February 2009 Archives

Barbara

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One of the questions we Student LoanDown bloggers get asked frequently (through comments and our Ask the Expert tool) is, "Can I lower my student loan interest rate?"

Some folks are looking to lower their monthly payment because they're not able to afford it — others are just looking to decrease the total interest paid to their lender. Here's the information I usually pass on to those readers.

When student loan borrowers sign their promissory note  agreeing to pay back the loan, they also agree to the interest rate detailed in the contract. For some loans this will be fixed and for others it will be variable (a margin that is added to a base rate). For federal student loans made after July 1, 2006, the interest rate is fixed. Most private student loans have variable interest rates.

Your promissory note locks in the terms on your loan (including the interest rate or rate margin). You can't "refinance" a student loan the way you can with other consumer credit products, but there are options to possibly lower your current monthly payment, reduce your interest rate, or reduce the amount you pay over the life of the loan.

Quick tangent: For those of you still in school or just beginning to take out student loans, be proactive. Understand what you're borrowing at what rate, so you don't find yourself unable to make payments later. End tangent.

Now, let's talk about the options.

Consolidate: By consolidating your student loans, you may end up reducing your current monthly payment because you are likely extending your repayment period. However, that means you would end up paying more over the life of the loan if you continue paying just the required amount each month. But if you're looking for a little payment relief now and are willing to pay more (or make higher payments later to avoid accruing additional interest), consolidation could be the answer. Your best bet for federal student loan consolidation is through the Department of Education's Direct Loan Program. 

An added benefit of private student loan consolidation is a possible interest rate change. If your credit situation has improved since you took out your loan (or if you bring on a cosigner), you may qualify for a better interest rate than you previously had.

Pay off the debt: Some borrowers could consider using a different consumer loan (personal, home equity, etc., depending on assets) to pay off their student loan. This option has a couple big things to consider, though. You would lose several benefits of student loans like deferment and forbearance options, as well as the potential tax deduction.

Pay more: If what you're looking to do is accrue less interest, then the best solution is to pay more money each month toward your principal balance. Even just a little bit each month could add up to big savings over the life of your loan.

Get the debt forgiven: There are some programs that will forgive a certain amount of a student's debt. For example, there is a federal loan forgiveness option available to students working in public service. 

Use borrower benefits: Ask you lender if they offer any benefits that could reduce your interest rate. For example, some lenders offer a discount if you make your payment automatically.

What other questions do you have about your student loans?

Caroline

As you might have noticed by now, I listen to a lot of National Public Radio.  And I recently heard yet another really interesting story  for college students.

Check out the link above for details — apparently lots of college students are paying for health insurance through their college or university, even if they are already covered under their parents' private health insurance.

The costs are often wrapped into the overall university bill, and aren't always easy to spot. The parent in the story found out health insurance through her son's college was costing over $1,000 per semester, and she didn't even realize she was paying for it.

This isn't true of all colleges. I quickly glanced at the Web site for the university my stepdaughter attends, and it appears that health insurance can be purchased through the college, but it is not automatically billed. It also appears that they will file to private insurance any claims not covered by the discounted Student Health Services.

Good news for me. But it's definitely something worth looking into for you and your parents, if you're not sure of your school's policy.

Barbara

As my father told me after my last home emergency, "Houses can sometimes be a money pit." Cue next home issue.

After Christmas, I decided that the wallpaper and bright green paint adorning my bathroom walls were meant to be left in 2008. It was a simple cosmetic fix. Well, it was until I got to the area around my tub and found moldy, wet drywall beneath the wallpaper. Awesome. New drywall and shower, coming up! Emergency savings, going down!

But through this tragedy I learned a valuable lesson: If you are able, do it yourself.

Yes, I still spent a pretty penny for professional drywallers and plumbers to ensure the work was done correctly (those are not DIY skills I possess). But by putting in a little sweat equity  when it came to demolition, I saved hundreds of dollars. I can tear down a defunct shower surround and rip out moldy drywall with the best of 'em!

The DIY mentality not only applies to home repairs, it also can come in handy during your college years (pre- and post-college, too!). Ask yourself how many times you pay someone else to do something you could've done yourself. Or how often do you pay for something new when you could've repaired the old item?

Here are some examples of what I mean:

• You may not be the best cook in the world, but does that mean you should eat out all the time? A little do-it-yourself cooking  could save you a bunch of money.
• What about clothing? Wouldn't it be easier to fix a ripped seam or hem in your pants rather than shelling out moolah for a new pair? Better to spend a few dollars for a needle and thread. 
• Applying for financial aid? Instead of paying someone to file your FAFSA, DIY! The same goes for taxes — go online and file for free.

Does the DIY mentality work for you? Tell us what you've done yourself (or would like to do) to save money.

