It's graduation time! Congratulations to those of you who are finishing your degree this month. Take time to celebrate, but don't forget your student loan payments will be here before you know it (wah wah!) .

Luckily your Federal Stafford Loans will likely have a 6 month grace period before your first payment. Have you thought about how you're going to use that time?

If you have unsubsidized Federal Stafford Loans, where all the interest accrued is your responsibility, you could use your grace period to pay off interest you've accrued during school. Otherwise, that interest will be capitalized (added to your principal balance) once your grace period ends.

That means you'd pay interest on interest. Paying even just a portion of your interest off could make sizeable difference in the total amount you pay.

If the government is paying your accrued interest with a subsidized Federal Stafford Loan or if you've already paid interest off yourself (nice work!), here's another idea for your grace period: practice making your payments. This way, you get used to making a payment each month AND you'll have a nice stash of cash once repayment does begin.

One other thing to think about: If you're finishing graduate school and dealing with Federal PLUS Loans for graduate students as well, know that you won't have a grace period on those loans. Repayment begins immediately even if you had your payments deferred while you were in school. However, some lenders will give you the option to align the repayment start dates of your PLUS and Stafford loans through a forbearance.

Posted by Barbara at 10:37 AM |  Contact Barbara |  Permalink  |  Comments (0)
Found in College, Federal loans, Money management, Paying, Post-college, Preparing, Student loans, Wells Fargo Bank

Back in February, I wrote about the possibility of lower student loan interest rates. We're getting closer to the possible rate changes for variable interest rate federal student loans (those made before July 1, 2006). Remember, those can change every July 1.

Are you getting antsy to know if the rates will change? Well, you can get a good idea right now.

Variable rate loans are based on the 91-day Treasury bill . Specifically, they're based on the investment rate of the last 91-day T-bill auction in May. This year that's May 27. Federal Stafford and PLUS loans with variable rates each have a margin that's added on to this base rate. They also have a maximum rate.

Here are the margins and what the rates are right now:

If you're wondering where these rates might be headed, you can check out how the 13 week treasury bills auctions have been going.

To see what the rates have been doing, you can perform a search on the Treasury Department web site . Just set the dates you want and be sure to click the 13-week box (that's 91 days…see, I can be a little mathy!) so you see only those auction results.

And make sure you're watching the investment rate. That's the interest rate to which the margin will be added.

Posted by Barbara at 07:20 AM |  Contact Barbara |  Permalink  |  Comments (0)
Found in Federal loans, Financial education, Paying, Preparing, Student loans, Wells Fargo Bank

After we talked about financing an education in the United States if you aren't a U.S. citizen, we fielded several questions about how U.S. citizens can fund study abroad .

I've always been intrigued with the idea of studying abroad. Several of my friends spent time at a university in Spain. They came back with awesome stories and Spanish speaking skills far superior to my own — yes, I'm still jealous, but I digress.

Some students choose to study abroad for a semester or so through an exchange program  with their home university. Others choose to seek their degree in a different country.

In each of these scenarios, federal funding from the U.S. is usually available. Foreign schools can choose to participate in the Federal Family Education Loan Program (FFELP). Of course, before you borrow, consider options for grants and scholarships that you won't have to pay back after you graduate. There are some notable scholarships  designed to help students study abroad.

Just like when attending a U.S. school, you'll work with your financial aid office to get your funding squared away.

If you do need to borrow for your education, your first step to federal aid is still the FAFSA  (Free Application for Federal Student Aid). But you might have to do a little extra work. Some foreign schools may not be able to receive the Institutional Student Information Record (ISIR)  electronically, so there might be additional steps to the process. Check with the school to see if they need you to mail a paper copy of your Student Aid Report (SAR).

And if federal aid, coupled with scholarships and grants, isn't enough to fund your education, some lenders offer private loans for study at foreign schools. In general, Wells Fargo isn't a lender at colleges and universities abroad. However, there are some exceptions.

If you're looking for more information on funding, NAFSA , an association of international educators offers a great resource page  for students pursuing education abroad. Or don't be shy about talking with your financial aid officer.

Let me know if you have more questions. I'll just be contemplating taking a couple years off to get a graduate degree at Oxford .

Pip, pip, cheerio!

Posted by Barbara at 11:24 AM |  Contact Barbara |  Permalink  |  Comments (2)
Found in College, Federal loans, Paying, Student loans, Studying abroad, Travel, Tuition, Wells Fargo Bank

Just like many U.S. students choose to spend time studying abroad, many international students choose to study in the United States. Here are two great resources for students considering traveling to the U.S. to further their education:

• educationUSA — advising centers from the U.S. Department of State

• eduPASS — a guide to studying in the U.S. including travel and customs

I recently answered an Ask the Expert question about student loan availability for international students. I wanted to share that information with the rest of the Student LownDown readers. Here's the scoop…

International or not, students should always apply for federal aid first. However, most foreign citizens aren't eligible for student aid from the U.S. federal government. There are some cases where non-citizens may be eligible for financial aid. Students should check out this online guide to federal student aid for international students to see if they qualify.

