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Sunday, August 20, 2006

After College, A Life without Debt?

Student loans, for more than half those attending college, are the new paradigm of college funding. Consequently, student debt is, or will soon be, the new paradigm of early to middle adult life. Gone are the days when the state university was as cheap as a laptop and was considered a right, like secondary education. Now higher education is, like most social services, a largely privatized venture, and loans are the chief way that a majority of individuals pay for it.

Over the past decade, there has been an avalanche of criticism of the "corporatization" of the university. Most of it focuses on the impact of corporate protocols on research, the reconfiguration of the relative power of administration and faculty, and the transformation of academic into casual labor, but little of it has addressed student debt. Because more than half the students attending university receive, along with their bachelor's degree, a sizable loan payment book, we need to deal with student debt.Printed with permission from Dissent Magazine.

The average undergraduate student loan debt in 2002 was $18,900. It more than doubled from 1992, when it was $9,200. Added to this is charge card debt, which averaged $3,000 in 2002, boosting the average total debt to about $22,000. One can reasonably expect, given still accelerating costs, that it is over $30,000 now. Bear in mind that this does not include other private loans or the debt that parents take on to send their children to college. (Neither does it account for "post-baccalaureate loans," which more than doubled in seven years, from $18,572 in 1992-1993 to $38,428 in 1999-2000, and have likely doubled again).

Federal student loans are a relatively new invention. The Guaranteed Student Loan (GSL) program only began in 1965, a branch of Lyndon B. Johnson's Great Society programs intended to provide supplemental aid to students who otherwise could not attend college or would have to work excessively while in school. In its first dozen years, the amounts borrowed were relatively small, in large part because a college education was comparatively inexpensive, especially at public universities.

From 1965 to 1978, the program was a modest one, issuing about $12 billion in total, or less than $1 billion a year. By the early 1990s, the program grew immodestly, jumping to $15 billion to $20 billion a year, and now it is over $50 billion a year, accounting for 59 percent of higher educational aid that the federal government provides, surpassing all grants and scholarships.

The reason that debt has increased so much and so quickly is that tuition and fees have increased, at roughly three times the rate of inflation. Tuition and fees have gone up from an average of $924 in 1976, when I first went to college, to $6,067 in 2002. The average encompasses all institutions, from community colleges to Ivies.

At private universities, the average jumped from $3,051 to $22,686. In 1976, the tuition and fees at Ivies were about $4,000; now they are near $33,000. The more salient figure of tuition, fees, room, and board (though not including other expenses, such as books or travel to and from home) has gone up from an average of $2,275 in 1976, $3,101 in 1980, and $6,562 in 1990, to $12,111 in 2002. At the same rate, gasoline would now be about $6 a gallon and movies $30.

This increase has put a disproportionate burden on students and their families -- hence loans. The median household income for a family of four was about $24,300 in 1980, $41,400 in 1990, and $54,200 in 2000. In addition to the debt that students take on, there are few statistics on how much parents pay and how they pay it. It has become common for parents to finance college through home equity loans and home refinancing. Although it is difficult to measure these costs separately, paying for college no doubt forms part of the accelerating indebtedness of average American families.

Students used to say, "I'm working my way through college." Now it would be impossible to do that unless you have superhuman powers. According to one set of statistics, during the 1960s, a student could work fifteen hours a week at minimum wage during the school term and forty in the summer and pay his or her public university education; at an Ivy or similar private school, the figure would have been about twenty hours a week during term.

Now, one would have to work fifty-two hours a week all year long; at an Ivy League college, you would have to work 136 hours a week all year. Thus the need for loans as a supplement, even if a student is working and parents have saved.

The reason tuition has increased so precipitously is more complicated. Sometimes politicians blame it on the inefficiency of academe, but most universities, especially state universities, have undergone retrenchment if not austerity measures for the past twenty years. Tuition has increased in large part because there is significantly less federal funding to states for education, and the states fund a far smaller percentage of tuition costs.

In 1980, states funded nearly half of tuition costs; by 2000, they contributed only 32 percent. Universities have turned to a number of alternative sources to replace the lost funds, such as "technology transfers" and other "partnerships" with business and seemingly endless campaigns for donations; but the steadiest way, one replenished each fall like the harvest, is through tuition.

Source: http://www.alternet.org/story/40440/

Thursday, August 17, 2006

Push for Student Debt Relief Greets Small Victory

With student debt on the rise, activists recently employed public pressure to convince a federal panel laden with corporate representatives to drop a recommendation that more families take on private loans for education, a move they argued would exacerbate student debt.

The recommendation was made by the secretary’s Commission on the Future of Higher Education, which was formed by the US Department of Education last September in order to design a “national strategy” to increase access to higher education, including changes to the financial-aid system. The Commission is made up of professors, university presidents and representatives from companies such as IBM, Kaplan and the nonprofit lending company EduCap.

The Commission will issue a final report in mid-September, according to Department of Education spokeswoman Samara Yudof.

In a previous draft of the report, the Commission recommended that families look to private loans to fund education costs in order to free “scarce public funds to focus on aid for economically disadvantaged students and families.”

But the Commission dropped the text after student associations and advocacy groups called for its dismissal, said Jay Bhatt, president of the American Medical Student Association, which lobbies on issues ranging from reduced resident work hours to policies that make medical school more affordable.

Source: http://newstandardnews.net/content/?action=show_item&itemid=3542

Wednesday, August 16, 2006

ACB Bank, RMIT in student loan deal

HCM CITY — The Asia Commercial Bank and Australia’s RMIT International University Viet Nam signed an agreement yesterday to offer students preferential loans. The agreement applies to students taking English courses in the diploma, undergraduate and postgraduate degree programmes.

A secured loan amount may be up to 100 per cent of the collateral value, and unsecured loans are available for VND200 million.

The monthly preferential interest rate will be 0.05 per cent lower than the normal one, according to ACB general director Ly Xuan Hai.

The debtors of unsecured loans will repay 30 per cent of the loan while studying at the university and the remaining 70 per cent after graduation.

Hai said his bank also would provide financial services including international credit cards and money transfer for student study overseas.

"RMIT students can work at our bank during their practical and apply for a job after graduation," said Hai.

Last year, ACB won three awards, including Best Bank in Viet Nam given by Euromoney magazine, Best Retail Bank in Viet Nam by The Asian Banker magazine and the Bank of the Year given by The Banker magazine.

Source: http://vietnamnews.vnagency.com.vn/showarticle.php?num=02BUS160806

College loans extend nearly to retirement

Will I still be paying off my student loans when I'm 64?

It's a question that certainly never occurred to Paul McCartney, but is becoming a possibility for some students and recent graduates. Spurred by recent waves of student-loan consolidations and lengthened loan terms, student borrowers are pushing scheduled payoff dates into their 40s, 50s and even 60s.

Over the past two years, millions of current students and graduates consolidated their federal student loans to lock in record-low interest rates. As they did so, virtually all borrowers took their lenders up on an option to extend the payment period of their loan -- from a 10-year payoff term to one of 20 or 25 years, or even longer. The result was much smaller monthly payments, but for a much longer time.

"Everyone pretty much goes for the maximum, which can be 30 years," said Tom Lustig, vice president of PNC's Education Loan Center. "One-hundred percent, really, are taking the maximum term."

Extended payment periods are attractive because borrowers' monthly payments drop substantially. On a federal loan of $20,000 -- just above the national average loan amount for a four-year undergraduate degree -- a borrower with a 4.75 percent interest rate would pay $210 per month on a 10-year loan, versus $129 per month for a 20-year loan.

For graduate and professional students with high loan balances, the difference is even more dramatic. On a federal loan of $60,000, a borrower would pay $629 per month at 4.75 percent interest over 10 years, versus $313 over 30 years.

Of course, those smaller monthly payments come at a cost of higher total interest payments. The $20,000 borrower would pay more than $5,800 more in interest for the extra 10 years, and the $60,000 borrower would pay nearly $37,200 more for the extra 20 years.

Those extra interest amounts frighten Victoria Racz, 28, who is getting her doctorate in international relations from the University of Pittsburgh.

Racz already has about $29,000 in student loans from her master's degree. When she's done with her doctorate, her loans will total $50,000 or $60,000 or more, depending on how long she takes to complete her degree.

"I don't like debt," she said. "It really makes me uncomfortable."

Though she could qualify for a deferment since she's in school, she's still paying her loans and is about two years ahead of schedule. But she knows that paying off loans for her doctorate will probably take her into middle age, at least.

"I'll probably be at least 40, unless I marry that really, really handsome dentist in my dreams," she said.

Dave Jang, 27, knows more about student loans than most. He has consolidated twice, and can quote interest rates and repayment plans at will.

"I have to," he said of his encyclopedic loan knowledge. "I have a quarter-million dollars."
Jang graduated this spring from medical school at Tufts University near Boston, and just started a residency in emergency medicine at the University of Pittsburgh Medical Center with about $260,000 in student loans.

He needn't start paying until he finishes his residency; then he'd like to pay them off in 10 years. But he knows that's a steep financial path, even for a doctor. "If I do the 10-year plan, it's $2,800 per month, which is like a mortgage," He said.

