The Procrastinator's Guide to Financial Aid

By Kay Peterson, Ph.D., Courtesy of FastWeb.com

When it comes to financial aid, late is often too late. Funds for next year are already allotted, and your school simply has nothing more to give. But don't give up until you consider these options:

Step 1: Check out your school's Web site.

Many sites provide information about the school's late applicant policies, additional suggestions for late applicants and links to alternate funding sources, such as loan companies and scholarship organizations.

Step 2: Make an appointment to talk to your school's financial aid office.

• Try to demonstrate special need, special circumstances or special abilities. Build a case for yourself - provide any information that will indicate that you deserve special consideration.
• If you're a new student, you might want to emphasize how enthusiastic you are about attending and what you can bring to the school. "Even if funding is limited, we will try to make room for one more good student," says David Pardieck, director of financial assistance at Bradley University.
• Remember that you are asking for a special favor. Let them know that you appreciate their efforts and be gracious, no matter what the outcome.
• Always be sure to get the names of the staff members with whom you speak. "It's important to document the conversation," recommends Douglas Bucher, vice president of Enrollment Services & Planning at New York University, "especially if you are asking for special consideration."

Step 3: Consider taking a loan (but be careful!).

If you have to rely on loans, your best bet is to obtain a federally sponsored student loan, such as the Stafford, the Perkins or the PLUS loan. But depending on your school, it may be too late to secure one of these loans for next school year. Check with the financial aid office to find out about the policies at your school.

Your school may also put you in contact with agencies that can provide last minute pre-approved loans. These agencies are private companies that offer loans separately from the federal government - in other words, the same kind of loan you would take out to buy a car or house.

Loans from these private companies can help if you're facing immediate tuition bills and don't have other funding sources. Be cautious, though. Pre-approved loans carry a high price - interest rates that can run as high as 17 or 18 percent.

Step 4: Your Last-Ditch Alternative

If you've exhausted all other possibilities, consider changing your educational path. One alternative: start at junior college, and then transfer to a four-year institution. You'll save money on tuition and get a chance to start college with a clean financial slate.

But before you follow this course, check a few things out:

• Make sure your credits will transfer to your preferred school. A year's worth of course work that won't transfer is a waste of money. Find out before you enroll.
• Learn as much as you can about the financial aid policy at your four-year school - especially as it pertains to transfer students. Some schools offer a different (and perhaps less attractive) financial aid package to transfer students than to students who spend a full four years at the institution.

Whatever you do, be sure to explore all your options, and don't give up until you've spoken to a representative at your school. Policies vary - and you may find it's not too late after all.

Copyright ©2005 FastWeb, LLC, All Rights Reserved

Five Tips for Saving Money on Your Student Loans

By Jennifer Levy

On February 8, 2006, President Bush signed into law a budget reconciliation bill that will impact your student loans as a student and a graduate. The interest rate on any new student loans (Federal Stafford Loans) that you take out after July 1, 2006 will be fixed at 6.8%. Any student loans you have taken out prior to that date will remain at a variable rate.

The good news is that origination fees on student loans are scheduled to phase out over the next several years, which means fewer fees on your student loans. Additionally, if you will be pursuing a graduate degree, a new PLUS Loan initiative will allow graduate and professional students to take advantage of PLUS funds. This will enable you to cover your total cost of attendance with federally guaranteed, low-interest loans instead of Alternative Loans, which are typically more costly.

If you are nearing graduation, you are probably thinking about consolidating your student loans through the Federal Loan Consolidation Program to lower your monthly payments up to 50%. The tips provided below will help you to deal with questions you may have concerning graduation and how to handle your student loans.

The average new graduate will owe more than $220 in student loan payments each month. Even if you have not received your first student loan payment yet, you should consider that there are important deadlines approaching. You can save hundreds or thousands of dollars in interest by consolidating now because the interest rate on your student loans will increase in July.

Because your rate is currently variable and can increase to as high as 8.25%, it is strongly recommended that you lock in now while rates are still the 4^th lowest in history (you can lock in as low as 4.5%*). As the pattern of rising interest rates continues, your rate AND monthly payment will likely go up if you do not consolidate before July 1st. How you manage your student loans can have a big impact on your financial future. Following these simple tips will make it easier.

Tip #1 - Don't let your interest rate go up. Student loan interest rates are variable - they change every July 1^st. You can permanently lock in your interest rate by consolidating now.

