As the biggest-ever high school graduating class gets ready to head off to college in the midst of an economic slump, the scramble for tuition -- not to mention room and board, books, and airfare home -- is on.
Private scholarships account for 7% of all grants awarded, and they average just under $2,000. The typical student applies for five to six awards, and the odds of winning one are about one in ten. You don't have to be an all-star athlete, a musical prodigy or even an A student to collect, either.
For instance, the Vegetarian Resource Group offers two $5,000 scholarships per year to students who promote a vegetarian lifestyle. Budding free-market capitalists can vie for one of 521 awards from the Ayn Rand Institute, ranging from $30 to $10,000, by writing an essay on one of Rand's novels.
Start your search in the high school guidance office. The financial-aid officer at the school you're applying to can help as well. FastWeb.com lists more than 1.5 million scholarships worth more than $3.4 billion, and matches scholarships to your profile. You'll get the most bang for your buck by staying local. You may have to look no further than an employer (the student's or a parent's) or a community group, club or lodge. The narrower the field, the less the competition.
Schools may reduce aid if scholarships and aid combined equal more than a student's calculated need. But that might mean a reduction in loans. Don't pay a nickel for services that purport to match you with awards you can find on your own. And never pay an application fee. Scholarships, by definition, are free.
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Monday, August 31, 2009
Monday, August 17, 2009
How to Repay Student Loans
That's a pressing issue for June grads as their six-month grace period on student-loan repayment ends. The challenge is especially great for borrowers whose debt includes private loans. Whereas federal loans -- including Staffords as well as Grad PLUS loans -- generally carry a fixed interest rate (Staffords issued before July 2006 have variable rates) and flexible repayment terms, private loans usually have variable rates and less-forgiving repayment policies. You could end up paying far more than you expected, with no relief in sight.
Best strategy? Figure out a way to make the federal loans manageable, then throw every spare nickel at the private loans (assuming the lender allows you to prepay), says Edie Irons, of the Project on Student Debt. "Because there are fewer protections, it should be a priority to try to pay off private loans first."
Luckily, you have plenty of choices on the federal-loan side, whether your loan comes from a private lender who participates in the Federal Family Education Loan (FFEL) program or from the government's Federal Direct Loan program.
I have Stafford loans and want to repay them as painlessly as possible. Which plan should I choose? You're automatically enrolled in the standard repayment plan unless you say otherwise. Stick with this plan, under which you make 120 equal monthly payments over a ten-year period. Be sure to take advantage of any discounts, such as 0.25% off the interest rate for having payments deducted automatically. If you want to unload your loans on a faster timetable and save on interest, pay a bit more than the allotted amount each month. Be sure to specify in writing that you want the extra amount to be applied to the principal.
My salary is low now, but I expect it to jump in the next few years. The graduated repayment plan suits your situation. Monthly payments start low and rise in increments over the ten-year period. Because you pay less in the early years, you pay a bit more in interest over the life of the loan than you would with the standard plan.
Source
Best strategy? Figure out a way to make the federal loans manageable, then throw every spare nickel at the private loans (assuming the lender allows you to prepay), says Edie Irons, of the Project on Student Debt. "Because there are fewer protections, it should be a priority to try to pay off private loans first."
Luckily, you have plenty of choices on the federal-loan side, whether your loan comes from a private lender who participates in the Federal Family Education Loan (FFEL) program or from the government's Federal Direct Loan program.
I have Stafford loans and want to repay them as painlessly as possible. Which plan should I choose? You're automatically enrolled in the standard repayment plan unless you say otherwise. Stick with this plan, under which you make 120 equal monthly payments over a ten-year period. Be sure to take advantage of any discounts, such as 0.25% off the interest rate for having payments deducted automatically. If you want to unload your loans on a faster timetable and save on interest, pay a bit more than the allotted amount each month. Be sure to specify in writing that you want the extra amount to be applied to the principal.
My salary is low now, but I expect it to jump in the next few years. The graduated repayment plan suits your situation. Monthly payments start low and rise in increments over the ten-year period. Because you pay less in the early years, you pay a bit more in interest over the life of the loan than you would with the standard plan.
Source
Monday, August 3, 2009
Get a Break on Student-Loan Payments
You have a mountain of student debt and a job you love in a low-paying field. Lately, you've considered ditching that job for a higher-paying gig just to get out from under.
Hang tight. As of July 2009, a new repayment plan for federal student loans, called income-based repayment, rescues borrowers buried in debt by slashing or even waiving monthly payments and forgiving any remaining debt after 25 years. "This is a big deal," says Edie Irons, of the Project on Student Debt, an advocacy group. "It's going to help a lot of people."
Source
Hang tight. As of July 2009, a new repayment plan for federal student loans, called income-based repayment, rescues borrowers buried in debt by slashing or even waiving monthly payments and forgiving any remaining debt after 25 years. "This is a big deal," says Edie Irons, of the Project on Student Debt, an advocacy group. "It's going to help a lot of people."
Source
Monday, July 20, 2009
New student loan program helps college grads bear loan debt
If President Obama hadn’t published two best-selling books which brought in a nice heap of cash, he and Michelle might still be paying off their hefty college debt. Unfortunately, most college graduates can’t expect to experience that kind of good fortune.
Today, two-thirds of four-year college students leave school with debt, crowding out many of their options and dreams like buying a home, starting a business or taking enough time to find the job they trained for instead of taking any position just to pay their mounting bills.
Luckily for new grads entering the worst job market in many years, a provision of a bill passed in 2007 and supported by Senator Patty Murray (D-WA) will give many college graduates a way to lessen their college debt burden.