What worries financial experts is that student-loan payments might come at the expense of an actual mortgage, or saving for retirement or a child's college fund.

"We don't really know what effect this (run-up and stretching-out of student debt) is going to have, financially and psychologically," said Robert Shireman, executive director of the Washington's Project on Student Debt. "Paying off those student loans can be a signal to start saving for retirement, or start putting away money. We're pushing those off in the future and we're going to see different patterns."

Indeed, twenty-somethings today often have a different view on debt than their parents. New options for 50-year mortgages, 10-year car loans and 30-year student-loans can make debt a life sentence.

"If you look at the way financial transactions are structured these days, the likelihood that you'll ever pay them off is slim," said John Lamb, co-author of an upcoming edition of "Solve Your Money Troubles."

Source: http://www.commercialappeal.com/mca/lifestyle/article/0,1426,MCA_521_4918904,00.html

Using Home Equity to Pay Off Student Loans Is Rarely Wise

We have a total of $69,000 in education debt. We also have a home worth $400,000 and our mortgage balance is $266,000, plus a home equity loan with a balance of $14,500.

We make a good salary, have excellent credit, pay all our bills on time, and, if gas weren't so darn high, we would have a decent amount of discretionary income.

We make extra principal payments when we can. The problem is that interest rates on our school loans are climbing, and payments are getting higher and higher.

We're wondering whether we should take out another home equity loan to pay off the student loans.

That would obviously leave us with less equity, which could limit the price we could pay on the house we plan to buy in three to five years.

But it would also decrease our monthly loan payment significantly and we would be able to deduct the interest on the home equity loan. (We can't deduct student loan interest because we make too much money.)

Does a home equity loan make sense in this case?

Answer: Generally speaking, trading student loan debt for home debt isn't a great idea.
Student lenders typically are much more flexible than mortgage lenders, with a wider variety of repayment options. You also can get a deferment or forbearance if you lose your job or otherwise encounter a financial hardship. This respite from payments can last as long as three years on many student loans.

Compare that with what would happen if you couldn't make your mortgage payments. Within a year, and usually much less, your home lender would start foreclosure proceedings.

In addition, most student loan debt can be consolidated. This would allow you to lock in your current interest rate and perhaps lengthen the repayment term to lower your monthly payments.

A longer loan means you would pay more interest over time, but it could help ease the monthly crunch you're feeling.

All that said, not being able to deduct the interest on your student loans is a significant disadvantage.

If you're confident you'll be able to make the payments, then you might consider paying off at least some of your student loan debt with home equity borrowing.

You should, however, limit your total borrowing -- all your home equity loans plus your primary mortgage -- to no more than 80% of the value of your house.

You want to keep at least a 20% equity cushion in your home whenever possible, as a last-resort emergency fund and also to protect yourself in case of declining home values. (You don't want to be faced with having to sell your home and owing more than it's worth.)

Given the loans you already have, you should be able to pay off $39,500 of your student loans with home equity debt. Then you could consolidate the remaining $29,500.

Source: http://firstrung.co.uk/articles.asp?pageid=NEWS&articlekey=2633&cat=44-0-0

Scrambling for Financial Aid? Avoid These Common Mistakes

BOSTON, Aug. 15 /PRNewswire/ -- Tuition costs are skyrocketing,interest rates are rising and there's one month until the 2006-2007academic year. College students and parents are scrambling to find loansthat best fill the "gap" -- the amount of money needed for college costsnot covered through financial aid and personal savings.

Shockingly, thesize of the gap is projected to reach $35.7 billion this year. "'Back to School' means more than dorm furniture and supplies -- itincludes determining the best way to pay for college," said Kevin Walker,co-founder and CEO of SimpleTuition, Inc.
(http://www.simpletuitiondotcom), acompany helping parents and students easily compare education financingchoices. "As students and parents determine how to best finance remainingcosts, many do so with little time or knowledge on how to find and comparethe loans to best fit their needs."

Parents report feeling overwhelmed with the amount of information onfinancing options. Loans come with different terms and benefits, andborrowers find it difficult to compare on an 'apples-to-apples' basis. Withthe clock ticking, students and parents to rush into loan decisions, whichleads to mistakes and "buyer's remorse".

With the average undergraduate student loan debt approaching $19,000,most families can no longer cover their costs with just one loan (likemortgages or car loans) and, thanks to limits on federal loans, often endup with three to four loans each year. By graduation, students have upwardsof 10 different loans.

A few things to remember when reviewing college loan options:

Get Creative About Sources for Direct Payment
Even if you've been saving since your child was an infant, it isusually not enough to cover the costs of four years of college -- afrustrating realization for many.
But you may be surprised to findadditional resources -- think about the savings by having a child away fromhome and revisit assumptions about college-related expenses (used books,off-campus living).

Even a thousand dollars in now can save substantiallylater. Remember: All Loans Are Not Presented Equally Each loan comes with different options including fees, repaymentlengths, total loan amount, consolidation options, credit requirements andeligibility, and lenders promote each differently in a quest to get yourattention. Be sure to review all the terms and benefits to ensure you'rechoosing the best loan for the long haul.

Avoid Buyer's Remorse:
Start Early Many parents put off decisions until the last minute. Then, in a panic,they rush and pick the lender that their friend used, go with a big brandor local bank, charge their credit cards, dip into their 401(k) and eventake out home equity loans. Start early and be diligent in researchingloans from multiple sources.

Evaluate Financing Options Carefully Optimize lower-cost loans (Stafford and Perkins) before adding privateloans, which tend to cost more. Remember the "four year cost" of borrowing,choices made for freshman year are likely to be a reality in subsequentyears. A rule of thumb: multiply freshman year borrowing by five for theaggregated impact of college borrowing.

Balance the borrowing betweenparent and student. Parents may be reluctant to add to their debt, but evena small amount of additional borrowing can save the future graduatesubstantially.

Source: http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/08-15-2006/0004416144&EDATE

Tuesday, August 15, 2006

The degree or the house

QUEENSLAND now has a university degree that will cost a full-fee-paying student a staggering $230,000.

Nine others will cost full-fee Australian students more than $100,000.
This compares with the average home mortgage in Australia of $220,000.

The 2007 Good Universities Guide, available today, says a fully paid place in medicine at Bond will cost $233,100 from next year. Full-fee medical places at Griffith University will cost $160,000, dental science at the University of Queensland will cost $152,261, and veterinary science $129,718.

Bond University emerged as a surprise star performer in the guide, being the only university out of 39 in Australia to receive five stars in six of the most important categories surveyed, including graduate starting salaries, getting a job, teaching quality and overall satisfaction.

Bond vice-chancellor Professor Rob Stable said the $233,100 medical degree was good value because it was 4½ years long, compared with seven years in other institutions.
"This saves up to $20,000 a year in living costs for students, and they are working that much sooner," Professor Stable said. "Families see it as a good investment."

Professor Stable said Bond University admitted 84 students to its undergraduate medical degree this year out of 350 applicants.

Only 3 per cent of the students are from overseas, far below the 10 per cent average of other medical schools.

"We are very conscious of the shortage of doctors in this country," Professor Stable said.
Under the Federal Government's rules, medical students can access up to $100,000 in student loans.

While Bond is a private university, Opposition education spokeswoman Jenny Macklin said Labor would put an end to full-fee places for Australian undergraduates at public universities.
"No ordinary 18-year-old or their family can pay anything like these sums for a degree," she said. "John Howard misled Australians when he promised in 1999 there would be no $100,000 degrees."

Like many students in the Bond medical course, Lucas Wheatley, 23, of Broadbeach, is funding his degree with help from his parents, a student loan, personal loan and a part-time job.
Mr Wheatley said few students were worried about paying back their debts when they started work on about $50,000 a year.

"Everyone is more concerned about passing the course," he said. "Everyone has made sacrifices to join the course, but it's worth it."

Source: http://www.news.com.au/couriermail/story/0,23739,20144177-3102,00.html

10 Things Your College Student Won't Tell You

1. "Sure, I've cheated. Who hasn't?"Blame it on Enron or blame it on Martha Stewart — the fact is that cheating has reached an all-time high on today's college campuses, with 70% of students now admitting to some form of it. Incidents involving unsourced material from the Internet in written work have quadrupled in the past six years, yet 77% of students don't consider it cheating or "very serious.""Some students have justified it to themselves," says Donald McCabe, founding president of the Center for Academic Integrity. "They'll say it's the faculty's fault if they're too lazy to stop it."

Mobile devices exacerbate the problem; students can text-message answers to one another or use camera phones to post exams online. Spark-Mobile, a service from study-guide publisher SparkNotes, lets students send in text-message queries and get crib notes in seconds. But that's just one of many such services: GradeSaver.com grants access to sample essays for $6 a month, while RentACoder.com lets computer-science students outsource homework to India for around $20. The companies say their sites weren't designed to help students cheat, but "it's impossible to police," admits RentACoder founder Ian Ippolito.

2. "Everyone knows that 'studying abroad' is one big party."Congress recently passed a resolution dubbing 2006 the "Year of Study Abroad." "We want the next generation of adults to be in touch with their national and global citizenship," says Jessica Townsend-Teague, program manager at the Commission on the Abraham Lincoln Study Abroad Fellowship.

