Why You Can’t Get a Loan

It seems the frustration level is rising. Times are tough, people are losing their jobs, and schools are raising tuition costs. Lenders are changing their portfolios, trying to stay afloat. All of this makes it very hard for a student to get a loan they once got in the past. Gone are easy to receive International school loans, gone are the private consolidation loans, gone are the loans that pop up in your mailbox. You can still obtain a loan, but it will most likely be different from any private loan you have had in the past. It may also require you to have a cosigner, even if your credit score is perfect.

This frustration is real, and it’s resulting in some students dropping out of school, even if its just for a semester while they get all their ducks in a row. So the question is what to do, how to prepare accordingly. If you relied on private loans in the past to pay your tuition, check with your school to make sure they will accept private “school certified” loans…as this seems to be the most prevalent loan in the market right now. If they do not handle those loans, then I would suggest looking into a cheaper state school, which you can afford with just Federal loans.

The biggest mistake I made, and others make, is going to a school for the name….and unless you are going to a Harvard or Yale, you very well may regret it in the future. Assuming large amounts of debt, and not being able to pay it will affect you for the rest of your life.

Articulation Agreement

You may have heard it’s a good idea to start your college career at a Community college to save money before transferring over to a more expensive four-year school. In fact, I’ve recommended it, but the other side of that coin is needing to be aware of the articulation agreement your Community college has with the four-year college you are interested in.

An articulation agreement simply states which courses will transfer to your four-year college. I don’t need to underscore the importance of this factoid. No one wants to be wasting their time or money on a class that won’t transfer. You can discuss any concerns you have about transfer courses and credits with the college registrar at the college you are transferring to.

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FAP892: Financial aid trends, jobcast, free stuff, fully loaded show

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Happy Holidays

I hope you have a wonderful holiday season and that you spend it safe, happy, and healthy in the company of family and friends.

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NJ Class Loans.

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+ Free scholarship search secrets eBook at StudentScholarshipSearch.com/ebook
+ Online degrees programs and directories at Edvisors.com
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Daily Aid 53: How to shop around for student loans

Daily Aid 53: How to shop around for student loans” rel=”external”>student loans

Student financial aid News

From the Star Ledger:

The state agency overseeing more than billion in college financial aid will no longer allow students to defer payments until after graduation — a move that could affect thousands of students at a time when it is getting increasingly difficult to secure loans elsewhere.

Before late last month, NJ Class borrowers could defer payments on the loan principle and interest until graduation. In typical years, about 40 percent to 45 percent of the borrowers chose this option, but this year it grew to 50 percent — the maximum allowable under terms of the bond that funds the program. The average loan last year was ,900.

Commentary

This is a major problem for anyone with a NJ private student loan looking to defer principal and interest while in school. If you’ve taken the average balance of ,900, you will now need to come up with 8/month while in school. Unfortunately, this is not something the state of New Jersey can alter at will - when the state got funding from bond sales, the percentage of students who could defer was baked into the agreement and cannot be changed without renegotiating the bond agreement or floating another bond. In this economy, a new bond to refinance an existing bond seems highly unlikely at best.

If you’re in this situation and your payments are suddenly due, you can refinance a private student loan with another one; be aware that the terms of the NJ Class Loan are fairly good - 7.92% for deferred payments, 20 year loan term, 2% fee - and a new private student loan might not necessarily have better terms. Read on later for a detailed tutorial on how to compare loans.

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Let’s talk today about shopping around for a student loan.

Full obvious disclosure: I work for the Student Loan Network. We offer student loans. (which sounds obvious, but I once had a sales guy cold call me and honestly say, “So, you work at the Student Loan Network, what do you guys do?” What do you think we do? Make cupcakes?) While I’ll do my best to be objective, bear in mind that any advice I give should be taken with a grain of salt. Do your homework.

There are two primary considerations for choosing a loan:

1. What is the overall cost of the loan?

2. What is the monthly payment on the loan?

The first is important because the highest cost loan may appear to be the better deal thanks to discounted incentives up front that get tacked on at the end of the loan, or conversely, a higher monthly payment may seem like a better deal but you’ll pay less overall in interest.

