lenders that offer repayment incentives that can lower the cost of a PLUS loan.

A parent will generally be required to pass a credit check. However, the it is not as stringent as it is for other college student loans with which you may be more familiar. If the parent borrower has been denied based on credit, they should still be able to get the student loan if they can get someone such as a relative to co-sign the student loan. The college student as well as the parent must also meet other general eligibility requirements for federal student aid loans.

A parent can borrow up to the cost of attendance minus other financial aid assistance including other college student loans.

For a PLUS Loan disbursed on or after July 1, 2006, the interest rate is fixed at 7.90 for a Direct PLUS Loan and 8.50 percent for a FFEL PLUS Loan.

Realize a fee of up to 4% can also be charged to borrow a PLUS loan. Many lenders will pay this fee on behalf of the borrowers, but not all of them. It is important to carefully review the terms and conditions of your student loan when they are presented by your lender.

Repayment of a PLUS loan will begin immediately after the last disbursement of the student loan. PLUS loans, like all federal student loans, are disbursed in equal amounts over the course of the academic year. For a school that uses semesters, that would mean one disbursement in the beginning of the fall and one in the beginning of the spring. Payment would have to begin after the spring disbursement.

The normal repayment term is ten years. However, depending on the amount borrowed the repayment term might be extended up to 25 years. If extenuating circumstances happen during repayment, a borrower can request forbearance (temporarily stop paying). During forbearance, the student or borrower will not have to make payments, but interest will continue to accrue and will be added to the principal if no payments of interest are made.

Alternative or private college student loans are designed to help college students who need additional assistance with there higher educational costs. In many cases, it is advantageous for college students to pursue Unsubsidized Federal Stafford College Student Loans and for parents to pursue Federal PLUS College Student Loans (or Grad PLUS College Student Loans for graduate college students) before seeking alternative or private student loans. One very major advantage of the federal student loan programs is that the federal government has caped the interest on the college student loans. Additionally, alternative or private student loans typically will not offer the same benefits as a federal college student loan will, such as consolidation, service cancellations and military repayment.

If you are still needing assistance beyond what has been made available to you through the federal college student loan programs is desired, there are a number of private student loan lenders or financial institutions who can offer alternative or private student loans to cover additional educational expenses. A Private Student Loan approval will most likely be based on the credit worthiness and ability to repay. Generally, for college students, a credit worthy, employed cosigner will probably be required. Each lender or financial institution will offer different interest rates, fees, repayment terms, and approval requirements. In order to get the best interest rates and terms, it is strongly suggested that you obtain a cosigner with a good credit history.

Your school of choice will have a list of approved lenders or financial institutions you can choose from. However, do keep in mind you are not required to use one of them on the list. It is important for you to know that the credit check that will be performed by many lenders will expire after 90-120 days. Therefore, you should not apply for an alternative or private student loan more than three months prior to the start of the college student loan period. However, due to possible extended processing time, you should apply as soon as you can within the three month window. In order for money to be available for payment purposes, applications should probably be submitted by June 1 for the fall semester, November 1 for the spring semester and March 1 for the summer sessions.

Most alternative or private student loan disbursements will be made via Electronic Funds Transfer from your lender to the college or university of your choice. The funds will be applied to the college student’s account with any excess, after all school fees are satisfied, and will be released to the college student.

I would encourage you to only borrow money that is needed. If the college student loan approval is more than you desire, you can always reduce the amount by contacting the Financial adviser and just changing the amount, or following the directions provided by the lender or financial institution on the disclosure statement you have receive.

We strongly encourage all college students who have borrowed through an alternative or private student loan program at other institutions prior to attendance your current school to retain their previous lender. This will help avoid making multiple college student loan repayments in the future.

College is not cheap. Fortunately, it is easy to obtain a college student loan to cover the costs of getting your college education. Unfortunately, while college student loans can remove the financial barrier to attending college, they can also come back to bite those who failed to properly research all the many available options.

There are three primary kinds of college student loans: federal college student loans that are made directly to the student, federal college student loans made to the college student’s parents, and college student loans from private financial institutions.