But despite good PR, study-abroad programs are often less than rigorous, and underage drinking is rampant. "It's necessary for the image of study abroad to shift from a 'party hearty' experience to a very serious national priority," Townsend-Teague avers. It's also a matter of safety: "Students go from being unable to drink legally to countries where alcohol is free-flowing," says Gary Rhodes, director of the Center for Global Education at Loyola Marymount University. "Some students have died while abroad."

Schools are doing their part to protect students, requiring better orientation and urging them to avoid countries deemed unsafe by the State Department. But Townsend-Teague advises students to think before they act: "Take a moment to be very sober about what we can and cannot do to rescue a student overseas."

3. "I'd stay here forever if I could get you to pay for it."Brian Bordeau graduated this spring from the State University of New York at Binghamton. He says it wasn't a big deal, but admits everyone else thought it was — he'd been in school for seven years. "Honestly, I'd rather come to school again next fall," he says. "I really like it here."

Bordeau isn't alone: Just 53% of students enrolled in standard undergraduate programs get their bachelor's degree within five years. Changing majors, transferring schools and good old slacking off can all result in extended enrollment. One of the obvious downsides is the added financial burden of an extra year or two in school. But there are hidden costs too.

"You lose a lot of money in loan interest and forgone wages by taking that fifth or six year to finish," says Jacqueline King, director of the American Council on Education Center for Policy Analysis.

If you plan to pay your child's way through college, King suggests setting a firm timetable. When Bordeau was forced to take out loans to pay for tuition during his sixth year, he began to buckle down and hit the books. "This year I paid for it," he says. "That motivated me to finish."

4. "College life can be hazardous to my health."Parents of college students often worry about their children's well-being — and for good reason. The university experience can be marred by physical and mental health issues ranging from anorexia and communicable diseases to depression.But the most serious concern for parents and educators is suicide, which accounts for an estimated 1,100 student deaths each year.

Fortunately, most schools now have counseling and intervention programs, but they differ widely. Some colleges ask those who've disclosed thoughts of suicide to withdraw — a policy that can inadvertently keep students from seeking help. The University of Illinois has developed another approach: protecting a student's "right to be in school," but requiring those who have threatened or attempted suicide to attend assessment sessions.

"If a student says he wants to take his own life, those statements should always be taken seriously," says Paul Joffe, chair of the Suicide Prevention Team at the University of Illinois. The program is aggressive, but it works: UI's suicide rate has decreased by 45% since it began 21 years ago and is around half that of other Big Ten schools.

5. "My résumé isn't the only thing I have posted on the Internet."Social-networking sites are wildly popular among college students, providing a forum for meeting and chatting with friends, posting photos, and writing about their lives and interests. But search Facebook — as some employers do to screen job candidates — and you'll find photos of underage drinking, partying and scantily clad college kids. "There are students who work like crazy on their GPA, but don't think twice about what they're posting on Facebook," says Lauren Steinfeld, chief privacy officer at the University of Pennsylvania.

College athletes have been particularly brazen. In a recent incident involving Northwestern's girls' soccer team, pictures on Webshots.com showed rookies blindfolded and in their underwear performing sexually suggestive acts. The team was temporarily suspended, and some members await further disciplinary action.

"It's hard for anyone over the age of 30 to truly understand what is going on at college these days without seeing it for themselves," says Bob Reno, founder of BadJocks.com, a sports-scandal site. And these days, it seems, "seeing it" is just a mouse click away.

6. "Just because I was a straight arrow in high school, doesn't mean I will be in college."the statistics are pretty scary: Each year 2.8 million college students drive drunk, and 1,700 die from alcohol-related injuries. Nearly half a million engage in unprotected sex, and almost 100,000 students are victims of alcohol-related sexual assault or date rape.

But alcohol isn't the only substance that's a problem. Use of narcotics other than heroin is back up to record levels among college students, and there's a newer trend causing concern: 29% say they have used prescription drugs recreationally. These include pain relievers like Vicodin, which can lead to respiratory and liver failure, and amphetamines such as Ritalin and Adderall, which can result in cardiac arrhythmia and coma — and can lead to harder drugs. Students using these stimulants are 20 times more likely to try cocaine.

Ironically, while drug use in high school is also up, drinking there is at an all-time low. According to the latest UCLA survey, fewer than half of last year's incoming college freshmen say they drank beer as high school seniors. And while that's surely good news, it remains to be seen whether the trend holds once these students hit campus.

7. "My grades are none of your business."Even though parents may have taken their child on campus visits, helped her move into her dorm and are now picking up the tuition bill, they could be denied access to their child's college records. Want to see if your son failed math? Wonder if your daughter has been ill? Depending on a given school's policy, you may have to get your college kid to sign a consent form.

Some schools grant access to parents of students who are claimed as dependents; there's also an exception permitting disclosure in the case of a medical emergency, such as a suicide attempt or testing positive for tuberculosis. "Nobody should get the impression that anything is absolutely confidential," says Steinfeld, at the University of Pennsylvania. Each school's approach to these exceptions is different, and the policy is usually detailed on the university's web site.

8. "I'll do just about anything for money."It's no surprise that college students are strapped for cash, but what they'll do to earn it can be shocking. From being poked and prodded in lab tests to handing over their DNA, students will do almost anything that pays.

Participating in research studies and surveys is one way to earn cash without committing to a steady gig. Fliers advertising participation in an experiment — worth anywhere from $7 to $80, depending on the task and time commitment — adorn campus bulletin boards and psych-department web sites. "I have to get my money somehow," says Yale senior Elizabeth Friedlander, who averages three experiments per month — so far including two MRIs.

For an even bigger payout, young women have begun donating their eggs to infertile couples: An "elite" ovum harvested from a healthy female at a top university can fetch anywhere from $10,000 to $35,000. "You'll see ads in all the Ivy League newspapers," says Debora Spar, a professor at Harvard Business School and author of The Baby Business. "Some women donate for money, some out of a sense of altruism, and most for a complicated mix of both motives." But the process is relatively new and virtually unregulated. "In other medical fields, we know the long-term effects," Spar says. "Here there's less information."

9. "I'm up to my ears in credit card debt..."No one said college would be cheap — tuition is up 95% from a decade ago at four-year public institutions and 74% at private schools. The cost of books, room and board is also on the rise. But many students who graduate with debt have only themselves to blame: Experts say the idea of living within one's means now seems alien to many students and cite growing pressure to keep up with classmates by purchasing expensive clothes, cars and gadgets. The average college senior now has six credit cards and a $3,200 total balance.

The effect is profound: 11% of college students frequently pay less than their monthly minimum, which can make it difficult to rent an apartment, obtain a car loan or even get a job. "Debt strangles their ability to become adults and make good career choices," says Tamara Draut, author of "Strapped: Why America's 20- and 30-Somethings Can't Get Ahead." In fact, 17% of young adults significantly alter their career path because they're so far in the red so early; Draut says that often "the door is locked" to fields like teaching and nursing, since salaries are too low to support young grads carrying heavy debt.

10. "...so I'll be moving back home after graduation."On graduation day students are ready for the real world, and parents are finally off the hook, right? Not necessarily. Currently, in 13 million households — up 70% from 2000 — parents are financially supporting children 18 and over, whether they live at home or not. It's a trend that experts don't expect to end anytime soon.

What's more, even working adult children are struggling to make ends meet — and they're moving back home in droves. They're called "boomerang kids," and eight million homes currently house them, according to MacroMonitor, a market-research program operated by Consumer Financial Decisions. "They're not dependent according to taxes, but they're sleeping on the couch, running up the utilities and using the ice box," says Larry Cohen, director of CFD. "The nest isn't quite empty."

Source: http://www.smartmoney.com/10things/index.cfm?story=september2006&pgnum=2

Money, a student's first test

THE moment of truth arrives in thousands of households this week and nerves are strained to snapping point. A-level results will be published and, depending on grades, school-leavers will choose their universities for the autumn.

But after the euphoria of exam success comes the harsh reality of financing the cost of at least three years' study. While some have parents who are happy to bankroll them, many students will have to meet their education bills themselves through part-time work and loans.

With tuition fees alone rising to as much as £3,000 a year from next month, the majority of students are expected to use a new package from the Student Loan Company to defer payment of this bill. Those who do not take this option must pay their fees upfront each year.

Under the loan scheme, students will be able to borrow enough to cover their annual tuition fees, with payments made direct to the university by the SLC.

On top of the tuition fees loan is a maintenance loan to help with accommodation, books, travel and so on. Payments are made each term into students' bank accounts.

Both loans allow students to defer making repayments until at least the April after they leave university --including those who drop out - but only when they start earning £15,000 or more a year.

Interest starts clocking up as soon as the loan is issued at a rate set annually and based on the Retail Prices Index - currently 3.2% but dropping to 2.4% in September - far cheaper than bank personal loans, which start at about 6%.

From September, the maximum annual maintenance loan is £6,170 for students living away from home and studying in London, £4,405 outside London, and £3,415 if living at home.

