College Student Loan News and Info

College graduates headed to law school have an array of school loan options to help pay for tuition and other associated fees. A common law school loan offered by the United States Department of Education (DOE) is the Federal Stafford Loan. The Stafford Loan process is identical to every other grant and loan program. To apply, the student must fill out a Free Application for Federal Student Aid (FAFSA). Based on the information provided on the FAFSA, the DOE will determine if the student qualifies for a law school loan and how much that loan will be. An award notice is then mailed to the student via the law school selected on the FAFSA.

Because law school can be an expensive venture, many students cannot pay tuition and living expenses based on the Stafford Loan alone. Several private bank lenders offer law school loans and law bar exam loans for this very reason. When a student applies for a law school loan through a private lender, the funding is granted based on his or her credit score and history. This is different from the DOE loan process that takes economic need into consideration in lieu of credit worthiness.

Interest rates, deferment and forbearance options, and repayment plans all vary dependent upon the loan program. DOE law school loans feature below prime interest rates because the federal government backs them. The government also guarantees several repayment plans that are flexible in nature to help meet all borrowers’ needs. In addition, federal law school loans come with a pre-determined grace period and in-school deferment period. Private law school loans, on the other hand, are a little different. The interest rate of a private loan will depend a lot on the borrower’s credit score. Borrowers with excellent credit run the best chance of receiving a low rate. Lastly, the deferment and grace periods and repayment options vary by student loan lender.

The Free Application For Federal Student Aid (FAFSA) is a sometimes confusing application utilized by the United States Department of Education. Students seeking federal student aid are required to fill out the FAFSA in order to receive consideration for aid. The following are some common questions surround the 2008 FAFSA. Where is the FAFSA available?High school counselors and college financial aid offices typically keep blank FAFSAs on hand for students to fill out. The FAFSA is also available online at   www.fafsa.ed.gov.Can I photocopy and submit a FAFSA?Unfortunately, the Department of Education does require applications submitted to the department be original – not a copy. Anytime of photocopy, scanned or faxed version is unacceptable.When should I submit my FAFSA?The sooner the better. The FAFSA can be submitted anytime on or after Jan. 1 for the following academic year. Students are encouraged no to wait on their tax forms. Instead, fill out the application and provide updated information including tax details at a later date.
How long will it take to process my FAFSA?Students who haven’t heard from the DOE four weeks after submitting a FAFSA should contact the Federal Student Aid Information Center at (800) 4-FED-AID and ask if the application has been processed. My birthday is on Jan. 1, can I qualify as an independent student? Students born on the first of the year are still required to provide their age for the previous year. Therefore, if you turn 24 on Jan. 1, you still cannot answer no to the question that asks “Were you born before January 1. ”What do all of these acronyms on my Student Aid Report (SAR) mean? The SAR is the direct product of information provided on the FAFSA. While students typically anticipate its arrival, it is often hard to read. Some common terminology on the SAR includes: Expected Family Contribution (EFC), Allowances Against Total Income (ATI), Employment Allowance (EA), Contribution from Available Income (IPA).

Borrowers Currently Enrolled in school can no longer Consolidate Their Loans. The Higher Education Reconciliation Act of 2005 eliminated the provision that allowed a FFEL or Direct Student Loan borrower who is enrolled in school on at least a half-time basis to request to enter repayment early on his or her Stafford Loans if the lender approves. Repayment is now defined as not beginning until 6 months and one day after the date the student ceases to carry at least one-half the normal full- time academic workload, as determined by the school. Therefore, a FFEL or Direct Student Loan borrower who is still enrolled in school at least half time may no longer request to enter repayment early to apply for a FFEL or Direct Consolidation Loan. To apply for a Direct Loan Consolidation or a FFEL Consolidation the borrower must contact the lender and complete an application. Most lenders provide borrowers with the ability to apply on-line or request an application over the telephone. Once an application is completed and submitted, the lender will request information from the borrower’s other lenders or from its own system to determine the amounts outstanding on the borrowers loans. The borrower will then receive notification about the direct student loan consolidation, normal consumer disclosures, the amount owed, and if appropriate, where to make payments. FFEL Consolidation Loan Weighted Average Interest Rate are fixed interest rates that are based on the weighted average of the interest rates on the loans being consolidated. A lender can provide a new consolidation loan borrower with the lowest statutory weighted average interest rate for loans by using the lower of the weighted average of the interest rates on the loans being consolidated as of July 1 or the date the lender received the borrower’s consolidation loan application. The lender should apply a consistent method of determining when an application is received. Most federal education loans are eligible for consolidation, including subsidized and unsubsidized Direct and FFEL Stafford Loans, SLS, Federal Perkins Loans, Federal Nursing Loans, and Health Education Assistance Loans. PLUS Loan borrowers (parent and graduate/professional degree students) can also consolidate their loans. Private education loans are not eligible for consolidation. To obtain a complete list of the federal student loans that can be consolidated Contact the Department of Education Financial Aid office. You can reach them by calling 1-800-557-7392. TTY users may call 1-800-557-7395. Or visit loanconsolidation.ed.gov.

