By: Gaurav Bhola, MSM, Managing Editor
As the student loan scandal of 2007 fades into oblivion, students and their families are still not any closer to getting the comprehensive reforms Congress and the regulators promised. Last year, an investigation led by New York Attorney General Andrew Cuomo into the college loan practices of private loan lenders and universities finally brought into the spotlight this diabolical coalition. A New York Times expose lead to Cuomo’s inquiry which revealed that some schools were receiving bribes from lenders in return for steering students to their loan programs.
The investigation revealed financial aid officials and other college officers receiving direct kickbacks from certain lenders in the form of trips, stock options, lunches, and so on.
However, the New Year has been dominated by other headlines; the student loan “scandal” seems forgotten. Meanwhile, Cuomo has moved on to greener pastures. And Congress’s impetus has also cooled, even though some action had been taken by them for example ending the government subsidies given to private school lenders.
Still, college and university loan lenders are not out of trouble yet. The U.S. Department of Education is beginning with administrative inquiries and enforcement actions that will become prominent in 2008. In the latter half of 2007, Congress and the General Accountability Office, amplified their oversight of the schools and the private lenders, as the Federal Student Aid (FSA) office sent official letters to 921 colleges whose school loan volume was mostly, if not completely, with one private lender.
The letters were serious in tone and message, intending to remind universities that their actions had to take into account only students’ interests and mustn’t violate the Higher Education Act of 1965 and its amended regulations. Out of the original 921 colleges, 55 colleges and 23 lenders received notification requesting documents and information that may show documentation of improper allurements and inducements of financial aid officials. It is likely that there will be some enforcement action by the Education Department in 2008.
But the U.S. Congress has more power to bring about change than a federal government department. For example, last year Congress passed an amended version of the Student Loan Sunshine Act. by a vote of 414-3, the bill would force colleges and loan lenders to follow stringent codes of conduct; provide full disclosure of school-lender alliances; ban lender gifts to financial aid officers; and protect students from perpetual marketing practices.
The current state of the economy has shifted the focus in Congress from the student loan industry discrepancies. The government is concentrating instead on the credit crunch, housing and mortgage markets. The remedy of the college loan industry is an afterthought, no longer on their radar. While, Congress shows apathy towards the students and their families, certain private loan lenders and colleges rejoice in the legislature’s disinterest.
Saturday, May 17, 2008
Student Loan Scandal Dissipates in Congress
Friday, May 16, 2008
Tips on Getting Private Student Loans
By: Gaurav Bhola, MSM, Managing Editor
College students and their families have started their search for student loans. Due to the lack of liquidity in the credit markets, school students have had difficulty accessing student loans. In the last few months, many college loan lenders have announced that they are suspending or eliminating student loan programs. Recently, over 37 student loan lenders have exited or suspended their involvement in the federally guaranteed Federal Family Education Loan Program. This is the result of the collapse of auction rate securities and the residual effects of the subprime mortgage crisis. Herein, the students and their families have to learn ways to seek out loans from private school lenders.
As more and more loan companies exit the government loan program, educational lending has entered a precarious position. Now more students will turn to private lenders to finance their education. The main difference between federal student loans and private loans is that interest rates are fixed for life by the government on federal student loans.
It is always best to first exhaust subsidized and unsubsidized Stafford loans and the Parent PLUS loans before applying for private loans. While federal loans are helpful up to a point, private loans have now become necessary. In this time of economic downturn, many parents are being denied Federal PLUS loans due to their credit history. A credit history includes foreclosures, bankruptcy, or being late by more than 90 days on debt repayment.
If Stafford loans aren’t able to meet your comprehensive financial aid needs then apply for private loans to make up the difference. Additionally, for international students, private loans are the only viable option as these students are not allowed to apply for federal student loan programs. Private loans are a valuable resource for non-dependent students as well.
In addition to searching for private loans at the college and university financial aid office, now you can apply online. There are two forms of private student loans offered to university students: school-certified and non-school-certified. The interest rates and fees are usually lower for school-certified student loans. You can go to premierstudentloan.com to get competitive private loan quotes.
