Social media offers potential students a lot of information about college, career options and even, financial aid. For students looking for help paying for college, there are plenty of ways to use social media to find student loans.

Online Forums

Online forums can be a great way for students to talk to others about loan opportunities and financial aid options.

Wells Fargo, for example, began a forum to give students and their parents an opportunity to ask questions and gain information about student loan options.

The forum is moderated by Wells Fargo representatives but the conversation doesn’t have to revolve around Wells Fargo’s student loans. Instead, community members discuss any college-related topics, such as selecting a major or finding affordable housing.

Community members can also ask questions about financial aid and they can gain insight not only from Wells Fargo professionals, but also from other students and parents.

SoFi

SoFi, which is short for social finance, is a company that offers student loans in a non-traditional manner. Through SoFi, college alumni actually loan the money to students and use it as an investing opportunity.

Alumni donate the money to a general fund, which reduces each investor’s risk. After graduation, students begin repaying the loan in a similar fashion to traditional loans.

SoFi currently works with 78 different schools. The program reports that over $90 million has been invested with a zero default rate.

SoFi uses social media sites such as Facebook and Twitter to attract perspective investors as well as students in need of financing.

GreenNote

GreenNote is another alternative way to borrow money for education by leveraging the social media power of friends and family.

Students looking to borrow money can fill out an online profile at GreenNote. Anyone in the student’s social network is then invited to loan money to the student.

GreenNote creates a legally binding contract for the loan and handles the details. The interest rate is fixed at 6.8 percent.

One of the benefits is that there is no credit check so students with a poor credit history can obtain funding. There is also no need for a co-signer.

Personal Social Media Efforts

Some students have taken financial into their hands and have found ways to leverage social media to help pay for tuition.

For example, some students have made announcements on Twitter asking people to help pay for their education.

Others have created their own websites or used Crowdfunding sites to attract attention to their financial. Some students ask for donations while others ask for loans.

Financial Aid Institutions and Social Media Problems

Some of the major financial aid institutions have been criticized for the way they’re using social media.

Sallie Mae has been in the spotlight for deleting criticism from students on its Facebook and Twitter pages. They’ve even been accused of blocking anyone who makes negative posts on their social media sites.

A financial institution’s use of social media can certainly have a big impact on how it is viewed by the community.

While many traditional lending institutions haven’t yet embraced social media, other non-traditional sources are using social media’s power to obtain funding for students.

About The Author:

Today’s guest article comes from Amy Morin. She writes about business and psychology topics, such as how small businesses can review reputation problems.

Public debate has raged for years about reforming student loans. While the housing crisis, once the only loan debate in town, seems to have somewhat subsided over the last 5 years, student loan debt is “the only form of consumer debt that has grown since the peak of consumer debt in 2008,” according to the Federal Reserve Bank of New York.

With student loan debt topping $1.2 trillion in May, 2013, students, tax-payers, educators and politicians are advocating for a solution to the problem. Recently, congress approved the Bipartisan Student Loan Certainty Act of 2013, a deal aimed at easing the financial burden of higher education for students and taxpayers. The bill has been met with enthusiasm, as well as criticism. The general consensus from education groups (who largely disapprove of the bill) is that students will ultimately pay far more under the new plan than they would have before, despite the low starting interest rate. Still others—including Ohio representative John Boehner, who calls the bill “a victory for students, for parents, and for our economy”—believe the bill is a welcome relief to the student debt problem.

The Bill

On Wednesday, July 24, 2013, the Senate overwhelmingly passed a bill regarding student loan interest rates, aptly named the Bipartisan Student Loan Certainty Act of 2013. The Senate passed the bill 81 to 18, and it was then sent to the House, which passed it with even greater strength, 392 to 31. When the President of the United States recently signed off on it, the bill was retroactively effective July 1, 2013 (meaning it will apply as though it had been passed on July 1).

The bill is relatively straightforward, and represents a step in the right direction for bi-partisan law making, given how easily it passed. It seems both sides of the political spectrum were in favor of the bill (though Republicans were more so than Democrats—17 of the 18 “no” votes in the Senate came from Democratic Senators).

