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Headed For College? Here’s What You Need To Do Beginning Your Sophomore Year Of High School

woman looking at billsYes, you read that right. If you believe you’ll be going to college there are things you should do beginning your sophomore or at the very least your junior year of high school. We know this sounds a bit early but as the saying goes, “the early bird gets the worm.” If you want to get in and then out of college with the least amount of student loan debt, you need to start by beginning a search for scholarships. There are some very good databases of college scholarships you should explore including Collegeboard.com, Collegenet.com and Fastweb.com.

Does your Mom or Dad work for a good-sized company? If so, have him or her ask if it has scholarships for the children of its employees. There are also social organizations such as the Elks, IOOF and Moose that provide scholarships to the children of their members. If your parent does belong to one of these fraternal organizations be sure to check into this.

As you find scholarships you think you might qualify for, create a spreadsheet with the dates that applications become available and when they are due.

Next, draft a list of schools that you think you would like to visit. Use a net-price calculator tool such as the one available on Collegeboard.org on each of the school’s websites to get an idea of what each school might cost your family per year. Don’t forget to make sure that your travel plans fit your budget. For example, if you live in California but would like to attend school on the East Coast you will need to check out travel costs and whether or not your family’s budget could handle them.

Your senior year

In September of your senior year you will need to make a timeline of admission application deadlines and financial aid deadlines. Be sure to include all early-decision or early-action dates. Bear down now and concentrate on researching the college-specific scholarships available for the schools on your list. You also need to begin putting together documents such as bank statements, tax returns, your Social Security card and income tax forms including W-2s and 1099s that you will need when it comes time to fill out the dreaded FAFSA or Free Application for Federal Student Aid.

Depending on which schools you would like to attend, you may need to fill out the CSS profile that becomes available October 1 on the Collegeboard.com website. This is the form used by almost 400 private schools throughout the US. It’s a much lengthier document then the FAFSA and will take you more time and effort to complete.

In December you’ll need to complete your applications and apply for your FAFSA PIN (personal identification number) at fafsa.gov. You and your parents will need to have separate PINs in order to complete the form. You should have your tax return information ready as early in February as possible. This is because some schools require you to submit your tax forms very early. Be sure to check each school’s due dates.

Note: If you are interested in federal student aid you must complete a FAFSA form. The deadline for submitting this form online is June of next year. However, each college and each state may have different deadlines. Be sure to check with the colleges on your list and go to https://fafsa.ed.gov/fotw1415/pdf/Deadlines.pdf for your state’s deadline.

If you complete and submit your FAFSA form in January, you should receive your Student Aid Report in March from the Department of Education. This will summarize your eligibility for federal aid.

Then, hold your breath, in April the admissions notifications will begin to roll in. Be sure to check for “unofficial” financial-aid awards in the student portals on the websites of the colleges you’ve chosen. You may also need to submit additional documents requested by a school such as tax returns.

When you have selected a school, be sure to keep submitting signed and dated documents and forms for financial-aid verification. Then check back for your official award letter.

The deadline for committing to a school is generally May 1. Make sure you notify any school where you’re declining an offer.

Finally, comes graduation and summer. In August you will probably receive your bill and this is when you’ll complete any loan documents required.

Financing college

When you compare the financial aid award letter you received against your estimated out-of-pocket costs you may find a shortfall or that amount of money you or your parents will need to come up with to pay for a year of school. Depending on your family’s financial circumstances this may not be a problem. Maybe your parents will be able to just write checks to make up the difference. However, if you’re like the 50% to 60% of students that don’t have parents this well off, you may have to borrow the money in the form of student loans. This is an area where less is definitely more. The less money you have to borrow the more better off you will be. Student debt has become a huge problem here in the US as outstanding loans now total more than $1 trillion. Seven in 10 college seniors or 71% that graduated this past year had student loan debts and they averaged $29,400 per borrower.