After federal aid, international students could consider private student loans. Many lenders will ask that international students who apply have a cosigner who is a U.S. citizen. Cosigners assume equal liability for the loan, so this is not a responsibility to be taken lightly.

For our international student readers, what has been your experience with American financial aid? How does the process work in your own countries?

Posted by Barbara at 11:00 AM |  Contact Barbara |  Permalink  |  Comments (0)
Found in Federal loans, Financial aid, International Students, Paying, Student loans, Travel, Tuition, Wells Fargo Bank

We've talked before about what to do once you've completed the FAFSA. Have your received your award packages (the next step) from your colleges yet?

If so, I bet many of your schools gave you a chance for some "free money" — that is, money you don't have to repay after you leave school, like grants and scholarships. Or you may have found the chance to earn some funds for school through the Federal Work-Study program .

Out of curiosity, I checked the possibilities  at my alma mater . Lots of options for many different interests! Have you thought about what type of work you may be interested in?

While I myself did not have a work-study position while in college, several of my friends (a lot of English majors) had jobs at USD's Writing Center . They were able to find a work-study position that was applicable to their major. (Our own Ms. Schiller scored a similar job during her collegiate years.)

For those of you who’ve already completed work-study jobs, where did you work?

Posted by Barbara at 10:00 AM |  Contact Barbara |  Permalink  |  Comments (1)
Found in College, Federal loans, Financial aid, Financial education, Grants, Jobs, Looking back, Wells Fargo Bank, Work-study

Check out this latest question we received through our Ask the Expert tool from Lynette, a concerned mother:

My daughter just received an application for a Stafford loan and they told her she would need to find the financial institution number and find her own lender. How do we go about that? She banks with Wells Fargo and would like to do the student loan with you.

A question like Lynette's is becoming more common these days. Many college and university Financial Aid Offices have moved away from recommending specific lenders, so often students and parents need to do the research on their own.

Once you've completed your FAFSA  (Free Application for Federal Student Aid) and decided on a lender, the actual application process can seem daunting — but it doesn't need to be. A good place to start is this step-by-step guide that outlines exactly what you need to do to choose Wells Fargo as your Federal Stafford Loan lender and begin the application process.

Here are the basics:

1. Let your school know that you want Wells Fargo to be your lender. You'll probably be asked to provide a lender code. Wells Fargo's lender code is 807176 (in all states except Utah, where our lender code is 813894).

2. Ask your school's Financial Aid Office if they have a preferred application process (some schools do).

3. Most likely, your school will tell you to apply online for a Wells Fargo loan.

4. If at any point in the process you need help, call our student loan center at 1-800-658-3567.

It's really pretty simple — and we're here for questions along the way!

BTW, whenever I see the Wells Fargo lender code, the classic 80s song "867-5309/Jenny"  by Tommy Tutone immediately pops into my head. Can't you hear it? "Eight-oh-seven-one-seven-siiiiiiix…"

Posted by Staci at 11:47 AM |  Contact Staci |  Permalink  |  Comments (0)
Found in Banking, College, Federal loans, Financial aid, Financial education, Parents, Paying, Student loans, Tuition, Wells Fargo Bank

By now, you've likely heard a little (or a lot) about the state of the economy — including the Federal Reserve decision to drop several key interest rates.

Have you thought about how these changes will affect your student loans?

We know some Student LoanDown readers have — several of you have been asking great questions through comments and Ask the Expert. Well, ask and you shall receive…

Private loan rate changes
Most private loans have variable rates that are generally based on the Prime Rate  (taken from the Money Rates column of The Wall Street Journal). Some lenders base their rates on other rates like the LIBOR  (London Interbank Offered Rate). If you're not sure what your rate is based on check the terms of your loan or call your lender for more details.

These base rates change with the economic conditions. You can see the historic changes of the Prime Rate here . As those rates change so does your student loan interest rate. When the rate change occurs will vary by lender. Some lenders adjust your rates quarterly (every three months ). Others change on a monthly basis. Again, if you're unsure, your lender is just a call away.

Some bloggers  noticed their rate change after the last time the Federal Reserve cut rates. So check your rate! It may have already changed without you knowing!

Federal loan rate changes
Federal loans are a bit different. For those of you with loans made after July 1, 2006, your rate is fixed and won't change. But loans made before that date are generally variable. However, federal loans aren't based on an interest rate index like the Prime Rate or LIBOR. They are based on a Treasury bill  auction and may change each July.