The second is important because cash flow is really, really important to students, especially after graduation. Cash flow is more important than assets for those just getting started out because if you run out of cash, nothing else matters. Personal opinion - I think it’s okay in the early years out of college to sacrifice more interest paid in the longer term for improved cash flow in the first couple of years while you get on your feet financially and start building a career, which is why I’ve suggested student loan consolidation to so many students.

So here’s how to shop around. Make a list of all the loans you’re considering, and list them by:

- Rate, in the form of APR.
- Fees, if any
- Loan term, in years

Take a look at this Google document I put together to compare loans.

Let’s review the spreadsheet. We have the starting balance and rate, and on the surface, the SLN loan appears to be more expensive, as its interest rate (in this case I’m using Prime + 4.75%, the rate for borrowers with the worst possible credit that still qualify for the loan) is 0.08% higher. The fees are as listed on the web sites, as are the loan terms.

The next column over is starting balance - typically with student loans, any fee is added to the balance of the loan since the student probably isn’t ready to pay the fee out of pocket. Thus, with a 2% fee, suddenly the NJ loan is already a little more expensive. Next, we break out the loan term into months, and then use the PMT formula for estimating the monthly payment. That formula is built into most spreadsheets. Details about it can be read here.

We see that the Student Loan Network private student loan has a marginally higher monthly payment. The next and final column is interest paid on the life of the loan (formula here), and it’s here that the longer loan term (20 years vs. 15) really shows up - the longer term loan will cost you an additional ,264 more over time.

Which is the better loan? Again, it all depends on need. Can you swing the extra a month for the Student Loan Network private student loan? If so, then you’ll save ,264 over the loan term. Are you really tight for cash? The NJ Class loan will give you that extra up front, but take it back in interest later.

I hope this gives you a head start on comparing loans. Ignore all the flashy marketing materials for loans and focus on what matters - the impact on your wallet. There are plenty more ways to really dig into the formulae if you’re interested, so if you’re a finance major screaming at your computer right now about capitalization periods, rest assured that I know they exist, but that’s for another time.

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+ financial aid Podcast Show Notes at FinancialAidPodcast.com.
+ Free scholarship search secrets eBook at StudentScholarshipSearch.com/ebook
+ Online degrees programs and directories at Edvisors.com
+ Free college scholarships contests!
+ Open an FDIC-insured savings account today!
+ Stafford federal student loans at StaffordLoan.com
+ Parent PLUS loans at ParentPLUSLoan.com
+ Graduate student loans at GradLoans.com
+ Private student loans available at any time - visit PrivateStudentLoans.com
+ FAFSA form tutorials and free help at FAFSAonline.com
+ The financial aid Podcast is a publication of the Student Loan Network.

I want to hear from you! Send me your comments, questions, and feedback using this handy contact form!

Red Cross 9/11 Recovery Grants Still Available

The American Red Cross created the September 11 Recovery Program (SRP) to provide long-term services to people directly affected by the terrorist attacks on September 11, 2001. The SRP recovery grantsearch.com/grants/GGS_0912_IM” target=”_blank”>grants began in December 2003 and will end in December this year. Here are the available recovery grants:

1. Access to recovery services

These one-year grants support organizations and programs focusing on hard-to-reach survivors of the 9/11 attacks. They mainly serve immigrant and low-income families whose culture and/or language has separated them from mainstream social help services. At present, 22 related organizations are receiving recovery grants.

2. Health diagnosis and treatment

These two-year grants pay for the diagnosis and treatment of rescue, recovery and cleanup workers of Ground Zero, who are experiencing physical and respiratory problems related to the 9/11 attacks. 7 organizations are receiving grants from this funding.

3. Lower Manhattan community recovery

There are 8 organizations receiving these one-year grants, which are helping lower Manhattan neighborhoods recover from the World Trade Center collapse. They keep residents informed of various development activities and strengthening procedures which allow them to provide their input on the improvisation and stability of their neighborhoods.

