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Student Loans
February 16, 2006
Bad deal for Illinois student loans
Illinois public universities want the state to sell studebt loan portfolio to investors, in a move that will generate additional revenues for schools, but also higher loan costs for students.
Posted at 11:22 AM
January 16, 2006
Student loans are getting much more expensive
This is the article on student loan reform, and I can't help but laugh and quote, "... the changes probably will cost borrowers more money, but their long-run impact remains to be seen." That is according to San Francisco Chronicle.
Probably cost more money? Hello, for those poor schmucks whose loans will be disbursed on or after July, 1 the student loan rates are going up by 2%, to 6.8%. And the student parent Plus loans rates which are currently at 7.9%, will likely go to 8.5%. I guess many retiring boomers will have to sell their nice vacation homes in warmer states or ski resorts to pay for children's college.
Of course, the students will be able to borrow more money, just to repay more I guess, and certain fees that are often covered by lenders will be slowly phased out - big deal, and there are other cosmetic things that intend to provide the impression that everything isn't that bad on the long run, but whom SF Gate is kidding?
Posted at 12:20 PM
January 02, 2006
Sharp in increase in student loan rates is coming this summer
The students who plan to take loans to pay for their education are looking at significantly higher interest rates. The rates will be fixed, not variable as they are today.
New student loan Interest rate will be a fixed rate at 6.8 percent. This is a jump of more than 2 percent from variable interest rate which now is 4.7 percent.
If your parents are nice enough to get in debt to help paying for your college, they will get the new fixed rate of 8.5 percent. Currently student parents are paying 6.1 percent.
Some parents should use home equity, refinancing and taking tax deductible cash-out to pay for their kids education. The 30 year fixed rate mortgage is around 6 percent. Even bad credit mortgage refinance can be better than just obtaining an unsecured student loan. The rate can be found around 7.5, may be 8 percent and it is still tax deductible.
Students will be able to get higher loan amounts: Freshmen will be able to get $3,500 instead of present $2,625, and sophomores will be able to go to $4,500 vs. $3500. During subsequent years, students could borrow $5,500, which is the same it is today. The total limit students may borrow over the course of their undergraduate studies will remain at $23,000.
The borrowing limits for graduate students will increase to $12,000 a year from $10,000. Read more ...
Posted at 11:13 PM
December 22, 2005
Student loan interest rates will likely increase as Senate trims financial aid
More students will have to apply for loans to finance their education after Senate approved the rather deep cuts on Wednesday. The vote was locked at 50-50 and Mr. Cheney broke the tie in favour of cuts. So supply of the money will be much less. Accordingly, interest rates on private student loans can jump in a hurry. Some project several percentage points in hikes.
Posted at 05:48 PM
December 14, 2005
New Zealand students celebrate interest free loans
Students in New Zealand got what they have fought for - student loans are interest free for the country residents, that is, so if you intend to study in NZ, make sure you meet the residency requirements. Meanwhile, New Zealand University Students’ Association set further goals.
Posted at 12:15 PM
December 08, 2005
Government can seize social security benefits to pay back old delinquent student loans
The Supreme Court ruled today that the government can garnish your social security benefits to satisfy the student loans you likely don't remember you even had.
Right now, there are roughly 7 billions in delinquent student loans. So to pay off the old debt, even disability payments can be seized.
Posted at 12:40 AM
December 06, 2005
South Dakota students repay their loans
South Dakota has nation's best student loan repayment rate, according to the US Department of Education. South Dakota's student loan default rate of 2.5 percent is lowest among the 50 states.
Posted at 10:45 AM
November 25, 2005
College graduates who default on student loans will be penalized
UK graduates who don't pay their school loans "will go on a credit blacklist". This will happen only if the Student Loans Company (SLC) which issues student loans gets its way. As it stands today, the SLC can not "identify graduates to banks and other financial lenders if they default on their loans."
Can you believe that? In the US the student loans will show on your credit report in a hurry, and don't you dare to default. Not even bankruptcy would save you in the past. Now with the recent reform, bankruptcy is useless in most cases anyway. But in Britain, at least for now, you could eat the cake and have it too.
Another thing is that "thousands of foreign students may be able to escape their obligations .. safeguards are still not in place for chasing up bad debts in the other EU countries ..." Now I don't know of any foreign student who can get a student loan here in US, do you? That's the Europe for you ...
Posted at 11:57 PM
November 08, 2005
Student loans for New Zealanders will likely be interest free
While student loans in US have been getting more expensive, New Zealand government is about to give the students interest free student loans.
Posted at 03:54 PM
October 28, 2005
Student loan debt will likely increase under new federal law
Student loans will be harder to get under proposed budget reconciliation plan that is being discussed in Washington
Both the House of Representatives and the Senate have looked for ways tor reduce the federal budget deficit. The couple proposals under review, recommend $15 billion in cuts. And student loans will be the biggest losers shall either proposal become a law. Student loan debt has become major hurdle for some graduates preventing them from buying homes, cars, having babies and spending money otherwise.
