Looming Default Crisis. As the Aug. 2 deadline for increasing the federal debt limit approaches with little sign of an agreement between President Obama and Congressional Republicans, the uncertainty is growing at colleges: what happens to financial aid and federal research funds if the government defaults? Once the limit is reached, the US Treasury will no longer be able to borrow to pay all of its bills and will have to prioritize its payments, including Social Security checks, debt payments and federal financial aid programs such as Pell Grants and student loans. Were left wondering if student aid will be available, said Justin Draeger, president of the National Association of Student Financial Aid Administrators. The group received assurances from the Education Department that the aid would be disbursed, he said, but the uncertainty surrounding the situation makes it hard to believe. If the president is unsure if Social Security will be paid, how can there not be a question about student aid? [Inside Higher Ed]

Under the Microscope. In times of fiscal crisis, scientific research is a ready target for budget cutters. Members of Congress grandly and publicly trash programs they see as wasteful. But there may be another, less obvious way to cut costs. The process the government uses to determine which projects are worthy of funding is itself expensive, drawn-out, and — as some politicians argue and many researchers agree — highly ineffective. As federal funding tightens, Congress needs to increase its oversight of the review process, Rep. Mo Brooks (R-Ala.), argued at a hearing Tuesday. The purpose of the hearing was to examine ways to streamline the process of evaluating the tens of thousands of grant applications submitted each year. [Inside Higher Ed]

Representin the DREAMers. Representative Luis V. Gutierrez, a Democrat from Illinois who has become a perennial thorn on immigration for President Obama, was arrested Tuesday afternoon along with about a dozen activists in a protest outside the White House.In a letter to Gutierrez on Monday, Obama rejected his proposal to suspend deportations of undocumented immigrant college students with clean criminal records. Gutierrez said he decided to go ahead with the protest after receiving Obamas response. It didnt disappoint me as much as I was saddened, Gutierrez said in an interview after he paid a $100 fine and was released by the police. He was arrested in May 2010 in a similar protest. [New York Times]

Lots of Grads, Too Many Loans. The nations growing number of graduate students, gravitating particularly toward masters-degree programs in business and education, are leaning heavily on loans and grants to pay for their education, says a report released Tuesday by the US Department of Education. Over all, the number of graduate students has increased by 57 percent since 1988. The average annual price of attendance for full-time graduate study ranged from $28,400 for a masters program at a public institution to $52,200 for a professional-degree program at a private, nonprofit institution. Across all types of degrees and institutions, most students received some type of financial aid. Those in professional programs at private, nonprofit institutions received the highest aid, on average, at $36,200 annually. [Chronicle of Higher Ed]

Henry Taksier [@HenryTaksier]is an editorial intern atCampus Progressand an editorial board member ofThe Fine Print, a progressive publication at the University of Florida.

President Obama’s administration has set the goal of seeing 8 million new college graduates by 2020. Ironically, a recent report by the Education Trust finds that many financial aid policies at schools actually hinder increased enrollment. According to the report, despite the availability of federal programs like Income-Based Repayment and Public Service Loan Forgiveness, which make it possible to obtain some relief on federal student loans, low-income students continue to face financially prohibitive barriers to earning a college degree.

In Priced Out: How the Wrong Financial-Aid Polices Hurt Low-Income Students, Ed Trust analyzes recently released net price data—the average price students have to pay after all sources of grant and scholarship aid are exhausted—and evaluates the financial barriers faced by low-income students.

[Read more about looking at net prices instead of college sticker prices.]

Looking at factors indicative of affordability, quality, and accessibility, Ed Trust concludes that the way institutions determine the distribution of their available grant funds in turn impacts the accessibility of higher education to many prospective students, and that these policies significantly limit low-income students’ access to quality higher education.

When looking at net cost, a major factor indicating affordability, the report found that the typical low-income student is required to come up with 72 percent of their family’s income annually to cover the costs of college after grants and scholarships have been exhausted. Middle-income student must come up with 27 percent of their family’s income, while high-income students need only produce 14 percent.

