New analysis of student loan repayment rates

A large percentage of borrowers who left college in the past four years made no principal payments on their federally guaranteed student loans in 2009, according to the Department of Education.

This is the first time the department has calculated and published repayment rates for every college and university whose students get federal loans.

The data, released Aug. 13, should be a wake-up call to taxpayers, who will be on the hook if these loans are never repaid, and to students who wonder whether they'll earn enough to repay them.

Prospective students who need to borrow for college should take the data into consideration before choosing a school, but it's important to understand them.

"This is one more piece of the puzzle that students and families can use to help them figure out which is the right college for them. It's not the most critical piece," says Debbie Cochrane, program director at the Institute for College Access and Success.

To determine repayment rates, the department looked at students who graduated or left college in the past four years with federally guaranteed student loans, then looked at the percentage of them who made at least $1 in principal payments in the past year. It weighted this percentage by the dollar amount of the loans.

Based on this measure, only 51 percent of loans are in repayment.

That means 49 percent "are not currently in repayment," but it doesn't mean those loans will never be repaid, says Mark Kantrowitz of FinAid.com.

The 49 percent includes borrowers with financial problems who are in approved forbearance or deferment programs that allow them to postpone payments. It also includes students who are in programs that allow them to pay interest, but no principal, on their loans. But it also includes students who are simply not paying their loans.

The Education Department came up with repayment rates as part of its new rules for for-profit colleges.

Federal law requires for-profit schools that receive federal student aid to prepare students for "gainful employment," but that term was never defined.

Concerned that too many students are graduating from these schools with debt they could not repay, the department decided to write new rules for for-profit colleges. In late July, it proposed rules that define gainful employment based on their former students' debt-to-income ratios and student loan repayment rates. If a for-profit school exceeds certain limits, its new students would not have access to federal aid.

Although the repayment data are new, this isn't the first time the department has attempted to quantify default rates. However, critics say the old way of calculating the rates covered too short a time period and was too easy for colleges to manipulate.

So it came up with a different way of measuring former students' ability to repay their loans. The two rates are calculated differently and present a very different picture.

For example, UC Berkeley's default rate was 0.9 percent for 2007, the latest year available.

In the newly published data, its repayment rate for 2009 was 73 percent, which implies that 27 percent of loans were not in repayment.

Berkeley's repayment rate is actually pretty good. The average repayment rate is 53.7 percent for all public colleges, 56 percent for private, nonprofit colleges and 36.4 percent at for-profit colleges, Kantrowitz says.

He warns that because the report is so new, there could be errors. Some schools have disputed the government data.

In some cases, the data are misleading. For example, Harvard Medical School's repayment rate is only 24 percent, but medical school graduates typically postpone student loan payments while they are interns or residents. Harvard University's repayment rate is 84 percent.

Under the department's proposed rules, a for-profit school could lose eligibility for financial aid if its repayment rate on federal student loans is less than 35 percent and its former students are spending more than 12 percent of their income and more than 30 percent of discretionary income to repay all college loans. (These rules also would apply to nondegree programs of less than two years at public and private nonprofit schools.

Source:www.sfgate.com

Students loans process becoming easier says province

The Ontario Government says it will be easier this fall for Ontario residents to get student loans.

Starting this year, college and university students will spend less time filling out loan and grant applications and standing in back-to-school line-ups. They will also receive their financial support faster, said a news release from Queen's Park this week.

The province said it is streamlining student aid by making the application process easier and cutting red tape. This will help students focus more on their studies. Changes to the process this year mean:

• Students will fill out fewer forms for the Ontario Student Assistance Program (OSAP) and Student Access Guarantee (SAG) funds

• When they complete their OSAP application, they will also be automatically evaluated for SAG funding

• Recipients of the Ontario Access Grant and Distance Grant will have their aid directly deposited into their bank accounts starting in January 2011.

The release further states that additional changes taking effect this school year will benefit students by:

• Providing more assistance for tuition, living costs, books, supplies and equipment

• Allowing students to keep more of the money they earn from part-time jobs

• Providing a no-interest no-payment period on student loans for six months after graduation

• Providing additional support for married students and students with children

Students loans process becoming easier says province

The Ontario Government says it will be easier this fall for Ontario residents to get student loans.

Starting this year, college and university students will spend less time filling out loan and grant applications and standing in back-to-school line-ups. They will also receive their financial support faster, said a news release from Queen's Park this week.

The province said it is streamlining student aid by making the application process easier and cutting red tape. This will help students focus more on their studies. Changes to the process this year mean:

• Students will fill out fewer forms for the Ontario Student Assistance Program (OSAP) and Student Access Guarantee (SAG) funds

• When they complete their OSAP application, they will also be automatically evaluated for SAG funding

• Recipients of the Ontario Access Grant and Distance Grant will have their aid directly deposited into their bank accounts starting in January 2011.

The release further states that additional changes taking effect this school year will benefit students by:

• Providing more assistance for tuition, living costs, books, supplies and equipment

• Allowing students to keep more of the money they earn from part-time jobs

• Providing a no-interest no-payment period on student loans for six months after graduation

• Providing additional support for married students and students with children

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• Introducing a new grant for part-time students

• Offering students more flexibility on repayment.

The McGuinty government's Open Ontario plan is helping build a highly skilled and educated workforce, giving Ontario the competitive edge in securing a strong economy for the future.

