College Student Loan News and Info

The ensuring continued access to College Student Loans Act of 2008 signed into law on May 7, 2008, increases Federal Stafford College Student Loan annual and aggregate limits for college student loans disbursed on or after July 1, 2008, for undergraduate college students.

You can receive both a subsidized and unsubsidized college student loan, as long as the amount you borrow does not exceed the annual college student loan limits.

When you do graduate with a graduate or professional degree, the maximum total amount allowed from Stafford College Student Loans is $138,500. This maximum total graduate loan limit includes Stafford College Student Loans received for undergraduate study as well.

Federal PLUS (College Student) Loans

Parents can take out a Federal PLUS Student Loan to borrow funds for a dependent, undergraduate college student who is enrolled at least half time. Like Federal Stafford College Student Loans, your college or university will participate in either:
• The Federal Family Education College Student Loan Program (FFELP) — where banks, credit unions and financial institutions fund the loans.
• The William D. Ford Federal Direct College Student Loan Program (Direct Student Loan) — where the U.S. Department of Education provides the money for the student loan through the college or university.

Loan Facts

A few Federal PLUS (College Student) Loan facts:
• Parents will have to pass a credit check in order to borrow these funds.
• In many cases, these student loans come in multiple disbursements.
• Federal PLUS Loans are not based on financial aid need.
• Parents will be responsible for repayment.
• The interest rate is fixed at 8.50% (FFELP) or 7.90% (Direct Student Loan).
• The loan limit equals the Cost of Attendance minus other financial aid received.
• There are no grace periods; generally, repayment begins within 60 days after the final student loan disbursement for the academic year.

Finding a serviced lender.
• If parents apply for, but are denied a PLUS loan, college students will have the option to borrow additional Stafford College Student Loan funds.

Federal Grad PLUS College Student Loans

The Federal Grad PLUS College Student Loan is designed for graduate and professional degree college students. Like Federal Stafford College Student Loans, your college or university will participate in either:
• The Federal Family Education College Student Loan Program (FFELP) — where banks, credit unions and financial institutions fund the loans.
• The William D. Ford Federal Direct Loan Program (Direct Student Loan) — where the U.S. Department of Education provides the money for the student loan through the college or university.

Loan Facts

A few Federal Grad PLUS College Student Loan facts:
• You must complete the FAFSA.
• You must also pass a credit check in order to borrow these funds. You must have applied for the annual student loan maximum eligible under the Subsidized and Unsubsidized Federal Stafford College Student Loan program before applying for a Federal Grad PLUS Loan.
• The interest rate is fixed at 8.50% (FFELP) or 7.90% (Direct Student Loan).
• The college student loan limit equals the Cost of Attendance, minus other financial aid assistance received.
• There is no cumulative lifetime maximum.
• There is no federally guaranteed grace period; generally, repayment will begin within 60 days after the final student loan disbursement for the academic year.
• Repayment begins once you have graduated, leave school or drop below half time. If you have a Stafford College Student Loan in a grace period.

Known also as technical, vocational, and trade schools, career schools provide options for students. Students who graduate from high school and who want to pursue a career but don’t want to get involved in the basic humanities courses needed for a college degree should be open to a Career School.

These schools specialize in vocational programs that can be obtained with specialized study and without the extra credits needed in college. Some of these vocational programs include mechanical programs, cosmetology, paralegal, and HVAC Technology as well as a myriad of other lucrative careers that can be accessed through these schools.

Over the years, career schools have become more and more accepted and respected by employers and students alike. These schools target the skills you need without having you learn the skills you might not need in your chosen career. While math and English are necessary to everyone as you compete in today’s job market, college level math might not be necessary for someone who wants to be a cosmetologist while college level English might not be necessary for someone who intends to work on air conditioners and heaters to earn a living.,

Depending on what you are searching for when it comes to your education, career schools are as good a choice as a two and four year college for several specialties. Chefs, pharmacy technicians, surgery technicians, office administration, and dental assistant are just a few of the careers that can be started quickly through vocational colleges.

In most cases, technical schools also have job placement personnel that work with graduating students to obtain internships and/or placements in their chosen careers. This has long been a practice of these colleges and it continues to enhance their appeal.

