Beginning this month and running through mid-December, the Dept of Ed's Office of Financial Student Aid (FSA) is beginning a campaign to assist students with repayment information.
The campaign will be targeted emails to borrowers whose grace periods are ending, borrowers who have falling behind in their payments, borrowers with higher than average debts, and borrowers who are in deferment or forbearance because of financial hardship or unemployment.
These emails should also be including a link to FSA's repayment calculator and a link to FSA's Income-Based Repayment (IBR) calculator. The emails will encourage borrowers to get in touch with their loan servicer and update their account.
Along with the email campaign, a social media campaign for all recent grad borrowers will include Facebook, Twitter, and Youtube. These messages will include information about student loan repayment options, common mistakes, and general student loan advice.
For more information, click here to see the Dept of Ed's press release announcing the campaigns.
Another helpful post from your friends at Metro Business College!
Monday, 25 November 2013
Monday, 4 November 2013
HEA Reauthorization.. What Is It?
The Higher Education Act was originally signed into law in 1965 as part of President Johnson's Great Society agenda of domestic programs. The HEA is the law that governs how federal financial aid is appropriated to schools and students as well as many rules on how financial aid works. The one thing that the HEA does not do is finance the financial aid programs; that process is left to appropriations bills in Congress.
The HEA is up for reauthorization again, and that means that committees are being held in order to discuss what the new version of the HEA should be. Since 1965, the HEA has been reauthorized nine times, some times taking years for each reauthorization. With more disagreements over higher education now than ever before, why does it matter that people keep a watch on the process?
Many people like to think that the HEA reauthorization isn't as big of a deal as it used to be. This feeling mainly comes from the notion that nowadays, many rules in higher education are made outside of the act itself. Congress, Dept of Education, Consumer Financial Protection Bureau, IRS, Veteran Affairs, and even the President himself will create rules that schools have to follow, and these rules may come at any time. Since these rules usually have more of an effect than HEA would seem, then most people assume that HEA isn't a big deal.
However, you should keep in mind that there are all sorts of different people involved in the HEA process, from Congress members to members of schools and accreditation agencies. Many people involved have their own agendas that help their cause. A couple years ago, the Dept of Education enacted gainful employment rules that jeopardized the ability of colleges and universities to offer choice to students who didn't want to go to a public school. After some legal battles, it was ruled that most of the GE rules were not based on any concrete evidence and the Dept of Ed couldn't explain where they obtained their figures. The rules were struck down. There is a GE II in the discussions for the HEA reauthorization which has many schools on edge. In the little that's been explained so far, the GE II is expected to be more intense than the first attempt.
It is important that schools monitor the progress of the HEA reauthorization so if there are extensive changes, then they can adapt accordingly. It is expected that this reauthorization will go on for a long time, just as most of the others have. But in the political climate that has been going on for over seven years at this point, it's clear that several of the agendas behind most of the HEA reauthorization are geared for political agendas rather than helping the students. As more develops, we will share more results.
The HEA is up for reauthorization again, and that means that committees are being held in order to discuss what the new version of the HEA should be. Since 1965, the HEA has been reauthorized nine times, some times taking years for each reauthorization. With more disagreements over higher education now than ever before, why does it matter that people keep a watch on the process?
Many people like to think that the HEA reauthorization isn't as big of a deal as it used to be. This feeling mainly comes from the notion that nowadays, many rules in higher education are made outside of the act itself. Congress, Dept of Education, Consumer Financial Protection Bureau, IRS, Veteran Affairs, and even the President himself will create rules that schools have to follow, and these rules may come at any time. Since these rules usually have more of an effect than HEA would seem, then most people assume that HEA isn't a big deal.
