Student Loan Guide

Great Student Loan Information Site (click here)

2005-06-17T08:34:00.000-07:00

Go to this site for the latest Student Loan News and Information

Direct Loans, the new way to fund going to college

2005-06-05T09:31:00.000-07:00

Direct loans, the new way to fund going to college by Jakob Jelling

Going to college can be an expensive proposition for both the student and the government. Many people are finding that going to college is an impossible dream due to raising tutitions and cost of living unless they receive help in the form of a scholarship or loan. Of course the raising costs of everything are no reason that any bright child should not receive a higher education and achieve all they can aspire to.

In the past the federal government has had a lending program to assist people with funding their secondary education costs but this system has it draw backs. The old system of student loans was fraught with fraud, was time consuming and very confusing to most people. With the old system there was more than 7.000 lenders with 65 secondary markets and 35 guaranty agencies. For one loan most students would have to fill out countless forms and apply to numerous agencies until they finally got the answer they needed.

The other big problem with the old lending system was the cost of administrating the loans. On average it cost the government $11 per $100 loaned to manage the accounts. The solution to this is the simplified Direct Loan system that is now in place. The Direct Loan system is exactly what it sounds like; the government lends the money directly to you thus eliminating the middleman and much of the cost of lending money to students.

When applying for a Direct Loan you will have two options, a subsidized or unsubsidized loan. A subsidized loan is generally for people who would not normally be able to afford going to college at all. With a subsidized loan the government pays all the interest on the loan until your schooling is finished at which point you must begin to repay the loan. An unsubsidized loan is the standard Direct Loan for most people. With an unsubsidized loan you must pay interest on the loan while you are in school and then begin to repay the loan after you graduate. You do have the option of deferring the interest payments while you are in school. If you elect for this option the amount of the interest is added to the principal of the loan each month until you graduate.

Just like all other areas of finance in your life, you must also carefully control the Direct Loan financing. There are many things to keep in mind such as the yearly lending limits. For the first year you can only borrow $2,625, $3,500 the second year and $5,500 each year after that. This means you may also have to work or find other sources of funding while in school. Keep careful records of all the money you receive and keep receipts for everything you spend the money on. You might be surprised at what all can be used as a tax deduction.

As you can see Direct Loans are a fast and efficient way to receive college funding from the government. The application process has been reduced to basically one form, the time it takes to gain approval is faster and you receive your money sooner than before. Direct Loans are a welcome overhaul of the generally failing old system of student lending.

About the Author
Jakob Jelling is the founder of http://www.cashbazar.com. Please visit http://www.cashbazar.com/loans.shtml to learn about the loans that suits you best.

FreeWebSubmission Jayde Online, Inc. © Copyright 2005, All Rights Reserved.

Student Loans Can Help

2005-05-28T00:55:00.000-07:00

Education loans can augment the boundaries of what you can achieve by Amanda Thompson

Education never ends – it is not said without reason. We are educated all our lives and getting an education not only is a great achievement but something that gives you the tools to find your own way in the world. Education is indispensable; little do we realize how much more it can bring to us in terms of worldly amplifications. Anyone can have propensity and the natural endowment for education. But one might not have the resources to finance their education. You certainly can’t let lack of resources impede you from advancing your prospects through education. Then you accidentally stumble upon the word ‘education loans’. Loans for education – you have never thought about it as a feasible arrangement. Education loans can open newer panoramas in regard to your education aspirations.

Education loans are open to all people in all its myriad forms. Education loans can realize your education plans or the education plans of your children. You can strengthen you own future and the future of your son or daughter with education loans. An extensive range of student and parent loans are presented under the category of education loans. There are many types of education loans. Discerning about the types of education loans will help you in making the accurate decision. The single largest resource of education loans is federal loan. The two main federal education loan programmes are the Federal Family Education Loan Programme and the Federal Direct Loan Programme. In the Federal Family Education Loan Programme the bank, credit union or the school is the lender. While the federal direct loans programme, the department of education is the lender.

Private education loans are offered to people so that they can provide financial backup to their education plans. Private education loans are not endorsed by other government agencies but are provided by other financial institutions. Private education loans programme are optimum for both undergraduate and graduate studies.

Formal education is requisite for future success. Though this is not a hard and fast rule, but education certainly helps you in gaining an upper hand. With universities getting expensive by each day an education loan will certainly give you an incentive to go ahead with your education plans. Each year while contemplating on your education plans the thought of finances almost invariably comes in. While working towards you degree, you are constantly plagued about paying for the education fees, books, and other living expenses. Education loans can provide funding for tuition fees, board and room, books computer, and even student travel. An education loan can help you with all these expenses. Education loans are sufficient enough to take care of all these expenses. If you have been forced to drop your education for any reason, you can still take up your education at any point of time. Irrespective of your age and also where you have left your education.

There are no specific eligibility criteria for education loans. Any person who is in need of sponsorship for education can find an education loan that befits his or her financial necessity. Loan amount on education loans vary with the kind of education you want to pursue. The repayment options with education loans will similarly accommodate your personal financial preferences. You can either repay interest amount while still in school or six months after graduation. Education loans offer upto ten years for repayments. The refund alternatives on education loans also include deferment, forbearance and consolidation. The various sites on education loans can give you innumerable repayment options and monetary remuneration.