This means that they aren't directly affected by recent interest rate cuts, but in general they tend to follow the trend . Some industry experts are predicting the rates will drop. Check out the quote from Mark Kantrowitz (of finaid.org)  at the end of this article .

For you December graduates currently in a grace period or for those of you set to graduate this May, possible rate changes could play a large part in your decision to consolidate your loans — or at least when you consolidate.

If your reason to consolidate is to lock in a fixed interest rate, then it could behoove you to wait and see if they lower. If you take the risk, however, know that rates aren't guaranteed to change.

Right now variable interest rate Federal Stafford Loans are 6.62% during in-school, grace period, and deferment and 7.22% during repayment. May graduates will be able to see if the rates change while they're in their grace period. But for you December grads, you could miss the 0.60% difference if you let your grace period expire to wait for the possible rate change. Signs point to the rates lowering, but again, it's not guaranteed (just playing Devil's advocate  for you!).

Posted by Barbara at 01:01 PM |  Contact Barbara |  Permalink  |  Comments (12)
Found in Federal loans, Financial aid, Financial education, Paying, Private loans, Student loans, Wells Fargo Bank

Feeling disheartened about the time and effort it takes to complete the FAFSA  (Free Application for Federal Student Aid)? You're not alone.

But fortunately, the good folks at FastWeb!  have developed this short video to explain the process.

(Note: The following links to a video from a non-Wells Fargo website.)

I like this video for three reasons:

1. It's only five minutes long.
2. It's informative.
3. It's funny!

IMHO, it's definitely worth five minutes to take a look — and hey, it may save you some time and sanity in the future!

Posted by Staci at 10:21 AM |  Contact Staci |  Permalink  |  Comments (0)
Found in College, Federal loans, Financial aid, Financial education, Paying, Student loans, Tuition, Wells Fargo Bank

It's January, and you probably know what that means — time to fill out your FAFSA (Free Application for Federal Student Aid) . The FAFSA is the best place to begin if you need financial aid (including student loans) to help pay for college.

Even if you think your parents make too much money to qualify for aid, you should still look into the FAFSA. Not all aid is based on financial need, and many factors go into the formulas for determining eligibility.

We always recommend that you fill out your FAFSA as soon after January 1 as possible. Some state aid is awarded based on your FAFSA application, and those deadlines vary , so it's in your best interest to get your FAFSA submitted as soon as possible. This is a great article  that makes a good case for filling out the FAFSA and lists all the documents you'll need on hand before you get started.

You can get a paper FAFSA from your high school guidance counselor, or you can fill it out online . This article  covers some of the common mistakes people make when filling out the FAFSA that can jeopardize your chances for maximum aid. Check it out to avoid making any costly blunders.

I'm curious — especially for you first-timers — how you feel about filling out the FAFSA. Did you fill it out online, or use the paper form? Was the application too long and complicated, or was completing it no big deal?

Posted by Caroline at 10:20 AM |  Contact Caroline |  Permalink  |  Comments (0)
Found in Back to school, College, Federal loans, Financial aid, Financial education, High school, Paying, Tuition, Wells Fargo Bank

No, I'm not talking about your Facebook  status ("Barbara Raus is writing a blog post"). I'm talking about your school status. Are you attending full-time, half-time, or less than half-time?

Your ability to qualify for certain types of financial aid or even your health insurance can depend on your attendance status. So you always want to be aware of how many credits you are taking.

This is especially important to consider during the add/drop period at your school, when you can choose to drop a class you are no longer interested in without being financially liable for it. This can get tricky. In some situations if you drop a class, it can change your enrollment status.

Say you're a full-time student with 12 credits. If you drop a three-credit class, you're suddenly a half-time student. For some students that might mean they're ineligible to be included on their parent's insurance.

Or if you're taking six credits and drop a class, you're below half-time status and no longer qualify for federal aid !

So watch your status as you pick and choose which classes to take or drop. If you don't, you could be facing some large financial repercussions.

Posted by Barbara at 10:40 AM |  Contact Barbara |  Permalink  |  Comments (3)
Found in College, Federal loans, Financial aid, Financial education, Wells Fargo Bank

I’m one of those people who make a list for everything. By the end of the week, I have a sizable collection of post-it notes in my purse ranging from new websites to check out to funny words or quotes I heard to stuff to buy. I’m also a doodler, a paper fanatic and obsessive about writing instruments. So it makes sense that I make lists, if not for any other reason but to put ink on paper, well, just because.

