Tag archive for "student loans"

Apply to College, Resources

Resources for Low-Income Students Applying to College

No Comments 26 January 2017

For low-income students, the cost of higher education could stop their journey to college before it begins. Luckily, there are plenty of resources to widen college accessibility for low-income students.

Federal Pell Grant

The Federal Pell Grant does not need to be repaid and is free money for college. You apply for the Pell Grant by filling out the FAFSA. The financial need listed on your FAFSA dictates how much money you will receive through the Pell Grant. Keep in mind, there is a maximum Pell Grant amount, and it can vary from year to year.

Work-Study Programs

Work-study programs allow students to earn cash at part-time jobs on or off campus. All you need to do to apply is check a box on the FAFSA. About 3,400 colleges participate in work-study programs. Talk to the financial aid offices at the colleges you’re applying to and check if they participate.

Net-Price Calculator

Sticker shock is a common problem for low-income students applying to college. Instead of being scared away from college, use a net-price calculator to make a more informed decision.

The net price is determined by estimating the total cost of college — including tuition, books, room and board — and subtracting the average amount of student aid. Colleges are required to post a net-price calculator on their website. Utilize this tool when deciding where to apply.

Scholarships

Take a look at College Greenlight and fill out a profile to create a scholarship match list. Be sure to provide lots of information so you can be matched with as many scholarships as possible.  There is no limit to how many you can apply for as long as you meet eligibility requirements.

Pay for College, Resources

Most College Credit Cards Leave Students Unprotected

No Comments 25 January 2017

Many colleges fail to monitor credit card and financial programs marketed to students, leaving campus officials largely in the dark about whether these programs are in a student’s best interest. The programs can prey on students, costing them hundreds of dollars in fees and penalties.

According to the Consumer Financial Protection Bureau’s Student Banking Report, on-campus financial institutions play a significant role in supporting a student’s financial stability. When a college fails to provide support, a student might not be equipped to handle unexpected fees or charges. This could impact a student’s ability to pay tuition and other costs related to higher education.

Many colleges do not take advantage of their rights under credit card and financial partnerships. They usually decline to receive information about student credit card use and the management of financial programs. They also turn a blind eye to student complaints.

Forty percent of college students — more than 10 million — attend a college or university with an on-campus bank.

To help make students aware of the pitfalls of on-campus banks and credit cards, the Consumer Financial Protection Bureau called for financial institutions to disclose consumer agreements on their websites. The bureau also launched an initiative to help colleges evaluate the economic effects of on-campus banks and affiliated credit cards.

The market for college credit cards, however, is declining. In 2015, the bureau reported a 21 percent decline in credit-card agreements from the previous year.

The Credit Card Accountability, Responsibility and Disclosure Act includes a section that intends to bring greater transparency to the college credit-card market. It includes:

  • Credit-card issuers must submit the terms and conditions of college credit cards
  • Credit-card issuers cannot provide cards to students under 21 who do not provide proof that they will be able to make payments
  • Prescreened offers of credit cannot be marketed to students under 21 without their consent

African American Students, Diversity, Federal Loans

Student Loan Debts at Historically Black Colleges and Universities

No Comments 20 January 2017

People who attend historically black colleges and universities (HBCUs) typically have larger amounts of student loan debt than those at traditional universities. Debt loads at HBCU’s tend to be larger because many students are low-income and/or first-generation.

According to the United Negro College Fund’s report, FEWER RESOURCES, MORE DEBT: Loan Debt Burdens Students at Historically Black Colleges and Universities, HBCU students typically graduate with higher debt loads because they borrow at a higher rate than their non-HBCU peers. According to a 2013 study, HBCU students borrow an average of $26,266 in federal loans. Non-HBCU students borrow an average of $14,881.

HBCU students also have lower loan repayment rates than their non-HBCU counterparts. According to the report: “Seven years after leaving college, the average cohort repayment rate for HBCU students is considerably lower than that for students at non-HBCUs (59 percent vs. 85 percent).” This rate, however, does not include factors that impact repayment rates such as student economic status, labor market conditions and choice of educational program.

Another issue facing HBCU students is that more come from families with lower incomes than their non-HBCU peers. In 2005, the median family income of students at HBCUs was $28,400. That is about half the median family income ($51,400) for students who attend non-HBCUs. The discrepancy in income limits the ability of an HBCU student to pay for college. Thus, HBCU students have large amounts of unmet need that require them to take out student loans.

HBCU institutions have limited resources, which hinders their ability to provide grants to students. In 2015, the top 10 HBCU endowments to provide grants to students ranged from $34 million to $660 million. The endowments for non-HBCU institutions that year ranged from $10 billion to $36 billion.

Suggestions to reduce the HBCU student debt loan

  • Policymakers should reduce the complicated nature of the federal student aid eligibility process and provide more aid to those in need
  • Grant aid and work-study opportunities should be increased
  • Federal loans should be less costly for students and their families
  • The federal student loan servicing system repayment process should be more manageable, effective and efficient

FAFSA, Money

Introducing the Streamlined FAFSA

No Comments 16 January 2017

Multiple organizations understand that the FAFSA application process is complicated and may present barriers to college access for many students. For this reason, the National College Access Network (NCAN) has created the Streamlined FAFSA. The FAFSA is a free a universal form for students to fill out in order to apply for financial aid from the U.S. Department of Education. NCAN’s model eliminates unnecessary and redundant questions in order to maintain FAFSA’s original purpose, which is to serve as the premier and free form to apply for financial aid.

