Student Loan News, Updates and Blog Posts

According to the results of the United States 91-day Treasury Bill auction, the interest rate for Stafford loans originated before July1, 2006 increased by 8 basis points. Loans in repayment will change from 7.14 to 7.22 percent. For Stafford loans in an in-school or grace, the rate will change from 6.54 to 6.62 percent. Additionally, interest rates on PLUS loans will increase from 7.94 to 8.02 percent.

For the graduates and parents who have older, variable-rate loans can take advantage of the lower rate if they apply for student loan consolidation by June 30. Also, for spring 2007 college graduates who still have variable-rate loans should apply for consolidation before their six-month grace period comes to an end. By applying in-grace, they can lock in a rate of 6.625 percent, compared to 7.25 percent if they wait until repayment begins this fall.

Also, students and parents who consolidate their Stafford, PLUS using a Student Loan Network Consolidation Loan can also reduce their interest rate by making on time payments and by using automatic debit to make payments electronically. For more details please phone us at 877-328-1565 or visit here.

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

Student Loan Network

The real world can be scary, my suggestion, stay in school as long as you can and exercise your mind. Earning your Bachelors degree will increase your earnings potential in this competitive fast-paced world of ours. Then, by the time you get out of school you’ll have a better shot at jogging thru life rather than running at a fever pace to keep up with the Jones’ and living paycheck to paycheck. If you obtain your Masters degree you’ll enter the power walk zone. But let’s crawl before we even think about jogging, running, or power walking. I know I have to sell some of you on the idea of even going to college.

Some of you are thinking, why even bother with college? What is the benefit? Heck, even some that go to college are left scratching their heads. I hear my friends say, “I’m not even doing what I went to school for. What a waste of time and money,” to which I respond – that degree still helped open the door to your current job. Prospective employers want to see that you paid your dues and that you are intelligent enough to construct a sentence. Granted, if you are gifted at selling yourself and getting in front of a decision maker you may be able to escape your uneducated past, but chances are they’ll move right along to the next applicant who is you + education on paper. No one wants to be Mr. Bojangles, left out in the cold, and if you’re like me at 18 you are clueless to the world of financial aid and what you truly qualified for. Here is my Bonvie Basic overview to get you started.

1. Complete your Free Application for Federal Student Aid (FAFSA) on http://www.fafsaonline.com/ (this application is sent to the Department of Education)
2. You will receive a Student Aid Report (SAR) which will be sent to both you and the school(s) you list on your FAFSA (up to six schools max)
3. The school will send you an Awards letter stating what grants, scholarships, and federal loans you are eligible for.
4. If you qualify for a Stafford loan you will need to find a lender to fund the loan. You can go to www.staffordloan.com and one will be assigned for you.
5. If you do not qualify for a Stafford loan than you may wish to explore private student loan options. You can visit www.acteducationloans.com for more details.

I hate feeling unprepared and scrambling to get something done at the last minute. Sometimes this applies to things I don’t really want to do (laundry, cleaning before guests come over) but you should never rush to get your finances in order. Planners prosper! Sometimes, it’s really hard to think 4+ months out but you have to, especially when your education finance relies on it!
Graduate students really should be looking to GradLoans.com to suit all their needs. I hope this post helps grad students figure out how to best use all the features of GradLoans.com

First off, if you need help, advice, forms, rates, etc., visit Grad Loans – it’s not only for applying for a loan, although the products on there are tailored to Graduates specifically. There are financial aid 101 sections with process guidelines, helpful tips and more.
Learn about the real cost of education, how to plan your whole academic year using a financial aid calendar, and how to maximize your financial aid through scholarships.

After doing your homework, apply for the Stafford Loan – your school won’t certify it until the end of the summer for the 2007-08 school year so you aren’t too late! You won’t have to make payments while in school and these loans are eligible for consolidation once you graduate.

To then bridge the gap between what you received in Federal Stafford funding and what you actually need, look into the Graduate PLUS loan. It allows you to borrow up to the cost of education minus any other aid you received. The funds are sent to the school, it’s Federally guaranteed and, like the Stafford loan, payments are delayed until graduation.