While I have a talent for making lists, just because, I also am a bit neurotic about maintaining a serious actionable to-do list at work and at home. I read a study somewhere that proved it is possible to get a rush of adrenaline when you cross something off a to-do list. Of course, the day I read this was the day I began adding things to my to-do list I had already done, just for the satisfaction of running my black Sharpie  through the middle of it.

It’s that time of year when I take my cue from the big guy in red  as I make my lists and check them twice before leaving the house to join the holiday crowds. It’s also time for many students to begin making their lists for the upcoming semester. Here are a few topics that may be on yours:

• Register for spring classes
• Look up scholarship deadlines
• Figure out how to apply for a Federal Loan
• Schedule a call with a loan expert
• Return library books
• Download exclusive music

As for my lists – today I ran into the kitchen waving our master holiday shopping list in the air at my husband as if it were a winning lottery ticket.

Holiday shopping? Check.
Adrenaline pumping? Check.
Celebrating good times? Check!

Sending you warm wishes for fun, safe and splendid holidays.

Editor’s note: Rachel and the rest of the Student LoanDown team will be on holiday hiatus until the new year. See you in 2008!

Posted by Rachel at 10:23 AM |  Contact Rachel |  Permalink  |  Comments (0)
Found in Federal loans, Financial aid, Financial education, Preparing, Remember, Student loans, Wells Fargo Bank

As always, just as you’re finishing up finals and easing into your winter break, somebody has to come along and remind you about your upcoming responsibilities: It’s almost time to file your Free Application for Federal Student Aid (FAFSA)!

Yes, applying for financial aid for next year is one thing you really should do before heading back to class for next semester. However, I do have some good news to share with you about Federal Stafford Loans for the 2008-2009 school year:

Lower interest rate: If you’re an undergraduate student and you take out a subsidized Federal Stafford Loan (where the government pays your interest while you’re in school, grace and deferment) for 2008-2009, your interest rate on new loans will be lower—down to a fixed rate of 6.00% beginning July 1, 2008. The interest rate on unsubsidized Federal Stafford Loans (and subsidized Federal Stafford Loans for graduate students) remains fixed at 6.80%.

Lower origination fee: For everyone who takes out a Federal Stafford Loan (either subsidized or unsubsidized) the origination fee will be lowered next year. Beginning July 1, 2008, the origination fee for new Federal Stafford Loans will be 1% (down from 1.5% currently).

If you have any questions while working on your financial aid application for next year, be sure to check in with your school’s financial aid office, or post a question here. We’re happy to help.

Posted by Caroline at 10:30 AM |  Contact Caroline |  Permalink  |  Comments (7)
Found in College, Federal loans, Financial aid, Financial education, Preparing, Wells Fargo Bank

Student LoanDown readers, I’m pleased to share another question and answer series with you from Ask the Expert:

I am starting graduate school in the Srping of 2008 and going full time. My intended graduation date is May, 2009. I applied for financial aid. I am awaiting my award package.

The maximum amount of federal stafford loans (subsidized and unsubsidized) for grad students is about $18,000 per academic year. So my question is, will I get $18,000 starting this spring (2007-2008 school year), and another $18,000 starting in the fall (2008-2009) school year? Or will I get screwed and only get half ($9,000) for the spring, and then like the whole amount for the next school year ($18,000) in the fall???

It is pretty important because I have to take summer classes also, so my average cost per academic year is about $23,000, which is more than the aid I will receive. So depending on the timing of their disbursements, upfront for each academic year, or they split it in half, makes a big difference to the kind of leverage I can have with that money and determine wether I can move out, have some breathing room, etc.

Hmmm, a bit of a quandary. What do you do when the cost of your graduate school education and the amount of financial aid don’t add up? Fortunately for this reader, the math had changed slightly:

Generally, school certified student loans are disbursed in multiple installments throughout the academic year—not just in one lump sum. So you should receive separate disbursements for the spring semester of 2008, the fall semester of 2008, and the spring semester of 2009. Check with your school's financial aid office to be sure. Your school also might have a special financial aid application process for summer classes, so I'd recommend you ask about that now.

The good news is that the maximum annual Federal Stafford Loan limit for graduate students has increased a bit—to $20,500. That will give you some breathing room!

There was also a change to the Federal PLUS Loan program last year that extended eligibility to graduate students. You can apply for this loan after you've applied for your Federal Stafford Loan if you still need additional funding. There's no annual maximum, so you can borrow up to the cost of education (tuition, rent, books, etc.) minus other financial aid you've received. This loan has a fixed interest rate and after the Federal Stafford Loan, it's one of the most affordable loan options available. If this loan isn't included in your award package, ask your financial aid office if it's an option for you.

One last bit of advice: Borrow only what you really need, because you have to pay it back—with interest.

Got a question for us? We’ve probably got an answer (or can find one), so don’t be shy!

