After College: Help! I Can’t Make My Student Loan Payments!

You’re repaying loans you borrowed to pay for college. But you often find yourself IMG_1086choosing between paying for essentials and making monthly loan payments. What should you do?

You’re in luck if, like 90% of today’s college borrowers, you borrowed federal loans. Washington offers multiple ways to get relief from your predicament. The question — which is best for you?

IMG_1087If you’ve not already done so, consider replacing your federal loans with a Federal Direct Consolidation Loan. These offer longer repayment periods and lower monthly payments if you owe more than $7,500. But look into consolidation’s advantages and disadvantages before going this route.

You can also tell your loan servicer will change your repayment plan. To check out how this’ll affect your payments use the Federal Student Loan Repayment Estimator. IMG_1090It already knows your loan balances and can tell you the repayment plans for which you’re eligible plus monthly payment amounts in each available plan. It can also determine how consolidation would impact your loan repayment.

If the reason you can’t afford monthly payments is temporary, look into getting a deferment to postpone your payments for up to a year. You’re entitled to deferment if you’re:

No deferment? Another temporary solution is asking your servicer for a forbearance. You’re not entitled to forbearance. It depends on your situation. But you can totally postpone or partially reduce your payments while in forbearance.

But be careful about deferment and forbearance. During the former, interest continues to build on your unsubsidized and PLUS loans. During the latter, interest keeps building on all your loans. Unpaid interest from these periods then gets capitalized (added to principle) when your deferment or forbearance ends.

If your trouble making payments is because of your monthly due date, ask your servicer if you may change your payment due date to another day that works better for you.

Act fast, because missed and late payments have really bad consequences.

College Affordability Solutions offers 40-years of experience working with various educational loan repayment strategies. Call (512) 366-5354 or email College Affordability Solutions for a no-cost consultation.


Special Bulletin: Congress Considering Cuts to Student Aid Programs

On Monday the White House released its budget proposal for Fiscal Year 2019, which begins this coming October. The prospective budget is similar to HR 4508, the “Promoting Real Opportunity, Success, and Prosperity through Education Reform” IMG_0890(PROSPER) Act. This is a bill designed to revamp federal higher education programs. It will soon to be debated in the House.

If your student is now or likely will be a federal financial aid recipient, contact your  U.S. Representatives and Senators to let them know your thoughts on the proposed budget and HB 4508. Why? If Congress passes either as written, several federal student aid programs would be reduced or eliminated.

Subsidized Federal Direct Loans: Currently, no interest is charged on these loans until six months after their undergraduate borrowers leave college. But they would end for those first borrowing on or after July 1, 2019. Even at current interest rates, which are expected to rise, this would increase the cost of borrowing the $27,000 maximum allowed over 4 academic years by at least $2,800.

Income-Driven Repayment: Four repayment options would be replaced by one repayment plan requiring ex-students to pay 12.5%, instead of the current 10%, of their discretionary income toward their federal college debts. The repayment period would last 15 years instead of 20 to 30 years for undergraduates, and 30 years for graduate students. Discretionary income is the amount a borrower’s income exceeds 150% of poverty-level.

Public Service Loan Forgiveness (PSLF): Any student first borrowing a federal loan on/after July 1, 2019 would be ineligible for PSLF.

Federal College Work-Study (FCWS): The budget would reduce FCWS funding by 49.5%. FCWS currently helps over 630 thousand students earn more than $1 billion a IMG_0891year to pay college costs. Graduate students would become ineligible for FCWS.

Federal Pell Grants: College costs keep rising, but the budget proposes to limit Pell Grants to the same amount as in FY 2019 as this year.

Pell Grant eligibility would be extended to students in short-term programs providing certificates, licenses, or other credentials for “in-demand fields”. For-profit vocational schools usually offer such programs, but their certificate earners average 1.5% higher unemployment rates, 11% lower earnings, and $5,000 more in student debt than students earning similar certificates at community colleges.

Federal Supplemental Education Opportunity Grants (FSEOGs): The FSEOG program, which provides extra grant dollars to approximately one million of the nation’s neediest Pell Grant recipients, would be eliminated.

Contact College Affordability Solutions at (512) 366-5354 or for a no-cost consultation you have questions about how to pay for college.

Special Bulletin: Your College-Related Tax Breaks Survived a Congressional Move to Eliminate Them

In November College Affordability Solutions urged you contact your members of the U.S. House and Senate in opposition to certain provisions within the House tax bill that was then working its way through Congress.

