Student Loan News, Updates and Blog Posts

Tuesday Rant (a tongue-in-cheek observation)

Believe it or not it’s still possible in 2009 to get three squares a day, a roof over your head, and a college degree for the bargain basement price of $0. So how can you get a piece of this all American pie? Simple. Get arrested.

Correctional education, perhaps the greatest perk of all for inmates, involves vocational training or academic education as part of a prisoners rehabilitation and preparation for life outside prison. It’s these educational programs that allow many inmates to emerge from behind bars in better shape, financially speaking, than many law abiding citizens who are struggling mightily to make ends meet due in large part to sizable student loans payments. Most graduate students these days carry debt totalling over $40,000 and face monthly payments in excess of $400.

Between teachers volunteering their time and publishers donating books, as is the case at San Quentin State Prison in California, inmates are getting a top flight education for free. How fair is that? I’ve got the perfect slogan for a state penitentiary. “Commit the crime. Do your college time. All on the taxpayers dime.”

I guess all that’s left is to determine which non deadly crime will get you 4-5 years behind bars. I’d really hate to see someone paroled early prior to getting their bachelors degree in criminal justice, that would be just tragic.

The graduate plus loan has become a very popular loan amongst graduate students over the past few years. What makes it enticing is the fact that it is a Federal loan even though you have to pass a credit check in order to be approved. It also can be combined with your Stafford loans from undergraduate school and grad school once you are completed with your studies.

A problem that some people face is getting approved for the loan. Many people have asked me how exactly the decision is made for approval on these loans. The approval process is not as stringent as private loan approvals. They also don’t require that you have an extensive credit history or even a steady income. What the lenders look at is if you have an adverse history on your credit report. If you do, and it’s not cleared up it will affect you from getting the loan. If you have something on your report from 2 or 3 years ago, that is cleared up, you should still be approved for this loan, however they may require that you add a co-borrower.

Another common question I get with this loan is if you can apply with a cosigner right off the bat. The answer is no. It is required that you apply on your own first, and if you get denied, you will then be given the opportunity to add a co-borrower. I also recently received a question on the financial aid forum regarding defaulting on a credit card and if this disqualifies you for receiving a grad plus loan. If this situation was resolved and account is now current, you should still be approved. However if the situation was very recently, chances are you will need a cosigner. However defaulting on a personal loan or line of credit is not the same as defaulting on a federal student loan and does not disqualify you for borrowing more Federal loans. FOr more information on the graduate plus loan, visit the GradPlusLoans.com information page.

Monday Rant!

Why do graduate students need to submit letters of reference? The official reason is that letters of reference are designed to promote applicants qualitative abilities. What the school hopes to discover is specific descriptions and examples which illustrate a students potential to make a difference in the world. Personally, I find this part of the application process laughable.

Depending on the school, you’re required to submit 2 to 3 letters of recommendation. This antiquated, and in my view, irrelevant practice should die like the hornets in my gutter as any student with good grades can get a professor to essentially type a form letter.

If you’ve been out of school for a lengthy period of time you’re allowed to use work/personal references. I know three graduate students who actually typed their own letters of reference and then had their references sign it. The process is a joke and the professor’s many times are a joke too.

Having to rely on incompetent professors to ensure your entrance into these programs is simply ludicrous. Perhaps this process works at top tier schools where professors enjoy ego stroking themselves and their top students, who in turn enjoy the attention and need the validation; but at the State level the requirements should just be one letter of recommendation sent by the professor’s choice of media (I would say do away with the reference completely but I know that won’t happen).

Anyone who has gone to school knows that professors can be absent minded. My one reference requirement allows you to hedge your bet. With a one reference requirement you could ask three professors to write a letter, knowing that one would come through and not hold up the process for you. The extra letters (assuming they actually did them) could then be optional.

I realize schools are trying to delineate between worthy candidates, but the reference letter devalues this process. You might as well pick up a magic 8-ball and shake away. Will I get into graduate school magic 8-ball? “Ask again later.”