The three primary kinds of college student loans will all carry different payment schedules, loan limits and interest rates, so it is important to choose wisely based on your specific needs and abilities to repay the college student loan. There will be no worse feeling than to graduate college ready to take on the world, only to realize you will be doing so with the burden of a hefty monthly college student loan payment.

If you have already saved money to pay for most or even part of your college, or, will be able to earn enough during your college years to cover some of the costs, then a direct federal college student loan is probably your best option.

Federal college student loans made directly to the college student will have a modest limit, preventing the accumulation of an over whelming debt. Furthermore, depending on your financial situation, the government can subsidize a federal college student loan by doing away with the interest all together.

Going with a direct federal college student loan could mean a busier lifestyle during college, especially if you will have to work long hours to make up the difference, but the far more manageable student loan payments following graduation are sure to make it all worth while.

The mane benefit of a federal college student loan made to your parents is the ability to borrow a much more substantial amount of money, making this type of student loan a natural choice if you will be attending a particularly expensive college.

However, payments on a federal college student loan to a college student’s parents must begin immediately, and the legal responsibility for repayment rests on the parents alone. Federal college student loans to parents also carry a larger interest rate of 8.5%.

Private college student loans offer the best of both types of federal college student loans with their higher limits and the ability to start repaying only after you have graduated. However, private college student loans are also one of the easiest ways to accidentally build up a huge debt that could take the next 20 years after you have graduated to pay off.

Private college student loan applications can be processed fast and require little if any proof of the actual need for the amount requested, making a private college student loan by far the most popular method of financing your college education. As a result, a growing number of financial institutions are offering competitive college student loan packages.

The fast application process and lack of lending safeguards are what can lead to trouble with a private college student loan. Additional funds are borrowed for what may seem like a good idea at the time, but later prove to be an unnecessary temporary luxury leaving only more debt.

Private college student loans are not a bad way of financing your college, but they should be entered into with caution and research.

The US Department of Education administers the Federal Family Education Loan (FFEL) Program as well as the William D. Ford Federal Direct Loan (Direct Student Loan) Program. Both the FFEL and Direct College Student Loan programs consist of what are usually known as Stafford College Student Loans and PLUS College Student Loans (for parents).

All schools do participate in either the FFEL or the Direct College Student Loan program but can sometimes participate in both. Under the Direct Student Loan Program, the funds for the student loan will come directly from the federal government. Funds for the FFEL will come from a bank or other financial institution that participates in the program. You can always research your options by using the internet. Eligibility rules and college student loan amounts are identical under both programs, but repayment plans do differ somewhat.

In order to apply for a Stafford college student loan, you do have to first complete the Free Application for Federal Student Aid (FAFSA). The FAFSA is used to apply for all kinds of federal college student aid offered and serves as your application for the Stafford college student loan program as well.

If your school is a Direct Student Loan school, your school will provide all the necessary instructions for you to obtain your Stafford college student loan. If your school is a FFEL School, you will have to choose a lender for your college student loan. However, your school will also have a list of preferred lenders you are able to use. Use the internet to help you compare your options so you can find the lender and college student loan program that is right for you. As stated, your school may present to you a list of lenders from which to choose your college student loan. However, you are free to choose any lender that does participate in the FFEL. There preferred lender list is simply provided to you as a convenience because hundreds of lenders do offer Stafford college student loans.

It is most important to research your options. While the terms and rates are set by the federal government, lenders will offer an array of incentives that can reduce the cost of borrowing.

Once you have chosen the right lender for you, you will then have to sign a promissory note. The promissory note is your legally binding agreement that you promise to repay your college student loan. Your school will also conduct an entrance interview that you must complete in order to receive your college student loan proceeds. The entrance interview should be conducted in person or online and is an informational session to ensure you do understand your rights and responsibilities connected with borrowing a federal college student loan.

Your school should determine your eligibility for either a Subsidized and or an Unsubsidized Stafford college student loan. Subsidized simply means the government pays the interest on your student loan while you are in school. Unsubsidized just means you are responsible for either making interest only payments on your student loan while you are in school or deferring the interest (allowing the interest to be added to your student loan principal) while you are in school.

