Federal Pell Grant Award

The maximum Pell Grant award for the 2007-08 award year (July 1, 2007 to June 30, 2008) is $4,310. The maximum award for the 2008-09 award year (July 1, 2008 to June 30, 2009) is $4,731. The maximum can change each award year and depends on program funding. The amount you get, though, will depend not only on your financial need, but also on your costs to attend school, your status as a full-time or part-time student, and your plans to attend school for a full academic year or less.

Your school can apply Pell Grant funds to your school costs, pay you directly (usually by check), or combine these methods. The school must tell you in writing how much your award will be and how and when you'll be paid. Schools must disburse funds at least once per term (semester, trimester, or quarter). Schools that do not use semesters, trimesters, or quarters must disburse funds at least twice per academic year. soruce:pellgrantonline.com

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Don't get swamped by student loan debt

Minnesota Society of Certified Public Accountants

Are you or someone in your family facing heavy student loan debt? Recent graduates left college with an average of $19,646 in student loan obligations, according to a study by the Project on Student Debt. That was up 8 percent from a year earlier, while average starting salaries rose only 4 percent from the previous year, the study found. That means the debt graduates are carrying is growing faster than their initial chances to earn the money to repay it.

Thereís no reason to despair, though, according to the Minnesota Society of CPAs, because there are several steps that you can follow to manage weighty student debt.

Lower your payments
If your monthly loan costs are simply too much, one simple and immediate solution is to reduce them by finding out if you can lengthen the amount of time you have to pay the loan — from 10 years to 20 years, for example. You should be aware that extending the loan term means that you will end up paying more interest over time, but lowering the monthly payment amount may be your top priority right now. Remember, that you can always increase your monthly payments later — and thereby shorten the length of the loan — if your financial situation improves in the future.

Consider consolidation
Students often sign up for a number of different loans to finance their education. That may mean you end up writing several checks to different lenders at various points in the month. When you consolidate, you take out a new loan that is equal to your total debt and use it to pay off all your existing balances. You then can pay just one student loan bill each month. That will make life easier, but it may not necessarily lower your overall monthly outlay, depending on the new loan terms. If you do find a consolidation loan that will reduce your monthly payments, make sure to examine the loan terms carefully. And remember that if you will be paying off the consolidation loan over a longer period, the loan will cost you more in the end, so it may not be the best choice.

Do well by doing good
Do you wish you could make a difference in the world? It's possible to cancel some or all of your federal student loan balance by signing up for any one of a number of programs aimed at making positive change. For example, teaching in an elementary or secondary school in a low-income area can reduce some federal loan totals, while serving a two-year term in the Peace Corps can also lead to a reduction in your loan balance. Volunteers for AmeriCorps and VISTA may qualify to postpone loan payments while they are involved in the program and receive stipends that can be used to pay down student loan debt. Health professionals who spend two years working with the National Health Service Corps serving communities that have a shortage of medical help can qualify for loan forgiveness of up to $25,000 a year. In addition, many law schools have loan forgiveness programs for newly minted attorneys who take jobs in public interest law. If you have a strong interest in making a difference, then that commitment can also help you relieve some of your student loan obligations.

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Another Hint of Student Loan Troubles?

There's growing evidence that some student lenders were as overly enthusiastic as some mortgage lenders in the recent past. A revealing blog post by an employee of a company that makes private educational loans documents how lenders' dependence on Internet applications and computerized processing might have made it too easy for students to borrow too much.

Christopher Penn of the Student Loan Network says he dissuaded a potential commission-paying client from taking out $50,000 in student loans because Penn realized what he believes predictive software programs couldn't—that the student was probably paying too much for courses that were unlikely to increase his earning power enough to cover the $500-a-month loan payments.

Similar concerns about the industry were voiced last month by federal fraud investigators in Seattle. They charged that a ring of women who allegedly borrowed nearly three-quarters of a million dollars in fraudulent student loans took advantage of student lenders who were overeager and overly reliant on technology.

The credit crunch has forced many lenders to pull back and refuse loans to students they believe to be bad risks. It will take years to see if lenders have modified their software and lending rules too much, enough, or too little.

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Paydirt: Student loan locator

Paying for college is a brow-furrowing challenge. But it's particularly confusing this year. From interest rate resets to loan providers exiting the market, there's so much going on that you could spend your summer sifting through the news. Instead, allow me.

Colleges going direct: Despite all the news about turmoil in the student loan markets, Joe and Jane College should be able to find the money they'll need. No question it's been a tough market for financing student loans, and because there are fewer incentives for lenders to offer federally guaranteed loans, 119 outfits have exited or taken breathers from the business in recent months, according to Finaid.org Publisher Mark Kantrowitz's tally. But financial aid directors are doing everything in their power to ensure that students aren't left loanless.

The turmoil has renewed interest in the Direct Loan Program run by the federal government. Locally, Macalester College and the University of St. Thomas in St. Paul are making the switch to government loans to guarantee that students will have access to funds. Without the switch, almost four in 10 borrowers returning to Macalester would have needed to switch lenders for the coming school year. At St. Thomas, more than half the students would have been in the same boat.

New Web tools for loans: Students in need of private loans have a growing list of resources at their fingertips. Greennote.com lets students borrow money from their social network at a rate rivaling federally guaranteed loans without needing a cosigner or a credit check. The loans have a competitive fixed rate of 6.8 percent; borrowers also pay $49 or a 2 percent "document fee." Lenders earn 5.8 percent on their money after Greennote takes a 1 percent administration fee. Virgin Money USA's Student Payback service (www.virginmoneyus.com) allows parents to borrow money for college from their preferred sources and then sets up a formal agreement for the students to pay back all or part of that debt. File an application with Tuitionbids.com, and lenders will bid on your loan. Simpletuition.com lets you compare various loan types for the best terms.

As always, look to federally guaranteed loans before shopping for alternatives. And read the fine print, even though you don't want to.

Big changes

On Tuesday, a host of changes went into effect that should perk up the ears of students heading to school or making loan payments.

Rates went down: The fixed interest rate for new subsidized Stafford loans dropped Tuesday, from 6.8 to 6 percent; the unsubsidized rate stays the same, courtesy of the College Cost Reduction Act passed by Congress last year. The act cuts the rate in half over the next four years.

This will save Minnesota students entering college in 2008 an average of $2,510 in interest, according to U.S. PIRG, the federation of state Public Interest Research Groups.

Stafford loans taken out before July 1, 2006, have variable rates that reset each year. This year, the rate dropped 3 percentage points, to 4.2 percent. This means it's a fine time to consolidate. If you don't, that sweet rate could go up in July 2009. If you do, you'll lock in at 4.2 percent. Recent graduates within their six-month grace period can lock in at 3.6 percent.

There aren't as many lenders offering consolidation loans because of the unfavorable student loan market and borrower benefits for paying on-time or allowing e-payments have pretty much dried up. But you can consolidate directly with the government, through www.loanconsolidation.ed.gov.

Student loans? You're forgiven: Consolidating through the direct loan program is the road to loan forgiveness for students planning at least a decadelong career in public service. The list of details is lengthy, so do your homework The Project on Student Debt -- www.projectonstudentdebt.org -- is a good place to start.

The College Cost Reduction Act also provides upfront tuition assistance for students who commit to be teachers in high-need areas. Visit studentaid.ed.gov and look for TEACH Grant info. The same site also has a wealth of information about much of what I've covered here.

And speaking of free money, Pell grants for low-income students also increased, from $4,241 to $4,731. This is the first of five increases for the Pell.

Kara McGuire • 612-673-7293

By KARA McGUIRE

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Five Charged With $690,000 in Student Loan Fraud

A ring of five Seattle-area women has been charged with taking out more than $690,000 in fraudulent private student loans, raising concerns by some federal officials that the kinds of abuses that have hammered the subprime mortgage sector may also be lurking in the student lender field.

In an indictment filed in early June in Seattle's federal district court, prosecutors allege that beginning in 2005, Kathy L. Hardy, 59, of Renton, Wash., her two daughters, ages 35 and 20, and two 36-year-old associates filed more than 70 applications for private student loans, often using other people's names or Social Security numbers.

According to the indictment, the vast majority of the women's applications were unsuccessful. But it charges that at least 24 fraudulent loan applications were approved. In a search warrant recently made public, investigators allege that the lenders sent checks—some for more than $40,000—to the women's addresses.

Although made to students, private educational loans are simply standard business transactions, little different from, say, auto loans. Banks typically charge comparatively high interest rates but try to make the applications quick and easy. In contrast, to obtain low-cost federally guaranteed Stafford or Perkins education loans, the federal government requires that students fill out the extensive Free Application for Federal Student Aid, and it requires schools to certify much of that information. The federal government caps the amount it will loan to an undergraduate, typically at a few thousand dollars a year. In addition, federal loan payments are usually made directly to a college and aren't sent to a student's home address.

Investigators and prosecutors say the women took advantage of private lenders' eagerness to make big, higher-interest loans. They also believe the defendants took advantage of a wrinkle that makes fraud in student loans harder to catch than, for example, mortgage fraud. Many lenders allow students to defer payments for as long as they are in school, which can easily mean four or five years. That means borrowers with no intention of paying don't attract lenders' or identity theft victims' attention by defaulting quickly. Finally, the investigators believe the women were able to keep taking out loans for two years despite a trickle of complaints from identity theft victims in part because of the Federal Bureau of Investigation's shift in focus to terrorism, which has slowed prosecution of some other types of cases.

