Lynnette_Khalfani: This is Lynnette Khalfani, The Money Coach. I've recently written a book about managing and paying off student loans. It's called "Zero Debt for College Grads: From Student Loans to Financial Freedom." For the next hour, I'm here to take your questions about college debt.

raz:Hi Lynnette, my son has been pestered by student finance companies to consolidate his loans now that he has just graduated. Their promises appear to be better than his Direct Loan rates. How do they get the contact info when he's (and we) are on the "no call" lists.

Lynnette_Khalfani: I suspect your son's school -- in particular the alumni association -- may have been the source that supplied your son's name to companies that are now offering to consolidate his student loans.

Lynnette_Khalfani: You can opt-out of getting many pre-screened credit offers by calling 888-5-OPT-OUT or visiting the website www.optoutprescreen.com. This will stop many solicitations, including credit card offers. But you may still get offers in the mail - for credit cards, student loan consolidation, etc. - because even after you place your names on a federal "do not mail" list, you and your son are still subject to a variety of pitches, including those from:

Lynnette_Khalfani: * local merchants in your area,

Lynnette_Khalfani: religious groups and charitable associations

Lynnette_Khalfani: * professional organizations

Lynnette_Khalfani: * alumni associations

Lynnette_Khalfani: * politicians

Lynnette_Khalfani: * companies with which you currently do business

Lynnette_Khalfani: All of these sources can legally solicit you. If you want to cut down on mail from any of these entities, you have to write each group individually and specifically ask to have your name (or your son's name) removed from their lists.

coesq: What are your options if you can't afford to pay what Sallie Mae requires as a min monthly payment?

Lynnette_Khalfani: Your options depend on the type of loan repayment plan you're currently using, as well as your personal circumstances.

Lynnette_Khalfani: You have four different loan repayment options:

Lynnette_Khalfani: * the standard loan repayment - where you take 10 years

maximum to pay off student loans ... this is the best option for those who want to quickly knock out student loan debt. But it's also the repayment program that makes you pay the biggest monthly payment.

Lynnette_Khalfani: If you're in a standard loan repayment plan, and you can't afford it, there are three other options:

Lynnette_Khalfani: * the extended repayment plan

Lynnette_Khalfani: * the graduated repayment option

Lynnette_Khalfani: * the income sensitive repayment program

Lynnette_Khalfani: Each of these options give you between 25 and 30 years to pay off your student loan debt. Since your payments are streched out, your monthly payments are much smaller. The downside is that you'll wind up paying a lot more in interest charges over time.

Lynnette_Khalfani: Another alternative if you can't pay, is to make a case for a deferment or forbearance.

Lynnette_Khalfani: These are generally available to people who are experiencing financial hardships, such as unemployment, recent divorce, or due to the birth of a child, etc.

Mariana: Hello, I am going to grad school this September and so far I have only been able to get federal loans. What are my options on private loans? So far I have only found ones with 9.32% interest, are these the only ones out there?

Lynnette_Khalfani: Generally speaking, there are two different types of student loans: federal loans and private loans. I'd advise you to seek out federal loans first before turning to the private loan market. Federal loans have lower interest rates and often lower fees, may be subsidized by the government (meaning the feds pay the interest on your loans while you're in school), and can contain loan forgiveness/loan cancellation benefits that don't exist in the private loan market.

Lynnette_Khalfani: If you explore the private loan market, do shop around for the best loan rates and terms. Find lenders that are willing to waive or lower their "origination fees." Ask for interest rate deductions if you set up you loans on automatic payment plans. And request a lower rate for being a good payer, and making payments on time.

Lynnette_Khalfani: If you explore the private loan market, do shop around for the best loan rates and terms. Find lenders that are willing to waive or lower their "origination fees." Ask for interest rate deductions if you set up you loans on automatic payment plans. And request a lower rate for being a good payer, and making payments on time.

City_Different: Is it wise to go to graduate school - and take out MORE loans - if loans from undergraduate school still aren't nearly close to being paid off?

Lynnette_Khalfani: It depends on whether or not graduate school is necessary for your professional/career ambitions or your personal goals. Many people who go to graduate school and take on loans do so even though they still have undergraduate student loan debt. In fact, two-thirds of all undergrads leave school with college loans. The key is to make sure you only borrow what is absolutely necessary. Also, don't take on massive amounts of loans in graduate school if you know that your career will only result in modest-paying jobs. I just don't think that's wise to do from a financial perspective.

