FAP505: Preferred lender list battles, writing scholarship, 529 plans, Rayko KRB

FAP505: Preferred lender list battles, writing scholarship, 529 plans, Rayko KRB
Student Financial Aid News+ From BankNet360: New York Attorney General Andrew Cuomo is threatening to sue Arizona State University over a profit-sharing deal with a San Francisco-based student lender.+ ASU’s agreement with Education Finance Partners allows the firm to use the school’s logo on promotional materials and also calls for school financial aid officials to suggest the Education Finance Partners to prospective student borrowers.+ Cuomo’s terms include a ban on schools from receiving anything of value from lenders. They also include rules on developing preferred lenders lists and a provision that would bar lenders’ from identifying themselves as university employees and working out of school financial aid offices.+ The threat comes just days after some New England schools accepted settlements over similar disputes. ASU said it is working to settle.+ From Inside Higher Ed: On Wednesday, the other shoe dropped in a growing investigation of colleges’ ties to the lenders they recommend to their students — and many experts on the loan programs were stunned by the developments.+ Administrators at Columbia University, the University of Texas at Austin and the University of Southern California were reported to have owned stock in a lender that they placed on their “preferred” list for students. Andrew M. Cuomo, New York State’s attorney general, sent a subpoena to Columbia Wednesday and letters to the other institutions, seeking details. The colleges involved are not disputing the stock ownership, which was reported in public filings.+ “We are seeing more and more suspicious practices and dealings between university officers and loan companies come to light,” said a spokesman for Cuomo. “This creates even more questions about the integrity of the student loan industry and the process by which colleges steer students to loans.”+ In contrast, the arrangements that came to light Wednesday involved university administrators personally holding stock in a loan company and apparently doing well with their stock sales.+ The National Association of Student Financial Aid Administrators, which has been critical of the Cuomo investigation, accusing the attorney general of hurting the reputations of aid officers, issued a statement Wednesday night saying that the group “believes it would be inappropriate for a school to place a lender on a preferred lender list in exchange for shares of stock.”+ However, the statement went on to say the following: “We would also note that if the financial aid administrator purchased the stock with their own funds, their ownership of the shares may not be evidence of improper conduct, but would certainly present the appearance of a conflict of interest. NASFAA advises its members to perform their functions with the interests of students as their foremost priority and believes that any activity that conflicts with that priority represents a questionable practice.”+ What does this all mean for you as a student?+ Fundamentally, it comes down to understanding choice in student loans - that despite what anyone tells you, you do have choice in all your student loan options+ Research as much as you can - check out Student Loan Network offerings for Stafford federal student loans, federal parent PLUS loans, and private student loans, 100% payola-free.
Scholarship Update+ Point of irritation - found a decent looking scholarship until $15 fee+ Don’t pay for scholarships+ Antioch College Writers Workshop Scholarships+ Deadline May 1, 2007+ Variety of awards, including for single mothers+ Details at our free college scholarship search site
Mail Bag+ Jason writes in: I am just a few years out of school and in the work force. Can I start a 529 plan for myself, knowing that I may wish to drop work and go back to school full-time eventually?+ Two types of 529 - prepaid tuition, which locks in today’s tuition rates+ College savings plans - tax exempt investments+ Yes, a student can take out a 529 in their own name+ Financial aid speaking, a non-custodial 529 is assessed at 20% for the student, same as any other investment asset+ Tax benefits are better than most benefits, including no federal, state, or local taxes for the most part and the ability to roll over other savings, like savings bonds, into 529s with no tax penalty+ No tax hit when a plan’s funds are redeemed for qualified education expenses, namely tuition, room, and board+ Great overview of 529s at FinAid.org+ Disclaimer: I’m not a certified financial planner or CPA
Podsafe Music+ Rayko/KRB, Charp+ From our friends at Binary Star Records+ Music via the Podsafe Music Network+ Stop by our MySpace page!
Reminders+ Private student loans available at any time - visit AlternativeStudentLoan.com+ Stafford federal student loans at StaffordLoan.com+ Student loan consolidation at StudentLoanConsolidator.com+ FAFSA form tutorials and free help at FAFSAonline.com+ Financial Aid Podcast Show Notes at FinancialAidPodcast.com.+ The Financial Aid Podcast is a publication of the Student Loan Network.

