Student Loans Insight

As the cost of college continues to rise rapidly, and federal college student loan limits fail to keep up the pace, the private student loan business has grown rapidly. These college student loans are used to fill the gap between available federal financial aid, and what college students and families can afford to pay out-of-pocket for there student’s college costs. However, these college student loans lack the more affordable fixed rates, and flexible repayment options that federal college student loans do have. Possible borrowers should exhaust all federal grant and student loan options (including PLUS loans) before considering a private student loan.

Banks and other financial institutions will provide private student loans without any financial backing from the federal programs and government. Interest accrues on all private student loans from the time they are disbursed, although interest costs may sometimes be deferred and capitalized when repayment begins. There are many different types of private student loans, each program and lender or financial institution with its own rules and requirements. Private student loans are also called private label or alternative student loans, and are often provided by the same lenders that will provide federal FFEL student loans. Because the government does not subsidize private student loans, the interest rates and terms are not regulated the way they are for federal student loans, which makes private student loans more of a risk and much more expensive to take out.

Private student loan terms and conditions, including interest rates and fees, are generally based on ones credit history or a co-signer’s credit history. This means that low income college students or those with negative credit histories will most likely receive student loans that are more expensive in the interest rate. Like government student loans, private student loans are supposed to be used only to finance postsecondary education such as books, transportation, and room and board. Check with your school and there estimated cost of attendance and consult with the financial aid office before you decide to go with a private student loan.

Private student loan lenders may pressure you or possibly even require you to obtain a co-signer. A co-signer can be a relative, friend or someone else who agrees to be responsible for your debt. A Co-signer must understand that they will be responsible for paying back the debt just as if they had received the money themselves.

There are some very important differences between government college student loans and private student loans. If you take out a private student loan, you will not be eligible for the same kinds of discharge options available for a federal student loan. The same is true for deferment and forbearances as well. Read your student loan contract very carefully to learn more about your private student loan’s specific terms, conditions, benefits, rates, fees, and penalties. Private student loan lenders do have to honor any promises they have made about terms and benefits.

Before considering a private student loan, make sure you have exhausted all federal, state, and institutional financial resources. If there is no other way to fill the financial gap, shop around and do your homework before choosing a private student loan. It is also important to remember to keep written records of all the forms, applications, and correspondence with your lender or financial institution, especially regarding discounts and special deals, for the entire life of your student loan.

Consolidating a college student loan can help make mountains of debt so much more manageable. According to the National Postsecondary Student Aid Survey, a large majority of four year college graduates have close to $20,000 in debt totaled up. Graduate college students, much more; and medical and law college students have much, much
more.

College student loan consolidations have become standard for both the federal college student loans and private college student loans. College student loan consolidation will not only combine loans, a lender can actually pay off the college student loan you are consolidating and rewrites a new college student loan, the consolidation.

Is It Time to Consider a Student Loan Consolidation?

How will you know when it is time to talk to your financial lender about a college student loan consolidation?

• You have been delinquent on monthly college student loan payments.
• You have multiple federal and/or private college student loans.
• You foresee large financial obligations that could put your monthly payments at a high risk.

If you find yourself drowning under college student loan payments, a college student loan consolidation can offer an affordable solution that may just save your financial future. You will can get out of debt and sleep easier at night. Moreover, guess what? Lenders and financial institutions have a stake as well in your financial health. This is why they offer college student loan consolidations in the first place.

Federal College Student Loan Consolidation

Two federal college student consolidation loans are available: the Direct Consolidation Loan and the FFELP Consolidation. The federal college student loan consolidation programs will allow borrowers to refinance all their federal college student loans into one.

Benefits Of Federal College Student Loan Consolidation:

• Interest rate is lowered.
• Monthly payments may be nearly halved.
• More money in your pocket each month.
• Extend your repayment period from 10 to 30 months.
• Protect your credit rating.

Private College Student Loan Consolidation

College Student borrowers can opt to consolidate there private college student loans for the same reasons they do a federal. For relief from the monthly cost and financial burden.