Beyond Federal funding, there are always private loans available for Graduate students. The perks of private loans are the reason for it’s popularity and strong growth over the recent years. With this particular loan program, students can borrow higher dollar amounts based on their program of study and the money gets sent right to the student directly. You then can use it for any education related expense. Again, payments wait until graduation. Also, there are some unique loans available – for Bar Exams, medical residencies and more.

GradLoans.com offers so much for students. In addition to great loan products to help you through a very tough time, take advantage of the other resources available.

Now that election season is upon us, there will be a lot of focus on political issues and education is always at the forefront of any good political debate. Over the last few months there has been much talk about protecting our borders and immigration rights. Amongst these debates is the issue of giving in state tuition to the children of illegal immigrants. Lately there has been some discussion about the DREAM ACT and whether it should be revised. Below I have attached an article that address this issue along with a link with the DREAM ACT Bill.

DREAM Act reintroduced in Senate
Immigrants’ Rights Update, Vol. 17, No. 5, September 4, 2003

[See also "Dream Act Reintroduced in Senate," Nov. 21, 2005.]

[See also "DREAM Act Passes Senate Judiciary Committee," Mar. 28, 2006.]

A new version of the bipartisan DREAM Act, which addresses the tragedy of young people who grew up in the United States and have graduated from U.S. high schools but whose future is circumscribed by current immigration laws, has been introduced in the Senate by Senators Orrin Hatch (R-UT) and Richard Durbin (D-IL). Under current law, these young people generally derive their immigration status solely from their parents, and when the parents are undocumented or in immigration limbo, their children have no mechanism to obtain legal residency. The Development, Relief, and Education for Alien Minors (DREAM) Act (S. 1545), introduced on July 31, 2003, provides such a mechanism for those who are able to meet certain conditions.

The leading bill in the House addressing the same issue is HR 1684 (Cannon, R-UT), known as the Student Adjustment Act. HR 1684 was introduced this spring and currently has 66 cosponsors from both parties.

Like last year’s version of the DREAM Act, which was also sponsored by Sen. Hatch, S. 1545 would enact two major changes in current law:

• Eliminate the federal provision that discourages states from providing in-state tuition without regard to immigration status; and
• Permit some immigrant students who have grown up in the U.S. to apply for legal status.

But S. 1545 differs in some important respects from its predecessor.

Unlike last year’s bill, DREAM 2003 sets up a two-stage process for applying for legal status. Immigrant students who have grown up in the U.S., graduated from high school here, and can demonstrate good moral character would initially qualify for “conditional lawful permanent resident” status, which would normally last for six years. During the conditional period, the immigrant would be required to go to college, join the military, or work a significant number of hours of community service. At the end of the conditional period, those who meet at least one of these requirements would be eligible for regular lawful permanent resident status.

If enacted, DREAM 2003 would have a life-changing impact on the students who qualify, dramatically increasing their average future earnings-and, consequently, the amount of taxes they would pay-while significantly reducing criminal justice and social services costs to taxpayers.

Advocates believe that S. 1545 has a reasonable chance of passage in this session of Congress, in large part because Senators Hatch and Durbin were willing to bridge the bitter partisan divisions that have plagued the Senate this year. The bill already has 15 cosponsors representing a wide swath of the political spectrum; others are expected to announce their support now that Congress has reconvened after its summer break.

The following are some of the key features of DREAM 2003:

Restore State Option to Provide In-State Tuition Benefit. DREAM 2003 would repeal section 505 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA), which discourages states from providing in-state tuition or other higher education benefits without regard to immigration status.

Who Qualifies for Legal Residency. Under DREAM 2003, most students of good moral character who came to the U.S. before they were sixteen years old and at least five years before the date of the bill’s enactment would qualify for conditional permanent resident status upon acceptance to college, graduation from high school, or being awarded a general equivalency diploma (GED). Students would not qualify for this relief if they had committed crimes, were a security risk, or were inadmissible or removable on certain other grounds.