You know the market is tough when Harvard University is holding seminars on how to handle rejection. Yep, I’m afraid the days of the red carpet being rolled out for freshly minted college grad students are gone – or at least temporarily suspended.

Many experts advised while the job market was slumping it would be prudent to go back to school, beef up your skill set, get your MBA, and resurface ready to market yourself and land that high paying job. But those dreams appear to be just that – dreams.

What graduate students find awaiting them now is a heap of student loan debt and an even more competition job market than when they entered grad school. In April of ‘07 the unemployment rate was at 4.5%, opposed to the staggering 8.9% we currently see today (the highest it’s been since September ‘83). As good as your alumni network is you’re asking a lot to land a high paying job right now. More polished candidates with years of experience are scooping up those jobs, and doing so for thousands less than their degree would have garnered them a few years ago.

Things will turn around as Warren Buffet said earlier this year. “Amid this bad news never forget that our country has faced far worse travails in the past…and we’ve overcome them.” Buffet was referring to the two World Wars and Great Depression that has plagued our nation. But those words ring hollow to those who don’t have a billion in the bank. For them the future can’t get here soon enough.

If you are having trouble making ends meet (click here) for a free debt consultation quote.

Five most recent graduate financial aid blog posts:

Subscribe to RSS headline updates from:
Powered by FeedBurner

If you have been toying with the idea of getting your master’s degree online, I wanted to supply you with some important information that may assist you in getting closer to achieving your goal. First off, many online schools participate in the Federal loan program, which means you can borrow the low rate Stafford loans and the Graduate Plus loans to fund your graduate degree. This is a huge help to all of us who are struggling in this stalling economy and also for those who simply do not want to drain their savings.

There are many online schools to choose from and the best place to start is to research them all and see which ones offer the program you need. Click here for a database on online school’s and online degree programs for graduate students.

Taking classes online can be a very convenient avenue for many to take, especially considering you can take the class on your on time. Once you log in to your course, you can interact with other students in chat rooms and you can ask questions and interact with your peers, just as if you are were in the class room. Usually an online class is broken down into lessons, which you complete in order. There are scheduled tests that you take, which are often timed, or sometimes you may have assignments that you need to complete and email to the teacher by a certain date. These types of classes do take a lot of self discipline so if this is not your strong suit, I wouldn’t enroll in an online degree program.

Just to get an idea of how many schools offer the program you need, and what those programs cost, definitely check out this directory and feel free to visit the Financial Aid Forum where you can ask other students who have completed online degrees about their experiences with it.

Marketing yourself is the name of the game, and having an MBA is the equivalent to a flashing neon sign in a pile of bachelors degrees; it stands out.

Yes, other variables are considered when a hiring manager is looking for the right candidate. Experience, how you present yourself in an interview, and if you were referred by someone at the company are all important factors, but wearing that MBA crown is undoubtedly the best chance you’ve got. Imagine if they had an actual MBA crown you could wear, or perhaps a huge wrestling style MBA belt? Now that would be priceless!

According to a recent article in the Pacific Business News, MBA’s degrees are holding their value among young professionals. Nationally, MBA graduates on average earn $106,000, according to a survey by the Graduate Management Admissions Council. MBA’s open so many more doors.

My friend Brian who is an MBA student, not a graduate, landed a paid internship with an excellent company in Boston last month. They liked the fact he was enrolled in an MBA program. It’s a great way to spark up a conversation. I have a BS in Economics, but am currently studying toward my MBA in International Management. Now that has some cache. Sometimes just taking that one class can open an unexpected door. And once that door is open you can have some real fun.

Five most recent graduate financial aid blog posts:

Subscribe to RSS headline updates from:
Powered by FeedBurner

You’ve finally decided that now is the right time to get that graduate degree. You’ve put it off long enough and are mentally ready to commit the time and effort required. But before you get snug in that lecture hall there are a few t’s that need to be crossed and i’s that need to be dotted.

1) Admissions Test: You’re not getting in to any grad school if you haven’t taken your admissions test. Your major will determine which test you need to take to get in. Obviously if you’re a business major you’re not going to be taking the PCAT, which is the Pharmacy College Admissions Test. Instead you will need to take the GMAT. If you are unsure which admissions test you need to take read Knowing Your College Test (1 of 2) and Knowing Your College Test (2 of 2).

