August 26, 2008
Is your financial aid in order?
With many colleges starting back this week, I hope you’ve got youre financial aid lined up already.
Not surprisngly we’re still receiving lots of applications for financial aid, such as the Stafford and PLUS loans. Is it too late?
Not necessarily. If you filed your FAFSA and your school hasn’t awarded all it’s aid you may be in luck. But you ARE behind!
Remember – financial aid is first-come first served, so next year get your FAFSA in early and make sure your applications are all set earlier in the summer!
August 6, 2008
Congress approves legislation to provide loan relief to young public lawyers
Public Defenders and Prosecuters take heart – student loan relief may be in sight!
NCHelp.org is reporting that Congress approved legislation to create “a student loan repayment program for law school graduates who commit to serve as criminal prosecutors or public defenders. The John R. Justice Prosecutors and Defenders Incentive Act was included in a Higher Education Act reauthorization bill that passed the Senate and House last week and now awaits signature by the President.”
Federal prosecutors are already eligible for loan relief; this bill extends that relief to state and local prosecutors and federal, state and local public defenders.
August 1, 2008
Shopping for private student loans? Do it quickly!
According to the New York Times, shopping around for private student loans will affect your credit score, unlike mortgages or house loans.
Conversely, you could easily overpay by going with the school’s recommended lender, as it may not be the best one for your position.
So what’s a family to do?
Read the entire article by clicking here. Also, here’s an excert from the New York Times:
To quote a rate, lenders check an applicant’s credit history. And every time a shopper asks a lender for a rate quote, it can show up as another inquiry on a credit report.
Lots of inquiries send the wrong signals to the formulas that create the popular FICO credit score that Fair Isaac administers, namely that borrowers may be applying for multiple loans because they’re financially troubled and potentially going bankrupt.
While Fair Isaac has mined years of data to determine that people making a bunch of mortgage and auto loan applications over a short period are almost always innocently shopping for a loan, it hasn’t declared student loan shoppers similarly safe.
One reason is that the company doesn’t have a big pile of private student loan data to mine. These loans are relatively new, and not many people shopped around for the best rate before the student loan scandals erupted.
July 25, 2008
Can the government handle the student loan volume?
Some schools are switching to the Direct Loan program in order to ensure their students get loans. But can the government cope with the additional volume? For those of you who aren’t sure what the Direct Loan program is, here’s a brief explanation:
Students who borrow a Federal student loan borrow either through the FFELP program or the Direct Loan program. The FFELP program handles loans through private companies and banks, whereas with the Direct Loan program which means student borrow directly from the government.
With the credit crisis affecting student loans last fall, some schools switched to direct loans to make sure their students got loans. But now with the increasing volume, some people , including Congressmen, are concerned that the Direct Loan program won’t be able to cope.
Congressmen Pete Hoekstra (R-MI) and Mark Souder (R-IN) sent a letter to the Government Accountability Office asking it to review the Direct Loan programs capabilities. The Congressmen are very concerned.
July 17, 2008
An educated consumer gets the best deals paying for college
…And Congress wants to make sure you’re more educated about college costs and what your options are. The Boston Herald is reporting that Congress is “trying to take the mystery out of the forever-rising costs of higher education by mandating that colleges provide students and their parents more information about how much the average student pays for school, what kind of tuition help they might be able to secure and which universities offer the best bang for the buck. Congress is also calling for an annual “blacklist” of schools with the steepest cost increases.”
But will this help or just create more paperwork for college staff?
Well the jury’s out on that one. Read the whole article here and let me know what you think!
July 1, 2008
Divorce and Student Loans
To get Federal student loans, you need to fill out the FAFSA. But if your parents are divorced, who fills it out?
Kiplinger has a great article that answers just that question:
Read the whole article here or read the excerpt below:
My parents are divorced, and I am wondering who should file the FAFSA financial-aid forms. My primary address is with my mother, but she only makes $15,000 a year and receives $20,000 a year in child support. My father and stepmom make $170,000 per year. Should my mom file the FAFSA, even though my dad says he is paying for my college? If my dad and stepmom file, won’t this hurt my chances of receiving financial aid because of their income? How does this work with divorced parents who are remarried?
It looks like you’re in luck: The federal aid formula considers only the finances of the custodial parent (the parent you lived with the most in the past 12 months). If the custodial parent is remarried, the stepparent’s income and assets are considered, too.
But the federal formula doesn’t include the financial resources of the noncustodial parent — regardless of any agreements the parents have made about who will pay for college. State aid formulas are generally the same.
