“Do I Need To Hire Someone To Handle An IBR Application?”

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Piglet at the vet getting haircut

Piglet wishes she could get these services for free (or perhaps not at all).

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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Paying For Help With Income-Based Repayment

Do I need to hire someone else to handle an IBR application or can I do it myself? I just received an email offering to assist me, and I don’t know if it’s a good idea or not. The fee seemed high and not really affordable to me. I’ve received quite a few pushy phone calls from this company.

While there’s nothing illegal in charging a consumer to help them manage the paperwork for their student loan, you don’t have to pay for such services. You can get the same help and access the same programs for free through your loan servicer or a free service (like SALT™).

What troubles me about the email they sent was the deceptive nature of the text, which implied that your loan holder cannot or will not offer the lower payments or other options that this company can. That is simply untrue. Federal student loans are heavily regulated, and no one can get you a lower payment or other option that you can’t get—or won’t have access to—for free through your loan holder.

I know you were interested in income-based repayment. You can find the application for that plan here or, likely, on your servicer’s website. You can also call your servicer to ask them to send an application to you. Ultimately, the payment you get under this program will be the same—whether you fill out the application or whether this company does so for you for a fee.

As far as this company goes, due to the deceptive nature of this email, you may want to consider forwarding it to your local attorney general’s office or the Consumer Finance Protection Bureau at www.consumerfinance.gov.

Too Much Interest Accruing On Loans

I just had my loans consolidated. I have approximately $72,000 in student loan debt. According to my new payment plan, I have to make $426/month payments for 358 months. By the time it’s paid off, I will have paid $153,963! I make $40,500 a year. What should I do? Does this seem right? Are there any options? Any other companies? Please help.

When I calculated your payment, I got lower numbers—but I also don’t know your interest rate, so you may want to use this calculator to do so yourself. That can help you tell whether these numbers are right or not.

I’m assuming these are federal loans, so moving companies won’t do you any good as Congress sets the terms and interest rates of these loans. These are simple interest loans, so the longer you take to pay them off, the more you will pay in interest.  Assuming your income increases over time—and especially if you pay extra when you can—I’m confident you will pay this loan off sooner than the time given, and with a lesser amount of interest.

My advice to you is to make a budget, be strict, and see how much you can devote to these loans monthly. I’d also try to commit to throwing every bit of extra cash—such as tax returns or those months that you get an extra paycheck—at the debt. You’ll be pleasantly surprised at the difference it makes.

Let me know if you have additional questions.

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.)

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