This spring, the U.S. Department of Education asked colleges to help students whose families are struggling due to economic hardship like unemployment and medical bills. Now, schools are dishing out record amounts of aid — and approving more appeals than ever.

Federal authorities estimate that 1.5 million students eligible for Pell grants did not apply because they wanted to avoid the Free Application for Federal Student Aid (FAFSA).

Starting in July, borrowers can choose a new repayment plan — Income-Based Repayment, or IBR — that calculates payments on federal student loans by income and family size. Under this program, qualified borrowers will never have to spend more than 15% of their discretionary income on student loan payments.

As a student you may wonder how the legislative changes will affect you immediately, but more than likely you aren’t too interested in reading through the fine print.

Furthering your education is no cheap endeavor. Making it affordable and achievable involves both smart choices and tough choices.

The old adage that you can avoid paying back your student loans by staying in school forever was never really true, despite what your “super senior” friend may say. Eventually, everyone will have to make payments on these loans, just some sooner than others.

There have been a lot of reports over the past few months about people having issues getting student loans. They certainly haven’t been as easy to obtain as years past.

It’s true. Filling out the FAFSA is about as exciting as watching the grass grow. But it is as important as changing the oil in your car.

February is Financial Aid Awareness Month. Pretty sweet, right? Knowing a bit more about how the financial aid process works can only help, as you try to reduce some of the administrative headaches involved with going to school.

Hoping to quell the student loan crisis, the government last month passed legislation that allows the Department of Education to buy out loans from lenders. This frees up funds for many lenders so they can continue making loans. While this is a short-term solution (the buy-out runs through July 2009), some say it will help students get the funding they need for this year. Find out how this new move could affect your loans.

In the wake of the student loan crunch, a new trend has hit the market – reaching out to friends and family for a loan. GreenNote, which launched in June, is just another site that links borrowers and lenders, offering people the option of borrowing from ordinary folk they know, who in turn get a return on their investment.

With rising loan debt, more and more medical students are opting for specialties and shunning primary care, says the Detroit News. But does this spell disaster for the future of health care?

There’s been a lot of back and forth about what’s going to happen to student loans lately. Who will have to pay more and who’ll get a great deal? Find out more.

Is the federal public service loan forgiveness program, which is set to start in July 2009, a good option for those who qualify? Not everyone agrees.

Want to check out the latest student loan crunch updates?

The Today show outlines the recent developments.

The Yale Daily News discusses how the loan crisis affects loans for professional students.

This year, the Economic Hardship Deferment program has new eligibility rules that allow more students to qualify for the program. To find out if you are eligible, you can use the Economic Hardship Deferment calculator or refer to a coversheet that outlines the requirements and documents you will need to provide when applying for deferment.

The credit crunch is taking a toll on student loans. And while the government promises borrowers it can make more federal loans available, some experts say it won’t be able to cover all the funds if the credit crisis lasts, reports the St. Paul Pioneer Press. Here’s what you need to do to avoid problems with your loan applications:

Why you should gauge your debt

When you’re busy with school, it doesn’t take much to lose track of your debt. Get a quick reality check early in your education with Bright Ideas: Gauge Your Debt – a lender-neutral brochure that helps you stay focused on your future financial goals.

Read the paper lately? The current hubbub about sub-prime mortgages is hard to miss. But what you may not know is that this unrest is trickling down to the student loan industry, as well, reports Business Week. Along with recent legislation, the mortgage crisis is likely to affect both new and existing student loans.

This year, the Department of Education is making the online FAFSA process easier by providing real-time PINs for students and parents. Instead of having a waiting period to confirm an applicant’s Social Security number with the Social Security Administration, you can use the PIN right away to sign your FAFSA. If the Social Security number doesn’t come through, the PIN is disabled and applicants receive their student aid report (SAR) in the mail, requesting the necessary information.

You can learn more about FAFSA and PIN updates for 2008-2009 here. You can also request your FAFSA PIN here.

With tax season upon us, you may be eligible for certain deductions, such as your student loan interest, reports the Kansas City Star:

• You can deduct the interest you’ve paid on eligible student loans if your modified gross income is less than $55,000 and you are filing singly (less than $110,000 if you are filing jointly).

• Eligible loans include your, your spouse’s or a dependent’s student loans if interest payments have been made during that tax year.

• To claim this deduction, you must be enrolled in a degree program at least part-time during the time of the loan.

• Loans made by a relative or under an employer plan are not eligible for this deduction.

• The maximum deduction is $2,500.

For more student tax information, check out the IRS student tax section.

The economic hardship deferment (EHD) program will continue until fall 2008, following a Department of Education announcement on November 1. The Department of Education will make its final decision on the status of EHD next fall. For now, eligible medical residents and other borrowers with high debt and low to moderate income can enter deferment until fall 2008. The reinstated EHD program also qualifies more students for deferment.

You can find out more about the latest EHD developments from American Medical News.

For many students, this academic year marks the first year they are virtually on their own when picking a lender. With schools and financial aid offices staying out of the selecting process, this new-found independence can be both freeing and daunting. No matter where you stand on the changes that arrived this fall, doing your own legwork when picking a lender has its ups and downs. So speak up on what you’ve learned and how you’ve fared. Maybe your fellow students will learn something from your experience.