Too easy to get

One of the biggest problems with student loans is that they are just so easy to get. In most cases all you have to do is sign a promissory note and off you go. It’s sort of like writing a check that you may not have to cash for two or even three years. But the day will come when you will have to start repaying those loans, which can be a big drag on your life – especially when you’re just starting out in your career. Of course, this assumes you will be able to start out in your career, as according to one study, some 47% of recent college graduates were unable to find their first jobs in fields related to their majors. This could at least partially explain why about one in seven people default on their student loans within three years after graduation.

graduate chained to student debtHow to avoid student loan debt

Fortunately there are things you can do to either avoid having to take out student loans or at least minimize the amount of money you have to borrow. What many students now do is go to a community college for the first two years and then transfer to a more prestigious school. Regardless of where you go to school, you will probably be required to take about the same basic courses those first two years so you basically have nothing to lose except maybe $40,000. This is the difference between going to a community school for two years and then our state university for two years vs. going to that same state university for four years.

A second alternative is to choose a cheaper school. If you shop around you might find a school in your state that would be cheaper to attend then either your state’s university or a private college. As an example of this, it costs $26,933 for an in-state student to attend our state university but only $18,743 a year to attend a smaller university located in the western part of our state. For that matter, you could attend that school for two years and then transfer to our state university, graduate with a degree from it and save some money in the bargain.

Third, you could live at home – assuming you choose a college or university in your city or town. This might not sound like much fun but it would slash your college costs dramatically. As you have read, it costs $26,933 for an in-state student to attend our state university, which of course includes room and board and incidentals. If you were to live at home you would pay only the cost of tuition, which is $10,240 a year. Even when you add incidentals and textbooks to this, you’d be cutting the cost of your education by nearly 50%.

Finally, work part-time. Almost all college and university towns have an ongoing need for part-time workers. If you land the right kind of job you might earn enough to make up the gap between your financial aid and you’re out-of-pocket costs to graduate debt-free. And as Martha Stewart would say, “it’s a good thing”.

5 Financial Moves For Students Entering College

student with a notebook and calculatorWhen you are going into college, there are a lot of financial moves for students that you need to do. There is no such thing as being too young to implement the right financial habits that will set you up for a debt free future.

It is a sad scenario that most students feel like they need to borrow high student loans to get a job in the future. That is not true. You need a college education. That is the truth. But you do not have to borrow a lot of money just to get the higher education that will qualify you to earn a higher income.

Our students are mostly misinformed or completely ignorant of what they are facing before going to college. This is why they can easily be encouraged to sign in on those student loans that will keep them in debt for the next decade or so. It is very important that we educate these students or that they seek out on their own certain financial lessons that can set up their future correctly.

While the student loan debt scenario should raise some concerns about the nation’s future, there are efforts to help steer the next batch of students from the same fate. According to the data published on the website of the Council for Economic Education (CouncilForEcoEd.org), 17 states have already added personal finance in their course requirements. High school students are encouraged to take these personal finances lessons before graduating so they are educated on financial moves for students entering into college. Not only that, economics courses are also being set as a requirement before graduation in 22 states.

The data showed that only 6 of the 50 states implement testing the knowledge of students when it comes to personal finance. Somehow, this might help students be more aware of how they should manage their finances when they get into college. It might even help if they have specific lessons about student loans and their options to minimize the load of this debt.

5 moves you must make before going to college

While it is difficult to demolish student loan debt this is not impossible to do so. Some students have actually graduated without getting any debt at all. It is mostly a combination of their parent’s planning and preparation but the student themselves also did their part by learning how to manage their money wisely.

You may feel overwhelmed when your parents are not able to help you pay for college but do not be discouraged. Although you will need to borrow student loans, it does not have to ruin your financial future. You just have to make these 5 financial moves for students so you can head off any potential financial problems while you are getting your degree.

