Showing posts with label federal student loan. Show all posts
Showing posts with label federal student loan. Show all posts

Friday, July 26, 2013

The Real Deal on the New Student Loan Interest Rates



                  62

Financial institutions that have private student loan workout programs are requested to provide student loan borrowers with information that clearly explains the programs, including eligibility criteria and the process for requesting a loan modification. This week the federal bank regulatory agencies issued a statement encouraging financial institutions to work with private student loan borrowers experiencing financial difficulties. This is a good start but stricter penalties should be implemented.  Financial institutions should be fined if they refuse to assist private loan borrowers with an affordable repayment plan.

Congress finally approved a plan to address the interest rate for federal student loans. New student loan interest rates will be set according to the 10-year Treasury yield plus a few percentage points. Under the plan, undergraduates taking out federal loans in 2013 would pay about 3.86%, graduate students would pay 5.4% and parent PLUS loans would pay 6.4 %. This only provides relief for this year.  If the Treasury yield increases so do student loan interest rates which will affect 11 million borrowers.

Under Congressional Budget Office projections, the interest rate is expected to increase over the next couple years, forcing student loan interest rates near 7% by 2017. Undergraduate loans are capped at 8.25% instead of 3.4%, graduate loans are capped at 9.5% instead of 6.8%, and PLUS loans at 10.5% instead of 7.9%. This would not be needed if the cost of college tuition was regulated. 

“We are opposed to the current deal,” Minnesota State Colleges Student Association president Kelly Charpentier-Berg said. “In the long-term, it’s actually going to cost students more. With it being market-based, when the economy goes up, the interest rate goes up.”

Unfortunately the Pell Grant does not provide enough money to cover one semester of tuition and forces students to obtain student loans. Tuition has become so expensive some students cancel their plans to go to college. Some experts believe that college tuition has become so expensive due to several factors such as:  declines in state or federal funding, increasing health care costs, soaring costs for labor productivity, colleges don’t and are not required to compete on tuition prices - Ivy league and other well-known colleges compete on academic reputation, hundreds of new rules, regulations and requirements that require colleges to change their business practices; other requirements that require colleges to hire additional administrators and compliance officers to ensure that they are not in violation of various new rules.

However, college tuition has also increased due to  food choices  including well-known fast food restaurants such as McDonalds, Starbucks, Pizza Hut, etc., more variety of bachelor degrees, new construction – at least 50% of construction cranes in America are on college campuses, elaborate student centers with theaters and bowling alleys, state of-the-art recreation facilities with rock-climbing walls; cable TV and wireless Internet access, online access to washing machines and dryers, and high college executive salaries, bonuses and exit payments.

Some experts state that the more aid colleges give the more they increase tuition. Colleges charge as much as someone is willing to pay.  Colleges that don’t accept federal loans have tuition that is half that of similarly-ranked colleges. The Minerva Project, a for-profit university in California stated that it will refuse Federal aid in order to keep tuition costs low. Cooper Union keeps tuition costs down because they don’t have a gym, swimming pools, climbing walls or a major cafeteria. Dormitories only house freshmen.

Students have been bamboozled to think that if a college charges a high tuition it must be a good school; this is not always the case.  If you have student loans take advantage of student loan forgiveness programs and demand affordable student loan reform from Congress and tuition reform from colleges.


Sunday, July 14, 2013

Exercise Forgiveness Programs to Pay Off Your Student Loans



                                            82
Fifty percent of Americans earns $50,000 or less and the dream of going to college has turned into a nightmare. The cost of college tuition increases higher than the yearly rate of inflation and less free money such as grants and scholarships are available for students wanting to go to college.  As a result, students are forced to obtain student loans. Student loans are merely another form of predatory lending and the economy is suffering from it. 

The default rate on most student loans is over 50% which affects college accreditations, affects the housing market - causes graduates who want to become homeowners to delay purchasing homes, prevents homeowners from upgrading to larger homes; causes couples to delay having children or achieving their financial goals; requires parents to provide financial support to children who move back home instead of focusing on planning for retirement and affects our reputation as a global economic leader.

