Student Loan Consolidation Lowdown

Sallie Mae’s Teach for Virginia and Care for Virginia student-loan programs will repay 10 percent of eligible students’ original loan balances for the 2006-07 year. This incentive is thanks to a partnership with the state, wherein nursing or teaching students at any Virginia college or university who take out the federally-backed Sallie Mae loans are eligible. Timesdispatch.com reports:

In addition this year, it will waive all origination fees — at another 2 percent savings — and, depending on the lender, students can earn an additional loan credit of up to 3.3 percent or an interest rate reduction up to 1.25 percentage points.

Read more:State expands loan perks for nursing, education students

A Bush administration panel recently withdrew a proposal to eliminate 75 percent of federal student loans programs and grow the main federal grant program by 45 percent. The proposal would have allowed federally backed loans only for low-income students. Banknet360.com reports:

The panel, headed my Charles Miller, chairman of the Commission on the Future of Higher Education, is due to report next month on ways to make college more affordable.

Read more: Bush Panel Retracts Student Loan Proposal

It’s just one month since the Department of Education raised the interest rates on federal student loans and the decision is already having a far-reaching impact. Most educators, students and parents agree that repayment is going to be even more difficult now, a very uphill task which could affect the students considerably. Timescommunity.com reports:

"It’s possible the new rates could prohibit someone from attending college," said Dr. Jeff Diamond, director of guidance at Fauquier High School. "These kinds of changes make an impact on students’ choices."

Read more: The own up on loan ups: What the rising student loan rates really mean

While credit card companies are busy wooing students, forcing them to pay their tuition with plastic, it would be a good idea if you checked with your University before deciding on this mode of payment. In what could be described as a trend, Purdue University recently decided that it wasn’t going to allow that payment option any time soon. Purdueexponent.com reports:

According to its credit card payment Web site, the University of Missouri-Columbia has endured $2 million in additional annual fees. The university, which is home to about 28,000 students, changed its payment policy in December 2005. The larger institution now requires students to pay the 2.75 percent transaction service charge, which is added by a third-party vendor.

Read more: Purdue denies credit card payments

Has it ever occurred to you that you could be paying off your student loan debt way into your 70s? Recent waves of student loan consolidations and lengthened loan terms, may see student borrowers pushing scheduled payoff dates into their 40s, 50s and even 60s. Post-gazette.com reports:

What concerns financial experts is that student loan payments that are "like a mortgage" might come at the expense of an actual mortgage or other financial steps such as saving for retirement or a child’s college fund.

Read more: Graduates’ dilemma: Living in shadow of debt

Maricopa Community Colleges governing board approved a no-cost contract Tuesday with national student loan company Nelnet, which recently lost data for about 188,000 customers. The breach is said to have occurred when NelNet’s magnetic tapes filled with student loan data were lost during transportation from Denver. Azcentral.com reports:

The newly approved contract allows NelNet to charge a student a $20 convenience fee to handle tuition repayments in installments rather than one lump sum, if the student chooses to accept the service.

Read more: Colleges board OKs pact with student-loan company

If you are a nurse working full time in Kentucky, you may become eligible to save on your student loans by applying for Best in Care benefits. Best in Care provides interest forgiveness each year to nurses who have Federal Stafford, PLUS or Consolidation Loans through The Student Loan People. Communitypress.com reports:

Registered nurses, licensed practical nurses and licensed vocational nurses who work in hospitals, long-term care facilities, public health care or nursing education at colleges and universities in Kentucky may apply for principal forgiveness on their loans each year.

Read more: Kentucky nurses may be eligible for student loan forgiveness

Two weeks from now and the second largest interest rate hike in the history of the student loan program will take effect. Federal student loan interest rates will increase almost 40 percent for students and 30 percent for parents July 1, meaning the new fixed rates for new Stafford loans will be 6.8 percent and 8.5 percent for PLUS (Parent Loan for Undergraduate Student) loans. Mariettatimes.com reports:

New rates for consolidation after July 1 will rise to 6.625 percent for consolidated loans made up of Stafford loans in grace or in-school deferment and 7.25 percent for Stafford loans consolidated during repayment. Currently, those rates are 4.75 percent and 5.375 percent.

Read more: It’s not too late to beat student loan rate hikes

Student-loan giant Sallie Mae and other lenders recently hiked rates about 1.84 percent for the coming fiscal year on two key programs: Stafford loans and PLUS loans. The steeper rates will translate into higher monthly payments for borrowers. Bostonherald.com reports:

Sallie Mae Vice President Pat Scherschel said rates shot up over the past two years because the Federal Reserve has been tightening credit in a bid to prevent inflation.

Read more: Debt by degrees: Feds to hike student loan rates