Concluding that requiring students to pay almost two thirds of their family’s income is not affordable or reasonable, Ed Trust set the metric for determining &"reasonably affordable&" schools as those that require low-income students to come up with a percentage of family income equivalent to that required of middle-income students—schools that require low-income students to pay no more than 27 percent of their family’s income annually.

The result: only 65 institutions out of 1,186 schools that had comparable data are &"reasonably affordable&" for low-income students.

The report then determined how many of these 65 affordable institutions offer quality, which is defined by Ed Trust as schools that give all their students at least a 1-in-2 shot at graduating. This reduces the number of affordable, quality institutions to 29.

The final attribute considered was accessibility: How many of these institutions meet or exceed the national average for enrollment of low-income students? That national average is 30 percent. Of the 29 affordable, quality institutions, only five have a student body that is at least 30 percent low income.

There are five quality institutions that are affordable and accessible to low-income students.

The reason: institutions have reduced the amount awarded in need-based grants. That is, institutions provide grant money to high-income or middle-income students who likely will attend college even without this aid instead of distributing this money to students who are not able to afford school otherwise.

[Get tips for how to pay for college.]

Since many high- and middle-income students would attend anyway, such policies essentially shut the door on, or &"price out,&" low-income students without increasing the number of people likely to attend college. In contrast, policies that distribute grants to those most in need would increase enrollment because these low-income students would not be—and are not—able to attend with this aid. The finding is quite significant at a time when the federal Pell Grant remains under the gun.

Ed Trust’s bottom line: the administration must figure out how to ensure colleges are not undermining the mission of increasing college enrollment and its democratic principles of making college accessible and affordable for low-income students.

The high cost of education and the burden of educational debt are significant barriers to many who wish to pursue a public service career. Equal Justice Works believes that educational debt should lead to opportunities for happiness and success in choosing to serve the public interest, not stand in the way of this service. We host a wealth of information and offer free, interactive webinars on educational debt relief programs that can help ease the burden on those dedicated to public service.

Are you burdened with educational debt you incurred because the costs were too high for you and your family to cover? Equal Justice Works has partnered with EARN on MyDebtStory.com to provide a public forum for student loan borrowers to join the debate because the national debate on educational debt is missing one of the most important voices of all: student borrowers themselves. Go to MyDebtStory.com and share your experience with educational debt, then help spread the word so our voices are heard.

Radhika Singh Miller is a program manager for Educational Debt Relief and Outreach at Equal Justice Works. In 2008, she served on the Student Loans Team in the Negotiated Rulemaking for the College Cost Reduction and Access Act (CCRAA) and has extensive knowledge of this landmark educational debt relief legislation. Radhika graduated from Loyola Law School Los Angeles and was most recently a staff attorney at the Partnership for Civil Justice, focusing on constitutional and civil rights litigation and advocacy.

• More Student Loan Ranger posts

There are two possible reactions to the news in recent weeks that U.S. Bank and Wells Fargo are now offering fixed-rate student loans in addition to the variable rate kind that had been standard.

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How to Shop for a Student Loan (if You Must)

The most important step to take in choosing a student loan is to shop around.

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Prospective students touring the campus of Washington University in St. Louis. One expert suggests that students not borrow any more than their annual salary will be when they graduate.

The first is to cheer. Borrowers now have a choice similar to people buying homes. Those who want certainty can pay extra for it, while those who wish to roll the dice and hope interest rates don’t rise too much can do that, too.

The second response is to rail against the fact that these loans are even necessary. After all, the federal government will lend most undergraduates up to $31,000. That this is not nearly enough for many families to cover the bills at all sorts of colleges is some kind of national disgrace, right?

Both reactions, it turns out, are valid. So let’s consider them one at a time.

But first, a review (and a semiofficial renaming of the loan at issue here). Not so long ago, federal student loans were variable and you could get them from a bank. Now, they are fixed at as little as 3.4 percent for this coming school year, and you borrow directly from the government.

