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Trends and Issues

Shoptalk Online 435, December 18, 2007

Trends and Issues

Mapping Your Future™ posts fix for ExitExpress issue

Regulations require that schools forward Stafford exit counseling records to guaranty agencies within 60 days of the borrowers completing counseling. Guaranty agencies can actually retrieve these records through Mapping Your Future’s ExitExpress service. The service automatically forwards Stafford exit data on behalf of schools to participating guarantors.

Recently, Mapping Your Future staff replaced two Web servers. With the release of these new servers, the staff discovered that guaranty agencies using ExitExpress may need to update their processes. Mapping Your Future staff can provide detailed procedures for making these updates and answer questions as well.

To learn more about the updates
For more information on recent changes, contact CariAnne Behr at (573) 634-8631, or send an e-mail message to carianne@mappingyourfuture.org.

Six warning signs to help you and your students identify scholarship scams

In their efforts to pay for college costs, many students and their families fall prey to scholarship scams. There isn't a fool-proof method for identifying such scams, but some warning signs include guarantees of winning, implying that anyone is eligible, or pressure tactics.

The Federal Trade Commission (FTC) offers six warning signs to watch for in order to avoid becoming a scholarship scam victim. Students and their parents should watch for any scholarships that claim:

"The scholarship is guaranteed or your money back."
"You can't get this information anywhere else."
"I just need your credit card or bank account number to hold this scholarship."
"We'll do all the work."
"The scholarship will cost some money."
"You've been selected by a 'national foundation' to receive a scholarship" or "You're a finalist" in a contest you never entered.

Many organizations that offer bogus scholarships may seem reputable, but applicants should be wary of any scholarship that sounds too good to be true. Applicants should research the organization offering the scholarship at the Better Business Bureau.

Generally, students and their parents looking for college money should avoid any questionable or unfamiliar organizations altogether and get a list of scholarships from school guidance counselors or college financial aid officers.

To learn more
As a financial aid professional, you can help students set and follow a pattern of careful financial management. Offer your students TG's training on financial literacy — POSITIVE+BALANCE™. TG's POSITIVE+BALANCE training equips students with valuable information on financial literacy and life skills.

To find out more about POSITIVE+BALANCE, contact your account executive at (800) 252-9743. You can also learn more from Rett Anderton or Joe Braxton, TG's default aversion consultants. Rett Anderton may be reached at (800) 252-9743, ext. 4765, or by sending an e-mail message to rett.anderton@tgslc.org. Joe Braxton may be reached at (800) 252-9743, ext. 4696, or by sending an e-mail message to joe.braxton@tgslc.org.

Question of the week

Q.: I want to make sure that I understand how the Stafford interest rate changes enacted by the recently passed College Cost Reduction and Access Act (CCRAA) will be implemented each year. Will each rate be effective for loans certified on or after July 1 or loans first disbursed on or after July 1 of a given year?

A.: The Stafford loan interest rate changes (which, it should be noted, apply only to undergraduate subsidized Stafford loans) for a given year will apply to loans first disbursed on or after July 1 of that year. So, the rates will be implemented as follows:

For loans first disbursed on or after July 1, 2008, and before July 1, 2009, the rate will be 6.0 percent.
For loans first disbursed on or after July 1, 2009, and before July 1, 2010, the rate will be 5.6 percent.
For loans first disbursed on or after July 1, 2010, and before July 1, 2011, the rate will be 4.5 percent.
For loans first disbursed on or after July 1, 2011, and before July 1, 2012, the rate will be 3.4 percent.
For loans first disbursed on or after July 1, 2012, the rate will be 6.8 percent.

Each Stafford loan made during a given year will have the fixed interest rate applicable to that year for the life of the loan. So, for example, if an undergraduate student borrows a subsidized Stafford loan first disbursed on August 25, 2008, that loan will have a fixed interest rate of 6.0 percent for the life of that loan (that is, the interest rate will not decrease to 5.6 percent the next year, 4.5 percent the next year, and so on). However, if this student takes out another subsidized Stafford loan the following year that is first disbursed on August 24, 2009, that loan will have a fixed interest rate of 5.6 percent for the life of that loan. Thus, an undergraduate borrower may complete his or her degree with multiple Stafford loans, all with different fixed interest rates. This will be quite interesting to explain to borrowers in the coming years!

Do you have a question?
If you have a question that needs an answer, feel free to Ask TG™. Ask TG is TG's online query tool for borrowers, schools, and lenders. It includes a database of frequently asked questions about financial aid, student loan processing, and TG's products and services. To submit a question to Ask TG, visit tgslc.custhelp.com.