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The Higher Education Act Bill in the Senate

Posted On: 2005-09-08
Length: 29:21

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Good morning it is Thursday September 8, 2005. We have a lot to talk about today, including some new changes on Capitol Hill, well not on new changes, the finalization of changes pending. Before we do that of course, I want to get to the donor rolls for people who have donated to the Hurricane Katrina Relief Funds for September 7, 2005. Yesterday, Leslie Huston $250, Jen Bacon $50, Jeanette Mongacu $25, anonymous $50, The Servers at the Rosewood Café in Oregon $64, Demi Wacongilo $100 and Sandra Campbell $100. I am very pleased to say we are now over $10,000 in reported donations to the Disaster Relief Funds whether they be a Salvation Army, Red Cross, or other accredited agency. It is just a phenomenal showing so far, and one thing that was pointed out to me by CEO and the President of our company here, Joe was that volunteer reporting is kind of unreliable, we don't really know if there is a lot of people who are doing it and just aren't sending in the e-mail, and you don't necessarily know that the people are sending the e-mail are doing what they've said they've done, but at the same time with there being very little financial incentive for you report something that you didn't do, there is probably a very low probability of fraud. Probably a fairly high probability who just didn't want to take the time to send the e-mail which is perfectly fine as long as you donated it doesn't really matter whether you tell someone or not. The amount we've raised is $10,069.31 so far that is reported. The un-reported amount could be anywhere from double to ten times that we don't know, I'm hoping it's more towards the ten times amount that would mean about $100,000 in donations and that would a real significant contribution to the relief efforts.

Let's start off with the news today. Topping the Higher Education News today, 1614 the Senates Higher Education Bill, the Senate Bill 1614 the Reauthorization of the Higher Education Act. The Higher Education Act Bill in the Senate is considerably more moderate than the one in the House in terms of changes to the programs. There are few changes that are worth noting including, changes to the Pell Grant program, allowing recipients to use their grants year round, raising the income cut off for the program to $20,000 from $15,000 and repealing a provision in the law that limits the amount of Pell Grant funds that students at community colleges and other low tuition institutions can receive. Will leave intact the current formula for distributing funds for campus based aid programs, including the Perkins Loan, the Federal Work Study and Federal Supplementary Educational Opportunity Grant Programs. It would also take some of the funds saved by cutting subsidies for lenders to establish a temporary mandatory program that will provide $5.5 billion in grant funds over five years. Other changes in the program, one is leaving in the 6.8% fixed rate for student loan rates for interest rates for Stafford Loans and for Federal Consolidation Loans. Going forward, if this version of the Higher Education Act were passed, all federal Stafford Loans and Federal Student Loan Consolidations would be locked in at a fixed rate of 6.8%. The Senate Bill would also change the fixed rate for PLUS Loans to 8.5% and would retain the 9.5% subsidized interest rate that non-profit lenders benefit from the 9.5% floor income, which is basically subsidized interest on loans made by recycling existing pools of money drawn from certain bonds. The final change in the Federal Bill put together by the Senate includes the continued exclusion of for profit colleges and for profit educational institutions from acquiring larger pools of Federal Financial Aid, restricting them to traditional colleges which are non-profit organizations. So that is the news at least the big news on Capitol Hill when it comes to student loans.

In other news, there is an article in the Panther which is the student publication of Prairie View A.M. University that talks about what to do when a financial aid fails. What to do when you don't have aid on campus to get through school. It points out a couple of different things, filing your FAFSA, work study and joining the military. I think it's worth pointing out that you also do have other options besides that, you have scholarships in droves, you have tons of scholarships, you have alternative student loans, private student loans that are loans, they are completely outside the Federal Financial Aid process; completely outside any financial aid process administered by a school. They are simply credit based and if you have a credit worthy co-signer, you can get one of those fairly easily like I said, as long as the co-signer's credit is in good condition and-two years of U.S. citizenship or permanent residency, two years of full time work history, either on your part or part of the co-signer. PLUS Loans, it also doesn't really cover; PLUS loans are parent loans for undergraduate students and what they are essentially is similar to a private alternative loan but they are federally backed. That means the interest rates tend to be somewhat lower on PLUS loans than they do on private alternative student loans. Those are other options that the article did not get too, so if you read the Panther, you may want to let them know that there is some more work to be done in terms of providing options for Federal Financial Aid. Let's do some Podsafe music, we're going to start off today with Jennifer Helane who is back again this time with a song called "Trying."

(music)