"Our government is committed to making postsecondary education accessible on the basis of ability to learn, not ability to pay. That's why we continue to invest in student aid and to make it easier for students to get the financial help they need," said John Milloy, Ontario's Minister of Training, Colleges and Universities.

QUICK FACTS

• This year the government is providing $81 million in additional financial support for college and university students.

• Streamlining the process will save more than 10,000 work hours in student aid offices, improve efficiency in evaluating and processing applications, and reduce back-to-school line-ups

• The changes to OSAP this year are expected to help about 210,000 Ontarians.

• Since 2003-04, there has been a 56 per cent increase in the number of Ontario college and university students receiving financial support through OSAP.

• The government's Open Ontario Plan will help raise Ontario's postsecondary education rate to 70 per cent.

• Ontario's 62 per cent postsecondary education rate is one of the highest in the world.


Source:www.timminstimes.com

Student Loans Bad Credit: Availing quality education despite bad credit

For leading a successful life, education is the main step. The higher education demands larger amount as various expenses like college fees, hostel fees, books expenses and other costs are considered. Student loans bad credit has been especially designed for people who want to study further and backed with credit deformities. The bad credit borrowers are people who have damaged their record of making payments due to some cases like late payments, arrears or defaults. The best part of these loans is that with proper repayment of loan amount, the bad credit holders can improve their credit ratings. These loans are easier to avail as there are many lending options for borrowing the money for higher studies in colleges.

Under this provision, students can help themselves to get the quality education. To grow in their careers, education is the best medicine. For the easiness, borrowers can avail either secured or unsecured loans. For larger amount, the borrowers can avail secured option while smaller expenses can be catered through unsecured options.

Importantly, the secured option caters valuable collateral against loan amount. Collateral can be anything that can fetch good money against the needs like house, car, building, real estate and so on. The amount availed can be used for meeting varied educational purposes. The terms and conditions offered are quite flexible due to secured nature. In contrast, unsecured option is free from collateral possession. The borrowers who do not possess valuable collateral can meet their educational needs under this option. In unsecured way, the borrowers are charged slightly higher rate of interest, smaller loan amount and shorter repayment option than secured mode.

The students regardless of their educational stream can opt for student loans bad credit. Therefore, the students in Arts, Science, Commerce, Management, etc can seek for external financial help to continue in their studies.

To make sure that student loans bad credit are of competitive, the borrowers must do extensive search and research. This will help them to decide the best option according to their pocket. Availability of online calculators has helped many loans seekers or students in calculating the best quote.

Source: allmynews.net

Student Loans for the Unemployed - Worry About Your Education Nothing Else

Students pursuing fulltime education often do not have the comforts of a salaried job. The cost of education is also increasing day by day. Under these conditions student loans have come to the rescue of the students to fund their education. Student loans are usually given at a low interest as it is for education. Students normally take the student loan for a period and amount depending upon their need. They take the only that amount that they would be able to pay back practically. Student loans can also supplement scholarships, grants and personal savings.

There are broadly four types of student loans depending on their source:

1. Government Student Loans - Government student loans are issued by the Department of Education and are granted directly to the students. The students need to repay the loan with interest when their studies get over. They usually have a low interest rate. The amount of money a student can borrow is decided by the lender.

2. Parent Student Loans - Parent student loans are issued to the parents of dependent students. So the parent has to make the repayments on completion of his/her child's study.

3. Private Student Loans - Private Student Loans are issued by private institutions like banks, lenders, etc. Like other types of student loans they finance the studies of the student by granting a loan, which is to be repaid on completion of the studies. Here rate of interest is higher than the government student loans.

4. Other Loans - Other sources of student loans could be something like a home equity loan, which offers tax benefits.
Since grants and scholarships are far and few student loans have become an increasingly popular method of financing one's studies.
About private student loans:

Private student loans have all the features of government loans and potentially can be the best choice for some students. They offer higher loan limits with attractive interest rates. They also offer a grace period and students can repay after completion of their studies.

Although the private student loans offer lower interest rates, the rates could be a little higher than the government loan rates, but it is much lower than the rates for other private loans. There are no processing fees associated with the student loans.

Credit history of the applicant or the co-signer plays a major role in getting a private student loan. International students can acquire these private loans with the help of a co-signer. The loan amount is paid directly to the school by the lender and the remaining money is given to the student as living expenses.

A word about student loan consolidations......

Unemployed student loan consolidation works just like any other loan consolidation. It combines various loans into a single consolidated loan. This takes care of various debts. Depending on the total loan amount and availability of security/collateral unemployed student can apply for a secured or an unsecured debt consolidation. Unsecured debt consolidation can be used for smaller amounts that are below £25,000. Secured debt consolidation can be used to borrow larger amounts like £25,000-£75,000. Repayment time for secured unemployed debt consolidation is normally 10-30 years and the interest rates are also lower than the unsecured debt consolidated loans.

Advantages of Unemployed student loan consolidation

1. A single monthly payment instead of several payments

2. Overall monthly payment is less than the sum of the earlier installments.

3. No credit check or processing fees.

4. The consolidated interest rate is lower than the earlier rate

Students can look at electronic debit option to save money and avoid missing payments.
Student Loans are available online so students can shop around and find what is suitable for them.

Source: ezinearticles.com