The purpose of the new student loan interest rate bill is to lower the cost of loan repayment for students, while keeping them intrinsically linked to the state of the economy. The theory behind it is that the United States needs to take care of both students and taxpayer’s—help the former, but not at too big of an expense to the latter. While the bill is fundamentally designed to make life easier for students with loan debt, it takes into account the fact that the market in the U.S. ebbs and flows. Ultimately, the politicians agreed, student loan interest should ride the same waves as the rest of the economy, ebbing and flowing with the market.

What are the New Interest Rates?

For this year (as aforementioned, starting retroactively on July 1, 2013), the interest rates for newly issued loans will be as follows:

• Subsidized undergraduate student loans will be just 3.8%—a large improvement from the previous 6.8%.
• Unsubsidized Stafford loans will have interest rates set at 5.4%.
• For graduate students with subsidized loans, the interest rate will be 5.4%.
• All PLUS loans (for graduate students or parents of students) will be set at 6.4%.

While rates are fixed, they are also tied to 10 year Treasury notes. That means that those taking out loans this year will have a fixed interest rate of 3.86% (for subsidized undergraduate loans), but those taking out loans next year will have a different rate, and so on and so forth. As such, student loan interest will only rise as the economy continues to rebuild itself and overall interest rates rise. There is, however, a cap—meaning that there’s a limit to the amount of interest charged.

Education Secretary Arne Duncan estimates that the bill will save students an average of $1,500 in each loan at the current rate, which is certainly a substantial amount for the roughly 11 million students it would currently affect.

From a taxpayer perspective, this is another win, as the Congressional Budget Office estimates that, over the next 11 years, taxpayers will save $715 million with the passing of this bill (based on the assumption that they will not have to cover amounts owed by students who default on loans).

Why Students are Torn

The deal is an emphatic improvement on interest rates in the short term, since current rates are higher than the ones listed above. Furthermore, all of the repayment benefits remain, such as teacher loan forgiveness. However, critics worry that the interest rates of students’ loans, which are tied to the economy, will go up (beyond what they would have prior to the bill) as the performance of the economy improves.

While current rates still represent historic lows, they will not remain at these levels indefinitely. The bill offers cap provisions (8.25% for undergraduate loans and 9.5% for graduate loans for students) that are meant to keep student loan interest rates from skyrocketing to above 20%. Yet students and educators argue that the caps are higher than the 6.8% rate students would be paying without the bill in place. It stands to reason that a stronger economy, which would trigger higher interest rates, would grant graduates more job opportunities; however, this is not always a certainty, and some students may risk facing a tough job market and higher student loan interest rates.

Last but not least, some opponents of the bill do not believe the legislation solves the student debt crisis in the long-term. Says Massachusetts Senator, Elizabeth Warren:

“I don’t think we should be making profit off the backs of our kids when they are trying to get an education. That’s going to be a big issue. There’s two things we have to do; we have to bring down the cost of college. The cost just keeps climbing, and that’s bad for our kids who need to get an education. The second thing we need to do is we have got to concentrate on a trillion dollars of outstanding student loan debt.”

The rising cost of tuition as whole has, thus far, not been addressed by the student loan deal.

The Future of Student Loans

In the coming months and years, the new student loan interest rate bill will be heavily discussed. And while it is encouraging to see both parties come together to pass a bipartisan law regarding education, it remains to be seen whether this is actually a step forward in the education of our youth.

About the Author:

Today’s guest article comes from Logan Wheeler, a freelance blogger and recent college graduate currently residing in Houston, Texas. When he isn’t learning more about the byzantine rules and regulations surrounding his college loans, he is at work earning his license to become a freight forwarder in Houston.

For many young adults, transitioning from high school to college is a monumental and life-changing event. Those young adults who are U.S. citizens often rely on loans, financial aid and other forms of financial assistance to pay for at least some of their college education. After all, the average cost to attend one year of college at a public university for an in-state resident was about $22,261 in 2012, while overall prices for a private college education in 2012 averaged about $43,289. However, for the price of an education, you can generally enjoy a higher quality of life. Consider, for example, that the average individual with a Bachelor’s degree will earn almost twice that of an individual with only a high school diploma over a lifetime. A college degree may truly open doors for you. However, if you are a non-citizen with your goals set on attending one of the many fine colleges or universities in the United States, you may be wondering what your financial aid options are.