Tip #2 - Use automatic payments. Most lenders offer a reduced interest rate when your student loan payments are automatically deducted from your checking or savings account. This can add up to big savings. Plus, you won't have to remember to write a check each month, and your loan payments will always be on time.

Tip #3 - Don't get behind on your payments. If you are having trouble making your student loan payments, you should immediately contact your loan servicer to find out if you are eligible for deferment or forbearance. Just as with any other loans, late student loan payments will negatively affect your credit.

Tip #4 - Choose the best payment option for you. Multiple payment options are available to student loan borrowers who consolidate. A payment plan that fits your current financial situation can help you keep up with your loans. And, you can switch plans when you need to.

Tip #5 - Get cash back from your student loans. A lender or servicer will often offer borrowers incentives to make their loan payments on time for a specified amount of time. For example, CLC^® offers borrowers up to $2,000 cash back after they make nine payments on time.* *

Call College Loan Corporation with any questions you may have regarding your student loans: 800.692.6121.

*4.5% with automated debit payment plan. Conventional payers can lock in as low as 4.75%.

**Borrowers who make payments on time each month for nine consecutive months will receive a cash rebate equal to 2% of their consolidation loan balance, up to $2,000. Borrowers who do not meet the minimum balance requirement but who make payments on time each month will receive a 1% cash rebate, up to $1,000. Additional terms and conditions apply; contact CLC^® for details.

© 2006, InCharge® Education Foundation, Inc. All rights reserved.

Student loan survival guide: drowning in student loans? Save yourself from debt using our simple step-by-step plan

Student loan survival guide: drowning in student loans? Save yourself from debt using our simple step-by-step प्लान

Philip Jones wanted nothing more than to marry his fiancee, fly away to Costa Rica, and embark on the rest of his life. But something was holding him back--the $40,000 in student loans he owes to Direct Loans and Sallie Mae.

Jones, 30, was stressed out because he knew that if he fell behind on his loan payments, the U.S. Department of Education could provide offsets against Social Security payments and garnish his wages and tax refunds, without a court order. Until recently, only the Internal Revenue Service wielded such power.

Luckily, the 2004 graduate of Rutgers University College of Engineering knew a little something about forbearance, a temporary suspension of loan payments that most lenders will allow when times are tough. For Jones, his wallet was being pulled in too many directions; he was trying to pay for a house, a wedding, and a honeymoon within a six-month period.

"I didn't have to make a payment for six months, so that money went toward the wedding and honeymoon. It's easing the financial stress," says the mechanical engineer, who works for Hayes Pump Inc., an industrial equipment distributor in Fairfield, New Jersey.

For the class of 2002, the most current information available, the median student debt was $16,500, according to Sallie Mae, the nation's leading provider of education funding. And with the average college debt burden increasing, many recent grads are finding it hard to manage when the bills are due.

While Jones opted for forbearance, there are plenty of other ways to stay on track with student loan payments without breaking the bank. Erin Korsvall, spokeswoman for Sallie Mae, offers a few tips for taking the pain out of repayment.

* CHOOSE YOUR REPAYMENT PLAN CAREFULLY. "There are a number of different repayment options to help you manage your monthly payments," Korsvall says, offering income-based and interest-only payments as examples. Borrowers can also extend their payment terms to lower the monthly payments.

"Each situation would apply for borrowers who are in a position where they need to minimize their monthly payments. Perhaps they are a recent graduate who has just entered the work force," she says.

* STAY IN TOUCH WITH YOUR LENDER "Make sure they have your current address. You don't want to miss the bills," Korsvall says.

* PAY ON TIME. "It's the best thing to do," Korsvall says. "Sallie Mae offers an interest rate discount when you pay on time. There are no pre-payment penalties."

One way to ensure you pay on time is to pay electronically. There are a number of benefits associated with electronic payments, in which the lender takes the money directly from your bank account. Payments are never late, so the borrower never has to worry about late fees. This also builds good credit, showing lenders that payments are consistently paid on time.

Forgoing stamps has another advantage. Some lenders, including Sallie Mae, will lower your interest rate if you choose to pay back loans via direct debit. For example, one borrower saw his interest rate drop from 4.8% to 4.25% after he switched to electronic payments. Between consolidating his debt and paying by debit, this student was able to lower the monthly payment for his Perkins and Stafford loans from about $300 to $138.

