The controversy over Federal or Private Loans – Which are really better for students and their families?

student loansWith the active debate in Congress on returning the Direct Loan interest rate to 6.80% and the PLUS rate holding at 7.90% and noting that both programs have originating fees, school financial aid professionals are wondering if families will prefer a private loan to a federally sponsored program, particularly a PLUS loan. We have even seen the topic addressed at breakouts in recent Financial Aid conferences.

iHELP’s position has always been for families to first consider all scholarships, grants and Federal loans prior to pursuing a private loan and even then only borrow the amount necessary. However, securing a federally sponsored PLUS loan first is a decision best left up to informed students and families after consulting with their school’s financial aid office.

Consider:
• Interest rates – fixed on PLUS loans at 7.90% and generally variable, but sometimes much lower on private loan programs. Variable rates are near all time lows and may increase over time.
• Credit checks – lower requirements on PLUS loans
• No grace period on PLUS, repayment begins immediately
• Cosigners are generally required on private loans, some parents may prefer to cosign a private loan to taking out a PLUS loan
• Many private loan programs now offer cosigner releases
• FAFSAs are required for all PLUS programs
• 4% Origination fees are charged on PLUS loans, many private loans do not charge Origination Fees.
• Deferment, forbearance and repayment options may be different

There certainly is a great deal to consider as schools guide families. On one thing we all can agree – a well-informed family considering all of their options can be satisfied with their final decision.

Please contact us or your school representative to learn more about the iHELP Private Loan Program and help with any questions you may have on comparisons to federally sponsored programs.

The Role of Parents in Choosing a College Major

college gradIn college, I’ve met people from diverse ethnic, religious, and socioeconomic backgrounds. I’ve made friends from all over California, and sometimes, even all over the United States. The majority of people I spend time with are first or second generation Americans. Yet despite these supposed differences, we all seem to share a similar outlook on life.

Based on my cursory observational research study of all the people I’ve met over the last four years, I’ve found that what differentiates us more than any of our glaring cultural dissimilarities is the variation in our parents’ approach to our education. My own parents never pushed me to study one subject or another, so I was nearly in shock after countless of my new friends, on separate occasions, explained to me how their parents would be angry, disappointed, devastated, disapproving, etc. if they couldn’t claim a doctor as their daughter, or if their son graduated with anything other than a degree in engineering.

While some of these friends appreciate having this guided path to their education (and life thereafter), others resentfully obey their parents’ wishes. These hard-working future professionals spend hours indoor laboring over chemistry equations under their parents’ jurisdiction, wishing that the controlling pair that pays their bills would let them frolic near the ocean and read books in the sun like the literature majors do (or as they think the literature majors do…). Though maybe eventually, they too will thank their parents for drawing up their blueprint for a successful career.

On the other end of the spectrum, are those who wished their parents had pushed a little harder. They dwell on a life decision to not do one thing or another, and will often blame their parents for these missteps. Personally, I like to fault my parents for the fact that I’m unathletic, can’t play the piano, and don’t speak 15 languages. Recently, I even heard my mom wish aloud that her parents had pushed her into majoring in computer science.

After letting these regrets ruminate and fully thinking them through, I came to a realization—there is no way I ever could have been good at gymnastics and the reason I don’t play the piano is because I refused to practice (I stand by blaming them for my monolingualism). Similarly, for my mother, no amount of formal training would turn her into a computer geek. I mean, the woman needs a 12 year old to help her use an iPhone.

In the end, we are who we are, and excessive amounts of expensive education can rarely altogether change our interests, let alone skillsets. Although pushing an indecisive child with a knack for physics toward a career in civil engineering may be exactly what he or she needs, a university education will not transform a squeamish bookworm into a straight-A biology lover. In my still college degree-less opinion, instead of pushing your children toward your unrealized dreams and away from the subjects they love, support their passions and push them toward success in whatever field they chose to study.

The idea for this blog post was sparked by an interesting Huffington Post discussion, “Should We Force Our Kids to Major in Science or Engineering?

Let us Help you with Your College Financing Gap

Excited to Introduce the New iHELP Student Loan!

smiling studentMaxed out your financial aid opportunities and still have a college financing gap? That’s exactly what iHELP is here for. We provide supplemental financing for college, designed to supplement, but not replace scholarships, grants and other financial aid including Federal Student Loans. And now an iHELP loan is more affordable than ever!

Once you’ve exhausted all your other financial aid options, iHELP student loan is a great way to pay for all of your remaining college costs, because it’s one of the lowest-cost loans you’ll find, with a truly affordable interest rate of either LIBOR + 2.5% or LIBOR + 6.8%, depending upon your credit status, with no origination fees whatsoever.

The iHELP Student Loan is a private, credit based loan. It is offered through local community banks and is designed to cover educational costs that aren’t covered by your traditional financial aid package of scholarships, grants and federal student loans. We don’t want you to borrow more than you absolutely have to, so you can borrow up to the cost of education minus the financial aid you’ve already received.

The program is flexible, and allows you to make no payments until after you graduate. Of course, if you choose to make some payments while you’re still in school, you will save even more in total loan costs. Your co-signers are eligible to be released after just 24 months of repayment.

Applying for an iHELP Student Loan is quick and easy. The loan has multiple repayment options of up to 20 years, and it takes just 10 minutes to fill out the application and find out if you’re approved.

iHELP is simple, honest and affordable. Our goal is to makes sure you know exactly what you’re getting into and avoid any unpleasant or expensive surprises once you borrow.

Ready to apply? Click here to begin.

Paying for College: A New, Exciting Tool from The Department of Education

Getting accepted into one of the colleges of your choice is no doubt a huge accomplishment, one you and your parents should be proud of. But with college costs so high these days, this is also a moment of worry and stress. Great! You got into college. But how are you going to pay for it?

