Archive for the ‘College Scholarship and Loans’ Category
Posted by admin on August 3rd, 2009
As new and returning college students gear up for the school year about to get underway, NextStudent Inc., one of the country’s longtime premier sources for college financing, has unveiled a new look to its website, www.nextstudent.com, with easier than ever one-stop access to a wide array of education financing options and information.
Since the spread of the post-subprime credit freeze into the student loan marketplace a year ago, non-government channels of student loan financing have shrunk to few and far between. Credit-based private student loans — which families have often relied upon to supplement their federal financial aid — have become especially difficult to come by, as several lenders of private student loans have gone out of business. The few lenders that remain have restricted their qualifying criteria to borrowers with superior credit or stopped offering private student loans altogether.
Even federal student loans, however, can be hard to find for those students whose schools have not yet transferred over to the Department of Education’s Federal Direct Loan Program but remain in the government-subsidized Federal Family Education Loan Program. Students enrolled at a FFELP school must obtain their federal college loans through a bank, state agency, or other third-party lender rather than directly from the government.
NextStudent, however, offers a simple online solution for those students and their families trying to find available student loans and other viable financial aid options.
The NextStudent website offers one-stop access to a network of multiple student loan providers. With just one click, students and parents can access a portal that allows them to compare dozens of student loans from various lenders and shop for the financing option that best fits the family budget. This portal puts students directly in contact with available lenders and allows students and parents to apply for student loans right then and there via these lenders’ online applications.
Courtesy of Marketwire.com
Posted by admin on July 6th, 2009
Years ago, when I graduated high school, I never thought twice about the debt I would rack up while attending college. I signed away on forms at the beginning of each semester not really grasping what was going to hit me once I took off that cap and gown. Six months into the real world, I started paying off the nearly $18,000 in debt I had accrued since my freshman year and I was one of the lucky ones! My parents helped pay for my tuition otherwise I would have been sitting on over $30,000 worth of debt. It puts a knot in my stomach to think of when my children are ready to go to college.
Are these loans really the best idea for our children? They’re starting their adult life in debt thousands upon thousands of dollars. Especially in these economic times where jobs are scarce, how can they even be assured a job once they graduate?
Is there a better way? There’s something to be said for schools where you cannot use Financial Aid. The costs are upfront and you know what you’re getting into, financially speaking. And, most of them offer payment options to make the cost a little easier to digest. I think even some 4-year colleges and universities have monthly payment options although I’m not sure how “affordable” they really are.
What are your thoughts/feelings? Would you still choose to defer the debt if you had an affordable option?
Posted by admin on July 2nd, 2009
College students are often forced to make a decision between two life paths: one that feeds the soul and one that feeds the bank account. Rarely do the two meet. As a result, the average college grad — who leaves school with about $23,000 in student-loan debt — either slogs along during those first few work years in satisfying (yet typically low-paying) jobs or makes a play for grinding corporate gigs that pay the bills and deaden the heart.
But all that stands to change on July 1 with the start of an income-based repayment (IBR) plan. The goal of the government initiative, which has been championed by Massachusetts Senator Ted Kennedy, is to prevent payments on federal student loans from exceeding 15% of a borrower’s disposable income above 150% of the poverty level. Borrowers who earn below that threshold (which in most states is about $16,000 for a single person with no dependents) wouldn’t have to make any monthly payments at all. (See how Americans are spending now.)
These changes, alongside a $619 increase in the maximum Pell Grant and a reduction in the interest rate on new federal loans, arrive at a moment of seemingly runaway college costs on one end and a dismal economic outlook on the other. The Obama Administration is trying to lessen the pressure on aspiring students in ways both big and small. Last week, Secretary of Education Arne Duncan announced a plan to simplify the Free Application for Student Aid (FAFSA) — the form to apply for federal dollars — cutting at least 20% of the questions and making it easier to fill out online. For months now, Duncan has discussed the possibility of making Pell Grants an entitlement or guaranteed benefit like Social Security that would be protected from annual budget cuts. Duncan is also trying to transition to a system in which students get all their college loans from the government, rather than going through banks and other private lenders. The new IBR program does not apply to private loans. (See pictures of the college dorm’s evolution.)
