College Student Loan News and Info

Most families will pay for college using a combination of savings, current earnings and financial aid. You can save money and reduce worry by starting early. If you know your child or children will be going to college, it is never too soon to start thinking about it.

Below are just some basic tips and ideas that along with small student loans or a little financial aid, will make the whole experience much easier for all concerned.

• Saving early and regularly gives compounded interest time to accumulate to your benefit.
• By starting early, you can save smaller amounts over a longer period of time.
• Early planning allows you to save for both education and retirement.
• Early investing helps student’s complete college with less debt.
• Having a larger college fund gives students a broader range of college choices.
• There are many different types of college savings accounts:
• Traditional bank accounts, including savings and money market accounts offer modest interest rates and balances up to $100,000 are federally insured.
• Coverdell Education Savings Accounts and Roth IRAs allow families to save for education and use the money tax-free to pay for college expenses.
• Qualified State Tuition (529) Plans, allow families to prepay tuition expenses or to accumulate savings in tax-advantaged funds.
• Insurance companies offer annuity policies. The cash value of these “permanent” life insurance policies can be tapped to help cover education expenses.
• Retirement accounts often allow the employee to withdraw funds or take loans against the current value to fund college costs. Check with your employer to learn more.
• U.S. Savings Bonds earn interest at modest rates and are exempt from most local, state and federal taxes if the bonds are used to fund education.
• Mutual Funds pool investors’ funds in a managed portfolio of securities. These funds carry higher risk than traditional bank accounts, but typically earn interest at higher rates.
• Stocks offer well-informed investors the potential for long-term investment growth. Available through brokerage firms, stocks offer no guarantees, so invest carefully.

The most important thing to keep in mind is that it is never too early or too late to begin to save for college. Even if you are only one year away, most families can afford to put some amount aside every week or even every month, no matter how small or how large.

Something else to think about that will help keep your cost down is the all mighty scholarship. There are so many different kinds out there being offered every year. If your child thinks about it, there should be a scholarship that they could apply for and make it a goal to obtain.

Scholarships are offered by many organizations including individuals, businesses, non-profits, schools, and governments. A few examples include:

• Your high school or prospective college may award scholarships based on academic performance.
• Ethnic organizations often provide scholarships to outstanding students sharing their heritage.
• Employers offer scholarships to their employees and to children of their employees.
• Churches, synagogues, temples, and religious groups offer scholarships for members or students planning a career in the clergy.

Trade and research organizations sponsor scholarships to attract students to a field of study facing a worker shortage or to encourage non-traditional or minority students to work toward a specific degree.

So, just remember, besides that traditional student loans and financial aid that is available, there are many other thing you can do now to make it easy in the future.

There are countless college graduates who, looking back on their time at school, wish they could change one thing: how they managed their college student loans. Some wish they had not borrowed so much; others wish they had spent the money differently. Because of their lack of foresight at the time, these individuals end up struggling to pay off their college student loans later in life. Some end up in worse financial shape than they were during their cash-strapped student days.

If you can follow these simple rules while you are still in college then you can avoid getting into debt trouble after graduation:

1. Only borrow what you need. Calculate what you expect your annual expenses to be and base your college student loan request on that figure. Just because you are offered a huge sum of money does not mean you should take out a huge college student loan. Always remember that the amount you borrow is not the amount you pay back. Most people end up paying around 30 percent more than they borrowed in interest. That is a lot of money.
2. Use loans for school, not fun. Never borrow money for anything other than essential expenses like tuition and books. Under no circumstances should you be using your college student loans to pay for something like a shopping spree or a vacation.
3. Increase your income. It can be hard to do, especially if you are in a rigorous program of study, but you should try as hard as you can to earn money during the school year. Income from a part-time job can pay for luxuries like clothing and entertainment. During the summers, work as hard as you can and save as much money as you can. You may have to sacrifice some aspects of your social life to find time for a job, but it will be worth it in the long run.
4. Manage the money you earn wisely. Do not squander the money you earn. Every dollar you save (rather than spending it on something you don’t need, such as another round of drinks at the bar) means one more dollar that can be put towards paying for school and one less dollar that must be borrowed in the form of a college student loan.
5. Do not get ahead of yourself. Never borrow based on the salary you think you will earn after you graduate. There is no guarantee you will land a high-paying job.

With the above rules, you truly can make yourself very successful before you even inter the working world. Imagine what you could do at that point with what you have learned in your college time.

