Student Loan Advice

Update on Student Loan Programs

2011-05-20T14:10:00.000-07:00

Before July 1, 2010, Stafford, PLUS, and Consolidation Loans were also made by private lenders under the Federal Family Education Loan (FFELSM) Program. As a result of the SAFRA Act, which was part of the Health Care and Education Reconciliation Act, no further loans will be made under the FFEL Program beginning July 1, 2010. All new Stafford, PLUS, and Consolidation Loans will come directly from the U.S. Department of Education under the Direct Loan ProgramSM.

Students who have previously received a federal student loan from a private lender under the FFEL Program will need to complete a new promissory note to receive loans under the Direct Loan Program. Please check with the financial aid office at your school for specific instructions.

If you’re a student attending an institution located outside of the United States, your school is now able to participate in the Direct Loan Program. Please check with the financial aid representative at your school for specific instructions on how to obtain a Direct Loan for your next term.

This change does not impact the process of applying for federal grants, loans and work-study or the amount of federal aid that students are eligible to receive. Students interested in receiving federal student aid should continue to complete a Free Application for Federal Student Aid (FAFSASM) for each school year that they wish to be considered for aid. If you have any questions about applying for federal student aid, please contact
1-800-4-FED-AID.

(Source: http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloansupdate.jsp)

Education Reconciliation: The Student Aid and Fiscal Responsibility Act

2010-07-22T13:24:00.000-07:00

Now more than ever, Americans need affordable, quality education opportunities to help make our economy strong and competitive again. President Obama has identified an opportunity to make historic investments in our economic future by making college dramatically more affordable – at no cost to taxpayers.

The Student Aid and Fiscal Responsibility Act, which was included in the health care reconciliation bill that passed on March 21, 2010 by a vote of 220-211 and signed into law on March 30, 2010, embraces the president’s challenge. It will help us reach his goal of producing the most college graduates by 2020 by making the single largest investment in federal student aid ever. Specifically, these provisions will:

Invest the bill’s savings to make college affordable and help more Americans graduate
* Invests $36 billion over 10 years to increase the maximum annual Pell Grant scholarship to $5,550 in 2010 and to $5,975 by 2017. Starting in 2013, the scholarship will be linked to match rising costs-of-living by indexing it to the Consumer Price Index. This includes an investment of $13.5 billion to fund a shortfall in the Pell Grant scholarship program due to increased demand for the scholarship.

* Invests $750 million to bolster college access and completion support for students. It will increase funding for the College Access Challenge Grant program, and will also fund innovative programs at states and institutions that focus on increasing financial literacy and helping retain and graduate students.

* Makes federal loans more affordable for borrowers to repay by investing $1.5 billion to strengthen an Income-Based Repayment program that currently allows borrowers to cap their monthly federal student loan payments at 15 percent of their discretionary income. These new provisions would lower this monthly cap to just 10 percent for new borrowers after 2014.

* Invests $2.55 billion in Historically Black Colleges and Universities and Minority-Serving Institutions to provide students with the support they need to stay in school and graduate.

* Invests $2 billion in a competitive grant program for community colleges to develop and improve educational or career training programs.

Provide reliable, affordable, high-quality Federal student loans for all families
* Converts all new federal student lending to the stable, effective and cost-efficient Direct Loan program. Beginning July 1, 2010, all new federal student loans will be originated through the Direct Loan program, instead of through the federally-guaranteed student loan program. The Direct Loan program is a more reliable lender for students and more cost-effective for taxpayers.

* Keeps jobs in America. Under the bill, 100 percent of Direct Loans will be serviced by private lenders. Lenders will compete for contracts to service all federal student loans, which will guarantee borrowers high quality customer service and preserve jobs. Unlike loans made by banks, Direct Loans can only be serviced by workers in the U.S. Last year, Sallie Mae was forced to bring 2,000 jobs back to U.S. soil to win a direct loan servicing contract. Sallie Mae is now one of four private banks servicing 4.4 million direct loans.

Meet Pay-As-You-Go fiscally responsible principles and reduce the deficit
* Saves taxpayers $61 billion over the 10 years by switching to the cheaper Direct Loan program, according to the Congressional Budget Office. In addition to investing in college aid, these provisions will also reduce the deficit by at least $10 billion over 10 years.

(Source: http://edlabor.house.gov/)

Obama Cuts Out the Student Loan Middleman

2010-03-30T10:31:00.001-07:00

Today, we mark an important milestone on the road to health insurance reform and higher education reform ... With the bill I signed last week, we finally undertook meaningful reform of our health care system. With this bill, and other steps we've pursued over the last year, we are finally undertaking meaningful reform in our higher education system ... By cutting out the middleman, we'll save American taxpayers $68 billion in the coming years. That's real money -- real savings that we'll reinvest to help improve the quality of higher education and make it more affordable. President Obama

Today, President Obama signed into law the Health Care and Education Reconciliation Act. What does this mean? It's an overhaul of the student aid system. Students can now take out loans directly with the fedral government. This ends the subsidized program for the student loan industry that banks and other financial institutions have been enjoying for a long time. All new federal student loans will be direct loans from private intitutions but under control by the Department of Education through performance-based contracts.

Student Loan Advice: Consolidation - Myth vs. Reality

2009-11-19T09:34:00.000-08:00

Good stuff from blog.studentloannetwork.com:

There has been a lot written and said about federal student loan consolidation over the years. The point of this blog is to debunk three common mythes floating around the Internet about consolidation benefits.

The consolidated interest rate changes every July 1.

MYTH. The reality is variable rate Stafford loan rates are subject to change each July 1, which directly impacts your consolidated interest rates.

Like a home mortgage I can refinance my student loans multiple times

MYTH. The realty is that it’s a one shot deal. When you consolidate your federal loans you are locked in for life at the interest rate. I know, seems pretty ridiculous doesn’t it?

I need to consolidate within six months of leaving school or I’ll lose my eligibility

MYTH: Consolidating within six months may be beneficial to students with variable interest rate Stafford loans due to the fact that a lower interest rate is extended to you during that six month window (2% versus 2.5%). However, it is not required that you consolidate within six months. You have an indefinite time frame in which to consolidate your student loans.

Quick Student Loans - Don't be Hasty

2009-09-17T16:09:00.000-07:00

Google "fast student loans" or "quick student loans" and you'll find a link to thinkfinancial(dot)com as your # 1 result at the time of this writing. Go to that site and you'll only find a link to a SunTrust private student loan application page. Think about it. You're in a hurry to get money to go to college as soon as possible and before you know it; you are likely to be looking at SunTrust student loan application. Is SunTrust your best option in this situation? Let's investigate.

Looking at an August 2009 review of student private loan providers, SunTrust ranked right in the center with 5 lenders below them and 5 rated above them. The best loans were all from federal credit unions. Before turning to a bank, definitely check out your neighborhood federal credit union for quick student loans.

Before making this crucial money decision, there are other important issues you must consider. Try getting someone with a good credit score to co-sign the loan with you. Traditional wisdom says never to co-sign a loan because of the risks. Still, if you have proven yourself to be a responsible individual in the past, maybe you can sweet talk a relative into "partnering" the loan with you. Even without a co-signer, quick student loans can be obtained but at a price. That price is a larger rate of interest and big time consequences due to missed payments. So, count the cost before you dive in too deep.

Be certain all other streams of money have been found before turning to quick student loans. Among these are college scholarships, federal loans, work study opportunities, and federal grants. There really is free money out there for college if you search for it.

Make sure you make a smart choice for your major. History degrees usually don't serve people for paying off quick student loans. You have to go after a degree that will land you a high paying job. A business degree is about the lowest you should go if a student loan is supporting your education. I'm even a little leery of that. Engineering, law, and of course medicine are your best money making degrees.

Lastly, think about starting out at community college for the first half of your schooling. The first two years of school are generally the same whether you are at a four year university or a two year community school. The price is a lot cheaper and often you receive better individual attention in your classes at a community college.

For good or bad, quick student loans are usually life changers. Be very careful before committing to one. Being impulsive has the potential of destroying your life for years to come.

Tips To Help You Apply For A Federal Student Loan

2009-09-02T15:07:00.000-07:00

1) Apply online using www.fafsa.ed.gov.

2) Check deadlines. Be aware of your state's and your school's application deadlines. While there is no deadline for applying for federal student aid, you should apply as early as possible after January 1 of each year that you will attend college. Some state and school aid is awarded on a first-come, first-served basis.

3) Collect the information you need to complete the FAFSA:
* Your Social Security number and your parents' Social Security numbers;
* Your driver's license number, if you have one;
* Your alien registration number, if you are not a U.S. citizen; and
* Your federal tax returns and income information

4) Check your FAFSA. After you complete the FAFSA, you will receive a Student Aid Report (SAR). Review the information carefully and make any necessary corrections.

5) Respond immediately to any request from your school for additional information.

(Source: federalstudentaid.ed.gov)

FFEL and Direct Loan Interest Rates Effective July 1, 2009

2009-09-02T14:15:00.000-07:00

Fixed Rates for Loans First Disbursed on or After July 1, 2006

Subsidized Undergraduate Loan: First Disbursed 7/1/2008 to 6/30/2009: 6.00%
Subsidized Undergraduate Loan: First Disbursed 7/1/2009 to 6/30/2010: 5.60%

Subsidized Graduate Loan: 6.80%

Unsubsidized Undergraduate Loan: 6.80%

Unsubsidized Graduate Loan: 6.80%

Direct PLUS Parent Loan: 7.90%
Direct PLUS Graduate Student Loan: 7.90%

FFEL PLUS Parent Loan: 8.50%
FFEL PLUS Graduate Student Loan: 8.50%

Variable Rates for Loans First Disbursed Between July 1, 1998 and June 30, 2006

These rates were calculated based upon statutory formulas and equal the bond equivalent rate of the 91-day Treasury bills auctioned on May 26, 2009, plus certain statutory percentage add-ons. The 91-day Treasury bills were auctioned at 0.178 percent, rounded to 0.18 percent.

Subsidized (Repayment/Forbearance): First Disbursed 7/1/08 to 6/30/09: 4.21%
Subsidized (Repayment/Forbearance): First Disbursed 7/1/09 to 6/30/10: 2.48%

Subsidized (In-school/Grace/Deferment): First Disbursed 7/1/08 to 6/30/09: 3.61%
Subsidized (In-school/Grace/Deferment): First Disbursed 7/1/09 to 6/30/10: 1.88%

Unsubsidized (Repayment/Forbearance): First Disbursed 7/1/08 to 6/30/09: 4.21%
Unsubsidized (Repayment/Forbearance): First Disbursed 7/1/09 to 6/30/10: 2.48%

Unsubsidized (In-school/Grace/Deferment): First Disbursed 7/1/08 to 6/30/09: 3.61%
Unsubsidized (In-school/Grace/Deferment): First Disbursed 7/1/09 to 6/30/10: 1.88%

PLUS Parent Loan: First Disbursed 7/1/08 to 6/30/09: 5.01%
PLUS Graduate Student Loan: First Disbursed 7/1/09 to 6/30/10: 3.28%

Notes:

*Interest rates on Stafford and PLUS loans disbursed before July 1, 1998, are calculated using different statutory formulas, percentage add-ons, or both.
*Generally, interest rates on Consolidation Loans are fixed rates calculated based on the weighted average of the loans being consolidated rounded up to the next higher 1/8 percent, not to exceed 8.25 percent.

(Source: studentaid.ed.gov)

Prioritizing your Debt

2009-04-10T22:06:00.000-07:00

I saw a good foundational article today at MSNBC on their Today page.

If you have several different types of debt — say, a credit card balance on a card with a 17% interest rate, a car loan with a 12% rate, and a student loan at 9% — pay off the loan with the highest interest rate first. One strategy you may want to consider is stretching out your student loan payments over 15 years instead of 10 years by signing up for the Federal Direct Consolidation Loan program. (To see if you're eligible, call the Department of Education at 800-4FED-AID.) This will reduce your monthly student loan payment and leave you with extra cash. Use this money to pay off your credit card balance faster. Once you've gotten rid of your credit card debt, start paying off your auto loan faster. After you wipe out that loan, too, increase your student loan payments to at least their initial levels.

If you're looking at a lot of different types of debt, it's important to stay disciplined to these principals.

U.S. Secretary of Education Margaret Spellings Takes Steps to Ensure Students Continue to Have Uninterrupted Access to Federal Student Aid

2009-02-03T06:00:00.000-08:00

The U.S. Department of Education is ensuring students and their families continue to have uninterrupted and timely access to Federal student loans by taking steps to maintain stability in student lending through both the Federal Family Education Loan Program (FFELP) and Direct Loan Program.

"We recognize that the current economic situation has created real financial challenges for students and their families, who are increasingly concerned about how they can secure loans to help cover college costs," said Secretary Spellings. "I want to reassure students and their families that Federal student aid - both grants and loans - remains available to eligible students."

As credit markets for student loans continue to tighten, there is a growing concern among schools, students and lenders about the availability of funds for the 2009-10 academic year. With lenders currently committing loan volume to schools for the upcoming academic year, the Department of Education, in coordination with the Treasury Department and the Office of Management and Budget, is using the authority of the extended Ensuring Continued Access to Student Loans Act.

"The unprecedented credit market conditions throughout the past several months have clearly impacted the student loan market. These necessary measures will allow for more liquidity in this market and should help to prevent the financial turmoil from hurting opportunities for our students," said Treasury Secretary Henry M. Paulson, Jr.

The Department of Education will replicate for the 2009-10 academic year the successful loan purchase and participation interest programs announced in May 2008 for the 2008-09 school year. To date, these programs have supported nearly 50 percent - or $8.7 billion - of the FFELP loans disbursed thus far this year.

In addition, the Administration intends to provide liquidity support to one or more conforming Asset-Backed Commercial Paper (ABCP) conduits to purchase and provide longer-term financing for FFELP loans. While details of this conduit are forthcoming, it is intended that all fully-disbursed non-consolidation FFELP loans awarded between October 1, 2003 and July 1, 2009 will be eligible for inclusion. Loans in the conduit will be financed with new issues of Asset Backed Commercial Paper. Support for the program will come from the Department of Education, which will enter into a forward commitment to purchase eligible student loans from the conduit in the future at a prearranged price. These programs will protect taxpayers by ensuring there is no net cost to the Federal government.

The Administration is working diligently on these programs so that students and their families can be assured that Federal funds will continue to be available to help pay for higher education and ensure that our students will be better prepared to pursue their dreams in today's competitive global economy.

For more information on these programs, please view the fact sheet at http://www.ed.gov/students/college/aid/ecasla-facts.html.

Student loan woes

2008-11-19T08:16:00.000-08:00

A survey administered by the scholarship-matching website FastWeb found that nearly half of student loan applications are being denied. According to the survey, one of the primary reasons students borrow private loans is because they have maxed out the federal Stafford Loan, a problem that has long been known to burden middle-income families. The survey shows that the government is failing to provide needed financial assistance.

Nearly half of Stafford Loan borrowers who said they maxed out their federal loan stated that they had to turn to private loans as result. These figures show that the average middle-income student is starting or has started to face obstacles in obtaining college funding.

Government has left the average middle-income family unable to finance higher education. Pell Grants are available for low-income students, but for middle-income students, the federal Stafford Loan has indeed become a scarce resource. Grants are often not offered to middle-income students, and when the Stafford Loans dry up, students are forced to turn to private loan alternatives.

The Department of Education needs to find a way to raise the allowed amount for a single student to borrow in Stafford Loan funding — perhaps even high enough so private loans will no longer be needed. To increase the private student loan appeal, banks should be rewarded for offering often non-profitable student loans to needy students. If these actions are taken, middle-income families would sleep soundly knowing the government has invested in their children’s futures — and their futures, as well.

(mndaily)

Paulson and Spellings Joint Statement

2008-11-11T13:38:00.001-08:00

Continuing constraints in our capital markets have posed challenges for students and student lenders throughout the last year. We recognize that education is the foundation of a strong American workforce and we must not let challenges in our capital markets hinder our students' opportunities. Given these ongoing concerns, the Administration is taking a series of steps to support the student loan market.

Earlier this week, President George W. Bush signed H.R. 6889, the extension of the Ensuring Continued Access to Student Loans Act. We appreciate Congress providing the Department of Education, in coordination with the Treasury Department and the Office of Management and Budget, renewed temporary powers to use federal funds to ensure students and families continue to have access to student loans.

The loan purchase and participation interest programs implemented over the last few months have helped ensure that Federal student loans were available to students enrolling in postsecondary institutions for the 2008-2009 school year, and Federal student lending is exceeding last year's pace.

Our financing program has supported just over 40 percent of the Federal Family Education Loan Program (FFELP) loans that have been disbursed this year. Over 800 lenders have enrolled in our loan purchase program. Almost $51 billion of federally guaranteed loans have been originated for the current school year, up from approximately $45 billion for the same period last year.

Over the next few months, schools and lenders will be making decisions for the 2009-2010 school year. Using our newly extended authorities, the Administration is moving aggressively to support the continued availability of funding for federal student loans in the next school year with the goal of restoring the government guaranteed student loan market to normal operations. We are working on an expedited basis and will make further announcements in the coming weeks.

Students Expect 10+ Years of Student Loan Debt

2008-10-29T05:39:00.000-07:00

CollegeGrad.com--the #1 entry level job site--today released its second annual survey results on how long college students anticipate it will take them to pay off their student loans. Fifty-one percent of student loan recipients say it will take them more than 10 years to pay off their student loans. Although last years numbers were similar, the 51 percent represents a five percent increase from three years ago.

