Student Loan News, Updates and Blog Posts

Try saying that five times fast!

Do you know what happens when you do not make your student loan payments? Ideally you should take repayment into consideration before you sign off on a loan, however most people do not really think about it until the bills start coming in. The worst thing you can do is miss payments. Missing payments kills your credit score. A bad credit score makes it impossible to obtain a mortgage, buy a car, and take out any other loans in the future. If you miss payments you will also end up getting slammed with interest in the long run. Paying at least the minimum amount every month is key to staying on top of your debt.

If you are in a position where you really cannot make your payments there are steps you can take to avoid being severely penalized. One option is to apply for income-based repayment. This is a new payment option for federal student loans. With this option your monthly payment is calculated based on your income and family size. The IBR loan payments will usually be less than 10% of your income.

Loan consolidation is another option that will help you minimize your monthly payments. When you consolidate your federal student loans your loan term is extended and you end up with one smaller monthly payment. The new interest rate is a weighted average of all of your previous loans. Before considering consolidation you should know that does not necessarily cut down your interest and you will be paying off your loans for a longer period of time.

Loan deferment options are also available in certain situations. Deferment does not excuse you from ever paying off your loans, rather it temporarily suspends payments. You may be eligible for deferment if you are in school at least half time, unemployed or have experienced an extreme economic hardship.

Finally, in rare situations a person might be eligible for student loan forgiveness. Forgiveness means that all or part of a person’s student loans are cancelled. You would qualify for loan forgiveness if you enter into public service, perform volunteer work, perform military service, or if you become permanently disabled.

If you are like me you probably graduated from college with two things; a diploma and a pile of debt. It is completely normal for students to have federal student loans and private student loans to pay off after college, but on top of credit card payments, rent and insurance payments these loans can be a huge burden. There are ways to quickly pay down your debt without getting overwhelmed. Here is the method that I use:

1: Figure out your monthly income and expenses including any student loan and credit card bills.  This will allow you to see how much money you have left over after the bare minimum is paid.

2: Pay at least the minimum payment on all of your debts each month. Missing any payment can negatively affect your credit score. A poor credit score will makes it hard to rent an apartment, buy a car and take out any kind of loan in the future. Additionally, if you put off making payments you will end up getting slammed with interest in the long run.

3: Without neglecting any other living expenses and a modest savings plan, use any extra money to pay off whichever debt has the highest interest rate.  If you have a lot of credit card debt it is probably best to pay that down first. Once your credit card debt is paid off, try not to accumulate any additional debt. Once your first debt is paid you can move on to using your extra money to pay off whichever student loan has the highest interest rate and so on until you are debt free.