The federal loans are a good deal, but they are often not enough make up the difference between what a family has saved or can spend out of current income and what the student gets in grants and scholarship money.

This is where private student loans come in — and proceed to send some undergraduates’ total debts spiraling into the six figures by the time they manage to earn a bachelor’s degree. While the government recently introduced lower federal loan payments for graduates with limited income and loan forgiveness for people in public service jobs, the banks don’t have similar programs for their private loan borrowers.

And about this name — private student loans. It’s factually inaccurate. To get the lowest rates, a teenager with limited credit history will need a co-applicant, which usually ends up being a parent.

The vast majority of these loans end up being a joint effort, so let’s call them what they are: private family loans. Yes, banks will often absolve the co-signer of responsibility after a couple of years if every payment has arrived on time, but forgetful young adults don’t always do that. (This, by the way, creates black marks on everyone’s credit history, not just the student’s.)

So here come U.S. Bank and Wells Fargo with their new fixed-rate family loans. Both last for 15 years. The crucial difference is that U.S. Bank offers only one rate: an annual percentage rate of 7.8 percent. An upfront fee can raise the actual annual percentage rate on the loan to as high as 8.46 percent.

Wells Fargo’s fixed-rate loans have no origination fee and are as low as 7.29 percent (or as much as another percentage point lower if you’re a current Wells Fargo banking or education loan customer). But if you don’t have excellent credit, the fixed rate could be high as 14.21 percent for community colleges or trade schools.

The current variable rate ranges from an annual percentage rate of 3.39 to 10.22 percent at U.S. Bank and 3.4 to 11.74 percent at Wells Fargo. Given the size of the gap and no signs that rate increases are imminent, why introduce this option now?

“We think that students and parents are looking for some level of certainty in the long run,” said Lucille Conley, senior vice president of consumer lending for U.S. Bank. “They’ve seen things happen in the housing market that may cause them more concern than they might have had four or five years ago.”

The bankers aren’t suggesting that borrowers actually try to do the math. In fact, it’s nearly impossible. The banks haven’t created calculators that allow you to input a series of interest rate spikes and declines at various points along a 15-year timeline and then compare it with a fixed rate. And since the professionals have no idea themselves what interest rates may do, it makes little sense for them to encourage their customers to guess.

Instead, this is a product for people who sleep better at night knowing what their payment is. Turns out there are lots of people like this. Kirk Bare, Wells Fargo’s business head of education financial services, said the bank was expecting a fairly low adoption of the fixed-rate loan and has been surprised by how many families have chosen it so far.

This is a fine thing, as far as it goes. Fine, that is, until you stop to think about what the mere existence of the private family loan actually means.

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Congratulations to recent college gradsand their parents!  So youve made it through four or five years of school. Now its time to deal with the real world. This also means it will soon be time to start re-paying those student loans.

Over 65 percent of students use loans to help finance their college costs. The total student loan debt for an individual graduating college is about $24,000.  

For most student loans, payments are not required while you are an actively enrolled student. But once you graduate, that all changes.

If you have a Stafford Loan, youll be required to begin payments in 6 months.  The grace period for Perkins loans is 9 months. Graduate students with PLUS loans will have to begin making payments six months after they are no longer enrolled at least half time.

Once you graduate, your lender will begin sending you repayment information in the mail, but here are two questions to begin thinking about now.

First, do you want to consolidate your student loans?  Student Loan Consolidation allows you to combine most of your small student loans from various lenders into one, fixed-rate loan, with one monthly payment.

But youll want to check if this will save on the interest rate. The Consolidation Loan interest rate is the weighted average of the variable rates on your existing loans, typically rounded up by the next eighth of a percentage point. Use the tools at the Federal Student Aid web site to compare the numbers for your loan situation.

