Starting next year, the Department of Education will sanction schools based on the three-year national cohort default rate, and if the two-year rate is any indication, the 2011 rate is likely to surpass 2010s 14.7%. More Borrowers Cant Pay The rate is based on the number of borrowers who default, not individual loans. A borrower is included in the calculation if he or she has federal Stafford loans or direct Stafford/Ford loans (subsidized or unsubsidized). Other types of student loans whether current or in default, are not factored into the calculation. While only 13% of students attend for-profit colleges, 46% of borrowers who defaulted from 2010 to 2012 were enrolled at such institutions. Of 1.27 billion borrowers from such colleges who began repaying their loans in fiscal 2010, 21.8% defaulted within three years.
They also need to know what type of loans they have. The National Student Loan Data System gives students a rundown of each federal loan by type and date my company disbursed. Most borrowers have a mix of subsidized and unsubsidized Stafford loans. Interest rates on these varied over the years, so check with your loan servicer the one who sends the statements each month to find out the rate on each loan and whether it is fixed. The interest rate on a consolidation loan is based on the average rate of all loans being consolidated. If borrowers combine low interest rate loans with those that have a higher rate, they could wind up paying more interest over time, says Deanne Loonin, director of the Student Loan Borrower Assistance program at the National Consumer Law Center.
9 common myths about your student loan
“We’re working with the Senate, with members of both parties. We’re working with leaders in the House as well on this issue to get this done,” said White House spokesman Jay Carney. The deal comes less than two weeks after a July 1 deadline, when interest rates on subsidized student loans doubled for 7 million students heading into the next school year. The deal will affect both subsidized and unsubsidized Stafford loans. Undergraduate students will pay an interest rate of about 1.8% plus the yield on the 10-year Treasury note.
Student loan debit cards draw complaints, lawsuits [The Orange County Register]
On days when financial aid money is released, he said, the line for the machine can be 50 or 60 students long. Gregory Peterson, the college’s vice-president of student support services, agreed that the line could be lengthy. He said the ATM had to be locked during certain hours because it was a free-standing kiosk, not bolted to the wall, that could be easily damaged without proper security. He said the school hired the company to supply debit cards because officials found that many students did not have bank accounts. Those students waited for their checks to be mailed, he said, and then paid high fees at check-cashing stores. This is not the first time that financial companies have been criticized for targeting college students for new business.
Tentative student loan deal hits snag
While that’s bad for students, it’s still worth keeping in mind that you wouldn’t be able to borrow money at this relatively low rate from any bank. Myth 6: “You have to pay your tuition fees to your university yourself” Your student loan is split up into two different sections: the tuition fee loan covers your university fees and your maintenance loan helps to cover your day to day living costs. Fortunately, you don’t need to worry about receiving the tuition fee loan into your bank account and then paying the university yourself as it gets paid direct. The money that you will personally receive at the start of each term is your maintenance loan, which is usually a time for mass celebration. Myth 7: “Moving abroad will mean that I don’t have to pay back my loan” This is one of those rumours that seems to spread amongst freshers like wildfire.