According to the folks at CNN/Money, today’s tough times call for a new take on the “rules” of financial security. Number one on the list: It’s time to re-think risk.

That’s a good hook. The recent turmoil in the markets has scared people to the point of stocking up on canned goods, so anyone who’s ready to offer a new outlook on this seemingly extinct notion of security is undoubtedly going to be playing to a full house.

Security? Now? Tell me, please!

Well, that’s what CNN/Money promises to do. They have the new recipe–with 7 secret herbs and spices–that will produce some finger lickin’ good investment results. Or do they?

I’m beginning if this new formula is anything more than a repackaging of the old one, framed within a discussion of current events to make it seem timely.

Case in point: Rule #1. Basically, they’re telling us that the days of acting like a riverboat gambler are gone, reserved solely for re-runs of Maverick on the Encore western channel. Instead, we should be approaching risk with a more conservative perspective. Here it is:

“Old thinking: If you can stomach the ups and downs that come with risk, you’ll be rewarded.
New rule: Risk isn’t about your stomach. It’s about making or missing an important goal. “

In other words, you shouldn’t risk so much that you put your future needs and goals at risk. That doesn’t sound like horrible advice at all, does it? Nope.

It also doesn’t sound much like a new rule. It sounds suspiciously like the same rule every reasonable person who has invested in the market or walked into an Atlantic City casino has always used. If you can’t lose it, don’t risk it.

You see, this isn’t a new rule. It just sounds that way because it’s set against the backdrop of a DOW that doesn’t seem hellbent on reaching the five-figure mark again any time soon.

The fact of the matter is that the risk/reward factor has always been with it and will always be with us. If you want to win big, you’re going to carry more risk than if you’re happy grinding out a lower rate of return.

The people who are reading CNN/Money aren’t staring at crushed 401(k) updates because they decided to play the market equivalent of baccarat like a drunk millionaire tourist. They were on safe side of risk/reward in the first place.

There wasn’t anything widely regarded as high-risk about having some of your money in GE or GMC. Those mutual funds were assembled carefully to mitigate massive risk. Very few of those average Janes and Joes who are now wondering what it’s going to be like sleeping on their kid’s basement futon in five years lost massive chunks of their retirement investments because they were being wild.

This “new rule” isn’t new at all. Period. The article says:

“This bear market’s lesson is that how much risk you can take is a matter of how much you can lose and still meet your basic goals.”

I’m wondering when that hasn’t been the lesson? As far as I can remember, it’s always been one of the first things everyone in the whole wide world learns about investment. Risk pays more when things work out, but you shouldn’t take on too much risk if the higher likelihood of disappointment is going to cripple you.

That’s the way it’s always been. It’s the way it will always be.

They conclude the article by recommending that readers take it a little easier on stock buys due to risk, even if that costs them a little bit. That may or may not be good advice. We’ll see. But that’s market projection; it’s not an investment rule.

I have no doubt that crazed risk-taking backfired on some regular folk. Over extension by those higher up on the financial ladder was also a problem. However, pretending that the lesson of the last several months is that people need to stop doing “insane” things like buying into middle-of-the-road mutual funds packed with consistent Fortune 500 performers is make-believe.

The new rule is the old rule. People aren’t sick to their stomachs because they behaved wildly. They played by this rule all along and still ended up on the short end of the stick. There’s something sort of ugly about implying that retirement funds were smashed because of the greed of reasonable people behaving in accordance with professional recommendations (including those of CNN/Money, I might add).

Hi Everyone,

Here are the Blog Carnivals that we participated in over the last 2 weeks.  Enjoy!

- Carnival of Debt Reduction #180 (The Quotable Quotes Edition) was hosted by Ask Mr. Credit Card and you can find our post entitled Packing a Little Extra Snow on Your Snowball listed there.

- Money Hacks Carnival #53 (The Bailout Edition) was hosted by Personal Finance Ology and you can find our post entitled How to Value a Charitable Donation listed there.