While the credit crunch and some reform proposals may make things tougher for future fraudsters, federal officials say the details of this case raise worries that "there are more cases like this out there." Joseph Velling, the Seattle-based special agent in the Social Security Administration's Office of the Inspector General, who spearheaded the investigation, said lenders approved loans based on applications that should have raised warning flags. "What I found surprising was that these checks were mailed to people living at addresses that hadn't been verified well enough. . . . Banks can check Social Security numbers and names" to make sure they match, for example, he noted.

Some of the fraudulent techniques alleged in the indictment and search warrant appeared to be sophisticated. Velling said, for example, that the defendants used Social Security numbers of people who have the same name or a similar name as the defendants. And the search warrant alleges that the women sometimes provided copies of doctored driver's licenses.

But the search warrant also charges that many loan checks were sent to the same addresses. And it says that in some of the applications, the applicants' names did not match Social Security numbers. Velling added that in at least one case, the Social Security number of a dead person was used.

He said the lenders' investigators became aware of the possible fraud but had trouble persuading federal agencies to take an official interest: "These companies are sitting on more fraud, but they can't get anybody to work them."

Velling said he happened to be working the Seattle FBI office on another case last fall when a call came in from a victim complaining that someone improperly had taken out a student loan in her name. The FBI asked Velling to lead the investigation. By teaming up with other federal and local investigators, as well as the fraud investigators employed by lenders, he says he found many other loan checks that went to the same home addresses or to people with similar-sounding names. "The applications were all done on the Internet. I don't know of one case where there was a face-to-face meeting," Velling added.

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The Problem with Federal Loan Forgiveness Programs

One of the Education Department's top higher education officials says there are significant problems with two of the most-trumpeted new loan forgiveness programs designed to help students afford college.

The public service loan forgiveness program that will begin in 2009 makes good headlines, Diane Auer Jones, assistant secretary for postsecondary education, told attendees of a Washington, D.C., College Savings Foundation conference this month. But many idealistic students hoping to get out from under their federal education debts will be sorely disappointed, she says.

"Guess what? You have to make 10 years of payments," before the remainder of the loan is forgiven, she notes. And most federal education loans are 10-year loans, which means there will be nothing left to be forgiven.

The Education Department is worried "some students will see the program and take on more debt than they would have otherwise, not realizing it is unlikely that most of it will be forgiven," she says.

In addition, the new "Teach grants" that this year started paying up to $4,000 a year to those studying to be teachers in needy schools will turn into costly mistakes for the vast majority of recipients, she says. Teachers who do not end up working in classrooms that qualify as "high need" will see those grants they received while in school turn into loans. Jones says the Education Department's experience with other similar programs indicates 80 percent of the recipients of Teach grants will have to pay them back with interest. The problem, she says, is that newly graduated teachers are having trouble getting hired by what she called "dysfunctional" but needy schools.

Robert Shireman, director of the Project on Student Debt, says that people should realize the new public service forgiveness program will help only those who take low-paying public service jobs. Borrowers who take on high-paying government or nonprofit jobs will have to pay off their loans, he said.

Anyone hoping to take advantage of the loan forgiveness program should make sure to consolidate loans with the federal government's new Income-based Repayment option, Shireman said. That way, low-paid public service workers will have to pay only a reasonable portion of their salary toward their loans, which could be lower than the regular loan payment. After 120 payments, the remainder of the loan will be forgiven. More information can be found at ibrinfo.org.

Congressional staffers say they are working on fixes to the Teach grant law to prevent the kind of unhappy surprises Jones warns of. A major education bill currently being discussed in House-Senate negotiations would broaden the definition of high-need classrooms and give the Education Department the power to give breaks to students who try but fail to get hired by needy schools.

source: usnews

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Cheaper, Bigger, and Cooler Student Loans

Finally, students and parents can celebrate a little good news: It's getting a little easier and cheaper to borrow for higher education.
The government has responded to the credit crunch by allowing all undergraduates to borrow more money from one of the cheapest federal loan programs, cutting interest rates for needy students, and easing repayment for strapped parents. In addition, while turmoil in the financial markets has driven some banks out of the student loan business, it has attracted upstart companies that are now offering students help making alternative arrangements, such as borrowing from rich relatives. So with a little shopping around, students and parents should be able to find lenders offering at least a small discount on modest-size educational loans.

More money: New federal rules taking effect July l increase the amount that almost every full-time undergraduate will be able to borrow from the federal Stafford program to at least $5,500. The newly expanded federal Stafford loan program will allow upperclassmen to borrow up to $7,500. Students older than 24 or who are independent from their parents can borrow at least $6,000 more than that.

The Stafford loan will cost students no more than 6.8 percent a year in interest and 2 percentage points in fees, for a total annual rate of 7.25 percent. And despite the credit crunch, some lenders are still waiving the fees and offering other small discounts.

Lower-cost loans: In addition, Congress cut the interest rate Stafford loans will charge students who qualify as needy to just 6 percent for the academic year that starts in the fall of 2008. It also has ordered further small cuts to the "subsidized" Staffords (which go only to needy students) in future years. Those reductions will cut the total cost of repaying the loan over 10 years by hundreds of dollars.

Best of all, nearly every student who fills out a Free Application for Federal Student Aid—even those who filled out a FAFSA just a few weeks before school starts and whose parents have high or low incomes—can receive a regular federal Stafford loan.

Once students have graduated, those who go into low-paid public service jobs may eventually get some of their education loans forgiven.

Payment flexibility: Parents are also getting a break under the new rules. Parents who take out a new federal PLUS loan—which can cover their child's full cost of attendance after considering other financial aid—will be able to defer payments until six months after the student leaves school. Also, parents facing financial difficulties because of the housing crunch or medical bills may now be able to get a PLUS loan, despite a poor credit record.

Although they offer some special goodies, such as free insurance, PLUS loans aren't cheap. Lenders can charge a maximum fixed rate of 8.5 percent a year plus 4 percentage points in fees, giving a true maximum annual percentage rate of 9.4 percent. (If a parent gets rejected for a PLUS loan because of credit problems, the student can borrow as much as $7,000 a year more through the Stafford program.) Education loan payments are tax deductible to parents with low and middle incomes.

That's why many parents with good credit, solid income, and home equity find that private loans are often better deals. Parents who can persuade a bank to let them tap their home equity despite today's housing and credit crunches may find banks willing to offer rates that start out as low as 4 percent in the summer of 2008 (though, of course, those rates and payments will very likely rise over time). Homeowners not subject to the alternative minimum tax may be able to deduct the home equity payments from their taxes.

Parents who don't want to touch their home equity may be able to find banks willing to make unsecured loans at similarly attractive rates. Discover Financial Services, for example, says it is offering borrowers with credit ratings in the top 20 percent private education loans at half a percentage point below the prime rate—which means it's charging just 4.5 percent in the summer of 2008. Of course, the payments on those loans will rise when prime rises, as it probably will.

Many parents also prefer private loans because they hope to eventually transfer the debt to the child. But advisers warn that although the student's name may be first on the loan, it can be hard to remove a parent's responsibility for the debt if the student ever defaults.

New and different: Several upstart companies have emerged to help students and parents looking for even cheaper and easier ways to borrow. Students who find a friend or relative willing to lend them college money can pay a small fee to Virgin Money or Greennote to do the paperwork to turn informal lending agreements into business deals that are billed and treated like bank loans. Fynanz is attempting to line up investors willing to lend to students they don't know. It typically demands students be backed by a cosigner.

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July 1 Brings Record-Setting Drop in Student Loan Interest Rates

PHOENIX, AZ -- 07/02/08 -- Both new and current student loan borrowers of certain federal Stafford student loans saw two interest-rate drops go into effect yesterday that could save them significant amounts of money on these fixed- and variable-rate student loans. Borrowers with variable-rate Stafford loans saw the biggest rate drop -- three percentage points -- due to the general interest-rate cuts made by the Fed over the past year.

Borrowers holding both subsidized and unsubsidized variable-rate Stafford student loans -- those Stafford loans that were disbursed between July 1, 1998, and June 30, 2006 -- received their record-setting rate reduction when the interest rate on those student loans reset on July 1, as it does every year.

As a result of the rate cuts made by the Fed, borrowers with variable-rate Stafford loans that are in repayment or forbearance saw their interest rate drop from 7.22 percent to 4.21 percent. Borrowers with variable-rate Stafford student loans who are still in school, in their grace period, or in deferment saw the interest rate on their student loans go from 6.62 percent to 3.61 percent.

Borrowers with subsidized Stafford loans that were disbursed on or after July 1, 2006, also saw a reduction in their interest rate, albeit a much smaller one. The rate on these student loans, which was previously fixed at 6.8 percent, dropped to 6 percent yesterday and will continue to fall over the next four years for both new and current borrowers, eventually dropping to 3.4 percent in 2011.

This phased-in reduction to subsidized Stafford loan rates comes as part of the College Cost Reduction and Access Act of 2007, which also increased federal grant aid to needy students. The fixed rates on subsidized Stafford student loans will be incrementally reduced on July 1 each year until July 1, 2012, when interest rates are set to revert back to 6.8 percent, barring new legislation that keeps the rate reductions in place.