When it comes to financing the costs associated with attaining a higher education, such as tuition fees, books, lab fees, and additional living expenses, many individuals chose a college student loans. However, because the need to raising the funds immediately, many prospective college students are inclined to sign college student loan deals without really carefully reviewing the terms and conditions. Unfortunately, this tendency can get most of us into a great deal of financial trouble, especially when it comes to a repayment. Thankfully, there are solutions for borrowers who are experiencing this kind of difficulty; they will always have the option to refinance student loans in order to ease there financial burden.

The process of college student loan refinance will allow borrowers to pay off one student loan by obtaining another student loan. This is generally accomplished through different college student loan consolidation programs, which are offered by many financial institutions, such as banks or government related programs. While the student loan amount usually stays the same, other conditions will likely be changed. However, these changes will typically work to the borrower’s advantage. For example, in many cases of college student loan refinance, the following benefits encourage most borrowers to apply:

• Better terms
• Lower interest rates
• Reduced monthly payments
• Option of cash out refinance

Before individuals refinance a college student loan, there are several factors that must be taken into consideration:

Why Kind of Existing Loans Do You Have

For college students that have both federal and private student loans, it is important to know that refinancing will need to be carried out separately. Federal college student loans can usually be refinanced at a lower interest rate. However, college students who need to refinance private student loans can expect to pay a higher interest rate. This is because a private student loan is a personal loan that has been lent out to a college student, based on the theory that their income will continue to increase as they further their education. Consequently, the interest rate for refinancing such loans is set significantly higher. Refinancing separately will allow the borrower to save money, as they are able to pay the lower interest rate in comparison to the interest rate that would be attached to the combined college student loans.

Secured vs. Unsecured

These kinds of college student loans are available in either secured or unsecured forms. For college students who require a larger sum of money, refinancing with a secured college student loan would probably be the best option. However, borrowers will have to put up some kind of collateral in order to obtain a secured college student loan. On the other hand, unsecured student loans can be obtained without any kind of security, but a higher interest rate will usually be attached due to a higher risk involved for the lender.

Who Qualifies

Most lenders that offer to refinance student loans will have different criteria for there own qualification purposes. Many of them stipulate a no in-school status on the student loans, which means that the applicant cannot be financing a student who is currently enrolled in college. Some lenders will also have a minimum balance requirement that must be met.

Credit Score

Because interest rates are based on a borrower’s credit report, it is imperative for an individual to check their credit score before applying to refinance a student loan. The better the credit score, the lower the interest rates.

Debt Relief

The entire purpose of refinancing student loans is to give relief of the financial burden and make your life easier. Therefore, it is important for the borrower to negotiate lower interest rates, thus reduced monthly payments.

College students or anyone can now apply for college student loan refinance from the comforts of their own home, as most applications are made available online. The entire process is usually quick and convenient, and will allow borrowers to locate several lenders on the Internet and do some comparing in order to find the best deal for their refinance.

College Student Loans are far the single largest financial aid program available to college students. A college student loan is extremely easy to receive and very often a college student’s first venture into the world of finance. Because college student loans must be repaid, the decision to borrow for college should be made carefully.

Completing the free online FAFSA will be the first step in determining your college student loan eligibility. Once the EFC has been calculated, additional steps will be ask of you to actually receive the college student loan proceeds at your institution. This will generally involve completing a paper or electronic promissory note. Let’s briefly look at the different college student loan programs available to students and their parents:

Stafford Loan. Stafford College Student loans are student loans that the student will borrower in their own name. There are two types of Stafford college student loans: subsidized and unsubsidized. Subsidized college student loans have the government paying the interest for the student while they are in school and during their grace and deferment periods. Unsubsidized college student loans have interest accruing while the student is still attending school.

Subsidized college student loans are based on need while unsubsidized college student loans are not need-based. Both student loans are not required to be repaid for six months after the student graduates or drops below half time. Interest rates on a Stafford college student loan will be fixed at a rate of 6.8% for all student loans disbursed after July 1, 2006.

