Browsing Category: "Student Loans"
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Just a quick head’s up: if you have Sallie Mae federal student loans, you may want to get in contact with Sallie and make sure that they didn’t report your account delinquent to the credit bureaus. Apparently the enormous student loan lender accidentally reported 10 million borrowers as being delinquent (they weren’t).
Some borrowers reported that their credit score dropped by as much as 100 points. While Sallie maintains that the mistake only affected borrowers who have graduated payment plans, it may be worth getting in touch with them even if you have a different repayment plan. Sallie Mae intends to fix the problem by the end of the week, and it’s possible that Experian — the national credit reporting agency — could have updated information in their system within ten days. But, if you’re concerned about your credit score, remember that you’re entitled to one free credit report a year.
If you’re one of the 10 million affected, good luck!
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Unfortunately, I’m a bit of a sucker for the work done by the folks at icanhascheezburger.com (the source of the picture above) and this one was just too fitting not to share. Enjoy!
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For those of you who will be still in school next year, or will be returning to school, 2008-2009 could prove to be a difficult year to get student loans. With the credit bubble bursting many loan providers are closing their doors or doing some belt tightening, which can mean you are left searching for a new loan provider.
According to Mark Kantrowitz of Finaid.org, “Pennsylvania’s higher-ed agency last month suspended their student lending. Numerous other private sources have exited as well, due to a profit squeeze.”
While not every lender is bailing out of the student loan game (for example Federal Stafford and PLUS loans will still be available), many are tightening their standards. Where in previous years a credit score of 620 for the student or cosigner was needed, that may be getting raised to 650 this coming year. What does this mean for you then?
As reported in a recent Newsweek article “Sallie Mae, the nation’s largest lender, might turn you down if you have a high debt load or your school has a high dropout rate. [Families] should call your school right now and see if your usual lender is providing funds. If not, start the hunt for other sources. You don’t want to be scrounging during the week before tuition is due.”
There are some other options as well, and as with all money matters it pays to shop around and see what kind of rates you can get elsewhere. Stafford loans carry a maximum percentage of 6.8%, which will be reduced by law for subsidized loans to 6% on July 1. You can find some better rates out there though, such as from MyRichUncle.com, which offers a 5.8% rate and may be cutting rates to stay ahead of the Stafford rates.
The major lenders out there are Sallie Mae, Citibank, Bank of America and Wells Fargo so get in touch with your school and check on your loan status for next year now. If you have to look around for a new lender, make sure to do your homework and try to negotiate the best rate possible. Just because the market is squeezing out some of the lenders doesn’t mean you have to accept whatever offer your lender gives you. In cases like these, it pays to do your homework.
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It’s been a long time coming, but — in a sure sign of the times — Sallie Mae has just officially announced that they are no longer offering student loan consolidation services. The company claims they are no longer profitable.
photo credit: Keren_According to SmartMoney, if you have variable rate loans (recent grads might, although all current and future federal loans will be given with fixed rates) you need/want to consolidate, you should check out the government’s consolidation offering. They claim,
“You’re likely to pay the same consolidation rates you’d pay if you did so with Sallie Mae.”
As for the 1.5% loan origination fee, students will no longer enjoy having that waived by Sallie Mae. Instead, you should now start shopping around for lenders who are still willing to pay them (J.P. Morgan Chase being one, but I’m sure there are more).
“Sallie Mae Halts Student-Loan Consolidation” [SmartMoney.com]
Technorati Tags: Sallie Mae, student loans, college, graduation, debt
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As has been mentioned here in the past, there are a growing number of Colleges and Universities trying to find ways to help ease the financial burdens on their students after graduation. Several have decided to do away entirely with student loans, replacing them instead with grants and scholarships.
Tufts University is now joining in this growing trend, as they recently announced a new Loan Repayment Program. While this program isn’t designed to take the place of loans in financial aid packages (something the University is beginning to do with the class of 2011), it is aimed to help alleviate student’s debt and promote the Tufts mission of “active citizenship.”
According to Tufts President Lawrence Bacow:
“Every student who graduates with a loan worries about how to pay it off. We would like alumni to be able to pursue their passions—to do what they really want to do—without being unduly focused on the need to retire a student loan. It is especially appropriate for Tufts to make this commitment, since as an institution we seek to encourage a spirit of public service in our students.”
