Student Loan Help

It is no surprise that the default rate on Federal student loans is the highest it has been since 1998. It can be kind of tough to make your monthly loan payments when you don’t have a job. With unemployment rising, so to is people’s inability to keep up with their student loan payments. The good news? You do have options if you can’t pay. To find out what your options are you first need to determine whether you have Federal loans or private loans or both.

If you are unsure what type of loans you have, be it Federal or private student loans, then you will need to do 2 things. First, you should check the national student loan database, which will pull up every Federal student loan you have ever borrowed. To access this database you will need your four digit FAFSA pin and your social security number. If you do not know your PIN number you will have to visit the Department of Education’s PIN site first. Once you have figured out what loans are federal, you may want to check your credit report to see if you have any private student loans. If you only got loans by filling out the FAFSA each year then most likely you do not have any private loans. To access a free credit report the best site is annual credit report.com. If you find that you have both federal and private loans, you need to deal with each type of loan separately. Federal loans are entirely separate from private loans, even if they are serviced by the same company.

So what are your options? For your Stafford loans, grad plus loans, and even parent plus loans, you have 2 main deferment choices: unemployment deferment and economic hardship deferment. You also have in school deferment options if you decide to go back to school. In order to apply for one of these options, you will need to either apply online at your loan servicer’s website, or you will need to download a form from their website and mail it in (you can get your loan servicer name directly from the nslds website). In school deferment forms typically need to be mailed in because they must be stamped by your school.

If you apply for a deferment and you are not approved, then you still have options. Forbearance is your next best bet, and you have up to three years of forbearance time with federal loans. Forbearance consists of putting your loan payments on hold. Interest will accrue on the loan and if you do not pay the interest during this period it will be capitalized no more than four times a year. This means that the interest accrued will be added to the principal balance and you will essentially be paying interest on interest. You can typically put your loans on forbearance simply by requesting one through your loan servicer. Remember that you have up to three years of forbearance time.

For private loans, deferment and forbearance options vary by each loan company, and typically provide less time than with federal loans.  You should contact your private loan company to see what your options are.

If you currently have a federal loan or loans in default, and you can’t afford the monthly payments that the debt collection agency is demanding, you should call the US Dept of Education’s default center at 1800-621-3115. They can buy your defaulted loan from the agency and work out a rehabilitation program with you. If you just ignore your defaulted loan then eventually the government will garnish your paycheck and take your tax returns and part of your social security benefits.

What do three of my friends who do not own a home, and me, who is a home owner have in common? Answer, we all have monthly payments in the $1,200 - $1,600 range. The big difference is that my money is going toward my home while there’s is going toward their student loan payments.

They use words like debilitating, crippling, suffocating, and nauseating, when describing their student loan monthly payment. I can tell you we’ve had a few long Friday nights where they drank themselves silly.

I distinctly recall saying to my friend Dan one night, who did you think was going to pay for the loans when you got out of school? He said I was young and didn’t realize how much money was accruing and just figured I’d get a job and pay it off. He then reminded me about a time when I rode on the roof of our friends Bronco while going 50mph. We were both young, dumb, and made some regretful decisions.

I guess that’s why I have a soft spot in my heart for anyone in the same position as my friends. I have seen the mental anguish and stress that has washed over them first hand. I mean, it wasn’t like they went out and bought a porshe here. They went to school to better themselves and become a productive member of society. But the good news is that help is on the way.

Part of the College Cost Reduction and Access Act of 2007 calls for an Income-Based Repayment Plan for those qualified individuals with federal loans (such as the Perkins, Stafford, and Grad Plus). The program will cap off borrower’s monthly payments at 10% of their gross income for 25 years with the rest of the debt being forgiven. This call to action will go into effect on July 1.

Be sure to speak to your lender regarding an income-based repayment plan this summer if you are behind the eight ball. I want that eight ball buried in the corner pocket!

Recently, President Obama has been talking about his plans to make college more affordable for families and students. The President’s plan is to increase the Pell grant, and make Federal student loans more accessible to students. Students from Kent State University recently asked Obama about his plans and when exactly those changes would take effect:

President Obama is pushing his budget proposal to overhaul the entire education system throughout the U.S. His plan would affect students of all ages with a goal of improving education levels all across the U.S. starting with preschool aged children. In a recent speech to the US Hispanic Chamber of Commerce, Obama began to divulge what exactly he has in mind for this giant overhaul. He spoke of a 5 tier reform plan that touches on what seems like every stage of the educational process. The President was quoted as saying, “We have let our grades slip, our schools crumble, our teacher quality fall short and other nations outpace us…The time for finger-pointing is over. The time for holding ourselves accountable is here.”

