To find out what type of federal government loan you have, visit the National Student Loan Data System (NSLDS). You can also click here to help you tell the difference between government and private loans.
William D. Ford Direct loans are made directly from the Department of Education to students, without the involvement of a private lender. Prior to July 2010, there was also a federal Family Education Loan Program (FFEL), also known as the guaranteed loan program. These loans were made by private lenders and guaranteed by the government. Many of the terms and conditions for the FFEL and Direct loan programs are the same. However there are some differences in repayment options. There are still many FFEL loans in the system, but as of July 2010, no new FFEL loans will be made.
You will need to complete a new promissory note to receive loans under the Direct Loan Program. You should check with the financial aid office at your school for specific instructions.
Federal loans, whether through a bank/private lender or the Department of Education, are funded and tightly regulated by the federal government. Private loans are not subsidized by the government, and therefore are not regulated as closely. Borrowers should generally maximize their federal loan options before resorting to private loans.
Banks and lenders – not Congress – set the interest rates, loan limits, terms, and conditions of private loans. They usually carry higher, variable interest rates, and lack the flexible repayment options of federal loans
Anyone who is enrolled in a degree, certificate, or other approved program at an eligible school and is a U.S. citizen or eligible non-citizen. In addition, borrowers must have a high school diploma, pass a test approved by the Department of Education or otherwise meet “ability to benefit” criteria. There is also a rule that students convicted under federal or state laws of sale or possession of illegal drugs cannot get federal student aid in certain cases
Guaranty agencies are state or private nonprofit agencies that administer the federal guaranteed loan program. The agencies insure federal student loans against default and pay off lenders when borrowers default. They also try to collect from borrowers. Guaranty agencies will still be around for a while even though the FFEL program was eliminated as of June 30, 2010. The agencies are still servicing and collecting on their existing FFEL loans.
Only in rare cases, including if you have new loans to consolidate that were not included in the first consolidation loan, if you are in default on a FFEL consolidation loan or if you want to get into the public service forgiveness program.
Consolidating private loans into a private consolidation loan may be a good idea if you think you can get a better deal. However, it is very dangerous to consolidate federal loans into a private consolidation loan. You will lose your rights under the federal loan programs once you choose to consolidate with a private lender.
Your payment goes first to accrued late charges or collection costs, then to any outstanding interest, and finally to outstanding principal. .
Interest on all federal loans is calculated on a simple daily basis.
Most do not, but it depends on the lender.
The waiting period after graduation or withdrawal from school and before repayment begins. .
A number of different programs are combined to form the Student Loan Relief Hero Plan, which can provide a degree of principal forgiveness, a lower interest rate and/or suspension of payments. Contact an SLR Counselor for more information
Typically there are some very simple options available to you despite what a collection company may tell you. Contact an SLR Counselor for more information
There is no specific federal law that requires private loan creditors to offer relief. If you are having trouble with a private loan, we can request a copy of your loan agreement to see whether the lender promised you any particular type of relief. We can also contact your lender to try to negotiate flexible repayment and other loan modifications on your behalf.
Delinquency means that you are behind on payments. Once you are delinquent for a certain period of time (usually nine months for federal loans), your lender will declare the loan to be in default. The entire loan balance will become due at that time. .
You are not eligible for new loans and grants. The government can also seize tax refunds, garnish wages without a court order, take a portion of Social Security payments, and charge very large collection fees. .
In most cases, you have to miss nine months of payments before you will be in default.
It depends on the grounds for default listed in the loan agreement. You can usually go into default on a private loan as soon as you miss a payment. .
Its depends on a number of different variables. The best thing to do is call and talk to a SLR counselor
The best ways are through consolidation or rehabilitation, but both of these must be implemented in the correct manner to ensure success.
Sometimes, but they usually require a large lump sum payment. .
Yes, but in most cases, there is a time limit on how long the negative information will appear. .
Yes, in limited circumstances. .