Most people don’t realize that every time you apply for a loan, your credit score is reduced by five points. The private loan lenders have five or six tiers of varying interest rates and fees that are offered to the borrower based on their credit score.
Applying to nine or ten loan lenders could lower your credit score, thus increase your loan interest rate. Ideally, you want to apply to three or four private loans. Also, consider using a co-signer with good credit to get more favorable loan terms. Hopefully, now you can make more informed decisions regarding your private loan.
Thursday, May 15, 2008
Saving for College
Even at today's tuition rates, saving for a child's education may seem like an impossible mountain to climb. For the sake of your child's future, though, now is the time to strap on those boots and grab that ice axe.
When saving money, time and discipline are your most powerful tools. If you set aside a little each week when your little one is young, you can build a substantial sum by the time junior becomes a college freshman. In reality, many parents aren't able to save consistently until their children are older. For these moms and dads, the availability of specialized college savings programs helps maximize savings quickly.
College Savings Plans: The Options
The following programs offer advantages over traditional savings accounts.
Section 529 Plans. There are two types of Section 529 Plans: the college savings plan and the prepaid tuition plan. The first is a tax-advantaged investment account. The latter allows for purchasing tuition credits that essentially lock-in current tuition rates.
Coverdell ESA. The Coverdell ESA, also known as the educational IRA, offers advantages including tax-free earnings and certain qualified tax-free distributions.
Rebate Programs. Some institutions offer loyalty rebates that help maximize your college savings over time. Two examples are BabyMint and Fidelity Investments' 529 Plan credit card. Both allow you to earn rebates through purchases of everyday products and services; these rebates are automatically transferred into your designated college savings account.
College student loans
There will be times when saving enough in the time available isn't realistic. Don't panic-you have contingency options. There are many college student loan programs available that can help fund that tuition shortfall. Talk to your child's counselor about federal student loans, and to your bank about private student loans and student loan refinancing. Depending on your situation, some government student loans may be almost automatic. Later, you can consolidate student loan debt as appropriate to your financial situation.
Now that you're in your boots, you're ready for the college-financing climb. It may be late in the season, but you won't regret starting up that mountain now.
By: Catherine Brock
Wednesday, May 14, 2008
Reap Some Rewards: Get a Scholarship
Most high school graduates think that scholarships are reserved for superstar football quarterbacks or academic wunderkinds. Fortunately, for the 99.9 percent of high school graduates who don't fall into those two categories, there are hundreds of different scholarships available. Even if you don't finish first in the race for grants, there are student loan options that can help overcome tuition hurdles.
More scholarships than you can shake a syllabus at
The volume of scholarship opportunities has boomed in recent years. There are new scholarships based on a variety of categories, including:
Academics. (Generally given to students with high Grade Point Averages and excellent standardized test scores.)
Athletics. (Not only traditional sports like football and basketball, but less popular endeavors like golf, crew, and track can score you some aid.)
Financial need. (Based on a student's finances. Can help low-income grads to attend prestigious universities.)
Demographics. (Local organizations award hometown heroes grants on a yearly basis.)
Other options include scholarships based on military service, the arts, and various occupations. Do some surfing on the Internet. You'll be surprised at how many different types are available, including scholarships for left-handed students and the Klingon Language Institute scholarships. Don't be afraid to boldly research where no man (or woman) has gone before.
Create a fallback plan
If none of these scholarship programs work out, there are plenty of student loan packages available to you. A student can choose government programs, such as the Stafford Loans (given to students) and the PLUS Loans (for parents). There are also private student loans, which compete with government loans in terms of rate, but generally involve less paper work.
The early bird catches the worm when it comes to scholarships; so if college looms, it's best for a student to start a scholarship search early. Check with local lenders regarding the best time to apply for a student loan. Consider both options, and you'll have passed this crash course in financing a college education. Besides, it never hurts to have a bird's eye view of your financial options.
By: MortgageLoan.com
Tuesday, May 13, 2008
Four Strategies to Help with Student Loan Debt
Traditionally, students throw mortarboards into the air when they graduate. For many college students, graduation is also a time when they begin throwing their money away by not repaying student loans properly.
