Student loan | If a Student Loan Co-Signer Dies, What Happens? - Law and Daily ...

Student loan | If a <b>Student Loan</b> Co-Signer Dies, What Happens? - Law and Daily <b>...</b>

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If a <b>Student Loan</b> Co-Signer Dies, What Happens? - Law and Daily <b>...</b> Posted: 23 Apr 2014 07:39 AM PDT If a student loan co-signer dies or declares bankruptcy before the loan is repaid, the loan may go into default and wreak havoc on the borrower's credit, a new report finds. The Consumer Financial Protection Bureau published the report which found that many private lenders will make the balance of a loan due if a parent, grandparent, or other co-signer becomes unable to share the responsibility of the loan, Reuters reports. Why does this happen, and what can borrowers do? The Report's Findings The CFPB accepts consumer complaints about private student loans and compiled the data for its "Mid-year update on student loan complaints." Not surprisingly, the biggest area of complaint for those with private student loans is repaying the loan or dealing with the lender. Unlike federal loans, which almost never require another person to sign on, more than 90 percent of private loans in 2011 were co-signed by parents, grandparents, or others, Reuters reports. The problem with having a co-signer for private student loans is that some lenders have a policy that puts borrowers in default after a co-signer dies -- even if the borrower is up-to-date on payments. Defaulting on a student loan can negatively impact a consumer's ability to take out further loans, buy a house, and could even injure a consumer's reputation. What to Do If You Default Although default usually occurs when a borrower consistently fails to pay her bill, it could also happen if the co-signer dies before the repayment is fulfilled. In the event of a defaulted loan, you have a couple of options: Try to negotiate with the lender. Although lenders can be difficult to deal with, you can try to negotiate new repayment options after your co-signer passes away. Declare bankruptcy. This is an extremely difficult option because student loans generally are not discharged through bankruptcy. It can potentially happen, though, if you can prove that the burden of repaying your student loan would impose a severe hardship on you. Consult a banking and finance attorney. If you're not sure what to do, an experienced banking and finance attorney in your area can explain your options and help guide you through whichever process you choose. In its report, the CFPB suggests that lenders should allow borrowers to find a new co-signer if the original co-signer dies or allow them to refinance the loan. To learn more about dealing with student loans, check out FindLaw's free Guide to Student Loan Debt. Related Resources: Grieving borrowers told to repay student loan (The Associated Press) Legal How-To: Getting Student Loans Forgiven (FindLaw's Law and Daily Life) Woman's Asperger's Gets $400K in Student Loans Discharged (FindLaw's Law and Daily Life) What Happens If You Default on Student Loans? (FindLaw's Law and Daily Life)

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Student loan | Want Student Loan Relief? Consider Public Service - Morningstar

Student loan | Want <b>Student Loan</b> Relief? Consider Public Service - Morningstar

