Saturday, January 14, 2012

Who Is to Blame for Record Student Loan Debt?

Over the last few years we have seen the levels of student loan debt rising at alarming rates. Today, the overall student debt is higher than both credit card debt and auto loan debt. With job opportunities being next to zero for recent college grads, it has many people wonder if college is even worth it. And the big question is "Who is responsible for this debt?" Should the borrowers be held responsible for every dime that they chose to borrow? Or should lenders be on the hook for some of it?

Choice A: The Borrowers

Generally the first group of people to be blamed for the record levels of student debt are the students themselves. If they had not taken out loans at the rates they had, then there would not be a problem like there is.

Most believe that these students should be held responsible for what they borrowed. They knowingly used borrowed money to pay for college, so it's up to them to pay it back.

But how much of a choice did many of these kids have in the first place? Many were raised on the assumption that they would be going to college after high school and had very little conscious choice in the matter. Unless they were very good at finding grants, scholarships, and saving they inevitably had to take out a large loan to pay for college... an idea that had been pressed on them since grade school by teachers and parents.

Choice B: The Lenders

Maybe the lenders are the ones that are to blame for the student loan mess. They successfully lobbied congress to strip borrowers of any bankruptcy protection, which means that student loans will follow you to the grave, even if you can prove you're unable to make payments.

They are also being accused of predatory lending practices, much like the ones used by mortgage companies. It's not hard to get a student loan, even if you have bad credit and no cosigner.

But there wouldn't be a lending industry if there weren't people who wanted to borrow money for college. These businesses exist because there are people out there willing to sign promissory notes and borrow money from them.

Choice C: The Schools

Ahhh here we go. Who is the one charging the ridiculous amounts of money per semester for attending college? Who has the biggest hand in determining how much a student will have to borrow? The schools!

Over the last 20 years the cost of attending college has been rising at a rate not proportionate to the rest of the economy. Why is it suddenly so much more expensive to attend?

Well think about college 20 years ago and college today. Today students have high-speed internet and cable TV in everx room on campus. They have new technologies and healthier food in the cafeterias. At the school I went to we had an all vegan dining hall. This stuff isn't free (or cheap!).

Choice D: All of the Above

The problem we're having is that we're trying to place blame on one group of people when many share the blame.

If colleges were competitively priced then costs would go down.

If costs went down students would have to borrow less and could be more responsible for smaller loans.

If lenders were a little more forgiving of hardships and willing to work WITH borrowers then more would be able to find a reasonable payment plan and pay off what they owe.

The situation is one that has to be addressed from many different angles. Currently, colleges are receiving less and less federal and state funding, which makes tuition costs rise. At the same time, there is legislation to DOUBLE the interest rate on federal student loans while retaining the lack of bankruptcy protection. How does this benefit students in any way?

In a time when everyone is worried about unemployment and the economy we can't be taking risks with young people who have taken the initiative to get an education.

Thursday, January 12, 2012

Student Loans - Do You Qualify For A Student Loan?

College is expensive; those that want to go to college are often unsure whether or not they can afford to go because of the steep cost of tuition, fees and books. Those that haven't the funds to pay for school know they can apply for grants, scholarships and loans but they wonder if they quality for a loan to pay for college. Fortunately, almost everyone qualifies for some sort of financial aid in the form of a student loan. There are different requirements for what type of student loan you do qualify for; but you will qualify for something that will help you pay for your college education.

Private student loans are one type of student loan. It is more difficult to qualify for this loan than any other. Private loans are issued by banks and other financial institutions and require the applicant has excellent credit. Since many college students have no credit - particularly those that have just graduated from high school - and many have less than perfect credit, it is difficult to get a private loan. If you have a friend or family member that has great credit and trusts you implicitly, you can always ask them to co-sign for your student loan with you. This will increase your chances of being awarded a student loan through private means.

