Stop Sending Your Student Loan Payments To The Direct Loan Servicing Center

Posted on August 1, 2014 by:

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Three blue mailboxes in front of brick building

Make sure you mail your payments to your loan servicer, not the Direct Loan Servicing Center.

It can be hard to keep up with what’s happening in the student loan industry, but policy changes can sometimes mean the difference between paying off your loans on time and facing a delinquent status.

Fortunately, the SALT™ Blog is here to keep you up to date in the world of student loans, including a big change affecting Direct Loan borrowers.

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The Department of Education (ED) has been transitioning away from its Direct Loan Servicing Center for nearly a year now.  On June 30, after many communications to affected borrowers, they shut down the mailbox that had previously accepted payments for those borrowers serviced by that particular center. Despite these communications, we hear that many people continue to send their student loan payments to this particular mailbox. This may not seem like a big deal, but sending your payment to the wrong address could mean that your loan is not paid on time—and that has serious consequences. If you have been sending your payments to P.O. Box 530260, it’s time to stop.

Any payments sent to that mailbox will be returned, but if you sent it too close to your due date, you may not get it back in time to send to the right servicer’s address. As a result, your account could become delinquent—even though you had the funds to make your payment and tried sending it on time. Not good, since delinquency can result in late fees and affect your credit rating.

Fortunately, there’s a pretty easy fix. If you’re making your own payments, just start sending them directly to your servicer’s payment address. If you use a bank or bill paying service to pay off your loans, let them know your servicer’s name and payment address.

But what if you don’t know exactly where to send your payment? Check the mail you’ve received from your loan servicer, and you’ll find their address. You can also look up your loan servicer’s address in the National Student Loan Data System (NSLDS®). You can find other contact information for loan servicers here.

Have a question about where to send your student loan payments? Let us know in the comments.

(Photo: Pixabay)

August Scholarship Of The Month: The Clubs Of America Scholarship For Career Success

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A great essay about your plans for the future could get you this month’s scholarship.

Let’s face it: It’s August, you may be getting tired of your summer roommates, and you’re likely looking for something to do before heading to school. Let me help you take advantage of that spare time by presenting you with the Clubs of America scholarship.

I mean, what better way to get into the new school year spirit than by applying for a scholarship?

***

As you know, I’m a huge fan of scholarships that are simple, open to a lot of students, and have a reasonable award. This scholarship has it all.

Also, after speaking with a representative from the company (see below), I get the feeling that the judges genuinely care about the stories and aspirations of their scholarship applicants. Why is this important? I like knowing that if I put effort into my scholarship application, someone will actually take notice.

My advice? Work hard on your essay/video submission for this one. The organization seems truly interested in students that can share their story, be creative and fun, and have big goals for their future. If you can capture all of that in your essay, then you stand a good chance of winning.

Good luck!

Website: Clubs of America Scholarship for Career Success

Award Amount: Up to $1,500

Number Of Awards: 1

Deadline: August 31

Eligibility Requirements:

  • Must be a current student
  • Must be attending an accredited U.S. college or university (2 or 4 year)
  • Must have a cumulative GPA of 3.0

Q&A With The Clubs Of America Scholarship For Career Success

Q: Tell us about your motivations to start this scholarship program.  

A: Clubs of America is a gift company, and we launched our scholarship program to give back. We want to help and inspire students in expanding their education and ease the burden of rising tuition costs.

Q: What are you looking for from an ideal candidate? 

A: A motivated candidate that has passion about what they are pursuing. Any current student of an accredited U.S. college or university with a cumulative GPA of at least 3.0 is welcome to apply.

Q: What is the biggest mistake you see applicants make when applying for your scholarship? 

A: An essay that too generic. Some essays come in too much of a canned presentation like, “I would like the scholarship because I want to be a _____.” We are seeking a specific passion on “why” they are following this career path. Is it because one of their parents was in this same career? Is it something they wanted to do since they were little? Why are they truly interested in this path?

We are seeking uniqueness, passion, and a student that thinks outside the box.

Q: What are some characteristics that make an applicant stand out? 

