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HSFPP Weekly Update #130—Consolidating Student Loans. Act Now!

Message from Flashman: This is our last update for this program year. One of our goals with weekly updates is to provide timely information. Another goal is to show how schools and 4-H Extension are relevant not only to teenagers, but that what teens learn can also be beneficial to their families.

This week’s update is for teens to take home to their parents. It will be helpful for teens who have older siblings in post-secondary educational institutions, or who have recently graduated and have not consolidated all their student loans.

I’ll see many of you this summer for the graduate course, FAM 759, which will focus on financial education resources for all age groups. This should help you in teaching the HSFPP and provide you with information to improve your own financial decisions. For more details, go to Update #123.

Make sure that you order student guides before you leave for the summer so you willhave them in August. And have a relaxing, stress free summer!

Message from Chris: Even though I’m only a junior, I plan to consolidate my loans to lock in my interest rate before it goes up in July. Along with this, I will ask for an extension so I don’t have to begin paying until after I graduate.

 

Web Site Pick of the Week:

http://www.fcs.iastate.edu/financial/

Iowa State University’s Financial Counseling Clinic provides excellent financial information and resources for students, especially those planning to go on to college. They provide calculators, games, information from a variety of sources, as well as links. At the top-right of their Web page, you can submit your e-mail address to sign up for their weekly updates. We frequently use their information for our weekly updates, including this week’s update, and you can, too.

 

Activity for Educators:

As part of your final exams, you might want to include questions from the 2004 Jump$tart Coalition Survey, which is included in Update # 92. This will let you know how your students compare with students nationwide. I also would appreciate it if you would share your students’ composite score for each question with your county Extension agent or mail this information directly to me at:

Robert H. Flashman
303 Funkhouser Bldg.
University of Kentucky
Lexington, KY 40506-0054

Don’t Wait! Act Now to Save on Student Loans!

Through loan consolidation, you can save thousands of dollars by locking in the lower rates. The current student loan interest rate is 2.77 percent; on July 1, 2005, however, it is likely to rise somewhere between 4.5 and 5 percent. By consolidating now, new graduates could forfeit the six-month grace period, but some lenders will also still give this grace period to new graduates. According to Dr. Robert Flashman, State Extension Specialist in Family Resource Management at the University of Kentucky,you need to do this right away. Some lenders will do the processing right over the phone and send the completed form via e-mail so you can electronically sign it, and still give you the six-month grace period. One of the largest student loan consolidators that Flashman checked on indicated a rate of 2.87 percent, with a quarter-of-a-point discount if you set up direct withdrawal from your bank account; additionally, after 36 months that lender will give another 1-percent discount if all payments have been made on time.

Mark Oleson, Director of Iowa State University’s Financial Counseling Clinic, who has evaluated student and Parent Plus loan consolidation programs across the country, recommends that you compare any other offer to the one offered by the state of Utah. If you have direct loans or loans from two lenders other than the Department of Education, you are eligible for the Utah program. Never mind that you don’t live in Utah; they have made their program available nationwide. Contact Utah at www.uheaa.org. Utah’s rate is 1.62%, if you have your monthly payments deducted from your bank account. After 48 months of continuous payments, they take another 1% off, leaving you with an interest rate of .62%. Can you beat that? Again, interest rates will go up July 1 st.

When consolidating, remember to include all government-backed Stafford loans, even those from banks or commercial lenders. Students who borrow directly from the government have always been free to consolidate while still enrolled but, since interest rates were going down the last few years, it wasn't worth it.

Loan consolidation may not be necessary if a student plans to be a teacher, child care provider, or nurse. There are programs for loan forgiveness if the student works a certain number of years in these professions. If the student plans to work as a nurse in Kentucky, it doesn’t matter where he or she received the degree. There are also programs for doctors and special education teachers who practice in rural areas. Go to the following Web sites to learn more: http://www.uheaa.org/forms.htm and http://www.kbn.ky.gov/edpractice/nisf/studentloanpeople.htm

For those who plan to graduate high school this June or in the near future, there are many programs that can help you afford college. If you’re interested in working in childcare there is a scholarship for you; to learn more, go the Kentucky Higher Education Assistance Authority Web site: http://www.kheaa.com/prog_ecds.html.

On KHEAA’s “What’s New” page, http://www.kheaa.com/whatsnew.html, you will learn about low-cost loans and loans for teachers and nurses. Kentucky teachers, guidance counselors, and school librarians can benefit from the Best in Class program, which offers interest-forgiveness loans. Teachers of math, science, special education, and English as a second language have 20 percent of the principal forgiven each year they practice in Kentucky. Similar benefits are also available through Best in Care to registered nurses and licensed practical and vocational nurses who work in Kentucky.

Also, don’t forget that, beginning in 2005, under the tax modernization plan, Kentucky taxpayers “may deduct a credit of 25 percent of the federal Hope or Lifetime Learning Credits up to $500 for tuition or related education expenses for them, their spouse, or other dependents. To take advantage of the state tax credit, the tuition or other expenses must be for undergraduate enrollment at an eligible Kentucky higher education institution that qualifies for participation in the federal Title IV student financial aid programs” (Kentucky Higher Education Assistance Authority, News Release, 4/15/05).

 

Kentucky High School Financial Planning Program

http://www.ca.uky.edu/fcs/hsfp

The purpose of this Web site is to assist county extension agents, credit union educators, and high school teachers in improving the economic well-being of our constituency, beginning with today’s students; and also, to assist teachers in Kentucky in meeting KERA’s goal that all students become technologically literate. Weekly Updates are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators.