Student Loan News, Updates and Blog Posts

Many people consolidate to get the lowest monthly payment possible for their federal student loans. The reason why consolidation gives you a lower monthly payment is because it extends the term of the loan. The chart below shows the maximum repayment term you are eligible for. The term is based on the total of all your student loans.

Now keep in mind that there are no penalties for early repayment, so by making larger payments you may pay off your loan sooner. This is because all additional payments go direct to your principal. Use our calculator to try different repayment scenarios before choosing to consolidate.

Hopefully this blog helps you decide if consolidation is something you could benefit from!

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

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What is an independent student?

The independent student definition created by Congress is VERY strict. It is strict because this status is used by school financial aid administrators in determining student’s eligibility for federal and state aid. Unless you are a returning college student it is unlikely that you are an independent student. If you should qualify for independent student status it means your parents income and assets are not included on the either the paper FAFSA or the FAFSA online.
An independent Student is a student who is considered independent for Federal financial aid purposes is at least one of the following:
-Over 24 years of age
-Married
-Have a dependent child who receives at least 50% of support from student
-Have a dependent person who receives at least 50% of support from student
-A veteran of the armed forces
-An orphan or ward of the court
If you answered yes to any one of the above questions you’re an independent student and you should consider how to maximize your financial aid package for as an adult student.
Otherwise, you must use your parent’s information on the FAFSA and any other financial aid form.

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Well…sort of.

For the past two years, the interest rate increase on July 1st has had a significant impact on student loan repayment. Having gone up nearly 1.8% (180 basis points) each year, the urgency and need for student loan borrowers to consolidate their student loans was truly evident. But what about this year? With rates set to increase 0.076% (7.6) basis points on July 1, shouldn’t everyone with student loans in repayment be rushing to file their applications prior to the deadline?

For a student loan borrower that has $23,000 in student loan debt, the interest rate increase would translate into roughly $11.43 per year – less then $.96 per month. My point is this: Borrowers should research and understand the benefits and drawbacks of student loan consolidation. They should consolidate their student loans for the right reasons, not simply because they are getting pressure from their lenders or other companies to “beat the rate increase deadline.”

The rate change is only going to affect those borrowers who have variable federal Stafford and PLUS loans taken out prior to July 1, 2006. For all federal student loans disbursed between July 1, 1998 and June 30, 2006, the interest rates will increase slightly on July 1, 2007 as follows:

• Stafford loans in school or in grace: 6.62% up from 6.54 %
• Stafford loans in repayment: 7.22% up from 7.14 %
• PLUS loans: 8.02% up from 7.94%

But keep in mind, consolidation is a great financial repayment tool that combines all existing federal student loans into one new federal loan, providing a significantly lower monthly payment. For any student loan borrower with a tight budget looking for monthly payment relief, consolidation would be a very helpful tool. And without any penalties for making extra or early repayments, borrowers can pay back more when it becomes affordable to.

While the July 1st rate increase may not be significant, borrowers who are currently in their grace period (6 months post graduation before entering repayment) should consider consolidating before it expires. They will save an additional 0.6% (60 basis points) off their interest rate.

So, my recommendation is to do your research, look for a company that demonstrates knowledgeable one-on-one customer service and the willingness to discuss both the benefits and drawbacks of student loan consolidation, and don’t rush to consolidate just because of the rate increase on July 1st.

Let’s start off easy…
Federal funds are the place to start when financing a graduate school education -
Your first stop should be the Graduate Stafford Loan. Rates are not increasing this July making it the most affordable option, aside from scholarships, which are the best since they don’t have to be repaid. Apply for the Stafford loan for the fall semester. While funds will not be disbursed (sent to your school) until closer to the semester start date, it’s good to get the application done now.

Assume you were awarded the maximum Stafford loan funds but still have more unmet need (which most Graduate students do as programs are often more costly than undergraduate education). How do you finance the rest?
Graduate PLUS Loan – this loan has just been out for a year, is Federally backed (like the Stafford Loan) and allows you to pay up to the cost of education. It needs to be certified by the school and your school gets the funds.

What if you need the money yourself to help pay living expenses or buy a computer?
Private student loans are the way to go, as you receive the funds yourself. Rates are variable and based on the credit of you and/or your co-signer. But, again, you get the funds yourself so you can use them on whatever education related expenses you have.

One of the best features of all three loans mentioned above is that repayment on all is deferred until after you graduate – no worrying about making payments while in school!

This is a great site (with a new design) that will help Graduate students with graduate school financing.

Chess is a game of skill and strategy which has been around since 600AD. Simply speaking chess is a board game for two players, each beginning with 16 pieces of six kinds with the objective of checkmating the opposing king. It sounds easy in concept, but it can be overwhelming for some.

It took my mother years to master her craft and now beats my step-Dad on a regular basis. In fact, I don’t know if any word in the English language holds as much weight as the word “checkmate.” It is a liberating feeling for one and a humbling, crushing feeling for the other when checkmate is finally declared. The world of student loans, like a chess board, can be equally difficult to navigate for parents and students alike. You have a world of knowledge at your finger tips. You have several diverse directions you can travel. So how do you protect your King? How do you know if you are making the right moves? Well, the fact that you are reading this blog tells me you are one step ahead of most and on your way to checkmating the king. You are either researching Stafford Loans for yourself, your children, or someone you care about; a wise choice indeed.

