Student Loan News, Updates and Blog Posts

Generally speaking, a student cannot update information, such as income or assets, that was correct as of the date the application was signed. However, three items, household size, number in college, and dependency status—must be updated in certain circumstances.

Dependency status

A student must update their dependency status any time during the award year unless it changed because his or her marital status changed. This update is required whether or not the student was selected for verification.

Household size and number in college

Unlike dependency status, household size or number in college cannot be updated unless the student is selected for verification. If the student is selected, these items must be updated to be correct at the time of verification unless they changed due to a change in the student’s marital status, in which case updating is not permitted.

Consolidation is not always the right move for students, yet they do it anyway. I believe the reason for this is because many students assume consolidation is just part of the financial aid process; that consolidation is the final stop on their debt filled journey.  The truth, however, is that consolidation is not for everyone.  Here are a few reasons why you should turn your nose up at consolidation.

1. You can afford your monthly student loan payment just fine thank you very much.  Consolidation is used as a debt management tool to extend out your repayment terms and minimize your monthly payment, but in the process you actually end up paying back more than you owe.  Who wants that?

2. Sometimes borrowers will consolidate because they want to turn their low variable rate into a fixed one, but if your loans are already fixed there is no point. All federal loans disbursed after 7/1/06 are already fixed and can not be lowered.

3. You may have better borrower benefits with your current lender than with your consolidated one.  Ask your current lender what benefits you have now compared to what you will have if you consolidate.  Examples include: ACH rate reduction, rate reduction after 36 consecutive months of on time payments.

When you receive your awards letter back from the school, which is the form that outlines your financial aid options, be sure to pay close attention to the loan types offered to you.

Hopefully you will be eligible for a Pell grant or some institutional aid to saw into that tuition cost, but after that you enter the world of loans.  Two of the most common federal loans you will find are the Perkins loan and the Stafford loan, but which should you take?

The quick answer is the Perkins loan, but that may change over the next couple of years.

Right now the Perkins loan holds a 5% interest rate, while subsidized Stafford loans are at 5.6%.  But for the 2010-2011 academic year the subsidized Stafford loan is dropping down to 4.5%.  So as of today I would say grab the Perkins if it is offered, but tomorrow take the subsidized Stafford loan, unless Perkins loans have a rate drop.  Check with your FAO for further details.

While Stafford loans remain your best loan option for higher education it is important to be mindful of the amount you are borrowing – it can get out of hand quickly.

As a rule of thumb repayment of student loans should be only a small percentage of your salary after you graduate.  If you expect to pay more than 15 percent of your annual salary for student loans, you might have difficulty making your monthly payments.

Ask your school’s FAO for starting salaries of recent grad’s in your field of study to get an idea of how much you are likely to earn after graduation.

Estimates of salaries for different careers are available in the Occupational Outlook Handbook at www.bls.gov/oco.

Degree Mills, which produce phony degrees, have been around for over a hundred years and have helped thousands of people find employment. Of course if the human resource department did their due diligence at the time of hire these cheaters would not thrive at all, but many are too trusting and take the credentials listed on ones resume at face value.

The superintendent of school’s for California’s second largest school disctrict lost his job and faced serious legal consequences when the Stanford Ph.D he had claimed for years turned out to be a phony one. The chairman of the board of a major Florida university resigned, after it became known that he had bought his degree from an Oklahoma diploma mill.

The Federal Bureau of Investigation actually has a division called DipScam, which was launched back in the 1970’s, and is committed to investigating diploma scams. That’s how big the problem has become. In fact, in one operation they accumulating over 7,000 client names from a diploma-mill raid, and the FBI identified more than 200 federal employees in the batch, including 75 in the Defense Department with bogus degrees! Just mind boggling.

It may also trouble you to know that newspapers and magazines continue to allow these perpetrators to advertise. Next time you pick up The Economist, USA Today, Forbes, Psychology Today, Inc., Discover, Investors Business Daily, and the regional editions of Time and Newsweek keep an eye out for these second rate operations.

