Posts Tagged ‘college loans’

How to Pick Your Student Loan Payment Plan

Did you know that you have a say in how you pay off your student loans? Unlike your rent and other bills, federal student loans offer quite a bit of flexibility with a variety of payment plans you can choose from. While some plans are reserved for those who can prove they’re in financial hardship, others can be implemented by anyone, regardless of their situation. If writing those checks every month on the Standard Plan feels like a punch to the gut, check out some other popular options that may make repayment a whole lot easier!

My Situation: I have an insane amount of student loans and paying them back means writing a check for close to a thousand dollars each month. At this rate, I won’t be moving out of my parents’ house until I’m in my thirties!

My Plan: Extended Repayment

How it Works: If you have over $30,000 in student loans, you can pay them back over twenty-five years instead of ten years under the Standard Plan.

Pro: Your monthly payments won’t be so scary.

Con: By extending the amount of time in which you pay back your loans, you’ll accumulate more interest. In other words, you’ll be paying more overall, but less on a monthly basis.


My Situation: I just began an entry level job. My monthly payments are a bit more than what I can afford right now. Maybe after I get that promotion, they won’t be so bad…

My Plan: Graduated Repayment

How it Works: If you don’t have enough money to afford your monthly payments in full right now, but suspect as time goes on you will, this plan starts your payments off lower than on the Standard Plan, with the payment amount increasing every two years.

Pro: You’re paying smaller amounts while you’re still the youngster at work, and larger payments as you move on up in the world.

Con: The last years of your payments will be higher than on the Standard Plan.


My Situation: I always have enough money for my monthly payments, but I’m a little forgetful, and some days I would rather pay the late fee than drive to the post office and buy stamps.

My Plan: Automatic Payments

How it Works: Your student loan payments will be taken out of your bank account automatically at the time they are due.

Pro: You have the comfort of knowing your loans are always being paid.

Con: You still have to be aware of what’s in your bank account so you don’t overdraw.


My Situation: My monthly payment is always due the same week every other bill I have is due, and then I end up eating Ramen for two weeks until I get paid again.

My Plan: Altered Due Date

How it Works: You can change the date your student loan payment is due so it’s more convenient for you!

Pro: You’re not starving while you wait for your next paycheck.

Con: Well, there really isn’t one!


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Student Loan Debt Now Tops $1 Trillion

Student loan debt has been in the news lately. According to the Consumer Finance Protection Burea’s student loan ombudsman Rohit Chopra, the student loan debt market is “too big to fail.” It was disclosed recently that student loans now top over $1 trillion.

According to Chopra, “Students borrowed $117 billion in federal student loans just last year. And students continue to borrow private student loans, which lack the income-based repayment and deferment options of federal student loans. If current trends continue, there will be consequences not just for young people, but for all of us.”

Another student loan issue in the news right now is the federal Stafford Loans. These subsidized student loans are set to expire this summer. If they are not renewed by congress, interest rates on those student loans will double to 6.8 percent.

Lots of schools are responding to this issue and the tough worldwide economy in different ways. Schools like Burlington College in Vermont and Mount Holyoke College in Massachusetts are freezing their tuitions. Burlington College has stated they will not raise tuition for four year and Mount Holyoke is enacting their first tuition freeze since the 1960s.

Some schools are thinking about out-of-the-box methods to entice students to attend. Ashland University in Ohio will begin to offer bachelor degrees next year that will only take 3 years to complete. Also in Ohio, Baldwin-Wallace College is starting a “Four-Year Graduation Guarantee” program. If a student who maintains a 2.0 GPA at Baldwin does not graduate in 4 years, the college will pick up the tab for the remaining tuition costs.

Schools are also finding ways to create programs that offer a combination of Bachelor and Masters degrees in only 4 years. Simmons College in Boston and Wilson College in Pennsylvania are a couple schools that are going in this direction.

Some schools are lowering credit hours required to graduate. Lipscomb University in Texas is lowering their graduation requirement from 132 credits to 126. This is the equivalent of 2 classes on average.

The student loan landscape is constantly evolving. Make sure to utilize Cappex to stay up to date on all things college.

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The Best Colleges for Financial Aid

graduate piggyU.S. News & World Report recently published a report that only 63 colleges are actualy able to meet students’ full financial needs.  Financial need is the difference between tuition cost and a student’s expected family contribution as calculated by FAFSA or the institution itself.  That discrepancy is then made up by schools that claim to meet full need through grants and loans.

Students also spend hours searching for college scholarships to fill that gap to pay for college.

Here is was U.S. News & World Report said about the Best Colleges for Financial Aid:

During the recent recession, numerous schools striving to meet the full financial needs of students were unable to do so because of shrinking endowments, dwindling donations, and sharp decreases in state funding. Though the economic recovery is far from over, some schools are now able to offer more than they have in the past…

…[Sixty-three] schools out of more than 1,700 surveyed by U.S. News that claim to meet their students’ full financial need. All schools listed report that they meet 100 percent of need for all students. Several schools including Vanderbilt University and Johns Hopkins University were a few percentage points shy of meeting full need, but were not included in the table:

Amherst College
Barnard College
Bates College
Boston College

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