Considering the increase in interest rates for federal student loans, combined with the ever-increasing sticker price of a college education and a faltering economy, it's not surprising that students are faced with larger student loan bills upon graduation, and a lengthier payback period.

"The financial pressures being placed on college graduates are growing each year," CollegeGrad.com Spokesperson, Adeola Ogunwole said. "Being weighed down with debt after college makes quickly finding a post-graduation job a priority for most students."

With only a six-month grace period before having to begin payments on their loans, it is critical for graduates to quickly begin earning a steady income. Graduates are faced early-on with some of the tough financial realities of the real world. Ogunwole points out, "finding a job that produces a steady income is very important in establishing the credit needed when applying for home and, or car loans."
(...More)

Community College Student Loan Rates

2008-08-01T09:51:00.000-07:00

As college tuition rates have increased, many two-year college students have been forced to take out loans. Because about one-quarter of two-year colleges do not participate in the federal loan program, these students are forced to take out private loans, which are riskier and more expensive; work while attending school; use credit cards; or, drop out of school. Of those students who completed a community college degree in 2003-04, 33% had student loans; the average amount was $9,061, according to an analysis of federal data by the Project on Student Debt.

The American Association of Community Colleges, which represents 1,200 two-year institutions, claims that colleges do not participate in the federal loan program due to concern for the consequences of debt and default for students, especially those who take remedial classes, for whom dropout and default rates are higher. In addition, colleges participating in the program could be barred from other federal aid programs if too many of their students default. This is especially concerning for schools with a large number of low-income students.

(Source: http://www.aacrao.org/transcript/index.cfm?fuseaction=show_view&doc_id=3946)

Student Debt Q&A

2008-07-15T01:40:00.000-07:00

How you are assessed as a credit risk will be based on whether you defaulted on your student loan. Government income tax refunds can stop and you may acquire wage attachments if you fail to take your student loan seriously and default on it. If you follow a few simple guidelines you can easily avoid defaulting on your student loan. You can avoid defaulting on your student loan if you just stay in contact with the lender.

If you let your lender know immediately you’re having problems, it’s unlikely you will need to default. I too had financial problems keeping up with the payments on loans I had acquired whilst a student. A few of my friends thought the situation was quite funny because they couldn’t see how the finance company could reclaim an education. Defaulted student loans usually start with this type of glib attitude towards the debt.

To avoid defaulting on your loan, contact your lender before it gets to this stage. After everything, I just felt relief after the lender had agreed to a deferment. The company was very helpful and they assigned an agent to me who assisted me with the deferment process.

It only took a week to have the payments suspended until I could re-commence at a later date. Although defaulting on my student loan wasn’t what I wanted, I knew that other financial institutions would not be quite as accommodating. I was aware that other agencies would not be so accommodating but I had managed to sort out my student loan.
(Source: cardprocredit.com)

Key Things To Consider Before Taking a Student Loan

2008-07-14T13:35:00.000-07:00

by Sarah Parker (www.oneiricissues.com)
The rising costs of college tuition have made it almost a necessity to apply for a student loan today. Students not only have tuition costs, but the cost of books, meals, gas, cell phones, recreation, etc. The variety of student loans enables students to take care of their varying college expenses. A student loan however, is a loan that must be repaid under specified circumstances.

The first thing you need to consider is your credit rating or credit history. A poor credit history can adversely affect your student loan application. Some lenders will look at your credit history; some don’t. It all depends on what kind of student loan you apply for. Thus, if you have a poor credit history, look into student loans that don’t consider your credit report or credit score a top requirement.

Guaranteed Student Loans, also known as Stafford Loans have a low interest rate. A student can apply for a subsidized or unsubsidized student loan. A subsidized loan means the government pays the interest for you while you are in school. The subsidized student loan is based on the students financial need. An unsubsidized student loan means you will be charged interest while you are attending school. The principal must start being paid after you have finished school. Both types of student loans need to start repayment six months after the student has finished college.

Federal Parent Loans or PLUS loans as they are known is a student loan not contingent on your income, but lenders do consider personal credit history. Parents or guardians who have a dependent child enrolled in college at least part-time are eligible for the PLUS loan. The interest rate is 9% or less.

Well the truth is student loan consolidation is not the answer for everyone who has a student loan. Federal loans should consolidated separately from private loans. It may be more beneficial in some cases not to consolidate student loans. Student loan consolidation counselors get paid the big bucks to help you figure out this information. However this article is designed to help you develop a better understanding of everything about getting a student loan including student loan consolidation.

Citigroup affiliate Student Loan Corp. to cut 89 jobs

2008-07-11T13:53:00.000-07:00

Student Loan Corp, a division of Citibank, plans to cut 89 jobs from its Perinton operation, the company said Thursday.

The jobs represent almost one-quarter of Student Loan's local employment and their elimination is part of a company-wide restructuring and cost-cutting effort. Overall, 174 jobs are being cut, including some at Student Loan headquarters in Stamford, Conn., and at Citibank in South Dakota.

Citibank's subsidiary is just one lender that is either slashing costs to stay in the student loan business or getting out of the business entirely because of new challenges in making a profit. Sallie Mae, the largest student lender, has already laid off about 1,000 employees.

A statement on the planned cutbacks said Student Loan Corp. remains committed to the business and will provide the "same level of superior customer service that schools and borrowers have come to expect ... over the past 50 years."

(more)

Debt Consolidation Overview

2008-07-11T12:50:00.000-07:00

If you're in way over your head, debt consolidation is a viable option.
You have to understand though that there is a tradeoff of easing your current pain.

http://banking.about.com/od/loans/a/debtconsolidate.htm

Debt Consolidation Programs
From Justin Pritchard,
Your Guide to Banking / Loans.
FREE Newsletter. Sign Up Now!
Overview of Debt Consolidation Programs
Readers are always asking about debt consolidation programs. What are they and what do you need to know about them?
Debt consolidation programs are usually just a big loan that pays off other smaller loans. They can be very beneficial to borrowers, but these programs also have their pitfalls.

When to Use Debt Consolidation Programs

Debt consolidation programs are good for a few situations. If you are paying several different loans off, your life may be easier if you consolidate everything into one loan. You’ll only get one monthly statement and make one payment.

Also, you’ll find that your monthly debt payments decrease if you use a debt consolidation program that stretches your payments out over a longer period of time. This means that you’ll pay out less each month and you can free up some cash.

A tempting (and sometimes successful) strategy is to use a debt consolidation program to manage various high-rate revolving debts. As an example, you might have numerous credit card balances with high interest rates. With a debt consolidation program, you might be able to get a handle on that debt and lower the interest rate that you’re paying. In general, credit cards have higher rates and secured loans (such home equity loans) have lower rates.

Things to Remember About Debt Consolidation Programs

Using debt consolidation programs can help you or hurt you. You should be very aware that all these programs do is shift your debt – a debt consolidation program does not eliminate your debt. You owe the money and will have to pay it back sooner or later.

One pitfall of a debt consolidation program is that you may feel like you have less outstanding debt. For example, you’ll notice that your credit cards once again have generous amounts of available credit. If you use this credit you’ll only dig yourself into a deeper hole.

You should also be aware that you may end up paying more total interest if you use a debt consolidation loan. If you stretch out your payments over a longer period of time, it is possible that your total interest cost will be higher. Of course, it may be worth it to you if you can more easily manage your cash flow today.

Finally, remember what you’re risking by using one of these programs. Often, you’ll use a home equity loan or a home equity line of credit to consolidate your debt. The consequences of falling off the payment schedule can include the loss of your home in some cases. Credit card companies can’t take your home. However, if you pledge your home as collateral in a debt consolidation program then your house is fair game.

How to Find the Best Debt Consolidation Programs

There are a variety of choices, and you should shop around to find one that fits your needs. If you need some ideas on where to start, try this plan:

Local credit unions or banks that you already have a relationship with. These are reliable sources that are likely to give you a fair deal.
Banks that you don’t already have a relationship with. They might offer you a good deal in order to win your business.
Mailers offering debt consolidation programs. These lenders already want your business – they’ve mailed you an offer because something about you fits into their desired profile.
An internet search for “debt consolidation”. Just be careful and be sure you don’t get scammed.
In addition to shopping around, you can ensure that you get the best deal by managing your credit. Loans are hardest to get when you need them the most. I suggest visiting the Loans page if your credit needs any work.
More Resources
Build Credit
Simple Interest
Phishing Scams
Help With Debt Consolidation Programs
A Tax Break With Debt Consolidation Programs?
Using a Second Mortgage With Debt Consolidation Programs
2nd Mortgage Quick Tips

Beat the college loan crunch

2008-07-08T05:34:00.000-07:00

(Money Magazine) -- For families with children heading off to college, this has been the year from hell. First, a record number of applicants made 2008 the most competitive year ever for college admissions. Then the credit crunch hit the college market in a big way, igniting fears of a drought in financing for all students this fall.

Spurred by dwindling demand for packaged loans from investors and cuts on federal subsidies, more than 100 lenders in the government college loan program have pulled out of the market. Private lenders are leaving the college market too - 27 so far. Those who remain are making it tougher to qualify for loans, while jacking up rates and reducing discounts.

The result: If you're counting on a loan to pay tuition bills this fall, you're probably anxiously holding your breath, waiting to see if you'll be able to borrow what you need at a rate you can afford.

Is it harder to get a student loan? Tell us.
Well, Mom and Dad, you can officially exhale now. You'll be fine, if you just play it right. Unlike the crisis in the mortgage market, where politicians continue to argue about how to help without actually doing much, Uncle Sam in recent weeks has swooped in with a practical damage-control plan for college borrowers.

(More from CNN)

Can a PLUS Loan be discharged (canceled)?

2008-05-23T08:30:00.000-07:00

Yes, under certain conditions. A discharge (cancellation) releases your parents from all obligation to repay the loan.

Your parents’ PLUS Loan can’t be canceled for these reasons: You didn’t complete your program of study at your school (unless you couldn’t complete the program for a valid reason—because the school closed, for example), you didn’t like the school or the program of study, or you didn’t obtain employment after completing the program of study.

For more information about loan discharge or repayment: If your parents have a Direct PLUS Loan, they should contact the Direct Loan Servicing Center at 1-800-848-0979, or go to www.dl.ed.gov. If they have a FFEL PLUS Loan, they should contact the lender or agency holding the loan.

(Source: studentaid.ed.gov)

Is it ever possible to postpone repayment of a PLUS Loan?

2008-05-21T07:29:00.000-07:00

Yes, under certain circumstances, your parents can receive a deferment on their loans.

If they temporarily can’t meet the repayment schedule, they can also receive forbearance on their loan, as long as it isn’t in default. During forbearance, their payments are postponed or reduced.

Generally, the conditions for eligibility and procedures for requesting a deferment or forbearance apply to both Stafford Loans and PLUS Loans. However, since all PLUS Loans are unsubsidized, your parents will be charged interest during periods of deferment or forbearance. If they don’t pay the interest as it accrues, it will be capitalized (that is, added to the principal amount of the loan, and additional interest will be based on that higher amount).

How do my parents pay back these loans?

2008-05-19T07:29:00.000-07:00

They'll repay a FFEL PLUS Loan to a private lender or loan servicer. They'll repay their Direct PLUS Loan to the U.S. Department of Education's Direct Loan Servicing Center. To read more about repayment options under both programs, read the PLUS Loans section in Funding Education Beyond High School: The Guide to Federal Student Aid.

When do my parents begin repaying the loan?

2008-05-16T08:27:00.000-07:00

Generally, the first payment is due within 60 days after the loan is fully disbursed. There is no grace period for these loans. Interest begins to accumulate at the time the first disbursement is made. Your parents must begin repaying both principal and interest while you're in school.

Other than interest, is there a charge to get a PLUS Loan?

2008-05-14T09:27:00.000-07:00

Your parents will pay a fee of up to 4 percent of the loan, deducted proportionately each time a loan disbursement is made. For a FFEL PLUS Loan, a portion of this fee goes to the federal government, and a portion goes to the guaranty agency (the organization that administers the PLUS Loan Program in your state) to help reduce the cost of the loans. For a Direct PLUS Loan, the entire fee goes to the government to help reduce the cost of the loans. Also, your parents may be charged collection costs and late fees if they don’t make their loan payments when scheduled.

What's the PLUS loan interest rate?

2008-05-12T09:26:00.000-07:00

For PLUS Loans disbursed on or after July 1, 2006, the interest rate is fixed (at 7.90 for Direct PLUS Loans and 8.50 percent for FFEL PLUS Loans). For PLUS Loans disbursed between July 1, 1998 and June 30, 2006, the interest rate is variable and is determined on July 1 of every year. For 2007-2008, the variable rate for these PLUS Loans (in both the Direct and FFEL programs) is 8.02 percent. Interest is charged on a PLUS Loan from the date of the first disbursement until the loan is paid in full.

Who gets my parents' loan money?

2008-05-09T13:25:00.000-07:00

Either the U.S. Department of Education (for a Direct PLUS Loan) or your parents’ lender (for a FFEL PLUS Loan) will send the loan funds to your school. Your school might require your parents to endorse a disbursement check and send it back to the school. In most cases, the loan will be disbursed in at least two installments, and no installment will be greater than half the loan amount. The funds will first be applied to your tuition, fees, room and board, and other school charges. If any loan funds remain, your parents will receive the amount as a check or in cash, unless they authorize the amount to be released to you or to be put into your school account. Any remaining loan funds must be used for your education expenses.

How much can my parents borrow?

2008-05-07T08:24:00.000-07:00

The yearly limit on a PLUS Loan is equal to your cost of attendance minus any other financial aid you receive. If your cost of attendance is $6,000, for example, and you receive $4,000 in other financial aid, your parents can borrow up to $2,000.

How do my parents get a loan?

2008-05-05T08:32:00.000-07:00

For a Direct PLUS Loan, your parents must complete a Direct PLUS Loan application and promissory note, contained in a single form that you get from your school’s financial aid office.

For a FFEL PLUS Loan, your parents must complete and submit a PLUS Loan application, available from your school, lender, or your state guaranty agency. After the school completes its portion of the application, it must be sent to a lender for evaluation.

Also, your parents generally will be required to pass a credit check. If your parents don't pass the credit check, they might still be able to receive a loan if someone, such as a relative or friend who is able to pass the credit check, agrees to endorse the loan. An endorser promises to repay the loan if your parents fail to do so. Your parents might also qualify for a loan without passing the credit check if they can demonstrate that extenuating circumstances exist. You and your parents must also meet other general eligibility requirements for federal student financial aid.

PLUS Loans (Parent Loans)

2008-05-04T15:21:00.000-07:00

Parents can borrow a PLUS Loan to help pay your education expenses if you are a dependent undergraduate student enrolled at least half time in an eligible program at an eligible school. PLUS Loans are available through the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Loan (Direct Loan) Program. Your parents can get either loan, but not both, for you during the same enrollment period. They also must have an acceptable credit history.

(Source: studentaid.ed.gov)

Federal Pell Grant

2008-05-02T13:14:00.000-07:00

A Federal Pell Grant, unlike a loan, does not have to be repaid. Pell Grants are awarded usually only to undergraduate students who have not earned a bachelor's or a professional degree. (In some cases, however, a student enrolled in a post-baccalaureate teacher certification program might receive a Pell Grant.) Pell Grants are considered a foundation of federal financial aid, to which aid from other federal and nonfederal sources might be added.

How much can I get?
The maximum Pell Grant award for the 2007-08 award year (July 1, 2007 to June 30, 2008) is $4,310. The maximum award for the 2008-09 award year (July 1, 2008 to June 30, 2009) is $4,731. The maximum can change each award year and depends on program funding. The amount you get, though, will depend not only on your financial need, but also on your costs to attend school, your status as a full-time or part-time student, and your plans to attend school for a full academic year or less.

If I am eligible, how will I get the Pell Grant money?
Your school can apply Pell Grant funds to your school costs, pay you directly (usually by check), or combine these methods. The school must tell you in writing how much your award will be and how and when you'll be paid. Schools must disburse funds at least once per term (semester, trimester, or quarter). Schools that do not use semesters, trimesters, or quarters must disburse funds at least twice per academic year.

(Source: studentaid.ed.gov)

President Barack Obama on CNN radio

2008-04-24T20:16:00.000-07:00

Obama speaks about his plans for student financing ... expand Pell Grants, cut out the middle men (... such as Sallie Mae), $4,000 tuition credit per year in exchange for community or national service, and finally curb university costs

Just watch/listen between the 3:00 and 5:30 minute mark of this YouTube video.

He speaks from personal experience with student debt. He said his and his wife's combined student loan debt coming out of law school was greater than their mortgage!

Authority to purchase federal family education loans

2008-04-23T12:03:00.000-07:00

This is straight from today's White House Press Breifing:

... recent credit market conditions have raised concerns in the student loan market among parents and some college students, and so the administration has been taking steps to prepare for the approaching student loan peak season of applications in July and August. Today Secretary Spellings, Secretary Paulson and Director Jim Nussle sent a letter to members of Congress urging prompt action to get the Department of Education authority to purchase federal family education loans to better ensure the availability for the upcoming academic year.

