Tag Archives: student 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.

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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.