If you have student debt and worry about how it will affect such things as applying for a mortgage, you have less to fret about than you may think. Here are some things to keep in mind:

• Lenders don’t just look at your debt, they look at your income.

• Lenders also view student loan debt more favorably than credit card debt.

• Another thing to consider is your down payment – the more you put down, the less of a risk you are to lenders.

• Mortgage lenders often try to get you to consolidate your student loan debt to a 30-year term to minimize your student loan payments. While this can help you qualify for a larger home mortgage, it can also add thousands of dollars to your student loan costs.

Find out more on how your student loans play into the home mortgage equation.

Second Helpings [this article was posted in October 2006]

It’s easy to get a student loan these days. It’s harder to find a lender that won’t sell you to the highest bidder.

Is your inbox full of student loan spam? Is your quality time with the Simpsons being interrupted by some lender yakking in your ear about debt reduction? Is your mailbox so crammed full of flyers about interest rates that you can’t even open it? Well, you’re not alone.
But who are these lenders? Where did they come from? And why are they suddenly so interested in you?

Around 1 a.m. on July 20, 2007, the Senate passed the Higher Education Access Act (s. 1762), the budget reconciliation bill that will cut lender subsidies by about $19 billion. The new bill passed by a vote of 78 to 18. The Senate approval clears the way for the Senate and House to start negotiating for a single solution on this legislation. Right now, the House bill puts more student loan subsidy savings into borrower benefits while the Senate bill directs more of the savings to increasing grant aid.

You can read more detailed coverage of this new bill here.

We at the Ramen Report appreciate your comments on our article regarding the looming student loan changes. As with any legislation, there will be winners and losers. With this bill, the graduate students will lose. Are there any graduate school Financial Aid Officers who would like to share their knowledge regarding the proposed changes?

Think school is expensive now? Well, in as little as a few months, student loans could get a lot more expensive, thanks to new congressional legislation that will hit graduate students the hardest. Here are the basics:

The gist: The government pays subsidies to lenders, which allows lenders to give you borrower discounts. This bill will cut that subsidy by .55%.

What this means for you: Without the money from the government, lenders are going to cut borrower benefits, meaning you will pay more for your loans. Although .55% may not seem like a big number, for a student who has $100,000 in loans that they plan to repay over 25 years, it means paying an additional $22,785 for that loan.

Don’t like the way that sounds? Well, there’s something you can do about it. Contact your senator or representative. Let them know that an affordable education is not something you are willing to give up.

When it’s time for repayment, know your options. Most lenders offer a variety of repayment plans depending on your situation, such as extending payment terms or making interest-only payments on your loans.

Another strategy you can try is lowering the payments on your lower-rate loans and using the extra money you save to make bigger payments on your high-interest loans (this will save you money that you would’ve paid on the high interest rate).

So do a little digging and contact your lender to find out what repayment options will work best for you.

Along with a storm of graduation cards, you’re probably seeing lender offers to handle your student loans now that you’re heading into repayment. Below are some tips from SmartMoney.com on finding the best offer for you while avoiding the pratfalls.

The variable interest rate on student loans originated prior to July 1, 2006, will increase by 0.08 percent starting July 1, 2007, the U.S. Department of the Treasury just announced.

Variable interest rates starting on July 1, 2007 will be:

· Stafford (in-school/grace period): 6.62%

· Stafford (in repayment): 7.22%

· PLUS: 8.02%

Rates on federal loans originated on or after July 1, 2006, remain fixed at 6.8% for Stafford, 7.9% for DL PLUS, and 8.5% for FFEL PLUS.

The good news for graduates is that you don’t need to rush into consolidation to lock in a great rate before the rate increase goes into effect — the fixed rate you would get before July 1 is likely going to be the same as the rate a few months later. This is because the rate increase is so slight and because consolidation rounds up to the nearest .125% (one-eighth percent).

Because of this, take your time and figure out if consolidation makes sense in your situation. Two factors to consider are simplicity and savings: use consolidation to enjoy the ease of having all of your federal loans with one lender and as a way to move your loans to a lender with better borrower benefits to reduce the cost of your loans. So shop around and take the time to evaluate consolidation lenders. Find the one that offers you real savings and don’t worry about the new rates deadline.

It probably comes as no surprise to you that today’s students are collecting record debt. But how much debt is too much? According to CNN’s On The Money, many lenders qualify borrowers for loans without considering other expenses, such as car payments and credit card payments, which are taking a sizeable chunk of students’ income these days, leaving the borrower with unmanageable debt.

We know school keeps you busy and sometimes you have bigger things on your mind than balancing the checkbook, so we’ve outlined five quick rules of finance wisdom from TG Online.

What a girl wants and what a girl needs. Girl or boy, now is the time to trim the luxuries. Let’s be honest: a coffee shop latte in the morning sounds enticing, but is the world really going to end if you brew you own coffee instead? Is the free shipping on your online impulse purchases really worth putting more mileage on the credit card? Go vintage and try thrift stores or at least give that purchase decision 24 hours to simmer.