Add up these steps, and the Obama Administration appears to be attacking the staggering cost of higher ed from the back end — that is, if we can’t fix how much college costs, at least we can try to fix how you pay that cost back. “There’s clearly a lot of work to do in bringing down the cost of college,” says Edie Irons, spokesperson for the Project on Student Debt. “But even if you froze college tuition at every institution tomorrow, you’d still have this problem where people are borrowing incredible amounts of money to take important jobs that may not pay very well.”
In the past, federal-loan repayment was structured so that a graduate would have to pay a certain amount of money each month, regardless of his or her income at the time. Under the IBR program, if you lose your job or are forced to take a pay cut, the amount you have to pay back per month will drop. If, however, your salary subsequently increases, your payments will still be capped at 15% of your disposable income. That is, of course, if you are eligible to participate in the program; grads with private loans are exempted as well as those who owe less than they earn in a year (use this calculator to figure out if you qualify). It’s all based on a debt-to-income ratio and is fluid and flexible in a way that most government systems are not. And if the Education Department is serious about abolishing the two-track loan system (in which it provides direct loans as well as subsidizes private-lender loans), this is just one more way of convincing borrowers to throw their hat in with the feds.
One big upside is likely to be a reduction in the number of people who default on their student loans, a financial disaster that can destroy credit ratings and hike up interest rates on future loans. “In this economic recession, a lot of students are having a difficult time just paying for normal things like groceries or rent,” says Carmen Berkley, president of the U.S. Student Association, an advocacy group. “This is really going to make sure that students are able to keep up with their loans and don’t have to default. We want to be able to have good credit, to eventually be able to buy cars and houses too.” (See TIME’s special report on paying for college.)
Under the IBR program, if students are still paying back college loans after 25 years, they will be eligible to have all debt erased (though, if the law stands as is, much of that remaining balance will be taxed as income). And if students go into a public-service career, they are eligible for loan forgiveness after a mere 10 years. While participants in programs such as AmeriCorps, the Peace Corps, the military and other such institutions have long been eligible for loan reduction or forgiveness, this new program expands such mercy to potentially hundreds of thousands more students who won’t be forced to make that knee-jerk decision between ideals and salary. “We really need college graduates to go into fields like teaching and social work and public-interest law and rural medical services,” says Irons. “And because of the way people are forced to pay for education, they are less and less able to do those jobs. For society’s sake, we should make it easier for them to do so.”
Time.com
Posted by admin on June 22nd, 2009
Low-income students and recent college graduates may reap dramatic gains beginning July 1 as a result of far-reaching changes in financial aid grant and loan programs.
While some of the gains – such as a significant hike in Pell Grants – have received attention, others that affect interest rates and student loan repayment schedules are just getting on the radar screens of policymakers and students. One of the most significant changes is the introduction of income-based repayment, through which students can reduce their monthly payments based on their earnings – a move of particular help to graduates in low-paying public service jobs.
“We estimate hundreds of thousands will take advantage of this,” said Edie Irons, spokeswoman for the Project on Student Debt in Berkeley, Calif. “But it’s not automatic. You have to apply for this.”
Students seeking income-based repayment must contact their lenders. But the switch should be easy to make, said Mark Kantrowitz, publisher of FinAid.org, a web site focused on the federal financial aid system. “If you’re in a public service job, it’s best to start sooner rather than later,” he told Diverse.
The U.S. Education Department has published a detailed chart of how income-based repayment, or IBR for short, may affect certain borrowers. For example, a single person earning $20,000 a year would face a monthly repayment of only $47. Adjustments may occur each year based on earnings and debt. (The chart is at http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp#content).
“The main goal of IBR is to make sure that your student loan repayment doesn’t ruin you financially,” Irons told Diverse.