The House recently passed a bill to provide this authority, and we urge the Senate to act promptly on the bill. Implementing this authority will take time, so it is imperative to move this legislation without delay if this authority is to be used in the upcoming school year. We do not want to see any students unable to attend universities this year because of the credit crunch, and that's why we are taking appropriate steps now to confront that challenge should it arise.

Larry Warder of Department of Education has been quoted saying:
"This has to be ready by July." ... in time for the peak time this year for student loans.

Martin Lewis, How to survive financially as a student

2008-04-15T20:05:00.000-07:00

Awesome financial advice if you're currently in school. It's from the U.K. but it's for everyone.

Student Loan Advice 'Concerns'

2008-04-10T09:40:00.000-07:00

U.S. News and World Report has posted an article expressing concerns about biased student loan advice on the internet. Along with blogs, they mention Christopher Penn's financial aid podcast from The Student Loan Network.

But consumer advocates are concerned that students may not realize or consider that these educational messages are coming from people who want their business, not unbiased sources.

First of all, I highly respect Penn's podcast. He provides a wealth of useful legitimate information. Of course, he's made a business out of it too.

Second, pretty much everyone has a biased view to some degree. The U.S. News and World Report 'online' piece has advertisements on it directing you to 'biased' sources. So does my blog. Information is never totally free. The point is, even in the biased advice, there is golden information that may be of some use to you. The most unbiased source would be government web sites and that's only because they're tax payer funded.

I thought the little video embedded in the U.S. News article was interesting. They gave 3 basic tips: 1) maximize your federal loans 2) Don't take out more money than necessary 3) Seek advice from the financial aid office.

Not taking out more money than necessary is golden advice. Maximizing your federal loans is also a must but you know you're still going to end up short on the needed cash. The thing you need to be most careful about is the financial aid office student loan advice. You'll generally get good advice but there's also a good chance you'll also get "biased" advice. The whole industry has been tainted the last couple of years because sweetheart deals between universities and loan companies

... major colleges received financial benefits for touting lenders that didn't necessarily offer the best deals for students. Some of these exclusive deals were greased with "gifts" such as free computing services or outright bribes to college loan officers.

My student loan advice to you: Soak in information from every source possible but use critical thinking skills to make the right choice for you.

Teacher Loan Forgiveness Program

2008-03-11T18:20:00.000-07:00

To qualify for up to $5,000 loan forgiveness under this program you must not have had an outstanding balance on a FFEL or Direct Loan program loan as of October 1, 1998. To qualify for the increased amount of loan forgiveness up to $17,500 available for certain mathematics, science, and special education teachers, you must not have had an outstanding balance on a FFEL or Direct Loan program loan as of October 1, 1998, or on the date that you obtained a FFEL or Direct Loan program loan after October 1, 1998.

Although a summary of the new requirements is provided below, for complete information about this program, contact the holder of your loan.

To qualify, you must have been employed as a full-time teacher for five consecutive complete academic years in an elementary or secondary school that has been designated as a "low-income" school by the U.S. Department of Education.

Additionally:

* At least one of the five qualifying years of teaching must have occurred after the 1997-98 academic year.
* The loan must have been made before the end of the fifth year of qualifying teaching.
* The elementary or secondary school must be public or private nonprofit.
* A defaulted loan cannot be cancelled for teacher service unless you've made satisfactory repayment arrangements with the holder of the loan.

(Source: studentaid.ed.gov and Student Loan Forgiveness)

Hillary Clinton on No Child Left Behind and College Loans

2008-03-03T21:19:00.001-08:00

Student Loan Forgiveness Program

2008-02-27T12:59:00.000-08:00

The Congressional Research Service has a nice reference document called Student Loan Forgiveness Program. This is a handy little document to read through during these troubled economic times.

Loan Rehabilitation

2008-02-20T13:23:00.000-08:00

You may want to consider rehabilitating your defaulted loan(s). Advantages of rehabilitation include:

* Your loan(s) will no longer be considered to be in a default status.

* The default status reported by your loan holder to the national credit bureaus will be deleted.

* You will be eligible for the same benefits that were available on the loans before the loans defaulted. This may include deferment, forbearance, and Title IV eligibility.

* Wage garnishment ends and the Internal Revenue Service no longer withholds your income tax refund.

If you are a Direct Loan Borrower:

To rehabilitate a Direct Loan, you must make at least nine (9) full payments of an agreed amount within twenty (20) days of their monthly due dates over a ten (10) month period to the U.S. Department of Education (Department). Payments secured from you on an involuntary basis, such as through wage garnishment or litigation, cannot be counted toward your nine (9) payments. Once you have made the required payments, your loan(s) will be returned to the Direct Loan Servicing Center.

If you are a FFEL loan borrower:

To rehabilitate a FFEL, you must make at least nine (9) full payments of an agreed amount within twenty (20) days of their monthly due dates over a ten (10) month period to the Department. Payments secured from you on an involuntary basis, such as through wage garnishment or litigation, cannot be counted toward your nine (9) payments. Once you have made the required payments, your loan(s) may be purchased by an eligible lending institution.

If you are a college loan Perkins borrower:

To rehabilitate a Perkins Loan, you must make twelve (12) on-time, monthly payments of an agreed amount to the Department. Payments secured from you on an involuntary basis, such as through wage garnishment or litigation, cannot be counted toward your twelve (12) payments. Once you have made the required payments, your loan(s) will continue to be serviced by the Department until the balance owed is paid in full.

Can my Stafford Loan ever be discharged (canceled)?

2008-02-19T08:35:00.000-08:00

Yes, but only under a few circumstances. Your loan can’t be canceled because you didn’t complete the program of study at the school (unless you couldn’t complete the program for a valid reason—the school closed, for example), or because you didn’t like the school or the program of study, or you didn’t obtain employment after completing the program of study.

What if I have trouble repaying the Stafford Loan?

2008-02-18T08:34:00.000-08:00

Under certain circumstances, you can receive a deferment or forbearance on your loan, as long as it’s not in default. During a deferment, no payments are required. You won’t be charged interest for a subsidized FFEL or Direct Stafford loan. If you have an unsubsidized Stafford Loan, you are responsible for the interest during deferment.

If you’re temporarily unable to meet your repayment schedule (for example due to poor health or other unforeseen personal problems), but you’re not eligible for a deferment, your lender might grant you forbearance for a limited and specified period.

(Source: Studentaid.ed.gov)

How do I pay back my Stafford Loan?

2008-02-15T09:33:00.000-08:00

You’ll repay your FFEL Stafford Loan to a private lender or loan servicer. You’ll repay your Direct Loan to the U.S. Department of Education’s Direct Loan Servicing Center. Both the Direct Loan and FFEL programs offer four repayment plans you can choose from, but the terms differ slightly. You will receive more detailed information on your repayment options during entrance and exit counseling sessions your school will provide.

When do I pay back my Stafford Loans?

2008-02-14T16:12:00.000-08:00

After you graduate, leave school, or drop below half-time enrollment, you will have a six-month "grace period" before you begin repayment. During this period, you'll receive repayment information, and you'll be notified of your first payment due date. You're responsible for beginning repayment on time, even if you don't receive this information. Payments are usually due monthly.

During the grace period on a subsidized loan, you don’t have to pay any principal, and you won’t be charged interest. During the grace period on an unsubsidized loan, you don’t have to pay any principal, but you will be charged interest. You can either pay the interest or it will be capitalized (added to your principal loan balance, thus increasing the amount you’ll repay).

Other than interest, is there a charge for this loan?

2008-02-14T08:31:00.000-08:00

You'll pay a fee of up to 4 percent of the loan, deducted proportionately from each loan disbursement. For a FFEL Stafford Loan, a portion of this fee goes to the federal government, and a portion goes to the guaranty agency (the organization that administers the FFEL Program in your state) to help reduce the cost of the loans. For a Direct Stafford Loan, the entire fee goes to the government to help reduce the cost of the loans. Also, if you don't make your loan payments when scheduled, you may be charged collection costs and late fees.

What's the interest rate on a Stafford Loan?

2008-02-13T14:28:00.000-08:00

For all Stafford loans first disbursed on or after July 1, 2006, the interest rate is fixed at 6.8 percent.

This change from a variable to a fixed interest rate does not affect a borrower's variable interest rate on loans made before July 1, 2006.

For Stafford Loans first disbursed between July 1, 1998 and June 30, 2006, the interest rate is variable (adjusted annually on July 1st) but will not exceed 8.25 percent. (You'll be notified any time the variable rate changes.) The interest rate for these loans in 2007-08 is 7.22 percent. (This rate applies to loans in repayment status; the rate may be lower during grace and deferment periods.)

How will I get the Stafford Loan money?

2008-02-13T09:28:00.000-08:00

For both the Direct Loan and FFEL programs, you'll be paid through your school in at least two installments. No installment may exceed one-half of your loan amount. Your loan money must first be applied to pay for tuition and fees, room and board, and other school charges. If loan money remains, you'll receive the funds by check or in cash, unless you give the school written authorization to hold the funds until later in the enrollment period.

Generally, if you're a first-year undergraduate student and a first-time borrower, your school cannot disburse your first payment until 30 days after the first day of your enrollment period. This practice ensures you won't have a loan to repay if you don't begin classes or if you withdraw during the first 30 days of classes.

A school with a cohort default rate of less than 10 percent for each of the three most recent fiscal years for which data are available are not required to delay the delivery or disbursement of the first disbursement of a loan for 30 days for first-time, first year undergraduate borrowers.

How much can I borrow for a Stafford Loan?

2008-02-12T12:25:00.000-08:00

It depends on your year in school and whether you have a subsidized or unsubsidized Direct or FFEL Stafford Loan. A subsidized loan is awarded on the basis of financial need. If you're eligible for a subsidized loan, the government will pay (subsidize) the interest on your loan while you're in school, for the first six months after you leave school, and if you qualify to have your payments deferred. Depending on your financial need, you may borrow subsidized money for an amount up to the annual loan borrowing limit for your level of study (see below).

You might be able to borrow loan funds beyond your subsidized loan amount even if you don't have demonstrated financial need. In that case, you'd receive an unsubsidized loan. Your school will subtract the total amount of your other financial aid from your cost of attendance to determine whether you're eligible for an unsubsidized loan. Unlike a subsidized loan, you are responsible for the interest from the time the unsubsidized loan is disbursed until it's paid in full. You can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan). Capitalizing the interest will increase the amount you have to repay.

You can receive a subsidized loan and an unsubsidized loan for the same enrollment period as long as you don't exceed the annual loan limits.

If you're a dependent undergraduate student, each year you can borrow up to:

* $3,500 (for the 2007-08 academic year) if you're a first-year student enrolled in a program of study that is at least a full academic year.

* $4,500 (for the 2007-08 academic year) if you've completed your first year of study and the remainder of your program is at least a full academic year.

* $5,500 if you've completed two years of study and the remainder of your program is at least a full academic year.

If you're an independent undergraduate student or a dependent student whose parents have applied for but were unable to get a PLUS Loan (a parent loan), each year you can borrow up to:

* $7,500 (for the 2007-08 academic year) if you're a first-year student enrolled in a program of study that is at least a full academic year. No more than $3,500 of this amount may be in subsidized loans.

* $8,500 (for the 2007-08 academic year) if you've completed your first year of study and the remainder of your program is at least a full academic year. No more than $4,500 of this amount may be in subsidized loans.

* $10,500 (for the 2007-08 academic year) if you've completed two years of study and the remainder of your program is at least a full academic year. No more than $5,500 of this amount may be in subsidized loans.

If you're a graduate or professional degree student, each year you can borrow up to

* $20,500 for the 2007-08 academic year. No more than $8,500 of this amount may be in subsidized loans.

When you graduate with a graduate or professional degree, the maximum total debt allowed from Stafford Loans is $138,500. No more than $65,500 of this amount may be in subsidized loans. This maximum total graduate debt limit includes Stafford Loans received for undergraduate study.

These amounts are the maximum yearly amounts you can borrow in both subsidized and unsubsidized FFELs or Direct Loans, individually or in combination. Because you can't borrow more than your cost of attendance minus the amount of any Federal Pell Grant you're eligible for and minus any other financial aid you'll get, you may receive less than the annual maximum amounts.

(Source: Studentaid.ed.gov)

How to Choose and Evaluate Lenders for Stafford Loan

2008-02-12T08:24:00.000-08:00

You'll need to choose a lender if you obtain a FFEL Stafford Loan. (If you have a Direct Stafford Loan, the federal government—through the U.S. Department of Education—is your lender.) Schools that participate in the FFEL Program will usually have a list of preferred lenders. Student loan borrowers may choose a lender from that list, or choose a different lender they prefer (for example, a credit union). Here are a few things to think about when selecting a FFEL lender.

(Source: Studentaid.ed.gov)

Stafford Loans

2008-02-11T08:22:00.000-08:00

In addition to Perkins Loans, the U.S. Department of Education administers the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Loan (Direct Loan) Program. Both the FFEL and Direct Loan programs consist of what are generally known as Stafford Loans (for students) and PLUS Loans (for parents).

Schools generally participate in either the FFEL or Direct Loan program but sometimes participate in both. Under the Direct Loan Program, the funds for your loan come directly from the federal government. Funds for your FFEL will come from a bank, credit union, or other lender that participates in the program. Eligibility rules and loan amounts are identical under both programs, but repayment plans differ somewhat.

How can I get a FFEL or Direct Loan?
For either type of loan, you must fill out a FAFSA. After your FAFSA is processed, your school will review the results and will inform you about your loan eligibility. You also will have to sign a promissory note, a binding legal document that lists the conditions under which you're borrowing and the terms under which you agree to repay your loan.

(Source: Studentaid.ed.gov)

The Today Show - College Loan Scandals

2008-02-06T14:46:00.000-08:00

This was filmed last summer but is still relevant for today:

Student Bank Loans

2008-02-06T08:57:00.000-08:00

Suppose you need a student loan and you don't want to be hindered by the restrictions and timeline of federal loans. Look into student bank loans.

Some of the advantages of student bank loans:
* It's usually a faster approval time.
* You don't have to fill out a FAFSA (Free Application For Federal Student Aid).
* You can borrow a good bit more money. (This is especially good if you're shooting for an expensive private institution.)

Student bank loan approval is based on your personal credit score and history as well as your ability to pay it off ... the better your rating, the better interest rate you get. Don't get scared, the loan rate will be comparable to a federal student loan and not like a credit card rate.

So, if your responsible and are considered a low risk, getting a student bank loan can save you the red tape surrounding federal loans.

Here's a couple of links for student bank loans:
Wachovia
Bank of America

Addressing Your Defaulted Student Loan

2008-02-05T12:46:00.000-08:00

If this applies to you then listen up. Here's what the Federal Student Aid office says:

Make a payment now by credit or debit card
(We accept American Express, Discover, Master Card and Visa as repayment options. Please contact the Default Resolution Group at 1-800-621-3115 to process your credit card payment).

Student loan borrowers in default now have more options than ever before to repay their student loans. The U.S. Department of Education's (Department) Default Resolution Group is committed to assisting individuals in default by making debt repayment a simple process.

This site will provide you with information on the following loan programs:

Federal Family Education Loans (FFEL), which include Federal Stafford, Federal Consolidation and Federal PLUS loans. When placed in default, these loans are first assigned to a guaranty agency (an organization that administers the FFEL Program for your state) for collection. Periodically, guaranty agencies assign loans to the Department for collection.

Direct Loans, which includes Federal Stafford Consolidation and PLUS loans that are offered through the William D. Ford Direct Loan Program. When placed in default, these loans are assigned to the Department's Default Resolution Group.

Federal Perkins Loans. When placed in default, Perkins Loans may remain with the school or be assigned to the Department for collection.

Federal Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Academic Competitiveness Grants and National SMART Grants. In certain instances, you may have to repay part of a Federal grant that was awarded to you.

If you are not sure what type of loan you have, check your promissory note or use our National Student Loan Data System. If your loan is not one of the loans listed above, the information on this site does not apply to you.

Student Loan Calculator

2008-02-05T07:40:00.000-08:00

Here's a handy little calculator from CNN Money to help you determine how quickly you'll pay off your student loans. I figure your loan amount and interest rate are set. Play around with the monthly payment amount. Figure out the maximum monthly payment you can afford and see how short your loan will last.

Chase cuts rates and fees

2008-02-04T13:40:00.000-08:00

Here's something to consider if you're currently shopping around for a student loan. According to Reuters:

Chase Education Finance said it will waive the origination fee on Stafford loans and the 1 percent default fee on Stafford, Parent PLUS and Grad PLUS loans.

It said it will also reduce the interest rate on all three loans by one-tenth of a percentage point if it makes, services and retains the loans.

Sponsor my Loan

2008-02-01T12:54:00.000-08:00

There's a Mr. Luke Livingston that has come up with a clever way to help pay off his student loans. Check out sponsormyloans.com and see what he's done.

For $200, you can be the sole sponsor of his site for 1 month with your ads on the header, footer, and sidebar. It reminds me of the "million dollar home page" some time ago but this site is a good bit more reasonable.

Sallie Mae Update

2008-01-31T09:29:00.000-08:00

Sallie Mae is tightening its belt and will "no longer provide loans to students with sub-prime credit scores." (Source: collegiatetimes.com)

"As a result of the impact of the College Cost Reduction and Access Act and the deterioration of the credit markets, Sallie Mae is discontinuing certain non-standard private education loan programs," said Tom Joyce, senior vice president of Sallie Mae's corporate communications.