Starting on July 1, the Income-Based Repayment program will allow federal student loan holders to ask the government to limit the payment on their loans to fifteen percent of their income. The program applies to federal student loans made under either the Direct Loan or Federal Family Education Loan (FFEL) program and can be applied to new or existing loans.
If you graduated in May or June and the hostile job market is making it hard to find a good job in your field, you won’t have to start loan repayment until November or December, giving you extra time to keep up the job hunt.
Considering the rising cost of tuition at Washington’s public universities (an increase of about thirty percent over the next two years) and an unwelcoming job market, this program comes not a moment too soon. Families’ economic troubles are helping to push student loan defaults to their highest rate since 1998.
Students who owe money on private student loans won’t receive such good terms. Private loans have soared from seven to twenty three percent of all student loans, and there is no limit on the interest rate and fees that their lenders can charge. It is almost impossible to get out from under private student loan debt even by filing Chapter 7 bankruptcy due to recent stricter bankruptcy law.
The escalating cost of a college education shouldn’t scare off students who want to improve their lives through education. Giving college graduates a fair deal on their student loan repayment gives them the freedom to pursue their dream jobs or start saving for a home or a family.
Source
Today, two-thirds of four-year college students leave school with debt, crowding out many of their options and dreams like buying a home, starting a business or taking enough time to find the job they trained for instead of taking any position just to pay their mounting bills.
Luckily for new grads entering the worst job market in many years, a provision of a bill passed in 2007 and supported by Senator Patty Murray (D-WA) will give many college graduates a way to lessen their college debt burden.
Starting on July 1, the Income-Based Repayment program will allow federal student loan holders to ask the government to limit the payment on their loans to fifteen percent of their income. The program applies to federal student loans made under either the Direct Loan or Federal Family Education Loan (FFEL) program and can be applied to new or existing loans.
The new program sets monthly payments based on adjusted gross income and family size. Unpaid principal and interest is generally added to your loan amount. Any debt remaining is wiped out after 25 years - or after 10 years if you work in the public or nonprofit sector.If you are an Ivy League grad with a high-paying job but with an even higher student debt like the Obamas, you are still in luck, as there is no income limit.
If you are unemployed, low-income or have a very large debt, you could qualify.
If you graduated in May or June and the hostile job market is making it hard to find a good job in your field, you won’t have to start loan repayment until November or December, giving you extra time to keep up the job hunt.
Considering the rising cost of tuition at Washington’s public universities (an increase of about thirty percent over the next two years) and an unwelcoming job market, this program comes not a moment too soon. Families’ economic troubles are helping to push student loan defaults to their highest rate since 1998.
Students who owe money on private student loans won’t receive such good terms. Private loans have soared from seven to twenty three percent of all student loans, and there is no limit on the interest rate and fees that their lenders can charge. It is almost impossible to get out from under private student loan debt even by filing Chapter 7 bankruptcy due to recent stricter bankruptcy law.
The escalating cost of a college education shouldn’t scare off students who want to improve their lives through education. Giving college graduates a fair deal on their student loan repayment gives them the freedom to pursue their dream jobs or start saving for a home or a family.
Source
Monday, July 6, 2009
Debt Consolidation Loan Demystified
A Debt consolidation loan is used to effectively bring together the dues of all the loans that you have currently taken from various lending institutions into one single consolidated financial product. The benefit of a debt consolidation loan is that you have the opportunity to start afresh with a new lender who would evaluate you on the repayment that you make every month after availing of the consolidated loan. It is even possible to bring in credit card dues for consolidation into a single loan with the other dues that you may have run up over the course of time.
Another advantage of getting a consolidation loan is that the combined monthly payment that you will have to make once you get the loan will be lower than the total of the individual payments that you were previously making to service your individual loans. Once you opt for a consolidation of your finances, you can forget about maintaining your accounts and concentrate on working out innovative ways of enhancing your income.
It is possible to get a debt consolidation loan without owning a home, but you would be much better off when you opt for consolidation of your debt by taking out a line of credit on your home. This could be somewhat similar to taking a second mortgage on your home. The advantage for you is that you will get your consolidated loan from the debt consolidation loan company at a lower interest rate if it is backed by a solvent security (i.e. your home).
People often go in for debt reduction because they are not able to manage their finances or find it very difficult to keep up with the monthly payments on present loans. Your personal finance counselor should be able to find the right kind of debt instrument for you depending on the number of loans that you have to pay off at present. An ideal debt reduction strategy will help you pay off your loans fast and also will boost your credit rating. A higher credit rating is extremely beneficial in getting the lowest interest rates when you apply for a loan in the future.
Source
Another advantage of getting a consolidation loan is that the combined monthly payment that you will have to make once you get the loan will be lower than the total of the individual payments that you were previously making to service your individual loans. Once you opt for a consolidation of your finances, you can forget about maintaining your accounts and concentrate on working out innovative ways of enhancing your income.
It is possible to get a debt consolidation loan without owning a home, but you would be much better off when you opt for consolidation of your debt by taking out a line of credit on your home. This could be somewhat similar to taking a second mortgage on your home. The advantage for you is that you will get your consolidated loan from the debt consolidation loan company at a lower interest rate if it is backed by a solvent security (i.e. your home).
People often go in for debt reduction because they are not able to manage their finances or find it very difficult to keep up with the monthly payments on present loans. Your personal finance counselor should be able to find the right kind of debt instrument for you depending on the number of loans that you have to pay off at present. An ideal debt reduction strategy will help you pay off your loans fast and also will boost your credit rating. A higher credit rating is extremely beneficial in getting the lowest interest rates when you apply for a loan in the future.
Source
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