Kathy

I’ll admit, I’ve got budgeting on the brain. Maybe it’s because it’s relatively early in the New Year, and I have the chance to start fresh with a clean slate. Maybe it’s because my student loans have recently gone into repayment. Maybe it’s because I have an extreme Type A personality  and I really can’t help myself.

Whatever the cause, the budget bug has bit me big time!

My group of friends is pretty much comprised of current and recent graduate students, and we are all-too-conscious of the need to save money where we can. So a few of us have recently adopted a challenging and budget-friendly New Year’s Resolution: find fun activities for the group to enjoy without spending more than $10 per person.

Let me tell you, living in the San Francisco Bay Area, that’s not an easy endeavor. We’ve pretty much eliminated every sit-down restaurant, museum  and high profile tourist activity  out there.

This is where some creative thinking comes in, and the fun begins! For example, did you know that many museums offer days where admission is free or the price greatly reduced? Or what about that hidden gold mine, the student ID? Many places of business offer great discounts for students, which may put previously out-of-reach ideas back into compliance with the resolution. The possibilities are endless!

I’m excited about the ideas we’ve come up with, but I’d love to get your input! How can you keep to a budget and still have a good time?

Caroline

If you're a high school senior, all the realities of college are probably getting more real by the day. Specifically, the reality of how much college costs.  Starting now, you've got just a few short months to pull together the financing for your first year.

That doesn't mean it's time to panic. It's time to get to a Financial Aid Night, if you haven't already attended one.

What's a Financial Aid Night? It's an evening dedicated to providing information and answering your questions about getting financial aid for college. Typically your school will host it with help from a bank or other lending institution.

It's a great time to go with your parents (yes, be sure to bring them) and get a good understanding of the financial aid process. You also learn more about grants and scholarships that are available. The knowledge you'll gain will help you move forward confidently to get money for college.

How does it work? There will probably be a presentation about the financial aid process and the opportunity to pick up brochures and information about loans and scholarships. You might also have a chance to visit with a banker to learn more.

If you haven't seen notices for a Financial Aid Night at your school, check in with your guidance counselor about when one might be scheduled. If you're really in the dark about financial aid, it's important that you attend sooner than later — deadlines rule when it comes to getting money for college.

If you've already attended a Financial Aid Night, let us know how it went. Did you find it useful?

Editor's note: Over the next few months, The Student LoanDown will be running a series of posts focused especially on high school seniors. We'll be attempting to cover lots of topics of special interest to this group as they count down to graduation and get ready to head off to college.

Karen

My Wells Fargo® Credit Card doesn't look like any other credit card in the world!

Want to know why? I used the newest Wells Fargo feature called the Wells Fargo Card Design Studio^SM service to put a picture of my daughter on my credit card. Now, every time I take out my card to use it, it's an excuse to show the world my personalized card and brag about my daughter a little bit. I liked it so much I added a picture to my Wells Fargo Check Card as well.

If you haven't checked it out, you should. Why shouldn't your Wells Fargo card be as unique as you? You can show your school spirit by adding a photo of you and your friends decked out for the big game. Or use the feature to remind yourself of something you miss from back home.

It's easy to upload a photo of you, your pet or your favorite sport — pretty much anything that interests you, but doesn't go against image guidelines. There's also an image library you can choose from if you don't have a personal image handy.

Best of all, it's a free service!

If you already have a Wells Fargo Credit Card or Check Card, sign on to Wells Fargo Online® Banking, click on the Account Services tab and select the "Access Card Design Studio" link to customize your card. If you don't already have a card, you can explore your options at wellsfargo.com. Or if you're just curious about the feature, view the demo  to see how it works.

So, what would you use to personalize your card?

Staci

Unlike Rachel, I didn't have an internship in college — or even after college, for that matter. My school didn't require it, and because I planned to go to graduate school and study literature, I'm pretty sure I thought college was enough of an internship for that. But I do have some experience with internships, because I had the privilege of supervising interns at my first job.

I was an entry-level staff assistant for then-Senator Tom Daschle  in Washington, D.C. (and yes, I'm still in mourning that he won't be Secretary of Health and Human Services). No one was lower on the totem pole than me, except the interns (and maybe the pages ), so I relished the opportunity to help direct their work.

