Special Bulletin: Now Ask Your Senators to Preserve Your College Tax Benefits!

The U.S. House of Representatives recently passed its tax bill. This bill would repeal many of the higher education tax benefits on which millions of college students and parents rely. But it isn’t law yet.

The U.S. Senate will soon act on a similar bill. But as currently written, the Senate’s bill IMG_0078would keep the House-targeted college tax benefits in place and unchanged. These benefits include:

  • College Savings Bonds: The House would start taxing students on money they use from such bonds to pay college expenses.
  • Coverdell Education Saving Accounts: The House would prohibit new deposits into these accounts.
  • Death and Disability Debt Discharge: The House would tax student loan debts forgiven for borrowers who die or suffer total and permanent disabilities.
  • Employer-Provided Educational Assistance: The House would subject what your employer spends on your tuition, fees, books, and supplies to taxation The Senate would leave current law as is — so only employer spending above $5,250 would be taxed.
  • Graduate Tuition Reduction Exclusion: The House would make all tuition reductions awarded to graduate research and teaching assistants taxable income.
  • Interest Deduction on Student Loans: The House would end this $2,500 per year deduction.
  • Lifetime Learning and American Opportunity Tax Credits: The House would repeal the Lifetime Learning credit that applies to what you pay on a course helping you get a degree or a job skill. Instead, it would expand the American Opportunity credit from 4 to 5 years. But the American Opportunity credit applies only to degree-related courses. The Senate would leave both credits unchanged.
  • Tuition and Fee Deduction: The House would kill this $4,000 per year deduction for what you pay in tuition and fees for yourself, your spouse, and your dependents.

All these changes would take affect in 2018 unless the Senate causes them to be dropped.

The Senate will amend, debate, and vote on its bill soon after Thanksgiving, so there’s little time to contact your Senators (their contact information is here). Urge IMG_0081them to use the Senate bill to preserve the tax benefits described above.

The House and Senate must negotiate to finalize all differences in the bills they pass, and such negotiations often lead to one or the other bill’s differences being dropped. So the last, best hope for preserving these tax benefits is a Senate tax bill that opposes the House’s plan to kill them.

Contact College Affordability Solutions at (512) 366-5354 or collegeafford@gmail.com if you have questions.

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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.

Special Bulletin: Proposed Federal Budget Would Reportedly Makes Big Cuts in Programs for College Students and Graduates

The Washington Post reports it has received what a U.S. Education Department staff member described as “near final” documents showing the administration will IMG_6510recommend a 13.6% reduction in federal education spending next week. The budget proposal would reportedly affect federal financial assistance for college students as follows:

  • Child Care for Enrolled Parents: End a $15 million program helping to make child care affordable for low-income parents attending college.
  • Federal Direct Subsidized Loans: Make as yet unannounced cuts that could end this program, which currently serves financially needy students. If this happens, all federal loans for such students would be unsubsidized and begin compiling interest the day they are made — significantly increasing student borrowing costs.
  • Federal Pell Grants: Hold Pell Grants for the nation’s neediest undergraduates at their current levels ($606 to $5,920 for fall and spring combined). Due to inflation, this would decrease Pell’s future “purchasing power.” Some good news is that the budget would fund an extension of 2017’s summer Pell Grants in future years.
  • Federal Work-Study (FWS): Cut FWS funding by $490 million (almost half), significantly reducing federally subsidized on and off-campus jobs that financially needy students use to pay for college.
  • Income-Driven Repayment: Close down all current income-driven repayment plans available to federal college loan borrowers. These plans offer loan forgiveness for balances remaining after borrowers pay 10% to 20% of their incomes over 20 to 25 year periods. They would be replaced with a new income-driven option requiring payments equal to 12.5% of income and limiting loan forgiveness to balances still outstanding after 30 years of such payments.
  • Public Service Loan Forgiveness (PSLF): Eliminate PSLF, which offers tax-free debt cancellation on federal student loan balances owed by ex-students in public service jobs after 10 years of on-time payment. Over 550,000 federal, state, local, and nonprofit employees are already registered for PSLF. It’s not yet clear whether they or public servants not yet registered would be cut off from It.IMG_6511

Presidents propose federal budgets, but Congress ultimately decides them. So if you support or oppose any of these proposed cuts, call or write your U.S. representative and senators to tell them how you feel.

College Affordability Solutions will post more bulletins on this website as additional information becomes available.