The loan amount is cut in the final year because it is not intended to be used for support after graduation. All students can borrow 75% of the maximum amounts, no matter the level of their family income. The remaining 25% is means-tested.

Because the loan rate is set at the Retail Prices Index, graduates effectively pay back exactly what they borrowed, with no profit taken by the SLC. This makes it an attractive proposition, even for students who do not need a loan to finance their studies. The SLC says 81% of students opt for the loan.

Source: http://www.thisismoney.co.uk/saving-and-banking/student-finance/article.html?in_article_id=411702&in_page_id=52&ct=5

Monday, August 14, 2006

Students face mounting debt

DENVER - An increasing number of college graduates are getting a crash course in economics, thanks to the monthly payments they have to make on their student loans.

The trend is present at Fort Lewis College, where the number of graduates burdened with debt from student loans has grown by 11 percent since the 2000-01 school year.

Almost four out of 10 people who take out student loans won't be able to manage the debt burden, according to Student Debt Alert, a national campaign that seeks to raise awareness about the sharply increasing levels of debt.

"Thirty years ago, we were talking about one-third of students taking out loans to pay for school and two-thirds getting government grants. Now, it's totally flip-flopped," said Cory Nadler, a campus organizer for Colorado Public Interest Research Group in Denver. PIRG chapters around the country are sponsoring the Student Debt Alert project.

Nadler's group released a report last week that showed student debt rose much faster than inflation or even health-care costs over the last decade.

The average debt load for four-year college graduates who took out loans jumped 107 percent between 1993 and 2004, to $19,200. Over the same period, health-care costs jumped 56 percent, while inflation in the Denver-Boulder area was 38 percent. (The Denver-Boulder area is the closest area to the Four Corners studied by the Bureau of Labor Statistics, the government office that tracks inflation.)

"I think what this report highlights is that higher education is getting a lot more expensive than most other things in our society," Nadler said.

Jack Klumpenhower, a spokesman for Fort Lewis, said, "We do have a feeling that students are increasing their reliance on loans significantly."

Last school year, 60 percent of students had loans. In the 2000-2001 year, only 49 percent took out loans. The average debt load for Fort Lewis graduates who took out loans last year was $16,966, compared to $14,102 in 2001.

Students are turning to loans as state support declines, Klumpenhower said. The state gave about $5 million to Fort Lewis students in scholarships and grants in the 2000-2001 year, but state support plummeted to $890,000 last year.

At the same time, tuition was going up. The tuition increase is being held to 2.5 percent at all state schools this year.

The biggest problem is the growth of the private loan industry, said Elaine Redwine, Fort Lewis financial aid director.

Source: http://durangoherald.com/asp-bin/article_generation.asp?article_type=news&article_path=/news/06/news060812_3.htm

Sunday, August 13, 2006

It's not too late to seek aid for college costs

You might weep the day you leave your son or daughter in a college dormitory for the first time, but wait until you take a look at the first bill for tuition, room and board.You could be moved to a different kind of tears.About this time of year, that bill arrives.

And it's a shocker: Maybe $20,000 for some schools, to be paid right then and there. And that's just half of it.

Around New Year's, its mate will arrive.But there are ways to get through this trauma--to break it down into more manageable pieces.-- Discovering free moneyLast spring, when the financial aid offer arrived empty--or small--you might have thought the matter was settled. You knew what you were going to have to pay, it wasn't pleasant, but that was that.Many people believe the financial aid letter is the last word on whether you will get any kind of help paying for college.

But you'd be making a mistake to assume the door is shut--even now. That's especially true if your family income is low, and your child has qualified for a Pell grant.

Typically, these grants--or free money--from the federal government are available to people with incomes under about $40,000. If you qualify and haven't sought a Pell grant, you can still go to the financial aid office and ask for one.

But if you've already been offered a Pell grant, you may be able to obtain even more aid.
The federal government is introducing two new scholarships this year. Students entering their first year of college can receive up to $750 in an Academic Competitiveness Grant. And students in their second year may land up to $1,300 if they have maintained at least a 3.0 grade point average.

Students in their junior and senior years may quality for another $4,000 each year through a National Science and Mathematics Access to Retain Talent Grant, or SMART grant.Both new grants go to strong students, and are provided in addition to a Pell Grant of up to $4,050 a year. The higher the cost of a school's tuition, the higher the Pell Grant.

To qualify for the Academic Competitiveness Grant the first year, a student had to go through a "rigorous high school program." There are guidelines at www.studentaid.ed.gov, but colleges are still interpreting them, said Carl Buck, vice president of college funding solutions at Peterson's. He suggests students assume they are eligible, request a grant from their college financial aid office, and --if necessary--ask a guidance counselor from your high school to state you've had a rigorous education.

To get the SMART Grant, you need to study math, science, computer or engineering, or a foreign language that's national-security related, Buck said.

Souce: http://www.chicagotribune.com/business/sns-yourmoney-0813college,1,3505891.story?coll=chi-business-hed

SUSAN TOMPOR: PERSONAL FINANCE: Cash for school is all about the hunt

Students who are scouring around for extra cash for college must ditch the notion that there's no real money to be found in scholarships unless you're, say, a super-brain who can win a prestigious Intel scholarship or, say, a super-goof who can pull off creating a prom dress out of duct tape.

There's money in the more mundane, too.

Mark Kantrowitz, 39, admittedly is one of the super-brains who won a slew of scholarships, awards and fellowships -- including the Westinghouse Science Talent Search (now the Intel Science Talent Search), the Courant Institute Prize for Mathematical Talent and the MIT William L. Stewart Jr. Award.

But he's also one of my favorite people to talk to about how to get money for college. He's the creator and publisher of FinAid.org -- a solid source on financial aid, scholarships and student loans.

His new book, which will be available next month, is called "FastWeb College Gold" (Collins, $21.95). It's a step-by-step guide that can help cash-strapped parents and teens figure out the higher-education money maze -- and yes, find scholarships.

Source: http://www.freep.com/apps/pbcs.dll/article?AID=2006608130563

Friday, August 11, 2006

NextStudent's PLUS Loans Let Parents Help With College Costs Now and Throughout the Year

PHOENIX, AZ -- (PHOENIX, AZ -- (MARKET WIRE) -- August 11, 2006 -- Many parents who want to help their children with college costs are not aware that funds still are available before the fall semester begins. With PLUS Loans -- Parent Loans for Undergraduate Students, funds up to the full cost of college with rates as low as 6.25 percent are available throughout the year through Phoenix-based NextStudent, the premier education funding company.

NextStudent's federal PLUS Loans features a 6.25 percent interest rate when accompanied by a 2 percent rate reduction following the first 48 months of on-time payments and an additional .25 percent reduction when borrowers repay with Auto Debit.

With PLUS Loans parents are able to borrow up to the full cost of their children's education expenses, less financial aid received. Parents may borrow costs for 2006-07 all the way through May 31, 2007. Reimbursement is available to those parent borrowers who already paid education expenses for their children. PLUS Loans are available throughout the year and costs for education can include tuition and fees, housing, supplies and transportation.

Parents will find it easy to receive a federal PLUS Loan since the loans are not based on financial need. Easy, fast preapproval is available, making PLUS Loans the perfect choice for parents whose children need funds to pay for the upcoming fall semester.

The federal PLUS Loan Program through NextStudent gives you more:

-- 3 percent cash rebate on the remaining principal balance after the
first 12 months of consecutive on-time payments.

-- Simple Application Process with E-Signature. Apply online and qualify
in minutes. A "second look" feature is available for borrowers who are
denied initially due to unresolved credit problems.

-- PLUS Credit Resolution Team at NextStudent has an 87 percent rate of
success resolving borrowers' credit problems, resulting in funded PLUS
Loans.

-- Flexibility with PLUS Loan repayment options, including deferred
repayment when a student is enrolled at school at least six credits.

Federal PLUS Loans through NextStudent may be tax-deductible and the loans are eligible for federal loan consolidation. Repayment terms on PLUS Loans usually are 10 years and start within 60 days of the loan's final disbursement. And there are no prepayment penalties.

NextStudent's federal PLUS Loan Program is available to parent borrowers now and throughout the year. Parents are able to get much needed college funds for their children just weeks before the fall semester. Great terms and benefits along with reasonable interest rates make PLUS Loans the right choice.


Source: http://www.marketwire.com/mw/release_html_b1?release_id=153277

Thursday, August 10, 2006

R1,6bn in the kitty for student loans

The National Student Financial Aid Scheme (NSFAS) has allocated R1,3-billion this year for student loans to enable young people to study at higher educational institutions.

Since its inception in 1991, the NSFAS has lent R6,2-billion, helping about 450 000 students to graduate from higher education institutions.

NSFAS chief executive Alan Taylor said students should realise the importance of repaying their loans so the fund could help other students. He said the collection this year of money owed had been better than that last year.

"Of the R6,2-billion, about R3,1-billion is due for collection. The balance is owed by students who are studying and those who haven't yet found employment," he said.

"In previous years commercial banks have charged as much as 23 percent interest on student loans. If you had one of these loans, you would be required to pay back the loan within a specific period, regardless of whether you were employed.