Unsubsidized Stafford student loans are unaffected by the legislation. Unsubsidized student loans are those in which borrowers are responsible for all interest that accrues, even if they are not currently required to make any payments on their student loan, as when they are in school at least half time or in an authorized period of deferment. With subsidized college loans, on the other hand, the government will pay any interest that accrues while borrowers are in school at least half time, in an authorized deferment period, or in the grace period they are granted after leaving school, before they must begin repayment on their college loan.

The interest rate on unsubsidized Stafford loans that were disbursed on or after July 1, 2006, remains fixed at 6.8 percent.

Yesterday's rate reductions also apply to federal consolidation loans, which allow borrowers to bundle all their eligible federal college loans -- both fixed-rate and variable, subsidized and unsubsidized -- into one single student loan with a fixed interest rate. Those who consolidate their Stafford student loans while in their six-month grace period could consolidate at a fixed rate as low as 3.61 percent.

"This is not only the biggest drop ever in the in the interest rates on variable loans," says Mark Kantrowitz, publisher of the financial aid website FinAid.org, "but the lowest rates in the history of the student loan program."

About NextStudent

NextStudent, Federal Lender Code 834051, is dedicated to helping students and their families find affordable ways to pay for college. NextStudent offers one-on-one education finance counseling and has a portfolio of highly competitive education finance products and services, including a free online scholarship search engine, private student loans, and information on parent loans, student loan consolidation programs, and college savings plans.

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Student Loans Make Money for Taxpayers

Good way to Student Loans Make Money for Taxpayers ,As banks and private lenders quit offering what they say are money-losing educational loans, one group is making nice profits from some student and parent borrowers: taxpayers. Government agencies estimate that for every $10,000 a parent or graduate student borrows through the federal PLUS loan program in the next year or two, taxpayers will collect anywhere from about $600 to $3,000 above the total cost of the loan by the time the debt is repaid.

Ironically, taxpayers are reaping healthy 5.5 to 30 percent profits on PLUS loans for the same reasons private lenders are losing money. The government has saved money by requiring lenders to send the government a higher percentage of each PLUS payment. And the credit crunch that has raised borrowing costs for private companies has lowered federal interest rates.

That's why PLUS loans are still the cheapest option for many parents. PLUS loans made directly by the federal government charge a fixed 7.9 percent in annual interest and an additional 4 percentage points in upfront fees, for a total annual percentage rate of 8.8 percent. Some private loans are advertising initial rates as low as 5 percent for people with excellent credit. But most borrowers would be charged several points more than that because they have less-than-perfect credit records. In addition, most private loan rates are variable, so payments will rise when other interest rates bounce up. Finally, private loans don't offer PLUS loans' free insurance or flexible repayment options and won't be reduced if a grad student takes a public service job.

As taxpayers, parents are glad that the PLUS program reduces tax burdens, but James Boyle, president of College Parents of America, says that the potential size of the profits raises concerns. "PLUS loan margins need to be watched closely, so that greater benefits go to parents and not the U.S. Treasury," he says. Rep. George Miller, chairman of the House Committee on Education and Labor, noted that the extra money generated from last year's reduction in subsidies to lenders helps increase Pell grants for lower-income students and funds loan repayment programs for public servants and borrowers who end up in low-paying jobs. And that makes "college more affordable for millions of Americans," he says.

The gains from PLUS loans also offset losses from student loans . Undergraduate and graduate students who qualify as needy and thus get a subsidized federal Stafford loan in the next year or so will end up paying back about 16 percent less than the loans ultimately cost taxpayers, according to estimates by the Congressional Budget Office and the Office of Management and Budget. Subsidized Stafford loans cost taxpayers because they don't charge any interest while students attend college. These loans also charge only about 6 percent annual interest once the student leaves school.

Any student who doesn't qualify as needy can take out an "unsubsidized" Stafford loan, which is likely a wash for taxpayers. Those students are charged interest of 6.8 percent a year—and the interest builds up while they are in school—plus 1 to 2 percent in upfront fees, raising the total annual percentage rate to about 7.2 percent. The OMB estimates those loans cost taxpayers about 3 percent, but the CBO estimates taxpayers will make about 2 percent on those loans.

Because the government lends about five times more in costly subsidized Stafford loans than it does as PLUS loans, the entire federally guaranteed educational lending program is projected to cost taxpayers about 2 percent next year, the CBO and OMB agree. In a March analysis—its most recent of the federal education loan program—the CBO estimated that the federal government will make $73.2 billion worth of educational loans in 2009. By the time all those loans are repaid, the loans will very likely have cost taxpayers about $1.7 billion more than the government received in principal, interest, and fees. That's nevertheless a dramatic improvement for taxpayers. As recently as 2005, federal education loans were much less advantageous for taxpayers.

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FAQs about Sallie Mae UK's Education Loan

Frequently asked questions for Sallie Mae UK
1. When do I start repaying?You are not required to make any payments whilst you are attending an eligible university at least part time (50%). You must begin repaying your loans nine months after graduation, a date triggered by the earlier of graduation, enrolment falling below part-time, withdrawal or completion of the programme of study, or your programme of study otherwise coming to an end. Actual amounts and repayment terms will depend on the amount of your Sallie Mae UK loan(s). Payment amounts can vary based on interest rate, loan balance and repayment terms.

2. How long do I have to repay my Sallie Mae UK Education loan?When loans are originated, they are amortised according to the following schedule:

If the loan principal at repayment is £1,000 to £14,999, the loan will be calculated on the basis of a 7-year repayment term (84 months).
If the loan principal at repayment is over £15,000, the loan will be calculated on the basis of a 12-year repayment term (144 months).

3. Should I repay my loan faster if I am able to do so?It depends on your individual circumstance. Sallie Mae UK loans are designed to accommodate various repayment abilities.

In most cases, a lengthy repayment term can be a benefit for borrowers who have difficulty making higher monthly payments on a Sallie Mae UK loan. Upon finishing their university studies, students normally need time to locate employment, and spreading student loan payments out over a longer period can help make more money available to pay for other items such as rent, utilities, etc. The longer repayment term also ensures that a borrower is not locked into an unaffordable, short-term repayment period. With a longer repayment period, however, overall interest costs are higher than when the loan is paid off more quickly.

However, some students do have the means after leaving university to afford a higher monthly repayment amount on their Sallie Mae UK loans, and they can take advantage of our policy that allows partial or full pre-payment at any time, without penalty. By repaying the loan faster, a student can save a significant amount of money in interest costs.

4. What is the current interest rate?Interest rates for the Sallie Mae UK Student Loan are based on the one-month Pound Sterling LIBOR rate, rounded up to the nearest one eighth of one percent (0.125%) and will change monthly if this rate changes. The LIBOR-based rate in effect 1 June 2008 is 5.50%.

5. Contact usBy telephone: 0845 602 0315
By email: studentloan@salliemae.co.uk
By fax: 0845 602 0316

Source: http://www.salliemae.co.uk/faq.asp#one

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$842M in stimulus cash held back from debtors

Government 'offset' program holds back money from 1.5 million tax filers who owe back taxes and child support.
NEW YORK (CNNMoney.com) -- The government has intercepted $842 million in economic stimulus payments for 1.5 million Americans who have skipped out on child support obligations, student loans or tax bills.

The amount withheld represents about 1.5% of the more than $57 billion distributed under the stimulus program. So far, 67 million tax filers have received payments.

About 54% of the cash intercepted will be funneled to states for child support, according to Dean Balamaci, a U.S. Treasury Department official. "We are really proud of that," he added.


Congress and the Bush administration came together earlier this year to enact a $170 billion economic stimulus package. The Treasury started distributing payments - $600 for individuals, $1,200 for couples and $300 per child - to tax filers. The goal was to juice the economy by putting money in the pockets of consumers.

Stimulus Cash for Child Support
One unanticipated side effect of the stimulus program is the recovery of money owed single parents and government programs that support children on welfare.

Of the stimulus cash that has been recaptured, $459 million is being sent to states to distribute for child support payments. And of that amount, $166 million is used to fund state child welfare programs and $292 million goes to custodial parents who have not qualified for welfare payments but are owed child support, according to Balamaci.

"It is important symbolically," said Robert Fellmeth, director of the Children's Advocacy Institute at the University of San Diego School of Law. "The government is saying that you owe this and your debt is more important than having you run out and spend the money."

Social service officials says the intercepted stimulus money helps reimburse state coffers, according to Anthony Farmer, spokesman for the New York State Office of Temporary and Disability Assistance.

"The state has an interest in being involved in helping to collect child support because if people don't pay child support, then those parents go on public assistance," said Farmer.

Nearly 40% of the stimulus money that has been recovered by the Treasury Department is going back to the federal government in the form of back taxes owed and student loans. About 6% will go to states that are owed back taxes. Georgia, Maryland and New York - each of which has received more than $4.5 million - are receiving the biggest stimulus offsets.

The Treasury Offset Program
The stimulus offset effort is part of the Treasury Offset Program, which intercepts federal payments of any kind to pay debts. The entire program has collected $4.6 billion so far this fiscal year.

Generally, the offset program captures money owed by people who are found formally delinquent on tax or child support payments. Tax filers on scheduled pay plans with the government are not affected by the program.

Any debtor whose stimulus check is eligible to be absorbed by the program has already received notice that he or she is delinquent on a debt, according to a Treasury spokesperson.

"These are all situations where some attempt has been made to collect the bills on a voluntary basis," said another spokesperson for the Treasury. The program matches payments due with debts owed by Social Security number and last name, according to a spokesperson.