Therefore, the new Tufts Loan Repayment Assistance Program aims to give financial awards to graduates who are working in non-profit or public service areas, or those areas that “promote the public good.”
This is great news for both current Tufts students and alumni, but also is a huge boost for the growing trend of institutions taking steps to help reduce the cost of education and the burden of debt. Kudos to Tufts for this great new program, I only wish it had been in effect a year earlier for my own sake.
To read more on this program, please read the Tufts Journal article entitled: In The Public Interest. You may or may not find a quote from yours truly in there as well.
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photo credit: ? ?é?†?? M?3ý ?These days it is pretty much assumed that if you’re graduating from college, you’re going to be graduating with debt. In fact, the average student graduates with about $21,000 in federal and private loans. With debt like that, even if you get a job right out of college, making your monthly payments is going to be TOUGH. Thankfully, there are some programs that can provide some relief. College loan consolidation is certainly a viable option, but it’s not the only program out there. Here are five choices you may make:
- Rather than federal student loan consolidation if your income is low enough, you can apply for an economic hardship deferment or forbearance, which would temporarily suspend or reduce your monthly payments until you get your first job. Just remember that the interest will continue to grow on loans that are not federally subsidized.
- If you think your money problems will be more long-term, than perhaps college loan consolidation is right for you. Student loan consolidation programs could drastically lower your payments, but will increase the life of your loan up to 30 years. Remember that stretching out your payments will increase the total amount you repay over the life of the loan and your total interest paid could nearly double.
- If you have federal loans through the Direct Loan program, you may qualify for an income contingent repayment plan where your payments are based on your income and your debt load. However, the terms on such a program require payments for up to 25 years. After that time, the remaining debt will be forgiven. And if you work in the public sector — for example if you’re a teacher or a public defender — your student loan debt is forgiven after 10 years if you’re on one of these plans.
- Private loans — which now account for one in every four dollars of borrowed student funding — have fewer options, however, and private student loan consolidation may in fact be your best bet. However, if you’d rather not go the college loan consolidation route but you’re having trouble making payments, let your lender know. It’s possible you can get your bill lowered temporarily or have your payments suspended for a while.
- Your private student loan consolidation rates are based on your FICO credit score. So, if your credit score is higher now than when you originally got your loan, you could save a lot of money.
If you’re still in college:
Plan ahead, plan ahead, plan ahead! Do as much as you can while still in school to make the burden of debt after graduation a little more bearable. For instance, try appealing to your college to give you more financial aid. And review your FAFSA forms throughly at the beginning of each semester; If you think it is inaccurate because of a recent and unusual circumstance — like a job loss or disability — ask the financial aid office for a professional judgment review.
In Conclusion:
College Loan Consolidation can be a great alternative if your monthly payments are difficult to make (I know, I consolidated my loans) but the consolidation of student loans is not the only option. There are many pros & cons to consolidation and their consideration should be taken vary seriously. Whichever route you chose, however, there is one fact that remains true: if you can’t keep up with your student loan payments, take action. There are very severe penalties for defaulting on a student loan.
Technorati Tags: college loan consolidation, federal consolidation, student loans, college, graduation
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Just a quick note to toot my own horn a bit. For those who don’t know, I have a little side project (an experiment, really) going at www.sponsormyloans.com where I am offering companies a month’s worth of advertising on the site (it’s chock-full of ad space) for $200/month. But the point is that I’m using that $200/month to directly pay off my student loans - so really the money the company would spend is more of a donation than anything else; they just get something (advertising) in return.
Anyway, financial publishing mega-site TheStreet.com sent me an email today alerting me to the fact that they’ve written a piece about Sponsormyloans.com and it’s now live on their site. You can view their story here.
Please check out the article on TheStreet.com, then check out my site, too (and feel free to throw some much appreciated ad money my way). Cheers!
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In a word: Yes. I’ve mentioned a number of times on RealWorldReally.com (although it bears repeating) that the average college student graduates with almost $20,000 in student loans. While this is a daunting sum, it is still possible to build wealth even while paying off student debt. it can be (and has been) argued that, unlike most types of debt, student loans are usually best when paid as slowly as possible. Someone who saves diligently and generally pays attention to their money and how it’s being spent can actually use student loan debt to their advantage.
