New York Attorney General Andrew Cuomo has launched an investigation into deceptive student loan marketing by issuing subpoenas to 33 lenders. The investigation extends the scrutiny of the student loan industry into how lenders communicate directly with students.

As U.S. News reported in April, dozens of lenders use mailings that mimic government documentation. Calling themselves official-sounding names such as “Student Loan Department,” some lenders stamp their envelopes and letters with eagle insignia or a book and leaves inside a circle within a circle, which is similar to the federal Education Department’s insigne.

Interviewed this spring, Greg Hassell, spokesman for Collegiate Funding Services—part of JPMorgan Chase, which received a subpoena from Cuomo—said its letters were not deceptive and that the insignia and “Student Loan Department” wording did not suggest the letters were from the government. (more…)

According to a recent study, student loan debt is rising faster than starting salaries for new college graduates. The Project on Student Debt found that while average starting salaries from 2006-07 rose by 4 percent, student debt rose by 8 percent during the same time period.

“This study represents what is going on in the economy, as well as increasing college costs,” said
Esther Manogin, director of student financial aid.

The study found the average debt for North Carolina was $17,760 with 55 percent of college students in debt.

However, Appalachian State University students are in debt an average of $14,838 when they graduate and 49 percent have some form of debt.

The Project on Student Debt urged Congress to pass legislation that would help alleviate the cost of college and the amount of debt that college graduates would have. The legislation has been passed and signed into law by President George Bush. (more…)

You need some more money for college expenses this semester. Do you whip out a credit card to pay for your books, or do you apply for a federal or private loan? Well, consider the options –

With a federal loan, your interest rate will be low around 5% and your payments will be deferred until 6-9 months after graduation.

With a private loan, the interest rate will be slightly higher than with a federal loan but will still be lower than average. In addition, you will only need to make interest payments until after graduation. (more…)

More than half of parents expect their child to have to take out a student loan to fund their studies at university, a new survey shows. Around 57% of parents said their child either had or would need to take out a student loan, rising to 71% among parents who work full-time, according to high street bank Halifax.

Nearly two-thirds of parents said they would help finance their child’s studies using money from their salary, while 59% said they would use their savings.

More than a third said they would consider either themselves or their partner getting a job or working longer hours to fund further education. (more…)

The wrong way to become a lender of choice SERVING borrowers with patchy credit histories has never been more perilous. America’s “subprime” mortgage providers have been hounded by congressional committees and face regulatory clampdowns.

Now the $85 billion-a-year student-loan industry is joining them in the dock. Its accuser-in-chief is New York’s attorney-general, Andrew Cuomo, who, following in the footsteps of his bank-bashing predecessor, Eliot Spitzer, claims to have unearthed a latticework of suspicious links between lenders, university officials and a government department.

The focus of the investigation is the “preferred lender” lists that financial-aid officials compile to help students choose loan providers. These lists are supposed to be based on merit, but some lenders appear to have secured a place on them by paying kickbacks in the form of shares, free travel, debt write-offs and phoney fees.

More than 100 higher-education colleges and several lenders have received subpoenas or requests for information. A senior official from the Department of Education, who oversaw the industry, and financial-aid officers from Columbia University, the University of Texas, the University of Southern California and Johns Hopkins University, have all been suspended pending the outcome of the probe. (more…)

You need to find an International student loan if you are a prospective overseas college student who is now a United States resident, or if you are thinking about returning to a college or university overseas. Just like here in the United States you will need to apply for and qualify for various student loans to help you make your way through school and pay for your tuition after you have graduated.

When you are applying to study overseas you need to find International student loans that you will qualify for and start applying for them.

According to the International Student Loan Center, each year over 190,000 Americans study abroad and over 550,000 international students come to the USA to study. However, studying abroad often requires financial assistance for extra expenses such as travel, accommodations and materials, which can make it a greater financial commitment.

What Is An International Student Loan?

An International student loan is for you if you are currently an American citizen and you plan to enroll in a college or university in another country, usually overseas.

What Is The Process Of Getting Approved? (more…)

The Student Loan Default Story Legally, a default occurs the first time you fail to make a payment when it is due. But if you fail to make your student loan payment for 180 days, your loan will enter the “official” default status and take on a life of its own.

This is the point at which the lender will report your student loan as defaulted to the credit bureaus. It is also the point at which a long list of bad things can start to occur. Your tax refund checks can be seized and your wages can be garnished.

What Happened?

Why are student loans so different from all other debts? Well, prior to 1991 the U.S. Department of Education was empowered to collect delinquent student loans for only six years. But in 1991 an amendment to the Higher U.S. Department of Education Act lifted all time limits for collection. And the amendment was retroactive; student loans that were past the statute of limitation for collection prior to the amendment became collectable again. And to further reinforce the longevity of student loan debt, a 1998 change in federal law made it virtually impossible to discharge student loan debt in a bankruptcy. (more…)

The student-loan industry is under a cloud, hit by allegations that some firms have been paying college financial-aid personnel to steer business their way. The scandal is just the latest twist in what has become an increasingly complex and frustrating process for parents and students in their quest to find ways to fund pricey college educations.

The growing concern over student lending has produced new regulatory proposals aimed at reining in the increasingly sophisticated marketing efforts used by private lenders. It has also sparked calls for parents and students to be more vigilant in looking after their own interests in the financial-aid process.

Bills Introduced

Companion bills have been introduced in the U.S. Senate and House that aim to protect students and parents from exploitation by requiring more disclosure from lenders about the deals they craft with colleges and universities. The bills would encourage families to maximize their borrowing through the government’s loan programs.

“Lenders are increasingly using questionable methods to persuade colleges to steer students to their loans,” Sen. Edward Kennedy (D., Mass.) wrote in an email response to questions. “In return, the colleges give an unfair advantage to the lenders.” A co-introducer of the Student Loan Sunshine Act in the Senate, Sen. Kennedy says that too many students don’t exhaust their federal-loan options, simply because they don’t know what funds are available or how to obtain them. (more…)