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!
Monday, 14 October 2013
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!
Monday, 26 August 2013
What Is a C-Code?
Hopefully, you've never seen a C-Code, but if you have, then you most likely already know what it is. These codes can be (and usually are) very problematic. When you complete a FAFSA, you will receive a SAR (Student Aid Report), and the school will receive a similar report called an ISIR (Institutional Student Information Record). On both of these, your EFC will be listed. If there is a "C" next to the EFC number, or even in place of a number, then you have what's called a C-Code.
C-Codes occur when there is something dramatically wrong with the information you reported on the FAFSA. Think of the C-Code as an error message: the information has to be fixed in order for you to get any financial aid. Depending on what the C-Code is for, you may be able to just make a correction to fix the problem, but sometimes it takes much more than that.
What are somet things that would cause a C-Code?
C-Codes typically give a sense of fear in the minds of FA administrators because sometimes resolving the C-Code can be difficult. However, you must keep in mind that in order for financial aid to be processed, the C-Code has to be resolved. So don't be surprised if the process takes some time.
Another friendly post from your friends at Metro Business College!
C-Codes occur when there is something dramatically wrong with the information you reported on the FAFSA. Think of the C-Code as an error message: the information has to be fixed in order for you to get any financial aid. Depending on what the C-Code is for, you may be able to just make a correction to fix the problem, but sometimes it takes much more than that.
What are somet things that would cause a C-Code?
- Males having not registered with Selective Service
- Being in default on at least one student loan
- Name and social security number not matching
- Unusual Enrollment History
C-Codes typically give a sense of fear in the minds of FA administrators because sometimes resolving the C-Code can be difficult. However, you must keep in mind that in order for financial aid to be processed, the C-Code has to be resolved. So don't be surprised if the process takes some time.
Another friendly post from your friends at Metro Business College!
Monday, 19 August 2013
Financial Aid Lifetime Limits
The federal government has been working on lifetime limits for different types of financial aid. Some of the rules have been changing as far as how much FA you can receive in your lifetime. Hopefully, you don't borrow enough loans to reach your lifetime loan limits.
Currently, Subsidized loans have a lifetime limit of $23,000, and Unsubsidized loans have a lifetime limit of $36,500. However, remember that the max amount a dependent student can receive their first year is $5500, and the maximum an independent student can receive their first year is $9500. Typically, this breaks down to up to $3500 of either can be Subsidized.
Also keep in mind that students are broken down into years by the length of their program. If you are in a 1 year program (or less) then the max Subsidized loan you can get is $3500. If you are in a program more than 1 year up to 2 years, then your 2nd year can qualify you up to $4500 in Subsidized loans. It is possible to have a $5500 and $6500 Subsidized loan, but you'd have to be a 3rd and 4th year student to qualify for those (and by 3rd and 4th year student, I mean in a 3 or 4 year program, like a bachelor's program). If you are an independent student, then you have a greater chance of hitting your lifetime eligibility if you keep going to school. This is because you can receive up to $6000 of Unsubsidized loans a year. It only takes six years to end up around your maximum, so make sure you make wise decisions!
Don't forget that Pell Grants have a lifetime eligibility too. New for the previous award year, the lifetime eligibility for Pell Grants was lowered from 900% down to 600%. Each 100% is a full academic year, no matter of the amounts. This means two things. Firstly, the lifetime limit was lowered from a total of nine academic years down to six academic years. Secondly, amounts don't matter, so if one year you qualified for $5000 and earned all $5000, then that was your 100% that year. If you qualified the next year for $2000 and earned all $2000, then that also was 100%, making you have a total of 200% at $7000. If you have two people and one gets $1000 and the second receives $5500, then if they both stay the whole year, then they both have 100% earned, even though they aren't close to the same amount.
Hopefully you don't use your entire limits of FA eligibility. The federal government wants students to get into college, earn their degrees, and graduate without going back over and over or not finishing and going from school to school. They want people to be completers and entering the job market. Keep that in mind if you decide to change your mind!
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