How come the average student loan debt is believed to be about $19,000?

Being in debt is depressing. Recently I discuessed this matter at a forum, and I think it might be useful for my readers, so here is a quick otline of the discussion.

How come the average student loan debt is believed to be about $19,000?
I got to know that the average debt of a college graduate is about $19,000.
How come? _MY_ student loans - and that's from this year alone! - is about $18,000 (yep, eighteen grands), and that's excluding expenses like books and whatever.

Indeed this makes me pretty sad:
- I slaved over about 40 scholarships (ending up with mere $1500 in total in my pocket).
- and I graduated at the TOP (right, top!) of my class
- I worked hard in high school
- I filled out the FAFSA truthfully

How you guys/gals deal with it?

Some comments/advices/thoughts on the subject:

1)

Mine is nearly $50,000! It's not easy. I make monthy payments to the loan company. They work with you on the amount you can afford.

I try not to think about it, because I can't default. And filing bankruptsy doesn't touch it. I just try to carry on knowing that an educated nation is better than an uneducated nation.

My opinion is that college should be free to everyone as long as they keep up their grades and give something back to the nation.

2)

I took out maiximum loans and grants and graduated with $22,000 in debt. But I went to a "cheap" state school.
My brother went to a private school (DePaul) and graduated with $34,000 in debt.
Personally, I think paying a huge amount for a college degree from a school with so-called name recognition is kind of wasting your money.

But on the other hand, you might be able to get a higher paying job out of it so in a sense it all balances off. Hang in there, and just stay away from credit caards!!!

3)

I'm with you on this one. I am in the same boat, with maybe double of that, and I'm not quite done yet. I think it's more just an average, including people who get associates, which is only 2 years of schooling, vs 4 years for a bachelor's. I try not to think about my debt, but it's good to know alot of loans for education have low interest rates, and you have about 10 years or more to pay it off.

4)

the average is low because people save money to go to college and family help is usually a big part of it. It takes money to go to college unless you are super smart and you are willing to go to a school beneath your goal.

5)

I moved back in with my parents after college to pay off my loans :(

Try to find a job that will contribute to your education - mine pays 50% as long as I get a B.

6)

I graduated with a debt of 22,000 and this was for my undergrad AND my graduate degree. It took me about 11 years to pay off.

I worked my rear off, working two jobs and going for YEARS without ever having a day off. From work to school to work to school...

Borrowing via private student loans has become something of a "norm" recently that scares the crap out of me and I think it should be federally regulated. Most kids don't realize what this kind of debt will have on the rest of thier lives and negate the whole reason they went to college in the first place.

With the dropout rate being like it is for undergrads I personally don't think any freshman should be allowed to borrow... but who am i? Federal loans have limits on them for a reason. To protect you!! The sharks of private lenders have no such regulations... they'll loan you 40K a year.. A YEAR!

YOU just need to make sure you can live with your decision to borrow this much. THIS will be your life if you continue down this path.
18K times four years = 76K total equals payments of around 800 dollars a month for the next 10 to 30 years. That is a house payment where I live and borrowing this much is NOT NORMAL!

If you (or your cosigners) are even the TEENY bit squeemish about having this much debt you need to get out of that school now, before you get all the way to your junior or senior year and it's too late to tranfer and the bank says you or your cosigners debt to income ratio is too high and they cut you off!!!! Kinda stinks uh?

Go to a state school, don't do any loans except federal ones and work 30 hours a week.

Origin:Reconsolidation Loans: Facts and Hints

Reconsolidating Student Loan Benefits

OLR Research report has quite nicely summarized benefits (as well as cons) of student loan consolidation.

In short:

- Student loans and their consolidation are governed by the Higher Education Act of 1965 (HEA), governs student loans and their consolidation.
- It clearly states what people who have borrowed money under various federal loan programs or from multiple sources CAN consolidate their loans after they leave school.
- several loans with varying repayment terms and interest rates CAN be merged into a single loan; repayment CAN be extended up to thirty years - AND at a fixed monthly payment.

FIXED is the key word here. It may vary, but in general weighted average of the loans being consolidated affacts it.
Rates are capped at 8. 25%.
PLEASE NOTE that a borrower whose loans are all held by one lender can ask only that lender for consolidation (it's the “single holder” rule). Soem exceptions may apply.

IMPORTANT: a borrower can consolidate loans just ONCE.

In detail:

Reconsolidation

The law permits a borrower to obtain a new consolidation loan if:
- he has at least one outstanding eligible loan that was not included in the initial consolidation OR
- consolidated loans then borrowed again under an eligible loan program.

Benefits of Consolidating student loans

1) consolidation lowers a borrower’s monthly payment - naturally, by extending the payment period.
2) consolidation yields a single billing statement and removes the risk inherent if variable rates rise.


Drawbacks of Consolidating student loans

1) borrowers pay more in interest because of the longer repayment period and cannot benefit if rates drop after they consolidate.

Consolidation Loan Terms

The above eligible loans have 10-year terms. A consolidation loan repayment term can be up to 30 years. The term is determined by the total consolidation loan balance plus the balances of other education loans as follows:

• less than $ 7,500—10 years;

• between $ 7,500 and $ 10,000—up to 12 years;

• between $ 10,000 and $ 20,000—up to 15 years;

• between $ 20,000 and $ 40,000—up to 20 years;

• between $ 40,000 and $ 60,000—up to 25 years;

• $ 60,000 or more-30 years

Consolidation loan interest is fixed. The rate is determined by weighted average of the loans being consolidated, rounded up to the nearest one-eighth (1/8) percent. Rates are capped at 8. 25%.

Consolidation lenders can offer four repayment plans:

• Standard: the monthly payment amount is fixed over the life of the loan

• Income Sensitive: monthly payments are based on, and change with, the borrower’s income

• Graduated: monthly payments start low and gradually increase over the life of the loan

• Extended: for loans over $ 30,000, borrowers can extend payments over 25 years under a level or graduated repayment schedule

A borrower whose loans are all held by a single lender must request consolidation from that lender. This is called the “single holder” rule. But a borrower with a single lender can seek a consolidation loan from another lender, but he must certify that (1) he sought and was unable to obtain a consolidation loan through the institution that holds his Stafford or PLUS loan or (2) the holder would not provide a consolidation loan with an income-sensitive repayment schedule. People who have borrowed from multiple sources can seek a consolidation loan from any eligible lender.

Eligible Loans

The loans eligible for consolidation are: subsidized (based on financial need) and unsubsidized Stafford Loans; Parent Loans for Undergraduate Students (PLUS); Supplemental Loans for Students (SLS); Perkins Loans; and Nursing Student, Health Professions Student, and Health Education Assistance loans. A borrower must be in the grace period (the six months after leaving school) or have begun repayment on each loan he wants to consolidate. Loans in default can be consolidated only after the borrower makes satisfactory repayment arrangements with the loan holder or agrees to repay the consolidating lender under an income-sensitive repayment schedule.

How Reverse Mortgage Helps My Old Parents To Get Cash

As you know, I've been collecting in this blog my own findings on a subject of reconsolidations loans - and it often comes handy, just like when my buddies need info on sallie mae reconsolidation, how to refinance reconsolidating student loan 2008, and of course about lowest reconsolidation rates...but last week I took some time to research the matter of reverse mortgages for seniors - cause my old parents need cash badly.

So I thought what some of my findings would be of interest to seniors and their kids (err, not kids by now, but loving children anyways?) - I'll provide here a short guide to reverse mortgage programs which contains links and explanations.

1) First things first: What are the Advantages of a Reverse Mortgage?

Homeowners can pull needed cash from the equity of the home, without incurring monthly expenses.

Lenders cannot force homeowners to sell the property to pay back the loan.

Reverse mortgages guarantee that the homeowner can stay on the property for as long as he or she lives, even if the outstanding loan and interest grow to exceed the value propertyЃs value.

Links:

cheapest reverse mortgages

mortgages reverse

second mortgage

mortgage refinance

2) OK - but what are the Disadvantages of a Reverse Mortgage?
Reverse mortgage fees can be high, although the fees are often rolled into the loan and not paid upfront. A reverse mortgage can cost thousands more than a conventional mortgage. One lower cost option is the FHA reverse mortgage program from the U.S. Department of Housing & Urban Development (HUD).

ItЃs important to calculate the cost of a reverse mortgage against what you would gain, because once you enter a reverse mortgage agreement, the mortgage company essentially owns your home.