$842M in stimulus cash held back from debtors

By Catherine Clifford, CNNMoney.com

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Why student loan business turned bad

Why student loan business turned bad
A few years ago, the $47.5 billion student loan market was booming. Now dozens of lenders have pulled out and the leading player is threatening to follow. Washington may have to step in.
By Tami Luhby
NEW YORK (CNNMoney.com) -- For years, financial firms made good money making government-guaranteed loans to college students.

Lenders were guaranteed a minimum interest rate at a healthy margin. Few borrowers defaulted and the federal government backed the loans if they did. Investors snapped up securities based on these loans, giving lenders a steady stream of funding.

Attracted by the easy profits, Wall Street jumped in. Goldman Sachs began investing in student lending businesses. JPMorgan Chase expanded its lending operations and upstarts appeared.

"It was a cash cow," said Mark Kantrowitz, who runs FinAid.

"It was a cash cow," said Mark Kantrowitz, who runs FinAid.org, an online college financing site. "A lot of these lenders popped up because it was a good business, an easy business."

Not any more. The $47.5 billion federal student loan world has been thrown into chaos in recent months. Lending has turned unprofitable for many firms, prompting scores of them to shut their doors or scale back.

Even Sallie Mae - by far the largest lender in the arena with 19% of the market - is questioning how many more loans it can finance. The company has already exited the market for consolidation loans, which are popular among graduates seeking to stretch out the repayment period. Sallie Mae (SLM, Fortune 500) had handled more than one in four of these loans. With the college financing season set to ramp up in May, the lender says it will not be able to meet the expected demand.

"We are literally in daily deliberations about how much further we can go," Sallie Mae Chief Executive Albert Lord said last week. "Our new loans are for the most part going to lose money."

Already, more than 55 lenders, which originate 13% of federal loans, have dropped out of the program, prompting fears that students will not be able to get funds needed for fall tuition. While some financing companies see the crisis as an opportunity to get more business, experts question whether this will be enough to make up for the exodus.

At this point, no one has been denied a loan, industry experts stress. But many are concerned this may change as a wave of students apply this summer, prompting lawmakers to propose temporary fixes.

JPMorgan, for instance, recently stopped making federal-backed loans at certain schools. The nation's fourth-largest lender evaluated the profitability of the loans it originates at each school. Factors included the school's default rate and average size of loans. While it costs the same for the bank to make a $1,000 loan or a $10,000 loan, it earns more on the latter.

The study led Chase (JPM, Fortune 500) to stop making federal loans at some schools, though a spokesman would only say: "It was not a small number."

Though Chase can fund loans through its own deposits instead of the costlier method of selling them to investors as securities, it must consider how much of its precious capital it wants to use for student loans. Ending lending at some schools will allow it to make more loans at more profitable ones. It is also expecting to get additional applications as other lenders leave the program.

Higher financing costs

The student loan squeeze began last fall when Congress reduced the subsidy given to lenders. The federal government provides a guaranteed rate to financial firms. The rate had been based on the commercial paper rate plus 2.34% - and that gave lenders a tidy profit when their cost of funding was low. The margin was cut to 1.79%, which combined with other changes, reduced lenders' yield on the loans by 0.7%.

Had this been the only change, most financial firms might have grumbled but that's about it, experts and lenders say.

Then, the credit crunch hit Wall Street. Mortgage defaults spooked investors of any kind of debt, forcing lenders to offer much higher rates to lure them in. Many lenders rely on securitizing these loans to obtain funding for new student loans. Nowadays, many financial firms find they have to pay investors rates that are 1.3 percentage points higher than last summer's to entice buyers of securities backed by student loans.

The result of lower rates from the government and higher borrowing costs? A profit margin of little to nothing on federal student loans.

"Lenders can't lend at these kinds of spreads and expect to meet the rise in demand that we're seeing from students for this upcoming season," Jack Remondi, Sallie Mae's chief financial officer, said last week. "The cost is just too high to continue those kinds of activity."

Response from Washington

With students starting to apply for funding in droves, financing companies are looking to Washington to jumpstart the market. Lawmakers have floated various proposals, including allowing the government to buy federal student loans or to allow the Federal Financing Bank to provide funds for loans.

The Department of Education on Wednesday said that it supports the effort to allow the government to buy loans at cost, thought it has yet to work out the specifics that would make this move beneficial for banks. But it concluded that the Federal Financing Bank does not have the authority to purchase the debt. Meanwhile, it is ramping up its direct loan program and working with guaranty agencies nationwide to make sure funding is available.

This may not prove enough, experts said.

"The letter fails to respond to questions posed by members of the Senate Banking Committee as to what actions the Treasury Department is willing to take to prevent [a student loan] crisis from occurring," said Christopher Dodd, D-Conn., chair of the Senate Banking Committee.

Some lenders see opportunity

Not all lenders, however, are fleeing the business. Bank of America Corp., for instance, is looking beyond the profitability of each loan, instead seeing college financing as a way to begin relationships with future banking customers.

Last week, the No. 3 lender said that it plans to focus more on the federal student loan market and exit the private loan industry. Bank of America said it hopes to grow loan volume by 20% over the next year.

Bank of America (BAC, Fortune 500) sees the market as an opportunity to connect with students and pitch them checking and savings accounts while they are in school and other products after they graduate.

"It doesn't end after the student gets out of school," said Diane Wagner, a spokeswoman. "We want to make sure we continue that customer relationship."
Why student loan business turned bad
Form CNN

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Sallie Mae snafu causes credit scores to sink

Sallie Mae snafu causes credit scores to sink
A coding error by the nation's largest student lender made some student loan repayments appear delinquent overnight.

NEW YORK (CNNMoney.com) -- As many as 1 million borrowers from Sallie Mae, the nation's largest student lender, may have seen their credit score plunge overnight after a coding error made some student loan repayments appear delinquent.

The error occurred in a routine transfer of account information to the credit bureaus, and was discovered on Friday, but by the time Sallie Mae notified the agencies, Equifax had already posted the information.

As a result, the accounts of some student loan borrowers with graduated loan repayment schedules were shown to be behind on their payments, causing the borrower's credit score to plunge immediately.

According to Tom Joyce, a spokesman for Sallie Mae, less than 10 percent, or 1 million, of Sallie Mae's borrowers were impacted.

Of those people, Joyce said it was unclear how many had been delinquent already.

The credit ratings have now been restored, according to Joyce, and there will be no negative repercussions on borrowers going forward.

"We certainly and fully understand the importance of one's credit rating and we worked with urgency to resolve this situation," Joyce said.

Calls to Equifax were not immediately returned.

Those who think they may be affected are encouraged to call 1-888-2-sallie. For those in the process of trying to get loans, Sallie Mae has offered to supply credit references on request.
Sallie Mae snafu causes credit scores to sink
by CNN

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Federal intervention boosts Sallie Mae

WASHINGTON (AP) -- Shares of industry leader Sallie Mae jumped Wednesday after it became known that the Bush administration is preparing to help struggling lenders in the student lending market by buying up their loans.

Because of the government's decision to step in, the nation's largest student lender will continue to make federally backed loans, Sallie Mae's chief executive, Albert Lord, said in a conference call with officials from colleges and universities.

"We have reached a conclusion that we will stay in the program," Lord said, noting that the steps being taken by the government will be sufficient to keep the company lending through the 2008-09 academic year. "Our commitment is virtually unbounded under this current [government] proposal," he said.

Shares of Sallie Mae, formally known as SLM Corp. (SLM, Fortune 500), rose $1.22, or nearly 6%, to close at $22.

The gain came in a market gutted by economic gloom and concern over record-high oil prices, with the Dow Jones industrial average marking a 2-day slide of more than 425 points.

Corporate fallout: Reston, Va.-based Sallie Mae has suffered since last year from financial losses, a failed buyout and reshuffling of top management. In January, the company announced it was cutting back on its core business of making student loans, becoming more selective and stressing the importance of graduation as a predictor of a person's higher earnings potential and likelihood to repay loans.

And, as it pushed aggressively for federal help in recent weeks, Sallie warned that it could not lose money indefinitely on federally guaranteed student loans.

During these weeks, the distress call over student loan access has been sounded by lenders, Wall Street investors and college administrators. They have gotten a sympathetic hearing - and helpful legislation - on Capitol Hill.

Distress in the $330 billion market for auction-rate securities in recent months - itself an offshoot of the subprime mortgage crisis - has caused more than 60 student lenders, including some state agencies, to stop making federally guaranteed student loans either temporarily or permanently.

Access to capital: On Tuesday, Bush administration officials told lenders that the government would buy up their student loans to ensure the companies have access to capital. Congress recently gave the Education Department the authority to do so.

The administration also has agreed to have the government invest in securities made of student loans bundled together, traditionally the exclusive province of private investing companies in a market that has become stressed. The move is expected to make capital available to student lenders at cheaper rates than what they can get by issuing student loan securities on the market. Borrowing costs for lenders rose dramatically as a result of the disruption in the credit markets.

"It changes the economics of new [federal student] loans in the near term," said David J. Long, an analyst at William Blair & Co. in Chicago.

Lingering concerns: Still, Sallie Mae was unhappy with an aspect of the government plan. It doesn't ensure that student loans are serviced by the same company that originally made them, a situation that could make it harder for students to keep track of their loans and possibly lead to more defaults, company President C.E. Andrews said during the call.

Fees associated with the servicing of student loans can be a lucrative business stream.