"We are also in the process of adjusting our underwriting criteria and pricing of our private education loans to reflect the current financing and market conditions."

Sallie Mae is also laying off 350 people (3% of their workforce) and looking to reduce their costs by 20% in the next two years.

Student Loans Pilot

2008-01-23T08:32:00.000-08:00

I'm not sure these guys have the best advice.

Mucho ojo... Tenga cuidado al buscar ayuda para estudiantes

2008-01-22T09:06:00.000-08:00

Fraude de becas

¿Cómo son los servicios de búsqueda de becas?
Hay muchos servicios particulares de búsqueda de becas que suministran listas de fuentes de ayuda económica. Es importante señalar, sin embargo, que nosotros no evaluamos esos servicios. Si usted opta por usarlos, debería comprobar su reputación comunicándose con la Oficina de Buenas Prácticas Comerciales (Better Business Bureau) o con la oficina de la procuraduría general de su estado. Se pueden hacer búsquedas de becas sin costo en nuestro sitio Web: www.FederalStudentAid.ed.gov.

¿Cómo puedo asegurarme de que estos servicios no son una estafa? ¿A qué debo prestar atención?
Hay que ser muy precavido a la hora de buscar información sobre la asistencia financiera. Se calcula que las familias pierden millones de dólares cada año a causa del fraude de becas. La Ley de Prevención de Fraude de Becas Postsecundarias (College Scholarship Fraud Prevention Act) protege a las personas contra el fraude relacionado con la ayuda para estudiantes.

La Comisión Federal de Comercio (FTC , por sus siglas en inglés) recomienda que los alumnos estén pendientes de las siguientes afirmaciones sospechosas:
«Esta beca está garantizada, o se le devolverá su dinero».
«Esta información no se puede conseguir en ningún otro lado».
«Para reservarle esta beca, sólo necesito su número de tarjeta de crédito o de su cuenta bancaria».
«Has sido elegido por una “fundación nacional” para recibir una beca».
«Es finalista» en un concurso en el cual nunca ha participado.

Asegúrese de que la información y las ofertas sean legítimas. No sea víctima del fraude. Para presentar una denuncia o para recibir información gratuita, llame a la Comisión Federal de Comercio al 1-877-382-4357. El número de teletipo es 1-866-653-4261. O visite www.ftc.gov/scholarshipscams.

Robo de identidad
Además de cuidarse del fraude de becas, usted debe ser consciente del robo de identidad.

¿Qué es el robo de identidad?
El robo de identidad es un problema cada vez mayor para todo el país. Ocurre cuando un individuo se apodera de los datos confidenciales de otra persona, como por ejemplo, el nombre, dirección, número telefónico o número de Seguro Social, con los cuales dejan arruinado el historial crediticio de sus víctimas. El ladrón puede acumular miles de dólares en deudas de tarjetas de crédito, para sólo mencionar un problema, y las facturas llegarán a usted. Como si eso fuera poco, es muy probable que su historial crediticio quede arruinado, y aunque esto no sea su culpa, le corresponderá a usted arreglar la situación, lo cual puede durar meses o incluso años.

¿Cómo ocurre el robo de identidad?
Cuando el malhechor se apropia de los datos confidenciales de otra persona —como por ejemplo, el número de Seguro Social o de la licencia de conducir—, puede utilizarlos para obtener tarjetas de crédito, préstamos (incluidos los estudiantiles), o mercancía y servicios. El ladrón de identidad puede acumular, a nombre de su víctima, miles de dólares en deudas. Los ladrones de identidad habitualmente obtienen esta información cuando una persona usa su computadora personal para realizar transacciones electrónicas con su banco o para comprar alguna mercancía por Internet. A veces uno se pone en riesgo al sólo usar un teléfono celular o al utilizar su número de Seguro Social como una forma de identificación. ¿Cómo? Cada una de estas transacciones requiere que se revelen los datos personales tales como los números de una cuenta bancaria o de una tarjeta de crédito, el nombre, dirección y número de teléfono. A veces esta información queda en manos de algún individuo inescrupuloso.

¿Qué pasa si alguien roba mi identidad y obtiene un préstamo estudiantil en mi nombre?
Cuando se trata de los Préstamos Stafford y PLUS, se considera que hubo una certificación falsa del derecho a recibir el préstamo, por lo que el mismo puede ser anulado.

¿Qué puedo hacer para evitar el robo de identidad?

No tire en la basura las solicitudes de tarjeta de crédito que no desee. Para mayor seguridad, rómpalas en muchos pedazos o tritúrelas antes de botarlas. De esta manera, nadie podrá sacarlas de la basura y usarlas para solicitar una tarjeta de crédito a nombre de usted.
Proteja su número de Seguro Social en todo momento. Es normal que se lo proporcione a su empleador o a su banco; sin embargo, si una empresa se lo solicita, pregúntele, antes de entregárselo, sobre el motivo de pedir el número y también sobre la manera en que lo usaría. En general, no hay necesidad legítima para que una empresa pida este tipo de información. Nunca divulgue su número de Seguro Social o de licencia de conducir a personas que se pongan en contacto con usted por teléfono o por Internet diciendo que necesitan esta información para verificar su identidad.
Nunca divulgue, ni por teléfono ni por Internet, información personal o financiera, a menos que haya sido usted el que inició el contacto.
Si opta por aprovechar el Internet para presentar su solicitud de ayuda estudiantil, utilice www.fafsa.ed.gov o www.FederalStudentAid.ed.gov, los cuales son sitios oficiales que están protegidos contra la divulgación no autorizada de datos. Guarde su identificador estudiantil electrónico— o sea, su PIN— en un lugar seguro y no se lo divulgue a nadie.
Las anteriores constituyen sólo algunas de las medidas que usted puede tomar para protegerse contra el robo de identidad. Para obtener mayor información, comuníquese con la Comisión Federal de Comercio, en www.consumer.gov/idtheft. O bien, llame al 1-877-438-4338.

Si el robo de identidad repercute de alguna forma en la ayuda estudiantil federal que usted reciba, puede presentar una denuncia llamando a la línea directa de la Oficina del Inspector General del Departamento de Educación de EE.UU.: 1-800-647-8733. O visite www.ed.gov/misused.

Información gratuita sobre los programas federales de ayuda para estudiantes

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La mayor parte de la ayuda estudiantil otorgada en el país proviene de los programas de becas, trabajo y estudio, y préstamos que administra el Departamento de Educación de EE.UU. Otorgamos casi toda la ayuda de estos programas según la necesidad económica que evidencie el estudiante. Ni las calificaciones académicas ni la posición relativa que éste ocupe en su promoción figuran en la decisión de conceder ayuda.

Si, después de leer la presente publicación, todavía tiene dudas sobre los programas federales de ayuda estudiantil, puede hacer lo siguiente:
Visitar nuestro sitio Web, en www.FederalStudentAid.ed.gov. Este sitio ofrece información completa y GRATUITA sobre todo lo relacionado con la ayuda estudiantil, como asi mismo enlaces a otros sitios que informan sobre la asistencia financiera.
Llamar a nuestro Centro de Información sobre Ayuda Federal para Estudiantes al 1-800-433-3243.
Otras fuentes de ayuda

Oficina de ayuda económica
Consulte con el administrador (o con su personal) en cada institución que le interese sobre el costo de estudiar en la misma y sobre los programas que se ofrecen para cubrirlo.

Agencia estatal de educación postsecundaria
Este organismo, ubicado en el estado donde usted reside habitualmente, ofrece información respecto a la ayuda estatal, incluido el Programa LEAP (por sus siglas en inglés), que es financiado conjuntamente por los estados y el Departamento de Educación de EE.UU. (Vea la información de contacto de las agencias, en la sección «Agencias estatales de educación postsecundaria».)

Programa AmeriCorps
A cambio del servicio a la comunidad, este programa concede ayudas para sufragar la educación del alumno que curse estudios con una dedicación exclusiva. El servicio se puede prestar antes, durante o después de la realización de los estudios postsecundarios. Además, se permiten usar los fondos para cubrir los gastos educativos actuales o para reembolsar préstamos estudiantiles obtenidos al amparo de los programas federales. Para mayor información, contacte con el Programa AmeriCorps:

Corporation for National Service
1201 New York Avenue, NW
Washington, DC 20525

1-800-942-2677
1-800-833-3722 (teletipo)

www.americorps.org
Programa de Becas «Robert C. Byrd» (Programa Byrd)
El estudiante que desee participar en el Programa Byrd deberá evidenciar logros académicos superiores y también demostrar la probabilidad de su continua excelencia académica en el futuro. Para mayor información, llame sin costo a nuestro Centro de Información: 1-800-433-3243. O visite www.ed.gov/programs/iduesbyrd/index.html.

Bibliotecas públicas e Internet
Éstas son buenísimas fuentes de información sobre la asistencia que ofrecen los estados y muchas entidades particulares. Al realizar búsquedas en cualquiera de estos dos recursos, conviene usar unas palabras y frases clave, como «ayuda económica», «ayuda para estudiantes» y «asistencia estudiantil». Hay que tener cuidado, sin embargo, con las estafas y con los servicios que piden comisiones por la búsqueda de ayuda económica.

Empresas y sindicatos
Muchas de estas entidades ofrecen programas que ayudan a pagar los gastos de estudio postsecundario de sus empleados o afiliados, o de los hijos de ellos. Conviene pedirles información sobre las becas que se ofrezcan y sobre la forma de solicitarlas.

Asociaciones, fundaciones, etc.
Con frecuencia se puede conseguir ayuda financiera por medio de los clubes municipales, fundaciones, sociedades religiosas y asociaciones estudiantiles masculinas o femeninas. Además de averiguar con estas entidades sobre la asistencia, comuníquese con otras asociaciones comunitarias y grupos cívicos, como la American Legion, la YMCA, el Club 4-H, los Elks, Kiwanis, Jaycees, y los Boy Scouts o Girl Scouts. Puede resultar provechoso contactar con las sociedades relacionadas con un campo de interés determinado; por ejemplo, la Asociación de Médicos de Estados Unidos o el Colegio de Abogados de Estados Unidos son de gran utilidad para aquellos estudiantes que deseen especializarse en Medicina o Derecho.

Fuerzas Armadas de EE.UU.
Las Fuerzas Armadas también ofrecen oportunidades de ayuda económica. Si desea información sobre los incentivos de alistamiento, contacte con un reclutador o visite el sitio Web del Departamento de Defensa de EE.UU.: www.todaysmilitary.com. Una vez en el sitio, pulse «Benefits», en la parte superior de la página, y luego seleccione «College Help».

Departamento de Asuntos de Veteranos de EE.UU.
Si usted (o su cónyuge) es veterano militar, o dependiente económico de un veterano, es posible que tenga a su disposición asistencia educativa. Para mayor información, visite www.gibill.va.gov o llame 1-888-442-4551.

Servicio de Impuestos Internos (IRS)
El Servicio de Impuestos Internos ayuda a ciertos contribuyentes a pagar el costo de educación postsecundaria, mediante dos créditos tributarios federales que se conceden por gastos relacionados con los estudios postsecundarios, lo que supone una reducción dólar por dólar de la obligación tributaria.
El crédito tributario «Hope», que tiene un valor máximo de $1,500 por estudiante, se ofrece a los alumnos, de primer y segundo año, con una dedicación de por lo menos medio tiempo.
El crédito tributario «Lifetime Learning» es un beneficio que equivale al 20 por ciento de los gastos de matrícula de una familia (hasta $10,000) para casi todo tipo de educación o capacitación postsecundaria, incluidos los estudios de pregrado posteriores a la obtención del primer título universitario, los estudios de posgrado e incluso los estudios con una dedicación de menos de medio tiempo.
Si desea más información sobre estos créditos, como asimismo sobre otros beneficios tributarios dirigidos a los estudiantes postsecundarios, visite el sitio www.irs.gov. Puede leer en este sitio la Publicación 970 del IRS, Tax Benefits for Higher Education (Beneficios tributarios para la educación superior), que informa acerca de estos créditos y otros beneficios. O bien, llame al IRS al 1-800-829-1040. Los usuarios de teletipo pueden llamar al 1-800-829-4059.

www.students.gov
Mediante este sitio, puede tener acceso a recursos gubernamentales que ayudarán a planificar y costear los estudios postsecundarios. Además de encontrar ahí información sobre la ayuda económica, uno puede valerse del sitio para presentar su declaración de impuesto, buscar un empleo y aprovechar los otros servicios que ofrece el Gobierno.

RESUMEN DE LOS PROGRAMAS DE PRÉSTAMOS

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Los estudiantes de pregrado y de posgrado pueden recibir Préstamos Stafford. Los estudiantes de posgrado y los padres de alumnos dependientes que cursan estudios de pregrado pueden obtener Préstamos PLUS.
Para recibir un préstamo, hay que estar matriculado para estudiar con dedicación de tiempo completo o medio tiempo en una institución educativa participante y con el fin de recibir un título o certificado.
Los préstamos estudiantiles son dinero prestado que, al igual que los préstamos hipotecarios o los que se obtienen para comprar un automóvil, deberán devolverse al prestamista con intereses.
No se puede anular la deuda de los préstamos estudiantiles por el simple hecho de que al prestatario no le haya gustado la educación que recibió o no haya obtenido empleo relacionado con su campo de estudio, ni porque esté pasando dificultades económicas.
Estos préstamos suponen una obligación legal, así que conviene pensar bien, antes de conseguirlos, el monto que tendrá que reembolsarse a lo largo de los años.
El monto que se puede conseguir depende del nivel académico del alumno, de su dedicación de estudio (o sea, tiempo completo o tiempo parcial) y de si es dependiente o independiente.
El estudiante que demuestre necesidad económica puede conseguir Préstamos Directos o FFEL con subsidio para cubrir toda o parte de la misma.
Tratándose de los Préstamos Stafford con subsidio, el Departamento de Educación de EE.UU. pagará los intereses mientras el alumno estudia con dedicación de por lo menos medio tiempo, durante los seis primeros meses después de la terminación de los estudios y durante los períodos de aplazamiento de pago (cuando se posponen los pagos del préstamo).
Los préstamos sin subsidio se ofrecen al estudiante que no haya demostrado necesidad económica. El Departamento de Educación no pagará los intereses de los préstamos sin subsidio.

Préstamos PLUS

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La ley ahora permite a los alumnos de posgrado participar en el programa de Préstamos PLUS. Los mismos términos y condiciones que corresponden a los padres que obtienen Préstamos PLUS para cubrir los estudios de alumnos dependientes también corresponden a los estudiantes de posgrado. Estas condiciones incluyen las siguientes: que el solicitante no tenga historial crediticio negativo, que el período de devolución comience en la fecha del último desembolso del préstamo y que los Préstamos FFEL PLUS tengan una tasa de interés fija del 8.5 por ciento y los Préstamos Directos PLUS, del 7.9 por ciento. Al igual que los padres, los estudiantes de posgrado pueden obtener hasta un monto equivalente al costo de estudiar menos otra ayuda económica recibida.

A diferencia de los padres, los estudiantes de posgrado deberán llenar la FAFSA si desean participar en el Programa de Préstamos PLUS. Además, antes de solicitarse el Préstamo PLUS, la institución educativa del estudiante de posgrado deberá averiguar que no se ha sobrepasado la cantidad anual máxima permitida al amparo el Programa de Préstamos Stafford.

¿Cómo pueden los padres y los alumnos de posgrado solicitar un Préstamo PLUS?
Préstamos Directos PLUS:
La institución educativa en la que usted tiene previsto estudiar debe participar en el Programa de Préstamos Directos.
Hay que llenar una solicitud de Préstamos Directos PLUS y un pagaré, los cuales se encuentran en un solo formulario, que se obtiene de la oficina de ayuda económica de la institución.
Préstamos FFEL PLUS:
La institución educativa en la que usted tiene previsto estudiar debe participar en el Programa de Préstamos FFEL.
Hay que llenar una solicitud de Préstamos FFEL PLUS, que se obtiene de la institución educativa, del prestamista o del garante de su estado. Después de que la institución educativa llene la porción de la solicitud que le corresponda, el formulario se deberá enviar al prestamista para ser evaluado.
Aunque no es obligatorio hacerlo en el caso de los Préstamos PLUS, conviene que los hijos dependientes presenten la solicitud FAFSA. De esta manera, los hijos podrán recibir la máxima cantidad posible de ayuda a la que tengan derecho a recibir. Los alumnos de posgrado que soliciten un Préstamo PLUS están obligados a presentar la FAFSA.

¿Pueden los padres y los alumnos de posgrado obtener un Préstamo Directo PLUS, y también un Préstamo FFEL PLUS?
No. Aunque pueden solicitar cualquiera de los préstamos para pagar los gastos de estudio de usted, no pueden solicitar los dos para un mismo período académico. No obstante, sus padres pueden pedir, por ejemplo, un Préstamo Directo PLUS para usted y un Préstamo FFEL PLUS para uno de sus hermanos.

