Student Loan Forgiveness News & Information

New Jersey Caps Student Loan Debt With New Law

New Jersey Caps Student Loan Debt With New Law

One of the problems with student loan debt is that it’s too easy to get too much of it. Unlike other debt, student borrowers don’t need good credit to obtain federal student loans. And after a certain point in their education career, they can take out unlimited amounts of federal student loans to cover the costs. That is most notable for graduate and professional students. In New Jersey, however, all students have easy access to unlimited student loans thanks to the Higher Education Student Assistance Authority (HESAA). They offer supplemental loans through the New Jersey College Loans to Assist State Students program (NJCLASS). HESAA has come under fire in the past year, being accused of predatory lending practices. They currently have around $1.9 billion in outstanding student loans. During a hearing about HESAA’s collecting practices, borrowers voiced many complaints. Some alleged that HESAA misled borrowers about repayment options. Others accused HESAA of inaccurately labeling accounts as default and sending them to collections agencies, who charged additional fees. Others even said HESAA refused to provide information about forgiveness of debt in cases where the student had died. Other complaints became the basis for the new law: students were allowed to borrow up to $200,000 in student loans, which they were often unable to pay off. The new law, signed into effect by Gov. Chris Christie on Monday, August 7, revises the requirements of the NJCLASS Loan Program. The program originally awarded supplemental loans up to the cost of education, after other aid resources. The new law adds the following provisions: Students must exhaust federal student loan offerings before taking out... read more
How Families Pay for College

How Families Pay for College

Student loans have been a growing problem for years. That’s bad news for those who have student debt or plan on taking on student debt in the name of higher education. But instead of wallowing in discouragement, families are learning. According to a Sallie Mae survey (conducted by Ipsos), families are being smart about the way they plan for college. They know that earning potentials are greater after graduating from college, making a college education worth it, so they make it work financially. Here are some of the findings: How They Pay Families pay for college in many different ways. Some families can cover the entire cost while others depend on loans. The survey found that, on average, the following is true: Scholarships and grants (free money) make up 35% of total college costs. Parents contribute about 31% of the costs, between savings and loans. 13% of the families surveyed use a 529 account to save for their child’s college. Students contribute about 30% of the costs, between savings and loans. Family contributes the remaining 4% of the costs. Half of the families surveyed use scholarship money, of which 87% got them through the college 75% got them through private, nonprofit, or community organizations 65% got them from states or local governments. Reducing the Cost Scholarships are a great way to reduce the cost of college, but there are other ways as well. The college a student chooses can greatly affect the total cost. Not only are private schools more expensive than public schools but out-of-state schools are more expensive than in-state schools. Families are increasingly choosing colleges based... read more

The New Federal Student Loan Servicer Plan

If you’ve ever tried to navigate your student loan accounts, you’ll know that the system could use some improvements. Thankfully, an overhaul is underway and a new system should be available in 2019. Department of Education Secretary Betsy DeVos announced this week that the Federal Student Aid office is reimagining the servicer environment. The FSA’s Next Generation Processing and Servicing Environment will be a one-stop shop for student loan borrowers to manage their student loans. While the press release also announced the cancellation of a solicitation for a single loan servicer, the department is focusing on the servicing system as a full solution for now. The single servicing platform will house all student loans, no matter who services them. This means every borrower will go to the same account login page to access their loan accounts. This consolidation will simplify access to personal loan information and improve customer service.   Each component of the servicing platform (database housing, system processing, and customer account servicing) will be acquisitioned by separate companies, “which will allow for maximum flexibility today and into the future,” according to the department’s press release. Dr. A. Wayne Johnson said, “When FSA customers transition to the new processing and servicing environment in 2019, they will find a customer support system that is as capable as any in the private sector. The result will be a significantly better experience for students – our customers – and meaningful benefits for the American taxpayer.” This announcement came hours after a bipartisan bill was introduced to prevent the department from contracting with only one servicer. Elizabeth Warren, D-Mass., co-sponsored the bill... read more
Interest: The Silent Killer of Student Loans