Get sound advice. Discuss your reverse mortgage plans with legal and financial advisors, and family members, before making a decision. Because home ownership is often a person's most valuable asset, getting a reverse mortgage is essentially the same as spending the money you'd expect to leave to your heirs.

Be sure that the older homeowner is thinking clearly when making this decsion (no dementia or symptoms of Alzheimer's), because having a sudden influx of cash can be a heady experience and it would be a shame to waste it or become the victim of a scam.

Reverse mortgages are often seen as a last resort if the homeowner needs cash and there are no other options.

Links:

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reverse mortgage lending

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3) Anyways, what a Reverse Mortgage is?

In a reverse mortgage, also known as a conversion mortgage, the home is used a collateral to get cash. This is similar to a standard mortgage, but with a reverse mortgage the homeowner doesn't need an income to qualify and there are no monthly loan payments.

With a reverse mortgage, the loan and the interest on the loan are paid off when the property is sold.

Links:

reverse mortgage providers

reverse mortgage for seniors

reverse mortgage programs

reverse mortgage costs

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reverse mortgage guide

seattle reverse mortgage

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4) What's the mechanics - how does Reverse Mortgage Work?

Once the property is sold|and this can be during the homeownerБs lifetime or after his or her death|the sale price of the property pays back the loan. This rule is in place even if the sale price is less than the combination of the loan and interest.

Lenders must accept only the sale price and cannot|by law|go after the homeownerБs other assets.

Links:

about reverse mortgage

reverse mortgage fees

5) Is there any Rules of Reverse Mortgages?

To reduce their risk, lenders generally limit reverse mortgage loans to amounts that are below their estimate of the propertyЃs full value.

Age is an advantage when applying for a reverse mortgage. Borrowers must be at least age 62, and the older the homeowner is, the more money he or she would qualify for. For example, a 78-year-old borrower would qualify for a larger loan than a 62-year-old.

Young Person's Guide to Private Loans Consolidation - grown-ups, take a look, too.

I just can't stand an urge to share with you a *very* detailed, simple and explicit article on reconsolidation private loans matters.
I'd call it a Young Person's Guide to Private Loans Consolidation - so thoughtfully and friendly this little FAQ on private loans consolidation is written.

Discussed are private loans of all kinds - mostly student loans, information should be very heplful for students indeed.

Highlights:
* Real Life Example "Paying Ahead"
* Managing Student Loan Repayment
* Avoid Delinquency, Default & Bankruptcy
...and virtually everything else - it's a condensed wisdom, if you ask me...Kudos to Patti Corjay for putting it up.

In particular, part about paying more than the required payment will save money was an eyeopener for me - paying just extra $25/mo would save me 5 (five) grands in interest - how's that?!

************************************

Borrower rights and responsibilities

What are loan terms and conditions?
What is the cost of my loan?

Managing your loans in repayment

Private Loan Consolidation
Post-MBA Strategies

Overview
Borrower Rights

o Written information on loan obligations
o An explanation of default and its consequences
o A copy of your promissory note and return of the original note when the loan is paid in full
o Prior to repayment, balance information, interest rates and fees and a repayment schedule
o Notification if your loan is sold
o Prepay your loan early without penalty


Borrower Responsibilities

o Repay the loan according to the schedule you select, even if you do not complete your academic program, are dissatisfied with the education you received, or you are unable to find employment after you graduate
o Notify your loan servicer of anything that affects your ability to repay the loan
o Notify your loan servicer of any changes in your status, including when you graduate
o Notify your loan servicer and school of any changes to name, address, and phone numbers
o Notify your loan servicer if you fail to enroll for the period covered by your student loan


Terms are the specifications identified in the promissory note that define the loan amount, interest rate, length of time in which to repay the loan (repayment term), and any other enforceable agreements entered into by the borrower and the lender before the loan will be made.

The loan terms stated in the promissory note will also include information on how interest is calculated and all conditions of repayment.

o Interest is generally calculated using the daily simple interest method

What are terms and conditions?

Conditions are the circumstances and “rules” the borrower agrees to abide by in exchange for the lender advancing the loaned funds applied for. Lenders in general will not release any funding until all conditions have been met by the borrower and cosigner, if there is one involved.

Examples of loan conditions are

o Borrower must agree to sign the promissory note before funds will be released
o In exchange for the cash provided by the loan, the borrower promises to repay in accordance with the terms set out in the promissory note
o Borrower agrees to use the loan for the purposes stated
o If the loan is not repaid according to terms, borrower agrees to pay various fees and court costs if incurred for the lender to get repaid


What are terms and conditions?

A price which is charged and paid for the use of money over time.
An interest rate is most often expressed as an annual percentage of the loan principal.
May be fixed or variable over time

o Fixed interest is a constant rate charged over the term of a loan
o Variable interest changes according to various schedules over the term of a loan.


Most private loan lenders have variable interest rates

Interest rate

Variable interest rates are generally used by lenders to help them maintain net interest income margins over the expected life of a loan.
A private loan borrower should be aware of the type of interest used by a lender and how the interest rate is determined.
Most variable rates are tied or indexed to a major commercial rate such as Prime or Libor.

o The prime rate is the interest rate that most commercial banks use to lend to their most creditworthy borrowers .

Private loan interest rates are generally stated as

o PRIME (Or Other Rate) Plus/ Minus an interest rate factor
o Example 8.25% +/- 2.0%.


Interest rates - Variable

The addition of accrued and unpaid interest to the principal balance of your loan.
o The less frequent the better.
o Read your promissory note to determine when interest on your private loan will be capitalized.
o Preference should be only once at repayment.


Capitalization

Grace period:
o Time interval between leaving school and the date that repayment begins. Six months is the grace period on most private loans.
o The grace period on your loan was created to give you a reasonable amount of time to transition from the academic world into the job market.
o Assess your financial situation and prospects
o If you think you have a financial problem at the beginning of repayment, anytime during repayment or your circumstances change, contact your loan servicer. Many times they can help.



Repayment terms

Repayment terms and options:

Variations of the loan repayment terms that may be chosen under certain conditions to assist the borrower in making their monthly payments

Typically repayment options will involve alternatives for:

# Length of time to repay the private loan
# Application of the monthly payment to interest and principal

Typical repayment term options

o 10, 15, 20 or 25 year repayment term
o Interest only followed by a standard payment schedule
o Most common option offered by a private loan lender is a 10 or 15 year repayment term

It is very important that you read your promissory note to understand the repayment options available to you

Repayment terms

Monthly payment:
Minimum amount that a borrower is required to pay each month.

When the payment is received by the loan servicer, the payment will be applied first to the interest that has accrued since the last payment and the remainder of the payment will be applied to reduce the loan principal amount.

Payment due date:

o This is the date each month by which a private loan borrower is required to make the monthly payment.
o Failure to make payments on time can result in late fees, collection calls and if not made over a period of several months, legal action.

Repayment terms

Repaying your student loans responsibly is one of the most important behaviors you can develop as you enter and grow in your career.

Failure to live by the terms of your promissory note and make your payments on time will carry serious consequences that will be difficult and costly to overcome. Contact your loan servicer immediately to work on possible solutions if you are having problems making your loan payments.

Nobody wins if you default on your loans.

Managing your loans in repayment



Managing Student Loan Repayment


Help your loan servicer keep track of you.

Your loan promissory note - a promise to repay on time and in full.

Failing to repay will put you in financial default.

If you’re having problems repaying, call your servicer - right away.

Alternate repayment plans can significantly reduce the amount of your monthly payment.

For Sallie Mae borrowers, go to www.SallieMae.com

Borrower benefits are options that lenders may offer as an incentive to borrowers

o to obtain their private loans through that lender
o use select services offered by the lender

Borrower benefits save you money!

Benefits could include:

o Borrower friendly capitalization policy
o Combined billing for multiple loans when in a repayment status
o Opportunity to release the co-signer from further obligation after a period of on-time payments
o No pre-payment penalties

Borrower benefits


Trouble Making Payments?


Call your loan servicer or lender right away

Explore your options


o Lower your monthly payment
+ Graduated repayment
+ Income-sensitive repayment
o Temporarily postpone your payments



Forbearance is an authorized interruption to your repayment schedule which allows you to suspend payment of principal, interest or both for a period of time

o Forbearance must be requested by the borrower and approved by the lender
o Interest accrues during periods of forbearance and is capitalized at the end of the forbearance period
o Must reapply with lender at the end of the period of forbearance if you wish to continue to remain in a forbearance status.