  1. Plan your finances. Everything should start with a plan. And take note, you should not stop with just one plan. The first that you need to create is a budget plan. This will help you identify how much money you have – whether it will be coming from your student loan or the funds that your parents have saved up for you. You need to determine the expenses that you will be making on a daily or weekly basis when you get to college. This will help you estimate how much you can afford to spend. You should also make a spending plan so you are guided on where your money should go to on a daily, weekly or monthly basis. Comparing it with your budget plan will help you decide if you need to add more money or cut back on some of your expenses. Lastly, for those who borrowed student loans, you may want to create a plan that will help you pay it off in the future. You can start paying off the interest on your student loans while you are still in school. That will help keep your debt payments to a minimum when you graduate.
  2. Build up your emergency fund. Nobody is exempt from emergency situations. Even if you are still young, you should be prepared to finance any unexpected event while you are still in school. It may be a sickness or a sudden expense that you have to make in the house where you are living. It can even be car repairs or the delayed release of your funds. It is always best to have an emergency fund so you will not be too stressed when something happens. Start with a small amount and gradually build it up as you get extra money.
  3. Apply for an account in a local credit union. Given your lack of credit history, it may be difficult for you to enjoy the products and services that traditional banks offer. But joining a credit union may be more beneficial for you. They are more customer oriented and do not usually ask for fees to maintain your checking account. They also have higher interest rates for savings accounts and lower rates for borrowers. Check out the local credit union near the school you will go to and see if their products are something that you can maximize.
  4. Work on your credit. It is a great idea to start developing your credit management while in school. If your parents helped you apply for a credit card, or you applied for a student or secured card, use it wisely and pay it off immediately. That way, you can build a strong credit history that will allow you to borrow money in the future with very low interest rates.
  5. Get a side job. One of the most common financial moves for students is getting a part time job. You may want to see if you can get a job waiting tables or in the retail industry as a sales crew. You can tutor or get work in the campus where you study. There are so many options for you to get the extra finances that you can utilize while you are still studying. Not only will this be beneficial in your finances, it is also something that you can put in your resume. According to an article published on UTDallas.edu, some college students have graduated without any student debt because they worked while in college. Some started their own business after high school while others entered paid internships. These students got their degree without incurring debt and were offered jobs immediately after graduating – no doubt because of their work experience in school.

Financial habits to develop while in college

As you work on these financial moves for students, you should also think about developing certain habits while you are at it. There are various habits that you can form while in college that will help set up your financial future. These habits will not only help you stay away from student and credit card debts, it will also train you to make smart financial choices all your life.

Here are some of the habits that you may want to form while you are in college.

  • Budgeting. This is something that you can practice if you implement the first of the financial moves for students that we discussed earlier in this article. You can apply this all throughout your life to ensure that you have full control over your finances.
  • Saving. This includes saving for your emergency fund and any expensive item that you want to buy. Make it a habit to pay for your expenses in cash. That way, you will not be working to pay for past expenses. You will be working to pay for future expenses. It will be a less stressful life.
  • Setting financial goals. Setting goals is a great way for you to make the right decisions because you know where you want to take your finances. It should be easy to make your decisions aligned.
  • Spending wisely. You have to understand that being a smart spender does not only mean you are saying no to the expenses that you cannot afford. It also means saying no to the expenses that you do not need – even if you can afford to pay for it in cash.
  • Investing. You do not have to be old to learn how to invest. The earlier you start, the more gains you will have in the future. When you have your emergency fund in place, put your extra money into investment funds.

Financial moves for students will help you set up for a wealthy future. Don’t you want to look back in your college years as something that helped propel you towards a better life? After all, a college degree will help you earn more as compared to those who skipped getting a higher education. According to NYTimes.com, The value of getting a college degree is rising each year. Although the cost is also rising, your ability to get a high paying job can compensate for that. Even if you had to go through college through student loans, it is possible for you to minimize that debt and get more out of it through the development of proper financial management skills.