A: Creativity and aspirations to reach their career goals in reaching for something they see themselves enjoying in their career.

Q: Do you have any general advice for the students who are applying for this award?  

A: Think outside the box, and reach for the stars in your education and career goals!

Find even more scholarship opportunities in our post on Upcoming 2014 College Scholarship Deadlines.

(Photo: jafsegal)

How To Choose The Right Private Student Loan For You

Posted on July 28, 2014 by:

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John Wayne can’t help you through the Wild West of private loans, but SALT™ can!

With many fall semester bills due on August 1, you may currently be looking for ways to cover your remaining tuition balance. And you may be considering private student loans for the job.

Unfortunately, when it comes to borrowing private student loans, things are as unruly as the Wild West—except there’s no John Wayne to make the tough decisions for you. So, before you sign the dotted line, here are some tips to help you choose the right option for you, pilgrim.

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1. Be Sure A Private Loan Really Is Your Best Option

Before navigating the waters of the private student loan market, make sure that you exhaust all the other options you may be eligible for: grants, scholarships, federal student loans, etc.

(Did you look under the couch cushions yet? I’ll wait.)

2. Know Your Interest Rates

Your loan’s interest rate will predominantly determine its overall cost, but don’t just jump at the lowest advertised one.

Many lenders claim “rates as low as X%.” The only way you get a rate that low, though, is if you or your cosigner has nearly perfect credit. You will need to apply to find out what your actual rate is.

Don’t be afraid to shop around for the best rate that you qualify for—just try to do so in a small window of time (2 weeks or less). That way, all the hard inquiries into your credit won’t affect your credit score as much.

Pay attention to whether the rates are fixed or variable, too. Even if it has a cap, a variable rate that starts low can increase significantly over time, costing you a lot of money. Don’t get caught off guard.

3. Read The Fine Print For Costs And Benefits

There are other loan costs than just interests. Many lenders also charge an origination fee, which deducts a percentage of your total loan before it ever gets disbursed to your school. Try to stay away from loans with these or other fees. If you can’t avoid them, go for options that have the lowest fees you can find.

Also, see if the lender offers postponements (deferments or forbearances) if you are having trouble making payments. And find out if they’ll discharge your loan if you become disabled. Most private student loans may not offer options like these, but if they do, that could make them worth your while.

Finally, if someone is cosigning your loan, see what options they have. For instance, a cosigner release is a great selling point if he or she is on the fence about cosigning with you. This release is sometimes offered after 48 months of on-time payments.

4. Do Your Research

Borrowing a private loan is like entering into any new business arrangement—you should be aware of whom you’re working with. You don’t want to wake up to find that your loans aren’t being handled how you had expected.

Visit the Better Business Bureau (BBB) and the Consumer Finance Protection Bureau (CFPB) websites to learn about the lenders themselves. The BBB has business reviews and records of complaints against companies. The CFPB compiles reports on private student loan lenders’ practices and gives helpful information about the types of complaints received about each.

You should steer toward lenders that have good customer service, fewer complaints, and will be around for the long haul. Consider a student-friendly lender who specializes in student loans before Joe Shmoe Bank that just opened in the old Blockbuster building down the street.

5. Seek Guidance

Don’t be afraid to talk to your financial aid office about your options—they’ll likely know choices you may not be aware of. For instance, many states have agencies that offer private student loans. You may also be eligible for state-sponsored alternative loans, which are usually offered to students who are residents of that state or attend school in that state. Either way, you won’t know unless you ask.

Do you have a private loan? What do you wish you had learned before you borrowed?

(Photo: Wikimedia)

Can You Discharge Federal Or Private Student Loans Through Bankruptcy?

Posted on July 22, 2014 by:

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Brown cat in wires of desktop computer

Piglet gets away from the vacuum by hiding behind the computer. You may not have as easy an escape route from your loans.

Helping people understand student loans is our job at SALT™, and few are better at it than Betsy Mayotte—the director of regulatory compliance for American Student Assistance®(our parent company). We told borrowers to “Just Ask” her questions, so check out her answers below (as well as her cat—because if Piglet can’t make student loans better, what can?).

