Going to college is a noble choice. Navigating the financial aspect of that decision can be quite daunting. CheapScholar.org provides a number of resources to help our readers traverse the challenges associated with paying for college.

I have always been a big fan of infographics – especially those that are informative and esthetically pleasing to the eyes. The following infographic is chocked full of great information related to the financial aid process. Some of the topics covered are: FAFSA, Federal Loans, Comparing Financial Aid Packages, The Costs of College, Grants, Scholarships, and Work Study. Enjoy!

Brought to you by SNHU.EDU

The following is a guest article provided by George Gallagher.

I am no stranger to the student loan industry. I work with cuStudentLoans and have personally digested the thousands of articles, answer websites, and online community discussions concerning student loans.

There is literally an endless amount of information on the Internet trying its best to explain student loans and give advice for any situation you might find yourself in. This overabundance of information has led many debt-holding people to become actually more confused. And quite fairly, as student loans, government regulations, and bank contracts are extremely complicated.

Binksty

However, a new start-up is attempting to fix this problem, Binksty.com. Like the incredibly popular personal finance helper Mint.com, Binksty aims to consolidate your student loan data into an easy to read format and offer you custom-tailored help along the way.

I recently talked to Binksty CEO Brendon McQueen and he graciously gave me a peek into what Binksty has to offer.

The Good

Once you get your Beta invite the first thing you get to do is type in your Social Security number and Federal Pin to help Binksty find your loans for you. If you have additional loans not within the government database, you can use the simple add loan tool to ensure you have all of your loans loaded into the system.

From there Binskty currently offers you two main objectives, to view your loans in various ways and to seek help in what you can do in your situation.

The viewing portion of the dashboard gives you sort options like type, balance, apr, and payment as well as a detailed calendar and alerts system to make sure you are on top of payments. The data is aggregated using Yodlee, which is the same company that powers many of Mint.com’s tools.

Although at first you may think that you are simply viewing data you are already aware of, the different display options really gives you a perspective on what your student loan situation really looks like. For example, the APR filter shows you a bar graph of different interest rates you are paying, and for many a huge disparity might indicate consolidation is a good idea for your future.

The strongest aspect of Binksty is the advice functions. From talking to hundreds of students monthly I find that their questions aren’t always that complicated, but the available resources to answer them on the Internet are often overly complicated. Binksty has persistent advice for you while you browse through your profile as well as a very robust FAQ and advice section. I found very easy to understand solutions to every student loan problem I could think of.

What can I do if I am unemployed? What is forbearance? What can I expect when talking to my actual lender?

All answered with simple, clear, and expert advice.

Binksty also does a great job of looking at your loan profile and suggesting various options that you could benefit from. They don’t give you too many options that indicates the advice is too general, but they give you enough options allowing you to weed out the ones that you’re probably not up for in your current financial situation.

Cons

For a website that has been described as Mint.com for student loans, Binksty does lack a number of features. Granted, this company is still in Beta and Mint.com has been the established leader in online finance management for years, so I imagine we can expect more features in the future. In fact, the CEO Brendan did tell me their are very close to launching the next stage of development, so we’ll have to wait and see what new goodies will be in store.

There is also a definite slant towards loan consolidation. Which, working in the industry I know that consolidation sometimes gets a bad rap even though it can be the perfect solution for a lot of people. And Binksty has to find some avenues for revenue as they plan to keep the service free to users.

Conclusion

With new features on the horizon and the service being completely free I suggest you give it a try. And there really is nothing like it on the Internet today. So if you are looking for a little guidance and loan management, you should definitely give it a spin.

The service is still in Beta, so you’ll be getting in on the ground floor, and the staff is very accessible and can entertain your suggestions for improving the service while they are still expanding its capabilities.

When talking with Binksty it turns out they were fans of CheapScholar and made this handy little link to get you to the front of the line of the Beta Invites: www.binksty.com/cheapscholar

George Gallagher works for cuStudentLoans.org. When not helping students with their student loan questions he likes to write about personal finance and education for a handful of online publications.

I receive a number of questions related to the financial aspect of the college experience. I respond to many of the emails directly but every now and again I like to share some of the questions on CheapScholar.org so that we can all learn from each other and maybe provide a little bit of a support group for our fellow readers.

