We Do The Homework. You Get the Loan.

Hatchbacks and station wagons have offered versatility to college students for decades. Today’s models also offer a low sticker price and decent fuel efficiency. Edmunds.com has compiled its list of the ten least expensive models to own in 2011.

The five least expensive models to own, based on base MSRP sticker are:

• Hyundai Accent at $9,985
• Chevrolet Aveo at $12, 115
• Smart Fortwo at $12,490
• Toyota Yaris at $12,855
• Kia Soul at $13,300

Just as a caution, keep in mind that these are base prices and you will have to pay a little more to get the options that you want. This list also does not include after purchase expenses like insurance and maintenance costs.

Rounding out the top ten are the:

• Nissan Versa at $13,910
• Mazda 2 at $14,180
• Nissan Cube at $14,310
• Scion xD at $15,045
• Kia Rio at $15,095

These cars offer a low MSRP combined with respectable fuel economy. Several of them offer great warranties as well. Even after factoring in insurance premiums, you should be able to afford any of these ten vehicles no matter how tight your budget or how small your student car loan.

We do not have any firsthand experience with it, but Overture Technologies is reporting that their Private Student Loan Marketplace (http://www.overturemarketplace.com) enabled students from 1000 different institutions in 2010 to get private student loans that were, on average, 350 basis points cheaper than the national average.  That could amount to a $15K savings on an average loan balance over a 15 year repayment structure.

There are 12 lenders in the marketplace, and the average interest rate was 6.12%.  An assortment of national banks, regional banks, credit unions, and state agencies are included.  Of course, remember that private student loans are a last resort for funding your education, once federal loan options have been exhausted.  If you are looking for the cheapest rates on student car loans, however, we are your best source!

Students and parents across the Peach State are nervous about the future of the HOPE scholarship.  Financed by the state’s lottery system, the HOPE program promised to pay nearly the full tuition rate for any college in the state university system if a high school student could maintain a GPA of 3.0 or higher.  Unfortunately, lawmakers are now saying that the lottery system is no longer able to sustain the costs of the program, especially with so many young Georgians opting to stay in-state for their college education.  Cutbacks could amount to a 10% slash in tuition payments, as well as significant decreases in areas such as textbook payments.

This could be a problem not only for prospective college students, but also for current students, particularly those already shouldering debts from student car loans or credit cards.  Most of these students have not made room in their personal finances to accommodate such a significant decrease in scholarships and funding.

There is a very interesting development underway in the US Department of Education.  That department wants to make colleges more accountable for whether or not they effectively prepare their students for the job market.  To do so, the colleges would be graded according to the rate of their graduates who fall into student loan default within 36 months of graduating.  The new rules, if approved, would go into effect in 2014.  The proposed threshold is 30%, so if more than 1 in 3 of a college’s student borrowers default on their student loans within 3 years of graduation, the college may be at risk of losing the ability to accept federal student loan money. The rules will not apply to other forms of student lending, such as student car loans.

These rules are largely designed to target for-profit schools.  Of course, none of the schools are allowed to run credit checks on students and use these as a factor in the acceptance equation, so even legitimate schools could be facing a real struggle.  For more information, check out this article in the AZ Star.

There is a new article in the New York Times about a college in Vermont which requires its undergrads to complete a set of “financial sophistication” seminars.  In the discussion of this topic, some key money management tips have come up for college students.

1. If possible, pay more than the minimum payment on your credit card
2. Multiple credit cards are never better than a single one
3. Avoid cards from department stores at all costs
4. Begin putting money into an IRA or Roth IRA as early as possible
5. If student car loans are needed, make sure you go with a reputable lender who offers fair APR

According to a survey of 1000+ colleges by The Project on Student Debt, the average college senior graduated with about $24K in debt from student loans in 2009 – an increase of 6% from the previous year. That might sound like a large increase; however, it’s right in line with the average per annum increase we would expect to see in spite of the global recession. The reason for this consistency is two-fold:

1. Most graduating seniors took out student loans prior to when the recession hit
2. Colleges and universities have worked hard to maintain financial aid despite the economy

Still, $24,000 is a ton of debt when seniors are graduating into an economy in which nearly 10% of the population is unemployed (8.7% for grads aged 20 to 24). Couple that debt with student auto loans, and today’s recent college grads are facing some tough challenges in the next couple of years. However, from another perspective, this stage of life may well have been more challenging for many of their parents who graduated from college during the Vietnam era, with the draft looming over everyone’s heads.

Identity theft is trending toward a new and dangerous demographic:  kids and teens. Problem is, nobody notices the problem until the victims get much older – often old enough to apply for student loans or auto loans for students. After all, many identity thefts show up on credit reports, and teens and young adults have no credit history, and thus no need to check their credit – not until they apply for loans.

Some teens have found themselves unable to get approved for student loans due to a credit record destroyed by identity theft. Even though many of these problems are able to be corrected, they could set a student back a semester – if not a year – from beginning their college career.

As you probably know, Sallie Mae is one of the leaders in helping students pay for college. They have a pretty widespread social media presence, and they offer a veritable encyclopedia of tips and advice for minimizing debt and paying for your education. Recently they offered three “debt-savvy” tips which apply just as readily to car loans as they do to student loans:

• Graduate on Time:  if you need to repay an auto loan, graduating on time is key. The sooner you graduate, the sooner you will find your first postgraduate job and start making enough income to pay off your debt in larger installments.
• Make Payments While Still in School:  you are not required to begin paying off federal students loans until 6 months post-graduation. However, you must begin paying off student auto loans as soon as they are funded. If you are receiving help from your parents to pay off the loan, you may want to ask them to help you pay more than the minimum amount per month required (if it’s not a financial burden for them). That way, you will have less to pay off once you are making the payments all on your own.
• Keep Track of Paperwork:  this is KEY. You must stay organized. Missing auto loan payments can quickly damage your credit, and could even lead to a repossession – a real stigma on your credit report.

You have probably heard that for-profit universities have been taking flak in the form of allegations of ripping off students. Right now, the federal government has these establishments under the microscope. Now state-level authorities are getting into the mix, led by the Florida Attorney General’s Office, which will be investigating the following 5 for-profit universities:

• Kaplan Inc
• University of Phoenix
• MedVance Institute
• Argosy University
• Everest University

The allegations which have been made against these universities include:

• Misrepresentations relating to financial aid
• Unfair recruiting, enrollment, accreditation, and job placement practices

With college graduations strapped with debt in the form loans and auto loans for students, finding a job after graduation is as important – and as difficult – as ever.

…so says a third-year law student at Boston College. Well, not in those words exactly, but the student did write an open letter to the dean which was published in the school’s online paper.  As the student stated:

“We are discouraged, scared, and in many cases, feeling rather hopeless about our chances of ever getting to practice law…”

He proposes to the dean that he will drop out of school without his degree if he can get his tuition back. The job market for new law school graduates has surely been bleak in recent years, with a job market saturated by laid-off attorneys with 1-3 years of experience who are willing to work for first-year associate salaries.

The kind of feeling expressed by this BC law student may not be typical of grad school students across the nation, but surely he is not alone. Remember this if you tempted to spend more on student auto loans than you can really afford. Spending the least amount of $ possible is the smart play these days.