This week I'm in our nation's capital—Washington, D.C.—attending the National Association of Financial Aid Administrators  conference.

It's unbearably hot and humid. The weather is triggering memories of the two Julys I lived here—when I'd walk the four blocks to my Capitol office in shorts and a T-shirt and change into hosiery and a suit after I arrived, drenched in sweat; when there was a brownout in my northeastern D.C. neighborhood and I sweltered through a sleepless, 100-degree night without air conditioning; when my friends and I would drive to Rehoboth Beach  in the middle of a weekend afternoon just to get some relief from the heat.

When I was much, much younger.

On Sunday afternoon I attended a seminar on the legislative and regulatory changes happening in the student loan industry. Here at the conference, it's a topic as hot as it is outside.

I've mentioned before that lately there's been a lot of media attention given to inappropriate relationships between some financial aid directors and some student loan lenders. But the operative word is some. The majority of those who work in financial aid aren't in it for money or glory. In their profession, there isn't much of either to be had. Rather, financial aid counselors, directors and administrators are doing this work for one reason: to help students and families pay for college educations. And it's complicated, stressful work.

So I'd ask this: Instead of believing all the negative stuff you see in the media about financial aid professionals, give 'em the benefit of the doubt. When you enter their offices, don't automatically be skeptical about their motives or intentions. Remember that they have knowledge to share, experience upon which to draw, and compassion beyond compare.

If they didn't, they wouldn't do what they do. And they certainly wouldn't be sweating it out here at the conference, trying to learn new information about how to help families navigate the choppy waters of financial aid. They really are good nuts, here to help. Let them.

Posted by Staci at 08:42 AM |  Contact Staci |  Permalink  |  Comments (2)
Found in Federal loans, Financial aid, Financial education, Grants, Lenders, Looking back, Paying, Preparing, Private loans, Refinancing, Remember, Student loans, Wells Fargo Bank, Work-study

I'm a sucker for breaking the awkward silence. If a professor waited long enough after asking a question in college, I would always pipe up. Well, if I kind of knew the answer.

I asked y'all for questions about student loan consolidation, and so far you haven't asked any! Well, the awkward silence is getting to me—so I'm going to raise my hand and ask (as well as answer) questions that I've been asked in the past.

What exactly is consolidation?

Consolidating means taking out one new student loan that combines your other student loans. Your consolidation loan lender will pay off the loans you are combining, so you'll have one new loan for the total amount. BTW, when people talk about student loan consolidation, they're usually referring to federal loan consolidation. Some lenders also offer options for private loan consolidation.

Am I eligible?

If you have federal student loans—no matter which lender holds them—you can consolidate them with any lender. Here are the federal loans that I'm talking about:

• Federal Family Education Loan Program loans (Stafford, PLUS, SLS, and Consolidation Loans)
• Federal Direct Loan Program loans (Stafford, PLUS, and Consolidation Loans)
• Federal Insured Student Loans (FISL)
• Federal Perkins Loans
• Health Professions Student Loans (HPSL)
• Nursing Student Loans (NSL)

And yes, you read that right. If you already have a federal consolidation loan and take out another federal loan (say you go back to school after a couple years to get a master's degree), you can "reconsolidate" and add more federal loans.

You can also consolidate a single Federal Stafford or Federal PLUS loan if you want to lock in the rate.

Why should I consolidate?

Consolidation offers a couple key benefits:

• You might see a lower payment each month—which can help when you're trying to manage other monthly payments while paying back your loan.
  
  
• Instead of making several payments, you'll only have to make one.
  
  
• Your loan will have a fixed interest rate—this is a big one, especially if you have variable-rate federal loans. The next questions tell you why.

What kind of rate will I get?

For federal loan consolidation the rate is an average of the rates on all the loans you are consolidating, rounded to the nearest one-eighth of a percent. But it won't get higher than 8.25%. Speaking of rates …

When should I consolidate?

This is an important question right now because students with variable-rate federal loans will see an interest-rate increase on July 1, 2007. If you have a federal loan that was issued before July 1, 2006, you're in this boat. These loans also increase by 0.60% when your grace period ends, so it's better to consolidate while in grace.

Why shouldn't I consolidate?

In some situations, there may be a better option to ease your loan repayment—like different payment options.

Also, you need to be aware of the disadvantages of consolidation. Since you might be extending your repayment term, you could end up paying more interest in the long run. And, it's possible you might lose any borrower benefits you've been reaping on your loans.

Here's a good checklist  that walks you through your decision.

What else should I know about consolidation?

• You can't "unconsolidate" your loans. Once you consolidate, your old loans don't exist anymore—your consolidation lender paid them off.
  
  
• Until your lender tells you your consolidation is complete, you need to continue making payments on all your separate loans.

OK, now that the silence is broken, is there anything else that you're wondering? If so, raise your hand.

Posted by Barbara at 07:52 AM |  Contact Barbara |  Permalink  |  Comments (5)
Found in Consolidation, Federal loans, Lenders, Paying, Post-college, Preparing, Private loans, Refinancing, Student loans, Wells Fargo Bank

If you're about to graduate from college, congratulations! And, if you've taken out student loans , guess what?

You have a new best friend.

If you took out federal loans , you may have already been through an "exit counseling"  session. That's where they tell you all about your rights (blah, blah, blah) and responsibilities (blah, blah, blah) as a student loan borrower.

With the excitement of graduation looming, you may have only heard "blah, blah, blah" during this session. But your responsibilities as a borrower are important. So let me boil them down to one easy-to-remember rule: Treat your student loan lender like your new best friend.

Got it?

Now let me break it down a little further …

• When you make a life change, you tell your friends. Well, since your lender is your new best friend, remember to tell them when you change your name, when you move to a new address, change your Social Security number, or if your school status changes.
  
  
• If you're in trouble, you tell a friend, right? If you're having problems making your student loan payments, tell your lender—don't hide from them. Your lender can help you work out a payment plan and avoid default .
  
  
• You wouldn't borrow money from a friend and try to get out of repaying it. You can't do it to your student loan lender either. You HAVE TO repay your loan as agreed. No exceptions if you didn't finish school, didn't like your major, can't find a job, yada, yada, yada.
  
  
• If your friends can't get  hold of you for a few days, you don't ditch them. Same with your lender—if you don't get your bill, YOU STILL HAVE TO PAY IT. There's no "get a free month" if your bill doesn't arrive for whatever reason.
  
  
• You go to your friends' parties. Consider entrance and exit counseling sessions less-than-exciting parties given by a great friend. You gotta go.
  
  
• You read texts, emails and IMs from your friends. You new friend will probably get in touch with you in a more traditional way—like through the mail . But you're required to open and read everything your lender sends you. So, hello mailbox!
  
  
• For better or worse, relationships change. Learn about your consolidation and refinancing options—these could be good things for you. But you also have to know what will happen if things go south in your relationship with your lender—as in, if you default. (Don't do it, it's so not good.)



• Know how to reach your friends. This is Friendship 101—you KNOW their phone numbers, addresses, etc.  Same with your lender—be sure you know where to send payments and written correspondence.

Posted by Caroline at 09:21 AM |  Contact Caroline |  Permalink  |  Comments (5)
Found in Consolidation, Default, Federal loans, Financial education, Paying, Post-college, Preparing, Private loans, Refinancing, Student loans, Wells Fargo Bank