Student Loans : News, Updates and Blog Posts

On Tuesday, the Senate voted on the future of Stafford Loan interest rates. The rates for subsidized loans are currently at 3.4%, but without action from the government, will jump to 6.8% come July 1, 2012. A majority of 60 votes were needed to pass the bill which would lower these rates, unfortunately, the votes were split 52/45.

The issue between parties is not lower interest rates — most are in agreement that they should be lowered — it’s the how that’s keeping the bill from passing. The bill, written by the Democrats, attempts to close a tax loophole for high-salary workers in order to fund one more year of low-interest loans. However, the Republicans rather see this money come from elsewhere.

With both parties locked in a stalemate, it’s unclear how this issue will be resolved, but to learn more about the bill, check out this recent article from The New York Times.

It’s 7:30 on a monday morning and your alarm clock goes off. You turn it off and roll over for 5 more minutes of sleep. When you finally roll out of bed and look at the clock, it’s 11:30 and you’ve missed your class. Not a big deal, right? As it turns out, skipping class might cost you more than you think.

According to the recent infographic from StudentScholarshipSearch.com, skipping just one class is a waste of $20 if you attend a public college, or $50 if you’re at a private school. This may seem like it’s not a big deal, but wasted money can add up fast! If you’re paying for college with loans, you’ll be paying interest on that class’s cost too!

Still not convinced you shouldn’t skip class? What if i told you that “those who wasted time in college are 3x more likely to be unemployed”? That got your attention, didn’t it?

To find other ways skipping class can hurt you, check out the True Cost of Skipping Class infographic.

This week, many student nationwide are rejoicing in their college decisions, having just sent their deposits to their chosen colleges. Simultaneously, parents everywhere are worrying about how to pay the upcoming tuition bill. If you’re one of these parents, you may be weighing the pros and cons of tapping your 401k for those funds. In this instance, it may be more beneficial to be a little selfish. Here’s what I mean…

Tapping your 401k to pay for college tuition is usually not a good idea. Whether you’re thinking about withdrawing funds, or borrowing against your 401k or IRA, both options end up leaving you with less funds for retirement. Anytime you withdraw funds from your account, the money will be slapped with a hefty 10 percent penalty AND subject to taxes. If you’re looking for a deal, this really isn’t your best option.
(more…)

Welcome to the last post in this month’s financial literacy blog series! We’ve previously looked at student loans basics and interest rates, and covered budgeting in college. Today, I want to tell you a little bit about credit and break down student credit cards. While credit cards are scary and troublesome for many people out there, they don’t have to be. It’s all about being responsible!

Credit — What is it?

Credit can be summed up as a person’s reputation with money. It’s used by banks, landlords, and even employer’s to judge a person’s financial reputation. This means the better credit you have, the more leeway you have when getting a car, house, student loan, or job. Having and keeping good credit can save you money on those big purchases in your life, not to mention saving you the stress that often accompanies credit issues!
(more…)

I’m pretty sure the title of this post just about says everything I need to say about the following video. Obama + Student loans + music + Jimmy Fallon = Magic. Pure magic. Oh, and what’s even better? It’s actually informative if you want to know more about what’s happening in the world of Stafford Loans right now.

Well done Sirs, well done.

You may have noticed in the news recently, student loan interest rates have been getting a lot of attention. On July 1, 2012, the interest rates of Subsidized Stafford loans are set to climb back up to 6.8%. Here’s why:

In 2007, congress passed a bill, lowering these interest rates for the next few years. Unfortunately, this bill will expire after June 31, and rates will go from 3.4% to 6.8% once again. Congress is now looking for ways to keep this interest rate hike from happening, though nothing solid has happened as of yet.

Last week, Obama spoke out about this issue and what he wants to see happen. Check out the video below to learn more.

In last week’s blog “Know your student loans” I talked about some of the basic student loan terms you’ll need to know when choosing the best financial aid option. Included in the article were the basics of student loan interest rates. This week I want to break down interest rates even further to help you understand why banks charge what they do and how this is determined.

How interest rates are determined

The first thing you might notice during your financial aid process is that not all interest rates are created equal, even federal ones. Federal Stafford loans are currently at very low rates of 3.4%, while federal PLUS loans are at 7.9%. Even amongst private loans, the lowest available rates can vary significantly. But why is this?

For starters, the lowest advertised rates are not what most people get. You and everyone you know must have perfect credit to get these rates (not literally, but it might as well be). These low rates offered by lenders are based on external factors like PRIME or LIBOR indexes, and the stock market, as well as some internal factors such as how the bank invests its funds or even the business model the bank uses. The bottom line: banks determine their lowest interest rates based on what will keep them competitive in the market, while still being profitable.
(more…)

April is financial literacy month and this blog kicks off our financial literacy blog series! In keeping with this spirit, I wanted to break down some common student loan terms so that students and parents can be better informed about the student loan choices they make.

Basic Terms

The following are a few basic loan terms that are imperative to know when taking out a loan for the first time:

Principle – The total amount of the loan when you take it out. Interest accrues on this amount.

Origination fees – These are fees charged by the lender for the “creation” of the loan.

Interest – The amount charged for use of the loan money.

Capitalized interest – An amount of interest that is added to your principle. This means that if you have a loan of 10,000 with $100 in interest, once your interest is capitalized your loan principle becomes $10,100. It’s always best to avoid capitalizing interest because any interest that accrues after is going to be based on this new, higher principle balance, so you will end up paying more over time.

(more…)

With graduation right around the corner for many-a-senior, the thoughts that occupy the minds of future grads probably revolve more around finals and parties than around repaying their loans. While graduation is absolutely a time for celebrating accomplishments, it also means that loan repayment is looming. Start planning now so that when the time comes, you’re ready and not scrambling to locate your loan paperwork.

Here are five ways you can prepare for repayment right now:

1. Locate your loans

This may sound simpler than it is. Many students lose track of their loans while in school. Whether due to neglect or the buying/selling of private loans, students can have a hard time tracking down who they owe. If you have federal loans (this includes Stafford, PLUS, Perkins) you can log in to NSLDS.ed.gov and find out all of your loan information, including who services the loan. Yes, the Department of Education outsources loan servicing, so while you may have a Direct Stafford loan, your payments may need to go to Great Lakes, for example. If you need to track down your private loans, request a copy of your credit report. This will list all of your loan lenders, plus it’s always good to know how your credit stands.
(more…)

If you have had any issues with your federal student loans, you may be familiar with the Federal Student Aid Ombudsman office. This office is responsible for mediating issues with your federal student loans or financial aid office. Students weren’t lucky enough to have this luxury for private student loans, that is, until now.

The Consumer Financial Protection Bureau created a private student loan Ombudsman office to handle consumer complaints with loan lenders, servicers, and collectors.

What does it really mean for you, the borrower? Well, for starters, a single federal agency is now responsible for overseeing private student loans, which will hopefully provide easy answers to families seeking assistance. This new office will allow families to file complaints, at which point the office will contact the loan lender to help resolve any issues. These could be issues such as you were billed while loans were in deferment, or your payments were not applies as specified. The CFPB will now be able to help resolve loan repayment issues between you and your private loan lender.

While this office does handle complaints, they are also available to answer questions you may have about borrowing a private student loan. For more information or to submit a complaint or question, visit http://www.consumerfinance.gov/complaint/ or call 1-855-411-CFPB.