Tag Archives: Federal Student Loans

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Tips on Paying for College

What can students do today to help pay for their college tuition? Cedar Education Lending lists 5 tips current students should follow:

1) Start researching for financial aid sooner rather than later. The competition for aid increases when the economy is weak. However, it also helps to check in as the start of the school year gets closer as some schools have emergency funds available as the admissions office gets a better handle on the final attendance numbers as some students withdraw or choose other schools.

2) Take as many AP courses as possible and to excel on the AP exams. High scores on AP exams can save considerably on college tuition. Many colleges award course credits for them, which can significantly reduce your tuition.

3) Apply strategically to colleges. If you exceed the school’s admission criteria, you might be likely to get a better financial aid package than a decent student.

4) Be realistic about how much debt to take on, given the starting salaries for probable majors and career paths. While some students feel they just have to attend pricey, brand-name colleges, a report released by PayScale found that state schools with low tuition offered students the best return on investment, when projected salaries and loans were taken into account.

5) If you have to borrow, pursue federal loans first before taking on private student loans. Also, remember that a private student loan consolidation can help save a significant amount of money after graduation.

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Student Loan Changes for 2012

On Sunday, July 1, several changes to federal student loan programs took effect. If you’re a current or soon-to-be college or graduate student, read on to see if you’ll be affected.
For undergraduate students:
The interest rate on subsidized Stafford loans taken out as of July 1, 2012, will remain at 3.4 % for one more year. But under a temporary provision that lasts until July 1, 2014, holders of subsidized Stafford loans taken this year and next will no longer enjoy an interest-free grace period after graduation. For the next two years, students with subsidized Stafford loans still won’t have to enter repayment until six months after they graduate, but interest will accrue during that time period.
In your last year of school, talk to your financial aid office about government options for students with federal loans, including Income-Based Repayment and Public Service Loan Forgiveness, Abernathy recommends.
Separately, students without a high school diploma or GED (excluding home schooled students) who are enrolling in college for the first time are no longer eligible for federal student aid, including loans. Such students that have already completed some college will still be eligible for federal aid.
For graduate students:
Graduate students are no longer eligible for government-subsidized Stafford loans. Grad students can still take out unsubsidized Stafford loans, for which interest accrues at a rate of 6.8 percent during school.
Graduate students with federal loans will be eligible for the government loan repayment programs after graduation, including Income-Based Repayment and Public Service Loan Forgiveness, as well as unemployment deferment.
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Federal Student Loan Crisis?

There has been a lot of focus on the pending rate interest rate hike on federally subsidized Stafford student loans potentially doubling in July from 3.4 to 6.8 percent.
This may sound alarming until you realize the rate increase would only affect new loans. Let’s say that the rate hike does happen, what will that mean in potential repayments? The rate hike will end up costing the average federal student loan borrower an additional $6 a month. What’s an additional $6 a month? Maybe it’s two Starbucks coffees, or you go to one movie every 2 months instead of every month, or maybe you pack one more lunch a month? Granted, $6 a month can add up over the life of the loan, but should we label this increase a “crisis” deserving all of the media attention that has come with it? In reality, the hype around student loans may have more to do with politics than changing what’s truly wrong with the student loan debt market, the escalating cost of tuition. Over the past 10 years the cost of private college has jumped more than 60%, nearly three times as much as incomes over the same period.Is that crisis worthy?