As many of you probably know, interest rates for federal student loans rose dramatically July 1st. Rates in recent years have been at historic lows, lulling many into a false sense of security.

Those of us who graduated 3-5 years ago were in a lucky situation where we were earning a higher interest rate on our savings accounts than they were paying on their student loans. It made no sense to pay the loans off early.

That’s all changed.

If you’re a current student or recent graduate, you’ll know that the rates have shot up over the past few years, bringing the current in-school Stafford loan rate to 6.54% and the repayment rate to 7.14% on July 1st of this year. That means, in addition to the higher tuition prices, students have to pay more back in interest as well.

That’s why it’s so important to plan financially for after graduation. Start now, before you graduate or go into repayment and the whole process will be much easier. Visit July’s edition of the Financial Aid Newsletter - about half way down is a Featured Article: The One Page Budget that is a great guide to get you started. If you get your finances in order now, life will be alot easier once you reach repayment.

Also, plan on applying for consolidation as soon as you graduate. Due to recent changes by the Department of Education, it is much more difficult for students still in school to consolidate with the company of their choice, but once you’ve graduated you have many more options. Don’t wait for consolidation - apply right after graduation. The fiscal year begins July 1, which means if there’s a rate increase again next year, you want to get your application in well before July 1, 2007. As the rates have gone up annually the past few years and with the current national debt, don’t be surprised if the rates go up again next year.

Sometimes, when you’re looking for financial aid information, you can get the wrong answer, or at least the not quite right answer. Take this Yahoo site for instance: http://answers.yahoo.com/question/?qid=20060617163838AAbG7w8

Here a person asks why they need to apply for a Stafford Loan and whether deadlines are important. There are three answers. All are partially correct, but not completely. That’s the danger in asking strangers for information.

The deadlines can be floating, as the first answer says, but the second person makes an important point - schools have a fixed amount of money to allocate. If you miss the deadline, you may not get as much, or you may not get any. If you’re lucky, everything will turn out fine. But to be certain get your documents in on time! Think of it like you’re first college test. You need to get your tuition finances straight before you can begin attending classes.

And the third answer is also partially correct - you DO need to pay back Stafford Loans. It’s not free money, like most scholarships are. It is at a much lower interest rate than non-Federal loans, but it is still a loan and you must pay it back. Scholarships are going to be your best bet as you don’t repay them.

For more information on Stafford Loans visit www.StaffordLoan.com

Visit www.studenteducationloan.cn to look through more than one billion dollars in scholarship money.

A lot of people are confused by what’s behind the Stafford and PLUS programs, so I though I’d give a little background information, hoping to make it all a bit clearer. Let’s start with the Department of Education.

The U.S. Dept. of Education began operating in 1980. It’s one of the last items President Carter signed into Law. It’s official acronym is ED, though you’ll often hear Department of Ed or DOE (this last one rightly refers to the Department of Energy, but you’ll hear it for the Department of Education as well).

Unlike the educational system of most other countries, education in the U.S. is not centralized, meaning that the federal government and Department of Education are not heavily involved in determining curriculum or educational standards. The main focus of the Department of Ed is to formulate federal funding programs involving education and to enforce federal educational laws.

So what does this mean to you? The Deptarment of Ed runs the Stafford and PLUS loan programs, which means either you will be dealing with them or you will be affected by them. While some issues, such as the recent rate hike, are decided by Congress, others are decided by the Deptartment of Ed. They can change their policies or their take on federal language independant of Congress. Sometimes this benefits the borrower, sometimes it doesn’t.

That’s the Department of Ed in a nutshell.

I found an interesting article on nj.com this week, a news site dedicated to New Jersey, but the question bears looking at.

A consumer asks “Can money in a 529 college savings plan be used to pay charges for study abroad programs or to pay off Stafford Loans upon a student’s college graduation?”

Lets back up a step and talk about what a 529 savings plan is. Named after the section of the federal tax code that governs them, 529 plans are programs that help families save for college while offering tax advantages. Selecting a plan does requires homework – there are two types. All 50 states offer at least one 529 plan, and the tax advantages, investment options, restrictions, and fees can vary a great deal.

Before buying a 529 plan, you’ll want to compare and contrast the plan(s) you are considering. Request an offering circular or official statement from the plan sponsor or your financial professional or from the corporation’s website. You can find links to 529 plan Web sites on The National Association of State Treasurers’ College Savings Plans Network Web site or you can call them toll-free at 877-277-6496.