Conditional Permanent Resident Status. Qualifying students would be granted conditional permanent resident status, which would be similar to lawful permanent resident status, except that it would be awarded for a limited period of time-6 years, under normal circumstances-instead of for an indefinite one. Students with conditional permanent resident status would be able to work, drive, go to school, and otherwise participate normally in day-to-day activities on the same terms as other Americans, except that they would not be able to travel abroad for lengthy periods. Time spent by young people in conditional permanent resident status would count towards the residency requirements for naturalization to U.S. citizenship.

Requirements to Lift the Condition and Obtain Regular Lawful Permanent Resident Status. At the end of the conditional period, regular lawful permanent resident status would be granted if, during the conditional period, the immigrant had maintained good moral character, avoided lengthy trips abroad, and met at least one of the following three criteria:

1. Graduated from a 2-year college or a vocational college that meets certain criteria, or studied for at least 2 years towards a bachelor’s or a higher degree; or
2. Served in the U.S. armed forces for at least 2 years; or
3. Performed at least 910 hours of volunteer community service.

The 6-year time period for meeting these requirements would be extendable upon a showing of good cause, and the Dept. of Homeland Security would be empowered to waive the requirements altogether if compelling reasons such as disability prevented their completion and if removal of the student would result in exceptional and extremely unusual hardship to the student, or to the student’s spouse, parent or child.

Stafford Loans

Parent Plus Loans

Student Loan Consolidation

If you had asked me many moons ago if I thought removing or limiting a school’s preferred lender list would work in the world of student loans and financial aid, I would have laughed you right out of my office.  The preferred lender list, in its inception was a great tool designed to assist financial aid officers with the cumbersome process of handling hundreds of different loans from different sources with different processing requirements.  Financial Aid Officers were burdened with ensuring that each loan got processed, then had to keep track of several different deposits and finally deal with paper checks that then had to be deposited in student accounts.  All of this would cause major delays for students and often resulted in them having registration problems in the following semester due to past due balances. 

 

I do not think that financial aid officers, students or lenders and guarantors, for that matter, are eager to return to that model.  That being said, it is 2007 and it is a different time for schools and students. The worries of accepting paper checks or even paper applications for that matter are not as relevant as they once were.  Fears of living in a bogged down paper environment are not taking into account the great strides in technology we have all made in this industry.   As such all of those participating in the distribution of and managing of student loans have many more electronic options for communicating important data and applying for loans and other federal and non federal aid than the did before the preferred lender list. 

In this ever changing environment for student financial aid administrators, lenders, guarantors and servicers alike, the preferred lender list has become a complicated implication of a bigger problem in corporate America. But that is for an editorial on another day.  My point is that regardless of how we fight it. The preferred lender list is going to change and the way financial aid administrators do their job is going to change. The same way students seek loan information is going to change.  How we as a community respond is what makes the difference.  Helping students find the best options available should still be our ultimate goal. 

 An interesting thought occurred to me while attending a session at the EASFAA conference this past week.  An audience member expressed concern that she would no longer be able to walk her students through finding the best loan for them.  And it got me to thinking; at what point do we look to students and their families to take some of the responsibility for becoming more educated consumers.  Look, I know there is perhaps no more complicated process out there than the student financing industry, that being said, the mortgage process is no picnic either.  But younger and younger American’s seeking home ownership and educating them on how to do it in the process becaue they see value in understanding it.  If we place no importance on the process of selecting your own financing options, how will they ever see the value in it? 

Perhaps this is the new approach we should take when it comes to student loans.  After all, what bigger investment does one make in one’s life than in their education?  A graduate education and beyond can cost into the hundreds of thousands of dollars, that is more than what some homes cost (although not in Massachusetts!).  The point is, maybe it is time we let go a little bit.  If the process doesn’t become that much more burdensome for the administrators, maybe it is time to education students at an earlier age about how to research and find the best financing options for them.  With good intentions, we may be doing them a disservice by sheltering them from the harsh realities of things like predatory lending practices and reading the fine print. 

