Student Loans : News, Updates and Blog Posts

For many students obtaining a private student loan can be difficult. Private student loans always sound fantastic because you can apply for them at any time during your college career and they can help you pay for books and housing. However, contrary to popular belief,  these loans do not just fall into the lap of every student who cries poor.

One of the major advantages of a private student loan is that they are not need based, but this comes with a trade-off. Private student loans are based on credit and if you have a bad credit history or no credit history your chances of obtaining a loan are slim. Even if you have a cosigner with a strong credit history your credit score will still be checked during the application process and could affect whether or not you get a loan.

You might be surprised to hear that the solution to this problem is a credit card. Credit cards often carry a bad reputation, but the truth is that when they are used responsibly they can help your credit score soar. My advice is to apply for a card with a low limit, use the card for a few purchases every week, and pay off the balance every month. This method with help you build your credit history and show prospective lenders you are financially responsible.

If the need for a private student loan might be in your future I encourage you to consider building your credit with a credit card. StudentPlatinum.com can help you figure out which credit card would be good for you. There are cards for people in all kinds of financial situations. Even if you already have poor credit you can apply for a card and start turning things around.

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

Budgets; you can’t live with them and you can’t live without them. I hate budgets just as much as the next person, but I have realized that having one makes my life a lot easier.  By the time you make the decision to pursue grad school chances are you will be completely on your own financially. Whether you decide to go to school full time or part time while you work, paying for grad school will take a certain amount of financial discipline and budgeting. However, living within your means does not have to be a drag. You can successfully pay for grad school without being strapped for cash.

Here are some tips for creating a budget that works for your lifestyle:

1: Determine your monthly income and your monthly expenses. This is the most important step to creating a budget. The amount of money you bring home on a monthly basis is what you have to work with. Make sure your expenses do not exceed you income. If you are going to school part time and working full time this will probably be a little bit easier for you. If you are living off of savings, determine how much you have for each month. Be sure to factor in all expenses including rent, car payments, insurance, groceries etc.

2: Take out loans to pay your tuition and other school expenses. As a grad student you have plenty of loan options. The Graduate Stafford Loan has a low fixed interest rate and does not require a credit check. The Graduate PLUS Loan is a low, fixed interest rate student loan that is based on your credit. It allows you to borrow up to the total cost of your education minus any other aid you receive. Finally, there are other private loans that can help you cover any and all of your school expenses. Make sure you include all loan funds and tuition payments in your monthly income and expenses. GradLoans.com can help you apply for and secure all of the loans you need.

3: Defer undergraduate loans until your graduate degree is complete. Unless you have the money to start paying your loans back while you are in grad school you might as well wait. Do not kill yourself trying to pay off these loans until you are working full-time and have more flexibility.

4: Use a free online budgeting tool like Mint.com. The days of scratching numbers on a piece of paper are over. This tool allows you to see all of your accounts, including your student loans, aggregated together. It will allow you to see where you spend the most money and where you might be able to cut back.

5: Find a credit card with good rewards. Sometimes using a credit card to make all of your purchases can be beneficial if you pay it off every month and you get rewards points. I have a credit card that awards one point for every dollar spent. Usually I trade in my points for Target gift cards. Since I spend a lot of money there anyway it gives me a little extra wiggle room in my budget. StudentPlatinum.com can help you choose a credit card with a rewards program that will work for you.

ScholarshipPoints code: BUDGETGRAD

I just have to laugh when I hear people say that credit cards put you in debt. I believe what they are really trying to say is, I’m irresponsible and can’t control my spending ways. That would at least makes sense to me.

The fact is credit cards serve a real purpose if used wisely. They help establish credit and are great for emergency situations. Of course your definition of emergency may be different from mine. A clearance sale on shoes does not constitute an emergency.

But if you feel you can not exercise self restraint, than a credit card is definitely not for you. You’ll run up a high balance and destroy your credit history. And should this happen to you, and I certainly hope it will not, just remember it won’t be the plastic that put you in debt.

Wednesday Rant!

If I was a student graduating in 2009 with Stafford loan debt the news of the decreased interest rates, which just broke last week and will go into effect this July 1, would anger me to know end.

I liken these rate decreases to a carrot dangling in front of a typical witless rabbit. You and I both know he will never catch his prize but yet he hops, hops, hops desperately in hopes of snatching it. Sure, the Stafford loan rates which dropped to 2% and 2.5% respectively look mouth watering, but most of you won’t get the chance to sink your teeth into them.

Stafford loan rates have been fixed since July 1, 2006, and at much higher levels than today’s current market. In fact, we already know what the rates will be through the 2012-13 academic year, and these fixed interest rates have many up in arms.