While some loans are not available to students in career schools, most of these institutions have a financial aid department and will work with you to make your schooling affordable. Some of the help may come through a work-study kind of program while some may come through scholarships and loans. Either way, don’t pass over these schools if you are interested in some of their offerings. They focus on the things you need to know for the career you have chosen. If you don’t know what career choice you want to make, a two or four year school will give you the opportunity to decide. But if you already know where you want to start and what you want to do, check into these schools for time and money savings.

It is just past mid-summer and the store sales flyers are all posting back-to-school sales. While no one usually offers scholarships for sale, there are some contests and scholarships out there that are available to students right now.

The Coach Design a Tote Scholarship is just such an example. With a deadline of August 4th quickly approaching, students with an interest in design might want to take advantage of the Coach Scholarship for the upcoming school year.

Coach is searching for a unique design that they feel is inspired to add to their classic chic tote. The rules are simple because you can start from scratch, you can use a favorite sketch, or you can incorporate some of the already popular Coach Design elements to catch the eye of the judges. Simply download a silhouette and then create your graphic and submit it. You could win a shopping spree and party as well as having your design grace the special limited edition item to be sold by Coach.

There are three prizes to be given. The first one will receive the limited edition exposure through Coach for his or her design, and will receive a $2,500.00 shopping spree and a $500.00 scholarship or cash, as well as a celebratory event at the nearest Coach store. The prize may be granted for an online shopping spree if the winner does not live near a Coach store.

The other prizes will go to the most viral entry and the high scoring entry. These two prizes consist of a $1,500.00 online shopping spree and a $250.00 scholarship or cash.

For the student who just wants to win the prize and the scholarship, you can enter and be able to shop to your heart’s content. However, for the design student who would like to pursue this career, this type of recognition would not only give you some money toward college this fall, it may open a door for you for after your degree is complete. When people recognize your design and you add that type of recognition to your portfolio, you will have many interested in having you as part of their design team.

While grants and loans are a big part of college, so are fun and scholarships. This could provide money toward college and let you and your friends in on some fun, as well. College is work but don’t forget the friends and the fun in pursuit of a college degree.

The largest overhaul of college financial aid was signed into law in October of 2007. How does that help students and exactly what does it look like.

The College Cost Reduction and Access Act will work for students in several different ways. The first way is that the Pell Grants will begin increasing and will be paying out up to $5,400.00 per student per year by the year 2012. The recipients of Pell Grants are low income students for the most part and have had to rely more on loans in recent years because the grant was not providing as much as it should for these students.

The second way that this law will help students is that is will cut the interest rate on federally subsidized loans for five years. The rate will go down a little bit every year until 2012 when it will return to 6.8% unless another law is enacted on the behalf of college students.,

Another way that this law will help students is that the repayment programs for the federally subsidized loans will begin to offer income-based repayment plans. This will begin in the July of 2009 and will be open to those who have federal student loans, whether from the past or the present of for the futures. Students who have invested in a college education in the past come out of college with lower paying jobs than they expected, thus putting a strain on their ability to repay the loans they received. This program aims to help them by capping the loan payments at a reasonable interest rate. This rate will be based on the borrower’s income. Therefore, if the borrower is being paid in the low range, the percentage cap will be lower. If he or she is being paid more, his or her percentage cap will be larger.

Another item relating to the College Cost Reduction and Access Act is the ability of the law to cancel the student loan debt after 25 years for the average payee and after 10 years for those who choose a public service career.

For students now, however, the law will raise the amount of money that a student can earn before they have to worry about eligibility for federal student financial aid. Right now, a dependent student has the ability to earn up to $3,000.00 per year before they have to worry about how it affects their financial aid. This law will increase this by increments until 2012 when the new per year earnings will be $6,000.00.

As gas, food, and living expenses continue to increase, this should be welcome news to anyone who will find themselves in need of a federally subsidized student loan in the next few years.

Some college student loans utilized by students will require a credit check. It is very important that you understand how your credit history plays a role in your financial aid assistance and your financial needs for the future.

Your credit will play such a big role in your life, which is why having good credit, and making student loan payments on time, and minimizing your debt are so important.

Some Key Factors
There are three key factors that creditors look at when determining your student loan eligibility. These are generally referred to as the three C’s of credit:

• Character - This is your personal financial character (history), or a look at how you have handled your debt in the past. Have you paid your bills on time, do you pay them off early, or do you just not manage money so well?
• Capacity: Your ability to pay back your student loan based upon your income and total debt.
• Collateral: What types of collateral do you have to offer in exchange for a loan?

