COLLEGE STUDENT LOANS What are they? Where are they? What do I have to do?
That the term college student loans refers to money you borrow for your college education is probably not just-in-time-news to you. You still might want to take a look at a complete glossary of financial aid terms
College Student Loans
New Student Loan Guidelines...What we know so far. What you need to know.
Question 1. What does the overhaul do?It cuts banks out of the student loan business - now government backed. Previously, money from the loans has come directly from the government or from private financial institutions. the banks would collect money in federal subsidies to protect them again default by borrowers.
All colleges and universities must switch to the new program by July 1, 2010.
Private lenders can still make student loans that are not backed by the government, and they will continue to have contracts to service some of the student loans, but loans will cease being the kind of money making industry for the banks it has been before the passage of this bill.
What are expected results of the new program?Results will include more money to Community colleges, and more money to institutions with predominantly minority populations.
Institutions that serve mostly minority students will receive an extra $2.55 billion in funding over the next decade.
Students with low incomes, minorities, or those who meet certain other eligibility requirements, who take out their loans after July 1, 2014, will have their payments limited to 10% of their discretionary income after graduation.
Students who make their payments on time will have their balance forgiven after 20 years.
People who enter public service jobs - police, teachers, nurses, and the military - will have their loans forgiven after ten years.
Do we, as borrowers, need to do anything to comply?No, student loans are handled by the financial aid department of each college, that will not change.
What about the Pell Grant Program?Community colleges with primarily minority students will receive more funding.
More than $40 billion form the Pell Program will go to students from low and moderate income families.
Will this bring down college costs?No. Who loses?
Banks and other lending institutions. Sallie Mae, the biggest student lender will be firing thousands of employees in the student loan program. Sallie Mae will still have contracts to service the loans.
Cost to the taxpayers, (53% of the population) is yet to be determined in any realistic way.
Student loans can be a good thing, and a wise investment, however if possible, one should not rely solely on them to finance a college education.They have to be repaid, with interest, and can mount up if not judiciously used.
Are there alternatives to borrowing money for college?
There are. They take time, effort and motivation. In the end they are worth it because you finish school owing less (or no) money.
Alternative Sources for College Funding
If you have read my
Earn-Money-in-College Site
you already know that I am not in favor of you shouldering a heavy work schedule while trying to get a college education, if you can avoid it.
With the government takeover of the Student Loan Programs, everything has changed and it will be awhile before we know how this will all play out. For now, consider earning a little money with some sort of job that does not become your primary focus, in either time or emotion. Look for free money.
If you take the time to search for scholarships, both those that require essays and those that don't, you will end up with some free money.
You need to treat it like a project, but it's a game of numbers, and you can prevail.
Watch out for the Scholarship Scammers!
Innovative jobs for college, some from businesses you start in your dorm room
Save money painlessly, with our (if I do say so myself), clever ideas
Stay tuned for the latest.
Loans for college are either subsidized or unsubsidized. Subsidized loans are granted to those who demonstrate financial need: they have low interest rates, or an interest exemption while the student is enrolled in college. An unsubsidized loan does not have these benefits. In addition there are Plus Loans that are available to parents.
The Student Loan Program takeover by the government, will not affect your loan arrangements for college this fall. It simply means that the government will be handling subsidized loans. You can still obtain loans from those banks willing to make them.
The strongest applicants to a college often receive the most desirable need-based financial aid packages-ones with more scholarships and grants, and fewer loans. This is one reason merit based scholarships can sometimes help you find a larger number of need-based grant money.
First Thing To Do:
- To apply for financial aid, each college will ask you to complete one or more forms. Details are available at each school’s website. By filling out these pesky forms, Free Application for Student Aid (FAFSA), and the CSS Profile, you will have applied for about 90% of the available federal funds you may need.
- Don’t wait to fill out those forms after you have done your taxes for the year. For instance, for many schools the due date for the FAFSA form (see glossary) is February 1-March 1, too early for most filers. Estimate the numbers based on the previous year’s return and adjust them later if necessary.
- Remember to pay attention to deadlines for financial aid forms and applications.
- Money should be saved in the parent’s name, not the student’s name. A visit to an accountant is a good idea; he or she can give you advice based on your family’s financial picture.
- Your financial aid package may include work-study. If this is so, your first stop on campus should be the student employment office. The better jobs go fast. Check out any work study very carefully. Sometimes the pay is low, and you may be able to find a better job on your own.
- There are other things a student can do to lower college costs. These include not purchasing a textbook until you are sure the professor plans to have you use it! Wait a couple of weeks to see if two trips to the library during the semester/quarter will be all the access you need to the text. They are very expensive.
- Another idea is to check your college invoice to be sure it includes all the federal aid you were promised. Learn to stick to a budget, and open a free checking account that you keep track of. Wells Fargo, for instance, provides free checking for the children of customers. Learn to manage any credit cards you have--sticking to just one card is better--and keeps your debt down. Don’t respond to every application that comes your way.
Private and Government sites for financial aid information and loans
Learn more, go to Financial Aid Main Page
Student Loan Consolidation Programs.
Another important part of being informed about college student loans is student loan consolidation, and federal student loan consolidation. This Google search result gives you plenty of ways to learn about this topic so you can manage any loans you receive in a way that is beneficial to you, and that may save you money.
Student Aid - U.S. Department of Education
National Student Loan Data System-Student Access System -Great Site!
Another great resource operated by the U.S. Department of Education. It is their central database for student loans and contains information about all government based loans and a glossary of loan terms.
On this site, students can keep track of their own loans, and update contact information. In addition, they can learn about payment options.
Site requires free registration.
National Student Loan Data System
Government Grants
National Association of Student Financial Aid
United Negro College Fund
Minority Students, Main Page
Minorities and College Financing
LEAP - Leveraging Educational Assistance Partnership (State Program
The LEAP program was formerly known as the State Student Incentive Grant (SSIG).
Educational Financing
It is a state run financial aid program, which allows states to receive matching funds for state residents from the U.S. Department of Education.
You can contact the program (for your state) here:
Policy Development DivisionPolicy Training and Analysis ServiceOffice of Student Financial AssistanceDepartment of Education, Grants Division400 Maryland Avenue, SWWashington, DC 20202-5447Phone: 202-708-8242
I know, no Web site. Seems impossible, doesn't it?
As soon as I find one, I'll put it up. So far, no luck.
*NOTE:
The above list represents only a fraction of the resources available for college funding and information about financial aid.
There are too many to list, and any search on the web will bring back thousands of hits. Our pages give you numerous resources, and help you learn about the process of financial aid, and about countless resources and databases for grants, loans, scholarships and other sources of funds for college.
We add to our pages all the time, and try to have each entry bring you useful information.
It is not possible to prevent repetition, but we continually update this site with information and resources we hope will be of value to you.
More Targeted Financial Aid Web Sites
Everything-about-college Scholarship Home Page
Get Acquainted with Financial Aid Terms
To learn more about college student loans, go to Financial Aid Main Page
Free textbooks-Save thousands while in college
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