The 5 reform points that he spoke about are as follows:

1. Increase investments in early childhood programs such as Headstart etc.

2. Holding students accountable for higher/tougher testing standards

3. Increase teacher training and recruitment, and offer “merit pay” (teachers that produce more results will get paid more than others). Along with that, ineffective teachers would be let go if they fail to improve.

4. Renew his campaign for the support of charter schools. (definition of a charter school = Charter schools are elementary or secondary schools in the United States that receive public money but have been freed from some of the rules, regulations, and statutes that apply to other public schools in exchange for some type of accountability for producing certain results, which are set forth in each school’s charter). President Obama also proposed longer school days.

5. For Higher Education he wants to increase the annual Pell Grants maximum to $5550, and push for students from working families to receive a $2500 tax credit.

I can only imagine that the republicans must be reeling…especially about the money for Headstart. Also included in early investments was an idea to have registered nurses visit the homes of single moms regularly to make sure their children are healthy and ready for school life. Not a bad idea, but who will run this program? I will say that he has a point when it comes to holding students and teachers accountable for their performances. Have you ever had a bad teacher? I have, and it made me lose any interest I may have had in the subject at hand. Frankly our country collectively cannot really afford to have children caring less about school than some of them already do.

For those students that are fortunate enough to go on to college, Obama has some plans there as well. The Pell grant is a Federal grant given to students who exhibit more financial need than others; this “financial need” is determined when you fill out the FAFSA (Free Application for Federal Student Aid). Obama proposes to raise the annual maximum amounts on that grant from $4,731 for the 2008-2009 school year to $5350 for the 2009-2010 school year, and then increase it again to $5500 for the 2010-2011 school year. The unsubsidized loan amount for dependent students is currently $2,000, but Obama’s stimulus plan will add an additional $2000 to that, which will help a lot of students out whose parents cannot afford to help them through college. The President also proposes to eliminate the FFEL loan program (private lenders who lend Federal loans) and have all Federal loans run through Direct Loans (the U.S. Department of Education’s Loan program); but wait, there is more….the Perkins loan, which is another federal loan awarded based on need, is typically run through the college itself, but Obama is proposing to shift that loan program so it is run through the government. Now I have my loans from my undergraduate degree with Direct loans, and the customer service is definitely not top notch. I am wondering how the Department of Education is going to manage all the loans that are currently in the FFEL program AND all the Perkins loan and still make sure that those loan programs don’t fall at the waist side. I personally do not see it happening…and didn’t Clinton propose this at one point, but it failed?

A student tax credit is also part of this the Presidents budget proposal, which would put an extra $2500 in students’ pockets. This is definitely helpful to any student in school, and it can also serve as an incentive for someone to go back to school and finish their education.

This new budget proposal has a lot of big ideas, some of which already have the necessary platforms to execute the new plans. Others however do not. It seems like all the ideas would help to improve the education system in the US, but the road to get there might be a long and bumpy one.

Code: EDUCATIONOVERHAUL

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It seems the frustration level is rising. Times are tough, people are losing their jobs, and schools are raising tuition costs. Lenders are changing their portfolios, trying to stay afloat. All of this makes it very hard for a student to get a loan they once got in the past. Gone are easy to receive International school loans, gone are the private consolidation loans, gone are the loans that pop up in your mailbox. You can still obtain a loan, but it will most likely be different from any private loan you have had in the past. It may also require you to have a cosigner, even if your credit score is perfect.

This frustration is real, and it’s resulting in some students dropping out of school, even if its just for a semester while they get all their ducks in a row. So the question is what to do, how to prepare accordingly. If you relied on private loans in the past to pay your tuition, check with your school to make sure they will accept private “school certified” loans…as this seems to be the most prevalent loan in the market right now. If they do not handle those loans, then I would suggest looking into a cheaper state school, which you can afford with just Federal loans.

The biggest mistake I made, and others make, is going to a school for the name….and unless you are going to a Harvard or Yale, you very well may regret it in the future. Assuming large amounts of debt, and not being able to pay it will affect you for the rest of your life.

Now that summer is over, it is time to start thinking about getting organized for the rest of the year, and yes - the holiday season…  One consideration might be private student loan consolidation.  Refinancing  your private student loan payments is a great way to lower your monthly payments and combines all your private student loans into a single manageable loan.  Consolidation is not always the best option for everyone - but it will help make life easier for many of you.  Learn more at:

http://www.studentloanconsolidator.com/private/

If you haven’t heard or read it in the paper, there has been much going on in the Education industry lately. Over the past few months there have been law suits filed, investigations into certain lenders, Sallie Mae got bought out, and now the shut down of lender access to the Government website NSLDS. This all comes because certain lenders (Federal as well as Private) chose to abuse their privileges. What this means in the world of banks and lenders is still up in the air. What this means for the borrower is a different story. It is going to require that the borrower/student be a little more careful when looking at thier statements. They are going to have to keep better records of who their lenders are, what loans they have taken out, and have the correct information provided to them to obtain this information.