Forbearance

What If You Become Delinquent?
* Call your lender or loan servicer immediately and ask for help!
* Your servicer will contact you.
* Your late payments will be reported to a credit bureau.
* Delinquency will become part of your financial history.

What If You Become Disabled Or Die?
Private loans seek settlement from the borrower’s estate or co-borrower


What If You Default?
You could incur collection costs and legal expenses
Your credit history will be tarnished for a long time


Avoid Delinquency, Default & Bankruptcy
o Stay in control of your credit from the start.
o When trouble arises, take action - immediately!
o Seek professional assistance from your local Consumer Credit Counseling Service (CCCS) - 1-800- 388-2227 - It’s a free service!
o A financial planner can help develop a money management strategy for a fee.

What is private loan consolidation?

Paying off one or more private loans with one new private loan.

Relatively new financial planning and debt management tool for borrowers with private education debt.

Some similarities with federal consolidation but many important differences.

Private loan consolidation


Why private loan consolidation?

For convenience

o One payment
o May be combined billing with payments on federal loans if all loans with the same servicer (check with servicer)

To lower monthly payments
o May be able to extend repayment length, depending on amount borrowed

In some cases, to get a lower interest rate

o Depends on credit score of borrower and cosigner, if applicable
o Reminder that private loan consolidation does not offer a fixed rate



Private loan consolidation

Who is eligible?

Creditworthy borrowers with at least one private loan

Requirements may vary by lender

Other requirements may include:

o U.S. citizen or eligible permanent resident with SS number
o Private loans in repayment status
o Minimum loan amount
o Completion of program or degree

Private loan consolidation

When to consolidate
Check with lender, but likely during repayment, after grace period has ended.
Borrowers will forfeit grace period on underlying loans if they consolidate too early.


Private loan consolidation

Should you reconsolidate?

Borrowers can reconsolidate private loans

May not be in borrower’s best interest, if fees are involved

o May have already paid fees

Private loan consolidation

Questions to Ask:

* Which loans are eligible?
* What is my new interest rate and are there any fees?
* What are my grace and forbearance options?
* What are my repayment options?
* What are my monthly payment and total repayment amounts?
* Is there a penalty for early repayment?
* Who will service my consolidation loan?
* How long will this take?
* What about spousal consolidation?

Private loan consolidation

Post-MBA
Money & Debt Management Strategies


Develop A Budget

List all sources of income

Adjust for taxes, FICA and other withholding

Divide by 12 for monthly income

Deduct housing costs

Deduct food and clothing (laundry, too)

Deduct utilities (gas, phone, electric, etc.)

Deduct credit card payments, if applicable


Develop A Budget

Deduct transportation expenses, including car expenses (also gas and insurance), if applicable

Deduct entertainment expenses

DEDUCT YOUR STUDENT LOAN PAYMENTS!!

Remember to pay yourself (IRA, savings)

The remainder should be greater than zero (some left over for emergencies)


Paying more than the required payment will save money.

For a $50,000 student loan*, with a 15 year repayment term:

o The monthly payment will be $545
o Total interest will be $48,096

However...

o an extra $25/month will save $5,387 in interest
o an extra $50/month will save $9,595 in interest
o an extra $100/month will save $15,805 in interest
o a double payment/month will save $34,366 in interest

* * Based on an interest rate of 10.25%

Real Life Example– Paying Ahead

Which Option Is Best For You?

Do your education loan payments exceed 8-10 percent of your gross monthly income (and you’re having trouble making payments)?

o 8-10 percent rule should allow borrowers to have enough income to cover rent/mortgage payment, pay for basic living expenses, and meet other debt service needs

Annual Monthly Maximum Student Loan Payment at

Income Income 8% 10% 15%

$ 50,000 $4,167 $333 $417 $ 625

$ 75,000 $6,250 $500 $625 $ 938

$100,000 $8,333 $667 $833 $1,250


What About Deducting The Interest?

Tax rules are a bit complex, so contact a tax preparer to determine if you can deduct interest for private education loans

Patti Corjay
Director, South Sales
Graduate and Professional Programs
April 2007

(Video) Student Loans - The Joy of Consolidation

I spotted quite funny - yet helpful - video on youtube on a matter of student debt consolidation/reconsolidation. In short, 3 friends band together to find the best student loan lender that can alleviate their pain from student loan debt. This is actually Episode II - it concludes their journey to freedom.

Summary of Student Borrower Bill of Rights Act of 2008

Here is a summary of recently presented Student Borrower Bill of Rights Act of 2008.

Goal: To provide student borrowers with basic rights, including the right to timely information about their loans and the right to make fair and reasonable loan payments, and for other purposes.

SEC. 2. FINDINGS.

I skip this part.

SEC. 4. A RIGHT TO SHOP IN A FREE MARKETPLACE.

There are interesting snippets here:

...
(iii) by adding at the end the following:
`(D) any on time payments made for such loan; and
`(E) such loan as a student loan.'.

© A Right To Reconsolidate Loans-
`(B)(i) Except as provided in clause (ii), an individual who has received a consolidation loan under this section, or the consolidation lender, shall pay a fee of 1 percent of the balance owed on the sum of such loans to be consolidated to the Department to obtain a subsequent consolidation loan under this section.

`(ii) An individual who has received a consolidation loan under this section may obtain a subsequent consolidation loan under this section for no fee if such individual was eligible to obtain a subsequent consolidation loan pursuant to this subparagraph on the day before the date of enactment of the Student Borrower Bill of Rights Act of 2007.'.

`(1) FEDERAL STUDENT LOAN- The term `Federal student loan' means a loan made, insured, or guaranteed under this title (except loans made to parents under section 428B or under the Federal Direct PLUS Loan program).

`SEC. 499A. A RIGHT TO TIMELY INFORMATION ABOUT LOANS.
...
`(7) a description of each fee the borrower has been charged for the current payment period;
`(8) the applicable monthly payment amount set by the Secretary under section 499B for such borrower and the amount such borrower would owe each month according to the borrower's repayment plan absent the provisions of section 499B, or, in the case of a loan payable less frequently than monthly, the amount that corresponds to the payment installment time period taking into consideration the applicable monthly payment amount set by the Secretary under section 499B for such borrower and the amount such borrower would owe that corresponds to the payment installment time period according to the borrower's repayment plan absent the provisions of section 499B;
`(9) the date by which the borrower needs to make the payment described in paragraph (8) to avoid additional fees;
`(10) the amount of such payment that will be put towards interest, the balance, and any fees;

`(b) Information Provided Five Months After Ceasing To Be at Least a Half-Time Student- A lender of a Federal student loan shall provide to the borrower of such loan, on the date that is 5 months after the borrower has ceased to be at least a half-time student at the institution of higher education for which the loan was made, who requests it, and make readily available on the Internet, a clear and conspicuous notice of not less than the following information:

`(1) The conditions under which a borrower could be charged any fee, and the amount of such fee.
`(2) The conditions under which a loan would default and the consequences of default.
`(3) The borrower's rights and options, including repayment options, deferments, forbearances, and discharge rights to which the borrower may be entitled.
`(4) Legitimate resources, including nonprofit organizations, advocates, and counselors (including the Office of the Ombudsman at the Department), where borrowers can receive advice and assistance, if such resources exist.

`(5) Information about how a borrower can appeal to the Department a decision made by a lender about their loan.

`© Information Provided During Delinquency-

`(2) ADDITIONAL INFORMATION- In addition to any other information required under law, a lender of a Federal student loan shall provide a borrower in delinquency with a clear and conspicuous notice of the date on which the loan will default if no payment is made, the minimum payment that must be made to avoid default, discharge rights to which the borrower may be entitled, legitimate resources, including nonprofit organizations, advocates, and counselors (including the Office of the Ombudsman at the Department), where borrowers can receive advice and assistance, if such resources exist, and information about how a borrower can appeal to the Department a decision made by a lender about their loan.

© Information Provided During Consolidation- Section 428C(b)(1) of the Higher Education Act of 1965 (20 U.S.C. 1078-3(b)(1)) is amended--

(d) Information Provided During Consolidation or Reconsolidation of a Federal Student Loan With a Private Loan- A lender shall, upon application for a consolidation or reconsolidation loan of one or more loans made, insured, or guaranteed under part B, part D, or part E of title IV of the Higher Education Act of 1965 (20 U.S.C. 1071, 1087a, 1087aa) with one or more private loans, provide the borrower with a clear and conspicuous notice of not less than the following information:

(1) That the consolidation or reconsolidation loan would be a private loan, not a Federal loan.