For those that need to obtain a loan another way, you need to fill out the FAFSA - the Free Application for Federal Student Aid. This application is easy to fill out and can be done online or on paper. It is due at the beginning of each year and it is far faster to fill it out and submit it online than by paper. All you need to fill out the FAFSA is your name, personal information, financial information, school code and your parent's financial information if you are a dependent student. Once you fill out your FAFSA and submit it to the federal government you are well on your way to receiving a student loan.

The federal government offers loans for students called Stafford Loans. These loans are available to anyone enrolled in a college or university in the United States, whether you have bad credit or good credit or no credit. Stafford Loans do not require a credit check is performed on recipients; it is available to everyone that is enrolled at least half time in college. Once you fill out your FAFSA, the government will send you the results as well as your school. You will then have the opportunity to see how much you were given and you can accept the full amount or a partial amount that is enough to cover the tuition, fees and books that you need for the school year.

Applying for a college loan is easy; and the best part is that you are not required to pay back the loan until you graduate from college - or drop out or below half time as a student. This allows you to have the time you need to focus on school instead of paying back your loans. Knowing that there are loans available to you no matter your credit score makes college a possibility for everyone.

Monday, January 9, 2012

2012 Education Tax Credits and Deductions....

WHOPPEE – its tax time again! As you start to gather your 2011 tax documents, don’t forget to include your education costs or the interest paid on federal student loans. There are also two tax credits this year, so more opportunities for savings. Of course, you cannot “double dip”, claiming more than one credit or deduction for the same expense, so do your homework and make sure you take advantage of the most advantageous choice for you!

The American Opportunity Tax Credit (AOTC) replaced the HOPE tax credit and provides additional benefits, extending coverage from the first two years to college to four years, covering text books and AOTC is partially refundable (40% or $1,000 maximum). This means that, even if you do not have a federal tax liability, you might still qualify for a refund. To claim your credit, you must use form 8863 and attaché to your 1040 or 1040A. At this time, this credit will expire at the end of 2012.

The Lifetime Learning Credit remains in place for 2011 and can create a tax credit of up to $2,000 for any level of college education (even graduate school). One unique feature of this credit is that it doesn't require a minimum level of enrollment. However, the Lifetime Learning Credit has a narrower income range compared to the tuition deduction, so you need to look at all options before deciding which tax credits or deductions to submit.

Here are some key facts the IRS wants you to know about these valuable education credits:

1. The American Opportunity Credit
• The credit can be up to $2,500 per eligible student.
• It is available for the first four years of post-secondary education.
• Forty percent of the credit is refundable, which means that you may be able to receive up to $1,000, even if you owe no taxes.
• The student must be pursuing an undergraduate degree or other recognized educational credential.
• The student must be enrolled at least half time for at least one academic period.
• Qualified expenses include tuition and fees, coursed related books supplies and equipment.
• The full credit is generally available to eligible taxpayers who make less than $80,000 or $160,000 for married couples filing a joint return.

2. Lifetime Learning Credit
• The credit can be up to $2,000 per eligible student.
• It is available for all years of postsecondary education and for courses to acquire or improve job skills.
• The maximum credited is limited to the amount of tax you must pay on your return.
• The student does not need to be pursuing a degree or other recognized education credential.
• Qualified expenses include tuition and fees, course related books, supplies and equipment.
• The full credit is generally available to eligible taxpayers who make less than $60,000 or $120,000 for married couples filing a joint return.

A Few Final Reminders: You cannot claim the tuition and fees tax deduction in the same year that you claim the American Opportunity Tax Credit or the Lifetime Learning Credit. You must choose to either take the credit or the deduction and should consider which is more beneficial for you.

For more information, visit:,,id=218389,00.html or

Finally, watch for the 2011 edition of the IRS Publications, referencing Education Tax Credits. As of January 9, 2011, the link still gave 2010 information. ( )

How To Understand Student Loan Eligibility Requirements

Furthering your education is something that you may want to do immediately after high school or it may be something you put off and decide to do at a later time in your life. It doesn't matter when you decide to go to college or what you want to study when you go; people go to college to get an education to further their career, to make more money and to accomplish a goal. And one thing remains the same for every college student; classes are expensive. For some, this is not a problem. Scholarships and their own personal finances allow some students to go to college at any time without worrying about money. For others, paying for school is a struggle. This is why it is important for you to understand what college loans you can obtain and what eligibility requirements you must meet.

