Student Loan News, Updates and Blog Posts

The Holidays are just about past us now and this is the time of year I like to reflect and plan for the future. Generally that starts with my finances. One of my credit cards (one that I use most) sends me a handy year end summary with nice pie charts and graphics of where I have been spent my hard earned dough. This usually prompt me to look at my budget and how I spend money. So when the piece of the pie for shoes is bigger than groceries, I know I need to make some changes. That being said, it is also a good way for me to find places to save more money by knowing where and how I spend.

Taking time to look at your finances and see where you are at is always better than ignoring them. Even if things are going relatively well, it is always a good idea to sit down and look at how you spend money. Much like writing in a food journal, you will be surprised by how easily we loose track of how much we spend.

January is a great time for people to make fresh starts, people resolve to get into shape, quit bad habits, dump that no good significant other for once and for all because he never is going to marr…oh sorry got a little off track there. But you get the picture. Use this time to look at your finances and how you can spend the next year improving your fiscal health.

If you are recently graduated grad student you may want to consider consolidating your student loan debt. Did you know that you can consolidate private loans as well? Private loan consolidation can save you thousands of dollars as well as improve your credit score. Check out www.StudentLoanConsolidator.com for more information. another great site we offer is www.StudentPlatinum.com. This site has a lot of great tips on debt management, credit and overall financial management.

So see you at the gym in 2008 (or the shoe store) and good luck with keeping those resolutions!

Source: FAFSA blog

The FAFSA4Caster is the Department of Education’s financial aid estimation calculator, and the one thing that sets it apart from every other calculator online is that the results from your estimate can be fed directly into a FAFSA application, reducing the time it takes to file a FAFSA. However, the output of the FAFSA4Caster isn’t always clear. Here’s a line by line analysis of the various numbers it returns.

First, the FAFSA4Caster tells you what you’re qualified for and the average or maximum amount of aid available. Here’s a recent report:

• Federal Pell Grant $4,310 / $4,310
• Academic Competitiveness Grant (ACG)* $750 /$750
• Federal Stafford Loan (Subsidized) $3,500 / $3,500
• Below you will see other sources of federal aid that you may receive. These amounts are based on the average award amount that other students have received.
• Federal Supplemental Educational Opportunity Grant (FSEOG) $765 / $765
• Federal Work-Study $1,200 / $1,455
• Federal Perkins Loan $0 / $2,185
• Average Cost of Attendance $10,525 / $18,875
• Total Estimated Aid Eligibility $10,525 / $12,965
• Estimated Need $0 / $5,910

Let’s examine this report line by line.

The Federal Pell Grant is a need-based grant from the government. In the example above, the student has qualified for the maximum amount of Pell Grant aid available and it will be awarded automatically in the student’s financial aid package.

The Academic Competitiveness Grant is a partial merit, partial need-based grant for students. In order to receive it, the student must meet academic qualifications and be eligible for the Pell Grant.

The Federal Stafford Loan, subsidized, is a student loan backed by the federal government with interest that is paid for by the government while you’re in school.

The Federal Supplemental Educational Opportunity Grant (FSEOG) is another need-based grant that supplements the Pell Grant for the neediest students.

Federal Work Study is employment in which the pay you earn goes to pay your tuition. Federal work study was designed to create jobs, even where jobs might not have existed, for the sole purpose of helping students earn money.

The Federal Perkins Loan is school-based student loan available at a fixed interest rate.

The most important thing about this award letter is that the last line is actually a misnomer. Estimated need in this case isn’t how much you need, but rather how much out of pocket money you’ll need to pay for school. This is otherwise known as the EFC, or Expected Family Contribution, and in the example above is the best case scenario: nothing.

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Financial independence, regardless of your definition, is something we all strive for. But think about those two words for a moment. What does financial independence truly mean to you? Perhaps financial independence to you means moving out of Mom and Dad’s house and getting your own place. Maybe it means procuring your first checking account and paying for that designer sweater with your after school job. For me I thought I was King the day I signed up for a Visa card outside Gillette Stadium at a New England Patriots game. Amazingly I was approved (I’ll tell you how later). Truthfully, I only signed up to get the free t-shirt. Those marketing wizards know our weaknesses, free stuff! Regardless of your definition of financial independence, we all aspire to have it. And good credit can certainly go a long way in getting you the funds you need for school.