David John Marotta and Beth Anderson Nedelisky, financial planners from Marotta Asset Management, Inc., write that,
Students often assume the best thing to do is to pay off student loans as quickly as possible. The sooner you pay off your loans, the sooner you can start building wealth, or so the thinking goes. But, given the opportunity, which answer should you choose: A) Make extra principle payments on your loan each month, or B) Pay the minimum amount due and save and invest the difference?
In reality, the lower the interest rate on your loans, the better off you’ll be just paying the minimum monthly payment and nothing more, than taking the extra money you were going to pay on your loan and invest it instead.
According to Marotta and Nedelisky,
The lower the rate of interest on your loan and the higher the average market return, the more it makes sense to invest your extra dollars instead of paying down on your loan. The difference between these two rates is known as the “spread.” If market rate of return is 11% and the interest on your student loan is 4%, then, the “spread” is 7% (11% minus 5%).
And remember, as stated before, the interest on your student loans is tax deductible (up to $2,500), helping to subsidize the cost of your loan. The faster you pay off your loans, the faster you lose that deduction.
Remember, though, that in order to benefit from this loan repayment strategy, you must save and invest your money. If you don’t invest the extra money, this type of repayment plan is worthless.
“Student Loans: How to Pay Them Off & Build Wealth” [SavingAdvice.com]
[image by Lowry Lou]
Technorati Tags: Student Loans, Debt, financial planning, college, graduation
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It’s times like these I wish there was a reason for me to go back to school… It was announced yesterday that Bowdoin College in Brunswick, Maine is eliminating all of their student loans and replacing them with grants for all incoming and current students receiving financial aid beginning next fall. The Associated Press reports,
Bowdoin is the latest liberal arts college — including several Ivy League schools — to adopt a no-loan policy in an effort to attract more students who otherwise can’t afford the high cost of college.
Students are now graduating college encumbered by an average of $20,000 in student loan debt. Bowdoin is trying to help alleviate that, at least for their students.
Bowdoin President Barry Mills said that by converting loans to grants, Bowdoin will eliminate a heavy debt burden for students who are eligible. Forty percent of Bowdoin’s students receive some form of finanical aid.
Technorati Tags: Bowdoin College, college, Student Loans, Graduate
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There was a letter on The Consumerist — a great blog I subscribe to — about a college graduate who was in graduate school half-time from mid-January to mid-May of 2007. Accordingly, he should have been covered by an in-school deferment through May of 2007. But, unbeknownst to him his lender, ACS (as sub-lender to PNC bank) decided that he actually needed to be making his student loan payments while in grad school but never told him about it!
The graduate then recieved a letter from ACS this past September alerting him to the fact that that his account was being reported as having been 60 days past due in May and 90 days past due in June; which had dropped his credit score by about 50 points!
The rest of the letter describes, in detail, the run-around he was given, first by ACS and then the national credit services. They had both told him the problem had been solved, but it continued to daunt his credit report for months. He eventually spoke to a supervisor at the lender, who promised him that she would be the one to take action and everything would be fixed in 24 hours. When he tried to call her back, he could no longer get a hold of her. So, what did the graduate do? Desperate times called for desperate measures - he decided to email “carpet bomb” the entire company. According to his letter,
Finally, I decided it was time for drastic action. After trolling around the lender’s webpage for a bit, I discovered the e-mail format used at the company by looking up the investor point of contact on the “Investor Relations” page. I then applied that e-mail format to the names of the CEO, in addition to 8 executive vice-presidents.
An hour and 20 minutes later, I received a phone call from the issue resolution team who assured me that it would all be corrected by today. And finally, after trying to correct this derogatory information since September, it was finally corrected (verified this morning with new credit reports).
The Consumerist notes that, sometimes company email addresses can be hard to find when you’re trying to launch your EECB (Executive e-mail Carpet Bomb).
Scour press releases, look for information in investor relations materials, and search message boards to find sample email addresses to use.
“EECB Scores Direct Hit On Student Lender ACS” [The Consumerist]
(image by surrealist303)
Technorati Tags: student loans, ACS, credit report, college
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