Another Hint of Student Loan Troubles?

There's growing evidence that some student lenders were as overly enthusiastic as some mortgage lenders in the recent past. A revealing blog post by an employee of a company that makes private educational loans documents how lenders' dependence on Internet applications and computerized processing might have made it too easy for students to borrow too much.

Christopher Penn of the Student Loan Network says he dissuaded a potential commission-paying client from taking out $50,000 in student loans because Penn realized what he believes predictive software programs couldn't—that the student was probably paying too much for courses that were unlikely to increase his earning power enough to cover the $500-a-month loan payments.

Similar concerns about the industry were voiced last month by federal fraud investigators in Seattle. They charged that a ring of women who allegedly borrowed nearly three-quarters of a million dollars in fraudulent student loans took advantage of student lenders who were overeager and overly reliant on technology.

The credit crunch has forced many lenders to pull back and refuse loans to students they believe to be bad risks. It will take years to see if lenders have modified their software and lending rules too much, enough, or too little.

Legislators Called to Take Action

The press release went on to quote Rep. Rob Kreibich, R-WI, co-chair of NCSL’s commission, “We call state legislators to action. They have the power to demand that we do better, to demand that we think of higher education not as the balance wheel of budgets, but as an investment in our future.”

Rep. Denise Merrill, D-CT, co-chair of NCSL’s commission, was also quoted in the press release as saying, “It is a national imperative that states reframe the message that higher education is vital to the success of our citizens, to the economic vitality of our states, and to the competitiveness of the country. States must take the initiative to reform higher education now, to avoid unnecessary federal intrusion. Each state’s systems, traditions, strengths and weaknesses are unique. States need the flexibility to set their own goals. Higher ed has always been a state responsibility and it must remain that way.”

The commission identified four specific ways legislators have contributed to problems in higher education:

They have not set clear goals and expectations for higher education.

They have not made higher education a legislative priority.

They have not exerted strong leadership on the issue.

They have funded higher education reactively, rather than strategically.

Current Education System Needs Strengthening

The report, titled Transforming Higher Education: National Imperative—State Responsibility, said that state legislators must, “be at the center of a nationwide movement to identify the strengths and weaknesses of the current system, determine a public agenda for higher education, set clear goals, and hold institutions accountable.” The commission found that, on a nationwide basis, for every 100 ninth graders who enter high school, only 18 finish college within six years.

The Blue Ribbon Commission on Higher Education is comprised of a bipartisan panel of six Democrats and six Republicans. The National Conference of State Legislatures assigned this group with the task of examining trends and issues in higher education over an 18-month period. They were to focus on the roles and responsibilities of state legislators.

NCSL Asks State Legislators to Step Up When it Comes to Education Reform

In a press release published Nov. 27, 2006, by the National Conference of State Legislatures, the final report of its Blue Ribbon Commission on Higher Education found that “more Americans must graduate from college if the United States is going to prosper in a global society.” Additionally, they see it as the responsibility of state legislators to make this goal a reality.

According to the report, “There is a higher education crisis in this country. The American system is no longer the best in the world. Other countries are outperforming us. At the same time, tuition and fees are skyrocketing and financial aid and loan programs aren’t keeping up. As a result, a post-secondary education is not accessible to many Americans. Students are falling through the cracks.”

USA Funds Introduces Loan Counseling for Graduate, Professional Students

USA Funds(R), the nation's leading education loan guarantor, announces the introduction of USA Funds Grad Guide(SM), its new online loan counseling program for graduate and professional students. USA Funds Grad Guide is designed to address the unique financial issues faced by students pursuing graduate and professional degree programs. The program meets both Stafford and Grad PLUS loan counseling requirements.

USA Funds Grad Guide helps better prepare graduate and professional students to make wise decisions regarding their current education loan debt by providing them with the option to review their total student loan indebtedness to date. The tool displays aggregated student loan information from the Meteor network, allows the student to include information about additional loans, and summarizes Stafford, PLUS and consolidation loan information in one comprehensive view.