Posted by Staci at 11:15 AM |  Contact Staci |  Permalink  |  Comments (2)
Found in Back to school, College, Federal loans, Financial aid, Graduate school, Paying, Post-college, Student loans, Tuition, Wells Fargo Bank

Right now, student loan consolidation may be on the minds of many student loan borrowers. If you graduated in May, your loans are probably coming out of their grace period right about now. Some of you may already have made your first payment.

I received an email question recently about consolidation—specifically, if borrowers would be better off waiting to consolidate their loans—and I wanted to share my response with all the Student LoanDown readers. The short answer is: It depends.

If you’re just entering repayment on your student loans, it’s likely some of the loans are variable-rate federal loans. The rate of these loans is adjusted annually each July 1  based on the 91-day T-bill rate. If you’re a borrower with these loans, it’s possible your rate may go down in July.

Remember, the rate on a consolidation loan is based on the weighted average of your current interest rates rounded up to the nearest one-eighth of a percent. Lower interest rates on variable loans could mean a lower consolidation loan interest rate.

So, should you wait?

There are a number of reasons you may decide to consolidate your loans, and many variables play into whether consolidation is the right choice. It depends on what you’re hoping to accomplish by consolidating:

• If you’re looking to reduce your monthly payment by consolidating, chances are your monthly payments might be more than you can handle. If that’s the case, you would likely benefit more from an immediate ease on your monthly cash flow. Otherwise you’d still have to make those higher payments each month until the July rate change.
• If you want to lock in your rate by consolidating—which is more of a factor for those with a large amount of variable rate loans—it could be beneficial to wait until July. Right now variable interest rate Federal Stafford Loans are at 7.22% during repayment. It is possible that next July variable interest rate loans might be lower, but there is no guarantee. There’s always the chance that the rate might not decrease.

For some borrowers, consolidation may not be the right option at all:

• Depending on your interest rate and loan balance, it might not make sense to consolidate. For example, if you have a large amount of debt at one interest rate and a smaller portion of debt at a higher rate, it might not be the best choice to combine those debts. You could be paying a higher interest rate in the long run on a portion of the balance that originally had a lower rate.
• Another option to consider in lieu of consolidation is an extended repayment plan. This option is generally available if you have more than $30,000 in student debt through the Federal Family Education Loan Program (FFELP) . With extended repayment, your monthly payment would decrease without having to take out a new loan.

So that’s the skinny on waiting to consolidate. Any questions?

Posted by Barbara at 10:02 AM |  Contact Barbara |  Permalink  |  Comments (7)
Found in College, Consolidation, Debt, Federal loans, Paying, Post-college, Student loans, Wells Fargo Bank

Last month we launched our "Ask the Expert" tool — and since then, your questions have been steadily rolling in. At first I was surprised by the number of inquiries we received this way. I thought the Student LoanDown community would use the comments section to ask questions — but I guess you take that section literally and use it for actual comments, not questions!

Nonetheless, I'm glad you're finding "Ask the Expert" useful. It's certainly useful for us bloggers because we learn exactly what kind of information you'd like more of — and then we can share it with the rest of our community.

So here's a question we received from a concerned parent about financial aid timing (certainly appropriate as spring semester is just a few months away):

My daughter is a freshman. We did not take out any loans for the first, fall, semester, but would like to take out one for the spring semester. Is it possible to get a Stafford or Perkins loan for the spring semester, or have we missed this cycle and have to wait for the fall of 2008?

And here's my response:

No, you haven't missed the cycle. (Whew!) If you haven't already completed the FAFSA  (Free Application for Federal Student Aid), that's your first step. The 2007 FAFSA covers the 2007-2008 academic year through June 30, 2008, and will determine your daughter's eligibility for financial aid.

I'd suggest that you check with the financial aid office at your daughter's school. Low-interest Federal Perkins Loans  are based on financial need and are awarded on a first-come, first-served basis, so those may not be available. But low-interest Federal Stafford Loans have both need-based and non-need-based components (subsidized and unsubsidized loans), and as long as your daughter is attending an eligible school at least half-time, this should still be an option for her.

One last thing: As a parent, if you're interested in borrowing to help your daughter pay for school, check out the Federal PLUS Loan for parents. It's also not based on financial need but does require a minimal credit check.

Please keep your questions coming — they're interesting, they're relevant, and ultimately, they make this a better blog!

Posted by Staci at 09:39 AM |  Contact Staci |  Permalink  |  Comments (2)
Found in Back to school, College, Federal loans, Financial aid, Financial education, Looking back, Paying, Student loans, Tuition, Wells Fargo Bank

Eventually Charlie's* transcripts were released and he obtained his degree — summa cum laude  and Phi Beta Kappa  — from the University of Minnesota. I told you he was smart! But with the degree and all its honors came a wide range of emotions, including severe financial fear.

