6 True Answers about Public Service Student Loan Forgiveness

Despite what some false headlines making the rounds on April 1 and earlier have said, President Barack Obama will not forgive all student loans.

Study loan

Study loan 

Regardless of what you’ve seen, or what you may hope, there’s no executive order coming to wipe your student loan slate clean. However, that doesn’t mean there aren’t real ways to get rid of your student loans without paying them.

The Consumer Financial Protection Bureau estimates that about one-quarter of workers in the U.S. qualify for Public Service Loan Forgiveness and fail to take advantage of it. That’s a true story that sounds hard to believe.

Make sure the prank isn’t on you by checking out these answers to commonly asked questions about the program.

1. What is Public Service Loan Forgiveness? This federal program eliminates, or forgives, federal student loans for specific borrowers. To qualify, you must be employed full time in an eligible public service or nonprofit job, and you must have made 120 eligible on-time payments in no less than 10 years.

Payments don’t have to be consecutive, so you can gradually work toward forgiveness over time. However, only eligible payments made during eligible employment count toward that 120 number.

2. What counts as an eligible payment?  Any payment made on a loan from the government’s direct loan program is eligible. If you have other federal loans, you can consolidate them into this program to potentially qualify. However, any payments you’ve made up until that point won’t count toward your 120.

3. What jobs are eligible? Many people assume that only teachers, social workers or other public servants are eligible for this program, but that’s a total myth.

The truth is that it’s not what you do that makes you eligible for loan forgiveness, but rather whom you do it for. Any employee who works full time at public or nonprofit institutions can be eligible for forgiveness. Yes, anyone – whether you spend your time in the boardroom or the mailroom, you can qualify if you make eligible payments.

4. How can I tell if my job is eligible? The easiest way is to ask your employer. As part of their push to raise awareness about loan repayment options, the Consumer Financial Protection Bureau created a handy guide to help your employer help you. If your human resources team isn’t sure whether your company qualifies, that guide should point them in the right direction.

Some eligible employers include AmeriCorps, Peace Corps and many 501(c)(3) nonprofits, including those in the public interest law, health and disability services fields. Labor unions and partisan political organizations are not eligible, even if they are nonprofits.

Workers at religious organizations are also ineligible, but only if their job functions include engaging in religious activities related to religious instruction, worship services or any form of proselytizing.

5. How do I apply? Contact your study loan servicer – the company you make your payments to – and confirm their procedure. Download a PSLF Employment Certification to help you track your progress.

You can submit that form to your servicer once a year. If you don’t do this, you will be responsible for producing pay stubs or other proof that you worked at an eligible employer when you officially apply for forgiveness.

6. Are there other forgiveness programs available? Absolutely. Multiple federal and state loan forgiveness programs exist. Check out this loan forgiveness e-book from SALT™ for an almost-comprehensive list.

Source: http://educationloanformba.tumblr.com/post/140073516985/6-true-answers-about-public-service-student-loan

3 Benefits of Making Interest-Only Student Loan Payments

For many college students, borrowing student loans means they’ll be paying back principal and interest. According to the College Board, in 2012-2013 alone, more than 7 million students took out federal unsubsidized Stafford loans, a type of loan where the borrower is responsible for all accrued interest.

Study loan

Study loan 

Interest starts to accrue on unsubsidized Stafford loans from the time they’re first disbursed. At the end of the grace period, the six months between the time a student leaves school and the first payment, the accrued interest is capitalized. This means it’s added to the principal balance and interest then starts to accrue on the new, larger balance.

Unsubsidized loan payments can be deferred until the borrower graduates or his or her course load drops below half-time, and most students choose to skip making payments while in school. But the Student Loan Ranger thinks students should still try to squeeze a loan payment into their limited budget – by paying just the loans’ interest. There are three reasons why.

1. You will save money: Let’s say you attended a one-year vocational program and took out a federal unsubsidized Stafford loan for $5,000 at a 3.9 percent interest rate. According to the Cost of Interest Capitalization Calculator over at FinAid.org, if you deferred principal and interest for 18 months, which equals the time you were in school plus the six-month grace period, the new loan balance would be $5,300.72 with accrued interest.

With the interest capitalization, under the standard 120-payment plan, after you got out of school you would pay $53.42 monthly, for a total payment of $6,410.40

If you instead opted to make interest-only payments while you were in school and during the grace period, you’d pay $16.25 a month over 18 months for a total of $292.50. Then, when your regular payments of principal and interest kicked in, your monthly payment would be $50.39 for 10 years, for a total of $6,046.80.

Combined with the $292 you already paid in interest, that means the total amount paid back would be approximately $6,339, or about $71 less than you would pay if you allowed the interest to capitalize.

2. You will develop good habits: Often, borrowers fall behind in their student loan payments because they miss the first one due after their grace period ends. Delinquency can increase the amount you owe through late fees – although most federal student loans currently don’t charge late fees, federal regulations do authorize up to 6 cents for each dollar of each installment past 15 days late.

Delinquency is also the first step toward default. However, if you align your interest-only payments with what will be your regular due date, you’ll get in the habit of parting with some money at that time.

In addition, you’ll already have a dedicated line in your budget for your student loan payments. You’ll likely have to increase that amount once your payments actually come due, however you won’t bust your budget with a student loan surprise. You’ll know that amount is coming, and you’ll hopefully plan for it by increasing your payments or decreasing your other expenses in advance.

As a bonus, you can also get a head start on automating your payments. Automatic debit is a great option for keeping your loan payments on track.

In addition, some lenders will even decrease your interest rate for choosing this option. You just need to remember to update the amount you pay each month once your grace period ends; the rest will take care of itself.

3. You will feel great: If you’re a student, you may feel like there’s not a lot you can control in your life. You can stop your study loan from feeding into that.

You can take control of your debt in many different ways, like choosing a repayment schedule that works for you. Making early payments and chipping away at that debt is another way to take charge of your money and feel like you can conquer everything the real world will throw at you after graduation.

Source: http://educationloanformba.tumblr.com/post/140025410035/3-benefits-of-making-interest-only-student-loan

Find Higher Ed Benefits That Support Service Members, Families

The Senate will hold​ a hearing this week examining access and support for service members and veterans in higher education.

