There have been several updates in 2010 in the financial industry for credit cards, debit cards, gift cards and now student loans. Interest rates have been slightly lowered for some federal student loans. Verify your statement to see if your student loan has been affected by the recent updates effective on July 1, 2010.
Subsidized undergraduate loans that are disbursed between July 1, 2010 and June 30, 2011 the interest rates have been lowered to 4.5%. Subsidized graduate, unsubsidized and PLUS loans that are disbursed between July 1, 2010 and June 30, 2011 the interest rates remain unchanged at 6.80% and PLUS loans remain unchanged at 7.90% for Direct Loans and 8.50% for FFEL loans.
Variables rate for unsubsidized and subsidized loans in repayment or forbearance for loans disbursed between July 1, 2010 and June 30, 2011 the interest rates have been lowered to 2.47%. Variables rate for unsubsidized and subsidized loans for student in school, in grace period or in deferment for loans disbursed July 1, 2010 and June 30, 2011 the interest rates have been lowered to 1.87%.
PLUS loans for parent and graduate students for all loan statuses for loans disbursed between July 1, 2010 and June 30, 2011 the interest rates have been lowered to 3.27%.
If you are a student attending college outside of the United States, your school is now able to participate in the Direct Loan Program.
The Federal Family Education Loan (FFEL) Program has been retired and will not provide any more loans as of July 1, 2010. All new Consolidation, Stafford and PLUS Loans will be provided by the Department of Education under the Direct Loan Program.
Students who have previously received a federal student loan from a private lender under the FFEL Program will have to complete a new promissory note to receive loans under the Direct Loan Program. Check with the financial aid office at your school for more information.
Showing posts with label student loan repayment. Show all posts
Showing posts with label student loan repayment. Show all posts
Thursday, September 16, 2010
Monday, September 13, 2010
How to Negotiate Student Loan Interest Rates
The hardest debt for college graduates to get rid of is student loan debt. Trying to find out who you owe, how much you owe, your interest rate and monthly payment can be a nightmare.
If you defaulted on your loan, it is even harder to get information about your loan especially if you account have been forwarded to a collection agency. It takes a lot of perseverance and patience to navigate through the student loan maze but you can negotiate the terms of your loan. Here are some easy ways to negotiate your student loan interest rate.
Strategies for Negotiating
1. You may be eligible for an interest rate reduction if you consolidate your loans.
2. You can refinance your loan to get a lower interest rate if you have good credit.
3. You can request a loan modification if you are unable to make monthly payments for certain reasons such as: job loss, medical bills, reduced wages or hours or emergencies.
4. You can pay interest-only payments over a period of time and ask the lender to shorten the length of the loan.
How to Negotiate
1. You can request that the company lower your interest rate if you have made payment on time for one to two years or more and your loan is not in default because their main goal is to keep your loan from defaulting.
2. Remain in constant contact with your student loan lender and make payments on time. If you are unable to make payments setup a payment arrangement with your lender. Make sure your information on file with the lender is current. Don't ignore letters sent to you regarding your student loan.
3. Establish a relationship with at least one person at the lender company and remain in contact with that person when handling your loan. It helps to have an additional person at the lender company to work with; either their supervisor or co-worker in the event the person gets promoted or leaves the company.
4. Many private loan companies will lower your interest rate if you setup automatic payments. Sallie Mae does this and has another program that links your Upromise account to your Sallie Mae account which also lowers your interest rate.
Other Options
1. When looking for jobs ask about student loan forgiveness programs. If you work in the medical or judicial fields, for the federal government, non-profit or low-income areas you are eligible for a student loan forgiveness program that may pay 25% or more of your student loan each year. For more information visit finaid.com.
2. Work a full-time and a part-time job or 2 full-time jobs to pay down the student loans. The highest interest is accrued during the first two to five years of the loan so the more interest you pay on the loan during that time the faster your balance will go down and the less money you will owe over the life of the loan.
3. Live at home after graduation for at least two years to save money and put most of your earnings toward your student loans. During this time try to double, triple or quadruple your loan payments. After about six months you will be able to see your balance go down each month. If you are unable to live at home after graduation rent out a room or cheap apartment and stay there for at least two years.
4. Don't buy a car, catch public transportation. If you absolutely need a car because there is no public transportation near your job then buy a cheap used car that is in good condition.
5. Keep expenses to a minimum and buy more needs vs. wants. If possible, continue to pay down your student loan debt until your balance is paid in full.
6. Delay going to graduate school if you have student loans. Pay off your student loans before going to graduate school because it will be harder to pay off two loans instead of just one.