No, but you may qualify for a school-related discharge if the school closed while you were there or if the school falsely certified your eligibility for a loan. You may have other remedies if you were dissatisfied with your school, including state student tuition recovery funds.
Yes, in the Student Loan Relief Hero Program.
Yes. Some discharge options are only for certain federal loans.
Contact a SLR Counselor
It depends on the type of discharge, but you might have to wait six months and possibly up to a year or more.
Yes. In most cases, loan holders are required to stop collecting once they receive a completed discharge application. You can also request forbearance so that collection stops while you are gathering information for your application.
As of July 1, 2010, there is a new definition of “total and permanent disability.” Borrowers will qualify for this discharge not only if they are unable to work and earn money because of conditions that are expected to result in death, but also if they have conditions that have lasted or are expected to last for a continuous period of 60 months (5 years). Also, as of July 1, 2010, there are no longer conditional discharges. Borrowers can get final discharges as soon as applications are approved, but the Department of Education will still monitor borrowers for three years to check for earnings above allowable limits and for any new federal loans. New rules regarding veterans went into effect even before July 1, 2010. Veterans who have been determined by the Secretary of Veterans Affairs to be unemployable due to a service-connected condition qualify for this discharge without having to provide additional documentation from a doctor.
For Social Security, no. For V.A., yes, if you have been determined to be unemployable due to a service-connected condition.
If you have federal government loans, yes. This means that your estate will not have to pay back those student loans. Survivors can apply for a death discharge to cancel a borrower’s federal student loans.
Parent PLUS loans may be discharged if the student for whom the parent received the loan dies. Also, the death of both parents with a PLUS loan (assuming both took out the loan) is grounds for the “death discharge.” The death of only one of the two obligated parents does not cancel a PLUS loan.
There is no administrative discharge for private student loans if you die. Private loan debts will be handled the same way as other debts. That means that they will be part of your estate. This estate settlement process (also called probate) varies by state. Some private lenders will use their discretion and agree to discharge loans when a borrower or co-borrower dies.
Yes, but only if the private lender has a cancellation program. Most do not, but some such as Sallie Mae and Wells Fargo have announced full or partial cancellations due to death and disability.
There are several career-related discharges that will cancel all or a portion of your loan if you work in certain professions.. Some states also have loan forgiveness programs. These programs are not well publicized and can be grossly underfunded.
Yes, but it is much more difficult than discharging other types of unsecured debt like credit cards. You have to prove “undue hardship.”
Most student loans are not dischargeable in bankruptcy unless you can prove “undue hardship”, but there are a few exceptions to this rule. .
In some cases, yes. .
In addition to filing the regular bankruptcy petition in court, you also have to file a separate case, called an adversary proceeding.
You can reopen your bankruptcy case at any time to try to discharge the student loans. There should be no additional filing fee to reopen a case for this purpose.
The fact that you filed for bankruptcy will be on your credit report for ten years.
The government can seize tax refunds, wages, and even certain federal benefits like Social Security, all without first getting a judgment in court. In some states they can revoke professional licenses. .
Yes, there are some limits. For example, in an administrative wage garnishment, the government can take no more than 15% of your disposable wages. No matter what, you get to keep an amount equal to 30 times the minimum wage (now $217.50/week). With Social Security offsets, the government cannot take SSI payments. They can take Social Security disability or retirement benefits, but no more than 15% of the total benefit. No matter what, the first $750/month cannot be taken.
Yes. You have the right to request an administrative hearing. You may also be able to reduce or suspend collection if you can prove that collection will cause great hardship.
No. Private loan lenders have less collection powers than the government.
Not for collection of federal loans, but there is a time limit on private loan collection. The time limits for private loans vary by state, but are usually about six years after default.
You have the right to be free from harassment and abuse and to send a letter to request that the collector stop contacting you. .
Yes, but there are limits on how much government lenders can charge you. The amount of private loan collection fees must be described in the loan contract. .
The government has the right to sue, but rarely does so because there are so many ways the government can come after you without suing. Private lenders also have the right to sue and may be more likely to do so because they have fewer collection powers than the government. .