One way to tackle student loan debt is to take advantage of student loan forgiveness programs. To be eligible for a student loan forgiveness program you must have made 120 separate monthly payments on time on Direct Loan Program loans.  Employees that work in the following industries are eligible: public health, public education, public library services and school library or other school-based services, emergency management, social work, military service, public safety, law enforcement, public interest law services, public library sciences, early childhood education, public service for individuals with disabilities and the elderly, employees who work for a not–for-profit tax-exempt 501(c)(3)organization or a private, not-for-profit organization.

The types of Loans eligible for student loan forgiveness are: Federal Direct Stafford/Ford Loans (Direct Subsidized Loans), Federal Direct Unsubsidized Stafford/Ford Loans (Direct Unsubsidized Loans), Federal Direct PLUS Loans (Direct PLUS Loans) for parents and graduate or professional students, Federal Direct Consolidation Loans (Direct Consolidation Loans). Here is a list of student loan forgiveness programs to help repay federal student loans:

1.      Volunteer in the ACTION program (including VISTA). Volunteers in Service to America call 1-800-942-2677 or 202-606-5000, americorps.gov/about/programs/vista.asp.
2.      AmeriCorps call 1-800-942-2677, americorps.gov.
3.      Peace Corps. Volunteers may apply for partial cancellation of Perkins Loans call 1-800-424-8580 or 202-692-1845, www.peacecorps.gov.
4.      Students who are in the Army National Guard may be eligible for their Student Loan Repayment Program, www.1800goguard.com/index_1024.asp.
5.      Full-time teachers in an elementary or secondary school that serves students from low-income families.  Contact your school district's administration to see which schools are eligible.
6.      Mississippi teachers who currently have their Alternate Route Teaching License and teach in a shortage area may be eligible for the Teacher Loan Repayment program www.ihl.state.ms.us or call 1-601-432-6997.
7.      The American Federation of Teachers maintains a list of other loan forgiveness programs for teachers, www.aft.org/yourwork/tools4teachers/fundingdatabase/.
8.      Employees who serve in the legal industry contact Equal Justice Works www.equaljusticeworks.org/ 202-466-3686, The American Bar Association (ABA) www.americanbar.org also has a summary of Loan Repayment Assistance Programs.
9.      Loan Repayment Assistance Programs (LRAPs) provide funds to make monthly payments.  Repayment and awarded benefits cannot exceed $10,000 in any calendar year or an aggregate total of $60,000 per attorney.  http://apps.americanbar.org/legalservices/probono/lawschools/pi_lrap.html
10.   US Department of Health and Human Services offers loan forgiveness programs through the National Health Service Corps, http://nhsc.bhpr.hrsa.gov/ and the Nursing Education Loan Repayment Program, http://bhpr.hrsa.gov/nursing/loanrepay.htm.
11.   National Institutes of Health's NIH Loan Repayment Programs www.lrp.nih.gov/ student loan debt for citizens who are conducting clinical medical research.
12.   US Department of Agriculture's Veterinary Medicine Loan Repayment Program (VMLRP) www.nifa.usda.gov/vmlrp offers loan forgiveness.
13.   California residents can contact the Office of Statewide Health Planning and Development www.oshpd.cahwnet.gov/ State Loan Repayment Program, 916-326-3745.  
14.   Contact the American Physical Therapy Association www.apta.org/ 1-800-999-2782 or the American Occupational Therapy Association www.aota.org/ 301-652-2682.
15.   Nicholas J. Pisacano MD Memorial Foundation Inc. (American Board of Family Practice) www.njpmf.org/
16.   Disadvantaged Health Professions Faculty Loan Repayment Program www.hrsa.gov/loanscholarships/repayment/faculty/
17.   Indian Health Service (IHS) Loan Repayment Program www.ihs.gov/loanrepayment/
18.   American Association of Medical Colleges (AAMC) maintains a database of state and other loan repayment programs for medical school students http://services.aamc.org/fed_loan_pub.
19.   Students who receive the Michael Murphy Loan to study law enforcement, law, probation and parole, penology, or other related fields are eligible to work as a State Trooper (or related law enforcement official) in Alaska. Contact the Alaska State Troopers, Director's Office Scholarship Fund, 907-269-5511 www.dps.state.ak.us/ast/.
20.   Maryland state and local government employees who earn less than $40,000 gross annually may be eligible for a loan assistance/repayment program to study law, nursing, physical and occupational therapy, social work and education. Contact the Maryland State Scholarship Administration, 410-974-2971 x146.
21.   US Department of Education Cancellation/Deferment Options for Teachers studentaid.ed.gov/PORTALSWebApp/students/english/teachercancel.jsp?tab=repaying and Cancellation for Childcare Providers,  studentaid.ed.gov/PORTALSWebApp/students/english/childcare.jsp?tab=repaying as well as the Teacher Loan Forgiveness Form www.ed.gov/offices/OSFAP/DCS/forms/form.teacher.loan.forgiveness.pdf.
22.   US Department of Education maintains a database of low-income schools eligible for teacher loan cancellation for Perkins and Stafford loans https://www.tcli.ed.gov/CBSWebApp/tcli/TCLIPubSchoolSearch.jsp.
23.   The Federal Student Loan Repayment Program www.opm.gov/oca/pay/studentloan/ allows federal agencies to make payments directly to the student loan holder.
24.   Student Loans can be discharged or canceled http://studentaid.ed.gov/repay-loans/forgiveness-cancellation
25.   Your federal student loans may be included when filing for bankruptcy http://studentaid.ed.gov/repay-loans/forgiveness-cancellation, www.studentloanborrowerassistance.org/bankruptcy/  

