College Financial Aid Advisors

College is over and you are rightfully proud of your graduate for putting in the effort required to earn that coveted diploma. The odds are that it will help your child get a better job and earn higher income. You have already provided the educational head-start, but now it’s time to give your graduate a financial head-start on life, too. Here are some tips for having the “money talk” with your graduate: • Calculate monthly student loan payments: Sit down together before the student loan bills start coming in and map out a plan of action. Learn about loan servicers, interest rates, repayment options, loan consolidation, and determine the monthly payment amount. It may be possible to forgive some or all of the federal student loans if your child decides to become a  teacher or public servant. This information will help quantify the amount of income needed to meet monthly payment amounts, and may help guide your child’s choice of career. • Student loans are a serious business: Not making prompt payments could lead to student loan default, which can have serious consequences. President Obama will work with financial institutions to increase education about loan defaults, but you can give your child a head start. The school, the financial institution that made or owns the loan, the loan guarantor, and the federal government can all take action to recover outstanding amounts. This could involve wage garnishment, attachment of federal income tax refunds, or assignment of the debt to any co-signers. Defaulting on a student loan could also affect your child’s ability to obtain other types of credit for a car, home, utilities, or cell phones. • Be careful of credit card debt: Many young adults are surprised by how quickly credit card debt builds. They think they are only borrowing a little money to tide them over until they get a job, and suddenly find themselves paying hundreds of dollars a month in interest. Make sure your child understands that a credit card should only be used when there is already enough money available to make the payment. • Start saving now: Most graduates think it is too early to worry about buying a home, paying for their own children’s education, or their retirement. But the best time to start saving is now, so that interest compounds over the long-term to build a nice nest egg or emergency fund. Even a small amount on a regular basis makes a big difference over a long period of time. • Have health insurance: Your child will be required to have health insurance under the Affordable Care Act. He or she may be eligible to stay on your coverage until the age of 26, could qualify as part of a compensation package, or can shop in one of the health insurance marketplaces. If you need more information about repaying student loans, or want insights regarding the college financial aid process, contact College Financial Aid Advisors (CFAA).

While recent college grads are putting away their caps and gowns and starting on their job search, one thing looming in their minds is student loans. Most graduates will start making payments on those loans very soon. To assist you with that process, here are some strategies for smart repayment: • Get to know your loan servicer(s): Most repayments are handled by a loan servicer. If you have several loans you may have several loan servicers, each of which may have its own procedures for payment. You are responsible for making prompt payments to each servicer, even if you do not receive a bill. • Choose a repayment plan for federal student loans: Federal student loans have different repayment options such as the standard repayment plan, where you repay your loan in up to ten years, or an extended plan, where you have up to 25 years. A graduated plan gradually increases payments. There are also several income-based options. You can choose whichever plan is right for your present income situation, but you have the right to change repayment plans at any time. • Consolidation may help: If you do have loans from several servicers, it may be helpful to consolidate them into one and make only one payment per month. Federal student loans may be consolidated with other federal loans, and private student loans may also be consolidated. • Let your servicer know about any special situations: You may be eligible for deferment or forbearance, which allows you to temporarily postpone or lower your loan payments. This could occur if you decide to go back to school, serve in the military, or experience financial hardship. • Check if you’re eligible for loan forgiveness: With federal student loans only, there are a few circumstances where you may not have to repay some or all of your loan. This includes certain kinds of teaching or public service, total and permanent disability, or the closure of the school where you were studying. Negative Consequences of Not Repaying Your Student Loans You must repay your loans even if you did not complete your education or cannot find a job related to your major. If you go into default, it could affect your ability to borrow money for a car, to rent an apartment, or buy a home. You might be surprised to find that you could have trouble signing up for utilities, homeowner’s and auto insurance rates could be higher, or you might not be eligible for a cellphone plan. The federal government may garnish your pay check, or it could attach your federal income tax refund. If there is a co-signer on your student loan, that person may become responsible for your debt. It is very important that you contact your loan servicer immediately if you are unable to make payments on time. If you need more information about repaying student loans, or want insights regarding the college financial aid process, contact College Financial Aid Advisors (CFAA).