Do I endorse buying a phony degree? No. Have many people jump started or furthered their careers with phony degrees? Yes. Every man has their own code of ethics and personal standards they must follow. You can roll the dice if you want, but just remember the house usually wins.

This is an article from the New York Times about Marymount Manhattan College (my alma mater) and its program to help inmates get college degrees. When I went to Marymount this program had just been developed and a few of my teachers taught at the prison as well. I always thought it was a great idea to give these women something more to live for…whether they are getting out of prison soon, or they are in there for life. In my opinion, everyone deserves a second chance, and this program without a doubt helps these woman succeed in the real world once they are released; it gives them hope and it gives them direction. I applaud the professors who take extra time out of their life to travel to the prison and teach these women. Now the next step would be to offer these women the opportunity to get their graduate degrees in prison…it’s possible right?

Valedictorian Knows What Future Holds
Thursday was graduation day for Cathy Watkins. She received a bachelor’s degree in sociology from Marymount Manhattan College.

Ms. Watkins did so well in her courses that she was named the class speaker. She set her speech on the lectern and put on her reading glasses. At 41 — a grandmother of three, no less — she was not the standard age for a graduate.

Much of what she said would sound familiar to anyone who ever sat through a commencement ceremony. “One person can make a difference,” she told her fellow students. “Let that difference start with you.” Afterward, she joined her classmates and visiting relatives for lunch.

And then Ms. Watkins returned to her normal life, locked up behind the walls and concertina wire of the maximum-security state prison for women in this Westchester suburb of New York City.

She has been here for 12 years. She is likely to stay here for a long time, having been found guilty of a 1995 murder in Manhattan. She didn’t do it, she said in an interview. But “innocent or guilty,” she said, “you can still grow to be a better person.”

“Even though these walls can restrict our physical movement,” she said in her valedictory, “they cannot restrict our imagination, nor our connection to the outside world.”

In some ways, a commencement exercise inside prison is much like any held on the outside. The graduates wore caps and gowns. They filed in and out of the Bedford Hills gym to Elgar’s “Pomp and Circumstance.” Their worthiness was affirmed by a guest speaker, Lanie Robertson, a playwright. “You each have your own spark of celestial fire,” he told them.

But how many ceremonies have you gone to where the robes hide state-issued green uniforms, or where the proceedings are interrupted and the graduates told to stand so that the guards can count them and make sure no one has slipped away?

At how many commencements can you say with confidence that the graduates enjoy the unqualified support of every one of their mates? At Bedford Hills, there was no such thing as polite applause. Dozens of inmates attended, and let out enormous cheers and whoops for each woman who walked on stage. It was as if every diploma was a victory for them all.

Thirty women graduated: 5 with bachelor’s degrees, 9 with associate’s degrees and 16 with high school equivalency diplomas that qualify them for college-level work.

Marymount Manhattan, on East 71st Street, has conferred degrees here since 1997 in collaboration with six other schools. “What better deal there is for the people of New York State, I simply don’t know,” said Judson R. Shaver, the college’s president. “The recidivism rate for women who graduate in our program, as far as we know, is zero.”

A 2001 studyby the Graduate Center of the City University of New York showed that Bedford Hills women who took college courses were far less likely to land back in prison than those who skipped the program. Overall behavior inside the prison improved. “If you want your degree, you have to stay out of trouble,” said Aileen Baumgartner, the program’s director since 2002.

IN a prison with about 800 inmates, Ms. Baumgartner had 175 students this semester. For those who stay in the program all the way, the road to a bachelor’s degree is long. Only a few courses may be taken each semester. Ms. Watkins needed 11 years to get her degree. Monica Szlekovics needed 10.

“I took my time,” Ms. Szlekovics said, adding with a glint of irony, “I have a lot of time.”