Federal Student Aid
Federal student aid is generally available for qualified or eligible citizens of the United States. However, some non-citizens may also be eligible. For example, you may be eligible for federal student aid as a non-citizen if you are a permanent resident alien with a green card or if your Arrival-Departure Record I-94 shows that you are a parolee, a conditional entrant, a Cuban-Haitian entrant, a refugee, or have been granted asylum. In addition, if you hold a T or T-1 visa, are a battered immigrant alien, or are a citizen of the Marshall Islands, Palau or Micronesia, you may qualify. Keep in mind that those who meet one of the requirements listed above may still need to meet additional eligibility requirements, so you should carefully review the eligibility requirements and contact the U.S. Department of Education’s department for financial aid for additional information.

Merit-Based Aid
Whether you qualify for federal student aid from the United States or not, you may still qualify for additional forms of aid. Merit aid is generally referred to as an academic scholarship, and these may be extended to you by the school where you apply or private organizations. You may also qualify for merit aid to attend a U.S. college or university through an organization or program in your native country. These scholarships may be awarded based on your performance in school, test scores, and other academic merits. There are hundreds of these scholarships available for eligible non-citizens, so you should carefully research these scholarships and apply for as many scholarships that meet your needs as possible. Scholarships can be found on popular college scholarship search engine sites like Scholarships.com and Fastweb.com.

Athletic Scholarships
Non-citizens who have considerable athletic ability may contact coaches at the colleges or universities of their choice about athletic scholarships. Generally, these coaches will want to see a student’s athletic ability through game films, and they may also want to visit the student’s school to watch the student perform in person. The athletic recruiting process generally begins several years before a student graduates, and the available athletic scholarships may be promised to students years ahead of time. Because of this, non-citizens who are interested in earning an athletic scholarship may consider contacting coaches early in their high school career. Universities interested in recruiting non-citizens can sponsor these student athletes with student visas.

Need-Based Assistance from Schools
Many colleges and universities provide need-based assistance to their students. Those non-citizens who come from underprivileged or lower income households may qualify for need-based assistance from some schools. The eligibility requirements formula that these schools use may vary considerably, so it is wise to learn more about the requirements for many schools. Some factors may include the cost of a college education at the school, the school’s definition of need, eligibility requirements for the school and other factors.

Work-Study Programs
It is important to note that student visas do not allow students to work full-time hours, but students may work up to 20 hours per week. This income may be used to pay for a portion of the student’s living expenses and college education. Many campuses offer work-study programs that are ideal for non-citizens to participate in. The jobs may be conveniently located close to the campus, and the work hours may be ideal for a student’s schedule.

Loans
While financial aid, scholarships and personal income from a work-study program may be a great way to pay for a portion of your college education, many young adults must also take out a loan to pay for the remainder of their education. Because loans will put a student into debt and must be repaid in the future, other forms of aid such as scholarships and financial aid should be exhausted before students use loans to fund their education. This can minimize the amount of debt the student gets into.

For most college students, regardless of their citizenship status, paying for college can be a challenge. Often, the solution to this challenge is to utilize a combination of financial aid sources, loans, and a part-time job to fully pay for their education. The money from these sources can be balanced with the course load for each semester to structure an affordable education plan.

About the Author:

 Today’s guest article comes from Logan Wheeler, who frequently writes about college life and global tax services for non-U.S. citizens.

The following guest article is provided by Dr. Joie Jager-Hyman

Students may spend an entire high school career sweating and slaving to gain admission to the college of their dreams. However, the happy ending does not necessarily come with an acceptance letter: now someone has to pay for it.

Tuition bills have grown shockingly large. The rising cost of college tuition is a hot topic and for good reason: the “sticker price” for the most expensive schools in the country can exceed a staggering $55,000 per year. Chances are that you are not blessed with a bottomless bank account, but there is hope in the form of financial aid. Between grants and scholarships, private and federal loans, it is possible to pay for college without drowning in debt.

Culled from advice in my new book, B+ Grades, A+ College Application, this post offers a brief explanation of the financial aid application process, reasons why you should not be scared of school’s sticker price, and how to interpret your financial aid awards, so that you can eventually enroll in a school that you love—and can afford.

• Financial aid documents are tedious and time-consuming. Their ostensible purpose is to determine your family’s ability to contribute towards college tuition. However, their format is meant to stymie and deter, so that the schools are not simply giving money away. Financial aid, for this reason, is something earned—not merely given. It requires work from your end, so make sure to follow all instructions and keeping on top of deadlines.