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Discharging Loans In Bankruptcy

I have Sallie Mae as my loan company, and [my loan] is through the U.S. Department of Education. Is this considered a private loan or federal? If I filed for bankruptcy, would it be possible to discharge this loan? I am unemployed, and I have no money to pay my debt.

Regardless of whether you have a federal or private loan, I’m afraid it is likely not eligible for discharge through bankruptcy—as education debt can only be discharged in cases of long-term and extreme financial hardship. Therefore, you’ll want to examine all your debt carefully and talk to a professional before deciding that bankruptcy is right for you.

The good news is that it sounds like you have a federal loan, which means you have many other repayment options available without declaring bankruptcy. First, ensure you are currently utilizing an unemployment deferment to prevent your loan from going past due while you seek full-time employment. Once you find full-time work, if the payment amount is not affordable, look into one of the many lower payment options available for federal student loans. Income-based repayment is an option that will actually adjust as your income does to ensure the payments stay affordable.

Please let me know if you have additional questions.

Paying Off A Tuition Balance

I was just informed that my school will not let me attend classes this fall unless I pay a balance of $4,000 that I owe from last year. How do I get a student loan to pay for this?

I’m afraid that schools can only approve federal student loans before the end of the period of time they will cover, so those won’t be an option for you. Some private student loans will allow limited funds for past due balances not more than 6 months or a year old for students still enrolled at the school. Your school should be aware of lenders that work with them for this purpose.

Another option might be to request a payment plan and pay the balance off over the school year. It may mean getting a part-time job, but if you are able to swing this and the school allows it, you’ll likely be able to pay the amount you owe with little or no additional interest.

Have a student loan question you need an answer to? Just Ask.

(Note: The questions and answers above are real; however, they have been edited for grammar and clarity, but not by Piglet.)

Money-Saving Ideas For Furthering Your Education Post-Undergrad

Posted on July 21, 2014 by:

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Four cupcakes with white and brown frosting and decorations of a pencil, a chalkboard, a book, and an apple.

Going to graduate school is a sweet move—if you have a way to pay for it.

I have been job searching since graduating. Now, I’m feeling the pressure to find work from my parents, but more so from my wallet—thanks to student loan payments kicking in.

I’ve begun weighing options that can help me land work, including going back to school. But, with a tight budget, furthering my education seems hard. So, I rounded up some less common ways to keep learning post-undergraduate without completely breaking the bank.

If you’re in the same boat, check out this quick information to see if these options may work for you.

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1. See If Your Work Will Pay For It

If you have found a job, check out if they offer any compensation for post-graduate courses. Your work might pay for your higher education for a number of reasons, like the skills you’d gain would be in their best interest or they simply offer this benefit to their employees.

Employers can pay for your schooling in a few different ways, including paying up to a certain dollar amount, paying an amount based on your GPA, or just paying in full in general. Ask your employer if they offer this, and find out how their compensation works. Be ready to negotiate if they have any flexibility.

2. Get A Certificate Or License Instead

Furthering your education doesn’t always have to be about getting a degree. Degrees can cost tens of thousands of dollars. However, you may be able to achieve your educational goals without one. Not all jobs require a degree—you’d be surprised what professions require only a certification or license.

As I’ve previously said, I am interested in working for a book publishing company. The jobs I want don’t require additional education; however, getting a certification would put me above other applicants.

Someone who previously worked in the publishing industry told me a certificate was just as good as a master’s in the field—at a fraction of the cost. I might be able to get a certification for around $3,000, while going for my master’s could cost over $20,000.

3. Join The Military

Although each branch has its own way of paying for your schooling, many times the military will help you pay for continuing your education. Another bonus from joining the military is that as long as you and your loans qualify they could help you pay your student loans as well. SALT™ has a great eBook that covers the financing options available for service members, veterans, and their families.

Of course, be sure that you don’t enlist just to further your education or to get help paying back your loans. Do your research before you sign up. Remember, you are serving your country and could be moved around a lot, depending on the branch and your job in the military.