Now back to the question:

Can a 529 plan be used to pay for a study abroad program ? Maybe. If the school is an accredited US institution and the entire check goes to that college, then you’re probably safe. If some of the money goes to an outside organization, then it might not be legal. You can look on the US Department on Education’s website and use the school-code lookup tool. If the school’s study abroad program has been assigned a code, you can assume it is eligible. However, you CAN NOT use the money to pay for transportation costs.

Can a 529 be used to pay back a Stafford Loan ? No – money from a 529 cannot be used to repay a Stafford Loan or any other federal financial aid.

It’s been nearly a month since the biggest single student loan interest rate hike, and it’s still making news. An article from Boise State University’s student newspaper explains how it’s affecting students.

They break down two loan scenarios, consolidation before going into repayment and comsolidating after; it explains exactly what it means in terms of what will be paid back over the life of the loan. Definitely a must-read for recent graduates.

Approximately 2/3 of student use student loans to pay for college.

From CNN:

As recently as 1990, only 46.2 percent of students at public schools took out loans, averaging just $9,798 in 2004 dollars. Private school debt in 1990 averaged just $15,054.

Call it a reverse dowry: college debt diverts careers and delays or impedes graduates’ plans to get married, buy a home or even to start a family. The effects can last years.

A 22-year old student graduating this year who consolidates their $40,000 loan at 6.125 percent will need to pay $243 a month…until they’re 52. By that time, they will have paid $47,494 in interest alone.

A reverse dowry

“My student loan debt is my biggest source of stress in my life at the moment,” said Steve Desroches, a 2002 graduate from Columbia University’s Graduate School of Journalism. “I live paycheck to paycheck.”

The degree left Desroches, who works for a newspaper on Cape Cod, $50,000 in debt with no savings. He’s unable to buy a needed car or to even think about entering Massachusetts’s “out of control” real estate market.

The repayments were so financially restrictive he briefly considered declaring bankruptcy, until he learned it wouldn’t affect his student loans because they’re federally guaranteed.

“My feelings about my degree now? My graduate education was invaluable [to my career], but it wasn’t worth $50,000, or more accurately, it isn’t worth the debt. My options are definitely limited.”

Christine Moellenberndt of Sacramento, California has given up on the idea of owning a home, at least anytime in the next 10-15 years. She graduated last June from the University of California, Santa Cruz with a degree in anthropology, and moved back in with her mother when she realized not doing so would mean living paycheck to paycheck with no chance of paying down her debts.

“That $675 I could be spending in rent could also be a good chunk of a credit card payment, or a huge payment for my student loans. I see that as a bit of a better investment than living on my own and struggling paycheck to paycheck.”

Moellenberndt says at least half her monthly income working at a state regulatory agency goes to pay off her $18k in federal student loans. And although the debt is daunting, her plans to become a community college professor call for an advanced degree…hiking her debt in the future.

A growing issue for the economy and society

The cumulative effect of such student debt on graduates is unclear, although few would argue that its impact will be positive for the graduates, the economy or society.

“We’ve never done this to a generation of young people before,” said Dr. Heather Boushey, Senior Economist at the progressive Center for Economic and Policy Research. “We’ve never put a generation in their 20s in debt they can’t get out of before they started their work life.”

“The normal approach in any healthy society is to help young married couples get started in life through marital gifts, dowries, and the like,” Allan Carlson of the socially-conservative Howard Center for Family, Religion, and Society said.

“We now burden many young adults with student debt, sometimes massive in nature; the price being paid includes marriages delayed or foregone and fewer children. This is foolish public policy.”

From Inside Higher Ed:

Those college officials and others hoping that passage of the Higher Education Act renewal might be on the horizon shouldn’t hold their breath. In a letter sent to his Republican colleagues late last week, U.S. Senate Majority Leader Bill Frist (R-Tenn.) listed his legislative priorities for the next two months — weighty issues like the war on terror and the rising price of gasoline, and arguably more marginal matters like flag burning — and nowhere among them was consideration of the key higher education legislation, which passed the House of Representatives late last month.

Sadly, it doesn’t look like federal student loans are going to get a fair shake…

From the Hill, the Congressional newspaper…

Fight brews over student loan bill
By Elana Schor

An election-year message war is brewing over the growing cost of college, as liberal-leaning and union-backed advocacy groups back a Democratic bid to halve student-loan interest rates while Republicans decry the politicization of education.