Okay, so your scholarships and work study don’t quite cover the bill. Despair not! According to the Wall Street Journal (“Student Loans: Navigating the Maze,” May 12, 2007), you have a lot of student loan options to help you out.

Step 1:

Check with your school’s financial aid office. Many schools have negotiated discounted rates with lenders that will save you money.

Step 2:

See what Uncle Sam has to offer. Federal student loans such as the Stafford, Perkins, PLUS or Grad PLUS usually have lower interest and offer a fixed rate.

Maybe you’ve noticed stories on possible inappropriate relationships between schools and student loan lenders in the news. Does this mean you should ignore the advice your financial aid officer gives you and strike out on your own? Hardly.

While you have the final say in the lender you choose for your loans, schools have saved students a lot of money by pointing them in the right direction and offering valuable advice.

Graduation can be a crazy time – you’re moving, starting or searching for that great job – you may not be thinking about your student loans. But if you consolidated in school or have a Grad PLUS loan, you should know that your first bill is on the way. Are you ready to make a payment this June?

Unlike most loans, consolidation and Grad PLUS do not offer a grace period. That means you start repayment as soon as you graduate, and that’s tough for a lot of students. Considering all the life changes you go through post-graduation, it’s not uncommon for borrowers to miss payments early on — in fact, the most commonly missed payment is the very first one, according to The Wall Street Journal.

Student loan marketers are really pushing the envelope these days — literally. By now, you’ve probably seen those official-looking envelopes in the mail, the ones marked “FINAL NOTICE” in red ink, urging you to “OPEN IMMEDIATELY”. Worse yet are those made to look like they’re coming from the U.S. government, with words like “Department of Student Loans” to make you think Uncle Sam is responsible for the content. At least one loan marketer even stamps the image of an eagle, that obvious national symbol, on its letters. Gets your attention, doesn’t it?

No matter how official they make it seem, don’t fall for the bald-eagle trick.

These solicitations are not from the president, and they’re not final payment notices. The goal of these deceptive tactics, in many cases, is to get you to consolidate your loans, which may not be the best decision these days. The good news is people are starting to take notice of this sketchy marketing tactic and criticize lenders that try to scare borrowers into responding. And while it hasn’t been done yet, lawsuits might be on the horizon.

Time is money, especially when it comes to paying your bills. Make a late payment on a credit card and chances are good that your interest rate will go up, in addition to any fees they’ll charge you for being late. Keep being late on payments, and your rate could soar (up to 35% in the worst-case scenario).

Luckily your student loan interest rates aren’t going to fluctuate based on missed payments, but you can still lose a lot of money if you’re late with your bill. Here’s how:

Think consolidation’s a good idea for your private loans? Think again.

First, private loans can’t be consolidated with federal loans under the federal loan program, meaning you won’t be able to get a lower rate (as you may have in the past with federal consolidation). You can, however, use private consolidation to get one monthly payment but remember that a lower payment now means you’ll pay more in the long run (and probably have a longer repayment term). Keep in mind, too, that private loan consolidation almost always comes with a variable rate, not a fixed rate, so expect your rate to fluctuate from season to season.

Even though 2006 tax forms don’t include key lines about tuition and fee deductions, you can still take advantage of them (up to $4,000 in eligible expenses).

When this year’s tax forms were printed, the Tuition and Fees Tax Deduction was still pending. President Bush approved the deduction in December, after forms had already gone to print. So you won’t see a specific line on the 1040 form for tuition and fees, but the IRS has since published instructions for this deduction.

Here’s how you do it:

…but times and interest rates have changed. Does it still make sense? Will it save you money — or cost you more?

There are lots of myths floating around about consolidation these days, and it’s hard to get the straight story (especially when your mailbox is full of marketing that practically begs you to consolidate). Before you sign over your loans, make sure you have the facts.

Capitol Hill has been at the center of the student loan debate with the newly elected Congress vowing to cut interest rates in half. Well, they just did — the House passed this legislation with overwhelming support, but doubters claim it does little to solve more serious problems with college funding. While supporters say it’s a meaningful step in the right direction, some argue that the focus should be on more grants for low-income students (who might not otherwise get to college in the first place).

What do you think? Read up and weigh in.

Your mom might be right: if something sounds too good to be true, it probably is.

Such is often the case with student loan incentives, or discounts—the offers of interest rate reductions that most lenders advertise to get you to do business with them.

Surely you’ve seen offers like “Get a 2% interest rate reduction (after 48 months of consecutive on-time payments).” Skimming two percent off your hefty loan balance sounds pretty sweet; that would save you a lot of money. So what if you have to wait 48 months. That’s only, what, four years. Hey, wait a minute…

It’s easy to get a student loan these days. It’s harder to find a lender that won’t sell you to the highest bidder.

Is your inbox full of student loan spam? Is your quality time with the Simpson’s being interrupted by some lender yakking in your ear about debt reduction? Is your mailbox so crammed full of flyers about interest rates that you can’t even open it? Well, you’re not alone.
But who are these lenders? Where did they come from? And why are they suddenly so interested in you?