Student Loan Forgiveness News & Information

Borrowing to Pay Off Student Loan Debt

Now that the student loan debt has reached an average of $33,000 for students that graduated in 2014, some are using creative methods to bring it down. So what are some of the ways in which students are borrowing money to knock their student loan debt down? Here’s a look at some of the ways. Home Equity Loans With the housing market still trying to rebound from the bubble bursting, interest rates are becoming much lower on home equity loans. For this reason, some students have been able to receive a home equity loan to completely pay off their student loan and take advantage of the low rates. However, this can be a large risk since home equity loans aren’t as easily forgiven as a student loan and the payments each month can be much higher. Always consult a financial expert before using this route. 401k 401k borrowing can be easy, but it’s not advised that you empty it out so early in your life to pay off a student loan. It’s easier to leave the money in the 401k so that it continues to grow and you will be taxed for taking out any amount as it counts as income. Personal Loans Some have received offers for a private loan in which their interest can be lower than even that of a Federal Government loan. It’s rare to see unless you have tremendous credit, but it’s possible. Again, a student loan has more of a chance for being forgiven if you work in some of the right fields. Others have even asked their friends and family with extra... read more

Using A Student Loan Calculator to Determine What You Need For College

There are many great tools on the internet that can show you how much you need for scenarios such as a mortgage or college. Using the student loan calculator, you can determine how much exactly you will need to borrow. This is a great option so you don’t end up over borrowing and getting deep into debt. So let’s look at the student loan calculator to determine an example of how much you might actually need for school. We’ll start with a job income. If you are able to get a part time job in which you make $5,000 that is a terrific start. Let’s also assume that the parents are able to spend $2,000 a year for tuition (this number can vary greatly). Add in another $1,000 through scholarships and grants to the student loan calculator. If you also have $1,000 in savings through high school work or graduation gifts, that can also make a big dent. Let’s use the number of $9,500 to determine the average public school costs for an in-state student when it comes to tuition and room and board. If you are able to live on-campus, his can save you a lot of money on bills such as internet, television, electric and more. Book costs are on the rise as well, so let’s assume you need $600 per year for those. Also, you will need spending money for gas (let’s use $500 for one year) and insurance (around $1,500 per year). Lastly, we will throw in $1,000 a year for other additional expenses (such as clothes, off-campus food, etc.) If you have exhausted every... read more

Why the Standard Student Loan Repayment Plan is Best For You

When it comes to student loan repayment, there are many options available. With the other plans differing from the Standard student loan repayment greatly, it’s important to know the difference. Now before explaining why the Standard plan is the best for student loan repayment, this is not the best one if you are working in public service. If you do work in public service for 10 years, your loan can be forgiven so an income based plan is best. The reason why the Standard repayment plan is best is because of the total amount that you will be saving during the student loan repayment process. Since the Standard plan allows you to finish paying off your student loan in exactly 10 years (in 120 payments), it’s the shortest lasting of all of the plans. However, it can come at a cost. Since the minimum payment is highest through the standard repayment plan (at least to start), not everyone is able to afford it. If you can afford the amount every month that the minimum has been set at, then you should go with this option. In the end, it will save thousands of dollars compared to the other student loan repayment plans such as the Graduated plan and income based ones. The student loan repayment process may be even shorter if your minimum is below $50. Since the minimum monthly payment has to be at least $50, you can finish paying off through the Standard plan in less than $10 years. Even if the 10 years is too short since it makes the payments higher, you can also extend... read more