4. Mental health and wellness

These grants, currently supporting 51 organizations, provide a wide range of programs regarding mental health and wellness to survivors of the 9/11 attacks, as well as special training for the professionals who help them.

5. Youth recovery and resilience

These grants help children and adolescents recover from the trauma of the 9/11 attacks, and build resilience in specialized programs where they live, play and learn. Some of the programs use mental health approaches to those in need, while others use a variety of proven techniques to support emotional development such as art, drama and music therapy. There are 41 organizations benefiting from these grants.

6. Strategic opportunities

There are grants which do not fall under the designated areas of funding, but still respond directly to the evolving needs of 9/11 survivors. There are 7 organizations receiving these grants.

As of June 2006, 118 non-profit partners awarded .9 million in grantsearch.com/grants/GGS_0911_IM” target=”_blank”>grants. To know how these grants can help you, visit your local Red Cross chapter or go to www.redcross.org.

 

Learn how you can save hundreds of dollars in bills and expenses through government grants! Be one of our subscribers now to receive updates, tips, and crucial information on how you can be the first to benefit from thousands of federal programs available to you. 

 

To Do List: - Suggested Links:

1. Get Printable Coupons:
   grantsearch.com/Education/GGS_0811_PP” target=”_blank”> grantsearch.com/Online-Coupons/GGS_0912_IM” target=”_blank”>106 offers for you to print!
2. Consolidate Your Bills:
   grantsearch.com/Student-Loan-Consolidation/GGS_0811_PP” target=”_blank”>student loans - grantsearch.com/debt-Consolidation/GGS_0811_PP” target=”_blank”>Credit Card debts - grantsearch.com/Quick-Mortgage/GGS_0811_PP” target=”_blank”>Refinance Home
3. FREE Healthy Samples:
   grantsearch.com/Healthy-Free-Samples/GGS_0912_IM” target=”_blank”>Valuable savings and offers from America’s Most Trusted Brands.
4. Be a real-life hero:
   Start or advance your grantsearch.com/Public-Service-Careers/GGS_0912_IM” target=”_blank”>public service career.grantsearch.com/Government-Auctions/GGS_0811_PP” target=”_blank”>
   

 

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Offbeat Government Grants for the Taking

While government grants such as the WIC Program or the grantsearch.com/Scholarship/GGS_0820_PP” target=”_blank”>Pell Grant are very popular, other initiatives like the Farmers’ Market Nutrition Program don’t receive as much publicity or as many applicants. But who would have thought that some public and private grants actually exist to provide free money for musicians, or that seniors can actually get discounted hunting and fishing licenses? Read on to see what the deal is for these unusual grants — you never know if you actually qualify for one of them.

Fishing and Hunting Licenses for Less: Is grandpa raring to head off for the great outdoors to catch some good ol’ trout or take home a few ducks? Well, here’s some good news for you! Nearly all senior citizens qualify for fishing and hunting licenses at specially-lowered rates, and in some states like Alaska, Alabama, Kansas, and Georgia, seniors who are over 65 won’t even need a license to hunt or fish. Just go to any outlet that sells these licenses, and you’ll get the information you need to qualify for the program.

Bagby Foundation for the Musical Arts: When classical musicians or opera singers in New York fall into hard times, the Bagby Foundation comes to the rescue and pitches them some relief. Qualified individuals can grantsearch.com/Grant-A-Day/GGS_0820_PP” target=”_blank”>receive monetary assistance, which can rise to the tune of around 00. The Bagby Foundation even helps up-and-coming students who need training and money to break through the classical music scene in New York.

Free Audiobooks, Magazines and a Whole Lot More: Grandma’s failing eyesight shouldn’t stop her from enjoying her romances! The National Library Service (NLS) keeps a literal storehouse of grantsearch.com/Quick-Books/GGS_0820_PP” target=”_blank”>free audiobooks, magazines, or materials in Braille to help those with permanent or temporary vision loss. Worried about how cassette tape recorders are getting scarce? The NLS will happily provide the necessary playback equipment to help make it easier for qualified individuals. Just contact your nearest public library to find out what their available materials are, and how you can claim them.

