New York Enters as Mass. Flounders

Just as New York’s Governor Paterson is planning to ask the state legislature to create a new low-interest student loan program, Massachusetts is turning students away from its own.

Governor Paterson announced last week that he would begin working with Albany to meet the needs of college students in his state that have been struggling to pay for college. New York is one of a handful of states that currently does not offer a low-cost program that alleviates financial burdens caused by the increasing cost of higher education. As highlighted in a recent New York Times article, Patterson has decided to pursue Eliot Spitzer’s agenda to allocate funding for a state government loan program; yet, opponents say that there is just not enough money in the budget that is already stretched thin.

No specific details have been provided for how Paterson will afford sending thousands of students to school, but he stated that his administration “is deeply committed to ensuring that we provide the best education services to our citizens.”

A low-cost program is already in place in Massachusetts, but financial strains are affecting the ability to meet demand. Prior to the credit crunch and the economic downturn, the Massachusetts Educational Financing Authority (MEFA), had a low 6.5% fixed rate for college students looking to borrow money. MEFA’s Executive Director, Thomas Graf, stated, “As a result of our problems and the continued dislocation of the capital markets, we have been unable to raise funds for the coming academic year.” Last year, MEFA provided over $500 million in loans to its residents, according to the Boston Herald.

Students who have taken advantage of the MEFA program must now turn to private student loans if federal loans do not cover the overall cost of their college expenses. The good news is that there are deals out there if students take the time to research the different institutions that offer borrower benefits. Putting in a little effort can save borrowers and their families hundreds or thousands of dollars over the life of the loan if they recognize that they should only take out what the need.

Planning Today for a Debt Free Future

With tuition prices of most colleges and universities steadily on the rise, it is not surprising that a large majority of students are relying on both private and federal loans to supplement the funding of their educations. However, thinking about the debt that you are incurring now, and making a viable plan to pay it off in the future, can greatly reduce the stress and financial burdens that can come along with taking out student loans.

Purdue University in Indiana’s weekly publication, The Exponent, is just one of countless student-run newspapers that has been addressing the topic of student loan debt more and more in recent months, offering ways to help decrease costs. The most common and helpful ways to reduce your debt amount while in school include:

• carefully planning out expenses and adhering to a budget
• taking advantage of work study and/or steady employment
• opening a savings account and/or consolidating loans to reduce interest rates
• making small monthly payments, if possible

Financial instability for many students after graduation stems from the idea that they do not need to think or be concerned about the debt they are incurring while in school. However, financial aid director of Purdue University, Joyce Hall, as well as countless other higher education officials across the nation, have the student’s best interests in mind, and are urging them to think now about working towards a debt free future. "Pay your loans off as soon as possible after graduation. Before you get a new car, computer or house, pay your student loans off. Pay them off as fast as you can so you can begin saving for the rest of your life," Hall stated to Exponent reporter Spencer Morris in a recent issue.

At Fynanz, we require a $25 monthly “good faith payment” for those students who opt to defer payments. The purpose of this is to instill a sense of responsibility early on by the borrowers. This can make them less likely to default in the future, if every month they are reminded that their loan is active, in existence, and accruing interest. In addition, lenders might feel more comfortable knowing that the borrowers are showing financial stability and responsibility. Furthermore, this process will help decrease the amount of interest students have to pay over time. This is why we also reward our borrowers by deducting 1% off your interest rate after 10% of the loan principal has been repaid and release your cosigner after 24 on-time payments.

Finance Your Education for the Fall

Despite the difficult times in the student loan industry, financial aid administrators are working tirelessly to get the funds that their students need to attend college in the fall. In a recent poll conducted by NASFAA, a total of 90 percent of student financial aid administrators have stated that they are “concerned” about the student loan crunch, and for good reason. To date, according to Finaid.org, a total of 119 student loan lenders have opted out of the market or have taken a temporary leave.

Many lending institutions who offer federal and private loans have notified colleges and universities that they will no longer offer loans to their students. A high percentage of schools that are being told that their students will not be receiving loans are those primarily attended by low and moderate income students attend. This process needs to change. Every student deserves the opportunity to better their livelihood and should have the right to an education.

The good news is that the landscape appears to be changing. As of July 1^st, subsidized Stafford Loans carry an interest rate of 6.0 percent, down from 6.8 percent previously. This is good news for students who are trying to cope with increasing prices and who need to borrow now to invest in their future. The government has stepped in to help students who are seeking federal student loans, which is always the best bet for students who need to borrow money for their degree.

There is an array of different techniques that financial aid administrators are employing; yet, only 25 percent have a backup plan to handle federal or private loan “disruptions.” Additionally, 20 percent aim to have a backup plan before fall 2008 to ensure the best options for their students. Students can do their part to ensure that they are receiving the best rates by taking initiative. Websites such as simpletuition.com and finaid.org can provide students with the ability to compare rates and borrower benefits.

However, while the terms of the federal program have improved significantly due to recent legislation, for many students, this is not enough. For those students seeking financing over and above what the federal program is offering, you may want to check out the Fynanz No-Cosigner Openloan program. To qualify, you must be a verifiable junior or senior and attend on of the schools on our approved list (please see our website). While this program may not be right for everyone, Fynanz is trying to make it easier to fulfill your educational loan needs while still keeping things as affordable as possible.

Friends, Family, and Fynanz

At Fynanz, education is one of the most important goals that a person can pursue, which is why we are dedicated to helping students reach their academic ambitions. With this in mind, we believe that there are people around you that will want to help you finance your future.

When a borrower designates a lender as one of their “friends and family” Fynanz will match their bids dollar for dollar up to the first $1,000 dollars and bid 50 cents on the dollar for the next $3,000 dollars.

The more friends and family that bid on your loan, the more likely the interest rate will be lower, and the quicker your loan will be funded. Your friends and family may not be able to lend you the entire amount you need, but they can help by lending as little as $50. Each $50 bid by a family or friend member translates to $100 for the borrower. Please see our website for full details on this promotion.

Example:

Friend bids $50 and Fynanz automatically bids $50 = Total Bids of $100!

Send an email to family and friends

NASFAA Conference

In order to provide you with the most comprehensive and beneficial alternative loan service, Members of The Fynanz Team will be attending the National Association of Student Financial Aid Administrators (NASFAA) Conference this weekend in Orlando, Florida. We look forward to speaking with financial aid officers from across the country regarding the student loan industry and the different financing options available to students to complete their degree programs.