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How To Avoid The New Student Debt Relief Scams

appearingDid you graduate a few years ago owing $20,000, $30,000 or even more on your student loans? That can be a pretty big burden when you’re just starting out in your career and are a low earner. Or worse yet, maybe you haven’t been able to find a job in your field of study and have become one of those “underemployed” – a fancy way of saying you’ve had to settle for working as a barista at Starbucks or as a call center employee. But then, Eureka! You receive a call from a friendly-sounding fellow who says that no sweat, he can get you out from under that load of student debt. He may even say he can get you a debt consolidation loan that will lighten your load and at zero interest. Would that sound like a great deal or what?

Watch out for predators

Former Presidential advisor Rahm Emanuel once said, “never let a crisis go to waste.” This could be the slogan of the scam artists that have picked up on the student debt crisis and are not letting it go to waste. These scamsters had seen that many young people are feeling desperate and confused about their student loans and have created new student debt relief scams you could fall for if not careful.

The scams

There are two very popular scams. The first is debt relief firms that make big promises of what they can do to restructure your loans so long as you are willing to pay their upfront fees. Some of these fees are so steep they would be equal to a very high interest rate if they were applied, say, to a $10,000 student loan. These companies often want you to turn over your personal information including your passwords, Social Security numbers and the personal identification (PIN) numbers of your student loan accounts.

The second type of scam is the loan consolidation scam. This is where they promise to get you a federal debt consolidation loan if, again, you agree to their fees. One of the easiest ways to spot this scam is if they ask you to provide a power of attorney. It‘s just not routine to have to provide a power of attorney to get a loan. As a matter of fact there’s never a reason to do this unless there is a clear need for it such as dementia or Alzheimer’s. The reason why a shady debt relief agency wants your power of attorney is so that it can apply for a federal consolidation loan for you. They’ll ask for all of the information that you would have to input into the website of FedLoan Servicing and then complete the application for you acting as if it were the borrower. But there is only one way to consolidate loans with a Direct Federal Consolidation loan. This is via the online consolidation application available on the US Department of education’ s website. ( And completing this application is very simple and something you could certainly do yourself for free.

Second, a scam artist may try to get you to believe you that you can’t consolidate your loans yourself. In truth the Fedloan Servicing application is pretty straightforward. And Fedloan Servicing improved it recently to make applying for the loan even easier. It will take you just 30 minutes or less. If you have any questions about the application process you can always call Fedloan Servicing directly and get help.

A “unique” service

A second sign that you are probably speaking to a scam artist is if he offers you the “unique service” of a year of no payments after you consolidate with the new loan. The fact is that there is nothing exclusive about this at all. All the scam artist is doing is putting your loans into forbearance. Again this is something you can do yourself online free at the Fedloan Servicing website.

Third, you may be talking to a scamster if he offers only loan consolidation. He will push this as the only solution regardless of what student debt issue you have. In doing so, he neglects to tell you there are options besides consolidating. In fact, there are a number of different repayment programs available to you even if you’re a bit past due on your payments.

He’s very pushy

Shady debt relief agencies also tend to be very pushy and use sales tactics. They will try to rush you into consolidating your loans and might even have a “special offer” to get you to make a fast financial decision. It’s important to keep reminding yourself that what they are most concerned about is their financial bottom line and not your best interests.

Lying salesman or businessmanMost of these agencies will also be less than honest or ambiguous about what they charge. They will try to finesse the issue by telling you that their fees vary based on the amount of work involved and how much debt you have. They may also claim you will need to pay monthly fees in addition to an upfront lump sum payment– all just to consolidate your debts. If the so-called debt relief agency is ambiguous or less than honest about its fees, this is a huge warning sign regarding its lack of ethics.

Finally, many of these agencies will have a website they hide behind. You will not see pictures of their representatives or find direct phone numbers you could use to contact them. They don’t want to form a personal relationship with you. Their goal is to preserve their anonymity so that if you run into trouble or change you mind you can’t contact them.

What you could do yourself

As you have read if your goal is to consolidate your loans with a Direct Federal loan this is a fairly simple process you can do yourself. You can also restructure your debt yourself by changing to a different repayment program. To do this you will need to first go to the federal student loan database ( to get information about your loans such as their type, when the funds were disbursed, what you’ve paid so far and how much you still owe. You should save this information to your student debt portfolio for future reference.

With this information in hand you will need to next check out the federal loan repayment ( programs to determine which ones you would qualify for and would give you the best terms and lowest monthly payments. One the most popular of these is Pay As You Earn. You might have read about this program recently when Pres. Obama signed an executive order making about 1.4 million more people eligible. If you are one of these people you could see your monthly payments capped at 10% of your disposable income.

If you find you’re ineligible for Pay As You Earn there is another program called Graduated Repayment. If you are currently a low earner but know that your income will increase in the years ahead this can be a very good option. It allows you to start with low payments that gradually increase every two years.

There is also a program called Income-based Repayment where your monthly payments would be capped at 15% of your disposable income – again if you would be eligible.

The last step

If you are able to find a better repayment program than what you currently have, the final step in the process is to contact your lender and discuss this with it. Your representative should be happy to help you through the process of changing repayment programs and might even suggest a better option than the one you chose.

Best of all, none of this will cost you a single cent let alone a big upfront payment or monthly fees.

2 Factors That Will Keep Your College Debt From Ruining Your Life

graduate chained to student debtCollege debt will never be a prerequisite to getting a college degree. All it really takes are good planning skills from parents and great financial habits from the student. While a lot of students are not financially well off to be able to get assistance from their parents, that does not mean they can let student loans ruin their lives.

You do not need to hear some really bad news about student loan debt to decide that you need to make a smart choice about it. You owe it to your future self to make a wise choice about your finances period. Regardless if you are still in school or you have rich parents, you need to learn how to manage your money so you can go out into the world and make yourself wealthy through your own efforts.

College loans will be more costly this year

Getting a higher education without college debt seem like a tough thing to do – but it is not impossible. There are a lot of students who have gone through this phase in their life without having to borrow a single cent.

But if you think that is impossible for you to do because you do not have enough time to save up for your tuition fee, that is alright. You can borrow money to pay for your college education, but make sure that you will do it correctly. More than ever, the situation now requires each and every student who will borrow money to be wise when it comes to taking out student loans.

According to an article published in the interest rate for school year 2014-2015 will be higher than last year. It is expected to rise by 0.8%. It may seem like a small percentage but the bigger the loan, the bigger interest amount you will be forced to pay off. The article said that the Stafford Loan that is an aid reserved for undergraduates will go up from 3.86% to 4.66%. The rate for the Direct unsubsidized loans for graduate students will rise from 5.41% to 6.21%. Direct PLUS loans for both parents and graduate students will increase from 6.41% to 7.21%.

All of these data will really make life a lot harder for students who need a loan to go through college. But even if you are trying to wrap your head around this financial difficulty, you might be comforted to know that all is not lost. With some effort, discipline and self control, you can focus on two factors that will help keep college debt from ruining your future.

Your degree determines if you can afford your student loan payments

The first factor involves the degree that you choose to study. If you need to borrow money to get a particular degree, you must ensure that it will lead you to a career that can afford to pay it off. It does not matter if you study medicine, education or political science, you need to repay student loans.

Let us lay them out for you and connect how this is important in relation to your student loans.