Learn how you can save hundreds of dollars in bills and expenses through government grants! Be one of our subscribers now to receive updates, tips, and crucial information on how you can be the first to benefit from thousands of federal programs available to you.

 

To Do List: - Suggested Links:

1. Increase Your Income:
   grantsearch.com/Education/GGS_0820_PP” target=”_blank”> Get an online degree with financial aid from the government.
2. Consolidate Your Bills:
   grantsearch.com/Student-Loan-Consolidation/GGS_0820_PP” target=”_blank”>student loans - grantsearch.com/debt-Consolidation/GGS_0820_PP” target=”_blank”>Credit Card debts - grantsearch.com/Quick-Mortgage/GGS_0820_PP” target=”_blank”>Refinance Home
3. Reward Yourself:
   grantsearch.com/Free-Computer/GGS_0820_PP” target=”_blank”>Get a new computer for free.
4. Get some cash you don’t have to pay back:
   grantsearch.com/grants/GGS_0820_PP” target=”_blank”> Government has money for almost any worthwhile need.
5. Bargain prices on government auctions
   grantsearch.com/Government-Auctions/GGS_0820_PP” target=”_blank”>Discounts on foreclosed property, liquidations, surplus items

 

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Four New Scholarship Announcements

Has your Winter Break started yet?  Hopefully you are done with finals and enjoying some well-deserved R&R.  If you’re not there yet, never fear — your time is just around the corner.

I am sure that the last thing you want to do this winter vacation is write *another* essay.  But brew some coffee, because that’s just what you’ll need to do if you want o earn some free money for college.  This week, I have four great scholarship opportunities for you with late December or early to mid January deadlines.

Each of the scholarships today requires an essay, although some are very short (just 50 words).  There are awards for budding ecologists, civil rights activists, and public servants.  If none of these strike your fancy, there is also a general competition for any student with a 2.5 GPA can enter.

To learn more about how to win scholarships for college, check out this article on college scholarship applications and this one on college scholarship essay writing tips.

#1. Apprentice Ecologist Initiative: 0
The Apprentice Ecologist Initiative (AEI) engages thousands of young people from around the world in cleaning up and preserving the environment.  One of the ways in which the AEI employers young volunteers is through its Apprentice Ecologist Scholarship.  Start by participating in one of three green initiatives: (1) Trash Cleanup, (2) Tree Planting or (3) An Eco-Initiative of Your Choosing. Then write an essay with accompanying photos of your experience.  The ten best essays will win a large, 100% organic cotton canvas tote bag.  The best essayist will win the grand prize — a 0 educational scholarships for students aged 13-21. Disabled and at-risk students are especially encouraged to apply.  The application deadline is December 31, 2008.

#2. HAMSA’s What Happens to a Dream Deferred? Essay Contest: Up to ,000
This international competition awards a total of ,000 in scholarship prizes each year to the winning essayists from the United and the Middle East.  For Americans, your 600-1,500 word essay should address one of three questions:

1) Why should Americans help civil rights reformers in the Middle East?

2) How can you as an individual support the struggle for civil rights in the Middle East?

3) What could the future of the Middle East look like if Americans partnered with reformers in that part of the world?

Essays based on US government policy and regional geo-politics will not be considered.  The judges are interested in your perspective on how grassroots efforts can change the landscape of civil rights in the Middle East, including issues such as freedom of expression, women’s rights, religious freedom and economic liberty. Failure to meet the guidelines will disqualify your essay. The application deadline is January 11, 2009.

#3. All-Ink.com Scholarship: Up to ,000
All-Ink.com is offering up to ,000 in scholarships to students enrolled in or planning to enroll in an accredited college or university for the 2009-2010 school year. Applicants must have a minimum 2.5 GPA and write two 50- to 200-world essays about the person who has had the greatest impact on your life and what you hope to achieve in your personal and professional life after completing graduation. You must complete your application and upload your essays online. The application deadline is December 31, 2008. Winners will be notified by February 20, 2009.

