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New financial aid options available
Published 7/21/2009 in Local News : Education
By MONICA SPRINGER
In the summer, students in the state and around the country are thinking about higher education possibilities. For some, acceptance letters are opened, and others are looking at their financial aid packages from colleges and universities.
And when those students step on a college campus, there are new programs available this year that students should be aware of, said Kathy Blau, director of student financial aid at Garden City Community College. Students who are attending college in the fall have options this year when it comes to paying for college that students in the past have not had, including a new loan forgiveness plan for those who work in public service.
Public service loan forgiveness
There's a new program for those who work in public service jobs who have high debt and low income. The program allows for student loans to be forgiven after 10 years of full-time employment.
"It might be a perk to get keep them in that job. In the long run it'd be a bonus," Blau said. "And it might be an incentive to stay in those jobs." There are several stipulations to the program, including:
- The borrower must have made 120 payments as part of the Direct Loan program.
- Periods of deferment or forbearance are not counted towards the 120 payments.
- Eligible loans include Federal Direct Stafford Loans, subsidized and subsidized; Federal Direct Plus Loans, and Federal Direct Consolidation Loans.
- Public service jobs include: emergency management, government (excluding time served as a member of Congress), military service, public safety and law enforcement, public health including nurses and health care support positions, public education, early childhood education, social work in a public child or family service agency, public librarians, school librarians and employees who work at nonprofit agencies. Faculty at tribal colleges and universities also qualify.
Consolidation
For those who already have student loans, now is an ideal time to consolidate those loans, Blau said.
On July 1, interest rates on subsidized federal student loans for undergraduates decreased from 6 percent to 5.6 percent. Blau said borrowers who have loans dated before 2006 should consolidate. If they do, they can take advantage of a 1.7-percent point reduction in their interest rates.
There is no in-school consolidation, Blau said, so students have to consolidate their loans after they graduate or after they decide to not continue with school. The only place consolidating right now is direct loans through the government, Blau said. Information on consolidation can be found at www.dl.ed.gov.
Income-based repayment plan
On July 1, a new program went into effect that caps borrowers' monthly student loan payments at 15 percent of their income. Anyone whose loan payment exceeds 15 percent of their income is eligible and after 25 years, the debts will be forgiven. Income-based repayment covers all federal loans, including Stafford, Grad Plus and federal consolidation loans, but not Parent Plus Loans.
Kansas teacher service scholarship
For a student wanting to be a teacher, there's a $2,250-per-semester scholarship available for those who are willing to teach in either a hard-to-fill discipline or an underserved geographic area of the state. Students must teach one year for each year of scholarship money received. Blau said she doesn't necessarily recommend this to community college students because if they don't teach in an underserved area or hard-to-fill discipline, the scholarship becomes a loan the student must repay.
The preference for this loan is given to juniors and seniors in college, or current teachers seeking endorsement, according to the Kansas Board of Regents.
Bottom line
Blau said the key is to be financially literate. She also recommended knowing exactly what lenders student loans are with and to keep in contact with those lenders, especially if an address changes or telephone number changes.
For students who have moved around or don't know who their loans are with, there's a tool to help, Blau said. The National Student Loans Data System, found at http://www.nslds.ed.gov, is the U.S. Department of Education's database for student aid. Upon signing up, a borrower can look at how many loans they have and where the loans are.
"The bottom line is to be responsible," Blau said. "Handle loans responsibly and keep your credit in good standing."
On the Web:
Garden City Community College: www.gcccks.edu
Free Application for Federal Student Aid: http://www.fafsa.ed.gov/
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