That bill was supposedly designed to cut taxes. But it would have done away with IMG_0428deductions and exemptions that reduce taxes for you and other students and parents by over $18 billion a year — money that helps pay college costs.

The original House bill was remarkably partisan. It was written by Republican House members without input from Democrats, and it got 227 Republican votes but no Democratic votes

Fortunately, the Senate also opposed eliminating college-related tax deductions, exclusions, and exemptions. It made sure they remained unchanged in the final bill, which is now law. So don’t ever think your voice doesn’t matter — constituent pressure clearly helped preserve these tax breaks!

Here are the college tax benefits that were preserved in the final bill:

  • If you’re a student, you still won’t be taxed on money you use from your College Savings Bonds to pay your educational expenses.
  • Parents, you may keep on making deposits into your Coverdell Education Saving Accounts to build up money for college.
  • The first $5,250 you use from your Employer-Provided Educational IMG_0429Assistance program to pay higher education costs will continue to be untaxed.
  • The Lifetime Learning Tax Credit remains unchanged. So you may keep reducing what you’ll pay in federal income taxes by up to $2,000 a year based on what you spend on tuition, required fees, books, and supplies for any student (including you) taking courses to get a degree or improve job skills.
  • The Scholarship and Fellowship Exclusion will continue to omit from federal taxation what your scholarships and fellowships pay toward your college costs.
  • Borrowers, you’ll still be able to claim your Student Loan Interest Deduction of up to $2,500 for student and/or parent loan interest you pay each year.
  • Your $4,000 per year Tuition and Fee Deduction remains unchanged.
  • Are you or will you be a graduate student? If so, any Tuition Reduction you receive in connection with a graduate assistantship or fellowship still won’t be subject to taxation.

Congratulations on keeping these benefits! But stay active and alert. More bills impacting college affordability will come before Congress soon.

Contact College Affordability Solutions by calling (512) 366-5354 or emailing


After College: Things to Do As Your First Student Loan Payment Comes Due

If you graduated from college last spring, chances are your obligation to begin repaying your Federal Direct Loans has begun. If you’ve not yet heard from the student loan servicer Washington hired to collect your payments, you need to contact it immediately (see below) because you’ve got some important things to do:

Choose Your Repayment Plan. Your servicer sent you a notice by email, U.S. Mail,IMG_0410 or both. This notice invites you to select the repayment plan that works best for you at this point in time. If you don’t select a plan, you’ll automatically be assigned a Standard Repayment Plan under which you’ll pay off your Federal Direct Loans within 10 years by paying the same amount every month.

No matter what your repayment plan, you can change it by contacting your servicer. However, if you’re paying under an income-based or income-contingent plan, you can switch only after making payments for at least three months.

Decide How to Pay. You may pay by cash or check. But the most convenient way to pay is to give your servicer permission to draw your monthly payment out of your bank account via “electronic funds transfer.”

Your Payment Due Date. Your notice will also tell you the date on which your first payment is due. This date is in January for most spring graduates.

Payment must arrive at your servicer within 15 calendar days of this date or you’ll be behind in your payments. But remember, if you’re mailing your payments, assume it’ll take the post office about 10 days to deliver them.

IMG_0411You’ll have the same payment due date every month. However, if at any time this date doesn’t work for you, you may contact your servicer and request a different payment due date provided you’re not behind in your payments.

If You Can’t Afford to Make Payments. Call your servicer. Describe the issues affecting your ability to pay. Ask if you qualify to postpone your payments through a deferment or forbearance. But remember, postponing payments often IMG_0412generates additional interest on your Federal Direct Loans, so you’ll spend more to repay them in the long run.

Contacting Your Servicer. Access your records in the National Student Loan Data System to find your loan servicer’s contact information.

You’ve got lot’s of options. Make well-informed, wise choices to help set yourself up for a smooth and successful repayment experience.

Need advice about your student loan payments? Contact College Affordability Solutions at (512) 366-5354 or for a no-charge consultation.


Special Bulletin: Does National Collegiate Student Loan Trusts Supposedly Own Your Loans? Make Them Prove It!

If you borrowed private student loans for your postsecondary education, and if an organization called National Collegiate Student Loan Trusts (National Collegiate) asserts you owe loan payments to it, double check everything it says about how much you owe and whether it actually owns your loans.

The New York Times reports that courts across the United States have dismissed IMG_7740many educational loan debts supposedly owed to National Collegiate because its was unable to prove that it had actually purchased those loans from lenders who originally made them. And in at least one case, a court dismissed part of a college graduate’s debt after finding that some loans for which National Collegiate was billing her were for enrollment at a school she never attended.

