Student loans: Not another D.C.-run plan

The federal government has its hands in far too many pots these days. It has taken over U.S. automakers, sectors of the financial industry, and now, along with health care, the Obama administration would like to take over student loans. This would create a huge problem for Utah, where our student loan system actually works.
Utah's state-organized student loan program creates custom repayment plans resulting in the lowest default rate in the country. Nationalizing student loans would undo the successful work of Utah, cut state jobs and increase default rates by eliminating the one-on-one service guiding students through the complex process.
Utah has the highest student loan repayment rate in the nation. Our colleges and universities are providing students good value for their investments, and the Utah Higher Education Assistance Authority has designed a loan repayment strategy that works for everyone. A September U.S. Department of Education report indicates only 2.1 percent of UHEAA borrowers defaulted last year, compared with a national average of 6.7 percent. But the Obama administration wants to make a federal case of it -- to literally take it apart and put it back together in Washington. The administration is calling for the U.S. DOE to become the originator of student loans, beginning next July. This could shut down UHEAA, which has successfully administered Utah education loans for more than 30 years.
Last year, UHEAA made nearly half a billion dollars in loans to students at Utah's major colleges and universities. About 170,000 Utah borrowers are well-served now, and millions of loans have been processed over the years. All of this goes away under the Democrats' plan for student loans, which will only expand D.C. bureaucracy and mismanagement.
A government-run student loan program would drive out the competition of private lenders by setting artificially low rates, yielding a complete takeover of the industry.
Obama's Direct Student Loan program would expand the federal balance sheet by $1 trillion over the next decade and taxpayers will fork over approximately $100 billion per year to lend to students. The Congressional Budget Office even admitted that the accounting on the plan's potential savings is skewed because it doesn't consider the risk from increased default rates.
I'm working with my Republican colleagues to bring some common sense to this discussion. There are several options. One is stopping Obama's student loan program entirely. The more people understand about this trillion-dollar bill and its implications, the better chance we have of keeping student loans local. We are also queuing up more modest modifications to preserve as much local autonomy as possible.
Anyone who has ever applied for a student loan knows that it's a formidable undertaking that requires a lot more assistance than what's available on a D.C. Web site. Students and parents will be hard-pressed to find someone to coach them through the repayment process if the Obama plan becomes law.
Washington should refrain from engaging in another government-run program that would only cripple the strong system developed in Utah rather than allowing our state to serve as an example for other states to follow as it does now.


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Student loan programs to switch lenders beginning Fall 2010

SFA Financial Aid will be switching lenders for student loan programs. This scheduled change will affect more than 7,000 students utilizing the Federal Stafford Loans (subsidized and unsubsidized) as well as the Federal Parent Plus Loan.

Currently, loan funding comes from 100+ financial institutions that participate in the federal loan program; with this change, funding will now be allocated through one direct lending source, the U.S. Treasury. All students who plan on receiving financial aid beginning with the Fall 2010 Semester must complete a new master promissory note regardless of previously completed promissory notes. This includes any loans granted to SFA parents as well.

This change will not affect interest rates, as they are set in the same manner and will be appointed accordingly.

"Our biggest concern is educating students about this impending change so that they know what to do and when to do it," Rachele Nixon, assistant director of financial aid, said. The financial aid department plans on rolling out a campaign to educate students on the changes beginning in December with a heavy emphasis in the Spring 2010 Semester after the transition has been completed and the process nailed down.

An important issue for upper level students receiving financial aid to consider is that this change will have a greater affect on their loans.

"Our long-term goals for students is that they understand when they graduate they will then carry two loans, (one) from the previous system and (one from) the new system. At (that) point they may wish to consider a consolidation loan upon graduation to alleviate the burden of carrying multiple loans," Valerie Harrell, assistant director of financial aid, said.

Student loans for the 2008 SFA school year amounted to $68 million, further indicating the scope of this change for students. This transition to direct lending through the U.S. Treasury is being instated in multiple higher education institutions, and the numbers are expected to grow. Over the past two years the financial aid program has begun losing participating lenders due to fundamental issues concerning new regulations that are tightening up the lending process.