• Don’t get “Sticker Shock.” The amount of aid offered can vary from school to school. Even so, the reality remains that many families cannot afford the number calculated for them. Instead of letting colleges dictate how much you can afford, it is better to come up with a realistic budget that takes into consideration your family’s out-of-pocket contribution and your debt limit.

• To this end, add some “safety schools” to your list. While financial aid can help you close the price gap between your private and public college options, it is still a wise decision to do your research and compare costs. This may involve adding more safety schools to your list if you are looking for a substantial amount of financial aid. It’s a tough reality, but applying for financial aid may actually hurt your chances of admission because most schools simply can’t afford to make admissions decisions without simultaneously calculating their own financial aid budgets. By adding more safety schools, you are giving yourself reasonable options in the event you are not admitted into a need-aware college.

• Even if you have a set budget, you still have to apply for financial aid to know exactly how much and what kind of aid you’re going to receive. As I mentioned before, different schools follow different models when it comes to offering their students financial aid. Things like retirement accounts, investments, home value, credit card debt, and medical expenses can all affect the amount colleges think your family can pay and the types of aid you receive.

• Finally—and most importantly, make the most of your application! By putting together the best possible application you can convince any admissions committee to accept you—and to want you in their school so badly that they won’t care if it costs them a little more money.

Today’s guest article is provided by Craig Anderson

It is the time of the year when students begin making student loans decisions. In many ways the decision is a simple one if the school offers a Federal Direct Stafford Loan, Graduate Direct PLUS Loan or Parent Direct PLUS Loan. But Private Student Loans are an additional option for students to consider. But what is a Private Student Loan and how does it differ from the Federal Direct Loans which have been the topic of so much media discussion in past months? Simply put, Private Education Loans are loans to the student which are directly from banks rather than the Department of Education.

Before taking a look at the top 5 differences between Federal Direct and Private Student Loans it is helpful to first look at the similarities:

1)      All federal loans and nearly all private loans are certified by the school’s financial aid office. They will determine how much a student can borrow, typically cost of education less other aid.

2)      Most loan programs allow the student to defer payment of principal and interest while in school. The interest will still accrue (except on Subsidized Stafford Loans) and borrowing costs can be reduced significantly if the student makes some sort of in-school payment.

3)      They have to be paid back.

Top 5 Differences between Federal and Private Student Loans

1)  Interest Rates

Federal Loans

As of this writing, Direct Stafford Student Loans have a 6.8% rate. For a Subsidized loan the federal government will not charge you interest while the student is in school. This is a significant benefit for students. The Unsubsidized loan will accrue interest while the student is in school but payments can be deferred until after graduation. Another option is the Graduate or Parent PLUS loan. This rate is currently set at 7.9%. Interest accrues on these loans while the student is in school but payment can be deferred until after graduation.

Private Loans

Private loans are typically based on PRIME or LIBOR plus a percentage over that. The rate is based on the credit of the student and/or the cosigner. Depending on credit, students may qualify for a rate lower than federal loans offer. It could also be much higher. The rate is disclosed after the borrower completes the application and is approved.

Private Loans offer two different rate structures. The first is a variable rate. Variable rates can offer lower initial rates but can rise over time. As interest rates rise, so will the overall cost of the loan. Another alternative is a Fixed Rate private loan. The rate may not be as low as a variable rate loan, but it will never change.

2)  Fees

Federal Loans

In addition to the interest rate that will be charged on the loan, students will pay an origination fee. These are assessed upfront and taken out of loan proceeds. On a Federal Direct Stafford Loan the fee is 1.051%. On a Graduate or Parent PLUS loan the fee is 4.204%. On a typical Stafford Loan of $8230 the fee is around $86. The average PLUS loan of $12,186 will have an origination fee of $512.

Private Loans

The majority of private student loans do not charge origination fees; they have been eliminated along with back end repayment fees. The student will get exactly the amount borrowed from the lender.

3)  Cosigners

Federal Loans

The Federal Direct Stafford and PLUS Loans do not require a cosigner. In essence the federal government is the lender and cosigner. The only exception is if the PLUS loan applicant does not pass the credit criteria. In that case they will need an “Endorser” who effectively acts as a cosigner on the loan. They are agreeing to pay the loan if the borrower does not.