Another major change involves consolidation loans. Borrowers with variable-rate loans before July 2006 could convert to consolidation loans with interest rates as low as 2 percent, Kantrowitz said. Such changes apply to those with variable Stafford or PLUS loans.
“It’s extremely unlikely that interest rates will ever get lower,” he said. With interest rates starting to rise again, the next adjustment in 2010 is likely to carry a higher rate.
Here is a look at other financial aid changes taking place next month:
* Pell Grants: The maximum grant for needy students will increase from $4,731 to $5,350 – a jump of more than $500. Legislation approved by Congress also will allow for year-round grants to students seeking to accelerate their education. The minimum Pell Grant will increase from $400 to an annual rate equal to 10 percent of the maximum grant.
* New student loans: New fixed-rate Stafford Loans will see their interest rate drop from 6 percent to 5.6 percent. Origination fees on Stafford Loans also will drop by half-a-percentage point.
* Part-time students: Students enrolled at least half time will get access to the Academic Competitiveness and SMART Grant programs, which provide additional aid to Pell-eligible students who have completed a rigorous high school program.
Posted by admin on April 21st, 2009
University of Phoenix’s Severely Injured Veterans scholarship program is recognized on the U.S. Army Community Covenant web site as a national best practice in support of military members and their families. The scholarship program was created to honor Washington D.C., Virginia, and Maryland’s brave men and women who return home from service in Iraq and Afghanistan with severe injuries. Through full-tuition scholarships, injured veterans are empowered to reach their academic goals or pursue second careers. University of Phoenix Severely Injured Veterans Scholarship program is especially proud to partner with Armed Forces Foundation in paying tribute to those who fight heroically for the protection of American freedoms. Four (4) full-tuition scholarships will be for severely injured veterans/service members, and one (1) full-tuition scholarship will be for a spouse or primary caretaker of a severely injured veteran/service member. These scholarships can be used toward one bachelor’s or master’s degree program of choice.
Residents in the DC area (Maryland, DC and Virginia) are eligible for the scholarship. The application deadline is May 1, 2009. Apply Today
Request more information from University of Phoenix
Posted by admin on April 21st, 2009
The Income-Based Repayment (IBR) plan was proposed as part of the College Cost Reduction and Access Act of 2007 and will become available on July 1, 2009.
Income-based repayment is intended as an alternative to income sensitive repayment (ISR) and income contingent repayment (ICR). (Both ISR and ICR plans will continue to exist.) It is designed to make repaying education loans easier for students who intend to pursue jobs with lower salaries, such as careers in public service. It does this by capping the monthly payments at a percentage of the borrower’s discretionary income, which is based on the borrower’s income, family size, and total amount borrowed. The monthly payment amount is adjusted annually, based on changes in annual income and family size.
Income-based repayment is only available for federal student loans, such as the Stafford, Grad PLUS and consolidation loans. It is not available for Parent PLUS loans or for consolidation loans that include Parent PLUS loans. (IBR is not available for Perkins loans, but it is available for consolidation loans that include Perkins loans.) It is also not available for private student loans.
Income-based repayment is similar to income-contingent repayment. Both cap the monthly payments at a percentage of your discretionary income, albeit with different percentages and different definitions of discretionary income. Income-based repayment caps monthly payments at 15% of your monthly discretionary income, where discretionary income is the difference between adjusted gross income (AGI) and 150% of the federal poverty line that corresponds to your family size and the state in which you reside. There is no minimum monthly payment.
(Overall, income-based repayment is probably a bit better for borrowers than income-contingent repayment, especially if the borrower’s financial circumstances improve. Income-contigent repayment caps monthly payments at 20% of the difference between AGI and 100% of the federal poverty line. Income-based repayment is clearly more generous than this aspect of income-contingent repayment, since it assesses a lower percentage, 15%, of a smaller definition of discretionary income, the excess of income over 150% of the poverty line. Income-contingent repayment also capped monthly payments at the 12-year extended repayment plan monthly payment multiplied by an income percentage factor of 50% or more based on income and marital status. However, few borrowers would trigger the income percentage factor caps.)