Student Loan Consolidation Rates and Hints

The Federal government created the student loan consolidation program to help students and their parents afford higher education, so that our youth is better educated and can achieve higher earning power. Like many government programs, however, some of the rules and procedures may be a bit complicated. That’s why it is advisable to have a student loan consolidation provider

Student Loan Consolidation: Eligibility

You are eligible if you meet all the following requirements:
You have graduated, left school, or are currently attending school either full-time or less than half time, and your loans are in repayment, deferment/forbearance or in grace.
You can certify that you do not have a Federal Consolidation Loan application pending with another lender.
You have at least $10,000 in eligible student loans you wish to consolidate.
You must have a minimum balance to apply for a student loan consolidation option through some providers and agents. For example, you may be required to have an outstanding balance of $10,000 in eligible student loans to consolidate them under some programs.
You can consolidate the following student loans with most providers:
SLS (Supplementary Loans for Students)
Federal Perkins
Federal Nursing Student Loans (NSL)
Federal Health Education Assistance Loan (HEAL)
Federal Health Professional Student Loans (HPSL)
Health Professions Student Loans (HPSL)
Federal and Federal Direct Stafford (subsidized and unsubsidized)
Federal and Federal Direct PLUS
Loans for Disadvantaged Students (LDS)
Federal Insured Students Loans (FISL)
Federal Consolidation Loans
Federal Direct Consolidation Loans
You may consolidate defaulted loans as long as you make three consecutive monthly payments to your guarantor prior to applying for loan consolidation. If you have several student loans, but also have bad credit, you can usually still consolidate your student loans. In general, there are no credit checks and no co-signers required for student loan consolidation. Most companies work solely with the student loans you own, and nothing else.
I you have already consolidated your student loans, the Department of Education has ruled that you cannot reconsolidate. There is a lawsuit filed requesting a temporary injunction against the DOE’s ruling, to enable more borrowers to reconsolidate, but no judgement has yet been issued. You can also re-consolidate your student loans, if you either received a new eligible student loan since the consolidation or have left an eligible loan out of the original consolidation.
Lowest Student Loan Payments
Making your required number of scheduled payments within the first 15 days of the due date each month on your new consolidation loan, may helpyou automatically reduce your student loan interest rate with some companies, by one full percentage point and leave it there as long as you continue to make on-time payments. Also, you can pay electronically (direct debit payments from your checking or savings account) and you can reduce your interest rate by an additional percentage point, as long as you continue to make your payments electronically. When you qualify for both benefits, you can reduce your interest rate and save hundreds, even thousands of dollars on your total loan costs.

