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HSFPP Weekly Update #163—Consolidating Student Loans: Act Now!

Message from Flashman: This is our last update for the 2005-2006 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 not only relevant to teenagers, but also could benefit teens’ other family members.

This week’s update is for teens to take home to their parents! It will be helpful for teens whose older siblings are in college or other postsecondary educational institutions, or who have recently graduated and have not consolidated all their student loans. This update also may be useful to parents who have taken out Parent Plus loans.

I hope to see many of you in my graduate course, FAM 759, this summer. This course will focus on financial education resources for all age groups; it should help you in teaching the HSFPP and also provide information for you to improve your own financial decisions. For more details, go to Update # 162.

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

 

Message from Chris: This will be my last weekly update. I hope you all enjoyed and found useful the weekly financial lessons I’ve worked on for the past four years. I’ve learned more by preparing these weekly updates than I have in any class I’ve taken at the University of Kentucky. Everyone benefits when they know more about how to manage their money. Having money is useless if you do not use it intelligently to meet your financial goals.

 

Web Site Pick of the Week: Kentucky

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

Kentucky Cooperative Extension’s Family and Consumer Sciences Web site provides a wealth of information available on all areas of family life and personal well-being. My favorite link, Focus Areas, http://www.ca.uky.edu/fcs/areas.htm, helps you find the area that interests you most and provides links to online publications, program materials, and other helpful sites.

 

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

Last year I consolidated my student loans up to my junior year at 2.87 percent. If you did not consolidate your loans last year, you should realize that rates are going up; but, by consolidating your loans by June 30, 2006, you can still lock in a low interest rate—the repayment rate will be around 5.3 percent—which will still save you money over the life of the loan and help you pay off your loans more quickly.

According to finaid.com, “current interest rates on the Stafford Loan are 4.70% during the in-school and grace periods and 5.30% during the repayment period. The current interest rate on the PLUS Loan is 6.1%. These rates are expected to increase by 1.75% to 2.0% on July 1, 2006, returning to historical average rates.” Some lenders will do the processing right over the phone and send the completed form via e-mail so you can sign it electronically.

According to Mark Oleson, Assistant Professor at the University of Missouri, the three best state consolidated programs are being offered by North Carolina, South Carolina, and Iowa, and are open to Kentucky students where their consolidation benefits exceed those of the “average private program.” North Carolina’s program is the only one that requires a connection (they also offer the largest rate reduction benefits – 2% total reduction after on-time payment), but creating that ‘connection’ is not difficult (5 minutes and $5) – read more details about each program on the following Web site: http://financialsuccess.missouri.edu/stateprograms.pdf.

When consolidating, remember to include all government-backed Stafford loans, not just those from schools that participate in the direct loan program, but also from banks or commercial lenders. Students who borrow directly from the government have always been free to consolidate while still enrolled. Students who attend schools that participate in Direct Lending can call (888) 758-9730 or visit the US Department of Education's Federal Direct Consolidation Loan Web site at: http://loanconsolidation.ed.gov.

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. Go to the following Web site to learn more: http://www.uheaa.org/forms.htm. In addition, loan forgiveness programs for teachers can be based on various criteria such as your field of study, occupation, or geographical region. Go to the following Web site to learn more about loan forgiveness: http://www.finaid.org/loans/forgiveness.phtml.

For those who will 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/about_whatsnew.html, you will learn about low-cost loans as well as 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.

And 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”

Sources:  (1) Mark Oleson, Assistant Professor, University of Missouri, author of Financial tip electronic newsletter (05-18-06); Kentucky Higher Education Assistance Authority, News Release, (4/15/05); and http://www.finaid.com/loans/.

 

Kentucky High School Financial Planning Program

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

The purpose of the HSFPP weekly financial updates and Web site is to assist county Extension agents, credit union educators, high school teachers, and parents who home school their teenagers so that they may improve the economic well-being of our teenagers; and also to show educators how the HSFPP and the weekly updates meet Kentucky core concepts. The Web site and weekly updates are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators. The list of core concepts and order form for free program materials including the student guide and instructors manual can be found on the Kentucky HSFPP home page.