7. Get a job with an employer that will pay for you to go to graduate school.
Your Credit Score
1. Damaging your credit score by defaulting on your loan to get a lower interest rate is not worth it for several reasons: you end up owing more on your loan due to the missed payments and accrued interest, you damage your credit rating which can take years to fix and you will not be eligible for student loans in the future, you damage your relationship with the loan company.
2. If you receive an interest rate reduction it may only be temporary because it is harder now to get interest rate reduction due to defaulted loans. You will have to provide proof that you are unable to pay the loan, i.e. budget, paycheck stub, tax forms, etc.
3. There are instances where you can settle on a defaulted less for less than the principal amount but it may take months or years of fighting with the loan company. You will have to document a financial hardship, i.e. paystubs or W2 forms, provide documentation of where you obtained money to pay for the settlement and provide a reasonable explanation of why they should accept the settlement amount.
If you defaulted on your loan, it is even harder to get information about your loan especially if you account have been forwarded to a collection agency. It takes a lot of perseverance and patience to navigate through the student loan maze but you can negotiate the terms of your loan. Here are some easy ways to negotiate your student loan interest rate.
Strategies for Negotiating
1. You may be eligible for an interest rate reduction if you consolidate your loans.
2. You can refinance your loan to get a lower interest rate if you have good credit.
3. You can request a loan modification if you are unable to make monthly payments for certain reasons such as: job loss, medical bills, reduced wages or hours or emergencies.
4. You can pay interest-only payments over a period of time and ask the lender to shorten the length of the loan.
How to Negotiate
1. You can request that the company lower your interest rate if you have made payment on time for one to two years or more and your loan is not in default because their main goal is to keep your loan from defaulting.
2. Remain in constant contact with your student loan lender and make payments on time. If you are unable to make payments setup a payment arrangement with your lender. Make sure your information on file with the lender is current. Don't ignore letters sent to you regarding your student loan.
3. Establish a relationship with at least one person at the lender company and remain in contact with that person when handling your loan. It helps to have an additional person at the lender company to work with; either their supervisor or co-worker in the event the person gets promoted or leaves the company.
4. Many private loan companies will lower your interest rate if you setup automatic payments. Sallie Mae does this and has another program that links your Upromise account to your Sallie Mae account which also lowers your interest rate.
Other Options
1. When looking for jobs ask about student loan forgiveness programs. If you work in the medical or judicial fields, for the federal government, non-profit or low-income areas you are eligible for a student loan forgiveness program that may pay 25% or more of your student loan each year. For more information visit finaid.com.
2. Work a full-time and a part-time job or 2 full-time jobs to pay down the student loans. The highest interest is accrued during the first two to five years of the loan so the more interest you pay on the loan during that time the faster your balance will go down and the less money you will owe over the life of the loan.
3. Live at home after graduation for at least two years to save money and put most of your earnings toward your student loans. During this time try to double, triple or quadruple your loan payments. After about six months you will be able to see your balance go down each month. If you are unable to live at home after graduation rent out a room or cheap apartment and stay there for at least two years.
4. Don't buy a car, catch public transportation. If you absolutely need a car because there is no public transportation near your job then buy a cheap used car that is in good condition.
5. Keep expenses to a minimum and buy more needs vs. wants. If possible, continue to pay down your student loan debt until your balance is paid in full.
6. Delay going to graduate school if you have student loans. Pay off your student loans before going to graduate school because it will be harder to pay off two loans instead of just one.
7. Get a job with an employer that will pay for you to go to graduate school.
Your Credit Score
1. Damaging your credit score by defaulting on your loan to get a lower interest rate is not worth it for several reasons: you end up owing more on your loan due to the missed payments and accrued interest, you damage your credit rating which can take years to fix and you will not be eligible for student loans in the future, you damage your relationship with the loan company.
2. If you receive an interest rate reduction it may only be temporary because it is harder now to get interest rate reduction due to defaulted loans. You will have to provide proof that you are unable to pay the loan, i.e. budget, paycheck stub, tax forms, etc.
3. There are instances where you can settle on a defaulted less for less than the principal amount but it may take months or years of fighting with the loan company. You will have to document a financial hardship, i.e. paystubs or W2 forms, provide documentation of where you obtained money to pay for the settlement and provide a reasonable explanation of why they should accept the settlement amount.
Saturday, September 4, 2010
How to Pay Defaulted Student Loans
Student loan debt is one of the hardest debts to pay off. Many Americans pay on their student loans well into their adult life. If your student loans go into default, it can take a while to get them into good standing. You risk having your tax refund taken, your paycheck garnished or being taken to court.
Federal loans have more regulations and programs to help account holders pay their student loan debt. Private loans are not as regulated and offer very few programs or none at all depending on the company to help account holders pay their student loan debt. You cannot include federal or student loans in bankruptcy. Here are 9 ways to get current on defaulted student loans.