¿Cuáles son los requisitos para obtener el Préstamo PLUS?
Los solicitantes de Préstamos PLUS deberán satisfacer los requisitos generales de los programas federales de ayuda estudiantil. Si los padres obtienen un préstamo para que su hijo dependiente pueda cursar estudios de pregrado, éste también tendrá que satisfacer los requisitos generales de participación. Por ejemplo, el solicitante del Préstamos PLUS y el estudiante deberán cumplir con lo siguiente:
Ser ciudadanos de los EE.UU. o extranjeros con derecho a participar.
No estar incumplimiento de pago de ningún préstamo federal para estudiantes.
No deber dinero por concepto de reintegro a los programas federales de becas de estudio.
¿Existe algún otro requisito?
Los solicitantes de Préstamos PLUS no deberán tener un historial crediticio negativo. (Se verificará el historial.) Los que tengan un historial negativo aún pueden recibir el préstamo si aportan documentación que demuestre la existencia de circunstancias atenuantes o si obtienen un aval que no tenga un historial negativo. El aval se compromete a pagar el préstamo si el prestatario no lo hace.

¿Hay que encontrar un prestamista?
Préstamos Directos PLUS: No. El Departamento de Educación de EE.UU. es el prestamista. Para ayudar a administrar el Programa, la institución educativa se encarga de lo siguiente:
distribuir las solicitudes de préstamo;
realizar los trámites necesarios y
desembolsar los fondos del préstamo.
Préstamos FFEL PLUS: Sí. Hay que encontrar un prestamista participante.
Si el solicitante necesita ayuda para encontrar un prestamista participante, deberá llamar a la institución educativa o al garante en su estado.
Para obtener la dirección y el número telefónico de esta agencia, el solicitante puede comunicarse con el Centro de Información sobre Ayuda Federal para Estudiantes, al 1-800-433-3243.
¿Cuánto pueden pedir prestado los padres o alumnos de posgrado?
El monto máximo del préstamo equivale al costo de estudiar menos cualquier otra ayuda que el alumno reciba.

Si los padres obtienen un Préstamo PLUS para ayudar a un alumno dependiente, ¿quién recibe el dinero, los padres o el estudiante?

La institución aplicará los fondos al pago de la matrícula y cuotas, de los gastos de hospedaje y alimentación, y de otros cobros institucionales.
Si queda alguna porción del préstamo, los padres la recibirán por cheque o en efectivo, salvo que autoricen la entrega de los fondos al estudiante o que el dinero se acredite en la cuenta que la institución mantenga para éste.
Cualquier monto restante se deberá usar para sufragar los gastos de estudio.
¿Puede el solicitante rechazar el préstamo después de firmar el pagaré y de aceptar las condiciones de la obligación?
Sí. puede rechazar el préstamo al igual que lo haría el solicitante en el caso de los Préstamos Stafford o Perkins.

Además del interés, ¿hay que pagar alguna otra cuota o comisión para obtener un Préstamo PLUS?
Sí. Hay una comisión máxima equivalente al 4 por ciento del préstamo.

Préstamos (continuación)

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¿Cuáles son las diferencias entre estos programas de préstamo?
En el cuadro que presentamos anteriormente, se muestran las diferencias principales entre los programas. Para obtener información más detallada, siga leyendo la presente sección. La oficina de ayuda económica de la institución educativa puede indicar cuáles de los programas se ofrecen ahí.

¿Cómo hago para solicitar un Préstamo Perkins o un Préstamo Stafford?
Al igual que se haría para solicitar cualquier asistencia de nuestros otros programas, hay que llenar la Solicitud Gratuita de Ayuda Federal para Estudiantes (FAFSA). No es necesario llenar ninguna otra solicitud de préstamo. Sin embargo, tendrá que firmar el pagaré, que es un documento legalmente vinculante que lo compromete a reembolsar el préstamo según las condiciones estipuladas en esa letra. Es importante leer el pagaré con detenimiento y guardarlo para futura referencia.

¿SABÍA QUE…?
Un título universitario le dará mejores probabilidades de empleo y mayores ingresos. Esto se debe a que el 90 por ciento de los empleos en la nueva economía de mercado impulsada por el conocimiento requieren algún nivel de educación superior.

¿Cuánto puedo pedir prestado?
Préstamos Perkins
El cuadro «Comparación de préstamos para estudiantes», en la página 10, muestra los montos máximos que se pueden recibir al amparo del Programa Federal de Préstamos Perkins, según se trate de un alumno de pregrado o de posgrado. Tenga presente, sin embargo, que el monto efectivo que usted consiga puede ser menor que los máximos señalados.
Cada año el Departamento de Educación de EE.UU. proporciona a toda institución participante cierta cantidad de fondos del Programa Federal de Préstamos Perkins.
Cuando se agotan los fondos, no se otorgan más préstamos ese año de concesión.
Para mejorar las probabilidades de recibir fondos del Programa, conviene presentar la FAFSA cuanto antes.
Préstamos Stafford (Directos y FFEL)
Consulte los montos indicados en el cuadro «Montos anuales máximos: Préstamos Directos y FFEL “Stafford”, con subsidio y sin subsidio». Como se puede apreciar, los límites también dependen de lo siguiente:
del año de estudio
de la situación de dependencia
Préstamos Stafford con subsidio:

Se ofrecen a los estudiantes que demuestren necesidad económica.
Los alumnos que reúnan los requisitos pueden obtener un Préstamo Stafford «con subsidio» para cubrir toda o parte de esa necesidad.
Con los préstamos con subsidio (o subvencionados), el Departamento de Educación de EE.UU. pagará los intereses durante los siguientes períodos:
el estudio con una dedicación de por lo menos medio tiempo;
los seis primeros meses después del final de sus estudios (conocido cómo el período de gracia) y
los períodos de aplazamiento de pago (o sea, cuando se posponen los pagos por concepto de la deuda del préstamo).
La cantidad del préstamo con subsidio que se obtenga no deberá sobrepasar la necesidad económica del estudiante.

Préstamos Stafford sin subsidio:
Se ofrece al alumno que no demuestre necesidad económica.
El Departamento de Educación no paga los intereses de los préstamos sin subsidio.
Para determinar el importe del préstamo sin subsidio que se pueda obtener, la institución educativa utilizará la siguiente fórmula:

Montos anuales máximos: Préstamos Directos y FFEL «Stafford», con subsidio y sin subsidio
Alumno dependiente de pregrado
Años
1.er año $3,500
2.do año $4,500
A partir del 3.er año (cada año) $5,500
Deuda máxima total de Préstamos Stafford al graduarse $23,000

Alumno independiente de pregrado
1.er año $7,500: No más de $3,500 de este monto pueden ser de préstamos con subsidio.
2.do año $8,500: No más de $4,500 de este monto pueden ser de préstamos con subsidio.
A partir del 3.er año (cada año) $10,500: No más de $5,500 de este monto pueden ser de préstamos con subsidio.
Deuda máxima total de Préstamos Stafford al graduarse $46,000: No más de $23,000 de este monto pueden ser de préstamos con subsidio.

Alumno de posgrado
1.er año / 2.do año / A partir del 3.er año (cada año)
$20,500 (cada año de estudio): No más de $8,500 del monto anual pueden ser de préstamos con subsidio.

Deuda máxima total de Préstamos Stafford al graduarse
$138,500: No más de $65,500 de este monto pueden ser de préstamos con subsidio. El monto límite incluye los Préstamos Stafford obtenidos durante los estudios de pregrado.

NOTA: Los montos que se pueden obtener para cubrir los períodos de estudio que duren menos de un año académico serán menores que los señalados. Asimismo, si el alumno recibe otras ayudas para pagar una porción de su costo de estudiar, es posible que el monto del préstamo sea menor que los indicados. La institución educativa puede negarse a certificar la solicitud de préstamo, o puede certificar el préstamo por una cantidad menor a la que se haya calculado según la necesidad económica del alumno, siempre que documente los motivos de su acción y se los explique al estudiante por escrito. La decisión de la institución es final y no se puede apelar de ella ante el Departamento de Educación de EE.UU.

Dependiendo de su necesidad económica, usted podrá recibir préstamos con subsidio y sin subsidio durante el mismo período académico, siempre y cuando el total de los préstamos no exceda el límite anual.

Si se trata de un préstamo sin subsidio:
Hay que pagar los intereses que se devenguen, desde el momento en que se desembolse el préstamo hasta que se reembolse la deuda en su totalidad.
Se pueden pagar los intereses durante los períodos de estudios y también durante los períodos de aplazamiento de pago y de «indulgencia de morosidad».
Se puede dejar que los intereses se acumulen (por ejemplo, durante un período de estudios) y luego mandar que se capitalicen, o sea, que se añadan al capital del préstamo. Es importante señalar que si los intereses se acumulan, el monto total que se tendrá que pagar será mayor que el monto que se pagaría si se hubieran pagado los intereses a medida que vencían.
Además del interés, ¿hay que pagar alguna otra cuota o comisión para obtener estos préstamos?
Préstamos Federales Perkins: No.
Préstamos Directos y FFEL: Sí. Al tratarse de préstamos desembolsados por primera vez entre el 1 de julio del 2006 y el 30 de junio del 2007, hay que pagar una comisión de apertura de hasta el 3 por ciento del importe del préstamo, la que se deduce proporcionalmente de cada desembolso. Tratándose de préstamos desembolsados en años posteriores, el monto máximo de la comisión se irá reduciendo de forma gradual. Como consecuencia de esta deducción, el monto efectivo que se reciba será algo menor que el monto prestado y que deberá ser reembolsado.
¿Cómo me entregarán el dinero?
Préstamos Perkins:
La institución educativa le entregará los fondos directamente (en general, por cheque) o le acreditará los fondos del préstamo en su cuenta.
Generalmente, se desembolsan los fondos del préstamo en por lo menos dos cuotas durante el año académico.
Préstamos Stafford:
La institución le desembolsará los fondos en al menos dos cuotas.
Ninguna de las cuotas será mayor que la mitad del importe del préstamo.
Si usted es alumno del primer año de pregrado, y también obtiene un préstamo por primera vez, el desembolso inicial de los fondos no se podrá realizar sino hasta 30 días después del primer día de su período académico.
Si es la primera vez que usted recibe ayuda federal, deberá completar una sesión de asesoramiento de ingreso antes del primer desembolso del préstamo.
Es obligatorio que el dinero de los préstamos estudiantiles se utilice primero para pagar la matrícula, cuotas y gastos de hospedaje y alimentación. Si queda alguna porción del préstamo, el estudiante recibirá estos fondos en cheque o en efectivo, salvo que se le dé permiso por escrito a la institución educativa para que le retenga los fondos hasta una fecha posterior durante el período académico.

¿SABÍA QUE…?
A nuestro personal le incumbe mucho más que la tramitación de solicitudes y el otorgamiento de préstamos, aunque esto también es una responsabilidad considerable. Trabajamos con más de 3,000 prestamistas privados que participan en nuestros programas y con más de 6,000 universidades e institutos profesionales que administran nuestros fondos. Parte de nuestra función es asegurar que todas estas entidades traten al prestatario justa y éticamente.

Si cambio de idea, ¿tendré la oportunidad de rechazar el préstamo después de firmar el pagaré y de aceptar las condiciones de la obligación?
Sí. La institución educativa le notificará por escrito cada vez que le acredite fondos del préstamo en su cuenta. Usted puede rechazar todo o parte del préstamo si le informa a la institución que desea hacerlo. Deberá avisarle de su intención dentro de un número limitado de días siguientes a la fecha en que la institución le envíe la notificación. En el pagaré, y también en la información que reciba de su institución educativa, encontrará las reglas y plazos relativos al rechazo del préstamo.

¿SABÍA QUE…?
La ayuda que ofrece la Oficina de Ayuda Federal para Estudiantes constituye la fuente más importante en el país de asistencia destinada para sufragar los estudios postsecundarios, formando casi el 70 por ciento (en dólares) de toda la ayuda otorgada a nivel nacional.

Préstamos

2008-01-18T16:04:00.000-08:00

A diferencia de las becas o del trabajo y estudio, los préstamos son dinero prestado que debe reembolsarse con intereses al prestamista, al igual que los préstamos hipotecarios o los que se obtienen para comprar automóviles. Si usted obtiene estos préstamos, recuerde que no se puede anular la deuda de los mismos por el simple hecho de que no le haya gustado la educación que recibió o no haya obtenido empleo relacionado con su campo de estudio, ni porque esté pasando dificultades económicas. Estos préstamos suponen una obligación legal, así que antes de conseguirlos, piense bien el monto que tendrá que devolver a lo largo de los años.

Tipos de préstamos:

Préstamos Federales «Perkins»:

Estos créditos se hacen a los alumnos de pregrado y de posgrado, mediante instituciones participantes.

Se ofrecen a los alumnos que demuestren el mayor grado de necesidad económica (los becarios Pell tienen consideración prioritaria).

El beneficiario puede cursar estudios con una dedicación de tiempo completo o de tiempo parcial.

Estos préstamos se devuelven a la institución educativa.

Préstamos «Stafford»: Estos préstamos se hacen a los alumnos de pregrado y de posgrado. Para recibir estos préstamos, es obligatorio estudiar con una dedicación de por lo menos medio tiempo.

Hay dos tipos de Préstamos Stafford: préstamos con subsidio y sin subsidio. Usted deberá demostrar necesidad económica para recibir un Préstamo Stafford con subsidio. No es necesario demostrar necesidad económica para obtener uno sin subsidio. El Departamento de Educación de EE.UU. pagará los intereses que devengue el Préstamo Stafford con subsidio durante ciertos períodos. Estos préstamos se hacen al amparo de uno de los siguientes programas administrados por el Departamento:
Programa Federal de Préstamos Directos para Estudiantes «William D. Ford» (Programa de Préstamos Directos). Los alumnos y padres que reúnan los correspondientes requisitos pueden obtener préstamos directamente del Departamento de Educación de EE.UU., mediante las instituciones educativas participantes. Este programa ofrece Préstamos Directos Stafford, Préstamos Directos PLUS y Préstamos Directos de Consolidación. Todos estos préstamos se devuelven directamente al Departamento de Educación.

Programa Federal de Préstamos para la Educación de la Familia (Programa FFEL). Los fondos de estos préstamos los aportan los prestamistas privados y los garantizan el Gobierno federal. Este programa ofrece Préstamos FFEL Stafford, Préstamos FFEL PLUS y Préstamos FFEL de Consolidación. Todos estos préstamos se devuelven al banco o al prestamista que los hicieron.
Préstamos PLUS: Estos préstamos los pueden obtener los padres para sufragar los estudios de pregrado de sus hijos dependientes. De ahora en adelante, también los estudiantes de posgrado pueden obtener los Préstamos PLUS para ayudar a costear los gastos de su propia educación. Estos préstamos se hacen mediante el Programa de Préstamos Directos y el Programa de Préstamos FFEL, mencionados arriba.

Préstamos de Consolidación: Estos préstamos, obtenidos al amparo del Programa de Préstamos Directos o del Programa de Préstamos FFEL, permiten al estudiante (o a los padres de éste) combinar los saldos de varios y distintos préstamos federales en una obligación única, que se amortizará con una sola cuota mensual. (Para mayor información sobre estos préstamos, consulte la sección «Consolidación de préstamos» .)

Trabajo y estudio

2008-01-18T09:42:00.000-08:00

¿Qué es el Programa Federal de Trabajo y Estudio?
En este programa, usted puede estudiar a tiempo parcial y así ganar dinero para pagar su educación. El Programa Federal de Trabajo y Estudio tiene las siguientes características:
Permite al alumno trabajar a tiempo parcial mientras estudia.
Ayuda a pagar los gastos de estudio.
Pueden participar los estudiantes de pregrado y de posgrado
Pueden participar los que estudian con dedicación de tiempo completo o parcial.
Las instituciones participantes administran el Programa.
El Programa fomenta, en lo posible, la labor al servicio de la comunidad y también el trabajo relacionado con el programa de estudio del alumno.
¿Qué tipos de trabajo se ofrecen?
El Programa Federal de Trabajo y Estudio ofrece puestos de empleo al alumno que demuestre necesidad económica. El Programa fomenta la labor al servicio de la comunidad y también el trabajo relacionado con el programa de estudio del alumno.

Los puestos otorgados al amparo del Programa Federal de Trabajo y Estudio, ¿son en el recinto educativo o fuera de él?
En los dos. Si usted trabaja en el recinto, lo más probable es que trabaje para su institución postsecundaria. En cambio, si trabaja fuera del campus, su empleador será, por lo habitual, una organización particular sin fines de lucro o una agencia pública. En este caso, el trabajo deberá ser de interés público.

Algunas universidades o institutos pueden tener acuerdos con algunos empleadores de la iniciativa privada que tienen fines de lucro, con el objeto de que éstos brinden empleos a los participantes en el Programa. En tal caso, el trabajo que usted realice con ellos deberá guardar relación con su programa de estudio, en la mayor medida posible. Si asiste a una institución educativa con fines de lucro, puede suceder que haya otras restricciones con respecto al tipo de empleo que se le asigne.

¿Cuánto puedo ganar?
El salario que usted cobre mediante el programa será, por lo menos, igual al mínimo federal vigente, aunque podría ser mayor, dependiendo del tipo de trabajo que haga y de las destrezas que se necesiten para desempeñarlo.

El monto que se le conceda a usted del Programa Federal de Trabajo y Estudio se calculará en función de lo siguiente:
la fecha de solicitud,
el grado de su necesidad económica y
el nivel de financiación del centro educativo. (Cada año proporcionamos a las instituciones cierta cantidad de fondos del Programa. Cuando todos los fondos se adjudiquen, no se podrá conceder más dinero del Programa para ese año de concesión.)
¿Cómo me pagarán?