I can’t tell you how many students I have spoke to over the past year who have said to me, “Dave, my parents won’t help me with school. I’m on my own. What can I do?” They feel overwhelmed and lost, and with good reason. They have gained all this momentum and are energized about going to school only to discover they can’t due to lack of funds. It’s deflating. It’s like when Charlie Brown went to kick the football and Lucy pulled it away at the last possible minute, just cruel! Well, I want to make sure Lucy and her mischievous ways are tamed. I want to ensure your kick is as true as an Adam Vinatieri last-second Super Bowl winning FG. What I want is for you to get a loan you don’t need right now!

Ok, you’re probably confused and wondering what on earth I am talking about. Get a loan I don’t need? This guy is crazy you are thinking! Well, remember I told you I got approved for that Visa card? What I didn’t tell you was that five of my friends also applied and walked away with a free t-shirt only. I was the only one who got approved with a $500 credit line extended. What was my secret? I got a loan I didn’t need when I was 17 years old.

When I was 17 my father took me to the bank and co-signed for a $1,000 loan for me. We walked out of the bank together that day with $1,000 in cash and a payment book. My father then handed me the payment book and the $1,000 and told me to pay the loan off. I was scratching my head, why I asked? I want you to establish credit history. You have 12 payments to make, make all 12 of them. I will pay the extra $90 in accrued interest he said. But I don’t want you to rush back here tomorrow and pay the whole thing off. Pay it each month so they can see you are responsible, and make sure you pay on time. I didn’t appreciate what he was doing for me back then; I was young and naïve. So in between my basketball games and trips to the mall I would stop off at the bank and pay them back with the money they had given me. It just became part of my routine. I never gave it much thought – that is – until I was the envy of my friends at the Patriots game.

My holiday wish is for everyone to have a person in their life like my Dad.  Someone who will take the time to lead by example and outline a winning formula.

Hey Dad, in case I haven’t told you lately, I appreciate all you’ve done for me.

Shelley Rep from NCHELP (NCHELP.org) posted the following:

The Congressional Budget Office has issued its estimate of the cost to the federal government of H.R. 4137, the College Opportunity and Affordability Act of 2007, as approved by the House Education and Labor Committee on November 15. This bill represents the House version of Higher Education Act reauthorization. In contrast to the budget reconciliation legislation enacted in September (which was a cost cutting and spending bill), the HEA reauthorization is referred to as a policy bill.

According to the CBO, the bill (if enacted) would increase direct spending by $75 million in 2008 and decrease direct spending by $27 million over the 2008 to 2017 period. One of the “savers” in the bill is the change in the definition of “cohort default rate”. The bill includes an amendment offered by Congressmen Grijalva (D-AR) and Bishop (D-NY) that would revise the definition of cohort default rate by adding to the period of time in which a default is counted as part of a school’s cohort default rate. Right now, a borrower default is included in the rate only if it occurs during the fiscal year when the loan enters repayment or the following year. The amendment would add one year to this period. Schools are subject to losing eligibility to participate in Pell and the student loan programs if their default rate exceeds 25% for three years. While no schools have been subject to this sanction in recent years, that could change if the amendment were included in final legislation.

CBO projects that this change would reduce the number of schools eligible to participate in the student loan programs, thereby reducing direct spending by $27 million over the 2008 to 2017 period. Accordingly, all the net savings in the bill are attributable to the change in the cohort default rate definition.

The CBO cost estimate also points out that the bill reauthorizes and amends many of the discretionary programs, and creates new discretionary programs. Discretionary programs require annual appropriations. CBO estimates that implementing these programs would cost $97.4 billion over the 2008 to 2012 period.
—

An interesting way to balance the budget? Submit your comments and/or thoughts.

As 2007 wraps up, make sure you’re taking full advantage of your student loan payments by noting the interest you’ve paid this year on your federal student loans. As long as your income is below a certain level, interest you’ve paid on your student loans is tax deductible on your federal tax return.

If you’ve paid less than $600 in interest, your student loan lender is not legally required to send you a 1098-E form in January for interest you’ve paid. You will need to request it.

Consolidated student loans are eligible for the interest deduction as well.

Consult IRS Publication 970 for details about education tax incentives

Now’s a good time to apply for a Stafford Loan for spring semester. Financial aid offices aren’t too swamped yet.

Source: FAFSA blog

Here’s an overall FAFSA strategy to help you maximize your federal financial aid.

First, gather up all your paperwork and do an IRS 1040 form. Unless you’re in a situation where you’re expecting a massive year-end bonus or a huge chunk of overtime, chances are your tax year 2007 is coming to a close with relative predictability, allowing you to get a reasonably accurate picture of your taxes.