4. Volunteer With Peace Corps/AmeriCorps

Volunteer opportunities like the Peace Corps and AmeriCorps can provide financial aid and scholarships to further your education. Unfortunately, from what I can tell, it seems most times you need to have been a previous volunteer to qualify.

On the bright side, this information is very useful for previous volunteers or college students planning to volunteer. Further research for other volunteer opportunities that offer some sort of funding for higher education might be required.

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Hopefully, this information will help you save some money if you decide to continue your education for a graduate degree. There are probably even more options, so be sure to do your research and decide which is best for you.

Know of any other ways that you can save money while pursuing higher education? Tell us in the comments!

(Photo: clevercupcakes)

4 Surprises You Could Find When Looking Up Your Student Loans

Posted on July 11, 2014 by:

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Brown dog in front of laptop

This is what Courtney looked like when NSLDS told her she had multiple loans.

There’s something you should know about me and my financial aid application process. Both my parents studied accounting in college. They’ve both done taxes for a living. Because of this, when my mom offered to fill out my FAFSA, I said YES. Leave it to the expert! No monotonous form-filling-out for me!

I’m starting to regret taking the easy way out.

***

When I told Ryan that I didn’t know a lot about my student loan situation (just that I had one), he suggested I check out NSLDS®. NSLDS, or the National Student Loan Data System, is a government website that holds information about students’ federal loans and grants.

I figured I would just see my one student loan when I logged in, but that’s not what I discovered. Here are four surprises I found:

1. You Need A PIN To Get In

To access NSLDS, you need the PIN you used to sign the FAFSA; I had no idea what this was. I guess it may have been helpful to at least look over my mother’s shoulder while she filled out the FAFSA.

As fun as it has been to be blissfully unaware of my financial aid situation, it’s time to be independent. I don’t want to be completely reliant on my parents for my PIN or any other financial information.

Lesson learned: Whether or not you’re the one filling out the FAFSA, you’ll need that PIN throughout the life of your loans, so pick one you can remember. If you or your parents can’t recall it, you can easily retrieve your PIN online.

2. One Loan Can Look Like Three Loans (Wait, No …)

After consulting my mother for my PIN, I log on to NSLDS and see three unsubsidized Stafford loans. Wait … three? I thought I only had one, and its amount increased each year. Is it time to panic?

Here’s how unsubsidized Stafford loans work: Freshman year, I got a base amount plus some more unsubsidized funds. Each year since, I got a different loan with a different interest rate and a larger base amount. I’m on track to graduate next year, which means I’ll have four student loans in total—not one.

I know how much money I owe; I just didn’t realize how it was split. NSLDS confirmed the amount I have to pay back, so if you aren’t sure how much you owe, visit NSLDS. If you think you owe a certain amount, and NSLDS says you owe significantly more, that’s definitely something you should look into.

3. The Interest Really Piles Up

Because my loans are unsubsidized, I have to pay all the interest that accrues on them—including during my time in school. NSLDS is kind enough to show how much I’ve accumulated thus far, and yep, the interest on my loan from freshman year is pretty hefty.

For unsubsidized loans, it’s especially beneficial to start paying off your debt while you’re in school—before the interest gets added to your loan’s balance (and you get to pay interest on top of your interest). So, the more you pay now, the less you have to pay later.

4. Your Parents May Not Know Best

Logging on to NSLDS was an eye-opening experience. While I knew roughly how much I owed, seeing the exact number reminded me of the work I have to do to pay it off. Finding out how much interest my loans have accrued made me want to start repaying now.

That being said, I could have gotten a head start if I had been more involved in my financial aid process. I’m grateful for the help I got, but I wish I had tried to fill out the FAFSA by myself and paid more attention to the loans I received.

If you’re like me and you’re not totally comfortable filling out financial paperwork on your own, it’s worth sitting next to your parent while they do. You’ll pick up some useful information, and next time you’ll have a better chance of completing these forms on your own.

