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What You Need to Know About Student Loans

There is a literal mountain of information I could talk about when it comes to student loans. Fortunately, I hope to wade through the minutia and give you the details that you really need to know about.

The main source of federal student loans is through the Federal Stafford Loan Program. These loans do not require a co-signer, they are simply in your name, as a student. There is also no credit check performed to receive one of these loans.

The application process is very simple, when you complete the FAFSA, there is a question that asks whether you are interested in receiving student loans, answer yes to this question, and when your school receives this information, they will automatically award you the Stafford loans you are eligible for.

Sounds easy right? Well, in all actuality it is very easy. My only word of caution is that student loans are just like any other loan, you have to pay them back! Fortunately, the interest rates are very low and there are numerous repayment options that will allow you to be very flexible with your repayment schedule.

I will post soon on some more details about the Stafford loans such as interest rates, Subsidized vs. Unsubsidized, deferments, forbearance, graduated and income sensitive repayment schedules, and forgiveness options (There really could be a blog dedicated to student loans in and of itself!)

There are also other types of student loans that you may encounter. There are private student loans. This simply means that they are not issued by the Department of Education. These types of loans are issued by many of the big loan lenders: Sallie Mae, Wachovia, Wells Fargo, Nelnet, and even smaller independent lenders such as the SC Student Loan Corporation in South Carolina. Compared to a Stafford loan, these private student loans typically have variable rates that tend to be higher, they also have less flexible repayment options, and most importantly, they do require a credit check. If you do not have established credit or sufficient credit, a co-signer will be required.

I would caution you to keep in mind a few things about student loans. 1st, obviously they are loans and they do have to be repaid! Always remember to factor in student loan payment into your monthly budget after you graduate. Second, when facing the decision of whether or not to take out a student loan, remember that a student loan is always better than a credit card!

Do you have student loans? Would you recommend one loan or lender over another? Are you considering student loans and do not know which is the best?

President Obama’s 2010 Proposed Budget

Since President Obama has taken office he has encountered nothing but tumultuous times. His actions in office thus far have been direct, and have been different than we have seen for many years, now without getting into an argument over the effectiveness of his policies I would like to bring to light an issue that could affect all of us in education.

In President Obama’s 2010 proposed federal budget, he has recommended for the elimination of the Federal Family Education Loan (FFEL) Program. Basically, these are private lenders who provide funds that are guaranteed by the federal government; they compose roughly 70%-80% of all student loans guaranteed across the nation. The president has proposed to do away with this system and revert back to the Direct Loan Program. This would mean that all student borrowers would borrow directly from the U.S. Department of Education and not from the lenders who have provided the massive majority of student loans in the FFEL program.

This is an issue that is being hotly contested among FFEL lenders and participating schools. This would mean a massive change in paradigms among participating schools as well as an elimination of roughly 35,000 jobs across the country due to the collapse of the FFEL lenders.

Let me know what you think. I would caution, that if you don’t know how this would affect you it is worth researching. Asking questions can never be considered a foolish action. I will update on this debate as it is currently being dealt with by lobbyists all over the country.

FAFSA 4 caster

The US Department of Education has introduced a new online tool this year that will prove beneficial in the planning stages for student who are trying to compare school costs, as well as decide how they will pay for their college costs.

FAFSA4caster can provide an estimate of federal student aid eligibility by quickly calculating your EFC (Expected Family Contribution). This program will then determine what type of federal aid (grants, work-study, and loans) you are eligible for and also will provide an estimated amount of these awards.

This tool could be incredibly useful for parents of younger students who would like to receive early estimates of aid, project future scenarios of aid based on expected income, and establish college savings strategies. Current college students can also use this tool to determine how much aid they should receive before they actually apply. In addition, some of the information submitted on the FAFSA4caster, will automatically populate into the actual FAFSA when you submit it.


You can access this tool at