However, you should keep in mind that there are all sorts of different people involved in the HEA process, from Congress members to members of schools and accreditation agencies. Many people involved have their own agendas that help their cause. A couple years ago, the Dept of Education enacted gainful employment rules that jeopardized the ability of colleges and universities to offer choice to students who didn't want to go to a public school. After some legal battles, it was ruled that most of the GE rules were not based on any concrete evidence and the Dept of Ed couldn't explain where they obtained their figures. The rules were struck down. There is a GE II in the discussions for the HEA reauthorization which has many schools on edge. In the little that's been explained so far, the GE II is expected to be more intense than the first attempt.
It is important that schools monitor the progress of the HEA reauthorization so if there are extensive changes, then they can adapt accordingly. It is expected that this reauthorization will go on for a long time, just as most of the others have. But in the political climate that has been going on for over seven years at this point, it's clear that several of the agendas behind most of the HEA reauthorization are geared for political agendas rather than helping the students. As more develops, we will share more results.
Monday, 14 October 2013
New Sequestration Changes Coming to Financial Aid
Announced on Friday, October 11, the Department of Education announced changes from the sequestration. There are some important things to note that have changed and some that haven't changed.
Firstly, Pell Grants are exempted from the sequestration changes for the remainder of the award year. No award amounts have been decided upon for the 2014-15 year yet, and they won't be until a bill providing an appropriation is enacted.
Secondly, campus-based programs (such as FSEOG) are not affected by the new changes either. As far as the 2014-15 award year's allocations are concerned, there is no information yet similar to the information regarding the Pell Grants.
Thirdly, there will be changes to the Iraq-Afghanistan Service Grant. According the letter from the Dept of Education, grant awards where the first disbursement is made on or after October 1, 2013, must be reduced by 7.2% from the original statutory amounts. Grant awards where the first disbursement was made after March 1, 2013, and before October 1, 2013, continue to be covered under the prior sequester and must be reduced by 10% from the original statutory award regardless of when any subsequent disbursement was made.
Fourthly, as of October 1, 2013, the sequester increases the origination fees for Direct Loans. Currently, the loan fees are set at 1.051% for Subsidized and Unsubsidized loans, and 4.204% for PLUS loans. The new loan fees will be 1.072% for Subsidized and Unsubsidized loans, and 4.288% for PLUS loans. These changes are more difficult to implement, so these changes will affect any new loans whose first disbursement is on or after December 1, 2013. Any new loans whose first disbursement was between July 1, 2013, and prior to December 1, 2013, will remain at 1.051% and 4.204%.
Another informative post from your friends at Metro Business College!
Firstly, Pell Grants are exempted from the sequestration changes for the remainder of the award year. No award amounts have been decided upon for the 2014-15 year yet, and they won't be until a bill providing an appropriation is enacted.
Secondly, campus-based programs (such as FSEOG) are not affected by the new changes either. As far as the 2014-15 award year's allocations are concerned, there is no information yet similar to the information regarding the Pell Grants.
Thirdly, there will be changes to the Iraq-Afghanistan Service Grant. According the letter from the Dept of Education, grant awards where the first disbursement is made on or after October 1, 2013, must be reduced by 7.2% from the original statutory amounts. Grant awards where the first disbursement was made after March 1, 2013, and before October 1, 2013, continue to be covered under the prior sequester and must be reduced by 10% from the original statutory award regardless of when any subsequent disbursement was made.
Fourthly, as of October 1, 2013, the sequester increases the origination fees for Direct Loans. Currently, the loan fees are set at 1.051% for Subsidized and Unsubsidized loans, and 4.204% for PLUS loans. The new loan fees will be 1.072% for Subsidized and Unsubsidized loans, and 4.288% for PLUS loans. These changes are more difficult to implement, so these changes will affect any new loans whose first disbursement is on or after December 1, 2013. Any new loans whose first disbursement was between July 1, 2013, and prior to December 1, 2013, will remain at 1.051% and 4.204%.
Another informative post from your friends at Metro Business College!
Monday, 7 October 2013
Why Should I Put my Email on My MPN?
On your Master Promissory Note (MPN), there is an optional line for you to enter your email address. Sometimes, students ask why they should enter it if it's optional. This is an option that is highly recommended you fill in.
