FAP463: Student Loan Sunshine Act, When is a private student loan a good choice, Italy, Casey Desmond

Student Financial Aid News
+ New York Attorney General Andrew Cuomo said Thursday he expanded a probe into perks provided to colleges by student lenders.
+ Cuomo has requested records from 60 educational institutions detailing how they develop their lists of preferred lenders. Many people are concerned schools are not steering students toward the best loan options due to obligations to those “preferred” lenders, which often award schools for sending them business.
+ Cuomo’s predecessor, Eliot Spitzer, began the investigation by requesting similar information from student lenders Nelnet Inc., Education Finance Partners, Educap, and SLM Corp. Cuomo also sent out letters to CIT Group and The College Board.
+ From NASFAA, the National Association of Student Financial Aid Administrators: On Feb. 1, Senators Edward Kennedy (D-MA) and Richard Durbin (D-IL) introduced the Student Loan Sunshine Act “to protect students and parents from exploitation by private lenders and lenders who offer gifts to colleges as a way to secure loan business.” According to Kennedy, the Sunshine Act was introduced in response to recent reports about questionable tactics used by lenders with colleges to increase their private loan volume.
+ Kennedy feels that the Sunshine Act will also stem the incredible increase in private lending over the past five years. Alternative loans have increased rapidly over the last five years and estimates place the total private student loan volume above $17 billion. Private loans offer little of the protection that federal student loans offer and may include stiff penalties and exorbitant interest rates. Even more troubling is an increase in the direct-to-consumer marketing used by some private lenders that allows students to take out loans before getting crucial advice from financial aid administrators.
+ As outlined in a Kennedy press release, the Sunshine Act:
+ Requires full disclosure of special arrangements that lenders and institutions of higher education have to offer loan products at the institution;
+ Bans lenders from offering gifts worth more than $10 to college employees, including travel, lodging, entertainment, and in-kind services that lenders provide to college financial aid offices;
+ Requires full disclosure of the reasons why an institution of higher education has selected a lender for its “preferred lender” list, including any special arrangements the lender has with the school;
+ Encourages borrowers to maximize their borrowing through the government’s loan programs before taking out alternative loans and direct-to-consumer loans with higher interest rates.
+ Disclosure is a good idea, but there’s a bigger reason private student lending has taken off:
+ Federal financial aid hasn’t kept pace with tuition!
+ In lighter news, A Yale University professor’s e-mail — subject line: “Shower Stalls are for Showering” — about a student couple’s use of a shower for “intimate activity” has set off considerable online discussion in New Haven and elsewhere, the AP reported. One couple has apparently been responsible for a flood and for leaving showers “in a decidedly less hygienic state,” the e-mail said. The IvyGate blog features more details.

Scholarship Update
+ Want to study in Italy?
+ The University of Trento is now inviting applications from qualified candidates for its three-year PhD Programme in International Studies.
+ The school invites applications across the whole range of disciplines comprising international studies but particularly encourages students who intend to carry out research in the following areas: European integration; EU law (constitutional, private, criminal); post-1945 international and European history; multi-level governance, Trans-atlantic relations, trans-national crime, international criminal justice, international financial theory and history, and comparative legal studies.
+ The programme is conducted entirely in English and will be taught by members of the university’s multi-national faculty. No tuition fees are charged and a number of fully funded three-year scholarships will be awarded to the top-ranked applicants. Scholarships will be augmented by 50% for authorised research periods spent abroad. At least 50% of the admitted candidates will be offered scholarships.
+ Application Deadline: March 15, 2007
+ Details at our free college student scholarship site

Focus on Financial Aid
+ When is a private student loan a good choice?
+ When speed counts
+ When federal aid isn’t enough
+ When federal aid isn’t available
+ When is a private student loan a poor choice?
+ If you or your cosigner don’t have good credit, you’re going to pay through the nose
+ Not a replacement for federal aid
+ Definitely not a replacement for scholarships or grants
+ Overborrowing risk
+ Check to see where salaries are in potential fields after college
+ If you borrow more than your first year’s annual gross salary, you could be headed for trouble
+ If you borrow more than double your first year’s annual gross salary, you could really get into trouble
+ Student loan lenders would rather you borrow less and be able to repay it than borrow a lot and default
+ Calculate monthly payments at StudentLoanConsolidator.com
+ In loan default, no one wins

Podsafe Music
+ More from Casey Desmond
+ Casey Desmond, Save Me Now
+ Music via the Podsafe Music Network

Reminders
+ Private student loans
+ Stafford loans | Other federal student loans
+ Student loan consolidation at StudentLoanConsolidator.com
+ FAFSA form online filing at FAFSAonline.com
+ Financial Aid Podcast Show Notes at FinancialAidNews.com.
+ The Financial Aid Podcast is a publication of the Student Loan Network.

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