"By comparison, NSFAS's interest rate is equal to the rate of inflation plus two percent. This two percent helps sustain the loan scheme."The size of repayments to the NSFAS depended on the borrower and payments began when the former student was earning R26 300 or more a year.

Taylor said the fund was trying to ensure that money was lent only to those who qualified. Of the R1.3bn lent this year, R320-million was money repaid by former students.

To qualify, students must be South African citizens, registered at a South African university or technikon, and be studying for their first tertiary qualification or for a second qualification necessary to practise in their chosen profession, such as law.

Students must be able to demonstrate their potential for academic success, and be financially needy.

Source: http://www.iol.co.za/index.php?set_id=1&click_id=13&art_id=vn20060810024744713C430446

Wednesday, August 09, 2006

College Students Risk "Burial" By Credit Card Debt

(KCPW News) More and more college students are using credit cards to pay for tuition and other expenses. The transaction ends up costing universities a hefty sum - last year BYU paid nearly one million dollars in fees to credit card companies.

"We do have a lot of concern about the unwise use of credit which could bury students," says David Feitz, director of the Utah Higher Education Assistance Authority. "We continue to urge students to borrow wisely, have a plan to pay debt back and don't get yourself so over-extended that you may have to drop out of school."

A study by financial company Nellie Mae finds undergraduate students carry an average credit card debt of 27-hundred dollars. Feitz says credit cards are increasingly popular for paying tuition because they're easy to use, particularly with online payment methods. That's fine, says Feitz, if a student has the tuition money on hand.

"The danger is the credit card can become so easy to use that you forget the day of payment is just around the corner," says Feitz. "That can become very difficult for students to recover from."

Feitz says student loans are always preferable to carrying school-related debt on a credit card. A number of Utah colleges, including BYU, urge students to pay tuition with cash or check and now charge a processing fee to offset the expense of taking credit card payments.

Source: http://www.kcpw.org/article/1415

Tuesday, August 08, 2006

If you are a student, this is important! Please read!

This is really important.

The most recent draft of the Bush Administration's Commission on Higher Education recommends cuts to federal aid by 50-75% encouraging students take out private loans as opposed to federal loans. This large cut in federal aid signals a cost to borrowers of $32 billion in additional interest payments. The Commission meets to finalize the draft on THURSDAY, AUGUST 10TH, 2006.

Please take action NOW by emailing AND calling the Commission's Public Comment Line within the next 24 hours. Below is a suggested text that you can email or read to the Commission.
Please tell your friends--this affects BOTH graduate AND undergraduate federal loans! Thanks very much.

Source: http://blog.myspace.com/index.cfm?fuseaction=blog.view&friendID=56100603&blogID=153716471

New options for 50-year mortgages, 10-year car loans and 30-year student-loan payments

Will I still be paying off my student loans when I'm 64? It's a question that certainly never occurred to Paul McCartney, but it is becoming a possibility for some students and recent graduates.

Spurred by recent waves of student-loan consolidations and lengthened loan terms, student borrowers are pushing scheduled payoff dates into their 40s, 50s and even 60s.

Over the last two years, millions of current students and graduates consolidated their federal student loans to lock in record-low interest rates. As they did so, virtually all borrowers took their lenders up on an option to extend the payment period of their loan - from a 10-year payoff term to one of 20 or 25 years, or even longer. The result was much smaller monthly payments, but for a much longer time.

"Everyone pretty much goes for the maximum, which can be 30 years," said Tom Lustig, vice president of PNC's Education Loan Center. "One-hundred percent, really, are taking the maximum term."

Extended payment periods are attractive because borrowers' monthly payments drop substantially. On a federal loan of $20,000 - just above the national average loan amount for a four-year undergraduate degree - a borrower with a 4.75 percent interest rate would pay $210 per month on a 10-year loan, versus $129 per month for a 20-year loan. ...Of course, those smaller monthly payments come at a cost of higher total interest payments.

The $20,000 borrower would pay more than $5,800 more in interest for the extra 10 years, and the $60,000 borrower would pay nearly $37,200 more for the extra 20 years. ...

What concerns financial experts is that student-loan payments that are "like a mortgage" might come at the expense of an actual mortgage or other financial steps such as saving for retirement or a child's college fund.

Source: http://watchingthewatchers.org/story/2006/8/8/165858/3325

Student loan firm aims to save you some money

The high costs of higher education have many students and parents crying uncle or, at least, crying that they wished they had a rich one. As if on cue, enter My Rich Uncle, a company whose stated aim is to relieve some of the pain when arranging financing for college.

Haven’t heard of them yet? That’s sure to change, as My Rich Uncle recently began to ramp up its advertising campaign. And it’s what the ads say that causes financially strapped students to drop their calculators.

In a two-page ad that ran in the New York Times in July, My Rich Uncle didn’t mince words. In black and white, the company said it is the first student loan company to cut the federal loan rate by up to two percent at repayment. That means a potential 1.25 percent off the fixed rate for Stafford loans, which is now set 6.8 percent, and a potential two percent off the federal PLUS loan — which is made available to parents of undergraduate students, as well as to graduate and professional school students — where the fixed rate is now set at 8.5 percent.

If this isn’t startling enough, the ad continues to say students can apply directly to My Rich Uncle for their loan and cut out the "middleman" which, in this case, is the financial aid office.

Understanding the part about the middleman gets to the heart of the matter.

Source: http://msnbc.msn.com/id/14246357/

Monday, August 07, 2006

9 Ways to Improve Your Credit Score

1. Paying bills on time, since any payments more than 30 days late will affect the credit score. Note that a bill issued March 15 with a due date of March 31 does not become 30 days late until April 30.

2. Paying the higher payment if a crunch makes it necessary to choose between paying two bills. For example, if an $800 house payment and a $300 car payment are due, and the person can only lay hands on $800, it will work out better for their credit score if they pay the house payment.

3. Never declaring bankruptcy, since it can affect credit scores for more than a decade, depending on state law. Anything is better for one’s credit score than bankruptcy even working with a credit counseling service to get everything paid down.

4. Trying to maintain 3-5 credit lines, since one’s score will be lower if he doesn’t have any credit.

5. Trying to get rent and utility payments factored into one’s credit score as nontraditional credit if the person otherwise has no established credit.

6. Attempting to stay within 10-30% of the maximum on each credit line, and not go over 50% on any credit line in any event. Although this contradicts the advice many credit companies give when trying to get new customers to transfer balances, it will lead to a higher score than consolidating everything into one credit line and max it out. Try to convert revolving debt to installment 45 days (or more) before making a big purchase like a home or auto.

7. Becoming an authorized signatory on one or more of one’s parents’ credit cards that they carry a balance on. If the parents pay it responsibly, the authorized signatory’s credit score will benefit, whether he personally charges anything to the card or not. This tip is especially useful for young adults with little or no established credit.

8. Keeping an eye on how student loans are reported. Student loans are notorious for being reported multiple times, making it look like one’s monthly payment obligations are higher than they actually are.

9. Avoiding causing too many inquiries to be made right before applying for a big loan that depends on credit score. One’s credit score is affected by recent inquiries made by anyone other than the individual, their insurance companies, and certain others specified by law. When a person applies for new credit, for instance, and the creditor checks the credit report, that can cause a temporary dip in their score.

Source: http://onlyidol.com/index.php/2006/03/02/9-ways-to-improve-your-credit-score-2/

How to help your child prepare for education beyond high school

Academic Preparation

Parents can begin to prepare their children for college early by:

helping them take the right junior high and high school courses based on the type of school they wish to enroll in after high school;

encouraging them to maintain good grades throughout their high school experience;

helping them obtain and complete admissions applications;

assisting them with essays and preparing for admissions interviews;

helping them decide on the right school by researching the school's curriculum, the size of the school, the type of school, and a school's affordability. Parents should also encourage campus visits.

Home Schooling

The first important thing is to have your homeschooled child contact the admissions offices at the colleges that interest him or her.

Different colleges have different requirements for homeschooled students, so be prepared to tailor the application package for each school. Most admissions offices will be interested in the level and intensity of the course work your child has completed. Be sure to find out whether the college requires a transcript of completed courses. Sometimes, colleges request a list of the books used and any completed course materials. Your child's GPA will probably not matter as much as factors such as college entrance exam scores, personal essays, and interviews.

Many colleges find it useful to have a portfolio of the homeschooled student's work. In addition to information such as grades and test scores, the portfolio might include writing samples, computer programming projects, awards, lists of books read, newspaper clippings about volunteer work, etc.

In addition, your child might want to consider enrolling at a local community college. Some homeschoolers find community college a good way to "try out" a college environment and to build a record of courses and grades beyond the home transcript.

You and your child can learn more through networking with other homeschoolers who are applying ? or have been admitted ? to college.

Financial Preparation -- Saving

You should begin saving as early as possible. The average in-state tuition and fees for full-time undergraduate students for 2000-01, before student financial aid was deducted, was $1,360 for a public two-year college and $3,980 for a four-year public university. Private four-year schools averaged $15,530 in 2000-01. (Source: National Center for Education Statistics, Higher Education General Information Survey.)

