08.07.13 | Student Loan Servicer Transfer

Posted in Financial Aid, News, Repayment, Student Loans by samantha b

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…)

08.06.10 | Should I Repay my Stafford Loans Early?

Posted in Repayment, Stafford Loan by Evan Jacobs

For many recent graduates, the grace period before they must begin repaying their Stafford Loans won’t come to a close until the fall, most likely in November. But for the lucky few who have already secured a job and an income, there might be a temptation to start repayment a few months early. So should they do it?

First, you must know that early repayment will immediately end your grace period. So if your grace period is scheduled to end in November and you decide to make a payment now, you won’t be able to wait around until November to make another one. You will have begun the monthly repayment process and must pay the minimum amount owed toward your loan every 30 days.

While you should take that into consideration, the loss of your grace period is really the only apparent downside to early repayment. There are no fees or penalties if you decide to repay early and doing so will only benefit you in the long run. The sooner you start repayment, the shorter the life of the loan and the less interest you will ultimately owe.

06.10.10 | Should you Pay Back your Student Loans Early?

Posted in Financial Aid, Repayment, Stafford Loan by Evan Jacobs

Many graduating seniors are still in the midst of their six-month grace period before they have to begin student loan repayment. But for some lucky graduates who have secured a job and have the means, they may be interested in starting repayment before their grace period is up.

In almost all cases, the sooner you are able to start repaying your student loans, the better. There are no penalties or fees associated with early repayment, and in some ways, it can be beneficial.

You do not get a lower interest rate for repaying your student loans early, but if you think about it, the sooner you start, the less interest you pay long-term.

For many, student loan debt is one of the longest monthly debts they will face, and can take decades to fully pay off. There is nothing wrong with getting an early start. One way to make life easier is to consolidate your federal and private student loans. This will allow you a lower monthly payment.

Visit www.StudentLoanConsolidator.com to get started.

03.09.10 | Ways to Save on Private Student Loan Repayment

When it comes to private student loans, one tense topic among students and parents is, “how are you going to pay for it?” Between often needing a cosigner and qualifying for a relatively high interest rate, there are a lot of considerations that go into choosing a private student loan that are not necessarily present in the lending offerings of federal programs like Direct Loan and FFEL.

Save Money on Private Student LoansThat being said, many private lenders have systems, incentives, and educational materials on hand to make their loans as attractive as possible. These can include benefits like graduation rewards, conditional interest rate reductions, and deferments based on special circumstances.

Graduation Rewards

An example of a graduation reward would be knocking a fixed percentage off your loan after completion of your degree. Here is a short list of what some of the more popular private lenders are doing today for graduation rewards:

  • Discover Student Loans – 2% interest rate reduction
  • SunTrust – $300 balance reduction
  • Sallie Mae – Cosigner release

As you can see, each has their own little incentive for choosing their company over the competition. If you’re interested in reading up on more of these differences, check out our private loan comparison tool.

Rate Reductions

Interest rate reductions are another great way to save money. Many lenders offer these for becoming part of special programs or consistently making on-time payments.

For instance, the Federal Direct Loan program is currently offering an interest rate reduction for borrowers that join the auto-debit program for making monthly payments. In addition, it is not unheard of for lenders to offer a small rate reduction for participating in paperless billing systems. If you have a pre-existing loan(s), check with your lender to see if there are any opportunities available for interest rate reductions.

Consolidation

The topic of private student loan consolidation is tricky in the arena of saving money, because you realistically are not saving anything. When you consolidate one or more loans, you are essentially remortgaging them; it combines them into one bill, repackages them under a new interest rate, and extends the repayment terms. The end result is a lower monthly payment, but the long term effect is more interest being paid to the bank.

So now I ask you, what tips and tricks have worked to save you money during repayment?

04.28.09 | What will My Monthly Payment be?

Posted in Graduate Loans by Kristin Morris

After a while it’s easy to lose track of how much money you owe and who you owe it too. In fact many bury their heads in the sand until after graduation.

Well, if you were ever curious about how much interest you’ve been accring each month on your grad stafford loans feel free to peek your head up from your sandy refuge. Below is a simple illustration of how your monthly interest is accrued.

Lets see how interest accrues between payments on April 15 and May 15 with $20,000 in student loans at 6.8%.

Average daily balance: $20,000 x 6.8% = $1,360

Days between payments (30/365.25) = .08214

$1,360 x .08214

Monthly interest: $111.71

Please note any subsidized grad stafford loan does not begin accruing interest until after graduation.

12.11.08 | Federal student loan interest capitalization

It took me forever and a day to find the answer to the question of when interest is capitalized on a federal student loan like the Stafford loan.

Capitalization occurs when:

  • The loan enters repayment
  • The loan exits deferment
  • The loan exits forbearance
  • The loan exits any status in which interest accrues

For the average student, interest will capitalize when the grace period ends on a subsidized Stafford loan. If you put a subsidized or unsubsidized Stafford loan into deferment or forbearance, once you return to repayment, accrued interest will capitalize. (see: College Loan Rates)

If you’re not familiar with capitalization, read What is capitalized interest?