Second, how quickly do you want to repay your student loans?  You generally have four options, ranging from 10 to 30 years.  Of course the quicker you pay off your debt, the less interest youll pay.  But it may be difficult to make large monthly payment on a low starting salary.  And if tackling these debts keeps you from investing in your employers 401(k), or paying off your credit cards, you should definitely consider an extended repayment period.

Heres something to think about: On a $24,000 loan with a typical 10-year repayment plan, the monthly payment would be $276 per month for 120 months. By the end of repayment, you would have paid back the $24,000 principal plus $9143 in interest, for a total of $33,143.

Finally, you can change your repayment plan at any time, and theres no penalty for paying your student loans off early.

TORONTO, ONTARIO, Jun 24, 2011 (MARKETWIRE via COMTEX) –
Despite an improving yet still soft job market for students, 70 per
cent of Canadian post-secondary students say they have found summer
jobs, according to the new BMO Student Summer Survey results released
this week. That’s good news considering almost half of them will rely
on summer earnings to pay for post-secondary education (48 per cent)
or cover day-to-day school-year expenses (61 per cent).

Post-secondary students across Canada say government loans and grants
(66 per cent), parental support (56 per cent) and summer job income
(47 per cent) are the three top sources of funding for their
post-secondary education. Despite drawing on multiple sources to fund
these costs, 66 per cent expect to have some debt when they graduate.

However, according to the study, conducted by Leger Marketing,
students are most likely to think they will have under $10,000 (32
per cent) in school debt or no debt at all (27 per cent), and 63 per
cent think they’ll be able to pay off their debt within five years.

“It’s not surprising that most students expect to have some debt when
they finish their schooling, but we were concerned to see how little
debt they thought they would have and how quickly they believed they
could pay it off,” said Su McVey, VP, Customer Communications &
Marketing, BMO Bank of Montreal.

According to Statistics Canada, based on 2009 data, undergraduate
students who receive Canada Student Loans pay an average of $5,138 in
annual tuition, and have an average total loan balance of $18,800
upon graduation.

The Canada Student Loan Program indicated most students do pay off
their loans in full (default rate is 14 per cent), and typically they
take 9.5 years to do it, with some taking up to the maximum allowable
repayment term of 14.5 years.

“We know the cost of a post-secondary education keeps increasing for
Canadian students and their families, but so does the value of that
education,” said Ms. McVey. “It is, in many ways, the most important
investment a person can make. While we can’t influence the cost of
education, banks like BMO CAN help students lower related costs, such
as the day-to-day expenses they’ll incur during the school year, by
providing money-savings options and advice. By following some simple,
smart steps, students can easily minimize their banking fees and
lower their monthly expenses.

“For example, BMO’s no-fee SPC MasterCard includes a free Student
Price Card membership that provides 10 to 15 per cent discounts at
hundreds of fashion, food, entertainment, lifestyle and travel
retailers across Canada, and the option of receiving AIR MILES reward
miles or cash back loyalty rewards on their cards.”

BMO developed the BMO SmartSteps(R) for Students program to help
students figure out how to budget and minimize banking fees. BMO
offers free banking to students of up to 30 transactions each month
among other benefits, and is the only bank to extend this offer to
recent graduates with an extra year of free banking. Instead of a
traditional student loan, students might want to consider a BMO
Student Line of Credit, where they are only charged interest on what
they actually borrow, and can borrow as little or as much as they
want, up to their approved limit. Students can also make
interest-only payments while still in school plus one year after
graduation, giving the new graduate some flexibility as they make the
transition into the work force.

“With the right saving, credit and loan products, and the right
information, students could be reducing their costs throughout the
school year, and we want to help them do that,” said Ms. McVey.

BMO’s 2011 Summer Student Survey was conducted from May 18-26, 2011,
by Leger Marketing. The sample was 625 Canadians, 18 years or older
currently attending college or university. The margin of error is
plus or minus 3.9 per cent.