Benefits of Student Loan Consolidation

Borrowers that have entered into the repayment portion of their student loans are given the option of consolidation. It’s a fine program that fits for many people for quite a few reasons. So what are the major advantages of being able to use student loan consolidation? Let’s take a look. Interest Rates Can be Lowered There are certain loans available through the Federal Government that have variable rates. If you are able to add one of these variable interest loans into your consolidation, then that loan will no longer be variable. In addition, consolidation has a cap on interest of 8.25 percent, and PLUS Loans tend to be higher than that even, so you’re automatically saving money if you add one. One Payment While it is not the most difficult thing to make multiple payments each month to different student loans, consolidation makes your life a bit easier. Instead of the tedious approach of three or four different payments, you now only have to make one. The best part about that is the fact that the minimum payment can be lower on your consolidation than the combination of the loans when they were separate. More Repayment Options Since each individual loan only accounts for the balance and your income, you may not be able to be eligible for an Income Based Repayment Plan through loans that are not in consolidation. Since the balance will be much higher while in consolidation, you are much more likely to be able to use this method. You can also use a graduated repayment plan or an extended plan if you are in need... read more

Obama Signs “Student Aid Bill Of Rights”

Today President Obama announced that he has signed a “student aid bill of rights” memorandum of a series on directives to the Department of Education and other federal agencies to help with student loan repayment programs and “improve the manner in which the federal government interacts with students”. President Obama made the announcement at Georgia Tech in Atlanta on Tuesday March 10 during a presentation to the university’s students. Part of the directives in the memorandum concerns student loan lenders and their responsibilities regarding customer service, repayment options and full disclosure of government lending programs that are available to their borrowers. The White House also released statistics on the state-by-state numbers of outstanding student loans. During his speech President Obama announced that the average student borrower “graduates with about $28,000 in student loan debt.” The directives in President Obama’s memorandum do not require congressional approval. Previously, the President had proposed other initiatives to relieve the pressure of borrowing for college, including offering qualified student 2 years of free community college but those initiatives have been stalled in Congress. We at AFBC applaud any and all programs that help relieve the burden of student loan debt and we look forward to seeing these programs and what they offer to student loan borrowers. You can be assured that once these programs become available, we will work tirelessly to make them available to our prospective... read more

Quick Guide to Getting Student Loan Forgiveness

It is possible to achieve student loan forgiveness that will cancel out the amount that you have on your loan balance. So how can this be done? Here is a quick look from American Financial Benefits Center on how to accomplish this. -Closed School Discharge If your school is closed while you are still attending, then you can be given student loan forgiveness. This would cause you to be unable to complete your program, thus the forgiveness. -Total and Permanent Disability Discharge In the event of a disability that leaves you unable to work, the Federal Government grants student loan forgiveness. The disability needs to last for at least five years to effectively forgive the loan. -Death Discharge Any borrower that has passed away will not have their family responsible for paying the rest of the loan. -Bankruptcy In rare cases, student loan forgiveness can be granted in a bankruptcy case. This should not be expected to work, but for some people it has. -False Certification If you weren’t eligible for student aid but your school certified that you were, you will no longer have to pay for the rest of the loan. This is also another rare example, but it can still happen. -Unpaid Refund In another case of fraudulent action by a school, this can also be grounds for student loan forgiveness. If the school does not issue the refund to the borrower, then the borrower is off the hook for the loan. -Teacher Loan Forgiveness In certain areas of the country where teachers are in great need, receiving a degree and getting a job in the... read more

Using a Student Loan Repayment Calculator to Determine Your Income Needs

When students use a student loan repayment calculator to determine how much they will be repaying back on their student loans, they typically only look at the minimum amount. That’s fine if you are only able to pay the minimum but some students that graduate are fortunate enough to get a well paying job right out of college. So using the loan repayment calculator, how much will you have to make each year to be able to afford the monthly payment? Let’s take a look at a couple of different scenarios and how the loan repayment calculator determines this number. Let’s say that you were able to get out of college with only $10,000 in student loan debt. If you have the standard interest rate of 6.8 percent, you should be just fine. The minimum is always $50 or more, and in this scenario it is $115.08 for a 120 month period. According to the loan repayment calculator, you will need to make at least $13,809.60 annually to be able to spend 10 percent of your gross income on your student loan. For those that can devote 15 percent, you will only need to make $9,206.40 per year. That’s really not enough to live on, but that’s the minimum to devote to the minimum payment, not bad right? Now let’s see what happens when you have the average student debt in 2014 of $33,000. This is where it gets a little tricky. For 10 percent of your income to be devoted to paying student loans, you will need to make $45,572.40 per year before taxes to make the minimum... read more

