I just thought I would post this as a follow up to the Why Student Loans Are A Huge Scam post from yesterday. US News & World Report did all the hard work here and read through a report issued by the U.S. Department of Education about which compiled  an extensive list of colleges where students have the best and worst track record of repaying their loans.

Walletpop.com has written a great article based on the article written by US News and I thought I would just post some highlights and if you liked it enough you could check it out on their site.

One finding: students at nursing schools and institutes of technology are among the most diligent about paying their student loans. Among the top 20 colleges on the list, are the California Institute of Technology (CalTech) and Medcenter One College of Nursing located in Bismark, North Dakota, both of which saw more than 90% of students repay their loans in 2009.

Among the colleges with some of the lowest payback rates, according to U.S. News, were historically black colleges like Grambling State, Fisk, Tougaloo, religiously-oriented colleges such as the University of Mobile and Liberty University, and some urban colleges like Detroit’s Wayne State and Georgia State. The report notes that beauty schools and other for-profit trade schools are listed at the bottom, as well.

You can read the full article from walletpop here.

When it comes to student loans, it is important to remember it is borrowed money and everything you buy with it is going to accrue interest.  It’s really pretty simple; if you take out less, less interest accrues, and you pay back less.  So live like you don’t have any of your own money (because most of you don’t) and just spend what is absolutely necessary.  The best way to do this is to set a budget up prior to taking student loan money.  When doing this, be sure to take enough out for anything unexpected.  When setting up your budget, there are some expenses that are absolutely necessary to account for.  Here is some information you can use to get started.

Absolutely Necessary Expenses:

• Tuition
• Books
• School Supplies
• Housing
• Utilities
• Groceries
• Gas and Other Automotive Expenses
• Emergency Fund for Unexpected Expenses

Let’s face it; school is not just about school.  You’re young; you need to enjoy yourselves within reason.  Allow some money for entertainment.  This can be for whatever you enjoy doing.

These items are just a foundation for getting started.  The key is to control your spending to keep you from having to pay off more debt later.  I purposely did not include percentages and amounts of money for each category.  Depending on your where you are attending school, prices of each of these items may vary.

For some great additional information on budgeting, loans, and paying off loans, MedDebt Solutions has some great information at http://www.medebtsolutions.com/.

How Do I Accept My Loans?

In the majority of schools, Financial Aid department will have a way (usually web based) to contact you when your loans are processed. Some lenders require Entrance Counseling in order to receive loans. The Entrance Counseling is also usually web based and you will typically be able to link to it from the information the Financial Aid Office sends you. The Entrance Counseling will give you basic information about loan types, requirements to keep your loans, and loan repayment. Once you finish the Entrance Counseling, you must sign a Master Promissory Note that basically says you accept the loan’s terms and conditions. This is usually done electronically but some companies still require the Master Promissory Note to be signed and mailed back.

Once these two steps are complete, your school’s Financial Aid Office will notify you about how much aid you will receive. You then choose how much of the awarded loan money you want to accept.

When do I have to pay all this back?

You must begin to pay back Federal loans following a 6 month period of not being enrollment in school. This occurs when you do not enroll in classes for six months or after you graduate. Remember to plan ahead with your budget and expect these bills to come. Find out the lenders information from your school’s Financial Aid Office and make arrangements to have your loans consolidated (all your loans rolled into one sum to repay) if possible. This makes for less financial confusion and a steady rate of billing.

To find out who services your loans click here.
To find out how to consolidate federal loans click here.

Deferment of Federal Loans

Loan deferment is possible under certain circumstances. If you find yourself in financial distress contact a counselor for your lender. If you are able to show your lender evidence of this distress, you can work out an extension period with the loan counselor to delay repayment until you are financially able to resume repaying your loans. You can also work with your lender to lower the amount to be repaid at a time or change the payment schedule based on your individual financial need.

It is always better to contact your lender and keep them informed of your current situation. This will put you in better standing with the company and save your credit. As long as you communicate with your lender and repay what you are able, the lender will be willing to work with you on your loan repayment.

To remain eligible for federal money, you must maintain a passing GPA and stay out of legal trouble. If you are arrested, you will not be able to get any addition money from Uncle Sam. Also, you need to make sure your school’s financial aid office has the most accurate and up to date info on you. For example, if you move or get married will need to inform the financial aid office and will probably need to submit new paper work with the changes. Don’t forget the FAFSA must be filled out every year for you to receive financial aid.