Si usted es estudiante de pregrado, se le pagará por hora.
Si es estudiante de posgrado, se le puede pagar por hora o mediante un sueldo, según la naturaleza del trabajo que realice.
Su institución educativa deberá pagarle, como mínimo, una vez al mes.
Ha de pagarle directamente, a menos que usted le pida que:
abone su cuenta bancaria o
utilice el dinero para cubrir los gastos institucionales que guarden relación con sus estudios, tales como la matrícula y cuotas, y el alojamiento y comida.
¿Puedo trabajar cuantas horas quiera?
No. La cantidad que usted gane al amparo del Programa Federal de Trabajo y Estudio no puede sobrepasar la concesión estipulada. Además, al asignarle las horas de trabajo, su empleador o administrador de ayuda económica tendrán en cuenta su horario de clases y su progreso académico.

Turae on Student Loans

2008-01-17T20:36:00.000-08:00

¿Qué tipos de ayuda federal puedo obtener?

2008-01-17T09:30:00.000-08:00

Hay tres tipos de ayuda federal para estudiantes:

Becas: Ayuda económica que no tiene que devolverse (a menos que, por ejemplo, el becario se retire de la institución educativa y, por ello, deba reintegrar lo recibido al programa de becas).
Trabajo y estudio: Ayuda estudiantil que el alumno gana trabajando.
Préstamos: Ayuda que el alumno toma prestado para sufragar los gastos de estudio. Hay que devolver los préstamos, con intereses, al prestamista.
Becas
Hay cuatro tipos de becas federales:
La Beca Federal «Pell»
La Beca Federal Suplementaria para la Oportunidad Educativa (FSEOG)
La Beca para el Fomento de la Competitividad Académica (ACG)
La Beca Nacional para el Fomento de la Retención de Estudiantes de Matemáticas y Ciencias (Beca Nacional SMART)
A diferencia de los préstamos, las becas no tienen que reembolsarse, a menos que, por ejemplo, se otorguen los fondos al alumno de forma indebida o éste se retire de la institución educativa. Todas las becas federales se otorgan a estudiantes con necesidad económica. La cantidad de la Beca Federal Pell depende de lo siguiente: el costo de estudiar, el aporte familiar previsto, la dedicación de estudio (es decir, tiempo completo o tiempo parcial) y la duración del período en que esté matriculado (es decir, un año académico o menos). La cantidad de su Beca Suplementaria (FSEOG), Beca Competitividad Académica (ACG) o Beca Nacional SMART depende del grado de necesidad económica del estudiante (vea «Necesidad económica y el aporte familiar previsto»).

¿Qué es la Beca Federal «Pell»?
La Beca Pell constituye la base de los programas de ayuda federal para estudiantes y, como tal, se le pueden agregar otros tipos de asistencia, ya sea federal o no federal.
Se otorga la Beca Pell, en general, exclusivamente a estudiantes de pregrado (o sea, universitarios, profesionales y técnicos) que aún no hayan obtenido ni título universitario de cuatro años (bachelor’s degree) ni título de posgrado.
En algunos casos limitados, el alumno puede recibir la Beca si se matricula en un programa de certificación docente después de conseguir el grado universitario.
El monto máximo puede cambiar de un año al otro. El monto máximo que se otorgará durante el año 2007-2008 es de $4,310.
¿Qué es la Beca Federal Suplementaria para la Oportunidad Educativa, o «FSEOG»?
Las Becas Suplementarias se destinan a los estudiantes de pregrado que evidencien una necesidad excepcional, es decir, a los que tengan el menor «aporte familiar previsto» (EFC).
A la hora de otorgar las Becas Suplementarias, se da consideración prioritaria a los becarios del Programa de Becas Pell.
Las Becas Suplementarias oscilan entre $100 y $4,000 al año.
¿En qué consiste la diferencia entre estas dos becas?
Becas Federales Pell:
Si el estudiante reúne los requisitos para recibir una Beca Federal Pell, se le otorgará el máximo del monto al que tenga derecho a recibir, ya que cada institución educativa que participa en el programa cuenta con suficientes fondos como para garantizar la concesión de la Beca Pell a todo alumno que cumpla con los requisitos de participación.
La cantidad de otra ayuda estudiantil que el alumno reciba no afectará el monto de su Beca Pell.
Becas Suplementarias (FSEOG):
A diferencia de lo que pasa con las Becas Pell, el monto de la Beca Suplementaria que se le conceda al estudiante dependerá no sólo de la necesidad económica que éste demuestre, sino también de la cantidad de otras ayudas que reciba y de la disponibilidad de fondos en la institución educativa.
El recibir otra asistencia puede resultar en una reducción del monto de la Beca Suplementaria.
No todas las instituciones postsecundarias participan en el Programa de Becas Suplementarias.
La oficina de ayuda económica de la institución decide cómo adjudicar los fondos del Programa.
Cada año toda institución que participe en el Programa de Becas Suplementarias recibe del Departamento de Educación de EE.UU. cierta cantidad de fondos del Programa. Cuando se agota en la institución todo el dinero previsto, no se pueden otorgar más Becas Suplementarias durante ese año de concesión.

Debido a las limitaciones expuestas arriba, las Becas Suplementarias no se conceden a todo solicitante que reúna los requisitos, por lo que conviene —para mejorar las probabilidades de recibir estos fondos— presentar la FAFSA lo antes posible.
¿Qué es la Beca para el Fomento de la Competitividad Académica (ACG)?
Esta beca se ofrece al amparo de un programa nuevo, establecido durante el año de concesión 2006-2007, que va dirigido a los becarios Pell que sean ciudadanos de EE.UU. y cursen estudios de pregrado con dedicación exclusiva en un programa aprobado. El candidato a esta beca deberá haber terminado satisfactoriamente un programa riguroso de estudios en el nivel secundario. También, deberá estar matriculado en uno de tres tipos de programas: (1) en un programa de dos años de duración cuyos créditos puedan convalidarse para efectos de la titulación universitaria de cuatro años; (2) en un programa de estudios de cuatro años o (3) en un programa de posgrado que incluya al menos tres años de estudios de pregrado.

Los programas rigurosos de estudios en el nivel secundario incluyen los siguientes:
Los programas propuestos por los estados a instancias del Departamento de Educación de EE.UU. Consulte la lista ubicada en www.ed.gov/admins/finaid/about/ac-smart/state-programs06.html.
Los programas de estudios secundarios avanzados o de honores.
Los programas que incluyan las asignaturas obligatorias similares a las del programa State Scholars Iniciative. Hay que cursar cuatro años de lengua y literatura (en inglés); tres años de matemáticas (incluidas la Álgebra I y otra asignatura de nivel superior, como por ejemplo, el Álgebra II, la geometría o análisis de datos y estadística); tres años de ciencias naturales (incluidas dos asignaturas de biología, química o fisica); tres años de ciencias sociales y un año de un idioma que no sea inglés.
Los programas Advanced Placement (Colocación Avanzada) o International Baccalaureate: Hay que cursar como mínimo dos asignaturas del programa Advanced Placement o del International Baccalaureate y también aprobar las correspondientes pruebas. El estudiante tiene que obtener una puntuación de 3 o superior en las pruebas Advanced Placement y de 4 o más en las de International Baccalaureate.

Los estudiantes que cursan el primer año académico de pregrado deberán cumplir con lo siguiente:
estar matriculados en un programa aprobado;
haber terminado un programa riguroso de estudios en el nivel secundario;
no haberse matriculado anteriormente como estudiante regular en ningún programa de pregrado y
haberse graduado de la secundaria después del 1 de enero del 2006.

El monto máximo de la beca es de $750 para el primer año de pregrado.

Los estudiantes que cursan el segundo año académico de pregrado deberán cumplir con lo siguiente:
estar matriculados en un programa aprobado;
haber terminado un programa riguroso de estudios en el nivel secundario;
haberse graduado de la secundaria después del 1 de enero del 2005 y
haber obtenido un promedio de calificaciones (índice académico) de por lo menos 3.0 al final del primer año de un programa aprobado.

El monto máximo de la beca es de $1,300 para el segundo año de pregrado.

¿Qué es la Beca Nacional para el Fomento de la Retención de Estudiantes de Matemáticas y Ciencias (Beca Nacional SMART)?
Este nuevo programa de becas va dirigido a los becarios Pell que sean ciudadanos de EE.UU. y cursen el tercer o cuarto año académico de pregrado con dedicación exclusiva en un programa aprobado. Para efectos de la Beca Nacional SMART, hay que cursar un programa de estudios aprobado que conduce a la obtención del título universitario de cuatro años o un programa aprobado de posgrado que incluya al menos tres años de estudios de pregrado (universitarios). El monto máximo de la beca es de $4,000 al año para el tercer y cuarto años académicos.
Los estudiantes deberán cumplir con lo siguiente:
cursar un programa de estudios aprobado en ciencias físicas o biológicas, informática, ingeniería, tecnología, matemáticas o en uno de los idiomas que se consideran críticos para la seguridad nacional, y
tener un promedio de calificaciones (índice académico) de por lo menos 3.0.
¿Cuál es la diferencia entre la Beca de Competitividad Académica y la Beca Nacional SMART?

La Beca Competitividad Académica (ACG) va dirigida a los estudiantes de pregrado matriculados en el primer o segundo año académico de un programa aprobado en cualquier especialización; que hayan concluido un programa riguroso de estudios en el nivel secundario y que también tengan un promedio de calificaciones de por lo menos 3.0 al final del primer año académico.
La Beca Nacional SMART va dirigida a los estudiantes de pregrado matriculados en el tercer o cuarto año académico de un programa aprobado en una especialización autorizada y que tengan un promedio de calificaciones de por lo menos 3.0. Para ser candidato a esta beca, el estudiante no tiene que haber terminado un programa riguroso de estudios en el nivel secundario.
Toda universidad que ofrezca por lo menos uno de los programas aprobados y participe en el Programa Federal de Becas Pell deberá otorgar estas becas a todo solicitante que reúna los correspondientes requisitos. La suma del aporte familiar previsto y la ayuda económica recibida (incluida cualquiera de estas becas) no deberá exceder el costo de estudiar.

¿Cuánto dinero puedo conseguir?
Becas Pell
El monto de dinero que se conceda puede cambiar de un año al otro. Para el año de concesión 2007-2008 (1 de julio de 2007 al 30 de junio de 2008), los montos de las Becas Pell oscilarán entre los $400 y los $4,310.
El importe efectivo que se le adjudique a usted se calculará en función de lo siguiente:
su aporte familiar previsto (EFC);
su costo de estudiar;
su dedicación de estudio (o sea, tiempo completo o tiempo parcial) y
la duración del período en que esté matriculado (es decir, un año académico o menos).
Se puede recibir sólo una Beca Pell durante un mismo año de concesión.
No se pueden recibir fondos del Programa de Becas Pell de más de una institución educativa a la vez.
Becas Suplementarias (FSEOG)
Se pueden obtener entre $100 y $4,000 al año, y el monto exacto dependerá de lo siguiente:
la fecha de solicitud;.
el grado de necesidad económica del estudiante;
el nivel de financiamiento de la institución educativa y
las normas de la oficina de ayuda económica de
Becas Competitividad Académica (ACG)
Hasta $750 para alumnos de primer año de estudios de pregrado.
Hasta $1,300 para alumnos de segundo año de estudios de pregrado.
Becas Nacionales SMART
Hasta $4,000 por año para cubrir el tercer y cuarto año de estudios.
¿Cómo me entregarán los fondos?
La institución educativa puede:
acreditar los fondos de la beca en la cuenta que la institución mantiene para usted;
pagarle el dinero directamente (en general, por cheque);
combinar estos dos métodos o
abonar los fondos en la cuenta bancaria de usted (previo permiso).
¿Con qué frecuencia recibiré el dinero?

Los fondos han de desembolsarse por lo menos una vez por período académico, ya sea por trimestre, cuatrimestre o semestre.
Aquellos centros educativos que no operen según los períodos tradicionales tendrán que desembolsar los fondos al menos dos veces al año académico.
¿Puedo recibir una beca si estudio con una dedicación de menos de medio tiempo?
Sí, pero sólo cuando se trata de la Beca Federal Pell y de la Beca Suplementaria. No obstante, la cantidad que reciba no será tan grande que la que recibiría si estudiara a tiempo completo. Pero, para poder recibir la Beca Competitividad Acádemica y la Beca Nacional SMART, hay que estudiar a tiempo completo.

Apply Early for Federal Student Aid with the FAFSA

2008-01-17T09:28:00.000-08:00

The start of the calendar year also marks the beginning of the college financial aid season with the release of the U.S. Department of Education's 2008-09 Free Application for Federal Student Aid (FAFSA). The FAFSA is the qualifying form for all federal grants and loans as well as many state and private student aid programs.

Each year, the U.S. Department of Education disburses more than $80 billion in higher education grants and loans to students attending postsecondary schools, but, to qualify, students must first complete the FAFSA.

"We want to make sure students and families take full advantage of the billions of dollars in federal financial assistance available to them for postsecondary education each year," Secretary Margaret Spellings said. "Most families are eligible to receive some type of financial aid; they just have to take that first step and complete the application."

Each year, an estimated 14 million applicants apply, and more than 10 million receive some type of federal grant or loan.

More than 95 percent of FAFSAs are submitted online, and now, with several added features, it is easier than ever to apply online. Students and families can:

Request a personal identification number (PIN) and immediately receive it to electronically sign the application.
Submit an online FAFSA and immediately receive a confirmation with a preliminary expected family contribution.
List up to 10 schools to receive the provided financial aid information.
Copy parental information to another FAFSA application for a second or third child.
To determine aid eligibility, students and families should fill out the FAFSA as early as possible after Jan. 1 for the academic year beginning July 1. Many factors contribute to a student's eligibility for federal financial aid besides income, such as the size of the family and the age of the oldest parent. Completing a FAFSA is the only way students and families can find out how much federal aid they are eligible to receive.

Although completing the FAFSA online is the preferred method for most families, there are other FAFSA filing options available, including downloading the form or ordering a hard copy. Both online and hard copy FAFSAs are available in English and Spanish at the Federal Student Aid Web site, www.federalstudentaid.ed.gov, by clicking FAFSA Filing Options.

(Source: http://www.ed.gov)

529 - Part 11

2008-01-10T15:30:00.000-08:00

Where can I find more information?

Offering Circulars for 529 Plans
You can find out more about a particular 529 plan by reading its offering circular. Often called a “disclosure statement,” “disclosure document,” or “program description,” the offering circular will have detailed information about investment options, tax benefits and consequences, fees and expenses, financial aid, limitations, risks, and other specific information relating to the 529 plan. Most 529 plans post their offering circulars on publicly available websites. The National Association of State Treasurers created the College Savings Plan Network which provides links to most 529 plan websites.

Additional Information About Underlying Mutual Funds
You may want to find more about a mutual fund included in a college savings plan investment option. Additional information about a mutual fund is available in its prospectus, statement of additional information, and semiannual and annual report. Offering circulars for college savings plans often indicate how you can obtain these documents from the plan manager for no charge. You can also review these documents on the SEC’s EDGAR database.

Investment Adviser Public Disclosure Website
Many college savings plans’ program managers are registered investment advisers. You can find more about investment advisers through the Investment Adviser Public Disclosure website. On the website, you can search for an investment adviser and view the Form ADV of the adviser. Form ADV contains information about an investment adviser and its business operations as well as disclosure about certain disciplinary events involving the adviser and its key personnel.

Broker-Dealer Public Disclosure Website
You can find more about a broker through FINRA’s BrokerCheck website. On the website, you can search for any disciplinary sanctions against your broker, as well as information about his or her professional background and registration and licensing status.

Other Online Resources
You can learn more about 529 plans and other college saving options on FINRA’s Smart Saving for College website. The website contains links to other helpful sites, including the College Savings Plan Network and the Internal Revenue Service’s Publication 970 (Tax Benefits for Higher Education). FINRA’s investor alert on 529 plans also provides valuable information for investors.

529 - Part 10

2008-01-10T09:13:00.000-08:00

What questions should I ask before I invest in a 529 plan?

Knowing the answers to these questions may help you decide which 529 plan is best for you.
* Is the plan available directly from the state or plan sponsor?

* What fees are charged by the plan? How much of my investment goes to compensating my broker? Under what circumstances does the plan waive or reduce certain fees?

* What are the plan’s withdrawal restrictions? What types of college expenses are covered by the plan? Which colleges and universities participate in the plan?

* What types of investment options are offered by the plan? How long are contributions held before being invested?

* Does the plan offer special benefits for state residents? Would I be better off investing in my state’s plan or another plan? Does my state’s plan offer tax advantages or other benefits for investment in the plan it sponsors? If my state’s plan charges higher fees than another state’s plan, do the tax advantages or other benefits offered by my state outweigh the benefit of investing in another state’s less expensive plan?

* What limitations apply to the plan? When can an account holder change investment options, switch beneficiaries, or transfer ownership of the account to another account holder?

* Who is the program manager? When does the program manager’s current management contract expire? How has the plan performed in the past?

529 - Part 9

2008-01-09T11:08:00.000-08:00

Is investing in a 529 plan right for me?

Before you start saving specifically for college, you should consider your overall financial situation. Instead of saving for college, you may want to focus on other financial goals like buying a home, saving for retirement, or paying off high interest credit card bills. Remember that you may face penalties or lose benefits if you do not use the money in a 529 account for higher education expenses. If you decide that saving specifically for college is right for you, then the next step is to determine whether investing in a 529 plan is your best college saving option. Investing in a 529 plan is only one of several ways to save for college. Other tax-advantaged ways to save for college include Coverdell education savings accounts, Uniform Gifts to Minors Act (“UGMA”) accounts, Uniform Transfers to Minors Act (“UTMA”) accounts, tax-exempt municipal securities, and savings bonds. Saving for college in a taxable account is another option.

