Student Loan Default Rates on the Rise

Updated statistics released by the U.S. Department of Education show that student loan defaults are rising. According to the latest figures, the default rate for government loans that entered repayment in 2008 is 13.8 percent, up 2 percent from the default rate for federal student loans that entered repayment in 2007.

The current official national student loan default percentage, which stands at 7.0 percent, measures the percentage of borrowers who default on their federal education loans within the first two years of repayment. But when the calculation is expanded to take into account defaults within the first three years of repayment, the national student loan default percentage jumps to13.8 percent.

The New College Grad: Unemployed, in Debt, and Defaulting

Under new rules implemented by the Higher Education Opportunity Act of 2008, the three-year calculation will soon be used as the standard measure of student loan default percentages. Beginning in 2014, colleges and universities whose default percentages rise above 30 percent will lose access to federal financial aid - government-funded grants and education loans - for incoming and existing students.

Current federal regulations cut off a school's eligibility for federal student aid when the school's default percentage exceeds 25 percent, but that guideline uses the more forgiving two-year default rate. Officials at the Education Department attribute the rise in student loan defaults to the soft job market and the ballooning number of recent graduates who are finding themselves unemployed and with a pressing need for debt relief.

Education Department officials also point to the growing amount of college loan debt being accumulated by students, particularly at pricier for-profit colleges and private nonprofit four-year universities. Among undergraduates who leave college with debt from school loans, the average student loan debt load is $23,186, according to FinAid.org.

Using the three-year default rate calculation, the default rate for students of private nonprofit colleges and universities is 7.6 percent, compared to a 4-percent two-year default rate. Among public university students, the three-year default rate is 10.8 percent, versus a two-year default rate of 6 percent.

The biggest jump from two-year to three-year student loan defaults is seen among students from private for-profit colleges. Using the three-year measure, the default rate among these borrowers is 25 percent, more than double the two-year default rate of 11.6 percent.

New Rules Threaten Schools' Access to Financial Aid

According to an analysis conducted by The Wall Street Journal, nearly 9 percent of higher education institutions would lose their ability to offer federal student aid if the new default rules on college loans were in full effect today. Under the current rules, only 1.6 percent of schools lost their eligibility for federal grants and college loans due to excessive student defaults.

A 2003 report from the Inspector General for the Department of Education charged that some for-profit colleges had become so concerned about the rise in student loan defaults among their former students that the schools were masking their true institutional default rates. Two high-profile cases in 2008 and 2009 charged two for-profit school with paying off delinquent student loans in order to avoid having to report the defaults, a practice that violates federal financial aid regulations.

In response to these and other barrages of accusations being fired at for-profit colleges, the Department of Education is considering other regulations that would prevent the for-profits from misrepresenting the financial health of their graduates by manipulating student loan default percentages.

In one proposed measure, termed the "gainful employment rule," the Department of Education will not only look at student loan repayment rates but also graduates' debt load from school loans as a percentage of the income these students earn after they leave school. By tying a for-profit school's eligibility for federal student aid to gainful employment following college, the Education Department is hoping to stem the spiraling levels of student loan debt at for-profit colleges, which historically have produced the highest default rates.

Student loan default rates have garnered new attention from the Education Department not only because the default rate is rising but also because the department is under Congressional pressure to produce a more cost-efficient student lending process with fewer losses from defaulted loans. The Department of Education is expected to issue the finalized gainful employment rule later this spring.

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4 Things To Look For To Consolidate My Student Loans

When you find yourself asking how to consolidate my student loans it can be a frustrating feeling. Nobody likes being in debt. People will often find ways out of it as easily and quickly as possible. Whenever you have multiple student loans it is best to get them consolidated to ease your burden and help you see the big picture. With multiple loans out it can be hard to fully understand the amount you owe and what you are paying in interest to all of these places. Here are a few things to look for when comparing student loan consolidation rates.

Interest Rates
Interest rates are the most important thing to look for when it comes time to consolidate my student loans. The interest rate will overall determine the amount of money you pay when it is all said and done. A loan that has a high interest rate will cost you as much as if not more money than the overall loan. It is best to have as low of an interest rate as possible to ensure that you do not have to pay more than you should.

Student Loan Calculator
A student loan calculator can really help you wrap your head around your student loan consolidation rates. This will help you understand what you can afford to pay each month with the loan consolidation that you choose. Simply put in your annual salary and what the amount you owe is. It will help you factor in how much you will be expected to pay each month while still remaining comfortable financially.

Type of Loan
The type of loan that you have will have a lot to do with the loan consolidation that you get. There are federal loans and there are private loans. Private loans are done through banks whereas federal loans are done through the government. A lot of consolidation services can help you regardless of the type of loan you have. However, it is still a good idea to look at this before anything else.