2) Selecting a Grad School: Find out which schools offer your graduate program. That may sound rather elementary but you’d be surprised how many students have their heart set on a particular school only to learn it doesn’t offer their program. U.S. News & World Report offers grad school rankings by location, tuition, school size, and test scores.

3) The Mighty Dollar: How much is this going to cost? If your company is not picking up the tab will you be able to afford the monthly payment when you get out of school? The Graduate Stafford loan and Graduate Plus loan are the most common loan options utilized.

4) Job Prospects: Perhaps the most important thing of all is knowing where your degree will take you. I know these days it is hard to predict with the economy in a state of flux, but knowing the demand in your field is important. You want a degree that will open doors not keep them closed.

Monday Morning Rant…

President Obama’s recent plan to eliminate private lenders from the private student loan market would be damaging to students and take away a students right to choose.

At present there are two primary lending options for students; the government’s in-house program and private lenders such as Sallie Mae, Suntrust, Discover Student Loans, Wells Fargo, Bank of America, and Citigroup to name a few. Obama’s plan would move all federal loans such as the Grad Plus and Graduate and Undergrad Stafford loans over to the government’s in-house program leaving private lenders out in the cold.

The private sector has been supplying funding for students for years and now, by 2010, the government could pull the rug out from underneath them if Congress gives the O.K. This would have a crippling effect on the public sector costing thousands their job.

Having options is what makes this nation so great. If we didn’t have Burger King and Wendy’s than McDonald’s could charge $6 bucks for a cheeseburger with no competition. What kinds of fees will the government be attaching to these loans? What type of borrower benefits would exist? Private lenders help the student loan industry, not hurt it.

I don’t know about you, but I don’t want any one entity monopolizing the federal student loan industry. As a consumer I want options.

#1 How are you going to pay? Fee’s continue to climb at both state and private institutions making school a costly investment. If you are currently employed you may try drafting up a proposal to your employer to pick up part or all of the tab. Outline how your knowledge will help the company. If you can demonstrate how your new tools will effect the bottom line in a positive way you may have a shot.

Additional financial options to consider include: scholarships, graduate Stafford loans, graduate plus loans, and private graduate loans.

#2 What is the market outlook for your profession? No point in going back for your MBA right now if the demand isn’t there. The market is saturated with talented people with MBA’s and loads of experience looking for work. If you are the one fronting the money for the degree you obviously want to put it to good use immediately and not place it on a shelf to collect dust.

#3 When are classes offered? Does the school offer your program at times convenient for you? Can you substitute classes if needed? I can tell you it greatly improves your chances of getting your MBA if you are actually in the class!

#4 With MBA salaries down is it worth the investment? Like I previously stated it really depends on the market. However, MBA degree holders on average earn between 15-20% more per year than those with a BA.

#5 Can I have my graduate student loans forgiven? You may be entitled to student loan forgiveness. Both Perkins loan forgiveness and Graduate Stafford loan forgiveness are available. Public service, volunteer work, and military service are among the notable forgiveness categories.

Monday Rant…

The fact that Grad Plus loans have an 8.5% rate in this market is nauseating to me. Home equity lines and 30-year fixed mortgages are in the 3.75% to 5.75% range these days. It just really baffles me how the Fed Funds Rate, which is the rate at which banks and other depository institutions lend money to each other, can be as low as 0.25% but yet we continue to let students burn.

I applaud the efforts of the Obama administration for increasing the amount of Pell Grant and Stafford loan funds, but why not hit the trifecta and address the inflated interest rate issue on Plus loans? The rest of us are benefiting from low interest rates, why can’t grad students?

Recommendation: Maximize scholarship and grant money first. Next, turn your attention to the Graduate Stafford loan before you consider the Grad Plus loan. The Grad Stafford has an interest rate nearly 2 percentage points lower than the Grad Plus. Let the Grad Plus loan be your fallback plan.