Student Loan Consolidation GIMMICKS

If you are thinking about getting a student loan consolidation there are things to watch out for, and often you have to read the fine print to find them. Here are some marketing gimmicks some consolidators will use to get you to do a consolidation loan: • "Apply by this deadline!"Well, the fact is THERE AREN’T APPLICATION DEADLINES in student loan consolidation. Just keep in mind that interest rates may change every July 1st, so it’s a good idea to check if rates are going to change that year and determine if you should apply before the loan interest rates change. • "Apply online and get great interest rate benefits!"Some loan consolidators may require you to apply for a loan online in order to receive interest rate discounts. Plus, if they send you an application confirmation via email, and if your email address is deemed undeliverable twice in 48 hours, then you may not get the discounts! • "Get an 0.25% interest rate reduction by doing business electronically."That’s great but you might LOSE that 0.25% reduction if you simply change your email address and they get a bounce back when they try to send your notice or statement. Be sure you understand your obligation to the consolidator in order to keep your reduction. • "Avoid late fees...pay with auto-debit."With auto-debit, watch your bank account balance! When the lender tries to auto debit your bank account and there are insufficient funds you may get a late fee from both the consolidator and your bank. Be sure to read the fine print to get specific details on their auto-debit program. • "No fees to apply for our consolidation loan!"Not charging fees is a requirement with federal loans. No one charges a fee for a federal consolidation loan. • "Important information about YOUR student loan interest rates!"Some loan consolidators attempt to mislead you into thinking that you’re being contacted by the lender of your education loans and that there are changes to your loans. Their hope is that you will contact them so that they can offer you their loan instead. Check out these lenders carefully before applying for a loan. • Mailings that use seals or logos to imitate the government, a college or university.Some loan consolidators do this to entice you to open their mailings. Be sure to really check out their logo and fine print to ensure you know who you are dealing with before applying for a loan. • "Get Deferment or Forbearance Insurance."Be on the lookout when some loan consolidators may play-up their services. If a loan consolidator offers you Deferment or Forbearance Insurance, they are basically "offering" you deferment or forbearance, which is a standard feature of consolidation loans and is offered by all lenders. Be sure to compare apples-to-apples and understand the actual benefits that your may receive with a loan product. Remember: If it sounds too good to be true it probably is… read the fine print, ask questions and get it in writing!

Student Loan Consolidation and Student Loan Debt

March 14th, 2007 by AdministratorSally recently got into some heavy student loan debt because she borrowed a lot of money in order to go for university studies. I suggested that she consult a reliable student loan consolidation company because consolidating loans is the best way to ensure that you don’t get heavier into debt. She agreed and immediately contacted several student loan consolidation companies to look for a federal student loan consolidation package that worked for her.The student loan consolidation company she called told her that there were several advantages to federal student loan consolidation, one of them being that you will get a locked in interest rate that is rather low and that one can lower your monthly payment by extending your repayment term. I think this is what Sally definitely needs

consolidation

ADVANTAGES TO GOVERNMENT STUDENT LOAN CONSOLIDATIONBy consolidating your loans, you will likely have a lower monthly payment. The federal interest rate is likely to be lower than the combined interest of your original loans. When you consolidate, you also have the opportunity to pay the loans back over an extended period of time, which will result in lower monthly payments.Borrowers can choose from four different payment plans, including an extended payment plan that can extend up to 30 years, depending on the amount that is owed.If you consolidate your loans, you only have to make one convenient monthly payment.There's no fee for consolidating your government student loans.There's no credit check when you consolidate your government student loans.There's no penalty for paying the loan off early.The loan application process is much simpler than it is for other kinds of loans.DISADVANTAGES TO GOVERNMENT STUDENT LOAN CONSOLIDATIONIf you take an extended payment plan, you will you pay more interest in the long run. If your loan is large, this could cost you thousands of dollars and have a negative impact on your financial future.It's possible that the consolidated student loan rate will be higher than the interest rates on your other loans. If this is the case, consolidation is not to your advantage.If you consolidate your loans during the six month grace period after graduation, you lose the remainder of the grace period.If you've already paid off a large chunk of your student loans, consolidation may not be worth the money or effort.Borrowers with a Perkins loan forfeit the special benefits that come with this kind of loan if they consolidate.If the consolidated loan is deferred when the borrower is in graduate or professional school, interest will continue to accumulate on the consolidated loan. This is not the case with deferred student loans that are not consolidated

Federal Student Loan Consolidation

Federal Student Loan Consolidation
Should you consolidate your U.S. government student loans? Here are some advantages and disadvantages to government student loan consolidation.If you're a U.S. college student who is approaching graduation day or a recent college graduate, no doubt you've been contacted by student loan consolidation services about government student loan consolidation. As you wade through all this student loan consolidation information, it can be hard to get a straight answer to a simple question: is federal loan consolidation right for you?First of, what is student loan consolidation? This simply means that if you took out more than one federal student loan during your time as a college student, you can combine all of these loans into one.If you also owe private student loans that weren't part of your financial aid package, you can consolidate these as well. However, lenders recommend that you don't consolidate federal student loans and private student loans together. If you do this, the new consolidated loan will count as a private loan, and you will lose all the benefits that come with your federal student loans, such as student loan deferment if you go to graduate school.So what are the advantages and disadvantages of consolidating your federal student loans? This questions depends partly on how much you owe, how much you've already paid, and other personal financial variables. In a nutshell, here's the pros and cons:

