Tag Archives: student loans

financial aid, student loans

Get the 411 on Student Loans

student loans

The day a son or daughter receives his/her college acceptance letter is one filled with joy and celebration.  The day that parents have to sit down with their children to choose student loans is not.  Selecting a student loan is often an intimidating process: not only are there so many options out there, but it is scary to think that a wrong decision could cost tens of thousands of dollars.   But before you pull out all of your hair just thinking about it, know two things.  One, Almost 60% of college students have to borrow money each year to assist in  tuition.  And two, there is a resource out there that helps parents and their kids find, using objective data, the student loan that best fits their needs and preferences.

FindTheBest just launched the best student loans comparison that lets students and their parents sort through 69 different loans by average fixed and variable interest rates and lifetime limit.  One can also filter down this list by loan type, loan coverage, eligible borrowers, cosigner requirements, and more.  For example, if you are an undergraduate that wants to get a loan from a private bank, you have a list of 7 loans to compare.  From here, you can pick the three or four loans that you like the most, and then compare side-by-side all of their application requirements, coverage, interest rates, repayment options, and more.

To summarize, FindTheBest breaks down the data, makes it easy to view, gives it to students and parents for free, so that scams and hidden fees are no longer a threat.  With this resource, students can make the most informed decision based on the factors that are important to them.  And if you have, no idea where to even start with student loans, check out the “Choosing A Student Loan” tab that guides you through the loan process and how this comparison tool works.  Try out the resource now below:

[findthebest container_style=”width:520px;margin:0 auto;” width=”520″ height=”400″ style=”vertical-align:top;” src=”http://student-loans.findthebest.com/w/srp?new=2&w=520&h=400&filter_by=lender_type,fixed_variable_interest,name_of_lender&amazon_id=parecountocol-20″ after_style=”text-align:center;” link_href=”http://student-loans.findthebest.com” link_style=”font:10px/14px arial;color:#3d3d3d;” link_text=”Compare Student Loans”]

college costs, financial aid, student loans

Taking on student loans the smart way

 

Student loansThe May 1st college deadline is quickly approaching and parents and students are making decisions about financial aid packages. Most likely, those packages will include some form of student loans–either Stafford or Perkins. Colleges also provide parents and students with private loan options to supplement the government aid when necessary.

No one wants to graduate from college loaded with debt, yet 60 percent of college students and their families borrow money each year to cover ever-rising tuition and fees, according to American Student Assistance. That’s because the average private college charges close to $40,000 a year for tuition, fees, room and board, while state universities average just over $17,000 a year. Out-of-state students at public four-year schools fall halfway between those costs, averaging just under $30,000 for the 2011-2012 school year, cited US News & World Report.

Financial aid — merit-based and need-based scholarships, grants, work-study programs and loans — has become a reality for the majority of college students.

A New Way of Life

The process of finding aid begins with completing the Free Application for Federal Student Aid (FAFSA) to determine expected family contribution (EFC) based on family income and expenses. There are 63 universities in the U.S. that claim to meet 100 percent of students’ financial need, as determined by the FAFSA. The cold hard truth is that the majority of students don’t attend these colleges and will need some form of financial aid.

Protect Yourself

While working through the process of acquiring funding for college, remain mindful of identity protection. Your soon-to-be college student can be especially vulnerable to identity theft because his or her personal data is easily accessible through grade postings, credit card applications and online transactions, according to the Dept. of Education.

Here are some ways to protect the identity of your student:

  • After completing the FAFSA, log off the page and close your browser.
  • Don’t use paid financial aid services that operate over the Internet or by telephone. The Department of Education offers its services for free and pages containing your private information are password-protected.
  • Do not reveal the FAFSA personal identification number (PIN) to anyone, even if that person is helping you fill out the form. The only time you should use your PIN is on secure websites.
  • Shred receipts and copies of documents with student identity information if they are no longer needed.
  • Review financial aid award documents and keep track of the amount of student aid applied for and awarded.
  • Make sure your student reports all lost or stolen identification (such as your student ID card) immediately.

Forgiveness

When your child graduates, the payoff amount on the loan may seem crushing. But your child has options: student loans, especially those connected to postgraduate professional education, sometimes can be paid off through public service. In 2007, Congress created the Public Service Loan Forgiveness Program to encourage individuals to work full-time in public service jobs. Borrowers who have made at least 120 payments on eligible federal student loans may qualify for forgiveness of the remaining balance while employed full-time by certain public service employers, according to StudentAid.gov.

If public service isn’t an option, loan repayments can be accomplished more easily by paying off private student loans before paying off federal loans.