Once the debt had been paid, how did you feel?

Honestly? I felt like telling the messed up and unsympathetic bureaucracy of that school to take a flying leap.

But, most importantly, I finally felt free and unfettered. I felt like nothing else, no matter how bad, would ever get me down. I felt grateful to my family and my friends for being constant sources of emotional support during the dark years of debt. Most of all, I am grateful to my father, who worked up to four jobs at one time to keep our family financially afloat and to make headway in the debt owed.

I will say this, and perhaps it is not entirely appropriate, but money is an emotional issue for me, and this is an emotional response to the issue. I said I am grateful to my father for all he did for me and for my family during some very dark years financially. But because my dad worked so much and was so burdened with the stress and constant worry about this debt, he became seriously ill. In the end, he was diagnosed with cancer and passed away when he was only 61 years old. For me, this debt will always be linked to the emotions of my father's untimely death.

What advice would you have for others who may be in a similar situation?

Start talking about money BEFORE you even THINK of applying to school. And honestly talk about what your family can afford and what sort of debt you can support. Students should do a lot of research, speak with the financial aid offices, and apply for every loan and grant available. And remember that there would be NO schools if it were not for the student. Remind the colleges of this and do not allow yourself to be brushed off by the bureaucracies.

How has this experience changed how you approach finances?

As I have said, money is linked to emotions for me. It is not the simple clear-cut idea of dollars and cents. It's linked to my father's death and to my own struggles to support myself and finance my continuing education. I find myself very cautious when it comes to finances and loathe to repeat the experiences of the past. However, I am much less emotional and terrified of money and debt than I once was.

How did the situation end up impacting your credit?

Miraculously, the debt owed did not reflect negatively on my credit. When I began requesting my credit reports  from the three major credit agencies, I combed through them diligently to see if there was anything that would be a black mark against me.

That huge sum of money owed, just sitting there and dragging me down, that's what truly affected me mentally and emotionally. The anxiety and stress of trying to come up with a plan on how to pay the debt was arduous, but, eventually, a payment plan was agreed upon with the school and the whole amount was paid off last year.

Even though your credit didn't take a negative hit, what made you decide to work on improving it?

My partner and I have a goal of purchasing a house within the next year or two. As such, we wanted to make sure there were no skeletons in our financial closets and that we had everything in order before we began the process of applying for a mortgage. Knowledge IS power and it's important to understand that money SHOULD work for YOU, not the other way around.

I review my credit reports every six months to check for any discrepancies and to see how my credit rating is improving, pay my bills ahead of time, and pay well over the minimum amount due. I've instituted an aggressive savings plan, including the purchase of CDs.

How are you feeling about your financial situation these days?

I make a lot of jokes about Suze Orman  and how I hate the fact that I cannot be as capricious as I would like in my spending habits because of her financial guidelines.

But I do have her "tough love" tactics for financial health to thank for being in a much better place than I have ever been. I do not feel as weighed down and helpless as I once did. I feel very positive and confident that my goals for continued improved credit and the purchase of a home are well within my reach.

I'll have you know that I'm very proud of my dear friend Charlie. Throughout this whole financial ordeal (and there were some seriously trying times), he never let it get the best of him. When his debt was paid last year, we celebrated — celebrated his dignity, his tenacity, and ultimately, his freedom!

If Charlie's story has given you something to think about, I hope you'll share your thoughts.

Oh, and in case I didn't make it clear before, I'm thrilled about the prospect of getting his canned goods and embroidered dishtowels for Christmas!

* Names have been changed to protect the financially challenged.

Posted by Staci at 11:23 AM |  Contact Staci |  Permalink  |  Comments (0)
Found in Budgeting, College selection, Debt, Federal loans, Financial aid, Financial education, Looking back, Money management, Parents, Student loans, Tuition, Wells Fargo Bank

After Charlie* embarked on his Ivy League adventure, he thrived. But unbeknownst to him, money was a problem.

Charlie, did you know that you had outstanding tuition bills?

For the year and a half I was at school, I had no idea there were any problems with paying for my tuition. If my parents received any sort of statements or letters, I was never privy to them.

I do not blame my folks for keeping this information from me. I think their first instincts were to protect me and to try to figure out on their own how they were going to come up with this huge sum of money to see their firstborn through his college education. And, the way I was raised, this is what parents do. They find a way, any way, to make their kid’s dreams come true, no matter what the sacrifices or hardships. And we were not raised to discuss the “sordid topic of coin.” So this crisis (and believe me, it was a crisis) just simmered and boiled over. And my entire family and I suffered for it.