Rep. George Miller (D-Calif.) and Senate Minority Whip Dick Durbin (Ill.) introduced bills before the Easter recess that would halt the scheduled July 1 increase in interest rates for federally subsidized student loans, reducing the fixed rate from 6.8 percent to 3.4 percent. Miller and Durbin last week helped launch a coordinated grassroots campaign aimed at promoting the bill among college students and their parents.

“The Republican majority knows that poll numbers show people are looking for change and a different direction,” Durbin told reporters at the campaign launch. “Many Republicans looking to take a more moderate position and break away from the positions of the Bush administration will be looking at this approach.”

Durbin and Miller vowed to force test votes on their plan in both chambers before summer, having already attracted eight GOP centrists last month when Miller offered a one-year interest-rate cut as a substitute amendment to the House’s reauthorization of the Higher Education Act (HEA).

Steve Forde, spokesman for House Education and the Workforce Committee, pointed out the high cost of a permanent cut, estimated at more than $30 billion over five years.

“The fact that they really don’t talk about a way to pay for the legislation shows how serious they are about it,” Forde said. Parrying the Democratic bill’s promise to “reverse the raid on student aid,” Forde noted that Democrats endorsed the 6.8 percent interest rate when it was first set in 2002.

Miller, ranking member on Education and the Workforce, anticipated a pushback on costs by the majority but directed the charge of fiscal irresponsibility back at Republicans.

“They say that to every proposal because they’ve given all the money away in tax cuts,” Miller said. “They decided they would do nothing about the cost of education other than making it more expensive for students and families. We want to take the country in a very different direction.”

The National Education Association (NEA) and American Federation of Teachers, which represent school officials at all levels of the system plan to formally endorse the interest-rate cut this week. NEA lobbyist Nancy O’Brien echoed Miller’s argument: “It’s a question of priorities, saying we can’t afford this but we can afford tax cuts for the wealthiest among us,” O’Brien said.

Rep. Ric Keller (Fla.), who chairs Education and the Workforce’s competitiveness panel, dismissed the Democratic bill as politically motivated public relations. Keller and other Republicans have compiled a one-page memo called “Fixed Rate Flip-Flops” listing past praise of the 6.8 percent rate by Miller and many of the groups behind the grassroots campaign.

“The American people are tired of partisan political stunts and misleading slogans,” Keller said in an interview. Durbin and Miller’s “raid” refers to the $12.5 billion cut in student aid programs passed earlier this year as part of budget reconciliation, but Keller said the bulk of the cuts hit banks and other lenders in the pocket, not students.

“When you hear Democrats and other groups complaining [about the cut] … not one student in America will receive less financial aid under that act” or the HEA reauthorization, Keller said. “If some lenders wanted to complain a little bit, they have some room to complain, but student groups have no room to complain.”

Most lending banks, however, would not see profits fall if subsidized interest rates were cut. Preset funding formulas require the government to ensure a reliable return for banks regardless of the interest paid by students or parents, and some banks could even benefit if Durbin and Miller’s bill entices more low-income students to consider college.

“Enactment of the Durbin bill would not reduce banks’ profits in the least because the lender return is based on the special allowance formula rather than the borrower interest rate,” said John Dean, special counsel to the Consumer Bankers Association, which represents some of the student-loan market’s top lenders. “Banks receive the same return on student loans under the Durbin bill that they do under current law.”

Durbin’s version of the bill also mandates full funding for Pell Grants, which the House HEA reauthorization boosted to a $6,000 maximum despite Congress’s four-year pattern of freezing actual appropriations for the grants at $4,050. Keller said he would support appropriating enough money to fill the Pell Grant funding gap, and touted the $5.4 billion jump in total Pell Grant spending since 2000.

“It’s a Herculean effort,” Keller said. “With that said, yes, I’d like to see it fully funded. I’d vote for that. But it’s out of my hands. It’s in the appropriators’ hands.”

While lending banks have not come out for or against Durbin and Miller’s bill, largely thanks to their lack of a direct interest, the Pell Grant provision could benefit from their lobbying muscle. Kevin Bruns, executive director of the America’s Student Loan Providers coalition, said member companies would discuss the bill in coming days.

“The richer the Pell Grant program aid is, the more students go to school, and we’re all better off with more students in school,” Bruns said. “So we have long supported the increased generosity of the Pell Grant program.”

Dean agreed on the bill’s potential benefit to students, but he predicted that its price tag would be its downfall.

Robert Borosage, co-director of the Campaign for America’s Future (CAF), one of Durbin and Miller’s advocacy-group allies, said the student-aid legislation would help galvanize voter turnout on college campuses regardless of its ultimate fate.

