You’ve seen the ads online screaming at you - CLOSELY GUARDED SECRETS OF THE FAFSA and CLOSELY GUARDED FAFSA AND FINANCIAL AID SECRETS TO MAXIMIZE YOUR COLLEGE SCHOLARSHIPS AND GRANTS… GUARANTEED! Well, I got sick of it. It’s annoying, it’s obnoxious, and most of all, it’s silly because the so-called “secrets” are right in front of you. Rather than try to scam you out of hard earned money for a few pages of common sense knowledge and strategy, we decided to relaunch www.FAFSA.net with these “secrets” plus our own unique spin on things. Check it out today… it’s totally free to you!

From the newswire…

Student Loan Rates Projected to Increase Up to 64%;
Students Could Pay Additional $1,018 Per Year

Quincy, MA March 14, 2005 —

College graduates and college students graduating in May of this year have an unexpected surprise lurking around the corner - a potential increase in federal student loan rates that could cost them thousands of dollars each year. Federal student loan rates are based on the interest rate of the 13-week (91-day) Treasury Bill at the last auction in May of each calendar year; rates set at that auction take effect on July 1 of that year. In the past three years, Treasury Bill rates have dropped repeatedly, making for the lowest student loan rates in the history of the Department of Education’s loan programs.

All that is about to change.

Over the last 9 months, 13-week Treasury Bill rates have been creeping up from just barely about 1% to nearly 2.8%, increasing an average of 0.039% per week. If the 13-week Treasury Bill rate continues its climb at that pace, by the end of May its rate will be approximately 3.233%.

What does this mean for students and graduates? Since Stafford and PLUS loans, two of the most common federal student loans, are variable rate loans based on the 13-week Treasury Bill, students and graduates holding these loans will experience rate increases from 52% to 64%. For students with an average of $30,000 in loans, this rate increase will translate into an extra $1,018 in interest paid every year. Students and graduates can avoid shelling out thousands of dollars more each year by consolidating their federal student loans before the rate change.

According to Jonathan Rudy, director of customer service at StudentLoanConsolidator.com, “Graduates can consolidate their student loans and lock in today’s interest rates; once locked in, they can’t change, which means that graduates will be insulated from any further rate changes, and not have to pay any extra interest when rates change later this year.”

What about students who are still in school? Mr. Rudy said that some student loan consolidation companies can “reserve” an application for current students. If students apply now and graduate before July 1, 2005, they can receive the current interest rates, but they must apply before July 1, and sooner is better than later.

“With no credit checks, no fees, and no early repayment penalties, there’s absolutely no reason for graduates not to consolidate their loans. However, graduates need to act now,” urges Mr. Rudy. “Very often, graduates wait until the last minute to file their paperwork and by then, they may not be able to insulate themselves from a drastic rate change. The earlier you apply, the better off you will be, as you’ll begin saving more each month immediately.”

Students and graduates can request a free information packet and application at http://www.StudentLoanConsolidator.com immediately or call (877) 328-1565.

How can you tell when a company is willing to go the extra mile for you? That’s easy - check to see if the company goes the extra mile for its employees. Two things come to mind for me when I assess how much a company cares about its employees: toilet paper and coffee. See, a company that is impersonal and cares nothing for quality or service will probably not have coffee available to its employees, or it’s such swill that no one would drink it anyway. And the toilet paper in the bathrooms could be used to sand and polish a shingle into a mirror. Good companies know that you can still be cost effective and provide a few small amenities that are high quality; better to do a few things really well than a bunch of things haphazardly. And if a company has no desire to treat its employees well, how well do you think those employees will treat customers in turn?

At the Edvisors Network (parent company of Financial Aid News and Student Loan Consolidator, among others), we’re passionate about quality and service. Some would probably call it obsessive, and a few people might even suggest psychiatric help. The toilet paper is good, and the coffee is out of this world, because we roast our own, grind our own, and brew it on premises, and it is of course free to all employees, as well as any customers who want to stop by. This morning, for example, we roasted up a Full City roast of Papua New Guinea Arokara Estate AA coffee beans. Divine.

From the Boston Globe:

As state aid has fallen, tuition and fees have skyrocketed, the result of campus efforts to offset state budget cuts. Tuition and fees at the University of Massachusetts increased from $4,700 to $8,400 in the last five years; state college charges grew from $3,000 to $4,600; and community colleges increased rates from $2,000 to about $3,300 per year.

