08.07.13 | Student Loan Servicer Transfer

Posted in Financial Aid, News, Repayment, Student Loans by Student Loan Network Staff

Federal Student Loan Servicer Transfer

Last week, the United States Department of Education released a newsletter informing students and their schools that federal student loans handled by four nonprofit servicers would soon be transferred to new servicers. Over the next two months, the majority of loans that are currently serviced by COSTEP, EDGEucation, and EdManage will be transferred to MOHELA, while those serviced by KSA Servicing will be transferred to Aspire Resources Inc.

What is a Loan Servicer?

To provide a little background, your loan servicer is assigned to you by the Department of Education after your loan has been fully disbursed. This company processes your payments and works as your customer service representative while you repay your student loans. For additional information on loan servicers, try visiting StudentAid.ed.gov.

Transfer Process

You will receive either an email or a letter in the mail prior to the transfer to inform you if your servicer will change, as well as an additional notification once the transfer is complete. These notifications will provide information on your new servicer, along with a statement that they will be servicing the loan on behalf of the the Department of Education.

You will need to contact the new servicer to activate features such as electronic billing and automatic loan payments. In addition, both MOHELA and Aspire Resources claim that students will not need to reapply for deferment or forbearance if their previous servicer already reviewed their application, but you should contact your new servicer just to make sure that this information carries over. (more…)

07.12.13 | Pros and Cons of Private Student Loan Consolidation

Congratulations on finally finishing college.  While it’s great to be working and living on your own, you now get to pay your own bills (and yes, now you finally understand why your parents always yelled at you for taking more than 10 minutes in the shower).  Amongst these bills, the most pressing may be those student loan repayment letters that start to arrive all too soon after graduation.  With student loan debt averaging out to $23,000 per borrower, you could end up paying $200 per month for the next 15 years!

Fortunately, there is an alternative: college loan consolidation. Student loan consolidation enables you to lower your monthly payments and pay back your loan over a longer period of time. To give you a better idea, let’s explore the pros and cons of consolidating your student loans. (more…)

04.25.13 | The 6 Costliest Student Loan Mistakes

Posted in Financial Aid, Repayment, Scholarships, Student Loans by Student Loan Network Staff

Damaged Piggy BankMistake #1: Not comparing college costs

Colleges all write their financial aid award letters differently. Some count student loans as self help, others may include it in your financial aid total. Comparing your awards, item to item, can give you a better picture of where you stand financially with a school. Feeling ambitious? Figure out how much student loan interest will accrue over 4 years at each school to see how your choice can affect you when you graduate.

Mistake #2: Not applying for scholarships throughout college

The biggest student loan mistake you can make is taking out more than you need to. Many students stop searching for scholarships after their freshman year, but by applying regularly, you’re more likely to win money for school and need to take out less loans over your college career.
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04.11.13 | Parents, 5 Financial Lessons for Your College Student

As a parent, you are faced with one of life’s greatest challenges: preparing your child for financial responsibility. When your child leaves home for college, they will explore their independence in more ways than one. Learning the financial facts of life can be confusing and can take years. You can help prepare your child for financial independence by sharing these important lessons.

1. Create a budget
The first step to financial responsibly is by making sure you do not spend more than you have. You can empower your child by helping him/her establish a budget for college. Consider how much income the student has (including loans, scholarships and financial aid), then add up the items you are budgeting for to see if the student can afford them. Here are some things to consider budgeting for:

  • Tuition
  • Food
  • School supplies
  • Laundry
  • Phone
  • Entertainment
  • Transportation (cabs/bus)

Managing and sticking to a budget will teach your child to make good financial decisions and will provide them with a sense of control.

2. Keep track

Creating a budget is half the battle – sticking to it can be the hardest part. A good tip to share with your child for sticking to their budget is to keep track of all spending. There are a variety of tools available besides bank accounts that can help with money management. Mint.com and LearnVest are two great tools that allow you to organize your finances, set a budget and alert you when you’re getting off track.