(2) A description of the benefits and protections for the loan made, insured, or guaranteed under part B, part D, or part E that the borrower would lose by consolidating such loan with a private loan.

(3) That the lender may be eligible to consolidate two or more loans made, insured, or guaranteed under part B, part D, or part E within the Federal loan program.

SEC. 6. A RIGHT TO MAKE AFFORDABLE LOAN PAYMENTS.

(a) Affordable Loan Payments- Part I of title IV of the Higher Education Act of 1965, as added by section 5, is amended by adding at the end the following:

`SEC. 499B. A RIGHT TO MAKE AFFORDABLE LOAN PAYMENTS.

`(a) Limit on Monthly Payment Amounts to an Affordable Level-

`(1) IN GENERAL-

`(A) LIMITATION-

`(i) IN GENERAL- With respect to Federal student loans that are made, insured, or guaranteed after the date of enactment of this section, the Secretary shall limit the total monthly payment amount for all of such loans of a student borrower to not more than the amount determined pursuant to subparagraph (B), except as provided in subsection (b)(3).

`(ii) COMMENCEMENT- The limit on the monthly payment amount described in clause (i) shall begin the day after 1 year after the date the student ceases to carry at least one-half the normal full-time academic workload (as determined by the institution).

`(B) FORMULA AMOUNT-

`(i) IN GENERAL- The amount referred to in subparagraph (A) shall be the same amount for each month of a year. Such amount shall be an amount that is the quotient of the sum of 10 percent of the borrower's annual adjusted gross income between 100 percent and 200 percent of the poverty line for the previous year and 20 percent of the borrower's annual adjusted gross income above 200 percent of the poverty line for the previous year divided by 12.

`(ii) POVERTY LINE- In this subparagraph, the term `poverty line' means the poverty line described in section 673 of the Community Services Block Grant Act (42 U.S.C. 9902), applicable to a family of the size involved.

`(2) PROVISION OF INFORMATION TO THE SECRETARY-

`(A) IN GENERAL- The limit on the monthly payment amount set by the Secretary under paragraph (1) shall apply only if a borrower provides the Secretary, in such form and at such time--

`(i) such information as the Secretary shall require to determine the monthly payment amount that is applicable for such borrower; and

`(ii) certification that the borrower is employed full time or is actively seeking full-time employment.

`(B) UPDATE TO INFORMATION- The Secretary shall require a borrower to--

`(i) provide the information required under subparagraph (A)(i) annually for the term of the loan of such borrower; or

`(ii) during each year for the term of the loan of such borrower, authorize the Secretary to obtain the information required under subparagraph (A)(i) from the Internal Revenue Service for such year.

`(3) CONTINUOUS UPDATE- Upon receiving information under paragraph (2)(B), the Secretary shall revise the limit on the monthly payment amount for such borrower under paragraph (1), as necessary.

`(4) APPLICABILITY TO ALL REPAYMENT PLANS- Regardless of which repayment plan a borrower of a loan selects under this title, the limit on the monthly payment amount set by the Secretary under paragraph (1) shall apply to the monthly repayment amount applicable for such repayment plan.

`(5) NO FEES OR CHARGES- Notwithstanding any other term or condition of Federal student loans of a borrower that are made, insured, or guaranteed after the date of enactment of this section, if the borrower pays the maximum monthly payment amount that is applicable for the borrower for such loans, as determined under this section, on time according to the terms and conditions of such loans, such borrower may not be charged any late fee, underpayment fee, or finance charge for such loans for such month.

`(6) SUBSIDIZED LOANS- In the case of a Federal student loan made, insured, or guaranteed after the date of enactment of this section for which an interest subsidy is paid under section 428(a), if the amount owed each month in interest payments for such loan exceeds the applicable amount for such borrower as determined under this section, and, at the discretion of the Secretary, if the borrower pays such applicable amount, the Federal Government shall pay the difference between such amount owed in interest payments and such amount that has been determined is applicable.

`(b) Study-

`(A) consider the payments required of student borrowers in other countries, including the United Kingdom, Australia, and New Zealand, and compare such payments to the payments required of student borrowers in the United States; and

`(B) be completed and submitted to the appropriate committees of Congress not later than 12 months after the date of enactment of this section.

`(3) ADDITIONAL LIMITS ON MONTHLY REPAYMENTS- If the Secretary determines in the study under paragraph (1) that additional protections are necessary to ensure that monthly payment amounts of student borrowers of Federal student loans made, insured, or guaranteed after the date of enactment of this section are affordable, the Secretary may establish rules based on such study that limits the monthly payment amount for a student borrower to a level that is affordable for such borrower.


(1) DISCHARGE AND CANCELLATION RIGHTS IN CASES OF DISABILITY-

(B) SENSE OF THE CONGRESS- It is the Sense of the Congress that the Department of Education should continue to administer the discharge and cancellation right provisions of the Higher Education Act of 1965 amended in subparagraph (A) in such a way as to prevent fraud and abuse.

(A) SENSE OF THE CONGRESS- It is the Sense of the Congress that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (Public Law 109-8) affords sufficient protections to prevent fraud and abuse in the carefully regulated discharge of student loans in bankruptcy.

SEC. 7. A RIGHT FOR INTEREST RATES AND FEES TO BE REASONABLE.

(a) In General- Part I of title IV of the Higher Education Act of 1965, as added by section 5 and amended by section 6, is further amended by adding at the end the following:

`SEC. 499C. A RIGHT FOR INTEREST RATES AND FEES TO BE REASONABLE.

`(a) In General- The Secretary shall conduct a study of the interest rates and fees that are charged of borrowers of private student loans, including--

`(1) the conditions under which the interest rate charged of such a borrower is raised or lowered, including the conditions under which the interest rate is raised on delinquent payments, and the amount and frequency of such interest rate changes;

`(2) the conditions under which fees are charged of such a borrower and frequency of such fees, including fees that are charged as a condition of taking a deferment or forbearance, and the amount and frequency of such fees;

`(3) identifying such practices as described in paragraphs (1) and (2) that are exploitative or unreasonable; and

`(4) determining what remedies exist for such practices identified in paragraph (3).


`© Cap on Total Charges-

`(1) IN GENERAL- The Department shall set a cap on the maximum total amount that can be charged of a borrower on a Federal student loan, including all interest and fees, as a percentage of the original loan balance, over a period of 10 years, 15 years, and 20 years.

`(2) LEVEL OF CAP- The cap set under paragraph (1) shall be set--

`(A) at the minimum level beyond which additional amount charged on a loan is unreasonable or exploitative; and

`(B) for each time period, at a level that is higher than the amount the borrower, who makes regularly scheduled payments in accordance with a standard repayment plan, currently pays over such time period.'.

(b) Conforming Amendments-

(1) LOANS PAID OFF THROUGH CONSOLIDATION- Section 428©(6)(B) of the Higher Education Act of 1965 (20 U.S.C. 1078©(6)(B)) is amended--

(A) by striking clause (i) and inserting the following:

`(i) on or after October 1, 2007, not charge the borrower collection costs in excess of the amount provided in section 499C(b)(1)(A); and'; and

(B) in clause (ii), by striking `clause (i)(I)' and inserting `clause (i)'.

(2) REHABILITATED LOANS- Section 428F(a)(1)© of the Higher Education Act of 1965 (20 U.S.C. 1078-6(a)(1)©) is amended by striking `not to exceed' and all that follows through the period and inserting `not to exceed the amount provided in section 499C(b)(1)(B).'.

`SEC. 499D. A RIGHT TO NOT BE EXPLOITED.

`(b) Sense of the Congress- It is the sense of the Congress that the Secretary should enforce the rights of borrowers of private student loans and Federal student loans to raise claims and defenses related to the actions of for-profit institutions of higher education against lenders from which the borrowers borrowed money to attend such institutions, including the Federal Trade Commission Rule.

New laws for refinancing - can you reconsolidate loans?

Can you reconsolidate student loans? That's the question...In other words, is reconsolidation of loans allowed?

According to Student Debt Relief Act of 2007, yes - it does allow reconsolidation of loans.
More to this:
- it also increases annual maximum Pell Grant program to $5,100 this year (2007) to $6,300 in 2011;
- it establishes the Fair Payment Assurance Program which caps loan repayment at 15 percent of a borrower's income for low income borrowers;
- it reduces FDLP origination fee to zero;
- it extends tuition tax credit.