While SFA is not legally bound to make this switch, current legislation indicates that it may very well become a mandate in the future.


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Student loan applications increase by 50 percent, cause delays

The Scholarship and Financial Aid office claims it was keeping up with processing applications for financial aid fairly well until August. However, some students say they have been waiting all summer for their loans to go through.

Denise Spudic, a graduate assistant for communication studies, said she filled out her student loan forms in mid-July, requesting the maximum amount of subsidized loans.

"I called [the Bursar's office] persistently for three weeks, starting August 12," she said. "I noticed my graduate fee remission wasn't going through."

Student loans were applied to her account a day before the extended deadline of September 3. Spudic was not the only student with these kinds of concerns.

Director of Scholarship and Financial Aid Bob Zellers said there was a large increase in applications for student loans this year. Compared to last year, he said, there has been a 50 percent increase in number of applications, given the national and state economy.

"We weren't expecting that kind of increase," he said. "We expected 20 or 30 percent, but nothing like this."

Zellers said they were keeping up with processing the loans fairly well, but in August there was a huge increase in applications. About 60 percent of the loan applications came in at the beginning of August, Zellers said.

He also noted another complication: sometimes students don't realize that award letters simply denote eligibility for a loan, and after receiving the award letter, students need to turn in request forms for financial aid.

Processing student loans should take about five business days, Zellers said. However, the increased number of applications made processing and awarding grants take longer than many students might like.

Financial Aid Advisor Janet Trimble said she believes the credit crisis has a lot to do with more students asking for financial aid.

"A large part of what we're dealing with is credit companies cracking down on who can co-sign on private loans," she said. "There's been a huge amount of job loss, and so we're seeing more students and parents taking out loans."


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Recent study shows student borrowing is on the rise

According to recent information published the by College Board on their website, the average amount of debt acquired by students during their college careers has increased, following an upward trend that has been consistent for several decades.

"I guess I am afraid of debt, but it's sort of necessary to get your foot in the door" said Angela Dela Cruz, sophomore. Dela Cruz estimated that she received a total of around $20,000 this year including grants and loans.

An annual census by the U.S. Government, known as the National Postsecondary Student Aid Study (NPSAS), puts together a highly comprehensive collection of college financial statistics and data.

The NPSAS reports on everything from average tuition costs to the amounts of financial aid received by students, and proves to be a crucial resource when looking at the trends of the collegiate world.

The most apparent of these trends is the rise in student borrowing, and consequently, student debt after graduation.

"Between 2003-2004 and 2007-2008, debt levels increased rapidly for students in the for-profit sector and for all of those earning certificates and two-year degrees," reported a College Board policy brief regarding the NPSAS. "However, the increase was relatively small for bachelor's degree recipients in public and private four-year colleges."

Over the last four years, Public four-year schools, like SSU saw a five percent increase in median student loan debt, which is relatively low compared to the astounding 30 percent increase felt by students in for-profit institutions.

While students in the public four-year system can be thankful they are seeing the low-end of the debt increase, the amounts being borrowed continue to rise, and have been doing so for quite some time.

A breakdown of some of the data released by the NPSAS puts the last ten years into perspective, after adjusting for inflation to match the value of today's dollar.

According to data published on the College Board's website, the average amount borrowed in 1997 through federal Stafford loans was around $17,238 per borrower, with a total of about ten million borrowers.


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Private Student Loans Toronto Ontario, No Credit Check for Bad Credit

Students are dreaming minds. And some of them have problems when you go for higher studies.The obvious costs of education make it impossible to benefit from higher education. Since education is one of the main instruments of their own development, can not ignore at all. You can control the cost of education, student loans are available in Ontario. You can a student loan to the ongoing costs of training requirements, ie their own tuition and other education-related bills fruit.