* ALERT LENDER BEFORE MISSING A PAYMENT. "The consequences of default are significant and could include a tarnished credit rating, garnishment of pay, and the inability to obtain additional aid and future credit," says Chris Greene, spokesman for the U.S. Department of Education. "In addition, legal action can be taken to recover unpaid loan balances and fees. If borrowers are experiencing trouble meeting their obligation, they should contact the Department of Education at 1-800-4FEDAID or their lender directly."

Borrowers have 270 days of nonpayment before their loan goes into default, according to the Department of Education. If the loan holder can't recoup its money, it may then decide to use an outside agency to try to collect the money. If that happens, as much as 25% of the amount of the loan could be added to the loan to cover the cost of collection.

"The last thing the department wants is for a borrower to go into default and force us to collect on the loan. Borrowers experiencing difficulties in making payments should contact their lender or the department, and we will work with them," Greene says. "Remaining in an active, current repayment status is in the best interest of the borrower and the department."

The government is currently trying to collect about $31 billion in defaulted loans, according to the Department of Education.

* TAKE A BREAK FROM PAYMENTS. Borrowers can postpone repayment through deferment or forbearance. Both allow for a period of time when the borrower doesn't have to make payments, and they are better alternatives to defaulting.

Deferment allows borrowers to stop loan repayment for specified periods of time under certain conditions, such as re-enrollment in school, unemployment, or economic hardship. You must formally request a deferment from your loan holder. You may need to complete a deferment form and show documentation that you are eligible for the deferment, according to the Department of Education. There is a three-year limit for deferring loans for those with an economic hardship or full-time unemployment. There is no limit for deferment based on reenrollment in school.

Tips and Tactics for the Life of Your Loans

Tips and Tactics for the Life of Your Loans
Sponsored by: The best debt management strategy is to be debt-free. However, in order to pay for school, you may need to take out student loans. Planning for successful repayment should begin before you sign your first promissory note. Just as you are making a commitment to your career by investing time and money in higher education, you should make a commitment to your financial future by effectively managing your student loans from the start. Next Steps Visit Access Group's Website to Create In-school and Out-of-school Budgets and Estimate Your Monthly Payments. Visit Access Group at PrincetonReview.com For Your Education Financing Needs. Financing Your Education: Questions to Ask Before You Borrow How Much Should You Borrow? The following tips and tactics may help make it easier to handle your student loan debt and repay your loans successfully. Get Organized It's a good idea to save all of your student loan documents and correspondence so you know exactly what you've agreed to, what's expected from you as a borrower, and how much you've borrowed. It may not seem important at the beginning of the student loan process, but when you are closer to repayment, you may need to refer to some or all of these documents. Start by setting up an easy-to-use record-keeping system to store your student loan documents and correspondence. There are many books and software products on personal finance to help you get started. Whether you use file folders, portfolios, binders, or envelopes, it is a good idea to set up one folder for each type of loan or account and keep the items sorted accordingly. What should you keep? Save documents such as your applications, promissory notes, disbursement and disclosure statements, and loan transfer notices. Keep copies of all correspondence between you and your lender(s), loan holder, and/or servicer(s) and your school's financial aid office. Maintain up-to-date addresses and telephone numbers of your lender, loan holder, and/or servicer. When speaking with anyone regarding your student loans, be sure to jot down his/her name, the date and time of the conversation, and a summary of what you discussed for future reference or clarification. When setting up your record-keeping system, be sure it's comfortable to use—a system you'll find easy to maintain over the life of the loan—and secure from theft or fire. You should keep all student loan related documents and correspondence until all education loans have been fully repaid. Manage Money Like a Pro It has been said, "If you live like a professional while you're in school, you'll live like a student once you've graduated." In other words, it's important to carefully manage your money while you're in school to minimize the amount you end up borrowing, and in turn, the amount you'll be responsible for repaying. Consider the following: Develop realistic budgets for while you're in school and for after you graduate, so that you don't borrow more than you need and can afford to repay your loans. Live as cheaply as you can. Remember, you are a student. You'll enjoy a more comfortable lifestyle once you've graduated if you minimize your borrowing while you're in school. Some ideas for how to be more thrifty include getting a roommate, renting a movie instead of going out to the theater, and bringing your lunch from home instead of eating out. Try to pay the full amount due for any credit card bill(s) you receive. Follow the budget you establish for yourself. Resist the urge to use credit cards or your student loan funds to buy things that are not within your budget. Explore work-study or other part-time employment. It may provide an opportunity for you to study or get valuable professional experience, as well as help cover expenses. Repayment Tips Being informed about your student loan obligations is crucial as you enter repayment. Default occurs when you fail to repay the loan as agreed and/or meet the other terms of your promissory note. Refer to the promissory note for each of your loans before you graduate or leave school so you know what your rights and responsibilities are in repayment. Here are some tips for successful repayment: Send your education loan payments when due each month, for the full monthly payment amount or more, regardless of whether or not you receive a bill. Understand the repayment options provided by your lenders. With some options, you can minimize the total cost of the loan by making a high monthly payment, while other options may reduce your initial monthly payments and may make it easier for you to afford your loans early in your career. Understand deferment and forbearance; exercise your options when you need them. Understand the pros and cons of loan consolidation and its repayment options. Contact your lenders, loan holders and/or servicers immediately if you: change your name or address have questions about your billing statement(s) have problems making your scheduled payment on time want information on or applications for deferment or forbearance. Read and understand all correspondence you receive from your lender, loan holder, and/or servicer, and respond promptly if asked (or required) to do so. For More Information The financial aid staff at your school is probably your most important resource. You can also consult publications from federal and state governments, lenders, and scholarship granting organizations, as well as financial aid guidebooks that are available from your local bookstore. Another useful source of information is the Internet. On Access Group's website, for example, you'll find information about financing your degree, the importance of good credit, managing your loans while in school, and repaying your student loans. You can also use the interactive calculators to help you plan your in-school and out-of-school budgets, and to project the cost of repaying your student loans. Finally, there are several websites that have been established by government agencies and other organizations to assist students with financing their education. These may be a good place to start your search: Project EASI and U.S. Department of Education.

