Lesson Two: If You Have to Borrow, Do It From Uncle Sam, Not Uncle Sammy, the Shady Loan Shark.

Introduction:

If your Federal Stafford loans have not been enough to cover your college costs -- don't take out private loans! -- there is good news. Good ol' Uncle Sam recently made two -- that's right two changes in how you get more of those tasty, safer, Federal Stafford Loans.

Unsubsidized Stafford Loans

University undergrads can now add $2000 a year to the amount of loan money they have previously been allowed. Unsubsidized means that interest accumulates while you're in school. Not as good as subsidized, but better than private. The fixed interest rate is 6.8%.

TEACH Grant Program

If you're thinking about becoming a teacher, this is the grant for you. You get a grant (money not borrowed, but given) of up to $4000 per year if you teach four academic years in a "high-need" public or private elementaries. This means low-income school districts. If you fail to meet your teaching obligations, however, the $4000 per year becomes an unsubsidized Stafford loan. Read more about these programs here.

This grant program also comes with a special bonus, the Stafford Loan Forgiveness Program for Teachers. Read the details at the link, but basically, after graduation, if you teach full-time, for five consecutive academic years in these "high-need" and "low-income" schools, you can have up to $17,500 dollars of your student loan debts forgiven... forgotten... poof... gone.

Conclusion:

There are ways to get through college without borrowing from private lenders. These are just a few. Go to the Financial Aid office at your university to see how Uncle Sam can help YOU.

A Good Resource for Borrowing Students

The Link of the Day: Project on Student Debt

This website is great resource for all matriculates of [your college here] university, and provides lots of valuable data of the financial state of college graduates. The Project on Student Debt is a project, obviously, being executed by The Institute for College Access & Success (TICA). As far as I can tell, TICA appears to be pretty legit, independent of any commercial sway.

Although they are not neutral -- voicing opinions on Obama's FAFSA reform and the bailout -- though their only political objective appears to be making college more affordable. Spend a few minutes browsing and you're bound to find something to pique your interest, float your boat, butter your bread, etc.

For example, in data collected from government studies, they found that the percentage of undergraduates borrowing PRIVATE STUDENT LOANS went from 5 to 14 % from 2003 to 2007. From 2008 - 2009, this same statistic went from 14% to a whopping 43%. If you need an interpretation, take this one: THIS IS NOT GOOD, and here's why:

There are basically two types of loans, Federal and Private. Federal Stafford Loans are the safest bet if you're taking out loans. Subsidized (funded) by the government, they have a fixed interest rates, and do not begin to accrue interest until six months after graduation. In addition to these, there are Unsubsidized Federal Stafford Loans, which are just about as good, but accrue interest immediately.

Now, after these are private loans. They are often dangerous and deceptive, so be wary. They are really similar to credit cards, have variable (changing) interest, and interest much higher, sometimes more than double, Federal Stafford Loans. Be very, very careful if you look to private lenders for additional funds.

So, according to the data, 43% of all American undergraduates are now taking out these high-risk loans. Six years ago, that number read 5%. Wow.

Next Post: How you can avoid joining that 43% by getting more Federal Loans

Lesson #1: Graduating Faster, Cheaper, Using the Costco Principle

Introduction:

This lesson will inform you on the undergraduate credit plateau, and how it will help you graduate from school faster and with spending less money.

The Undergraduate Credit Plateau:

Most universities have built into their tuition costs what is called a undergraduate credit platueau. What this means is that any classes registered past your first twelve credit hours are free, usually with a limit of about 18. In short, the more classes you take at once, the less you will pay. It's the Costco Principle.

Example:

Lets say your major requires 120 credit hours for a degree. If you take twelve credits per semester, at a rate of $100 per credit, you will graduate in ten semesters. You will pay $12,000.

Using the same standards, if you take 15 credits, you will graduate in eight semesters, paying $9,600 and saving $2,400. Not bad.

Practice:

Use this exercise sheet to find out how much you can save, if you're willing to put in the work.

1. ____ (credit hours required for degree) X ____ (price of credit hours) = _____

2. ____ (number of credit hours over 12) X ____ (price of credit hours) = _____

The answer to problem #1 is how much you will pay at 12 credits per semester.

The answer to problem #2 is how much you will save taking more than twelve credits per semester.

Find the difference to know how much you will save!

To calculate how many semesters it will take you to graduate, see problem #3.

3. ____ (credit hours required for degree) / ____ (credit hours taken per semester) = ____

Conclusion:

Take more classes. Pay less money. Graduate Faster.

Enjoy.