Private Student loans are available in a wide range of lenders. Including public and private operators work the same way. Among the private donors, known as the simple and quick loan processing. You can contact a number of such lenders online. They have their loan costs. Through the online method you can negotiate as much as possible. They do not, you can choose the right loan for the loan was quickly approved.Unlike other loans, Private student loans in Ontario, a number of specific rights. Students can find much more comfortable conditions. Such loans to ease you back to a course to continue and to get a job. The general, of course, six months after the permit is granted, provided that the student can earn at least $ 15,000. Later you can earn and pay the full amount of the loan.

Significantly, and the Ontario student loan, you can replace all the costs of training their own. In short, these are the tuition fees, library fees, buy computers, pay for your stay, etc. The loan amount depends on your needs.

Ontario Student loans are classified into secured and unsecured forms. Secured loans require pledging of an asset. Whereas, unsecured loans, there is no such requirement. Form is secured by a lower rate, while the unsecured one is a little higher.

Students are dreaming minds. These are valuable assets of the country. Their dreams can do to the country they live, so they will have the necessary attention to the quality of teaching and course costs. Ontario student loans can help you compete on quality education. It is preparing a potential student loans are very necessary for students.

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People Capital – Peer-to-Peer Lending for Student Loans

During the financial crisis, college students found that it was almost impossible to get private student loans. People Capital hopes to solve that problem by creating empowering people to finance each other’s educations.

The idea of person-to-person lending through the internet isn’t a new idea. Prosper.com was the first company to run with the idea by allowing individuals to loan each other money through the internet with Prosper acting as a lending broker of sorts. Lending Club then took that idea and ran with it and refined the industry’s business practices in hopes of maximizing investors’ rates of returns.

Amidst the worst financial crisis since the Great Depression, students have found it almost impossible to borrow money from anywhere other than through federal student loan programs. When banks found themselves with a severe shortage of capital, high-risk credit card borrowers and students hoping to finance their education were the first to be turned away.

People Capital hopes to provide an alternative market place so that students can get financing for their college education. Many college students have had a hard time getting educational loans through Prosper and Lending Club because they do not have much credit. People Capital rates students on a “human capital” score to determine the credit worthiness based on the student’s GPAs, standardized test scores, college and major to provide a “true and unbiased, data-driven measure of the economic value of an education”.

Students wishing to borrow must be enrolled in a Title-IV educational institution in the US, be a US Citizen, have a valid SSN, and be at least 18 years of age.

People Capital has not launched yet, so there is no data about the interest rates that students will pay or the rates that lenders will earn on their money. Whether or not People Capital’s person-to-person lending marketplace for student loans will largely be dependent on the quality of their “human capital” rating and their ability to judge student’s credit-worthiness. Since students traditionally don’t start paying loans back until after they are out of college, it may take several years to determine the viability of the company’s business model.


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Credit Card Debt Consolidation

Looking to credit card debt consolidation OR a credit card consolidation expenses, countless former students have looked for various sources and means to cut down both on the number of loans being paid each month and to perhaps cut the amount paid on all of the loans to a lower single payment. In many students’ cases, loan amounts today for student educational expenses can easily be beyond fifty thousand dollars. In some cases the sum may be double that amount.

The students of the 21st century are looking at very high debt amounts for their training and bankruptcy laws have gotten much tougher, not allowing students to so easily disengage from fiduciary responsibilities. There are really two types of student loans, federal and private. Each one has peculiarities and requirements that must be met in order for them to be able to have any chance to school loan consolidation.


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U.S. Department of Education Expands Its Student Loan Servicing Capacity