After suffering through years of cramped apartments and ramen noodle diners, most college graduates are eager to get a job and start earning money. One more lesson, however, must be learned. Students need to understand the correct way to repay their student loans. To effectively manage their debt, grads should follow these five strategies:
1. Pay on time or call your lender
New jobs and salaries also mean more financial responsibilities. Sometimes, a loan payment gets missed in the transition. To keep their credit reports unmarred, many graduates opt for an automatic repayment plan. This simple procedure automatically deducts the loan payment from a checking or savings account.
If a financial setback makes a late payment unavoidable, contact your lender and explain the situation. You may be able to work out a plan to deal with short-term problems. If you say nothing and the loan goes into default, you face serious legal and financial problems.
2. Choose the right repayment option
As graduates get a handle on their cash flow, they can pick out the best loan repayment option. People in low-paying, entry level jobs may opt for income-sensitive repayment programs that align a monthly payment with their income. For those earning a heftier salary, a better fit is the standard repayment option with fixed payments and low interest costs. Watch out for interest-only payments that shrink monthly obligations but don't reduce debt over the long haul.
3. Consider consolidation
Debt consolidation is a great choice if you have more than $10,000 in loans at rates higher than current market interest rates. Be aware that the move can extend the term of your loan repayment, so make sure that you understand how much you'll be spending in long-term interest. Also, avoid combining government loans with private loans. You'll negate federal benefits such as deferment or subsidized rates.
4. Don't repay right away
Life after school isn't always rosy. Unemployment, economic hardship, or a desire to return to school can crimp your ability to repay your student loan.
You do have options. Deferment, for example, allows you to stop making payments for a specified period of time. There's a three-year limit for cases of economic hardship, but the time is unlimited if you re-enroll in school. You can also choose forbearance. Reserved only for cases of severe hardship, forbearance is granted in yearly increments. In either case, interest continues to accrue on all student loans.
A diploma in hand doesn't mean a student's education is finished. Students should study all the repayment and consolidation options, if financial times get tough. The learning curve can be unforgiving out in the real world. Smart graduates will improve their debt management IQs by learning how to best repay their student loans.
By: Greg Mischio
Monday, May 12, 2008
U.S. ready for emergency student loan advances
The U.S. Education Department will be ready to process emergency advances for student loans by June 1, the Wall Street Journal said on Monday, citing a letter to be sent Monday to state agencies that would enforce the program.
Under the plan, the Education Department would temporarily be allowed to pump liquidity into the sluggish secondary market for federally guaranteed student loan debt.
The move comes under a student loan market stabilization plan that is aimed at helping lenders who have warned of a potential loan shortage in coming months as millions of students seek financial aid for college.
The plan, expected to be signed into law, is also meant to let the Education Department funnel capital for loans to state guaranty agencies under a "lender of last resort" program for students and for colleges if they faced loan shortages from other sources.
Education Department officials were not available immediately for comment.
U.S. ready for emergency student loan advances: report
(Reporting by Aarthi Sivaraman; Editing by Quentin Bryar)
NEW YORK (Reuters)
Student loan plan goes to Bush
WASHINGTON (Reuters) - The Bush administration will get broad price-setting powers under a student loan market stabilization plan given final approval on Thursday by the U.S. Congress, lifting the stock prices of student loan providers.
The House of Representatives voted 388-21 to approve the bipartisan legislation that next goes to President George W. Bush, who is expected to sign it into law.
Bush said he was pleased Congress had quickly passed the measure he says could potentially help millions of students.
"By granting the Department of Education greater authority to purchase Federal student loans, today's action should ease the anxiety many students may feel about their ability to finance their education this fall," Bush said in a statement.
The plan is aimed at helping lenders such as Sallie Mae get through a rough patch in the capital markets.
Hit hard by subprime mortgage crisis fallout, lenders have warned of a potential loan shortage in coming months as millions of students seek financial aid for college.
Under the plan, the U.S. Education Department would temporarily be allowed to pump liquidity into the sluggish secondary market for federally guaranteed student loan debt.
That would assist lenders, such as Sallie Mae, which depend on that market to raise new capital to make new loans.