BACKGROUNDER

BMO SmartSteps(R) for Students

BMO encourages students and their parents to work together to
establish responsible saving, spending and borrowing practices. To
help, BMO developed the BMO SmartSteps for Students program designed
to help students identify ways to minimize banking fees to lower
monthly expenses, take advantage of valuable student discount
programs and develop realistic budgets that outline how much they
need and how much they can actually spend. BMO SmartSteps for
Students is available at
www.bmo.com/smartstudents .

- Develop a realistic budget. Set a budget for yourself so you know
exactly how much you need and how much you can spend. Your budget
should cover everything from your rent, utilities, and books down to
your daily coffee. The BMO student budget calculator can help you
develop a budget for the year.

— Reducing your budgeted expenses by just $3 a day can add up to more than
$1,000 in savings over a year.

-Monitor your actual spending. Part of sticking to a budget is
continually being aware of what you actually spend and comparing it
to what you budgeted. At the end of each week, do the comparison - if
you're over budget in some areas, but under in others, make
adjustments for the following week.

-- An easy and secure way to stay on track is by viewing all you
transactions online. BMO provides you with a number of free money
management software options through Online Banking such as BMO
MoneyLogic.

-Keep your savings separate from your main account. Keep all the money
you earn working during the summer - or from grants, bursaries,
scholarships and family gifts - in a savings account and set up a
weekly automatic transfer from your savings to your chequing account
of just the money you need each week. Keeping the money separate
reduces temptation to spend more than your budget allows.

-- Free savings and chequing accounts are included in selected student
banking packages.

-Minimize your banking fees to lower your monthly expenses. Make sure
you understand all of the transactions that are included in your
banking package so you can avoid paying more than you need to.

-- At BMO students can bank for free while enrolled in school plus one year
after graduation. That's a savings of $102 per year.

-Take advantage of student discount programs. BMO offers a free
Student Price Card (SPC) that provides exclusive discounts and deals
on fashion, shoes, accessories, sporting goods, restaurants.

-- Students can save the $9 annual fee with an SPC card from BMO, and save
average discounts of 10 to 15 per cent on purchases at participating SPC
merchants.

-Use your credit card smartly. Take advantage of the student BMO SPC
MasterCard. There is no annual fee, and you have your choice of
rewards. Plus, you get exclusive discounts at hundreds of Student
Price Card Ltd. (SPC(R) Card) retailers nationwide.

-- By shopping at AIR MILES(R) reward miles sponsors you can also double
your reward miles earned.

-Using a student line of credit instead of a bank loan can help reduce
your interest costs because you're only paying interest on the amount
you actually need to access, not the full amount of a traditional
loan.

-- With a BMO Student Line of Credit you can continue to make interest-only
payments up to one year after graduation/residency, to help you as you
transition into the workforce.

BMO SmartSteps for Parents

-- More than 56 per cent of students polled said they'll rely on parents to
pay for their post-secondary education. A reliable way for parents to
maximize their savings for a child's education is through RESPs, which
offer the benefits of a tax-sheltered investment and, coupled with the
federal government's Canada Education Savings Grant (CESG), allows
parents to keep on top of rising costs and gives them peace of mind in
knowing that they can provide for their child's education.

For more details, see BMO SmartSteps for Students.

Contacts:
For media enquiries: BMO Bank of Montreal
Ralph Marranca, Toronto
(416) 867-3996
ralph.marranca@bmo.com

Carol Greene, Toronto
(416) 867-3996
carol.greene@bmo.com

Sarah Bensadoun, Montreal
(514) 877-8224
sarah.bensadoun@bmo.com

Laurie Grant, Vancouver
(604) 665-7596
laurie.grant@bmo.com

www.bmo.com/mastercard

SOURCE: BMO Bank of Montreal

mailto:ralph.marranca@bmo.com
mailto:carol.greene@bmo.com
mailto:sarah.bensadoun@bmo.com
mailto:laurie.grant@bmo.com

http://www.bmo.com/mastercard

Copyright 2011 Marketwire, Inc., All rights reserved.

