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by Agnes Jasinski

As a response to "operating in unsettled and ... unsettling times," Williams College has decided to stop offering its no-loan student-aid program and to reintroduce modest student loans to students' financial aid packages.

In an open letter to the Williams community released over the weekend, the school's Interim President Bill Wagner said the change would not affect current students, but beginning with the class that enters in the fall of 2011. Families below a certain income will still not be expected to borrow at all, and other students will be offered loans on a sliding scale up to a maximum size that the school says will still be among the lowest in the country.

Student loans were eliminated at Williams in the 2008-2009 academic year, joining more than 30 private colleges that had adopted similar policies, such as Amherst and Claremont McKenna colleges. (There have already been rumors that Amherst College may join Williams in amending its own policy.) The decision to cut loans out of students' financial aid packages came at a time when the school's endowment had grown so large that there were demands to spend more. But at the same time, more students were applying for and qualifying for financial aid.

Williams isn't the only college to renege on a promise to students, nor is it the first. Lafayette College raised the loan limit it pledged to students from $2,500 a year to $3,500 a year if they had family incomes of between $50,000 and $100,000. Dartmouth College has been requiring loans again for those at certain levels now exempt from borrowing. Endowments across the country have plummeted, suffering their worst losses since the Great Depression. According to an article in The Chronicle for Higher Education published last week, the value of college endowments declined by an average of 23 percent from 2008 to 2009. An endowment student sponsored by the National Association of College and University Business Officers found that of the 654 institutions that reported carrying long-term debt, the average debt load grew from $109.1 million to $167.8 million.

Are "no loans" policies feasible at all? Some critics explain that there are students currently exempt from taking out loans who could easily be able to pay them off once they graduate. Students with family incomes of more than $120,000 have the resources to borrow less than other students, critics say, and the focus instead should be on helping low-income students keep their loan debts at a minimum. Williams hasn't been clear as to what the family income cutoff would be for its new policy, but it will undoubtedly hit the middle class hard.

by Suada Kolovic

Here at Scholarships.com, we love the idea of students going to college debt-free but the reality is that student loans, for the most part, are a necessity in today’s educational world. And while private student loans should be a last resort when paying for college, it can help bridge the gap for families who have maxed out federal loan limits. The silver lining: Sallie Mae is lowering its interest rates on student loans.

The new cap on Sallie Mae’s rate will be 9.875 percent plus LIBOR, which is the interest rate that banks charge each other for loans. The new lowest available rate will be LIBOR plus 2 percent, which reflects a half percent rate reduction. But remember, the exact interest rate Sallie Mae assigns to a specific loan will vary depending on the borrower’s credit score and repayment option. They’re also offering students the option to make $25 monthly payments while they’re in school to counter interest costs or defer payments until graduation. Another added bonus: For loans disbursed between July 1 and Oct. 1, Sallie Mae is offering free tuition insurance for a year.

All these perks aside, Sallie Mae can’t compete with federal loans that come with a fixed rate of 6.8 percent but a cut in student loan interest rates is still a win in my book.

by Emily

On the heels of last week's announcement that Sallie Mae would not participate in the upcoming PLUS loan auction, the student lending giant once again comes bearing news that may ruffle some feathers and potentially hurt its customers' ability to pay for school.

In a move to reduce default rates, Sallie Mae has announced changes to their popular private loan program.  As of next week, borrowers will be expected to make interest payments on their loans while they're still in school.  Additionally, the repayment period will be kicked down to under 15 years, as opposed to the current norm of 15 to 25, and the bank will also grant forbearances only in the case of serious financial hardship.  Other student lenders have expressed interest in this plan and may soon follow suit, according to an article in The Chronicle of Higher Education.

This is actually good news for student borrowers with the means to repay their student loans quickly and make interest payments while still in school--the total amount they repay will be much smaller under this plan.  Additionally, if Sallie Mae's loans become more appealing to buyers, it may help the bank stay around to make more loans and could potentially increase loan availability.  This move will also cause borrowers to think twice before applying for a private loan from Sallie Mae, which could encourage more responsible borrowing.

However, not everyone is taking out tens of thousands in private loans to drive a sports car to the campus climbing wall at an elite private college.  Many borrowers may already be at a community college or state university and may be using their private loans to buy ramen.  These students could potentially be edged out of college unless they find alternative sources of funding.  If they do stick with private loans, they may need to borrow more to be able to cover their interest payments on their current private loans.  This will in turn drive their interest payments and loan balances even higher, while allowing them fewer opportunities to receive a forbearance if they struggle to make payments.