“Politicians of either party don’t have much to say to young people these days. Students are exercised about the war, but even more about these kinds of questions,” Borosage said.

Miller and committee Democrats have opened an online “e-hearing” to solicit personal testimony from students and parents seeking relief from skyrocketing college tuition bills. Both US Action and the Campaign for America’s Future are targeting Republican lawmakers with student-aid petition drives, the AFL-CIO and other major unions are tapping their memberships, and on-campus organizing drives are in the works at the U.S. Student Association, the Center for American Progress, the College Democrats and Young Democrats of America.

House to Take Up Measure to Boost Pell Grants, Alter Student Loan Rules
Source: Congressional Quarterly Today

The House is beginning debate on a bill that would authorize larger Pell grants for low-income college students, increase competition for consolidated student loans and endorse an “academic bill of rights” proposed by conservative activists.

The legislation (HR 609) — introduced by Majority Leader John A. Boehner, R-Ohio, when he was chairman of the Education and the Workforce Committee — would renew many provisions of the 1998 Higher Education Act (PL 105-244), which authorizes more than $70 billion in federal aid to college campuses and students.

The law was set to expire at the end of fiscal 2003, but has been extended several times as Congress has debated a broad rewrite. The most recent extension (PL 109-150) expires March 31. On Tuesday evening, the Senate cleared a new extension (HR 4911) lasting through June 30.

Direct and guaranteed student loan programs, which entail mandatory spending, were reauthorized for eight years by the fiscal 2005 budget reconciliation law (PL 109-171) enacted last month. That law made changes to the loan programs that raised interest rates and fees paid by students or their parents; cut some subsidies to lenders, and reduced federal spending on the programs by $12.7 billion over five years

The bill that the House is considering Wednesday and Thursday includes other provisions pertaining to the loan programs.

One would eliminate what is known as the “single-holder” rule for loan consolidations. That rule — long supported by Sallie Mae, the heavyweight of the college loan industry — requires student and parent borrowers to consolidate, or refinance, their loans with the lender that originally made them, even when they can obtain lower interest rates elsewhere.

“We anticipate, — and have anticipated for quite a long time now — that it would be repealed,” said Tom Joyce, a spokesman for Sallie Mae. “We welcome the competition.”

The bill also would boost the maximum authorized Pell grant for low-income students to $6,000 from $5,800 per year. However, since Pell grants are subject to appropriations, the actual maximum Pell Grant would depend on the amount appropriated for a given year. (The current amount appropriated permits a maximum of only $4,050.)

The bill would also authorize a new “Pell Grant Plus” program that would allow an additional $1,000 in each of the first two years of college. The total from the Pell Grant Plus program, the regular Pell grant and other federal financial aid programs could not exceed the cost of attendance.

Non-binding language in the bill that would encourage universities to not discriminate against students based on “personal political views or ideological beliefs” has been controversial, though no one offered an amendment to strike it. Republicans included the “academic bill of rights” language at the behest of conservative activists who contend that a liberal political climate at many universities has resulted in harassment of students with conservative views.

The bill also would make it easier for private for-profit colleges to compete for federal aid by redefining the term “institute of higher education” to include accredited for-profit colleges. Public and nonprofit universities argue that taxpayers should not be asked to subsidize for-profit schools. But Republicans say for-profit schools are increasingly important for “non-traditional” students, especially those changing careers.

Tuesday morning, negotiations aimed at reaching a consensus within the Education and the Workforce Committee on a rewrite broke down after ranking Democrat George Miller of California told Chairman Howard P. “Buck” McKeon, R-Calif., he could not achieve a consensus among Democrats to support the bill.

“For some reason there was a meeting of minds among the Democratic leadership that from this morning forward, this was going to be a partisan bill,” McKeon told the Rules Committee, which Tuesday night was considering which amendments would be allowed on the floor.

“We just don’t think that this is a marquee higher education bill,” Miller said, explaining that “possibilities were lost” when Republicans included the student loan changes in the reconciliation law. He called the bill “leftovers” and said he was offering a substitute amendment that would lower student loan rates, create new programs aimed to increase college attendance by black and Hispanic students and allow students to collect Pell grants year-round.

McKeon will offer a substitute amendment backed by committee Republicans. It would set a fiscal 2007 starting date for all reauthorizations in the bill, lasting for the succeeding five years. It would retain current law for the campus-based aid formula and require a Government Accountability Office study of that formula; add three new schools to the list of named institutions authorized to participate in the Historically Black Graduate Institutions program and allow funding to support anti-piracy efforts on college campuses.