Many state governments now offer innovative college savings programs. The College Savings Plans Network (an affiliate of the National Association of State Treasurers) provides information about these plans and links from their Web site to the many state plans.

Source: http://www.dailyprogress.com/servlet/

Private Student Loans Help Families Find Financial Aid for College Tuition

A recent article in the New York Times highlighted what many students already knew -- that not only was college getting more expensive, but the amount of federal aid available to students is not keeping up with rising education costs.

Quincy, MA (PRWEB) August 7, 2006 -- A recent article in the New York Times highlighted what many students already knew -- that not only was college getting more expensive, but the amount of federal aid available to students is not keeping up with rising education costs.

[1A revision and update to the EFC, or Expected Family Contribution, formula for the 2005-2006 school year translates into an increase in what families have to pay before federal aid can kick in. In the New York Times study (June 6, 2005), the average amount of additional money that families must come up with is $1,749 per year, with some families experiencing increases between $6,000 - $7,000.

[1Why is the shift of the financial burden moving increasingly towards families?
Part of the overall formula for determining federal financial aid is the rate of inflation -- as inflation increases, the number of dollars that a family has would be expected to increase.For example, a family with a household income of $50,000 in the year 2000 would be expected, based on a 3% inflation rate year over year, to have an income of $57,964. in 2005.

By that assumption, the family would have more money to spend on education, and therefore federal aid could be reduced.[2However, there is a flaw in the formula used to compute federal financial aid, and that flaw is this:

the projected rate of inflation which the formula is based on does not necessarily reflect the actual rate of inflation. As a result, the formula assumes people make more money -- in some cases, much more -- than they actually do.

What is the solution for the increased gap between federal aid and the actual cost of education? Private student loans, such as the Act Education Loan from the Student Loan Network, can help to bridge the gap between federal aid, the actual cost of education, and expected family contribution.

Loans such as the Act Education Loan are independent of federal financial aid computations, and are based on the creditworthiness of the borrower, rather than need-based formulas.

Undergraduate, graduate, and continuing education students can apply for alternative student loans at www.ActEducationLoans.com http://www.AlternativeStudentLoan.com at any time; students are strongly encouraged to have a co-signer.

Parents of K-12 students can also apply for private school loans at www.ActEducationLoans.com http://www.AlternativeStudentLoan.com. Students and families can also apply by phone by calling toll-free (866) 229-8900.

Source: http://www.prweb.com/releases/2006/8/prweb420445.htm

Sunday, August 06, 2006

Credit cards can give college kids a real education

I f your kids are off to college, have you had "the talk?"
You know, how temptation and momentarily bad choices can haunt them for years?
No, I'm not talking about majoring in art history -- I'm talking about credit cards.

With no regular income or fixed address, a college student would seem about as credit-worthy as a stray cat. The feline, in fact, might be a better risk, since I've never known alley cats to borrow $20,000 in Stafford loans to study medieval poetry.
Students rack up credit debt

But credit-card companies love college kids. They sign students up early because they'll be loyal customers for years, especially when they start making money after graduation. Plus, if they get into trouble, the Bank of Mom and Dad can bail them out.

According to student loan agency Nellie Mae, 76 percent of undergraduate students had credit cards at the beginning of the 2004 school year, with 79 percent carrying an average balance of $2,169.

Kids are inundated with credit card offers on campus, often tempted with a free T-shirt or other trinkets for filling out an application. Some credit issuers don't require co-signers, even if the students are under 18.

In some cases, this turns out to be as big a disaster as you'd expect: unaccustomed to handling credit, the kids rack up debt into the tens of thousands. Some students cut back on classes or even drop out so they can work to pay their credit card bills.

Establish good credit

But properly handled, college credit cards can be a good move.
The primary benefit is that its much easier to get credit in college than after graduation, when students turn into entry-level wage-earners. Using one or two cards to establish a good credit rating makes it easier to rent an apartment and get cheaper insurance and auto loans after graduation. Plus, more employers are using credit scores to screen job applicants.

Since the kids are going to get credit with or without you, agree now on just how your student will handle his or her plastic:

Agree to no more than one or two major cards with low limits -- no more than $1,000.
Have them get the cards in their own names. Adding Missy or Junior as an authorized user on your account won't help them build their own credit history.

Don't co-sign. That just tangles up your credit with theirs.

To monitor spending and payment activity, set up online accounts where you share the user name and password. That way you know if they've upped their limit or gone past due on the bill.
Discuss the importance of paying on time and what you will -- and won't -- do if they run into trouble.

While small payments on time build credit, push students to pay more than the minimum. Students think they can easily pay off their cards when they get a job, but forget they'll also bear all their own living expenses.

If the card is "just for emergencies," point out that no emergency involves anything they can eat, drink or wear.

Source: http://www.detnews.com/apps/pbcs.dll/article?AID=/20060805/OPINION03/608050354/1369

Decision on selling student loans near

A state panel is nearing a decision on the potential sale of Illinois’ student loan portfolio, an idea some lawmakers describe as financially foolhardy.

But the Illinois Student Assistance Commission, which manages the state’s student loan portfolio, needs to find a way to pay for a new $34 million grant program Gov. Rod Blagojevich signed into law last weekend. The MAP Plus program, in effect only for the 2006-07 school year, will provide grants of up to $500 to college sophomores, juniors and seniors with family incomes below $200,000.

ISAC chairman Donald McNeil said Friday that the panel’s options are to sell the entire student loan portfolio, sell part of it or restructure it. McNeil said that restructuring, which is analogous to refinancing a home mortgage, would result in cost savings.

ISAC is in the “final stages” of selecting one or more financial advisers to help it negotiate on whatever it chooses to do, he added.

“It’s not just the sale of some or all of the loan portfolio,” which is about $3.8 billion, McNeil said. The commission also will consider possible outsourcing of current agency work, such as servicing student loans.

Commission members are committed to doing their best to ensure that in the event of a sale, ISAC employees wind up with “substantially equivalent positions,” he said.

“We’re very sensitive, very concerned about preserving jobs” as much as possible, McNeil said, adding that the panel will not do anything to endanger the quality of ISAC services.
ISAC spokesman Claude Walker said the sale or restructuring process should be wrapped up by the end of this year, so MAP Plus grant money can be distributed for the fall 2006 and spring 2007 semesters. He said schools would be reimbursed later for grants that cover the approaching fall semester.

Some Republican lawmakers, especially those who live close to college towns, have expressed opposition to the notion of selling the student loan portfolio. The idea first surfaced when Blagojevich’s budget director discussed it on the second-to-last day of the spring 2005 legislative session.

Rep. Chapin Rose of Mahomet, near the University of Illinois at Urbana-Champaign, said his main concerns are whether students and taxpayers will get a fair deal.

“The governor has made a promise (with MAP Plus), and they still don’t know how they’re going to pay for it,” he said. “This is exactly why this is such a disastrous idea to begin with.”
Rep. Richard Myers, a Colchester Republican whose House district includes Western Illinois University, said his views on selling the student loan portfolio remain unchanged from a year ago.

“I still think it’s wrong,” he said. “I think we need to hang onto as many assets as we can.”
Myers fears that by selling the student loan portfolio, the state would be opting for a quick infusion of cash while sacrificing future assets and jeopardizing loans to the next generation of students. The same risk exists with the governor’s proposal to sell or lease the state lottery to generate extra money for education, he said.

Source: http://www.sj-r.com/sections/news/stories/92639.asp

Thursday, August 03, 2006

Students to repay loans from next September

The Education Department announced today that the changes were necessary because of the increase in student numbers as well as tuition fees and States financial constraints.‘The Education Department would prefer that the States found a way of continuing to offer higher-education awards, under the current system, by increasing the department’s budget,’ said deputy Education minister Wendy Morgan.

‘However, the Treasury and Resources Department has indicated that this is not possible and the rest of the Education Department’s budget is also under significant pressure. ‘It has, therefore, been forced to consider alternative ways of meeting the need.’

Students who started a course before 1 April this year will continue to receive grants under the current system until the end of that course. They will not have to take loans, even if the course continues after 2006/7.

All students who receive support for courses that commenced after 1 April will receive grants under the current system for the academic years 2006/7 and when loans are introduced, they will not be asked to repay those grants.From September 2007, the new funding and loan arrangements will apply both to students who enter full-time further and higher education outside Guernsey in that month and to those who are continuing courses which they entered at any time after April 2006.

This change will particularly affect those students starting their courses in September this year.Students will not be required to repay any part of the loan until the completion of their course. It is intended that the loan interest rate will be variable, at the Bank of England base rate plus 1%.

‘The department is announcing its proposals today, which it will take to the States in November, so that students starting higher education in September 2006 will have an idea of what it might cost them,’ said Deputy Morgan.

‘However, the proposals will be subject to acceptance by the States and the enactment of the necessary legislation.

‘The department would like all young people to have the opportunity to gain the qualifications, life skills and experiences associated with being able to pursue a course of higher education.