Contact a participating FFEL lender if you are applying for a FFEL Consolidation Loan. If you do not know whom your FFEL lender is, please call 1-800-433-3243 for assistance.

Eligibility rules. All FFEL and Direct Stafford Loan borrowers are eligible to consolidate after they graduate, leave school, or drop below half-time enrollment.
PLUS loans are eligible for consolidation once they are fully disbursed. Borrowers who are delinquent or in default must meet certain requirements before they may consolidate their loans. Contact your loan holder for more information. To be eligible for a William D. Ford Direct Student Loan Consolidation Loan, you must have at least one of the following: 1. A Direct Stafford subsidized or unsubsidized loan that will be included in the Consolidation loan; or 2. Have at least one Federal Family Education Loan (FFEL) program subsidized or unsubsidized loan.
If your current loan holder does not offer a Consolidation Loan or a Consolidation Loan with Income Sensitive Repayment terms acceptable to you, and you are eligible for Income Contingent Repayment, you may apply for a Direct Student Loan Consolidation. In addition, if you have more than one FFEL loan, you may apply for a Consolidation Loan with any of your FFEL loan holders or through the Direct Consolidation Loan Program.
Borrowers who obtain a Direct Student Loan Consolidation or a FFEL Consolidation Loan while they are in the grace period on any loan that will be included in the new Consolidation Loan, or who will include one or more Perkins Loans in the new Consolidation Loan, are advised that the grace period on those loans will be immediately terminated (e.g., you will lose the benefit of having a grace period before repayment would begin).
Note that borrowers with one or more Direct Loans, including Consolidation Loans, can also consolidate under the FFEL Consolidation Loan Program if they choose.

There are two sources for student loans — the federal government and private lenders. In order to obtain most federal student loans, you will first need to file the Free Application for Federal Student Aid (FAFSA). In most cases, the FAFSA is required for all federal financial aid including federal student loans. There are four main federal loan programs:

·        Federal Stafford Loan

·        Federal PLUS Loan

·        Federal Graduate PLUS Loan

·        Federal Consolidation Loan 

The Federal Stafford loan is made in the name of the student and is based on need (only the subsidized portion), does not require a credit check (it’s guaranteed by a private guarantor and backed by the government rather than credit/income/assets, etc.) and does not have to be repaid until after the student graduates, leaves school or stops attending on at least a half-time basis. Some schools offer Stafford loan directly through the federal government. These are commonly known as Direct Stafford Loans. The schools that offer Direct Loans are known as Direct Lending Schools. Other schools offer Stafford loans through banks or other lenders. These schools are commonly called FFEL schools (Federal Family Education Loan). In order to obtain a federal Stafford loan through a FFEL school, you will need to choose a lender.

Federal PLUS loans are made in the name of a parent. While they do require a credit check, the credit criteria to obtain a PLUS are not as stringent as they are for other types of consumer loans. Repayment of a PLUS loan begins after the loan is fully disbursed. Again, some schools offer PLUS through the federal government and others offer it through banks or other lenders. 

The Federal Graduate PLUS is just like the PLUS for parents except that it is made in the name of a graduate student. However, you must first use your Federal Stafford loan eligibility before applying for a Federal Graduate PLUS loan. It is important to remember that the Federal Graduate PLUS requires payment as soon as the loan is fully disbursed. Deferment options are available while you are still attending school at least half-time. Check with your financial aid office. (Note: Servicers are automatically placing Grad PLUS loans in deferment).

Federal loan consolidation is for students who are in repayment status or parents who wish to extend the repayment period on their current PLUS and obtain a fixed interest rate for the life of the loan. You can combine all of your eligible federal student loans into one loan with a Federal Consolidation Loan. Consolidating also locks the interest rate you pay on your loan. 