Private college student loan payments are refinanced as one low interest student loan, which puts more cash in your pocket each month.

Lenders and financial institutions approve college student loan consolidations based on credit. You may borrow with a co-signor. Most lenders will release the co-signor after a certain length of time provided you make consistent and on time payments.

While the interest rate for A private college student loan consolidation is typically higher than that of a federal college student loan consolidation, you can still get a decent rate.

The application process for a college student loan consolidation will depend on the type of college student loans you will be consolidating.

• Federal college student loan holders have two options when consolidating: Typically, if you have Direct federal college student loans you apply for a Direct Consolidation Loan through the Department of Education. For FFEL college student loans, you can apply to your lender for the FFEL Consolidation or to the Direct Consolidation Loan program.
• Private college student loans must be consolidation through a private lender, either the lender that originated the initial student loan or another. Remember, private consolidation loans are credit based.

Before you default on your student loans always choose to consolidation your student loan.

There are people and companies and non-profit organizations out there that are willing to give you free money to go to college – you just have to find them. Finding Scholarships is going to take some work on your part but they are well worth your time and effort in not having to pay the money back at high interest rates.

You will need to look for scholarships in much the same way you work at your job – consistently and with dedication. It is work finding scholarships and you need to be able to take some time each day to look online or spend at the library tracking down the sources for these funds.

Take on the scholarships that others may not want to tackle. The scholarships that require a long, written essay are not going to be as much sought after as are those that are offered because your parents work for a certain company or because you have done some volunteer work. Be sure to list all your accomplishments, etc., but don’t be afraid to take on the harder challenges.

Everyone has rules. Schools, parents, jobs, and scholarships all have rules. You must abide by the rules of the scholarship application if you want to be considered for the scholarship. Follow the directions accurately. If the rules say 500 words in 12 point Arial font, don’t put it in 11 point Times New Roman. Pay attention to and follow the guidelines they give. While it simply may be for ease of reading on the part of the one who will be reading the application, if it’s not right, he or she won’t read it. It’s their scholarship and their prerogative.

Make sure that the application and whatever materials are requested are neat and orderly and keep a copy of the scholarship for your records. If, for some reason, the packet you send gets lost or put in the wrong inbox in the company, you’ll be able to reproduce it and send it off again quickly.

In writing, the first rule is proof-read. The second rule is that if you really want to make sure it’s right, have someone that knows something about writing proof-read it again. And when they proof-read it, follow their suggestions. If you want a well displayed application and packet, proof-read, proof-read, and proof-read again. You’ll be glad you did when you receive the scholarship because of the accuracy of your materials.

Finding scholarships may not be easy but it will be worth the time and effort you invest. Take the time, do it right, and reap the benefits of your hard work.

The life altering experience of going to college can be a wonder full thing for a student. For some, it may include moving away from home for the very first time, meeting new people, struggling through difficult courses and working through the financial issues that will come up.

With the financial status of the country looking a little on the grim side these days, many college students can see a reflection as they apply for a college student loan.

I read in a July survey by the National Association of College Student Financial Aid Administrators of financial aid administrators’ perspectives on the college student loan crunch, the results showed that more than 90 percent of federal financial aid administrators said they were concerned about the college student loan crunch.

Many colleges and universities have noticed a slight increase in college students experiencing some difficulty accessing a private student loan and are working with these college students to find some alternate ways to finance their higher education costs. However, students seeking a federal college student loan are seeing much more success.

At many colleges and universities, college students are finding it no more difficult to obtain a federal student loan this year than in previous years. However, for college students who have established some poor credit or who do not have a credit worthy co-signer, private student loans have become much more difficult to obtain.

Some lenders and financial institutions have tightened their criteria for private student loans and, in many cases, have increased the interest rate or decreased repayment incentives.

On the other hand, terms of the more popular federal college student loans have not changed and the interest rates are actually scheduled to decrease again over the next three years. An adequate number of lenders are participating in the federal financial aid programs to service the students, despite a few lenders that are opting out of the program.