Note: National Collegiate is a “secondary market” that buys private student loans after they’re made, giving it the right to collect what borrowers owe in principal and interest on those loans. It has been particularly aggressive in going to court against private student loan borrowers unable to repay their debts.

National Collegiate contracts with American Education Services to provide its borrowers with services and do routine collections on its loans. The Times reports it uses a collection agency called Transworld Systems to collect debts when borrowers fall behind on their payments.

If any of your private student loans are being collected by either of these companies, determine whether National Collegiate Student Loan Trusts says it owns them. To do this, contact American Education Services and/or Transworld Systems to inquire. If they list National Collegiate as the owner of any of your loans, double check your records to confirm whether you actually borrowed them. If not, ask for documents proving you borrowed the loans and establishing what the courts call a “chain of title” to prove National Collegiate’s ownership.

Note: There are no reports of any federal or state student loans being dismissed by IMG_7739courts because of the irregularities described above.

Never stop making payments on and debt you really do owe. This can cost you big bucks and ruin your credit rating. And never, ever, use false or misleading information to try to get out of any of your debt obligations. That’s called a criminal offense called fraud!

But if there are questions about debts National Collegiate Student Loan Trusts says you owe it, retain a law firm or seek help from your local legal aid society if necessary. Don’t get ripped off!

We’re on summer vacation at College Affordability Solutions, but this issue was too important to ignore. Join us next month when we again begin publishing regular weekly blogs.


After College: If Your Student Loan Servicer Mistreats You . . .

The U.S. Education Department (ED) is the lender to which you owe what you borrowed under the Federal Direct Loan Program (FDLP). But ED doesn’t collect payments, answer questions, or provide help related to your FDLP debts. It’s contracted those jobs to one of nine private companies called a “loan servicer,” something many lenders do for their student and other consumer loans.

IMG_6914Loan servicers are usually very helpful. However, in one year alone there were over 30,000 documented complaints about them denying or discouraging the use of loan deferments, forgiveness, and repayment plans to which borrowers were entitled; inappropriately charging late-payment fees or increasing interest rates; losing or misapplying loan payments; and otherwise doing injustices to student loan borrowers.

If your servicer messes you over, here’s what you should do:

  1.  Go to ED’s Federal Student Aid website and review the applicable section under “How to Repay Your Loans” to make sure you understand your rights and responsibilities as a federal loan borrower.
  2. Call your servicer for help in resolving the problem. If necessary, speak with someone in management. Keep detailed notes — date, time, names, what you said, what they said, etc.
  3. Problem not resolved? Submit a complaint on the Consumer Finance Protection Bureau’s (CFPB) website. The CFPB is an independent agency under current IMG_6917federal law. It has the authority to investigate servicers, fine them, and require them to repay the money borrowers lost due to their errors. The CFPB also maintains a publicly accessible database about complaints regarding loan servicers and other financial companies — a database that can be used to determine which servicers ED hires in the future.

The U.S. House recently voted for HR 10. This bill that would end the CFPB’s independence and shut down public access to its complaint database. Also, Education Secretary Betsy DeVos has proposed taking servicer misconduct out of the criteria used to award future federal loan servicing contracts.

Nobody’s sure if the U.S. Senate will agree with HB 10 or the DeVos recommendation. So if you have federal student loans call, email or write letters to your Senators now. Tell them what you want them to do regarding these proposals.

And if you ever are mistreated by a federal student loan servicer, be aggressive in standing up for yourself and seeking relief. It’s your right, not just as a borrower, but as a citizen!

This is College Affordability Solutions’ last regularly scheduled blog for the 2016-17 academic year. But we’ll start up again in early August with more strategies to be used before, during, and after college for helping to optimize higher education affordability. Have a great summer. We’ll be back soon!


Special Bulletin: IRS Data Retrieval Tool Back On-Line for Income-Driven Repayment Applications

Good news! The IRS Data Retrieval Tool (DRT) is once again operable for federal student loan borrowers requesting Income-Driven Repayment (IDR) plans.

When such borrowers apply for IDR plans on their federal student loans, they must provide information to the U.S. Department of Education data from their recent tax returns. The DRT the easiest and fastest way to do this but, in early March, the IRS made the DRT inoperable due to security concerns.

Now, new encryption has been added to the DRT. The Department of Education and IRS will also be back on-line to provide tax return data for the 2018-19 Free Application for Student Financial Aid (FAFSA) when that form becomes available this coming October 1.