7 Secrets You Need to Know About College Student Loans

1. Financial aid officers at all the major schools are wined and dined by the big student loan companies. These financial aid offices have set-up a "loan process" with a specific lender. In many cases, this is the federal government, but many colleges are now going with private corporations. The paperwork hassle in dealing with a bureaucracy has become too much for these financial aid officers. In some cases, the financial officer is really a "stand-in" rep. for a student loan company. However, what they are selling or advocating may not be the best deal.

2. Under the Clinton administration the federal government got involved in the student loan process in a big way. Now the private companies are getting the business back. If you are going to a private college you may not be eligible for federal loans.

3. Always consider your options and talk to a financial aid counselor. If you are applying for graduate school, be aware of the fact that there are few scholarships for graduate school relative to undergraduate programs. You may be able to find a scholarship, but in most cases it will not cover the real costs of graduate school. A graduate student loan may be your only option.

4. It is recommended that you go with a loan company that offers all of the following types of loan services:
Private Student Loans
PLUS Loans
Federal Stafford Loans
Student Loan Consolidation
Private Consolidation Loans
You want the largest selection possible.

5. Whenever possible lock in a student loan rate. Some loans are based off the Treasury bill. In these cases, the loan rate fluctuates. This can either be really good or bad. When interest rates go up, you may want to restructure the loan.

6. Pick a fixed student loan rate and start date to do a side by side comparison. Make sure that you are comparing apples to apples when student loan shopping and checkout numerous student loan companies before making a decision.

7. Never borrow more than you absolutely need. Compound interest can make a small student loan turn into a huge amount. Don't take out extra money and play the stock market or try to get rich quick. This scenario almost never works out for college students. Moreover, in most cases it is a violation of the student loan agreement.

Loans for College (Stafford Loans) from NextStudent

Student loans for college (also called Federal Stafford Loans) are perhaps the most affordable ways to pay for school. The two biggest benefits are Stafford student loan rates are lower than other forms of consumer financing, and repayment is postponed until you are out of school.

• Interest rates currently low—just 6.8%
• No collateral or credit check is required
• You owe no payments while you are in school
• You can qualify for even lower rates with an Automatic-debit discount of 0.25% plus an interest-rate reduction of 2.0% after 48 consecutive on-time payments
• Student loans for college are eligible for student loan consolidation
• Tax deductions and flexible repayment options available
• No guarantee fee or co-signers required

Understand the Two Types of Loans for College (Stafford Loans)

Stafford student loans for college processed through NextStudent can be subsidized or unsubsidized.