That she does. She was found guilty of a 1996 murder in Rochester and sentenced to a minimum term of 50 years. At 33, she can expect to stay where she is into old age.

For her, graduation was “bittersweet.” The program “allowed me to live in here,” she said. Now she wonders “what’s the next chapter in my life here? How do I engage myself intellectually?”

Women like Ms. Watkins and Ms. Szlekovics are “the most compelling” for Ms. Baumgartner. Most people focus on how a program like hers can help prisoners once they’re freed. “But frankly,” she said, “I’m here for the ones who won’t get out — because they still have minds and spirit, and can grow. Part of me thinks that crime stems from a lack of imagination. What higher education does is broaden the imagination.”

“I’m not in the business of shutting doors on people,” she said.

E-mail: haberman@nytimes.com

For someone like my wife who suffers frequent anxiety attacks, tests for her are exceedingly stressful. To be honest she’s brighter than me, but I’m the one holding the degree while she remains underpaid in the wonderful world of retail. Perhaps that’s why I was so inspired to post this blog. I really feel for anyone who has trouble taking tests; whose heart palpitations cause their blood pressure to spike and lead to wavering focus and a poor test score. Many people don’t know it, but if you need to take the GMAT to get into grad school you may qualify for a non-standard accommodation.

The non-standard accommodation gives you twice as much time as everyone else, if that’s what you need to compensate for a medical condition.

You’ll need to complete a form called the Documentation Certification for Nonstanding Testing Accommodations which you can get from a counselor at the office of your college that provides services for students with disabilities or from a human resource operator at the company where you work. There’s also a second form, the Examinee’s Eligibility Questionaire for Nonstandard Testing Accomodations that you may need to complete as well. If all else fails a letter from your physician detailing your condition will also suffice.

Additional note: On August 1, 2001 the ETS, who administers the exam, removed the indicator which alerted anyone who viewed your GMAT that you were awarded extedend time.

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This morning I received a question about the parent plus loan that I felt would be beneficial to share with all of you.

Q: I will have three children in college this fall and all three are eligible for the subsidized Stafford loan at 5.6%, which we will utilize. However, that will not be enough to cover all of their tuition. My question is would it be more beneficial for me to have them take out the unsubsidized Stafford loans at 6.8 % or tap in to a home equity line of credit at 3% to cover the difference?

A: There are a few factors to consider here. First off, would your home equity line of credit be fixed or variable? The prime rate, which drives the home equity line rate, will not stay at 3.25% forever. However, for now it makes the equity line option very appealing (especially if it is fixed). Second is the length of time you have to pay the money back and when payment begins. Stafford loans hold 10-year repayment terms and are deferred while the student is in school. Third, both have tax benefits. You can charge off the interest paid on both the equity line and Stafford loan which is good. Fourth, are any of your students going into public service? They may be entitled to loan forgivenss under the Stafford loan program which you don’t want to miss out on. Fifth, are there fees or points associated with your equity line? There is usually a 1% fee attached to the Stafford loan.

As you can see it is not a simple black and white answer. It really depends on a number of factors. What is right for me may not be right for you.

In the second of my two part blog series Knowing Your College Test we shall tackle pharmacy school, optometry, nursing, and English as a second language.

Pharmacy College Admission Test (PCAT): it is a specialized test that helps identify qualified applicants to pharmacy colleges. It measures general academic ability and scientific knowledge necessary for the commencement of pharmaceutical education. The PCAT is constructed specifically for colleges of pharmacy. Exam cost: $125 online or $160 by mail.

Optometry Admissions Testing (OAT): a standardized examination designed to measure general academic ability and comprehension of scientific information. The OAT is sponsored by the Association of Schools and Colleges of Optometry (ASCO) for applicants seeking admission to an optometry program. All schools and colleges of optometry in the United States, and the University of Waterloo, Canada require the OAT. Exam cost: $189.