Source: http://www.thisisguernsey.com/code/shownewsarticle.pl?ArticleID=000948

NextStudent's PLUS Loans Benefit Parents and College Students

PHOENIX, AZ -- (MARKET WIRE) -- August 03, 2006 -- With federal PLUS Loan interest rates as low as 6.25 percent, parents can offer a helping hand with their children's education costs. Phoenix-based NextStudent, the premier education funding company, offers PLUS Loans -- Parent Loans for Undergraduate Students at low rates when coupled with incentives and benefits that make it easy to pay for college.

The 6.25 percent PLUS loans interest rate offered through NextStudent is available when accompanied by aggressive incentives including a rate reduction of 2 percent following the first 48 months of on-time payments, and a rate reduction of .25 percent with repayment through Auto Debit.

With PLUS Loans parents can cover 100 percent of education costs of their dependent children, including tuition, room and board, and supplies, less any financial aid received. For the 2006-07 academic year, parents can borrow all education costs up through May 31, 2007. In addition, parents who already paid education expenses can be reimbursed through PLUS Loans.

PLUS Loans are not based on financial need, so regardless of financial circumstances parents cannot be turned down. NextStudent's PLUS Loan Program includes a quick and easy pre-approval process, eligibility for federal loan consolidation, and interest that may be tax-deductible.

The repayment term on federal PLUS Loans typically is 10 years and starts within 60 days of final disbursement. Moreover, there never are prepayment penalties.

Other benefits of NextStudent's federal PLUS Loan Program include: -- A cash rebate of 3 percent on the remaining principal balance

following the first 12 months of consecutive on-time payments.
-- Simple Application Process with E-Signature is done online and can be
qualified within minutes. NextStudent also offers a "second look" to
borrowers who initially are denied due to unresolved credit problems.
-- NextStudent's PLUS loan Credit Resolution Team has an 87 percent
success rate when resolving credit issues of borrowers that result in
funded PLUS Loans.
-- Various PLUS Loan options for repayment, including deferred payment
when a student is enrolled at school at least half time.

In order to be eligible for a federal PLUS Loan a parent must be a biological, adoptive or step-parent of a dependent undergraduate; a U.S. citizen or eligible noncitizen; and able to meet minimum federal standards of creditworthiness. Students of parents must be U.S. citizens or eligible noncitizens; less than 24 as of Dec. 31 of academic year; and unmarried without dependents.

Parents can help their children receive full funding for college with federal PLUS Loans through NextStudent. The loans are a great way to pay for college and offer parents excellent terms, incentives and benefits that often are better than other consumer loans.

Source: http://www.marketwire.com/mw/release_html_b1?release_id=150618

Wednesday, August 02, 2006

More needed for debt relief, say students

A provincial scheme to reduce student-loan debt for university graduates took effect Tuesday, but critics say the measures don’t go far enough to help those struggling to pay Nova Scotia’s high tuition fees.

The Education Department has announced that graduates could reduce the amount they owe on their Nova Scotia student loans by 51 per cent under its plan.

"Our debt reduction program provides an incentive for students to graduate, to remain in the province and to make payments on their loans," Education Minister Karen Casey said in a news release.

Graduates can apply to the province for debt forgiveness. The amount forgiven starts at 15 per cent of what was borrowed in the first year and increases by 10 percentage points for each year the student received a loan.

As of this month, graduates will be entitled to have their debts reduced by a further 50 per cent of that forgiven amount as part of an employment bonus if they have worked full-time in Nova Scotia for at least 50 weeks within three years of finishing university.

Graduates will also be able to have an additional 20 per cent of their debt forgiven as a repayment bonus after making 12 full payments against their student loan within three months of graduation. The previous amounts for the employment and repayment bonuses were 25 per cent and 10 per cent respectively.

"It’s definitely not enough," Danielle Sampson, Nova Scotia representative with the Canadian Federation of Students, said. "The program doesn’t go far enough.

"Students have to incur massive amounts of debt in the first place to be able to take advantage of these programs."

The maximum amount someone can receive each year through a Nova Scotia student loan is $5,100. After four years — the typical amount of time an undergraduate degree takes to complete — the amount borrowed under this part of the student loan program would equal $20,400. The province calculates that under its debt-forgiveness plan with the increased employment and repayment bonuses, graduates could avoid repaying $10,404.

Ms. Sampson said the province could better spend its money on grants for university students.
"Nova Scotia is one of the only provinces in the country without a system of needs-based grants," she said. "Those grants would allow low-income students to avoid taking on those debts in the first place."
Jennine MacNeil, a fourth-year arts student at Dalhousie University, said she expects to graduate with about $45,000 in debt, but the province’s loan forgiveness program won’t help her a bit.

That’s because she was denied a Nova Scotia student loan when she applied and has had to work 40 hours a week at two jobs — in a pizza restaurant and clothing store — while attending university to pay her way.
"My parents certainly can’t afford to just throw out $40,000," Ms. MacNeil, 22, said. "I had to get a student line of credit one year."

She wants to stay in Nova Scotia but will have to leave for up to five years after graduating because of the poor job market in the province. She doubts the province’s debt-reduction plan will be enough to entice any graduate to stick around, contrary to the minister’s claims.

Source: http://thechronicleherald.ca/NovaScotia/519453.html

4 Steps to Make the Most of Your Student Loans

San Mateo, CA (PRWEB) July 20, 2006 -- Now that this year’s cap-tossing and graduation parties are in the memory banks, the reality of paying for that higher education is setting in -- but students still have options to choose the best way to handle college and graduate school debt.

“Most Americans with student loan debt saw a flood of news articles encouraging borrowers to consolidate their loans before government loans underwent their annual interest-rate increase on July 1,” said Brad Stroh, chair of Bills.com, who noted that because of the rising U.S. interest rate environment and a government-mandated reset of rates on student loans, rates on federal student loan debt increased by a substantial 1.84 percent on July 1. “Now that student loan rates are no longer at the 3 percent interest rates they hit during the economy’s slowest days, it pays even more to be savvy about borrowing for school or returning to school.”

According to FinAid, two-thirds of college students borrow to pay for school, with an average loan debt of nearly $20,000. Ten percent of parents borrow an average of $16,218 for their students’ education. And those figures account only for undergraduate education; graduate degrees can pack on an additional $27,000 to $114,000 in student debt (source: FinAid).

This year, borrowers also could be affected by two new rules that took effect July 1, making it all the more important to pay attention to smart financing options for student loans.

• Interest rates on new Stafford Loans will not be variable, but will be locked at 6.8 percent.
• Previously, if borrowers had multiple loans with one lender, they could only consolidate with the same lender, but as of mid-June, they can consolidate with any one lender.

For those who owe -- or who are looking at borrowing for college or graduate school via new student loans starting this year or later -- Stroh suggests four steps to find the best financing mechanism for student loans.

1. Try again next year. If you have older student loans that you have not consolidated, make a note on the calendar to check rates prior to next year’s June 30 consolidation deadline. The maximum rate allowed for federal Stafford loans is 8.25 percent. For 2006-2007, the rate will be 7.14 percent for those in repayment, or 6.84 percent for those with in-school deferment (source: Sallie Mae). It is possible rates still will not have hit the maximum by next June 30, and you then might be able to lock in lower rates.

2. Compare rates. Whether you’re looking at new loans or old ones, check to make sure you are getting the best deal. Check out some of the easy-to-use Web site calculators, such as the one in the Bills.com Savings Center.

3. Check your options. A few career fields -- like teaching and emergency services in high-need areas -- are eligible for loan forgiveness or debt reduction of student loans obtained to enter that field. Check with your school, professional organization or lender to determine if you are eligible for any of these programs.

4. Get help if you cannot pay. If you’re unable to make payments on your loans, contact a debt resolution professional or get other reputable assistance. Student loan debt typically is not eliminated by declaring bankruptcy, but you may be able to work out a payment plan with your lender if you do not have the income to pay the debt according to the original schedule. Student loans represent a serious financial commitment, and avoiding repayment has major repercussions.

“Student loan debt is one of the few ‘healthy’ types of debt, as it helps individuals better themselves, furthers their careers and society, and generates greater long-term earnings,” said Stroh. “With a bit of research, you can make the most of your student loans and your education -- and increase your financial know-how along the way. And in borrowing, as in education, there’s always next year to improve your situation.”

Based in San Mateo, Calif., Bills.com is a free one-stop online portal where consumers can educate themselves about complex personal finance issues and save money by choosing the best-value products and services. Since 2002, Bills.com’s partner company, Freedom Financial Network, has provided consumer debt resolution services, serving more than 7,500 customers nationwide and managing more than $250 million in consumer debt. The company’s co-founders and CEOs, Andrew Housser and Brad Stroh, were recently named Northern California finalists in Ernst & Young’s 2006 Entrepreneur of the Year Awards.

Source: http://www.emediawire.com/releases/2006/7/emw414063.htm

Students to pay more as loan rates increase

The hike adds about $20 to the monthly minimum payment on $20,000 in student loans, Sallie Mae reported.

Also as of July 1, all new, federally guaranteed student loans carry a fixed interest rate of 6.8 percent, as opposed to a variable interest rate. The fixed interest rates on new loans could benefit students and parents in future years, especially if interest rates in the general market continue rising, said James Boyle, president of College Parents of America, a nonprofit advocacy organization for current and future college graduates.