The bill would also let the Education Department funnel capital for loans to state guaranty agencies under a "lender of last resort" program for students and for colleges if they faced loan shortages from other sources.
Some college financial aid experts are concerned about the leeway the administration will get under the plan.
"This is an industry that has taken the taxpayers to the cleaners for years," said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers.
Robert Shireman, executive director of the Project on Student Debt, a financial aid research and advocacy group, was more charitable about the widely supported plan.
"I don't see what Congress has done as a bailout. I see it as securing backstops we already have in existence," he said.
How the Education Department carries out the plan will largely determine whether or not it begins to look like a bailout for the $85 billion student loan industry, he said.
SALLIE MAE SHARES RISE
Sallie Mae shares closed up 7.8 percent. More diversified lenders also rose. In broadly bullish New York Stock Exchange trading, Bank of America Corp rose 4.9 percent; Citigroup Inc, 4.2 percent and JPMorgan Chase & Co 3.4 percent.
Sallie Mae Chief Financial Officer Jack Remondi told Reuters in an interview the legislation "gives the department pretty broad authority to do different things."
"It could involve everything from buying perhaps participation interest in loans to actually buying whole loans. They will have to decide which direction," he added.
In a related matter, Federal Reserve Chairman Ben Bernanke told Senate Banking Committee Chairman Christopher Dodd that Congress might want to revisit the issue of government subsidies paid to student loan providers.
Bernanke's April 25 letter to Dodd, a Connecticut Democrat, was made public on Thursday. In it, Bernanke said recent student loan market problems stem from many causes, including cuts made last year by Congress in lender subsidies.
"Congress may well wish to revisit the question" of whether setting hard subsidy levels for loan providers is the best approach, Bernanke said, suggesting a more flexible policy in which subsidies could adjust according to market conditions.
Student loan plan goes to Bush
Thu May 1, 2008 7:53pm EDT
By Kevin Drawbaugh and Rachelle Younglai
(Editing by Andre Grenon, Phil Berlowitz)
US student loan bill advances, Bush will sign
WASHINGTON (Reuters) - The U.S. Senate on Wednesday unanimously approved legislation aimed at stabilizing the student loan market and heading off what lenders warn could be a shortage of loans in coming months as millions of college students lock in their finances before heading to school.
The bill would temporarily allow the U.S. Education Department to inject liquidity into the secondary market for student loans, which seized up recently after investors were spooked by the subprime mortgage crisis.
The department would be empowered until mid-2009 to buy federally guaranteed loans that lenders are unable to sell as securitized debt. Many lenders depend on selling such debt to raise money for new loans.
The bill would also let the Education Department funnel capital for loans to state guaranty agencies under a "lender of last resort" program -- not only for students, but for entire colleges, if they face loan shortages from other sources.
The House of Representatives was expected to vote in favor of the bill, possibly as soon as Thursday. The White House said on Wednesday that President George W. Bush supports the legislation and will sign it.
Loan providers such as Sallie Mae (SLM.N: Quote, Profile, Research), Bank of America Corp (BAC.N: Quote, Profile, Research), Citigroup (C.N: Quote, Profile, Research), JPMorgan Chase & Co (JPM.N: Quote, Profile, Research) and many others in the $85-billion industry would be affected.
Sallie Mae said the bill would give the Education Department "at no cost to taxpayers, the flexibility to implement a comprehensive, equitable solution to the credit crunch in the student loan capital markets."
The company urged the Education Department to move as quickly to write regulations to implement the bill as Congress had in adopting it. Sallie Mae, known formally as SLM Corp, is the nation's largest student loans provider.
The industry has also been shaken by the recent exit of some lenders from the federally guaranteed student loan program after the government slashed subsidies paid to lenders. The cuts reduced the profitability of making such loans.
Most U.S. student lending goes through the guaranteed loan program. Dozens of lenders, accounting for about 14 percent of federally guaranteed student loans issued, have dropped out, but many more lenders are still active in the business.
UNCERTAINTY FOR STUDENTS
The situation is causing concern among lenders and lawmakers about whether enough loans will be available this summer, typically the peak season for student lending.