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Want <b>Student Loan</b> Relief? Consider Public Service - Morningstar Posted: 22 Apr 2014 05:00 AM PDT Question: I've heard that people who take out college loans can have part of the loans forgiven if they work in certain types of jobs. Can you explain how this works? Answer: There are two programs through which borrowers with federal student loan debt can have a portion of that debt forgiven, or canceled. The first of these is geared toward borrowers who work in public-service jobs while the second is geared specifically toward teachers. In each case eligibility depends largely on the borrower's type of employment and level of income.For Those in Public Service The first of these programs, called the Public Service Loan Forgiveness Program, requires that the borrower make 120 regular, on-time monthly payments on their federal loans while also working in a public-service job. Forgiveness covers the remaining balance on the loan and only loans made through the Federal Direct Loan program, including Stafford loans, are eligible. Perkins loans, loans made through private lenders (even if guaranteed by the federal government), and other college loan types are not. However, if you consolidate any of these loans into a Direct Consolidation Loan, any payments made on this new loan count toward the 120-payment rule. (You can read about the pros and cons of consolidating college loans in this Short Answer article.)What kinds of jobs qualify for the program? According to the program website, they include "any employment with a federal, state, or local government agency, entity, or organization or a not-for-profit organization that has been designated as tax-exempt by the Internal Revenue Service." The type of job and type of organization doesn't matter, meaning the program is open to pretty much anyone with a qualifying loan who works full-time in government or a not-for-profit organization with 501(c)(3) tax-exempt status. Included in this are borrowers serving in the military or who work in public safety, law enforcement, emergency management, public health, public education, or public libraries.To take advantage of the Public Service Loan Forgiveness Program, the borrower must choose a qualified loan-repayment plan, such as the Income-Based Repayment Plan, which limits monthly payments to 15% of the borrower's discretionary income. Although the standard 10-year repayment plan technically qualifies, the fact that it is designed to pay off loans before forgiveness eligibility kicks in (as noted above, the borrower must make 120 on-time payments to qualify) effectively makes it irrelevant here. Income-based repayment plans, on the other hand, extend the repayment period to as long as 25 years while offering lower monthly payments. Therefore, students considering public-service careers while borrowing for school are encouraged to use one of these income-based repayment plans as this may qualify them for loan forgiveness after 10 years. Also, parents who take out Parent PLUS loans on behalf of their children may be eligible for loan forgiveness if they--the parents--work in one of the aforementioned public-service fields.More information on the Public Service Loan Forgiveness Program, including how to apply, may be found here. For Teachers at Low-Income Schools The federal government also offers a loan-forgiveness program for borrowers who teach in underprivileged schools. Under the Teacher Loan Forgiveness Program borrowers who teach for at least five consecutive years in schools designated as low-income may have up to $5,000 in loans forgiven. For teachers in specialty areas such as math, science, or special education, up to $17,500 in total loans may be forgiven. Borrowers must have a bachelor's degree, a teaching license, and meet other qualifications.The program is available to teachers who have taken Federal Direct loans, which are offered directly through the U.S. Department of Education, as well as to those with Perkins loans, a type of need-based federal loan that colleges offer. You cannot take advantage of both the Teacher Loan Forgiveness and Public Service Loan Forgiveness programs. Generally, for borrowers with higher loan debt and who qualify for both, the Public Service Loan Forgiveness is more beneficial.For more information on the Teacher Loan Forgiveness Program, visit the Federal Student Aid website here. Other Repayment Plans In addition to the federal programs described above, some schools offer what's known as a Loan Repayment Assistance Program, or LRAP. Typically these are available to graduates who pursue a specific career path--such as law school grads who go into public service--and/or who meet certain income guidelines. Additional repayment assistance is offered by programs such as AmeriCorps, which grants qualified volunteers who complete one full year of service an award of $5,645 (the current maximum Pell Grant amount) that may be used to pay off college loans, and the Peace Corps, through which volunteers who serve for two years can receive a 15% cancelation of their Perkins loans.Student loan debt forgiven through the federal programs mentioned above is not subject to federal income tax. But loan forgiveness provided by other institutions, such as colleges, may be. Consult a tax professional if you're not sure whether having some or all of your loan forgiven would add to your tax bill.Have a personal finance question you'd like answered? Send it to TheShortAnswer@morningstar.com.

<b>Student Loan</b> Forgiveness Email Scam Has Virus - Penn State Office <b>...</b> Posted: 14 Apr 2014 12:00 AM PDT If you receive an email from "Student Forgiveness," delete it. Students across the country report receiving the following email: From: Student Forgiveness [7998799@studentforgiveness02.info] Sent: Monday, April 14, 2014 9:56 AM To: (Last Name), (First Name) Subject: IUPUI Students: Do you need a student loan forgiveness? Dear (name), If you have a student loan through Sallie Mae or another private student loan company, we may be able to help you consolidate your loan into one smaller and easier payment. Call us at (877) 662-4946 and we'll tell you how much you can save. Our hours are between 9am - 9pm (EST). Not interested? unsubscribe [link]. Your first and last name may appear in the "To:" section and "Penn State," "PSU," or similar may be in the subject line. Do not respond. Do not click on "unsubscribe." It links to a virus. Just delete the email.

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New Interest Rate Projections for the 2014-15 AY

Yesterday, the Consumer Financial Protection Bureau (CFPB) updated their Paying for College tool. This tool gives students and prospective students the ability to get an idea of how to pay for college by understanding the different repayment options as well as other information that can help students make informed financial decisions regarding their education. 

What makes this of note is the CFPB has issued their projections for interest rates after July 1. These interest rates are based on the ten year note from the Treasury Dept. Next month, the Treasury Dept's bond auction will take place, setting the interest rates officially.

But in the meantime, here are the projections from the CFPB:

For Direct Sub and Unsub Loans (undergraduates), the current rate is 3.86%, and is projected to rise to 5.09%.

