- Introduction
- Featured Article: Rates Keep Rising
- Interest Rate Updates
- Scholarship Notes
- A Word from our Sponsors
- Privacy and Subscription Information
- Back Issues
- Sponsor this newsletter!
Welcome to the April 2005 issue of FinancialAidNews.com. This month, we are proud to introduce our Act Education Loan program at AlternativeStudentLoan.com, a new service of the Student Loan Network. With good credit or a qualified co-signer, you can get up to $30,000/year towards education expenses including tuition, room and board, travel, books, computers, and more! We also debut www.StudyAbroadLoans.com and www.GradInsurance.com, and review the intricacies of interest rates.
In other news, we are hiring! Are you a web developer with PHP/MySQL skills or an outstanding customer service professional? Do you live in or plan on moving to the Boston area? Have a look at our job listings!
- Senior Developer: http://www.FinancialAidNews.com/job.php
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Enjoy this month's newsletter!
Christopher S. Penn
Editor in Chief, The Student Financial Aid News
The Student Financial Aid News
1250 Hancock Street, Suite 703N
Quincy, MA 02169
Featured Sponsor: Consolidate your student loans
Student loan rates have been at their lowest in 39 years, but those rates will be changing for the worse in less than 60 days. Act now! Consolidate your student loans and lock in your current rates before it's too late.
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Apply now to consolidate your student loans online at www.StudentLoanConsolidator.com or by called 877-328-1565. The lowest rates in 39 years are not going to last much longer!
Featured Article: Rates Keep Rising
Federal and commercial interest rates are going up across the board, from mortgages to student loans to commercial banking. But what causes interest rates to go up or down? In this article we'll examine how interest rates work, why they fluctuate as they do, and how you can benefit from them.
Fundamentally, interest is a form of rent. Think of interest as the rent you pay when you borrow money. Just like an apartment or a car, you pay rent to borrow the use of someone else's money. The amount of "rent" you pay on a loan is contigent on three things:
- How much money you're borrowing. Just as renting an SUV costs more than renting a compact car, the larger a loan you take out, the more interest you pay.
- The amount of money available. Again, just as apartments in large, very crowded cities like Boston command premium rents, when the money supply gets tight, the "rent" - interest rates - go up. When the supply grows, rates go down.
- How risky you are as a renter. Apartments generally require security deposits; mortgages have PMI. For federal student loans like the Stafford and PLUS loans, rates are always very low because the government is your co-signer, so there's virtually no risk for a lender. Private student loans require you to have good credit - the financial measure of your trustworthiness.
When it comes to interest rates at a national level, the biggest influence on rates is #2 - the money supply, how much money is available. When the economy as a whole takes a downturn, when people lose their jobs, they stop earning money. There's less money available for spending, less money available for saving, and so the supply of available money tightens up. When things pick up, more money becomes available, and so rates go down.
Logically, anything which causes more money to become available will lower rates - such as the dotcom boom at the turn of last century. Thousands of new companies sprung up overnight, spending billions of dollars on products, services, and employees. The economy flourished, and rates dropped like a rock. Then things like September 11 and the war in Iraq occurred, the market tanked, and the economy started shedding jobs like crazy. Rates went up, and are still going up today.
What does this mean for you, and how can you benefit? Very simply put, when rates drop, borrowing money - renting money - gets cheaper, so you borrow money when rates are low to get things like business ventures started, or to finance an education. Some of the world's most powerful companies started in college dorm rooms, like Dell Computer, Google, and Yahoo.
When rates go up, renting money gets more expensive. When you save money by investing it in financial institutions, you are effectively renting out your money to that institution. The more you rent out, the more rent you collect in the form of interest paid to you. So when rates go up, save and invest as much as you can; take advantage of high rates to become a monetary landlord.
Now that rates are climbing up across the board, think about minimizing your "rent" as much as you can, and maximizing your "rental properties". Some surefire strategies to do that are:
- Consolidate your federal student loans. You can still lock in last year's interest rates (low rent!) until July 1, but it takes 30 - 60 days to consolidate, so do it now. Click here to consolidate now.
- Pay off variable rate loans as fast as you can. This means things like credit cards, private student loans, and auto loans with variable rates.
- Stop borrowing when possible. As rates rise, "rent" goes up, so if you can pay up front rather than borrow, do it.
- Kill consumer borrowing. Take your credit cards to the shredder - building up consumer debt at high interest rates is financial suicide.
- Don't cash that IRS refund! Invest it - turn it into a "rental" that works for you. Some excellent investments are things like tax-exempt mutual funds and tax-exempt municipal bonds.
As the economy continues to change, stay tuned - we'll do our best to provide you with the best strategies for finance that we can.
Currently, the 91-day Treasury Bill Rate (the rate on which federal student loan interest rates are computed) is %. What does this mean? If federal student loan rates were set for the most recent T-bill auction (), your rates would change as follows:
| Loan Type | Current Rate |
New Rate |
Current Pmt* |
New Pmt* |
| Stafford (in school) | 2.77% |
% |
||
| Stafford (in grace) | 2.77% |
% |
||
| Stafford (in repayment) | 3.37% |
% |
||
| PLUS | 4.17% |
% |
If you have graduated and want to lock in the current rates before they change, visit www.StudentLoanConsolidator.com and apply now.
With interest rates rising across the board, it's more important than ever to have the best tools available for your search for interest-free money, and that means scholarships. That includes free solutions like Google and premium solutions like Financial Aid Officer's Scholarship Search. For a nominal fee, you get access to an ever-increasing database of scholarship awards, more than 2.3 million worth $14 billion.
If you can't find the financial aid you're looking for online, try the FinancialAidOfficer.com Scholarship Search Service at http://www.financialaidofficer.com/scholarship_search/ today.
And now a word from our sponsors...
Health insurance for Grad Students! (finally)
We have been waiting for more than a year for a great student health insurance provider for students who need health insurance in their own country of residence/origin. There's a lot of great international student health insurance out there, but until this month, we didn't know of anything for, say, US grad students in the US. Now there is. Visit www.GradInsurance.com today for the Global Citizen health insurance plan!
Study Abroad Loans!
Are you a US student who needs a loan for studying abroad? Look no further than Study Abroad Loans. We provide up to $30,000 per year for all study-abroad education expenses. Visit www.StudyAbroadLoans.com today!
List your school, club, or organization for free!
Do you have a club or organization you want to let the world know about? Is your school a source of pride and you want to help it achieve greater recognition? Submit a free listing to the Edvisors Education Directory today, and help your school, club, or organization be listed in one of the largest education directories online!
Visit http://www.Edvisors.com for more!
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