Test of Essential Academic Skills (TEAS): Nursing schools and other post-secondary education programs use TEAS® test scores as a standardized measuring stick to determine who gets admitted and who benefits from the best scholarships they have to offer. While it may not be fair, a student’s entire academic career will get completely overshadowed by a single TEAS® test score. Exam cost: $45.

National Council Licenser Examination (NCLEX): this exam is designed to see your knowledge and critical thinking skills as a potential nurse. Your critical care nursing judgment is put to the test. The examination is purposefully difficult so only qualified applicants will pass. Health promotion and a safe care environment are examples of the types of topics covered in the NCLEX. There are multiple choice questions and alternative type items on the nursing exam. Exam cost: $200.

Test Of English as a Foreign Language (TOEFL): evaluates the potential success of an individual to use and understand standard American English at a college level. It is required for non-native applicants at many US and other English-speaking colleges and universities. The TOEFL is the product of the Educational Testing Service (ETS), which is contracted by the private, non-profit firm, the College Board to administer the test in institutions in the US; they also produce the SAT. Exam cost: $185.

Did you pass the test about tests? Were you aware of all the different types out there? Chances are you will only take one or two of these exams at most as they are in specialized fields or have a specialized focus.

Also, keep in mind, it is wise to take a prep course for these exams, as they are designed to be challenging. True, you can take the test multiple times should you fail, but the added cost of taking the exam again can add up quickly. Spend the money upfront by investing in a prep class would be my suggestion; it may save you valuable time and money later.

For more information on grad loans (click here).

For more information on private student loans (click here).

With so many programs and admissions tests out there it can be difficult to keep them all straight.

What test do I need to take if I want to get my MBA in business administration? Is there a certain test needed to get into a pharmacy college? What if I want to be a nurse?

In the first of my two part blog series entitled, Knowing Your College Test I will discuss the general management, dental, medical, law, and psychology admissions tests you need to be aware of.

Graduate Management Admission Test (GMAT): a 3-1/2 hour standardized exam designed to predict how test-takers will perform academically in MBA (Masters in Business Administration) programs. GMAT scores are used by graduate business schools to make admission decisions. You might also see the GMAT referred to as the “GMAT CAT”; the acronym CAT stands for “Computer Adaptive Test.” The GMAT is administered only by computer now, except in certain locations outside North America, where the test is referred to as the “paper-based.” Exam cost: $250

Law School Admissions Test (LSAT): half-day, standardized test administered four times each year at designated testing centers throughout the world. Most law schools throughout the US and Canada use the LSAT results as part of their admission process. All ABA-approved law schools, most Canadian law schools, and many non-ABA-approved law schools require applicants to take the LSAT. Exam cost: $123.

Medical College Admission Test (MCAT): The Medical College Admission Test is required by all medical schools. The evaluation of grades alone is not helpful in selecting students. Thus, the MCAT is designed to help the admissions committee determine who is best suited for medical school. The American Association of Medical Colleges administers the test once in April and once in August. A whole day is spent at the testing center with an average of 9 ½ hours. Exam cost: $225

Graduate Records Examination (GRE): consists of two separate tests: the General Test and the Subject Test in psychology. The General Test is composed of three parts–verbal, quantitative, and analytical writing. It is similar to the well-known SAT test except that the GRE is used for acceptance to graduate instead of undergraduate schools. The GRE is a computerized test that can be taken at authorized testing centers at virtually any time during the year. Exam cost: $140.

Dental Admission Test (DAT): is a multiple-choice standardized exam taken by potential dental school students in the U.S. and Canada (although there is a separate Canadian version with differing sections). Both American and Canadian versions are usually interchangeably accepted in both countries dental schools. The DAT is a computer based test that can be administered almost any day of the year. Each applicant may only take the test a total of three times before having to ask special permission to take the exam again. After taking the exam you must wait 90 days before repeating it. Exam cost $205.

For more information on grad loans (click here).

For more information on private student loans (click here).