A brief summary of Student Debt Relief Act of 2007:
Jan 22, 2007, Edward Kennedy (D-MA - Senate Health, Education, Labor and Pensions Chairman ) introduced S. 359, the Student Debt Relief Act of 2007.
Core moments:
1) The bill proposes to provide incentives for schools to switch to the Federal Direct Loan Program;
2) halve student loan interest rates;
3) increase the federal Pell Grant limit;
4) cap federal student loan repayment at 15 percent of a borrower’s discretionary income.


Speaking of other legal stuff on regard of student loans - there is a Sunshine Act, too.
Edward Kennedy and Senator Dick Durbin (D-IL) introduced S. 486 on Feb. 1, 2007 - the Student Loan Sunshine Act.
The bill would require schools and lenders to report certain activities if the school and the lender have an “educational loan arrangement,” defined as an arrangement or agreement under which the lender provides education loans to students (or parents of students) at the school.
The bill is noteworthy in that its scope encompasses private education loan activities as well as FFELP loans.

Two easy ways for students to reconsolidate their loans

1) Question: I read that you can reconsolidate student loans. Is that true? In fact, I was under impression that student could not do this.
Sam Prentow, via e-mail

A: Keep in mind that you can reconsolidate under two circumstances. 1st is if you go back to school and take out a new loan. Once you've borrowed anew, you can then consolidate the fresh loan with the original consolidated loan.

2nd, is if you have a loan that has been left out of a consolidation package. Here again, you can blend that left-out loan with the consolidated loans to make a new loan.

The interest rate is determined by the weighted average of the underlying loans (in this case one consolidation loan and the other single loan), then adjusted upward to the nearest one-eighth of a percent. But, hey, it never hurts to ask. Quiz your original lender first.

2) Question: Say, I want to refinance my home loan to pay off our debts, but have not found a lender that will refinance at 100 percent. I filed for bankruptcy four years ago and have tried to keep my credit good. I'm now disputing items on my credit report. I have one late payment on a credit card, which was not my fault. My credit score is 568. A few months ago, it was 622. Can anyone help us?


A: You may continue to find it difficult to secure 100 percent refinancing of your home.
We suggest that you focus on repairing your credit score.

The 1st step would be to call your creditors to negotiate lower interest rates. If you've been a loyal customer, creditors will sometimes trim rates by 1 to 3 percent.

If that doesn't work, seek aid from a credit-counseling agency. Look for one that offers genuine educational assistance and budget planning to help you return to financial stability.

In the meantime, Viale suggests that you look a little more closely at your credit report. The fact that your credit score fell 54 points in a span of a few months is a matter of concern. There may be additional mistakes that would warrant a second look.

Credit reconsolidation 2007

Question: Can I reconsolidate my student loan that went into collections, along with a credit card that is about to be maxed at the same time? And will it improve my credit? Help me with reconsolidation of student loans!

Answer:
First of all, you are not alone. With $13 Trillion out there of debt, we're just about all depressed with bills. The challenge is to take charge of the situation and come up with a solid game-plan.

The first goal will be to budget. Start out with the attached Personal Finance and Budget Guide (which I have attached for you for free). It has some excellent tips on how to manage your money and how to get out of the cycle of debt and into a virtuous cycle of wealth.

If you want to handle your debts on your own, and have the available cash flow to meet your payments, you may consider student loan consolidation. Unfortunately, with delinquencies and student loans in collections, you will most likely not be a viable candidate for traditional student loan consolidation, which is a federally backed program to lower rates and payments.

It is imperative, however, to understand your personal needs and then tailor a solution to what best fits your financial game-plan. There are many forms of traditional debt relief, including: i) debt consolidation loans, ii) credit counseling, iii) debt negotiation, and iv) bankruptcy.

Be aware that forms of debt consolidation are not the same. You need to consider your specific situation, including if you own or rent your home, your monthly debt to income ratio, and your credit rating. A program like a debt consolidation loan may lower your monthly payment, get you a lower rate than most credit cards, and the interest is tax deductible.

Alternatively, a program like negotiated debt settlement may lower your monthly payment, get you debt free fast, save half of what you owe, but it could negatively impact your credit rating.

Since your credit rating has already been negatively impacted, you may want to explore the lowest cost, shortest program, to get debt free without bankruptcy... which is debt settlement.

Source

OK, just for a change, I'm off to Singles dating service

Student loan reconsolidation 2007

Next issue: Be-bratz games | Be-bratz dolls

New Law Changes Student-Loan Terms

A new federal law makes several changes in federal student-loan programs. If you already have student loans or plan to take out federal student loans for the 2006-2007 academic year, you should review the following items that may affect the terms of your loans. Many of the changes took effect July 1, 2006.

Consolidation Loans
Loan consolidation permits federal student-loan borrowers to bundle multiple student loans into a single loan, and depending on the borrower’s total education debt, extend the period for paying back the loan.

* In-school consolidation. You no longer will be able to consolidate your student loans while you still are attending school at least half time. The new law eliminates a provision that had permitted you to request that your loans enter repayment early. You now will have to wait until you are in the grace period after you leave school (or drop below half-time enrollment) or in repayment on your loans before you may consolidate them.
* Spousal consolidation. Spouses no longer will be able to include their loans in a single consolidation loan.
* Reconsolidation. With a few exceptions, if you already have consolidated your loans, you may not obtain a subsequent consolidation loan. The exceptions are that you subsequently take out a loan eligible to include in a consolidation loan, that you decide to include additional eligible loans within 180 days after receiving your consolidation loan, or that you decide to add eligible loans that you did not include in the original consolidation loan. The new law adds another exception that permits borrowers with Federal Consolidation loans to obtain a Direct Consolidation loan for the purpose of obtaining income-contingent repayment, but only if the lender has requested assistance from the loans' guarantor to help the borrower avoid default.



Deferment – Military Service
Deferments permit borrowers who meet certain criteria — for example, unemployment, economic hardship or attending school — to temporarily postpone their student-loan payments. The new law adds a new category of borrowers who qualify for deferment. Effective July 1, 2006, if you’re serving in the military on active duty during a war or other military operation, or national emergency, or performing qualifying National Guard duty during a war or other military operation or national emergency, you may qualify to defer payments on loans that were disbursed on or after July 1, 2001.



Disbursement
Waivers from delayed and multiple disbursements. Typically, your loan dollars are paid out to your school in more than one installment. In addition, if you are a first-time borrower and a first-year student, federal regulations require that your first loan disbursement be delayed for 30 days after your classes begin. If your school has a low student-loan-default rate, however, the new law provides waivers from these disbursement requirements. This change was effective as of Feb. 8, 2006.

To study-abroad or foreign-school students. If you are studying abroad through a program of a U.S. postsecondary institution or studying at a foreign school, the lender or guarantor of your loan first must verify your enrollment (and the foreign school that you’re attending must specifically request disbursement directly to you) before your loan can be disbursed directly to you. In addition, foreign schools must comply with the multiple- and delayed-disbursements noted in the preceding paragraph, although they also are eligible for the waivers noted above.



Fees
Prior to July 1, 2006, Stafford- and PLUS-loan borrowers could be assessed upfront loan fees of up to 4 percent of the loan amount. The new law makes the following changes in those fees.

* Federal default fee. The law requires the collection of a 1-percent fee to defray the costs of loan defaults. Lenders and guarantors, however, may pay this fee on your behalf.
* Origination fees . Origination fees for Federal Stafford loans are being phased out. The maximum origination fee is reduced to 2 percent from 3 percent for Federal Stafford loans whose first disbursement is on or after July 1, 2006. The origination fee will be reduced in annual increments of 0.5-percentage points until it is eliminated by July 1, 2010. PLUS-loan origination fees are unchanged.



Interest Rates
Stafford loans. The new law made no change in a federal law that was enacted in 2002 and calls for a change from variable interest rates to a fixed rate of 6.8 percent for Stafford loans whose first disbursement is on or after July 1, 2006. Loans disbursed prior to that date will continue to carry variable interest rates that adjust annually on July 1, based on the rate of the 91-day Treasury bill.

PLUS loans. The new law increased the fixed interest rate on Federal PLUS loans whose first disbursement is on or after July 1, 2006, to 8.5 percent from 7.9 percent. PLUS loans disbursed prior to that date will continue to carry variable interest rates that adjust annually on July 1.