Loan servicers are switching over to electronic services and messaging. You can pay your student loan bill online and manage your student loan account online. Email is just the next step in that. Loan servicers are trying to cut down on costs, and mailing out statements costs money in postage and paper, not to mention the ink to print them. Although they will mail you statements, they actually prefer to email statements which keeps their costs down.
Also, it's an attempt to meet the newest generation of student loan borrowers on their own terms. As technology continues to grow and the face to face conversations (and even voice to voice conversations) are going down, the student loan servicers are trying to converse with the borrowers in an impersonal manner such as email. So for those that have developed a phone phobia, the servicers are willing to accommodate for that, leaving no excuse not to get in touch with them. The servicers want to hear from the borrowers, and email is just another way for that to happen.
Loan servicers are switching over to electronic services and messaging. You can pay your student loan bill online and manage your student loan account online. Email is just the next step in that. Loan servicers are trying to cut down on costs, and mailing out statements costs money in postage and paper, not to mention the ink to print them. Although they will mail you statements, they actually prefer to email statements which keeps their costs down.
Also, it's an attempt to meet the newest generation of student loan borrowers on their own terms. As technology continues to grow and the face to face conversations (and even voice to voice conversations) are going down, the student loan servicers are trying to converse with the borrowers in an impersonal manner such as email. So for those that have developed a phone phobia, the servicers are willing to accommodate for that, leaving no excuse not to get in touch with them. The servicers want to hear from the borrowers, and email is just another way for that to happen.
Monday, 23 September 2013
Forgiveness vs. Discharge
Two terms that are used with student loans are the terms 'forgiveness' and 'discharge'. In either case, you can be released from your obligation (in part or in whole) to repay your student loan if your loan is forgiven or discharged. But what's the difference between the two? It depends on what you do or what happens to you.
For discharging your student loan, it has to be a circumstance that was not your choice. Two common ways of discharging a loan is if you are considered 'total and permanent disability' and 'death'. In these two circumstances, it obviously not be your choice to be totally and permanently disabled or to die. Since you are not able to use your education in the strictest way, you may have your loans discharged. Another way to get your loans discharged may occur if your schools closes before you are able to complete your educational program. The key is 'before you complete your program' though. This is a rare scenario, and neither of the previous two are good situations either.
For forgiving your student loan, it has to be a circumstance in which you made a choice to devote your time to something in exchange for part or all of your student loans. Usually, the forgiving party in this case is the government. For high demand, important jobs such as teaching, public service, or government work, the federal government may actually forgive part or all of your student loans depending on the job and length of service. Some organizations and state governments will do this as well.
Although these are options available, most students won't or aren't able to give back to the community in the specified ways that qualify for student loan forgiveness. And although student loan discharge is available for those who can't physically complete the work their education prepared them for, they are only options in the extreme cases. The most common method of handling student loans is repaying them. With several repayment options available (and some even acting almost like forgiveness programs themselves), it's recommended that you go into repayment with a plan. If you have trouble with any aspect of repayment, talk to your loan servicer for more information.
For discharging your student loan, it has to be a circumstance that was not your choice. Two common ways of discharging a loan is if you are considered 'total and permanent disability' and 'death'. In these two circumstances, it obviously not be your choice to be totally and permanently disabled or to die. Since you are not able to use your education in the strictest way, you may have your loans discharged. Another way to get your loans discharged may occur if your schools closes before you are able to complete your educational program. The key is 'before you complete your program' though. This is a rare scenario, and neither of the previous two are good situations either.
For forgiving your student loan, it has to be a circumstance in which you made a choice to devote your time to something in exchange for part or all of your student loans. Usually, the forgiving party in this case is the government. For high demand, important jobs such as teaching, public service, or government work, the federal government may actually forgive part or all of your student loans depending on the job and length of service. Some organizations and state governments will do this as well.