If you need help with any of your student loans, National Debt Relief can help. Their consultancy service will assist you in choosing and applying for the right student loan debt relief program. The service also includes helping out with the documentation. The consultation involves a one time service fee that will be put in an escrow account. If you are satisfied with the paperworks, that is the only time this payment will be released. There are is no upfront or maintenance fees.

How To Keep Student Debt From Ruining Your Life

graduate chained to student debtIt is estimated that some 20 million students are going to college this fall and that unfortunately some 12 million of them will be required to take out student loans to pay for their educations. Unless you’ve been hiding under a rock, you probably already know that student debt stands above $1 trillion making it even larger than our national credit card debt. Colleges and universities are not making things any easier either. The average tuition has increased 27% at public universities and 14% at private schools in the past five years, which would help explain why people are graduating owing an average of $25,000 or more.

But regardless of whether you’re just starting college or are already in school, there are things you can do to keep student debt from ruining your life.

Choose the most affordable school you can

In the event you’ve already started college this advice may come too late. But if you’re still a high school senior you should try to choose the most affordable school you can. This may not be the most prestigious of colleges but what many people have found is the secret is to go to an affordable school for four years and then get their graduate degrees at a more prestigious college or university.

Another way to keep from piling on so much debt it would ruin your life is to go to a community college for two years and then transfer to a more prestigious school. Whether you start at a two- or four-year college you’ll probably be required to take basically the same courses for the first two years so you really have nothing to lose by starting at a local community college. As an example of what this can mean, the cost to attend one of our local community colleges for a year is $6832 while the cost for an in-state student to attend our state university is $26,933. Do the math and you’ll see you would save approximately $40,000 by doing your first two years at the community college.

Choose your major carefully

Even if you’re already in college it’s not too late to consider changing majors if you’ve chosen one that would doom you to being a low earner for years. Recent studies have shown that if you get a degree in child and family studies, elementary education, exercise science, broadcast journalism or animal science you will be a low earner for life. For example, even the mid-career salary for a person with a major in child and family studies is just $37,200 and for elementary education it’s $45,300. The starting salary for a person with a major in exercise science is $32,600 with an estimated mid-career salary of $51,000 while the mid-career salary for a broadcast journalism major is just $68,800. Now compare this with the $100,000 or so that you will spend on your education and ask yourself the question would one of these majors be a good investment.

Also be careful about the college you choose

Believe it or not there are colleges that offer better values just as there are automobiles that are better values and the names of some of the schools might astonish you. For example, Harvard University is considered to be a good value because nearly 60% of its students receive need-based grants so that the average cost to them is just $15,486 a year. Brigham Young University is also considered to be a good value because the average cost of attending there for a year if you receive need-based grants is just $12,367. And the cost to attend the Massachusetts Institute of Technology for a year averages just $19,957 assuming you qualify for need-based grants. Now compare this to the cost of attending our state university for a year of $26,933 with little or no opportunity to get grants and you should be able to see why it’s important to be careful about which school you choose.

Score some scholarships

Fortunately, scholarship money being handed out by foundations, corporations and other private-sector benefactors has also risen as has tuition at universities and colleges. There are websites available that can help you and your family find scholarships for which you might qualify. However, it’s important to search early. If you’re a student your parents should check with their employers to see if maybe they offer its employees’ children scholarships. Don’t be afraid to aim high. Even though the competition for big scholarships can be very tough, you should give it a shot. They payoff can make it worth the effort. This is also an area where choosing a private school could be better than a public university. While it’s very difficult to score a scholarship from a public school it should be easier to get one from a private institution – just as it’s easier to get needs-based grants. As an example of this, the small private college I attended now costs – at least theoretically – a little more than $37,000 a year. However, 100% of its students receive scholarships or grants so that the true cost of attending it is clearly much less than the $37,000.