Loan Limits
Beginning next year, July 1, 2007, certain undergraduate and graduate students will be able to borrower more under the Federal Stafford-loan program.

* Undergraduate students. The maximum annual loan limit for a first-year undergraduate student will increase to $3,500 from $2,625; the annual loan limit for second-year undergraduates will increase to $4,500 from $3,500.
* Graduate and professional students. The unsubsidized loan limit will increase to $12,000 from $10,000.



PLUS Loans for Graduate and Professional Students
Previously available only to parents of dependent undergraduate students, PLUS loans also are available, beginning July 1, 2006, to graduate and professional students to help defray their costs of attendance. PLUS loans are federally sponsored loans that may permit you to borrow on more favorable terms than private, nonfederally sponsored loan programs offer.

The chief benefit of a PLUS loan is that you can borrow up to your total cost of attendance, less any other financial aid you receive. So, unlike Federal Stafford loans, there is no set loan limit. You must pass a credit check to take out a PLUS loan. PLUS loans are unsubsidized, so you are responsible for all of the interest that accumulates on the loan. Unlike Stafford loans, PLUS loans offer no grace period: PLUS loans enter repayment within 60 days after the loan is fully disbursed. PLUS-loan interest rates also are higher than rates for Stafford loans, but PLUS loans offer the same flexible repayment options and the ability to defer loan payments or request forbearance, if you qualify.



Rehabilitation of Defaulted Loans
If you’re in default on a federal student loan, you may qualify to rehabilitate your loan. Rehabilitation can be beneficial by removing the reporting of your default to national credit bureaus and restoring your account to repayment status. The new law makes it easier for you to qualify for a rehabilitation loan by permitting you to make nine voluntary, on-time payments within a 10-month period, rather than the previous requirement of 12 consecutive, voluntary, on-time monthly payments.



Teacher Loan Forgiveness
The new law extended provisions for expanded loan forgiveness available to certain teachers. Read more information about teacher loan forgiveness.



Wage Garnishment
If you are in default on federal student loans, your loans’ guarantor may order your employer to withhold a percentage of your pay to apply to your unpaid loan balance. The new law increased the percentage that may be withheld to 15 percent from the previous level of 10 percent.

questions about relationship with loan-consolidation company

OU alum group answers AG's questions about relationship with loan-consolidation company

-- Advertising: Travel videos | Halo 3 videos | WoW videos | LOTRO videos -- Ohio University's alumni organization is cooperating fully with a probe by Ohio Attorney General Marc Dann into the relationships of college alumni groups with companies that offer loan consolidation. "We're glad to cooperate and give him the information," said Ralph Amos, executive director of the OU Alumni Association. On May 8, Dann sent letters to alumni associations at Ohio's public and private colleges, including OU. The letters demanded information detailing any arrangements the groups have with lenders. Amos readily acknowledged that the OU Alumni Association has a three-year contract with the National Education Loan Network (Nelnet), based in Lincoln, Neb. Under the contract, he said, the lender pays around $39,000 a year to have the Alumni Association promote its debt-consolidation services to Bobcat alums, many of whom have student debt to pay off. "Our contracts with Nelnet are as straightforward as they can be," Amos said, with payments from the lender used to help fund the group's member services, and no individual group officers getting payoffs of any kind. "There's no personal gain for any individual" from the contract, Amos said. Dann's office seems to be suggesting, however, that any payoff by lenders to alumni associations to promote the lender's product should be scrutinized for possible impropriety. "Marketing arrangements between lenders and alumni associations threaten to undermine the integrity of the alumni groups and the trust of incoming students and graduates," Dann said May 9, when he announced the latest expansion of his probe. "If alumni associations are leveraging the brand and reputation of their respective universities in exchange for compensation or financial gain, then that is a cause for very serious concern." A pitch for Nelnet is included on the OU alumni group's Web site, which can be linked to directly from OU's front page. When a viewer clicks a link under "alumni services" titled "loan consolidation," he or she is taken to a brief, low-key promotion for Nelnet, which states that "As an industry leader, Nelnet has the experience and resources to help you better manage your student-loan debt." It also urges alums to research their loan consolidation options before making any commitments, and provides a link to an informational page offered by Nelnet, titled "Factors to Consider About your Student Loan Consolidation." After Dann began showing interest in the issue, according to the Columbus Dispatch, Ohio State University's alumni association recently posted an explanation on its Web site of the relationship it has with another loan-consolidation company, Student Trust. The statement acknowledges, among other points, that the OSU alumni group gets at least $35,000 a year from the lender for steering business its way. The OU Alumni Association has not to date posted anything similar on its Web site regarding its contract with Nelnet. A spokesman for the Ohio Attorney General's office said the agency would not comment on the ongoing investigation of alumni associations' connections with lenders. The letter Dann sent to the universities demands a long list of documents, including an organizational chart of the university financial aid office; a list of lenders included in the school's financial aid awards; copies of loan applications; marketing materials given to prospective students; criteria for a lender getting on or off the school's "preferred lender" list; records of any gift or compensation offers made by lenders to the school or individual employees; and records relating to any service by the school's financial aid employees as board members or consultants to affiliated lenders. Nelnet, the company that contracts with the OU Alumni Association, has been at the center of a probe by New York Attorney General Andrew Cuomo into alumni association ties to lenders. Earlier this month Cuomo sent 90 subpoenas to alumni groups of various colleges who have relationships with Nelnet, though according to Amos, OU was not one of them. As with the Ohio investigation, Cuomo wants to know whether the alumni associations got paid for pushing the lender's services, and if so, whether they let their alumni members know this. In a statement issued May 3, Nelnet promised to cooperate with Cuomo's investigation, but insisted all its relationships with alumni groups are squeaky clean, and similar to those that alumni organizations have with other kinds of businesses that provide services to their members. "We have been and remain proud of our affinity relationships with alumni associations," the statement declared. "These relationships provide valuable information and opportunities to alumni regarding student-loan consolidation, as well as generating income that helps alumni associations carry out their mission... We believe our agreements are appropriate and completely in accordance with the law." Amos said his group chose Nelnet as a loan-consolidation company to promote to its members because it seemed to be a solid company, big enough to provide services to a group the size of the OU Alumni Association. "Our main requirement is that they be strong enough to serve our alumni population. And Nelnet is large enough to handle the volume of our alumni population," he explained. "The customer service piece is essential." He added that while the loan-consolidation package Nelnet offers OU alums is "competitive," the alums don't get any kind of special deal for signing up through the alumni group. In its fourth year contracting with Nelnet, Amos said, about 1,500 alums have signed up for the company's loan-consolidation services, and most seem happy with the service provided. "Alumni feedback we get from the program has been solid," he said.

How To Choose a Federal Student Loan Consolidation Lender

In the past few years, many students and graduates took advantage of record-low interest rates and consolidated their federal student loans to lock in the historic low rates. If you missed out — don’t fret, here is a simple guide on how better narrow down your decision for a future consolidation.

Besides locking in lower rates, there are some other reasons why you may want to consolidate your loans. Check out FinAid’s list of pros & cons to consolidating student loans.

So when rate changes comes around and locking in lower interest rate becomes a no-brainer, who should you choose to consolidate your loans?

The easy answer: your current lender. You’ve chosen your current lender for a reason, there’s no reason to complicate things further by going with a different lender. However, the problem with the easy answer is, you may have chosen the wrong lender in the first place, or, get this—there may be better lenders out there.

FACT: The only differences between federal student loan consolidation lenders are: Lender Repayment Incentives and Lender Service. Don’t underestimate their importance!

If you currently have a federal student loan for yourself or your child, you’ve no doubt received many solicitation from different lenders to get you to consolidate your loans to them. Many of these will tout some type incentive programs. Common repayment incentives are along the lines of reduction off in interest rate, after a certain amount of timely repayment.

Example: After 36 months of consecutive [timely] payment on your 10 year loan, you receive a 1% discount from your loan.

This typical type of lender incentive sounds great enough, but the problem is, many borrowers fail to qualify for the incentive program. Many of these incentive offers require timely monthly payment, so if you miss a payment deadline before reaching the required payment term, you won’t receive the rate deduction bonus. The same applies if you miss a payment deadline after earning your bonus.

In comes a different type of incentive program: immediate interest rate deduction if you sign up for auto debit, with additional deduction after consecutive payment.

