Education 
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comments

Student Loan IBR Income Based Repayment Plans

Graduation CakeA few weeks ago I asked newsletter subscribers to email me with the things that concerned them. Many readers told me that the cost of higher education, specifically the college and university level, and their student loans were some of the things on their mind.

A few years ago, I wrote about how my sister took advantage of a student loan forgiveness program for teachers. It’s a great program if you can participate because it helps the (former) student and it helps society as a whole by putting incentives and compensation more in line with the work performed. Today, I wanted to discuss the Income-based Repayment plan created by the College Cost Reduction and Access Act of 2007. It only became available/effective on July 1 of 2009.

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 Personal Finance 
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5 Tips for Getting Ahead in College

HandJim has covered the fundamentals and offered great tips on what to do before you start working after college. I figured I would chime in with my thoughts on how college students can get ahead of their peers by the time graduation day rolls around.

This is not textbook theory; I have used these tips myself. These are also not tips that only college students can use, just ideas for how to get ahead of the pack. Finally, you can use this advice at any time in your college career, from 1st year to 4th year (or even 6th! nothing wrong with switching majors).

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 Education 
5
comments

Understanding Your College Savings Options

This is a guest post from MLR @ MyLifeROI. This is a 3 post series and each post is going live this morning on three different blogs: Bargaineering, Green Panda Treehouse, & Poorer Than You. I will be posting a wrap-up post to tie it all together and summarize each article.

You are 22 years old. You have just spent the past four years paying tuition, room and board, books, food, utilities, transportation, etc. The worst part is that it is all getting more and more expensive beyond peoples’ expectations. Where does that leave you? In a mountain of debt upon graduation. For some of us that means letting our debt dictate a less than optimal career.

However, what are some ways that we could better prepare for our college education? And if it is too late for you, how can we better plan for our children’s education?

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 Education 
11
comments

How to Navigate the College Financial Aid System

Financial Aid Money GrabApplying for financial aid can be an overwhelming and stressful task. There are many steps involved and some of the steps can be rather complex. It is important to remember, however, that the financial aid system has been set up to help you. With a little patience, the system can really pay off in the end. This article will give you an overview of the steps in the financial aid process and will give you a little bit of advice along the way.

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 Education 
10
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Free College Money: The FAFSA

FAFSA FormThe last few weeks have been hectic in the BFP household as we had a combination of the holiday festivities and my wife’s applications for graduate school. She’s applying to Ph.D. programs, so she’s been researching graduate programs, writing applications, preparing for the GRE, and taking the GRE these last few weeks. Fortunately, one problem she hasn’t had to tackle was how to pay for the Ph.D. because they often get tuition covered by the school, plus a stipend.

I graduated undergrad with about $25,000 in student loans, a paltry sum when compared to some of my friends who had upwards of $50,000 and $80,000 in student loans. Also, the majority of my loans were low-interest deferred Stafford loans. I was only able to get those loans, and other grants, because I filled out a FAFSA form… something 25% of families fail to do.

I was amazed when I read a press release from Sallie Mae that stated 25% of families didn’t even complete the FAFSA application! Sallie Mae is another one of those former government sponsored entities that privatized a few years ago (like Freddie Mac and Fannie Mae) and they deal strictly with student loans and college savings plans. The FAFSA is the Free Application for Federal Student Aid.

How do I apply?
You can either fill out a paper form or you can apply online. Applications can be submitted starting January 1st (so you can do it now) and the deadline is June 30th.

Why is the FAFSA so important?
It’s used to determine everything in federal aid. Need- and non-need-based grants, scholarships, work-study and low-cost student loans – they all use the FAFSA to determine who gets what. Last year, $163 billion dollars in student aid was awarded and 40% of them were grants that do not have to be repaid. That is free money. If you don’t complete a FAFSA, you are not eligible for any federal financial aid. No Stafford loans, no Perkins loans, no PLUS loans, and not even unsubsidized Federal loans. Zero. Zip.

I heard student loans are really hard to get this year.
That may be true, but if you don’t spend the hour or two to fill out the FAFSA, they will be nearly impossible for you to get because you won’t be eligible for any of the federal loans.

What are the interest rates on subsidized loans?
The Stafford loan is probably the most popular subsidized loan as it has the most favorable interest rates, it’s a need-based loan and the rates are schedule to be (all loan rates are listed on Sallie Mae):

  • July 1, 2008–June 30, 2009 the interest rate is 6%.
  • July 1, 2009–June 30, 2010 the interest rate is 5.6%.
  • July 1, 2010–June 30, 2011 the interest rate is 4.5%.
  • July 1, 2011–June 30, 2012 the interest rate is 3.4%.
  • Beginning July 1, 2012 the rate is 6.8%.

Those rates may not look incredibly favorable now but remember that interest is tax deductible if you earn under a certain amount and the interest is deferred until after graduation.

I recognize that some part of that 25% of families may not be eligible for federal financial aid on a need basis, but there are plenty of non-need related federal financial aid options that everyone should try to apply for.

I am extremely thankful that I was able to get federal financial aid (and some grants directly from Carnegie Mellon) and it all starts with filling out and submitting a FAFSA.

(Photo: btreenews)


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