- Festival of Frugality #166 (The Winter is Almost Over Edition) was hosted by Student Scrooge and you can find our post entitled Easy Button in Full Effect: Finding a Staples Coupon is a Breeze listed there.

Washington Mutual Mortgage is the mortgage lending branch of the nation’s largest savings and loan association, Washington Mutual, headquartered in Seattle, Washington.

The third largest mortgage lender in the United States, Washington Mutual offers fixed and variable rate conventional mortgages, interest-only mortgages, equity lines, and a number of ARM creative financing options.

In December of 2007, Washington Mutual Mortgage closed 160 of its 336 home loan offices across the country, and eliminated 2600 positions, constituting 22% of its entire staff. Hit hard by the subprime lending crisis, in March of 2008 Washington Mutual also reduced the 2007 compensation package of its CEO Kerry Killinger from $14.2 million to $5.25 million after its stock price dropped 70% due to huge losses in the mortgage division.

WaMu (as it is now called in its ad campaigns) has set aside $2 billion for losses in 2008 which it expects to continue into at least the third quarter.

In December of 2007 Washington Mutual Mortgage was also investigated by the Securities and Exchange Commission due to allegations that it had based some of its mortgage loans on intentionally inflated home appraisals. Though formally cleared of these allegations, the chief legal officer for Washington Mutual Mortgage, Fay L. Chapman, retired immediately after the investigation ended. Ms Chapman, then 61, insisted that no connection existed between the company’s legal troubles and her sudden departure.

Washington Mutual does offer very competitive rates on conventional fixed rate mortgages, but its terms on ARMs vary widely and should be carefully read and understood before signing. For example, a one-month ARM option is can be hit with increases of up to 7.5% annually with no lifetime cap, and with negative amortization over the life of the loan a real possibility.

Negative amortization means that the amount owed on the home increases even though payments are made regularly and on time. Buyers who choose this option betting on mortgage rates staying low and their property rapidly gaining equity can end up owing more than their house is worth very quickly if they are wrong.

Five, seven, and ten year ARMs are also offered that carry a more reasonable 5% cap for the life of the loan, but even this can cause problems if buyers don’t realistically consider all possible outcomes. Many people only consider the best case scenario, a bad idea especially considering the real estate mess of the past year.

An even more slippery multi-pay option allows WaMu buyers to choose one of four different payment types for the first ten years of their ARM. The first payment option allows a minimum payment that does not even cover accrued interest and can result in negative amortization.

The second option is an interest-only option.

The third is for a normal principal and interest payment.

The fourth is for a 15-year principal and interest payment.

In the worst-case scenario, buyers could choose option one for ten years, owe more on their property each year than they did the year before, and then after ten years get hit with an unaffordable payment on an upside down mortgage. That might be worth doing if refinancing was an option and property values kept pace with the negative amortization, but that is a lot of ifs to be considering at the beginning of a property purchase.

People who need (or think they need) this kind of flexible payment option unfortunately tend to be the very same people who should never, ever be offered this kind of flexible payment option. It’s hard to say whether Washington Mutual is still making this kind of creative loan given the current chilly lending climate, but they do still offer it on their website: http://www.wamu.com/personal/loans/home_loan/multipay/default.asp

Washington Mutual Mortgage is likely to be around for awhile, having merged with or acquired Homeside Lending, Fleet Mortgage Corporation, PNC Mortgage, and Alta Residential Mortgage, all in the past eight years.

Given the deep cuts, huge losses, and radical changes to the mortgage division in 2008, it is almost certain they will eventually emerge a more conservative, more cautious lender.

During tough economic times, many turn to loans as a means to make ends meet or to finance an unexpected expense.  If you have bill collectors at your door, on your phone or sending you threatening notices, an infusion of cash may be necessary – and this is where the many options for urgent loans may come in handy.

