Student Loan News, Updates and Blog Posts

I actually hear this question quite often, and in the interest of full disclosure I must admit that I didn’t know who my lender was when I took out my Stafford loan either.  Truthfully, you don’t really need to know unless their is a problem with the funds getting sent to your school.  But if repayment is now upon you it would certainly be beneficial to know who holds the note on your loan and ensure they have your updated address on file.  You don’t want to be delinquent with your first payment.

How to find out who your lender is…

1. Ask your Financial Aid Office. They have a record of who your lender or lenders were.

2. Contact the Department of Education.  You can either contact them at 800-433-3243 and request to speak with the borrower tracking department or visit the DOE online with your four digit FAFSA pin number.

After you file your FAFSA and receive your financial aid package from your school either you or your parents might be unhappy with the results. When this happens your first instinct might be to write an appeal to the financial aid office. While this might be the right move in some situations other people should think twice before making a call to the college.

With so many families experiencing unemployment and salary reductions the number of appeals that financial aid offices are seeing is on the rise. Financial aid officers realize that this is a hard time for many families and they are doing everything they can to meet the need of every student. It is important to put your families’ financial situation in perspective. Although everyone has a different situation you should think about your income in the grand scheme of things. If you are a parent, see if there are places in their budget where they can make sacrifices to send their children to school. If you are a student, see if you can save a little bit of money from your summer job to put towards your education.

If you still need to make an appeal there are a few things you can do effectively communicate your situation. First, make sure you know what you are appealing. To some families an appeal is an automatic reflex. Often times parents do not know what they are appealing, they just know that the package is not enough. Secondly, try to peak with a financial aid officer over the phone Many schools encourage parent phone calls and will field as many calls as possible. This is much easier at smaller schools, but larger schools try to accommodate phone calls as well. A phone call will make it much easier for you to understand the financial aid officer and for them to understand you. Finally, make sure you have clear documentation as proof of your current income. A financial aid officer will not be able to guess your income so it is important to present your families’ current situation as clearly as possible.

Did you know the Stafford loan has fees attached to it?  There are two different fees attached to Stafford loans, an origination fee and a default fee.  Now here is the good news – those fees are coming down.

The Stafford loan program instituted a three year program back in 2008 to dissolve the origination fee’s completely and bring down the default rate.  In 2008 the origination fee was 1%, in 2009 it went down to 0.5%, and beginning 7/1/10 it will be 0%.  That’s sweet for students! Now what about the default fee?

The default fee is also coming down from 2% and will land at 1% beginning 7/1/10.  By the way, the default fee is not an absolute charge.  Lenders / guarantors are permitted to waive the default fee as part of their incentive package. This is important to know if you are attending a FFELP school.  FFELP schools allow you to choose your lender.

Last week I chronicled the various ways you can complete your FAFSA in a blog entitled FAFSA Applications.  One of those ways was mailing in your FAFSA.  But what happens next?  How long does it normally take to process when you mail in your FAFSA application?

Your FAFSA will be processed in two to three weeks. But, before mailing it, you should check to see if your school, or a school that you’re interested in, would submit your FAFSA electronically for you to speed up that process.

If you do not hear anything within three weeks of the date you submitted your application, check your status through FAFSA on the Web. You can also check your status by contacting the Federal Student Aid Information Center at 800-4-FED-AID.

File your FAFSA today!

If you are a parent of a prospective college student, or a prospective college student yourself, you should be starting to think about financial aid. You have probably heard people around you talking about FAFSA, Stafford loans, Pell Grants, scholarships, and alternative student loans. It might seem like you are the only one who does not know what is going on, but trust me you are not alone in your confusion. Applying for financial aid can be very stressful for families and filing the FAFSA is a task that most people dread.

In order to be eligible for any kind of Federal student loans or grants you must file the FAFSA. Many people play down the importance of the FAFSA, but it should not be taken lightly.  Mistakes on this form can end up costing you thousands of dollars in aid. Luckily there are people out there who know a lot about financial aid and might even be able to help you with the application process.

Many high schools and communities host financial aid and FAFSA workshops. These are usually free sessions run by the high school guidance department, a local college or outside consulting group. These workshops usually go over a general look at financial aid, applying for student aid, why you should file the FAFSA, determining financial need, and tips and techniques for filling out the FAFSA.