Loan Program

The Rules Committee on Tuesday night began considering more than 100 proposed amendments to the bill. Rather than completing that job, the committee approved a rule that will allow the House to begin debating the bill and 15 amendments on Wednesday.

The list of 15 includes one by Dan Burton, R-Ind., to require colleges and universities that receive funds under international education programs to disclose contributions and gifts under the Integrated Postsecondary Education Data System. A bipartisan group of five House members will offer an amendment to authorize funds to recruit and train a national corps of top recent college graduates who commit to teach in low-income communities. Melissa A. Hart, R-Pa., will offer an amendment to establish student services offices that can assist pregnant students and students who are already parents in locating child care, family housing, flexible academic scheduling and various counseling and support services.

The Rules Committee is expected to meet again on Wednesday to approve another rule that would outline any additional amendments that would be allowed, and provide for a final vote on the legislation Thursday.

Among the amendments under consideration by the Rules panel was one by Tom Petri, R-Wis., cosponsored by Miller, to encourage colleges to use the government’s direct loan program, rather than government-subsidized loans sold by Sallie Mae and other lenders.

Several government studies have said the direct loan program is more efficient; White House budget officials agree. But Boehner and many other Republicans prefer providing loans through private lenders.

Another proposed amendment, by Rahm Emanuel, D-Ill., would repeal three student loan provisions recently enacted in the budget reconciliation law. Emanuel’s office said in a news release that the changes totaled a $12 billion decrease in student aid.

… the Deficit Reduction Act wasn’t resetting rates on July 1, the variable rate loans wouldn’t be much of a savings at all. The current T-Bill rate is 4.563%, which means that if loans were set at today’s rates, they would be:

Stafford in grace: 6.263%
Stafford in repayment: 6.863%
PLUS: 7.663%

Someone needs to write a memo to Congress to let them know that education financial aid needs to be more of a priority.

From the New York Times…

Budget Measure Increases College Loans and Rates
By JONATHAN D. GLATER
Published: February 2, 2006

With the narrow passage of the spending bill by Congress yesterday, students and their parents will be able to borrow more money to pay for higher education but will face higher interest rates on these federal loans beginning in July.

Some critics have argued that the higher interest rates are, in effect, a cut in student aid. But the legislation also potentially generates nearly $14 billion in revenue over five years by capturing what has at times been a windfall to lenders: the difference between the interest rates paid by students and rates paid by lenders.

Before, lenders could keep profits generated when rates they had to pay were lower than those paid by borrowers; now, that spread will have to be paid to the government. (The government will still pay lenders when the rates they pay are higher than borrower rates.)

The bill increases the rate on loans taken out by parents, known as PLUS loans. It had been scheduled to rise to 7.9 percent from the current 6.1 percent on July 1; it will now increase to 8.5 percent as of that date.

Under current law, the interest rate on federal Stafford loans, taken out by students, will rise to 6.8 percent from 5.3 percent.

–

Nice job, guys. Good to see our elected representatives hard at work.

It is purported that implementation of the new student loans and eligibility rules in January 2007 will generate savings to the Crown in the order of $20 million in reduced student loans.

Papers revealed under the Official Information Act, as reported by Education Review, show it has been assumed that 90% of students currently enrolled in courses not funded by TEC (some 3000 EFTS) would not transfer to an alternative TEC-funded course after introduction of the new rules.

One might well challenge that assumption.

However, in a moment of generosity we shall grant the Government's policy analysts the benefit of the doubt on that one. They can have their $20 million and they can have their 3000 fewer EFTS.

But, we would like to understand just how a policy of reducing costs through eliminating students and trainees contributes to objectives for upskilling our workforce.

Just as hurricane season comes every year, so too does the quandary of whether students and their parents should consolidate student loans.

This year, the answer is fairly easy for most borrowers: Yes.

The deadline for con solidating to get the best interest rates is June 30.

By law, interest rates on most existing federal student loans are variable and are calculated based on a formula that uses the interest rate of the 91-day Treasury bill set at the last auction in May.

That auction took place May 30. The interest rate for the one-year period beginning July 1 will be 6.54 percent for borrowers who are in school or in a grace or deferment status.

Loans for borrowers in repayment will be set at 7.14 percent.