ScholarshipPoints Bonus Code: PAYDOWNDEBT

As you head back to school, some back to school financial aid tips…

1. Avoid credit reps on campus. You don’t need that free t-shirt, and a lot of inquires can hurt your FICO score.  (Your FICO score is used to determine your eligibility for student loans and other credit products.)
2. Make a budget BEFORE the semester begins. Figure out what kind of money you’ll be able to earn and what you’ll be spending – and stick to it.
3. Team up with a roommate, dormmate, or friends to enforce each others’ budgets. The power of the group works. Social financial apps like Wesabe, Mint, and Geezeo can help with this, too. Set a goal that you publish among your friends and stick to it. Set rewards for achieving those goals.
4. Take a class online while everyone is out partying – or during a break.  If you take one class during one spring break and one class each summer – you can graduate a semester early!
5. Go for a lot of walks on campus. You’ll meet a ton of new people, and you won’t have to spend money to do it. Being visible is the easiest way to meet new people. Want to meet lots of new people really, really fast? Volunteer at any kind of event, work at the help desk, etc. Be helpful and you’ll make amazing, fast connections that often endure long past college.
6. Everything marked free isn’t. Beware of any free offer that requires you to sign up for anything. Not saying it’s bad, just know what you’re signing for – like a stealth student credit card application.
7. Some of the best conversations you’ll have are on playgrounds. Hang out at places like that vs. cafes or other money-spending venues. Want to make your own game socially? Go off campus, wander around (with safety in mind) and find the best hangout spots in the town, then share them with friends. Museums, galleries or the city gardens as examples.
8. Check your campus email every day. Financial aid offices often send notices to campus email addresses. Don’t miss a bill. If you’re technically savvy, just forward it to your webmail account.
9. Buy and bring to campus an indoor dryer rack. You’ll cut your laundry bill in half and the rack will pay for itself in weeks, especially if it’s around $18. You can find magnetic and closet-based systems for as little as $10 online.
10. Bring resealable containers. I’m not saying bring them into the dining hall or anything… but, you know. Make sure you don’t skip meals if you’ve paid for them. That’s just throwing money away.
11. Have a small lockbox in your dorm room. Keep your checks, debit card, etc. in there and locked up. Make it a combo lock so that if you lose your keys, you’re not out of luck, and if you’re drunk, you can’t get at the good stuff until you’re sober enough to remember the combination. Seriously.
12. If you have a student ID card that’s tied to any kind of financial account, punch a hole in it, stick it on your keychain, and put your keychain on a lanyard.
13. Opt out of as many fees and unnecessary bills as possible, such as campus phone and TV service. Seriously, you have the Internet. What else do you need? Use free applications like Skype, change your mobile plan to unlimited calling if you call home a lot (and you probably will if you’re a first year student), use Hulu.com for television, and avoid those extra, unnecessary expenses.
14. Shop around online for better textbook prices. We have a free eBook on the topic.
15. If you’re living off campus and on a partial or no meal plan, sign up for the supermarket loyalty card plans, coupon hunt online, and get a decent meal plan together. Planning ahead a little will save you hundreds, if not thousands of dollars on food.
16. Set up an affiliate program during college and get your personal professional web presence going as soon as you can. You’ll have more free time in college than you will after college, so take the time to set up your blog, web site, etc. and develop professional contacts early. By the time you graduate, you’ll be way ahead of everyone else playing the resume cannon game. Get known for something in your field of study or focus early on.
17. Keep hunting for scholarships! Pick a time each week, 1 hour per week, and apply for a new scholarship each week. I guarantee after a year you’ll be happy you did. Better yet, get some friends together and make it a social thing.

Financial Aid Tips – Audio Version, Listen now:

FAP923: Back to school financial tips special

Scholarship Update

Are you working towards a marketing degree that will take you through the constantly evolving world of multi-channel marketing (mobile, web, email, virtual worlds, social media networks, podcasting) in the 21st century?

How would you like to earn a $500 Scholarship and real world experience at the same time?

We will award one (1) $500 scholarship to the person with the highest number of referred sign-ups to ScholarshipPoints as of midnight, September 30.

Details at Scholarship Points.

We are often asked: What loans are available for students with bad credit?”.  In short, your options are limited.

We would always recommend you work on building your credit.  Visit www.studentplatinum.com to learn more about credit, how to build good credit and how to repair your credit if it goes south.

For some detailed information on Bad Credit Student Loans, visit:

http://www.studentloannetwork.com/resources/bad-credit-student-loans.php

There are three primary student loans available – Stafford, PLUS and private student loans.

Stafford Loans do not require a credit check – so you are good there.

PLUS loans for undergrads are in the parents name.  If the parent has bad credit, then ask the lender if you can add a cosigner to the PLUS Loan application.  Generally, the PLUS Loan has lower credit criteria so you may be eligible for the PLUS loan even if you have been denied for another type of loan.

Private Student Loans do require good credit – now more than ever.  This loan is generally in the students name and a parent will act as a cosigner.  If the parent does not have good credit, anyone with a job and good credit can be a cosigner.  Regardless of the cosigner, if the student has very poor credit, the chances of approval are very low.

As always, talk with your financial aid office about your options and other sources of financial aid, including scholarships, grants and work study.

We want it all, and we want it yesterday.

My Dad often talks about the “ME generation with contempt. Cell phones, emails, texts, and twitter status updates make him cringe. He looks back at his younger days with nostalgic eyes (just as we all do) and enjoys a simpler time. Heck, I’m 33 and have seen things change drastically over the past 16 years let alone the past 46 when my Dad was a teen. But as we bathe ourselves in this magnificent age of technology, it may just be an old fashion practice that saves our electronic butts one of these days.

If you’re having difficulty making your monthly student loan payment and are looking to either negotiate a more manageable payment schedule with your lender or see if you qualify for an income sensitive repayment plan it would be prudent to conduct all of your business in writing. Those records could prove to be invaluable down the road in the event the lender contests you. The automated services and second-rate customer service representatives are frustrating, and more importantly, undocumented. Having that written correspondence could serve to be the key to your case should it land on the desk of the Better Business Bureau.