If federal loans are not enough to cover your educational expenses and you do not wish to make payments of principal and interest while in school or if you want a loan that is in the student’s name, there are private student loans (sometimes called alternative student loans). Private loans are made by banks and other private student loan lenders. They must be used solely for education expenses, but offer convenience and flexibility not found in other federal loan programs. However, you will need good credit and most students will need a qualified co-signer in order to obtain a private loan. Also, while interest rates, fees and other loan program terms are competitive, they vary widely from lender to lender. It is important to compare your options before choosing a private loan. Once you have found a loan that meets your needs, you can apply online and in many cases get an instant decision on approval.

The bottom-line with student loans and federal student loans is that you do have options when you cannot pay all of your college costs out-of-pocket. Visit the www.studentaid.ed.gov for Federal loans. Visit www.student-loans.net for private student loans.

In addition to Perkins Loans, the U.S. Department of Education administers the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Student Loan (Direct Loan) Program. Both the FFEL and Direct Student Loan programs consist of what are generally known as Stafford Loans (for students) and PLUS Loans (for parents). 

Schools generally participate in either the FFEL or Direct Student Loan program but sometimes participate in both. Under the Direct Student Loan Program, the funds for your loan come directly from the federal government. Funds for your FFEL will come from a bank, credit union, or other lender that participates in the program. Eligibility rules and loan amounts are identical under both programs, but repayment plans differ somewhat.

The Direct Student Loan Program is one of the Federal Student Aid (FSA) programs offered by the Department of Education, and it provides students with a simple, inexpensive way to borrow money to pay for education after high school. You apply for FSA by filling out the Free Application for Federal Student Aid; you can use the paper FAFSA, but I recommend using the online version, FAFSA on the Web. 

If your school participates in the Direct Student Loan Program, you will then need to complete a master promissory note (MPN) to get a Direct Student Loan. The MPN explains the loan terms and is the legally binding agreement that you will repay the Department.

The Direct Student Loan Servicing site has online entrance and exit counseling tutorials that you can take if you are or will be a Direct Student Loan borrower. 

To find out more about the Direct Student Loan Program, check out the internet.  You will find libraries of publications for borrowers, including the new entrance and exit counseling guides and the basics brochures. These publications will tell you more about how much you can borrow and your rights and responsibilities when you are repaying your loan.

Use a budget calculator to enter your estimated income and expenses and find out how much money you will need for the school year. Then use a repayment calculator to compare the initial monthly payment amounts you would make under the various repayment plans.  These calculators can also be found online. 

There are four types of repayment plan - standard, extended, graduated, and income contingent - so you can choose the one that is best suited for your situation.

Because the financial consequences for default are severe, you should do all you can to avoid it. Deferment and forbearance are options that might help you as you repay your loans. Also, as mentioned above, you can choose the repayment plan that is best suited for your financial situation. 

If you already have a Direct Student Loan, you can find a servicing site for your one-stop center for managing your loan. Make online payments, take online loan counseling (as noted above), view your account balances and payment history, change your billing options, enroll in electronic services, learn about default management and deferment and forbearance, and more.

Consolidating your loans can be a great way to simplify repayment and lower your monthly payments. If you have a Direct Student Loan, you can consolidate it with other student loans. To find out more, visit a consolidation website.

Federal student financial aid programs have assumed a central role in making college education a reality for millions of Americans. In 2002, 11 million loans valued at approximately $40 billion were made to students and their families under the FFELP, FDLP and Perkins loan programs. This represents nearly 30% of the estimated $135 billion of the total expenditures made by students and their families for tuition, room, board, books, fees, and transportation.

The demand for student loans is expected to continue to grow. According to projections made by the U.S. Department of Education, federal student financial aid volume is expected to grow to nearly $64 billion in 2009, with 71% of those dollars coming from FFELP. Increased demand for federal student financial aid is attributable to three major factors: increasing enrollment, the rising cost of college education, and the declining purchasing power of grants. A very interesting and informative student financial aid read is the Fiscal Year 2008 Higher Education Budget Request in PDF format.

As more students graduate from high school and go on to pursue college education, demand for student loans will continue to increase. By 2012, the number of college-age young adults will increase 15 percent, or more than five million young adults, to 18 million young adults.

While the number of students enrolled in college education is growing, federal investments in financial student financial aid has shifted dramatically over time. In 1980-81, grant aid accounted for 55 percent of all aid awarded and loans were only 41 percent. By 2002, these numbers were reversed: loan aid represented 54 percent of total aid awarded, while grant aid accounted for 39 percent. 

