The rate of borrowers who will default on student loans is higher than short-term government estimates indicate, reports the The Chronicle of Higher Education. According to their data, 20 percent of government loans that started repayment in 1995 have gone into default. The rate is even higher for students attending two-year colleges.

Defaulting on student loans leads to serious personal and financial burdens. Borrowers become ineligible for additional federal aid and can have their wages and tax refunds seized by the government. It also ruins future credit ratings, making it difficult to obtain mortgages, car loans or credit cards.

Loan money that is not recovered by the government must come from taxes. At the end of the 2009 fiscal year, $50.8 billion of student loans were in default.
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We could all use some good news when it comes to money these days. And even if it’s not your own money, the federal government is taking steps to make borrowing money for student loans cheaper and easier to get and much simpler to pay off.

Here’s why:

On July 1, the federal government lowered the interest rates on many student and parent loans, and took out the middle-man by awarding loans directly through the government itself rather than through a bank.

The only downside is that there will be a bit of a learning and processing curve on the shoulder’s of the schools’ financial aid offices as they learn about the new rules and spend more time answering parents’ questions. So expect longer phone times and maybe mixed messages from school administrators during the first few months of the academic school year. Read the rest of this entry »

We have all been writing blog after blog about how to save for rising tuition and prepare for the costs of college, but here is a way to save your money while spending money on everyday items.

Upromise is a free service that allocates money towards college bills and student loans when you purchase groceries, shop online or buy gas. Students can also use the money for 529 investment programs.

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It’s no secret that most graduates are in debt. By the time you walk across the stage in cap in gown you have likely built up several thousands in student loans. According to the Project on Student Debt, students, on average, are $23,200 in the hole by the time they get their degree. So instead of cringing when you get your first letter from Sallie Mae, you should educate yourself. Here are some tips on how to manage your student debt:

1. Know what you owe: Go to the National Student Loan Data System at to find out how much you owe. The website will be able to keep you up to speed on all the loans you have taken out so far. You should also know the different federal student loans you have, the lenders on each of the loans and the interest rates one each of them.

2. Never default on a student loan: There’s never a good reason to default on a loan. No matter what your financial situation is, lenders have several repayment plans, including a 36-month economic hardship deferment plan. Keep in mind that once your loans become delinquent, you lose the right to deferment and have to deal with those pesky collection fees. Read the rest of this entry »

According to new published reports, students and graduates born between 1980-2000 are probably going to be financially screwed for the rest of their lives.

This report comes from financial advisor Lee Jenkins of Lee Jenkins on Money. He asserts that “They have high, unrealistic expectations and many don’t manage money very well.”

Even prior to the December 2007 recession the students were destined for doom. Their parents had the G.I. Bill and pension plans while they have expensive high-tech gadgets necessary for scholastic success along with an average of $23,200 in student loan debt come graduation.

Additionally, the entire generation faces economic struggles come graduation where they will encounter a decline in health benefits, chronic job insecurity, stagnant wages, and a soaring increase in basic living expenses while having minimal savings. Read the rest of this entry »

College Board® recently found in a recent study that the average student debt from a private school for bachelor’s degree was around $22,380.

In another study, according to the research and advocacy organization Project on Student Debt, in Oakland, California, 10 percent of 2007 and 2008 graduates had accumulated over $40,000 worth of student loan debt. They gathered this data per calculated Federal statistics.

While the students are burdened with the debt, in my opinion, the responsibility also falls upon the financial loan providers and the colleges who connect the students with their loan sharks.

In reality though, prestigious universities are not likely to discourage student loans to afford their hefty tuition rates.

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It is no secret that a college education is expensive.

In fact, the average price for tuition at a private college according to the College Board for the 2009-2010 was $26,273, a 4.4 percent increase from 2008 and public school was an average of $7,020, up 6.5 percent. Over the next 18 years, the cost of a college degree is expected to increase to a couple hundred thousand dollars.

There is hope however for families who will need to start planning now for those expensive four years.

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With ever-rising loan interest rates, dwindled savings from financial hardship and less scholarships on the market than in years prior, high school graduates are having to decide between Ivy League and state schools based on price versus prestige.

With seven out of ten high school graduates heading straight to college, the student enrollment is up, as are the tuition prices.

Private colleges are averaging about $35,000 and state universities are about $15,000 a year. When compared with the value comparison calculators offered on most state university websites, students may see that after four years they could potentially save over $100,000. Those numbers are hard to argue with.

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It is no secret that college is normally synonymous with debt but here are simple tips on how to graduate without destroying your credit score:

• 1. Create a spending plan: Habits are hard to break, so even if your cash intake is minimal now, it’s important to figure out how you’re currently going to dispense it so you get into the habit of staying on course with a plan.

2.   Save something: Even if it is only 50 cents to a dollar a day, change can add up. Set aside an amount daily that you can commit to so that you become accustomed to delegating a portion of your income to a savings account.

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On March 30, 2010, President Obama signed the Education Reconciliation Act of 2010.

Two major goals of this act are increasing financial assistance to minority students and investing in community colleges.

A big part of this act will be to increase funding to America’s Historically Black Colleges and Minority-Serving Institutions. Almost 60 percent of the nation’s 4.7 million minority students attend these schools; however, these schools have not received any addition funding to help offset expenses.

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