  • Your degree will tell you the career path that you can take. The best way to choose a college degree is to determine what type of career you can work on for the next few decades of your life. Do you picture yourself being a teacher, a doctor, a lawyer or a businessman? Or do you see yourself being an inventor or a scientist? You want to look at the career you want to have before you choose the appropriate degree that will allow you to qualify for that career.
  • Your career will determine how much you will earn. Thanks to the Internet, you can easily see how much professionals are earning these days. If you want to be a doctor, you can check out the average earning potential. You can narrow it down to specialty and even location.
  • The expected earnings of your intended career should define if you can afford to pay off your college debt. Finally, once you know that national average, you should be able to make a smart decision as to whether you can afford the student loan payments that you are trying to apply for.

It is as simple as this: if you have chosen to be a teacher by profession, why would you put yourself through $100,000 debt when the average salary of a teacher is only $30,000 to $40,000 annually? At least, this is true when you are just starting your career. It does not make sense to pay so much when your salary is not expected to be at par with what you have to pay off. revealed that 51% of Americans who have college debt through the Education Department (Direct Loans) have difficulties with their payments. A lot of those who are not making payments have said that the cause of that is financial hardship. Do not be a part of this statistic by making a wise choice about your degree in the first place. If your chosen career can only pay yourself this much income, then know the limit of student loans you can borrow. That will keep your debt from eating more than half of your monthly salary and making your life a living hell.

Your college expenses will set the pace for your financial future

The second factor that you need to look into is your college expenses. How you spend your money while you are studying will set you up for a life of debt or financial success.

According to, the undergraduate budget for SY 2013-2014 are as follows:

  • Public 2-year Commuter: $15,933 ($3,264 tuition fees; $7,466 room and board; $1,270 books and supplies; $1,708 transportation; and, $2,225 other expenses)
  • Public 4-year In-State On-Campus: $22,826 ($8,893 tuition and fees; $9,498 room and board; $1,207 books and supplies; $1,123 transportation; and, $2,105 other expenses)
  • Public 4-year Out-of-State On-Campus: $36,136 ($22,203 tuition and fees; $9,498 room and board; $1,207 books and supplies; $1,123 transportation; and, $2,105 other expenses)
  • Private Nonprofit 4-year On-Campus: $44,750 ($30,094 tuition and fees; $10,823 room and board; $1,253 books and supplies; $990 transportation; and, $1,590 other expenses)

It may be safe to expect that these will the expenses that students of SY 2014-2015 will go through. The thing is, you do not have to borrow all the money needed to completely finance your way out of college. It is understandable if some students will find it hard to fully demolish student loan debt. But that does not mean you cannot lessen it.

Here are some tips that you can use to lower your college debt.

  • Get a part time job. You can probably pay for your daily expenses through the money that you will earn. Or, you can build up your emergency fund so you do not have to be financially short when an emergency strikes.
  • Budget your money. Learning how to budget is very important because it allows you to identify your finances and decide where it should go to. You can prioritize your expenses and make sure that your money is not wasted an only spent on the important purchases.
  • Study hard. Another way to lower your expenses is to just study hard. You may be able to qualify for a scholarship the next year so make sure your grades are up.

Here is a video from ABC News about how you can increase your source of cash and lower your expenses while you are in college.

If you need help with student loans, National Debt Relief offers a consultation service that will help you select the right debt relief program to make your payments easier. The company can help you find the right program based on your financial situation, employment conditions and college debt. National Debt Relief will even help with the documentation. There is a one-time service fee involved that will be deposited in an escrow account. When you are happy with the service and the paperworks, only then will the payment be released.

Why Student Loan Debt Is Like The Ghost Of An Old Relationship

Broke woman student holding books and empty walletAlmost all of us have ghosts that continue to haunt us. For some of us it might be the ghost of an old relationship while for others it might be the ghost of a failed business or the ghost of those stocks you should have sold before they crashed. Whichever the case it may feel as if that ghost will never stop haunting you. Unfortunately, student loan debt is just like your ghost. It can and will haunt you forever.

There’s just no escaping it

You’ve probably heard that old saying that there are only two sure things in life – death and taxes. Well, you could actually add a third to that – federal student loan debts.

The fact is that there is basically no way to escape federal student loan debts. It’s not even possible to get these debts discharged in a chapter 7 bankruptcy unless you can prove a serious financial hardship and have a sympathetic bankruptcy judge. Why can’t you discharge these debts in a bankruptcy? It’s because Congress changed the law several years ago to protect us taxpayers whose money fund these loans. People have even fled the US to escape their student loans only to find they were arrested when they tried to return to America.

The government has more powers than a rabid collection agency

If you owe on student loans you can literally be pursued to your grave. This is because there is no statute of limitations on collection activities as there are on most other unpaid debts. In addition, the federal government has powers that any private collection agency wishes they had. If you go into default on a student loan, the government can seize your tax refunds, garnish your wages without getting a court order or even take part of your Social Security checks.

Miss just one payment and you’re toast

It’s much easier to go into default on a government-backed loan than you might think. If you miss or are late on just one payment you are in default. However, your lender will probably not report you to the three credit bureaus until you are 90 days past due. If this happens your entire balance will be due immediately, collection fees can be added to your balance, you will lose your eligibility for any more federal loans and any unpaid fees or interest can be capitalized. If this happens they will be added to your outstanding balance and you’ll end up paying interest on them as well.

What happens to your credit report is really horrible

A default on a student loan can be one of the very worst things to appear on your credit report and can be worse even than late payments. If this happens

  • You may not be able to lease an apartment, buy a home or get any credit cards
  • The interest on your existing loans or credit cards may increase
  • You may not be able to open a checking account
  • Your car and home insurance may cost more
  • You may be denied a job

What to do, what to do?

If you have a student loan or loans that go into default there are three options. The first is to repay those loans. A second option is what’s called loan rehabilitation. You could do this if you have a Direct Loan or FFEL Program loan. What this requires is that you and the Department of Education must agree on an affordable and reasonable repayment plan. Your loan would then be rehabilitated after you have made the payments you agreed to on time and a lender has purchased one of your loans. If you choose this option, make sure you understand that outstanding collection costs could be added to your outstanding balance. If you are able to successfully rehabilitate your loan, you may regain those benefits you had before you defaulted. This could include forbearance, deferment, loan forgiveness and a choice of repayment plans. There are some other benefits of loan rehabilitation including:

  • The default status on your defaulted loan will be removed
  • Your new status will be reported to the national credit bureaus
  • If your wages are being garnished, it will stop
  • If any of your income tax refund is being withheld by the internal revenue service, you will receive it

Loan consolidation

The third option for dealing with student loans in default is to get a debt consolidation loan. This would allow you to combine all of your outstanding student loans into one new one with a single monthly payment and a fixed interest rate. However, you cannot include a defaulted federal student loan into the new loan until you’ve made arrangements with the Department of Education and a few voluntary payments. In most cases you will be required to make three consecutive, on time and voluntary payments before you can consolidate.

If you’d like to know how to do a Direct Consolidation loan yourself, watch this short video courtesy of National Debt Relief.

The repayment options

As noted above one of the options to get a loan or loans out of default is to repay them. When you graduated or left school you were automatically put into 10-Year Standard Repayment unless you were smart enough to choose another program. Assuming you didn’t, you have six other repayment options. One of the most popular of these is Pay As You Earn Repayment. You may have read about this recently when Pres. Obama issued an executive order that made about 1.4 million more Americans eligible for this program. What makes it so popular is that it caps your monthly payments at 10% of your disposable income that exceeds 150% of the federal guideline given the size of your family. Since this program is based on your income, it can change each year as your income increases or decreases. It also includes loan forgiveness, which means that if you make all of your monthly payments and on time for 20 years but still have a balance remaining, it will be forgiven or eliminated.