Special Bulletin: Public Service Loan Forgiveness in Jeopardy for Thousands!

If you work for a 501(c)(3) or some other tax-exempt organization and are hoping to have some of your federal student loan debt discharged under the Public Service Loan Forgiveness (PSLF) program, you may be in for a rude shock.

In a March 30 story, the New York Times reports that the U.S. Department of Education (ED) is taking the position that thousands of PSLF approval letters sent by FedLoan Servicing Servicing, the company ED hired and supervised to administer PSLF, were invalid.

FedLoan’s letters reportedly confirmed to borrowers that the jobs they held with nonprofit organizations qualified them for PSLF. However, many of these decisions wete retroactively declared invalid, and affected borrowers got no explanations or opportunities to appeal. According to the Times, four borrowers and the American Bar Association have gone to court against ED to restore those borrowers’ lost PSLF eligibility.

What should you do if you get caught up in this mess? Ultimately you, too, may have get a lawyer and take ED to court. But you should also:

* Contact your U.S. representative and senators to ask them to intervene with ED on your behalf; and

* File a complaint with the Consumer Finance Protection Bureau because members of congress interested in passing a bill to fix this problem will no doubt ask it provide accurate input on the problem and how many Americans are affected.

* Most of all, whether or not you’ve been informed that ED has invalidated correspondence you’ve received from FedLoan, keep working with your employer to submit your PSLF certification form once a year; and stay on top of of this issue by monitoring for developments related to it on the internet, in the news media, or on this website.

College Affordability Solutions will its best to keep you posted on this in the future.

Thank You, Mr. President!

Families that struggle with college costs need help. Fortunately, they had friend in Washington over the last eight years — Barack Obama.

The President and his wife are the first couple in the White House to have borrowed for college. Coming from families of modest means, they borrowed a lot, so much that they paid off their college debts just four years before entering the White House. “When we married we got poor together,” the President once said, “we added up our liabilities and there were a lot . . . basically in the form of student loans.”

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So although Congress did little on student aid, President Obama’s administration created several helpful initiatives:

  • Federal Direct Loans. The President’s lone student aid success in Congress established the government, not banks, as the primary maker of student loans. It simplified federal student loans, reduced corruption, and redirected billions in subsidies from bankers to students.
  • PAYE and REPAYE. The President began the Pay As You Earn and Revised Pay As You Earn programs, which limit what college borrowers must repay to 10% of their discretionary incomes, and forgives what they still owe after as few as 20 years.
  • Aid Application Process. The administration made the Free Application for Federal Student Aid (FAFSA) available in October, not January, and began collecting “prior-prior” tax year data on it. So students now know what their federal student aid will be as they narrow their college choices. Also, families can img_5167now tell the IRS to load key numbers directly onto their FAFSAs, and they now have more time to verify their FAFSA data. All this makes applying for financial aid easier.

So thank you, President Obama! You made college more affordable and reduced barriers to financial aid. Millions benefitted from your efforts, and our country is better off for them!

If you want to contact College Affordability Solutions, email us at collegeafford@gmail.com or call (512) 366-5354.

A Year of College Affordability Solutions

College Affordability Solutions is dedicated to helping families keep higher education spending within their means. It uses this website to highlight postsecondary educational cost-management strategies at the times of the year when you and/or your student are most likely to need them.

21-of-the-most-beautiful-college-campuses-in-amer-2-20243-1428837186-9_dblbigDespite those who’ll try to talk your student out of college, postsecondary education is still worthwhile even if he or she has to borrow to pay for it. But student loans increase the cost of college, so do everything possible to minimize their use.

Over the last year, we’ve covered several approaches to keeping college and college-related debt affordable. Click on any of the links below to learn more . . .

Before College

Various investment and savings programs can help you prepare for college bills. Among these are 529 plans and college savings bonds, but you should explore them all – the sooner the better.

And be sure to apply for financial for every year of college. Complete the Free Application for Federal Student Aid (FAFSA) as soon as possible after October 1 but, by all means, before your FAFSA priority deadline arrives.

Student dependency status plays a big role in who completes the FAFSA. Other family factors do, too. But it isn’t as hard to complete as you’ve heard, especially if you fulfill 5 key steps, gather all the documents you need, and get answers to your last-minute FAFSA questions before doing so.

Long before the FAFSA, your student needs to begin aggressively searching for scholarships. It’s critical to know about the when and where and the how of doing this.

