Student Loan News, Updates and Blog Posts

On January 17, 2006 the US House of Representatives passed a bill to cut interest rates on all new subsidized Stafford loans. If this bill gets passed by the President it would mean that every year for five years your interest rate would gradually decrease. Starting at 6.8 and ending at 3.4%. The catch to this bill is that after that five year period it levels off to 6.8% again. Although this bill has not yet been signed by the President, they are anticipating it going through and taking effect this July,1.

You may be asking yourself what this has to do with consolidation. Well, I have received many calls from people who wanted to wait to consolidate because they thought the new bill would affect all their loans. The truth is that this new bill only affects your most recent student loans and has no affect on past loans. Another reason is because of the above statement. Since you are not eligible to consolidate while you are in school the dropping rate really has no affect on consolidation. Therefore, if you are in the business of saving money then you really want to consider consolidating your loans. Not only will it lower your monthly payment but you will be locked into a fixed rate with only one bill to pay each month. If you have any questions on the new bill check out the following link http://www.cbo.gov/showdoc.cfm?index=7729&sequence=. Questions about consolidation check out Student Loan Network

OTHER INFORMATIVE SITES
Student Loan Network: Stafford Federal Student Loans, Parent PLUS Loans, Student Loan Consolidation, Private Student Loans

Recently our student intern, Vanusa received a new role at her college as a Resident Assistant. Vanusa was selected for this role out of 75 applications. Pretty impressive, I know. After talking with Vanussa about the perks of this position I thought it would helpful if I shared with my readers the benefits of becoming an RA.

When you become an RA you will receive the unbelievable deal of free housing on the dorm floor that you supervise. Often times an RA will receive their very own single room with free television and phone service plus free meals at the school cafeteria! Sounds like a great deal, right? After all, we are all aware that tuition rates are soaring and the cost of living at school is going higher and higher every year. Having a position to help pay for the cost of attendance can be extremely helpful in reducing a students debt. A college dorm room alone can cost more than $10,000 a year. It is clear that serving as an RA can be a financially rewarding position for a student.

After reading this you are probably thinking of becoming an RA? Being an RA is a large commitment and one you should carefully consider. Aside from being a great financial help it is a big commitment that requires a lot of patience and determination. I know that Vanusa will be an incredible RA because she puts a lot of heart and dedication with every job that she does.

Famous Resident Assistants include the following:

Hilary Clinton + Chyna from WWE + Sheryl Crow + Adam Sandler + Wesley Snipes

The Student Loan Network: Stafford Federal Student Loans, Parent PLUS Loans, Student Loan Consolidation, Private Student Loans, Education Loans/College Loans

As you may have seen in the press or on the nightly news, there is a lot of activity taking place in Congress regarding student loans. The topic is a political winner – which politician wouldn’t want to stand in front of his/her constituents and say they increased the Pell Grant, or reduced interest rates? Unfortunately, those changes have to be paid for, and at a cost of $6 Billion or more nothing is settled. While it’s important to note that many changes to the proposed Student Loan Bills are forthcoming, it’s also worth staying on top of the legislative changes to see how they may affect you and your student loans.

So far, the House has passed a bill which would cut the interest rate on subsidized Stafford undergraduate loans from the current 6.8% to 3.4% over a period of five years. As described in an earlier post on this blog, the government pays the interest on subsidized Stafford loans while students are in school. The student picks up the payments when they leave school. About 5.5 million students would benefit from this rate cut, but unfortunately those recieving unsubsidized loans and graduate students don’t get a rate cut. Also, parents taking out Parent Plus loans are also not impacted. The lower interest rates would apply to loans originated on July 1, 2007 or after. If you are considering a Stafford Loan for the 2007-08 school year, it’s still best to apply early (after completing your FAFSA! – see earlier post) as the funds will not be disbursed until late summer/early fall.

I’ll stress again that this bill is not yet final – the House version still needs to be reconciled with the Senate’s proposal. Preliminary analysis of the Senate bill indicates that there will need to be some negotiation between the two chambers. Senator Kennedy has proposed raising the maximum Pell grant from $4,050 to $5,100 – Pell grants do not have to be repaid. Doing this in addition to reducing the interest rates will cost much more than the current $6 Billion price tag – a cost Kennedy would like banks to absorb in addition to offering incentives to schools to allow more students to borrow directly from the government.

Once the Democratic leaders of the House and Senate negotiate a compromise bill, they must work with the Republicans and the Administration to get it passed into law. A long process lies ahead. For now, do what you would have done – complete the FAFSA (get started at FAFSAOnline.com), look for grants and scholarships (studentscholarshipsearch.com), and apply for financial aid at your school. In addition, stay on top of the news – or come back to read these blogs – so you are aware how these legislative changes impact you and your strategy for maximizing your financial aid. Good luck!

As the tax season approaches and the deadline for the FAFSA nears, March 1, 2007 to be exact, I thought it would be a good time to go over some common mistakes to avoid when filling it out. The first mistake I see people make is not having their tax information up to date. If you are unable to get your taxes in on time you still want to fill out the FAFSA. The longer you wait to fill out your FAFSA the less chance you have on receiving money. What you want to do is fill out the FAFSA to the best of your ability using the year before tax information. You can always update your FAFSA when you get the new taxes back. This is perfectly legal and recommended by the DOE. If you are still not sure what to do always check with your schools financial aid office or check out FAFSA Online.

Mistake #2!! Always check your work. Make sure you have filled everything out with the right information in the right order. It sounds like common sense but time and time again people put their name out of order, parents fill out the student’s part of the FAFSA with their information, and they leave questions blank. Just because a certain area doesn’t apply to you doesn’t mean to leave it blank. By doing this you are hurting your chances on getting money awarded to you. What you want to do is put the number O in instead. You may think there the same thing but the DOE doesn’t. In doing their calculations every number matters.