Private Loans

By law, private loan lenders cannot require the applicant to have a cosigner, but most students will want to have one. The typical undergraduate does not have a significant credit history so it is hard for lenders to determine the risk of making the loan. If the student is approved for the loan they will likely be charged the highest rate. Adding a qualified cosigner to the loan with good credit can lower interest rates, sometimes significantly. Many private loan lenders offer rates competitive with the federal loan programs, but only when a good cosigner is on the loan. It is important to recognize though the cosigner is now part of the loan transaction. They are agreeing to make the payments on the loan if the student borrower does not. Many cosigning parents don’t realize this and are surprised when they get that first call from the lender asking for payment.

4)  Repayment Options

Federal Loans

One benefit of the federal loan programs is the wide variety of repayment options they offer. Depending on what the student borrows, the payments can be large, especially right out of college. As a result, Congress has created a variety of repayment options that allow students to better manage their payments and align them with their income. This can be done by extending the repayment period of the loan or allowing the borrower to make payments as a percentage of their income instead of the standard principal and interest payment. While all these plans result in lower monthly payments, they can also result in the borrower paying significantly more than they would if they paid it off on the original terms. While these programs are helpful, borrowers should try to get back to making payments on the original terms as soon as possible. The Department of Education has considerable information on repayment plans including eligibility requirements and calculators.

Private Loans

Private Education Loans typically offer less repayment flexibility than federal loans. While most lenders offer students the option to defer payments until after graduation, they offer less flexibility once repayment begins. Regulatory requirements prohibit lenders from changing loan terms and conditions while the student is in repayment.  Lenders can offer temporary relief from loan payments in 2 month increments. But the lender can only offer this for a total of 12 months over the life of the loan and only if the student’s difficulty is temporary.

5)  Loan Discharge and Forgiveness

Federal Loans

In some cases federal loans can be forgiven or discharged. Under the Income Based Repayment (IBR) and Pay As You Earn (PAYE) programs borrowers’ loans can be forgiven after a number of years of payments. There are also additional options for students in Public Service positions as defined by the Department of Education. Loans may also be forgiven or discharged in the case of permanent and total disability, closure of the school the student is attending and some other circumstances.

Private Loans

Private loans vary on the circumstances under which a loan can be forgiven. Most forgive the loan in the case of the death of the borrower and some in the case of disability. Before accepting a private education loan it is a question borrowers should ask.

Conclusion

The real question then is when should a student borrow a private loan instead of a federal loan? That comes down to what the student (and their parent) wants to do. Federal loans offer many benefits, but with a good cosigner a student may be able to get a better priced loan. In some cases, parents don’t want an education loan in their name, but they are willing to cosign for a private loan.  Or, a student may need to borrow a private student loan because their federal loans are not covering the cost of their education. It is an important decision and one which every student should take some time to consider. Students may be told to borrow federal loans first as they are “always better.” It is not always the case; it depends on each individual student’s circumstances. Students and families considering private loans should take the time to do their research.

About the Author:

Today’s guest article comes from Craig P Anderson, who has been working in the Higher Education Finance Industry for over 20 years. He is a Student Loan Expert and has worked for a variety of student loan providers including Chase and Sallie Mae. He also worked in the Financial Aid Offices of the University of Florida and St. Petersburg College and has served on several industry boards. You can read more from him at CommonSenseStudentLoans.com or follow him on Twitter @CraigPAnderson .

There are many factors that students and parents should consider when selecting colleges and universities to apply to. Perhaps the most important factor is if the school offers a good program in the student’s academic area of interest, but the selection process should not end there. With the economy in a years-long slump, financial aid has seldom been more important to families hoping to put their children through college. It is estimated that over 10 million students applied for financial aid in 2011. Financial aid from the college or university a student attends can mean the difference between being able to go to college and needing to enter the job market right out of high school. Many parents are beginning to worry that applying for financial aid will negatively affect their students’ chances of being accepted to the school of their choice, which leads them to making some common mistakes on their applications.

Are Need-Blind Schools A Myth?
A need-blind school is one that does not review the financial status or need of the family when reviewing the student’s admissions application. The student’s application is considered solely on merits such as academic performance in the classroom, scores on standardized tests, extracurricular achievements, and volunteer activities. Students and parents should be realistic about how desirable their application to these schools will be, as these schools are most likely to be very selective about whom they admit. While there are a handful of colleges in the United States that claim to admit students based on merit alone, the vast majority of schools in the U.S. will consider a family’s ability to pay when making their admissions decisions.