Some private colleges, however, do ask about the noncustodial parent’s income and assets on their own aid forms and consider the resources of both parents — as well as the custodial parent’s spouse. But they generally don’t consider the income and assets of the noncustodial parent’s spouse.
A few colleges use the income and assets of both natural parents without asking for any information from the stepparents when calculating financial aid. It’s a good idea to ask up front about the school’s financial-aid formula, which could make a big difference in the amount of aid you could receive.
And here’s another article for your perusal.
April 30, 2008
Sudent Loan Forgiveness for people working in the public sector
I’ve been asked a LOT of questions about this since the new legislation was passed in October, and I finally have some concrete details to share with you.
You can view a PDF from the Department of Education that explains the changes. Access the PDF here. These are guidelines. Final regulations will be issued in November 2008.
Here are the highlights:
- You MUST make 10 years of payments (120 payments ) after October 2007 before your loans are forgiven – that means loan forgiveness won’t even start until October 2017.
- You MUST be employed in the public sector for all of those 120 payments.
- You MUST be employed in the public sector at the time the loans are forgiven.
- In the case of Parent PLUS loans, it is the parent who must mee the above 2 requirements, not the student.
- Your loans MUST be Direct Loans. Now those of you in the FFELP program, don’t panic – you can consolidate (or re-consolidate) your loans into the Direct Loan program to qualify.
IMPORTANT: As many of you know, the standard repayment period for student loans is 10 years. Essentially, those of you with high balances that you consolidate (ans thus extend the repayment period), or those of you on a reduced-income repayment plan will be eligible.
Here is a list of public-service full-time positions that are eligible:
• Emergency management
• Government
• Military service
• Public safety
• Law enforcement
• Public health
• Public education (including early childhood education)
• Social work in a public child or family service agency
• Public child care
• Public service for individuals with disabilities
• Public interest law services (including prosecution or public defense or legal advocacy in low income communities at a nonprofit organization)
• Public service for the elderly
• Public library sciences
• School-based library sciences and other school-based services
• Certain tax-exempt organizations
• Faculty teaching in high-needs areas, as determined by the Secretary
• Full-time faculty member at a Tribal College or University
April 29, 2008
Bush administration realizes it doesn’t have authority to fix student loans
In an unsual admission for this administration (just talking factual here, nothing else implied), the Bush administration admitted it doesn’t have the authority to fix the student loan crisis, and that Congress must fix it.
Here is an excerpt from the Chronicle of Higher Education. You may need a paid subscription to view the entire artcile.
The Bush administration called off internal deliberations over a bailout plan for student-loan companies
after concluding it did not have the authority to act on its own, instead endorsing a Congressional
proposal that would allow the education secretary to purchase loans from private lenders.
Education Secretary Margaret Spellings, after weeks of discussions within the administration, joined her
colleagues at the White House and Treasury Department in telling Congress that they see no legal option
for putting in place an industry-backed proposal to use the Federal Financing Bank to supply funds to
cash-strapped student-loan companies.
…
The decision leaves Congress facing a ticking clock for solving a student-loan “crisis” that some
legislators aren’t sure yet exists. The members are also caught between industry lobbyists who feel the
authority proposed for the education secretary may offer them little real help and student-aid advocates
worried about setting a framework that might enable abuses.
The proposed authority for the education secretary appears to offer lenders nothing more than funds to
cover the cost of writing their loans, said Sameer Gokhale, an industry analyst with Keefe, Bruyette &
Woods. “That’s not really a viable option for many lenders,” meaning they might not continue to
participate in the government-subsidized system, Mr. Gokhale said.
At the same time, some student-aid lobbyists have expressed concern that the plans under consideration
in Congress, especially the version pending in the Senate (S 2815), contains enough loopholes and uncertainties that loan companies could profit by dumping only their lowest-value loans on the federal
government and keeping the more-profitable loans for themselves.
…
Congress faces a difficult challenge writing a plan that will be fair to all sides and doing it quickly
enough – within a few weeks – to make a meaningful difference for college students who might
encounter problems finding a willing lender for this coming academic year, said Terry W. Hartle, senior
vice president for government and public affairs at the American Council on Education.
April 17, 2008
Financial Aid Roundtable available for free online
Following on a comment I got yesterday, here is the link to the Financial Aid Roundtable that my coworker hosted last week with industry experts and Financial Aid Officers.
http://www.studentloannetwork.com/student-resources/
Take a listen – the questions answered may be more helpful than you realize!
April 15, 2008
Washington Post Editorial cartoon parodies student loan “crisis”
You want to see this, trust me. This will make you laugh, even if it is ruefully:
You may need to register for a free account to access this cartoon.
Student Loan Info for Parents 