Finally, not that any of you upstanding citizens out there would do this, but, DON”T LIE on your FAFSA. That is the one sure way not to receive any money and its illegal. Also, with the new rule changes it’s no longer necessary to hide inheritances or college funds. They are no longer factored into your total EFC (Expected Family Contribution). Now that you know what not to do it should make your experience a little less painful.

Some Helpful Links

Ms. Stafford and Financial Aid Podcaster’s BLOG
ActEducationLoans.com

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1. Federal law suspends your eligibility for federal student aid, if you have been convicted for the possession or sale of illegal drugs for an offense that occurred during a period of enrollment for which you were receiving federal student aid (grants, loans, and/or work-study).
2. Even if you are 23 years old, living on your own, paying your own way…the Gov’t still views you as a dependent student…meaning they still use your parents’ income to determine your specific “financial need”…(my advice: just wait a year until you are 24 and considered an adult in the eye of the Feds)
3. If you transfer schools, you MUST update your FAFSA online. You will not be able to receive loans at your new school unless you do this.
4. FAFSA is not a loan!!!! It is a government form that determines your eligibility for all types of aid, including loans.

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I know it seems as if the first of the year just passed, but if you have not thought about completing your FAFSA for this year you should start to do so ASAP. The deadline is March 1, 2007 if you intend to start school fall 2007. If you have already filed your taxes for 2006 then you should file your FAFSA now. Since the FAFSA is bases on the previous year’s financial information, you do not want to fill it out until your taxes are complete. In my experience with the DOE (US Dep’t of Education)…when they get swamped…you end up waiting a very long time to get your SAR (Student aid report) in the mail. This report is vital because it tells you what type of Federal Aid/grants you are eligible to receive…giving you, the student, a clearer perspective of how much you will need to come up with to attend college. If you are already in school, don’t forget that you have to update your FAFSA every school year!!! If you do not fill out the FAFSA you will not be able to get any sort of grants or Federal Student loans for that upcoming school year.

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The US House of Representatives voted last Wednesday to cut the interest rate on future federal student loans. The bill will gradually reduce interest rates for only federally subsidized loans. If this bill is passed by both the House and the Senate, interest rates on the subsidized Stafford Loan will be cut beginning this July. These rate cuts will be phased in over the course of five years. So, this year, the interest rate will be cut from 6.8 percent to 6.12 percent. This cut will help lower the monthly cost of repaying student loans for millions of low-income students.

The bill currently awaits Senate and presidential approval.

The Student Loan Network: Stafford Federal Student Loans, Parent PLUS Loans, Student Loan Consolidation, Private Student Loans, Education Loans/College Loans

The Student Loan Network offers four ways to repay your student loan debt. Each one fits a slightly different financial situation, so you need to think seriously about what you can afford when you pick a repayment plan. It is our job at the Student Loan Network to ease your nerves as well as your pocketbook when thinking about making those student loan payments. Listed below are the details on the following plans that are available once you consolidate your loans through the Student Loan Network.

The Standard Repayment Plan is when the borrower pays the same amount each month for the life of the loan. This is your best option for paying the least amount of interest back. Your loans are initially set up for a Level Repayment Plan. It is recommended that you continue with the Level Repayment Plan if you’re able to make your monthly payments. Again, this is because it is the lease expensive plan in the long run.

Another Repayment Plan is a Graduated Plan. The Graduate Plan offers a lower, more affordable monthly payment in the early months of repayment and higher payments later in the repayment term. Your loan is repaid in the same time frame as the Standard Plan. It is the total interest costs that are slightly higher than the Standard Repayment plan.

The Income Sensitive Plan is when the monthly payment amount is adjusted annually, based on the borrowers expected total monthly gross income from employment and other sources during the course of repayment. This is the most flexible plan, but it can be the most expensive in the long run, and you must reapply annually.

There may be times when you have some difficulty making your monthly loan payments. If you find yourself in this situation, you may be eligible for a student loan deferment or student loan forbearance. Deferments and forbearances are for those times when you run into short-term financial difficulties. For more information on this please contact your lender or the Student Loan Network.

The Student Loan Network: Stafford Federal Student Loans, Parent PLUS Loans, Student Loan Consolidation, Private Student Loans, Education Loans/College Loans

Finally, the drinking is done and hopefully the hangover has worn off. It’s decision time. How do you plan to overhaul your life in 2007? Will you change the way you work or what you do in your free time? How much you spend or will you start to save? Or have you made any vows of a more offbeat nature?

2007 for me is the year to:

Manage my debt

Save money for my Barbie townhouse

Stick to one hair color

Gain new job responsibilities

To post your New Year’s Resolution’s click here

Happy New Year everyone!

Anytime the federal government and money are involved it is bound to be confusing and frustrating. The federal government is always changing the rules and regulations for federal aid creating new loopholes and issues for the student loan industry.

For example, a recent change in legislation does not allow students to consolidate while they are enrolled at least half time or above in school. To consolidate a student has to be out of school or carrying an academic workload of less than part time.

I personally think this rule is ridiculous. I get many requests from borrowers wanting to consolidate their loans because they need to improve their credit score to receive a better rate on a home mortgage or a car loan. Its true-consolidating improves your credit! Every year you attend school and borrow a student loan you create an open line of credit on your credit report. Consolidating your loans into one open balance really gives a boost to your credit score. When a computer calculates your credit score, it will see this: eight loans paid in full. You will look like a responsible and trustworthy borrower. Why does the federal government care that a student wants to make this smart financial step?

You can write to me about it. Not much I can do except agree with you. I suggest you write to Congress to complain about this ridiculous rule.