Last week, the Senate educational committee passed a bill to cut $15 billion from various governmental aid programs. About $9 billion in savings will be somehow tunnelled toward other forms of student debt assistance.
Once again, why wouldn't our government look at some other ways for reducing deficit and assisting hurricane victims? At least few things come to mind ...
Posted at 01:09 PM
October 12, 2005
Nursing college student loans can be forgiven
College students studying nursing in Iowa, have another incentive. Their student loans can be at least partially repaid through Nursing Education Loan Forgiveness Program. By repaying the student loans of nursing professionals, the program is encourages students to stay and work in Iowa after graduation.
There is a shortage of nurses and other health care professionals in Iowa, and it is to become quite severe by the year 2010. Repaying college student loans is a big stimulus for many intended to leave, to reconsider.
Posted at 09:20 PM
October 06, 2005
Student loan debt is at all time high
The student loan debt has reached levels not seen before. According to the Center for Economic and Policy Research, the average graduating senior had about $17,600 in debt on graduation day in 2004. Student loans are now taken by almost 70 percent of all the students who attend four year college. Here are several main facts:
- student expenses at public four-year universities have risen 59.4 percent since 1990, so many more students finance their degrees with loans
- in 1981, college students could work full-time all summer at a minimum wage and earn about two-thirds of their annual college costs; today, however, students earning minimum wage would have to work full-time for one year in order to afford one year of education at a four-year public college or university
- higher levels of student loan debt have implications for how students think about career and life-choices; indebted college graduates may choose to postpone marriage, buy a house, or start a family in order to pay off their loans
No kidding, how a student in debt up to his or her neck can buy a house at today's prices. Home related expenses are even worse these days than student loan debt.
Posted at 09:24 PM
September 16, 2005
Student loan company consolidation can happen among lenders
Student loan consolidation can take a bit different shape. What I mean is the corporate merger when one company buys another. For those of you who doubt it could happen, consider the proposed takeover of Pennsylvania Higher Education Assistance Agency (PHEAA) by Sallie Mae. Sallie Mae offered 1 billion dollars for the company that services about four million student loans with total assets close to $57 billions. This bid expired on the 31st of August, because PHEAA thought that the deal was low and poorly structured.
There were also usual claims from PHEAA that such student loan company takeover would lead to less competition, more bureaucracy and higher rates and fees.
Sallie Mae claimed that to the contrary, it is PHEAA state monopoly that keeps costs high, and the proposed buyout would eventually help students.
If I were a student with a loan, what would such a consolidation mean for me? I don't know how PHEAA runs its business, but after something like Sallie Mae would take over, it is hard to imagine that my student loan would become any cheaper.
Sallie Mae will likely try another time and things may be working to its advantage. That is because Congress is working toward closing a loophole that has provided billions of dollars of subsidies to student loan companies. Without these subsidies, the PHEAA value will likely decrease.
Posted at 12:43 PM
September 12, 2005
Where student loans are the most expensive?
Students in New Zealand are paying the most for their loans accumulated during the school years. Once the student enters the loan repayment period, the effective interest rate is whopping 7 percent. Canadian students took the dubious second spot with 6 percent interest rate.
Student loan rates in the USA are around 3.37 percent according to these student debt study, I wonder how that one was calculated. The UK students pay the same.
Australian students pay only 2.4 percent, and the German students pay no interest at 0 percent during the repayment period.
Posted at 12:31 PM
September 11, 2005
Colleges lend money directly to the students
College gives you a student loan. That was almost unheard of just 10 - 15 years ago. Now in the effort to make money, more universities and colleges originate student loans. It mostly limited for graduate and professional schools, so medical and law students are likely candidates. The program is called "school-as-lender" and today, about 100 schools write loans directly to their own students. Then university holds such a debt for several months and sell it for a premium to a third party. Those premium vary anywhere from 2 to 6 percent of the given student loan.
So on the $100,000 loan which is pretty common for a medical or law school, university can make up to $6,000.
Supporters of such student loans point at lesser fees and convenience. They also say that the profits mostly go back to fund all types of financial aid for the needy students.
But critics say these programs create incentives for schools to encourage more borrowing. "Universities themselves set the price of attendance, and play a big role in determining how much financial aid students receive. If schools stand to gain from an increase in loans, they could offer debt-heavy aid packages that aren't in the students' best interest."
The federal Higher Education Act that governs student loan programs ends this month. Both versions of legislation in House and Senate will require that all profits from student loans made by schools be used for aid to needy students. Universities claim that they do it already, but now, there will be a law. So much for the free enterprise.