Education loans will help you in planning your life after graduation. However, an education loan like every loan is a huge financial obligation. An education loans is generally the first substantial loan for most people and therefore the first major expense. Do not be completely dependent on your education loans for the funding of your complete education. Try to apply for any other financial sustenance like university grants, scholarships, fellowships, work study programmes and assistance ship and any other form of aid. This will certainly encourage a fluid dispensation of your education loans. You can start by going to the financial aid office in your school or university. It will provide you further insight to the kind of education loans, you must apply for.

Education is an experience of life. It is so rewarding in itself that it helps you to manage almost everything in your life. Education loans discipline your impulse towards education and training into a fruitful contrivance. The payoff is delicious in terms of improved quality of life. Education is expensive! Is it? With education loans it can’t be. Now, you don’t have to take the road in front of you. Make your own road with education loans.

About the Author
Amanda Thompson holds a Bachelor’s degree in Commerce from CPIT and has completed her master’s in Business Administration from IGNOU. She is as cautious about her finances as any person reading this is. She is working as financial consultant for http://www.chanceforloans.co.uk To find a personal loans,bad credit loans,debt consolidation loans,home equity loans at cheap rates that best suits your needs visit http://www.chanceforloans.co.uk

FreeWebSubmission Jayde Online, Inc. © Copyright 2005, All Rights Reserved.

Do's and Don'ts - Student Loans

2005-05-28T00:40:00.000-07:00

Dos and Don'ts: Student loans by Marc Sylvester

Parents should begin saving money early for their children's college education because of the high costs and expectations that parents will pay part of the costs associated with the education. Several stock mutual funds are recommended.

Here's a question that's as pleasant to consider as a fraternity hazing: How will you come up with the money to send your child to the campus of his or her choice? If you're like most Americans, your answer is probably loans--unless you start saving and investing more effectively. According to a recent MONEY poll, fully 87% of U.S. moms and dads expect their kids to go to college. But nearly half of them, 47%, have not yet stashed away any money to cover the costs, which currently run an average of $7,118 a year for tuition, fees, room and board at four-year public schools and $18,184 at private universities, according to the College Board. And at the current growth rate of 5% a year, the cost of a four-year degree is projected to rise to $73,834 (public) and $188,620 (private) for a child born in 1997.

The survey of 1,118 adults with children, conducted by ICR of Media, Pa. (margin of error: plus or minus 2.9 percentage points), also provides a wake-up call for parents who say they are saving for their kids' college costs. More than half stash their savings in unwise college investments, such as certificates of deposit. And nearly a quarter of parents who are saving are putting away a paltry $500 or less a year for each child.

Yes, your child can lessen your burden by working part time and by pursuing scholarships (see "Strategies That Can Cut Costs 30% or More" on page 126). But financial experts say that the average parent should be prepared to pick up at least a third of total college costs.

If your child is in high school and you haven't saved enough, check out our advice on page 138 on borrowing for college. If your children are younger, however, the sooner you start to save, the better. For example, Richard and Deborah Winters of Milford, Conn. (pictured at left) began putting away col- lege money for son Kyle, 4, when he was six months old and for daughter Kar- lie, 2, when she was 1 1/2. Oakland registered nurse Iris Winn (pictured on page 139), a late starter, now stashes a whopping $12,000 of her $70,000 annual salary into college savings for her daughter Monique, 15.

But whenever you start your savings regimen, you can maximize your dollars by planning and investing wisely. Later in this article, we suggest investment strategies for families with college-bound children. But before you get to the specific advice, study these basic rules--the dos and don'ts of smart invest- ing for college:

--Do set family goals. You must first figure out how much you need to carve out of today's spending for tomorrow's college costs. To do this, you can use the savings calculators included in popular software such as Quicken, online services like MONEY's college savings calculator (http://www.pathfinder .com/cgi-bin/Money/collsave.cgi) or free worksheets offered by brokerages and mutual fund companies, including Charles Schwab (800-435-4000) and Fidelity (800-544-8888).

"Parents and children should work together to make sure they are focused on the same goal," says James Pearman of Fee-Only Financial Planning in Roanoke. "That way, you can face tough questions early on--for example, what to do if you are planning to pay for 75% of tuition at an in-state public school and your child wants to go to Harvard."

--Do start saving early. Every year, as your investment principal grows, so do the earnings on your money. The lesson is simple: Don't put off investing.

--Do invest in stock mutual funds. According to the MONEY poll, parents saving for college have plowed 53% of their education investments into low-risk--but low-interest--CDs and savings accounts at banks and money-market mutual funds. The parents have invested only 23% of their money in stocks and stock funds. That's a serious mistake. While stocks carry some risk, they are your best bet for making your money grow over five years or more.
Since 1926, stocks have gained an average of about 11% a year, more than any other type of investment. Moreover, you can't count on bank account and CD yields to keep pace with tuition hikes.