USA Funds Grad Guide entrance counseling is the newest component of USA Funds Loan Counselor(R), USA Funds' suite of counseling services to help student loan borrowers understand their rights and responsibilities and take control of their education debt. USA Funds Grad Guide provides the following features to help students navigate their options, plan a budget and understand the details of credit, including student loans:

    -- A video adviser to explain big idea concepts for each topic.
    -- Repayment and consolidation calculators.
    -- An interactive budget calculator.
    -- Information about credit scores.
    -- Details of issues to consider before taking out student loans.

"As part of our commitment to graduate and professional education, we have tailored this counseling program for students pursuing advanced degrees," said Denise B. Feser, USA Funds senior vice president, customer relations. "USA Funds Grad Guide delivers information relevant to these students who typically incur larger student loan debts to complete their postgraduate studies."

USA Funds invites campus financial aid professionals to learn more about USA Funds Grad Guide and the other USA Funds Loan Counselor components by visiting the USA Funds booth during the national conference of the National Association of Student Financial Aid Administrators in Orlando, Fla., July 6-9.

Headquartered in Indianapolis, USA Funds is a nonprofit corporation that works to enhance postsecondary education preparedness, access and success by providing and supporting financial and other valued services. During the year ending Sept. 30, 2007, USA Funds guaranteed education loans totaling $25.8 billion for students and parents throughout the nation. USA Funds serves as the designated guarantor of federal education loans in eight states: Arizona, Hawaii and the Pacific Islands, Indiana, Kansas, Maryland, Mississippi, Nevada and Wyoming. USA Funds also invests $16.3 million annually in scholarships and outreach programs that advance its mission of support to higher education. For more information about USA Funds, visit www.usafunds.org.

Student loans come under spotlight

HA NOI — Deputy Prime Minister Nguyen Thien Nhan will establish inspection groups to examine the implementation of student loan policies in various cities and provinces with extraordinarily high and low levels of outstanding loans, according to the Government Office.

Members of the inspection groups will include representatives of the Ministry of Education and Training (MoET), the Ministry of Labour, Invalids and Social Affairs (MoLISA) and Viet Nam Social Policy Bank.

The inspections are scheduled to be completed by the end of the month.

A one-year summary of the policies is expected before August 20 in order to improve the implementation of said policies by the time the new academic year begins, according to a Government Office notice issued on Monday.

The Deputy Prime Minister also required the Finance Ministry to provide over VND4.05 trillion (US$241 million) to the Social Policy Bank for student loans for the first semester of the 2007-08 academic year, by the end of November.

To increase the effectiveness of student loans, Nhan asked city and provincial people’s committees to provide accurate numbers of poor students eligible for student loans.

Meanwhile MoET and MoLISA are to make early predictions of the total number of admitted students at the entrance exams to help the Social Policy Bank work out next year’s demand for student loans.

The bank reported that by the end of May, almost 750,000 students have received soft loans worth a total of VND5.3 trillion ($312 million) since the policy took effect last October.

The number accounted for more than a quarter of the total 3.1 million students of higher education institutions and vocational schools nation-wide.

Students received VND800,000 ($50) a month at a monthly interest rate of 0.5 per cent.

However, MoET is considering raising the monthly supplement to VND1 million ($60) due to inflation.

Meanwhile the ministry is drafting a proposal to set a new tuition schedule for higher education institutes, as many poor students cannot afford the current rates.

Wholesale Educational

Every parent wants his or her child to learn fast and grow up to become efficient and smart. Educational toys offer the best ways to help a child learn and have fun simultaneously. Parents who purchase educational toys for their children can save a lot of money by buying them at wholesale prices.