Unfortunately, you will learn in college that sacrifice is a big part of life. You can still have fun but sacrifice a few things to make the rest of your life easier. If you sacrifice early in life you will not need to do so when you become successful. At that point you can just set back and enjoy the ride. Do yourself a favor. Pay attention to what you do now.

To the average American, receiving that acceptance letter in the mail from the college of your dreams represents a significant and memorable time in life. Incontestably, one of the most stressful tasks- selecting from a maze of more than 9,000 post-secondary institutions in the United States- is at that point, behind them. Finding the optimal college match for one’s intellectual and interpersonal expectations, as well as one is learning style involves a generous amount of time and research. The pay-off is well worth the investment, however, for the end result is a well-adjusted college student who fits perfectly in his or her social and academic place, performs at peak level, and is able to capitalize on his or her university education. In short, choosing the right school enables students to achieve their potential.

The college elimination and selection process involves an evaluation of numerous factors. What follows is a discussion of the critical criteria and factors that higher education applicants should take into consideration.

Prospective university students have a wealth of resources at their disposal for investigating colleges. They can schedule an appointment with a guidance counselor for specific information about schools that meet their educational and personal needs. They can visit the local library and bookstore for guides providing detailed information about different universities such as admission requirements, areas of study and tuition costs. Two popular resources include the Fiske Guide to Colleges and The Insider’s Guide to College. Applicants may also avail themselves of a number of online college research tools that are free of charge.

Prior to initiating their search, applicants should ask themselves the following questions:

• Reasons for wanting to attend college
• Their academic skills and strengths
• Their weak points
• Their long-term objectives (whether tangible or intangible in nature)
• Their general interests
• The program(s) of study they would like to pursue

Applicants should acquaint themselves with the various types of higher education institutions and select the one that offers the field(s) of study that interest(s) them and that fits their academic requirements. College-bound individuals may choose from among the following types of schools:

• University
• Community college
• Liberal arts college
• Technical college or trade school
• Specialized institutions (business school, law school, medical school)
• Graduate school

In order to best assess their aptitude and skills, college applicants should focus their search on schools offering a wide array of classes.

It is important for prospective students to decide whether they wish to stay close to home, within the state, or out of state. They should also ask themselves whether they prefer to live off campus, on campus or commute.

Applicants should inquire as to the annual cost of enrolling in the college(s) of their choice. The total cost should include tuition, room and board, and miscellaneous expenses. Students should not be discouraged by a seemingly astronomical sticker price. This is because the vast majority of private universities offer financial aid- whether in the form of a college student loan, tuition installment plans or scholarships- thus making the cost considerably more affordable.

Another element that prospective students should consider is the university’s location and size. The student body at a college may range from less than 2,000 (for small colleges) to more than 10,000 (for large colleges). Some students feel more at ease in more intimate classroom settings, while others place a premium on an extensive selection of courses and activities as are offered by larger schools. Applicants should also determine whether they prefer an urban, suburban or rural college.

A college environment that matches an applicant’s learning style and personality will help him or her succeed and foster personal growth and satisfaction. Prospective college students should strive to learn as much as possible about their favorite schools. They may do so by visiting the campus and talking with school representatives, current students and/or alumni.

Another way for applicants to assess potential compatibility is to compare their academic profile to that of new students attending the universities under consideration. They can consult the university’s admission website for such information.

Special programs that further applicants’ objectives and needs should also be investigated. Such programs include the following:

• Internships;
• Study abroad programs;
• Co-op programs;
• Intercollegiate sports programs and extracurricular activities; and
• Honors programs
• Financial Aid Programs

Prospective students should determine whether the college dorm accommodations- co-ed or single-gender- are suitable with their personality.

My belief is the number one thing that should be considered is the cost of the university in consideration. Is it affordable and are there financial aid programs and such to help pay the cost.

The average medical student borrows $130,000 in student loans during their four years of school, and that does NOT include any student loans that you may be carrying from undergraduate school. The majority of students rely upon student loans to obtain their education.

Most students attending an accredited institution in the United States qualify for government loans, better known as Stafford student loans. There are two kinds of Stafford student loans: subsidized and unsubsidized. Always apply for Stafford loans first. Medical students can borrow a maximum $8,500 in subsidized loans, and $30,000 maximum in unsubsidized Stafford student loans. Maximum amounts vary for disciplines; check with your financial aid office or prospective lender if you are in any other program.