BW: Question - As a recent grad (May 06), my federal loans are consolidated and reasonable (About $175/month). However my problem is my private loans - 3 Loans that i pay a combined $750/month on. Can you consolidate private loans, and do you have any advice?

Lynnette_Khalfani: Yes, you can consolidate private loans. Most lenders will impose certain limitations, usually based on your credit or the amount of loans you have. For example, at Wells Fargo, here are some of their restrictions:

Lynnette_Khalfani: $5,000 - $100,000 per year, depending on your credit

Lynnette_Khalfani: $100,000 aggregate loan limit (including all other education debt)

Lynnette_Khalfani: You can't consolidate federal and private loans together. There are a few things to watch out for with loan consolidation :

Lynnette_Khalfani: 1)know the interest rate you'll get and make sure it's competitive Lynnette_Khalfani: 2) realize that consolidation can be costly in the long run. Even though consolidation may give you some breathing room, by rolling all your loans into one larger loan and giving you a smaller monthly payment in the short-run, over the long-term you can wind up paying many thousands of dollars in additional finance charges because one of the features of most loan consolidation programs is that you stretch out the loan payment for an extended number of years.

Lynnette_Khalfani: 3) Do the math and know exactly what consolidation will cost you (in terms of the principal amounts you'll repay and the interest).

Lynnette_Khalfani: A good online calculator to use for this can be found at http://www.finaid.org/calculator.

Jo: If a student wants to buy a car, is he better off in the long run maximizing his financial aid to do so since the rates seem lower and payments can be deferred until he finishes school?

Lynnette_Khalfani: I don't recommend using financial aid (and I assume you mean loans) to pay for a car. Here's why: Even though student loan debt can be obtained at a lower rate than the typical car loan, most auto loans are for five year terms. By contrast, that student loan you take out will likely have a 10-year term (or maybe as much as 30 years). You'd effectively be paying for your car for a ridiculous amount of time -- not to mention paying excessive finance/interest charges in the process. Besides, student loans should be primarily used to cover the basics and the costs directly associated with you getting an education -- tuition, fees, books and supplies, dorm fees/rent, etc. Work to pay for a car, get a traditional auto loan from a bank, or do without wheels. You'll be better off in the long run with any of these options.

Lawyergirl99: I graduated from law school in 1999. I would love to be student loan and credit card free. I was thinking of stopping my 401(k) contributions for six months, paying off all my credit card bills, start investing again and double up on my student loan payments. Lynnette_Khalfani: You're confronting a dilemma a lot of people face: namely how to most quickly pay off student loan debt even as you try to juggle other bills, like credit cards payments, etc.

Lynnette_Khalfani: I'm reluctant to suggest halting your contributions to your 401(k) plan for a few reasons. First, you may be getting a match from your employer. If so, then by stopping your 401(k) contribution, you're leaving free money on the table.

Lynnette_Khalfani: Second, there's an opportunity cost associated with halting your investment plan. I don't know how well your 401(k) has been doing, but let's say you're earning 8% a year. That's money you can't recoup. Plus, you forgo the opportunity to earn interest on top of interest (i.e. compounded interest).

Lynnette_Khalfani: I do like the idea of doubling up on your student loan payments. This can work wonders. And it can help you knock out those student loans so fast, too. My recommendation would be try to use alternative sources of money to pay off those credit card bills and make bigger student loan payments. If you get a raise, put that money toward your debts. Ditto for a tax refund check, a year end bonus, any unexpected money or windfalls that you come into.

hollyhock__Guest: My husband and I are considering 529 plans for our kids. Are some better than others?

Lynnette_Khalfani: I love 529 Plans. These are state-sponsored college savings programs that I believe are the single best way to save for a college education. I have 529 Plans for each of my three children, who are now 9, 7, and 1 years old. In my opinion, yes, some plans are better than others. And by better I mean, they have better investment returns, better fund managers, and lower fees. The best place to get more information about 529 Plans online is: http://www.savingforcollege.com. This website is run by a college finance expert named Joe Hurley. He's the nation's leading authority on 529 Plans.

CJ: Are there any federal grants or programs that help students pay down if not off their student loans?