Education Secretary Margaret Spellings told the lenders in a letter Wednesday that the government will purchase some of the loans.

"Many lenders today do not have access to funds at a cost that justifies originating new loans," Spellings wrote. "Our plan is designed to provide viability in the marketplace for lenders who step up and make loans in this difficult environment."

Federal intervention boosts Sallie Mae

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Private student loans pose greater risk

When Jeremy Hynd graduated from Vanderbilt University in 2004, he applied to consolidate $44,000 in student loans. With interest rates then at record lows, consolidation offered the opportunity to lock in a 2.5% rate for the life of the loan.
But Hynd discovered that $27,000 of his loans weren't eligible for federal loan consolidation because they were private student loans. The rates on the two private loans have since jumped to 8.7% and 11.7%, from 5% and 8%, when he was in school. Hynd, 24, an analyst for Sony Pictures Television in Los Angeles, recently took on a second full-time job so he can pay off his private loans as quickly as possible.

Private loans are the fastest-growing sector of the multibillion-dollar student loan industry. In 2005-06, college students borrowed a record $17.3 billion in private loans, up 913% from a decade ago, according to a report issued Tuesday by the College Board.

Unlike federal student loans, private loans aren't guaranteed by the federal government. While guaranteed student loans carry a fixed rate of 6.8%, there are no limits on the interest rates and fees private lenders can charge. Some have variable rates of up to 19%.

Once primarily used by graduate and professional students, private loans are becoming increasingly popular with undergrads. Nearly 85% of private loans provided by student lending giant Sallie Mae go to undergraduate students, up from 72% five years ago, says Barry Goulding, a Sallie Mae senior vice president.

While federal Stafford loans are available to all students regardless of their credit history, private lenders check a borrower's credit report before making loans. Students who have no credit history, or poor credit, will typically pay higher rates than those with a good credit history or those with a parent who will co-sign the loan. As a result, the poorest students end up with the most expensive loans, says Luke Swarthout, associate at the State Public Interest Research Groups' Higher Education Project.

"It works entirely counter to our financial aid system, which is intended to provide access and affordability with a particular eye to students who are least able to pay," Swarthout says.

Some major lenders that provide federally guaranteed loans, such as Sallie Mae and Citibank, also offer private loans. Other lenders, such as EduCap, specialize in private student loans.

Behind the rise in private borrowing:

1 Limits on federal

student loans.

The total amount undergraduates who are dependents can borrow through the federal Stafford loan program is $23,000, an amount that hasn't changed since 1992. During the same period, the average annual cost of college tuition and room and board at public, four-year colleges has risen 135% to $12,796 this year, according to the College Board.

In addition to the overall limit, there are caps on the amount undergraduates can borrow each year. On July 1, 2007, the amount of Stafford loans college freshmen can borrow will rise to $3,500 from $2,625, while limits for sophomores will increase to $4,500 from $3,500. But that's still well short of the annual cost of attending many private — and even some public — colleges.

The amount of aid available for low-income students has also stagnated. The maximum Pell Grant, the most common form of direct federal aid for low-income students, is $4,050, a sum Congress hasn't raised since 2003. The most available under the Perkins program, which provides low-interest loans to students with "exceptional" financial need, is $4,000 a year.

As a result, private loans "have become a necessity for a lot of families," says Jerry Cebrzynski, financial aid director for Lake Forest College in Lake Forest, Ill.

Natalie Jones, a sophomore at Northeastern University in Boston, has borrowed the maximum available under the federal Stafford program, and she also won some scholarships. Still, she fell far short of what's needed to pay Northeastern's $40,000 annual tuition and room and board. In her first two years of college, she's borrowed about $39,000 in private loans.

Because Jones' mother, DeLaine Jones, co-signed for the private loans, the interest rate is 7.25%; without a co-signer, it would have been 8.25%. There's no guarantee, though, that the rate won't rise.

Jones, a communications/business major from Apple Valley, Minn., wishes she could borrow more from the federal program but believes the education she's getting is worth the cost of private loans. "I feel I fit into this school," she says. "I'm proud of the fact that I'm getting a private education.

2 Aggressive marketing.

A borrower who plugs "student loans" into an Internet search engine will find dozens of links to student lenders. Many of them promise to approve $50,000 or more in student loans in 15 minutes. Others say they can deliver loans faster and more efficiently than the federal loan program can.

Such claims have led to charges that some private lenders are misleading students. Last month, the United States Student Association, an advocacy group for college students, filed a complaint with the Federal Trade Commission. The association charged that advertising by Loan to Learn, a private lender, tries to discourage borrowers from applying for federal student loans. The advertisements also suggest that the company's loans are a better alternative, the USSA argued.

"There has been a lot of confusion, and I feel students have been deceived in many different ways," says Jennifer Pae, president of the association.

Officials at EduCap, Loan to Learn's parent company, contend that the complaint mischaracterizes the materials it provides potential customers. "We encourage families to take advantage of all government financial aid programs they're eligible for before seeking assistance from lending organizations such as ourselves," says George Pappas, a senior vice president at EduCap.

Many students, though, aren't getting the message. A 2003 analysis by the Public Interest Research Groups found that nearly half of undergraduates with private loans did not first borrow the maximum available from the Stafford program. About a quarter of those students bypassed the federal loan program entirely.

Robert Shireman, director of the Project on Student Debt, says some borrowers might not understand the difference between federal and private loans, which are often provided by the same lenders.

Students may also be intimidated by the application forms for federal loans — a fear, Shireman says, that some private lenders exploit.

Borrowers "are drawn to the easy, quick, '30 seconds and you'll be approved' type of approach we're seeing more and more of now," Shireman says.

3 Financial pressures on parents.

Parents of undergraduate students can supplement their children's aid and loan packages with a federal Parent Loan to Undergraduate Students, or PLUS loan. PLUS loans carry a fixed rate of 8.5%.

The credit standards for these loans are less stringent than those for private loans, and parents can borrow up to the full cost of college.

But parents are increasingly reluctant to borrow for their children's education, lenders and financial aid directors say. Over the past decade, the amount borrowed from the PLUS program has grown at a far slower rate than the amount borrowed from private lenders.

"We're seeing a new generation of parents who want their students to take charge and be liable for their education cost," says Cebrzynski of Lake Forest College.

Parents in their 40s and 50s are "at a place in their life where they're trying to balance the desire to help their son or daughter with education and planning for retirement, and they're really torn," says Sallie Mae's Goulding. Instead, he says, they tend to co-sign a private loan taken out in a student's name.

Co-signing typically provides more favorable rates for student borrowers, but it doesn't get parents off the hook. If the borrower can't make payments, the parents who co-sign are then responsible.

John Bowie, financial aid director at the University of New England in Biddeford, Maine, points out that because current interest rates are relatively low, rates on many co-signed private loans are lower than PLUS loan rates. But he worries that some borrowers might not realize that private loans are like adjustable-rate mortgages: If interest rates rise, the rates on their loans will go up, too.

"If I were a parent, I would do a PLUS before a private loan," Bowie says.

Loans for life?

Private lenders insist the long-term benefits of a college education are worth the extra cost of a private loan. "Even if it's at a slightly higher rate, it still helps the students pull themselves up and live the life they want to live," EduCap's Pappas says.

But if borrowers are unable to find well-paying jobs, they could run into serious financial trouble. Borrowers who are unemployed or suffering economic hardship are entitled to defer payments on their federal loans for up to three years.

Private lenders aren't required to offer hardship deferments, though some do so voluntarily.

In addition, a provision included in the stricter bankruptcy law that took effect last year makes it nearly impossible for borrowers who file for Chapter 7 bankruptcy to erase private student loans. Under the law, borrowers with private loans must show "undue hardship," the same strict standard that applies to federal loans.

Borrowers must convince the court that they'll never earn enough money to repay the loan — an unattainable standard unless the individual is permanently disabled, bankruptcy attorneys say.

Sallie Mae officials say that provision was needed to encourage lenders to offer private loans at reasonable rates.

"It's a loan being made to borrowers with no income, no near-term job prospects and no collateral," Goulding says. Giving additional bankruptcy protection to lenders, he says, "makes common sense."

Consumer groups counter that providers of private student loans don't deserve special bankruptcy protection, because there are no limits on the fees or interest rates they can charge borrowers. And because these loans lack protections included in federal loans, some borrowers could spend the rest of their lives paying off high-interest student loans, they say.

"The assumption is these people won't get stuck because college always works out financially," says Deanne Loonin, an attorney for the National Consumer Law Center. "I think that's a flawed assumption."

Jeremy Hynd, the analyst in Los Angeles, says income from his second job has enabled him to cut the balance on his private loans to about $21,000. But to do so, he's had to work 80 hours a week.

"I'm hoping, if I can keep doing it, I can get it paid off within two years," he says. "Hopefully sooner."

Private student loans pose greater risk


By Sandra Block, USA TODAY

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Sallie Mae: A hot stock, a tough lender

NEW YORK (FORTUNE) - For millions of Americans, the first big financial decision in life is whether to take on a student loan. Student loans are debt, of course, but they represent something different than credit card debt or a car loan: They are part of a quest for a better future.

And they can have lifelong consequences, both good and bad, because for the unwise or the plain unlucky, a student loan can become an inescapable burden. It can almost never be expunged in bankruptcy, and the Supreme Court just ruled that even Social Security income can be garnisheed to pay for defaulted student debt.