If you are not eligible

There are other income-based repayment programs. For example, if you are not eligible for Pay As You Earn, you could switch to Income-based Repayment that would cap your monthly payments at 15% of your discretionary income, which is defined as the amount that your adjusted gross income is above the poverty line. This repayment program is also based on the size of your family and can increase or decrease every year depending what happens to your income.

Graduated repayment

Another popular repayment program is called Graduated Repayment. This is where your payments start out low but then gradually increase every two years. This program can be especially helpful to young people who currently have low incomes but that will increase in the years ahead.

It can be complicated

Whether or not you would be eligible for one of these repayment programs will depend on a number of factors including which types of federal loans you have and when you got them, as well as your income and family size. National Debt Relief recently inaugurated a new service designed to uncomplicate this. The way it works is that a National Debt Relief counselor analyzes your financial picture including your earnings, family size, debts, earnings potential and more. He or she will then review your student loan portfolio to see if there is a repayment program that would be a better fit than the one you currently have. If so, National Debt Relief will draw funds into an escrow account under your control and begin the student loan relief process by working directly with the Department of Education (DOE) to attain final approval on the best repayment option given your financial circumstances.

If this idea appeals to you, be sure to go to our new student debt consolidation page for more information or call us as 1-888-455-5007.

Revealed: Six Surefire Ways To Pay Off Your Student Loans Fast!

couple looking at a laptopThose student loans seemed like such a good idea at the time. All you had to do was sign a piece of paper and bingo! You were good to go in school for another semester. But then according to that legendary fighter, Rocky Balboa, “You wanna dance, you gotta pay the band, you understand? If you wanna borrow, you gotta pay the man.” And if you danced your way through school by borrowing money you’re now going to have to pay the band.

Three months to zero hours

If you graduated in May of this year, your grace period will likely end in November and you will need to begin paying back those student loans. If you’re typical you’ll want to get those loans paid off as fast as possible. So what can you do?

Move back in with dear old Mom and Dad

We understand that one of the last things you want to do is move back in with your parents … back to that old bedroom with those Pearl Jam posters and those tacky Star Wars curtains … and that dinky little study desk. But and here’s the biggest but – this is the number one way to pay off those college debts fast.

Do the math

If you don’t believe us, just do the math. Let’s suppose you owe $25,000 at 6% interest. While $25,000 is actually a bit below the national average for college graduates we’ll use this for the sake of our example. We’ll further assume that your net annual income is $30,000. If you live rent free with your parents you should be able to easily devote around 30% of your income to paying off those student loans. Do this and you would have that $25,000 paid off in three years and a month. And if you were to up those payments to 40% of your take home (net) salary you’d be debt free in a little more than two years. Just imagine. By November of 2016 you’d have all your student loans paid off and would be ready to go out, get your own place, maybe buy a new car and start living debt free.

Join the Peace Corps

You might remember the old Peace Corp slogan, “The toughest job you’ll ever love.” It was created back in the 1990s and as great a line as it might be, it doesn’t tell the whole story, which is what volunteering in the Peace Corp could mean to you personally. While this might make you a better person there are other more tangible benefits. For example, certain of your federal student loans may be eligible for deferment while in the Corps and for Public Service Loan Forgiveness. If you have Perkins loans they may be eligible for partial cancellation. Plus, when you complete your service, you will be given a “readjustment” allowance of $7,425 (pre-tax) that you could use any way you wish (hint: you could use the money to pay off some of your loans?).When you return to the U.S. the Peace Corps will also provide you with assistance related to jobs and education. It publishes online job announcements, information about graduate schools and articles related to possible careers and hosts career events throughout the year in Washington, DC and across the country. It will even help you translate you field experience for prospective employers.

Flee the country

Another way to get rid of those onerous student loans fast is to leave the country. There are countries where you could earn decent money but that have very low costs of living. You might be able to get a job teaching English somewhere in Central America or the West Indies that would pay well but where it costs next to nothing to live. For example, we read recently that a couple can live well in Nicaragua for $995 a month. If a couple can live well on this amount, just think would you could live on if you were single. Let’s suppose you could earn $2,000 a month teaching math to kids or as a software engineer. Go to the Bankrate Pay Down Debt calculator, plug in the amount of your student loans (again, let’s assume $25,000 at 6%) and your payment of, say, $600 a month, and you’ll be debt free in three years and 11 months. Boost that monthly payment to $800 and you’d be debt free in a little less than three years. Plus, you’d have had the experience of living somewhere exotic for three or four years – with lots of stories to share with your friends and family members when you get back to the states.

Enlist in the French Foreign Legion

This is by far the most radical way to get rid of student debts but here’s the deal. If you join the French Foreign Legion you would be given the opportunity to visit foreign lands. Plus, the Legion actually encourages people to choose a new identity. You could go from being Alex Hatfield to being Serge Simpson with the stroke of a pen and leave all your student loans behind. If you serve just one stint in the Legion you can apply for French citizenship, which would give you protection from those nasty creditors. In addition, you would be eligible for the French state run health care system, which we understand is pretty great.

Join the Military

You don’t have to join the French Foreign Legion to escape your student loan debts. You could enlist in the U.S. Army, Navy or Air Force as the military offers some great education resources. This includes the Montgomery GI Bill, which can cover more than half the cost of a college education. If you’re facing some heavy debts, the Army National Guard offers some sweet options including the Student Loan Repayment Program, which will pay as much as $50,000 of your loans – depending on your field of study. In addition, being in the Guard is only a part time proposition — every other weekend and two months in the summer – so you could still work a full time job and use some of the money you earn to pay down your student loans.

Volunteer for AmeriCorp/Vista

Vista would place you with a nonprofit group or groups while Americorps would put you in a variety of jobs from environmental cleanup to teaching school. In either case, you would earn a stipend of up to $7,400 for a one-year stint along with $4725 to pay off your student loans.

smiling womanIt doesn’t have to be 10 years

Unless you chose some other repayment plan, you were automatically placed into 10-Year Standard Repayment. This means you will be required to pay off your loans in 10 years at a fixed interest rate. But as you read in this article, there are a number of ways to get those loans paid off in less than four years. While some of them are on the exotic side (think French Foreign Legion) there are others like working abroad that could be both fun and financially rewarding. If none of these appeals to you, you could still make things easier by switching from that 10-Year Standard Repayment Plan to a different option. As you might have read Pres. Obama recently signed an executive order that makes many more people eligible for the Pay As You Earn repayment program. If you could qualify for this plan your monthly payments would be capped at 10% of your disposable income. It will take you the same number of years to pay off your loans but your monthly payments should be a lot lower, which would take some of the sting out of repayment.

Check out the other options

There are a number of other repayment plans available you might want to check out. In addition to Pay As You Earn there are three other income-driven programs, along with Extended Repayment and Graduated Repayment. Talk with your lender and you might be able to find the one repayment program that would be best for you given your earnings and financial circumstances.

