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...

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...

Are you drowning in your student loan debt? Come July 1st, you may be able to get a little relief. That’s when a new income-based student loan repayment option will go into effect for those of you with federal student loans. Under the plan, monthly payments will be capped at 15% of the amount by which your income exceed the federal poverty line — regardless of how much you own. Currently, the poverty level is $16,245 for an individual. To figure out how much you would pay, take a look at Line 37 on your 1040 Form — that’s your adjusted gross income (AGI). Let’s say your AGI is $30,000. That means your income exceeds the poverty level by $13,755. Under the new repayment program, you would owe 15% of $13,755 — or $171.94/month. The even better news is th...

Remember back in February, when the Finder reported on President Obama’s student loan plan – a complete revamp proposal? He plans to save billions a year by making the federal government the student lender, rather than the current system in which the fed subsidizes private lenders like Sallie Mae. He would then use some of those savings to up the amount of the Pell Grant — and the number of students eligible for this low-income grant. Well, the President’s reform plan got a major nudge on Tuesday, when Congress released its 2010 budget resolution. Both the House and Senate gave tacit approval to the president’s bump in Pell Grant funding, by creating reserve funds that would cover turning the Pell program into an entitlement — like social security. The...

Last week I posted about the controversy over President Obama’s Stimulus Package and whether or not it was really “stimulatory”. I pointed to radio show pundits who were picking on various programs in the bill, including Obama’s plan to increase funding for student aid. Well, if Dave Ramsey, Congressional Republicans and many Americans are critical of upping the level of the Pell Grant by just $500 a year, imagine what they’d say about two grassroots campaigns floating around Facebook these days to cancel out all student loans. That’s right — Robert Applebaum and Kevin Bartoy have both started Facebook groups calling for the federal government to forgive all student debt for college graduates making less than $150,000 a year. Their argument? Th...

We are always on the look out for great financial aid information to share with you. Yesterday I came across a video put together by Duke University’s financial aid director Alison Rabil. Please watch it (5 minutes) as there’s lots of great information from a very knowledgeable financial aid administrator. In simple terms she tells you how to get started with the financial aid process, whether you should bother applying, mistakes students often make, how colleges determine how much financial aid gets awarded, how financial aid packages are often comprised of loans and grants, which loans are the best, where to find lenders, loan repayment, and other related topics. If you find any similar videos that you find useful, please let me know! ...

As the economy tanks and employment skyrockets, the number of former students struggling to pay off their student loans is likely to grow, too.  While failure to repay any debt can have serious consequences, not making payments on your student loan is especially grave.  Here’s a quick primer on what it means to default on student loans — and how to avoid it. What does “being in default” mean? If you are more than 270 days delinquent on your loan repayments (and have not arranged for deferment or forbearance), then you are considered to be in default.  Three out of four people in default dropped out of school.  I guess they didn’t know that even if you never graduated from school, you must still pay back your loans! These babies are with you for life &#...

With the cost of tuition rising and the economy seizing up, it would seem that most students are going to need some form of student loan to pay for college. But according to a Monday report released by the Institute for Higher Education Policy, there are a growing number of students who forgo borrowing — despite needing it and being qualified for aid. According to the report, there are three reasons students may chose not to borrow money, despite need and being qualified: 1) They attend less expensive schools and/or attend very part-time. In 2003-2004, part-time community college students were the least likely to take out student loans. 2) They are older, employed and delay college until they can finance it with their current income or other saved resources. 3) They are a member ...

November 13, 2008 by Mara Strom Treasury Secretary Paulson spoke yesterday morning at a press conference about the status of the $700 billion federal bailout of the banking industry. Paulson said that while the original plan was to focus on the failing mortgage industry, the Treasury Department will now be expanding the scope of Troubled Asset Relief Program (or TARP) to include support for consumer loans such as car loans, credit cards and student loans. What does this mean for you, the beneficiary of student loans for college?  Let’s take a look: Will the Federal Government be giving out more student loans? No, not exactly.  When you take out a loan, the bank that makes that loan then sells it to someone else. That’s called a security. The market for securities on consu...