Few commentaries here at Sense on Cents have received as much attention as that which I wrote a few months ago highlighting issues within the student loan market and questioning the value and integrity of higher education. That commentary, Are Student Loans an Impending Bubble? Is Higher Education a Scam? hit a nerve on many fronts.

Today, our focus on this segment takes a new twist and we get a behind the scenes look at the intrigue and innuendo encompassing a hedge fund which would seem to believe that the student loan market may be a bubble and higher education for profit may just be a scam.

Potential of insider trading, investigative hedge fund research, prospects for increased regulation of the for profit education industry. This story would seem to have it all. 

Lets navigate as the Project on Government Oversight released just yesterday a scathing commentary entitled POGO Investigation Provokes Probe from Private Dick, (interesting choice of words!!),

If only Id seen it coming. With barely a hello after I picked up the phone last week, Diane Schulman launched into a slew of questions about an item Id just written for POGOs blog, an item about arguably inappropriate, possibly illegal information-passing between the Department of Education (DoED) and Wall Street short sellers.

Never having spoken to Schulman before in my life, I asked her who she was working for. She told me that she did research for some outfit called The Indago Group on behalf of investment companies and law firms.

I didnt realize that Diane Schulman was actually a licensed private investigator in league with a troubled New York hedge fund.

Specifically, Schulman has been helping out one of Wall Streets biggest short sellers, a guy named Steve Eisman. But she didnt mention that.

Eisman won fame and especially fortune betting on the collapse of the housing market. Id cited him in my piece last week because of his latest target: the for-profit education sector, which includes firms like giant Phoenix University, that the Dept. of Education is trying to regulate. Harsher regulation, which Eisman had been lobbying the DoED to endorse, would have meant bigger profits for him and other short sellers.

According to emails obtained under the Freedom of Information Act, Schulman personally assisted Eisman in his many contacts with only-too-willing top officials at the Department eager for the dirt he (and Schulman) had dug up on for-profit companies.

And, for some of those companies, there was a lot to dig, especially dirt on how firms reaped tens of millions of dollars in federally guaranteed student loans, leaving many of their graduates in debt and unable to find jobs.

Eisman and Schulman are not credentialed education experts, and neither seems to have shown any particular prior commitment to working in the field. Yet emails show Schulman personally importuning DoED on behalf of Eisman and others connected to his FrontPoint Financial Services fund (owned by Morgan Stanley).

Some of the officials she targeted were in the process of formulating rules from which short sellers stood to profit. At least one such meeting actually took place last year. (FrontPoint is currently in reorganization amid charges of insider trading–none of which involve Eisman specifically. He recently indicated he is leaving the fund.)

In her phone call to me, Schulman labeled the widespread criticism of short sellers a red herring. Then she got down to business, repeatedly asking me to provide evidence I might be aware of that short sellers (presumably like her client, and possibly herself) could have received leaks of confidential, market-sensitive information from the DoED, a central point of my article.

If short sellers had gone on to buy and sell stocks based on confidential information from DoED, it could amount to insider trading, subject to civil and criminal penalties.

Not grasping that she might have a distinctly personal stake in the matter, I told Schulman that Morgan Stanley–owner of Eismans fund, FrontPoint Financial Services–had issued a report to investors in the spring of 2010 that specifically refers to a leak about the timing and substance of the Education Departments impending actions.

That provoked a strong objection from Shulman. I thanked her for being in touch, ending the increasingly weird phone call.

Schulmans bio mentions that some 20 years ago she worked as an investigative producer for CBS and ABC affiliates in Boston. Helping out a New York hedge fund probably pays better.

While the POGO writer clearly takes serious exception to the manner in which Ms. Dick Schulman engages him, I welcome bringing attention to this story for a number of reasons including:

1. To highlight an investigative practice of a high profile Wall Street hedge fund manager.

2. The potential for insider trading activity as alleged by the writer.

3. Perhaps most importantly, further confirmation of the fact that the student loan market likely is a bubble and for profit education likely has elements of being a scam.

