How can dependent students get an auto zero EFC? Two conditions must be met.
First, your parent must have an adjusted gross income less than $30,000.
Second, someone in your parent’s household must be participating in one of the federal benefit programs detailed in questions 77-81, or your parent(s) are eligible to file a 1040EZ or 1040A federal tax return, or your parent is a dislocated worker, as specified in question 85.
Consolidating private loans may cost you anywhere from 1-5% of your total loan volume. Generally speaking the lender will roll that amount into your outstanding principle balance.
Neither one has an out of pocket expense at the time of consolidating, but your private loan volume with increase. You just need to decide if the loan term and interest rate provided warrant the 1-5% fee you will be charged.
Five most recent student loan consolidation blog posts:
I’ve heard of illegal immigrants marrying U.S. citizen so they could remain in the country, but marrying for a college education is a new one.
At the beginning of the month I ranted about how the FAFSA’s dependent status leaves many in the lurch. The magic number is 24 years of age to become an independent student and increase your financial aid allotment, unless you are serving actively in the military, are a veteran, working on a masters degree, are emancipated, or married. If you meet any of these conditions you are granted an independent status regardless of age.
According to an article published in the student-run newspaper The LumberJack one student tied the knot just so she could continue her education.
She explained that with the tightening credit market she was unable to secure a private loan despite her father co-signing. His excellent credit score and six figure salary were not enough. The problem was that he had too many co-signed debts between all his family members. Three daughters and his spouse are all in school.
So she decided to take the plunge for a couple of hundred dollars and is now eligible for thousands more in federal aid.
As we head into the warm summer months, many students will be turning their focus to seasonal employment, family vacations, and long days at the beach. Student loans rarely find a place on the summer checklist. I’d like to tell you that’s because students have squared away their financial affairs beforehand, but I don’t want to lie to you. Many students just choose to worry about it later, which can leave you scrambling in the fall. So before you engage in your mental holiday lets first take a quick look at the student loan process to make sure you are all set.
1. Make sure you’ve done your paperwork. All federal student loans like the Stafford loan require the completion of the FAFSA. If you haven’t done so, visit www.FAFSAonline.com for tips and suggestions on how to complete this important form and maximize your federal aid.
3. Determine who’s paying. For Stafford loans, the student is always the primary borrower and has the sole responsibility for repaying the loan after school. For PLUS loans, the parent is the borrower with the student having no legal responsibility to repay the loan. For private student loans, the student is the primary borrower while the parent serving as the cosigner; so while the parent has some obligation if the student doesn’t pay, it’s still principally the student’s obligation. For this reason, some parents prefer to borrow private student loans over PLUS loans.
4. Determine which is the better rate. Work out the numbers as to which of your borrowing options is going to be the best for you, both during and after school. Take a look at this example to see how private student loans and federal loans compare:
5. Apply for your student loans sooner rather than later. Financial aid offices have never been busier, so the sooner you can get your paperwork done, the sooner you’ll know what other financial aid options you’ll need to pursue. Here’s a handy, one-stop shopping page for you to get to every loan option available:
You’ve finally decided that now is the right time to get that graduate degree. You’ve put it off long enough and are mentally ready to commit the time and effort required. But before you get snug in that lecture hall there are a few t’s that need to be crossed and i’s that need to be dotted.
1) Admissions Test: You’re not getting in to any grad school if you haven’t taken your admissions test. Your major will determine which test you need to take to get in. Obviously if you’re a business major you’re not going to be taking the PCAT, which is the Pharmacy College Admissions Test. Instead you will need to take the GMAT. If you are unsure which admissions test you need to take read Knowing Your College Test (1 of 2) and Knowing Your College Test (2 of 2).
2) Selecting a Grad School: Find out which schools offer your graduate program. That may sound rather elementary but you’d be surprised how many students have their heart set on a particular school only to learn it doesn’t offer their program. U.S. News & World Report offers grad school rankings by location, tuition, school size, and test scores.
3) The Mighty Dollar: How much is this going to cost? If your company is not picking up the tab will you be able to afford the monthly payment when you get out of school? The Graduate Stafford loan and Graduate Plus loan are the most common loan options utilized.