If you are perplexed by the financial aid process make sure you find out if your town is holding a workshop. If they are not planning one it may be beneficial to suggest it to the high school principal or guidance department. The U.S. department of education even provides resources and presentation materials that make hosting a financial aid night more manageable. After attending a financial aid or FAFSA session you will probably find out that you are not the only one who feels lost, but you will also probably feel more confident and ready to tackle the application process.

Yes, a third party with power of attorney for the borrower may sign a Stafford promissory note if the borrower is unable to sign.

Use of a power of attorney when signing an MPN limits the use of the MPN to
one loan. If the borrower submits his or her MPN through the school, the school must retain a copy of the original power of attorney and submit a copy with the MPN to the loan holder. A photocopy or a fax of the power of attorney is acceptable.

If the note is signed with a power of attorney, the student must authorize the
school in writing to credit the loan funds to his or her account at the school. In addition, the school must pay any remaining balance to the student for living expenses.

These days most students complete their FAFSA application form online.  However, you do have other options.  Let’s take a look at all three ways you can file your FAFSA.

• Online application which goes directly into the Central Processing System. This is the most popular option today.
• A Financial Aid Officer at your school can submit your application through FAA Access or CPS online. If you are not computer savvy this is probably the best way to complete your application.
• A Paper FAFSA application, which you can get through your school (although they can only request 50 copies each semester), by calling 1-800-4-FED-AID, or by simply (clicking here). For those weary about putting their personal financial details into the computer a paper application is probably for you.

Important note: You need a PIN number to complete your FAFSA online.  Your PIN number serves as your signature and should never be shared with anyone.  You can visit www.pin.ed.gov to request a PIN number.

So much of life is being in the right place at the right time. The guy behind you at the convenient store may be the one to scratch that winning lotto ticket while you may be the one that gets hit pulling out of the parking lot. It’s all about timing. It’s all relevant. It’s all this thing we call life.

America has seen a surge in the average age of students enrolling in college (non-traditional) over the past few years since the economy went south. For once being older may work in your favor.

When completing the FAFSA, if you are under the age of 24 you are listed as a dependent student, unless you are emancipated or married for the most part. That’s why many students get so frustrated. Those who are say 22 and living on their own still need to list their parents information on their FAFSA despite the fact that their parents are not helping pay for college. It doesn’t really seem fair. But for all of you nontraditional students (ages 25 or older) you can rejoice.

Gone are the days of listing your parents income. Finally you can cash in on the fact that you barely have enough money for a slice of pizza on a Friday night. And if you have children, even better. All of these factors work in your favor to help maximize the federal aid you are eligible for. And you thought getting old was a bad thing.

File Your FAFSA

So much of life is being in the right place at the right time.  The guy behind you at the convenient store may be the one to scratch that winning lotto ticket while you may be the one that gets hit pulling out of the parking lot.  It’s all about timing.  It’s all relevant.  It’s all this thing we call life.

America has seen a surge in the average age of students enrolling in college (non-traditional) over the past few years since the economy went south.  For once being older may work in your favor.

When completing the FAFSA, if you are under the age of 24 you are listed as a dependent student, unless you are emancipated or married for the most part.  That’s why many students get so frustrated.  Those who are say 22 and living on their own still need to list their parents information on their FAFSA despite the fact that their parents are not helping pay for college.  It doesn’t really seem fair.  But for all of you nontraditional students (ages 25 or older) you can rejoice.

Gone are the days of listing your parents income.  Finally you can cash in on the fact that you barely have enough money for a slice of pizza on a Friday night.    And if you have children, even better.  All of these factors work in your favor to help maximize the federal aid you are eligible for.   And you thought getting old was a bad thing.

File Your FAFSA

If your GPA falls below a 2.0 you still may be eligible for federal aid. H0w the process works is that you are given a semester to raise your cumulative GPA to above 2.0 (the probationary period). If you are unable to do so you may be sanctioned to financial aid suspension or dismissal from the school.

If you get dismissed you will need to enter another school (most likely without the benefit of federal assistance), raise your academic standing, and then apply for reinstatement.

The other alternative, however, is to just enroll in a new school, file your FAFSA, and not have your transcripts sent over to the new one.  That assures you will still receive federal aid, assuming you demonstrated financial need of course.  The problem with this option, however, is that any previous credits you received would not be credited at the new institution. It would be like you were entering college for the first time in many ways.   You would also still be required to repay the loans you took out at your first school, and those amounts would be debited from your maximum allotment of funds as well.