Saturday, June 23, 2012

Will the July 1st Student Loan Changes Affect You




President Obama asked Congress to extend low student loan interest rates for another year. If Congress cannot come to an agreement and pass the bill, student loan interest rates for subsidized government Stafford loans will double increasing from 3.4 to 6.8% on July 1, 2012. However, the increase will only affect undergraduate students who are issued government loans after July 1, 2012.  Interest rates for existing loans will not be affected.  

The interest rate for subsidized loans which are based on economic need is fixed for the life of the loan.  You are not charged interest while you’re in school at least half-time and during grace periods and deferment.  However, a six-month grace period on interest charged on federal subsidized student loans has been suspended which will cause interest to accrue the day after a student graduates from college from July 1, 2012 through June 30, 2014. The interest rate for subsidized loans is fixed at 6.8% for graduate and professional degree students and will not be affected.

The interest rate for unsubsidized student loans is 6.8% and will not be affected.  Interest accrues on unsubsidized loans from the time it is disbursed. You can pay the interest while you are in school and during grace periods, deferment or forbearance, or you can allow the interest to accrue.  

For military service employees, the interest rate on loans obtained before entering military service may be capped at 6% during your military service. However, you need to contact your loan servicer to request this benefit. Interest is not charged for loans disbursed after October 1, 2008 for up to 60 months, while serving on active duty, serving in a hostile area, performing qualifying National Guard duty during a war or an emergency. 

Private loans may initially offer a low interest rate similar to a balance transfer credit card, but the interest rate is variable and can increase at any time. The Georgetown University Center on Education predicts that by 2018, approximately 63% of all jobs will require some graduate school education. Here are 9 tips to protect yourself from the July 1st student loan changes:

1.     Consider going to a cheaper college.
2.     Create a budget and stick to it while you are in college. 
3.     Determine if you will be able to afford to make the minimum loan payments before applying for the student loans. 
4.     Think hard about your major and map out how you can pay back student loans on your starting salary.
5.     Extend school for 5 to 6 years by working a co-op.
6.     Pay for tuition for participating in a work-study program.
7.     Work during the summer and save a large portion of the money to pay for school.
8.     Work full-time and go to school part-time.
9.     Consider staying at home for 1-2 years after graduation to save money and pay down student loans.
10.  If you are on active duty verify the terms and conditions of your student loan and the benefits for military personnel.

Unexpected events occur frequently and it is best to plan ahead instead of waiting until the last minute or being blindsided.