Overall Concepts

If you are exploring loans, there are a few key concepts to understand, specifically “Credit Score”, “Collateral” and “Loan Terms.”  In essence, when making urgent loans, most lenders require two things:

• A demonstration of your ability to pay the loan back based on past performance (credit score) and
• The promise that you will give them something of equal or more value than the loan amount if you do not (collateral).
• The terms of the loan (pay back timeframe, interest rate, etc.) depend on how well you’re able to demonstrate your ability to pay back

In other words, your credit score and sources of collateral will determine whether your loans will have a payback period of 5 years at 7% interest or 2 months at 25% interest.

Sources

There are a variety of sources for urgent loans, many of which can get cash in your hands in as little as 24 hours.  Start by looking in to some of the following:

• Family and friends:  Family and friends are almost always one of the first options you consider.  Their terms are likely to more favorable than a bank or other institution and they may be less interested in the type of collateral you can offer.
• Cash Advances on Credit Cards:  If you already have credit cards and have any remaining space left between the amount you’ve charged and the limit, consider taking a cash advance.  Although the interest rate will be high on these kinds of urgent loans, it is often easier to get cash immediately through a credit resource that you already have, as opposed to applying for something new.  Check with your credit card issuer to see if they have a cash advance process.  You may even be able to get cash from an ATM or a local bank.
• Home Equity Loans:  If you own your home and there is a difference between the amount you paid and the market value, you may be able to get fast turnaround on a home equity loan.  Check with your lender to see if something can be arranged.
• Pay Day Loans:  Many companies, such as Discount Advances, My Cash Now and Personal Cash Advance offer urgent loans utilizing your paycheck as collateral.  If you have an unexpected expense that needs to be addressed immediately, but your paycheck won’t be available for two weeks, these companies will loan you the money in exchange for a financing fee.  In general, you must agree to hand over your paycheck to them the moment you receive it.
• Pawn Shops:  Sometimes, urgent loans are as close as your local pawn shop.  You can turn old jewelry, electronics or other valuable in to cash quickly and easily.  Basically, the pawn shop offers you a loan utilizing the valuable you’ve left with them as collateral.  You can return to buy the items back at a slightly increased fee (which provides the profit to the pawn shop owner) or you can leave them there to be sold to others.
• Online Person-to-Person Lending:  For urgent loans of up to $25,000, you might want to consider an option like Prosper, where people with available cash pool together resources to make loans to others.  The interest rate you will ultimately receive on your funds is based on your credit rating and your demonstrated ability to pay back the loan.  So, if your credit rate isn’t great, lenders will charge you a higher interest rate.

When you’re in a difficult financial situation just knowing that there are options for loans can be comforting.  But remember, if you are using urgent loans indiscriminately as the only means to make ends meet, it might be time to take a closer look at your overall finances.

Unsecured debt consolidation loans are basically a way of putting all your debts into one loan with one monthly payment with no collateral required. Collateral refers to a physical asset like an automobile or a piece of real estate that the bank can seize if you default on the loan. Loans made against collateral are call “secured loans,” because your ability to repay is “secured” by the agreement that the lender can seize your collateral if you default.

A credit card is basically an unsecured loan. You do use the card to purchase real physical assets but they tend to be small and the bank does not usually try to take them back if you default. This means that unsecured loans are riskier for the bank or lending institution. They are usually much harder to get, and if you can get one, the terms are usually not as good as they would be if you had some collateral for the loan.

All of these considerations lead us to an obvious question: Why would a reputable lender want to make an unsecured loan to consolidate debt?

Most reputable lenders do not make very many of these loans, but a few will do it in some cases. Bank of America offers an unsecured debt consolidation loan for anywhere from $500 to $50,000. The interest rate can be as low as 8.99% or as high as 24.9% depending on your credit and the rate can be changed at their discretion at any time during the life of the loan. You can choose a term of 60, 72, 84 or 96 months. You can read about this loan at:

http://www.bankofamerica.com/vehicle_and_personal_loans/index.cfm?template=debt_consolidation

The shorter the repayment term the higher your monthly payment, but choosing the shortest term you can is still the best way to go, both so you can be quit of the debt quickly, and because you will save money in interest paid to BOA.