Be Smart

Only borrow what you can afford to repay. There are numerous sites that provide student loan repayment calculators. Know your options before you borrow and educate yourself on student loan repayment. Research salaries for your career choice and always estimate using entry-level figures.

 

college guidance, college planning, financial aid, parenting

Should you co-sign on a student loan?

 

student loans

As a parent, you probably want to do anything within your power to make your child’s dream of college come true. Hopefully you’ve saved up enough money to help them afford tuition, but that college fund may not stretch nearly as far as you once thought it would. Tuition rates continue to rise and finding grants and scholarships take some work on the part of your college-bound teen. For the vast majority of students and families, taking out loans is the only recourse. But some private loans will require you to co-sign on your child’s behalf. This complicates things, and could cause a host of problems. But, should you co-sign on a student loan?

It’s important to remember that any loan offered by the federal government will never require you to co-sign.

Those loans make up the bulk of the borrowed money for any student, and they come with low interest rates and controlled payback periods. In addition, some federal loans won’t accrue interest or require any payments to be made until after the student graduates. Federal subsidized Stafford loans do not charge interest until graduation. Unsubsidized Stafford loans begin charging interest on the day they are disbursed.

If you’re being asked to co-sign, that means it’s a private loan.

You must make sure that your child has looked for all government loans first before going this route.Repaying a private, co-signed loan is also far less flexible. You may have to start paying it off immediately, and the lenders don’t always offer the same deferment and forbearance options as the government. This makes it much harder to manage repayment, which also greatly increases the chance of a loan default. If your child does need some sort of deferment, they’ll often be charged a fee to do so. Overall, this option is far less favorable.

Co-signers are held responsible.

Keep in mind that as the co-signer you will be held responsible if your son or daughter fails to make payments. In fact, the lending institution will consider you 100% liable for this money, just as if you personally borrowed it. You don’t ever want to think about your child running into these sorts of problems, but it happens all too often to be ignored. Not only will they hold you responsible, but just as with those title loans in Arizona that went into default they will hit you with legal action if you fail to pay. That means action from the IRS, penalty payments and a massive dent in your credit score. This can bring about a whole host of emotional issues within the family, and the financial strain just isn’t worth it. All in all, consider co-signing to be an absolute last resort move.

Parents can co-sign on a student loan.

There are some positives to be found going this route. First of all, your student will be able to secure a lower interest rate, thanks to your involvement. Even if your college-bound child has been saving diligently, chances are he or she has not built up much credit to date, if any at all. If you have a solid credit history, you should be able to help your child secure a far lower interest rate by co-signing. And that means the cost of the loan will be lower over the life of the repayment period. In addition, by co-signing you are helping your child establish his or her own credit history. This process is crucial, as it will help them get future loans. Building credit often starts by opening up credit cards, and that comes with all sorts of other issues. By going this route you’ll work together to build your child’s credit.

Parents do have another option-PLUS loans (Parent Loans for Undergraduate Students).

To qualify for PLUS Loans, parents must have children who are enrolled at least half-time at an approved educational institution. The maximum allowable amount that can be borrowed for a PLUS Loan is the difference between the cost of the student’s attendance and any other financial aid the student receives (a number set by the school’s financial aid office).Unlike Stafford Loans, PLUS Loans feature neither a grace period during which no payments are due nor any period during which interest doesn’t accrue. The upside of this choice is that you control the repayment and do not have to rely on your student’s job procurement after graduation, or their ability to repay their loans.

college guidance, college planning, financial aid, scholarships

Thinking about student loans?

images-1As college bound teens are thinking about college social life, and perhaps their preferred courses and the subjects that motivate them, parents are often thinking about how to afford the combined costs of tutoring, accommodation, food and study materials. Student loans are usually part of the funding equation and it pays to do some investigating in advance of the time when the money is needed to be able to take advantage of the best interest rates available. Here are a few things to be mindful of when checking out the possibilities for financial aid.

Free money

In some cases students may have access to ‘free money’ – grants and scholarships that are non-repayable – and these should always be investigated first. In fact, there are many thousands of scholarships and grants available through universities and colleges, state and federal governments and other organizations, both public and private. Usually, private organizations and schools award scholarships, while governments provide grants, although some schools also provide grants. An Internet search will normally yield a number of possible sources, and reveal whether a prospective student is eligible for financial assistance.