How To Know If You Should Consolidate Your Student loans

How To Make Debt Consolidation Loan EffectiveIf you owe a ton of money on your student loans and to multiple lenders, the idea of consolidating them into one new loan can seem very tempting. You’ve probably seen ads from debt consolidation companies extolling the virtues of a debt consolidation loan. They usually focus on the fact that if you consolidate, you will have only one payment to make every month instead of the multiple ones you’re making now. And that payment will be “dramatically” be less than the total of the payments you’re now making.

This is all true but before you decide on a debt consolidation loan, there are some important things to consider.

The options

When it comes to consolidating student loan debts there are basically two options. You could get a Direct Consolidation Loan from the federal government or from a private lender.

If you were to choose a Federal Direct Consolidation Loan, you could consolidate the following types of loans.

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
  • Direct PLUS Loans
  • PLUS loans from the Federal Family Education Loan (FFEL) Program
  • Supplemental Loans for Students (SLS)
  • Federal Perkins Loans
  • Federal Nursing Loans
  • Health Education Assistance Loans

In other words, you could consolidate just about every type of federal loan if, and here comes the big if, and that’s you need to have at the minimum one Direct Loan or FFEL Program loan that is in repayment or in a grace period. In addition, you must either make repayment arrangements with your loan servicer that are satisfactory to it or you will need agree to repay the loan under Income-Based Repayment, Pay As You Earn repayment or Income-Contingent Repayment.

Calculating your interest rate

Both the interest rate and the term are fixed with a Federal Direct Consolidation Loan. The way interest rates are calculated is based on the weighted average of the loans being consolidated rounded up to the nearest 1/8th of one percent. The best way to think of this is that your new interest rate will be higher than the loan with the lowest interest rate you’re now paying but lower than your loan with the highest interest rate.

Note: The government has a calculator you could use to determine exactly what your new interest rate would be. Click here to access it.

The application process

If you decide on a Federal Direct Consolidation Loan, the application process is fairly simple. You go to where you will find both paper and electronic applications. You can download the electronic application or download and print the paper version. You would then submit it by US mail. If you choose to file electronically, there are five steps as follows.

1. Choose Loans & Servicer
2. Repayment Plan Selection
3. Terms and Conditions
4. Borrower and Reference Information
5. Review and Sign

Once you’ve submitted your application electronically or by mailing the paper version, the consolidation service you selected will handle all the other actions necessary to consolidate your loans. It will also be your point of contact should you have any questions in the future regarding your consolidation application.

Repaying your Federal Direct Consolidation Loan

As noted above, you have three repayment options if you choose a Federal Direct Consolidation loan. They are Income-Based Repayment, Pay As You Earn repayment and Income-Contingent Repayment.

Private student consolidation loans

Given the fact that federal consolidation loans come with some pretty great features, why would you choose to refinance with a private lender? One way to determine whether this would make sense for you is to use this guideline: If your annual income is larger then the amount of student loan debt you have, you might take a look at private refinancing. You’ll also need to take into consideration other factors such as your credit history and other monthly expenses. However, comparing your income to your debt load is a good way to start.

More and more private lenders are entering the student loan consolidation market so that there are more and more options for refinancing. Be sure to keep in mind that once you consolidate your student loans with a private lender you will lose the benefits that come with a federal loan including loan deferment, repayment options, forbearance and loan cancellation. So before you take out a private debt consolidation loan, it’s important to ask yourself whether or not it’s worth it to give up those benefits just to get a lower interest rate.

Check out other options

Before you apply for either a Federal Direct or a private consolidation loan, do check out the other options available for handling your debts. For example, you could go to a credit-counseling agency for help. This is where you will be assigned a counselor that reviews all of your finances, helps you develop a budget and provides you with tips for better managing your money and your debts. There’s likely a credit-counseling agency near where you live. Just make sure it’s a nonprofit and offers its services either free or at very low cost. Also, if you choose this option do not let your counselor push you into a debt management program unless you totally understand it.

Snowballing your debts is another way to get student loans paid off without having to borrow money to do it. This is a technique developed by the financial guru Dave Thomas. The way it works is that you focus all of your efforts on paying off the student loan with the lowest balance. Once you’ve done this you will have more money available to pay off the loan with the second smallest balance and so on. This is called snowballing because as you pay off each loan you will gather momentum to pay off the next loan just like a snowball rolling downhill gathers momentum. If you choose to do this just make sure that while you’re paying off that first loan you continue to make at least the minimum payments on your other loans.

If you’d like to know more about debt snowballing here is a video with Dave Thomas himself explaining it …

Shop around

If you do decide that a private debt consolidation loan would make sense given your earnings and circumstances, be sure to shop around. There are, unfortunately, some debt consolidation companies that are basically scam artists. While they promise a consolidation loan, what they often do is push you into a debt consolidation program. On the other hand, there are honest and reputable debt consolidation companies such as National Debt Relief. We actually offer many of the benefits that come with a Federal Direct including repayment options and deferment in the event you become sick or unemployed. The repayment options offered by National Debt Relief include Extended and Graduated. If you were to choose Extended Repayment you would have up to 25 years to repay your loan, which would lower your monthly payments fairly dramatically. Graduated Repayment could be a good choice if you are not earning much now but believe your earnings will grow in the years ahead. This is because with Graduated Repayment your payments start low but then gradually increase every two years.

Advice and counsel

In addition to offering debt consolidation loans with a variety of repayment options, National Debt Relief also offers a counseling service designed to help people choose the federal loan repayment program that would best for them given their circumstances. The way this works is that the National Debt Relief customer is assigned a counselor that will carefully analyze the person’s salary, family situation, earnings potential and general finances and then recommend the best repayment program. The cost of this service is a flat, one-time fee, which is placed in an escrow account until the customer signs off on the recommended repayment program and the paperwork that we prepare to get that person into the new program. Anytime a customer is unsatisfied with National Debt Relief’s recommended repayment plan or with its paperwork, he or she can cancel out and won’t be charged a cent.

When It Comes to Student Loans There’s A New Player in Town

Graduation cap with moneyThe Student Loan Marketing Association (Sallie Mae) has long been the largest purveyor of student loans in the US. It began life as a government entity but is now a publicly traded corporation. It originates, services and collects on student loans and currently manages in excess of $180.4 billion in debt for more than 10 million people. While the company initially provided federally guaranteed student loans under the Federal Family Education Loan Program (FFELP), it now provides only private student loans. It calls this side of its business Navient.

The new player in town

There is now a new company that may be taking away some of Sallie Mae’s customers. The San Francisco-based company SoFi (Social Financing Inc.) is a peer-to peer-lender that is growing fast. It was founded by Stanford University graduate Mike Cagney and has now issued more than $500 million in loans to more than 5000 members.

What makes SoFi different from Sallie Mae is that it enables its highly qualified members to refinance their federal and private student loans. This, according to Cagney, has enabled SoFi members to purchase a home or even start a business and has helped its members save an average of $9400 over the life of their loans. Again, unlike Sally Mae, SoFi is community-based and offers its borrowers such unique benefits as entrepreneurship support, career coaching and protection against unemployment.

As Cagney explained, “We lend to individuals who we believe have the potential to be great customers for the big lenders — but we get them two years early. They are in their early 30s with a high FICO score — high incomes and cash flow — but they do not yet satisfy the criteria to get loans from the big banks.”

SoFi claims that its customers repay their loans as they have more cash flow, higher FICO scores and higher incomes.