At the same time, federal investments in Federal Pell Grants are designed to help students with the greatest need and the least resources to pay for their education have increased. But the purchasing power of these grants has declined as more students participate in the program. In 1986, the average Pell Grant covered 98% of average tuition at public four-year institutions, but by 1999, the average Pell Grant covered only 57% of average tuition at these institutions. The shift results in greater reliance on loans by students and parents in order to pay for college education.

As more and more college-qualified students graduate from high school and choose to pursue higher education, demand for federal student financial aid will continue to increase. A loan demand also reflects the continuing pattern of grant aid increasing more slowly than educational costs, resulting in greater reliance by students and families on loans to pay for college education. 

According to a study by the College Board, over the past ten years, average tuition and fees at four-year public and private institutions increased by 38%. Increases in tuition are related to such factors as declining state appropriations for public sector institutions, while in the private sector, growth in institutional aid for students, investments in facilities are prime factors.

Many students and parents are concerned about their ability to pay for college. However, recent surveys conducted by the American Council on Education show that students and parents frequently overestimate the cost of education and underestimate the amount of federal student financial aid available. In addition, the range of institutions that comprise the U.S. postsecondary education system provides many affordable options for students and families.

You would think comparing student loans would be easy. After all, the government sets the interest rates and fees lenders can charge, right? This is assuming you are looking at federal Stafford or PLUS loans, of course; private loans are an entirely different beast. 

Think again. To compete with each other, lenders offer an incredibly confusing variety of incentives such as fee waivers, discounts and other promotional benefits. One of the most common incentives, for example, is a reduction in the interest rate or the loan principal after you enroll in an automatic debit program or once you make a number of on-time monthly payments, typically 24 or more. Some lenders offer application fee waivers on the front end, others offer rewards on the back end, such as waiving your last six payments or wiping out your balance once you pay it down to $500.

Which benefits are best? The ones you get upfront. Those are savings that you get immediately and cannot lose, he explains. If a lender waives the application fee on your Federal Stafford loan, for example, that is an immediate savings of 4%.  This is the maximum fee lenders can charge. 

Contrast this with benefits that kick in once you enter repayment or after some number of on-time monthly payments: You may never see any of those savings because once you graduate; you will likely consolidate your loans. That is because student loan consolidations have their own incentives, different from those offered on Stafford or PLUS loans.

Logically, if you are shopping for a student loan consolidation discounts for on-time payments do matter. However, do keep in mind that less than 25% of students make enough on-time payments to qualify for such reductions. 

One thing to watch for is some lenders might make you repay any upfront benefits you have received if you consolidate your loan with a different lender. Be sure to read the fine print.

Consolidating, or refinancing, student loans occurs when outstanding student loans (even just one) are bundled into a new student loan with one monthly payment. Federal student loans and private student loans must be consolidated separately. 

You can save time and money by comparing multiple federal student loan consolidation options from a variety of leading lenders. Simply enter the amount of your outstanding federal student loans and a little bit about yourself to see a customized list of school loan consolidation options. You can also compare the total cost of repaying the balance if you do not consolidate versus the consolidation options.

When considering student loan consolidation, some of the things you want to consider are the annual percentage rate (APR).  This takes into account principal, interest rate and structure, fees and other costs of the loan, and length of repayment.  The total cost of the loan.  This is an estimate of the sum of the total payments you would be scheduled to make on a loan.  The Monthly Payment, and finally the loan’s borrower rewards.  This can also be called borrower benefits or loan discounts. Many lenders offer these incentives to encourage borrowers to repay the loans in a responsible way. Borrower rewards also provide lenders with competitive advantages over their competitors. Some borrower rewards are applied automatically, meaning that you receive the benefit just for getting the loan.

Student loans are one excellent way to pay for college. However, you already know that, don’t you? The emphasis now is finding the right kind of loan for you. You know you need a student loan to pay for college because you’ve exhausted all other forms of aid, but you’re not sure where to start. Does that sound about right? If so, keep reading as we discuss the best student loan options out there today. 

If you have to get a student loan, always try to get one from the federal government first. Government student loans have the lowest interest rates, the most lenient repayment plans and the most flexible terms. There’s just no getting around it. No matter how you look at it, federal student loans make life easier for financially struggling college students. I mean, if you think about it, it really makes sense. College students often have little to no credit, so borrowing from a bank either isn’t an option or causes a very high interest rate.

There are quite a few types of government student loans available to college students actively pursuing degrees. Here are a few of the most common: 

The Federal Stafford Loan is one of the most commonly distributed loans to college students. It is for students that show some need for financial assistance, but does not have the same low-income ceilings as federal grants. Likewise, many students can get this loan subsidized, meaning the federal government will pay any interest that accrues on the loan while you are in school, so you won’t have to worry about it.