Students who are currently relying on private loans from Sallie Mae to remain enrolled in college should be aware of these changes and search for other funding options if paying interest while in school is not an option.  Make your first move a scholarship search before reviewing other private loans or alternatives to alternative loans.

by Suada Kolovic

On the heels of our latest post – a story about a Northeastern grad who accumulated $200,000 in student loans – the Pew Research Center released a report that members of the class of 2008 borrowed 50 percent more than their counterparts who graduated 12 years earlier. According to the report, increased borrowing by college students has been driven by three trends: more college students are borrowing, college students are borrowing more, and more college students are attending private for-profit schools. The report reveals that the number of undergraduates borrowing rose from 52 percent in 1996 to 60 percent in 2008 and among those who borrowed, the average undergraduate loan increased from $17,000 in 1996 to $23,000 in 2008. The rise in attendance at private, for-profit colleges also resulted in the increase of student borrowing; the report states, “Students who attend for-profit colleges are more likely than other students to borrow, and they typically borrow larger amounts.”

This isn’t the shock of the century by any means. In August, the Wall Street Journal reported that for the first time in history, student-loan debt surpassed credit card debt. The figures are staggering: According to the Federal Reserve, Americans owe $826.5 billion in revolving credit, while students owe an estimated $829.785 billion in loans. In fact, so many college graduates are plagued by massive amounts of debt that the Huffington Post has provided an outlet for college graduates to share their stories - almost as a cautionary tale – through an ongoing project, Majoring in Debt.

What do you think? With recent college graduates facing debt in the hundreds of thousands, what are you doing to ensure you don’t end up in the same situation?

It seems Sallie Mae wants nothing to do with PLUS Loans and it's possible many other lenders will be reticent to bid on the graduate student and parent targeted loans at the upcoming "auction". Supposedly, the government is not allowing lenders to make enough money on these loans for it to be sufficiently profitable so they are opting to invest their capital elsewhere.

Some are claiming this is a ploy to get a larger cut than what the government currently allows. This certainly isn't out of the question, and it seems likely that Sallie Mae would participate if the "price were right", but this is likely beside the point to those seeking financial aid for college. They just want to know how they are going to pay for school if nobody wants to underwrite their PLUS Loan.

There is no question it's difficult to get a loan for education these days and getting more so by the day. Naturally, it would be ideal if every student attending college next year could find sufficient scholarships, grants and other "free" money to pay for their entire education but we are all well aware that is fairly unlikely for most. But that doesn't mean you shouldn't try. It is rare that those who do, somehow, find a way to get through college without taking out loans are not quite surprised themselves. The key is to search for scholarships and to do so with the belief you can win. Because you can. You probably won't win them all, but you might win some of them, right? Improve your odds by applying to as many as you can from now until every deadline has passed! You may not get all of your tuition paid for (some of you will, though!) but that's no reason not to try, right? Some of you will be able to pay about half, or even more than half and that's huge. Even if you were able to get $3,000 a year? Or even $2,000? Maybe go to state school instead of that pricey private college you were going to attend. Now that $3,000 is much more substantial, isn't it? Consider all of these things and conduct a free scholarship search today and see what's available out there before you start looking at loans.

Back to PLUS Loans and Sallie Mae's absence from the upcoming auction. The idea is that lenders actually have to "bid" on the loans by stating their lowest acceptable federal subsidy rate they are willing to accept to make the loan. They have to give their absolute best offer in competition with other lenders, which should, in theory, benefit those taking out the loans. This "auction" format began just a couple of years ago and may already be on its way out, as President Obama has called for the elimination of the entire guaranteed-loan program. Naturally, this puts further strain on those still trying to move forward with the auction, which will now be without Sallie Mae, who makes 40% of PLUS Loans in the guaranteed-loan program. It is difficult to know how big an impact this will have on the event, but you can rest assured it does not bode well for students counting on PLUS Loans to fund their education.

by Alexis Mattera

There’s good news and bad news regarding state aid for students. The good: State financial aid for college students, including grants, work-study and loans, rose by nearly 4 percent last year. The bad: Just about half of the states surveyed cut need-based grants, even as demand for financial aid increased.

The data – from a report by the National Association of State Student Grant and Aid Programs – also revealed a 1-percent decline in overall state higher education spending and more money spent on need-based grants versus the amount spent on merit-based grants. While this means some students have access to resources that will help them complete college and bolster the economy, not all students are benefiting. Ohio, Alaska, Michigan, Hawaii and Utah have cut need-based grant funding by as much as 66 percent and in Georgia, lower award levels have been implemented for the HOPE Scholarship. And what about California and Washington, where financial aid increased? They’ve seen an increase in student-aid applications but cannot honor all requests because they have run out of money.

Experts view these findings as positive overall but are proceeding with “cautious optimism.” Do you agree or disagree with the actions taken thus far?

by Suada Kolovic

If you’re a recent college graduate, chances are you’ll have to start paying off your student loans sooner than you think. And even with the economy in a slump, don’t expect a free pass on not paying your loans. Are you starting to panic? Well, don’t! There’s a ton of advice out there to help students stay on track and courtesy of the U.S. News and World Report, here are seven tips for repaying your student loans.

