Sunday, April 29, 2007

College Loan Could Mean Low Earnings for Fresh Graduates

"According to the College Board, borrowing to pay for college generally makes sense because education builds earning potential. The typical college graduate earns about 73 percent more than the typical high school graduate, and the higher pay covers the cost of four years of tuition and fees by the time the graduate is 33."

A news from the Baltimore Sun revealed that students who avail of college loans may be facing huge debts when they graduate and force to take on even low paying jobs in order to pay off the debt before interests sip in.

"Too many students don't think about it until they are about to graduate from college," says Mark Oleson, director of the Office for Financial Success at the University of Missouri-Columbia. "But by that time they might have dug themselves into a hole they can't afford."

In a recent poll of 1,508 college graduates between ages 21 and 35, Mathew Greenwald & Associates found that 44 percent delayed buying a house because of the burden of student loans. And 28 percent postponed having children.

About 27 percent skipped medical or dental procedures, and 32 percent said college loans and credit-card debt for college forced them to move back into a parent's home or live there longer than they expected.

Before deciding on a college, and loans, we suggest thinking about the student's likely career choice and pay.

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Friday, April 27, 2007

College Funding and Loan: An Overview

Who is eligible for financial aid?
To be eligible for financial aid, you need to fulfill the following requirements:

  • Have a high school diploma, GED or have passed a similar independent test approved by the U.S. Department of Education.
  • Be a U.S. citizen or eligible non-citizen.
  • Be enrolled with the Selective Service (if you are a male age 18 – 25).
  • Be enrolled at least half-time as a regular student in an accredited institution (if you need FFEL loans).

When should I begin the financial aid process?
The ideal time to begin the financial aid process is the year before you plan to attend college, but no later than the December prior to the first year of college. Take this time to read about financial aid options and concentrate on completing the necessary forms.

The FAFSA form should be submitted as soon as possible after January 1. If you are applying for early admission, check with your college to find out when to submit financial aid forms.

Remember, while there is no limit to the number of student loans available from lenders, students who respond earliest have the best chance of getting the financial aid they need from the school.

What do I need to do to get financial aid?
You need to sign the following forms provided by your Financial Aid Office:

  • A statement of Education Purpose.
  • A Certification Statement on Refunds and Default.
  • An Anti-Drug Abuse Act Certification.
  • A Statement of Updated Information.
  • A Statement of Registration Status.
  • You will also need to sign a promissory note, which may be provided by the school or your lender.

How do I know if I'm an "independent student?"
You are considered an "independent student" if you meet one or more of the following criteria:

  • At least 24 years of age by December 31 of the school year
  • A graduate or professional student
  • A married student
  • A veteran of the United States Armed Forces
  • An orphan or ward of the court
  • Have children who receive more than half their financial support from you
  • Have dependents (other than your spouse or children) who live with you and who receive more than half their support from you

What is the FAFSA form?
The Free Application for Federal Student Aid (FAFSA) form determines eligibility for all federal financial aid programs. It helps determine how much a family can afford to pay toward a student’s college expenses based on household income and other factors, including how much you will need to meet the cost of attending college. A FAFSA form must be completed each year that you wish to be considered for financial aid.

The new FAFSA form and instructions usually become available in November prior to the new school year. The electronic version typically becomes available online in January prior to the new school year.

Where can I get a FAFSA form?
FAFSA forms can be obtained at your high school guidance office, your college's financial aid office, the public library, and online at

If I am awarded financial aid, when will I get the money?
Methods of distributing financial aid vary from campus to campus. Most financial aid will not be given directly to you. The majority of aid is sent to your school and credited to your student account at the start of an academic term.

I plan to go to school part-time. Am I eligible for financial aid?
Almost all types of financial aid funds are available to students who attend school at least half-time (i.e., carrying at least six credit hours per semester). Citibank's CitiAssist® Loan is available to those who are enrolled part-time.

Do I have to make payments on my student loan while I'm in school?
In most cases, you can postpone payments while you are in school at least half-time

What happens if I don't repay my FFELP student loan?
If you do not repay your loan according to the terms disclosed on your promissory note, you may eventually be in default on the loan. Some consequences may include:

  • An adverse affect to your credit rating and may limit your ability to borrow for a car or a home, or to obtain a credit card.
  • A requirement to pay the entire amount of the loan, including interest immediately.
  • A withholding of your wages to pay your debt after the loan is claimed by the guaranty agency or the federal Department of Education.
  • Inability to get additional federal or state financial aid, including student loans.
  • Withholding of your federal and state tax refunds.

If I don't finish college or if I am unsatisfied with my education, do I need to repay my loan?
Yes. If you enrolled and attended class you are liable for the loan. Check with your school regarding loan cancellation policies.

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