Next, see a financial planner about making any last minute, year-end adjustments to your taxes, such as additional contributions to retirement funds to maximize the deductions you can take. Most community banks and credit unions offer free or very low cost access to financial planners.

Download a copy of the FAFSA from our help guide and do a practice run.

If you run into trouble or there are questions that are confusing, contact us, ask a financial aid administrator at your school, or attend a College Goal Sunday event for free help.

Make careful note about when the FAFSA deadlines for your state are! If you miss a deadline, you will very likely miss out on some financial aid.

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Source: FAFSA blog

From NASFAA:

Beginning January 1, 2008, students and parents will be able to apply for and receive a “real-time” PIN when completing a FAFSA on the Web (www.fafsa.ed.gov) or when applying for a PIN on the Department’s PIN Web site (www.pin.ed.gov).

After determining that 97 percent of PIN applicants provide correct information (i.e. social security number), the Department decided to make this real-time PIN available not only for first-time PIN applicants but also for those who have lost or forgotten a previous PIN. After receiving the real-time PIN, applicants will be able to change the PIN to a number that is meaningful to them.

First-time PIN applicants will instantly receive a conditional PIN that will allow them to electronically sign their FAFSA on the Web. The conditional PIN can only be used to sign the original application that students and/or parents are completing at the time they applied for the PIN. The data supplied by the PIN applicant will then be verified with the Social Security Administration (SSA). If the applicants’ PIN information is accurate, the conditional PIN will then be good for all processes that require a PIN in the future. If the applicants’ data does NOT pass the SSA match, they will receive a SAR with a rejected signature comment and the school will receive a rejected ISIR. The students and/or parents will then need to provide the required FAFSA signatures. Students and parents will need to correct PIN data to receive their PINs.

The 2008-09 Process Guide for Student Web Application Products provides more guidance about how the real-time PIN process will work. The following is taken from that guide.

* Real-time PIN – When applying for a PIN, requesting a duplicate PIN, or changing a PIN, applicants can receive their PIN in real-time. Whether system-generated or user-selected, if the applicant chooses to display or personalize the PIN or receive the PIN via e-mail, he or she can use the PIN immediately to sign the application.

* SSA Match – The Social Security Number (SSN), name, and date of birth information submitted by the applicant and parent is transmitted for a match with the Social Security Administration (SSA). If the SSN, name, and date of birth are successfully matched, the PIN remains valid and becomes a permanent PIN. 98% of student records and 97% of parent records are successfully matched with the SSA, so this change will positively impact the application process for the vast majority of students and parents.

* PIN Status Information – Using the PIN Web site, the applicant can check the status of a PIN application and learn the results of the data match with the SSA.

* Successful SSA Match – After receiving a successful SSN match from SSA, the PIN can be used to access SAR information on the Web, make corrections using Corrections on the Web, and access personal information on other Federal Student Aid Web sites.

* Unsuccessful SSA Match – If the match with the SSA is not successful (does not result in a match flag of “4″), we alert the student. We ask the student to apply for a new PIN using the correct information if the information provided on the PIN Application is not correct, or to contact the SSA if the information is correct. The student is unable to use the PIN until the SSA match is successful.

By Susan Luhman

NASFAA Assistant Director for Professional Assessment, Training, and Regulatory Assistance

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One of the things I love about working here at the Student Loan Network is that we are a fun bunch of cool cats. A meeting never goes by without a hearty laugh or chuckle about something sometimes even at my expense! 1250 Hancock is truly a fun place to work. So now that the holidays are upon us we are doing our annual “Secret Santa” gift exchange and knowing my colleagues, this is going to be fun and challenging.

We have set a limit at $25 and over three gifts over three different days. This scenario requires quite an imagination and some skill. It was requested that we blog to give some hints about things we would like to receive. Since Chanel bags don’t cost $25 well the knock-offs in NYC do but eww… tacky.

Anyway here are some things that make me, me!
Love most types of music (not really a country western fan though)
I love to work out and if I am not in Yoga I am running or hitting a step class
I love to read
I love movies (have a tendency towards complex plots, think pieces and documentaries)
I can never have too many hair elastics
I love Cabernet, Pino Noir and Zinfandel wines
I am almost always out of gas (yes I still drive an SUV!)-but not much anymore though-trying to be green
I don’t like candy
I don’t eat seafood
I like soy candles

Hopefully that is enough info for the fortunate person who gets to present me with a gift!
Enjoy the holidays and remember to laugh!