For private loans for students issued by a bank or other financial institutions, you must have excellent credit - or a cosigner with excellent credit - to be issued a private student loan. For those students without excellent credit and/or a cosigner, the federal government offers federal student loans that do not require a credit check. Just about everyone is eligible for a federal student loan, but to ensure that you are eligible, you must understand the eligibility requirements. They are not too difficult or too complicated, but you need to understand a few requirements before you apply.

Anyone that wants to apply for a college loan must meet all eligibility requirements. The first is that you must be a high school graduate or you must have obtained your GED. Additionally, you must be enrolled in an accredited college or university or you must have been accepted as a student at one of these. You must be a United States citizen or an eligible non-citizen, which means you must have your Green Card or you must be a student that is in the country for the specific purpose of going to college on a school Visa. You must also have a valid Social Security Number as issued by the Social Security Administration.

Furthermore, you must maintain satisfactory academic progress while in school to maintain your eligibility for a student loan. You must not be in default of repaying another student loan and you must sign a form stating that you will use your federal student aid only to pay for college classes and other college expenses. The final eligibility requirement for obtaining federal student loans is filling out the FAFSA. The Free Application for Federal Student Aid is available on the internet or you can pick up an application at any college campus. You must fill this out and submit it to the federal government - it is easier and faster and you will get your results sooner if you fill it out and submit it online. Once the federal government reviews your FAFSA, your school will be issued the funds you need to go to college. You can accept the full amount of your student aid or you can accept only what you need to cover tuition. This is all you need to know about student loan eligibility requirements.

Wednesday, January 4, 2012

The Importance Of The FAFSA When Acquiring Student Loans

College, as most people are well aware, is an expensive place to go. The situation is tricky for many people because they need to go to college in order to obtain the education they need to fulfill their career dreams and earn a great salary, but many people cannot afford college; leaving you wondering how you will ever get ahead in life if you need an education to earn a good salary but you haven't the money to get an education. This is where student loans are important. For those that do not have enough scholarships and grants - or the personal funds - to pay for college, student loans are a great alternative.

There are two kinds of loans; there are federal loans and private loans for students. There is a big difference between the two. Federal loans are offered to every student that is enrolled in college at least part time. The private loans are only available to those that have excellent credit and fill out a loan application. To obtain a private student loan, you will have your credit pulled and your decision made based on your credit score. While filling out a student loan application for a private loan is simple, it is difficult to get a private student loan if your credit is not perfect. You do have the option of asking a relative or friend to co-sign for a student loan on your behalf, but if they don't have perfect credit or are unwilling to co-sign, your chances of getting a private student loan to cover college expenses such as tuition and books is very slim.

Fortunately, federal college loans are available to anyone and do not require a credit check. What a federal school loan does require is a FAFSA - the Free Application for Federal Student Aid. Without filling out the FAFSA, you are not eligible for a federal college loan. The FAFSA is very important for those wishing to obtain a federal school loan. The FAFSA is available online or you can pick up an application at any college campus. The application is required to be filed at different times for each different school in each different state, but the sooner it is filled out, the better. The information required on the FAFSA is used so the government can issue your student aid award and provide you with the funds you need to go to college.

On the FAFSA, you will need to provide your name, your address, your Social Security Number and your school code, which can be obtained on the FAFSA website by performing a simple search or by asking anyone that works at the college where you will be in attendance. Additionally, you will be asked to provide your financial information from your most recent federal income tax return. If you are a dependent student you will need to provide your parent's financial information. Once your application is submitted, your school will be notified of the amount you are eligible to receive. The school will receive your funds at the beginning of each semester and remove the amount that covers your tuition, refunding the rest to you. From there, you may use the extra funds for books and other college expenses.