Of course, you do have options when it comes to financing college education. You should always start with free money, looking for scholarships and grants. Take this scholarship search very seriously! Each dollar you manage to get as a scholarship is one less dollar you will end up owing, and paying interest on.

Next come relatively-cheap (though getting more expensive in the near future) federal loans, and then there are private loans, with terms that vary greatly, some of them are truly affordable student loans, while others just post a tempting teaser rate, but upon reading the fine print and going through the application process, you are likely to discover that you would pay a rate much higher than the advertised rate.

So how do you navigate through all the information that’s out there?

One cool tool that we really like is a brand new interactive tool from the Department of Education. Right now it’s still in beta mode, and the department is asking students to help it fine-tune the tool. The goal of the tool is to help you make side-by-side cost comparisons, tailored to your unique financial circumstances, giving you an easy-to-understand view of how your decisions today impact your debt burden after graduation.

We went ahead and gave the tool a try, entering three schools: Stanford University, UCLA (in-state) and San Jose State University (in-state):

After we submitted our choices, the tool explained that “We’ve gathered the most recent information for your schools and made some estimates based on the average starting salary for bachelors graduates.These estimates are based on average grant and scholarship awards. To make the estimates more accurate, enter the financial aid you’ve been offered.” So, you can really tailor this to your individual situation.

Here are our results:

As you can see, you can specify whether you’re on-campus or off-campus. The tool also lists the average cost for a 4-year degree at a private university and at a public university as an in-state student. You also get the option to save and/or email your results.

We think this is a great tool, and a very welcome one. If you’ve tried it, let us know what you think in the comments below.

How to Choose a College

picking a collegeApril of senior year marks the peak of excitement for nearly every high school student. College decisions are out, and you’re done waiting for acceptance letters, facing rejection, and scrolling through annoying college acceptance Facebook statuses. You’ve finally reached the point where you decide. There are many factors that should be considered when picking your college— but what are they?

1. Majors offered. If you know what bachelor’s degree you’re aiming to achieve, it would be wise to make sure that a college offers a curriculum (and degree, of course) for that topic. However, unless you’ve dreamed of studying some obscure subject since the first day of kindergarten, this should definitely not be your deciding factor. Very few people graduate with the major that they bubbled in on their college applications, so keep your options open. Personally, I’ve learned a lot about myself and my own academic interests since my senior year of high school. And though I’d consider myself a particularly indecisive person, I know that had I chosen my major four years ago, I would not have picked the environmental science degree that I am so pleased with today.

2. Public university or private school? While public schools are cheaper and often offer a world-class education, many private schools provide students with more attention and guidance throughout their college careers. Consider this in conjunction with your own academic tendencies and educational needs when making final decisions about your school.

3. Distance from home. I always envisioned college as the point in my life where I would no longer need, or even want, to go home. However, I coincidentally ended up a short, cheap, 45-minute plane ride away from the city where my parents live, affording me the luxury of flying home for the weekend, if I so chose. If you’re a homebody, don’t stray too far.

4. Academic calendar. Unlike high schools, different colleges are set on different educational systems. Most schools follow the typical semester system, while several schools go by the quarter system. The quarter system starts and ends later than the semester, and squeezes three quarters into the timespan of two semesters. The ten-week quarters fly by quickly, so consider your learning style when matching yourself with a university.

Of course, my list of criteria does not fully encompass every important aspect to ensure that you chose the best college for yourself. Each person has their own set of needs to maximize the benefits of his or her university experience. Think about the things that matter to you and draw up your own list before weighing out the pros and cons of your school options.

6 Tips for College Freshmen

When high school ended, I was elated. I was finally free from the seven-hour school days, done with pre-7am alarms, and finished pretending to care about lame “school spirit” activities. And more importantly, I had my high school diploma and my college admittance; I figured this was the end of stressing over academics, extra-curricular activities, and social standing. Yet in hindsight, it is apparent that I, like many high school seniors, held an overall misconstrued conception of college life.

Here are a few tips for high-school seniors and college freshmen:

1. You’re not done. The beginning of college does not hail the end of worrying about your future. Contrary to popular belief, admittance into your dream school does not signify the end of tedious schoolwork, much less the end of critical thinking.

2. Seek out help. Professors offer office hours on a weekly basis, at the least. Your professors are highly educated, proximate resources, and you can gain much more insight unto the material, and often one-on-one attention, during office hours. Access to so many renowned academics is a privilege reserved for the college setting, so try to fully exploit this unique opportunity.

3. Search for your passion. As my father always tells me, “passion does not tap you on the shoulder.” Be proactive about choosing your major, engaging in your classes, and finding out what you love. The more energy you pour into finding yourself, the better your chances of graduating college with some semblance of an idea of your true passion.

4. School isn’t everything. Most universities offer an extensive array of clubs. No matter what you might be interested in, be it culture, sports, community service, research, or quiddich, there’ll most likely be a group for you. Groups are a great way to fit into a smaller community within the larger student body. Consistent involvement may eventually make you eligible for leadership position in the club, which not only looks great on a resumé, but provides valuable experiences and skills that can be used in your post-college life.

5. Keep a calendar. Sure, you had an agenda in high school. And maybe you even used it. But despite the fact that your time in a classroom will be divided by four once you get to college, your schedule is inevitably going to get a lot crazier. Between due dates, club meetings, and social plans, it is essential that you have a clear vision of your obligations each day in order to maintain your reputation as a reliable student, club member, and friend.

6. Have fun. Yes, directing energy toward your schoolwork and co-curricular activities is always important, but make sure to schedule in some time for yourself too. College will most likely be the last time in your life where you’re surrounded by people your age, who have similar goals and ambitions. Explore your surroundings, meet new people, and spend time with close friends.