You’ll also want to make copies of your payment stubs and the checks you send the lender with your account number listed along with instructions on how you want the payment applied (principal and interest). Yes, these measures are time consuming and even require some snail mailing but it is time well spent to protect yourself.

Don’t get me wrong I love the carousal of progress we are spinning on, but there is a time and place for each mode of communication.

This article originally appeared on the Financial Aid Podcast.

Is there such a thing as negotiating your financial aid award package? Yes and no. No in the sense that your school’s financial aid office is not like a car dealership with a dean of admissions in the back room who will give you the manager’s Wednesday special. Yes in that if you can prove beyond question that your financial need and circumstances are greater than what’s provided via the usual financial aid paperwork like the FAFSA, schools can be flexible.

Before we get started, I recommend strongly reading this article on StudentLoanNetwork.com about how to read a financial aid award letter.

Get Your Budget In Order

If you don’t use any kind of personal finance software, be it a desktop application like Quicken or a web-based application like Wesabe, Mint, or Geezeo, I strongly recommend starting with one. The web-based applications are free, so if you’re trying to save money from every angle, start with one of those.

Start by importing any electronic records of your finances and your family’s finances for at least 90 days. You’ll want to take the time to categorize your expenses in terms of mandatory and discretionary, followed by breaking them out into individual categories, like mortgage or rent, utilities, etc.

Once you’ve got your budget broken out, you’ll want to compare it against your award letter, especially looking at what kind of discretionary income you have compared to the expected family contribution, or out of pocket expenses. If your EFC from your award letter divided by 12 (for what’s essentially a monthly EFC) is greater than your discretionary expenses budget (dining out, entertainment, etc.) then you’ve got a good starting point for a conversation about what you can and cannot afford.

Get All Your Paperwork Together

If you’re going to be asking for more financial aid based on changed economic circumstances, have ample paperwork available to back up your claims and requests. Did someone lose a job in the family? Have termination notices, unemployment insurance, or other papers ready. Did your income change? Use any of the budgeting software described above to graphically illustrate your monthly cash flow, along with things like pay stubs, tax returns, etc.

Know What To Ask For

It’s not enough to ask for more money. That’s way too generic. Ask for specific amounts, ask for specific assistance, and try to know some of the different types of things financial aid administrators are permitted to do. Financial aid administrators are permitted to make professional judgement overrides on:

- dependency. If you can prove that you are an independent student due to the involuntary dissolution of your family (i.e. parents in jail, social services removed you from the home due to abuse, etc.) a financial aid administrator can override the dependency requirements for undergraduate students, letting you complete the FAFSA and other financial aid paperwork without parental income information.

- future earnings and income. If you can prove that you or your family has had a significant change in income that impacts your ability to pay for college, a financial aid administrator can grant you more assistance. Be prepared with termination notices, tax returns, and every scrap of paper you can find to make your case.

Updated April 2, 2009: The Department of Education has offered additional guidance for this scenario. See this post at FinancialAidNews.com about the changes.

- cost of attendance. If you can prove that expenses in your student budget (transportation, medical, disability, dependents, and a few other select cases) do not reflect your situation, a financial aid administrator can alter your student budget, allowing for additional aid. If you pursue this override, again, be prepared to document every step of the way to show why, for example, traveling to and from your school requires a transportation budget greater than allotted.

- special circumstances. In some cases, parents divorce during the financial aid award year, but the FAFSA cannot be changed to reflect the divorce. With appropriate court documentation noting the dissolution of the marriage, a student can ask for a special circumstances override that will let them use the income of the custodial parent.

There are other, more narrow circumstances that apply as well. If you don’t know what to ask for, haul as much documentation to your financial aid administrator as possible so that they have as complete a picture of your finances as possible.

Be Polite

The single thing that will do the most good or harm in getting additional aid is how you approach the financial aid office. The best time to approach them is before you need their help, as is the case with virtually all professional networking. Stop by from time to time casually, and say hello. Ask if there are any new scholarships that have been posted. Check in. If you find a scholarship that you’re not eligible for but other students at your school might be, let someone in the office know about it so it can be posted in the office. If you want a real education in financial aid, apply for a work study job in the financial aid office.