How did you find out that you had to leave school?

I was home for the Christmas break. I had packed up all of my bags and even had some boxes addressed to my campus address that I needed to be mailed. I remember walking into our kitchen and telling my parents we had to go to the post office that day so the stuff would be at school when I arrived. They didn’t respond; they just sat there, very quiet. And I knew. I knew something was terribly wrong.

Mom and Dad broke the horrible news to me that I would not be going back to college and that Mom and I would be leaving the next day to collect all of my belongings. Of course, I was thunderstruck, devastated, shocked. I did not know how any of this could have happened. HOW could my carefully planned life have gone so terribly wrong? I remember a lot of tears. I was in a stupor for the entire drive and spoke very little to my mother.

When I got to school, I had to tell all my friends, as well as all of the freshmen I counseled (I was a Resident Counselor for my sophomore year) that I had to leave and I did not know if I would ever be coming back. I had less than 12 hours to pack up my entire college experience, stuff it into a tiny car and leave it all behind me. Once I got back home is when the anger and the fury at the school and what they had done to me and to my family begin to really take hold.

Because of the unpaid tuition bill, it took several years before your school would release your transcripts — meaning that you couldn’t continue your education elsewhere. How did that situation change your education plans?

I had no choice but to immediately go to work. With no college degree, I did not have a lot of options, but I did find a job at a local book retailer. I worked for several years in my home state and then transferred jobs to a neighboring state. Like any twentysomething , I needed to find my independence.

I always planned to go back to college. It was simply a question of when. And the WHEN was determined by the release of transcripts from the school. My education plans never changed — they were only postponed.

When all was said and done, how much did you owe?

We owed over $30,000, which included late fees and fines.

How long did it take to pay off the balance?

15 years.

Tomorrow, the final chapter: lessons learned (and emotional baggage packed).

* Names have been changed to protect the financially challenged.

Posted by Staci at 11:35 AM |  Contact Staci |  Permalink  |  Comments (2)
Found in Budgeting, College selection, Debt, Federal loans, Financial aid, Financial education, Looking back, Money management, Parents, Paying, Student loans, Tuition, Wells Fargo Bank

It's October, which means that high school seniors all around the country have begun their college searches in earnest. They're taking entrance exams, filling out applications, visiting campuses, and setting their hearts on particular schools.

But are they thinking about how they're going to pay for it?

Are you?

A few posts ago I introduced my best friend Charlie* and his financial challenges. This week, I'm going to tell you how he got there (and hopefully, how you can avoid some of the pitfalls he experienced).

It all started in our senior year of high school, right around this time of year. Charlie was (and still is) my brilliant friend, and I always knew he was destined for something great. So it was no surprise to me that he was admitted to some very prestigious colleges.

Charlie, how did you find yourself in the Ivy League? 

Like many other prospective college students, the summer before my senior year in high school my family and I took a tour of the colleges and universities in which I had an interest. We took the incredibly long drive from South Dakota to the East Coast to look at seven campuses, both state and Ivy League schools. Of course, the academics and the prestige of attending an Ivy League school were very enticing.

In the end, I got into all the schools except for one. The spring of my senior year, I was invited to visit two of them for a weekend, to get a better feel for campus life, meet other students, etc. (I clearly recall receiving letters from both schools, telling me what an asset I would be to the student body, how impressed they were with my academics and extra-curricular activities, how I was very unique and had a lot of potential. Well, for an 18-year-old kid from a square Midwestern state, that's wonderful praise.)

I had a tough choice, but I knew that my father in particular would be over the moon if I decided to attend an Ivy League school. I remember walking into one of the large halls off the campus green and approaching my dad, saying, "How would you feel about having a child with an Ivy League degree?" The man literally leaped up and down, clapped his hands, and gave a whoop. He was so, so very proud. And that was very, very important to me.

Why was it important for you to attend this type of school?

Honestly? Because it had cache. Because it had status. Because I wanted to be one of the very few from my graduating high school class to attend an Ivy League school.

Most importantly, though, because I had EARNED it. I had worked so, so hard for four years to get excellent grades and to participate in a myriad of extra-curricular activities. My entire focus and direction while in high school was to be an academic all-star so that an Ivy League school would be able to look at my application and think, "Wow! We cannot pass this kid up! Let him in!"

Was the cost of education an issue for you? Your parents?

The topic of money was never, ever brought into the equation in my final decision. My parents never discussed it with me, and, as an 18-year old I assumed what most children do: that Mom and Dad would provide. How was I to think differently? We lived in a beautiful house with a pool in an affluent upper-middle class suburb. Why wouldn't I be able to attend whatever school I wanted, no matter what the cost?