Interest: The Silent Killer of Student Loans

When you think about student loans, what are your main concerns? Your total balance? Your monthly payment amount? How long it’ll take you to pay them off? What about your interest rates? According to a survey by LendEDU, 7.9 percent of students don’t know their interest rates on their loans. It makes sense; interest seems inconsequential next to larger numbers like the loan balance and monthly payment. Which number makes you more nervous, 5 or 35,000? When you hear horror stories about student loan balances ballooning, interest is often the culprit. So it’s in your best interest (pun intended) to learn everything you can about them so you can work with them. The Basics of Student Loan Interest First, federal student loan interest rates are set for the life of the loan. If you consolidate several federal loans, the new interest rate will be the average of the loans’ rates, no matter what the current interest rates are for new loans. The federal student loan interest rates are tied to the Treasury Department’s auction of 10-year notes each March. This year, the rates went up .69 percent, effective July 1 for loans taken out for the 2017–2018 school year. Interest accrues while you’re in repayment, but depending on the type of the loan, interest may accrue at other times. The following table outlines when subsidized and unsubsidized loans accrue interest. Some events in the life of a loan will trigger the interest to capitalize. That means all accrued interest will be added to the loan balance and will then accrue interest with the rest of the loans. The loan... read more
DACA Uncertainties Affect Prospective College Students

DACA Uncertainties Affect Prospective College Students

Student loans are easy for Americans to obtain, but it is much more difficult for DACA recipients to find funding for college. Though they are still encouraged to fill out the FAFSA, they are not eligible for federal financial aid. However, some states and colleges provide aid for DACA recipients. Deferred Action for Childhood Arrivals (DACA) is a program enacted in 2012 that protects immigrants who came to America as children from being deported. They are protected for two years at a time, at the end of which they can renew their application for continued deferment. DACA also gives approved applicants work visas. Due to the immigration climate in the Trump administration, many people fear DACA may be removed, regardless of Trump’s comments that he will “show great heart.” Though the administration claimed there was no policy change regarding DACA, a DACA recipient was deported in February and others were detained following the Trump administration’s moves on immigration. This puts into question whether Trump’s administration will “show great heart” or let it slide. Because of the uncertainty about whether DACA will continue to exist, lenders are increasingly hesitant to hand out student loans to DACA recipients. If DACA ceases to exist, the current recipients will lose their temporary work visas, which are necessary for them to pay their loan back. This makes lenders nervous about handing out tens of thousands of dollars to people who may not be able to pay them back. Some people are affected more than others. For example, Julio Ramos is a DACA recipient who has always dreamed of being a doctor. He applied to... read more
Private Student Loan versus Federal Student Loan

Private Student Loan versus Federal Student Loan

When getting loans for college, you can go two directions: federal student loans or private student loans. Some argue that one is always a better option than the other. But the truth is, they are both just options. There is no perfect solution for everyone when it comes to selecting which loans to get to help you through college. Sometimes students need both to cover all the costs associated with college life, including tuition, textbooks, housing and other living expenses, and other fees. Federal Student Loans Federal student loans come from the federal government. Anyone can apply for federal student loans by filling out the Free Application for Federal Student Aid (FAFSA). This application needs to be filled out every year you are in college. Besides generally lower interest rates, federal student loans have two major built-in protections for borrowers that can save them from slipping into default: Federal student loan borrowers are entitled to three years of forbearance time. During forbearance, borrowers do not need to make payments, but interest still accrues. Federal student loan borrowers have access to an income-driven repayment plan for student loan borrowers who need a lowered monthly payment. Those that qualify will typically be under financial strain and not able to maintain the high monthly payments that come with the standard repayment plan. Federal student loan borrowers who need to lower payments often choose to consolidate their loans first. Paired with income-driven repayment plans, this is an effective way to manage student loan payments. Private Student Loans Private student loans are issued by financial institutions; accordingly, benefits will vary from lender to lender.... read more
Student Loan Complaint Rate Increased 325%