FEDERAL GUIDELINES FOR ELIGIBILITY

Progress Standards

You are in violation of maintaining Satisfactory Academic Progress Policy (SAP) for financial aid purposes if you:

• have a cumulative GPA of less than 1.6 for 0-29 attempted hours
• have a cumulative GPA of less than 1.8 for 30-59 attempted hours
• have a cumulative GPA of less than 2.0 for 60 or more attempted hours
• have a cumulative GPA of less than 2.0 if pursuing a second bachelor’s degree(including all undergraduate courses as recorded by the Records Office)
• have a cumulative GPA of less than 3.0 if pursuing a graduate degree

You must earn 66.7% of your attempted credits to remain eligible for financial aid. All courses for credit will be counted as hours attempted.This includes all withdrawals, incompletes, repeated coursed, remedial/developmental courses, ESL courses, transfer hours as recorded by the Records Office and courses receiving a grade of F, X, or W. This policy applies to both Undergraduate and Graduate students.

The maximum time limit for the completing an undergraduate degree is 150% of the program’s published length. For example, most undergraduate programs require 120 hours for graduation. An undergraduate student will be allowed 180 attempted credit hours before he/she will max out the time limit and be ineligible for any additional federal loans to pay for the remaining credit hours needed to complete the degree.

Please refer to the chart below to determine maximum attempted hours allowed for graduate programs:

If you are currently seeking a graduate degree and have a combination of the following you will need to contact your school’scontact the Financial Aid Office to determine eligibility: one or more Master’s or Doctorate degrees, a specialist degree, and/or teacher certification courses.

Evaluation

If you fail to meet either the GPA or Credit Completion Rate criteria for any semester, you will be put on probation for one semester, assuming you were in good standing the previous semester. If your GPA or Credit Completion Rate does not meet SAP standards by the end of the probation semester, your aid will be suspended.

You will also be placed on Probation if you have a hold on your account that is 5 years or older from a failure to meet the Cumulative Completion Rate SAP criteria in the past. Students who have exceeded the 150% Time Limitation SAP Standard are no longer eligible for Financial Aid.

If you are not in compliance with the SAP criteria, do not qualify for probation, or if during your probation period your are unable to bring your completion rate or GPA up to required level, your financial aid will be suspended. This means you will be unable to receive Federal Title IV Aid (grants, loans, work-study), state funded programs, and any other aid programs that require SAP standards. You will be able to appeal your suspension (see section under Appeal Process).

If you make up your deficiencies following your suspension, it is your responsibility to contact the Financial Aid Office and let them know . A review will be made to determine your eligibility for aid.

SAP reviews are made following the posting of final grades after both Fall and Spring semesters. Most schools post the information regarding your loan eligibility online and you are then able to access it through your account.
Replace 2nd paragraph with:

Transfer students: If you are a transfer student, you will be evaluated prior to the first term you attend at your transfer school to determine if you meet the SAP Completion Rate and GPA requirements. If you fail to meet the Completion Rate and/or GPA SAP criteria, you will be placed on probation. Before receiving aid, your attempted hours at other schools will also be reviewed. If you are over 150% of the maximum allowed hours (Time Limitation SAP Standards), you are no longer eligible for Financial Aid.

Academic Fresh Start students will have their academic progress evaluated on work attempted after returning to the university as well as any previous credits that are applicable to their current program (as determined by the Records Office).

You may not receive federal aid for more than 30 attempted hours of remedial/developmental coursework (this does not include ESL courses).

All distance education, telecommunication, television, web-based, and summer courses are calculated in total attempted hours.

Courses attempted when you did not receive any financial aid are still calculated in the SAP standards.

The following students will be notified in writing or via email regarding their financial aid status:

1. Students placed on probation will be sent a warning letter notifying them that they must be in compliance by the next SAP review or lose eligibility for financial aid.
2. Undergraduate students who have attempted 150 to 179 credit hours will be sent a warning notification reminding them of the 180 attempted hour limitation.
3. Graduate students who have attempted 45 to 59 credit hours will be sent a warning notification reminding them of the 60 hour limitation.
4. All graduate students who have attempted 60 or more credit hours will be sent a letter indicating suspension of financial aid. It will be the students responsibility to notify the FAO if they meet the published standards (i.e. in a Specialist, Doctoral, second Masters program or taking Teacher Certification courses).
5. Students who do not meet the SAP standards will be notified of their aid eligibility being suspended. Following suspension notification, any remaining federal or state aid for that school year will be canceled immediately. Procedures for appealing the suspension will be included with the suspension notification, if applicable.

*All mail will be sent to either local mailing address or the email address you have on file with the Records Office. If notices are sent via standard postal mail and a current local mailing address is not on file, your mail will be sent to the permanent address on file with the Records Office. It is the your responsibility to make sure the Records Office has your up-to-date mailing and email addresses. Failure to receive notification does not negate probation or suspension of aid or the consequences of failing to meet appeal deadlines.