New Podsafe music from Jennifer Helane on "Trying." I don't know about you but the guitar riff on that song a lot like "Last Dance for Mary Jane," by Tom Petty. There is something about that catchy rhythm that reminds me very strongly of that song. The rest of the song is obviously sounds completely different, but just that background guitar piece, just sounds very reminiscent of Tom Petty; I'm not saying it's a copy or anything like that because it's clearly not, but just the feel of it. All right let's do a quick scholarship update. If you are in New Jersey, if you are student in New Jersey who is specifically studying in the field of Social Services, there is some good news coming down the pike for you today. The Governor of New Jersey, Governor Richard Kodiak, I guess he is the acting Governor after Governor McGreevy stepped down or was forced down, I can't remember which; announced that he has signed a law to forgive up to $20,000 in student loans for any student, and graduate who is entering the Social Services industry in New Jersey. What the aim is, I guess New Jersey's been losing Social Workers at an alarming rate, cost of living in New Jersey is pretty high, and of course the Social Services field never pays particularly well. This is a pretty big chunk of change that their giving away to attract Social Services workers. It is a $5,000 forgiveness program for four years for any student or graduate, you don't have to have gone to school in New Jersey, you can be from out of state coming to work there; it will forgive up to $5,000 in loans for students for each of the first four years during which they serve at a state or state contracted non-profit mental health facility. If you are a student there, who is studying in Social Services and you are going to be going into Social Work, this is great news, it's not really scholarship per se, it's sort to of like a reverse scholarship, or a past due scholarship where you get money after you are out of school. That raises an important point, the scholarship spectrum starts really as early as when you are born almost, some scholarships of course are based on things like ethnicity and stuff so, it literally does-your qualifications do start at the moment your are born. This award points out that scholarships don't end when you leave school, scholarships don't end when you get your diploma, there are still a lot of options more and more options now for paying off your student loan debts and your other education related expenses and debts after you've left school. If you are getting in the habit of setting up those Google Alerts, and Google Scholarship Searches that we've talked about in the Scholarships Searching Secrets Guide, this is an important thing to add on. Start maybe adding student loan forgiveness or scholarship forgiveness, or student debt forgiveness into your Google searches. You may be surprised at what you can come up with in terms of opportunities for you to get rid of student loan debt after you leave school.

Let's move on to one more piece of Podsafe music, this is a new one from Rob Costlow who has-I think I've played all of his songs on the podcast before, he is a really, fabulously talented piano player and this one is called, "Bliss." It was released literally just yesterday.

(music)

Fantastic new Podsafe music from Rob Costlow, you can find his work at www.robcostlow.com and you can find it on the Podsafe Music Network, which is where I found it as well this morning. Always good to hear from some of the best artists out there and just hear the works that they're coming up with and Rob is just phenomenally talented. All right let's do a little bit of mail call. Tuesday's writes to ask I have a student loan with Stafford Direct Loans and I want to send in a big payment, since I am deferred and I am in school but I think it would be a good idea, what address do I send it too? Okay, if you have a direct loan, all direct loans are administered by Department of Education; but before you go writing a check, here are some important things keep in mind. First of all, if your Stafford Loans is subsidized loan, then it means its not gaining interest, it means you are not paying interest while you are in school so the principle on that loan remains the way it is. If you can take that money that you've got set aside that you want to make a big payment for and set it aside and maybe to an interest bearing account of some kind, then when you do graduate in how ever long months or years or whatever; you will have a little bit extra to work with. The second thing to keep in mind that if you have other debts that are higher interest rate debts, pay those first, pay those down first before you go pay your student loan. Federal student loans even at there peak, cap out at 8.25% interest rates. Which is high, it's not free money but right now the Federal Stafford Loan for students in school is 4.7%, there is no credit card on the market that I can think of beyond the introductory period offers; but there is no credit card in general that offers anywhere near that rate. So if you have credit card debt, if you have any other unsecured debt and you want to pay down something, pay down those debts.

Previn Johanson writes, I had applied for a PLUS loan and have received more applications from our college, do I need to fill out more or is my application sufficient? All right what's happening here, depending on the school that you are going to and there are a few schools, not many, but there are a few schools that are out there that-what tends to happen is that schools have a preferred lender list and some financial aid officers, a few, very, very few, tend to heavily favor their preferred lenders over any other lender, even if the other lenders are legitimate lenders. What they will do is anything from take your PLUS loan application you filed with another company and just tear it up or put white out over the lender i.d . and pencil in their preferred lender because effectively from the students perspective, it really it doesn't matter as much because the PLUS loan is still a Federal loan. What does matter the borrower benefits that come with it, what I would do is check with your schools financial aid officer to see why you PLUS loan that you filed with the Student Loan Network has not funded. If there is an issue with the application its self then the school can contact us and we can clarify any application data. If the school is pressuring you into using exclusively using their preferred lenders, if the lender is one you are not comfortable working with or there is certainly any number of stories out there about some lenders that people just don't want to work with for whatever reason, then you can either apply for a direct loan with Department of Education or apply for alternative student loan. Generally speaking, financial aid officers will work with you to get things squared away.

All right let's see, the rest of the mail box is just spam so, let's finish out today with one more piece of Podsafe music.

(music)

That was Carmen Tyler with "Summer Time," from the Podsafe Music Network. All right folks that is going to do it for today's show, we are going to keep you apprised in any changes in the Senate Bill and of course on the House Bill when it comes to the Reauthorization in keeping an eye on those because clearly it is going to define what is going to happen for college and financial aid over the next few years. Otherwise, stay tuned, stay subscribed, if you are not subscribed get subscribed because we are going to be rolling out more stuff in the RSS feed in the days and weeks to come, and if you are not subscribed you won't get them. You probably will want to get them. Again, thank you for donating, if you've already donated, if you have not donated please do so at 1-800-HELPNOW or any of the other charities in the public service announcement that we've played. Otherwise we will see you next time, take care.

Discuss It!

college study tips said:

I had applied for a PLUS loan and have received more applications from our college, do I need to fill out more or is my application sufficient? All right what's happening here, depending on the school that you are going to and there are a few schools.

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