How to Deal With Student Loans

Ken Dolan: Just that you don’t know this. Well, maybe you do year read the paper. You read more papers than I do. Daria Dolan: Yeah. Ken Dolan: In today’s I believe in yesterday or today’s Wall Street Journal. The cost of tuition, I don’t even know about room and board. In public and private universities depending on the university is up between 15% and 31% over last year. Daria Dolan: Well, and then there’s more bad news. Ken Dolan: What? Daria Dolan: Loans are getting harder to come by. Ken Dolan: Credit crunch. Daria Dolan: The credit crunch is affecting the student loan area, and there’s some really serious problems out there. So it is — Ken Dolan: Well, in light of the fact this is one of the most important investments that kids and parents and grandparents will love to make. Daria Dolan: Absolutely. Ken Dolan: That kids can benefit for the rest of their lives. Daria Dolan: Absolutely. Ken Dolan: But with the credit crunch in the sub prime mess, it’s a real mess. Daria Dolan: Sallie Mae. Ken Dolan: Yeah, I’ve heard about that. Daria Dolan: Which is the biggest issuer of credit is now saying, “Unless we get the Feds in here to help us with some more cash—” Ken Dolan: They may stop loans of money. Daria Dolan: —they may stop loans. Citibank and Bank of America according to what we read in the New York post are curtailing the number of loans that they will give to students and parents for financing college education, it’s getting very difficult out there. Ken Dolan: Last year we borrowed about $78 billion in public, in a private and Federal loans. Daria Dolan: We didn’t, but we did. Ken Dolan: We’re already passed that. Before we forget, if you still owe money on a Stafford Loan which is a variable rate, a very, very important date—and we’ll give you some good news here, a very important date, as July 1, interests on these Stafford Loan is going to readjust based on the 91-day T Bill rate at the end of May, and that could be a pretty darn good savings. Daria Dolan: It could be a done good savings, so what you want to do is think about those of you that are in the position to where you making your payments to consolidate loans, and remember you get one shot to consolidate and one shot only. You could be looking at the opportunity of bundling all your loans into as little as four and a quarter percent in interest payments. Ken Dolan: Exactly right. It depends where it is now on the Stafford Loans, it looks like they’re going to adjust to four or four and quarter percent which is a great, great deal over with us now. And we don’t know exactly how much it will cost depending on what are the kinds of loans you have and what the interest rates are, but it is a time to look at consolidating as much as you can. Daria Dolan: But looking to consolidate and actually being able to consolidate are going to be two different issues this year because many entities including Sallie Mae have gone out of the consolidating loan business mainly because those two issuers of consolidation loans lose money from the first day that they issued those loans. So the one place that you can go to and still be guaranteed, come on July 1 or before July 1— Ken Dolan: Important date. Daria Dolan: Is to go to Loan— Ken Dolan: Consolidation. Daria Dolan: Thank you. I couldn’t figure a word—loanconsolidation.ed.gov. They will still be consolidating no matter what the other entities— Ken Dolan: Yeah, take a look at don’t forget this July 1 as an important date. You may want to wait take a look at what that rates going to be because it’s likely to be lower because that will be the rates you’ll pay for the next 12 months. Good point Daria. LoanConsolidation.ed.gov., FINAID.org spectacular site and also StudentLoanConsolidator.com. Now listen, learn about this stuff because you and the kids can save a whole lot of money here maybe. How about the book recommendation? Daria Dolan: And those of you, well quickly before we do that book recommendation. Ken Dolan: Yeah. Daria Dolan: Those of you that are in that stage where you’re looking for money yet and have time, it becomes more important than ever before that you join those 529 plan, put savings away. Get savings bonds that could be tax free for education, et cetera. Plan now. I don’t see it getting better anytime in the near future. Ken Dolan: Be creative. You’re going to find however, Daria that some college and universities are going to either expand their financial aid which is their loans and maybe expanding grants because the Federal Government is saying, “Wait a minute. There are lots of colleges and universities, will lay lose some of that. Daria Dolan: Exactly. Ken Dolan: So be tough on the college that you’re looking to, and one last thing. Daria Dolan: The book. Ken Dolan: Kal Chaney. Daria Dolan: Kalmen Chaney, Paying for College Without Going Broke. Ken Dolan: Very, very good. Last piece we got lot of information here—529 Plans, some are not very good, some are rated high, some are rated low and some are closing—saviongforcollege.com. Good luck everybody.