Even though Bank of America is a reputable lender, the unsecured debt consolidation option has some real drawbacks, even with them. First of all, the “unsecured debt consolidation loan” is actually a revolving line of credit, in other words, a credit card without the plastic. You can make draws against the paid down portion of the loan, and if you do, it will extend the loan term and sometimes change the interest rate. If you are late on a payment the rate jumps to 27.99%, which is not at all good.

In the worst case scenario, if you are approved for Bank of America’s unsecured debt consolidation loan, and you transfer your credit card debt into the balance to the tune of the maximum $50,000 for 96 months at $762 each month. You don’t close out your credit cards but after all, they are at a zero balance now that you have the debt consolidation loan.

Several months into the loan you or a family member starts charging up the credit card again, plus you take a draw on what you’ve paid so far and the interest rate jumps several percentage points. Before you get anywhere near the end of the 96 month term you have other credit card debt again and now your debt consolidation loan is out of control too.

If you choose any of hundreds of unscrupulous lenders who prey on people in deep debt by misrepresenting what they actually do, you can end up with an even worse credit rating than you had when you started.

Some companies negotiate with your creditors to lower the amount you have to repay. That is not illegal, but it isn’t the same as paying off your debt and will leave a mark on your credit similar to bankruptcy, even though the lenders will often tell you it won’t.

A better idea is to start with credit counseling and some financial education on debt and how to reduce or pay off debt. A good credit counselor will make you cut up all your credit cards at the very beginning if you haven’t done so already. If anyone suggests anything fancier than that, don’t sign anything until you shop around. Some “free” credit counseling services actually charge fees and will steer you to their own predatory products rather than give you good advice.

A good rule of thumb is, “if it sounds too good to be true, it probably is.” It takes awhile to get in over your head in debt. Anyone who promises to fix it for you quickly and painlessly is probably lying.

Mortgage loans come in all shapes and sizes, with many different terms and conditions. Buyers who understand the types of mortgage loans available and which ones are best for their specific needs have a definite edge over buyers who go into home shopping without doing this research first.

A good resource that describes the basic types of mortgage loans and their terms and conditions can be found at http://mortgage-x.com/library/loans.htm.

Mortgage loans can be back by the Federal Housing Administration or the Veterans Administration. These loans are called FHA and VA loans, and are typically easier to qualify for than conventional mortgages and require less of a down payment.

The Rural Housing Service of the US Department of Agriculture is another government agency that backs low-cost loans with no down payments for buyers who want to purchase property in certain rural areas and meet certain conditions.

In addition to federally backed mortgages like FHA, VA, and RHS loans, many states and local communities offer low-cost mortgages with minimal or no down payments for buyers who meet certain income limits or are willing to live in depressed areas and rehabilitate their properties. To find out if such loans are available in your specific area, contact any licensed realtor.

Conventional mortgage loans can be conforming or non-conforming. Conforming loans follow the terms and conditions set forth by Fannie Mae and Freddie Mac guidelines, two huge corporations that purchase mortgage loans and sell them as securities to investors.

The 2008 conforming loan limit on a single-family dwelling is $417,000. In other words, $417,000 is the maximum amount you can borrow to purchase a single family home if your loan is backed by Fannie Mae or Freddie Mac, which most conventional loans are.

Conventional mortgage loans over $417,000 (for a single-family dwelling) are called non-conforming Jumbo loans. Jumbo loans tend to have a little bit higher interest rate, and may be somewhat more difficult to obtain, or, in times of tight credit, very difficult to obtain.

Within conventional mortgage financing you can find fixed or adjustable rates with various term lengths. The most common fixed rate terns are 10, 15, 20, 25, 30, and 40 years, with 15 and 30 year options being by far the most popular. The shorter the term on a fixed rate mortgage, the better (in general) the interest rate will be. Many people take out 30 year fixed rate mortgages and then refinance to 15 years after they have lived in the home for a few years.