The following story was brought to me by a young man named Adam. As you read through his situation, you may think that his scenario is unique, a little scary, and maybe even quite hard to stomach. However, I assure you that Adam is not alone and there are certainly others that are experiencing similar situations – just not maybe quite as severe as Adam.

Read Adam’s story and feel free to leave any advice, comments, or questions below. Tomorrow, I am going to introduce a new resource for Adam that I think may help his situation.

Dear CheapScholar,

This situation is going to sound very “cartoonish”, but I assure you it is no joke and a fact that I’ve just recently been slapped in the face with… I myself was brought up to highly value the dollar by my family so I still don’t quite understand people who abuse both money or “bad” debt (credit cards, auto loans, student loans & etc). By 27 years old I have saved very well on my own, pay my credit cards off in full every month, have an excellent credit score, hold a steady well paying job/career, have purchased and own multiple pieces of real estate, have a healthy 401K, have an active brokerage account I trade in frequently and other misc investments. Generally I am ALWAYS trying to learn how to invest and manage myself better financially; I have a spreadsheet for everything. I feel I need to give this brief background so that one can understand better, within a few sentences or so, the personal value that I place on managing one’s money.

The slap in the face came a few weeks ago when I made my girlfriend of 2+ years now, whom I love dearly and have planned to marry, start getting her college/student loans tallied up because she had just gotten a notice that one of them will be maturing soon and payment(s) due. I always knew she had student loans, and she always knew with 7 yrs of “private school” it’d probably be a larger but manageable number. Long story short, but it wasn’t long after going through her loans that my heart stopped and I went white as a ghost… but reality quickly snapped me out of the nightmare that  we just recreated on paper, and I realized how extraordinarily dreadful her and now our situation truly was. Her student loans are in excess of $340,000… That’s almost $50k/yr on average, an unfathomable amount…

The worst part about all this is that no she has not been training to become a Doctor or Lawyer. She got her undergrad, master’s and is now just finishing up an Advanced Education Specialist Degree, all in Psychology, and all of which will put her into a public school system paying her next to nothing. She is truly a sweetheart, is always wanting to learn/challenge herself educationally and has never (since I’ve known her) been careless spending with credit cards or the like. Her only real desire career-wise is to help everyday and work with mentally disabled K-12 students, she truly is a saint. In saying that, now her loans are plentiful, come from every conceivable lender, are comprised of every loan type and amount & most of which are unfortunately private rather than federal. I have plenty of moral and personal issues with this whole situation, but none of which I am willing to render an opinion on personally until I can help her figure out and start to climb out of this egregiously deep financial hole she has somehow gotten herself into. The story stems even deeper back to incredibly naive and irresponsible parents that created this loan nightmare for her; they “withdrew” or took out every loan disbursement amount and paid her tuition/expenses for her through the 7 years… My girlfriend, now only 25 years old, truly believed that a portion of her college had been being paid for by them and other family means, and that they certainly would have told her years ago if it was ever becoming a problem as terrible as this.

What boggles my mind, and I guess where my question(s) come in are how can the federal and private student loan entities possibly lend to one individual an amount of money this massive??? How has she racked up student loans of nearly $50k/yr??? To me these loan entities are borderline criminal, and seem completely vulturous in nature. Honestly this whole situation seems very similar to the Real Estate lending entities that have recently destroyed soo many lives/families/homes thru lending anyone and everyone home mortgages well outside of their financial wherewithal’s. I can only research soo much and have no idea which way to go from here. I don’t even know which way is up in all of this.

Any insight, direction or “miracle” would be wholly appreciated at this point… Please help!!! SOS!

Thanks,
Adam

With the economy making a slow trudge back from the brink, many are considering going back to school. Student loans are the only viable option for many potential college students, but that means incurring extra long-term debt at the worst possible time. A lot of language about reform has been batted around at all levels of government this past year. What has changed, what are politicians promising, and what policies are on the way?

Pay as You Earn

President Barack Obama announced in October 2011 that he would be making some major changes to the federal student loan program. Introducing the “Pay As You Earn” proposal, he promised smaller monthly payments for over 1.6 million students.

It won’t take effect until 2014, but you will then be able to ensure your student loan payments are no more than 10% of your income. If you make payments for 20 years, your balance may then be forgiven. The current Income-Based Repayment Plan (IBR) only allows your payments to be reduced to 15% of your income, with balance forgiveness after 25 years. Visit this link to find out if you are eligible.