The government pays the interest on subsidized Stafford student loans while you are in school and internship/residency training for up to three years. You are responsible for the interest on the unsubsidized student loans; it continues to accrue while you are in school and during internship/residency training. Usually the interest on your student loans is capitalized at graduation, and may be capitalized at additional times after that, including when you enter repayment. Each time the interest is capitalized, the prior interest that is accrued becomes part of the principal, and you are accruing interest on the interest that previously accrued.

Alternative or Private Loans

Most students also have to borrow additional funds from private lenders. These are commonly known as alternative or private student loans. Try to borrow as little as possible from alternative loans. These student loans typically have a higher rate of interest, and are credit-based loans. This means that the better your credit is, the cheaper it will be for you to borrow. If you do not have good credit, you will need a co-borrower to sign along with you in order for you to borrow the money. Of course, this means that this student loan will be listed on your co-borrower’s credit history until it is paid off, and may prohibit your co-borrower from receiving credit. This person is also responsible for paying back this loan if you default, die, or become totally and permanently disabled.

The aggregate limit for Stafford student loans that a medical student can borrow is $189,125. Of this amount, no more than $65,000 can be subsidized Stafford loans. The total amount, including federal and private student loans that a medical student can borrow without a co-borrower is $200,000. There is no limit with a co-borrower. Bear in mind that student loan limits can vary from lender to lender.

We urge you to consider the amount you are borrowing carefully. These loans do not just go away. You will be repaying them for a good portion of your life, and private student loans are not forgiven upon death or disability. If something happens to you, your spouse and/or co-borrower will be left with the added responsibility of paying back your loan. We see it over and over: students want to borrow as much as they can in medical school, then once into repayment, regret it. In addition, they have a lot of years to think about it as they are repaying those loans.

When you start to search for a student loan, there are a lot of assumptions made about your financial status. However, the biggest assumption made about people seeking student loans is that they are fresh out of high school and will need to rely on their parent’s good credit record in order to secure a student loan. Another assumption is that these parents have good credit! In addition, what if the students need to pay for college themselves or are too old to rely on their parents? What then?

Financing your education with student loans is possible, even if you do have bad credit. You may have to work a little bit harder to secure the financing, but you should never let bad credit stand in your way of pursuing an education.

Let us discuss all of your options when it comes to student loans and what types of offers you can pursue with bad credit.
Before you even visit your bank to ask about student loans, you need to follow a series of steps in order to get the most out of your all financial aid programs.

One of the first things you should do for your college education is to fill out the FAFSA. This not so short form will tell the government how much money you make, how much your parents make and how much you can afford to pay for college. You need to fill out the FAFSA in order to be eligible for any and all types of federal financial aid programs including grants and student loans.

Within a few weeks after submitting the FAFSA, you will receive a Student Aid Report or SAR in the mail. The SAR tells you just exactly how much money you and your parents are expected to pay out of pocket for your college education. In addition, a few weeks after that you should receive an award letter in the mail detailing how much money you will receive in financial aid as well as the financial aid programs you qualify for. It is then you are given the option to select what type of aid you are willing to accept. If you have qualified for a grant, accept it! The amount you receive will be sent directly to your school and applied to your tuition balance.

Likewise, if you have qualified for a federal student loan, you will need to indicate that you are accepting it by sending the award letter back. After that, you will need to apply for and directly accept the loan through a lender like a student loan company.

Therefore, once you have received all of the federal financial aid you are going to receive, it is time to do the math. How much tuition and other college expenses are left over? If it is a small amount that you can afford to spend from your savings than you are very fortunate. However, if the amount left over is still significant you may need to apply for an additional student loan outside of the federal system.

With a federal student loan, you can easily sidestep the whole bad credit thing altogether. In fact, your credit history may never come up at all and it is one of the best no credit check student loans available. With the Federal Stafford Student Loan, there is an assumption that most borrowers are coming straight from high school and will have little to no credit. Because of this, credit is not even taken into consideration! So long as you have never defaulted on a student loan before, you should be able to borrow if you meet all of the requirements.

Your first step in keeping college costs under control is to make some hard decisions about the type of school your family can afford. If you and your children are going to rely on student loans to pay part of the cost, your next step is to decide how much debt is reasonable.

Set a limit that is realistic. The average student loan debt among graduating seniors is just over $19,000. One financial aid officer says it is reasonable if a student graduates owing less than $25,000.