What to do if you’re already deep in student loan debt

If you owe $20,000, $30,000 or more in student debt you can still keep this from ruining your life. For one thing, you could get a federal Direct Consolidation loan, which could lower your monthly payments dramatically by giving you more time to pay off your debt. The other advantage of this is that you would have just one monthly payment to make a month versus the multiple payments you’re currently making. The interest rate on these loans is computed as the weighted average of the loans you’re consolidating rounded up to the nearest 1/8th of a percent. The simplest way to think of this is that if you get a Direct Consolidation loan, your interest rate will be higher than the lowest interest rate you’re currently paying but lower than the loan with the highest interest rate.

Choose a different repayment program

You might also be able to make your life easier by changing repayment plans. There are six available in addition to the 10-Year Standard Repayment program. Three of these are income-based meaning that your monthly payments would be based on your income and family size. One of these is Pay As You Earn, which would cap your monthly payments at 10% of your discretionary income. Pres. Obama recently signed an executive order that makes about 1.6 million more people eligible for this program and you might be one of them – if you got your first federal student loan after October 1, 2007 and it was a Direct Loan or a Direct Consolidation loan you received after October 1 of 2011. The eligibility requirements for Pay As You Earn can be a bit confusing so be sure to watch this short video to learn more about them,

Other repayment options

In the event you aren’t eligible for Pay As View Earn, there are other options that could keep your student debt from ruining your life. The Income-based Repayment program would cap your monthly payments at 15% of your discretionary income or if you just recently graduated you might choose Graduated Repayment. This is where the payments start smaller but then gradually increase every two years.

The long and short of it is that you can get a good college education without it ruining your life. However, you will need to make some smart decisions when it comes to choosing a school and choosing a major. There are also options available that can make things easier in the event you have a considerable amount of student debt. As the old saying goes, “you don’t need to know a lot about money to be good with money.” The important thing is to think things through and make decisions that will enhance your life and not ruin it.

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 Forbes.com 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.

Huffingtonpost.com 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 CollegeBoard.org, 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 StudentLoans.gov 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.

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 Amazon.com, ABE Books are even Craigslist. Another option is to go to half.com or textbookrush.com 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 www.clegg.com or www.bookrenter.com.

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 Amazon.com 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.

4 College Majors Worth Taking On Student Loans and 5 That Aren’t

family with teenage daughterIf you’re in or headed towards college you may be like 12 million other Americans and have to borrow money to finance your education. You certainly won’t be alone as there are about 37 million student loan borrowers that have outstanding loans today. But before you join this crowd you need to take a hard look at what you’d like in the way of a career after you graduate vs. what would be a good-paying career. The problem is that the two often don’t go hand-in-hand.

It is still true that the average college graduate earns a lot more over his or her lifetime than a high school graduate but this is just an average. The fact is that what you major in will have a huge impact on your lifetime earnings. For that matter it can have a major impact on whether you will even be able to get a job in your field of study. One recent study revealed that 2012 graduates are having a tough time and many have been forced to take jobs for which they are overqualified or even accept low-wage or part-time work – often because they chose the wrong major.

It’s an investment

You might feel passionate about a particular subject but before you decide to major in it, you need to evaluate it as you would any investment. The College Board has reported that the average cost of tuition and fees for the 2013–2014 school year for state residents that went to a public college was $8,893 and $30,094 at private colleges. Multiply that $8,893 by four years and you’d be looking at a total investment of at least $35,572. Given this, plus the fact you that you’ll probably have to borrow all or a good part of that money, it’s important to choose a major that will turn out to be a good investment.

What not to invest in

Just as there are stocks that perform well and generate a good ROI (return-on-investment) and bad stocks that don’t, there are also college majors that won’t return as good an ROI as others.

The five worst

A study was done recently on college majors in terms of which are the “worst” and which are the “best” in terms of a career. The fifth worst is Art History with a starting annual salary of $36,400 and a mid-career salary of just $54,000. Plus its mid-career unemployment rate is 8.3%. No matter how passionate you are about art history, you’d be better off majoring in a related field such as art education with its unemployment rate of just 3.9%.