Study Loan

Study Loan 

That hearing and some additional research brings to light just how many benefits are out there for this group – just not all in one place. In fact, of the hundreds of higher education benefits available, there are probably just as many individual places that current service members and veterans will have to dig to try and find them.

So, as the Memorial Day weekend approaches, the Student Loan Ranger would like to dedicate this week's blog to providing information and resources for some of the higher education benefits service members might be entitled to that can help either pay for college or repay student loans.

Paying for College

Most people are familiar with the GI Bill, but did you know that it was the first federal financial aid program? There have been many changes to the benefits offered through the years, the most recent and significant being the post-9/11 GI Bill, but the premise remains the same.

Tuition assistance programs are available for active-duty members of the Air Force, Navy, Army, Marines and Coast Guard. Unused benefits may be transferable to your spouse or dependent children. Each program is a little different, so it’s important to know your full eligibility before applying.

Veterans can also receive tuition assistance for degree and certificate programs under several programs including the Montgomery GI Bill Active Duty, Montgomery GI Bill Selected Reserve and the Yellow Ribbon program. The Veterans Education Assistance Program allows funds from your military pay to be

placed in a postservice education account where the government matches every $1 placed in the account with $2. Most states also offer special education benefits for local veterans.

Almost every state offers some sort of tuition benefit or scholarship program for its active-duty or veteran residents. Most of these programs are fairly generic and similar in eligibility criteria, but some have additional programs that are very specific.

Texas, for example, offers in-state tuition rates to most service members. This is a pretty common state benefit, but Texas also offers free tuition, books and room and board to those who have at one time been classified as prisoners of war.

Repaying Student Loans

Most service members who serve for a little over three years and continue into the military reserves​ or other types of domestic national service programs can have up to $18,000 in student loans repaid under the National Call to Service Program. Most of the military branches also offer a Department of Defense student loan repayment program that will contribute, in some cases, up to $65,000 toward student loans.

The Servicemembers Civil Relief Act ​ has been in the news quite a bit lately thanks to the recent settlement paid by Sallie Mae in answer to allegations that the company made it difficult for eligible student loan borrowers to claim the benefits allowed under this program.

The law caps the interest rate on any debt received before military service at 6 percent. Note that service members have to notify the loan holder of their eligibility and in many cases provide proof of active-duty service to obtain this benefit. The settlement will require Sallie Mae to streamline this process for borrowers, and add more phone staff versed in the benefits available under the law.

Those borrowers with federal direct loans are actually given a zero percent interest rate on loans made on or after Oct. 1, 2008 if serving in a hostile area. Finally, military members can defer their federal Study loan while on active duty by applying, or having their representative apply for, a military service deferment. This will keep your loans from coming due for payment during certain periods of active-duty service, and for six months after you’ve been demobilized.

State and federal governments do quite a bit to help members of the U.S. armed forces and their families manage higher education costs. The problem is that information on these benefits can be difficult to find.

You can find more information on all the higher education benefits for service members, veterans and their families in SALT’s new e-book, "The Military Smartbook for Defeating Student Debt."

Source: http://singhmadhuri.tumblr.com/post/139960620056/find-higher-ed-benefits-that-support-service

Indian government minister asks banks to give more education loans

Since last year, banks in India have been more cautious on giving education loans to students seeking education abroad.    Many factors are playing into this trend: issues students have faced in universities that are not recognized or approved, and quality of medical degrees from universities in Russia to name two.

And yet the demand for higher education continues to grow, which led to the Finance minister in the Indian government to urge Indian banks to grant more loans to students. An important statistic the Minister shared was that nearly 2.4 million students have taken education loans valued at $50bn so far.

Easy access to education loans has been one of the major factors in the increasing number of students choosing to study abroad. So the message from the government is well-timed to ensure the banks don’t clamp down too hard in their due diligence process.

This request comes at a time when banks are more cautious about issuing Educational loan especially for students aspiring to do medicine abroad.

Top- ranked Indian School of Business, which already has programs in Oman, UAE, Pakistan and Bangladesh, is

Source: https://theinsideindiablog.wordpress.com/2013/01/30/indian-union-minister-asks-banks-to-give-more-education-loans/

Education loan

Education is expensive and Higher education is all the more expensive especially foreign education. Hence the need for education loan, which is a financial aid given to meritorious but needy students for meeting the expenses of their higher education in India or abroad. In this article we shall explain education loan, what it is, process of getting education loan, repayment, tax benefits under section 80E.

What is education loan?

Educational loans are available for the purpose of higher education. Higher education means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognized   by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so.

·         The course should necessarily be full time.

·         It can be graduate or post-graduate course in technology, engineering, architecture, medicine, management and applied or pure sciences, including mathematics and statistics etc.

·         It can be pursued in India or abroad.

·         One gets tax deduction for education loan taken.

What is covered under the loan?

Education loans take care of all expenses incurred such as :

Admission, tuition, examination and library fees

Cost of purchasing books, computers and other equipment.

Some banks like State Bank of India also offers loan for two-wheeler if hostel and college are far.

If the loan is being taken for studies overseas, travel expense is also included in the loan amount. As medical expenses are high in countries such as the US, the loan also accounts for health insurance. Although the bank is in India, the student gets his amount in dollars for studies overseas, and the amount is paid directly to the institution abroad.

What is education loan subsidy scheme?

On 24th June, 2010 Government of India approved a Scheme to provide full interest subsidy during the period of moratorium on loans taken by students belonging to economically weaker sections under the Education loan Scheme, for pursuing any of the approved courses of studies in technical and professional streams, from recognized institutions in India. The interest will be paid to the banks by the Government of India. It is applicable from the calendar year 2009-10. The benefits under the Schema are applicable to those students b with an annual gross parental/ family income upper limit of Rs. 4.5 lace per year (from all sources). Income proof shall be required from the students from public authorities as authorized by the State Governments for certification of income status for the scheme.

Source: http://www.bemoneyaware.com/education-loans/

Study Loan

2016 Best Companies to Refinance and Consolidate Your Student Loans

If you are overwhelmed with student loan debt or just looking for a way to save money on your loan repayment, student loan consolidation and refinancing could be the solution you’ve been looking for.

