A couple of years ago the financial aid industry saw a huge change in the process of awarding federal student loans, thanks to New York
Attorney General Andrew Cuomo and Congressional Democrats. At the time, it was a huge hit on how colleges awarded loans because schools were banned from assigning a lender to a student. I still believe the action was not in the student's best interest, but on the bright side I think colleges have offered better consumer information on student loans as a whole.

Now, the target is the private loan industry and loans offered by for-profit colleges. The Obama administration is trying to create a Consumer Financial Protection Agency to regulate these types of loans. Is that a bad thing? I don't think so. Why? Have you ever taken out a private loan? Or at least looked into taking out one? I am not saying that private loans are bad, but one has to be very careful and do extensive research. Some opponents to private loans liken them to credit cards, where interest rates are high and failure to pay will ruin your credit.

Private loans are usually taken out to 1) supplement the federal Stafford Loan and other financial aid, or 2) be the only financial resource for students enrolled in schools that do not qualify for federal student aid. Because these loans are not federally regulated, entities can charge exorbitant fees and require students to repay immediately. In my experience, students who have taken out a private loan tell me they will be paying interest rates anywhere from 6% to 16% (sounds like credit card rates?). Not only that, but private lenders may gladly loan funds to high-risk students-those with high dropout rates, which increases the amount of loans that go into default. And if increased numbers of loans do go into default, chances are your interest rate will go up to cover those bad loans.

I can't say that I support the proposed Consumer Financial Protection Agency because I have yet to see the written proposal. However, I do support any action taken to support students as consumers. For now, I can offer several suggestions if you are thinking of taking out a private loan:

• Research and compare private lenders. Mark Kantrowitz has a comparison list of the more popular private loans through his finaid.org website. (Take an indepth look at his excellent website)
• Compare interest rates and repayment plans for private loans to select which best fits your needs.
• Utilize a co-signer. In some cases, using a co-signer will lower your interest rate.
• Find out if the lender will sell your loans. While this seems trivial, many lenders turn around and sell their loan portfolios. You may find it difficult to track down who owns your loan when you have questions.

I am not against private loans. In fact, with the rapidly rising college costs over the past 10+ years, I know it's a necessity. What I am saying is that one has to be very careful to select a private lender who has the student's best interest in mind.

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The Academic Competetiveness Grant, further known as ACG, is a grant awarded by an eligible college to students who have met a rigorous high school curriculum. This isn't for high school students. It's for freshman or sophomores in college, but you have to have taken high school courses that meet the definition of rigorous curriculum. Eligibility for ACG begins with filing the Free Application for Federal Student Aid (FAFSA).

First, let me start off by saying that an eligible college is one that is accredited and offers a program that leads to an associate's or bachelor's degree, which includes two-year programs that lead to an associate's or bachelor's degree. It's imperative that students applying for ACG are in an acceptable degree program at their institution.

ACG is awarded to eligible students for up to $750 the first year, and $1300 for second year. First year and second year status, or grade level, is defined by the applicant's college. Students may receive the award if eligible and enrolled half- or full-time.

To receive a first-year (basically, a freshman) ACG, a student must meet the following criteria:

• Pell Grant Eligible (determined by the FAFSA)
• at least half-time enrollment
• Completed high school after January 1, 2006
• Completed with passing grades a high school program of at least the following courses:
• 4 years of English
• 3 years of Math (including Algebra I and a higher level course such as Algebra II, Geometry, or Data Analysis and Statistics
• 3 years of Science (including at least two courses from Biology, Chemistry, or Physics
• 3 years of Social Studies
• 1 year of Foreign Language
  or
• In high school have taken 2 Advanced Placement or 2 International Baccalaureate courses with a minimum passing score of 3 or 4 respectively.

Awards may be prorated depending on enrollment status and financial aid eligibility, but $750 is the maximum a student can receive as a first-year recipient. The ACG is also available for up to $1300 at the second year (sophomore level), but additional criteria must be met:

• Pell Grant Eligible
• at least half-time enrollment
• Completed high school after January 1, 2005
• Completed a rigorous high school program defined of at least completing the following with passing grades:
• 4 years of English
• 3 Years of Math (including Algebra I and a higher level course such as Algebra II, Geometry, or Data Analysis and Statistics
• 3 Years of Science (including at least two courses from Biology, Chemistry, and Physics
• 3 years of Social Studies
• 1 year of Foreign Language
  or
• in high school having taken 2 Advanced Placement, or 2 International Baccalaureate courses with a minimum passing score of 3 or 4 respectively.
• Have at least a 3.0 G.P.A. on college course work at the beginning of the second year

If you feel you meet the criteria for either of these grants but the award was not listed on your financial aid award letter, contact your school to see if you are indeed eligible for the ACG. However, your school will not be able to determine eligibility unless you have submitted an official copy of your high school transcript. Colleges need the high school transcript to evaluate whether or not you have met the rigorous high school program.

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Sorry for the absence in posting. It's been super crazy in our office. In addition to the regular routine, our director retired at the end of September, which means I've been much more involved in administrative duties and working some late nights.

My secretary scanned some pages of a book and sent the mini-article to our middle- and upper-management. I set the email and attachment aside to look at later, but it wasn't long before our interim director was in my office asking if I'd read the file, which of course prompted me to look. I'm glad I did, because I am appalled at what I read regarding students who take a Stafford Loan through the Family Federal Education Loan Program (have to select a bank). My article does not apply to students taking loans through Direct Lending.

I will not divulge the name or author of the book (published in 2008) becuase what this person wrote is ludicrous. The first statement of a certain chapter says not to trust your financial aid office, and that your financial aid officer doesn't care about you at all when it comes to awarding student loans. The author goes on to say that financial aid offices prompt students to select lenders that provide financial kickbacks to schools. What?!!!

Let me tell you the truth. We do care. Financial aid offices do not take kickbacks from lenders. My college is one that used to assign a lender to the student automatically, but I can assure you that we and any other college only selected lenders who charged the lowest fees to students and had the best customer service. And why did we do that? Because students are inundated with junk mail from lenders offering student loans, which is overwhelming. I know this for a fact because we had two children in college and even I was confused with all the promises they received from banks. Colleges that practiced assigning a lender didn't do so because they were getting kickbacks, but rather to help the student choose a lender that was best for the student. This practice was terminated over a year ago because of people like this author who alleged charges without doing their homework.

So what was the fallout? Beginning last year, colleges can offer a preferred lender list but can no longer assign a specific lender to the student. Instead of your financial aid office selecting the lender who offers the lowest fees and best customer service, you now have to do your research to determine which lender you want. The author also tells readers in the article to read the fine print because financial aid people won't help. I totally agree that you need to read the fine print. Most financial aid offices don't have the staff to personally pull in every student for one-on-one counselling on student loans. However, web tools are available, counseling requirements are in place, and financial aid offices provide information on student loans so students can read and be well-informed about the student loan program. And I guarantee that your financial aid counselor will be happy to answer any additional questions you may have.

Bottom line--if you read any drivel like what this author wrote, don't believe it. In fact, if you do read anything like this, bring it to your financial aid counselor's attention. It's only fair that your counselor have a chance to tell you the truth!

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