A recent “Upshot” blog in The New York Times reported on an analysis of Labor Department statistics by the Economic Policy Institute in Washington, which demonstrated that a four-year degree has probably never been more valuable. The pay gap between college graduates and everyone else reached a record high when Americans with four-year college degrees made 98 percent more per hour on average than people without a degree. The National Association of Student Financial Aid Administrators (NASFAA) concluded that “The decision not to attend college for fear that it’s a bad deal is among the most economically irrational decisions anybody could make.” The question still remains of how to pay for this education. That’s where financial aid comes into the picture. The first piece of the financial aid puzzle is federal student aid. This may include a combination of grants, which do not have to be repaid, and federal student loans, which do have to be repaid. If that’s not enough, here are six additional steps you can take: 1. Federal Work-Study: This program provides part-time jobs for students with financial need, allowing them to earn money to help pay education expenses. It encourages community service work and work related to the student’s course of study. 2. Other Resources from the Federal Government: Besides aid from the Department of Education, other opportunities include aid for serving in the military or for being the spouse or child of a veteran; tax benefits for education; an Education Award for community service with AmeriCorps; Educational and Training Vouchers for current and former foster care youth, and/or scholarships and loan repayment through the Department of Health and Human Services’ Indian Health Service, National Institutes of Health, and National Health Service Corps. 3. State Financial Aid: Even if you’re not eligible for federal aid, you might be eligible for state financial aid. Contact your state grant agency for more information, since each state is different. 4. College Financial Aid: Your school will have many types of grants and programs available to help pay for your education. Ask the financial aid office for assistance. 5. Scholarships: Many organizations offer scholarships or grants which can make a real difference in how affordable your education is. Check out every possible resource to find scholarship money. Look online, ask friends and relatives, consider community groups, and ask your high school guidance counselor. Also inquire whether the department that offers your course of study has any scholarships for students in your major. 6. Private Student Loans: Many banks and lenders have private student loans available to cover any remaining difference between costs of attending and available funds. Be sure to ask about interest rates, interest deferment, and repayment options before signing for any loan. If you need more information about what to do when federal student aid is not enough, or want insights regarding the college financial aid process, contact College Financial Aid Advisors (CFAA).

As a recent college graduate, you will soon be faced with the prospect of repaying your college loans unless you qualify for some type of deferment. Instead of waiting under the payments start coming due, take charge of the process and make a plan now for repaying those loans. First, sit down and figure out exactly how many student loans you have. If you only took out one loan each semester, that would be eight loans, but it could be more or less depending on your specific situation. Determine if they are federal student loans or private student loans, and find out who the servicer is for each. A servicer is a bank or company that receives your payments and answers your questions. Now you can start estimating the monthly payments on each of your loans. • Repaying Federal Student Loans: You may be eligible for deferment if you return to school for additional courses or perform active duty military service. Your monthly payment will depend on the type of loan you received, how much money you borrowed, the interest rate on your loan, and the repayment plan you choose (standard, graduated, extended, income-based, pay as you earn, income-contingent, and income-sensitive). Use the Repayment Estimator to look at which plans you may be eligible for, and to see estimates for how much you would pay monthly and overall. • Repaying Private Loans: Your monthly payment is based on the terms of your individual student loan with each private lender. Most have some type of payment calculator that can help you estimate the amount of your payments. As an example, take a look at the payment calculator for Discover Student Loans. You will need to know your loan amount, interest rate and repayment term to estimate a payment amount. Similar to federal loans, they also offer several deferment options and repayment assistance options. Make sure you also take advantage of their Graduation Reward. This should give you a good idea of the total amount of student loan payments you will be making each month. This will help you in estimating how much money you will need to earn, and budgeting how much you will have available to spend on living expenses. If you have a large amount of money available you might benefit from early payment plans, like the one available at Discover Student Loans. Does It All Sound Too Confusing? It might seem overwhelming, but your lender, financial aid office, or a professional college financial aid advisor can be of assistance. If you have a lot of student loans, you could consider consolidation to make things a little easier on yourself. This combines several federal loans into one or several private student loans into one. Consolidation might also help you save some money on interest rates. If you need help making a plan to repay your college loans, or need more information on the college financial aid process, contact College Financial Aid Advisors (CFAA).

As college graduates head out into the world, they will soon be faced with repaying their student loans. As high school graduates head off to college, they may be thinking about taking out student loans to help cover some of their costs. Before making any decisions, it is important to compare federal student loans and private student loans. While federal student loans have fixed interest rates, private student loans may have fixed or variable interest rates: • Fixed Interest Rates: These remain the same throughout the life of your student loan. This usually allows you to determine exactly how much you will be paying each month. An exception, however, is that the payment might change if you qualify for deferment, forbearance, or an interest rate reduction benefit. • Variable Interest Rates: These interest rates are usually tied to some type of index, such as the Prime Index or the London Interbank Offered Rate (LIBOR) Index, and go up or down as the chosen index changes. This means your monthly payment can change based on interest rate fluctuations, and also if you qualify for deferment, forbearance, or an interest rate reduction. When you compare federal and private student loans, look at the Annual Percentage Rate (APR) to make a fair comparison because it includes interest, fees, and other charges, and also takes into consideration whether payments have been deferred. The APR may actually be higher or lower than the stated interest rate. Understand when interest starts accruing, or adding up, on your student loans. In most cases, interest is deferred while you’re in school and doesn’t start building until graduation, but some loans may start accruing interest while you are still in school, even though you are not yet making payments. Recent graduates will likely be entitled to a grace period of six months before they need to make any payments; however, interest may still accrue during this time. If your budget allows, it might make sense to start repaying your student loans as soon as possible. If you have a number of student loans, you could consider consolidation. This helps you combine several existing federal loans into one or several private student loans into one. You won’t have to juggle a number of loans and you might be able to save money on interest rates. What About Student Loans for 2014-2015? The federal government usually sets the interest rate on federal student loans on July 1.  The National Association of Student Financial Aid Administrators (NASFAA) predicts the following interest rates on student loans for the upcoming academic year: • 4.66 percent – Federal Direct Stafford Loan (Subsidized and Unsubsidized) for undergraduate students • 6.21 percent – Federal Direct Unsubsidized Stafford Loan for graduate or professional students • 7.21 percent – Federal Direct PLUS Loan for parents and graduate or professional students. If you need help understanding your federal and private college student loans, or would like more information on the college financial aid process, contact College Financial Aid Advisors (CFAA).