"The full scope of the problem isn't clear yet, but we can't afford to wait for a full-blown crisis before we act," said Massachusetts Democrat Edward Kennedy, chairman of the Senate education committee and sponsor of the Senate bill.
Some critics of the student loan industry have expressed skepticism about the severity of any crisis for students, while acknowledging lenders face problems.
Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers, said a "frenzy" had been created by lenders' warnings about a potential loan shortage. "We have no evidence that anybody is being denied loans right now," Nassirian said.
Stephen Burd, senior research fellow at think tank New America Foundation, said some lenders were having financing problems. "We just don't think the government should let the loan industry define the terms of the intervention."
In addition to pumping liquidity into the secondary market, the bill would let students borrow more money under the federal loan program; give parents of students more time to repay federal college loans; and ensure that parents hit by the mortgage crisis can still qualify for college loans.
The Senate added an amendment to the bill that would make more federal grant money available to about 100,000 students.
The student loan industry was embarrassed last year by revelations of kickback schemes and conflicts of interest among some lenders and colleges. The scandal threw the industry on the defensive just as Democrats determined to reform the loan system took over Congress after the November 2006 elections.
US student loan bill advances, Bush will sign
Thu May 1, 2008 6:03pm EDT
By Kevin Drawbaugh
Five Ideas for Saving Money on Student Loans
Student loans provide the springboard for bright careers and higher earnings. They can also drag a young professional deep into a financial hole if his repayment isn't managed wisely.
Enthusiasm abounds for college graduates. Exciting career opportunities await-including potential for high earnings, interesting travel and, if you're lucky, a really nice parking space. It sounds rosy, but there's a thorny side to the story: Student loans, which graduates sometimes forget, need to be repaid.
Student loans can provide a financial education outside the classroom. Learn how to shrewdly manage your loans, and you'll develop an understanding of debt management that will benefit you for the rest of your life. Here are five ideas to get you started on the road to repayment:
1. Consolidate
If your loans are at rates higher than what's currently on the market, consolidation might be an option. Combining all your student debts into one loan can significantly reduce your monthly payment-but it may extend the term of the loan. Avoid consolidation unless you have in excess of $10,000 in student loans, and be careful not to mix private loans with government ones. If you combine the two, you lose federal benefits such as deferments and subsidized interest.
2. Automate payments
With your hectic everyday pace, it's easy to miss a bill payment now and then. Late paying wreaks havoc on your credit score. Avoid this dilemma by setting up automatic bill payments. Your monthly bill will be deducted automatically from your savings or checking account. As an added bonus, many lenders offer a reduced interest rate for loans with automatic deduction.
3. Don't be late
Arriving late to a party may be fashionable, but if your payment arrives late, your credit score suffers. If financial woes are causing you to fall behind on your bills, contact your lender immediately. Work with them to find a solution to get you over any short-term hurdles.
4. Look for cash incentives
Many lenders offer cash incentives for good repayment performance. Make 12 payments in a row, for example, and a lender may credit $1,000 to your account. Research various lenders to find the best cash-back program.
5. Choose the right repayment option
Many different types exist; be sure to pick one that fits your financial situation. Options include:
Standard repayment: Monthly payments are fixed up to 30 years. This option offers the lowest overall interest costs.
Income sensitive repayment: Monthly payments adjust annually based on your income. The more you make, the faster your loan gets paid off.
Graduated repayment: Initial repayment amounts start out low, and then steadily rise during the life of the loan.
Brighter grads will learn to view their loans as more of an opportunity than an albatross. Instead of focusing all your attention on investments and 401(k) programs, consider the above methods for repaying your student loans. A penny saved is a penny earned, a fact that holds true for anyone who understands the value of effective debt management.
By: Greg Mischio
Student Loans: Outlook 2008
Scandal rocked the student loan industry in 2007-what's on tap for 2008?
When Jackie, the TV weather person, gives her prediction for the week, you don't expect her to mention what's happening in the student loan industry. That's a good thing, because the outlook might involve lingering thunderstorms and high-pressure systems, as colleges and lenders try to rebound from some bad business that was uncovered last year.