3. Be smart about plastic

If your child does not already have his/her own bank account, this will be the first step. Once they establish their own checking account, they are ready to determine how they will pay their bills. There are a variety of different payment options. The most commonly used payment method for college students are debit cards, since there is debt risk associated with credit cards. Take the time to explain the advantages and disadvantages to using both:

Debit Card Credit Card
When is money taken from account? Immediately- automatic deduction from account At a later date- Money is borrowed with a line of credit.
Can you accrue debt? No- but you can overdraft Yes
Can you establish credit history? No Yes- build a credit score as you pay bills
Are there rewards? No Yes- earn points/rewards when you make purchases. Used to get cash back, discounts, miles, etc.
Are there risks? Minimal- easier to keep track of funds since money is automatically deducted for each purchase. Higher- more difficult to keep track of spending because you pay back what you borrow at a later date. Easier to accrue debt.

3. Pay bills on time

It is important to explain to your child that not paying bills on time can have a negative impact on their financial future. Explaining the importance of establishing a good credit history early in life is an invaluable lesson.  Your child will need to have good credit history in order to qualify for a private student loan if they need more funds for college, buy a new car, apply for a job or take out a mortgage for a house later in life. It is important to explain to your child that in order to establish good credit, they must pay their bills on time and in full.  Even a late phone bill can negatively affect their credit score.

5. Borrow what you need

If your child has taken out a loan for college, it is important to stress that they will need to pay back that money, along with the interest accrued, once they graduate.  With that said, it is key to emphasize that they should only borrow what they need or they will quickly find themselves under mountains of student-loan-debt situation after graduation. If your child finds him/herself in a situation where they need more money for school, there are other ways to fund their education than borrowing such as finding a job and applying for scholarships. If they do borrow, make sure to exhaust all federal loan options first, especially subsidized Stafford loans, which do not accrue interest while a student is in school.

03.26.13 | 10 Things You Didn’t Know About Financial Aid

Posted in Financial Aid, financial aid tips, Repayment, Student Loans by Student Loan Network Staff

Piggy Bank With Graduation CapThe financial aid process can be tough to navigate, and like many students out there, you may not know all of the ins-and-outs. To help you make the most of your financial aid, we compiled a list of some noteworthy facts.

1. You must maintain Satisfactory Academic Progress (SAP)

To stay eligible for financial aid, there are certain criteria you have to maintain. Many students know about the qualitative measures such as minimum GPA, but there are also quantitative criteria students must meet. For example, a student must not exceed 150% of the credits required for their program of study, and this includes attempted credits. This means that too many withdrawals, failed, or incomplete courses can impede your eligibility for financial aid. Make sure you know your school’s SAP policy to keep your financial aid on track or check out this example from the University of Minnesota.

2. Males must register with the Selective Service

Some students don’t realize this until it’s too late, but in order to receive financial aid, male students 18 and older must register for selective service. If you don’t register by the time you’re 26, you will be unable to receive federal financial aid funds. After that, it’s incredibly difficult to regain eligibility, if at all.
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03.18.13 | Can You Refinance Student Loans?

You can refinance your mortgage, but can you refinance your student loans? The short answer is: possibly. Let me elaborate.

Refinancing is a tool commonly used by borrowers in the housing industry to lower interest rates. In regards to student loans, refinancing options are not widely available and depend on the type of loan you have.

Consolidating Federal Student Loans

Federal student loans (such as Stafford Loans) are not able to be refinanced but they can be consolidated. For federal loans, you must consolidate them through a Federal Direct Consolidation Loan which determines your new interest rate as a weighted average. Unfortunately, weighted averages do nothing to lower your rate.

