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Archive for the ‘Student Borrowing’ Category

Is That All She Wrote for Private Student Loan Lenders?

The Student Aid and Fiscal Responsibility Act, currently moving through Congress, would stop the FFELP (Federal Family Education Loan Program). The FFELP has allowed third party (private) lenders to issue student loans which are backed by the government. In 1992, the Federal Direct Student Loan Program began, which allowed parents and students to borrow directly from the U.S. Department of Education without a FFELP lender or involvement from a bank. If the Student Aid and Fiscal Responsibility Act is passed by Senate vote, critics of the act argue that it will put most private student loan lenders out of business... more »

Ten Percent of Community College Students Do Not Have Access to Federal Student Loans

According to the Project on Student Debt, there are about 900,000 students at community colleges in 31 states who do not have access to federal student loans because their colleges do not participate in federal loan programs. What’s more, 362,000 community college students (2 out of 3 students) who do have access to federal loan programs took out private student loans during the 2007-2008 school year, instead of using the more affordable and safer federal student loan options. This decision to fund education with private student loans may be due to deceptive marketing practices of some private lenders, as well... more »

Consumers and Banks Continue to Reign in the Credit

For the seventh month in a row, outstanding consumer credit declined in August, according to a recent Federal Reserve report. Total credit debt dropped 5.8 percent to $2.463 trillion dollars , signaling continued caution on the part of consumers and perhaps continued reluctance on the part of lenders to make credit available. The seven month declining streak is a record not seen since 1991 and consumer credit has never contracted for eight straight months in the history of the survey, dating back to 1943. Revolving credit, including credit card debt, fell to $899.4 billion in August, a 13.1 percent drop... more »

Student Aid and Fiscal Responsibility Act Ends Government-Backed Private Student Loans

In the past, the federal government guaranteed student loans that were financed by private lenders. Recently, the U.S. House approved a money-saving move that will stop guaranteeing private lender loans and replace them with student loans that are financed through Treasury funds and that are therefore less expensive. This will save the government an estimated $80 billion over a 10 year period. How will the government use the $80 bill in savings? The savings are meant to provide larger grants and more grants to lower-income students for their college expenses, and to increase federal aid available to community college students.... more »

Volunteer in Exchange for Student Loan Payments

A college education has been proven to open the doors to higher paying job opportunities, but as many college graduates are finding out, there are no guarantees that the college diploma will land you a job right out of college. Since a large percentage of students rely on various forms of financial aid, including student loans, the stress of repaying those loans upon graduation is downright frightening to students who don’t immediately enter the workforce with a higher-than-minimum-wage position. What can a student with loans and living expenses do to keep up with their financial responsibilities if they’re unable to... more »

Government Student Aid Continues in Full Force

According to an article on Forbes.com, the number of American students applying for financial aid increased last year, and fortunately for them, so did the number and amount of government student loans. The article says that 16.4 million students applied for government aid during the 2008/2009 school year, a 12 percent increase from the previous year. For the 2009/2010 school year, 15 million have already applied and a total of 20 million are expected to apply by the deadline, representing a 25 percent rise from last year. “As far as the federal student loan program, the bulk of student loans,... more »

The Need for Student Loan Consumer Protections

The federal student loan system has become fundamentally predatory due to the Congressional removal of standard consumer protections, combined with Congressionally-sanctioned collection powers that are stronger than those associated with all other loan instruments in our nation’s history. These actions by Congress have, predictably, created an inherently predatory, state-sponsored lending and collection system where the motivations of the various functional elements of the system are fatally misdirected. The system promotes inefficiency in administration, unchecked inflation, bureaucratic malaise and conflicted oversight. Moreover, the resulting set up also promotes needless and expensive complexity and redundancies, fails to encourage academic excellence, and ultimately,... more »

Most Students Are Not ‘Drowning in Debt’

Contrary to some flashy news stories, most U.S. college students are not graduating from college with excessive student loans, according to a story from U.S. News & World Report. A new study from the College Board, admittedly designed to “take down a notch the sensationalist stories about students drowning in debt,” according to study author Patricia Steele, found that a full third of June 2008 graduates completed their degrees with no outstanding government or private student loans. And only 10 percent of all graduates of four-year colleges had more than $40,000 in such loans at the end of their college... more »

Bad News For Lenders of Student Loans

With the ever soaring cost of higher education, student loans have been an almost indispensable tool when trying to put the kiddies through college.   Tuition has reached a level of $50,000 a year in some private colleges and universities.   At that rate, a graduate can expect to be in debt for a quarter of a million dollars. Over the years there have been three kinds of loans available.   Federally guaranteed loans are made by private lenders and guaranteed by the government, Direct loans are made by the federal government and of course there are unsubsidized private loans.... more »

Sallie Mae In Financial Trouble

Sallie Mae, formerly known as SLM Corp., makes student loans.   Recent news from Forbes indicates that the Obama administration unveiled on Thursday a new budget proposal that would make the government the sole provider of federally backed loans for students.   This spells bad news for Sallie Mae, whose shares tanked on the news. According to Forbes, the fiscal budget for 2010, which goes in place on October 1, should save the government more than $4 billion by slicing entitlements for companies like Sallie Mae.   Beginning in 2010, new student loans would be originated through the direct student... more »