Truly Need-Blind Colleges and Institutions
Some of the wealthiest schools in the country, such as Harvard, Dartmouth, and Yale, can afford to be truly need-blind. These schools selectively admit only those students who are the best candidates to their school, regardless of need. However, these schools have enormous endowments and can afford to pay for students who do not pay full tuition; many schools must at least partially consider the probable financial need of a student, even when the student’s financial aid application status is not listed on the admissions application. If a student’s admissions essay casually mentions a summer in the Seychelles, for example, that sends a message to admissions officers that the student may be able to pay full tuition. Often parents will state outright in their application that they’re able to pay full tuition, but this is probably not actually helpful.

Need-Sensitive Schools: A Middle Ground
Some schools are entirely need-blind and others openly review an applicant’s ability to pay for tuition, but others consider themselves mostly need-blind schools. These are schools that may be most concerned with the applicants’ merits, but which will take into account the student’s financial needs if they are sizeable. While some schools may be truly or mostly need blind when considering applicants, some may treat applicants on a wait list differently when it comes to financial need. In fact, the National Association for College Admission Counseling conducted a study in 2008 that showed that about six percent of private schools were need-sensitive for students on their wait list. Admissions departments will often tell you what their policy is regarding financial aid and admissions. One way to ensure a student’s application receives the most favorable review is to apply for early admission. Many schools assess applications without regard to financial need before a certain deadline, so applying within that window may give students who are concerned about their financial need affecting their application the best chance of being accepted.

Applying for the Top Schools
Parents and students alike are deterred from applying for admissions to top schools like Yale, Standard, and Harvard because they believe that they will not be able to pay the tuition and fees at these schools. However, because these wealthy schools may be truly need-blind, they may be able to offer a more attractive financial aid package to students. The cost of tuition should not deter students who want to attend these schools and who have the academic background to thrive at these schools from applying for admissions.

How to Consider Financial Aid Status When Applying
The fact is that admissions departments consider many factors when reviewing a financial aid package. While some will openly consider if a student requires financial aid, grants, and scholarships in order to attend, others may be more subtle about reviewing applicants’ financial need. Students concerned about their financial need affecting their application can apply for early admission, when many colleges maintain a need-blind attitude to application assessment. Parents and students alike can stay realistic about the desirability of their application, and should focus on applying to schools to which they feel acceptance is within reach.

With each school considering financial need in different ways, parents and students may be understandably concerned about how financial need could affect their own applications. The bottom line is that students should apply for the schools that are the best fit for their academic interests. Even schools that may place some emphasis on financial need in admissions decisions will probably not rule out an applicant who is well-qualified based on need alone. It is best to apply for the right schools that are a good fit; a financial aid package will often be provided that helps to make paying for the school more affordable.

There are quite a number of people who wish to obtain a college education, but their limited resources may easily hinder their ability to do so if not for the accessibility of student loans. Subsidized student loans have over time been availed by the government, but a number of non-government institutions have also provided the unsubsidized options. Some of the existing laws have however, been reviewed to make way for new ones, which will enable for the loans to be serviced and dispatched in a more effective manner. In essence, the new law will make it possible for students to go through their education using government rewarded loans, and then later repay them under better terms.

Laws Impacting Borrowers

1. The current law stipulates that people who take federal student loans and responsibly handle the repayments will have the balance forgiven after 25 years, but when the new law takes effect, students who get enrolled in or after 2014 will have their balances done away with in 20 years. In addition, those who will be successfully recruited in the public service sector will be forgiven after a period of 10 years, to ease their burden seeing as the workers in this sector receive significantly lower pay.

2. Students will also have the freedom to make payments that amount to only ten percent of their earnings. Individuals who will settle for this repayment option will put not more than 10% of their wages into settlement of the obtained loans –the current rates stand at 15% and the decrease is therefore pretty significant. Over a million persons will be eligible for this repayment plan.

3. If you intend to take out the student loans as a first-timer you should also be ready to deal with the limits that will be in place with regard to the amount you will be allowed to borrow. In the event that the loan will not be able to take you through to graduation, as a student, you will have to look for scholarships, unsubsidized loans or seek employment. This is a regulation designed to make more students graduate within a specific time.

