September 12, 2012

Student Loan Repayment and Consolidation

Posted in Graduate Students, Parent PLUS Loans, Private Loans, Stafford Loans, Student Loan News tagged , , , , , at 4:44 PM by Joe From Boston


We often get questions about repayment of student loans and loan consolidation options.  Here is a quote from the Student Loan Network website:

Student loan repayment should be seriously considered prior to taking on debt. Typically, it will take students 10 to 20 years after graduation before they are able to repay their student loans in full.”

Review all of your loan documents to insure you know how much you owe.  Talk with your lenders about repayment plans.  Do a budget and figure out where you are spending your money and if there are ways you can save.

The general advice is to make sure you pay off your high interest debt first. Generally federal loans have more favorable repayment terms than private loans – so weigh your options carefully.  Finally, consider consolidating your loans to reduce the number of payments you have to make.  (note: you will want to keep your private and federal loans in separate consolidation.  Consolidating private loans with federal loans may eliminate the benefits of the federal loan programs).

For more information, visit: http://www.consumerfinance.gov/students/repay/

May 19, 2009

New Income-Based-Repayment Plan for Student Loans July 1, 2009

Posted in Consolidation, Graduate Students, Legislation Affecting Students, Stafford Loans, Student Loan News tagged , , , , , , , at 7:30 AM by Joe From Boston


While this won’t help parents as it doesn’t apply to PLUS Loans, this will help your students. Starting July 1, 2009 a new Income-Based-Repayment (IBR) plan will be offered to students for Stafford, GradPLUS and Consolidation loans that are not used to pay back Parent PLUS Loans.

According to the Team FFELP IBR Workgroup, “A borrower must have a partial financial hardship to qualify for an income-based repayment plan. A borrower who at one time had a partial financial hardship, but ceases to have a partial financial hardship may remain in the IBR plan.”

Partial Financial Hardship is calculated with the equation:
Standard Payment > 15%[AGI – (150% Poverty line applicable to family size)]

This means, partial financial hardship occurs when the standard repayment plan based on a 10-year repayment period at the time the borrower initially starts repayment is greater than 15 percent of the difference between the borrower’s adjusted gross income and 150% of the poverty line for the borrower’s family size.

Family size is defined as members of your household, such as spouse, children, grandparents who live in your residence with you and receive more than half their support from you. So a parent with Alzheimer’s that you take care of would count, but a roommate would not. It does include unborn children that will be born over the next year.

To qualify, you will need to authorize your loan company to receive the current year and past 3 years worth of tax returns from the IRS using IRS Form4506-T.  Contact your lender to learn more!

April 23, 2009

How Much Can I Borrow?

Posted in Parent PLUS Loans tagged at 8:33 AM by dbonvie


The yearly limit on a Parent PLUS Loan is equal to the cost of attendance minus any other financial aid received. If the students cost of attendance is $15,000, for example, and they receive $8,000 in other financial aid, you can borrow up to $7,000 to bridge the gap.

When Do I Begin Repaying My Parent Plus Loan?

Posted in Parent PLUS Loans tagged at 8:07 AM by dbonvie


For Plus loans made to parents on or after July 1, 2008, the borrower has the option of beginning the repayment period 60 days after the loan has been fully dispersed or waiting until six months after the student ceases to be enrolled on at least a half-time basis.

For parents who took out a loan prior to July 1, 2008 you do not have an option I’m afraid. The repayment period, as you already know, automatically kicked in 60 days after the loan was fully dispersed. Still, you may file for an economic hardship deferment or forbearance with your lender if needed as you do have three years worth of deferment benefits.

April 1, 2009

Still in school? Learn about repayment NOW!

Posted in Stafford Loans, The Financial Aid Process tagged , , , , at 10:10 AM by Joe From Boston


Trust me – take 15 minutes now, before you graduate and read a little on this convenient loan repayment portal set up by the Department of Education.

Learn NOW what will happen in the coming months BEFORE you graduate.  Remember, you’ve taken out loans and sworn on paper that you’ll repay, so it’s worth your time to learn about what’s ahead for you.

Also, check out this Stafford Loan exit counseling interview – if you have a Stafford loan, you’ll be required to go through exit counseling.  You’ll learn about your rights & responsibilities as a borrower in the federal student loan program.