Choosing the best loan

Once any grants or scholarships and any other types of financial aid have been taken into account, parents and prospective students are in a position to work out the requirements for a student loan. Here again, it is worth looking around for the best deals. For example, some lenders offer competitive rates for courses specific to a career, such as business administration, the health profession or law. The best institutions will lend up to 100 percent of college costs, offer both fixed and variable rates, have zero origination fees and require no in-school payments. In some cases, for example with certain law school loans, the lender will provide a reduction in the debt when automatic repayments are made from a bank account, and may also offer a reduction on successful graduation – read more information about law school loans by clicking here. 

Tips and advice

Parents and prospective students will benefit from working out a strategy to enable them to handle student loans wisely. Establishing and maintaining good credit for young people is an important starting point as this will often be used to make decisions about loans and other types of finance throughout their lives. To reduce student loan costs, one option is to prepay loans. For example, if a loan covers all the student’s costs – living expenses as well as tuition fees – and the student gets part-time work while at college, the additional money could be used to make loan repayments early. When making repayments, students should be encouraged to pay promptly and on time, as penalties for late payment will be reflected in their credit rate.

As well as taking advantage of any rewards offered by the lender, students or parents may be eligible for tax deductions if they have paid eligible student loan interest. A tax advisor will be able to offer guidance and the IRS website is a good source of tax information.

financial aid, infographics

Drowning in Student Loan Debt

Here’s an infographic outlining the Obama Plan to help student’s with their student loan debt. But is it enough? In my opinion, the only way to look toward the future is to educate our kids about debt and make wise college choices that allow them to graduate with little or no debt. It’s not a “new deal”…just a band-aid.

New Student Loan Deal
Created by: Online University

financial aid, in the news

Obama’s solution to help student loan borrowers

I received this email from the Institute for College Access and Success. It was a press release issued on President Obama’s speech yesterday.

__________________________

Yesterday the Obama Administration announced important and timely new steps to help struggling student loan borrowers.  We applaud the Administration’s steps to make more federal loan borrowers aware of Income-Based Repayment and to provide additional repayment relief for up to 1.6 million current students, including a lower monthly payment cap and loan forgiveness after 20 rather than 25 years of responsible payments.

IBR has already helped nearly half a million borrowers lower their payments and avoid default, but many more borrowers are struggling to keep up with their payments in these tough economic times and could benefit from IBR and the proposed Pay-as-You-Earn option.

By encouraging more borrowers to convert their bank-based federal student loans to more cost-effective Direct Loans, the changes announced today will also help more people qualify for Public Service Loan Forgiveness. Those working for a public or nonprofit employer could see their remaining debt forgiven after just 10 years of payments. Borrowers with bank-based federal loans must already convert them to Direct Loans for their payments to qualify for Public Service Loan Forgiveness.

The Administration took two additional steps to help students and families decide where to go to college and how to pay for it.  The new model financial aid disclosure form, or draft “shopping sheet,” is designed to make it easier to compare the real cost of different college options.  The new Student Debt Repayment Assistant will help current borrowers with both federal and private student loans, as well as those about to enter repayment, better understand their options.

With these changes on the way, it’s more important than ever to make sure that the millions of borrowers who could benefit from IBR know it’s out there. With the class of 2011 about to face their first student loan payments, there’s no time to waste.

IBR has been available to borrowers since July 2009. For more about how IBR and Public Service Loan Forgiveness work and how to apply, see our consumer website:www.IBRinfo.org.

For more on the Obama Administration announcement, please visit the White House website.

college costs, financial aid, parenting

In the News: Students struggle to repay student loans

 

I came across an article on WalletPop in their Money College section by a recent college graduate. Pop over there and read her student loan story and make sure you are sitting down when you do:

One student’s losing battle with private student loans

Those student loans are tempting. Here’s the rationalization that sucks in many college students:

  1. You don’t have to pay them back until you graduate.
  2. The interest rates are usually lower than regular loans.
  3. Once you graduate, there’s a grace period (allowing you time to get a job).
  4. Almost EVERY student has some sort of student loan debt.
  5. If you can’t pay it back, you can always file for bankruptcy.
  6. They let you consolidate so your payments will be affordable.

All of those statements have some truth in them to some degree. However, it is EXTREMELY important that every college-bound student understand these truths:

  1. The interest usually accrues while you are in college (unless it’s a subsidized loan).
  2. Private loan rates are higher than federal student loan rates.
  3. Going into massive debt for an education is a BAD idea.
  4. Many student loans are not forgivable in bankruptcy.
  5. That grace period creeps up on your FAST!
  6. You may not land a job that pays enough to make those monthly student loan payments.

Parents–please counsel your teens on the downfalls of having tremendous amounts of student loan debt. Encourage them to be financially responsible and prudent when borrowing money for college. Those loans can shackle them for many years after college graduation.