The maximum repayment period is 25 years. After 25 years, any remaining debt will be discharged (forgiven). Under current law, the amount of debt discharged is treated as taxable income, so you will have to pay income taxes 25 years from now on the amount discharged that year. But the savings can be significant for students who wish to pursue careers in public service. And because you will be paying the tax so long from now, the net present value of the tax you will have to pay is small.
A new public service loan forgiveness program will discharge the remaining debt after 10 years of full-time employment in public service. The borrower must have made 120 payments as part of the Direct Loan program in order to obtain this benefit. Only payments made on or after October 1, 2007 count toward the required 120 monthly payments. (Borrowers may consolidate into Direct Lending in order to qualify for this loan forgiveness program starting July 1, 2008.)
In addition to discharging the remaining balance at the end of 25 years (10 years for public service), the IBR program also includes a limited interest subsidy benefit. If your payments don’t cover the interest that accrues, the government pays or waives the unpaid interest (the difference between your monthly payment and the interest that accrued) on subsidized Stafford loans for the first three years of income-based repayment.
The IBR program is best for students who will be pursuing public service careers and borrowers with high debt and low income. Having a large household size also helps. Borrowers who have only a temporary income shortfall may be better off seeking an economic hardship deferment.
Students who are not pursuing careers in public service may be intimidated by the through of a 25-year repayment term. However, it is worth careful consideration, especially by students who might be considering using an extended or graduated repayment plan. IBR will likely provide the lowest monthly payment for many low income borrowers and certainly is a reasonable alternative to defaulting on the loans.
Calculating the cost of a loan in the IBR program can be somewhat complex, in part due to the need to make assumptions about future income and inflation increases. FinAid provides a powerful Income-Based Repayment Calculator that lets you compare the IBR program with standard and extended repayment. You can compare the costs under a variety of scenarios, including the possibility of starting off with a lower income and later switching to job with a higher salary.
FinAid’s IBR calculator also computes the net present value of the total payments, telling you how much they would cost in constant dollars. The idea is that a dollar ten years from now will have less buying power than a dollar today, due to inflation. Net present value tells you how much that dollar would be worth today, under certain assumptions. Comparing different loans using constant dollars can provide a more realistic analysis of the difference in real cost.
When comparing the IBR program with the standard and extended repayment programs, it is important to recognize that the loan term has a significant impact on loan cost. Although net present value figures allow you to compare costs on a constant dollar basis, comparing the cost of a 10 year loan with a 25 year loan is like comparing apples and oranges. A 10 year loan will likely have a lower overall cost than a 25 year loan, primarily because of the shorter loan term. For example, consider a student with a $72,000 loan and an AGI of $40,000. Under the IBR program, the net present value is $77,940.78. Under the standard repayment program, the net present value is $76,074.74. So the standard repayment program is slightly less expensive than the IBR program. However, it would be a mistake to conclude from this that the extended repayment program with a 25 year loan term is better than the IBR program, because the relative costs change as the loan term increases. The 25-year extended repayment program turns out to have a net present value of $80,743.06, more expensive than the IBR program.
The marriage penalty inherent in the IBR formula was corrected by Congress (P.L. 110-153, December 21, 2007) by allowing a married borrower who files income tax returns as “married filing separately” to count only the borrower’s adjusted gross income and student loan debt. This lets a borrower exclude the (higher) income of his/her spouse when calculating the cap on monthly payments under income-based repayment instead of combining the income as under the original legislation.
An important feature of the government’s IBR program is that although you must initially sign up for 25-year income-contingent repayment, you are not locked into this payment plan. If your circumstances change or if you just decide that you want to pay off your loan more rapidly, you may do so. (Borrowers who switch into Direct Lending in order to obtain public service loan forgiveness are limited to the IBR, ICR and standard repayment plans.)