Federal Loans are at the apex of the student loan universe with the most common of those loans being the Stafford Loan. Stafford loans simply put hold excellent rates and benefits for its borrower. That said, you do need to qualify for a Stafford loan. The process begins by completing your FAFSA. That report is then sent to the Department of Education where they arrive at an Expected Family Contribution (EFC) number. A Student Aid Report (SAR) is then generated and sent to the school or schools you designate. Finally, the school(s) will send you an Awards letter outlining what you are eligible for. It will state what grants, scholarships, and federal loans you are entitled to. If you are awarded a Stafford loan you may come back to this website and apply to have a lender assigned to your loan. The lender then disburses the funds directly to your school after they receive certification from the school that you have enrolled and that you have been awarded the funds. That is the final step in the equation. It’s that simple.

Now that you are armed with the knowledge you need, are you up for the challenge? Are you ready to take down the opposing king? I think you are. Say it with me, checkmate.

On May 25, President Bush signed into law an amended section of the Fair Labor Standards increasing the Federal minimum wage in three steps. The current $5.15 minimum wage will be increased to $5.85 effective July 24, 2007, to $6.55 an hour effective July 24, 2008, and to $7.25 an hour effective July 24, 2009. The HEA specifically states that an institution may not pay any wage to students employed under the FWS Program that is less than the current Federal minimum wage. Therefore, effective July 24, an institution must pay FWS Program students at least $5.85 an hour.

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

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Today the House Education and Labor Committee is scheduled to consider legislation that would dramatically increase student aid by increasing Pell Grants and loan limits, cutting student loan interest rates, providing income-contingent student loan repayment, and offering new loan forgiveness programs.

The College Cost Reduction Act would increase federal spending on student aid by nearly $20 billion and would pay for this increase by cutting federal subsidies to student loan companies and guaranty agencies.

House Education and Labor Committee Chairman George Miller (D-CA) introduced the bill Tuesday claiming that it would “make the single largest investment in college financial aid since the GI Bill” and do so “at no new cost to U.S. taxpayers.”

Among the benefits to students contained in the bill, it would:

-Cut interest rates in half on subsidized student loans over the next five years.
-Increase federal loan limits to provide borrowers with additional assistance in paying for college and to help them rely less on costlier private loans.
-Increase the maximum Pell Grant scholarship by at least $500 over the next five years, ultimately reaching a maximum scholarship of at least $5,200.
-Expand eligibility to include and serve more students with financial need.
-Provide upfront tuition assistance to qualified undergraduate students who commit to teaching in public schools in high-poverty communities or high-need subject areas.
-Provide loan forgiveness for first responders, law enforcement officers, firefighters, nurses, public defenders, prosecutors, early childhood educators, librarians and others.
-Revise policies to allow public servants to have their loans forgiven after 10 years.
-Establish a partnership with federal, state and local government entities, and philanthropic organizations through matching challenge grants aimed at increasing the number of first-generation and low-income college students.

To pay for this aid the bill would:

-Reduce special allowance rates to lenders
-Eliminate the exceptional performer status
-Reduce lender insurance
-Reduce guaranty agencies’ collection retention
-Increase lenders’ loan fees

*The National Association of Student Financial Aid Administrators (NASFAA) is the professional association of the individuals who manage financial aid at the nation’s postsecondary institutions.

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

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Extra, Extra, read all about it!

Don’t be lured by the temptations of private loans.  You want a candidate who will listen to your needs!  Here are my Elite Eight reasons to vote Stafford on loan day!

Save money

Ten year loan term

Affordable monthly payments

Fixed Interest Rate

Forgiveness potential

On time payment incentives

Regulated by the Federal Government

Defer your loan payments while in school

For many students graduating college, the biggest challenge they face is when and how to begin paying back their college loans. About two-thirds of students borrow money to pay for college, so this is no small issue.

In 2007, the median debt of students who graduate from four-year private colleges is about $20,000, and it is about $16,000 for students graduating from public colleges, according to the College Board.

Students graduating with loans to repay are advised to follow these steps:

Due to the way college costs are financed, students typically end up with five to seven loans at graduation. Each loan can be for a different amount and carry a different interest rate. It’s important to take an inventory of all of your loans to know when you must begin repayment. Most loans (federal and private) will be in deferment for the first six months after graduation, which means you do not have to make payments during that time. You will need to know when payments are due, and how much the payment is for each loan. Also, you’ll want to update your contact information with the lenders (you may have moved) and get updated contact information on them, since some of your loans may have been sold to another company, which will now collect the payments. This is important, so you will receive important notices and know where to send payments.

I hope this helps!

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

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The other day I spoke to a lovely woman who has been teaching for a few years in a low income area. While teaching, she went back to school to get her Masters degree to help raise her salary and keep her credentials. After a few years of teaching in a low income area she made a salary of $32,000. Her student loans equaled $50,000.

My suggestion to help manage her student loan debt was to consolidate her federal student loans. I explained to her that if she did not consolidate her monthly payment for her student loans would be about $570 a month for 10 years. It’s obvious that a monthly payment this high is just not possible to manage on a teacher’s salary. By consolidating it would stretch her repayment term to 25 years however there are no early repayment penalties. Her monthly payment once consolidated could be as low $276 a month.

With all of her big plans and obligations like rent, utilities, car payments, and beginning savings, she won’t have to worry about how to make her loan payments once she consolidates. No she is free to pursue her dreams without a dark cloud hanging over her head.

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

Student Loan Network