Example: You receive a 0.5% interest rate deduction if you sign up to have your monthly loan payments automatically withdrawn from your checking account. Plus, after 24 months of consecutive on-time payment, you receive an additional 1.25% deduction in your interest rate.

A much nicer incentive, right? The above example is from ELC, which unfortunately has a minimum of $20,000 for their 1.25% deduction. If you only have a $10,000 loan, you’re out of luck on the additional interest deduction. Thus, it’s important to compare the offers and figure out which programs you can actually qualify.

As mentioned above, the second difference amidst the sea of lenders are lender services. Even if the incentive program is the best in the world, if the lender has a spotty track record for customer service, you may be doing yourself a disservice by signing up. What happens if you wish to defer your payment? If you call to ask about that, or a general inquiry on your loan, will they respond in a timely matter? For those of us with a low loan amount, lender service may not be a big deal—but for those of us that are in it for the long haul, you’ll want approachable service.

Remember, you can only consolidate once. So if you choose the wrong lender to go with, you’ll be stuck with them until you pay off your student loan for that expensive private university.

Important questions to ask when you’re choosing your lender:

• What is the repayment incentive?
• Is there a waiting period for the incentive? Do I have to earn it?
• What happens if I miss a payment?
• What happens if I request a deferment?
• How many of the borrowers actually receive the incentive?
• Is the lender knowledgeable and experienced?
• What is the credibility? Does your school support or recommend the lender?
• How is the accessibility?
Are there online account access? A 24/7 customer service number? If you call them, will they give you information tailor to you, or will they give you some generic scripted response?
• How is their long-term commitment? Does the lender have a history of selling consolidated loan?
The worse part in owing money, is when your lender disappears and some other company buys out your loan; suddenly you owe money to someone else.

If you can’t figure out some of these answers with the information provided to you, ask the lenders. This is a great way to gauge their service. If a customer service rep is having a hard time, or trying very little to help you understand their program, it may be a good cue to stay away. If they’re being such a hassle when you’re trying to give them money, imagine when you already owe them the money!

More Resources to Check Out:

• Bank Sweeten Student-Loan Terms from the WSJ
• Student Loan Consolidation Info from FinAid.org
• Best Student Loan Consolidation Deals from Fatwallet Finance Forum. Great thread with a list of various different lenders, their incentive programs and some first-hand customer service experiences.

More re selling loans - losing borrower benefits inevitable?

If you consider student loan consolidation, you better be aware of these tricks.

I bet you've been getting tons of email junk about student loan consolidation.
Tell me, did they promise "reduced interest rates"? Yes? OK, but look for the fine print - I guess you’ll find terms that allow the lenders to change - or even take away! - these benefits.

I compiled a list of common tricks loan lenders use to make sure you don’t earn their benefits.

1) “On-time payments” - Many lenders offer discounts for making on-time payments. What they don’t tell you is that to keep the discount you have to continue making on-time payments until the loan is paid off – which could equal up to 30 years of on-time payments!

Most lenders give borrowers a “grace period” before they will consider a payment late (typically around 14 days). However, some lenders require payments to be made “by the due date as initially scheduled” in order to qualify for their benefits. This means if your payment is not received by them on your payment due date, you lose your benefits.

2) Managing Your Loans Online - Some lenders may require you to apply online in order to even be eligible to receive their benefits.

Some lenders also require you to receive all correspondence from them electronically to be eligible for their benefits. If they send you an application confirmation via email, and your email address is deemed undeliverable twice in 48 hours, then you may not get the loan benefits. Also, if you ever change you email address without notifying them and their correspondence bounces back to them you could lose your benefits.


3) Automatic Debit - Most lenders offer borrowers an additional interest rate reduction (typically 0.25%) for using auto-debit (ACH) to make their monthly payments. However, some lenders tie the ACH benefits and the other benefits together. You have to use ACH to get the benefits. If you lose ACH then you lose the benefits too.

Sometimes the opportunity to sign up for ACH is limited to 30 days from the signing of the application. If the borrower does not follow up with the lender to get ACH WHILE the application is processing, then they can be outside of the sign up window. ALL benefits lost before they get their first bill!

They are required to sign up to receive their bill via email. In addition every month they must reply to the email acknowledging receipt. If they don’t they lose ACH which causes them to lose their benefits.

Returned emails, NSF in their checking account and failure to notify of a change of address are additional ways to lose ACH, which causes loss of other benefits.

4) Repayment Plans - There are four “repayment plans” that lenders can offer: Standard, Graduated, Extended and Income-sensitive. With a Standard repayment plan borrowers will pay a fixed monthly amount (principal + interest) for the life of the loan. With the other three options, borrowers can start with lower monthly payments by paying interest only for the first two years (Graduated), three years (Extended) etc.

Some lenders require borrowers to be on a Standard repayment plan to qualify for their benefits.

5) Minimum Balances - Some lenders require minimum balances to qualify for benefits (usually $20,000 or more is required).

6) Forbearance/Deferment – These are ways for borrowers to stop making payments for periods of time, such as times of unemployment or if they go back to school.

With some lenders, borrowers can lose their benefits if the apply for deferment or forbearance.

7) Proof of Graduation - Some lenders require borrowers to provide proof of graduation in order to keep benefits.

8) Early Pay Off - Borrowers can sometimes lose their benefits if they pay their loans off early.

Selling loans = loosing borrower benefits?

Do you wonder if selling loans will lead to losing borrower benefits?
Choosing a lender can be one of the most important decisions you’ll make when borrowing money to pay for school. Be sure to take into account the savings offered by each lender such as origination fee discounts, interest rate reductions, or rebates. To help you make the best possible choice, consider the following information.

Under federal guidelines, lenders are allowed by law to charge an origination fee of up to 3% of your gross loan amount. Some lenders offer you discounts on this fee, while others may offer special discounts or rebates for making a number of consecutive on-time payments. For more information, see the Loan Cost Comparisons of KHEAA’s Major Lenders. Loan costs change periodically, so you should contact the lender for the most current information.

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Loan Cost Comparisons of KHEAA’s Major Kentucky Lenders
o Federal Stafford Loans
o Parent PLUS Loans
o Graduate/Professional PLUS Loans

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Loan Cost Comparisons of KHEAA’s Major Alabama Lenders
o Federal Stafford Loans
o Parent PLUS Loans
o Graduate/Professional PLUS Loans

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Loan Cost Comparison for Alternative Loans

The Kentucky loan cost comparison chart is provided in the popular Adobe Acrobat™ format. If you need the free Adobe Acrobat Reader™ software, you can download it by clicking on the Get Acrobat Reader™ button below.


Following are important questions to ask about lenders you are considering for your student loan.

Does the lender provide origination fee discounts, interest rate reductions, forgiveness of principal, or other incentives?

The bottom line is that discounts and other incentives can save you money! Lenders are not allowed to provide an origination fee discount prior to disbursement for PLUS loans.

Does the lender sell its student loans?

Many lenders sell their loans to other holders or secondary markets after the loans have been disbursed. When your loan changes ownership, the servicer may also change multiple times during the life of your loan. It is important that you stay in touch with your loan holder and/or servicer to ensure you fulfill your repayment obligations.

Does the lender use a servicer?

Many lenders use loan servicing agencies, or servicers, to handle the day-to-day work on their student loans. Servicers handle not only borrowers’ questions about their loans, but also repayment and deferment issues. Since the borrower/servicer relationship is often long-term, it is important for you, the borrower, to know who you are dealing with. Some lenders service their loans locally and some use out-of-state or national servicers.

Does the lender require a credit check?

Federal regulations require that credit checks be performed for all Federal PLUS Loan borrowers. However, some lenders may require credit checks for Stafford Loan borrowers as well.

Does the lender require a "customer relationship"?

Some lending institutions, such as credit unions, require that you are a member of their institution before they will accept your application.

Does the lender offer Federal Consolidation Loans?

You are required to make payments to each lender that makes a student loan for you. If, throughout the course of your education, you borrow from more than one lender, you may be eligible to consolidate those various loans into one loan. By doing so, you will only have one payment to make to one lender each month. You may also reduce the amount of your monthly payments once your Consolidation Loan is approved. However, you may lose certain other benefits, such as deferment options, so consider these carefully before consolidating your loans.

As an alternative to a Consolidation Loan, some lenders are willing to buy or sell your loans from/to other lenders. This allows you to retain the same benefits on your loans and make one monthly payment. You should contact your lenders to determine if this is an option for you.

What is a preferred lender list?