If your FAFSA days are over, you can still take control of your loans. Log on to NSLDS and see what your debt looks like. You can even add your loan info directly to SALT™. Once you know what you’re facing, you’ll be able to make a repayment plan and tackle your debt.

Did you find anything surprising when looking up your student loans? Tell us in the comments!

(Photo: My Name Is Gigi)

Upcoming College Scholarship Deadlines: August 2014

Posted on July 8, 2014 by:

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Red sneakers on grass

Lace up your sneakers and apply for a scholarship this month.

August is historically a slow month for scholarships.

Generally, scholarship providers do not like to put their deadlines in August because most students are just starting classes again and don’t have a lot of time to apply for scholarships. As such, August presents a perfect opportunity for you to apply for scholarships without a ton of competition!

This batch of scholarships includes a few awards that almost any student can apply for. Good luck!

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The Gene And John Athletic Fund Scholarship

Scholarship Deadline: August 1, 2014

This organization provides scholarships to LGBTQ athletes who are also pursuing a college education.

From my research, it appears as though undergraduate and graduate students can apply. There doesn’t appear to be any citizenship requirements either, so international LGBTQ students should feel free to apply for this scholarship as well.

The only stated eligibility requirements are the following:

  • Must be an LGBTQ athlete looking to continue their education or actively pursuing a sports career (either professional or recreationally)

Patsy Takemoto Mink Education Foundation

Scholarship Deadline: August 1, 2014

The Patsy Takemoto Mink Foundation is offering five $5,000 scholarships to low-income women with children who are pursuing their education. To apply for this scholarship, you must meet the following eligibility requirements:

  • Must be a woman
  • Must be at least 17 years of age
  • Must be a mother, with minor children
  • Must be pursuing a vocational degree/certificate, an associate’s degree, a first bachelor’s degree, or a professional/master’s/doctoral degree
  • Must be enrolled in a not-for-profit, accredited institution or program during the 2014-2015 academic year
  • Must be low income (annual family income less than $20,000 for a family of two; less than $24,000 for a family of three; less than $28,000 for a family of four)

The ARTBA’s Student Transportation Video Contest

Scholarship Deadline: August 1, 2014

A $500 prize goes to the student (or team) that creates the best 2- to 4-minute video examining any aspect of transportation in the United States. To apply, you must be currently enrolled in any post-secondary (college, graduate school, community college, etc.) program.

The Eve’s Addiction Scholarship

Scholarship Deadline: August 15, 2014

This scholarship is an essay contest open to almost any student. To apply, you must complete a 500-word essay on the following topic:

“How can the web give a company a competitive advantage?”

Additional eligibility requirements include:

  • Must be a high school senior, undergraduate, or graduate school student
  • Must be enrolled in a degree program in fall 2014 or spring 2015

Domo Scholarship For Business Management

Scholarship Deadline: August 31, 2014

Domo is awarding $2,500 scholarships to two college students who study business management. The scholarship requires you to complete a brief survey and write a 200-word essay in order to apply.

To qualify for this scholarship, you must meet the following eligibility requirements:

  • Must be attending a U.S. based 4-year college or university
  • Must be studying business
  • Must demonstrate an interest in analytics

Happy hunting!

For more information on college scholarship deadlines in 2014, including our scholarship of the month feature, check out our post on Upcoming 2014 College Scholarship Deadlines.

(Photo: Wikimedia)

Scholarship Of The Month: The Goedeker’s General College Book Scholarship

Posted on July 3, 2014 by:

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Stack of textbooks

Textbooks are expensive (especially if you have to buy a lot of them). Fortunately, this scholarship can help.

This month’s featured scholarship is open to all currently enrolled college students—and its prize is something all currently enrolled college students could likely use:

$500 to help cover the costs of expensive college textbooks!

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There is no official application for this scholarship. Instead, the scholarship asks that you submit your essay, proof of GPA, your contact information, a recent photo, and proof of college enrollment via email.

The essay needs to be 300 words minimum. Meaning, you can (and should) write a much longer and comprehensive essay (around 500 words). If you have a solid career goals scholarship essay already handy, then use that essay as a base and make edits to better reflect the requirements of the Goedeker scholarship.