Though many students just graduating from high school are seeking some kind of financial aid, so are many adults who are looking to better themselves with a specialized degree.

There also seems to be an increase of college students who want to continue their education after they have been out of college for a few years and are coming back to college and seeking some financial aid.

Many of the new college students are people that have found themselves out of work or know their companies are going to close. On the positive side, students going to community colleges can obtain an associate degree for a much lower cost and transfer their credits for a bachelor’s degree to a four-year college or university. It is a win-win situation for the college student.

As college bound students look towards the future, the most important thing a college student can do to afford college is to save for it. Every dollar you have saved now is a dollar you do not have to borrow at a later. Even if it is savings earned during summer jobs while in high school this can significantly reduce the dependence on a college student loan later.

College student loan programs are still an excellent vehicles for financing the remaining cost of a college student’s education when other resources are not available. The lifetime learning benefits of a college degree far outweigh the short-term cost of repaying a college student loan.

While it may be tempting to find a college, think that it has all you want in a college, and then go ahead and make an early decision about the college to be sure you get in, that may not be the best decision on your part. College Admissions is a process and if you want to get into a great school, you will need to follow the guidelines given but also take a good look at various colleges that offer the program in which you are interested.

As you begin thinking long-term about your future while in high school, it is best to look at several colleges that offer courses in which you are interested. No one college is going to be the perfect choice right up front. You’ll need to find out about the college, visit the college, learn a bit about its academic standards and philosophy, and find out about campus life before you commit to that school.

Looking into several colleges will make you aware of questions that you will want to ask that you didn’t think to ask in your first contact with that school. You will want to find out about financial aid. What do they offer? Do they have loans that are particular to that institution? What about scholarships and work-study programs? Those are all valid financial aid questions.

You will want to find out about student life. What organizations are present at the school for students to join? What activities do they offer on campus for the students?

Finding out about their academic requirements is essential for finding a college that will give you a good basis for your education. If their academic objectives are vague and their grading system seems biased and unregulated, you might want to go ahead and consider another college.

Once you have made a decision, you will then need to contact the college admissions office and find out what the process is for enrollment. Every school has a slightly different process and you will need to follow their guidelines in your application to their school. Will you need to go to the school for an interview or do they simply need an application and a telephone interview? Will you need references and if so, what kind? If you are involved in volunteer projects, they might want references from the program as well as academic references. Be sure to be available to talk with them should they need to contact you with a question regarding your application. Sometimes, something we think we’ve stated clearly in writing is not as clear as we thought and a question will arise. When you find the right school you will know it and you’ll be glad you took the time to look thoroughly for just the right college or university.

Are you looking for federal financial aid to help foot the tuition bill? Just follow these 10 tips to help you secure the financial aid help you need and remember – do not wait until your child’s senior year to start thinking about this. The sooner you start the more money you might be able to find.