Student loans and scandal
In 2007, the student loan industry was marred by scandal. Some colleges and universities were found to have revenue-sharing agreements with lenders who were receiving financial kickbacks for funneling their students to only one lender. As a result, nearly 1,000 colleges and universities received letters from the Federal Student Aid office (FSA) reminding them of their responsibility to provide students with several lender options. A few months after sending the initial batch of letters, the FSA followed up with 55 colleges and 23 lenders, asking for further documentation of their student loan activity.
Stricter standards
In the aftermath of last year's scandal, colleges and student lenders can expect 2008 to be characterized by stricter interpretation of existing legislation, further scrutiny into college records and, possibly, enforcement actions to protect a student's right to choose his own lender.
The Higher Education Act of 1965 (HEA) doesn't permit colleges to receive payments from lenders in exchange for student loan applications. The exact definition of what constitutes an enforceable violation, however, is open to interpretation. Traditionally, the FSA has acted on the belief that a violation happens when the lender gives the incentive specifically in return for exclusive student referrals. But the lender has been allowed to provide schools with other types of incentives, such as those intended to further the lender's advertising, branding, or goodwill objectives.
A lender's burden
In the latter part of 2007, the FSA announced that a new interpretation of the HEA will take effect in July, 2008. Under the new interpretation, the FSA places the burden on the lender to prove that payments made to colleges were not for the purposes of obtaining student loan applications. This burden of proof may make it difficult for lenders to partner with colleges on any type of business development program.
The FSA might also start conducting more on-site reviews of a college's financial aid records, as well as their business dealings with lenders. These examinations may go as far as reviewing relationships between lenders and affiliate groups, such as alumni organizations. While the existing federal legislation doesn't prohibit arrangements made between lenders and affiliate groups, at least one lender in 2007 was forced to stop paying an alumni group for exclusive student loan referrals.
Where schools or lenders are found to be non-compliant, the FSA may initiate action to suspend or terminate that entity's participation in the Federal Family Education Loan Program (FFEL). Hopefully, such measures can be avoided, because the students will be the ones to get stuck in the downpour.
Teenage Children - Balancing the Relationship
Teenagers! One minute as parents our relationship is great the next Whoosh! Up it goes in flames - again. Is that how seems in your family?
Bringing up teenagers is for sure a challenging prospect and one of seemingly precarious balance. It is so easy to drop the wrong side of the ridge and at times it seems that whatever you do it is 'out of the chip pan and into the fire' [an English saying].
It used to be that way in my family, all calm and comfortable with everyone getting on well with their own things, me with my hobbies and my teenage children doing well? whatever it is that teenagers do?.and that was part of the problem?. the gap of ages so to speak.
It used to really wind me up when following a perfectly innocent comment all hell would break lose and to the chain reaction would burst forth. One minute calm and tranquillity? the next into the heart of the furnace with each providing the fuel to the other.
The trigger that fired, created anger and anger spurned more anger, it was getting ridiculous and no one 'won' or gained anything from it other than a bad feeling followed by guilt.
But as parents we have the benefit of having been there, done that?. As is said so often and you would think that as mature adults we would see the situations for what they are.
Eventually the light came on as to how to break the cycle?..You know that other old saying? It takes two to have an argument? well I MUST be getting older as I hear myself using the very same phrases so often heard of my parents and grand parents, yes they have stood the test of time and more likely because of the truth that lies within them. So that was it really, I realised that the best way to solve this was to manage things that I had the ability to control. The thing that had been staring me in the face was really quite simple?It takes two to have an argument? so remove myself from the situation?. Result? - no argument and no I didn't leave the family!
What I did though was research, study and then put into action a number of techniques that would help me to manage my own anger and thereby starve the furnace of it's fuel? result?... no arguments, I felt much much better, the tension like atmosphere has pretty much gone and yes, when my children wind me up I can manage to discuss it with them without the original scenario returning to the discussion.
Life is good again, understanding has grown in leaps and bounds and I now know that 'Garage' isn't only about automobiles!