Not for everyone

If you owe a lot on your student loans and would like to have them refinanced, SoFi could be a good choice. However, it’s not for everyone. First, you’re basically borrowing money from alumni of your school, which means your school must be one of the 550 that participate in SoFi. You must reside in one of the company’s eligible states

Note: variable rate loans are not available in Minnesota and Tennessee and in Iowa the minimum loan amount is $50,000.

Plus, there are other factors that SoFi takes into consideration including your income, credit score and that you are either employed or have an employment offer. In addition, you must not have declared bankruptcy in the past three years and must not have been convicted of a felony.

The dangers of loan refinancing

Another factor that makes SoFi unique is that it will refinance both private and federally backed loans by consolidating them. For some people, this is “breaking the golden rule of student loans.” These experts point out that once you consolidate federally backed loans with private loans you lose the benefits that come with the federal loans. You would have a loan with a fixed interest and a fixed term but would lose the possibility of having your loan canceled, deferred or extended. In other words, it would pay to be very familiar with the terms of your SoFi loan because once you sign on the dotted line that’s pretty much it.

The biggest benefit of  federally backed loans

The biggest benefit you would give up if you consolidated your federally backed loans with a private loan is the various repayment options available with federally backed loans. In fact, there are a total of seven repayment programs, including four income-driven plans. The other three are the 10-Year Standard Repayment program, Extended Repayment and Graduated Repayment. Students with federal loans are automatically put into the 10-Year Standard Repayment program unless they choose another option. This program has a fixed monthly payment, a fixed interest rate and a fixed term of 10 years. In comparison, the Extended Repayment program lengthens the term of a student loan to 25 years, which should dramatically reduce its monthly payments. In the case of Graduated Repayment, the loan payments would start low but then gradually increase every two years. This can be an excellent option for people that are just starting out and that have careers with incomes that will continue to increase.

Income-driven repayment

Of the four income-driven repayment plans, the one that has gotten the most attention recently is Pay As You Earn. The reason for this is that Pres. Obama recently signed an executive order that makes nearly five million more people eligible for this program. In addition, it caps borrowers’ monthly payments at 10% of their disposable income. Your disposable income is determined by subtracting 150% of the poverty level from your total income.

Other things you need to know

There are some other things about Pay As You Earn you need to know. For one thing, it takes into consideration not just your income but also your family size as larger families mean lower monthly payments. Second, your payments will be scheduled according to a 20-year repayment term instead of 25 years. If you make all of your payments and on time for those 20 years but still have a remaining balance, it will be forgiven. Finally, you will be required each year to submit documentation proving your income, which means your monthly payments could go up or down every year.

How to know if you could qualify for Pay As You Earn

The reason why more people will soon be eligible for Pay As You Earn is because borrowers who got their loans before October 2007 or stopped borrowing by October 2011 are now eligible. Prior to this, only newer borrowers were eligible. However, it’s important to keep in mind that these changes do not kick in until 2015. So if you feel it would be advantageous to switch to Pay As You Earn, you might have to wait until these changes take effect.

If you’d like to more details about Pay As You Earn here’s a video courtesy of National Debt Relief with lots of more information.

Income-based Repayment

A second popular repayment program for federal loans is called Income-based. It is much like Pay As You Earn except monthly payments are capped not at 10% but at 15% of your disposable income. To qualify for this repayment plan, your payments must be less than what you would pay under 10-Year Standard Repayment. Generally speaking, you would be eligible for Income-Based Repayment if your federal student loan debt is higher than your annual discretionary income or if it represents a large portion of your annual discretionary income.

Again your payments would be based on your income and family size.

Income-Contingent repayment

The third form of Income-driven repayment is Income-Contingent repayment. This program was created to make it easier for people to repay their loans that intend to pursue careers with lower salaries, such as public service jobs. The way it does this is by fixing the borrower’s payments according to family size, income and the total amount he or she borrowed. As with Income-Based Repayment, the monthly payments under this program are adjusted each year depending on the borrower’s family size and income. It also offers loan forgiveness after 25 years of payments made on time.

Income-Sensitive Repayment

The fourth and final form of Income-driven repayment is called Income-Sensitive. This program is an alternative for loans that are serviced by lenders in the Federal Family Education Loan Program. Like the Income-Contingent program, this plan was created to make it easier for borrowers tha have low-paying jobs to make their monthly payments. The way it works is that payments are pegged to a fixed percentage of the borrower’s gross monthly income. This percentage will be between 4% and 25% and is determined by you the borrower. However, the resulting monthly payment must be larger than or equal to the interest that accrues. And it’s important to understand that some lenders set a minimum threshold on the percentage of your income, which will be based on your debt-to-income ratio.

5 Ways to Mine Free Money For College

College student  catching money in the airFree money in college refers to scholarships and grants that a college undergraduate can use to pay school expenses. Some people are saying that as the government increases the funding to support higher education funding, the cost of attendance in colleges and universities across the country are also going up. This has lead to more and more student having to borrow to be able to earn a college degree. shares that 60% of the total average enrolled college students in America needs student loans to get to and stay in school. This percentage boils down to about 12 million out of the 20 million students needing either a federal student loan or a private student loan or both to pay for college. This need produces students with a college degree and multiple student loan types and amounts.

The need to repay them has been nothing short of challenging for student loan holders who are already separated for school and has entered the repayment stage. There are approximately 14% of the 37 million college debt owners are trying to get current on at least one past due student loan account. This means that around 5.4 million borrowers with past due loans can become delinquent and default on their payments.

This has lead to some extreme and crazy things borrowers repay their student loans. Some has left the country to try their luck in a foreign land earning more and paying less in taxes. There are those that are packing back home and staying in their old room to save up on rent and food. While some are trying to juggle two to three jobs just to be able to make ends meet especially with their student loan payments. This is where free money in college could have made a big difference.

Getting free money for college expenses

Not all families are able to build up a college fund for higher education expenses of the children. For those that do, their kids are going to have a relatively easier time with their finances compared to those that are graduating every year with college debt. But free money is available for those that does not have a 529 plan or a college fund under their name.

Free money refers to scholarships and grants that a student can qualify for in college. It is free money simply because it is free and the entity giving it to the student does not require repayment. Comparing it to student loans that has to be repaid at a future date, free money is given to the student for use in college expenses without a repayment clause.

Briana McGeough is a testament to the effectivity of free money as shared by Not only was she able to use free money to pay for cost of attendance in college, she was able to graduate debt free. To top it off, she was able to graduate with at least $16,000 refund after college expenses from all the scholarships and free money she used in school.

Of course, free money has to worked on. It may be free but it certainly is not easy. It does not grow on trees where student can leisurely pick and choose whatever they want. Hard work is also needed in securing free money for college. It will require time and commitment from the part of the borrower to identify possible sources of the funds.

Scholarships are merit-based while grants are need-based. This means that a borrower has to show proof of financial need to qualify for a grant while scholarships can have a variety of qualifications. The most popular are academic and sports scholarships where student in high school who has sterling grades or a promising athletic career are give a free ride in college.