Now that the May 1 deadline has passed and high school students have settled on their choice of college, it is time to begin the process of finalizing how to pay for it. Many financial aid packages include student loans, but it is important to understand that there is a difference between federal student loans and private student loans. Since the federal student loan process does not start until June, now is a good time to learn about the options available from some of the private student loan lenders. Some lenders can make it frustratingly complex to learn about all of their options, but Discover was recently recognized by The Wall Street Journal for embarking on the next generation of customer service. Discover Financial Services earned a spot on a list of the top business technology innovators in the U.S. by developing a new application that provides a fully comprehensive, customer-centric view. It also supplies account managers with better data and up-to-the-minute information, allowing them to provide superior customer service. Another example of Discover’s efforts to become more customer-centric is its newly-designed student loans website. They have included an easily-understandable chart to compare private student loan options right on the home page. The Discover site allows students and parents to easily compare options among its private student loans and those available from Sallie Mae and Wells Fargo. The three options do seem comparable on some points such as covering up to 100% of school-certified college and graduate school costs, offering competitive rates, getting an interest rate reduction when you sign up for automatic payments, not requiring payments while in school at least half-time, offering a free customized scholarship search, and applying in as little as fifteen minutes or less. But there are a few areas where Discover Student Loans stand out. The first is that they have a zero fees offer which includes no loan application fees, no origination fees, and no late fees. Secondly they have just instituted a Good Student Rewards Program, where students who get a 3.0 GPA or better are eligible for 1% cash reward on each new student loan. Finally they are the only lender on the list to offer 100% US-Based Student Loan Specialists who are available anytime, day or night. Knowledge is Power When it Comes to Student Loans When the federal loan process starts in June, Discover also has a chart which will help students and parents compare federal student loans to their private student loans. You can make wiser borrowing choices when you have a full understanding of all these differences. Talk to a professional college financial aid advisor who can help you sort through the entire financial aid process including grants, work-study programs, scholarships, and student loans to find the best combination that fits your unique financial situation. If you need help understanding your college financial aid opportunities, or would like more information on federal and private student loans, contact College Financial Aid Advisors (CFAA).

Whether you are a high school senior just deciding on which financial aid offer to accept or a high school junior who is planning summer trips to visit prospective colleges, the financial aid office is a great resource. The financial aid director is an incredible source of knowledge, but you have to be able to ask the right questions to get answers that can help your financial cause. Here are three intelligent questions to ask a financial aid director: 1. How much does it really cost to attend this college: It can be frustrating to try to come up with cost figures because students all have individual financial circumstances, but the financial aid director will probably have the best understanding of the closest dollar estimate. Start with a complete understanding of what it really costs to attend this college, not just tuition, room and board. You need to understand the typical costs for fees, books, living and travel expenses as well. Find out whether grants and scholarships are renewable, and what the anticipated increase is for next year’s tuition so you can plan ahead. From this amount you can subtract the amount of financial aid most students receive that does not have to be repaid, such as grants and scholarships. Even though it may look like all of your costs are covered, be sure you ask how much of the financial aid offer is student loans that have to be repaid after you graduate. 2. What are my chances of realistically being able to repay my student loans: You have to get a clear picture of whether this school is committed to helping you succeed. Find out how many students from the freshman class typically stay after the first semester, and ask how long it usually takes to graduate. Inquire about the percentage of graduating seniors who land jobs and what their average income is for various degrees. This will help you determine whether you will actually be able to earn enough money to repay any student loans you might need. 3. What else do you suggest for students in my particular situation: Most financial aid directors have years of experience and they have worked with students in just about any financial situation imaginable. Explain the specifics of your financial background, let the director know if anything is anticipated to change within the next year, and ask about what other students have done to achieve success. The financial aid director can be a wonderful source of information but if you are still not sure how to proceed, you can always work with a professional college financial aid advisor to make sure you understand all the implications of the financial decisions you make. Your advisor can help you put together a list of intelligent questions and will also help you decipher the answers. If you need help coming up with questions for the financial aid director, contact College Financial Aid Advisors (CFAA).