A wholesaler buys toys in large quantities from the manufacturers or importers. He sells smaller quantities to retailers, who in turn sell them to customers. Typically, wholesale rates are offered only to retailers who purchase the toys in bulk. However, there are times when a wholesaler sells these toys directly to the end user, namely the parent or teacher. There are a number of educational toys available at wholesale prices throughout the year. They are generally old stock that the wholesaler would like to dispose of quickly to make room for new models. Consequently, the wholesaler is inclined to sell them at cheaper rates.

The sale of educational toys at wholesale prices also happens during summer breaks or during festivals. When parents or teachers buy educational toys in large quantities, cheaper rates are offered to them.

There are many companies offering educational toys on the Internet at wholesale rates. The most popular educational toys now offered at wholesale rates on the Internet are kid's laptops. These laptops are a good buy, because they make little kids computer savvy at a young age.

There are also other electronic learning toys for kids of all ages that provide a complete learning experience. In the past, many parents were hesitant to buy educational toys for their kids because the prices were really exorbitant. The availability at wholesale prices has proved to be an incentive for parents to buy educational toys.

Educational Toys provides detailed information on Educational Toys, Children's Educational Toys, Educational Games, Educational Baby Toys and more. Educational Toys is affiliated with Reading Glasses.

Universal Technical launches $10 million student loan program

. has developed a $10 million loan program to help students bridge the tuition gap in today's tight credit market.

Students who have exhausted traditional Title IV financial aid options or who are unable to qualify for credit-based loan programs are eligible, the Phoenix-based university (NYSE:UTI) said in an announcement Wednesday.

Loans will be originated by 1st Century Bank and serviced by ACS Education Services Inc. (NYSE:ACS). UTI will back the loans, assuring repayment.

"Traditional federal student aid and alternative student loans are still the first and best sources of funding for our students, but this program will greatly assist those who would otherwise be unable to pursue their education goals because of an inability to obtain reasonable loans through other sources," said Kimberly McWaters, UTI president and CEO. "Helping eligible students bridge the tuition gap on a limited basis is a good use of UTI's strong balance sheet and further enhances our capacity utilization."

UTI has additional programs to help students with tuition and expenses, including the recently created UTI Foundation. The nonprofit awarded nearly $400,000 in grants and scholarships so far this year and anticipates awarding nearly $1 million by the end of the year to students pursuing opportunities at UTI.

The UTI Foundation Student Emergency Fund raised more than $130,000 from employee fundraising events and contributions from the company, its employees and alumni to aid UTI students this year already enrolled.

Types of US Department of Education Loans

There are three main possibilities when considering US Department of Education loans: grants, which are monetary gifts, student loans, and work-study programs where the money for education is earned. Only in the case of student loans does the money need to be repaid. Most federal grants are based solely on financial need, and some are given on a first-come-first-served basis, so it is important to apply as early as possible.

Work-Study programs are not technically US Department of Education loans, but they are a federally mandated way to receive financial aid to attend college. A number of work-study hours are specified as part of the financial aid package. These usually involve jobs working with non-profit companies or on campus, and pay a modest salary. The money earned can be used for college tuition.

True US Department of Education loans include the Perkins Loan, the Stafford Loan, and the PLUS loan for parents. Perkins loans have a particularly low interest rate and can be paid back over a time period of as long as 10 years. There are a limited number of Perkins Loans available to each school every year. The Stafford Loan has a higher interest rate than the Perkins loan, and doesn’t necessarily offer a grace period after graduation. However, there are more Stafford loans offered by the US Department of Education every year. Stafford loans are even available to students who don’t have a pressing financial need. Stafford loans may be paid off over a period of as long as thirty years.

PLUS loans are the final type of US Department of Education loans. They are offered to parents of undergraduates, as opposed to the students themselves. Payments on Federal PLUS loans start two months after the money is received, and can be paid off over a ten-year term.

About The Author

Mark Kessler's website offers a comprehensive free resource of college financial aid. Don't even think about paying for school until you've read this about Consolidating Student Loans, as well as Alternative Student Loans, ACS, Bad Credit, and US Department Of Education Student Loans, including a variety student loan articles.