1. Get an early idea of your EFC: Estimate your Expected Family Contribution (EFC) while your child is still a junior in high school. By obtaining an idea of what you might pay, you will better find colleges within your price range and identify what you will need in scholarships and college student loans to manage your tuition costs.
2. Reduce your child’s savings: An entire 20 percent of your child’s assets will be considered available for college, as opposed to a small 5.6 percent of yours. Encourage your child to save, but keep all college funds in a custodial account.
3. Learn something about marketing: This is one of the most important aspects of competing for merit-based awards. Highlight your child’s accomplishments and an award committee will be all that much more likely to consider giving a scholarship to your child.
4. Make federal financial aid a part of your campus visits: Speak with someone in the financial aid office – it is the best way to get your family on the radar for campus-based awards. Afterwards, take some notes! These new contacts could come in handy later.
5. Do a bit of detective work: Determine if your child’s application for financial aid affects the probability of admittance. If so, find out how and why.
6. Make a decision on early decision: If your child may be thinking of applying Early Decision or Early Action, determine how it will affect your chances for financial aid. Early Decision acceptance could prevent you from comparing awards, because your child will have to commit to the school before you see the financial aid offers from other applications. This will not be a factor if your child is accepted under an Early Action or Single-Choice Early Action application, as these are non-binding offers.
7. Determine the effects of any outside awards: If your child receives an outside scholarship, find out if it will affect your financial aid award. Some schools will lessen grant aid, and others will pare down on student loans. The school’s policy will affect the amount you will have to borrow.
8. Pay attention to all deadlines: The sooner your child files there college applications, the better your chances of receiving financial aid. To assist with financial aid forms, file your taxes as early in the year as possible. Keep in mind that if you are applying to schools that will require the PROFILE financial aid application, it may have an earlier deadline than the FAFSA.
9. Always complete the FAFSA: Fill out this form, even if you do not think you qualify. Some very affluent families sometimes qualify for financial aid at certain high-tuition schools. This single application is your gateway to all federal student loans, grants, and work-study awards that total in the billions of dollars.
10. Make your college aware of any special circumstances: If you have lost your job since completing the FAFSA or PROFILE, let the schools know about your situation. Most have standard policies that allow for the use of projected income, which could increase financial aid assistance.

It is always recommended that you consider federal college student loans first. They will offer a low, fixed interest rate and the best flexibility for repayment. If you are seeking a degree, enrolled at least half time, and a U.S. citizen or U.S. national, you will more than likely qualify for some kind of financial aid.

Here is what you need to do:

1. Fill out the FAFSA
2. Find out how much you will qualify for

Fill out the FAFSA, the Free Application for Federal College Student Aid, is always the first step in applying for federal college student loans and grants. Some colleges will also use the FAFSA to determine eligibility for campus based programs and other types of financial aid originating with or administered from the college or university. It can be your ticket to some of the most affordable college financing solutions available today.

Complete the FAFSA online at www.fafsa.ed.gov as soon after January 1 as possible. The FAFSA is a big form that can takes up to two hours to complete and asks for detailed information. However, it is not so complicated if you gather your tax forms and financial information before you begin.

You will need to complete the FAFSA each and every year. However, after the first year, the Department of Education will send you a Renewal Application for Federal Financial Aid or a PIN to re-apply online.

You will usually find out how much you qualify for about four weeks after you have submitted the FAFSA to the Department of Education, you and the college or university you have applied to will receive a Student Aid Report. This will include your expected family contribution (EFC), or how much the government believes you and your family should also contribute to your education.

Next, the college or university you are accepted to will send you an award letter with different financial aid options that may include grants (free money), scholarships (more free money), Work-Study programs, and federal college student loans.

Undergraduate and graduate college students may qualify for a combination of subsidized and unsubsidized Federal Stafford College Student Loans. How much you can borrow will vary depending on whether it is a Federal Stafford College Student Loan for Undergraduates or a Federal Stafford College Student Loan for Graduate Students.

• Subsidized college student loans are only for college student borrowers who demonstrate great financial need, and the government pays the interest that accrues while the college student is in school or in a qualified deferment period.
• Unsubsidized college student loans are not need-based, and college student borrowers are responsible for all interest that will accrue. You can choose to make interest-only payments while in college, or postpone these payments until you leave school or drop below half-time enrollment. When you postpone the interest payments, the interest that has accrued will be added to the principal balance at the start of repayment.

Graduate college students may also qualify for the Federal PLUS Student Loan for Graduate and Professional College Students, and combine it with their Federal Stafford College Student Loan to cover the entire cost of their education.

Parents of undergraduate dependent college students can get the Federal PLUS Student Loan for Parents. Not all colleges and universities require college students to complete a FAFSA for parents to apply for the Federal PLUS Student Loan, but it is always encouraged to ensure that the college student receives the maximum financial aid possible.

If the federal college student loans you receive will not cover your expenses, you can also get a private college student loan to cover all the remaining costs. Parents who prefer to not take out a student loan themselves can help by cosigning their college student’s private student loan.

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.