STUDENT LOAN

Thursday, July 12, 2007

INTRODUCION

The federal government currently ensures that students have access to loans for college and graduate school in two ways: by guaranteeing bank loans, and by lending directly to students.The Federal Family Education Loan Program (FFELP) takes the government-guaranteed approach. In this program, the government provides financial incentives to banks and student loan companies that provide student loans. The lenders keep the profit from students’ interest payments as well as subsidies they get from the government. The government also guarantees the loans against default, using taxpayer dollars to protect lenders from financial risk. Congress sets the fees, interest subsidies, and guarantee rates that the government pays banks, loan companies, and other vendors and intermediaries that participate in this system.The other program takes a different approach. Through the the government provides low-interest loans directly to studenFederal Direct Student Loan Progam (FDSLP), ts, then uses their interest payments to help cover the program’s costs. The direct lending program uses market competition to determine the appropriate price to pay for loan capital and for private sector services to administer the loans. Instead of fixed fees and rates of return, it can pay the lowest price that the market will bear.In both programs, taxpayers are responsible for virtually all default costs, as well as much of the interest rate risk. However, the returns are distributed differently. In the guaranteed program, lenders get to keep student interest payments along with taxpayer-financed fees and subsidies. In the direct loan program, the government uses the income earned by the loans to minimize taxpayer costs.

Education a boom

Education was promoted from the earliest times in the U.S. Since many settlers had strong Christian religious beliefs, a rudimentary education was necessary to read and understand the Bible. That education turned out to be useful in work and business pursuits too. Laws were passed that required some schooling and colleges were created early, most by religious leaders to become ministers to the people. These colleges later became secular as learning turned more to science, agriculture, technologies, art, literature, history, etc. Governments used taxes to install primary, secondary and college institutions.
Education is a vast subject, so I can't get too much into it here but education enhances one's ability to get better work and become an informed citizen, which is important in a democracy and for peace. If people are left uneducated, they won't know too much about a possible better life. I don't see how a democracy can function adequately unless the general population has at least the ability to read to know what is going on in the government so that they can choose leaders intelligently. If the people are uneducated in the democracy, then the minority of educated people will pass laws and elect officials who promote their interest rather than interests of the general population. Also, scientific and technical work require high reading skills.

Wednesday, July 11, 2007

Managing debts

A note of caution for students as you make your way through the college experience: review carefully your financial aid award package each year. You will be surprised at how quickly your student loans can add up. If you have federally funded student loans, once you begin the repayment period you are liable for all of the debts that you accrued to make your college dream a reality. This would be a bad time to fail to meet your financial obligations. Repaying your student loans should be a priority to keep you from destroying your credit history. Failing to repay student loan debt can result in you having judgments placed against you and wage garnishment. Have your wages garnished to repay your student loan obligation, forces you to live on a lower monthly income because you don’t have a choice in the matter and neither does your employer.

FFA

The first time you receive Federal Financial Aid at your college or university, you will be required to complete entrance counseling. In fact, funds will not be disbursed until this counseling is completed. Through this process, you will learn what is involved if you accept federal financial aid. Even though grants are “free money” that you are not required to repay, there are rules involved that you need know. For example, if you drop out of school midway through the term, you may be expected to repay the grant. If you are receiving student loans, expectations on repayment will be explained.

Loan preference

Students who qualify for federal student loans are sometimes surprised to learn that there is a maximum amount they may be able to receive. This amount is based on their year in school and the amount of student loan debt that have accumulated overall. For undergraduate students, the maximum subsidized Stafford student loan amounts are: $2,625 year one; $3,500 year two; and $5,500 for years three and four. Graduate students may qualify to receive up to $8,500 per year. The overall maximum for an undergraduate student is $23,000 while graduate students can accumulate up to $65,500 in subsidized Stafford Loans.

Loan from a Pvt. lender

A number of banks offer private student loans for students or their parents who meet the banks credit criteria. These loans can be used to supplement your savings to cover the cost of college expenses or be used in conjunction with other federal student aid funds. Before going this route, it is a good idea to complete the Free Application for Federal Student Aid (FAFSA) to see if you first qualify for any federally sponsored funds. Private lenders often charge a higher rate of interest depending on the loan program and your credit score. In addition, repayment on these loan programs may begin immediately. You can look into some of the programs available for college expenses by obtaining more information on a Citibank student loan, Great Lake student loan, Key Bank student loan, or an AES student loan.

