Sunday, 27 April 2014

Student loan | 4 Mistakes I Made With My Student Loans and How You Can Avoid ...

Student loan | 4 Mistakes I Made With My <b>Student Loans</b> and How You Can Avoid <b>...</b>

4 Mistakes I Made With My <b>Student Loans</b> and How You Can Avoid <b>...</b>

Posted: 25 Apr 2014 05:00 AM PDT

mistakes_image

It's been tough for me to come to terms with, but, unfortunately for me, I am not in college anymore. In fact, this spring marks three years since I graduated from college and went into repayment on my student loans. I know, not the most exciting thing in the world, but important. So while I don't claim to be a student loan expert, I have learned a lot of lessons along the way, mostly through trial and error. In hopes that you won't make the same mistakes I did, here are some things I wish I had known when I was graduating and getting ready to start repaying my student loans:

  1. I should have kept track of what I was borrowing

Let's be real. When you take out student loans to help pay for college, it's easy to forget that the money will eventually have to be paid back … with interest. The money just doesn't seem real when you're in college, and I didn't do a good job of keeping track of what I was borrowing and how it was building up. When it was time to start repaying my loans, I was quite overwhelmed. I had different types of loans and different interest rates. When I did eventually see my loan balance, I was pretty shocked.

You can avoid this problem. Had I known there was a super easy way to keep track of how much I'd borrowed in federal student loans, I would have been much better off. Just go to www.nslds.ed.gov, select "Financial Aid Review," log in, and you can view all of your federal student loans in one place! How did I miss that?

  1. I should have made interest payments while I was still in school

If you're anything like me, you probably consumed your fair share of instant noodles while trying to survive on a college student's budget. Trust me, I get it. But one thing I really regret when it comes to my student loans was not paying interest while I was in school or during my grace period. Like I said, I was far from rich, but when I was in college, I did have a work-study job and waited tables on the side. I probably could have spared a few dollars each month to pay down some student loan interest. Remember, student loans are borrowed money that you have to repay with interest and more importantly, that interest may capitalize, or be added to your total balance. My advice: Even though you don't have to, do yourself a favor and consider paying at least some of your student loan interest while you're in school. It will save you money in the long run.

  1. I should have kept my loan servicer in the loop

If you're getting ready to graduate or have graduated recently and haven't heard from your loan servicer, make sure you check that your loan servicer has up-to-date contact info for you. When I graduated and moved into my first big-girl apartment, I forgot to change my address with my loan servicer. I found out that all of my student loan correspondence was going to my mom's address. I hadn't even thought to update my loan servicer with my new contact information. Don't make the same mistake I did. Keep your servicer informed of address, email, and phone changes.

  1. I should have figured out what my monthly loan payments were going to be BEFORE I went into repayment

By the time my grace period was over, I had a decent idea of how much I had borrowed in total, but I had no idea what my monthly payments would be. I thought I was fine. I had started my new job and been paying rent and other bills for about six months. Then my grace period ended, and I got my first bill from my loan servicer. It was definitely an expense I hadn't fully taken into account.

Don't make the same mistake. Federal Student Aid has an awesome repayment estimator that allows you to pull in your federal student loan information and compare what your monthly payments would be under the different repayment plans that are offered. That way, you can choose the right repayment plan for you, know how much you can expect to pay monthly, and budget accordingly … unlike me.

I'll be the first to admit that this whole process can be a little overwhelming, especially when you're new at it. But just remember, your loan servicer is there to help you. If you have questions or need advice, don't hesitate to contact them.

Nicole Callahan is a digital engagement strategist at the Department of Education's office of Federal Student Aid.
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Friday, 25 April 2014

Student loan | 6 Things You Must Know About Repaying Your Student Loans | ED ...

Student loan | 6 Things You Must Know About Repaying Your <b>Student Loans</b> | ED <b>...</b>

6 Things You Must Know About Repaying Your <b>Student Loans</b> | ED <b>...</b>

Posted: 23 Apr 2014 05:00 AM PDT

When it comes to repaying your federal student loans, there's a lot to consider. But, by taking the time to understand the details of repayment, you can save yourself time and money. This should help you get started.

When do I begin repaying my federal student loans?

You don't have to begin repaying most federal student loans until after you leave college or drop below half-time enrollment. Many federal student loans will even have a grace period. The grace period gives you time to get financially settled and to select your repayment plan. Note that for most loans, interest will accrue during your grace period.

Your loan servicer or lender will provide you with a loan repayment schedule that states when your first payment is due, the number and frequency of payments, and the amount of each payment.

Whom do I pay?

You will make your federal student loan payments to your loan servicer*, not the U.S. Department of Education directly. The Department uses several loan servicers to handle the billing and other services on federal student loans. Your loan servicer can work with you to choose a repayment plan and can answer any questions you have about your federal student loans. It's important to maintain contact with your loan servicer and keep your servicer informed of any changes to your address, e-mail, or phone number so they know where to send correspondence and how to contact you.

How much do I need to pay?

Your bill will tell you how much to pay. Your payment (usually made monthly) depends on

  • the type of loan you received,
  • how much money you borrowed,
  • the interest rate on your loan, and
  • the repayment plan you choose.

You can use our repayment estimator to estimate your monthly payments under different repayment plans to determine which option is right for you. Just remember, if you would like to switch repayment plans, you must contact your loan servicer.

How do I make my student loan payments?

There are several ways you can submit payments to your loan servicer, including options to submit your payment online through your loan servicer's website.

TIP: Your servicer may offer the option to have your payments automatically withdrawn from your bank account each month. You may want to consider this option so you don't forget to make your payments.

What should I do if I'm having trouble making my student loan payments?

Contact your loan servicer as soon as possible. You may be able to change your repayment plan to one that will allow you to have a longer repayment period or to one that is based on your income. Also, ask your loan servicer about your options for a deferment or forbearance or loan consolidation.

Note: Several third-party companies offer student loan assistance for a fee. Most of these services can be obtained for free from your loan servicer.

What happens if I don't make my payments?

Not making your student loan payments can result in default, which negatively impacts your credit score. This may affect your ability to borrow for things like buying a car or purchasing a home. Your tax refunds may also be withheld and applied to your outstanding student loan debt. There is never a reason to default. The Department of Education offers several options to ensure that you can successfully manage your student loans. If you're feeling overwhelmed or having difficulty making payments, contact your loan servicer for help.

*If you are repaying federal student loans made by a private lender (before July 1, 2010), you may be required to make payments directly to that lender. 

Nicole Callahan is a digital engagement strategist at the Department of Education's office of Federal Student Aid
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Thursday, 24 April 2014

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>

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.

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Wednesday, 23 April 2014

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

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

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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Tuesday, 15 April 2014

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.
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Wednesday, 19 February 2014

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.
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Monday, 20 January 2014

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.
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