Many lenders or student loan consolidation companies now offer ways to consolidate both federal and private loans into a single loan. Often borrowers, who are now graduates with better credit and a higher income than when they initially took out loans, can qualify for significantly lower interest rates and better terms with a consolidation loan. This is great for borrowers, but what’s the catch? When including federal loans in student loan consolidation, borrowers may sacrifice benefits that come with federal loans, such as loan forgiveness programs and income-based repayment options.

More and more student Best Education loan  consolidation companies are entering the market for student loan consolidation and refinancing. There are a variety of types of lenders, including traditional banking institutions, credit unions, and new, nontraditional lending options. The traditional banks offer credibility but often have higher interest rates and sometimes stricter eligibility requirements. Credit unions offer similar loan options as traditional big banks, but they are less corporate and more customer and community-focused. Credit unions often offer lower interest rates than the big banks but may have a lower maximum loan amount. The new, nontraditional financial startups offer loan consolidation and refinancing that is more personalized with a focus on customer communication and ease of access.

Source: https://www.credible.com/blog/best-companies-to-refinance-and-consolidate-your-student-loans/

6 Financial Aid Implications of Obama's Proposed 2017 Budget

Every year around this time, the president of the U.S. submits a budget proposal to Congress for consideration for the next fiscal year, which begins Oct. 1. This request, first required under the Budget and Accounting Act of 1921,​ lays out the spending and revenue plans for all federal agencies and departments, including the Department of State, Department of Agriculture and, of course, the Department of Education.​

Education loans

Education loans    

The proposals are analyzed by the Congressional Budget Office and submitted to the House and Senate Budget Committee for consideration. How receptive these committees are to the president's proposals depends on several factors, not limited to – but certainly including – party politics.

The Department of Education's higher education portion of its proposed budget attempts to continue the administration's focus on enrollment, affordability and completion. The proposal puts an extra emphasis on completion, stating, "the Administration has doubled down on its efforts toward a new higher education focus on degree completion, in addition to college access and affordability, seeking to help shift incentives at every level to focus on student success, not just on access."​

While that likely sounds good, students and graduates are probably more interested in what the proposed budget really means for them. Here's a look at some of the Education Department's proposals, as well as their implications.

Summer Pell Grants

The proposed budget reinstates the ability for full-time students who have exhausted their Pell Grant eligibility for the year to receive additional Pell funds for the summer semester.

The idea here is to offer low-income students an incentive to complete their credentials and do so more quickly, which would hypothetically reduce student loan debt. The proposal also wants to speed things up by allowing an additional $300 "Pell bonus" for those students taking at least 15 hours per semester, which is more than a full-time course load – defined as 12 hours by federal aid policies.

Perkins Wind Down

The budget proposal alters the Perkins loan program, which is winding down, to an unsubsidized loan program. That means the interest on the loan would be the responsibility of the borrower and would start accruing upon disbursement; currently, the federal government pays the interest on Perkins loans while the borrower is in school, in a grace period or during certain periods of payment postponement.​

The new program would still be at an institution's discretion, but would be administered at the federal level as a direct loan program.

Easier FAFSA

The Department of Education is looking to reduce the questions on the Free Application for Federal Student Aid. It proposes doing this by relying primarily on tax return information and removing questions related to assets and additional types of income, including savings and investments.

One Income-Driven Repayment Plan

The proposed budget creates a single income-driven repayment plan for borrowers who take their first loan on or after July 1, 2017. The plan would be similar to the new Revised Pay As You Earn plan. Existing borrowers would still have access to whichever repayment plans they are eligible for today.

Greater Teacher Loan Forgiveness

The Education Department is seeking to simplify and increase the existing teacher incentive programs by combining the current TEACH Grant with the Teacher Loan Forgiveness benefit for a maximum forgiveness amount of $25,000.

Borrowers who graduate from "an effective preparation program" and who begin teaching in a low-income school starting in 2021 would potentially be eligible for this maximum amount, while others with lesser credentials could potentially qualify for up to $10,000. The proposal also bases forgiveness amounts on time spent teaching in these high-need areas

Capped Public Service Loan Forgiveness

The proposed budget would cap the forgiveness benefit under Public Service Loan Forgiveness to $57,500. The reasoning for this proposal is to protect students and taxpayers against institutional practices that may encourage over-borrowing. The Student Loan Ranger wants to emphasize that this is only a proposal, and if it should pass, it would not apply to existing borrowers.

While the goal for the budget process is a budget resolution that passes both the House and Senate, doing so is not a requirement. With an upcoming presidential election and therefore a fairly short number of voting days in Congress this year, the Student Loan Ranger isn't sure that completing a budget will be a priority.

Even if it completes a budget, it's unlikely that this Congress would prioritize any of these proposals, unless they meet certain agendas – which most do not. In short, the Education Loans advises readers to look at this proposed budget as more of a suggestion for future Democratic policy proposals when Congress initiates the reauthorization of the Higher Education Act, likely in 2017 or later.

Source: http://educationloanformba.tumblr.com/post/139529761960/6-financial-aid-implications-of-obamas-proposed

Higher Ed – Worth The Price?

Education loan

Education loan 

What to Do When a Tax Refund Is Seized for Student Loans

It's that time of year again – tax time. While you may not look forward to the actual filing of your taxes, many consumers do look forward to getting that refund check. In fact, most start planning what they will do with that refund long before tax season.

Whether you were planning on putting a down payment on a new vehicle, putting it in savings, catching up on those Christmas bills or paying off debt, finding out your federal or state tax refund has been seized ​can be a nasty surprise.

Many federal student loan borrowers are caught off guard the first time their refund is taken.​ This will happen if the loan defaults – no payment for 270 days – and no payment arrangements are made. If you contact the loan holder and start rehabilitation or another type of payment plan and make those payments on time, chances are the process​ won't be initiated. You can also consolidate the loan out of default.

The process for what is commonly called garnishment starts with initial certification for Treasury Department​ offset ​several months before tax time – usually in the fall. You will receive a notice that the loan holder is submitting your debt for tax offset and have the opportunity to appeal this action. This notice is generally sent to the address you used the last time you filed your taxes or to the address on file at the loan holder. Some reasons for appeal include:

• The debt is paid in full.

• The loan should not be in default.

• You may be eligible for discharge because a school closed or falsely certified the loan.

• The borrower is deceased or permanently disabled.