Given the fact that most borrowers/students think Stafford is their lender, we at the Student Loan Network have provided students with a link to look up thier loans and find out who their lender are. All you need is your Pin number. If you have misplaced your pin you would have to apply for it again. You can do all of this at www.studentloanform.com. Just follow the prompts and it will connect you to the NSLDS government website. Students and financial aid officers are the only people left with access for now. Also, If you are looking to consolidate your student laons then you will need to have all your loan data on hand so the representative on the other end can better help you.

However, with the above being stated this is not to say that all lenders are bad. There is always that one or two bad apples that spoils it for the bunch. For the most part all existing lenders are still in practice and offer good services. If you have any further questions regarding this issue please feel free to contact the Student loan Network.

On January 17, 2006 the US House of Represenatives passed a bill to cut interest rates on all new subsidized Stafford loans. If this bill gets passed by the President it would mean that every year for five years your interest rate would gradually decrease. Starting at 6.8 and ending at 3.4%. The catch to this bill is that after that five year period it levels off to 6.8% again. Although this bill has not yet been signed by the President, they are anticipating it going through and taking effect this July,1.

You may be asking yourself what this has to do with consolidation. Well, I have received many calls from people who wanted to wait to consolidate because they thought the new bill would affect all their loans. The truth is that this new bill only affects your most recent student loans and has no affect on past loans. Another reason is because of the above statement. Since you are not eligible to consolidate while you are in school the dropping rate really has no affect on consolidation. Therefore, if you are in the buiseness of saving money then you really want to consider consolidating your loans. Not only will it lower your monthly payment but you will be locked into a fixed rate with only one bill to pay each montn. If you have any questions on the new bill check out the following link http://www.cbo.gov/showdoc.cfm?index=7729&sequence=. Questions about consolidation check out Student Loan Network

OTHER INFORMATIVE SITES
Student Loan Network: Stafford Federal Student Loans, Parent PLUS Loans, Student Loan Consolidation, Private Student Loans

Anytime the federal government and money are involved it is bound to be confusing and frustrating. The federal government is always changingthe rules and regulations for federal aid creating new loopholes and issues for the student loan industry.

For example, a recent change in legislation does not allow students to consolidate while they are enrolled at least half time in school. To consolidate a student has to be out of school or carrying an academic workload of less than part time.

I personally think this rule is ridiculous. I get many requests from borrowers wanting to consolidate their loans because they need to improve their credit score to receive a better rate on a home mortgage or a car loan. Its true-consolidating improves your credit! Every year you attend school and borrow a student loan you create an open line of credit on your credit report. Consolidating your loans into one open balance really gives a boost to your credit score. When a computer calculates your credit score, it will see this: eight loans paid in full. You will look like a responsible and trustworthy borrower. Why does the federal government care that a student wants to make this smart financial step?

You can write to me about it. Not much I can do except agree with you. I suggest you write to Congress to complain about this ridiculous rule.

The Student Loan Network: Stafford Federal Student Loans, Parent PLUS Loans, Student Loan Consolidation, Private Student Loans, Education Loans/College Loans

Over the last few weeks, I have noticed an increase in the amount of callers who have been concerned with wether or not to consolidate due to changes in Congress. There seems to be some concern on whether the interest rates will drop this upcoming July. My answer is this”¦If you were lucky enough to fill out an application before the July 1st rate increase then I would say definitely consolidate. Last years rates are 4.7% if you are in your grace period and 5.3% in repayment. If the rates do drop I don’t anticipate them dropping that much.

If you are a recent applicant the interest rates are 6.54 in grace and 7.14 in repayment. By not consolidating your rate is variable and will change this upcoming July. It may seem silly to consolidate if rates are going to drop, but, I would way your options and see which makes the most sense. You should remember that if you don’t consolidate you are paying that variable rate on all your loans which may make the payments tough to manage. Overall it is your call but I would do a little research before making this decision. You can read more about this on www.studentloanconsolidator.com

In conclusion, it is always best to way all your options and make an educated decision. If you would rather talk to a person you can always call the helpful reps. at www.studentloannetwork.com

More links for your review

www.staffordloan.com

www.ActEducationLoans.com