Applying for the FAFSA is a complicated process, with only about 44 percent of students completing the form. This means about $24 billion goes unclaimed in federal aid, which includes $2.7 billion in Pell Grants. NCAN recognizes that there are several barriers for students completing the FAFSA. Chief among them is a lack of understanding the application process, overly complex questions and the length of the FAFSA. These issues cause barriers for many applicants, especially first-generation students.

The Streamlined FAFSA eliminates these issues by providing a shortened series of eligibility and demographic questions for applicants. An updated Federal Student Aid ID (FSA ID) and expanded access to the IRS Data Retrieval Tool (IRS DRT) allows many identifying and financial questions to be automatically filled in, which saves the applicant time and reduces errors.

The Streamlined FAFSA reduces the number of questions by guiding students down one of three paths. Pathway one has as few as 20 questions for applicants from families who receive benefits from eligible federal means-tested programs. This means that these individuals automatically can skip all financial questions and receive the maximum Pell Grant award.

Pathway two has no more than 23 questions for applicants who do not participate in means-tested benefit programs and do not file a schedule with their taxes. Pathway three includes 25 questions for students who file tax schedules with their taxes.

NCAN’s Streamlined FAFSA is outperforming the current FAFSA. Independent testing of the NCAN model shows a 56 percent lower error rate, a 39 percent improvement in completion times and 50 percent fewer questions to answer.

Transparency has been increased and uncertainty is reduced in the FAFSA filing process because of the streamlined FAFSA. This model could increase Pell Grant expenditures by nearly 5.1 percent and increase FAFSA completion by 7.4 percent.

With 85 percent of four-year college students receiving financial aid, a simplified FAFSA application process is vital. The streamlined FAFSA could ensure that needy students have the access to financial aid.

Federal Loans, Money, Private Loans, State Loans

How to Help Borrowers with Unpaid College Debts and Defaulted Student Loans

No Comments 17 November 2016

Students sometimes encounter roadblocks because they owe money to a college or have defaulted on their student loans. Low-income students are more likely to be affected by these problems. These tips will help counselors help them overcome these obstacles.

Problem: Colleges may legally refuse to provide official transcripts to students who owe a debt to the college. This can prevent the student from transferring to another college to continue their education. But, the student can’t afford to repay the debt until they graduate and get a good job. Or, the student may need financial aid to pay off the debt.

Solution: A counselor can help the student by advocating on their behalf with the college. Maybe the student can finish their degree at the original college, with just a little more financial support. Maybe the college can accept a payment plan instead of payment in full, and release the transcripts after the student has made a few consecutive monthly payments. Maybe the counselor can convince the new college to conditionally accept unofficial transcripts and let the student enroll with a promise to deliver official transcripts later. Colleges may be more willing to compromise when a counselor intercedes on behalf of the student. (Counselors should get the student to sign a FERPA waiver so that the college can discuss the situation with the counselor.)

Problem: The student wants to repay his or her student loans, but circumstances have overtaken them. By the time the student loan bill is due, they’ve already spent their paycheck.

Solution: Sometimes, students just have trouble managing their money. Ask them to track their spending for a month using a program like Quicken or Mint.com. Increasing awareness of how they spend their money is the first step in exercising restraint. It will also help them plan for their bills. Encourage them to enroll in auto-debit, where the monthly student loan payment is automatically transferred from their bank account to the lender. Not only will this help ensure that they make the payments on time, but many lenders offer a slight interest rate reduction as an incentive. Asking the lender to change the due date to a few days after they receive their pay check may also help. These problems can also be prevented by providing students with access to financial literacy mini-courses while they are still in school.

Problem: The student is getting harassed by collection agencies. They are afraid to open their mail or answer the phone. They need someone to help them figure out a way out of this mess.

Solution: Avoiding the problem will only make it worse. The simplest solution is to talk to the lender and ask about their options. If they are actively engaging with the lender, the flood of letters and calls will stop. They can also exercise their rights under the Fair Debt Collection Practices Act (FDCPA) to tell the lender to stop contacting them, which will end most of the calls and letters, except for notices about specific actions the lender is taking, such as filing a lawsuit. But, this will not address the underlying problem, which is the difficulty dealing with the debt. There are options for dealing with financial difficulty, such as suspending or reducing the monthly loan payments, and for rehabilitating defaulted student loans.

Problem: The student doesn’t know the status of his or her student loans, just that it is bad.

Solution: The problem might not be as bad as the student thinks. If the student is just a few months delinquent, as opposed to being in default, making a few payments might be all that is necessary to bring the account current. Start by compiling a list of the loans and the lenders. If the student doesn’t remember any of these details, have them login to the National Student Loan Data Systems (NSLDS) to check on the status of the federal loans. Information about private student loans, as well as federal loans, may be found in the student’s credit reports, which may be obtained for free at www.annualcreditreport.com. Then, have the student call the lenders to learn about their options.

Problem: The student wants to continue their education, but has learned that they are ineligible for further federal student aid because they are in default on a previous federal student loan.

Solution: Borrowers can regain eligibility for federal student aid by rehabilitating the defaulted student loans. There are two main methods. One is to make 6 consecutive, full, voluntary, on-time payments on the defaulted student loan. The other is to consolidate the loans into a Federal Direct Consolidation Loan and agree to repay the consolidation loan with an income-driven repayment plan. This is a one-time opportunity, so if they redefault, they will have no choice other than to pay off the debt in full.


Join us!

Create a free profile and...
  • Discover more than $11 billion in scholarships and merit aid
  • Get your college matches and see which colleges want you
  • Instantly see your admissions chances for getting into the college of your dreams
Create My Profile Now