• The loan should have been refunded by the school.

• The loan is not yours due to identity theft.

• The loan was discharged in bankruptcy.

If you think you have a valid reason to avoid offset, you should submit your appeal within 65 days of the date of the notice. If you wish to review your loan file, you must make that request within 20 days of the notice and request an appeal within 15 days of that request.

All requests must be in writing to the loan holder, whose address will be included in the notice of offset. If you request an appeal within those time frames,​ your offset will generally be put on hold while you wait for a hearing. Requests made after that will not halt the offset process, but if you succeed in your appeal the offset amount will be returned to you.

If you file your taxes jointly, your spouse may also request to have his or her portion of the refund returned.​ This is called an injured spouse claim and is filed directly through the IRS.

Once your account has been certified for Treasury offset, and there is no successful appeal, it will remain in this status until the default is resolved through rehabilitation, consolidation or by paying the loan in full. This certification does not limit the garnished amounts to tax refunds but can include other types of federal payments including: wages for federal employees, including military pay; Social Security benefits, other than Supplemental Security; some federal bond payments; and federal retirement benefits.

In some cases, especially when Social Security benefits are offset, the borrower can file a financial hardship appeal to the loan holder to receive a portion or all of the garnishment back. If Social Security is your only income, and losing a portion of it will drop you below a minimal standard of living, you should submit this appeal to the loan holder. You will likely be asked to submit proof of all income and expenses as well as other forms of support you may receive.

If you take the trouble to go through the appeal process, the Student Loan Ranger encourages you to take the opportunity to resolve the student loan default while you are at it. Remember there is no statute of limitations on federal student loans, so unless and until you resolve the default, it will continue to haunt you until – well, forever.

Education loan that are not in default are eligible for lower payment options including the income-driven repayment plans, which set the payments based on your income, and have a forgiveness component after a certain number of years. If your income is very low, such as someone whose only income is Social Security, those payments could be zero dollars per month.

While appealing the offset and resolving the default may feel intimidating to some, the process is straightforward and fact-based. Doing so will also alleviate a lot of future headaches.

Source: https://educationloansinindia.wordpress.com/2016/02/16/what-to-do-when-a-tax-refund-is-seized-for-student-loans/

Co-Signing Trends

Educational loans

Educational loans 

4 Warning Signs you’re headed for Student Loan Default

September is here, which means a new school year is getting underway. Even if you’re not heading back to college this fall, you may still be paying for it. In fact, if you recently graduated, you may not have even started dealing with your biggest education expense yet – your student loans.

Study Loan

Study Loan 

Many borrowers are still a couple months away from their loans entering repayment. However, when this occurs, you want to start on the right path, because entering the wrong one could lead to student loan default.

Defaulting on a student loan is one of the worst financial mistakes you can make. On its own, default takes a bite out of your bank account through additional fees and collection practices, including wage garnishment and tax refund seizure. Default also affects your credit, which can make it tougher for you to lease a car, buy a home or even get a job.

Despite such consequences, there are currently 6.8 million borrowers in default, according to the most recent data from the U.S. Department of Education. Default happens for a number of reasons. By understanding four of the biggest warning signs behind them, you can prevent default from affecting you.

1. You don’t know when your first payment is due: It’s not surprising if you largely ignored your student loans for the past four years. When it comes to repaying them, though, it's time to pay attention.

If you borrowed student loans, you are responsible for knowing when your payments begin, how much they are and where to send them, even if you don’t receive any notices with these details.

You can log on to your loan holder’s website to find out when payments are due. If you're not sure who that is either, check the National Student Loan Data System. This database covers everything about your federal student loans.

Once you find who your loan servicers are, contact them to make that first payment on time and set yourself up for success thereafter. If you have private loans, you’ll have to check your credit report to find out who the lender is.

2. You dropped some classes or dropped out of school: One common reason why some borrowers don’t know when their first payment is due is that they didn’t realize their repayment grace period was already winding down.

For federal student loans, the grace period kicks in when students drop below half-time enrollment. Half-time enrollment is defined differently from school to school. If you’re not taking a full course load, ask your financial aid office to ensure repayment isn’t creeping up on you.

Of course, if you've left school altogether, you certainly dropped below half-time enrollment. Even if you don’t complete your education, you are still required to repay any loans you borrowed.

3. You can’t afford your payments: The student loan grace period gives borrowers some time to figure things out before repayment begins.

However, after that time, you may still be looking for work or barely able to cover your living expenses, let alone expensive loan payments. In situations like these, some people ignore their loans until they can pay them. This is the last thing you want to do.

Instead, talk with your loan holder about your different options. If you borrowed federal student loans, you may be able to select a payment plan that decreases the amount you pay each month, perhaps

based on how much money you make. You may also be able to temporarily postpone your payments, with a deferment or forbearance.

Decreasing or pausing your payments may increase the amount you repay overall. Still, that’s better than letting your loan default, which will definitely add to what you owe.

4. You think you already defaulted: Borrowers often confuse delinquency and default. If you miss a few payments, your loan is likely delinquent, not in default, and you can still do things to avoid the consequences listed above.

You may think you defaulted because you’re receiving late notices and calls from your Study loan holder. Instead of hoping they go away, talk to these people about your options. Believe it or not, they want to help you.

If you have defaulted, don’t give up. You can pull your loan into good standing by paying it in full, consolidating it or through rehabilitation. Fees remain for each option, but vary between them. In addition, upon completion of rehabilitation, the default entry gets removed from your credit history.

Source: https://educationloansinindia.wordpress.com/2016/02/12/4-warning-signs-youre-headed-for-student-loan-default/

13 Tips For College Graduates

Study Loan

Study Loan 

Understand How Late Student Loan Payments Affect Your Credit Score

Declining student loan default rates is good news, but many student loan borrowers are still struggling. Estimates show 22 percent of borrowers haven’t yet defaulted but are between 90 and 270 days ​past due on their federal student loans, ​which means their credit is likely affected.

Education loan

The consequences of defaulting on a student loan are well documented​, but the ramifications of delinquency, particularly the hit to your credit score when ​you ​fail to make payments on time, are not publicized enough. ​​​​​ ​

It can be hard to pinpoint specifically how a late student loan payment can affect your credit score, says Rod Griffin, director of public education for Experian, a leading global information services company that helps individuals check their credit report and credit score.