Appeal Process

If you are not on probation and fail to meet SAP standards for Cumulative Grade Point Average and/or Completion Rate, you will be allowed to appeal your suspension. For an appeal, you must have extenuating or mitigating circumstances (see Examples section) that have resulted in undue hardship. All appeals must have a legibly handwritten or typed letter explaining in detail what the circumstances were and how they affected you in regard to not passing the required amount of classes and/or maintaining an appropriate GPA. You will also need to include any and all supporting documentation with your request for appeal. All information must be submitted to the Financial Aid Office where it will then be reviewed by the Satisfactory Academic Progress Committee. The appeal will NOT be reviewed without supporting documentation. Decisions regrading appeals will be made within 2-3 weeks and you will receive written notification of the SAP Committee’s decision. The decision by the SAP Committee is final.

If you pay for courses out of pocket (including the use of a private/alternative loan) or sit out a semester this does not qualify you for reinstatement of aid eligibility. If you have been placed on suspension, you must either have made up your to meet SAP standards or have been granted an appeal in order to be eligible to receive financial aid again.

What If I Leave School Early During a Semester?

This can vary from school to school, but common policy dictates that the semester hours up to the point you leave are prorated. You will then own the prorated amount and the remainder of your loan must be returned to the federal government. If you are out of school for six months, any other student loans you have accumulated will begin to be due after the six month grace period.

Federal Stafford Loans – The First Loans Received

These loans are federally based with low interest rates. Repayment is differed until the student graduates or is not enrolled in classes full time for one consecutive semester. This is the first loan type offered to you.

A student must accept the full amount of these loans before the Graduate Plus Loans can be applied for. The loan amount offered is calculated based on school tuition, room status, and a small percentage for living expenses. There are limits to how much money can be borrowed with Stafford Loans.

Graduate Student Loan Limits

• Subsidized Stafford loan limit of $8,500 for the school year.
• Unsubsidized Stafford loan limit of up to $12,000 for the school year.
• Lifetime Stafford loan limit of $138,500, which includes all subsidized and unsubsidized graduate and undergraduate loans.
• Generally out-of-state students are eligible to receive the maximum annual loan limit.

STUDENTS MAY NOT QUALIFY FOR THE FULL AMOUNTS LISTED ABOVE.

What does it mean when a loan is Subsidized or Unsubsidized?

The Federal Stafford Loan will come in two distinctive amounts:

• A smaller amount will be called your Subsidized loan. This just means that the loan will not accrue interest during the time you are in school.
• The larger amount will be Unsubsidized which means that while you’re in school the loan will be accruing interest.

*Some students only need the subsidized loan to pay for school. Your school’s financial aid office will inform you of the amount of aid that has been awarded to you. You then decide whether to accept the entire awarded amount or just the amount you need.

Graduate plus Loans – The second source of federal loans

You must fill out a separate application for this loan. Applications can be found in your school’s Financial Aid Office. These loans are the only way to borrow above the set yearly limit unless private loans are used. These loans also have a low interest rate and repayment does not begin until the student graduates or is not enrolled in classes full time for one consecutive semester.

Remember these loans need to be applied for separately and they are based on your credit record. Keep this in mind when you are applying!

Private Loans – The third source of loan aid

These loans are provided through individual financial institutions and are not backed by the federal government. These private institutions control both the interest rates and when the loan must be repaid. These interest rates can change drastically so be careful when using this type of resource.

Remember if you need a private loan, talk to your school’s Financial Aid Office about preferred lenders. These are a group of private lenders who frequently deal directly with your school to provide students loans.

Even though it sounds very intimidating, filling out the FAFSA is really quite simple. The internet has simplified the process just be sure to have all the information you need before getting started!

To get started, there are 3 pieces of information you’ll need to collect to help you feel out your FAFSA.

Step 1. Obtain the appropriate tax information. You will want tax records for the appropriate year. For example, if you are planning to enroll in classes for fall 2010 then you would need to find your 2009 tax records.

Step 2. Next obtain a Federal Education PIN number here.

(This is located on the FAFSA’s website. The PIN allows you to save, retrieve and electronically sign your FAFSA forms and accept any aid given to you. Follow the step by step guidelines located on the website. )

Step 3. The next step is to obtain school codes for all the school’s you will be applying to. Each school’s federal code needs to be placed on your FAFSA.
(Each of the schools you input will be sent the results of your FAFSA.)

Once you have completed the steps above you can now begin filing your FAFSA. The FAFSA will calculate how much financial aid is needed based on your individual situation. To do this the FAFSA takes into account your income, your spouse’s income (if you are married), your mom or dad’s income (if you fill that section out), etc. etc.

The financial aid department of each school will inform you of how much money you have been awarded. You decide how much of the awarded amount you want to accept.

You can find out more information on FAFSA as well as fill out yours here

It is important to plan ahead. If you worked the year before starting school, financial aid will be based on the prior year’s tax records! Filing out the FAFSA is the most important step to receive any financial aid. The deadline to fill out the FAFSA is usually April 1st.