You can not make this stuff up.

Navigate accordingly.

Larry Doyle

Isn’t it time to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook?

Please get your friends and colleagues to do the same. Thanks!! I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

Read more posts on Sense on Cents »

TERRE HAUTE, Ind. (WTHI) – The cost for Hoosiers attending college continues to rise. Now, more than ever, students in Indiana turn to loans to pay for their college tuition.

Indiana State University proudly boasts its role as one of Indianas most affordable colleges.

Even with the lower price tag students still pay around 16,000 dollars a year.

Nearly 70 percent of the ISU student body takes out some sort of financial aid. Many, like ISU student Alisha Whitecotten, turn to loans.

I had money saved up instead of my parents for the beginning of school and then once it ran out I needed money,” Alisha said.

Student loans finance college educations now more than ever.

Probably 15 or 20 years ago, most of the money that was given out was in the form of grants; 60 percent grants 40 percent loans. Today the absolute reverse is true,” John Beacon of ISU’s Enrollment department said.

Loans, unlike grants, require students pay them back after college. Most Federal subsidized loans, like a Stafford loan, allow students to complete college without paying interest until after graduation. Then students generally have a grace period after school before they begin paying off their loans.

Many students would not qualify for a loan if they went to a bank, but theyre going to get a loan to get an education because the federal government is guaranteeing it,” Beacon said.

But for some students a non-federal loan is the only option to pay for college. Those loans gather interest right away and some require payments while students are still taking classes. For many that initial debt is seen as an investment.

If you have the potential of earning, because you have a college degree $1.6 million over the course of your life. Who wouldnt borrow $20,000 if the return on that investment was $1.6 million,” Beacon said.

That $20,000 investment can still look pretty scary to future college graduates, facing a troubled job market.

I really hope I find a job afterwards. If I dont find a job after four months then I think Ill be worried about it,” Alisha said.

Leaving Alisha, like many other college students, hoping education pays off in the future. 

The Student Loans Company (SLC) have today released two publications containing statistics on student loans for higher education in Scotland, providing information on outlay and repayment of loans for Scottish students studying anywhere in the UK and a small number of EU students studying in Scotland.

Key findings from Student Loans for Higher Education in Scotland Finanacial Year 2010-11 include:

The amount lent to eligible HE students for Maintenance Loans during financial year 2010-11 was £216.9m, an increase of 13% when compared with 2009-10
The amount lent to eligible HE students for Graduate Endowment loans during financial year 2010-11 was £0.1m, a decrease of 38% when compared with 2009-10. This decrease is a result of the abolition of the graduate endowment
The total amount lent to eligible HE students during financial year 2010-11 was £227.2m
Repayments posted to customer accounts amounted to £100.7m in financial year 2010-11, an increase of 9% compared to 2009-10. Repayments included £13.4m paid earlier than required, an increase of 8% compared with 2009-10. £90.1m of the repayments relate to Income Contingent Loans, an increase of 13% compared with 2009-10
During the 2010-11 financial year, 3,900 mortgage style borrowers repaid their accounts in full, this represents 8% of all mortgage style borrowers at the beginning of the financial year
During 2010-11, 3,400 ICR borrowers repaid in full compared to 2,100 in 2009-10. By the end of financial year 2010-11 there were also 29,400 ICR borrowers who had fully repaid with the account closure in progress
The balance outstanding (including loans not yet due for repayment) at the end of financial year 2010-11 was £2,532.7m, an increase of 6% compared with 2009-10. The balance outstanding on income contingent loans was £2,398.3m, an increase of 7% compared with 2009-10
At the end of 2010-11 there were 427,800 borrowers; of these, 330,900 (77%) had accounts liable for repayment, increases of 5% and 7%, respectively, compared with 2009-10

supplementary publication, Income Contingent Student Loans by Repayment Cohort and Tax Year 2000/01 to 2009/10 presents analysis of the repayments of income contingent repayment (ICR) student loans. It includes information on the repayment status of borrowers, the average amount repaid and the average outstanding balance. Income contingent repayment loans are those where the repayments are linked to a borrowers income after they have left university or college. Fixed-term loans (known as mortgage style loans) are not included in these statistics.

