FEDERAL STUDENT LOANS

A community college in Virginia is setting a new lending standard by requiring students to create repayment plans in order to qualify for Federal student loans. While this goes above and beyond requirements issued by the Education Department, the school thinks this approach could work to reduce loan debt for students.

Tidewater Community College Rewrites Lending Rules

Repaying student loans was difficult for the 25 percent of students who defaulted within three years of beginning repayment. According to the Department of Education, the one thing these students had in common is that they had all attended for-profit colleges.

For-Profit Students Twice as Likely to Default on Loans

New data released on Friday by the Department of Education revealed that not only have one quarter of all borrowers with federal student loans at for-profit colleges defaulted, but these students will be twice as likely to default as their counterparts at non-profit institutions.

There are quite a few financial deadlines to remember over the course of 12 months and it’s probable you’ve missed one or two in the past. Are you familiar with the sense of panic that accompanies waking up on April 15th and realizing you haven’t started your taxes? Did you forget to max out your retirement account contributions last year? If you need some assistance remembering all your important 2011 budget and planning dates, here’s a quarterly calendar to keep you on track.

Q1 2011 (January-March)

Former students are always looking for ways to ease the pressure of paying back student loans, especially when there are multiple loans to repay. For many, loan consolidation has become a great way to reduce loan payments while eliminating the need to keep up with multiple lenders and interest rates.

You may have heard of a number of consolidation options, including the Direct Consolidation Loan Program. Since it offers a lot of advantages for borrowers looking to consolidate, let’s take a look at what the program is and how you could benefit from it.

For-profit college student loans received in 2008 are expected to see a 46-percent default rate, which in turn is prompting the federal government to consider implementing a “gainful employment” rule. This rule would ensure for-profit colleges only accept students who are actually expected to earn enough salary after graduation to repay funds before receiving distributions for federal student loans.

Nearly Half of Students to Default

With all the news surrounding the Wall Street Reform Bill, you may have totally missed another set of extremely important financial changes recently approved by the president. Back in March, President Barack Obama signed off on the Health Care and Education Reconciliation Act of 2010, which calls for several modifications to the current student loan system that are taking effect this month. Here’s a look at what this student loan reform is all about and how some of these changes could affect you:

Starting July 1, several major changes took effect as a result of student loan reform, which was signed into law on March 30. The first is that federal student loans will now officially be made available only through the government via college and university financial aid offices.

A second change is that interest rates on subsidized Stafford loans will drop to 4.5 percent from 5.6 percent, while Parent PLUS and Grad PLUS loans dropped from 8.5 percent to 7.9 percent. Finally, for those who want to consolidate student loans originated before July 1, 2006, the consolidation rate is dropping to 2.47 percent (CBS Money Watch).

Starting on July 1, the federal government will be lowering the interest rates for many parent and student loans since it will no longer need to pay banks for making federally-backed education loans. This will make them cheaper to repay in the long run. In addition, they will be easier to obtain since they will be handled through one source, the government.

With colleges sending all federal loan applications straight to the government, they will be processed directly, reducing the steps involved and speeding up the process. (U.S. News and World Report)

Financial aid is an important part of the college process. Since a higher education is not free, and, in some cases, not cheap, many students rely on assistance to pay for schooling.

Many people voice their concern about how much tuition has increased over the years while aid has decreased, but financial aid has been needed and distributed for centuries now.

On March 30, President Barack Obama approved of  student loan reform that would change the way loans are distributed to students from this point forward. Because so many changes have come from this new reform, which was signed into law with the Health Care and Reconciliation Act, it’s good for students to take a look inside to see what to expect as it takes effect.

Government Is Now Top Dog