The giant of the student loan industry is the Student Loan Marketing Association, better known by its friendly-sounding nickname, Sallie Mae. Many people think that Sallie Mae, like Fannie Mae and Freddie Mac, is sponsored by the U.S. government. And until recently it was. But at the end of 2004, Sallie became an independent, publicly traded company, completing a process begun in 1996.

It is now radically different than it was even five years ago -- an aggressive, highly profitable lender and a stock market superstar. Since 1995 its stock has returned over 1,900 percent, trouncing the S&P 500's 228 percent gain. Today Sallie's stock sells for 22 times earnings and almost ten times tangible book value, "an almost unheard-of valuation for a financial institution," as a Criterion Research report noted.

Sallie's dividend has risen at an average annual clip of 18 percent over the past ten years. And thanks to hefty helpings of stock options, Sallie's top executives have earned fortunes. From 1999 to 2004, just-retired CEO Al Lord -- now the lead investor in a group trying to purchase the Washington Nationals -- received total compensation of $225 million. New CEO Thomas "Tim" Fitzpatrick made $145 million over the same period.

To produce those sorts of numbers, a company usually has to be obsessed with the bottom line, and Sallie is certainly that (a big chunk of its executives' bonuses is based on Sallie's profits). As good as that may be for shareholders, a growing number of critics contend that those profits are coming at the expense of Sallie's other constituents: students and taxpayers.

"Sallie advocates policies we believe are frequently contrary to the interest of students," says Luke Swarthout, a higher-education advisor to the U.S. Public Interest Research Groups. He charges that Sallie used its political clout to shape new legislation that will increase the cost of student loans.

Ira Rheingold, executive director of the National Association of Consumer Advocates, decries Sallie's growing presence in the ugly business of collecting on defaulted debt. Pennsylvania state representative Doug Reichley alleges that Sallie is engaging in "predatory lending."

Indeed, Sallie uses high interest rates and fees to charge students as much as 28 percent annual interest on loans. As a result, some have seen their school-loan debt balloon into six-figure delinquencies that they can't hope to pay when the collection agency (which nowadays may be owned by Sallie) comes calling.

"Sallie Mae's practices are in the best interests of students, schools, and taxpayers," a spokesman says. "We were created 34 years ago to provide access to higher education for Americans, and that's still the business we're in. No one wins if a student borrower is unable to repay his or her loans."

You could also argue that student loans are simply a business, like computers or laundry detergent -- or maybe health care -- and that Sallie's sole responsibility is to deliver results for its shareholders. But lately there are even some doubts about Sallie's ability to do that, given the increased risks it is taking to sustain its high profits.

Two Wall Street analysts actually rate Sallie's stock underperform. Many investors buy the stock because they still see it as a safe, government-backed company. They may be in for a surprise.

Sallie Mae: A hot stock, a tough lender
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AMA Advocates For Provisions To Help Med Students And Residents In Higher Ed Reauthorization Bill

In an effort to aid medical students and residents with their high debt-burden and make sure there are enough young physicians to serve our aging population, the American Medical Association (AMA) successfully secured a number of provisions in the higher education reauthorization bill, known as the College Opportunity and Affordability Act of 2007, which widely passed the House Thursday by a vote of 354-58.


"Most medical students enter the workforce with substantial debt, an average of $140,000 when entering residency" said Chris DeRienzo, AMA Board Member and fourth year medical student at Duke University. "This high debt burden can and does play a role in students' ultimate career choices, potentially deterring them from primary care specialties or practicing in underserved areas."

Among the provisions the AMA advocated for is a federal loan forgiveness program for physicians who serve in areas of need. The bill allows eligible medical specialists with five or more years of graduate medical education to qualify for up to $2,000 of forgiveness annually and up to $10,000 over five years of service.

Other provisions in the bill the AMA advocated for also include:

- Disclosure requirements for private lenders that will improve private student loan transparency,
- Disclosure requirements for certain federal lenders that will make sure applicants are provided notice about terms of consolidation, and
- A Government Accountability Office (GAO) study that will analyze the impact of debt on medical school graduates.

"The AMA is committed to easing the significant financial burdens faced by medical students and residents during their graduate medical education years," said Mr. DeRienzo. "The higher ed reauthorization bill is a positive step, providing incentives that will help encourage physicians to work in underserved areas where patients desperately need them and increase loan transparency that will benefit med students and residents during the cumbersome financial planning process."

The College Opportunity and Affordability Act of 2007, H.R. 4137, amends the Higher Education Act of 1965 (HEA) and reauthorizes it for another five years. The Senate passed its version of the bill on July 26, 2007. The House and Senate will hold a conference to resolve differences between the bills before sending to the president. The HEA expires on March 31, 2008.

In addition to its work on the higher education reauthorization bill, the AMA continues to work with the Department of Education and Congress to permanently reinstate and expand the medical student loan deferment eligibility during residency. The program, known as the "20/220 pathway," allows medical residents to defer payment on their loans for up to three years during their residency training based on economic hardship. The eligibility for medical residents was eliminated in October as part of the College Cost Reduction and Access Act. The AMA worked with the Department of Education to get the program temporarily reinstated during the Department's negotiated rule-making process, which is not expected to be completed until the fall of 2008.

Negotiations are ongoing for permanent reinstatement of the "20/220 pathway." "We are committed to working with Congress and the Department of Education on a long term solution for continued loan deferment eligibility for medical residents," said Mr. DeRienzo.

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Loans for Graduate Students

To be considered for need-based federal, state, and university loan funds, graduate students must complete and submit the FAFSA. Unsubsidized loans and alternative loans, which are not based on need, are available for students who don't qualify for need-based financial aid. UC Davis has chosen to participate in the William D. Ford Direct Loan Program. Under this program, the loan funds come directly from the U.S. government. We are unable to process Federal Family Educational Loan (FFEL) Program applications offered through banks or other lending institutions.

If you are offered a loan, you'll be notifed by an e-mail or postcard to visit the electronic Financial Aid Notice (eFAN) Web site to review your awards and instructed how to accept, decline, or reduce the amount.

Federal Direct (subsidized) Loans
UC Davis offers loans through the William D. Ford Federal Direct Loan Program. When the Financial Aid Office receives your FAFSA from the federal processor, we will usually award one or more of the following federal direct loans according to your eligibility:

Federal Direct (subsidized) Loan
Federal Direct (unsubsidized) Loan
Current Interest Rates as of July 1, 2008. Interest rates and information about the Direct Loan Program are also available online at the Direct Loan Servicer Web site at www.dlssonline.com.

Federal Direct (subsidized) Loans are based on financial need and have a variable interest rate that is adjusted annually, capped at 8.25%. Subsidized means that the interest is paid by the federal government while the student is in schoo1. Repayment begins six months after graduation or withdrawal from school.

You have the option to borrow less by changing the amount online through eFAN before accepting the loan. The minimum amount of Direct Loan offered is $200. For maximum loan amounts, see the Direct Loan Program Maximums chart.

Loan Fees and Repayment Requirements
As a borrower, you will be charged a loan fee when you borrow Federal Direct Stafford Loans. The fee is 2.5% (2% after July 1, 2008), which is deducted proportionately from each disbursement of your loan. After you graduate, leave school, or drop below half-time enrollment, you have a six-month (grace period) before you begin repayment. During the grace period on an unsubsidized loan, you don't have to pay any principal, but interest will be charged. You can either pay the interest or allow it to accumulate. Every educational loan you receive will require that you sign a Promissory Note, in which you will agree to the interest rate and repayment requirements required for the loan.

The Master Promissory Note
Federal Direct Loans and Graduate Plus loans require a Master Promissory Note, which allows a student to receive multiple Direct Loans under one Promissory Note while enrolled at UC Davis. Entering students or first-time borrowers will be asked to sign a Promissory Note online at dlenote.ed.gov. If necessary, students can request a paper Promissory Note from the Financial Aid Office.

Federal Direct (unsubsidized) Loans
Federal Direct Unsubsidized Loans are not based on financial need. Interest is charged beginning the day the loan is disbursed until the loan is repaid in full. Students may pay the interest while they are in school, during the grace period, or during deferment, or they may capitalize the interest (by adding it to the total principal of the loan).

Again, you have the option to borrow less by changing the amount online through eFAN before accepting the loan. For maximum loan amounts, see the Direct Loan Program Maximums chart.

To receive a Federal Direct subsidized or unsubsidized Loan you would need to accept the loan through our electronic Financial Aid Notice (eFAN), and sign the Master Promissory Note online at dlenote.ed.gov.

Graduate Plus Loans
Students who need to borrow funds beyond the federal subsidized, unsubsidized, and Perkins loan limits will now be able to choose between the new federal Grad Plus Loan and Private Loans. The Grad Plus Loan is provided by the William D. Ford Direct Loan Program because UC Davis is a Direct Loan institution for federal student loans. Students in Teaching Credential programs are not eligible for Graduate Plus loans.

The Direct Grad Plus being offered at UC Davis has a fixed interest rate of 7.9%, no annual or aggregate borrowing limits (other than cost of attendance less other financial aid received). While credit checks are required to be eligible for the Grad Plus, the credit criteria are less strict than those associated with private student loans. Furthermore, if you do not meet the credit requirements for a Grad Plus, you may still obtain the loan with an endorser who does meet the credit requirements. All Federal Graduate Plus Loans have a 2.5% origination fee deducted from the loan amount.