Here are some steps to remember when actively pursuing free money for college expenses:

  • Free Application for Federal Student Aid or FAFSA. This is the primary step in receiving federal financial package. One of which are need-based Pell grants. It is important to fill out the FAFSA because in the absence of free money the a Pell grant, you can take advantage of lower interest rates in federal loans and probably some subsidy on interest payments while in-school.
  • Small over big scholarships. There are some who prefer using one hour preparing for a big amount of scholarship rather than use it to apply to three to four smaller amounts of free money. The idea is to get a balance with the priority on the smaller ones where the chances of getting some is better that being turned down for a one time big amount application.
  • Do not stop after year one. Once in school, continue to actively look for other scholarships or grants that you can use in college. Even when you are already in your second, third, or even senior year in college, you need to constantly be on the look out for free money. Especially so that cost of attendance usually increases as you progress through your years in college.
  • Under the parent’s name. For parents wanting to build up a college fund for the kids, it is advisable to put it under your name first rather than your child because when financial aid put more importance on a student’s list if assets rather than the parents.
  • Part time job. Consider looking for free money as a job. Treat it as if your are working for someone (yourself) and you need to continuously look up scholarships and grant providing companies. This might sound like a crazy way to pay for student loans but it can work to your advantage.

Here is a video about free money that can help you understand it better.

Extra tip in pursuing debt free college graduation with free money

With all the statistics that are around you on how graduates are wondering how they will pay for their student loans or the total number of the student loan debt, it might surprise you to know that the school also plays a big part in the total college expenses. With that being said, students should be open to the idea that first choice of schools might have to be changed to match cost of attendance with free money available.

Debt collection scams even with student loans

After Illinois filed a landmark case versus some debt settlement companies dealing with student loans, it couldn’t be even more evident that shady groups are present even with student loan industry. In fact, discussed recently how the Consumer Financial Protection Bureau are putting their foot down on illegal debt collections techniques that can include student loans among the rest.

The buy and sell of old unpaid debts, that can include student loans, is a common practice between and mostly private lenders. There are banks that sell to a collection agency. In turn, the collectors gets their hands on fresh piece of information on who owes money and how much they are behind for. Of course, there are other companies that are too quick to the draw and possibly forego background check on the debtor if they do still haven’t paid for the loan or it has been paid off before.

Free money is a great objective in paying for college expenses, It just takes commitment in holding on to the feeling that you do not want debt in graduation. But for those that had to lean on federal and private student loans, there are a few ways to detect college loan scams.

The Big News About Student Loans Might Not Be So Big After All

woman thinkingPeople struggling with student debts were excited to hear the big news that Pres. Obama had signed an executive order that could make it easier for millions of Americans to pay off their student loans.

Unfortunately, the big news turned out to be not that big.

It won’t help every borrower

If you aren’t aware of this, and many people aren’t, there are seven different ways or programs for repaying federal student loans. Four of these are income-based as they take into consideration your income as well as your family size.

Pres. Obama’s executive order affected only one of the four – the Pay As You Earn option. If you are on this plan or would be eligible for it, this could help by capping your monthly payments at 10% of your disposable income (more on disposable income later).

It will still be 20 years before forgiveness

One thing that the President’s executive order didn’t change in Pay As You Earn is the number of years before loan forgiveness. You will still be required to make all your loan payments and on time for 20 years. Do this and if you still have a remaining balance it will be forgiven – or erased.

More people eligible

One of the most significant changes made by the President’s executive order is expanding the number of people who can take advantage of Pay As You Earn. Prior to this order, only newer borrowers were eligible. However, beginning next year, anyone who took out loans before October of 2007 or who stopped borrowing on their loans by October 2011 will now be eligible. It is estimated that this will affect about five million people.

Must prove a “partial financial hardship”

To be eligible for Pay As You Earn, you must prove a partial financial hardship. You would have a partial financial hardship if the annual amount due on all of your eligible loans as calculated under 10-Year Standard Repayment exceeds 15% of your discretionary or disposable income.

Determining your disposable income

As you read earlier, the President’s executive order caps monthly payments under Pay As You Earn at 10% of the borrower’s disposable or discretionary income. You need to know your discretionary income in order to determine whether or not you would qualify for Pay As You Earn. So how do you determine your disposable income? First, you need to calculate your monthly Adjusted Gross Income and then subtract 150% of the Federal poverty line, which this year is $1450. Here’s an example of this. If your Adjusted Gross Monthly Income were $4280 and you subtracted that $1450, your disposable or discretionary income would be $2800. Multiply this by 10 percent and your Pay As You Earn monthly payment would be $280, which could be substantially less then what you’re now paying.

Only certain types of loans qualify

There is yet another eligibility requirement, which is that only certain types of loans qualify. They are:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans made to graduate or professional students
  • Direct Consolidation Loans that did not repay any PLUS loans made to parents

If you have other types of loans such as subsidized federal Stafford loans or FFEL consolidated loans, you would not qualify for Pay As You Earn. However, you could get a federal Direct Consolidation loan, use the proceeds to pay off those other types of loans and would then have a loan that would be eligible for Pay As You Earn.

The one downsideVideo thumbnail for youtube video 10 Signs That Your Financial Management Skills Suck!

The one downside of Pay As You Earn – as with all of the income-driven repayment plans – is that you must prove your income every year. In other words, you will need to submit documentation to your loan servicer every year proving your family size and income in order to stay eligible. If you ever reach the point where your family size and income exceeds the amount you would pay under 10-Year Standard Repayment, your monthly payment will be adjusted to that of 10-Year Standard Repayment. This new payment will be based on the loan amount you owed when you first started Pay As You Earn – meaning that it could result in a substantial increase in your monthly payment.

If you can’t qualify for Pay As You Earn

If for some reason you would not qualify for Pay As You Earn, there are three other income-driven repayment plans. They are Income-Contingent, Income-Based and Income-Sensitive.

Income-Based Repayment – This plan was meant to replace the Income-Contingent and Income-Sensitive Repayment plans though they are still available. It is much like Pay As You Earn and also caps your monthly payments at 10% of your disposable or discretionary income. It is also based on the size of your family and requires that you submit documentation every year proving your income. Loans that are eligible for income-Based Repayment include all Consolidation Loans made under the Direct Loan or Federal Family Education Loan programs, all Stafford Loans and all Grad PLUS Loans.

In 2010, the president took an executive action that made this program available to more borrowers by the end of 2012 instead of 2014. This latest change should reduce the monthly loan payments for an additional 1.6 million responsible student borrowers.

If you want to determine whether you would qualify for Income-Based Repayment (IBR), you should use the U.S. Department of Education’s IBR calculator to learn if you would likely qualify. This calculator takes into consideration your family size, income and state where you live to calculate your monthly payments. If this amount were less than the payments you are making on your loans under 10-year Standard Repayment, you would be qualified to pay back your loans under IBR.

If you were not a new borrower on or after July 1, 2014, your payments will be capped at 15% of your discretionary income but will never be higher than under 10-Year Standard Repayment. On the other hand, if you were a new borrower on or after July 1, 2014 your payments will be capped at 10% of your discretionary income.

Income-Contingent Repayment – Under this program you would make payments for 25 years before any remaining balance would be forgiven. You won’t need to prove a “partial financial hardship,” and your payments would be 20% of your discretionary income. Under this program, your monthly payments will be pegged to your income, the size of your family and the total amount you borrowed. Since your term will be 25 years, you will likely have lower monthly payments though you will pay more total interest over the life of the loan. Also, under this repayment program if you have a balance forgiven at the end of the 25 years, you will have to pay taxes on it.