 The fear for financial aid officers is that by losing some of the control over who students borrow through, they are going to end up with higher rate loans with little to no borrower benefits.  Granted this is a possibility, as long as students remain ignorant about the process.  Let’s face it students sit through entrance and exit interviews thinking about things other than what we are telling them.  They don’t take the process seriously because they don’t participate in the most important part of it; applying for it. 

I have thrown the suggested for many years now that colleges should implement, as a freshman requirement, a financial literacy program that students must pass before they both move onto the sophomore grade but also receive more federal student and other loans.  I believe it would be in the best interest of the student, the school and the United States Economy as a whole.  Okay, I am stretching it a bit, but think about it.  We would not have a population of graduating students who are overwhelmed by not only their student loan debt, but the enormous amounts of credit card debt we are seeing younger and younger students take on. 

 I think that it is time students start to take responsibility for these researching and managing their loans much sooner in the process than in repayment.  Having worked in claims and bankruptcy unit for ASA, many times I’ve heard defaulted borrowers say “Gee I never even realized I was taking this much money.” Or, “I didn’t realize that I would have to pay this entire loan back!”  Things like preferred lender lists and serial MPN’s don’t help this situation either. 

I think that this attitude is do to the fact that historically we have taken them out of the decision making process.  Again, I don’t think that was the intention of the preferred lender list but I think it was a result of it. 

 I think we are at a cross roads here.  Let’s use this changing environment as an opportunity to empower our students to become responsible consumers.  Here at the Student Loan Network, we know how important that is.  It is why we take our responsibility as one of the leaders in internet student loans so seriously.  We understand that we have tremendous responsibility to provide accurate, easy to understand information to help students create a college financing package that they understand, can manage and that will help them achieve their educational goals.  visit our site at www.studentloannetwork.com to see how we communicate to our students and families.  

 Change is never fun. But it is inevitable and always provides opportunity for growth, improvement and innovation. Whether we see it as good or bad, helpful or cumbersome, is inevitable.  Think MPN when it was first introduced.  Remember all the grumbling of “how in the world are we going to…” well we managed.  The same way we will manage in this new world.

Now is the time when most schools are sending out their Financial Aid Award letters to students who plan on attending their school this Fall 2007. Graduate school programs are typically more expensive than undergraduate programs, so the 18,500 that you may be getting in the Stafford loan, may not be enough to cover your tuition and expenses. Or perhaps it is enough to cover your basic tuition, but you still need a loan to help you live while you are attending school. The Graduate Plus loan is a new option for students that is guaranteed by the Federal Government. What does this mean for you? It means that when you complete your education, this loan can be consolidated with your Stafford loan…this will make it much easier for you to manage your debt. It is around this time of year when you should apply for the Graduate Plus loan. If you do not know how much you need to borrow, it is wise to over-estimate when applying, because it is much easier to decrease the loan amount, then to try and increase it once school starts. Typically the loan automatically goes into an in-school deferment, but you may have to fill out a form to post pone payments. This loan does not have a 6 month grace period after graduation…but you can request a forbearance for 6 months after you leave school. For more information on this loan you can visit: Graduate Plus Loan Info

More Helpful Sites for Financial Aid Info:
Live Podcast
FAFSA Information
Add me as your friend!

You have come to the right blog today if you are just trying to have some basic questions answered on federal loan consolidation. Here are some commonly asked questions I receive at the Student Loan Network about loan consolidation. Enjoy!

Can I consolidate jointly with my spouse?

No, Effective July, 1 2006 a married couple may no longer obtain a Federal Consolidation Loan as joint borrowers. Why not you ask? When married students consolidated their loans together, each spouse became responsible for the full amount of the loan, and the loans could not be separated if the couple got divorced. To avoid such problems, Congress decided to repeal this provision as part of the Higher Education Reconciliation Act of 2005.