President Obama announced recently that he intends to spur this to 2012 for students who are already struggling with payments. If you are employed in public services, such as nursing or teaching, you may get balance forgiveness in as soon as 10 years.

Bear in mind that none of this affects students who got loans for school from private lenders.

Loan Consolidation

Because of multiple payments for different loans, there has historically been a high default rate, as juggling multiple loans gets tricky. Beginning January 2012, 6 million more students were able to consolidate all their loans so that interest rates are more affordable.

It is not advised to do a loan consolidation with a credit card. If you can pay off a short term loan, check out financial tips from Plain Green Loans. Taking advantage of the consolidation earns you a 0.5% reduction of your interest rate.

Better Informed

As part of these reforms, the Consumer Financial Protection Bureau and the Department of Education have partnered up to offer the “Know Before You Owe” project. This is a form that endeavors to help potential students better understand what type of aid they qualify for, how much they may receive, and how to compare the different financial aid and work study options offered by various colleges. They believe that a lot of students sign for loans each year or each quarter without really understanding the repercussions for default or even how much they may end up owing, much less what other options exist.

If you are interested in seeing what a form looks like and helping the organizations with the project by providing feedback, please visit: http://www.consumerfinance.gov/students/knowbeforeyouowe/

Interest

One thing that isn’t very clear in any of President Obama’s speeches is that subsidized loans are slowly disappearing. The government (beginning July 1st, 2012) will no longer subsidize the interest for graduate student loans and interest will also start accruing for undergraduate subsidized loans during the 6 month grace period after graduation.

In addition, it is probably important to mention that the interest rate on subsidized student loans is doubling from 3.4% to 6.8% this coming academic year.

Startup Encouragement

The Small Business Administration (SBA) hopes to help young entrepreneurs by offering the Student Startup Plan. While the current administration says it wants to support and grow new startups, the SBA is backing it up by promoting the IBR as part of their startup planning for recent graduates. The ideology is that student loan payments should not stand in the way of anyone starting a business.

Graduate and Professional Students

Meanwhile, the Budget Control Act (BCA) became law in August 2011. This law makes it so that graduate and professional students can no longer get Stafford Loans. While the total annual loan amount allowed ($20,500) has not changed, the cap has traditionally been only for unsubsidized loans. Now that there are not subsidized loans, this means you may borrow the same amount, but now you pay much more in interest.

Other things that changed with the BCA include disallowing the Department of Education from offering repayment incentives such as interest reductions or rebates to encourage on-time payments, though they are still allowed to offer rate reductions if you are a Direct Loan borrower who has opted to have your payments automatically withdrawn from your bank account.

Private Borrowers

If you were a private borrower, Tennessee Rep. Steve Cohen and other Democrat Congress members are working for some relief for you, too. Since 2005, thanks to the Bankruptcy Reform Bill, you could not declare your privately held student loans in a bankruptcy. He is looking to reverse that, likening it to credit card debt. He is facing major opposition from his Republican counterparts, however.

Demand for Bigger Reform

Tuition will continue to climb as long as enrollment is up – and it is. The Occupy Wall Street movement has spawned Occupy Student Debt – asking for 0% interest on student loans, total and immediate debt forgiveness for prior students, and a future of free public college. While the solvency of these demands is debatable, politicians are listening. They have to. These future students are current voters.

Today’s guest article was provided by Christina Jones who is a Blogger Outreach Specialist with Blue Glass Interactive

Sources:

[1] http://www.whitehouse.gov/the-press-office/2011/10/25/we-cant-wait-obama-administration-lower-student-loan-payments-millions-b

[2] http://www.finaid.org/loans/forgiveness.phtml

[3] http://www.secureloanconsolidation.com/blog/changes-in-2012-for-holders-of-student-loan-debt/

[4] http://www.whitehouse.gov/economy/business/startup-america

[5] http://www.sba.gov/startupamerica/student-startup-plan

[6] http://www.loyno.edu/financialaid/federal-student-loan-changes-2012-2013

[7] http://www.cbsnews.com/8301-503544_162-20126172-503544/who-will-benefit-from-obamas-student-loan-plan/

[8] http://www.occupystudentdebtcampaign.org/our-principles/

The ebb and flow of lending institutions participating in the private education loan market has been somewhat difficult to track over the years. Back in 2008 we witnessed a large number of organizations dropping out of the industry. However, over the course of the past few years, a good number of lenders have gotten back into the student loan market.