The Federal PLUS Loan is meant for the parents of college students. Parents can borrow as much as they need to help fund their child’s college education. However, these loans are not subsidized and the parent will be responsible for making payments while the student is still in school. 

The Federal Perkins Loan is a loan for students that show exceptional need for financial assistance. It is a beneficial program that offers a super lower interest rate of only 5%. Rather than being awarded money directly from the government or through a participating bank, the Perkins Loan is distributed through your school of choice. Therefore, it will be your campus that decides which students show the most need and which qualify.

Now, you don’t have to pick and choose which federal loans you’d like to apply for. Rather, when you fill out and submit the FAFSA, you apply to all at once. With all of your financial information in one convenient place, your application will be processed and your worthiness will be evaluated. 

If it is shown that you do qualify for one or more of these government student loans, you will be notified by means of an award letter. Should you choose to accept one of these loans in the amount offered, be sure to return the award letter and to sign a Master Promissory Note (MPN) to indicate you agree to the terms of the loan and agree to begin repayment at the designated date?

In some cases, you are able to choose the lender of your federal student loan, so be sure to choose wisely. Sallie Mae student loans and other low interest student loan companies are good choices. Just be sure to thoroughly read the fine print of your loan application before signing a thing. This commitment will stick with you for several years, so you want to make sure it is right.

Alternative Student Loans Infofrom Student-Loans.net Attending a private, four-year, post-secondary institution after high school can cost around four times more than it costs to enroll in a public school. An increasing number of students, however, are heading into private institutions in hopes of securing a bright future and higher earning potential. Paying for private school, however, presents a large financial challenge in comparison to public and two-year schools.
With the help of the United States Department of Education (DOE) and, in some cases, alternative student loan lenders, a private education is very much attainable. Each year, the government provides students with unsubsidized and subsidized funding programs. Program recipients are selected based on their financial need. Students with a high need typically qualify for subsidized funding - meaning the government picks up the interest charges billed to the loan while the student is in school and during other grace and deferment periods. 
Both subsidized and unsubsidized loans feature excellent interest rate charges, as compared to private lenders. The DOE also offers flexible repayment plans and deferments for students under financial strain. The problem with federal funding is it is rarely enough to cover college expenses at a public school, let alone a private institution.
It is here alternative student loans come into play. Alternative loans are funds provided by private lenders outside the government loan program. These loans feature loan limits in the $20,000 per year range. Alterative student loans, however, do have tighter requirements than their federal counterparts. To qualify for an alterative loan, the borrower must boast a secure credit score and history, or have a co-signer who does. The better the borrower’s credit, the more like he or she is to secure a low interest rate loan. Like the DOE loan program, alternative lenders feature flexible repayment plans. They also have a faster approval rate and online application process. Students with excellent credit can become approved for a private loan within a matter of seconds as compared to the lengthy wait most DOE applicants face.  To acquire additional information on alternative student loans visit www.student-loans.net  

An important thing to remember when applying for a federal Direct Loan is, as a student, the debt is your responsibility – not your parents. Approximately 90 percent of the school loan programs offered by the United States Department of Education (EOD) are designed for students. With that said, the EOD does offer a Federal PLUS Loan for parents to borrow money for their dependent’s tuition. This, however, is a separate loan program with different qualification requirements than the Direct Student Loan program.This rule also applies to students under the age of 18 seeking a direct student loan from the EOD. In typical loan cases, individuals under 17-years-old or younger are subject to the “defense of infancy.” The regulation disallows minors to enter into a financial contract before they are 18. In regards to the Higher Education Act, that ultimately provides students the access to Direct student loans, the defense of infancy is not applicable. Therefore, a student under 18 is eligible to apply for and receive Direct Student Loan funds. Additionally, the EOD provides loans for students without the need of a co-signer.With that said, parents or relatives wanting to assist the student with paying off his or her school loan can ask the student to have the billing statements forwarded to their home. While it is not the responsibility of the relative, and the individual receiving the bill is in no way obligated to pay it, he or she can also opt to have the payment electronically deducted from a checking or savings account.Students should also be aware that if a parent or relative decides to quit paying the bill or makes a late payment, in the end it is the borrower’s responsibility.Unlike Direct Student Loans, borrowers with private loans may require the use of an adult co-signer. If this is the case, the co-signer is also held responsible for loan repayment. More information on private student loans can be found at www.student-loans.net                                                                      __________________________________________________________Visit a  Chase private student loan site.   _____________________________________________________________________