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 »

Applying for student loans can be very confusing and difficult. Do you need a subsidized loan or a Perkins loan? A Stafford or a private? Here’s a quick rundown of what the different types of student loans are.

Stafford Loans: These are federal loans. They come directly from the government through the Federal Family Loan Program. These require the FAFSA to be completed by the student.

Subsidized Loans: These are a type of Stafford loan and are designed for students who demonstrate financial need. While students are in school, the government pays the interest on these loans. Read the rest of this entry »

Students: here’s one group that’s looking out for you, The Campaign for College Affordability. This group recently sent Congress and the Obama administration a letter urging them to tackle the college affordability crisis as a part of the stimulus package. They point out that approximately 400,000 students are priced out of the higher education system in the United States every year, and that at this rate, the U.S. workforce will be short $16 million degree holders by 2025.

Here’s what the Campaign for College Affordability proposes:

1. An increase of the Pell Grant maximum by at least $500 to $5200 (which Obama has proposed as well in his stimulus package proposal), and a subsequent increase of the maximum to $7200 for the following year. Read the rest of this entry »

How to Get a Student Loan

According to a report from the National Center for Public Policy and Higher Education, college tuition and fees increased 439 percent from 1982 to 2007, while median family income rose just 147 percent. You don’t have to be a math professor to see how that sort of trend puts amazing pressure on students and their families to find ways to pay for a college education.

If you haven’t saved enough money to pay for your education, all is not lost. Financial aid has more than doubled in the last decade. And while the recent credit crunch has made it even more difficult on those in need of financial assistance, you still have options. We’ll show you how to tap into public and private sources of aid.

Loans for higher education come in three major categories: student loans, private student loans, and parent loans. Let’s take a look at each option. Read the rest of this entry »

Here’s a welcome change—some good news about student loans. In response to the worsening economy and the credit crunch, the U.S. federal government has enacted some recent policy changes that will make it easier to get student loans, and a little less painful for both students and parents to pay them back.

Here’s a summary of the recent changes:

• The Stafford loan program has been expanded. Most undergraduates will now be eligible to borrow up to $5500 per year, and most upperclassmen will now be eligible for $7500. Virtually all students will be eligible to receive Stafford loans as long as they fill out the Free Application for Federal Student Aid (FAFSA). Students who are 24 years old and above, or who are independent of their parents, will be able to borrow an additional $6000. These Stafford loans will come with an interest rate of no more than 7.25%.
• Needy students will be eligible for a lower Stafford loan interest rate of 6%– and further cuts are in the works.
• Interest rates will drop to 4.21% on all unconsolidated student loans issued before July 1, 2006. This includes loans that are currently being paid back, as well as loans that are not.
• Parents who take out a new PLUS loan can now defer payments until six months after their child has graduated from school. In addition, it’s become easier for parents to qualify for PLUS loans. And if a parent is denied a PLUS loan because of credit problems, the child is then eligible for additional Stafford Loan funds.

Loans are still a burden, of course, and these actions don’t solve the problem that a college education has become overwhelmingly expensive for students and families. But perhaps this is a move in the right direction.