Lynnette_Khalfani: There is a fabulous federal program to help college grads pay off student loans. It's called the Federal Student Loan Repayment Program. This program is run by the Office of Personnel Management. In a nutshell, if you agree to work for any federal agency, the government will pay off $10,000 a year worth of your student loan debt - up to a maximum of $60,000. For more information, visit the OPM's website at: http://opm.gov.

toGuest: Would it be better to pay off a student loan or a credit card first assuming the rates are within a couple of points of each other?

Lynnette_Khalfani: Chances are your student loans are at lower rates than your credit cards, and a "couple of points" can make a big difference in the finance charges you pay over time. If you can pay lump sums or aggressively pay off your debts, I'd suggest knocking out the credit card debt first. Those finance charges aren't tax deductible and some student loan interest you pay may be tax deductible. Getting rid of the credit card debt first will also boost your FICO credit score.

City_Different: I'm not sure what my repayment program is, uh oh! I pay monthly payments, my loans are not consolidated. I believe I am just on a standard repayment plan. I do want to go on to grad school or law school within the next few years - I would most likely defer my current loans. I would just be concerned with having HUGE monthly payments to pay off both undergrad and grad/law school loans.

Lynnette_Khalfani: It's a big choice to think about whether its worth it to take on big loans in grad school or law school. Many people come out of law school with six-figures worth of debt, so take that into consideration. The good news is that there are lots of so-called LRAPs, loan repayment assistance programs, just for lawyers and attorneys and people working in the legal field. I describe many of these programs in "Zero Debt for College Grads." Bottom line: your law school, or various public interest organizations and legal groups, or even your employer, can help you pay off your student loan debt if you decide to pursue a law degree.

Lynnette_Khalfani: Regarding your current loans, if you don't know what repayment program you have, call your lender and ask. Or even better, you should go online and get a full listing of all your federal student loans. Just visit: http://nslds.ed.gov. This is the National Student Loan Data System, which keeps records of all your federal loans. Online at this site, you'll be able to see the date you took out loans, the principal amount, the interest you've paid, the status of the loan (in deferment, forbearance, repayment, default, etc.).

poor_mom: Is there any load that my undergraduate student son can get on his own without me having to cosign? The Stafford loan is not enough money

Lynnette_Khalfani: I don't know what your son's area of interest is, but there are many federal loans that do not require you to cosign.

Lynnette_Khalfani: Besides Stafford loans, there are Perkins Loans, health Professions Student Loans, health Education Assistance Loans, National Direct Student Loans, SLS Loans, and Federal Insured Student Loans, to name a few.

ironhorse4: Do you think that First Marblehead's position as an industry leader will be threatened by the recent sale of Sallie Mae?

Lynnette_Khalfani: Well, since First Marblehead handles a lot of the "back office" type work in the student loan universe - including processing and securitizing loans for other companies that make student loans - some people think that some of First Marblehead's market share may decline. The logic goes something like this: Now that JP Morgan Chase, Bank of America, and others have teamed up to buy Sallie Mae (the biggest student loan company in the world), a lot of the services that First Marblehead offered may be now done in house. It's hard to say whether this prediction will actually materialize though, because it's my understanding that First Marblehead has some good contracts/agreements locked in place, and has recently won new agreements to provide student loan services to other major lenders. So I would expect First Marblehead to remain competitive, even if they do ultimately see some business fall off as a result of the Sallie Mae sale.

CJ: In your "Zero Debt for College Grads," do you talk about programs for business students, too, or is there another one of your books that is better for them?

Lynnette_Khalfani: "Zero Debt for College Grads" discusses student loan repayment options that can help students of all majors, including business students like yourself. randy__Guest_: are you still taking questions?

Lynnette_Khalfani: Yes, for a few more minutes.

Nicki: How do you feel about the MEFA vs 529 plan. I need to start saving and not sure where to start.

Lynnette_Khalfani: I like the 529 plans best as a way to save for college. Check out www.savingforcollege.com for more info.

MEK: If you don't qualify for student loans because your income is too high, what is the best way to pay for college that puts some of it on the student's shoulders?

Lynnette_Khalfani: Have the student work, build assets in his or her own name, get paid internships, or get aggressive in seeking out scholarships and grants.

Lynnette_Khalfani: Well, thanks for joining me on this chat sessions about student loans. For more help, pick up a copy of my new book, "Zero Debt for College Grads: From Student Loans to Financial Freedom." You can also get free money-management tips and personal finance advice by signing up for my personal finance newsletter at http://www.themoneycoach.net.

Lynnette_Khalfani: Best, Lynnette_Khalfani, The Money Coach.