FAP786: How much student loan debt is too much?

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Student Financial Aid News
+ Chronicle: If Congress wants more low-income students to enroll in college, it should provide larger Pell Grants to the poorest of them, says a new report out today.
+ The report, “Window of Opportunity: Targeting Federal Grant Aid to Students With the Lowest Incomes,” asks lawmakers to give up to $750 in additional aid to students whose families are so needy that their expected contribution to tuition is a negative number. Under current law, such students receive the same-size Pell Grant as higher-income students whose expected family contribution, or EFC, is zero.
+ Inside Higher Ed: When the University of Central Florida’s medical school opens next year, every member of the inaugural class will receive a full scholarship. The university, citing the Association of American Medical Colleges, said that no other medical school has awarded full scholarships to every member of a class. There will be 40 students admitted for the first class, and each will receive scholarships worth $160,000 over four years — half for tuition and half for living expenses and fees.
+ NASFAA: “Sen. Hillary Rodham Clinton today unveiled a sweeping plan to ensure that students are not left without money for college as a result of the withdrawal of dozens of lenders from the guaranteed-student-loan program,” The Chronicle of Higher Education reports. “The release said Mrs. Clinton is urging the Bush administration to act quickly and support her plan, which includes: Creating a way for colleges to quickly transfer from the guaranteed-student-loan program to the direct-loan program… Giving breaks to parents who now run the risk of being denied access to federally guaranteed low-interest loans for their children as a result of defaulting on a mortgage or being 90 days late in repaying such debts… Authorizing the Education Department to advance money to state or private entities that ensure student loans and to purchase federally guaranteed loans from lenders who are no longer able to handle them.”

Scholarship Update
+ Sterling Scholarship Directory for Utah
+ Great compilation of scholarships, many of them full tuition, for colleges in Utah
+ Details at our free college scholarship search site

Mail Bag
+ Felicia writes: How much debt should a student accrue for a college education? When is it too much?
+ It becomes too much when you know you won’t be able to afford to repay it
+ One model is to not borrow more than your first year’s salary
+ As Justin Draeger mentioned in our roundtable, under 10% of income is good – 15% – 17% is when defaults spike
+ If you don’t know what you’ll be doing after college, find BLS or other stats for average salary for your MSA
+ Borrow as a last resort after non-loan options have been exhausted
+ Federal student loans are the best choice
+ Stafford federal student loans at StaffordLoan.com
+ PLUS loans at ParentPLUSLoan.com
+ Graduate student loans
+ Only after scholarships and federal loans should you borrow private student loans
+ Private student loans at privatestudentloans.com

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Reminders

+ Financial Aid Podcast Show Notes at FinancialAidNews.com.
+ Free scholarship search secrets eBook at StudentScholarshipSearch.com/ebook

+ Private student loans
+ Student credit card information at StudentPlatinum.com
+ FAFSA tutorials and free help

+ Stafford loans | Other federal student loans
+ The Financial Aid Podcast is a publication of the Student Loan Network.