Lenders will reviewed this criterion simply by looking at your credit report. However, most lenders will use an electronic system that assigns a number to your credit score. The number you are assigned will tell them what type and how much credit you can receive. This technique is called credit scoring. A credit score will tell the lender how likely you are to pay back the student loan and adhere to the loan terms.

Credit Agency
Lenders will use a credit agency to obtain a credit report on potential clients. You will have the right to receive a copy of your credit report anytime. This will give you the opportunity to see what the lender is seeing. There are three national credit bureaus that will release your credit report when you have given permission. The three agencies are Equifax, Experian, and TransUnion.

Your Personal Credit Report
The following information will be included in credit history reports:

• Name
• Telephone Number
• Social Security Number
• Date of Birth
• Address
• Place of Employment
• Tax liens, judgments, and bankruptcies
• Current loan balances, original amount borrowed, amount of payment, status, and number of late payments
• All credit inquiries for the past 24 months

When negative issues are reported to the credit bureau it will stay on your credit report for seven years, with the exception of a bankruptcy, which will stay for 10 years. It is illegal for information regarding race, gender, religion, national origin, checking or savings accounts, medical history, purchases paid in full, and business accounts to appear on your credit report.

The Equal Credit Opportunity Act (ECOA) guarantees everyone has equal access to credit. It is illegal for the creditors to do any of the following:

• Discriminate against you due to sex, race, marital status, or national origin
• Ask if you are divorced or widowed
• Inquire about future plans to have children
• Not consider public income as reliable as any other form of income
• Not consider alimony, child support, or other payments as income

It is legal to ask for your personal information on any loan application, such as:

• Name
• Telephone number
• Social Security Number
• Employer
• Length of employment
• Marital status
• References
• Current income
• Prior debt
• Current debt
• Bank account balances

Understanding how your credit works for you will only help you make the right decisions about finances in the future and keep you on track with your student loans.

You have graduated from college. Congratulations! Now, however, comes the real test. Can you begin to pay off all those student loans and still live on the salary you will receive from your new employer?

Many times, as we exit college and step into the “real world,” we have dreamed of all those things we want to do when we are out of college and into a “real job.” We want to buy a house, get a new car, a new TV, pay down our student loans, or…you can insert your own dream here. However, we begin to find that as we step into a different living style, the money we thought was going to cover our every whim and desire just simply seems to melt away as it comes into sight. The best thing to do in this situation to give yourself a couple of years to begin to save an emergency fund before you begin to stretch and make those very large purchases.

An emergency fund is just that – a fund for emergencies. Emergencies don’t consist of TVs, video games, movie tickets and brand new BMWs. Emergencies happen when the refrigerator breaks down (and it will) and the repairman has to come out and charges you $400.00 to fix it. Emergencies happen when the transmission goes out (and they do) and the repair bill is $1,600.00. Emergencies happen when you fall down the stairs (and you can) and break your leg and can’t go to work for at least two weeks.

In order to establish this emergency fund, you might want to just continue to live like a college student. That means to continue to bike to work or keep the same car or not eat out very often. Whatever you did in college that helped you save money for college bills, continue to do. If you do this for a couple of years as you get used to paying off college loans and begin to get the hang of going to work instead of going to classes, you will soon find that you will also be able to begin to purchase some of your dream products.

However, you don’t want to do that from your emergency fund. So, for the first two years out of college, determine to set aside an emergency fund, to build up a savings fund, to begin to pay off your college loans, and to be ready to do the research required to get the best price on your brand new TV or your brand new car.

Live like you are college student – get the most from what you need to buy and learn to go without for awhile. No one ever died because of the lack of a plasma TV. You won’t either.

Some families will turn to a private student loan when the federal student loans have not provided enough money or when they are in need of more flexible repayment options. Examples could include, a parent may want to defer repayment until the college student graduates, an option that is currently not available from the federal parent loan program. Many PLUS student loan providers are slowly starting to allow parents to defer payments on the PLUS student loan while the college student is in school using an administrative forbearance. Interest will continue to accrue on this type of student loan.