The maximum yearly amount a independent student or undergraduate student may borrow in combined subsidized/unsubsidized Stafford college student loan eligibility is:

• $2,625 for freshmen
• $3,500 for sophomores
• $5,500 for juniors and seniors

The maximum yearly amount an independent student, undergraduate student or dependent student whose parent have been denied a PLUS college student loan may borrow in combined subsidized/unsubsidized Stafford college student loan eligibility is:

• $6,625 for freshmen (maximum of $2,625 subsidized)
• $7,500 for sophomores (maximum of $3,500 subsidized)
• $10,500 for juniors and seniors (maximum of $5,500 subsidized)

The maximum yearly amount a graduate college student may borrow in combined subsidized/unsubsidized Stafford college student loan eligibility is:

• $18,500 (maximum of $8,500 subsidized)

Stafford college student loans will carry with them fees and interest charges that should also be considered when making the decision to borrow such a student loan. Stafford college student loans will also come standard with a ten year repayment plan with a minimum payment of $50. There is no penalty for paying the college student loan off early.

Parent Loan for Undergraduate Students (PLUS). A PLUS college student loan is a loan made available to credit-worthy parents of dependent students and undergraduate students. The maximum yearly amount a parent may borrow under this program is the student’s cost of attendance minus any other financial aid assistance they have received.

Perkins Loan. These college student loans are funded by federal and institutional dollars and given to the neediest undergraduate and graduate college students. They carry a 5% interest rate and will not have to be repaid for nine months after the student has graduated or drops below half time. The maximum an undergraduate college student can borrow is $4,000 annually and $6,000 annually for graduate college students.

Private loan. Recently, there have been large increases in private college student loans funded in order to fill a gap created by the rising cost of education while federal college student loan limits have remained relatively dormant. Some schools have begun actively awarding private college student loans on the award letter since the demand is so strong. Private college student loans are inherently more costly as they carry higher interest rates and fees than a federal college student loan. The higher rates and fees are of course due to the private lenders owning 100% of the risk of lending out the money. The federal government does not back these student loans as they do with Stafford, PLUS and Perkins loans.

A college student loan can come in many different forms and products. There are college student loans for parents, college student loans for graduate and undergraduate college students, both current and future, as well as private college student loans and federal consolidation college student loans for parents and graduates who want to manage their college student loan debt in the most affordable and most convenient way possible. Are you confused yet? Do not be. I will walk you through how easy your options really are.

The very first thing you need to do is fill out your free FAFSA application online. It does take a little time to complete the whole application, but is well worth the time. It can also be just a little confusing, but if you just take your time and read everything, the answers will come easy to you. There will be some things you will need to have with you in order to complete it. You need to have your SSN, Drivers License #, Tax returns. Things of this nature.

If you are really confused, go see a financial aid counselor at your school of choice. They are trained for this and can walk you through it in no time. In a lot of cases will just get some simple information from you and they will do the rest. How is that for easy?

If a federal college student loan is not going to cover the total cost of your higher education, you need to think about applying for a private college student loan. A private college student loan will be an unsecured, credit based loan available to undergraduate, graduate and continuing educational college students for tuition, fees, supplies, computers, living expenses, and anything else that you may have forgotten about.

Once you have left college, a college student loan consolidation can help ease the burden of college student loan repayments by putting all your college student loans into one single student loan with one lender and one monthly bill. You might even be able to cut your monthly payment nearly in half. Anyone with qualifying federal college student loans or federal parent college student loans will be eligible for a college student loan consolidation.

Private college student loan consolidation are different from a federal college student loan consolidation. If you have already consolidated your federal college student loans and wish you could do the same with your private college student loans, you are in luck, because you can. You can consolidate all your eligible private college student loans at record low interest rates that will save you money each month. Both parents and college students are eligible.

I have given you some basics of different college student loans, both federal and private. Now it is up to you to go out there and apply for what you need. Be smart and ask the right questions and read the very, very small print. What you sign will affect your future so do what is right for your financial situation. Take a look at what you will be earning once you graduate and what your payments will be. Be smart and do the right thing for you.