Tag: student loan repayment

College graduation season is upon us, which means that soon students will need to start repaying their school and education loans.student loan repayment

Here are some tips to help keep you on track as you start to pay back your loans:

Make sure your information is up to date. You need to inform your lender as soon as possible if any of your personal information changes like your address, name, etc.

Save all your paperwork. Keep all your student loan paperwork and information organized. Start a file or folder where you can keep everything. Read everything that you receive in the mail or online! If you don’t understand something, make sure you ask your financial advisor or call the loan lender.

Make a payment plan. Decide how you’ll pay for you loans. Most lenders allow students to make payments several ways like online, over the phone, by check, or having it automatically deducted from their checking account each month. To avoid penalties for late payments chose the same day each month to pay your loan off. Write it down in your planner or calendar.

Check your student loan account online. Most lenders will offer students online access to their student loan accounts, so you can check the balance of your loan, see when payments are due, and make sure your payments went through. Regardless of the way you have decided to pay your loan bill, you will be able to easily check your account if anything comes up.

Ask questions. Student loans can be confusing, so don’t be afraid to ask questions if you don’t understand something. Ask your parents, financial advisor, bank, or loan lender for help or clarification with your student loan.

Make sure you pay your loans on time! There are consequences if you are late on your loan payments.

To learn more, please read: What Happens If You Default On Student Loans

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Have you ever felt like you watched a paycheck come in one door and go out another before you could say “savings account”? Well, the beginning of the new year is an excellent time for advice on saying “hello” to more money and saying “goodbye” to burdensome debt. So, we looked around for just that kind of advice. Here’s what we found:

In the Boston Globe, personal finance guru Suze Orman listed her Top Money Tips for 2010. Check out this advice on saving money, paying cash for purchases, understanding mortgages, preparing for being laid off, and finding career paths for prosperity.

Favorite quote from this article, re: finding a job:

“You should go into a field where you really want to spend the rest of your life. If you can just do what you want to do and you can be the best at what you want to do, better than anybody else out there, you will create a job for yourself. Just because there’s a job market out there this month or next year in an area, it doesn’t mean it will be there a few years from now—look at the car industry.”

And at Bankrate.com, Steve Bucci provided 10 Ways to Dump Your Debt in 2010. Considering that the Class of 2008 carries an average of $23,200 in student loan debt (and often far more than that), any practical and effective advice on how college students and graduates can start eliminating their student loan and credit card debt is a step toward a brighter future.

Welcome to the last year of the first decade of the new millennium!

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financial aid for collegeWhat do you want to know about financial aid for college? Considering the country’s economic turmoil in 2009, EducationGrant.com certainly picked a good year to launch a college financing blog. Not surprisingly, the posts that attracted the most readers were those that focused on how to get scholarships and grants.

Here are the top 5 EducationGrant blog posts of 2009:

1. Single Mom Scholarships

2. 10 Scholarships for Women

3. Pell Grant Application Process

4. Financial Aid for Single Mothers: Grants

5. Student Loan Forgiveness

With the latest numbers on average student loan debt rising to $23,000, the demand for scholarships and grants and a better financial aid system will surely be intense in 2010. No one has all the answers to the question of paying for college, so EducationGrant.com invites readers to share their personal experience, ideas, and suggestions with each other and the entire EducationGrant community next year.

We’ll be back on Monday, January 4th. Best wishes for a safe and happy New Year holiday.

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How to Check Your FAFSA Loan Status

NSLDS2The National Student Loan Data System (NSLDS) is the U.S. Department of Education’s online mega-database of federal financial aid accounts. This database keeps track of all federal student grants and loans (Title IV financial aid) awarded to students through the FAFSA program, including FFELP and Direct Lending student loans.

The information about all these student loans comes from the institutions that loaned or manage the money awarded to borrowers via the FAFSA, including banks, financial institutions, loan guaranty agencies, individual schools, and the U.S. Department of Education (Direct Loans).

The National Student Loan Data System provides you with a convenient way to check on the status of your FAFSA loan yourself, without having to go to a physical location or wait in line or on hold to speak to a bank teller or customer service rep. By logging in to the National Student Loan online database, you can see what your loan status is 24/7 and find information such as:

  • the FAFSA grant and loan amounts you were awarded
  • how much money was paid out to you or your school, and when
  • what your FAFSA loan’s outstanding balance is
  • whether you are up-to-date or falling behind on any required interest payments or loan repayments

You’ll need a FAFSA PIN (Personal Identification Number) to check your FAFSA loan status at the National Student Loan Data System site. If you filed your FAFSA online, you already have a PIN. If you mailed in a paper FAFSA, you’ll need to get a PIN before you can check your account status.

You can find more information about getting a FAFSA PIN and checking your FAFSA loan status on the Frequently Asked Questions (FAQ) page of the federal Student Aid website.

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How does the Income-based Repayment Plan work?

In a standard 10-year student loan repayment agreement, your monthly payment is calculated from the total amount you borrowed and the applicable interest rate applied over 10 years.

By contrast, under the income-based repayment program, your monthly payment is calculated from your Adjusted Gross Income (AGI) using a federal formula that adjusts for family size. The resulting amount is then divided by 12 to produce a consistent monthly repayment

Advantages of the Income-based Loan Repayment Plan

  • Pay as you earn: Your IBR payment is calculated so you can pay off your student loan without draining your budget. Your monthly payments will likely be less than 10% of your income and will be capped at 15% – usually less than the amount you’d have to pay under a 10-year standard repayment plan. (If your IBR repayment turns out to be higher than what you’re paying under the 10-year standard repayment, then your lender may recommend that you stay with your original repayment agreement.)
  • Don’t worry about loan interest for three years: If your IBR payment isn’t enough to cover the interest that accrues on your subsidized Stafford loan (either Direct Loan or FFEL), the government will pay your unpaid interest for up to three consecutive years. After three years, and for grad PLUS loans and consolidated loans, the accrued interest will be added to the loan principal only after you’re no longer is eligible for an IBR repayment amount.
  • Longer repayment period, and loan cancellation: The loan repayment period for the IBR plan is 25 years (more than double the standard loan payment period). If you meet your IBR plan payments and obligations over that time, whatever loan debt you have left will be cancelled outright.

Drawbacks of the Income-based Loan Repayment Plan

There are also a couple of drawbacks to keep in mind when you evaluate the income-based repayment plan. One is financial, one is a matter of convenience.

  • You may pay more interest over the long run. The faster you repay a loan, the less interest you pay; the longer you take to repay, the more interest you pay. Since the IBR plan will extend your repayment period, you’ll owe a lower monthly payment but you’ll pay more total interest over the life of the loan.
  • More paperwork to do. To determine your IBR payment amount each year, your lender will ask you to provide updated information about your income and family size every year. If you don’t provide your lender with this documentation on time, your payment will revert to the standard 10-year repayment amount.
  • IBR Plan may not benefit you if you’re married and file taxes jointly. Because of a poorly written rule in the program, the income of both spouses is counted as total income for the purposes of determining monthly affordability, even if there’s only one student loan to repay. This is rule will likely be changed in the future, but is in effect for the first year of the IBR plan.

The Project on Student Debt has a good FAQ section on the Income-based Repayment Plan.

How do you sign up for the Income-based Loan Repayment Plan?

Contact the financial institution you got your student loan from. Your lender will confirm your eligibility for the IBR program and calculate your final income-based payment for you.

Examples of Income-based Repayment Plan amounts by income

Source: U.S. Department of Education

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