Private student loans tend to cost a bit more than the education student loans offered by the federal government, but will be far less expensive than any credit card debt. The federal education student loans offer fixed interest rates that are lower than the variable rates offered by most private college student loans. Federal student loans also offer better repayment and forgiveness options. Since federal student loans are less expensive and offer better terms than a private student loan, you should exhaust your eligibility for any federal college student loans before resorting to a private student loan.

Private student loans will typically have variable interest rates, with the interest rate attached to an index, such as LIBOR or PRIME, plus a margin. The LIBOR index is the London Interbank Offered Rate and will represent what it costs a lender to borrow said money. The Prime Lending Rate is the interest rate lenders offer to their most credit worthy customers. A rate of LIBOR + 2.8% is essentially the same as PRIME + 0.0%. The spread between LIBOR and PRIME has been growing over time. So all else being equal, it would be better for all to have an interest rate pegged to the LIBOR index, as such a rate will increase much slower than a rate pegged to the PRIME index.

The interest rates and any fees you will pay on a private student loan will be based on your credit score and the credit score of your cosigner. Typically, if your credit score is less than 650 (FICO), it may be difficult to be approved for a private student loan. An jump of just 30 to 50 points in your credit score is often enough to get you a better term on your private student loan.

It will be better to apply for a private student loan with a cosigner even if you can qualify for the student loan on your own. Just applying with a cosigner will usually results in a slightly lower rate, as such private student loans are not as risky for the lender. Moreover, the interest rates as well as the fees are usually based on the higher of the two credit scores. Therefore, if your cosigner has a much better credit score than you, it may result in a much lower interest rate.

Private student loans can be used to pay for the EFC, the family’s portion of the college costs. While some lenders can offer private student loans in excess of the cost of attendance, any amount going over the difference between cost of attendance and any financial aid is considered a resource. Like an outside scholarship, this can reduce need-based financial aid. Some lenders will offer non-school-certified private student loans to bypass this limitation by not informing the college about the student loan. If the college becomes aware of the loan though, federal regulations will require the college to reduce need-based financial aid. Pending federal legislation will require lenders to tell colleges about all private student loans thus eliminating this loophole. This cost-of-attendance limitation only applies to college student loans, which are student loans that make enrollment a condition of the private student loan. It does not matter where the student loan proceeds are sent or how the student loans are marketed. On the other hand, mixed-use loans such as home equity loans as well as credit cards, are not considered education student loans and are not limited by cost-of-attendance.

A new type of loan on the market for college students may be one that no one saw coming. With the mortgage crisis and the student loan crisis, one might wonder where the funds will come from for the next year’s school bill. However, there are some who are willing to pick up the slack.

Because of the social networking on the computer, today’s students have turned to the computer for many answers. The answer for this dilemma may come from the same place. There are now websites that help establish loans between college students and investors who are looking to find a better return on their money than they may be receiving in the market.

There is a fee for formalizing the peer-to-peer lending agreements and the interest rates are hovering at about the same rate as the Stafford loans. The amazing thing is that there is no credit check for this service and this 6.8% interest is actually a bit lower than students may find for the privately funded loans through a bank or other lender.

Officials however, are worried that there could be some difficulties. In that case, students are being urged to seek help from several different sources before finalizing an agreement with someone you don’t know through one of the internet websites. Basically, the websites simply formalize agreements between two parties, one being the lender and the other being the borrower.

There is, however, another website that has just come on the scene that formalizes the agreement to lend and borrow between two people who are already acquainted with one another. Therefore, if you have an uncle that would be willing to loan you the money you need for college, this website will set up a formal agreement between the two of you so that there are no questions about the money and how it is being used and repaid. Everyone knows the terms as well as the amount borrowed, helping relatives and friends breathe a little easier. It has long been known that lending money within the family could bring consequences that no one wants to pay if the borrower begins to get behind in the payments or the lender begins demanding payment early. This system may be a method to help you avoid those kinds of conflicts because it is a formalized lender/borrower agreement.

These peer-to-peer websites are new and still untried. For peace of mind, you might want to watch how the transactions are handled for awhile before you invest a large sum or before you borrow a large sum using these systems. However, if they prove to be a good system, they may save you some money in the long run.