Income-Sensitive Repayment – With this program, your monthly loan payment would be pegged to a fixed percentage of your gross monthly income. This would be between 4% and 25%. You would determine the percentage yourself. However, your monthly payment must be greater than or equal to the interest that accrues on the loan. Although you choose the percentage, be aware that some loan servicers set a minimum threshold on the percentage of your income based on your debt-to-income ratio. This program is like Pay As You Earn and Income-Contingent in that you must reapply every year. This usually means submitting your W-2 statements and tax returns. With Income-Sensitive Repayment your term or length of the loan is limited to 10 years. This means it will increase the size of your monthly payments to compensate for this. If Income-Sensitive Repayment interests you, be sure to go to the U.S. Department of Education’s IBR calculator to see if you would be eligible.

Two other alternatives

Most people will choose Income-Based Repayment over the other two alternatives explained above – assuming they are eligible. It’s just a better deal for most people. However, if you don’t qualify for any type of income-driven repayment, you still have two other options. The first is Extended Repayment. What this does is extend the term on a 10-Year Standard Loan from 10 years to 25. This almost always results in a lower monthly payment though you will pay more interest over the term of the loan since it’s 15 years longer.

A second alternative that is not income driven is Graduated Repayment. If you were to choose this program, your payments will be lower at first but then gradually increase every two years. Like with Extended Repayment, you will end up paying more interest over the life of the loan then under 10-Year Standard Repayment.

As you have read there are a number of different repayment programs available to those who have federal loans. If you are currently under 10-Year Standard Repayment, it would certainly be worth your time to use the U.S. Department of Education’s IBR calculator to learn what other repayment programs you might be able to take advantage of. You should also probably talk with your loan servicer. In any event, make sure you check out your options so that you will have a repayment plan that you can live with and that offers the best deal given your income and circumstances.

How To Graduate From College Debt Free

Yes, debt negotiation worksDid you know that undergraduate students that graduate from college with no student loans are way in the minority? In fact, according a study published in 2011 only about 2/5ths of undergraduate students or roughly 1.7 million students graduate debt-free. As of 2011, about 3/5ths graduated having less than $10,000 in student loan debts.

However this number has increased substantially in the last three years as seven in 10 college seniors or 71% that graduated this past year had student loan debts averaging $29,400 per borrower.

So what could you do to graduate from college debt-free?

The first thing to do is to go to an in-state public college. Of undergraduate students who graduated debt-free 85.2% graduated from public colleges. And of this nearly 70% were in in-state public schools. Going to school in-state at a public college costs less because states appropriate money to their universities in order to keep tuition low for state residents.

Forget those for-profit schools

For-profit schools have been in the news a lot lately due to some of their practices. One of the largest, Everest College, has been targeted by half a dozen states and the federal government over allegations that it slanted attendance records, distorted student grades and exaggerated job placement data in its ads. This has led to Everest’s parent company, Corinthian College, closing some of its nearly 100 campuses and selling the rest.

Beyond this, less than 7% of students who went to for-profit colleges graduated debt-free.

Enroll in a two-year or shorter program

If you enroll in a two-year or shorter program you’re more likely to graduate debt-free. Half of the students that graduated with no debts graduated from a community college. One-third graduated from a public four-year college and 61% of students that earned an associate’s degree from a public college graduated with no debt. What many students are now doing is going to a community college for their first two years and then transferring to a state university. Since most of a student’s first two college years are devoted to basic or core classes, it makes very little difference where he or she takes them. If you do this, your record may show that you did two years at a community college before transferring but your diploma will have the name of your state university or even a more prestigious college.

Choose a low-cost college

If you choose a school whose tuition and fees is less than $10,000, you are very likely to graduate debt-free. In fact, 80% of students who did graduate with no debt graduated from a school meeting these criteria. Another 57% graduated from a school whose total cost of attendance was under $10,000 and 86% graduated from colleges that had a total cost of attendance of less than $20,000. You might have heard the old song titled “Shop Around” and this is especially true when it comes to picking a school – assuming your goal is to graduate debt-free. For that matter there was one study done recently that came to the surprising conclusion that, in some respects, where you go to college is less important than where you applied – assuming you are accepted. It appears that when it comes to earnings that if you are smart enough to get into a prestigious school like Yale or Harvard, you’re probably smart enough that you will be able to earn like a Yale graduate.

Reduce the amount you spend on textbooks

Seventy-five percent of students that graduated without debt spent $1000 or less per year on their textbooks. If you buy your textbooks at the campus bookstore you’ll probably pay top price. As an alternative to this, you might be able to buy the textbooks you need used on sites such as, ABE Books are even Craigslist. Another option is to go to or and look for international editions of the textbooks you need. Finally, you may not be aware of this but it’s also possible to rent textbooks. Doing this will typically slash the book’s list price by two thirds. This can be very appealing unless the book you need is one that you want to keep in the future for reference. If this idea appeals to you try or

Live at home

If you live at home with your parents you are more likely to graduate debt-free than students who don’t. While you might feel “shamed” to live with your parents, it’s better to live at home while you’re enrolled in college then to be forced to live at home after you graduate because you have so much student loan debt.

Choose your parents wisely

If you have upper-income parents, you are more likely to graduate with no debt than if you don’t. Statistics show that 56% of upper-income students graduated debt-free compared with 36% of low-income students and 45% of middle-income students. For that matter, if your parents have advanced degrees you are more likely to graduate debt-free because your parents probably have an higher average income. Also, more than two thirds of those who graduated debt-free got help paying for tuition and fees from their parents. In addition, statistics also show that a small percentage of students that graduated with no federal or private student loan debts were able to do this because their parents borrowed from the parent PLUS loan program.

College costs continue to skyrocket

Many students have no choice but to borrow money in order to get a college education. The cost of a higher education continues to do nothing but skyrocket. The College Board’s Trends in College Pricing reported in June of this year that the average total cost of attending a four-year public college and university in-state was $17,131. Of course, this included everything – fees, tuition, room and board. If you chose to attend a public college or university out-of-state, you would be looking at an average cost of $29,657 and if you want to go to a four-year private college you’d be looking at an average of $38,589.

If borrow you must, hope for a subsidized federal loan

As you can see, these costs echo what we had said earlier about choosing an in-state public college or university. Beyond this, if you must borrow money hope for what’s called a subsidized federal loan. You need to be able to show “need” to get one of these loans but if you can, you’ll be spared from the burden of paying interest on the loan while you’re in school. Instead, our federal government will pay the interest for you. How would you show “need” in order to get a subsidized direct federal loan? The US Department of Education (Ed) will evaluate your FAFSA or Free Application for Financial Student Aid to determine whether or not you have “need.” In addition, your FAFSA will be automatically sent to the school or schools where you have applied for admission. They will also use this information to determine what type of financial aid to offer you. Of course, the best type of financial aid is the kind that you don’t have to repay. This could be a grant, a work-study grant or best of all, a scholarship. If you find that most of your aid will come in the form of a federal student loan, you need to sit down, and evaluate how much you’ll have to borrow versus the benefits you would obtain from attending that particular college.

Work part-time

You may also be able to graduate from college debt free or at least reduce the amount of money you will have to borrow by working part-time. Most college towns have an overabundance of small shops, hotels and fast food outlets that hire part-time workers. These jobs may not pay a lot but every dollar you earn is a dollar you won’t have to borrow. Work just 15 hours a week at $10 an hour and you should net somewhere around $100 a week or around $1500 a semester – which would go a long way towards paying for your textbooks and some of your food and rent.

