August 28, 2009

Financial Aid 101

Posted in FAFSA, Parent PLUS Loans, Scholarships, Stafford Loans, Student Loan News, The Financial Aid Process tagged , , , , , , , , , , , , at 6:57 AM by Joe From Boston


With colleges heading back this week, you should have your financial aid already lined up, but it’s the perfect time to start planning for next year.

Let’s go over the basics:

* Fill out the FAFSA as early as you can.  Financial aid is first-come, first-served so get your paperwork in early.  If you ‘re waiting on a few last 1099s, use your existing paperwork to file early, and file an amendment when everything finally arrives.  If you use a tax prefessionsal, they will often file the FAFSA for you for little to no additional charge.

* You need the FAFSA for all federal loans, such as Stafford, PLUS and Perkins loans.  Some scholarships also require the FAFSA.

*Always exhaust your federal options first, such as Perkins, Stafford and PLUS loans, before looking at alternative sources of funding such as private loans or home equity loans.   Federal student loan offer borrower incentives and protections that you will not find elsewhere.

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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 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.

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 StaffordLoan.com – it’s a great resource for learning about the Stafford Loan, who qualifies, the maximum you might be awarded, etc.