It depends on whether you are “collection proof.” This means that your assets and income are small enough to be protected by federal and state law from seizure by creditors.
Yes, including the right under the Service member Civil Relief Act to reduce the interest rate to 6% on any student loan, federal or private, incurred by a service member before active duty. .
Your loan servicer has probably stressed the importance of repaying your loan on time.
And if you don’t, you will receive unsubtle reminders in the mail of the serious consequences should you end up in default. Life has enough headaches. Let us deal with them by handling your loan payments.
Jobs have disappeared at alarming rates during the past couple years. The availability of fewer jobs has affected how much disposable income Americans have to spend on goods and services. Until the seventy percent of the U.S. GDP, which is fueled by consumer spending is restored, the economy won’t improve. The country’s recession has affected the psyche of the American public, too. Fear is a driving factor in today’s economy. Fear of losing health insurance, work and yes, fear of falling behind student loan repayment obligations. The argument could be made that no one deserves a bailout no matter what the circumstance. But that doesn’t change the fact that ground breaking and unprecedented solutions are required to solve new and unheard of challenges
You are no longer enrolled in school more than half time
Your student loans are in a repayment, grace, deferment, or forbearance period
You have graduated or are about to graduate
If you are a parent, you can consolidate your Parent PLUS loans at any time, as long as the loans have been fully disbursed. Parents can consolidate any time after disbursement regardless of the student’s enrollment status.
If your monthly student loan payments are breaking your budget, you want to ease your payment burden by extending your repayment time, you’re paying high or variable interest rates on your loans, you’re in a grace or repayment period of your loans, you’re a parent who prefers to consolidate loans taken out for your child, you want to reduce your student loan debt to improve your credit score, you’re about to apply for a mortgage or other major loan (student loan consolidation will improve your creditworthiness, thus increasing your chances of qualifying) or you simply want the convenience of making one student loan payment per month – it’s time to consolidate.
Also, if your interest rate is really high your monthly payments are most likely going to be high. If there comes a point when you are struggling to make your monthly payments, in danger of defaulting or just barely able to make the minimum payment it is time to do something. Letting your loan go to collection would be a bad idea, it would only cause more headaches for you and cause your credit rating to plummet, which would raise interest rates on any other loan you try and take out in the near future. Consolidating your student loan can lower your interest rate and monthly payment. It will increase the length of your loan, but at least you will be able to make those monthly payments and no longer have to worry about high interest rates.
You can’t consolidate your federal student loans while still in school, but you can with your private student loans. Even if you are not yet paying your private student loan, if you have yet to graduate, it still might be a good idea to start thinking about consolidation.
Bankruptcy is not something that will be effective in bankruptcy court. College graduates are getting into a whole new form of debt with student loans. This debt is good because they get an education out of it and don’t have to pay it back until their education is done. However, this debt is also bad because of the different methods of how it is handled. Let us handle it for you.
We believe student loan debt is more deserving of forgiveness than other types of debt for a myriad of reasons. First, most students who ever borrowed money to pay for school were encouraged to do so under the assumption that student loan debt was “good debt” – an investment in their future. But considering today’s rough job climate and dwindling wages that promise doesn’t always ring true. Second, unlike all other types of debtors, student loan borrowers have suffered inequitable hardships such as the removal of nearly all consumer protections, including statutes of limitations, truth in lending requirements and bankruptcy. The amounts originally borrowed by the students differ markedly from the amounts those same borrowers are expected to and often wind up paying. That’s where we step in. We want to lower your monthly payments and eventually make the whole bill go away.
Student loan debt is even more of an albatross for college graduates when lucrative employment opportunities are few and far between. Current research indicates that graduates are increasingly delaying major life activities because of student debt. Student loans are such a burden that more and more college grads are holding off on life milestones such as the following:
38% of graduates report delaying the purchase of their first home because of student debt
14% reported putting off marriage because of student loans
21% delayed having children because of education loans