Are the Student Loan Laws Beneficial?

The student loan policies will take effect in July, which means that anyone who obtains the loan before then will not be affected. The loans will also be provided based on the annual earnings of students’ families. The law that will go into operation will be aimed at decreasing the number of students eligible for such type of financial aid.

The limits on the loan borrowing will be put in place to help manage the debt amassed by college students in the course of their training. As a result, they will deal with lower payments once they start out on the loan settlement and this will significantly help ease the load.

Access to the subsidized loans will be restricted, but students will still be able to get hold of the unsubsidized loans regardless of their socioeconomic status. The policies will be of considerable benefit especially to the families with low income, since more of the students from such families will get to access the assistance they require.

As much as a college education is important, it cannot be meaningful if it plunges the borrower into financial ruin. This is something the government has taken note of and consequently worked to develop new law to make possible for the borrowers to handle the accumulated debts better. Considering the high cost incurred in catering for college education, getting financial aid is certainly a commendable cause, but it is important to be accountable in order to make the most of those resources.

About the Author:

Today’s guest article comes from Andrew Deen. He is a writer who creates informative articles relating to law. In this article he offers student loan advice and aims to encourage further study with a education law degree programs .

You can never know too much when it comes to financing your education. Here are some facts that may help you pay down your loans more quickly and make the most of your investment.

1.      Size doesn’t (necessarily) matter when it comes to paying off student debt.

No one wants to be burdened with huge amounts of educational debt. But when it comes to paying it off, the size of the debt may matter less than where you attend school, your degree choice, and where you decide to live after graduation.

In a recent report by the Federal Reserve Bank of New York, states with some of the highest average student debt burdens per person tend to have some of the lowest student loan delinquency rates. States where residents carry the lowest levels of student debt, on the other hand, have some of the highest delinquency rates.

The takeaway: Even a high level of student debt can be more easily tackled by a well-prepared graduate who settles in an area where opportunities abound. Graduates with much lower amounts of student debt may struggle with repayment if they choose a low-demand degree, move to an area with a high employment rate, or leave school before graduating.^[1]

2.      Participating in an income-based repayment (IBR) program now can result in tax pain later.

Designed to help debt-burdened grads build a little more flexibility into their monthly budgets, IBRs allow you to adjust your federal student loan payments to take up no more than 15 % of your current monthly income. The payment timeline is extended to 25 years, and interest continues to accrue during that period. At the end of that time, Uncle Sam forgives the remainder of the debt.

Here’s the catch: The forgiven portion of the debt will be taxed as a gift, and those taxes must immediately be paid in full. The tax bill could be substantial. For example, on a forgiven balance of $41,000, taxes could be $10,000 or more depending on your tax bracket. Before enrolling in an IBR, be sure you fully understand the repayment terms and the tax bill that could be waiting for you down the road. ^[2]

3.      Repaying student loans by direct deposit can save you big bucks.

The Department of Education and most other educational lenders offer some type of discount – usually about 0.25 % – on interest for borrowers who sign up for direct deposit payments. Over the life of your loan, that can add up to significant savings. While you’re checking on the availability of direct deposit, it’s a great idea to ask the lender if they offer any other interest rate breaks that could help you pay your way out of debt faster. It never hurts to ask! ^[3]

References

[1] Weismann, Jordan. “These Maps About Student Loans Explode One of the Biggest Myths About Student Loans.” The Atlantic. Web. 15 May 2013. http://www.theatlantic.com/business/archive/2013/05/these-2-maps-about-student-loans-explode-one-of-the-biggest-myths-about-student-loans/275868/

[2] Lieber, Ron. For Student Borrowers, Relief Now May Mean a Big Tax Bill Later.” The New York Times. Web. 14 Dec. 2012. http://www.nytimes.com/2012/12/15/your-money/for-student-borrowers-a-tax-time-bomb.html?pagewanted=all

[3] Feldman, Benjamin. “4 Ways to Pay Off Your Student Loans Faster.” Yahoo! Finance. Web. 13 Feb. 2013. http://finance.yahoo.com/news/4-ways-pay-off-student-110002948.html

About the Author:

Today’s guest article comes from Donna Parshall. She writes articles about frugal living and personal finance for Allied Cash Advance. Allied Cash Advance is a responsible payday loans and cash advance lender.