The percentage of borrowers who have fully repaid their loans at 30th April 2011 ranges from 2.4% for the latest entry cohort (2011) to 23.3% for the 2000 cohort (after 11 years of repayment liability)
The average amount repaid by each borrower who made a repayment via HMRC in tax year 2009/10 ranged from £420 for the 2009 cohort in its first year of repayment to £740 for the 2004 and 2005 cohorts (after 5 and 6 years, respectively, of recorded repayment history)
The average debt for borrowers who still had a live account at the end of tax year 2009/10 ranged from £5,450 for the 2000 cohort (after 10 years of recorded repayment history) to £7,570 for the 2005 cohort (after 5 years of recorded repayment history). For the 2010 cohort, the average debt was £5,940 at the point where their liability to repay began
Within cohorts of borrowers the average repayments have generally increased, due to growing incomes since leaving higher education. The 2009 cohort which is the latest cohort to have made a repayment, has the same average repayment than that of the 2008 cohort as reported in its first year of repayment

Before you take out a student loan, you need to know all of the real facts about payment and consequences. Do you know how much a student loan will really cost you? Heres 10 things that schools and lenders dont want you to know about student loans.

1. Eligible to declare bankruptcy? Your student loans will survive the process. While it is possible to have student loans discharged in bankruptcy, it is highly unlikely. Generally, student loans are only discharged if you have a serious disability that will permanently affect your ability to draw an income. If you have the ability to work in any capacity, the court will likely deny a request for your student loans to be included in your bankruptcy.

2. Co-signing on a loan means that you are responsible for payments if the borrower defaults. Before you co-sign a student loan, you have to be willing to accept that youre essentially taking on responsibility for the loan yourself. The person youre co-signing for may be very responsible, but what happens if they lose their job? You dont want your credit ruined because of someone elses finances.

3. Parents arent able to discharge student loans they took out for their children, either. This means Parent PLUS loans are almost never eligible to be discharged in bankruptcy.

4. Programs designed to help you during times of financial hardship will actually hurt you. You may be eligible for economic hardship deferrals or forbearance, but interest and fees will continue to rack up. Suddenly, your debt is doubled and youre no closer to being able to afford payments.

5. Economic hardship programs are limited, generally to three years. Thats over the entire life of the loan, so hitting multiples tough spots financially could mean that youll be forced to default on your student loan. Defaulting on a student loan is extremely detrimental to your credit score, more so than defaulting on private debt.

6. You may be able to get your student loan debt cancelled. There are two ways to get your debt cancelled. First, those taking jobs that are geared towards public service may be eligible for loan forgiveness programs. Second, if you attended a college that was unaccredited and gave you the impression that their degrees were valid, you may be eligible to have your student loans cancelled.

7. Collection efforts on student loans are more vigorous than with private debt. The government reserves the right to garnish your wages up to 15%, and can take tax refunds due to you to satisfy student loan debt. If youre disabled and receive a disability or social security check, the government can even garnish that.

8. Defaulting on a student loan makes you ineligible for deferment in the future. Even if you manage to get your account back into good standing, having a financial hardship will not allow you to defer payments after defaulting. If you cant pay your student loan bill, its essential to defer payments immediately so your account does not go into default.

9. If you default on a student loan, you will no longer be eligible for future financial aid assistance. If you plan on going back to school to either finish your education or obtain a higher degree, defaulting on a student loan can prevent you from doing so.

10. The government can actually revoke your professional license if you fail to pay back your student loan as agreed. If youre having trouble making payments because of your job situation, this can make it literally impossible to ever find a job in your chosen field.

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