• Subsidized: The government will pay (pay, not defer) the interest on the loan while you are in school and during grace and deferment periods. However, students must demonstrate “financial need” to be eligible for a subsidized Stafford student loan.
• Unsubsidized: Students are responsible for all interest, although payment is deferred until after graduation. All students, regardless of need, are eligible for the unsubsidized Stafford Loan.

Repayment of Student Loans for College

Repayment normally begins six months after the student leaves college, with a minimum monthly payment of $50 (the actual payment depends on the amount borrowed). There is no prepayment penalty for Stafford student loans for college and the repayment periods are initially set at 10 years.

Take 2 Minutes to Apply Online or call us toll-free at (800) 299-4639

Stafford College Student Loan Amounts

Undergraduate students can borrow along the following guidelines:

Academic Level	Dependent	Independent
Freshman	$2,625	$6,625 (up to $2,625 subsidized)
Sophomore	$3,500	$7,500 (up to $3,500 subsidized)
Junior & Senior	$5,500	$10,500 (up to $5,500 subsidized)
Graduate	N/A	$18,500 (up to $8,500 subsidized)

How do I apply for Stafford Loans for College?

You can apply online or call a NextStudent Education Finance Advisor at (800) 299-4639.

Student Loan Consolidation to be Affected by Recent Laws

The passing of the Deficit Reduction Act of 2005 in February brought with it major cuts to the federal student loan program. Along with cuts to other federal programs such as Medicare, Medicaid and food stamps, the student loan program was hit hardest, with a whopping $12 million in cuts.

In addition, legislation instituted and set to take effect on July 1 will negatively impact student loan consolidation, which will prove to be a thorn in the sides of students throughout the country.

NextStudent’s Low Consolidation Rates

Borrowers who currently are in school now can lock in student loan consolidation rates at 4.75 percent, thereby preventing their federal rates from increasing before the July 1 deadline, according to Phoenix-based NextStudent, an education funding company.

NextStudent also offers a 2.5 percent fixed rate, with benefits applied, whereby eligible borrowers can consolidate student loans and reduce their payments by as much as 70 percent.

Locking in now at a low rate is a smart idea for both students and graduates. Along with a lower student loan consolidation rate, borrowers can receive incentives such as one easy monthly payment, no prepayment penalties and a longer payment term.

Consolidate Before July 1 Change

Other stipulations concerning student loan consolidation are important to note, as the July 1 effective date is just a couple months away. Borrowers should be aware of other regulations set to be instituted before rates skyrocket and student loan consolidation becomes more difficult.

Student loan consolidation will retain the single holder rule. If one FFELP lender holds all of a borrower’s loans, that lender has the right to refuse to release the loans to another company. NextStudent’s low 2.5 percent student loan consolidation rate for qualified borrowers may not be offered through various lenders, so it is important to act now before the interest rate increase.

The new legislation will eliminate spousal consolidation, whereas borrowers no longer will have the option to jointly consolidate with their spouse.

In-school student loan consolidation will be eliminated; therefore, if a borrower is in school, that borrower will be unable to consolidate until he drops below six credits.

NextStudent’s Student Loan Consolidation Benefits

NextStudent’s student loan consolidation is a free government program with no fees and no costs. Other benefits include: one-minute eligibility determination; reduced or postponed monthly payments; and the prevention of interest rate hikes.

With a long list of regulations set to negatively turn around student loan consolidation, student borrowers now can take advantage of rates they may not see after July 1.

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 Loan Consolidation at http://www.nextstudent.com/consolidation_loans/consolidation_loans.asp.

Students and Parents Can Choose Lenders When it Comes to FFELP Loans

12-26-06

Students who fill out their FAFSA and qualify for Federal Loan Programs such as subsidized and unsubsidized Stafford Loans and PLUS Loans, can have their loans processed through two federal programs: the Direct Loan Program (DLP) or the Federal Family Education Loan Program (FFELP). The difference between the two programs is “the who” behind who funds the loans.

With the Direct Loan Program, the loans are funded through the U.S. Department of Education in conjunction with a university and with the Federal Family Education Loan Program the loans are funded by private lenders that participate in the FFELP program. Most schools offer either/or but there are some schools out there that offer both programs.

According to NextStudent, the Phoenix-based premier education funding company, students and parents should keep in mind that it is their decision when it comes to choosing “the who” behind who funds their FFELP loans. A university’s financial aid office can and will recommend a private lender for students to work with— however, it is just that, a recommendation. The Higher Education Act mandates that schools can not require students to get loans through the preferred lenders suggested by their college’s financial aid office.