Although these are options available, most students won't or aren't able to give back to the community in the specified ways that qualify for student loan forgiveness. And although student loan discharge is available for those who can't physically complete the work their education prepared them for, they are only options in the extreme cases. The most common method of handling student loans is repaying them. With several repayment options available (and some even acting almost like forgiveness programs themselves), it's recommended that you go into repayment with a plan. If you have trouble with any aspect of repayment, talk to your loan servicer for more information.
Monday, 16 September 2013
10 Things You Should Know as a Student Loan Borrower
As a student loan borrower, there are some things you are expected to know and understand. Here are ten things you should know as a loan borrower.
1. Borrow as little as possible.
Sometimes people forget that they will owe loans back with interest. The less you have borrowed, the less you owe back. Seems common sense, but sometimes people forget how much they borrow, and they get into financial trouble when they graduate. Always use loans as a last resort, and if you don't absolutely need to borrow loans, then don't.
2. Have a financial plan while you're in school.
Don't wait, start now! It's a good idea to know how much your schooling will cost. Map out how much gas you'll use going to school, school activities, etc. Go here for some helpful tools on how to do this.
3. Create and follow a budget.
Don't wait on this either! This will be critical when you graduate. You will need to pay attention to how you spend your money because you will likely owe back loans. For help with budgets and some helpful tools, go here.
4. Understand your loans.
If you don't understand what kinds of loans you have, you won't be able to deal with them very well. You should know what types of loans you have (subsidized or unsubsidized, federal or private) and how your interest works (fixed rate or variable rate).
5. Know your loan servicer.
You should know who is servicing your loan in case you have any issues and need to contact them. The easiest way to find out is to go to the NSLDS website. (You will need your FAFSA PIN to access your information.)
6. Setup an online account with your servicer.
This is a good idea because you will be able to receive messages from your servicer quickly. Also, you will be able to keep your contact information up to date and communicate with them easily.
7. Make payments while in school.
Even if it's only $5 a month, it will help. You will be keeping your principal/interest lower which will save you money in the future. If you skip one coffee a month or five song downloads a month, that can add up over the length of a program.
8. Understand there are other repayment plans.
If you are having trouble making payments on your loans, look into maybe switching to a different repayment plan. Servicers won't suggest you try a different one; you will have to ask. You may qualify for a different plan that fits your situation better. Don't be afraid to ask.
9. Repayment is easier when your overall debt is lower.
Try to avoid credit cards and large items that require installment payments. This is helpful for when you go into repayment because then you have less to worry about paying back. It's better to just worry about rent/utilities and your student loan payment, rather than rent/utilities, car payment, the big screen TV, credit card debt, vacation, and student loan payment.
10. Keep in touch.
Don't be a stranger when you have issues! Call someone and ask questions. Your best option is to call the servicer directly. If you don't have their number, the NSLDS website will provide a contact number to call. Nobody can help if they you don't ask for help.
Another friendly post from your friends at Metro Business College!
1. Borrow as little as possible.
Sometimes people forget that they will owe loans back with interest. The less you have borrowed, the less you owe back. Seems common sense, but sometimes people forget how much they borrow, and they get into financial trouble when they graduate. Always use loans as a last resort, and if you don't absolutely need to borrow loans, then don't.
2. Have a financial plan while you're in school.
Don't wait, start now! It's a good idea to know how much your schooling will cost. Map out how much gas you'll use going to school, school activities, etc. Go here for some helpful tools on how to do this.
3. Create and follow a budget.
Don't wait on this either! This will be critical when you graduate. You will need to pay attention to how you spend your money because you will likely owe back loans. For help with budgets and some helpful tools, go here.
4. Understand your loans.
If you don't understand what kinds of loans you have, you won't be able to deal with them very well. You should know what types of loans you have (subsidized or unsubsidized, federal or private) and how your interest works (fixed rate or variable rate).
5. Know your loan servicer.
You should know who is servicing your loan in case you have any issues and need to contact them. The easiest way to find out is to go to the NSLDS website. (You will need your FAFSA PIN to access your information.)