Eligibility and Requirements

Private lenders prefer to have credit worthy applicants even for student loans. Many lenders will be more flexible in providing credit for college expenses, but this is not always the case. A student with no credit experience or a poor credit history may need a co-signer to help get the loan. You also may need to provide proof that you are enrolled in an accredited school on at least a half-time basis. Not all lenders will require this. In fact a benefit of getting a student loan through a private lender is that often the requirements regarding the number of credit hours you are taking and the type of program are not nearly as strict as what the federal government requires.

Determining expenses

Each individual college or university determines what the cost of an education at their institution will be for the average student. They take into account more than just tuition and fees but include other costs like books, housing costs, and food. There may also be other educational expenses associated with the overall costs that are also figured in. College expenses are typically different for those students who commute from off-campus housing or live in the residence halls. Additionally, the costs calculated for a graduate student will vary from those identified for undergraduate students. The financial aid package awarded to a student is determined based on the cost of attendance as determined by all of the information provided. Essentially, your financial aid award takes the cost of attendance minus your expected family contribution to determine your financial need.

Completing FAFSA

When completing your online application for financial aid the first time, there are a number of items that you should have available, including:
1. A PIN number assigned by the Department of Education. This acts like your signature verification and allows you to complete the entire process completely online. If this is your first time completing the FAFSA and you don’t have one yet, you can apply for one at the same website and wait to complete your FAFSA until you receive the PIN.
2. Your social security number.
3. Your driver’s license number.4. Information from your previous year federal tax return.

Information for consolidation

The student loan consolidation process requires you to obtain much of the same information you would need when applying for any loan. Get student loan consolidation information from your lender before completing the application so you are prepared and can complete the process quickly. Typically you will need the following information:
1. Your social security information – this will allow your lender to check your credit history, if needed.
2. Employment information – this will include employer name and address; length of time employed; job title; and, salary information.
3. Your date of birth.

Loan Experience

Information solutions for the student loan industry are unique. Lenders must wrestle with the burdens of government compliance, industry-specific data protocols, sophisticated risk management models, indenture management, school certifications and more.
It is critical to select an information technology partner that knows your business.
We have the technical skills. More importantly, we understand how technology can solve business problems specific to the student lending business.
We know the regulations on FFEL processing inside and out.
We know the requirements for creating and reading file types unique to the industry—such as CL4, CL5, CAM, CRC, etc.
We offer plug-and-play tools that enhance the value of your existing systems.
We understand your day-to-day processes.
We are active members of industry associations including EFC, NCHELP and PESC.
Because we understand your business needs, we communicate more effectively with your staff and offer creative solutions that are guaranteed to work on-time and on-budget.

Loan Reforms

Anyone have any opinion on the new student loan reforms?There will be interest rate relief, but the most important provision appears to be the "Fair Payment Assurance" provision which will cap loan payments at 15% of disposable income (above poverty line) if one chooses to do so and erase debt after 25 years if there is a balance left on the loan. If the payment doesn't meet the interest, the interest will capitalize, but the balance will still be forgiven after 25 years as long as someone makes a payment and is not in default..

National Student Loan

The National Student Loan Data System (NSLDS) is the U.S. Department of Education's (ED's) central database for student aid. NSLDS receives data from schools, guaranty agencies, the Direct Loan program, the Pell Grant program, and other Department of ED programs. NSLDS Student Access provides a centralized, integrated view of Title IV loans and Pell grants so that recipients of Title IV Aid can access and inquire about their Title IV loans and/or Pell grant data.

Loan Repayments

The Student Loan Repayment program allows agencies to provide student loan repayments, provided that you sign a three year contract with that agency.
As an employee you can receive up to $10,000 a year and up to $60,000 in total repayment benefits. There are no restrictions on what majors or academic areas can receive loan repayment, and receiving loan repayment does not preclude you from receiving other employment benefits, including recruitment, relocation bonuses, and retention allowances.
However, if you transfer agencies your new employer is not required to continue the loan repayment. Also, if you quit or are fired within the three year timeframe, you are required to pay back the loan in full.
For more information about program specifics, visit http://www.opm.gov/oca/pay/studentloan.