Student Loan Complaint Rate Increased 325%

This last year consumer advocates have been on a warpath regarding student loans, setting their sights on loan servicers. Just this year the Consumer Financial Protection Bureau (CFPB) began the process of suing one of the largest student loan servicers: Navient. With the CFPB so prominently in the news lately, it was only a matter of time before the number of complaints submitted to them would skyrocket. On April 1, the CFPB released their monthly complaint snapshot, showing a 325% increase in student loan complaints received in a year-to-year comparison of just three months. From January 2017 through March 2017 the CFPB received 3,284 complaints about student loans, compared to 773 from January 2015 through March 2016. The CFPB has noted that the spike in student loan complaints may be because of the awareness of loan servicer issues, specifically tied to CFPB suing Navient. The report shows that Navient was the most complained about company, jumping from tenth most complained about in the previous month’s report. The number one complaint had to do with student loans, followed by debt collection — by a large margin. After these past three months, Navient now has a complaint total of over 12,000. “The agency’s lawsuit against Navient was a wake-up call to many borrowers that they too may have been preyed upon by the company’s illegal conduct,” said Rohit Chopra, a senior fellow at the Consumer Federation of America, and student loan ombudsman for the CFPB. Most of the complaints from the snapshot were issues with credit card companies, which remains the nation’s highest debt. Wells Fargo showed an increase of approximately... read more
Consolidation versus Refinancing

Consolidation versus Refinancing

There is a lot of confusing jargon in the world of student loans — it’s hard to keep track of it all. There are a couple of terms that often get mixed up and could cause you, the borrower, a serious headache. The word consolidation can mean different things in different contexts. Some people simplify and define consolidation as combination. Combining loans to create a single monthly payment can be a good option to lower payments (but not always, so do your research first). To get more specific, combining loans is different for federal loans and for private loans. When you combine federal loans it’s called consolidation, and when you combine private loans, it’s called refinancing. The differences are outlined below. Federal Consolidation Only federal loans are eligible for federal consolidations. These consolidations are completed through the government. A federal loan consolidation combines all the selected loans into one with a single loan servicer, which you can choose from a list. You will be given a new interest rate that will be the average of all the interest rates of your loans. Generally, you don’t need to consolidate. Though it is a tool that can help simplify your payments if you have more than one loan servicer. Refinancing (Private Consolidation) All loan types are available for refinancing. Some people refer to refinancing as private consolidation. Really what you’re doing is having someone buy your loans, similar to when you refinance other loans like auto or home loans. Your account transfers to the new lender, the term starts over and you make payments to the new lender. Refinancing your loans... read more

Rings Commit Student Loan Fraud

A new report from the Inspector General for the Department of Education shows that large and well-organized ring of fraudsters are creating fake student profiles and applying for student loans, working primarily through online education providers. The problem is made worse by many online education outlets not properly reporting attendance and enrollment to the Department of Education. Sometimes the fraudster commit student loan fraud through creating “straw students”, completely fictitious profiles of non-existent persons. Other times, they take out student loans in names of real people who later find out that they were targeted when their finances take a hit due to unpaid student loans that they never applied for or received. If you have student loans, be sure to check periodically to see if there is unusual activity on your student loan records to protect yourself from student loan... read more

8% of Congress Carries Student Loan Debt

It may come as a surprise to you that 47 members of Congress currently have student loan debt. Even if the percentage of members with student loan debt is small, at 8%, their average debt is nearly $70,000 per person. 28 Republicans and 19 Democrats are on the list, but Congress itself right now leans Republican so the number of Republican student loan debtors only leans slightly Right. While in the average American population about 13% of people have some student loan debt, the lower number in Congress is high, considering that the average member of Congress is much older that the general population and much wealthier. We often imagine that Congress’ complete inaction in dealing with the student loan debt crisis comes from their separation from the day-to-day issues of most Americans, but for at least 8% of Congress, student loan debt is very real. More information about which members of Congress currently have student loan debt and how much are at... read more