For Direct Sub and Unsub (grad), the current rate is 5.41%, and is projected to rise to 6.64%.

For Direct PLUS (parent/grad), the current rate is 6.41%, and is projected to rise to 7.64%.

This isn't the highest jump historically, but a jump nonetheless. Even though these are projections, the expectation is even if they are not quite accurate, the rates will be rising regardless. Be sure to stay informed on your student loans and keep track of them to understand your interest rate and how any change in them will change your payment. As far as this increase is concerned, if you had a $5000 loan, your interest would be just over $3 more a month in your monthly payment, and for an undergrad loan, the overall increase over ten years would be around $355 total.

When the actual numbers are released, we will post them. It'll be interesting to see how close the rates that have been projected actually come to the real numbers.

This has been another helpful post from your friends at Metro Business College.

New Tax Transcript Option from the IRS

If you have your FAFSA verified, and if you didn't use the IRS Data Retrieval Tool, then you probably know that you'll have to most likely obtain a tax return transcript to submit with your paperwork. If you live close enough to an IRS office, then you can go there to pick one up, but sometimes, this takes time. I've heard stories of people who could quickly walk in and walk out a short time later with their transcript, but I've also heard stories of people who had to wait and others who couldn't actually pick it up that day.

If you need to obtain a tax transcript, one easy way of obtaining it is to call 1-800-908-9946 and request it be sent to you. Another easy way is to request one from the IRS through their website. Click here to be taken to that page.

But the quickest way of obtaining a tax transcript is the new option to download a pdf of the transcript. If you click here, you will be taken to the IRS website where you immediately download your tax transcript pdf. This is helpful because if you call in or if you request online, it can take up to a couple of weeks to receive your transcript in the mail.

Remember, the best way of avoiding being verified is to use the IRS Data Retrieval Tool and making sure everything on the FAFSA is accurate. But if you are selected for verification anyway and need a tax transcript, be sure to check out the new transcript request option on the IRS website.

This has been another helpful posting from your friends at Metro Business College.

Documentation Is the Name of the Game

The one thing that a student and a financial aid officer has in common is the need to document your information. Without documentation, how can you prove things when asked?

As far as the student is concerned, you should document everything you receive from the school, from the government, and from your loan servicer (or bank if applicable). This is important so you can keep track of everything you may need for future reference. While you're in school, you may receive a 1098-T which you may be able to use when you figure your taxes, which could help you out. In addition to that, if you end up with discrepancies, you will have your information from before that you can use to help resolve the issue. It's also good to have items so you have contact information, account numbers/information, and a running balance total. 

As far as the financial aid officer is concerned, there are many reasons they need to document (everything from government regulations, accrediting agency requirements, campus policies, etc.), but one of the biggest reasons is justification. If the Dept of Ed or the accrediting agency walk in the door one day and ask to see a file, then it has to tell the story without any explanation from the financial aid officer. This means that all the paperwork has to be present and explain why that student deserved the financial aid they received.

An example of this is if a student has an unusual circumstance, then they have to provide documentation of that unusual circumstance. Let's say there is a student who is considered to be a dependent student who applies for financial aid, this means they need their parent's information. Unfortunately, this student had been living with friends and family their senior year of high school because of a domestic issue in that student's home. In order to help that student, the financial aid officer needs to document this situation so that if questioned, the questioning party would agree with the conclusion. All too often, the student will get family members and friend's parents to contribute letters of explanation and these letters are lacking in information. Many times, these letters will say things like "The student has been staying with us off and on", "She's a good person", "She deserves a chance", etc. The problem is usually, they don't contain any information to make a decision. They play on emotions and don't actually say the cause of why the school should do anything out of the ordinary.

On one hand, it's fortunate that schools are left on their own to decide what is good enough documentation. Unfortunately, sometimes what the school decides is enough might not actually be enough. Every one of these situations is different, and the Dept of Ed understands that, which is why they leave it open to the school. But if they check your file, and they do not agree that what you've provided is enough, then they will force the school to return your financial aid that you've received down to amount that you were eligible for to begin with. This means that you will most likely then owe the school a balance.

So, when in doubt, document everything. It's much better to have too much than not enough. And always, when in doubt, ask questions.

This has been another helpful posting from your friends at Metro Business College.

FSA's New Campaigns to Help Students

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!

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.