Reconsolidation Student Loan 2007 - Many Lenders Provide Significant Discounts.

Although 90 percent of students have some type of financial aid, last year’s seniors racked up an average of $17,300 in student loan debt.

For many, taking out a loan is inevitable. Financial aid director JoAnn Laugel said the 60 percent of students who had federal loans last year requested about $5,500 each.

But taking out a loan is better than resorting to credit cards, she said, which often accrue more debt through higher interest rates. Loans are also debts to be repaid, Laugel said, but students cannot get a four-year interest-free loan for anything else.

The first step in the loan process—for undergraduate and most graduate students—is filing for the FAFSA. The Indiana deadline is March 10.

Laura Freeman, Old National Bank student loan administrator, said the FAFSA enables students to learn how much money they are entitled to in scholarships and grants, as well as if they qualify for a federal Stafford loan.

Federal loans are the best type students can get, Freeman said, because they generally have lower interest rates and fees than private loans.

Laugel said UE provides a preferred lender list for federal and private loans.

“There are thousands of players, that’s the reason we have six,” she said.

Lisa Rollings, Citibank senior account manager, said students should look closely at what lenders are offering as many provide significant discounts.

“Some benefits are only if you pay on time, and some are up front,” she said.

If students plan on consolidating their loans—taking out one to pay for others—the up-front benefits will work best for them. But, typically, Rollings said students who consolidate loans pay more in the end as interest from lower monthly payments adds up.

Although consolidation can be beneficial, Freeman said one of the biggest problems is students who did not consider the size of payments, often $200 per month for those with $17,000 of debt.

Laugel said that is why UE offers exit counseling for graduating seniors—some becoming financially independent for the first time—to help them learn about sorting their finances. Sessions will be set toward the end of the semester.

While balancing loan payments might be difficult for some, UE students have been above the national average for keeping up with payments, she said.

According to the U.S. Department of Education, the national rate for students not making payments on time for the 2004 fiscal year was 5.1 percent. Laugel said UE had a 1.7 percent default that year, and the 2005 fiscal year was at 1.1 percent.

“Just that 1 percent defaulted,” she said. “It’s a sign students are getting good jobs with a UE education.”

And if students are having problems making loan payments, Rollings said they should contact their lender.

“Make sure you communicate with your lender,” she said. “If you move, if you have any updated changes like marriage, changing your name or financial situation changes, call.”

If students communicate with lenders, Rollings said most are more willing to give them options and even briefly accept lower payments.

But Laugel said loans are not the only way to help pay for college. Ongoing scholarships from outside UE are available for all students

Financial aid has a notebook of scholarships in the office and the list is also posted at evansville.edu/prospects/financialaid/currentstudents.