May 21, 2009

Parent Plus Loan Deferral Period, Independent Student

Posted in Parent PLUS Loans tagged , at 3:25 PM by dbonvie

In 2008 the rules of the game changed for the better for parents.

Prior to last summer, repayment on a Parent Plus loan began thirty days from the fully disbursed date, which was usually during the second semester. Meanwhile students were enjoying the benefit of an in school deferment on their federal Stafford loan for as long as they were in school half time or greater. This double standard was addressed and now Parents enjoy a similar deferral benefit.

Provided the student is enrolled half time or greater (usually 6 credits) as defined by the school, parents also enjoy the in school deferral benefit; though it’s worth noting that interest will still accrue during that time frame. But what happens when a dependent student (under 24) turns independent in the schools eye? Will the deferral period be terminated? The answer is NO.

Regardless of the students status, independent or dependent, the loan is still deferred whilst they are in school half time or greater. What the independent status does change, however, is the amount of Stafford loan funds which can be borrowed. It also disallows a parent to take out a Parent Plus loan on the student’s behalf.

March 13, 2009

Student Loan Forgivenes as of Feb. 2009

Posted in Consolidation, Legislation Affecting Students, Parent PLUS Loans, Stafford Loans, Student Loan News, The Financial Aid Process tagged , , , , , at 9:46 AM by Joe From Boston

Last month, the federal Dept. of Education released new guidelines about qualifying for Public Service student loan forgiveness program.

Eligibility Requirements:

  • The borrower must not be in default on the loans for which forgiveness is requested.
  • The borrower must be employed full time by a public service organization –
    • When making the required 120 monthly loan payments (certain repayment conditions apply – see below);
    • At the time the borrower applies for loan forgiveness; and
    • At the time the remaining balance on the borrower’s eligible loans is forgiven.

loan repayment requirements:

  • The borrower must have made 120 separate monthly payments beginning after October 1, 2007 on the Direct Loan Program loans for which forgiveness is requested. Earlier payments do not count toward meeting this requirement.  Each of the 120 monthly payments must be made for the full scheduled installment amount within 15 days of the due date
  • The 120 required payments must be made under one or more of the following Direct Loan Program repayment plans–
    • Income Based Repayment (IBR) Plan (not available to parent Direct PLUS Loan borrowers)
    • Income Contingent Repayment Plan (not available to parent Direct PLUS Loan borrowers)
    • Standard Repayment Plan with a 10-year repayment period
    • Any other Direct Loan Program repayment plan, but only payments that are at least equal to the monthly payment amount that would have been required under the Standard Repayment Plan with a 10-year repayment period may be counted toward the required 120 payments.

Eligible jobs:

The borrower must be employed full time (in any position) by a public service organization, or must be serving in a full-time AmeriCorps or Peace Corps position. For purposes of the Public Service Loan Forgiveness Program, the term “public service organization” means –

  • A federal, state, local, or Tribal government organization, agency, or entity (includes most public schools, colleges anduniversities);
  • A public child or family service agency;
  • A non-profit organization under section 501(c)(3) of the Internal Revenue Code that is exempt from taxation under section 501(a) of the Internal Revenue Code (includes most not-for-profit private schools, colleges, and universities);
  • A Tribal college or university; or
  • A private organization that is not a for-profit business, a labor union, a partisan political organization, or an organization engaged in religious activities (unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing) and that provides the following public services –
    • Emergency management;
    • Military service;
    • Public safety;
    • Law enforcement;
    • Public interest law services;
    • Early childhood education (including licensed or regulated health care, Head Start, and state-funded pre-kindergarten);
    • Public service for individuals with disabilities and the elderly;
    • Public health (including nurses, nurse practioners, nurses in a clinical setting, and full-time professionals engaged in health care practioner occupations and health care support occupations);
    • Public education;
    • Public library services; and
    • School library or other school-based services.

September 12, 2007

Stafford Loan Certification

Posted in Stafford Loans, Student Loan News, The Financial Aid Process tagged , , , , , at 3:17 PM by Joe From Boston

This is a topic I’ve mentioned a lot recently, but it’s critical to understanding Stafford Loans, and it will affect any student getting a Stafford Loan, so I’m devoting another post to it.  Here’s an FAQ with questions I’ve heard our Customer Service Reps asked a lot recently.

Stafford Loans must be certified by your school

What does that mean?

It means that your school has the final say in whether you get a college loan and in how much money you actually get.

What does the school do?

The school confirms to the lender that they have awarded you the money in your award letter the previous spring, and they confirm to the lender that you were allocated a certain dollar amount to receive.

Why does my school have to certify the loan?

Stafford Loans are FEDERAL financial aid – Federal is the key word here.  Schools are only allowed to give out a certain amount of money in Stafford Loans, and students must qualify for the loan by filling out the FAFSA.  The certification process ensures that the money was awarded properly.

Does it affect the loan’s time frame?

YES. It’s another step in the process, and another party involved, so it will affect how long your loan takes to fund.  If you apply at the last minute when your school is swamped, you will encounter long delays.

If you have any questions about the loan you want answered, leave a comment here or visit – it’s a great resource for learning about the Stafford Loan, who qualifies, the maximum you might be awarded, etc.