Cheaper, Bigger, and Cooler Student Loans

Finally, students and parents can celebrate a little good news: It's getting a little easier and cheaper to borrow for higher education.

The government has responded to the credit crunch by allowing all undergraduates to borrow more money from one of the cheapest federal loan programs, cutting interest rates for needy students, and easing repayment for strapped parents. In addition, while turmoil in the financial markets has driven some banks out of the student loan business, it has attracted upstart companies that are now offering students help making alternative arrangements, such as borrowing from rich relatives. So with a little shopping around, students and parents should be able to find lenders offering at least a small discount on modest-size educational loans.

More money: New federal rules taking effect July l increase the amount that almost every full-time undergraduate will be able to borrow from the federal Stafford program to at least $5,500. The newly expanded federal Stafford loan program will allow upperclassmen to borrow up to $7,500. Students older than 24 or who are independent from their parents can borrow at least $6,000 more than that.

The Stafford loan will cost students no more than 6.8 percent a year in interest and 2 percentage points in fees, for a total annual rate of 7.25 percent. And despite the credit crunch, some lenders are still waiving the fees and offering other small discounts.

Lower-cost loans: In addition, Congress cut the interest rate Stafford loans will charge students who qualify as needy to just 6 percent for the academic year that starts in the fall of 2008. It also has ordered further small cuts to the "subsidized" Staffords (which go only to needy students) in future years. Those reductions will cut the total cost of repaying the loan over 10 years by hundreds of dollars.

Best of all, nearly every student who fills out a Free Application for Federal Student Aid—even those who filled out a FAFSA just a few weeks before school starts and whose parents have high or low incomes—can receive a regular federal Stafford loan.

Once students have graduated, those who go into low-paid public service jobs may eventually get some of their education loans forgiven.

Payment flexibility: Parents are also getting a break under the new rules. Parents who take out a new federal PLUS loan—which can cover their child's full cost of attendance after considering other financial aid—will be able to defer payments until six months after the student leaves school. Also, parents facing financial difficulties because of the housing crunch or medical bills may now be able to get a PLUS loan, despite a poor credit record.

Although they offer some special goodies, such as free insurance, PLUS loans aren't cheap. Lenders can charge a maximum fixed rate of 8.5 percent a year plus 4 percentage points in fees, giving a true maximum annual percentage rate of 9.4 percent. (If a parent gets rejected for a PLUS loan because of credit problems, the student can borrow as much as $7,000 a year more through the Stafford program.) Education loan payments are tax deductible to parents with low and middle incomes.

That's why many parents with good credit, solid income, and home equity find that private loans are often better deals. Parents who can persuade a bank to let them tap their home equity despite today's housing and credit crunches may find banks willing to offer rates that start out as low as 4 percent in the summer of 2008 (though, of course, those rates and payments will very likely rise over time). Homeowners not subject to the alternative minimum tax may be able to deduct the home equity payments from their taxes.

Parents who don't want to touch their home equity may be able to find banks willing to make unsecured loans at similarly attractive rates. Discover Financial Services, for example, says it is offering borrowers with credit ratings in the top 20 percent private education loans at half a percentage point below the prime rate—which means it's charging just 4.5 percent in the summer of 2008. Of course, the payments on those loans will rise when prime rises, as it probably will.

Many parents also prefer private loans because they hope to eventually transfer the debt to the child. But advisers warn that although the student's name may be first on the loan, it can be hard to remove a parent's responsibility for the debt if the student ever defaults.

New and different: Several upstart companies have emerged to help students and parents looking for even cheaper and easier ways to borrow. Students who find a friend or relative willing to lend them college money can pay a small fee to Virgin Money or Greennote to do the paperwork to turn informal lending agreements into business deals that are billed and treated like bank loans. Fynanz is attempting to line up investors willing to lend to students they don't know. It typically demands students be backed by a cosigner.