I will also say that I do not recall the high school counselor with whom I spoke about colleges providing me with information about financial aid. Also, when I visited the campus and attended various programs to learn more about the school, I do not remember getting a lot of information about how to pay for college.

After I did get in and my family came to visit me in the fall of 1989 for Parents' Weekend, my folks did meet with financial aid. I think it was at that point, unfortunately, too late in the game, that they realized that an Ivy League education would be very dear and they just did not have the funds to see me through four years.

Of course, at that time, all federal loans and grants had been meted out for the year, so there really was nothing left for me. And, because my parents made a decent living, they did not see me as a hardship case. My parents were turned away without any help or any solid and feasible suggestions for paying for my education. In fact, I later learned the loan officer told my parents, "If we had known your son would need such significant financial aid, we never would have admitted him."

Next up: What happened to Charlie when the money ran out.

* Names have been changed to protect the financially challenged.

Posted by Staci at 10:00 AM |  Contact Staci |  Permalink  |  Comments (0)
Found in Budgeting, College selection, Debt, Federal loans, Financial aid, Financial education, Looking back, Money management, Parents, Preparing, Student loans, Tuition, Wells Fargo Bank

An experience this past weekend got me thinking about unplanned expenses. I had my first homeowner emergency – the water and sewer drain starting backing up...into my basement. Yay, homeownership!  

Nearly $200 on the credit card later, I can once again shower, flush my toilets, do my dishes, and wash my clothes. Luckily, I created my emergency fund for situations like this. So I'm just a transfer and payment away from getting that cost off my credit card.

My situation got me thinking about student loan borrowers. College is full of unexpected expenses – higher book costs than anticipated, bigger utility bills, etc. Caroline suggested earlier this year to plan for the unplanned expenses. But if you didn't, what other options do you have?

If you've already used federal funding for tuition, but need more to cover the cost of your education (which includes your books, housing, etc.), one option to consider is a private loan. Depending on your situation, you may choose a certified or non-certified loan.

What's the difference? Check out this comparison with some of the big differences:

Here are two examples of Wells Fargo's certified and non-certified options for undergraduate students.

How have you dealt with unexpected expenses in college? Was your savings enough to cover them, or did you turn to a private loan?

Posted by Barbara at 10:07 AM |  Contact Barbara |  Permalink  |  Comments (2)
Found in Banking, Budgeting, Federal loans, Financial education, Money management, Paying, Preparing, Private loans, Wells Fargo Bank

A while back I told a reader that I’d faced my own Stafford Loan conundrum in college. If you’ve been reading the Student LoanDown for a while, you know I didn’t take on any student loan debt to attend college, thanks to a full-ride scholarship.

But after a summer internship in Fargo, N.D., I thought about accepting a Federal Stafford Loan. Living on my own for a summer — making a small but adequate salary — I incurred some credit card debt to covering some necessities like groceries and other living expenses.

Because of my credit card’s high interest rate (about 17%), I wanted to throw all of the money I was going to make working that upcoming semester toward my debt. But that’d have me cutting it close on living expenses, since that’s what the money usually covered.

So when my college’s financial aid award letter arrived a little more than halfway through the summer, I took a second look at the funds I was offered. Alongside my two scholarships was an Unsubsidized Federal Stafford Loan — for somewhere around $2,000.

Even though I had scholarships coming my way, my dad had me fill out the FAFSA (Free Application for Federal Student Aid) every year just in case my situation changed. And with all the benefits of federal loans, it was a smart plan.

But when I looked at that loan on my award letter, I didn’t know if I should take it. In my mind, because I had my tuition covered and a little left over to live on, it seemed wrong to take the money.

I opted not to take the loan. Instead, I faced a financially tight year, and ended up with more debt after having to use my credit card in a pinch — well, several pinches. Definitely not the smartest decision, considering the Stafford Loan rate would have been 4.70% while I was in school and during a six-month grace period after graduating!

For those of you wondering what you can use Federal Stafford Loan money to pay for, here are the details from the Promissory Note. You can use a Federal Stafford Loan to pay for:

• Tuition
• Room
• Board
• Institutional fees
• Books
• Supplies
• Equipment
• Dependent child care
• Transportation
• Commuting expenses
• Rental or purchase of a personal computer
• Origination fee and federal default fee
• Other documented, authorized costs

So, bottom line: if the school awards it to you based on cost of attendance, expected family contribution, other financial aid, etc., and you use it for an authorized expense, you’re good to go.

Wish I’d looked into this two years ago! :)

Posted by Barbara at 10:42 AM |  Contact Barbara |  Permalink  |  Comments (0)
Found in Budgeting, Credit cards, Debt, Federal loans, Financial aid, Grants, Money management, Paying, Student loans,