The Loan Comparison Chart is designed to help you to consider the significant variables when choosing between the Grad Plus Loan and Alternative Loans. An Alternative Loan may be less expensive depending on your credit score and whether the variable interest rate will increase before you complete repaying the loan.

Direct Plus Loan Request & Credit Authorization Form: Print, complete, and submit it to the Graduate Financial Aid Office. Students in the Schools of Law and Medicine can obtain the form from their respective Financial Aid Office web sites.

Alternative Loans for Graduate Students
Alternative loans, also known as private loans, are obtained through outside lending institutions. They can help a student pay for college expenses that may not be covered by Federal Title IV loans or other financial aid. Alternative loans can assist in filling the 'gap' between what a student receives from all funding sources and what the student's need is.

The Graduate Unit can assist in determining the student's eligibility for loan. The federal government does NOT guarantee the alternative loan so the student must be credit-worthy or secure a credit-worthy cosigner to be eligible.

For more information and an application, visit the Alternative Loans Web page.

Federal Perkins Loan
Federal Perkins Loans are currently at a 5% interest rate (subject to change). Perkins Loans may be limited to a percentage of student's need, their respective programs, or because of demand and limited funds. Repayment begins nine months after graduation or withdrawal from school and may be extended over ten years. Additional deferments are possible for temporary total disability or volunteer service in a private, non-profit organization, VISTA or the Peace Corps. Effective July 1, 2001, for a period not to exceed three years students serving on active duty during a war or other military operation or national emergency, or performing qualifying National Guard duty during a war or other military operation or national emergency. Some teachers of students from low-income families and full-time teachers of handicapped children may also qualify for partial loan cancellation.

If you are offered a Federal Perkins Loan, you'll be asked to complete and submit a Promissory Note, Truth-in-Lending form, Acceptance of Loan Obligation form, and Loan/Borrower Information form to the Financial Aid Office before the loan is disbursed.

Entrance and Exit Loan Counseling Required
Federal regulations require that all first-time borrowers receive entrance loan counseling before funds are disbursed. Entrance Loan Counseling is available online through the Financial Aid Office, or through the Direct Loan Servicer website.

Students who are approaching graduation, and before leaving school, are required to attend Exit Loan counseling to assess their loan indebtedness and to receive a repayment schedule. Student Accounting will provide Exit Loan counseling for your Federal Perkins and University Loans. For Exit Loan Counseling for your Direct Loans, visit the Direct Loan Servicer website.

Federal Student Loan Ombudsman
The Federal Student Aid Ombudsman of the Department of Education helps resolve disputes and solve other problems with federal student loans.

Short-Term, Emergency, and Assistant Loans
If you are experiencing a temporary shortage of funds, the Financial Aid Office administers the UC Davis Short-Term, Emergency, and Assistant Loan Program for all students. These loans are available only to regularly enrolled UC Davis students or new students who have enrolled in classes. The funds may be used for educational purposes only.

To apply, read and complete the application before the loan application review. Assistant and Short-Term Loan review for graduate students takes place Mondays, Wednesdays, Thursdays, and Fridays: 8:30-9:30 a.m.; Tuesdays 11:00 a.m.-12:00 noon.

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Phd student loan: Financial Aid for the Ph.D. Program,Indiana University

Financial Aid for the Ph.D. Program
There are a variety of sources of financial aid for doctoral students, including fellowships awarded by the university to outstanding graduate students. SLIS also provides support to Ph.D. students in the form of graduate assistantships and other kinds of direct aid. Graduate assistantships are usually awarded to students who have been involved in ongoing research projects. Newly admitted students are often awarded other forms of financial aid.

The amount of financial aid available through SLIS for doctoral students is limited and varies from year to year. Generally, it is restricted to full-time students and consists of fellowships, scholarships, fee remissions and research assistantships. Full time is defined as a minimum of 8 credit hours per term.

Fellowships usually carry a cash stipend, plus an award that covers tuition costs for a specified number of credit hours per semester. Scholarship awards, in the approximate range of $1,000 to $3,000 per semester, may be used at the student's discretion to pay tuition, living expenses or other educational costs. The school occasionally provides doctoral financial support in the form of fee remissions and non-resident fee subsidies without an accompanying cash stipend.

One or two research assistantships may be available each year under which the student is appointed to work between 12 and 15 hours per week helping individual faculty with research responsibilities. Assistantships are awarded on the basis of the applicant's academic background. Research assistantships include the payment of up to 9 credit hours of tuition fees per semester, plus an a hourly wage. Continuing students often remain in an assistantship position from the previous year. Adjunct teaching opportunities are also available as a form of financial assistance. Doctoral students given responsibility for teaching a course are paid the same salary as other adjunct faculty members. Students interested in teaching should communicate that interest to their committee chairperson and the associate dean.

Financial aid is used primarily for recruitment purposes. Academic merit is the primary criterion, with economic need being a secondary consideration. Newly admitted students falling into either of these categories are automatically considered for some sort of financial support. Since financial assistance is extremely limited, all international students are expected to come to the university fully funded. International students admitted to the doctoral program are required to submit evidence of financial support for tuition and living expenses adequate to cover the first year of study at Indiana University before the Office of International Admissions will issue the document needed to apply for a visa to enter the United States as a student.

The academic performance of students initially awarded financial aid is reviewed each year for renewal of the award, for up to a maximum of three years. All financial aid decisions are contingent on availability of funds and satisfactory academic performance during completed terms.

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Specific Ph.D. Financial Information,Indiana University

SLIS Departmental Aid Information
Any Ph.D. applicant who fills out the application for SLIS financial aid will be considered for all financial aid awards listed below. A student must be admitted to a graduate degree program in order to be eligible for financial aid from SLIS. Students with financial assistance must make adequate progress toward their degree each semester and meet all other requirements of the award, or financial support may be discontinued. Stipends and salaries earned by graduate students are taxable. It is the responsibility of each recipient to confirm the tax status of any award with the Internal Revenue Service.

Federal Financial Support Programs
There are a variety of sources of financial aid for doctoral students, including fellowships awarded by the university to outstanding graduate students, and government-funded research awards. SLIS also provides support to Ph.D. students in the form of graduate assistantships and other kinds of direct aid. Graduate assistantships are usually awarded to students who have been involved in ongoing research projects. Newly admitted students are often awarded other forms of financial aid. International students are required by the University Graduate School to demonstrate financial independence before being admitted to the program.

Fellowships/Scholarships/Awards
The School also offers some one-time cash fellowship awards to new and continuing students in the SLIS degree programs. One scholarship of particular interest to doctoral students is the Clayton A. Shepherd Scholarship.

University Graduate School GradGrants Center
Resource Page
Rob Kling Social Informatics Fellowship
This fellowship honors Professor Rob Kling's many contributions to social informatics education. The Fellowship is awarded annually, in consultation with Mitzi Lewison, Kling's wife, to a social informatics student enrolled in the doctoral program of the School of Library and Information Science.

Kling was among the first to recognize the political character of computerization. He wrote extensively about value conflicts and social choices, advocated that social values be incorporated in the design of computer-based information systems, and lobbied for changes in public policy. In addition to his scholarly work, he wrote textbooks to introduce students to social informatics and published articles on the challenges of teaching the social uses of computing. Kling's greatest legacy is to the generations of students he introduced to social informatics, those whom he inspired, nurtured, mentored, collaborated with, and to whom he communicated his deep engagement with intellectual life and the world and his commitment to an ethical and moral life.
Source: slis.indiana.edu

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Phd Student loans,Barry University Administers Federal Financial Aid Programs

Barry University Administers Federal Financial Aid Programs-Student Loans
A majority of students enrolled in Barry University School of Social Work receive some form of financial aid through federal financial aid programs (Federal Family Education Loan Program (FFELP)).

Low-interest loans for doctoral students who are registered for at least three credits are provided by private lenders such as banks, credit unions, and savings and loans associations. There are two types of FFELP loans for graduate and professional students:

The Subsidized Federal Stafford Loan is a need-based loan. The government assumes interest for this loan while the student is in school. For graduate and professional students, the annual limit is $8,500.

The Unsubsidized Federal Stafford Loan provides additional funds for educational expenses. This is a non-need based loan. Graduate and professional students can borrow up to $18,500 per year minus any funds received under the subsidized Stafford loan program. For additional loan information please call the University’s Office of Financial Aid at 305/899-3664 or 1/800/756-6000 extension 3664.

There are alternative loan programs for students who find the federal loans insufficient to meet their educational expenses. These loans are offered by private agencies and vary in interest rates and terms. The University’s Financial Aid Office maintains application for these loan programs.

To request information regarding loan based financial aid please contact the University’s Financial Aid Office at 305/899-3664 or 3670 or 1/800/756-6000 extension 3664 or 3670. The University’s Financial Aid Office will mail a complete financial aid application packet. This packet includes the Free Application for Federal Student Aid (FAFSA). Your completed FAFSA should be mailed to a federal processing agency. Within 4–6 weeks, you will receive a Student Aid Report (SAR) from the processing agency. For further information on the FAFSA and SAR.
Doctoral students seeking student loan information or other federal student aid programs should contact:
Barry University Office of Financial Aid
KELLY HOUSE
11300 NE 2nd Avenue
Miami Shores, FL 33161-6695
305-899-3664 or 1-800-756-6000 extension 3664.