Educational Loan

“How do I decide where to consolidate – I get so many offers?”This is perhaps the most important question to address … My experience with consolidation issues over the past several years has drawn me to one primary conclusion – the ‘financially smart’ place to consolidate is not going to be the same for every student; it is largely a factor of how you plan to repay your debt.(1) If you haven’t borrowed much or plan to repay your debt quickly, you should search for a company that will reward you for doing so. This benefit will normally come as a principal balance credit. For example, Key Bank offers a 5% credit for consolidating with them. Some companies will provide a max credit, as well as other ‘fine print’ caveats, so read the application. While a couple ‘Benjamins’ is nice if this is my situation, if I have a long-term repayment scenario, being enticed by this type of benefit would be a big mistake!(2) If I find myself in a ‘long-term’ repayment situation (I’m going to define this as 10 years or more of repayment anticipated), the best “deal” for me would be the company that will reduce my interest rate the most. This won’t solely be people that have large debt levels; these will also be individuals that wisely consolidated during the past couple years when rates were at historic lows and they see an opportunity to repay their debt at amazingly low levels and want to minimize that payment while they invest, prepare for homeownership, and focus on other financial goals. Your baseline when comparing rate benefits is to understand that an “average” company will offer a 1.25% reduction (normally .25% reduction for auto pay will be provided along with a 1% reduction in rate for on-time payments [normally of 36-48 months]). As part of the resource links below, I provide links to state programs that provide ‘above average’ benefits, like North Carolina, which offers a 2.25% total benefit for automatic and on-time payments. Information about the programs as well as other information are available below …(3) The first two scenarios will cover most individuals, however, some individuals will have borrowed too much to pay off quickly; others may be debt averse and don’t want to extend it, so they fall somewhere in between the above two options. In this case, where you plan to repay your debt over an ‘intermediate’ term, review a company that will provide interest rate benefits (these will almost always work out better than the principal credit benefits) where the benefits are offered up front. For example, the Educational Loan Company offers a better than average rate reduction benefits (1.75%), but rather than needing 4 years of on-time payment, .5% of the benefit is up front for auto pay and 1.25% is available after only 24 months of on-time payments.NOTE. Three things I want to emphasize. (a) These are general guidelines/rules of thumb – run the numbers to see what will make sense for YOUR LOAN SITUATION. (b) Read the applications to see if there are caveats – for example, the principal balance credit by Key Bank is foregone if you defer or forebear the loans during the first 36 months of repayment; Educational Loan Company requires you to be consolidating at least $10,000 total in debt. So read through to make sure the program fits with your situation. Don’t, however, assume that you’re not eligible either. It’s easy to say “I’m not from North Carolina, so I can’t do that” when the reality is that if you’re willing to spend 5 minutes, you can create a connection that will enable you to be eligible for their program. Thus, (c) BE SMART and take a few minutes to figure things out, it will be well worth your time!