Posted at 07:28 PM
New Jersey goverment waives student loans
State government of New Jersey passed the law which was signed by acting governor Richard J. Codey, that will make college student loans much more affordable for some. Up to $20,000 in student loans for qualified graduates who are majoring in Social Services and Mental Health, will be forgiven.
Mr. Codey said that social workers face very difficult work at rather low pay and don't need another burden with college student loan, and he hopes, this law would attract few more smart people with a passion to help who, otherwise would choose a different career.
The new law is somewhat similar to the program for student loans repayment unveiled by National Institute of Health, which offered up to $35,000 to help health care students pay for their college loans.
Posted at 06:53 PM
September 02, 2005
Pending Congress resolution will increase student loan costs
The House Resolution 609, the re-authorization of the Higher Education Act of 1965, has provisions that would make students paying a 1 percent guarantee fee on the principal of a loan. Currently this fee is often paid by lenders. The resolution would also raise the interest rate cap for federal student loans, increase interest rates on consolidated loans by a full percentage point and add an origination fee to consolidated fixed-rate loans, according to Casper Star Tribune
Posted at 01:34 PM
August 30, 2005
National Institutes of Health offer up to $35,000 annually for student loan repayments
The National Institutes of Health (NIH) start accepting applications for the five Loan Repayment Programs (LRPs) on Thursday, September 1st. Application's deadline is December 1, 2005.
The five LPRs are the Clinical Research, Clinical Research for Individuals from Disadvantaged Backgrounds, Contraception and Infertility Research, Health Disparities, and Pediatric Research.
NIH will give as much as $35,000 annually for qualified biomedical and behavioral researchers, who possess a doctorate degree, devote at least 50 percent of their time to research funded by a domestic non-profit organization or government entity (federal, state, or local), and have educational loan debt equal to or exceeding 20 percent of their institutional base salary.
Applicants must also be U.S. citizens, permanent residents, or U.S. nationals. Applications are available NIH Loan Repayment Programs.
From National Institutes of Health.
Posted at 11:32 AM
August 28, 2005
Student loan debt can be written off
You owe about $30,000 in student debt and working hard paying it off. Still a long way to go. Then, one bright morning you discover your student loans are gone. All the student debt you accumulated is wiped out. Sounds good, doesn't it? That is exactly what Scottish National Party is proposing as it going to assemble for the party conference somewhere in Scotland.
The party thinks that the student debt is an additional burden on economy since it significantly diminishes spending ability of the yesterday's students as they're entering the work force.
If this proposition is supported and the SNP wins elections, then this can become a reality. This student loan dismissal policy is a continuation of the current policy to replace student loans with grants.
That would be quite a radical student loan reform and already, SNP rivals are claiming that this is a trick to get young voters.
Posted at 08:33 PM
August 26, 2005
Private student loans can be very costly
If you are student looking for a loan, be very careful where you get your money from. Many students, especially those attending trade schools, turn to private financing, instead of federally regulated loans. Often, these private funds are the only ones available for many students who, somehow, are not eligible for Stafford or Perkins student loans.
Private lending grew very rapidly between the 1995 and 2004 school years, according to a College Board survey, from $1.3 billion to $10.6 billion. Private loans now account for about 9 percent of all student financial aid.
There are several problems with non regulated student loans. Sky high interest rates, immediate repayment while student still in school and incomplete disclosure of terms and conditions are the main problems. Some lenders are being investigated for failing to properly disclose terms and conditions of the student loans they have given. Read more at NewHouseNewsService.
Posted at 04:18 PM
August 13, 2005
Student loans - don't default whatever it takes
Some worry that with recently increased student loan interest rates, many may have problems repaying those loans. Student debt consolidation rate stood at 2.77% and went up by almost 2 percent to 4.7%. Still historically low, but a lot more expensive for big loans.
The chance is high, rates will only increase further, just like a solid rubber bounce ball goes down hard and low, only to jump back almost as hard and pretty damn high. WFMYNEWS of North Carolina gives some advice on how to prepare yourself to pretty much guaranteed higher interest rates.
The one point this article makes, "Consolidate. Paying one loan is less of a hassle than paying several" needs to be taken with great caution. Remember, you live only once and you can consolidate your student loans only once. If timing is bad, you may end up consolidating at the higher rate than some or all of your original loans. I think most of us wouldn't mind a hassle in such case.
The other point that needs some clarity - "Remember, a defaulted loan can remain on your credit report for seven years and could keep you from buying a house or a car."
Student loans are almost impossible to dismiss, discharge or get rid off in some other way. If you become delinquent on your student loan and stay delinquent, it will remain on your credit report till death does you and the loan apart. Once you bring it up to date or pay off, it will still remain as derogatory record for 7 years. See Bad Credit Time Limits for more information on other bad credit things you don't really want happened.