My lender told me I have to consolidate with them. Is this true?

Students and parents can consolidate their loans with any lender, even if all of their loans are with a one lender. (The single holder rule was repealed on June 15, 2006, as part of the Emergency Supplemental Appropriations Act of 2006.) This allows you to shop around for a lender that offers a lower rate or better discounts.

How much does federal loan consolidation cost?

There is no application or processing fee for consolidation. Also, no credit or income verification is needed.

What if I forgot to consolidate one of eligible student loans?

You can only add a forgotten eligible student loan to your new consolidation loan if you add it within 180 days of the loan consolidation. If you are within the 180-day period, this won’t require a new consolidation loan.

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

Student Loan Network

Ok, let’s go over a common scenario…

You’re 21 years old, have been living on your own for a couple of years, are legal drinking age and yet you still need your parents information when filling out the FAFSA. It seems unbelievable, but it is true. The US Department of Education considers a student a dependent up until the age of 24 except in certain circumstances. Below I have broken down the difference between an Independent VS. Dependent student.

Independent Status

• You are at least 24 years old on the day you file your FAFSA
• You are or will be enrolled in a masters or Doctoral degree program at the beginning of the school year
• You are married on the day you file your FAFSA
• You are a parent
• You have dependents other than your spouse who live with you and who receive more than half their support from you at the time you apply
• Both your parents are deceased (or were until age 18) a ward of dependent of the court
• You are currently serving on active duty in the U.S. Armed Forces for purposes other than training
• You’re a Veteran of the U.S. Armed Forces.
• You were a foster child after the age of 13.
• You are an emancipated child as determined by a court judge.
• You are homeless or at risk of homelessness as determined by the director of a HUD approved homeless shelter, transitional program, or high school liaison.

If none of the above criteria apply to you, you’re a dependent student – even if your IRS tax status is different, even if you have no idea where your parents are.

That said, in rare cases, your school’s financial aid officer can override the FAFSA results to help you get more aid if you can demonstrate a compelling case that your parents and family provide absolutely no support, and therefore you’re not really a dependent. This is called a professional judgement override and while they are granted extremely rarely, they do exist. If you need a professional judgement override for dependency status, gather up as much documentation as you can, from rent bills to utility bills to the legal judgement from a court emancipating you from your parents and bring it to your financial aid advisor. While you’re not guaranteed anything, it’s at least worth a try.

Here’s what a financial aid administrator had to say on the topic of professional judgement override:

For Dependency Overrides the Federal guidelines are extremely clear. Being self-supporting is NOT grounds for an override.

Instead you must prove INVOLUNTARY DISSOLUTION OF THE FAMILY. This means you were forced to leave your parents’ home and have no contact with them. You must explain,in detail, why you cannot live with your parents. Then you must have official third party letters, on letterhead, that back up your story.

Just because you feel mature enough or responsible enough to be on your own does not erase your PARENTS’ OBLIGATION to assist you with your education.

We accept letters on letterhead from H.S. Guidance counselors and teachers, lawyers, personal counseling centers, social services, clergy, etc. We also will accept police reports documenting abuse. Absent that, we require two letters from people personally knowledgeable to the relationship with the parent like a Grandparent, Aunt or Uncle. The letters must be very detailed about the situation and their relationship to the student.

Most students make the mistake of having a roommate or employer write a letter that the student is self sufficient and pleading for us to just cut them some slack. They don’t realize that Fin Aid reps are personally liable for willfully violating Federal Law. I’ve been in Financial Aid for 12 years and I haven’t met a student yet that is worth going to jail for.

If you are still unsure of your status please feel free to contact the Student Loan Network.

The FAFSA blog is sponsored in part by:

Five most recent FAFSA form help blog posts:

Subscribe to RSS headline updates from:

As a Customer Service Representative at the Student Loan Network the questions I most often here is, “How do I get the Stafford Loan?” and “What is the difference between subsidized and unsubsidized’ and finally “How do I get my Stafford loan money?’
All questions are great and important questions to ask. Listed below are my answers to the commonly asked questions”¦.

