I have never hid my opinion from our readers that, if given a choice, federal student loans are far superior to private student loans. Federal student loans have lower interest rates, more favorable terms (such as income-based loan repayment), don’t require a co-signer, and freeze your repayments and interest while you’re in school. All these factors, coupled with the instability of the private loan market starting last fall, make federal student loans a much better option than private student loans for students. Congress concurs, which is why a House committee recently took up a bill to more closely regulate private student loans within its overhaul of banking regulations. If approved, the Consumer Financial Protection Agency Act of 2009 would create a new centralized fed...

Did you know that soldiers who are serving in active duty are charged interest on their student loans? Going to graduate school will free your student loan interest accrual, but serving in Iraq? No. A group of 15 senators is introducing a new bill to change this, providing immediate student loan debt relief to active-duty soldiers and members of the National Guard. According to a blog post from Senator Arlen Specter (R-PA), the bill would prohibit interest from accruing on direct student loans, regardless of the date of origination, for all service members on active duty for up to 60 months. This would save the average service member between $1,183 and $1,479 over the course of a 12- to 15-month activation period. Between this and the delays with tuition benefits from the new GI Bill, I am...

The House of Representatives approved a sweeping overhaul of the federal government’s student lending practices last Thursday. The Student Aid and Fiscal Responsibility Act of 2009, now being debated by the Senate, will cease subsidies to private banks providing federal student loans. Instead, the federal government will directly make loans to student, saving some $40 billion over 10 years. The Act will then redirect those savings to increase funding for the Pell Grant, expanding the number of eligible students and upping the maximum award to $5,550 per year. Additional changes in the bill include: Expanding the Perkins Loan Program for low-income students Allocating $10 billion to Obama’s community college initiative, which aims to produce 5 million more 2-year ...

The U.S. Education Department recently released numbers showing that the total amount of money borrowed by students in the 2008-2009 grew by 25%, to $75.1 billion, over the previous year. The number has been rising for many years, but this bump is the largest on record. The deputy undersecretary of the Education Department, Robert Shireman, has said that this increase was “definitely above expectations” but was likely caused by the nation’s dire economic crisis. According to the National Postsecondary Student Aid Study, two out of three college students borrow money to pay for college — and their debt load is growing significantly. In 2008-2009, the average debt load was $23,186; in 1997 the average amount was $13,172. With a growing debt load and the highest unem...

We have been conditioned to think that student loans are inevitable. A necessary evil for today’s college student. But yesterday’s New York Times article on student loan debt has an optimistic message: One out of three students earn their BA degree with no student debt. That’s right — one-third of all undergrads will get through their degree without owing a penny in student loans, according to a new survey conducted by the College Board. So what’s that we keep hearing about how all students are drowning in student loan debt? According to one of the College Board’s researchers, Sandy Baum: People think students are drowning in debt, and there is a small proportion of students that borrow an exorbitant amount, but most students graduate with a manageable d...

President Obama’s plan to federalize student loans and increase funding for the Pell Grant cleared its first legislative hurdle today when the House Education Committee approved the plan. Known as the Student Aid and Fiscal Responsibility Act of 2009, the President’s plan would expand the number of students eligible for Pell Grants. Currently 40 percent of American college students receive Pell Grant assistance. In addition, the bill would tie the dollar amount of the Pell Grant to the rate of inflation, allowing for a maximum increase from $5,550 next year to $6,900 by 2019. In order to pay for the increase in Pell Grant funding, the bill would eliminate subsidies for federal student loans by private lenders such as Sallie Mae, replacing them with direct loans from the feder...

If you are already attending college or are about to start in the fall, you no doubt realize just how expensive getting a higher education really is. Even if you choose a more frugal option such as attending your local community college and living at home with mom and dad, there are all sorts of little expenses that really pile up. The average cost of text books is $1,000 per year, for example. And college fees aren’t cheap either. One of the best ways to ensure that you graduate college without having to charge your way through is to apply for as many scholarships as possible. Whether you need an extra $2,000 or $20,000, the more scholarships you apply for, the better your chances of winning enough to cover your bills. Not sure where to find out about scholarships you might be qua...

A number of important changes are looming for federal student aid, which may save you some serious cash. Here’s a quick look at the most significant developments: Interest rates on subsidized Stafford loans are dropping — This year, they will go from a 6% to 5.6% (fixed). Under the College Cost Reduction and Access Act of ‘07, the rate will continue to drop until 2011-2012, when it will reach an all-time low of 3.4%. Unfortunately, the lower rate only applies to loans taken out — or consolidated — in that academic year. Remember, with a subsidized loan, the federal government pays your interest while you are in school. Income-based loan repayment — I won’t bother rehashing the details, since I’ve covered them extensively in earlier posts. ...

TFIF, all you scholarship seekers! What a lightening fast week this has been. What are you doing to stay busy this summer? Work? Internship? Summer school? Whatever is filling up your schedule, I hope you will make some time to apply for scholarships as well. In fact, why not set a goal for yourself: 100 days of summer, 100 scholarship applications. You won’t get all of them. You won’t even get half of them. But even if you win jut 5 percent of the scholarships you apply for, that could translate into tens of thousands of dollars to apply toward your tuition bill next fall. As you know, every week, I make it easier for you to apply for free money for college by posting about three scholarships with upcoming deadlines. I only search out those scholarships that have wide, natio...

It looks like the last two weeks have unintentionally turned in to the “Student Loan Hour” here at the Financial Aid Finder. Earlier this week, I covered the New York Times piece on student loan debt. Five experts sounded off on the question, “How much student loan debt is too much?” (Did you answer that question for our student debt poll on Tuesday? Please do that now if you haven’t already!) You might also want to check out the Times’ follow-up to their student debt piece, appropriately titled Student Debt, Fool’s Gold? There are hundreds of reader comments that painfully, at times, illustrate the naivety with which so many students take out tens of thousands of dollars in student loans. If nothing else, it’s an eye opening read. *** I ha...