Although lenders make it seem as if consolidation is a no-brainer, I've received a number of e-mails from parents and students seeking a little more clarification.

With no time left for graduates to consolidate their federal student loans at the current lower interest rates, borrowers are turning to esignature as their last remaining option.

On July 1, interest rates on federal student loans made a near-record setting 35% increase over the current loan rates. Graduates who qualify and apply for a student loan consolidation prior to July 1 will be able to lock in their interest rates, protecting them from the increase.

However, graduates' and student loan borrowers application forms must be received before July 1 in order to be protected from the rate increase.

With less than 24 hours left for consolidation of federal student loans at the current lower interest rates, borrowers are turning to esignature as their last remaining option.

The First Marblehead Corporation (NYSE: FMD) todayannounced it has entered into a three-year agreement with GE ConsumerFinance, a top provider of innovative financial solutions, to market afull suite of Direct-to-Consumer (DTC) private student loan servicesunder its consumer brand, GE Money.

GE Consumer Finance will offerfinancing programs to a variety of education levels, including K-12,undergraduate, graduate, and continuing education.

"Our partnership with GE Consumer Finance validates the benefitsof our DTC marketing strategy and expands on the momentum we arecreating in this area," said Jack L. Kopnisky, president and chiefexecutive officer of First Marblehead.

"GE Consumer Finance's programprovides creative and essential education finance opportunities,tapping into various markets that have specialized needs we canfulfill."

"As a leading provider of credit services to consumers around theworld, we are constantly looking for ways to enhance our productofferings," said Scott Young, senior vice president of GE ConsumerFinance's Personal Finance unit.

Student Loan Corp., educational lender majority owned by Citigroup Inc., reported a 26% increase in its second-quarter profit from a year ago.

Quarterly earnings rose to $101.8 million, or $5.09 per share, from $80.9 million, or $4.05 per share, in the year-ago period mostly thanks to a $42.3 million gain tied to the securitization of $2.2 billion in student loans, which was $13 million above the 2005 securitization.

Most recent quarter results were also bolstered by other gains on loan sales, and fees and other income that surpassed the results from a year-ago comparable period though the gains were partially overshadowed by a $9.8 million reduction in floor income.

Revenue in Q2 added 27% over last years results to $206.7 million, while net interest income declined 12% to $109.9 million hurt by the $16 million lower floor income.

For read more

U.S. President George W. Bush left out a linchpin in his recent American Competitiveness Initiative.

While it's laudable that he wants to spend a record $137 billion on federal research and development programs in the 2007 budget, it doesn't mean a thing if students can't afford a college education or have to forgo research or teaching positions when they graduate due to school debts.

Crippled by loans that may take them decades to repay, recent graduates are less likely to be able to afford a home or car and to start a family.

The Campaign for America's Future, a Washington-based policy group, estimates that some 200,000 Americans are being priced out of college education annually. Tuition at four-year colleges alone has climbed 40 percent since 2001.

The rules for college loans are undergoing a host of changes, thanks to recent action by Congress that will reshape how students and their families pay for higher education for years to come.

Here are the biggest changes and what they mean for you. Since late 1992, the two largest federal student loan programs have come with a variable interest rate.

Starting July 1, the rate for new Stafford loans will be fixed at 6.8 percent and the rate for new PLUS loans will be 8.5 percent, which could benefit borrowers if interest rates continue to rise.

Variable rates on loans issued before July 1 that have not been consolidated will continue to be reset once a year. Under the old rules, college freshmen could borrow up to $2,625 in Stafford funds.

read more

Maricopa Community Colleges is taking a second look at a contract with a national loan company to provide student tuition services after the company lost information on 188,000 customers.

The district's governing board is slated to approve a contract with NelNet at its Tuesday meeting without discussion.

The agreement effectively would make available loan services to about 280,000 students enrolled in the district's 10 colleges and two skill centers. Students would pay all fees for the service. There would be no charge to the district.

read more

Unlike some other financial aid programs, student loans must be paid back.

There are several types of student loans available in the United States.

The first is the Federal Student Loans made to the students directly. There are no payments until after graduation, but amounts are quite limited.

The second is the Federal Student Loans made to the parents. They have a much higher limit, but payments start immediately.

The third type is the Private Student Loans made to students or parents. These have higher limits and no payments until after graduation.

Usually the interest will start to accrue immediately though. The first type of student loan is made directly to the students and is used to supplement personal and family resources, scholarships, grants and work-study.

These loans can be subsidized by the Federal government or may not be, depending on the students needs.