Adjustable rate mortgages are conventional mortgages with interest rates that fluctuate over the life of the loan. Currently, adjustable rate mortgages are popularly sold as 30 year mortgages with a low fixed rate for the first 2 to 5 years, and then a variable rate that resets each year. Sometimes the initial five year period is interest-only, making the early payments artificially low, and later payments then reset each year for the rest of the mortgage.

When considering an adjustable rate mortgage it is very important to understand the terms and conditions and read everything very carefully, asking plenty of questions and possibly even hiring an attorney to review the loan documents before signing. Many people get into trouble with adjustable rate mortgages because they are confident they can refinance once the fixed rate portion is over, and then they find that market conditions have changed and they are stuck with a rate they can’t afford.

When considering an adjustable rate mortgage look for a cap on the interest from year to year and also a cap on increases over the life of the loan. If the cap is very high, or if there is no cap, you might want to consider other financing. Also, keep in mind that mortgages always come with closing costs that can be quite expensive, so factor this in to any decisions you make in which refinancing later is an important part of your plans.

Finally, many other more creative options for mortgage financing are available, but probably not as easily available as they were before the recent sub-prime mortgage meltdown. Before considering any creative options such as interest-only mortgages or reverse mortgages, it is best to consult a mortgage attorney or other trustworthy expert to insure the loan isn’t predatory or just a really bad idea.

Mortgage rates change from day to day, which is why buyers have to wait until the last minute to get the exact amount to bring to the closing from their lender. Not only do mortgage rates change from day to day, they change from state to state, and from lender to lender.

Today’s mortgage rates may differ from the weekly index rate, although both daily and weekly indexes provide information on current rates by computing an average. Daily rates show changes from one day to the next. The weekly index shows average current rates over the course of the preceding week.

Often lenders can take an educated guess at whether today’s mortgage rates are on the way up or on the way down by looking at volatility from day to day and the current market, but no one ever knows for certain what the rate will be at the time a loan is closed.

Today’s mortgage rates change according to many variable factors such as the current availability of credit, the prime rate, and various fluctuating market conditions. A number of excellent financial websites offer current updates on today’s mortgage rates, as do most major newspapers.

Remember when checking on mortgage rates that today’s rate will not necessarily be your personal rate should you apply for a home loan. Factors such as credit worthiness, income, appraised value, percentage of down payment, the kind of financial institution used, and the loan term all impact the final rate charged. The rates shown in tables of today’s mortgage rates are based on excellent credit and a down payment of at least 20%. Any deviation from these ideal conditions will change the rate on the mortgage.

Typically mortgage rates will be displayed for 30 year fixed rate loans, 15 year fixed rate loans, 5/1 ARMs (adjustable rate mortgages with interest only payments for five years that reset to an adjustable principle and interest rate tied to the prime rate once a year thereafter), 30 year fixed rate jumbo loans (fixed rate mortgages for over $417,000), and 5/1 Jumbo ARMs. These are not the only loans available; they are just the standard loans listed in today’s mortgage rate tables. To find out about other options, you need to actually speak with specific lenders.

Some good financial websites that allow you to get today’s mortgage rates from a variety of institutions and compare their terms and fees are

• www.bankrate.com
• Equifax Mortgage Match
• www.realestate.yahoo.com/loans
• www.mortgages.interest.com,
• www.hsh.com, and
• www.lendingtree.com.

You can also check the website for your local newspaper for rates, or check your favorite financial institution’s website.

Online money magazines such as:

• www.money.cnn.com
• www.fool.com, and
• http://www.msnbc.msn.com/id/8874568/.

Some major mortgage lenders and their daily mortgage rate sites are:

• www.wellsfargo.com/mortgage/rates/,

• www.eloan.com,
• www.countrywide.com, and
• www.wachovia.com.

Real estate websites publish today’s mortgage rates too. Among the top real estate websites for today’s mortgage rates are:

• www.coldwellbanker.com/real_estate/Mortgage_Resources,
• www.century21.com/finance/default.aspx, and
• http://finance.realtor.com/homefinance/findlender/findlender.asp.

