Student Loan Grace Periods End

The grace period on student loans to those who graduated last May has ended and it's time to start paying them back. That's ok if you have landed a job that actually pays you enough money to live on, but what about those who either haven't found a job or your pay isn't adequate to subsist on?

You do have a few choices, but one of them is NOT burying your head in the sand and ignoring the situation. That will only put you into default, hurt your credit rating (not a good idea for anyone, but especially someone just starting out) and possibly lead to legal action. Get in touch with your lender and explain your situation.

One possibility is student loan deferment. This is a temporary suspension of loan payments for various reasons including reenrollment in school, unemployment, or economic hardship. For your subsidized loans, you won't need to pay interest while the deferment is in place. For non-subsidized loans, you are responsible for the interest added during your deferment. If you are unable to pay it, your loan will be recapitalized and the interest added into the total you owe.

Even if you aren't eligible for deferment, you may be able to use forbearance which is a temporary postponement or reduction of payments for a period of time because you are experiencing financial difficulty. Forbearance may be granted by your lender for 12 months at a time up to a maximum of three years.

Student loan forgiveness may be possible in exchange for service in various organizations such as Peace Corps, VISTA, Military Service and also by agreeing to teach in certain underprivileged or low income areas as defined by the Department of Education.

Bankruptcy is probably not a very good option. Not only will it hinder you going forward since it remains on your credit reports for years, but the student loans are not usually discharged in a bankruptcy and you will still end up owing the loans.

Bottom line...if you are having trouble paying your student loans, talk to your lender as soon as possible. Don't wait until you are already months in arrears.

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Stanford University Announces Plan to Pay Tuition For Lower Income Students

If you've been putting off applying to Stanford because of the $47,000 price tag, take another look. Stanford recently announced a new plan that will pay the tuition ($36,000) for students with family incomes below $100,000. Students with a family income below $60,000 will not be expected to pay anything for tuition, room or board. The program will also eliminate the need for student loans.

As the latest entry to the number of colleges and universities dipping into the endowment to try and bring the cost of education back to the realm of possibility for most, Stanford has upped the ante with this far-reaching plan. Hopefully many other institutions with huge endowments will follow suit.

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Wellesley College Announces Plan to Reduce or Eliminate Loans

Wellesley College announced on February 7 a new financial aid plan that would eliminate loans for students with family incomes below $60,000. The plan would also reduce by one third the loans for those students with a family income between $60,000 and $100,000, which would in effect limit student loans to these students to a totla of $8,600 over four years.


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Dartmouth College Announces Tuition and Loan Elimination Plan

Dartmouth College President James Wright announced today several major additions to the school's financial aid program. Beginning with the 2008-09 school year:

All students with a family income below $75,000 will go tuition-free. They may also be eligible for scholarships to help cover other expenses such as room, board, books and miscellaneous expenses.

Scholarships will be replacing grants for incoming scholarship students beginning with the Class of 2012. Current students will see their loans cut by 50%.

Starting with the Class of 2012, Dartmouth will extend it's need-blind admission policy to all international students. Currently students from the US, Canada and Mexico are covered by the policy.

Financial aid recipients will be eligible for a $2,950 scholarship in their junior year to assist them in taking advantage of possible research or internship opportunities.

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