This week (yesterday), U.S. Bank sent a notice stating that as of March 29th, 2012 (tomorrow), they will no longer be accepting loan applications. You can find the notification letter below.

In addition, a source from the financial aid industry recently shared with CheapScholar.org that all of the education loan reps from Chase Bank were let go. This is probably a good indication that Chase Bank will be following suit with U.S. Bank’s exodus from the student loan market.

What does all this mean for students and families? Hopefully these large lenders discontinuing education loans is not a sign of what’s to come with the student loan industry as a whole. While loans are not the preferred method to pay for college, they do provide students accessibility to an education that they may not be able to afford otherwise. If you are a student that has utilized an education loan from U.S. Bank or Chase Bank in the past and need to start the search for another lender, please feel free to utilize CheapScholar’s Private Loan Comparison Tool or visit our Education Loan Resource Center to view all your different options and get helpful tips.

Letter From U.S. Bank To Participating Institutions:

Over the years, U.S. Bank has deeply appreciated the student lending relationship we have shared with your school and its students and families.

We regret to inform you that U.S. Bank is exiting the private student lending business and will no longer accept applications for student loans after March 29, 2012. Please know that this announcement applies to all schools and is not specific to your institution.

Any applications received by U.S. Bank up to and including March 29, 2012 will be processed normally. Loans received by that date that are approved and certified by your institution will be disbursed according to your normal disbursement schedules.

As a school partner, we are asking you to do the following:

U.S. Bank continues to be a proud partner with colleges and universities across the country. Through our on-campus branch networks, our program sponsorships and our lending and financing, we look forward to continuing to serve schools, students and families across the country with their banking needs.

If you have additional questions, please contact us at 800-242-1200, select option 2 and then 2 on your phone.

We apologize for any inconvenience this may cause, and we thank you for the business you have done with U.S. Bank.

U.S. Bank Student Lending

The following is a guest article provided by J. Randy Green, Director of Financial Aid at Wittenberg University

This morning, a local reporter called me with questions about student indebtedness.  She raised some interesting points on the recent changes made by the Department of Education to ease the repayment burden on federal loans.

For example, the new Income Based Repayment guidelines should not only reduce the financial stress imposed by education debt, but also allow graduates greater flexibility in selecting a job that best fits their skills and preferences.  Someone who will make a great teacher will now be more able to afford accepting that teaching position, rather than being forced to work in a different field for the higher pay it may provide.

But the reporter’s focus was on the level of indebtedness and how that has changed in recent years; this echoes many other stories I have read lately.   Having this focus risks ignoring two important facets of borrowing – the rate of defaults and the impact of borrowing on daily activity – and one looming challenge.

If a student borrows money to attend college, and after completing college is able to repay that money, then the system is working.  The student may choose to borrow more to attend a higher cost institution, or less to attend a lower cost one, but the decision is left to the student and the equation does not change.  A school should prepare a student to repay the loan taken to attend.  One measure of this relationship is the default rate, which is the percentage of students who default within a given period and which the Department tracks for every institution.

Independent of this, the amount a student borrows may impact other aspects of life – the ability to rent an apartment, to be offered a job at a bank, the rate of a car loan – but the most closely felt impact is on day-to-day bills and purchases.  A student shouldering a large monthly loan payment (large relative to monthly income) will be less likely to be able to afford the activity that drives the economy.

An item that has not been discussed recently is the fact that the interest rate charged to financially needy students is set to double on July 1, 2012.  Currently, subsidized Federal Direct Student Loans are made at 3.4%.  Unless Congress or the Department of Education takes action, these loans will carry a rate of 6.8% for 2012-2013 and beyond.  Regardless of debt level, this change will increase the repayment burden students already face, raising the risk of delinquency, default, and diverting borrower income from the economy and into the government’s coffers.

Given the tremendous level of attention given to the cost of education and the indebtedness of graduates, it seems appropriate for some discussion to occur about this pending increase in the cost of that borrowing.