Each college saving option has advantages and disadvantages, and may have a different impact on your eligibility for financial aid, so you should evaluate each option carefully. If you need help determining which options work best for your circumstances, you should consult with your financial professional or tax advisor before you start saving.

529 - Part 8

2008-01-08T08:59:00.000-08:00

Does investing in a 529 plan impact financial aid eligibility?

While each educational institution may treat assets held in a 529 plan differently, investing in a 529 plan will generally reduce a student’s eligibility to participate in need-based financial aid. Beginning July 1, 2006, assets held in pre-paid tuition plans and college savings plans will be treated similarly for federal financial aid purposes. Both will be treated as parental assets in the calculation of the expected family contribution toward college costs. Previously, benefits from pre-paid tuition plans were not treated as parental assets and typically reduced need-based financial aid on a dollar for dollar basis, while assets held in college savings plans received more favorable financial aid treatment.

529 - Part 7

2008-01-07T13:40:00.000-08:00

What restrictions apply to an investment in a 529 plan?

Withdrawal restrictions apply to both college savings plans and pre-paid tuition plans. With limited exceptions, you can only withdraw money that you invest in a 529 plan for eligible college expenses without incurring taxes and penalties. In addition, participants in college savings plans have limited investment options and are not permitted to switch freely among available investment options. Under current tax law, an account holder is only permitted to change his or her investment option one time per year. Additional limitations will likely apply to any 529 plan you may be considering. Before you invest in a 529 plan, you should read the plan’s offering circular to make sure that you understand and are comfortable with any plan limitations.

529 - Part 6

2008-01-07T09:05:00.000-08:00

Is there any way to purchase a 529 plan but avoid some of the extra fees?

Direct-Sold College Savings Plans
States offer college savings plans through which residents and, in many cases, non-residents can invest without paying a "load," or sales fee. This type of plan, which you can buy directly from the plan's sponsor or program manager without the assistance of a broker, is generally less expensive because it waives or does not charge sales fees that may apply to broker-sold plans. You can generally find information on a direct-sold plan by contacting the plan’s sponsor or program manager or visiting the plan’s website. Websites such as the one maintained by the College Savings Plan Network, as well as a number of commercial websites, provide links to most 529 plan websites.

Broker-Sold College Savings Plans
If you prefer to purchase a broker-sold plan, you may be able to reduce the front-end load for purchasing Class A shares if you invest or plan to invest above certain threshold amounts. Ask your broker how to qualify for these breakpoint discounts.

529 - Part 5

2008-01-06T13:02:00.000-08:00

More about fees:

Many broker-sold 529 plans offer more than one class of shares, which impose different fees and expenses. Here are some key characteristics of the most common 529 plan share classes sold by brokers to their customers:

* Class A shares typically impose a front-end sales load. Front-end sales loads reduce the amount of your investment. For example, let’s say you have $1,000 and want to invest in a college savings plan with a 5% front-end load. The $50 sales load you must pay is deducted from your $1,000, and the remaining $950 is invested in the college savings plan. Class A shares usually have a lower annual distribution fee and lower overall annual expenses than other 529 share classes. In addition, your front-end load may be reduced if you invest above certain threshold amounts – this is known as a breakpoint discount. These discounts do not apply to investments in Class B or Class C shares.

* Class B shares typically do not have a front-end sales load. Instead, they may charge a fee when you withdraw money from an investment option, known as a deferred sales charge or “back-end load.” A common back-end load is the “contingent deferred sales charge” or “contingent deferred sales load” (also known as a “CDSC” or “CDSL”). The amount of this load will depend on how long you hold your investment and typically decreases to zero if you hold your investment long enough. Class B shares typically impose a higher annual distribution fee and higher overall annual expenses than Class A shares. Class B shares usually convert automatically to Class A shares if you hold your shares long enough.

Be careful when investing in Class B shares. If the beneficiary uses the money within a few years after purchasing Class B shares, you will almost always pay a contingent deferred sales charge or load in addition to higher annual fees and expenses.

* Class C shares might have an annual distribution fee, other annual expenses, and either a front- or back-end sales load. But the front- or back-end load for Class C shares tends to be lower than for Class A or Class B shares, respectively. Class C shares typically impose a higher annual distribution fee and higher overall annual expenses than Class A shares, but, unlike Class B shares, generally do not convert to another class over time. If you are a long-term investor, Class C shares may be more expensive than investing in Class A or Class B shares.

529 - Part 4

2008-01-05T12:37:00.000-08:00

What fees and expenses will I pay if I invest in a 529 plan?

It is important to understand the fees and expenses associated with 529 plans because they lower your returns. Fees and expenses will vary based on the type of plan. Prepaid tuition plans typically charge enrollment and administrative fees. In addition to “loads” for broker-sold plans, college savings plans may charge enrollment fees, annual maintenance fees, and asset management fees. Some of these fees are collected by the state sponsor of the plan, and some are collected by the financial services firms that the state sponsor typically hires to manage its 529 program. Some college savings plans will waive or reduce some of these fees if you maintain a large account balance or participate in an automatic contribution plan, or if you are a resident of the state sponsoring the 529 plan. Your asset management fees will depend on the investment option you select. Each investment option will typically bear a portfolio-weighted average of the fees and expenses of the mutual funds and other investments in which it invests. You should carefully review the fees of the underlying investments because they are likely to be different for each investment option.

Investors that purchase a college savings plan from a broker are typically subject to additional fees. If you invest in a broker-sold plan, you may pay a “load.” Broadly speaking, the load is paid to your broker as a commission for selling the college savings plan to you. Broker-sold plans also charge an annual distribution fee (similar to the “12b 1 fee” charged by some mutual funds) of between 0.25% and 1.00% of your investment. Your broker typically receives all or most of these annual distribution fees for selling your 529 plan to you.

529 - Part 3

2008-01-04T12:33:00.000-08:00

How does investing in a 529 plan affect federal and state income taxes?

Investing in a 529 plan may offer college savers special tax benefits. Earnings in 529 plans are not subject to federal tax, and in most cases, state tax, so long as you use withdrawals for eligible college expenses, such as tuition and room and board.

However, if you withdraw money from a 529 plan and do not use it on an eligible college expense, you generally will be subject to income tax and an additional 10% federal tax penalty on earnings. Many states offer state income tax or other benefits, such as matching grants, for investing in a 529 plan. But you may only be eligible for these benefits if you participate in a 529 plan sponsored by your state of residence. Just a few states allow residents to deduct contributions to any 529 plan from state income tax returns.

If you receive state tax benefits for investing in a 529 plan, make sure you review your plan’s offering circular before you complete a transaction, such as rolling money out of your home state’s plan into another state’s plan. Some transactions may have state tax consequences for residents of certain states.

529 - Part 2

2008-01-04T09:01:00.000-08:00

What are the differences between pre-paid tuition plans and college savings plans?

Pre-paid tuition plans generally allow college savers to purchase units or credits at participating colleges and universities for future tuition and, in some cases, room and board. Most prepaid tuition plans are sponsored by state governments and have residency requirements. Many state governments guarantee investments in pre-paid tuition plans that they sponsor.

College savings plans generally permit a college saver (also called the “account holder”) to establish an account for a student (the “beneficiary”) for the purpose of paying the beneficiary’s eligible college expenses. An account holder may typically choose among several investment options for his or her contributions, which the college savings plan invests on behalf of the account holder. Investment options often include stock mutual funds, bond mutual funds, and money market funds, as well as, age-based portfolios that automatically shift toward more conservative investments as the beneficiary gets closer to college age. Withdrawals from college savings plans can generally be used at any college or university. Investments in college savings plans that invest in mutual funds are not guaranteed by state governments and are not federally insured.

529

2008-01-03T12:20:00.000-08:00

What is a 529 plan?
A 529 plan is a tax-advantaged savings plan designed to encourage saving for future college costs. 529 plans, legally known as “qualified tuition plans,” are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.

There are two types of 529 plans: pre-paid tuition plans and college savings plans. All fifty states and the District of Columbia sponsor at least one type of 529 plan. In addition, a group of private colleges and universities sponsor a pre-paid tuition plan.

(Source: www.sec.gov/investor/pubs/intro529.htm)

The International Student Loan Center

2008-01-03T08:10:00.000-08:00

Around 800,000 students go to college outside their country each year.
InternationalStudentLoan.com is a student loan resource for US students who want to study abroad as well as foreign student enrolling in the states.

Their products include:

International Student Loans
Study Abroad Loans
Foreign Enrolled Loans for US Citizens
International Stafford Loans for US Citizens
CanHelp Loan for Canadian Citizens

InternationalStudentLoan.com is owned by Envisage International Corporation and currently has a "Satisfactory Record" with the Better Business Bureau.

National Student Loan Data System

2008-01-03T08:00:00.000-08:00

DO you need information about the student loan you currently have? You can go here to the National Student Loan Data System to retrieve your information online.

The National Student Loan Data System (NSLDS) is the U.S. Department of Education's (ED's) central database for student aid. NSLDS receives data from schools, guaranty agencies, the Direct Loan program, and other Department of ED programs. NSLDS Student Access provides a centralized, integrated view of Title IV loans and grants so that recipients of Title IV Aid can access and inquire about their Title IV loans and/or grant data.

Student Loan Consolidation Checklist

2007-12-21T11:47:00.000-08:00

The very first step: Take inventory of your student loans.
For information on your student loans, review your loan documents, and contact your lender or loan servicer. If you are uncertain of your current lenders or loan servicers, you can find them by going to www.nslds.ed.gov.

Monthly Payment Amount
If you are not in repayment status yet, estimate your monthly non-consolidated loan payment based on the current interest rate and your loan balance. You can get payment amounts by calling your lender or loan servicer.

Next Steps
* Determine whether your monthly payment exceeds the percentage of your income to be allocated to student loan payment. This percentage should be based on a realistic budget. (If payment exceeds monthly allocation, reevaluate budget and assess income situation.)

* Consider deferment or forbearance option for short-term payment relief needs. (If debt relief needs are long term, consider consolidation.)

* Select loans for consolidation.

* Determine monthly payment and total interest costs for Consolidation Loan and compare to cost of repaying loans without consolidation. (For help in calculating monthly payments, contact your lender or loan servicer.)

* Consider the impact of consolidation on future deferment options, cancellation options, and other borrower benefits such as interest rate discounts or principal rebates, which can significantly reduce the cost of repaying your loans. You might lose some discharge (cancellation) benefits or deferment benefits if you include certain types of loans in your Consolidation Loan—Federal Perkins Student Loan, for example. To find out more about the impact consolidating might have on deferment and cancellation benefits, contact the holder of your loan.

* If you decide consolidation is right for you, contact your lender to begin the consolidation process.

* If still in the grace period, consider consolidating approximately two months before the end of the grace period to allow enough time to have your Consolidation Loan processed before the grace period expires, yet not so early that you lose too much of your grace period if you have a FFEL Consolidation Loan. (For FFEL Consolidation Loans, if you consolidate during the grace period, you give up whatever portion of your grace period remains. You retain all of your grace period, however, if you have a Direct Consolidation Loan.) Some FFEL lenders offer to hold disbursement of Consolidation Loans until the end of the grace period to enable borrowers to minimize their interest rate and maximize their grace period.

* Remember that if you consolidate during your grace period, you can lock in an interest rate at least a half percent lower than the current repayment rate.

* When filling out the consolidation application, provide complete address information, include two references, and sign the promissory note.

* If already in repayment, make sure to continue making payments on your loans until consolidation is completed. (If you need immediate payment relief, request deferment or forbearance.)

* If you have questions about consolidation, do not hesitate to contact your lender or loan servicer. Check your loan documents for the toll-free customer assistance number.

(Source: www.studentaid.ed.gov)

End of the year news

2007-12-21T09:33:00.000-08:00

AACRAO.com has reported on year end Omnibus bills that Congress has passed.

Concerning education financial aid:

In addition, Democrats were able to secure funding for several favored programs President Bush hoped to eliminate. Supplemental Educational Opportunity Grants (SEOG), Perkins Student Loan, and the Leveraging Education Assistance Programs (LEAP) will all be spared, although their budgets will be significantly tighter than in fiscal year 2007.

Student Loan Consolidation - Next Student

2007-12-21T07:21:00.001-08:00

When choosing a student loan consolidation program, you need to carefully examine the company you're dealing with so you don't get burned. Here's one I recommend: Next Student

Next Student has been Better Business Bureau accredited since 2004 with a satisfactory record for at least the past year. According to the BBB, at this time, Next Student does not have an unusual volume of complaints, or any government actions involving its marketplace conduct.

Over the past 3 years, there have been 45 BBB complaints and 28 of them were closed last year. Next Student has been in existence since 1992.

Contact Information
Next Student Inc.
19601 N. Black Canyon Highway
Phoenix, AZ 85027
Telephone: (623) 879-5026
Fax: (602) 993-7417

College Loan Perkins

2007-12-20T09:52:00.000-08:00

If you're applying for student financial aid and you fit into the extreme financial need category, this loan is for you.

Features:
* 5% interest rate with no origination or default fees
* Maximum yearly loan: $4K undergraduate and $6K graduate programs
* Total limit: $20K undergraduate and $40K graduate
* Repayment starts 9 months after graduation OR dropping below half time enrollment
* 10 year repayment plan

To qualify for a Perkins College Loan, you must fill out an FAFSA (Free Application for Federal Student Aid). The financial aid office of the school you apply for with use that information to determine if you qualify for the extreme need Perkins Loan. Check with the university financial aid office for application deadlines.

Student Loan Consolidation - Miscellaneous Questions

2007-12-18T13:34:00.000-08:00

How long does it take to consolidate my loans once I submit my application?

The consolidation process generally takes 60-90 days. Using our online Web application can reduce the amount of time it takes to consolidate a borrower's loan.

When can I expect my first bill?

Borrowers will receive bills from the Direct Loan Servicing Center within 60 days of the first disbursement of their Direct Consolidation Loan.

How do I make payments?

Borrowers receive monthly billing statements from the Direct Loan Servicing Center, unless they enroll in the Electronic Debit Account (EDA). Borrowers receive a 0.25 percent discount on their interest rate for as long as they continue to make payments using EDA. Borrowers must keep the Direct Loan Servicing Center informed of changes of address and to their names. Borrowers are responsible for making payments on time regardless of whether they receive billing statements. Borrowers should send payments to:

U.S. Department of Education
Direct Loan Payment Center
P.O. Box 530260
Atlanta, GA 30353-0260

Can I prepay on my loan?

Borrowers may prepay all or part of the unpaid balance on any Direct Loan at any time, without an early repayment penalty. If a borrower makes a payment that exceeds the required monthly payment, the prepayment will be applied first to any charges or collection costs, then to outstanding interest, and last to principal. However, if a borrower's account has no outstanding interest, the prepayment is applied entirely to principal. If the prepayment is twice the borrower's monthly payment, the next payment due date is advanced unless the borrower specifies otherwise. The borrower will be notified of a revised due date.

(Source: loanconsolidation.ed.gov)

Can I change repayment plans?

2007-12-18T08:30:00.000-08:00

Yes. Most borrowers may change repayment plans at any time. Borrowers who are required to repay under the ICR plan must make three consecutive monthly payments before switching to another plan. There is no limit to the number of times borrowers may change plans.

A borrower may change to the ICR plan at any time. After the switch, the borrower's repayment period will be 25 years, less any time spent in the ICR and the Standard repayment plan. Time spent in several other plans may not count towards the 25 year maximum.

A borrower may change to another plan as long as the new plan has a repayment term longer than the amount of time the borrower has already spent in repayment. The new repayment term is determined by subtracting the amount of time a borrower has spent in repayment from the term allowed under the new plan.

(Source: loanconsolidation.ed.gov)

How is the amount of my payment calculated under the ICR plan?

2007-12-17T12:27:00.000-08:00

The ICR Plan is designed to keep payments affordable. Generally, borrowers pay the lesser of:

the amount they would pay if they repaid their loan in 12 years, multiplied by an income percentage factor that varies with their annual income, or
20 percent of their discretionary income (AGI minus the poverty level for their family size)

Under the ICR plan, the monthly payment is $0 for borrowers with family incomes that are less than or equal to the U.S. Department of Health and Human Services poverty level for their family size. Borrowers whose calculated monthly payment is greater than $0 but less than $5 are required to make a $5 monthly payment. Other borrowers must pay the calculated monthly payment.

Until the Department receives income information from the IRS or alternative documentation of income, borrowers' monthly payments are equal to the interest that accrues each month. If they are unable to make the interest-only payments, borrowers may request a forbearance until the first scheduled Income Contingent Repayment (ICR) plan payment is due.

(Source: loanconsolidation.ed.gov)

Income Contingent Repayment (ICR) Plan

2007-12-17T08:24:00.000-08:00

The ICR Plan gives borrowers the flexibility to meet their obligations without causing them financial hardship. Monthly payments are based on borrowers’ annual Adjusted Gross Incomes (AGI), loan balance and family sizes. Income is obtained from the Internal Revenue Service (IRS) or from an Alternative Documentation of Income Form (discussed below) submitted by the borrowers.