“But the trade-off is that the interest rates are higher than they’ve been in previous years, so in the short term there’s a negative impact for this coming academic year,” he said.

The changes that took place July 1 apply only to federally guaranteed student loans such as Stafford loans and PLUS (Parent Loan for Undergraduate Students) loans — and not private loans. While new Stafford loans carry a fixed interest rate of 6.8 percent, new PLUS loans, which are available to parents, as well as graduate and professional students, carry a fixed interest rate of 8.5 percent, said Martha Holler, managing director of corporate communications for Sallie Mae, the nation’s largest student loan provider “This was the second consecutive year of rate increases for the (existing) variable rate loans, and prior to that there were several years of steady decreases in loan interest rates,” she said.

“Essentially from 2001 until 2004, rates dropped on student loans to historically low levels. The rates that were in place before July 1 were the fourth-lowest in the 41-year history of the student loan program.” The interest rates on the existing loans represent a “return to what has been more of a historical average on student loans,” Holler said. Sallie Mae issues about $21 billion in student loans annually and has about 10 billion customers.

“Over time, they’ve averaged around the high 6 percent to low 7 percent, and so that’s what we’re seeing,” she said. The higher interest rates on federally guaranteed student loans may make private loans a more affordable alternative because they may include lower interest rates, Boyle said. However, private loans usually are not available to students without a cosigner, he said.

“The private loan is almost always co-signed by the student and their parent because the student is unlikely to have the type of credit history that would allow him or her to get a private loan,” he said. In the meantime, the default rate on existing student loans remains less than 5 percent, Boyle said. “That doesn’t mean former students are not struggling to repay those loans, but they seem to be meeting that struggle in most instances,” he said.

Source: http://www.eastvalleytribune.com/index.php?sty=69847

Tuesday, August 01, 2006

student loans for the undergraduate

Private Student Loans Through NextStudent Help Students Fund Their Education

Private Student Loans Through NextStudent Help Students Fund Their Education
College students who have not secured their funding for college or who were unable to cover their total education costs with federal aid have another option. NextStudent, the Phoenix-based premier education funding company, offers private student loans for undergraduate and graduate students.

Private student loans are available throughout the year to student borrowers who need money for college. The student loans are unsecured and are credit-based. NextStudent’s Undergraduate and Graduate Private Loans can help students cover up to the full cost of their education, less any financial aid received. Education expenses covered include tuition and fees, housing, computers, supplies and many other everyday expenses related to education, according to NextStudent.

No Deadlines

There are no application deadlines or fees with NextStudent’s Private Loans; therefore, undergraduate and graduate student borrowers can apply at the beginning, middle or near the end of the school term. Student borrowers can apply directly online with a fast and easy application form and receive preapproval in minutes.

With NextStudent’s Private Loan Program student borrowers may qualify with or without a co-signer. Funds are disbursed directly to the borrower, and payments do not have to be made until after graduation. There are various money-saving repayment options and interest payments may be tax deductible.

Eligibility Requirements

To be eligible for NextStudent’s Undergraduate and Graduate Private Loans, students must be enrolled at school at least half time in a degree or certificate program at a school approved by The Education Resources Institute, TERI, a nonprofit organization by which all NextStudent private loans are guaranteed. Private loans also are available for distance learning and international students.

Student borrowers can borrow an annual maximum of $40,000 or the calculated cost of attendance (lesser amount) with a program maximum of $130,000.

Repayment on the Undergraduate and Graduate Private Loans starts six months following graduation, or when the student borrower drops to less than half-time enrollment status. Student borrowers have up to 20 years to repay their loan. However, student borrowers with balances of more than $40,000 may have their term extended to 25 years. The minimum loan payment is only $25.

NextStudent offers private student loan options throughout the year for eligible undergraduate and graduate students who need the funds to help them achieve the dream of a college education. There are no deadlines or time constraints so that student borrowers can receive the funding they need no matter the time of year.

NextStudent believes that getting an education is the best investment you can make, and it is dedicated to helping you pursue your education dreams by making college funding as easy as possible. Learn more about Student Loans at http://www.nextstudent.com/.

Source: http://www.nextstudent.com/articles/private-student-loans-help-students-fund.asp

Get a Credit Card Even If You Have Bad or No Credit

student loans for the undergraduate -Get a Credit Card Even If You Have Bad or No Credit

Credit Wanted brings you the best credit card offers on the internet. Search our credit card database for applications online. Credit Card offers include Visa, MasterCard, American Express and Discover credit cards. Shop for consumer, student, business, pre-paid, low interest rate and guaranteed approval credit cards. Whatever type of credit you are searching for, we can help. Get your free credit report here also.


Boise, ID (PRWEB) July 25, 2006 -- CreditWanted.com - a one-stop store for all your credit card needs, is now under new ownership.Swords & Cues L.L.C. has recently acquired the business and website of CreditWanted.com, in addition to their other popular websites of eLearn2Earn.com, 123FindaWebDesigner.com, StudentLoanSearch.info, and NiagaraPokerSupply.com.

This new website, built with the consumer in mind, offers you a one stop website where you can compare credit cards of all types, from American Express, CitiBank, Discover, HSBC, Bank of America, Chase, Orchard Bank, and more. And then simply click on the credit card that you want and apply. Available are low interest credit cards, guaranteed credit cards, credit cards for those with bad or no credit, secured credit cards, rewards credit cards, business cards, student cards, cash back cards, airline cards, and more.

While some might think that credit cards are troublesome, there are actually more benefits than disadvantages to having a credit card.Building your ever important credit ratingWhen it comes to getting low interest loans and getting financed for other bigger purchases, your credit rating is one of the first things that lenders look at.

They want to know if you can handle your money in a responsible manner. By having a credit card, charging items to it, and then paying it off, you get the chance to show that you can handle your finances.You don’t have to carry cash.A credit card is much safer to carry around than cash. Even if your credit card should get stolen, you can report the loss and not be held accountable for the unauthorized purchases.

When cash is lost, it’s usually gone for good.Free insurance on purchases.Credit cards also offer free insurance on items that have been purchased, allowing you to return items that do not meet your expectations or cancel transactions that weren’t authorized.Credit helps in an emergency.One of the main uses of credit cards is to supply extra funds in an emergency.

Many cards offer car insurance and roadside assistance as well as cash advances and checks that can be written from the limit of the credit card. If you have a bill that’s larger than you expected, credit cards can help to pay it off until you gather the money that you need.Online shopping.Shopping on the Internet is safer and easier when you use a credit card instead of a check or money order.

Almost all online retailers take credit cards over a secure link, allowing transactions to be completed instantly rather than having to wait for checks to clear.Widely used.Nearly every retailer takes credit cards as well as restaurants, hotels, airlines, car rentals, and gas stations. You are covered with a form of payment wherever you go and whatever you do.

RewardsAnd of course, credit cards also like to thank their customers for using them with rewards like cash back or airline miles. You can also receive discounts on future purchases or gas rebates.

Source: http://www.emediawire.com/releases/2006/7/emw415604.htm

Student Loan Consolidation

Student Loan Consolidation – A Simple Way To Help Manage Your Debt

Student loan consolidation is typically defined as the process or the act of combining multiple loans into a single loan in order to decrease the monthly payment amount or elevate the repayment period. There are a lot of reasons behind it, and among those is money saving payment incentives, decreased monthly payments, fixed interest rates, and new or renewed deferments.


Student loan consolidation is also beneficial to those students who have graduated; but find that they're still having difficulties managing the payments of all of the loans that they've amassed while they were still in school.


This way of paying for your loans is more organized, and manageable. It also allows you to save some money, because consolidating all of your student loans lower your interest rate.


Students on average, borrow around $10,000 in loans. The average interest rate goes for around 6- 8 %. Now, for those individuals who would choose to have their loans consolidated, this number would decrease significantly. This type of payment plan is a long term deal. So this would give you more time to finish paying for your debts.


A longer payment plan also means a lower monthly payment. Most payment plans for student loan consolidations are flexible. This is ideal for those individuals who are in a financial crisis.
If so desired, students may increase their monthly payment as their finances would allow. This would shorten the overall time they'd have to make payments. This would also enable them to finish paying up for their consolidated loans as soon as possible.


There is no payment fee required to have you student loans consolidated. The procedure of applying for a student loan consolidation is very simple.


Lending institutions vary in their requirements and specifications for eligibility. Some of the information that is usually asked for is, personal information, list of loans, contact information, etc.


Those who are thinking of applying for a student loan consolidation should also look for a lending institution that offers an arrangement that's most suited for their needs. Plus, it would not hurt to compare interest rates to get the best deal.


Applicants for student loan consolidation would have to continue paying for their existing loans while they are still waiting for their applications to get processed. Students can even apply online.


Once they have been accepted they would receive a notification email that relates to all of the necessary information that they need, such as: schedules and details about the payment plan.
All of their existing loans will be paid for by the lending institution. This would be advantageous for the borrower since this would show on their credit record.


All the borrowers would have to do is to make sure that they keep up with the payments for their consolidated student loans.

Souce: http://EzineArticles.com/?expert=Dean_Shainin

student loans for the undergraduate