Build an online business

When it comes to making money online, the Internet recognizes no age restrictions. People as young as 16 have earned literally thousands of dollars a month by creating a successful business online. You could become an associate of and promote all of its products. Amazon even makes it incredibly easy to build a complete online store. The commissions you would earn from Amazon would not be a lot per sale but if you sell dozens of items a week, the money will mount up. Plus, this is something you could do without ever leaving your dorm room or apartment. And you could spend as much or as little time on your business as you wished.

Sell stock in yourselfVideo thumbnail for youtube video How To Calculate The Money Factor When Choosing A College

If you have a good career path mapped out and can convince other people that you will be successful you can actually sell shares in yourself via one of the crowdfunding websites. There is also a new company called Pave where you could raise money by offering a percentage of your future earnings. As an example of how this works, one person recently signed up with Pave in the hope of raising money to pay for an advanced masters degree. If he raises the $30,000 he needs he will then pay back his investors at the rate of 7% of his salary for the next 10 years.

Join the Peace Corps

This may sound a bit on the radical side but if you join the Peace Corps and complete a four-year stint you will earn $7,425 (pre-tax) to help with your transition to life back home. Plus, any payments you have on Stafford, Perkins, direct or consolidated loans will be deferred while you’re in the Corps. And if you have Perkins loans, you could be eligible for a 30% to 70% cancellation benefit meaning that a large portion of your loan could be canceled.

How To Reduce Those Incredible Out-of-State College Tuition Fees

couple going over billsIf it seems to you that college just gets more expensive every year, it’s not your imagination. In a 15-state region that includes the state where we live the tuition fees for residents at four-year public schools increased an average of 3.1% in the 2013-2014 school year. However, that’s just chump change when compared to the 50.5% increase that’s occurred since the 2008-2009 academic year and the incredible 123.4% increase since 2003-2004.

And that’s for in-state tuition.

If you or your child is attending an out-of-state college, we don’t have to explain the phrase “those ridiculous out-of-state tuition fees.” You know only to well what this means.

Here are a few examples. Where we live the tuition for an out-of-state student is $33,333 or roughly three times what a resident pays. And it’s just as bad in other states. In-state tuition at Arizona State University is $10,156 while out-of-state residents pay $24,502. If you live in California you would pay $12,872 to attend the University of California-Berkeley but if not, your tuition would be $35,750. The University of Washington charges in-state residents $12,394 while out-of-state residents pay $33,513 … and these numbers are just for one year!

Becoming a resident

Of course, you could beat this by becoming a resident of the state where you are going to school. Unfortunately this is not easy. You will have to prove that you are a permanent resident of the state and not just going to school there. You will need to show that you are financially independent to a degree. This means you may have to turn over statements from your bank, your parents’ tax returns and your W-2 forms. You may also need to register to vote, have an in-state driver’s license and show that you’re paying income taxes to that state. In fact, where we live the law requires that students that are less than 23 years old and doesn’t have a parent living here must prove emancipation or total residential and financial independence for one year to be eligible for in-state tuition.

A few options for relief

There are a few ways to get relief from these onerous costs. One of them is a tuition reciprocity program like the Western Undergraduate Exchange (WUE). This can save a lot of money for residents of certain states. The agreements made under this Exchange allow students to attend schools in other states at either in-state or highly discounted rates, and save thousands of dollars in tuitions bills. Over 150 two-year and four-year schools in 15 western states participate in this program. The way this works is that every member school offers eligible students from all other member states a discount on tuition. This often means charging students no more than 150% of the in-state rate. In the academic year 2013-2014 the savings that could be gotten from this program ranged from $925 to $13,400 per student and averaged $6150. However, be aware that each participating school has its own rules for eligibility. There are ones that automatically give students the WUE rate assuming they meet certain academic thresholds. However, many schools restrict the number of WUE awards each academic year by giving the rate only to a specific number of students or those that major in specific categories. In case you’re wondering which states belong to the WUE they are, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, Wyoming, and the Commonwealth of the Northern Mariana Islands.

In-state Angels

If you don’t live in any of the states listed above, there is another alternative called In-state Angels. It guarantees that you will either get in-state tuition or you pay the company nothing. The way this works is that In-state Angels develops a customized action plan designed around your specific circumstances and then assigns you a personal In-state Angel. This person will work with you every step of the way to achieve in-state residency. He or she understands the process of getting in-state tuition and will help with a plan that requires you to do as little as possible. The company works for free until it is successful in getting you in-state tuition and then charges a percentage of the money it’s saved you each semester until you graduate. Because In-state Angels makes no money unless it can get you in-state tuition its motivation is to get this for you as quickly as possible. In-state Angels claims that undergraduates have saved up to $18,000 per year net depending on the college even after you subtract its fees.

Is this legal?

Given the fact that it’s illegal to make false claims about residency, which can actually be a crime, this raises the question of legality – is what In-state Angels does legal? According to the company, what it does is 100% legal and we guess you can’t get more legal than that.

Not for everyone

While the savings promised by In-state Angels makes the program sound very tempting, it’s clearly not for everyone. You will have to first submit all your information, You and your parents will have the opportunity to ask questions and get answers. You will ultimately receive a quote, review it and share it with your parents. You would then talk to In-state Angels to determine whether or not you would be a good candidate. If so, you’ll be required to sign the contract and then schedule a time to come into the In-state Angels’ office to get started.

frustrated looking womanIf you can’t qualify for one of these types of programs

In the event you don’t live in one of the states that belongs to the Western Undergraduate Exchange and if you find that you can’t take advantage of the In-state Angels program, what can you do? You’ll probably end up having to borrow a lot of money. There are two ways to do this — through public and private loans. The best deal by far is to get a public loan or a loan from the Department of Education (ED). It offers William D. Ford Direct Loans that are loans where the money comes directly from the federal government. You can learn more about these loans on the Department of Education’s website, The way you apply for one is by filling out the Free Application for Federal Student Aid (FAFSA). As a general rule, Direct Loans are usually part of a larger “award package,” which will come from the college or colleges where you applied for admission. This package may also contain other types of financial aid.

The two types

If you are offered a Direct Loan there are two major types – subsidized and unsubsidized. Subsidized loans are based on need. In other words, if you can demonstrate that you have a financial need as determined by federal regulations, you would not be required to pay any interest while in school at least half-time. If you can’t demonstrate a financial need, your loan would be unsubsidized meaning that you would be required to pay interest during all periods you are in school including even periods of grace or deferment.

PLUS loans

There are also PLUS loans. These are unsubsidized loans that would be taken out by your parents and that can also be used by graduate/professional students. These loans are designed to help pay educational expenses up to the cost of attending the school minus all other financial aid. Since the loans are unsubsidized, your parents would be required to pay interest during all periods that you are in school.

The best loan is no loan at all

Of course, the best type of student loan is no loan at all. If you can graduate from college owing nothing you’ll be well ahead of most people. In fact, according to recent statistics about 12 million students borrow money each year to help cover their college costs. As a result they graduate owing an average of more than $28,000 in student loans. So, how could you graduate debt free? The answer will be a combination of what’s in your financial aid package and what your parents will contribute. You will need to add up the aid offered by your college such as a scholarship, work-study grant or some other type of aid and then subtract this from the cost of attending that school. If your parents can make up the difference, you could actually graduate debt free. You should also check with your state to see what grants and scholarships it has available. If one of your parents belongs to a social organization such as the Elks, IOOF or Moose be sure to see if it has a scholarship program for the children of its members. And, finally, many companies have scholarship programs for the children of their employees.

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