Finally. even with defaulted student loans you still can buy a car and obtain a mortgage, under rather rough terms of course.
Posted at 01:48 PM
August 05, 2005
Students get creative to pay off loans
The MSNBC reports that some students have become very creative with their already consolidated student loans. Since you can consolidate them only once, many of those who did it years back, got interest rates as high as 7.5%. The story talks among other things, about using home equity as the tool to pay off high interest consolidated student loans.
We think it is a good approach, considering the highly appreciated home values and tax deductible benefit of home equity line of credit or HELOC and cashout refinance. Read more about free debt consolidation and home equity line of credit.
The thing to keep in mind is HELOC interest rates has been steadily rising with somewhat regular Federal Reserve quarter point (.25%) increases and are currently based on Prime Rate at 6.25%. If you have good credit and enough equity, you can get them down to as low as 5.24%. Check Charter One, Chase among others.
Please note this is for your information only. no recommendations are given, consult qualified personal banker and/or accountant.
Posted at 12:50 PM
August 01, 2005
Student loan rates are higher because of massive consolidation effort
Student loan consolidation reached very high numbers literally overwhelming lenders. According to MarketWatch too many students sent their consolidation paperwork just on time, before federal government's July 1 consolidation deadline. As the result banks are so backed up with loan consolidation paperwork that they can't process all the applications. So instead of getting 2.77 percent interest rate which was the historically lowest rate for consolidated student loans, many are stuck with 4.7 percent. That is for a few months at least, while their papers are being worked on.
For those students who graduated from private schools, or highly expensive professional programs - medical, law, business, etc. student loans often run well over $100,000. Almost 2 percent difference with a loan of that size means quite a bit of money even for a few months.
Posted at 11:51 PM
July 23, 2005
Student loan subsidy loophole closure is approved by House Education and Workforce Committee
The approval vote was 27-20. The elimination of this loophole will likely mean higher student loan interest rates. That is according to Blogger News Network.
Other changes - "the amount of loan principal insured against default for lenders would be reduced to 96% from 98%, and for guaranty agencies, the amount insured against default would decrease to 93% from 95%."
Few other loopholes from which lenders have benefited for a long time will be closed.
Posted at 04:56 PM
July 22, 2005
Student loan relief for active military
Representative Tom Osborne from Nebraska suggested a proposal under which military personnel based in conflict zones around the world would be able to waive student loan interest.
Waiving the interest on federal subsidized student loans for active duty soldiers is the very least thing that can be done in our opinion.
Providing soldiers with completely free education is the only proper way in the end.
Good start, nevertheless, Mr. Osborne.
Posted at 03:48 PM
July 15, 2005
Student loan - good deals are still out there
Student loan interest rates went up sharply. While a student attends school the loan rate is 4.7%, when he or she is in repayment period rate will be even higher at 5.3%.
The Federal PLUS loans that parents can take carries interest rate of 6.1%.
Certain state are trying to relieve the higher rate burden. Louisiana has moved fast. According to deridder daily news Louisiana Education Loan Authority drastically reduced fees and interest rates. Some borrowers can have their student loan rates reduced by three percent or even more.
For more information about student loans, students and parents should call the Louisiana Education Loan Authority toll-free at 1-800-228-4755 or visit Lela's website.
Posted at 11:45 AM
July 11, 2005
Student loan debt consolidation deadline passed on 6/30
The rate for student loan consolidation was amazing 2.77%. Also, for the first time, students could consolidate their loans before graduation. That was big.
If you did consolidate your loan, you are one smart student. If you didn't, you will likely be paying more since the student loan consolidation rate jumped to 4.70% on Federal Stafford Loan Rates, and that is while you are in school or in deferment.
See more student loan debt consolidation rates.
Posted at 10:42 PM
Can student loan debt be discharged by filing bankruptcy?
This student loan debt question we have gotten so often lately, sounds like many student loan debt holders are in deep red.
Bad news folks, you can only get rid off your student loans if you incur some sort of very detrimental hardship. The requirements are so hard to meet that we think you stand a better chance to win a jackpot and pay that pesky student loan debt off.
Two things are for sure, death and taxes ..., now you can add the third.
Posted at 11:24 AM
July 09, 2005
Student loan loophole that benefit banks can be closed shortly.
When you got your student loan you helped yourself to get a higher education. That is what student loans for. What you didn't probably know that you might have helped the lender also. Certain student loans have 9.5% subsidy from the US government. That is for the banks not the students. The practice goes back into the 80s when the interest rates were high and not too much cash was available for student loans.
Now with the rates dirt cheap and plentiful cash, education secretary, Ms. Margaret Spellings moves to revoke this subsidy.
That is from New York Times.
We agree, banks have plenty of dough, use this subsidy to pay a tiny bid of trade deficit or towards a non oil fuel research.
Posted at 11:24 PM
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