In this issue:
- Introduction
- Scholarship Updates
- Featured article: How much can you responsibly borrow?
- A Word from our Sponsors
- Privacy and Subscription Information
- Back Issues
- Sponsor this newsletter!
Welcome to the September 2006 issue of the Financial Aid News. In this issue, we show you a method for figuring out how much you can responsibly borrow in student loans, as well as scholarships and other news updates. Be sure to listen to our daily podcast as well (no iPod required) at www.FinancialAidPodcast.com so you never miss a scholarship opportunity or money-saving tip! Finally, a reminder that if tuition bills are coming fast and furious, and you need financial aid help immediately, be sure to visit:
http://www.ActEducationLoans.com
Christopher S. Penn
Publisher, The Student Financial Aid News
Producer/Director, The Financial Aid Podcast
A Publication of the Student Loan Network
1250 Hancock Street, Suite 703N
Quincy, MA 02169
Featured Sponsor: Financial Aid Resources !
Here's a compendium of student loan and financial aid resources online to help speed your way through the financial aid process!
Start with:
- http://www.StudentScholarshipSearch.com - free scholarship database
- http://www.FAFSAonline.com - free FAFSA filing information
Next:
- http://www.StaffordLoan.com - for federal Stafford loans
- http://www.ParentPLUSLoan.com - for PLUS loans for parents
- http://www.GradLoans.com - for graduate PLUS loans
- http://www.AlternativeStudentLoan.com - private student loans, no FAFSA
- http://www.GradLoans.com - graduate, law, and medical students
After Graduation :
Finally, a quick word about consolidation. Though the 2005 - 2006 interest rates expired on July 1, 2006, anyone who filled out an application request before that date and is eligible for consolidation will still get the lower rates. Not sure if you are qualified? Visit http://www.StudentLoanConsolidator.com today and fill out an application request. You'll recieve information by email about your eligibility to obtain last year's rates.
Another big month for our scholarships web site, www.StudentScholarshipSearch.com - now with over $2.75 BILLION in scholarships! Here's a selection of awards added in the last month.
- University of Kansas Summerfield and Watkins-Berger Scholarships
- National Association of Black Journalists Scholarships
- The Watson Fellowship from the Watson Foundation
- University of Arizona Excellence Award
- Tulane University Dean's Honor Scholarship
- THE LAGRANT FOUNDATION (TLF) scholarship
- Cisco Systems DeVry Scholarship
- The Economic Club Of Washington, DC Doctoral Research Fellowships 2006-2007
- St. Andrew's Society Scholarship
- Benjamin A. Gilman International Scholarship Program
- The Fannie and John Hertz Foundation Graduate Fellowship Awards
- Horatio Alger Association Scholarships
- Vanderbilt University Chancellor's Full Tuition Scholarship
- CarDonors.com Quarterly Scholarship
- Society of Automotive Engineers BMW/SAE Engineering Scholarship
- Gates Millennium Scholars Program
- TIAA-CREF Paul A. Samuelson Award
- NRA Civil Rights Defense Fund Law Student Scholarship Writing Contest
International students can find resources at:
Remember, you can get daily scholarship updates by listening to the Financial Aid Podcast and visiting the Student Scholarship Search web site!
Featured Article: How much can you responsibly borrow?
Figuring out what you can borrow for student loans can be tricky, particularly if you're still in school, or not even to college yet. Choose right, and you'll be able to enjoy a comfortable standard of living after college, pursuing the life path you want. Choose wrong, and you get crushed by debt, or you don't go to/finish college. How do you determine what is a reasonable amount to borrow?
Work in reverse. Debt has to be paid off, so figure out how much debt is sustainable. Most financial planners advocate not exceeding 10% of your net income for debt service, so that's a good number to remember. What you can pay is of course dependent on how much money you make.
Statistically, college graduates average a starting salary around $30,000 per year. This is highly dependent on where you live, the cost of living, etc., but $30K for liberal arts, up to $50K in medical and technology fields seem to be about the national norms.
Let's work backwards now. From gross pay, we're going to write off 1/3 of the salary to taxes and mandatory deductions (social security, etc.). Yup. Uncle Sam takes that much. Here's the result, your NET income after taxes:
$30K gross: $20,000 net
$40K gross: $26,700 net
$50K gross: $33,300 net
Now, divide each by 12 and you get your net monthly income.
$30K gross: $20,000 net = $1,666/month
$40K gross: $26,700 net = $2,225/month
$50K gross: $33,300 net = $2,775/month
Okay. Now, let's assume you are free and clear of all other debts (credit card, auto, etc.) at the time of graduation and you just have student loans. You can now afford to make the following maximum payments at a 10% debt service to net income ratio:
$30K gross: $20,000 net = $1,666/month = $166/month
$40K gross: $26,700 net = $2,225/month = $223/month
$50K gross: $33,300 net = $2,775/month = $276/month
Today's federal student loan interest rates are 6.8% for Stafford Federal Student Loans. Based on this, we can use a student loan consolidation calculator in reverse to see the maximum amount of money you can borrow at 6.8% with and without consolidating your federal student loans.
$166/month = $14,424 if you don't consolidate, $18,700 if you consolidate
$223/month = $19,378 if you don't consolidate, $29,213 if you consolidate
$276/month = $23,983 if you don't consolidate, $39,765 if you consolidate
The higher your estimated income at graduation is, the more you can afford to borrow, and if you consolidate your federal student loans upon graduation, you will be able to borrow more. This is a pretty good methodology for figuring out how much you can afford to borrow - and a good example of how overborrowing can limit your career choices to jobs that can pay for your student loans.
For more information about student loan consolidation, visit StudentLoanConsolidator.com on the web.
And now a word from our sponsors...
Need lots of money for college fast? Try alternative student loans! With funding as fast as 5 business days, alternative student loans can help bridge any shortfall or unexpected expense you might have. Learn more and apply at:
http://www.AlternativeStudentLoan.com
It's never too late to file your FAFSA and possibly gain additional federal financial aid. Get inside tips on completing the FAFSA and file your FAFSA line for free at FAFSAonline.com today!
The Financial Aid Podcast is financial aid radio whenever you want it - for free! No iPod required! On your PC, on a CD, on your iPod, at school, home, or work. Learn about student loans, scholarships, how to get a job, and more. Make sure you have the latest copy of iTunes from www.Apple.com and then visit:
http://www.FinancialAidPodcast.com/subscribe/
Got financial aid questions you want to have answered on the air? Call our comment line and leave a voicemail question!
Toll-free: 877-328-1565 extension 529!
Public Service Opportunity: Light the Night Boston 2006
Financial Aid Podcast host Christopher Penn will be participating in Light the Night 2006 Boston, the walk for curing leukemia and lymphoma. Support this great cause by donating online today!
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