Based on my own knowledge of working with interns, here are five tips for making the most of your internship:

1. Soak it all in. Most of the interns in my Senate office were still in college, spending a semester in our nation's capitol getting work experience and college credit. But even if you aren't interning in a glamorous location, it's still your chance to see how things work in the real world. Eventually, you're going to need to know the essentials: how phone and computer systems operate, what is (and isn't) appropriate work attire, and how to deal with office politics. Now's you're opportunity to learn.
2. Have realistic expectations. Yes, you're going to be answering phones, opening mail, and running errands. No, you're not going to be making policy decisions, speaking to the press, and meeting with the White House.  Nonetheless, the work is important and needs to get done. Have a positive attitude about what you ARE accomplishing — it takes far less energy than focusing on what you don't get to do.
3. Teach as much as you learn. Since you're a student (or perhaps a recent grad), you most likely have been exposed to new research or practices that could be useful to your internship provider. Plus, you probably have some technology skills to share. Offer these up — when you're seen as a resource, you might have a better chance of getting hired on once your internship is over.
4. Take advantage of any "intern perks." All of the interns in my office had the opportunity to shadow the Senator for a day, usually including time on the Senate floor and lunch in the exclusive Senate dining room.  Not even the permanent staffers got to do that! Ask your intern supervisor if a similar program exists where you are, perhaps with the CEO. If it doesn't exist, suggest it.
5. Make a connection. The experience you're gaining is important, but the relationships you're developing are even more so. Seek out a mentor — it doesn't have to be your intern supervisor. Find someone with whom you have common interests or work styles, and ask to collaborate on a project. Down the road, he or she could provide a reference letter, be a contact for future job prospects, or even end up as a lifelong friend.

What success stories do you have from your own internship experiences? Share with us here!

Rachel

Internships. A good one can be like the holy grail for college students.

It would be great if we could all be like Lauren Conrad and land one at Teen Vogue straight out of high school. But in reality, a lot of students wind up with internships that feel like they're one step up from a temp. Think Ryan from The Office. And before you wear the humbling title of intern, you first have to go through the painstaking process of seeking one out.

I remember touring Goodby, Silverstein & Partners (my version of Teen Vogue) in college. They're the advertising agency that created the Got Milk? advertising campaign. When asked how one could score an internship working for them, the recruiter replied with something to the effect of, "If you're smart enough to know about us, we'll give you an internship." Oh, and in the same breath she explained that their internships are unpaid. Right.

I still don't know how exactly an unpaid internship is manageable when you are working your way through college. And because I was never able to figure that out, it was goodbye, Goodby.

There's some truth to the old sayings:

"It's not what you know, it's who you know."
"Luck is what happens when preparation meets opportunity."
"Go out on a limb. That's where the fruit is."

At my college, an internship was required to graduate. I completely stressed out over finding an internship that was a) in my related field of study (a caveat to the requirement) and b) paid. Then, one night at the grocery store, I bumped into one of my college teachers, who also happened to be a city councilman. By the next week, I was a Public Information Office Intern.

You may be thinking, well la te da, Rachel. The thing is, once you start meeting people, your exposure to opportunities increase. Talk to your professors, your guidance counselor, your friends and their parents. Work the six degrees of separation to your advantage. Go to a local rotary or chamber of commerce meeting. Attend a networking luncheon in your related field, like the American Marketing Association. Research other groups in your area like a young professional's network.

Put yourself out there!

Before you know it, you'll be jumping up and down in the produce section of the grocery store thanking your lucky stars.

Caroline

Recently a co-worker received an email from a prospective intern — a college student. And let's just say, he was less than impressed. Capital letters where they shouldn't be, missing punctuation marks, you get the idea.

For any student seeking an internship or job, I can't emphasize enough how much the details matter. Grammar , spelling and punctuation mistakes are almost always noticed.

You may think nothing of typos — after all, anyone can fumble at the keyboard, right? But you have to look at it from the employer's perspective.  Your future employer does not know you at all. So your mistakes are doing a lot of talking for you — and they're saying you don't pay attention to details.

In today's job market, employers  can afford to reject applicants on the basis of sloppiness alone. So make sure your correspondence stands out by being well-written and mistake-free.

When composing an email, run spell check before you hit "send." But don't rely exclusively on it — it's not going to catch every mistake. Read it over carefully once or twice before sending it. You want to put your best foot forward any time you communicate with a potential employer. Mistake-free writing is a great place to start.

What do you think? Are you careful about correspondence you send to potential employers?

Staci

It's February 2 — Groundhog Day. 

According to weather lore, on this day, if the proverbial groundhog  emerges from its burrow and sees its shadow, six more weeks of winter are in store. But if it's cloudy and the groundhog's shadow isn't visible, an early spring is in sight.

I'm hoping for an early spring.

Since spring might be right around the corner, we're going to spend this week talking about a part of your college experience that usually needs to be completed before graduation: internships.  Internships are your chance to do a little "shadowing" of your own. You can gain more knowledge of your desired profession, learn some real-world skills to include on your resume, make connections for future job prospects, and (fingers crossed) get paid a little, too.

We hope our advice will make your internship experience less of a different sort of Groundhog Day  — one repeated over and over again!