The safest, easiest and most disciplined way to invest in equities is through mutual funds. Not only do funds offer diversification but many will also waive initial investment minimums if you make automatic deposits every month, typically as little as $50 or $100. To avoid having any money siphoned off in commissions, stick with no-load funds like the ones we name in this article.

--Don't neglect saving for retirement. Planning for your child's education should not sidetrack you from making regular contributions to your own 401(k), IRA or similar tax-deferred retirement account. You simply don't want to miss the chance to make the most of the tax-deferred gains available in such accounts. And retirement assets won't affect your eligibility for federal need-based college financial aid.

--Don't invest in esoterica. From time to time, you may encounter sales pitches encouraging you to save for college with investments such as annuities or cash-value life insurance. Both defer taxes on your investment earnings but at the price of costly withdrawal rules. Many deferred annuities, for example, charge penalties of 7% or more if you need to take out money within seven years of making your investment. Tempted to buy zero-coupon Treasury bonds, which recently yielded 6.6%? They can be fine investments--as long as you buy ones that will be redeemed when you need the money. If you have to sell a zero before maturity, you may lose principal if interest rates have risen since you bought it. Prepaid-tuition plans, another way of building up college savings, can make sense if you're too nervous to invest in stocks (see the box opposite).

--Don't put your money in your child's name if you hope to get financial aid. College financial aid formulas generally require a child to contribute 35% of his or her assets toward costs, but parents typically need to put up no more than 5.6% of their savings.

With those basic dos and don'ts at the heart of your investment strategy, here are moves to make, based on your kid's age:

If your child is 13 or younger, you have enough time to weather any short-term stock market squalls. Investment strategists therefore recommend that you put 75% to 100% of your college savings in stock funds, depending on how much risk you can tolerate, and the rest in such fixed-income investments as bonds and bond mutual funds. You might start your savings program with a fund that holds shares of large and mid-size companies with consistent earnings gains and strong growth potential. Financial planner Michael Zabalaoui at Resource Management in Metairie, La. suggests Oakmark (up an average of 25.13% annually for the three years that ended June 30; 800-625-6275). Pearman recommends Vanguard Index Value (up 25.46%; 800-851-4999). Both funds seek out undervalued equities and bear below-average risk, according to fund ranker Morningstar.

After you have accumulated $5,000 in your starter portfolio, you can move as much as a third of your holdings into small-company and international stock funds, which offer the prospect of juicier returns but also carry greater risk. For funds specializing in shares of small companies, Zabalaoui favors Berger Small Cap Value (up 22.6%; 800-333-1001). Among international funds, he likes Janus Worldwide (up 24.7%; 800-525-8983).

If your child is 14 or older, reduce risk to safeguard savings. Zabalaoui recommends getting at least 50% of your money out of stocks by the end of your child's freshman year and moving all of your college savings for that child into short-term bonds, fixed income and cash by the end of her sophomore year. To keep risk low, most investment experts prescribe short- and inter- mediate-term bond funds, which will add more pop to your total return than CDs or U.S. Savings Bonds. Pearman likes Vanguard Bond Index Intermediate-Term (up 8.62%; 800-851-4999). The fund shuns high-risk bonds and has an extremely low annual expense ratio of about 0.2% of principal, enabling more savings to go toward your child's college costs.

About the Author
Marc Sylvester is expect based in Edison, NJ . He holds expertise in the banking and finance sector and is a consultant to leading business houses.

What is a Student Loan?

2005-05-28T00:37:00.000-07:00

What is a Student Loan?
by John Mussi

Not everyone is aware of what is a student loan? Student loans, as the name implies, are available to students who require help with living costs while studying.

Student loans are part of the government's financial support package for degree only students embarking on a course of higher education. For most students, a student loan is their largest single source of income. So unless you have very generous parents, you will need to apply.

Regardless of where you are studying, if you are from England and Wales you will apply to your Local Education Authority using an HE1 form. They will then calculate how much you're entitled to receiving – as well as working out whether you need to pay tuition fees.

They will then send you back a form that you need to forward to the Student Loans Company (the government organisation that administers your student loan) who will process your application. This usually takes a month, so make sure you get the paperwork done well in advance of the start of term.

Although it is only a loan, you'll never be able to borrow money more cheaply, so it's the most cost-effective way of borrowing money while you're studying to pay for all those bills. The interest charged is only equal to the rate of inflation.

Unlike support towards tuition fees, you have to repay any loans. The Student Loan is repaid after you graduate (or after you leave the course, should you leave before completing). Repayments are calculated on a sliding scale and are repaid monthly directly to the Student Loan Company.

Should your salary fall below £10,000 payments are suspended until you earn above this figure again whereupon you will recommence payments. Interest on the Student Loan is calculated at a preferential rate which is far lower than any commercial bank loan rates.

Loans have the unfortunate tendency to mount up your debt. If you take the full £4,000 a year for three years that means you'll be £12,000 in debt by the end of your course – and if you're on a longer degree programme, that total could be even higher.

You may freely reprint this article provided the author's biography remains intact:

About the Author
John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the www.directonlineloans.co.uk website.