Student Loans : News, Updates and Blog Posts

I have received some inquiries about my previous blog: Four Bizarre things you did not know about the FAFSA.

What qualifies you as an Independent Student?

If one or any of the following apply to you, then you will be considered an Independent Student:

1. You are enrolled in a Masters program, Doctorate Degree, or graduate Certification program
   • age does not matter, if you are enrolled in any of these types of programs you are considered and independent student
2. You have a child or children that are your legal dependent(s)
   • you may have a family member etc. that is considered your dependent…he/she does not necessarily have to be a child
3. You are married
4. You are under the age of 24 and both of your parents are deceased
5. You were a ward of your state until you were 18 years of age
6. You are 24 years of age or older
7. You are a Veteran of the United States Armed Force
8. You were a foster child after the age of 13.
9. You are an emancipated child as determined by a court judge.
10. You are homeless or at risk of homelessness as determined by the director of a HUD approved homeless shelter, transitional program, or high school liaison.

Want more details, visit: FAFSA Online : Independent Students

The most important aspect of this is to remember that your school has the right to reassess certain circumstances, a process called professional judgment.

Some students have no contact with their parents, and therefore cannot use their tax information for filing the FAFSA. If you find yourself in this situation, you’ll need to go to your school’s financial aid office and ask them for help. Chances are, you’ll also need to bring plentiful documentation (rent, utilities, etc.) to prove that your situation is as you say it is. You’ll be asking for a professional judgment override on dependency status.

What this means is, if you’re under 24, in order to file as an independent, you must first go to your local courthouse and ask to appear before a judge to be ‘legally emancipated’ and apply as an independent student.

Update: We just wrote a pretty helpful blog about how people in situations like yours can get a FAFSA dependency change. For information on this, read Appealing Your FAFSA Dependency Status

More: When are the FAFSA Deadlines

Five most recent FAFSA form help blog posts:

If you’re like me, you probably took one look at most scholarships’ requirement to write an essay and groaned. 500 or 1,000 words are perhaps a small price to pay for free money for college, but not all of us are so gifted with the writing gene.

Thankfully, there are other options. Have you ever checked out ScholarshipPoints?

Their model is pretty different from other sites I’ve seen in that they,

1. Don’t charge for their services (it’s free!), and,
2. Don’t require you to write a grueling essay just for the chance of winning.

Instead, you complete different activities to build up the site’s currency — scholarship points. These “points” become the raw entries into their monthly and quarterly scholarships (up to $10,000!) and the more points you use, the better chance you have of winning.

As far as the activities go, none of it is particularly intensive. Reading a blog is a common one or filling out a simple opinion survey. All in all, much less frustrating and stressful than having to pump out words you probably don’t care about or want to write.

Check out ScholarshipPoints »

(If this doesn’t sound like it’s for you, they also have a scholarship search engine called StudentScholarshipSearch.)

Now, more than ever, there is quite a large array of loan and financial aid options available for both undergraduate and graduate students in need of extra money for school. The primary college student loan options available are: federal Stafford and Perkins loans, private student loans and federal PLUS loans.

Stafford / Perkins Loans

These loans are provided through the Federal Direct Loan Program, a division of the U.S. Department of Education. However, the Perkins loan actually is given to you by your school… so the process can seem a little convoluted at first glance.

To summarize the Stafford loan, there are 2 types: unsubsidized and subsidized. Subsidized Stafford loans are exclusively for students with strong financial need and and unsubsidized Stafford loans are available to all students who file a FAFSA.

Perkins loans are for students with exceptional financial need and are decided by the school’s financial aid department. The money actually comes from the government though, so it technically is a federal student loan.

Private Student Loans

Private loans are also referred to as alternative or supplemental student loans. They are credit-based — meaning you need to have a good credit score or a creditworthy co-signer to get one — and have a variable interest rate. Of all the college student loans, these can theoretically have the highest interest rates, though this totally depends on your credit.

However, private student loans also offer the largest variety in the form of borrower incentives. These can include co-signer release, graduation rewards, APR reductions and more depending on the lender.

Compare private student loan lenders and learn more »

PLUS Loans

PLUS loans come in two flavors: Parent PLUS and Graduate PLUS. Parent PLUS loans are only available for parents of undergraduate students and the Graduate PLUS loans are exclusive to graduate students. These loans are NOT transferable once borrowed, meaning the parent can’t force the student to take on the debt after graduating.

They are useful because they cover up to 100% of your total cost of attendance, while maintaining a fixed interest rate (currently 7.9% in 2010-2011) and several repayment plans.

** Please keep in mind that the Student Loan Network always recommends that you expend your available cash reserves, scholarships and federal student aid intelligently before you consider a private student loan.

Depending on the type of student loans you will be consolidating, the interest rate can vary greatly. For instance, federal student loan consolidation allows you to obtain a fixed interest rate based on the weighted averages of your existing loans. Private student loan consolidation is much harder to nail down. (more…)

The most common things we see in our Financial Aid Forum every day is, “what loans can I get without a cosigner?” or “My parents don’t want to cosign because they don’t want another loan over their head.” It’s a prevalent and enduring problem, made worse by the economy and anxiety about job security.