FEDERAL STUDENT LOAN CONSOLIDATION

As the end of the semester is upon us, it seems timely to review the issue of student loan consolidation. This week I’ll address consolidation of federal loans and will address consolidation of private loans next week.First off, some reminders about some of the recent law changes:- In-school consolidation is no longer an option. You will need to be out of school in order to be eligible to consolidate.- You are no longer required to have multiple lenders in order to be able to choose your lender – even if all of your loans are with one lender [i.e., DMU], you are able to shop for the best deal for you.- You are now unable to consolidate your loans with your spouses’ loans – this was never smart, but is no longer an option.Other important consolidation considerations:- You do not want to consolidate Perkins loans [or other loans] if they may be forgiven or repaid by your employer, state, etc. It is ok to consolidate them otherwise.- If a lender is offering to combine your federal loans with private loans, credit cards, or any other non-federal loan debt, RUN!- You can AND SHOULD consolidate even if you consolidated prior to take advantage of lower rates. You can always reconsolidate (to combine) loans as long as you have loans to consolidate that haven’t been consolidated prior. As most of you heard last year from me, doing this WILL NOT negatively impact your interest rate. Your overall rate will be a weighted average of your loans rounded up to the nearest 1/8th. For example, if you consolidated $5,000 of loans at 6.8% and $5,000 at 4.8%, you would now have a $10,000 consolidation loan at 5.8% … view resources below to access a calculator to find out your weighted average.- Some people are afraid to consolidate because their repayment will be extended (thus more interest paid). Keep in mind that you can select the repayment option you want as well as choose to pay whatever amount you want (no legitimate program will assess a penalty for early payoff). Consolidation, however, is the only way to ‘lock’ the rate of otherwise variable rate loans

Got questions about student loan consolidation?

Got questions about student loan consolidation?We've got answers: View the details of the federal consolidation loan, or visit our student loan consolidation FAQ where you will find answers to our most frequently asked questions, organized by topic area.Calculate your different repayment options with our student loan consolidation calculator.

Thinking about student loan consolidation?

Sallie Mae is the nation's #1 provider of student loans, including consolidation loans, with more than 10 million borrowers nationwide. By consolidating with Sallie Mae, you are choosing a company that leads the student loan industry with more than 30 years of experience, superior servicing, and exceptional student loan consolidation benefits including:Guaranteed lowest statutory interest rate allowed by the federal governmentEasy, fast and secure online applicationsE-signature to make the student loan consolidation process even easierBorrower discounts to lower your interest rate just by paying on timeFree concierge service—we'll fill out all the paperwork for youNo application fees or credit checksWhether you've worked with us in the past or want to switch to the company that leads the education financing industry, consolidate today to take advantage of all the benefits Sallie Mae offers.

Debt Consolidation Loans should be your solution to stressful credit card payment

Debt Consolidation Loans should be your solution to stressful credit card payments. As long as you still have a decent credit score you could be able to save a great deal of money in the long run.Given that your aspiration will be to lower interest cost and decrease your monthly charges, avert bankruptcy, consolidate your debts and have one monthly payment, or clearly come to be out of debt the fastest way achievable, then a Debt Consolidation Loan serves to produce the answer. Are you feeling overburdened with debt? May be you paying out too much every month for your credit cards, store cards and loans? Then why not replace them all with one, lower, affordable repayment through a Debt Consolidation Loan? Debt Consolidation Loans serves to offer you a fresh start, letting you to Consolidate all of your loans into one - furnishing you one easy to deal with payment, and in various cases, at a reduced rate of interest. Secured on you property, inexpensive, low rate, cheap, low interest Debt Consolidation Loans can sweep away the bundle of repayments to your credit cards and store cards and replace them with one, low-priced, monthly payment one intended to be favorably within your means. Utilizing a Debt Consolidation Loan you can borrow from $5,000 to $150,000 and up to 125% of your home market value in some cases. A Debt Consolidation Loan is a lower cost loan secured on your housing. It frees up the spare capital (or equity) in your housing to pay off your store cards, credit cards, personal loans, medical charges and other monetary obligations. It could decrease both your interest rate and your monthly committments, putting you back in control of your life. Debt consolidation Loan rates are variable or fixed, depending on your status and credit score. Your monthly installments would depend on the quantity borrowed, term and interest cost.

