With the US presidential election five months away, the candidates are making an effort to get their voices heard on topics such as health care, taxes, the economy and the ongoing war. But what about topics closer to a college grad’s bank account - student loans and the college tuition? Here is a breakdown of what is known about Barack Obama and John McCain’s stances on these issues so important to today’s students.

Faced with steep inflation of college tuition, many college aged people are looking to find out where the candidates stand on student aid and the rising cost of higher education. As over 17 million voting-age college students stand to be affected by the troubles in the student loan market, it has been harder for the candidates to avoid discussions on the costs of higher education.

From Bnet’s article on college costs in the candidate’s agendas:

This year, students are voicing concerns more loudly about their ability to afford a higher education as ever-rising college costs — up 22 percent in the last five years alone — have been thrown into especially stark relief amidst a media and public storm about the potential unavailability of student loans facing families in the upcoming academic year.

Traditionally Republicans like to cut public programs and funding in favor of projects deemed more important and McCain’s stance so far seems to be in line with that. To deal with the expanding federal deficit, McCain’s preferred solution is cutting government spending. This is good and bad since earmarks will decrease (under Bush the number has grown substantially). Read more…

Some of the biggest banking institutions are bailing on the student loan industry, referring to it as “unprofitable” and “a risky investment.” The hardest hit are community college students. Some providers, such as Citibank, JPMorgan Chase and SunTrust, are cutting their lists of colleges (mainly community and less-selective four-year colleges) whose students they will provide loans to, making students turn to other sources for pay for their college tuition.

Report by the New York Times:

By splitting out community colleges and less-selective four-year institutions, some remaining lenders seem to be breaking the marketplace into tiers. Students attending elite, expensive, public and private four-year universities can expect loans to remain plentiful. The banks generally say these loans are bigger, more profitable and less risky, in part perhaps because the banks expect the universities’ graduates to earn more.

Lenders are keeping quiet on how many colleges they’ve dropped which makes it tricky to estimate how many students have been affected. Colleges who have higher default rates are more likely to be dropped. And since most lower-income students attend community and a easy-to-get-into four-year colleges, these schools are the ones being dropped in most cases. Read more…

Every time I turn around it seems like a new peer-to-peer lending service is being launched. The latest, Fynanz, launched in March and is trying to bring the peer-to-peer structure to student loans. If you are looking to get into peer-to-peer loans (or P2P for short), either as a borrower or lender, you have many options to choose from; Prosper, Zopa, Lending Club, and Virgin Money are just the well-known ones that have recently launched. But with all the these sites launching so close together and all with basically the same idea, will the market be big enough for them all?

As the credit crisis forces banks to tighten their lending practices, peer-to-peer lending has stepped in to fill the void in the loan industry. P2P lets people bypass banks and borrow directly from a real person. It works for lenders because the security of being guaranteed and insured against loss is still there like a traditional loan backed by the government. The upside for borrowers is that lenders compete to give them better rates.

Zopa and Prosper seem to be best equipped to last the longest and emerge as the front runners in this yet developing industry. Lending Club, with its unique marketing strategy of first launching as a Facebook app, is targeting a slightly different audience than the rest and this strategy will help them spread their name faster than the others. Read more…

If you’ve been paying attention for the last 4 or 5 months you should already know that the government is sending out rebate checks to everyone who filed their income tax. For students who were claimed as dependents by their parents, sorry but you’re out of luck. But for those who filed separately, its likely that you will be receiving a crisp $600 check in the mail sometime soon. For couples who file jointly, that number doubles to $1200 and you may add an additional $300 for every dependent who is claimed. About 116 million American families will be receiving the economic stimulus rebate in the coming months. So here’s the million (more like billion) dollar question: When that check arrives, what will you do with it?

This economic stimulus plan was announced some time ago and the first checks have just started to be sent out. The plan is intended to address economic worries coming from a long reaching financial crunch created by the mortgage and credit crises. The plan did face opposition from fiscal conservatives when first proposed for fear of ballooning the federal debt. But in the end it was passed without much trouble.

Back to the question: How will you spend your government rebate check? The options are almost endless. Spend. Save. Give. Invest. If you are a lucky college student who is getting a check you may put it back into your education by buying supplies, books, housing or tuition. Ramen is always an option, lots of it. But a word of advice: Don’t throw a party! Invest in something tangible or save it for a rainy day. Read more…

From Yahoo! News: The Associated Press reported that last Saturday President Bush said the recent credit crisis is threatening the availability of student loans. His administration is doing what it can to help with emergency loans for new students for the upcoming fall semester but called to Congress for authority to do more.

Bush threw his support behind a House-passed bill that would grant the Education Department greater temporary authority to provide loans to students unable to secure ones from banks or other lenders. A similar measure by Sen. Edward M. Kennedy, D-Mass., is pending in the Senate. He has also told Congress to get the new legislation on his desk as soon as possible. With college students needing to secure loans for the fall semester, there is no time to waste.

Earlier this month the legislation passed the House in a 383 to 27 vote.

The House bill would raise limits on how much borrowers can receive under the federal program. It also tries to encourage parents to take out federal loans for their children’s education. The bill would allow parents to defer repayment of those loans until after their children leave school, which is currently not allowed.