Anger Management is for many rather difficult to explore. JJ Coopers program takes a comprehensive look at practical, proven methods gained by helping people deal with anger and anger issues. http://www.anger-management-ebook.com
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How You Can Get Affordable Supplemental Health Car
Our older years are supposed to be our golden years, yet many seniors are faced with financial burdens they shouldn’t have to deal with – especially after long lives of education, taking care of families, working, and paying taxes! Where’s the fun in the golden years if they’re spent worrying about how to pay for the left over health care costs that Medicare failed to pick up?
That’s where affordable supplemental health care insurance for seniors comes into the picture. By purchasing an affordable supplemental health care insurance policy, seniors can rest assured that all of their health care costs will be covered, and not just the health care Medicare covers.
When seniors purchase an affordable supplemental health care insurance policy, they can stop stressing about the next health care bill the mailman drops off. After all, if you already have health care insurance, you shouldn’t have to worry about health care coverage and costs, right? Wrong. Some health care insurance, such as Medicare for seniors, doesn’t cover all health care costs. Luckily, with an affordable supplemental health care insurance policy, seniors won’t have to stress anymore.
Many health insurance companies offer affordable supplemental health care insurance policies that are perfect for seniors; however, Medicare offers several affordable supplemental health care insurance policies for seniors as well. When choosing an affordable supplemental health care insurance plan for seniors, the goal is to choose a plan that isn’t going to cost anymore than paying for the additional health care costs out-of-pocket would cost. Many seniors are on limited incomes as it is, so considering one of the plans Medicare offers is a good start.
Medicare plans include the original Medicare with Medicare Supplement plan; the Medicare Part D plan which offers prescription drug coverage; the managed care plan, which includes HMOs, PPOs, POS, and cost plans; the Medical Savings Account Plan; the Religious Fraternal Society Benefit Plan; and the Private Fee-for-Service plan.
How to Get Affordable Supplemental Health Care Insurance for Seniors How to make self employed health insurance more affordable
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How You Can Get Affordable Supplemental Health Care Insurance For Seniors by Elizabeth Newberry
Sunday, May 11, 2008
How Do Second Mortgages Work?
A second mortgage is a fixed rate, simple interest, installment loan, recorded as a lien on the property title deed behind the existing first mortgage. Equity in your home can be accessed without refinancing the current mortgage, which can save money on costs, and retain an existing low rate.
The guidelines can vary depending on the lender, some may have a limit of 80% loan to value, while others may offer loans up to 100% of value. Homeowners who have little, or no equity, may be able to qualify for cash out, but good credit is the key to a high loan to value second mortgage program. Also, see FHA loans as an alternative for a high loan to value, or lower credit scores.
The cash out from a second mortgage can be used for any purpose. Paying off high interest debt is a common use which can provide several benefits, such as: reducing monthly payments, changing compound interest into simple interest, and saving money from a possible tax deduction.
Second mortgage rates can be influenced by a number of factors such as: credit scores, the amount of the loan requested, debt to income ratio, your disposable income, and the value of your home.
Payment terms are usually offered in 5 year increments, which can range from 5 to 30 years. Fully amortized, fixed rate second mortgages are scheduled to be paid off at the end of the designated term as specified in the loan documents, with no balloon payment due.
Second mortgage interest payments may be tax deductible for a primary home, with a limitation for the deduction set at the a maximum of $100,000 or 100% of value. Check with an advisor.
The full second mortgage balance, minus any closing costs, is paid in one lump sum at the close of the loan process, unless there is an agreement to pay any third parties directly. For example, a lender may require some borrowers to pay off certain debts in order to meet the debt to income ratio. Also, if you have a line of credit or home equity loan, it must be paid off with the new loan.
Credit Crisis will Affect Student Loans
Many students enter school with the hopes of bettering themselves and earning more income. A recent announcement by Sallie Mae that they'll no longer make loans to subprime borrowers may throw a wrench in the goals of many students, particularly those with bad credit.
Throw a pebble into a pond, and you'll see gentle ripples expand in concentric circles. The subprime lending crisis has been the equivalent of throwing a cinder block into that pond. It's sent out a tidal wave of trouble, and student loans are the latest financial product to get hit.