#4. John F. Kennedy Profile in Courage Essay Contest for High School Students: Up to ,500
Named for President Kennedy’s 1957 Pulitzer-Prize winning book, the Profile in Courage Essay Contest is open to high school students from across the nation Applicants must write an original essay of no more than 1,000 words about an elected official who has demonstrated political courage. The winning essayist will be invited to accept his or her award at an award ceremony hosted in May by Caroline Kennedy and Senator Edward M. Kennedy at the John F. Kennedy Presidential Library and Museum in Boston. All entries must be postmarked or received no later than Saturday, January 10, 2009.  Registration forms are available online.  Winners will be notified by March 31, 2009.

What you need to know about repaying your student loans

For those of you whom graduated this past June, the grace period on your student loans is coming to an end.  Starting in January, you will be responsible for paying back the principle and interest of your student loans every single month, faithfully and on time, until they are paid off in their entirety.

It’s a weighty responsibility, but there are a few things you need to know to make them a little more manageable.

1. Save money by setting up automatic withdrawals.
If you have a federal student loan (Perkins or Stafford), you are entitled to a discounted interest rate (usually .25%) when you sign up for automatic deductions from your checking account.  This is a great deal for you and one that you should definitely take advantage of — not only will you save money on interest payments, but you won’t ever face late fees because you were out of town or ran out of checks or just forgot to post your payment in time.

2. Pick the right repayment plan for your life.
You can chose from a number of repayment plans, depending on your current income, your expected future income, and other expenses.  Here’s a run-down on the options:

>> Level Payment Plan: The total amount of your loan plus interest is divided until 120 equal payments.  Then you pay the same amount every year, for 10 years, until the loan is paid off.  This plan is usually the fastest and least expensive way (i.e. the least amount of interest) to pay back your student loan.

>> Graduated Payment Plan: Your monthly payments start out low, when your income is lower.  Repayments gradually rise over the ten-year period, as your income increases.  The lower payments at the beginning mean that you will end up a paying a bit more in interest over the life of the loan, but the affordability when you are first starting out is a major plus.

>> Extended Payment Plan: If you have borrowed more than ,000 in federal loans, you can stretch out your repayment from 10 years to up to 25 years. Your monthly payment will be significantly lower, but you will pay more in interest over the life of the loan.

>> Income Contingent Plan: If your income is low and your family’s budget is already stretched thin, you may qualify for significantly lowered payments, made over 25 years. After 25 years, the balance of your loan is forgiven — if you

3. Consider consolidation.
If you have multiple federal loans, you can consolidate them, giving you a single monthly payment.  And you can stretch out the repayment plan as long as you like — up to 30 years. Plus, Stafford loans taken out before 2006 have a variable rate.  Consolidation lets you lock in one lower rate.  The 2008-2009 rate is quite low: 4.21%.  The even better news is that if you consolidate during your grace period, you can lock in an even lower grace period of 3.61%.

4. Call your lender immediately at the sign of financial trouble.
If you are having financial problems of any kind, the first person you should call is your lender.  If you call before you start missing payments, you have a number of options, including deferment (your repayment and interest accrual are frozen during economic hardship) and forbearance (repayments are frozen, but interest continues to accrue.)

And on another note, I want to wish all of you students and parents a very happy new year! Cheers!

Does My Stafford Loan Transfer To My New School?

Contrary to popular belief when you change school’s between semesters your Stafford loan funds do not simply transfer over to your new school with you.

The reason being is because the new school needs to receive a copy of your Student Aid Report (SAR). That is the report the FAO uses to determine your eligibility for the Stafford loan and how much it will be for. Just because you received ,500 at one school does not necessarily mean you will receive the same amount at the new one.

As for your lender, who had already disbursed half of your Stafford loan funds to your old school in the Fall, you will need to contact them for three reasons. 1. You want to make sure they do NOT disburse the second installment to the old school, 2. they should be made aware of where you are currently enrolled so they can send a school certification form to your new school, and 3. you want to make sure they know you are still enrolled half-time or greater as defined by your school so they do not begin billing you.

If you need a Stafford loan (click here).

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