When searching for today’s mortgage rates, read the analysis offered at the site as well to gain an understanding of current rate trends. For example, at this writing, even though the Federal Reserve recently made yet another cut in the rate banks charge to lend money to one another, mortgage rates are at their highest in seven weeks, remaining over 6% for even the best customers due to lingering market concerns about inflation.

In other words, the rates are not always intuitive: rates on other kinds of credit can all be dropping, but that isn’t necessarily a predictor of where mortgage rates are headed.  If you read the analyses offered by various sites, it will help you understand what is happening with rates so that you can make a better plan should you need a mortgage or a refinance. Sometimes, based on trends, it makes sense to strike while the iron is hot. Other times, waiting it out can be the best strategy.

SunTrust Mortgage is the mortgage lending division of SunTrust Banks Inc., an American bank holding company with 1700 branches and offices throughout the southern United States. In its current form, SunTrust Banks Inc. is the result of the 1985 merger of the Trust Company of Georgia and Sun Banks Inc of Florida.

The Trust Company of Georgia helped underwrite the initial public offering of Coca Cola in 1919. As a result, SunTrust Banks Inc. holds 48.3 millions shares of Coca Cola worth approximately $2 billion and paying $59 million each year in dividends. Two SunTrust executives currently sit on the board of Coca Cola, and one Coca Cola executive sits on the board of SunTrust.

SunTrust Mortgage offers ten to forty year fixed rate mortgages at competitive pricing with financing on up to 103% of the property value. No income verification loans for self-employed buyers are also offered (assets and unearned income are still verified), as well as fixed rate loans for people with “less than perfect credit.”

SunTrust offers a variety of ARM products, from one year ARM loans to 7 year ARMs, with a 95% loan to value ratio. All SunTrust ARM loans have a cap on interest rate increases over the life of the loan and from year to year.

SunTrust Mortgage offers special 100% financing mortgage program for certain rural property purchases, and also special programs for low to moderate income households.

In many circumstances the down payment on a home can be a gift or can be financed as well through a variety of options with SunTrust itself.

Mortgage payment options with SunTrust are straightforward. Buyers can send payments by mail, set up ACH payments on a recurring monthly basis, make one-time ACH payments for a fee that varies by payment amount, or set up bi-weekly payments for a fee. The bi-weekly payment option is especially good for buyers who can afford it, since it shaves some time and money off the mortgage and builds equity more quickly.

SunTrust Mortgage also offers Jumbo loans, FHA, and VA mortgages, and special terms for loans on student condominiums.

SunTrust Banks recently partnered with the city of West Palm Beach, Florida to open a foreclosure help center. With Bank of America and Bank Atlantic, SunTrust will be one of only a handful of banks willing to buy foreclosed properties and work out new terms for people behind on their loans. They will also provide counselling to help these same homeowners to repair their credit.

Florida foreclosures are up 70% over last year. Currently the state is behind only CA and Nevada in number of foreclosures. While many lenders have given lip service to the current loan crisis and the need for individual assistance, SunTrust is one of the few to actually make a commitment to refinance and write off some loan amount in order to keep Florida residents in their homes.

While SunTrust stock is currently at a low point historically speaking, it seems to be due more to the general turmoil in the mortgage and banking industry, and less to the policies of SunTrust Mortgage itself. In March of 2008, Motley Fool listed it as one of the top stock bargains in a bad market: http://www.fool.com/investing/general/2008/03/31/the-scariest-market-in-six-years.aspx which is high praise in these troubled times.

Whether you have recently completed your degree or are nearing completion, chances are you have a wide-range of student loans to manage.  And, believe it or not, lenders generally require that monthly payments on those loan amounts begin almost immediately after graduation.

Wouldn’t it be nice to make one monthly payment that covers all your loans?  That’s where a student loan consolidation center can come in handy.

What does it mean to consolidate your student loans?

Basically, through a student loan consolidation center, you can have all your various federal loans, including Stafford, Perkins and other loans merged in to one account.