The recent problem stems from dozens of lenders that have stopped making loans under the federal program that subsidizes and backs low-interest loans. Some students relying on private loans, which are not federally backed and can carry high interest rates, have had trouble getting those nonfederal loans due to those lenders. The lenders make up an estimated 13 percent of the student loan market. Read more…

Lenders of student loans have been feeling the effects of the recent credit and housing crisis and it’s now starting to affect the students who borrow from them. The problem they are facing is that they are unable to raise money in the financial markets like they normally do. While the credit crisis is being felt in all financial areas, it will now be hitting hard on the college students seeking private student loans and loan consolidations.

Earlier this month, The Education Resources Institute Inc., a Boston nonprofit that guarantees student loans, filed for bankruptcy and left the more than 500 students without means to pay their tuition and bills. This is a growing trend with more than 50 firms having abandoned or cut back their federal or private student loan programs.

Loans are going to be harder to come by and more expensive for students and parents who are applying for financial aid and loans for the upcoming school year. In the past, families used to secure student loans almost regardless of their credit history.

From the Boston Globe, Credit Crisis Hits Students Borrowers:

Student loans have been among the easiest and cheapest loans to get - allowing millions of Americans to go to college as long as they promised to pay the bills after graduation. Given this year’s challenging environment, many colleges are offering more assistance to students, such as more generous grants and direct government-backed loans with capped interest rates, such as Stafford loans.

This month also saw some bad luck for customers of Citigroup, one of the largest private student loan lenders. Citigroup announced it would stop lending at some schools and end its federal loan consolidations. This is a big problem for students and graduates looking to save in interest payments by consolidating their student loans. Bank of America Corp., the third-largest student lender in the country, is also jumping ship by saying they will no longer be offering private student loans. Read more…

This past Thursday was the fourth time in the past year that House of Representative lawmakers discussed the Credit Cardholders’ Bill of Rights, unveiled earlier this year by Rep. Carolyn Maloney, D-N.Y. More than half of the 15 witnesses that testified before a panel of the House Financial Services committee endorsed the 9-point legislative plan. The issue has taken on more relevance as more and more Americans are facing rises in unemployment, inflation and have had to increase their reliance on their credit cards to make ends meet.

A statistic from the CNN article, Congress Tackles Credit Card Reform:

Based on the most recent data from the Federal Reserve, the average American family carries an average of $2,200 in credit card debt.

As fallout from the recent housing and credit crises hit the big companies, more everyday folks are now feeling the affects as the companies, in order to preserve their profits, are passing the whole of the costs onto the consumers. This is the point many credit card company critics have argued. Many credit card issuers have been charged with engaging in “unfair” practices such as raising interest rates on debt even when consumers pay on time or imposing excessive fees. Read more…

Charity For Debt is a startup nonprofit group (with a very nice logo) dedicated to helping students and alumni with debt pay off their student loans by providing paid volunteer opportunities by working with local charity organizations. The nonprofit was launched just this year but already has had many sign ups from potential volunteers. So if you’ve ever thought about giving back to your community, this is the perfect time. Not only will you be giving back but you will also be paying off your debt.

Charity For Debt depends on 3 groups to work: the student and alumni volunteers who want to pay off their debt, donors who are looking for innovative ways to donate to the local community and see the direct results of their dollars, and nonprofit or charity groups that need volunteers to keep their organizations running. Read more…

Looking to take an extended vacation overseas? Maybe if you’re a student you have plans to spend Spring Break ‘08 in Cancun this year? There may be something you haven’t thought about. You may not be aware but your credit card could have extra transaction fees associated with every purchase you make. So before you take out the plastic, you should know about your card’s overseas fees.

To the joy of credit card companies everywhere, credit cards are becoming more accepted in a growing number of countries around the world. When once only hot-spot tourist destinations like Paris and Barcelona accepted credit cards, many more places off the beaten path are starting to accept plastic also, such as eastern European countries, the Middle East and India, just to name a few. For those who are wary of carrying gobs of foreign cash or traveler’s checks with them, credit cards provide a useful alternate for travelers. Read more…

The Federal Reserve readied itself to lower interest rates yet again in the wake of the housing and credit crises. By lowering the interest rates, the government hopes to brace the economy by cutting a key interest rate. That’s great, but what does this mean for me and my student loans?

If your loans are already consolidated, you really don’t have any worries since your rate is most likely locked in. But for those looking to consolidate or refinance, paying attention to the key benchmarks at which banks base their rates from is a wise decision. Unlike home loans, student loans use different benchmarks to base their lending and rates from. Three of the main benchmarks used are Cost of Funds Index (COFI), London Interbank Offered Rate (LIBOR) and prime rate. By looking at these different benchmarks, you can better understand if refinancing your student loans is the right thing for you to do or not.

If you have a variable rate loan, the COFI is probably responsible for your rate of interest. The COFI is a regional average of interest expenses incurred by financial institutions. It is used to calculate variable rate loans. Many lenders will use this rate if you decide to consolidate your private student loans with a variable rate product. The LIBOR rate is the interest rate the most credit-worthy banks around the world charge each other for loans. This rate fluctuates throughout the day and is based on the market, similar to stocks. Read more…