And that Pell Grant, which cost us the Perkins Loan program, is going from $4,000 to $4,500? Big deal. That extra $500 is being outpaced by 50% to 75% tuition hikes.

Well, at least there’s private loans.

A few people have written back about our most recent press release and article concerning the future of student loan consolidation; one author even went as far as to state that we were shilling for the Democratic Party. Just to clarify, no, we’re not.

Here’s the thing - what’s happening right now in the proposed budget is ugly. The increase in Pell Grant funding is laudable, but when it comes at the expense of other programs that students need just as much, then it’s not so good. Think about it. The Pell Grant will give, according to the budget, 5.4 million students an average award of $2,486.

Now, to a college-bound student, every dollar helps. We don’t contest that at all. The more money a college student can get, the better. (hence why we have a professional scholarship search service at http://www.financialaidofficer.com/scholarship_search/) But if you take away from other programs to make the Pell Grant larger, then you’re not really doing much in the big picture. Think about it carefully - how much does a year of tuition cost? More than $2,486. That’s practically a coupon. Here, save 10% on your college tuition from Uncle Sam! To pay for Pell, Perkins goes away. In press releases from the administration, they claim that the Perkins loan program is a small, inefficient program that doesn’t help that many people.

When you read the budget, 630,000 students helped by the Perkins loan isn’t a small number. Consider this, too. The number of Pell Grants expected will go up by a whopping great 138,000 students. Who helps the 500,000 students that were getting assistance from the Perkins Loan but now aren’t getting a Pell Grant? Is the budget really helping more students?

Why do we make such a fuss about student loan consolidation? Well, consider this aspect. The average student graduates with $18,900 in student loans. Without student loan consolidation, for this year, that student will pay about $185/month on that loan. If rates go up as projected - about 1.4 points - you’re now looking at about $200/month in student loan payments. For a new college graduate in an entry level position, $200/month is big money. According to Salary.com, entry level pay here in Quincy, where the Student Loan Network is based, is about $30,000. Uncle Sam, now that you’ve graduated, wants payback in many forms. $30,000 salary will net about $3,000 in taxes. So you’re down to $27,000 in income. Then take out food - about $100/month, give or take. Bang goes $1,200 to $25,800. A one bedroom apartment in this area goes for about $1,150/month if you are very, very lucky. Figure about $13,800 for the year. Now you’ve got $12,000 left. Many students own cars. Say goodbye to anywhere from $200 - $300 a month. If you have a car, don’t forget about car insurance, either, which for someone 18 - 25 will be anywhere from $1,000 - $2,000 a year. Call it $5,000 for the year ($250/month, plus $2,000 insurance). $7,000 left in usable income once basic needs are met - then add in utilities like heat, water, electricity, gas, etc. - about $150/month. Add in a cell phone and basic cable TV, another $200/month. That’s $4,200 a year. You have $2,800 left in usable income. That’s $233 per month. Now you factor in that student loan payment. If you pay full price - meaning you don’t consolidate - you’re looking at $185/month until July 1, when it will probably go up to $200/month. That means you would have exactly $33 left in discretionary spending.

If you consolidated, you’d be paying about $133/month, leaving you with about $100 in discretionary spending. You’d have even more if you elected one of our graduated repayment plans; for the first two years (while you claw your way up out of entry level pay) you’d pay only $54/month. That’d leave you with about $179/month in discretionary cash. Think about it - you could have $33 or $179 at the end of the month. I know which I’d choose.

That’s why student loan consolidation is so important, and why it’s a bad thing for the program to incur the wrath of the powers that be in order to scrape up extra funding for a Pell Grant coupon. Consolidation helps ten times as many students as the Pell Grant, so if the goal is to help as many people as possible, then that one’s a no-brainer.

Personally, and this is just my opinion, not the Student Loan Network’s, if we stopped invading countries and plowed that money - $154 billion to date - into education, we could fund the Pell Grant, Perkins Loan, consolidation, and still have money left over for scholarships and grants a plenty. the Department of Education’s budget is $63 billion. That means we could effectively triple its budget for the cost of one war. Think about it. Three times as many grants. Three times as many low interest student loans. Three times as many consolidations to help graduates make life after college more affordable. But hey, I’m not in charge. At least I voted, though.