At the lower end, more than half of all full time students enrolled in public four-year colleges pay in-state tuition and fees between $3,000 and $6,000 a year. Therefore, a student splitting the total cost with his or her parents might reasonably borrow $12,000 or possibly less.

Once you have decided on a limit, stick with the federal student loan programs: Perkins and Stafford loans for students. Perkins loans are the cheapest, but they are available only to students with the greatest financial aid needs. For most students, Stafford loans are the best deal around. Any student can borrow at a fixed rate of 6.8%.

Interest accrues while your child is a student, but he or she does not have to begin repaying the student loans until six months after graduation. If your family qualifies for a subsidized Stafford student loan on the basis of financial aid need, the government will pay the interest while your child is in school.

Despite the advantages, many students do not exhaust the entire Stafford student loan money to which they are entitled. Some families are apparently put off by having to fill out the Free Application for Federal Student Aid (FAFSA), a prerequisite for getting a Stafford student loan.

Do not fear the FAFSA. In addition to a low interest rate, Stafford student loans come with attractive benefits when it is time to repay. For example, borrowers can defer repayment if they attend graduate school, or renegotiate loan terms to stretch out or lower their payments.

Get a list of lenders from your child’s school, or from FinAid (www.finaid.com) or the Education Finance Council (www.efc.org), which lists state-run programs. Rates and loan terms are fairly standard. Some lenders do offer attractive discounts, such as a waiver of the loan origination fee when the student loan is disbursed. Immediate discounts are better than future benefits tied to a certain number of on-time payments, a requirement that is tough to meet.

Scope out scholarships. Do not count on your child to bail you out with a full ride. However, many private schools are willing to cut their sticker price to attract the right students. The trick is to apply to schools where your child’s grades, SAT scores or outside activities make him attractive.

In addition, not every scholarship is based solely on grades. They can be based on a wide range of criteria. Make sure you research all the sources available. The chances of finding a scholarship or fellowship are quite high.

Through the College Cost Reduction and Access Act of 2007, Congress created the Loan Forgiveness for Public Service Employees Program. This program provides for the cancellation of the remaining balance due on eligible federal student loans after the borrower has made 120 monthly payments on those student loans under certain repayment plans while employed in certain public service fields. The below information will explain the provisions of this program.

Borrowers must have made 120 monthly payments after October 1, 2007 in the William D. Ford Federal Direct Loan (Direct Loan) Program. Therefore, the first cancellations of loan balances will not be granted until October 2017 at the earliest.

Any non-defaulted student loan made under the Direct Loan Program is eligible. See below for information on how borrowers of student loans made under other federal student loan programs may qualify. The Direct Loan Program includes the following types of loans –
• Federal Direct Stafford/Ford Loans (Direct Subsidized Loans)
• Federal Direct Unsubsidized Stafford/Ford Loans (Direct Unsubsidized Loans)
• Federal Direct PLUS Loans (Direct PLUS Loans) – for parents and graduate or professional students
• Federal Direct Consolidation Loans (Direct Consolidation Loans)
• Eligibility of Other Federal Loans: Although student loan cancellation is only available for student loans made and repaid under the Direct Loan Program, borrowers with student loans made under other federal student loan programs may be eligible if they consolidate those loans into the Direct Student Loan Program. However, only payments made on the Direct Consolidation Loan will count toward the required 120 monthly payments. Loans that are eligible for consolidation into the Direct Loan Program include –
• Federal Family Education Loan (FFEL) Program, which includes:
• FFEL Subsidized Stafford Loans
• FFEL Unsubsidized Stafford Loans
• FFEL PLUS Loans
• FFEL Consolidation Loans
• Federal Perkins Loans
• Certain Health Professions and Nursing Loans

NOTE: Borrowers may have to meet additional eligibility requirements to consolidate these loans into a Direct Consolidation Loan. If you are unsure about what kind of loans you have consult the National Student Loan Data System at http://nslds.ed.gov.

Eligibility Requirements – Repayment Plans:
To be eligible to have remaining balances cancelled, the borrower must not be in default on the eligible loans and must:

• Have made 120 monthly payments on the eligible loan(s) beginning after October 1, 2007. Earlier payments do not count toward meeting this requirement.

Payments must have been made under any one or a combination of the following Direct Student Loan Program repayment plans:
• Standard Repayment Plan with a 10-year repayment period.
• Income Contingent Repayment (ICR) Plan – not available to parent Direct PLUS loan borrowers.
• Income Based Repayment (IBR) Plan – not available to parent Direct PLUS loan borrowers.
• Other Direct Student Loan repayment plans, but only payments that are at least equal to the amount that would be required under the 10-year Standard Repayment Plan may be counted toward the required 120.