"The answer to that question is, 'it depends,'" says Griffin. "A 30-day delinquency can have very different implications for two different people, because credit scores take into account many variables like the length of your credit history and your utilization rate, or the total balance-to-limit ratio on your credit cards."

The impact of student debt on your credit report can also depend on the scoring model being used. "There are at least hundreds of different credit scoring systems used by lenders," explains Griffin. "There are credit scores designed only for auto lending, mortgage lending and even insurance purposes. And, different credit scoring systems have different scales."

As a result, Griffin points out, it can be really dangerous to tell student loan borrowers "if you do 'X' with your student loan payment, your score will drop by 'Y.'"

But while it’s hard to tell exactly how a late student loan payment may affect your credit, it’s important to know that it most definitely will.

"Keep in mind that a student loan is a debt obligation just like any other," Griffin says. "Once that loan is open, the lender may begin reporting it to the credit reporting companies. Missing payments affects your credit just like any other debt. Payment history is the most important factor in credit scores."

The lower your credit score, the harder it is to access other forms of credit, like a mortgage and auto loans. It can also make accessing additional credit more expensive via higher interest rates.

And it’s not just your eligibility for additional lines of credit that could be restricted. Landlords may deny you the ability to rent an apartment and employers may pass you by for job opportunities if your credit record has too many blemishes.

Besides keeping your student loan payment on track by choosing the right payment plan and sending payments in on time every month, the following are some other tips to keep in mind about student loans and credit ratings.

• Borrow student loans with plenty of repayment protections: Many prospective college students and parents shopping for student loans make their decisions based on interest rates alone, but flexible repayment terms can mean much more to credit in the long run.

For example, federal student loans offer deferment options that won’t harm your credit​ when you can’t repay. Private student loans from a bank or lender may also temporarily halt your payments if you’re having difficulty, but it’s at their discretion and is not a consumer right as it is with federal loans. A good rule of thumb is to always exhaust all of your federal student loan options before turning to private loans.

• Know how to ​recover from student loan default: Defaulting on a student loan is one of the worst entries for your credit report, but there are ways to recover. You can rehabilitate your defaulted federal student loan by contacting your loan holder and working out a reasonable and affordable monthly payment amount, which will be initially calculated as 15 percent of your disposable income – your adjusted gross income minus 150 percent of the poverty level for your family size.

Then, you’ll need to make nine consecutive, voluntary, on-time monthly payments to your loan holder. After nine successful payments, the loan will be sent to a new lender and servicer and the default will be removed from your credit history, though the delinquency will stay.

You can also consolidate your federal student loans out of default in a shorter period of time, but it won’t remove the default from your record. It’s important to note that both consolidation and rehabilitation will charge collection costs.

With consolidation, it can be as much as 18.5 percent of the total unpaid balance of your Education loan, while rehabilitation collection costs can be as much as 16 percent. Ultimately, though, getting that default off your record may be well worth the cost.

Source: http://educationloanformba.tumblr.com/post/139103839310/understand-how-late-student-loan-payments-affect

Debunking the Student Loan Bankruptcy Myth

The belief that student loans are never dischargeable in bankruptcy is one that makes us here at the Student Loan Ranger cringe every time we see it – and we see it a lot.

Educational loan

Educational loan 

We cringe because it’s not true. You actually can get your student loan discharged in bankruptcy in some limited cases. In fact, according to a study published in 2011 by Jason Iuliano, at least 40 percent of borrowers who do include their student loans in their bankruptcy filing end up with some or all of their student debt discharged.

The problem is the old tale that has consumers thinking there’s no chance to have these loans discharged, so they don’t try. Iuliano’s report found that only about 0.1 percent of consumers with student loans attempt to include them in their bankruptcy proceedings.

To be clear, if you borrow money, you have a moral and legal obligation to pay that money back, even if that means making some financial sacrifices. It is strongly recommended that students do more cost-benefit analysis and long-range planning before taking on student debt of any amount.

But sometimes life throws students some pretty big curveballs that they just can’t plan for or recover from, and it's in those cases that bankruptcy comes into play. If you’re in that position, here are the most important things you need to know about student loans and bankruptcy.

The Student Loan Ranger is not an attorney and strongly advises you to consult one before taking any type of action related to this topic.

• Check if you pass the Brunner test: Current bankruptcy law exempts education loans and obligations from eligibility for discharge unless doing so would cause the consumer undue hardship. The problem is

that undue hardship is not defined within bankruptcy law, leaving the bankruptcy courts to decide what this means.

While all courts are different, many use what’s called the Brunner test to determine if requiring a consumer to continue to be responsible for an education debt would cause him or her undue hardship. There are essentially three criteria a consumer has to meet under the Brunner test.

First, continuing to pay the loan must cause the borrower to be unable to sustain a minimum standard of living. Second, the borrower's financial situation must be unlikely to change in the future. Finally, the borrower must have made a good-faith effort to pay his or her loans.

If you think you meet these criteria, you will need to ask your bankruptcy attorney to file an adversary proceeding, which is essentially a lawsuit within the bankruptcy case itself. While you can technically file one of these yourself, due to the complex nature of these cases it is strongly recommended you retain a qualified bankruptcy attorney, preferably one with experience in student loans.

• Investigate other possible discharge strategies: The bankruptcy code describes an education loan as one that, in part, was used to attend an eligible education institution, which is further defined as one that is eligible to participate in the federal student aid programs.

Some consumers have been successful in arguing that, because their private student loans were used to attend a school not eligible for these federal student aid programs, the loans don’t fall under the definition of an education loan and should therefore be eligible for discharge.

Another part of a student loan’s definition in the bankruptcy code requires that the loan be used for cost of attendance expenses as defined in the Higher Education Act. Cost of attendance expenses, for federal student loan purposes, are essentially tuition, fees and indirect costs related to your enrollment in postsecondary education. For example, a computer can be considered part of the cost of attendance, but only if it is required by the school.

With this in mind, some borrowers have argued that the portion of their student loan funds used for non-eligible educational expenses is dischargeable. This argument is risky, however, as most promissory notes signed by student loan borrowers contain a statement of educational purpose, which means by borrowing the loan, you agree to only use the funds for these very same cost of attendance related expenses.