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Federal Graduate PLUS Loan Review

Graduate and professional students can borrow under the PLUS Loan Program. The terms and conditions applicable to Parent PLUS Loans also apply to Graduate PLUS loans. You may borrow up to your cost of attendance (determined by your graduate or professional school) minus other financial aid including other loans. You must not have an adverse credit history and repayment begins after the loan is fully disbursed. If you are still enrolled you can qualify for an In-School Deferment to avoid making payments. Contact your school or your servicer once the final year's disbursement is made to request the deferment. The loan carries a fixed rate of 8.5 for FFEL loans and 7.9% for a Direct loans. The standard repayment term is 10 years, but can be up to 25 years depending on your total borrowing.

In order to receive a Graduate PLUS Loan, you must first complete the Free Applicaton for Federal Student Aid (FAFSA) and have used your maximum annual loan eligibility under the Federal Subsidized and Unsubsidized Stafford loan program.

You can use our LoanFinder to compare and apply for a Graduate PLUS loan
source:estudentloan.com/

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Home Schooling and Financial Aid

1. Are there any programs that provide student financial assistance to homeschooled children?

Homeschooled students are eligible for federal student aid for college if they have "completed a secondary school education in a home school setting that is treated as a home school or private school under State law" (Section 484(d)(3) of the Higher Education Act of 1965). Homeschooled students have not been required to take the GED or take an ability-to-benefit test since the Higher Education Amendments of 1998. High school dropouts must take a GED exam or an ability-to-benefit test, but students who have completed a home schooled secondary education that satisfies the requirements of state law do not. For additional information, see Federal Requirements for Homeschoolers Seeking College Admission and Financial Aid, Home School Legal Defense Association (HSLDA), May 2003.

Many private scholarships are open to homeschooled students. Some scholarships, however, require a high school diploma or GED. If a scholarship requires a high school diploma or GED, ask for a clarification or exception before applying. If you encounter resistance, it can help to point out that in 2005 the winner of the Siemens Westinghouse Competition in Math, Science and Technology's $100,000 scholarship was a 16-year-old homeschooled student.

There aren't many scholarships specifically targeted at homeschooled students, other than those sponsored by the Home School Foundation.
Source:FAQs about Financial Aid ,finaid.org

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Student loans consolidation scheme receives alarming response

It has been found out that student loan debt consolidation loan can be of help in many ways. Firstly they enable you to segregate several federal student loans and make a single payment. This amount as calculated is certainly less than the amount which one would have otherwise required to pay as per the original 10-year repayment option. This appears to be good news not only to parents and students but also to academicians and managements of many educational institutions. The reason is quiet simple. They will have more and more students. Students and parents are otherwise apprehensive to when it come to loans. Therefore it is convenient that such a measure can do a great thing to improve the rate of the number of people educated in the whole of United States of America.

This move is hailed by many people for many reasons. Firstly the terms are flexible and it is very easy to make things work out in your favor. A student can be assured of the fact that once he or she enrolls for a program and alternatively funds his education through the loan he will be in a position to repay the money as soon as he gets a comfortable job. It is for this reason this loan has received an alarming and encouraging response. The earlier loan schemes were also good enough however many of them lacked merit when it came to practical applications. This loan is not only important for the educational aspects. It helps a lot in the economy of the nation too. Such loans will make sure than more money is spent on a productive means like education and that there are more employment opportunities and as well as improved chances for increase in the aggregate national income. These loans are a very important issue and people should not take them for granted. If they do so then it will be too late to realize that they have missed something which would otherwise have great impact on career and financial stability. Lots of applications are already expected for these loans.

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Sallie Mae affirms commitment to provide federal student loan access to all students, all schools

Company ready to process applications for Stafford loans with new, increased loan limitsRESTON, Va., June 10, 2008
Sallie Mae, the nation’s leading saving- and paying-for-college company, today reiterated its commitment to fund every eligible federal student loan application received from every student at every school for the upcoming academic year.

“Some lenders have ceased lending to certain school types, such as two-year and proprietary institutions. We want students at those schools to know that we will lend to all students at all schools who need a federal loan to pay for college, just as we have for the last 35 years,” said C.E. Andrews, president, Sallie Mae.
Source: salliemae.com

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Sallie Mae appoints senior vice presidents

Tim Hynes joins Sallie Mae as senior vice president, credit. In this newly created role, Hynes will head the credit department and build the company’s infrastructure, controls and analytics for sound credit risk management and quality asset growth. Previously Hynes served in a variety of consumer finance lending and credit management roles at MBNA America, both in the U.S. and abroad. Most recently, he had profit and loss responsibility for new and existing credit card account marketing for Bank of America. Hynes received a Bachelor of Science degree in business administration from the University of Richmond.

John Kane joins Sallie Mae as senior vice president, collections. In this role, Kane will oversee the company’s contingency and private credit collection activities. Previously, Kane served in a variety of roles within consumer credit operations at MBNA America, including credit acquisition, fraud, collections and delinquency management. Most recently, he directed enterprise fraud strategies for Bank of America’s global consumer group. Kane received a Bachelor of Arts degree in economics from the University of Delaware.

“We are excited to welcome both Tim and John to this great company,” said Jack Hewes, executive vice president and chief credit officer. “Their experience and credit discipline will bring significant value to our growing business.”

Sallie Mae appoints senior vice presidents
source: salliemae.com

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U.S. News & World Report 2009 rankings of Ohio State graduate programs

Fisher College of Business: ranked 27th overall among 425 institutions with MBA programs. Specialty program in supply chain/logistics ranked 7th.
College of Education and Human Ecology: Ohio State ranked 16th overall out of 278 graduate education programs. Specialty programs in vocational/technical education ranked 1st; counseling/personnel services ranked 4th; elementary education, curriculum/instruction, and administration/supervision ranked 6th, and secondary teacher education ranked 7th.
College of Engineering: ranked 29th overall out of 198 institutions with graduate engineering programs. The school also experienced gains in programs for environmental engineering, industrial and systems engineering, mechanical engineering. Computer science ranked 31st.

Moritz College of Law: ranked 32nd in the nation out of 184 ABA-accredited law schools. The specialty program in dispute resolution ranked 5th. U.S. News again identified the College of Law as one of the most racially diverse student bodies in the nation, with 9 percent of the students identified as Asian-American.
College of Medicine: ranked 30th overall among 125 accredited medical schools. The specialty program in primary care ranked 31st. Within the College's School of Allied Medicine, the program in physical therapy ranked 19th.
College of Pharmacy: ranked 5th overall.
Physical Therapy: ranked 19th overall.
Master of Fine Arts: ranked 21st among 220 Master of Fine Arts programs in art and design. Industrial design ranked 5th in the country, and programs in ceramics and glass both ranked 6th.
College of Social and Behavioral Sciences: ranked 33rd in clinical psychology, and 18th in speech-language pathology.
The John Glenn School of Public Affairs ranked 36th out of 269 schools with master's programs.
College of Mathematics and Physical Sciences: ranked 11th in nuclear physics, 33rd overall in mathematics and 26th in physics.

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Montclair State University Announces Its First Ph.D. Program

Montclair State University news.
Montclair State University Announces Its First Ph.D. Program
Ph.D. Program in Counselor Education is Unique to the New York Metropolitan Area
MONTCLAIR, NJ--Montclair State University announced today that it is accepting applicants for its first Ph.D. program: a doctoral program in counselor education that was approved today by the New Jersey Commission on Higher Education.

The only doctoral program in counselor education in the New York metropolitan area, the primary objective of this Ph.D. program is to prepare scholars and practitioners to become leaders in maximizing the mental health and quality of life for individuals, families, communities, and educational organizations.

"I am so proud that we will be offering the first Ph.D. program in counselor education in the region," comments Ada Beth Cutler, Dean of the College of Education and Human Services. "Our faculty is second to none and we expect an overwhelming response from prospective applicants who need this doctoral degree to advance in their field."

Individuals with counselor education doctoral degrees work as academic faculty in higher education and in administrative and managerial roles in health care agencies, nonprofit organizations, community agencies, and student affairs/academic affairs units in colleges and universities as well as in businesses. In addition to working in such agencies and in business, holders of Ph.D. degrees in counselor education also serve as consultants for agencies on specific projects- for example, consultants to state departments of education concerning guidance outreach to underserved populations.

According to U.S. Department of Labor statistics, the demand for counselors is expected to grow much faster than average for all occupations through the year 2016, with overall employment projected to increase by 21 percent. The current Occupational Outlook Handbook for 2008-2009 projects the areas with the highest job growth are:

· substance abuse and behavioral disorder counseling (34 percent expected job increase)--as society becomes more knowledgeable about addiction, it is increasingly common for people to seek treatment;

· mental health counseling (30 percent expected job increase)--counselors will be needed to staff statewide networks that are being established to improve services for children and adolescents with serious emotional disturbances and for their families. Under managed care systems, insurance companies are increasingly providing for reimbursement of counselors as a less costly alternative to psychiatrists and psychologists;

· marriage and family therapy counseling (30 percent expected job increase)--demand will increase in part due to an increased recognition of the field, and as more people become open to seeking help for marital and family problems.

The Montclair State University Ph.D. program in counselor education combines scholarly preparation and advanced counseling and supervision practice in preparation to pursue these and other career opportunities. Applications are being accepted for Fall 2009 study. Review of completed applications, including review for doctoral assistantships, will begin on or about November 1, 2008. The final application deadline for Fall 2009 is February 1, 2009.

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