1. A federal financial aid student loan featuring no origination fee is cheapest overall.
Many times the interest rate reductions offered during the repayment will reduce the cost of your student loan more than any benefit that will eliminate up front fees.
2. Obtaining the lowest interest rate on a college student loan is the only thing I need to focus on.
While getting a great interest rate is important, choosing a lender with a solid reputation that also offers highly trained customer service representatives will help you the most over time. If you do happen to run into difficulties making your payments at some point, these experts will help you find an option to make your payments more manageable.
3. I should select a non-certified private college student loan instead of one certified by my school.
Private college student loans certified by your school can have many advantages over the non-certified variety. By certifying or verifying your eligibility for a college student loan, your school is helping you borrow only what is needed. Non-certified private college student loans will typically have higher borrowing limits and higher interest rates than the certified college student loans. It is very important not to borrow more than you must to avoid repaying the additional amount with interest later. Finally, while the interest on certified private college student loans is generally tax deductible, interest paid on non-certified private college student loans is not.
4. My credit history is no good. Therefore, this will hurt my child’s chances of getting an undergraduate college student loan.
There are many options available to help your child get a competitive interest rate on a college student loan. Federal Stafford College Student Loans, with a fixed interest rate of no more than 6.80% will not require any credit checks. Federal PLUS College Student Loans for parents, which feature a fixed interest rate of 8.50%, will do only a limited credit check. If you are denied for a Federal PLUS College Student Loan based on your credit, your child will likely to be able to borrow additional funds through an unsubsidized Federal Stafford College Student Loan. Your child can also apply for a private college student loan on there own. Private college student loans are credit based, but will not require a college student to use his or her parents, or spouse as a co-signer. By adding a credit worthy co-signer to their application, college students may receive more favorable student loan interest rates.
5. I am not likely to get any federal financial aid, so I will not need to fill out a FAFSA.
Buying into this untruth is likely to cost you money. Since most colleges and universities will use this information provided on the FAFSA to distribute campus and state based financial aid like scholarships and work study, you definitely need to complete the FAFSA even if you do not think you will qualify for federal financial aid.
6. If I am awarded federal financial aid, they will send me the money.
Most federal financial aid will not be given directly to the college student. The majority of federal financial aid is sent to your college or university and credited to your college student account at the start of an academic term.
7. My family makes in excess of $50,000 per year so we I will not be eligible for federal financial aid.
There are many factors in addition to your household income that will help determine if a college student is eligible for federal financial aid, such as the number of dependents. Additionally, there are college student loans for which families of all incomes will qualify.

If you received decent grades in high school, you may believe that you will have it made in college. And you may. But then again, you may not. Because you are expanding on what you have learned previously, you are going to need to study in a different way. While there will be some memorization and repeating that memorized information back to the professor, you will be asked how to apply what you have learned in much broader situations. And for that, you will need a different set of study skills.

When you receive your book, maybe even before you go to the first class, read the Introduction in the textbook. Once you have read that, go back to the Table of Contents and read down through the subject headings for each chapter of the book so that you will know what direction the course will take. If there is a particular chapter that stands out to you or is of special interest to you, go ahead and read that chapter or a portion of it. If you get a feel for the course before you go to the first class, you will be well ahead of the game.

During your class, take good notes, highlight things in the textbook that the professor particularly mentions. If it’s in the textbook and he or she particular quotes it in class and talks about it at length, you can pretty much be sure that sometime, you will see a question about that subject on a test. Take particular note of whether the professor stays with the order of the textbook or whether he or she skips around. That will tell you something about which ideas he or she considers as foundational. Always get the foundational ideas; sometimes several tests or projects will be built around those foundational thoughts.

When your first class is over, be sure to go back through your notes and your highlighted textbook before the next class. If you read your 2-3 pages of notes 2-3 times before you go back to that class again, you will be able to remember what you are hearing and learning better without a lot of last minute memorization before a test. Remember that college professors are not just looking to have to memorize the textbook; they are looking for you to be able to apply what you have learned. They are looking to expand your world.

One other thing you need to be aware of in college classes – you are going to be doing a lot of reading. You will not have to memorize everything you read but you will have to be able to logically think through and talk about the ideas given in the books you are reading.

Good study skills will enhance your reading and understanding during class. Be sure to develop these by finding people in your classes to talk with about what you are studying and to study with during test preparation time. Throughout your lifetime, you will be pleased with the skills you have developed, as well as the friends you make, while in class and while preparing for projects in a given class.