Federal Government Keeps Student Loan Servicers on Contract

In a recent release by the Department of Education, it was announced that the contracts for multiple student loan servicers in the United States have been extended. This includes the largest company, Sallie Mae, as well as Great Lakes Loan Servicing and Navient. Navient is currently the third largest of the student loan servicers with over $160 billion in student debt currently being serviced. They have been criticized for their treatment of military borrowers and high fees, but they also have the lowest default rate of servicers. Great Lakes Loan Servicing currently handles over 10,000,000 borrowers in the United States and has guaranteed the Federal Government over $50 billion in student loan debt, so this is a big win for them. Sallie Mae currently sits at the largest with more than $180 billion in debt for even more borrowers than Great Lakes Loan Servicing. Also included in the contract extension were Nelnet Inc. and Pennsylvania Higher Education Assistance Agency. The contract extensions came as a result of Barack Obama announced that the nation was in need of new refinance policies that would give students a better chance at paying back their student loans and avoiding default. The plan to allow for better refinance options is an important subject for Americans as there is now over $8 billion in default over the span of over 800,000 different borrowers. This has not gone over well with some of the members of the House of Representatives who have noted that Sallie Mae continues to be a problem for the Federal Government. It will be interesting to see the direction that loan servicers... read more

What Is Debt to Income Ratio?

One of the terms you will see as a student loan borrower is Debt to Income Ratio. You will also be seeing this same term if you are buying a home as it can affect your mortgage amount and interest rates. So what is Debt to Income Ratio? There are actually a couple of answers that we can look to. Front End Ratio The first example of Debt to Income Ratio is Front End Ratio. this is directly related to how much it costs to pay towards a house each month. If you rent a home, then the amount of rent is your Front End Ratio. Those that own a home have principal, interest, insurance premiums, property tax and homeowner dues. Back End Ratio If you have a debt that has a monthly payment that occurs each month, this would fall under the Back End Ratio of Debt to Income Ratio. These types of monthly payments can be credit cards, student loans, car payments and anything else due each month. So What Does It All Mean? To determine what your Debt to Income Ratio would be, you will need to find the percentage of your income that goes towards the Front End and Back End Ratios. Let’s take a look at an example. If you are looking at a lender who will only initiate a loan if you have a Debt to Income Ratio of 30/36 and you make an average of $4,000 per month, it’s time to do some math. You would multiply the $4,000 by .30 for the amount you’ll be able to pay for housing. This... read more

Consequences of Student Loan Default

One of the leading problems in the United States when it comes to student loan debt is defaults. Debt collectors are scrambling these days to try and receive money from students that have gone into default. To avoid debt collectors from bugging you, stay current on your student loan. Here is what can happen if you go into default. One Payment is Due Instead of having the luxury of paying a small monthly payment one at a time, your entire balance is due immediately. Nobody can afford that payment. Loss of Eligibility Not only can you no longer receive financial aid while in default, but you also can’t use a deferment or forbearance on your balance. Credit/Collections Having your student loan acquired by debt collectors is a huge red flag on your credit history. This can affect many different things such as trying to purchase a home or car, or even trying to get a job. Your Money is Withheld Unless you can work out an arrangement, you will have money withheld from you. Not only does this mean that your income will be garnished with each paycheck, but you also won’t get a tax return until the entire debt is paid off. The standard amount is 15 percent of each paycheck, so you want to avoid that. More Due With a student loan that is up to date in payment, there aren’t many fees other than interest. However, if it reaches a debt collectors hands then there are going to be a multitude of fees. Late fees, collection fees and even more interest than there was before. If... read more