However, there are still some benefits to consolidating your loans, such as:

  • It lowers your monthly payment by extending the term of the loan
  • It makes managing your repayment easier by combing multiple federal loans into one

Probably not the answer you were hoping for, but consolidation can be helpful to those struggling with high monthly payments.
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12.18.12 | New Changes to Income Based Repayment – Pay as You Earn

Posted in Financial Aid, financial aid tips, News, Repayment by Student Loan Network Staff

Great news for student loan debt holders who are struggling to pay those loans every month. Have you heard of the Income Based Repayment (IBR) program, or the “Pay as You Earn” plan? Well if you haven’t, you might want to listen up.

To give you a little history- the US Department of Education implemented an Income Based Repayment (IBR) program in 2007, which aimed to help borrowers pay off their student loan debt, relative to their earnings. However, the program wasn’t cutting it as the student debt number continued to rise to $864 billion in federal loans and most students out of college were landing low paying jobs.

The improved version of this program, also referred to as the “Pay as You Earn” plan, is designed to address this issue and will launch on December 21st, 2012.

This plan is designed to do two things:

  1. Reduce the cap on monthly payments from 15 to 10 percent of discretionary income.
  2. Accelerate the time it takes for students’ loans to be forgiven from 25 to 20 years.

Here is an example of potential savings with this improved plan for a household of 1 with an income of $45,000/year and $60,000 in loans:

Standard Old IBR Pay as You Earn
Monthly Payment $720 $297 ($423 savings) $198 ($522 savings)
Amount forgiven N/A $156,927 after 25 years $139,769 after 20 years

To qualify for the “Pay as You Earn” program:

  • You must have taken out a federal student loan after October 1, 2007 AND have taken out at least one loan on or after October 1, 2011 (Private student loans do not apply).
  • Use the IBR calculator to determine if you are eligible for the Income Based Repayment Program.

The Department of Education estimates that at least 1.6 million borrowers qualify for the “Pay as You Earn” plan, but very few are aware that it exists, so spread the word and share this important information with your peers! Learn more about Income Based Repayment.

11.12.12 | College Financing Resources for Veterans and Military Families

Posted in College Life, Financial Aid, Repayment, Student Loans by Student Loan Network Staff

Little Girls Thank SoldiersHappy Veterans Day, and National Military Family Month! In the words of Maya Angelou, “How important it is for us to recognize and celebrate our heroes and she-roes!” To thank all of the military men, women, and families who serve our nation, here are some resources to help veterans everywhere take advantage of their education benefits.

Funding Education

Scholarships for Veterans and Families

There are hundreds of scholarships out there to help veterans and their families receive a college education. Whether you’re a veteran, or the spouse or child of a soldier, there are lots of scholarships to take advantage of. Here are just a few:

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10.29.12 | 8 Ways to Keep Student Loans from Haunting you

Posted in Consolidation, Repayment, Student Credit, Student Loans by Student Loan Network Staff

Student loans can be scary! Paying off thousands in debt is no easy task, and repayment can creep up on you if you don’t have a plan. So to keep you on track, here are 8 ways you can keep your loans at bay.

1. Know who you owe

With lenders buying and selling loans, the first step to know where your loans are. For federal student loans, borrowers can track their servicer information through NSLDS.ed.gov. Your loan servicer will be your main contact for making payments and for the day-to-day handling of your federal loans.

For private loans, you should consult their original loan paperwork. If this is not an option, request your free credit report. Your credit report will list all of your creditors, including private loan lenders.

2. Keep in touch

Now that you know who you owe, stay in touch. At the first sign of repayment trouble, contact your lender to discuss your options. Ask about different repayment plans, or if deferment or forbearance options are available.
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09.28.12 | 5 Reasons to Consolidate your Student Loans

Pile of Bills

1. Easier Repayment

If you have loans from many different lenders, staying on top of your payments can be tough. Consolidation can help to streamline the repayment process, so you only need to send one check, to one lender (two if you have both federal and private loans).

2. Better Discounts

Many lenders offer student loan discounts for a variety of situations. Discounts can include interest rate reductions for setting up automatic payments, or even for being a current customer of that bank. If your loan does not have any incentives like this, then consolidation may save you some money.
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