UNCL Mru Holdings (MM)

Private Student Loans Can Help Fill a Gap - But Savvy Students and Parents do Lots of Homework and Thinking to Guide Their Borrowing NEW YORK, July 30 /PRNewswire/ -- In the heat of summer, parents and students sweat over the cost of college and how to pay for it. The best approach is to sweat just a bit more by doing all the homework when it comes to knowing the real cost of college, where to look for free and cheap money, and determining whether and how to make use of private student loans, i.e., loans that are not backed by the government. That's according to MyRichUncle(R) (http://www.myrichuncle.com/), a student loan company and information source for parents and students. "Parents and students who are in the process of assembling a plan to pay for college do themselves a major favor by doing lots of leg work, research and shopping around when it comes to calculating whether to borrow, how much and from whom to borrow," said MyRichUncle's John P. Derham. "Cutting corners, accepting an aid package without investigating it and over-borrowing can cause parents and students serious money problems down the line." According to a recent survey of 1,000 parents with children in college or soon to enter college sponsored by MyRichUncle, 69% of parents believe their children will have to borrow to pay for college. Yet 57% of parents with children soon to go to college say they are not confident they know which loans should be applied for first, and similar percentages say they don't understand the range of interest rates on student loans and the repayment options. "There are a lot of misconceptions and disconnects when it comes to paying for college, and they can be costly. Parents and students -- especially in this tight economy -- need to make the effort to understand the landscape and what it takes to make smart moves. Bottom line: Don't just take the first aid package that's offered," Mr. Derham said. The Rules of Thumb Mr. Derham and his colleagues offer rules of thumb for financing a college education -- including the basics of smart use of private student loans. For instance ... -- Sit down and do the math to learn the real, total cost of an education, over and above tuition and fees. Taking into account the cost of books, transportation, housing and food will help prevent students from getting into a jam -- one that forces rash, expensive borrowing mistakes. -- Know the "sequence" of funds to tap to pay college bills. First look for "free money." That usually means scholarships and grants. "Apply for them. It's worth the effort," said Mr. Derham. The next step for many families will be borrowing, and the rule of thumb here is to locate and secure the least expensive borrowing options first. Look at all the sources available to you -- from federally-guaranteed and private student loans to personal and home equity loans -- and exhaust the least expensive loan money before moving on to other sources. -- Never borrow a dollar more than absolutely necessary. "While it's sometimes tempting to use loans to have a little 'cash cushion,' borrowers will regret that decision when it's time to repay. The worst attitude is, 'I'll just worry about it later.' You need to pay back more than just the amount you borrowed; interest will capitalize on most student loans so minimizing the borrowing is critical in managing what you will repay," Mr. Derham said. -- Do not let talk of the "credit crunch" lead to rash decisions: Federally-guaranteed loans are available to everyone who qualifies for them, from a variety of sources. Smart parents and students fill out the FAFSA form to qualify for federally-guaranteed loans. If they qualify, it is worthwhile to check the rates and discounts of several lenders in order to secure the best deal. -- Consider private student loans -- i.e., ones not federally-guaranteed -- to fill a cost gap, but shop hard for those. If there is a cost gap that needs to be filled with a private loan, shop hard for that loan. Just one percentage point difference in the rate of interest is significant when it comes to the amount of debt being accumulated. For instance, the payback difference between a $10,000 loan with deferred repayment plan at a 8.69% interest rate and one with a 6.92% interest rate is $5,700 -- more than half the amount of the loan itself! -- Be your own best resource for finding the best deals. Take the savvy shopper you are when it comes locating the cheapest gas, shopping for best discounts on groceries or comparing rates on car insurance, and put that to work on your student loans. Search beyond the preferred lender of your school by getting on the Internet, visiting your local bank, and even credit unions. Shop, compare and take the lowest rate -- it's too important not to be actively involved in your lender selection process. -- Is there a co-signer with strong credit? Students often get better -- i.e., lower -- rates on private loans if they have a co-signer, like a parent or other relative, who has strong credit. -- Understand the benefits/costs of deferring repayment until after graduation. While deferring monthly payments on your private student loan will be less financially taxing on the student while in school, the amount of actual debt will be significantly higher than if the student started repayment immediately. "A good -- and realistic -- way to think about the deferment option is that your debt level gets bigger every day that you're deferring. If it's possible to start making on-time monthly payments in school, do it," said Mr. Derham. -- Take a hard, unemotional look at the job and salary prospects for a field or major. As difficult as it may be, it is worthwhile to research whether one's chosen field of study or area of career interest will be able to support what it will cost to pay back this investment in education. If the prospects appear challenging, it might be worth starting off at a less expensive -- e.g., two-year -- school or thinking about career alternatives. "Seventy-six percent of parents told us the return on investment in an education is a 'good' to 'great' value," added Derham. "Parents and students can ensure the value proposition by being smart, selective and savvy about paying for their education. We want families to make better decisions today, for the sake of the decisions they will want to have the opportunity to make in their future." MyRichUncle's web site, http://www.myrichuncle.com/, provides further guidance for parents and students solving the puzzle of funding a college education. About MyRichUncle(R) From its inception in 2000, MyRichUncle(R), the consumer brand of MRU Holdings, Inc. (NASDAQ:UNCL) has been at the forefront of innovation for education finance, most recently focusing on the growth market of student loans. Since May of 2005, MyRichUncle has originated more than $450 million private and federal student loans using its breakthrough underwriting platforms and innovative technology to deliver competitively priced products and services to borrowers. In May 2006, the Company launched Preprime(TM), the first and only student loan that allows students to qualify for loans based on individual merit, rather than credit history alone. Dedicated to reshaping the student loan industry to function in the best interests of students, founders Vishal Garg and Raza Khan and their team are committed to delivering the most innovative solutions for their customers. The Company and its founders have been recognized by Fast Company's Fast 50 (2006) and listed among BusinessWeek.com's Tech's Best Young Entrepreneurs (2006). For more information, visit http://www.myrichuncle.com/. UNCLG DATASOURCE: MyRichUncle(R) CONTACT: Karin Pellmann, VP, Public Relations, +1-212-444-7541 (direct), ; or Adria Greenberg of Sommerfield Communications, +1-212-255-8386, Web site: http://www.myrichuncle.com/

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