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?).
Maternity Options For Borrowers
I am pregnant and due in October 2013. I am not getting paid by my job during my leave, so I am unsure I can pay during those times I will be out of work. Is there an option for me? What would you recommend?
Congratulations!!! There used to be a deferment for maternity leave, but unless you have federal loans made prior to July 1, 1993, you would not be eligible. The only other option would be to use what’s called “forbearance” to put the payments on hold for those few months. I almost never recommend this option, as it could actually increase your balance and monthly payment amount once you go back into repayment.
You see, interest accrues on all of your loans while you are in forbearance, and while you have the option to pay it, it’s not required. Frankly, most people, even those with the best intentions, end up not paying the interest—at which point, it is capitalized (added to the principal), making your balance, and likely your payment, higher. So, if you can afford to pay the interest while in the forbearance, please do so.
Also, request the shortest forbearance possible. Your loan holder will likely offer you 12 months, but if you are going back to work by January or February, 5 or 6 months will be plenty. Ask them to make that the end date. To apply, simply give you loan holder a call, as most will process the forbearance right over the phone.
Please let me know if you have additional questions. Good luck and best wishes!!!
Additional Aid Resources For Dependent Students
I am looking for an additional $4,000 to finish paying for school this year. My parents do not qualify for Parent PLUS loans due to credit matters resulting from the recession. What sources are available for a dependent student/family to borrow money for education? We have already took advantage of the Stafford and Perkins loans.
We get that question a lot this time of year! If a parent is denied a PLUS loan, they have the option of obtaining a credit-worthy endorser to continue with the loan process. If that is not an option, their dependent student can be awarded an additional $6,000 in unsubsidized Stafford loans.
If this has also been exhausted, I always recommend that the student make an appointment to discuss their situation with the school’s financial aid office. They might be aware of some state or institutional programs that may not have been exhausted or be able to make some adjustments to allow for additional aid. Most schools offer payment plans that split the balance over the school year as well.
Don’t forget the free money too—there’s lots of scholarships out there!
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.)