• Weigh whether you should bother filing for bankruptcy: With all the new income-related repayment and forgiveness options that have been introduced over the last few years, most borrowers, especially those with federal loans, should be able to find a repayment strategy that is manageable, which makes meeting the criteria for the Brunner test a little more difficult.

But remember that bankruptcy is there for a reason, so if your debt is overwhelming and your life circumstances don’t seem like they are going to allow you to fulfill these obligations in a reasonable way, then you may want to consider filing for this relief. Even if you don’t meet the criteria for student loan discharge, it might be possible to discharge other debts, freeing up resources to allow you to pay the Educational loan.

In the end, you really only need to remember two things: work with a qualified attorney, and when it comes to student loans and bankruptcy, never says never.

Source: https://educationloansinindia.wordpress.com/2016/02/10/debunking-the-student-loan-bankruptcy-myth/

6 tips to Easily pay off Student loans

Study loan

Study loan 

Know When it Makes Sense to Consolidate Student Loans

Gone are the days when it was generally a good idea for most federal student loan borrowers to consolidate their loans. The student loan world has changed significantly, eliminating two of the biggest benefits of consolidation.

Education Loan in India

Education Loan in India 

First, most federal loans previously featured variable interest rates. These rates changed annually, so consolidation allowed borrowers to lock in historically low numbers. In July 2006, interest rates on new loans became fixed. Because consolidation interest rates take a weighted average of the underlying loan rates, borrowers no longer automatically get a lower rate by consolidating.

Second, in the past, it was common to have your federal loans held by multiple servicers. By consolidating, borrowers could pay one servicer instead of many. Now, most borrowers pay all their loans under one bill from the start, thanks mostly to efforts on behalf of the Department of Education.

With these benefits removed, borrowers may be wondering if consolidation is even worthwhile. For many, the answer is, "not really." However, it can still be a useful tool for some. Here are some situations where it can make sense to consolidate student loans.

1. To obtain access to forgiveness or repayment benefits: Student loan regulations and laws are complicated, but sometimes that can work to the borrower’s benefit. This is true when it comes to consolidation, Parent PLUS loans and Public Service Loan Forgiveness.

While Parent PLUS loans are technically eligible for PSLF, it’s hard for borrowers to take advantage of this benefit. A borrower must make 120 payments under either a standard 10-year, income-based, income-contingent or Pay As You Earn payment plan to qualify for PSLF.

The catch is that Parent PLUS loans are not eligible for the three income-related payment plans, and a borrower paying under a standard repayment plan will have nothing left to forgive after 120 payments.

If you consolidate a Parent PLUS loan under the Direct Loan program, however, it becomes eligible for income-contingent repayment and therefore has the potential to be eligible for PSLF. If the borrower wouldn’t otherwise be eligible for PSLF, having access to this option could make payments much more manageable, especially if the borrower still owes money when he or she retires.

On a related note, as only Direct Loans are eligible for PSLF, borrowers with older Federal Family Education Loan Program loans can use consolidation to transfer those loans ​into the Direct Loan program to gain access to PSLF.

Consolidation can work the other way too, especially when it comes to Perkins loans. Many unique forgiveness opportunities available to Perkins loans are lost when they are consolidated, so make sure you do your research before taking this step.

2. To obtain a lower payment: While income-related payment plans provide much needed relief for many, those lower payment amounts may still be too high to manage. For those borrowers, especially those with lower loan balances, extending the term of the loan through consolidation may actually yield a lower payment than some other repayment options.

This calculator can help weigh all of those options at once. Just remember that the longer you take to pay the loan, the more you will pay in interest.

3. To manage private student loans: The benefits of student loan consolidation have increased when it comes to private student loans. While it is generally not advisable to consolidate federal loans ​with private loans since you’ll lose the federal benefits, consolidating your individual private loans may make sense.

There’s been a significant increase in lenders offering a private loan consolidation product, increasing the competitiveness of these products. Borrowers can often find a lower interest rate and more favorable terms, especially if they have a good payment history on their existing private loans to date.

At the very least, private loan consolidations can extend the term of your loans, lowering the payment. As we’ve discussed in the past, private loans have very few lower payment options, so consolidating to a longer term with a lower payment can sometimes be the only option available.

If you have good credit and payment history on the loans you want to consolidate, this can also be a way to release the co-signer​ from responsibility of those underlying loans. The co-signer will not automatically transfer to the new loan product, so if you do still require one to consolidate, you’ll need to find a new one, or ask your existing co-signer​ to re-up his or her commitment.

4. ​To get out of default: If you’ve defaulted on your federal student loans, consolidation is the fastest way to get the Education loan in India out of default. Consolidation is not as beneficial as loan rehabilitation, as consolidation doesn’t remove the default from your credit history. However, if you’re not eligible for rehabilitation or can’t take the time to complete that process, consolidation can get your loan back in good standing.

A good place to start to determine the pros and cons of consolidation will be your student loan holder, which will have a good understanding of how consolidation will benefit – or not benefit – your particular situation.

Source:  http://educationloanformba.tumblr.com/post/138981016300/know-when-it-makes-sense-to-consolidate-student

What if I ignore my student loans ?

Education loan

Education loan

How the New Government Spending Bill Could Affect Student Loans

The continuing resolution-omnibus spending bill, known as the "cromnibus," has yet to pass into law. With that said, things seem to be moving at a fairly good pace toward that end, and it is very likely to be passed before the deadline.

Study loan

Study loan

Remember the government shutdown this time last year? Republican lawmakers do, and seem to be making a concerted effort to avoid a repeat of that event.

The funding agreement as it was announced mostly leaves education spending at last year’s levels, but there are a few changes college students and student loan borrowers may want to be aware of.

1. The ability to benefit provision returns: This provision is probably the most significant change in the new education appropriations bill. Until 2012, students without a high school diploma or GED could still qualify for federal financial aid by either passing an exam known as an ability to benefit test or by successfully completing at least six credits in a degree or certificate program.

Congress eliminated this provision via another appropriations bill back in 2012​. The proposed bill restores the ability to benefit rule, but limits its use to students enrolled in career pathway programs at community colleges.