Posted by admin on March 24th, 2009
Changes to federal student loan policy will affect more students than ever as the financial crisis brings them in growing numbers to loan office doors.
“We just have a sense that there will be more than in past years,” said Tom Melecki, director of the Office of Student Financial Services. “That’s based on the fact that we have had a steady stream of new students saying, ‘Gosh, you know my family’s been negatively impacted by the economy, how do I go about applying?’”
This year, federal PLUS loans — which parents borrow to cover undergraduate education costs — will be administered by only two banks per state. Banks placing the two most competitive bids in a statewide auction will get exclusive rights to administer the loans.
Congress voted for the auction system in 2007 to drive down the projected cost of federal subsidies and simplify the loan process.
Melecki said the system may not be completed in time to award PLUS loans for the 2009-2010 school year and that the UT student financial services office was hoping to notify students about their financial aid by April.
“Since the U.S. Department of Education has not yet conducted that PLUS loan auction, any parent borrower who has not yet borrowed a PLUS loan — we have to send them a message and say as soon as the DOE tells us who wins the auction rights, we’ll let you know,” Melecki said. “Until then, we can’t take steps.”
Congress has imposed a July 1 deadline for completing the auction. The FAFSA priority deadline is March 31.
During the 2007-2008 fiscal year, 3,644 UT students’ parents borrowed $44,267,358 in PLUS loans, Melecki said.
President Barack Obama’s budget includes another change in the student loan process: Whereas in previous years private banks administered student loans that were in turn guaranteed by the federal government, the current administration hopes to eliminate the intermediary and administer loans directly to students.
Melecki said that, while this is a drastic change for banks, loan and repayment procedures for students will remain the same.
“I don’t think it’ll have much effect on our students, because the terms and conditions on the loans are virtually identical between the federal direct loan program and the Federal Family Education Loan Program,” Melecki said.
Melecki said the government’s plan to remove private banks from student lending may discourage banks from bidding on PLUS loan contracts since they would likely only administer loans for a year.
Loan giant Sallie Mae, which awards 40 percent of federal PLUS loans, announced last week that it would not participate in the auction. Sallie Mae’s exit may deter smaller lenders from participating in the auction as well.
“It’s one thing to bid in the PLUS auction if you can do it for five, six, seven years,” Melecki said. “It’s totally different if you can only do it for one.”
Provided by: Daily Texas
Posted by admin on March 24th, 2009
Sallie Mae, the nation’s leading saving- and paying-for-college company, today announced a new private loan that enables students to save money, build good credit, and repay their student loan debt faster. With the new Smart Option Student Loan, a typical customer would pay off the balance nine years sooner and would save an estimated 40 percent of the total amount paid, including principal and interest, compared to most other private student loan alternatives.
Students may apply for the Smart Option Student Loan beginning today. Under the new program, customers will make interest-only payments while in school, so students avoid negative amortization and graduate with substantially less student loan debt. A freshman borrowing the average loan size of $7,700 would cut the payment time in half and save approximately $8,700, compared to most other private student loan alternatives.
Sallie Mae recommends private student loans for families who have exhausted their eligibility for free or less-expensive funds such as scholarships, grants and federal student loans. The company continues to offer federal student loans, which allow students to defer interest payments while in school, to every eligible student at every school in the United States through the 2009-2010 academic year. Terms of previously disbursed private loans remain unchanged.
“Today’s students are financially savvy and looking for affordable, responsible options to help with their investment in higher education,” said Jack Hewes, senior executive vice president and chief lending officer, Sallie Mae. “We have tried to design this loan to be sensitive to the needs of students who not only rely on this financing to get to college, but also want a more manageable level of debt as they transition from school to work. Paying a little while in school guarantees that students will save a lot later.”
Sallie Mae’s Smart Option Student Loan encourages responsible borrowing by functioning like other monthly obligations, such as cell phones and cable TV. The interest-only monthly payments required while in school, coupled with regular financial literacy communications, will help students develop good repayment habits, improve their credit scores, and help make loan payments after graduation more manageable. Reactions from college financial aid officers were favorable and confirmed the need to help students borrow responsibly.