It wasn’t all that long ago when all Stafford loan rates were determined by the 91-day T-bill and pegged at certain margins above the three-month treasury yield in late May, which is how the historically low 2% and 2.5% rates were arrived at last week. Today, only the loans which were dispersed prior to July 1, 2006 are effected by the T-bill and subject to the change (they are variable rates). Today’s graduates may have had one or two loans at most from that desirable time frame with the majority of loans being disbursed afterwards.

So when you pick up that paper, visit a website, or see a newsflash on TV about Stafford loan rates dropping to historic lows just know it probably won’t effect you, and if it does it will be in a very small way. It sure would be nice if the rabbit could catch the carrot once in a while.

Wave goodbye to the stresses of cramming for finals and writing term papers and say hello to the stress of finding a job. Although there are some positives to report, so lets focus on that.

Just last week Careerbuilder.com complied a Top 10 list of best cities for employment for ‘09 grads. And although it may not be your first choice to relocate it may wind up being a necessity in order to find employment.

Sometimes you need to think outside of your comfort zone (50 miles from your house) and expand your horizons. Consider new regions and cultures to make your mark. You’ll be better off for it.

I became a father for the first time earlier this year which was the best moment of my life. Every decision I now make is with Barrett (featured to the right) in mind, which includes going back to school. I’m currently enrolled in classes with the aim of bettering myself, providing a better life for my family, and becoming a more well rounded person. I want to add to our countries GDP numbers. The only problem is my loan volume from school is now skyrocketing upward like a five star Sarah Palin wardrobe.

Did you know the average college graduate carries more than $20,000 in debt? That is a 6% increase year over year. When you combine that with starting salaries for recent grads, which only rose by 3% over that same time period according to the Project on Student Debt, it’s even harder for students to repay those sizeable loans. Of course many students have been unable to land jobs at all and have been forced to place their loans into forbearance where more interest will accrue inflating that total payback number.

It’s really an interesting dichotomy. Go to school and be in debt thousands vs. entering the work force right away with no debt at all. They both have pros and cons but the long term benefits and typical salaries for those with an education will far surpass those without – even when debiting the loan cost from the bottom-line.

To help make those monthly payments more affordable you may want to consider consolidation. Consolidation extends out your loan term and helps minimize your monthly student loan expense. There are also no prepayment penalties so if you have extra money to put toward your loan you can do so at any time.

I know consolidation is going to be in my near future when I graduate. That way I’ll be able to afford my loan payment each month and still buy that new bike for Barrett!

I was speaking with a few friends earlier this week who had asked me some general questions about the economy. After answering one question in particular about taxes I thought it might make for a nice blog topic. After all, it is my aim to educate and inform.

First off, the economy is a complicated mechanism as we all know. When we’re struggling thru tough economic time’s politicians can not simply institute tax cuts to remedy the problem. True, tax cuts may be part of the solution but not the sole answer. So why will tax cuts alone not work? I mean, that would help jumpstart the economy, right? More money being spent by consumers on goods and services is a good thing. But the reality is those tax cuts have a counterproductive aspect to them as well.

Conventional wisdom tells us if you have less money to spend than your consumption will decrease. If taxes get cut than the government has less money to spend which means something must get sacrificed. But if you delve a little deeper into the root of what happens when tax cuts are made you will have a better grasp of the mechanics behind this negative relationship.

For example, say McCain or Obama cut taxes. That will mean consumers will have more disposable income in their pockets, which is great. And because of that extra money the consumer can then purchase more goods and services with those extra dollars. That will then lead to a positive shift in the aggregate demand. With consumption on the rise that will then lead to higher interest rates which will then serve as a detriment to businesses that want to invest, since the cost to borrowing money would be increased by those higher interest rates.

So by doing a good thing, cutting taxes to stimulate growth, demand for investment falls. It is such a tangled web we weave. It’s like trying to juggle 10 things at once and hoping you don’t drop one. Unfortunately we’ve been dropping more than we’ve been catching lately. Let’s hope the next circus that comes to town can keep things a float.

“I can’t pay my bills, help!”  I hear that unwanted phrase at least 10 times a day, and many others who don’t actually say it are thinking it.  I can hear it in their voice.

For those in trouble, and I know there are many as the unemployment rate is holding steady at 6.1%, you have an option for your private loans.  You can defer your loans after you consolidate for up to 12 months with an economic hardship deferment?

To qualify for an economic hardship deferment your student loan payment must exceed 20% of your gross monthly income, and your gross monthly income can not be more than 3X the Federal Poverty level in your state.

Also, as a back-up plan, anyone can qualify for a 12 months forbearance on their private loan consolidation just by requesting it.  You don’t have to “qualify” financially for this.

If you have $10,000 or greater in private student loans and wish to consolidate (click here) now.

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