To participate in the ICR Plan, borrowers (and if married, their spouse) must sign the Income Contingent Repayment Plan Consent to Disclosure of Tax Information Form. This authorizes the IRS to release borrowers' income information to the Department of Education to calculate monthly payments. Monthly payments are adjusted annually to reflect inflation, family size and income.

Monthly payment amounts for some borrowers may not be enough to cover the interest accruing on their loans. This situation is referred to as negative amortization. In such cases, the unpaid interest is capitalized and added to the principal balance once per year. The amount added to the principal balance will never exceed 10 percent of the original Direct Consolidation Loan amount. Once this capitalization limit has been reached, interest continues to accrue but is not capitalized. The capitalization limit does not apply to interest that accrues during deferment or forbearance.

The maximum repayment period for the ICR Plan is 25 years, less any time spent in ICR and the Standard repayment plan. Time spent in several other plans may not count toward the 25 year maximum. If the Direct Consolidation Loan is not repaid after 25 years, the unpaid portion is discharged. Borrowers must pay taxes on portions discharged after 25 years.

Alternative documentation of income is required for Direct Consolidation Loan borrowers if their underlying loans were in the first or second year of repayment when they were consolidated. Alternative documentation includes pay stubs, canceled checks, or, if these are unavailable, signed statements explaining income resources.

(Source: loanconsolidation.ed.gov)

Extended Repayment Plan

2007-12-16T13:23:00.000-08:00

To qualify for this plan, your Direct Loan balance (your new Direct Consolidation Loan Amount plus other Direct Loans) must be greater than $30,000. Your plan options are:

Fixed Monthly Payment Option - Under this plan, you will pay a fixed amount of at least $50 each month for up to 25 years. Repayment under this plan will result in lower total interest paid when compared to graduated plans with similar terms.

Graduated Monthly Payment Option - Under this plan, you will pay a minimum payment amount of at least $50 or the amount of interest accrued monthly, whichever is greater, for up to 25 years. Your payments start out low and then increase every two years. Repayment under this plan may provide lower initial monthly payments, although the total interest paid may be greater when compared to plans with similar terms with fixed payments. This plan may be beneficial if your income is low now but is likely to steadily increase.

**Extended repayment terms are available to Direct Loan borrower with no outstanding principal or interest balances as of October 7, 1998 and with more than $30,000 in Direct Loans.

(Source: loanconsolidation.ed.gov)

Graduated Repayment Plan

2007-12-15T13:22:00.000-08:00

Under this plan, you will pay a minimum payment amount at least equal to the amount of interest accrued monthly for up to 10 to 30 years, based on your total education indebtedness. Your payments start out low, and then increase every two years. Generally, the amount you will repay over the term of your loan will be higher under the Graduated Repayment Plan than under the Standard Repayment Plan. This plan may be beneficial if your income is low now but is likely to steadily increase.

(Source: loanconsolidation.ed.gov)

Standard Repayment Plan

2007-12-14T12:21:00.000-08:00

Under this plan, you will pay a fixed amount of at least $50 each month for up to 10 to 30 years, based on your total education indebtedness. This plan may result in lower total interest paid when compared to repayment under one of the graduated plans.

If you have not selected a repayment plan by the time repayment begins, your loan(s) will be placed on the Standard Repayment Plan.

(Source: loanconsolidation.ed.gov)

Student Loan Consolidation - What are the repayment plans?

2007-12-14T08:31:00.000-08:00

Standard Repayment Plan:
You will pay a fixed amount each month until your loan(s) are paid in full. Your monthly payments will be at least $50 for up to 10 to 30 years, based on your total education indebtedness.

Graduated Repayment Plan:
Your minimum payment amount will be at least equal to the amount of interest accrued monthly. Your payments start out low, and then increase every two years for up to 10 to 30 years, based on your total education indebtedness

Extended Repayment Plan:
To be eligible, your Direct Loan balance must be greater than $30,000 and you will have up to 25 years to repay your loan(s). You have two payment options:

Fixed Monthly Payment Option -You will pay a fixed amount each month until your loans are paid in full. Your monthly payments will be at least $50.

Graduated Monthly Payment Option - Your minimum payment amount will be at least $50 or the amount of interest accrued monthly, whichever is greater. Your payments start out low, and then increase every two years.

Income Contingent Repayment Plan (ICR):
Monthly payments that are based on a borrower's annual income, loan balance and family size, and are spread over a term of up to 25 years.

If you consolidate more than one loan type (subsidized, unsubsidized and PLUS) you will have one Direct Consolidation Loan with up to two parts: Direct Subsidized and Direct Unsubsidized Consolidation Loans. Even with up to two parts of each Direct Consolidation Loan, you make only one payment each month.

If you do not choose a plan, your new Direct Consolidation Loan will be placed on the Standard Repayment Plan; however, you may change plans at any time.

(Source: loanconsolidation.ed.gov)

Student Loan Consolidation - What are the consequences of defaulting?

2007-12-13T13:15:00.000-08:00

Borrowers who fail to make a payment on time are considered delinquent on their Direct Consolidation Loans. Borrowers who do not make payments for 270 days are in default. Defaulting has severe and long-lasting consequences, as follows:

1) The Department of Education can immediately demand repayment of the total loan amount due.

2) The Department of Eduction will attempt to collect the debt and may charge collection costs.

3) The Department of Education reports defaulted loans to national credit bureaus, damaging borrowers’ credit ratings and, making it difficult for borrowers to make purchases such as cars or homes.

4) Borrowers with loans in default are ineligible for Title IV student aid.

5) Borrowers with loans in default are ineligible for deferments.

6) The Internal Revenue Service can withhold borrowers’ Federal income tax refunds.
Borrowers' wages may be garnished.

It is important that borrowers with Direct Consolidation Loans stay in touch with the Direct Loan Servicing Center. Default can occur when borrowers fail to keep the Direct Loan Servicing Center up to date on address and name changes, causing billing statements to go astray. In addition, the Direct Loan Servicing Center can offer alternatives when borrowers have trouble making monthly payments. Borrowers may apply for a deferment or forbearance, or change repayment plans.

(Source: loanconsolidation.ed.gov)

Should I rehabilitate before consolidating my defaulted loan?

2007-12-13T08:40:00.000-08:00

Rehabilitation or Consolidation?

There are many benefits to rehabilitating a defaulted loan before consolidation. If you consolidate a defaulted loan without rehabilitating it, your credit record continues to show a default status on the loan. This is true even after the consolidation loan pays off the defaulted loan in full.

Consolidating a defaulted loan will result in your credit report bearing the notation that the loan was in default but then "paid in full." This notation will remain on the credit report for up to seven years. While a "paid in full" notation is preferable to an unpaid default, , there is still the possibility that lenders will deny you future credit, such as mortgages, auto loans, or credit cards because of this notation. However, if you rehabilitate a defaulted loan before consolidating it, the loan holder will update your credit record to no longer reflect the default status of the rehabilitated loan(s).

Rehabilitating a defaulted Direct Loan or FFEL loan requires that you make at least nine (9) full payments of an agreed amount within twenty (20) days of their monthly due dates over a ten (10) month period. Rehabilitating a defaulted Perkins loan requires twelve (12) on-time monthly payments. Contact your loan holder to obtain additional rehabilitation terms and conditions for your loan type.

Keep in mind that if you default on your loan, you are liable for any collection costs incurred to collect the loan. If you pay off the defaulted loan by taking out a Consolidation Loan, the amount you borrow must be enough to pay off your defaulted loan, including principal, interest, and collection costs. This means that the amount of the new loan may need to be up to 18.5% larger than the principal and interest outstanding on your defaulted loan.

Both rehabilitation and consolidation will reinstate your eligibility for additional Federal student aid under Title IV of the Higher Education Act (Pell Grants, FFEL and Direct Loans etc.)

(Source: loanconsolidation.ed.gov)

Can I consolidate jointly with my spouse?

2007-12-12T13:04:00.000-08:00

Nope.

Can I Consolidate a Defaulted Loan?

2007-12-11T10:00:00.000-08:00

Generally, Federal education loan(s) in default may be consolidated in a Direct Consolidation Loan if borrowers:

Agree to repay the loan(s) under the Income Contingent Repayment Plan.
OR
Make satisfactory repayment arrangements with the current loan holder(s). If, before applying for consolidation, borrowers who want to completely clear the default notation from their credit records, they may want to consider another option: loan rehabilitation. Borrowers should contact their loan holders to obtain more information about this option.

Borrowers cannot consolidate defaulted loans under these conditions:
1) If a judgment has been issued against a defaulted loan, it cannot be included in
the consolidation unless the judgment order has been vacated (dismissed).
2) If they are trying to consolidate defaulted Direct Consolidation Loans.
3) If they are trying to consolidate defaulted FFEL Consolidation Loans unless they
have made satisfactory repayment arrangements with their current loan holder OR
the borrowers agree to repay under the Income Contingent Repayment Plan.
4) If they are trying to consolidate defaulted Perkins or health professions loans
unless they have made satisfactory repayment arrangements with their current loan
holders.

Note: Borrowers with defaulted FFEL or Direct Loan Program loans may be liable for collection costs incurred to collect the loans. If the holder of the defaulted loan, which may be either the U.S. Department of Education or a guaranty agency, retains a collection agency to collect defaulted loans, charges imposed by the collection agency may be added to the amount borrowers owe. This means that the amount of the Direct Consolidation Loan may include collection costs of up to 18.5% of the principal and interest outstanding on the defaulted loan.

For defaulted Perkins Loans and health professions loans, collection costs may equal as much as the amount owed at the time the defaulted loan is paid off through consolidation.

(Source: loanconsolidation.ed.gov)

Can I consolidate my loans that are in grace?

2007-12-11T08:10:00.000-08:00

Yes, Borrowers who consolidate loans that are in grace may receive a lower interest rate on their Direct Consolidation Loans if they are consolidating variable rate loans. However, once grace status loans are consolidated borrowers lose any remaining grace period. Borrowers receive their first bills within 60 days after the new Direct Consolidation Loan is made.

The timing in which an application is submitted is important:

Loans first disbursed on or after July 1, 2006 have fixed interest rates. While borrowers with fixed interest rate loans can consolidate while in grace, there is no benefit to do so since the interest rates for in-grace and in-repayment are the same.
Borrowers with variable interest rate loans should apply for Direct Consolidation Loans while their loans are in the grace status in order for them to receive the possible interest rate benefit.
Since repayment begins within 60 days of the day the Direct Consolidation Loan is made, borrowers should not apply too early in their loans’ grace periods; otherwise borrowers lose any remaining grace period. For example, if a borrower's loans are consolidated during the second month of grace, they would begin repayment within 60 days, thus forfeiting the remaining portion of the grace period. Therefore, borrowers should wait until about half-way through the 6-month grace period before applying for a Direct Consolidation Loan.

(Source: loanconsolidation.ed.gov)

Can I consolidate an existing consolidation loan?

2007-12-10T22:20:00.000-08:00

Yes, under two conditions.

A borrower can consolidate existing consolidation loans into a new Direct Consolidation Loan if the borrower includes at least one other FFEL or Direct Loan into the new consolidation loan.
A borrower can conslidate a single FFEL consolidation loan if the FFEL consolidation loan is in default status or has been submitted to a guaranty agency for default aversion by the borrower's loan holder.

(Source: loanconsolidation.ed.gov)

Can I consolidate my loans if I am enrolled in school?

2007-12-10T13:57:00.000-08:00

Yes and No. Effective for Direct Consolidation Loan applications received on or after July 1, 2006, borrowers who are enrolled in school cannot consolidate loans that are in an in-school status. These are loans that have not yet entered or used up the 6-month grace period entitlement.

Borrowers still can consolidate loans that are in grace, repayment or deferment

Borrowers can add loans to an existing consolidation for up to 180 days after the Direct Consolidation Loan was first disbursed. If more than 180 days has passed, borrowers can apply for a new Direct Consolidation Loan. The new consolidation loan can include the original Direct Consolidation loan and must include another eligible outstanding Federal education loan.

Example: A borrower who has education loans stopped attending school for a year and the loans used up the 6-month grace period and entered repayment. The borrower returned to school and obtained a new loan. While enrolled, the borrower applies for a Direct Consolidation Loan. The Direct Consolidation Loan can include the first group of loans the borrower received, but not the newly received loans. Once the borrower leaves school again he or she can add these new loans to the existing consolidation loan or submit a new Direct Loan Consolidation application to combine the original consolidation loan and the other remaining loans.

(Source: loanconsolidation.ed.gov)

Can I consolidate health professions loans?

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Yes, With a Direct Consolidation Loan, borrowers can include certain health profession loans sponsored through the U.S. Department of Health and Human Services with other Federal education loans in their Direct Consolidation Loan. Borrowers must include at least one Direct Loan or Federal Family Education Loan (FFEL) Program loan in the Direct Consolidation Loan.

Eligible Health Professions Loans

Health Professions Student Loans (HPSL)
Health Education Assistance Loans (HEAL)
Loans for Disadvantaged Students (LDS)
Nursing Student Loans (NSL)

Direct Consolidation Loans offer many advantages to borrowers of health professions loans. These include:

a longer repayment period;
a lower monthly payment; AND
a single monthly payment

When deciding to consolidate a health professions loans, consider the following advantages:

Borrowers who have defaulted on a HEAL may include the collection costs and late fees in a Direct Consolidation Loan. These fees may not be included in HEAL Refinancing.

Under the Direct Consolidation Loan Program, HEAL borrowers may repay under the Income Contingent Repayment (ICR) Plan for the life of the loan.

HEAL lenders are only required to offer an ICR Plan for the first five years. To qualify for an in-school deferment, Direct Consolidation Loan borrowers must be attending school at least half-time. HPSL, HEAL, and LDS borrowers are required to attend school full time to be eligible for an in-school deferment.

Issues to Consider
Before applying for a Direct Consolidation Loan, consider the following points:

HEAL loans have fixed or variable rate that are tied to the average 91-day Treasury bill rate plus 3 percentage points. There is no maximum interest rate for variable rate HEAL loans. In contrast, the interest rate for a Direct Consolidation Loan is based on the weighted average of the interest rates on loans being consolidated, rounded to the nearest higher one-eighth of one percent. It is a fixed rate and will not exceed 8.25 percent.
The interest on some health professions loans is subsidized by the U.S. Department of Health and Human Services. This interest subsidy is lost when these loans are included in a Direct Consolidation Loan.
Interest does not accrue during deferment for HPSL, LDS, and NSL borrowers. Interest does accrue during deferment on the portion of Direct Consolidation Loans that include health professions loans.
Borrowers who consolidate Health Professions Loans do not retain the deferment benefits that apply to those loans. However, they gain the deferment benefits that apply to Direct Consolidation Loans. For example, a borrower may be eligible for additional deferments if they have an outstanding balance on a FFEL made before July 1, 1993, when they obtain their first Direct Loan.

(Source: loanconsolidation.ed.gov)

PLUS and Perkins Loan Consolidation

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Can I consolidate a PLUS Loan?

Yes, PLUS Loans can be consolidated into a Direct Consolidation Loan.

Can I consolidate a Perkins Loan?

Yes, it is possible to consolidate Perkins Loans into a Direct Consolidation Loan if borrowers include at least one Direct Loan or Federal Family Education Loan (FFEL) in their request. Perkins Loans cannot be included in a Direct Consolidation Loan by themselves. Furthermore, all Perkins Loans consolidated into the Direct Loan Program will be included in the unsubsidized portion of the Direct Consolidation Loan.

Borrowers should carefully weigh the advantages and disadvantages of including a Perkins Student Loan in a consolidation loan. While the borrowers gain the benefits of the Direct Consolidation Loan Program, they also lose the benefits associated with the Perkins Loan Program.

We recommend that you consider the following points prior to making a decision:

Perkins Loans are eligible for additional cancellation benefits, such as performing certain kinds of public service. This benefit is lost when a Perkins Loan is included in a Direct Consolidation Loan.
Perkins Loans have a grace period of 6-9 months. When a Perkins loan is consolidated, any remaining grace period is lost.
Interest does not accrue when a Perkins Loan is placed in deferment. Since a Perkins Loan is included in the unsubsidized portion of a Direct Consolidation Loan, borrowers are responsible for interest that accrues throughout the deferment period.
Perkins Loans generally have a lower interest rate but have a less flexible repayment period of 10 years.
The Direct Consolidation Loan Program offers standard, graduated, extended and income contingent repayment plans which may lower monthly payments.

NOTE: Lower payments and extended repayment terms can increase the overall finance charges incurred over the life of loan.

(Source: loanconsolidation.ed.gov)

Direct Consolidation Eligibility

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To qualify for Direct Consolidation Loans, borrowers must have at least one Direct Loan or Federal Family Education Loan (FFEL) Program loan that is in grace, repayment, deferment, or default status. Loans that are in a in-school status cannot be included in a Direct Consolidation Loan.

Borrowers can consolidate most defaulted FFEL and Direct Loan Program loans, if they make satisfactory repayment arrangements with their current loan holder(s) or agree to repay their new Direct Consolidation Loan under the Income Contingent Repayment Plan.

Borrowers who do not have Direct Loans may be eligible for a Direct Consolidation Loan if they include at least one FFEL Loan and have been unable to obtain a Federal Consolidation Loan with a FFEL consolidation lender or have been unable to obtain a Federal Consolidation Loan with income-sensitive repayment terms acceptable to them.

(Source: loanconsolidation.ed.gov)