How do I apply for the Stafford loan?
You must fill out a FAFSA application to see if you are eligible for the Stafford loan. Virtually everyone is awarded this loan however you need to fill out the FAFSA paperwork for the school to review and determine your eligibility for Federal Aid (i.e. Stafford loans, Pell grant, Perkins loan, etc.) Once you are awarded the Stafford Loan money you can go to www.StaffordLoan.com and get your Master Promissory Note to agree to the terms and conditions of the loan. Depending on your school’s process you may need to print out the MPN or do an electronic signature.

My award letter lists subsidized and unsubsidized Stafford loans. What is the difference?
Subsidized Stafford loans are need based and interest free while you are in school. Unsubsidized Stafford loans are non-need based and interest accrues on the loans while the student is in school.

How do I get my Stafford loan money?
The funds for the Stafford loan get disbursed directly to the schools financial aid office. The money is put into your student account, applied to any outstanding tuition or fees and the amount left is then issued to you via check. If you are interested in receiving a refund check you need to coordinate it with the school’s financial aid office and not the lender.

If anyone has any questions on financial aid I’ll be glad to try to help or answer any question you may have. Thanks for reading.

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

It is about the time of year when recent graduates are wondering whether or not to consolidate their Federal student loans. It is a big decision for multiple reasons. It is not only a long term finance plan, but it is not a reversible decision either. People call in every day asking if they can reconsolidate their Federal Student Loans. The answer to this is simple; if you have new Stafford loans to add in to the consolidation, then you can combine your previously consolidated loan with your current Stafford loan(s). However, this is in no way changing the rate of your previously consolidated loan. The way that the rate is determined is through a weighted average. So for example:

You consolidated some loans in 2002:

$23,000 fixed in at 3.5%

You went back to school and took out:

$18,500 Stafford loan at a fixed rate of 6.8% (this rate is set by the Feds, and can change every July 1st)

$10,000 grad plus loan fixed at 8.5% (this rate is set by the Feds, and can change every July 1st)

You are now thinking about consolidating these all together:

• $23,000 @ 3.5%
• $18,500@ 6.8%
• $10,000@ 8.5%

Your rate is formed by taking the weighted average of your loans:

Step 1: 23,000 x 0.035 = 805

18,500 x 0.068 = 1258

10,000 x 0.085 = 850

Step 2: 805 + 1258 + 850 = 2913

Step 3: 23,000 + 18,500 + 10,000 = 51,500

Step 4: (2913 / 51,500) * 100 = 5.656

Step 5: round to the nearest 1/8^th = 5.75%

So because you have a portion of your loans at a lower rate, and a portion at a higher rate, the interest rate is weighted on those portions. Under no circumstances can you reconsolidate a federal loan that is already consolidated. That amount of loans will be at that interest rate for the life of the loan. So, now we know how the rate is determined – should you consolidate your loans? The example above does not take into account that most student’s Stafford loans are at a variable interest rate that is reset every July 1^st. So for someone that has a Stafford loan that was disbursed Jan 2006 and this person just graduated, their rate is 6.54%…this rate, if not locked in by consolidating, will change July 1^st. It could be higher, and it could be lower. Here is a list of pros and cons for Federal Loan Consolidation. As with any financial decision, every situation is different, so it is always smart to relate this information to your specific loan portfolio.

Based on this list, the people who choose to consolidate are usually the people who cannot afford to pay their minimum monthly balance. The average college graduate graduates with about 20,000 in loans – .this is a payment of about $231/month; so the biggest aspect to consider is can you see yourself making a payment of $231/month for 10 years? Or would it make your life easier now to consolidate, pay $154/month, with the hopes of paying down the principal in the future, so you are not taking the allotted 20 years to pay it off. In my personal and professional opinion, if you aren’t rolling in the dough – it makes sense to consolidate now because you can always pay more in the future – when you have it.

Helpful Sites

Student Loan Network
Private loan Consolidation
Add me as your friend!