Choosing the Best Lender

The interest rates on FFELP loans are mandated by the Department of Education, so all lenders that participate in this program must charge the same rates, the federal rate. However, there are other ways that lenders vie for business. Many offer special benefits, such as discounts for electronic payments and rate reductions for on-time payment history. When choosing a lender it’s important to take a look at these benefits carefully, and choose the lender that can save you the most over the long run.

Lenders also compete for your business by offering different types of repayment schedules. Look for a lender that offers flexible repayment options, such as reduced payment or postponed repayment, while your child is in school. Hardship policies are also an important factor because certain lenders will, under certain hardship circumstances, lower your monthly payment or postpone repayment until you’re back on your feet.

Lastly, look for a lender that offers the best support, service and convenience, such as online applications, a toll-free contact number, and a professional, courteous staff that will help you through the loan process and over the life of your loan.

NextStudent’s FFELP Loan Incentives
NextStudent offers parents and students some of the most competitive loan incentives for FFELP loans. First and foremost, NextStudent is committed to excellent customer service. Every NextStudent customer is assigned their own Education Finance Advisor, one person to help the customer throughout the entire loan process. Also, there are no collateral or credit checks when applying for a NextStudent FFELP loan.

The NextStudent Premier Stafford loan package includes:

• 2 percent upfront cash rebate
• 3 percent cash rebate on the remaining principal balance after the first 30 months of consecutive on-time payments
• .375 percent interest rate reduction when the borrower elects to use auto-debit for repayment

The NextStudent PLUS and Graduate PLUS loan package includes:

• 3 percent cash rebate on the remaining principal balance after the first 12 months of consecutive on-time payments
• 2 percent interest rate reduction after the first 48 months of consecutive on-time payments
• .25 percent interest rate reduction when the borrower elects to use auto-debit for repayment

Before they sign on the dotted line, students and parents should make sure that the lender they chose to fund their FFELP loans is one that works for them.

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 simple. Learn more about student loans at http://www.nextstudent.com/.

How to Search for Scholarships

Finding scholarships for college or a major university is a lot like picking an actual college. It is not an easy process or something that just happens overnight, but rather, it takes hard work, dedication, and a lot of research to find the scholarship opportunities that are best for you. On the one hand, you are putting a lot of time, work, and effort into finding a scholarship. But just think about the thousands of dollars that you can save by obtaining a scholarship for college.

Using the Internet To Search

One of the most valuable resources for searching for a scholarship is the Internet. Web sites like NextStudent offer you the chance to sit in front of your computer screen and find hundreds and thousands of college scholarships being offered around the country. When searching for a scholarship, think about your qualities, skills, and high school activities that may place you into a scholarship opportunity. Scholarships come in many shapes and forms, and it is quite likely that you can receive a scholarship for everything from playing a sport to being a member of the computer club at your school. People want to give money for high school students to eventually attend college, so take advantage of these situations.

Seek Guidance

While the Internet and NextStudent offers you the chance to search for scholarships for yourself, not everyone can be a pro at picking out their best qualities and finding matching scholarships. If this is the case with you, do not be afraid to visit your high school's guidance office and ask a counselor for help. Here, he/she can match your specific qualifications up with the right scholarship opportunities. And, when it comes to scholarships, half the battle is just applying and throwing your name into the hat to receive a scholarship. Many others do not take advantage of this opportunity, and they miss out. But that is where you come in to take advantage of the situation. Get out there and search for the right scholarship. College isn't cheap, but scholarships sure do make a difference!

This article is distributed by NextStudent. At NextStudent, we believe that getting an education is the best investment you can make, and we're dedicated to helping you pursue your education dreams by making college funding as easy as possible. We invite you to learn more on How to Search for Scholarships at http://www.NextStudent.com .

Who Wins, Who Loses?

Who Wins, Who Loses?

Hauptman, a public policy consultant who specializes in higher education finance issues, reported:

“More importantly, the Democrats’ plan helps the wrong borrowers. The interest rate cuts are limited to new borrowers in the subsidized student loan program, who, by definition, already qualify for federal interest payments while they are in school. As a result, they are precisely the students who least need the assistance in the near term, because the federal government is already paying the interest on their loans (which also means there is no net cost to the government while these borrowers remain in college, since it is already responsible during that time for making all interest payments to lenders). In this scenario, the students’ benefit from lower interest rates and the new cost to the government will occur only when repayment begins at least several years from now.