Many colleges provide student borrowers a list of lenders to consider. These lists are developed by the colleges under a wide variety of objectives which may include some of the following: (1) prior service provided to borrowers at that school, (2) discounts or other borrower savings provided at loan origination time, (3) savings provided to borrowers during repayment of the loan, (4) proximity of banks/lenders in the area where the college is located, (5) electronic processes offered to student borrowers and the college financial aid office necessary for efficient and timely delivery of funds, and (6) cancellation provisions for borrowers who enter certain professions after graduation. These lists are suggestions and are provided as a convenience to the borrower for consideration. As a borrower, the ultimate decision on which lender to use rests with you--compare the origination fees, discounts, and other savings each lender offers and choose the one that is best for you.

Once I’ve compared lenders and the benefits they offer, how can I make sure I get the benefits I’m looking for?

Different lenders may have several different Lender ID Codes, and each code may have different benefits associated with it. Be sure to use the correct Lender ID Code when you fill out your loan application.

Life After College

How many times have you said to your friends, “I can’t wait to be able to afford all those things we can’t afford now”? The prospect of earning a “real” salary, buying a new car, and getting a new wardrobe is really exciting, but don’t forget that this new lifestyle is also going to include having to pay bills at the end of each month.

Once again, having a plan in place will help you deal with the new financial challenges you’re about to face. This time the plan is called a budget. It’s not easy to anticipate all the expenses your salary will have to cover, so putting the data on paper will help you see where your money goes. Here are some things to consider.

Credit Card Debt
Banks make getting credit cards easy. Credit cards make spending easy. But sometimes easy is not so good. Credit card companies market extensively to recent graduates because there is a great deal of money to be made in that market: Interest rates vary from card to card and may range anywhere from 10 to 20 percent yearly. It’s very easy for a new graduate to get caught in the credit card trap.

Before you accept or use your new credit card, make sure you carefully read and understand the fine print and can pay at least the monthly minimum balance. If at all possible, pay off your credit card debt as soon as possible. If you have a savings account or have received money as a graduation gift, you should consider paying off your credit card bills before you take that expensive trip you’ve been dreaming about. “Pay now, buy later” is a good rule of thumb at a time when your income is limited.

Repaying Student Loans
Most students are troubled by the prospect of repaying their student loans. They’re not sure of the who, what, when, and where of the system. Here are a few things to remember:

* All students who took out loans and signed promissory notes during their undergraduate study now have a legal obligation to repay that amount and any interest associated with that loan.
* Know the addresses and phone numbers of all your lending agencies.
* Know all of the loan repayment options that are available to you, such as loan consolidation, standard repayment, and graduated repayment. Choose the option that will best fall within the limits of your budget.
* A deferment is postponing the repayment of a student loan. As a borrower, you have a legal right to exercise this option if circumstances merit.
* Forbearance options are also available, where the lender agrees to extend your payment schedule to avoid a default situation. Contact your lender immediately if you are having problems with your repayment schedule. On certain occasions, lenders may be willing to temporarily change your repayment schedule.

A word of caution is needed here about credit ratings. Anytime you are late with a payment, whether it be a credit card payment, car loan payment, telephone bill, or rent, it most likely will be reported to a credit bureau. This bureau will be contacted when you try to get a mortgage or want to borrow money to make any kind of sizeable purchase. It’s very important to remember that your buying and spending habits now may have major repercussions in the future.

Buying a Car
Making any major purchase requires lots of research before the transaction is completed. The process of buying a car is time consuming and takes lots of patience.

The first step is to decide whether you want a new or used car. More and more people are buying used cars, since the initial cost of buying a used car is usually a good deal lower than the purchase of a new car.

Then, you should spend time prioritizing the extras you want. Can you really afford a sunroof or that stereo system that has spectacular sound? It’s true that such items will increase the resale value of your car, but they will also increase the purchase price.

Know the cost of insurance for the car before you buy a new car. Investigate several insurance companies and learn what services they provide, how much deductible you will have to pay, etcetera.

When it’s time to pick up your car, you will have to sign all loan agreements, have a certified check for your down payment, and have a check to cover the costs for the registration of your car. You will need some sort of verification from your insurance company to indicate that the car is insured.

Ultimately, you should consider all options before committing to costly payments each month, and remember, if you’ve made the wrong choice, you can always go to Plan B or even Plan C if necessary.

Building a Professional Wardrobe
Now that you’ve got that job, what kind of clothes will you need and, just as important, what impact will buying these clothes have on your budget?

Dress codes vary greatly, depending on the industry and management team at the helm of a business. If you’re not sure you’re dressing right on the job, look around you and notice the attire of the managers and others who are the decision makers. Meanwhile, wear your more conservative clothes until you get a sense of what’s appropriate.

But how do you manage to buy a wardrobe for your new work situation, while you’re living on a very tight budget? Once again, you’ll need to devise a plan.

You really don’t need to buy a great many clothes. Start with the basics and add new components and accessories from there. The mix and match rule will help you recycle the same outfits until you can afford to augment your wardrobe.

Also, check out discount stores and resale shops for apparel, at a fraction of the retail price. Think of buying clothes that are “classic” and not in a style that will be out of fashion next year. An expensive suit that you can wear for five or six years is a better investment than a poorly made bargain that looks shabby after you’ve worn it for a year or two.

If you put some time and effort into planning your wardrobe, you can look like a successful, big-time career person, by only using a small-time budget.

From: Reality 101: The Ultimate Guide to Life After College, by Fran Katzanek

i really enjoyed this book. this is an excerpt from this great novel. i recommend anyone reading this who is stepping out of college and fresh into the working world. considering i am one of those people, i had to pick this up at Barnes & Noble. Glad I did! This book is great. Besides, its nice to have a "smart read" once and awhile.

Reconsolidation Loans

John Carlton writes today in his blog:

...Here’s what I’m talking about: The Web has “officially” become the Number One source for advertising for many of the culture’s biggest advertisers — a year earlier than predicted. Gazillions of bucks that used to be channeled through “traditional” media (newspapers, magazines, direct mail, television, radio, etc) have now been measurably diverted online.

For the people who keep track of this sort of info, this news is astonishing and troubling (if not unexpected).

The entire foundation of our capitalistic economy is shifting, and most of the former movers and shakers simply are not prepared for the change.

The obvious signs of upheaval are the disappearance of entire market segments. Like most of the music-selling stores (Tower, Wherehouse, your favorite former local hipster CD haunt)...

Read more at his blog.

Comprehensive Overview of Student Loan issues

These days, getting angry seems to be part and parcel of earning a degree. And I'm not talking about student protests. I'm talking about student loans.

Higher education has always been expensive and applying for financial aid was never easy. The difference now is that student loan debtors, like other consumers, are more vocal when they think they're being treated unfairly. And student loan companies don't like what they're hearing.

The latest controversy revolves around Loan to Learn, whose parent company EduCap Inc., based in Herndon, pioneered the private student loan business.

A quick and dirty primer: Students have several pools of money to tap into to pay for school: their family, grants and scholarships, federal loans and private loans.

Student borrowers are limited as to the amount of federal loans they can take out. And family and grant money are, for most people, a finite resource. That's where private loans come in.

Reconsolidation loan gimmicks you shall be aware of

If you are thinking about reconsolidating your loan, getting a student loan consolidation or whatver else kind of loan (like, wedding etc.) 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!

Jonh Chow's calculus class

You guys ever tried "make money online" query on Google? OK - I was in a mood for googling what "make momey online" can bring me and here you are - take a look at this make money online.jpg:



Now you see what? Title of the captured page reads "make money online" - that's one.
Address field of the captured page reads "make money online" - that's two.
My beloved Web 2.0 panel search field (at the captured page) reads "make money online" - that's three.
Google search field of the captured page reads "make money online" - that's four.
Web results bar of the captured page reads "make money online" - that's five.
Bolded phrase of the 1st search result block reads "make money online" - that's six.
And - ta-dam! - 2nd result (out of OMG 140 Mln!!! for the term "make money online") sports three (3) more hits for the phrase you've already seen somewhere today - right, that's "make money online".

And that "make money online" belongs to John Chow, it's his blog. You wanna know who the guy is? Come check the blog - it's pretty intriguing how he managed to achieve 2nd out of 140 Mln position ranking on the phrase which - I bet - you've seen in my post 10 (or was in 11? Darn it...) times by now - "make money online".

Cheers John - keep up the good work.