However, the reality of the situation is the fact that most students simply can not afford college without the help of student loans. In some cases, federal student loans can be enough to cover your tuition (mostly for in-state public schools or two-year institutions), but affording private college and out of state schools can be much more difficult.

As I mentioned earlier this week in a blog about saving money through loan repayment incentives, there are a lot of different rewards, benefits, and marketing techniques that private lenders use to try and prove their product is better than the competitor next door. However, one benefit that I didn’t mention that has become popular lately is cosigner release.

Cosigner release basically means that once you graduate from your degree program, you can request to have whomever cosigned on your loan released from their financial obligation. This is big. Cosigner release makes all of those “I don’t want to be ‘on the hook’ for your loan” arguments invalid, assuming you make sure to finish school of course.

If you’re interested in checking out who offers this, have a look at our private lender comparison tool. It lists some popular lenders and their various perks and quirks for student loan offerings. As always, I recommend going federal before going private, but cosigner release definitely makes the prospect of a private student loan less uneasy for whomever you ask to help pay for school.

If you have a co-signer ready to go, apply for a private student loan today!

ScholarshipPoints Code: COSIGNRELEASE

Image Credit to lost in pixels on Flickr

As a graduate student, the pressure is higher than ever and of course, your classes are likely more expensive than your undergraduate career. The majority of loan products available to you are graduate Stafford loans, graduate PLUS loans and private student loans.

Getting back to the primary question, why pick a graduate PLUS loan?

There are some differing schools of thought on this, but I’ll break down the benefits and differences so you can decide which makes more sense for your financial information.

Graduate PLUS Loans vs. Private Student Loans

Interest Rate

• Grad PLUS = 7.9% fixed
• Private = variable, based on the Prime or LIBOR + X%; can be very low with good credit or a creditworthy cosigner

Repayment Terms

• Grad PLUS = several repayment options including: Standard, Graduated, Income Based Repayment, Income Contingent Repayment and Extended Repayment
• Private = Generally 1 or 2 standard repayment plans; often 15 years

Incentives / Benefits

• Grad PLUS = interest rebate for one year’s worth if you make every payment on time during the first year; 0.25% APR reduction for auto-debit payments
• Private = a variety of different options depending on the lender such as: APR reductions, graduation rewards, co-signer release and more

To learn more about the differences between graduate PLUS loans and private student loans, check out GradLoans.com’s “Comparing Graduate PLUS and Graduate Private Loans” page.

Often times, federal loans just aren’t enough to pay for the full gamut of education expenses in college. In my personal experience, federal aid usually covered about 70% of my tuition/fees, but I had to seek alternative financing for the other 30%.

A supplemental student loan (also known as a private loan) can help in this department by covering up to your full cost of attendance. This can include costs such as off-campus housing rent, books, lab fees, a computer and of course, your tuition. (more…)

In my previous post, I gave a quick run down of the types of financial aid that I can apply for to help finance my education. Applying for federal aid will be my first step, so I want to start preparing my FAFSA form.

Why do I need to fill out a FAFSA form?

In order to qualify for federal aid for students, you must complete and submit the Free Application for Federal Student Aid (FAFSA) to the U.S. Department of Education. This form is used to calculate your financial aid eligibility based on the financial and demographic information for you and your family.

Once complete, the Department of Education will forward a record of the application to the school/schools you specify.

What can I do now to prepare my FAFSA?

While the FAFSA needs to be filed with your 2010 tax information (which you won’t get until at least January of next year), it is recommended that you get a head start on gathering the right information now. In fact, most of what you’ll need for the FAFSA can be taken care of now. You can also estimate your tax information based on this years forms, however, this is only recommended if you can make a very accurate guess.

Below is a check list for what you and your family can do now to prepare early for the college financial aid application process:

Financial Aid Deadlines: Begin gathering the deadlines for your financial aid applications. Each school may have different deadlines.

Tax Information: Grab your 2010 tax forms, and anything else you are preparing for 2011 as well. You’ll receive your W2′s in February of next year and you may want to update your FAFSA when that information arrives.

Asset and Demographic Information: This where you list the financial details about you and your family, including your assets and demographic information. For help with what this will entail, visit FAFSAOnline.com and send your parents here.

School List: You can tell the Department of Education to send your results to a maximum of 10 schools. You will have to list the schools by their school code, which can be found here: FAFSAOnline.com – School Code List. When you’re looking into schools and noting their deadlines, make sure you find their code as well.

FAFSA Pin: Both you and your parents need to sign up for a FAFSA Pin #. This number will be used to identify you throughout the application process, and you can get it early and put it away in a safe place!

Ok, now go! You can download the FAFSA form now. You may file it early, but you will have to then update the forms next year with your new tax information.

At this time, there are no private student loan forgiveness programs available.

Unlike federal student loans (with the exception of the PLUS loan), private student loans are credit-based and the majority of lenders choose to offer other incentives to apply such as graduation rewards, co-signer release and more.

Additionally, federal law currently does not include provisions for discharging private student loans in a bankruptcy settlement, so that avenue is closed for the time being (September 2010). (more…)

If you are in school or having trouble making payments on your federal loans, thankfully there are avenues you can take to temporarily suspend your payments.

Although loan deferments and forbearances have different meanings in the world of mortgages and more complicated financial instruments, in the world of student loans they basically mean that you can hold off on payments for a certain amount of time. (more…)