2. Program funding levels see little change: While Pell Grant advocates were concerned over a proposal that would have used $2 billion​ of the current $4 billion Pell program surplus to fund other programs, in the end only a little more than $300 million changed budgetary lines. ​

President Barack Obama's First in the World program, which promotes innovation in higher education, also fell victim to cuts, going from $75 million to $60 million​. Much of that money will be used by the Department of Education to pay not-for-profit federal loan servicers, while the rest provides slight increases to several other student aid programs.

The federal work-study program will see an increase of $15 million, while TRIO will grow by only $1.5 million​ and federal supplemental educational opportunity grants will remain at their current funding level of $733 million​. While the Pell surplus was pirated a bit, the actual award maximum will increase for the next academic year as scheduled, from $5,730 to $5,830.

While the bill saw primarily level funding, there was still room for some "new" programs. Five million dollars were set aside to fund a program for veterans that hasn’t seen funding in almost five years. ​The program provides support for veterans on college campuses. Another $2.5 million will be used to set up a new program to create a national center for disabled students.

3. What got left out: What may be most notable about this appropriations bill is what it didn’t contain. There was some fairly significant concern going in to this process other programs in addition to Pell Grants would fall victim to cuts. Subsidized Stafford loans, for example, have seen cuts within the last several years, leaving eligibility limited to undergraduate students only and for a limited time frame.

Obama’s recent executive order to expand the Pay As You Earn repayment plan was also rumored to be on the chopping block, as was the controversial college ratings system. The Study Loan suspects this is likely due in part to a Republican desire to avoid the political consequences of another government shutdown and therefore trying to keep the controversial proposals to a minimum and making the bill as easy to approve as possible.

While student loan consumers won’t see many changes from this bill, many more modifications to federal aid and student loan laws could be on the horizon. Most higher education wonks feel that 2015 will see a reauthorization of the Higher Education Act, and perhaps some significant alterations to higher education and student aid policies.

Source: https://educationloansinindia.wordpress.com/2016/02/08/how-the-new-government-spending-bill-could-affect-student-loans/

Start Student Loan Repayment From the First PAyment

7 essential guidelines to follow as you apply for Education Loans

Universities around the world continue to raise their tuition fees but that does not deter passionate students from India realizing their dreams by securing admission in one of the universities abroad.

Remember that your study abroad experience is a lifetime investment and for most, taking out a Education Loan is the only way to make their dream a reality. Most educational loans will cover your tuition fees, board and room fees, health insurance fees, transportation fees, living expenses, books and any other supplies. At the start of each year or semester, the bank will directly send the money to the university account.

Here are 7 essential guidelines to be followed as you apply for a Education Loan –

1. The moment you get the admission letter from the university, apply for a Education Loan as the processing may take a while. Even before this, research your loan options.

2. Compare interest rates offered by various banks and other loan providers well in advance. Rates vary with different providers and comparing loans will help you identify an entity offering lower interest rates. As a general rule, state run banks offer lower interest Education Loans as compared to the private banks.

3. Are you eligible for Education Loan? This is an important first question you must ask yourself. Here again, eligibility criteria varies with different banks. Shortlist banks after you check for eligibility. Find out which are the programmes that are covered by banks. Usually, English language and other short term courses and vocational courses are not covered.

4. In advance, get in touch with a couple or more shortlisted banks and find out about the papers you require in order to apply. Get all the necessary documents and papers ready for the application. Certain universities have tie-ups with certain banks. Find out if the university you have chosen has any such deal as this will make the processing faster. Even as you apply to a university, check out if they are associated with any bank in your country and start the loan application process with that particular bank to make things easier.

5. Most banks or Education Loan institutions will require a standard set of documents such as –

Identity proof like pan card, passport, driving license, signed verification letter from a recognized public servant or public authority and voter’s identity card. For address proof, you will have to keep any of the below mentioned document ready –

• Telephone bill or electricity bill or water bill

• Voter’s ID

• Aadhar card

• Ration card

• Bank account statement

• Passport

• Government issued allotment letter

6. After you get the Education Loan, there are certain things you must do. After your Education Loan is approved, it is time to rejoice. Before you do so, however, you must carefully go through the fine print. Some of the aspects you must check for in the document include pre-payment details, interest structure and an option to extend repayment in case of delay in finding employment. Understand all the listed clauses carefully and have a clear idea about the entire loan process.

7. Last but not the least, if you get a lucrative part time job you can start repaying the interest amount each month to ensure it does not build up to a huge amount. This way, you can greatly reduce the burden.

These are a few essential aspects to understand with clarity before you apply for Education Loan. For more information and guidance on Education Loans for Indian students, contact our professional counselor at overseas consultants. We are here to take you through the entire process, helping you get your necessary documents together and get that loan you desperately need to fulfill your dreams.

Source : http://www.thechopras.com/blog/7-essential-guidelines-to-follow-as-you-apply-for-student-loans.html

Afford a Mortgage with Student Loan Debt

Experts are divided on whether student debt is affecting the housing market. A recent study by John Burns Real Estate Consulting estimated that heavy college debt will reduce real estate sales by 8 percent for this year.

Meanwhile, the Federal Reserve Bank of New York found that, for the first time in at least a decade, households with student loan debt are less likely to have a mortgage than those without student loan debt.

Others disagree and maintain that lower home purchases among millennials are more due to changing mores and attitudes of the younger generation.

The math behind the former argument is obvious: More debt means less money to save for a mortgage down payment and leads to fewer home purchases. However, that’s not the only thing holding borrowers back.

If you have student loans and want to own a home – whether in the next month, next year or next decade – you need to manage how your student loans affect your debt-to-income ratio and overall credit score to ensure you’ll be approved for a mortgage when the time comes. Here are the main things to keep in mind.

Your Debt-to-Income Ratio

A debt-to-income ratio is one way lenders measure your ability to manage and meet your monthly loan payments. If you’re applying for a mortgage, a lender will calculate your debt-to-income ratio by adding up all your monthly debt payments, including your expected mortgage amount, and dividing them by your gross monthly income – the amount you earn before taxes and other deductions.

Debt payments include mortgages, auto loans, student debt, credit card debt and any other installment or revolving debt. It does not include other budget expenses such as utilities. Most lenders will not approve you for a mortgage if your debt-to-income ratio exceeds 43 percent.