The Smart Option Student Loan’s repayment term will range between five and 15 years, depending on the student’s cumulative Sallie Mae-serviced private student loan balance and academic grade level. Interest rates will be variable based on LIBOR. Those who apply for a Smart Option Student Loan with a creditworthy cosigner will increase the probability of approval and a lower interest rate. Interest rate reductions may also be available for customers who elect to make payments via automatic debit and receive communications via email. To prevent students from borrowing more than their budgets can handle, the approval process will include a review of monthly income and other debt payments.
Students and families considering a Smart Option Student Loan are encouraged to use Sallie Mae’s Education Investment Planner to estimate the total cost of a college degree, build a comprehensive plan to pay for college, and estimate the salary a graduate would need to keep repayment of student loans manageable. Visit www.SallieMae.com/plan for more information.
Provided by Maketwatch.com
Posted by admin on March 20th, 2009
The Student Loan Corporation (SLC) reiterated today its commitment to the Federal Family Education Loan (FFEL) Program and to its mission of providing schools, students, and families with affordable, reliable access to higher education.
SLC reaffirmed its dedication in light of the Administration’s recently released fiscal year 2010 budget outline. The outline includes a proposal to provide federal student loans solely through the government’s Direct Lending Program as early as July 2010. Congress will debate this proposal in the coming weeks to define the scope of any legislation pertaining to how federal student loans are provided in the U.S.
“Although we share the Administration’s desire to make education financing more affordable and accessible to students and their families, schools and borrowers will not enjoy the many critical benefits of competition without private sector involvement in student loan lending,” said Michael Reardon, Chairman, President and CEO of SLC. “In addition, eliminating the FFEL Program would limit choice for students and families, and would be less efficient and more costly to taxpayers at a time when the nation is experiencing severe economic stress.”
For over 40 years, the FFEL Program participants, including SLC, have provided schools, students and families with a choice of lenders as well as innovative products and services, such as easy-to-use online applications, tools and resources; financial literacy programs; default prevention services; and a variety of incentives to lower consumers’ total borrowing costs. And when it comes to efficient service, competition has driven enhanced levels of customer satisfaction, as a result of responsiveness, personal attention and on-campus support. These attributes have led 73% of higher education institutions to choose the FFEL Program over the government’s Direct Lending Program. For more information on this topic, please go to www.faaonline.com.
Mr. Reardon concluded, “We continue to engage in active dialogue with government leaders to support a federal loan program that leverages the best characteristics of the public and private sectors. We look forward to continuing to work closely with government officials and the higher education community in shaping the future of student lending.”
SLC has been dedicated to providing essential education financing to schools across the country for over 50 years. The Company continues to provide both federal and private student loans to schools nationwide, originating $5.7 billion in FFEL Program loans and $1.8 billion in private CitiAssist® Loans in 2008.
Posted by admin on March 2nd, 2009
The new 2010 budget introduced by President Barack Obama contains a proposal to move federal student loans into the U.S. Department of Education’s direct-loan program.
Currently, private financial institutions that lend money to students receive subsidies from the government under the Federal Family Education Loan Program. Sallie Mae is the largest of these lenders.
Without the funding, private lenders do not have much incentive to offer student loans, as they do not typically generate much revenue for banks.
But the program has faced criticism over the years for its expense and has recently come under scrutiny due to the economic turmoil on Wall Street, which led to an unreliable supply of funds for higher education.
According to a Department of Education news release, the change is aimed at making loans “reliable, stable and efficient.”
The budget also includes a provision that the Federal Pell Grant program will be tied to inflation, which Education Secretary Arnie Duncan said will open more education opportunities to low-income students.
“The new funding announced today represents a significant expansion of our federal student aid programs, providing more dollars to allow more students to attend more schools,” he said.
provided by Credit.com