Here are the details, as well as some answers from the scholarship provider about what they’re looking for in an applicant.

Website: The Goedeker’s General Book Scholarship

Award Amount: Up to $500

Deadline: July 31

Eligibility Requirements:

  • Any student that is enrolled in an accredited college is eligible to participate
  • Must be enrolled for the spring 2014 or registered for the fall 2014 semester

Q&A With The Goedeker’s General Book Scholarship

Q: Tell us about your motivations to start this scholarship program.

A: Goedeker’s started the annual book scholarship because we understand how difficult it is to pay for college tuition and textbooks. With tuition increasing faster than student aid, it has become almost impossible to graduate from college without utilizing some form of student loans. We believe that every person who desires a higher education should have a chance; that is why we are offering a textbook scholarship.

Q: What is the scholarship judging process like? Are the judges volunteers? Employees?

A: After the deadline, a few selected employees will read and analyze each essay based on creativity, grammar, spelling, originality, and organization of thought. The submission requirements determine whether you make the cut; the essay determines who will win. We will bring the best entries together to determine the final winner and two honorable mentions.

Q: What are some characteristics that you look for in an ideal applicant?

A: The ideal applicant will show promise and desire to excel as a student and in whatever they do outside of school. We are looking for someone who follows directions, has goals for their future, and who dreams of making a difference.

Q: What is the biggest mistake you see applicants make when applying for your scholarship?

A: The biggest mistake we see is failure to follow directions. The requirements are clearly noted on the scholarship page. When part of the application is missing or the applicant does not include the proper subject heading, the entry automatically goes into the non-qualified folder.

Q: What are some characteristics that make an applicant stand out?

A: A stand-out applicant has a creative essay that makes me think, “Wow. This person is amazing!” Whether it be through extracurricular activities, volunteerism, or personal hardships, I want to see why they deserve this scholarship more than anyone else.

Q: Do you have any advice for the students who apply for this award?

A: Edit, edit, and edit again. Poor grammar, spelling, and punctuation are going to be the ultimate factors in who wins the grand prize. One essay may have better content, but if there are grammatical errors all over the place, the other will win.

Find even more scholarship opportunities in our post on Upcoming 2014 College Scholarship Deadlines.

(Photo: cutendscene)

4 Student Loan Changes In July That You Should Know About

Posted on July 1, 2014 by:

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Fireworks

July is a month for fireworks, for Independence Day and the student loan industry.

They say that there’s nothing certain except for death and taxes, but in the student aid world, we can almost always count on changes coming to our programs every July 1 (remember last year?). This year is no exception.

So, what’s going on, and how will it affect you? Here are the four big changes that you should know about.

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1. Interest Rates

Any new loans that you borrow as of July 1 have different interest rates than your loans from last year. Interest rates for undergraduate Direct subsidized and unsubsidized loans are 4.66%, graduate Direct loans are 6.21%, and Grad or Parent PLUS loans are 7.21%.

Consolidation loans are a little different, as their interest rates don’t change based on the year (unless you have an older variable rate loan). These are calculated to be the weighted average of your underlying loans when you consolidate rounded up to the nearest 1/8th% and won’t change annually.

2. Income-Based Repayment (IBR)

The specifics of IBR for new borrowers who haven’t borrowed Direct Loans before or have a zero balance as of July 1, 2014, have changed. If you qualify for IBR, your payments will be capped at 10% of your discretionary income and any remaining balance you have after 20 years may be forgiven but would be taxable (see above quote about death and taxes). You can learn about the specifics of IBR for current loans here.

These numbers may sound familiar. The Pay As You Earn Repayment plan offers the same benefits but is limited to students who borrowed in a very small window of time. This IBR plan will significantly increase the amount of people who will be able to apply for the coveted terms of Pay As You Earn.

3. Rehabilitation

Hopefully, you will never have to go down the road of rehabilitation because that means that your student loan is in default. In the event that you do need to know about rehabilitation, the regulations for how much your payments will be for 9 months to get your loan out of default are changing as of July 1.