Private loans
1. Offer a good faith payment or a lump sum payment to use as negotiation to request that any fees or finance charges be waived. Also, request that your payment history is updated on your credit report.
2. Refinance. After paying your loan on time for at least two years you can comparison shop and sell the loan to another loan servicer or bank for a better interest rate.
3. When private loans go into default they are usually forwarded to a collection agency which may not be as willing to work with you to setup a payment plan. Negotiate and offer a payment plan that you know you will be able to afford each month. If they refuse to accept your payment plan you may have to provide documentation such as a budget or paystub to support your payment plan.
4. You may be charged fees by the collection agency but no more than 18.5% of the outstanding principal and interest.
5. If you are in the military and are on active duty there are limits on interest accrual.
6. If the collection agency is not adhering to the Fair Debt Collections Practices Act file a complaint against the company with the Federal Trade Commission.
7. You can consolidate loans to use the student loan forgiveness (or public service forgiveness) programs.
8. Ask for a copy of the collection agency's business license, proof that they have a legal right to collect on the student loan and proof that you owe the amount stated on the letter you received.
9. If the school you attended closed or you withdrew from school you may be eligible for a partial refund by completing an unpaid refund discharge application form.
Federal loans
1. After making payments on time for 9-10 months, your loan will be placed in good standing (rehabilitated) and you will be eligible for various programs such as deferment, forbearance and student loan forgiveness.
2. Determine how much you can afford to pay each month. This may require that you create a budget and reduce some expenses to ensure you make the payments each month.
3. If your loan has not been sent to a collection agency, send a payment to the Department of Education's Payment Center.
4. You can consolidate your loans into one loan which will put your loan in good standing.
5. Don't consolidate federal loans into private loans because you will no longer be eligible for deferment, cancellation, forbearance or income-based payment plans.
6. You can consolidate your federal loans into the Direct Loans government consolidation program.
7. If you default on a Direct Loan you must make 3 payments or agree to pay the loan using the Income Contingent Repayment Plan (ICRP) or Income Based Repayment Plan (IBR). If you sign up for the ICRP or IBR you do not have to make 3 payments before applying for consolidation.
8. You can only consolidate a Direct Loan once.
Federal loans have more regulations and programs to help account holders pay their student loan debt. Private loans are not as regulated and offer very few programs or none at all depending on the company to help account holders pay their student loan debt. You cannot include federal or student loans in bankruptcy. Here are 9 ways to get current on defaulted student loans.
Private loans
1. Offer a good faith payment or a lump sum payment to use as negotiation to request that any fees or finance charges be waived. Also, request that your payment history is updated on your credit report.
2. Refinance. After paying your loan on time for at least two years you can comparison shop and sell the loan to another loan servicer or bank for a better interest rate.
3. When private loans go into default they are usually forwarded to a collection agency which may not be as willing to work with you to setup a payment plan. Negotiate and offer a payment plan that you know you will be able to afford each month. If they refuse to accept your payment plan you may have to provide documentation such as a budget or paystub to support your payment plan.
4. You may be charged fees by the collection agency but no more than 18.5% of the outstanding principal and interest.
5. If you are in the military and are on active duty there are limits on interest accrual.
6. If the collection agency is not adhering to the Fair Debt Collections Practices Act file a complaint against the company with the Federal Trade Commission.
7. You can consolidate loans to use the student loan forgiveness (or public service forgiveness) programs.
8. Ask for a copy of the collection agency's business license, proof that they have a legal right to collect on the student loan and proof that you owe the amount stated on the letter you received.
9. If the school you attended closed or you withdrew from school you may be eligible for a partial refund by completing an unpaid refund discharge application form.
Federal loans
1. After making payments on time for 9-10 months, your loan will be placed in good standing (rehabilitated) and you will be eligible for various programs such as deferment, forbearance and student loan forgiveness.
2. Determine how much you can afford to pay each month. This may require that you create a budget and reduce some expenses to ensure you make the payments each month.
3. If your loan has not been sent to a collection agency, send a payment to the Department of Education's Payment Center.
4. You can consolidate your loans into one loan which will put your loan in good standing.
5. Don't consolidate federal loans into private loans because you will no longer be eligible for deferment, cancellation, forbearance or income-based payment plans.
6. You can consolidate your federal loans into the Direct Loans government consolidation program.
7. If you default on a Direct Loan you must make 3 payments or agree to pay the loan using the Income Contingent Repayment Plan (ICRP) or Income Based Repayment Plan (IBR). If you sign up for the ICRP or IBR you do not have to make 3 payments before applying for consolidation.
8. You can only consolidate a Direct Loan once.
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