U.S. Secretary of Education Arne Duncan today announced that four companies were awarded contracts to service a portion of the approximately $550 billion outstanding federal student loan portfolio held by the Department. The selected contractors will also service loans originated by and sold to the Department in the future. The award of these contracts provides the Department with the capacity necessary to support anticipated increases in the number of loans owned by the Department and ensures borrowers receive the assistance they need to effectively manage their federal student loan obligations.
AES/PHEAA of Harrisburg, Pennsylvania; Great Lakes Education Loan Services, Inc., of Madison, Wisconsin; Nelnet, Inc., of Lincoln, Nebraska; and Sallie Mae Corporation of Reston, Virginia, were awarded contracts under the Title IV Student Loan Management/Servicing procurement.
"The award of these contracts is another step in the Department's efforts to ensure that all eligible students have access to federal student loans and that, in partnership with the private sector, schools and borrowers receive excellent service," Secretary Arne Duncan said.
As a result of the state of the credit markets and subsequent passage of the Ensuring Continued Access to Student Loans Act, the Department will be acquiring a large volume of federally guaranteed loans in the coming months. In addition, the President's FY 2010 budget proposes originating all new federal student loans through the Direct Loan Program starting in 2010.
"The President's proposal ensures the viability of the federal student loan programs while saving billions of dollars that can be used to assure the future availability of federal Pell Grants for our nation's neediest students," Secretary Duncan said.
The new performance-based contracts offer the Department the capability to manage all types of Title IV student aid obligations, including, but not limited to servicing and consolidation of outstanding debt. The contracts have a base ordering period of five years with an optional five-year ordering period. The minimum contract award for compliant and performing firms is valued at $5 million, with a maximum assignment to service up to 50 million student loan borrowers over the five-year ordering period. Ultimately, revenues generated under these contracts will be driven by contractor performance as measured by customer satisfaction and default aversion.
This year, the Department financed over 60 percent of the loans issued by private lenders through the authority granted the Secretary by Congress under the Ensuring Access to Student Loans Act. In addition, the number of loans originated under the Department's own Direct Loan Program has grown by 63 percent over the prior award year primarily as a result of schools choosing to switch to the Direct Loan Program.
The Department of Education's office of Federal Student Aid manages and administers the student financial assistance programs authorized by the Higher Education Act of 1965. Last year, Federal Student Aid delivered approximately $100 billion in financial aid to almost 11 million students and families.

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New Aid Program Targets Student Funding

The U.S. Department of Education has established a new student financial aid program which is already in effect at Auburn University.

Income Based Repayment encompasses all major types of federal student loans.

“The program caps the (student’s) monthly payment based on income and family size at 15 percent of discretionary income,” said Charles Markle, manager of Financial Aid Services. “Discretionary income is the different between adjusted gross income and 150 percent of the poverty guideline for your family size and your state.”

This repayment program is only available to students who have taken out Stafford, Grad PLUS or consolidation loans. Parent PLUS loans are not covered by IBR.

“The problem with the caps that the government places on FAFSA and other loans is that just because someone is way over the average income doesn’t mean that they have extra money lying around to pay for college,” Anna Lee Alford, a senior in international business, said. “If we were to devote the amount of money the government assumes that my parents should devote to my college education, we would have to move into a smaller house, as would a lot of other people.”

Alford also said she felt that people who want to pursue a more humanitarian or public service position can do so because the pressure of paying back their student loans will not be as pressing of an issue when they’re searching for a job.

Currently there are two Stafford loan programs that a university can choose to use. Either the Stafford FFEL or Stafford Direct loan program may be used.

Prior to summer 2009, Auburn University was affiliated with the Stafford FFEL program.

The Stafford FFEL loan program is set up so that the lender is a bank or another private lender, whereas the Stafford Direct loan program has the federal government as its lender.

Mike Reynolds, director of Financial Aid Services, said that both programs are equal and that the major issue is that the money needs to be accessible to students.

He said he felt a lot more confident with the Stafford Direct loan program because it alleviates problems with private lenders.

Reynolds is not concerned with possibility of the Stafford Direct loan program not having the capacity to handle the volume of students because Auburn is already involved.

Auburn’s switch to the Stafford Direct program had no effect on its capability to take on IBR.

Before IBR, the University used the standard 10-year repayment plan which put students on a strict deadline.

“(IBR) is directed at students who intend to pursue jobs with a lower salary and public service jobs,” Markle said. To qualify for IBR, you have to be able to demonstrate financial hardship.

“It would benefit me because I will be entering a low income job field,” said Christen Holmes, a junior in secondary education. “I think it’s a good thing because students deal with a lot coming out of college. They are faced with a lot of debt which has a negative impact on the first few years out of college.”

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