The Role of Your Student Loans

Let’s say you’re a recent college graduate earning $45,473 annually –  the average for the college class of 2014. Your gross monthly income would be about $3,789. You have a car loan monthly payment of $200 and a credit card payment of another $200. On top of that, let's say you have $30,000 in student loans, about the average amount of debt for graduating college seniors. Assuming this is an unsubsidized Stafford loan at 4.6 percent interest, you'll be left with a monthly payment of $312.

Now, let's say you’re applying for a home loan of $222,261 with a $1,061 monthly payment – the national average. Your total monthly debt payments would total $1,773 and your debt-to-income ratio would be around 46 percent, putting you over the 43 percent threshold and potentially out of luck for buying that particular house.

Options to Manage Your Loans

While your car and credit card payments can’t be adjusted without refinancing the auto loan or paying down your credit card balance, any federal student loans have some flexibility.

Using the example above, switching your student loan repayment plan from standard to graduated would result in a monthly payment of just $176. That reduces your debt-to-income ratio to 43 percent, potentially increasing your chances of being approved for the mortgage.

It’s important to recognize that the graduated plan assumes your salary will rise in the next few years. Your student loan payments start low with this plan but then accelerate.

The last thing you want is to take on a mortgage that you can’t afford if your student loan payments rise. If you don’t think your salary will increase anytime soon, you may want to check out some other repayment options like income-based plans.

Ways to Elevate Your Credit Score

Student loans can also affect your mortgage approval in that they are an important factor in your credit score. Paying your student loans on time each month is an excellent way to build good credit.

A lender will use your credit score to not only evaluate whether your mortgage should be approved, but also to determine your mortgage’s interest rate. Borrowers with higher scores are eligible for lower interest rates and more loan choices, while subprime borrowers face higher interest rates, less eligibility for different varieties of loans and possibly even denial of their mortgage request.

Federal student loans are usually reported to credit bureaus as delinquent after 60 days of no payment; private loans may be classified as delinquent – or even defaulted – after just one missed payment. If late student debt payments are dragging your credit score down, contact your student loan holder to talk about getting your payments back on track.

You can bring your account current by making all the payments you’ve missed, switching to a different payment plan or temporarily postponing payment and halting any more damage to your credit report.

If you’ve defaulted on your student loan, you can rehabilitate your loan back to good standing and remove the default from your credit history – though the delinquency will stay.

If you are planning to take on more study loan and you want to buy a home soon after you leave college, stick to federal student loans and avoid private loans if possible. The flexibility to lower your monthly payments can be crucial to maintaining a healthy debt-to-income ratio and credit score.

Source: (http://educationloanformba.tumblr.com/post/138723567565/afford-a-mortgage-with-student-loan-debt)

How Transferring Schools Can Affect Student Loans

If you’re planning on switching schools, there are likely a number of reasons behind the decision. Some people transfer after realizing a different academic program will better fit their long-term career goals, while others simply want to be closer to their families.

Study loan

Study loan 

No matter their reason for transferring, all of these students should think about their student loans. Unlike credits, which may or may not follow a student to a new institution, student loans never transfer between schools. As a result, prospective transfer students need to be aware of a number of things to ensure they can fund their education at a new school and take care of what they've already borrowed.

Resubmit Your FAFSA

When you transfer, you have to resubmit your Free Application for Federal Student Aid to your new school. Fortunately, resubmit does not necessarily equal redo.

Each academic year has its own FAFSA. If you transfer midyear, the FAFSA you completed for that year is still good. Simply list your intended transfer school or schools in the form and resubmit it at FAFSA.ed.gov.

Because the other information on your FAFSA remains the same, your eligibility for financial aid will be the same as well. That means there shouldn’t be any surprises when it comes to your expected family contribution.

In addition, the government regulates the amount of federal student aid a borrower can receive. That means you can’t get more than the annual maximum in Pell Grants – $5,730 –  or subsidized Stafford loans – $3,500, if it’s your first year in school – no matter the school or schools you attend.

Despite these rules to standardize processes, transfer students still have to resubmit their FAFSAs. That’s because these borrowers won’t necessarily receive the same exact award at different schools. You have to go through a school’s financial aid process, including receiving a new student aid report, so they can calculate that themselves.

Your Financial Award May Be Less

Odds are, your awards won’t differ greatly from school to school, particularly when it comes to your federal student aid. As mentioned above, your expected family contribution is the same no matter which school you attend. Still, your overall award may differ and your new one could potentially be less than you thought. There could be a few reasons for this.

First, your new school may award you less institutional aid. This could be due to your financial situation or theirs. Some schools simply have less money to give out. Much campus-based aid, including Perkins loans, is limited and disbursed on a first-come, first-served basis.

So, it’s possible that funds that were once available to you are no longer an option. Unfortunately, like federal loans, any campus-based aid you previously received won’t transfer with you either.

In addition, if you transfer midyear, you may qualify for less financial aid than you did as a first-time or returning student. This will depend on how much aid you earned at your previous school. In general, you don’t fully earn financial aid until you’re 60 percent through a semester.

Leave before then, and your school returns the unearned aid, loans first, to the federal government. This could affect your borrowing maximums at your new school.

Finally, your school’s cost of attendance can affect your award. Transfer to a less expensive school, and your aid may shrink as well. If your federal aid amounts shift greatly, it will likely be because of a big cost

differential between your old and your new school. Then again, going to a cheaper school and having fewer loans to repay isn’t necessarily a bad thing.

Don’t Forget About Any Existing Loans

Your federal loans may not transfer with you, but that doesn’t mean they disappear. When you leave your old school, your Study loan from there will begin their grace period. That means you may have to make payments on them in as little as six months.

If you plan to immediately re-enroll in a new school at least half time, you can file for an in-school deferment to pause these payments. This will allow you hold off on making them until you graduate from your new school or drop below half-time enrollment again.

In addition, remember to check out your new school’s satisfactory academic progress policy to find out how they measure transfer credits. If you fall below SAP, you can become ineligible for aid.

You should also be sure to understand how transferring affects your eligibility for subsidized Stafford loan interest payments. If you transfer from a four-year program to a two-year program, this can greatly affect how much aid you're eligible for as well.

Source: (https://educationloansinindia.wordpress.com/2016/02/04/how-transferring-schools-can-affect-student-loans-2/)