Eligibility Requirements
Employment in a Public Service Job: To be eligible to have remaining balances cancelled, the borrower must:
• Have been employed in a public service job during the period in which the borrower made each of the 120 monthly payments and;
• Must be employed in a public service job at the time of loan forgiveness.

NOTE: In the case of a parent PLUS loan, the qualifying public service employee is the parent, not the student on whose behalf the loan was received.

Public Service Jobs: Eligible public service jobs are full-time jobs in the following fields:
• Emergency management
• Government
• Military service
• Public safety
• Law enforcement
• Public health
• Public education (including early childhood education)
• Social work in a public child or family service agency
• Public childcare
• Public service for individuals with disabilities
• Public interest law services (including prosecution or public defense or legal advocacy in low-income communities at a nonprofit organization)
• Public service for the elderly
• Public library sciences
• School-based library sciences and other school-based services
• Certain tax-exempt organizations
• Faculty teaching in high-needs areas, as determined by the Secretary
• Full-time faculty member at a Tribal College or University
• Additional Guidance and Implementing Regulations: The Department of Education will publish regulations to implement the Loan Forgiveness for Public Service Employees Program after providing an opportunity for public comment in accordance with legal requirements. Those regulations will be issued by November 2008.

In general, only borrowers who are making reduced monthly payments through the Direct Student Loan income-contingent or income-based repayment plans will have a remaining balance after making 120 payments on a loan. In other words, only borrowers with a high debt-to-income ratio or consistently very low income will qualify for loan forgiveness under the Loan Forgiveness for Public Service Employees Program.

When it comes to big-ticket items you have to pay for in your lifetime, it does not get much bigger than higher education. Predictions are that college tuition will increase by about twice the rate of general inflation, year over year. This would mean, in 20 years, the average annual cost of tuition for a four-year public program would rise from today’s $5,132 to $19,859 and the cost of a private program from $20,082 to $77,711.

Nevertheless, help is at hand. For want to be college students who could benefit from a financial aid leg up in this department, here are some resources on what is available.

The ideal sources of funding for your child’s education are scholarships and grants that do not require repayment. Those lucky enough to qualify rarely receive enough to foot the whole bill though. Fortunately, there are several types of student loans. They are distinguished by various factors, including their interest rates, repayment terms, and maximum available amounts and whether the repayment falls on the student or his or her parents.

Some principal sources of student financial aid are:

* Federally funded student loans
* Parent loans
* Private student loans
* Other loans
* State financial aid
* Institutional assistance

The U.S. Department of Education’s Federal Student Aid (FSA) programs provide nearly 70 percent of all financial aid for American students. FSA is available to students — both undergraduate and graduate — enrolled in eligible programs at participating schools. In most cases, they are granted based on a student’s need.

Stafford student loans are long-term, low-interest loans regulated by the federal government. They are given to students and must be repaid with interest following the completion of their educational term.

A student’s financial aid need is calculated based on his or her expected family contribution (EFC), academic level and the anticipated cost of his or her education including tuition, room and board, and books. Worksheets that show how the EFC is calculated are available at www.studentaid.ed.gov/pubs, or you can request a free copy of the EFC Formula by calling 1-800-4ED-PUBS, and asking for the Federal Student Aid Handbook.

Students are required to begin paying off their Stafford student loan debt six months after they graduate, or after their enrollment drops to less than half time.

Stafford student loans come in two types: subsidized and unsubsidized. Interest accrued on subsidized loans during school is paid by the government. Borrowers have up to 10 years to repay their subsidized federal Stafford student loan.

Unsubsidized loans start charging interest from the moment the money is given to the student. Sometimes, the lender offers the borrower the option to make “interest-only” payments over the course of his or her time in school. Unsubsidized Stafford student loans can be used to supplement subsidized Stafford student loans.

Borrowers have up to 10 years to repay their unsubsidized federal Stafford student loans. However, they must pay interest while they are in school, unless they make arrangements to postpone or capitalize them at the start of the repayment period.

To be eligible for a Stafford student loan, subsidized or non-subsidized, you must:

• be enrolled as a full or half-time undergraduate, graduate or professional student;
• be a U.S. citizen or eligible resident non-citizen;
• meet financial need criteria as defined by the federal government;
• Sign an application and promissory note.