6. Setup an online account with your servicer.
This is a good idea because you will be able to receive messages from your servicer quickly. Also, you will be able to keep your contact information up to date and communicate with them easily.
7. Make payments while in school.
Even if it's only $5 a month, it will help. You will be keeping your principal/interest lower which will save you money in the future. If you skip one coffee a month or five song downloads a month, that can add up over the length of a program.
8. Understand there are other repayment plans.
If you are having trouble making payments on your loans, look into maybe switching to a different repayment plan. Servicers won't suggest you try a different one; you will have to ask. You may qualify for a different plan that fits your situation better. Don't be afraid to ask.
9. Repayment is easier when your overall debt is lower.
Try to avoid credit cards and large items that require installment payments. This is helpful for when you go into repayment because then you have less to worry about paying back. It's better to just worry about rent/utilities and your student loan payment, rather than rent/utilities, car payment, the big screen TV, credit card debt, vacation, and student loan payment.
10. Keep in touch.
Don't be a stranger when you have issues! Call someone and ask questions. Your best option is to call the servicer directly. If you don't have their number, the NSLDS website will provide a contact number to call. Nobody can help if they you don't ask for help.
Another friendly post from your friends at Metro Business College!
Monday, 2 September 2013
What Does 'SULA Eligible' Mean?
If you've looked on your NSLDS and you're a new student, you will probably have seen the phrase 'SULA ELIGIBLE'. But what is SULA? And how are you eligible?
SULA is another wonderful acronym that stands for 'Subsidized Usage Limit Applies'. This is in reference to the Dept of Ed's new 150% rule for Subsidized loans. For any new student who had no prior student loan indebtedness on July 1, then you will fall into this category. If you had no loan indebtedness, then you will be tracked by the Dept of Ed for as long as you are enrolled to make sure you complete your program in 150% of the published length of the program. If you do not complete in this timeframe, then you will lose the interest subsidies on your Subsidized loan and your interest will accrue as though it were an Unsubsidized loan.
Since this only affects students with no prior student loan indebtedness on July 1, students with prior student loan indebtedness won't be tracked. If in the future you pay off your loans completely, then return to school, then you will be tracked.
So, being SULA eligible doesn't mean you are eligible for anything cool or helpful: it just means you are being tracked to make sure you complete in 150% of the normal length of the program. And really, for your own benefit, you should complete in that timeframe. If you are fulltime the entire time, and you go beyond the 150%, then you aren't meeting Satisfactory Academic Progress. Also, financially, if you lose your interest subsidies, then you are only hurting your pocket and will be owing money that you could've avoided had you completed earlier.
Another friendly post from your friends at Metro Business College!
SULA is another wonderful acronym that stands for 'Subsidized Usage Limit Applies'. This is in reference to the Dept of Ed's new 150% rule for Subsidized loans. For any new student who had no prior student loan indebtedness on July 1, then you will fall into this category. If you had no loan indebtedness, then you will be tracked by the Dept of Ed for as long as you are enrolled to make sure you complete your program in 150% of the published length of the program. If you do not complete in this timeframe, then you will lose the interest subsidies on your Subsidized loan and your interest will accrue as though it were an Unsubsidized loan.
Since this only affects students with no prior student loan indebtedness on July 1, students with prior student loan indebtedness won't be tracked. If in the future you pay off your loans completely, then return to school, then you will be tracked.
So, being SULA eligible doesn't mean you are eligible for anything cool or helpful: it just means you are being tracked to make sure you complete in 150% of the normal length of the program. And really, for your own benefit, you should complete in that timeframe. If you are fulltime the entire time, and you go beyond the 150%, then you aren't meeting Satisfactory Academic Progress. Also, financially, if you lose your interest subsidies, then you are only hurting your pocket and will be owing money that you could've avoided had you completed earlier.
Another friendly post from your friends at Metro Business College!
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