Pay close attention after you file your FAFSA to make sure you handle what happens next. Then carefully assess your financial aid offers as they arrive from colleges.

But it’s not all about financial aid and scholarships. A critical factor in college affordability is for your student to enroll in a college and major that fits him or her well.

During College

Once college begins, you can help your student keep his or her expenses within reason.140815_FF_BestCollegeCard Limited spending and indebtedness is important even with today’s low college loan interest rates.

Some of the most effective strategies for minimizing student borrowing include your student getting through college in 4 years or less while carefully managing money and avoiding rip offs such as the recent “student tax” scam. A little-known but highly-effective cost-saver involves returning unneeded federal loan dollars with 4 months of disbursement.

Help your student keep college more affordable by giving him or her some holiday gifts that’ll lower his or her reduce expenses upon returning to school and by recommending he or she generate funds through seasonal employment instead of borrowing.

After College

Seven out of 10 students borrow before earning their degrees, and over 90% of their loans come from federal loan programs. Fortunately, the government has designed  post-graduation strategies to help keep educational debt manageable.

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Your student needs to understand what happens to college loans after graduation. It’s worthwhile to consider the pros and cons of student loan consolidation, an often-used tactic for reducing monthly debt payments. Equally important is knowing how your student might qualify for forgiveness on all or part of what he or she owes.

Coming in 2017

We’re taking a few weeks off for the holidays, but beginning January 4 we’ll start publishing again about plans for keeping college affordable. Here’s hoping you have the happiest of holiday seasons, and that you’ll rejoin us then!

 Find out more about College Affordability Solutions and its services at https://collegeafford.com, or by calling (512) 366-5354.

Federal Student Loan Consolidation Advantages

If you graduated from college this past spring, chances are you’ll soon enter the time when you’ll be required to pay off your federal student loan debt — i.e. your repayment period. At this point you ought to be asking, “Should I consolidate my federal student loans?”

To consolidate, you need to have at least one Federal Direct Loan or Federal Family Education Loan. You may designate all or some of them, along with your Federal Perkins Loans, for consolidation. The government’s consolidation loan repays the debts you designated. Depending upon how much you owe on your total federal student loan debt, screenshot-from-2016-06-08-135849 you’ll get more time to pay off your consolidation loan than you had to pay off the loans it replaces.

Here are good things that’ll happen if you consolidate:

(1) You’ll Lower Your Monthly Payments: The longer you repay, the lower your monthly payment amount. Use the Federal Student Loan Repayment Estimator to figure out the repayment plans for which you qualify, estimate the monthly payment amount for each plan, and see how long that plan gives you to pay off your debt.

If none of your monthly payments looks affordable, you should consider borrowing a Federal Direct Consolidation Loan. Chances are it’ll give you more years to repay and lower your monthly payments.

(2) You May Expand Your Repayment Options: A consolidation loan may qualify for repayment plans for not open to your individual federal loans, but which may be helpful to you.

(3) You’ll Maximize Loan Forgiveness Benefits: If you’re starting a career as a public school teacher or in another form of public service, you should pursue the Federal Direct Teacher Loan Forgiveness or Public Service Loan Forgiveness Programs. The lower your monthly payments, the more you’ll get forgiven by these programs. Conversely, consolidating a Federal Perkins Loan can have disadvantages.11-3-is-student-loan-consolidation-right-for-you

(4) You’ll Simplify Repayment: As its name implies, all your consolidated debts get combined with one loan servicer (a company the government pays to collect your debt(s) and give you loan-related assistance). The result? A single monthly payment and just one party to contact if you need help.

(5) You Pick Your Servicer: The government picks the servicer for all your other federal education loans. But under consolidation you make this selection. As you do, think about whether your current servicer(s) have met your needs and ask friends about experiences with their servicers.

(6) You Get One Fixed Interest Rate: All debts you consolidate will get the same interest rate. It’ll average out to the rate for each consolidated loan, rounded up to the nearest one-eighth of 1%. It’ll be fixed for the life of your consolidation loan. If you have old federal loans whose interest rates change annually, consolidation will bring that to an end.no_fees

(7) You Incur No Costs: You pay nothing for anything related to consolidating your loans.

Consolidation’s a good thing for most borrowers. But it’s also got some disadvantages. Definitely consider these before deciding whether to consolidate your federal student loan debts.

College Affordability Solutions can help you better understand the pros and cons of federal student loan consolidation. Call (512) 366-5354 or email collegeafford@gmail.com.