Your loan holder will collect your income and family size information from you to calculate what the Department of Education believes to be a reasonable and affordable rehabilitation payment. This will be 15% of your adjusted gross income (AGI), which exceeds 150% of the poverty guideline for your state and family size divided by 12 months (now that’s a mouthful!). Why not try estimating what your payment would be here instead?

If your 15% payment seems too much to handle, you can work with your loan holder to complete a financial disclosure that will (hopefully) be a better representation of your actual financial circumstances to come up with an affordable payment for you.

4. Closed School Discharge

The last major change that borrowers may want to be aware of is an expansion to the closed school discharge eligibility criteria. Currently, to be eligible to have your loans discharged because your school closed (the entire school, not just your location), you would have needed to have been enrolled within 90 days of the school’s closure date. For applications received as of July 1, 2014, that window expands to 120 days.

This is another one of those cases where I hope that you never have to pursue the option, but this change increases the amount of people who may take advantage of a loan discharge when their school closes unexpectedly.

Until Next Year…

Well, if you aren’t behind on your monthly student loan payments or you aren’t planning on taking out any new loans, then these changes really won’t affect you. Here’s to seeing some beneficial changes for you next year!

Do these changes affect you? Let us know in the comments.

(Photo: Wikimedia)

Can You Defer Student Loan Payments If You Have An Internship?

Posted on June 24, 2014 by:

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Cat with small model of Statue of Liberty

Piglet and Godzilla have a lot in common, if you consider “Mothra” to be the “student debt” of monsters. (And we do!)

Helping people understand student loans is our job at SALT™, and few are better at it than Betsy Mayotte—the director of regulatory compliance for American Student Assistance®(our parent company). We told borrowers to “Just Ask” her questions, so check out her answers below (as well as her cat—because if Piglet can’t make student loans better, what can?).

***

Payment Postponements For Internships

Hello! I have a question about deferring my student loans. When I was attending my exit counseling, I did not know at the time that I would be having a yearlong internship in the Church of the Brethren Archives in Elgin, IL. My question is, since this is an internship, do I qualify for a deferment?

I’m afraid that unless you have federal student loans made prior to July 1, 1993, you would not be eligible for an internship deferment; however, there are other options.

The economic hardship deferment is something you may qualify for if your internship is full time and your earnings are less than 150% of the poverty level for your state and family size. Another option would be income-based repayment. This plan will keep your payments at no more than 15% of your income, minus an allowance for family size. You can read more about this plan here. You would apply for both of these options directly through your federal loan holders, and you’ll want to make sure you submit the necessary paperwork to all of them.

If you have private student loans, I’m afraid your options may be even more limited as many don’t offer deferments or lower payment options. You’ll need to contact your private loan holders directly to find out what your options are.

Loan Forgiveness For Social Workers

I just graduated from college with my BS in social work. I am working for the YMCA full time making $12 per hour. I work with high-risk teens in a rural community in Northern New Mexico. I have a $5,000.00 loan that I got in January 2014 to complete my education. My payments will start in 6 months; can my loan be forgiven because I work with a high-risk population? Who should I contact, and how can I receive help?

There are forgiveness programs available for the type of work you do; however, it is very likely that you will have this $5,000 loan paid off before you can take advantage of them.

This e-book from SALT™ covers all the forgiveness programs we could find—in particular, you should look at Public Service Loan Forgiveness (PSLF) and income-based repayment. Income-based repayment/Pay As You Earn will keep your payments affordable by ensuring they never go above 10% of your income. Opting for either of these plans will also help qualify you for PSLF.

Unfortunately, you need to make 120 payments to qualify for PSLF. Since you only owe $5,000, I believe you will likely pay that amount off well before you would qualify for forgiveness. Even without a payment plan, your payments would be no more than $50 per month with this balance. Considering this low balance, you may want to consider just paying it off as quickly as possible to reduce the amount of interest you will pay over time.

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(Note: The questions and answers above are real; however, they have been edited for grammar and clarity, but not by Piglet.)