The fourth worst major in terms of a career is Early Childhood Education. You might feel strongly about working with pre-K and kindergarten kids but the starting salary for this job is only $29,200 and its mid-career salary is $37,600. While it’s believed that the demand for preschool and kindergarten teachers will rise rapidly, you might be better off getting other specialized education training in elementary or middle school teaching.

Third on our list of majors with a poor career outlook is social work. You might be committed to helping people in need but your starting salary will be only $33,100 with a mid-career salary of $45,300. However, the demand for healthcare social workers is expected to increase 33.5% through the year 2020 or more than double the national average. Another field you might explore related to social work is public administration. Majors in this area sport a lower 6.2% mid-career unemployment rate and a higher pay grade as it begins at $41,500 a year.

Fine Arts comes in as the second worst major in terms of a potential career as it has a starting salary of just $31,800 and a mid-career salary of $53,700. Fields related to fine arts where you would do better in terms of a career, especially after you have a few years of experience, is film, video and photographic arts. Majors in these areas start at $37,500.

Number one on our hit parade of bad majors is Human Services and Community Organization. The starting salary for these people is just $32,900 with a mid-career salary of $41,100. And its mid-career unemployment rate is 8.1%. If you are really passionate about human services and community organization, try for the managerial ranks. This has a projected 10-year growth rate of 26.7% and an annual median pay of $59,970. Another related area that would be good is business administration. It has a mid-career unemployment rate of just 5.6%.

Girl with one hand on laptop, the other giving a thumbs upThe top five

If you can think of your major as a steppingstone to a good career, there are five that hold the best potential. The first is Nursing. Its starting salary is $54,100 and its mid-career salary is $70,200. Even more important, nursing’s mid-career unemployment rate is just 2.3%. If the idea of becoming a nurse interests you, you should take many science courses including chemistry, microbiology, nutrition and anatomy. And you will have to pass the National Council Licensure examination to get your license.

Fourth best major according to a recent study is Information Systems Management. The starting salary in this career is $51,600 and its mid-career salary is $88,600. If you get a major in Information Systems Management this can lead to many different kinds of computer related careers but the best seems to be information systems manager. This is the highest paid of all computer specialists with a median salary of $120,950 a year.

The third best major is Civil Engineering. The starting salary for civil engineers is $53,800 and its mid-career salary is $88,800. Civil engineering’s mid-career unemployment rate is just 4.0%. If the idea of majoring in civil engineering appeals to you, be sure to take courses in statics, fluid mechanics, structural analysis and design and thermodynamics.

Computer science is the second best choice for a major. Its starting salary is $58,400 with a mid-career salary of $100,000. The mid-career unemployment rate in computer science is just 4.7%. In addition to having an estimated above-average growth in demand for computer scientists, the median pay for this job is $102,190 year.

Here comes a surprise. The top rated major for career growth is Pharmacy and Pharmaceutical Science. The starting salary in this field is $42,100 and the mid-career salary is an excellent $120,000. Even better, the mid-career unemployment rate in Pharmacy and Pharmaceutical Sciences is just 2.5%. If you would like to become a pharmacist, you’ll need a Doctor of Pharmacy degree, which you can earn with or without a bachelor’s degree in pharmacy. If the idea of working as a pharmacist behind the counter in a CVS store doesn’t appeal to you, a bachelors in pharmacy can also get you work as a medical scientist doing research to design and develop drugs. The median annual pay for medical scientists is $76,980. So, the few years of graduate training you would have to undergo to become a medical scientist could make this worthwhile.

Finally, here is a short video courtesy of National Debt Relief with more information about hot careers of the future.


The net/net

The long and short of it is that you may decide to major in something you know won’t lead to a great career in terms of money but you’re willing to accept that because you’re passionate about the work. If so, go for it. Being happy in what you do for 40 or 50 years can be more important than how much you would earn. Plus, you can always change your mind once you get out in the work world and try something entirely different as do many people.

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