MyRichUncle(TM) Showcases Its Student Advocacy by Reducing Rates on Federal Student Loans
NEW YORK, June 15 /PRNewswire/ — MyRichUncle(TM), the student loan
company focused on shifting the industry to work in the best interests of
the student, today is announcing the launch of its Federal Loan Program,
priced well beneath industry standard rates. Federal Student Loans, the
most widely utilized and cost-effective loans for education will move to a
higher fixed rate structure on July 1, 2006. However, by securing their
Federal Loans through MyRichUncle, students and parents will realize
sizeable cost savings at repayment on Stafford (5.8 percent), PLUS (6.75
percent) and GradPLUS (6.75 percent) loans, versus other lenders offering
industry-standard rates of 6.8, 8.5 and 8.5 percent, respectively.
   In addition to the immediate interest rate reduction at repayment,
MyRichUncle will offer further repayment reductions:
   * .25 percent for borrowers who select to repay through an auto-debit
     system,
   * an additional principal reduction, equal to the percentage amount of the
     Department of Education origination fee, after 48-months of on-time
     payments, on the balance at time of qualification.
   MyRichUncle will be offering its Federal Loans direct-to-students. This
allows the Company to eliminate a number of inefficiencies in the
traditional Federal Loan process and pass on the savings to students. All
Federal Loans require certification from a schools financial aid office
prior to disbursing funds. MyRichUncle will automatically send a loan for
certification on behalf of the student. Under federal law, a financial aid
office’s loan processing staff is required to certify Federal Loans, no
matter which lender the student selects, or the channel by which the
student applies. Students applying for a Federal Loan should always let
their school’s financial aid office know their lender of choice to ensure
certification of their loans.
   MyRichUncle Federal Student Loans
   Education is both the first major investment of many people’s lives,
and, upon repayment, also the first time a student will realize the
enormous responsibility of debt. Families pay for this investment through a
mix of some or all of the following: Scholarships, Grants, Personal
Savings, Federal Loans and Private Loans. Of all these avenues for funding
education, Federal Loans are perceived by borrowers to be the most
judicious with regards to rate structures. Federal loans are subsidized by
taxpayer dollars; however, the government’s commitment to funding for
higher education decreased by $12.7 billion dollars under the Deficit
Reduction Act, signed in February of this year. Included in the Act was a
bill that cut that amount from federal student loan programs as part of its
deficit-reduction efforts.
   The student-centric brand of MRU Holdings, Inc., MyRichUncle originates
private student loans with an approach that is designed to shift the
student loan industry in a new direction, namely one where student’s best
interests are the first things considered. MyRichUncle cites the efficient
and innovative nature of its business as the core reason for its ability to
provide Federal Loans with particularly lower rates that are realized
immediately at repayment.
   “Historically, the higher rates charged to students are generally
linked to industry-wide processes that our company has eliminated or made
more efficient,” said Vishal Garg, co-founder and chief financial officer
of MyRichUncle. “We have been extremely strategic and disciplined in
growing our business, and that efficiency has placed us in an exceptional
position to fund students with innovative products and better rates.”
   Federal Family Education Loan Program (FFELP)
   As a provider of FFELP, MyRichUncle is offering students the
lowest-priced nationally available Federal Loans in the industry. Under the
Deficit Reduction Act, passed in February of this year, Federal Loans will
move from a variable rate structure to a fixed rate structure, which will
be the highest rate for Federal Loans in five years, and the second highest
since the 2000- 2001 academic year when the repayment rate was 8.19
percent. All FFELP loans are provided to students based on the Free
Application for Federal Student Aid, or FAFSA, which is the government’s
sole source of information in declaring eligibility for Federal Loans.
   Stafford Loans were created in 1965 in Title IV of the Higher Education
Act, and have been amended over the years as the costs of education have
skyrocketed. Currently at a variable rate set once a year and moving to a
fixed rate structure of 6.8 percent on July 1, 2006, Stafford Loans are
capped for each year of study depending on the student’s status as
dependent or independent, federally guaranteed and can be secured as
subsidized or unsubsidized, depending on need as determined by the FAFSA.
MyRichUncle is offering Stafford Loans for a fixed rate at repayment of 5.8
percent.
   Parent Loan for Undergraduate Study, or PLUS Loans, were created in
1980 in response to consumer demand for additional government assistance in
paying for education. Also a variable rate product that is moving to a
fixed rate structure of 8.5 percent on July 1, 2006, PLUS Loans are also
capped for each year of study. Repayment begins one month after funds are
distributed to the student’s institution. MyRichUncle is offering PLUS
Loans for a fixed rate at repayment of 6.75 percent.
   GradPLUS, a newly-created Federal Loan for graduate study, will be
introduced with a fixed rate of 8.5 percent. These PLUS loans for graduate
students were introduced because of demand from graduate students above and
beyond the Stafford loan limits. MyRichUncle is offering GradPLUS Loans for
a fixed rate at repayment of 6.75 percent.
   Why It Matters Now - A National Student Debt Dilemma
   According to the College Board, the average student today graduates
with close to $20,000 of Federal and private loan debt. Of the approximate
$95 billion borrowed in 2005 to pay for education, Federal Loans account
for approximately $65 billion. While students have historically benefited
from the variable rate structure, set on June 1 of each year according to
the 91- day T-Bill, the new fixed rate structure has received strong
opposition from students, parents and education providers.
   Putting Students First
   “The proposition of taking on debt to pay for education is not
desirable. Debt is serious, but as an investment in education, it’s also
necessary for many students,” said MyRichUncle Co-founder and President
Raza Khan. “MyRichUncle provides a better way for students to pay for
school. With a continuous spectrum of loan products, we’ve created a
process of borrowing money to thoroughly address the needs of our
borrowers. Furthermore, we want to take the seemingly inherent complexities
of student loans and repackage those on a more digestible, student-friendly
level.”
   In addition to providing lower-priced Federal Loans, MyRichUncle also
provides competitively-priced private loans for education. As part of its
suite of loan products, MyRichUncle originates private student loans for
the widest demographic of students: those with credit histories, those with
creditworthy co-borrowers and even students who lack credit history or a
creditworthy co-borrower. For the latter, a loan based on traditional
credit underwriting criteria becomes a challenge. To address this
demographic, which is estimated to be approximately 70 percent of all
students who need a private loan, MyRichUncle has recently introduced
Preprime(TM), an innovative underwriting criteria that replaces traditional
credit-based underwriting with its proprietary models. A Preprime loan is
based on student-centric criteria, such as academic history, course of
study and institution. Using a blend of information, similar to that which
is provided on an admissions application, MyRichUncle is able to qualify
students for a loan. MyRichUncle believes that good student behavior is
indicative of a student’s ability to handle the considerable responsibility
of student loan debt.
   Moreover, MyRichUncle provides specialty loan products, including those
that cover costs for studying abroad and internships, as well as
professional and graduate school private loans.
   “We cannot say it louder, we cannot say it enough - it matters now.
Through the loan products we create and subsequent inefficiencies we
eliminate, we are changing the language, the tone and the entire vibe of
this industry,” added Vishal Garg. “The bottom line is that there is a
choice: students and parents can stick with the status quo and pay more for
Federal Loans. We hope they choose MyRichUncle and pay less.”
Written by Originator on June 15th, 2006 with
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