This approach offers tremendous advantages in terms of both ease of payment as well as lower interest rates.  Many student loan consolidation centers also offer programs to restructure your private loans as well.

What are the advantages to consolidating student loans?

There are a variety of reasons to consolidate your student loans, including:

• Reduced Payments: This is the number one reason to consolidate your loans.  In some cases, you can reduce your payments by as much as 50%.
• Reduced Long Term Interest Rates: In addition, merging your student loans in to one package may reduce your interest rates.  This is especially true if you have a mix of very low rate loans (such as the Stafford loan) and high rate loans, such as the Parent Plus loans.
• Ease of payment: Instead of writing multiple checks or making multiple online payments, a student loan consolidation center can help you create one payment schedule, which will help ensure that you do not miss payments due to confusion over which payments have been made.

What are the downsides / What should I consider?

Student loan consolidation sounds like a great deal, but there are some important factors to consider before you just “leap in:”

• Longer Term Loans: The reason why monthly payments can be reduced so dramatically is because, in many cases, the consolidation loan extends the term of your loan.  That might be useful for the short term, when you’re low on cash, but do you really want to be paying off your student loans 30 years after you’ve graduated?  Think carefully about how long you want your loan term to be and be sure there are no prepayment penalties if you decide to pay off your loans early.
• Private Loans: If, in addition to or instead of federal loans you have a range of private loans, think carefully about how you consolidate these.  If you merge your private and federal loans, you will lose all the benefits associated with your federal loans, including interest rate protections and deferral procedures.
• Grace Period: For students who took out student loans before July 1, 2006, you have a limited period of time in which to get your loans consolidated.  Check with your preferred student loan consolidation center for more details.

How Do I Get Started?

There are a variety of different student loan consolidation centers.  Check out services like Student Loan Consolidator.com and the Consolidation Center for more details.

A student loan calculator is a financial tool that lets you determine how much you will have to pay each month after graduation on the money you borrow to attend college. Having this kind of information in advance can help you make decisions about where to attend school, how much you should borrow, and even what to choose for a major.

Getting a realistic idea of the cost of your education and a plan for paying it back is not the most fun you will ever have in an afternoon, but it can save you a lot of trouble down the road. As the cost of a college education gets higher and higher, and the job market gets tighter and starting salaries lower, having a plan can reduce anxiety and help you concentrate on your studies and your future.

FSA, the Federal Student Aid website, has a variety of helpful calculators plus the current interest rates on federal student loans at:

http://www.ed.gov/offices/OSFAP/DirectLoan/calc.html

One repayment plan calculator at the FSA website breaks down different federal student loans into standard, extended, and graduated payment plans. For example, a $50,000 Stafford loan balance can be repaid in monthly instalments of $575.40 for 120 months on the standard repayment plan.

The extended repayment plan spaces that term out to 300 months, which reduces the monthly instalment to $347.04.

The graduated plan resets to a higher amount every two years, so the first two years are reduced to $287.70 each month.

An income contingent plan calculator at FSA lets you calculate how much your payment will be each month based on your annual income after graduation. Say you borrow the same $50,000 but can’t find anything except a $20,000/year entry level job in banking when you graduate. At that income level, you will pay $167.13 each month until you can make more money.

Many banks do offer refinancing options for consolidating student loan debt into one payment, and provide student loan calculators to help you estimate you monthly savings. Chase has a good one available at http://www.chaseconsolidationprogram.com/ You plug in the amounts of your different loans, and it gives you an approximate consolidated single monthly payment.

A really depressing student loan calculator is available at the CNN finance page at: http://cgi.money.cnn.com/tools/studentloan/studentloan.html

Plug in the same $50,000 student loan debt at a $300 monthly payment and you will see that the loan will be paid off in only 48 years, with a total loan cost of 103,453. If you are still stuck in that $20,000 entry level job, sorry, but you will never pay off your student loan debt at $167.13. That’s right, you will die first. It’s hard to know what to do with information like that. Study: that might be one response. Study your brains out and score some scholarship money.