Paid review of *Debt Consolidation News*

If you have student loans, you've probably been asked at least once, "Have you consolidated yet?" Consolidating loans, like rolling over old workplace retirement plans, is one of those things that people talk about as a no-brainer. Nobody asks, "Do you plan to consolidate?" or "Do you think consolidating your loans would be a good move?" They ask, "Have you done it yet?"Like most one-size-fits-all financial advice, consolidating your loans is more complicated than it first appears, and it's not always the best choice. If you have revolving debt on multiple credit cards, the oft-repeated advice to pay off revolving debt by borrowing against retirement accounts or home equity is also overly simplistic. Whenever you're planning to move debt from one creditor with a certain set of terms to another creditor with a different set of terms, it pays to look carefully at all the options, get some advice, do some research, and then decide whether consolidation will be the panacea it's made out to be.The website calling itself Debt Consolidation News seeks to educate those who are considering consolidating their debts, whether they plan to consolidate student loans or borrow against their assets to pay off high-interest debt. The site is formatted like a blog, with a sidebar offering links to popular posts, the site's archives, and a short list of categories. However, much of the content is in longer, detailed article format, not in the short, frequent posts that characterizes most blogs. Although the writing is somewhat uneven, the content is for the most part well-researched, and gives a good broad view of the options available to people in different situations. There are many useful definitions to help in the process of shopping for consolidation vehicles. One useful post explains the difference between credit counseling, which helps you get your spending in control, and consolidation, which gives you one bill to pay instead of many, and hopefully also gives you a fixed interest rate instead of a variable rate.Who's the audience here? Clearly, the audience is people who have found themselves in debt and want to find a way to make debt more manageable. But is the site American or British? It's actually an interesting bridge. The author or authors (only a few articles are signed) are quite obviously from some corner of the United Kingdom. Much of the statistical information is about UK debtors. But many of the links to news articles are from American newspapers, and the authors seem to have an excellent grasp of American laws that regulate credit, bankruptcy, federal student loans, etc. Overall, I think this site is definitely worth reading for folks trying to eliminate debt. My major criticism is that some of the articles seem too focused on debt elimination, sometimes at the expense of other financial goals. Although the site doesn't exactly encourage debtors to borrow against retirement funds, it doesn't explain in too much detail why this is a bad idea for many people. And there's a very hard line taken on credit card use, an assumption that if you have credit cards you will eventually run up unmanageable debt. I agree that some people really should not have credit cards because they're unable to use them responsibly. But I think for the majority of people who have high credit card balances, credit cards will still figure in their overall financial picture even when the high balances have been paid off. I'd rather see an emphasis on responsible use of money, instead of an oversimplified presentation of credit cards as evil.Best of all, this site has unexpected glimmers of honesty and humor. In this post about student credit card debt, the anonymous author advises students to "Stay within your budget." But the post goes on to say, "If you are a super rich brat, this advice isn’t for you. But if you are one of the regular guys, you must know your limits and stay within them."So, super rich brats need not bother to visit this site. For the rest of us regular guys who are trying to get out of debt and stay there, it's worth a read.

Federal Student Loan Consolidation Interest Rate

The fixed interest rate for federal student loan consolidation equals the weighted average of the interest rates of the loans being consolidated, rounded up to the nearest 1/8th of one percent and capped at 8.25%Use Access Group's Weighted Interest Rate Calculator to determine your consolidation interest rate, or follow the example shown below.Determine the Weighted Interest Rate: An ExampleLoan Balances and Interest Rates$10,000 loan balance at 5.99% interest rate$7,500 loan balance at 6.79% interest rate$5,000 loan balance at 5.39% interest rateStep 1: Multiply each outstanding loan balance by its interest rate.10,000 x 5.99 = 59,9007,500 x 6.79 = 50,9255,000 x 5.39 = 26,950Step 2: Add the products.59,900 + 50,925 + 26,950 = 137,775Step 3: Total the outstanding loan balances.10,000 + 7,500 + 5,000 = 22,500Step 4: Divide the sum from Step 2 by the sum from Step 3.137,775 / 22,500 = 6.123Step 5: Round the result of Step 4 up to the nearest 1/8th percent.6.123 up to the nearest 1/8th percent = 6.125Fixed interest rate for this loan would be 6.125%If the decimal place of your rate is:Round up to:.001 through .125.125.126 through .250.25.251 through .375.375.376 through .500.5.501 through .625.625.626 through .750.75.751 through .875.875.876 through .000the next full percent (.00)