Sallie Mae, the nation's number one lender for college students, recently announced it will no longer make private education loans to students who are subprime borrowers. "Subprime" is classified as a person who's a high credit risk, and either made late payments on a credit card or loan, or carries too much debt.
Private loans to feel the most impact
For-profit education institutions, such as culinary schools, design academies, and trade schools, will feel the brunt of Sallie Mae's announcement. These institutions rely heavily on subprime borrowers for their enrollment.
The impact will not be as profound at non-profit colleges and universities. These types of institutions benefit from a higher number of grants and government financial aid. Nevertheless, with private loans making up nearly a quarter of all education loans, the ripple effect will likely occur.
Adapting to a new financial order
Just like the real estate and mortgage lending industry has adapted to new market conditions, educational institutions are likely to do the same. Many have already begun exploring ways to self-fund their own private loans, a prospect that may even add revenue, provided that they don't make the same mistakes as the home lending sector.
How can private educational institutions avoid the same problems that are currently plaguing lenders like Sallie Mae? First and foremost, they should be careful to follow solid lending fundamentals. The lending institutions that have suffered losses are the ones that have extended loans to people with horrendous credit. By tightening lending guidelines, lenders can steer clear of student loan defaults.
Student adaptation
How will subprime students fare in this new financial order? Undoubtedly, it will be a struggle. Students will have to do more research to find a lender that will work with them. But with private educational institutions beginning to provide their own loans, they actually stand a better chance of getting a loan at a reasonable rate, rather than being raked over the coals by unscrupulous lenders.
Ultimately, cleaning up the student loan pool is a task that must be shared by both lenders and students. Tighter guidelines will prevent future defaults. For students, sound money management will help them raise their credit scores. Hopefully, these changes will allow students not only to qualify for better loans, but also give them access to a better life.
Overview of Student Loans
When you're trying to pay for college, it's nice to turn to a wealthy uncle for a little financial assistance. No one is happier to help you pay for your higher education than Uncle Sam and the federal government.
You can tell a lot about a society by how much it values education. With its vast network of public and private universities, America is a world-leader in education.
Our emphasis on higher learning could be attributed to the correlation between education and economic growth. If the U.S. is going to keep its economy running at full speed, it needs an intelligent workforce. Higher education doesn't come cheap, however, so the federal government has created a number of student loan programs.
Perkins loans
Available to undergraduate and graduate students alike, Perkins loans offer the lowest interest rate-currently fixed at 5 percent-and can take up to 10 years to repay. Your school acts as the lender, and the loans are given on a first-come, first-served basis.
It's a particularly attractive loan for people in the military, law enforcement, certain teaching positions, and non-profit jobs. If you pursue a career in these public service fields, the government may discharge your loan.
Stafford loans
Stafford Loans are provided to undergraduates and graduate students who are enrolled in school at least half-time. Unlike Perkins loans, the government will partially subsidize the money based on a student's level of financial need. Uncle Sam will pay the interest during school years, but the student must begin repaying the loan six months after graduation. In the unsubsidized loan, a student loses his six-month grace period.
Loans are made available directly from the government to colleges or financial institutions. Current rates for Stafford loans are capped at 6.8 percent. Terms of repayment range from 10 to 25 years on both the subsidized and unsubsidized loans.
PLUS loans
Like the Stafford Loans, PLUS loans are granted to undergraduates and graduates who are enrolled at least half-time. With PLUS Loans, the interest rates are variable, but they do have a cap. Loans distributed directly by the government are capped at 7.9 percent, and those distributed through a school or a lender are capped at 8.5 percent. There's also a fee associated with the PLUS loans. Repayment terms are 10 years, and you must begin within 60 days after the final loan is disbursed.
To obtain any of these loans, a student first needs to apply for the Free Application for Federal Student Aid, or FAFSA.
Even though the government values education, it can't give a free ride to everyone. The loan programs are based on a student's financial need, which may be the cause for the wide number of programs. If you're confused, consult with a financial aid counselor or a loan officer from a lending institution, and you'll find out where you fall in the student loan spectrum.