If you know your parents are, shall we say, less than diplomatic, then try to mediate any discussions with the financial aid office so that overly aggressive or insistent requests don’t harm your chances of getting help.

Deion Sanders was known as “prime time” back in the day; a name the self-absorbed NFL star actually gave himself. But when people speak of prime time these days they are usually referring to the widely used benchmark which determines the interest rate on a number of loans. Strike now while the kettle is hot is my advice.

I’ve been beating the private student loan drum for the past few weeks, and with good reason. It is a great time to take out a private student loan for school. With the prime rate at 3.25% and Stafford loan rates ranging between 6% and 6.8% it’s just good business acumen.

Whether you are looking to cover a portion of your student loans or fund your entire education with private loans one thing is certain, the rates have never been better. Apply today.

It’s not the gun, but the person pulling the trigger that’s ultimately guilty of the crime. The same principle applies to credit cards and debt. Who’s really at fault when credit card debt gets out of control? Is it the person swiping the card or the bank that handed it to them? Or perhaps it’s neither. Maybe it all starts at home.

I receive calls and emails from angry parents asking, “Why are you offering credit cards to students? I don’t think that’s very responsible of you.” I must admit, I scratch my head when I hear this, although I do understand that parents want to safeguard their children from life’s many dangers. Being a father myself I certainly want to protect my son from any potential pitfalls, but credit cards are not one of them.

I’ll sit down with Barrett, when he is a little older, and set in motion a plan to ensure he is financially viable, and yes, having a credit card in his name is one way I plan on doing it.

I’ll serve as the co-signer on his credit card so I can monitor the purchases and view the statement activity. I will also have the credit line capped at $500-$1,000 as a precautionary measure. I want him to first learn to be responsible with a small balance before graduating into the world of auto loans or even a mortgage. Your child can gain valuable credit history at an early age and be well on their way to financial freedom with your guidance and watchful eye.

I take my responsibility as a parent seriously. I want the very best for my son as any parent does, which is why when I receive emails claiming we are irresponsible for offering credit cards to students I’m bewildered. My Dad took time to explain things to me and ensure I would not get myself into financial trouble. “Pay yourself first” and “spend beneath your means,” were two common threads of wisdom he showered on me. He also eased me along in the world of credit and showed me how to make it work to my advantage.

We send our children to school so they’ll be educated and capable of making intelligent decisions in their lives, but that education begins at home. They look to us for sound advice and guidance. They put their trust in us. I am educated to the facts, and not the negative propaganda surrounding credit cards, which is why my son will be a step ahead of the rest. But it can be lonely being the lead dog. Anyone want to join our team?

Related Topics

Why Smart Students Have Credit Cards

Now that summer is over, it is time to start thinking about getting organized for the rest of the year, and yes – the holiday season…  One consideration might be private student loan consolidation.  Refinancing  your private student loan payments is a great way to lower your monthly payments and combines all your private student loans into a single manageable loan.  Consolidation is not always the best option for everyone – but it will help make life easier for many of you.  Learn more at:

http://www.studentloanconsolidator.com/private/

It has been reported that many Universities throughout the country are freezing 2008-2009 tuitions at last year’s levels in an effort to help make college more affordable for the nation’s middle class. Thanks guys, but you’re about a decade too late. This initiative reminds me of the movie Jurassic Park when they were discussing how much they would charge people for the amazing Dino Amusement Park attraction (before things went terribly astray). They could charge anything they wanted and they knew people would pay it. When someone asked what about the common man the lawyer replied, “We’ll have a coupon day or something.” Well, this coupon has come much too late.

Freezing tuition rates sounds good for the papers but there are a number of ways schools can still hike up the cost on you. Perhaps room-and-board costs will be increased, like was the case at Ohio State University who bumped up cost by 5.8%. Maybe out of state tuition will be increased. How much is your parking decal this year? You probably won’t even notice the few extra dollars attached to your text books. One way or another they can and will get you.

Don’t be disillusioned by newspaper headlines. Do your research. Look at the tuition, room-and-board, books, parking, meal plans, and other transportation costs (such as gas) when making your decision. These costs add up quickly and end up taking years to pay off for many.

One thing I don’t want to see is you driving frantically in a jeep with a T-Rex chasing you down looking for money. Who needs that stress? I’d rather dine on Dino burgers.