- Introduction
- Featured Article: Changes are coming your way
- Interest Rate Updates
- Scholarship Notes
- A Word from our Sponsors
- Privacy and Subscription Information
- Back Issues
- Sponsor this newsletter!
Welcome to the March 2005 issue of FinancialAidNews.com. This month, we look at the ramifications of the proposed 2006 federal education budget, what it means for you, and how it will impact your life during and after college. Also, for those of you who have been waiting for US domestic health insurance... we finally have some worth recommending!
Have you visited FinancialAidNews.com? The Student Financial Aid News web site provides you with the back issues of Student Financial Aid News, so that if you missed an issue or your email address unexpectedly changed, you'll still get to read the articles you need. Also, don't forget to check our Financial Aid Blog from time to time. As always, please share The Student Financial Aid News with your friends, family, and colleagues, by simply forwarding this message, or letting them know to subscribe by visiting www.FinancialAidNews.com today!
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
Benefits of Student Loan Consolidation:
- Reduce your monthly payment by as much as 60%
- Lock in fixed low interest rates, as low as 1.625%
- Consolidating your student loans will improve your credit rating!
- Applying online takes only two or three minutes and can save you hundreds of dollars a month!
- Consolidate student loans during your grace period to lock in a lower interest rate for the life of the loan.
- Flexible repayment plans help meet your needs!
- Lower your interest rate as much as an additional 1.25%* with our borrower benefits.
- No fees!
- No credit checks!
- No cosigners!
- No early repayment penalties!
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: Changes are coming your way
I wrote about this topic on the Student Financial Aid Blog, and thought I'd go into a little more depth here.
We've read through the proposed 2006 Student Loan budget. The good news is... well, actually, there isn't a whole lot of good news for students and graduates, especially for those interested in consolidation.
Highlights (so to speak):
- The budget for student loan consolidation has dropped by nearly $10 billion.
- LEAP program cancelled
- Perkins loan program cancelled
- No increase in work study
- Stafford Loan rates to jump to 6.8 percent fixed as of July 1, 2006
- Elimination of fixed rate consolidation
- Initiation of a reconsolidation borrower fee (if you have $100,000 in medical school loans and you reconsolidated to get a better rate, you'd have to pay a $1,000 fee)
- Increase in lender fee from 1/2% to 1% (which could be passed on to students)
So, what does all this mean? If the proposed budget is enacted as submitted, it will be much harder to get out of debt if your graduation date is 2006 or beyond. You'll graduate with a lot of loans at high interest rates and consolidation won't help you very much.
What can you do to prevent this? Well, not to sound trite, but write your senators and representatives. Tell them that the above submitted proposals are going to be harmful to your ability to be a productive citizen, and encourage them to vote against the proposed budget as written.
The increase in Pell Grant funding is laudable, but when it comes at the expense of other programs that students need just as much, then it's not so good. Think about it. The Pell Grant will give, according to the budget, 5.4 million students an average award of $2,486.
Now, to a college-bound student, every dollar helps. The more money a college student can get, the better. (hence why we have a professional scholarship search service at http://www.financialaidofficer.com/scholarship_search/) But if you take away from other programs to make the Pell Grant larger, then you're not really doing much in the big picture. Think about it carefully - how much does a year of tuition cost? More than $2,486. That's practically a coupon. Here, save 10% on your college tuition from Uncle Sam!
To pay for Pell, Perkins goes away. In press releases from the administration, they claim that the Perkins loan program is a small, inefficient program that doesn't help that many people. When you read the budget, 630,000 students helped by the Perkins loan isn't a small number. Consider this, too. The number of Pell Grants expected will go up by a whopping great 138,000 students. Who helps the 500,000 students that were getting assistance from the Perkins Loan but now aren't getting a Pell Grant? Is the budget really helping more students?
Why do we make such a fuss about student loan consolidation? Well, consider this aspect. The average student graduates with $18,900 in student loans. Without student loan consolidation, for this year, that student will pay about $185/month on that loan. If rates go up as projected - about 1.4 points - you're now looking at about $200/month in student loan payments. For a new college graduate in an entry level position, $200/month is big money.
According to Salary.com, entry level pay here in Quincy, where the Student Loan Network is based, is about $30,000. Uncle Sam, now that you've graduated, wants payback in many forms. $30,000 salary will net about $3,000 in taxes. So you're down to $27,000 in income. Then take out food - about $100/month, give or take. Bang goes $1,200 to $25,800. A one bedroom apartment in this area goes for about $1,150/month if you are very, very lucky. Figure about $13,800 for the year. Now you've got $12,000 left. Many students own cars. Say goodbye to anywhere from $200 - $300 a month. If you have a car, don't forget about car insurance, either, which for someone 18 - 25 will be anywhere from $1,000 - $2,000 a year. Call it $5,000 for the year ($250/month, plus $2,000 insurance). $7,000 left in usable income once basic needs are met - then add in utilities like heat, water, electricity, gas, etc. - about $150/month. Add in a cell phone and basic cable TV, another $200/month. That's $4,200 a year. You have $2,800 left in usable income. That's $233 per month.
Now you factor in that student loan payment. If you pay full price - meaning you don't consolidate - you're looking at $185/month until July 1, when it will probably go up to $200/month. That means you would have exactly $33 left in discretionary spending. If you consolidated, you'd be paying about $133/month, leaving you with about $100 in discretionary spending. You'd have even more if you elected one of our graduated repayment plans; for the first two years (while you claw your way up out of entry level pay) you'd pay only $54/month. That'd leave you with about $179/month in discretionary cash. Think about it - you could have $33 or $179 at the end of the month. I know which I'd choose.
That's why student loan consolidation is so important, and why it's a bad thing for the program to incur the wrath of the powers that be in order to scrape up extra funding for a Pell Grant coupon. Consolidation helps ten times as many students as the Pell Grant, so if the goal is to help as many people as possible, then that one's a no-brainer.
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.
We just finished redesigning our scholarship search page. It's easier on the eyes, and our service can help tuition be easier on your wallet. Many scholarships begin accepting applications in the new calendar year, so it's more important than ever to have the best tools available for your search. 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 US 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 students in the US. Now there is. Visit www.eStudentInsurance.com today for the Global Citizen health insurance plan!
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!
Privacy & Subscription Information
You can always change your subscription options by visiting our subscription page, located at:
We value your privacy. We do not under any conditions sell, rent, share, or distribute your email address at any time unless you specifically request that we do so by applying for a specific product or service. Organizations and companies that wish to communicate with you must do so by sponsoring our newsletter.
Would you prefer to read Financial Aid News as an RSS feed? You can! We update the feed for each issue. You can subscribe to it using FeedReader or any RSS/XML feed reader at:
Subscribe to our podcast in 2 easy steps!
- Download iTunes and install it.
- Click here to subscribe!
If you wish to write us via postal mail, you can direct correspondence to:
The Edvisors Network, Inc.
1250 Hancock Street, Suite 703N
Quincy, MA 02169
Missed an issue? Did you remember a scholarship but can't find the back issue? You can always find back issues of the Financial Aid Newsletter at:
Want to tell a friend about the newsletter? Forward a copy to them, or have them visit:
Sponsor the Financial Aid Newsletter!
Sponsorships are limited to one per month. Your Sponsorship message in the newsletter will be delivered to more than 779454 subscribers, many of whom forward the newsletter to friends, associates and customers. If you would like us to consider you or your company for Sponsorship, please send email to: newsletter@financialaidnews.com
Share this page!