• Repay you student loans automatically. Make things easier on yourself by setting up automatic withdrawals from your bank account. This reduces the chance of late or missing payments.
• Aim for 10 years. The traditional repayment period for student loans is 10 years and ideally you'll be able to pay off all your debt within that time period. If you end up struggling with your monthly payments, however, you could stretch out your loans to 20 or even 30 years. Your monthly payments will become more manageable but you will end up paying a lot more in interest.
• Stay organized. Having multiple student loans can be a challenge to keep track of but with the government's National Student Loan Data System, you’ll be able to track all your federal student loans in one place.
• Pay off the loans with the highest interest rates first. A high interest rate costs you every month and compounds that amount you owe every month you aren’t paying off the entire balance.
• Consider IBR. The IBR is a federal Income-Based Repayment program that allows a borrower to repay his or her federal loans based on what is affordable and not what is owed.
• Keep abreast of student loan developments. Staying informed is just as important as making your payments. Familiarize yourself with websites that are devoted to college debt issues like Project on Student Debt and the National Consumer Law Center's Student Loan Borrower Assistance Project.
• Contact the Federal Student Aid Ombudsman. Sometimes your relationship with a lender can go belly-up. If you end up in a dispute, the Federal Student Aid Ombudsman may be able to help resolve the issue.

by Alexis Mattera

Attention recent college grads: You may be able to pay down those student loans a bit sooner than expected!

According to the annual Salary Survey by National Association of Colleges and Employers, graduates from the Class of 2011 shows a 4.8 percent starting salary bump over last year’s graduates. The increase was seen across most disciplines including engineering, liberal arts and social sciences, though 5 percent more 2010 graduates were able to find jobs than their 2011 counterparts. With approximately $2,357 more before taxes (this year’s grads will average $51,018 to last year’s average of $48,661), new grads will have enough for a few months of rent, some padding to a savings account or, yes, a way to make a dent in those loans.

Recent grads, are you happy about this news? Soon-to-be grads, are you hopeful the salary figures will continue to increase until you finish college?

by Jessica Seals

The first day of classes means new professors, new classmates and a completely new routine. It is also about the time that universities distribute refund checks to students. Refund checks are extra funds that are left over after all school fees have been paid. These funds are the result of excess scholarships, grants and loans. Refund checks can come in handy, as students can use the extra money to buy a laptop, food, books or to pay off another loan. Some students, however, are not wise with their money and are left scrounging for pennies before the end of the semester.

I always hear students complaining about how they do not have any money left from their refund check long before finals roll around. They chose to splurge on clothes, the newest Droid phone, expensive restaurants or they spent money on friends. Buying a few extra “fun” items is not something that should necessarily be avoided but you should maintain a budget and be conscious about how much money you are spending. I have taken money from my refund check and separated it into two separate bank accounts. The money in my savings account rarely gets touched unless it is an emergency and the money in my checking account is what I use on a daily basis. I keep less money in the checking account so I am not tempted to spend more than I intend to.

While in college, it is especially important to learn how to manage your money. If you get a refund check back from the school, this could be your chance to start learning how to do so. You will feel great knowing that you will not be labeled a broke college student!

Jessica Seals is currently a senior at the University of Memphis majoring in political science and minoring in English. At the University of Memphis, she is the secretary of the Pre-Law Society, the philanthropy chair of the Phi Kappa Phi Student Council and a member of Professional Assertive United Sisters of Excellence (PAUSE), Golden Key Honor Society, Alpha Lambda Delta Honor Society, Sigma Alpha Lambda Honor Society, and Black Scholars Unlimited. She also volunteers to tutor her fellow classmates and hopes to attend law school in the near future.

by Alexis Mattera

In recent years, college students have become more cautious about taking out loans to pay for school. There are multiple reasons for this – horror stories from friends or siblings, limited job prospects after graduation and high interest rates have all been cited – and while it’s an admirable goal to graduatefrom college debt-free, educators think this approach could actually hinder students from getting degrees.

According to a recent Associated Press article, students are attempting to limit borrowing by working longer hours, taking fewer credits (and often not enrolling full-time), living at home and attending less selective institutions. While educators are impressed with this level of fiscal responsibility, they are quick to point out that each action above is a risk factor that makes college students less likely to graduate. Borrowing could prevent this, said Deborah Santiago, co-founder and vice president of Excelencia in Education. "If you can take out a little bit of loan you're more likely to complete. If you can go to a more selective institution that gives you more resources and support, you're more likely to complete." How much more likely? Federal data analyzed by Excelencia and the Institute for Higher Education Policy (IHEP) in 2008 shows roughly 86 percent of students who borrow for college are able to attend full-time compared to 70 percent of students who don't borrow and roughly 60 percent of full-time students receive a bachelor's degree within eight years compared to 25 percent of part-time students.

What can be done to facilitate this message? Educators believe students need to better understand financial aid, the difference between types of loans, debt management and the returns on various degrees and majors. In addition to searching for scholarships and grants, is borrowing part of your financial aid plan and does this information make you more or less likely to take out a loan?