Fees
The fees on a loan consolidation service can very easily add up. A lot of the services will also only mention these fees in the fine print. This is why it is important to read the fine print as well as the big picture stuff whenever considering a loan consolidation service. So many times fees can add up to become quite expensive. This is why it is a good idea to find the fees and factor them into the overall initial cost of the loan consolidation service. Most of the services you come across will have these fees. It is up to you to find a fee that will cost you the least amount of money overall.

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An Overview Of Great Lakes Student Loans

Student loans are no wonder a profitable business and that's probably one of the major reasons why the educational fees are almost touching the sky. Aspiring students are keen on continuing their studies and somehow bearing the expenses of their education while the loan providers are on a constant look out for finding the students who need financial assistance. Now the Great lakes student loan, in simple terms is a way to help both the sides; the students as well as the loan providers.

Opportunities For Borrowers And Lenders:
Great lakes basically make all the federal loans accessible to the students via the Government's Federal Family Education Loan Program. It also offers Stafford loans which provide the students with some extra cash as well on yearly basis as long as he/she is studying. Moreover, since a lot of loans are Government funded so the students are relieved of paying interest charges on these loans as long as they are in college. This consequently takes the financial burden off the students since Government in this case pays the interest in place of students till the student finishes the college and gets capable enough to pay back the loan with interest. In case however, your loan is not funded by Government, it would be better to pay the interest while you are in college as it will save you from paying accumulated interest amount at the end of your education period.

It also provide federal loans like PLUS loans which are actually provided to the guardians of the student during the 4 years of undergraduate education period as well as to post-graduate along with the Stafford Loans. You do not need to worry about having a superb credit history to get these loans since even a less-than-perfect credit history can do well because it can be compensated with a co-signer. It basically by managing the FFEL student loans provide an opportunity to the individual lenders to enter this FFEL market.

Financial Assistance:
This lending organization along with all these loans also offer private student loans to bring together the financial demands of students and the profit garnering opportunities for the lenders. These types of loans help the students in meeting the growing financial demands of their education which a simple Government funded loan cannot bear.

Invaluable Services:
This lending institute, no wonder is rendering invaluable services to not just the aspiring students and the lenders but also to the society as a whole since it is helping in providing financial assistance to the students who will make a difference in the development of a nation afterwards. They have also made available booklets, guides and use online resources to spread awareness to the aspiring students regarding the advantages of obtaining a degree, plus provide loan calculators and give thorough loan info to the lenders, colleges and campus counselors etc.

Developing The Society By Assisting In Education:
Great Lakes Higher Education Corporation Associates as said earlier are making a huge difference in particularly the higher education sector by helping the needy students. They work together with the colleges, universities, lending institutes etc to help the students in letting them complete their degrees without worrying about the financial costs and hence play their role in building an educated society in whole.

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5 Ways to Pay Back Student Loans

Paying back student loans can be a never ending pain and challenge in your life. Back when you were a student and you first took out your student loans chances are good that you did not realize at the time the full impact of having this debt on your life. Whether you have borrowed a lot of money or only a little, the reality is that to pay back student loans you are going to have to sacrifice, and stretch. It will not be easy but it can be done and there are ways to do it in less time than you might think is possible.

Here are five ways to pay back this debt in less time and without having to live like a broke student forever.

1. Start your own business. While you might think that it is impossible, there are lots of ways to do this with a minimal investment of under $500. The easiest ways to do this include network marketing or direct sales or freelancing for clients offering them any skill that you have that is in high demand. You can do it part time while you are working and generate enough extra income to pay them and even more. I personally started my home business while I was in graduate school and while it was difficult at times to balance, work, school and my business, I created income and generated a high database of leads and customers while I was still in school. I also found that having a home business as a student was a nice way to get a break from studying. Furthermore, when I graduated it took me almost four years to get a full-time job and I was able to use the income from my home business to pay back student loans and other bills while I was job hunting.

2. Get an extra job for a few hours one night or day per week and then set aside that money to add to your minimum payment for your student loans. Doing this consistently for a year or two will make a big impact and in fact, you will be surprised at the impact that this will have. I'm also done this, and the reality is that even an extra $100 a month can decrease the amount of time it takes to pay back your loans because you will pay less interest.

3. Set a goal to pay back student loans in a certain time frame. Make your goal reasonable and doable. For example if you owe $40,000, setting a goal to have it paid off in 3 years would be reasonable but it would also require you to do some work and to sacrifice.

4. Make a list of all of the skills that you possess that people would pay you for. Develop ways for people to hire you to do those tasks and then find 2-3 people per week that you can work for in your spare time after you are through working your regular job. Examples include things such as bookkeeping, web design, how to use Facebook and other social media sites, writing articles for people, house cleaning, and babysitting.

5. Make your minimum payments on your student loans until your credit cards are paid off. If you do not already have credit card debt then you are even better off and you can start paying more on your loans. Stop using your credit cards except for an absolute emergency such as a medical disaster.

In summary you can pay back your student loans but you will have to work at it. The consequences of not paying them back are severe and can cause you to have major financial problems so you need to do what you can to get them paid as soon as possible.

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