“By contrast, the House-passed legislation provides no help for the millions of borrowers who are currently having trouble repaying their loans because of high debt levels and/or low incomes. It would have been much better if the House had sought to help these borrowers, for example, by allowing them to consolidate all their federal student loans into a single loan repayment schedule when they leave school and begin repayment. This expansion of existing consolidation provisions would greatly simplify the student loan system by allowing borrowers to refinance their student loans once they leave school.

“Or the House could have sought to expand the largely underutilized income contingent provisions that give borrowers the option to repay their loans on the basis of their income once they complete their educational program. Rather than provide postponed help for new borrowers, these two changes would provide immediate relief for millions of borrowers who need the help now. And these two changes could actually save the government money rather than add to costs if they were financed directly by the federal government rather than having the loans continue to be held by the private sector which demands federal payments over the life of the loan.

“Senator Edward M. Kennedy of Massachusetts, the newly restored chairman of the Senate Health, Education, Labor and Pensions Committee, seems to understand this problem. He has emphasized the need to expand income contingency for borrowers who need help with their repayments and in moving toward greater reliance on direct loans as a way to cut government costs. Hopefully, he can persuade his colleagues in the Senate to provide some real repayment relief to borrowers rather than the cosmetics offered by the House. Otherwise borrowers with repayment problems will be out of luck for another several years until the politicians turn their attention back to this issue.”

Students and Parents Can Choose Lenders When it Comes to FFELP Loans

12-26-06

Students who fill out their FAFSA and qualify for Federal Loan Programs such as subsidized and unsubsidized Stafford Loans and PLUS Loans, can have their loans processed through two federal programs: the Direct Loan Program (DLP) or the Federal Family Education Loan Program (FFELP). The difference between the two programs is “the who” behind who funds the loans.

With the Direct Loan Program, the loans are funded through the U.S. Department of Education in conjunction with a university and with the Federal Family Education Loan Program the loans are funded by private lenders that participate in the FFELP program. Most schools offer either/or but there are some schools out there that offer both programs.

According to NextStudent, the Phoenix-based premier education funding company, students and parents should keep in mind that it is their decision when it comes to choosing “the who” behind who funds their FFELP loans. A university’s financial aid office can and will recommend a private lender for students to work with— however, it is just that, a recommendation. The Higher Education Act mandates that schools can not require students to get loans through the preferred lenders suggested by their college’s financial aid office.

Choosing the Best Lender

The interest rates on FFELP loans are mandated by the Department of Education, so all lenders that participate in this program must charge the same rates, the federal rate. However, there are other ways that lenders vie for business. Many offer special benefits, such as discounts for electronic payments and rate reductions for on-time payment history. When choosing a lender it’s important to take a look at these benefits carefully, and choose the lender that can save you the most over the long run.

Lenders also compete for your business by offering different types of repayment schedules. Look for a lender that offers flexible repayment options, such as reduced payment or postponed repayment, while your child is in school. Hardship policies are also an important factor because certain lenders will, under certain hardship circumstances, lower your monthly payment or postpone repayment until you’re back on your feet.

Lastly, look for a lender that offers the best support, service and convenience, such as online applications, a toll-free contact number, and a professional, courteous staff that will help you through the loan process and over the life of your loan.

NextStudent’s FFELP Loan Incentives
NextStudent offers parents and students some of the most competitive loan incentives for FFELP loans. First and foremost, NextStudent is committed to excellent customer service. Every NextStudent customer is assigned their own Education Finance Advisor, one person to help the customer throughout the entire loan process. Also, there are no collateral or credit checks when applying for a NextStudent FFELP loan.

The NextStudent Premier Stafford loan package includes:

• 2 percent upfront cash rebate
• 3 percent cash rebate on the remaining principal balance after the first 30 months of consecutive on-time payments
• .375 percent interest rate reduction when the borrower elects to use auto-debit for repayment

The NextStudent PLUS and Graduate PLUS loan package includes:

• 3 percent cash rebate on the remaining principal balance after the first 12 months of consecutive on-time payments
• 2 percent interest rate reduction after the first 48 months of consecutive on-time payments
• .25 percent interest rate reduction when the borrower elects to use auto-debit for repayment

Before they sign on the dotted line, students and parents should make sure that the lender they chose to fund their FFELP loans is one that works for them.

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 simple. Learn more about student loans at http://www.nextstudent.com/.