4) Job Prospects: Perhaps the most important thing of all is knowing where your degree will take you. I know these days it is hard to predict with the economy in a state of flux, but knowing the demand in your field is important. You want a degree that will open doors not keep them closed.
It is no surprise that the default rate on Federal student loans is the highest it has been since 1998. It can be kind of tough to make your monthly loan payments when you don’t have a job. With unemployment rising, so to is people’s inability to keep up with their student loan payments. The good news? You do have options if you can’t pay. To find out what your options are you first need to determine whether you have Federal loans or private loans or both.
If you are unsure what type of loans you have, be it Federal or private student loans, then you will need to do 2 things. First, you should check the national student loan database, which will pull up every Federal student loan you have ever borrowed. To access this database you will need your four digit FAFSA pin and your social security number. If you do not know your PIN number you will have to visit the Department of Education’s PIN site first. Once you have figured out what loans are federal, you may want to check your credit report to see if you have any private student loans. If you only got loans by filling out the FAFSA each year then most likely you do not have any private loans. To access a free credit report the best site is annual credit report.com. If you find that you have both federal and private loans, you need to deal with each type of loan separately. Federal loans are entirely separate from private loans, even if they are serviced by the same company.
So what are your options? For your Stafford loans, grad plus loans, and even parent plus loans, you have 2 main deferment choices: unemployment deferment and economic hardship deferment. You also have in school deferment options if you decide to go back to school. In order to apply for one of these options, you will need to either apply online at your loan servicer’s website, or you will need to download a form from their website and mail it in (you can get your loan servicer name directly from the nslds website). In school deferment forms typically need to be mailed in because they must be stamped by your school.
If you apply for a deferment and you are not approved, then you still have options. Forbearance is your next best bet, and you have up to three years of forbearance time with federal loans. Forbearance consists of putting your loan payments on hold. Interest will accrue on the loan and if you do not pay the interest during this period it will be capitalized no more than four times a year. This means that the interest accrued will be added to the principal balance and you will essentially be paying interest on interest. You can typically put your loans on forbearance simply by requesting one through your loan servicer. Remember that you have up to three years of forbearance time.
For private loans, deferment and forbearance options vary by each loan company, and typically provide less time than with federal loans. You should contact your private loan company to see what your options are.
If you currently have a federal loan or loans in default, and you can’t afford the monthly payments that the debt collection agency is demanding, you should call the US Dept of Education’s default center at 1800-621-3115. They can buy your defaulted loan from the agency and work out a rehabilitation program with you. If you just ignore your defaulted loan then eventually the government will garnish your paycheck and take your tax returns and part of your social security benefits.
After a while it’s easy to lose track of how much money you owe and who you owe it too. In fact many bury their heads in the sand until after graduation.
Well, if you were ever curious about how much interest you’ve been accring each month on your grad stafford loans feel free to peek your head up from your sandy refuge. Below is a simple illustration of how your monthly interest is accrued.
Lets see how interest accrues between payments on April 15 and May 15 with $20,000 in student loans at 6.8%.
Average daily balance: $20,000 x 6.8% = $1,360
Days between payments (30/365.25) = .08214
$1,360 x .08214
Monthly interest: $111.71
Please note any subsidized grad stafford loan does not begin accruing interest until after graduation.
Many students have seen their federal student loans fall into a default status in recent months, and as a result are having their tax return money withheld and applied toward the outstanding balance. The only way to avoid your tax return dollars being withheld year after year is to get your loans rehabilitated.
Rehabilitation is simply the process of bringing a loan out of default and removing the default notation on your credit report. To rehabilitate your Stafford loans you must make at least 9 consecutive payments of an agreed amount within 20 days of their monthly due dates over a 10 month period to the U.S. Department of Education.
To rehabilitate your Perkins loan, you must make 12, on-time, monthly payments.
There are many dirty little secrets in the consolidation world. As previously discussed consolidation is not always a wise move, in that it merely extends your repayment terms, and thus, the amount of money you owe.
Another downside to consolidation is connected to your borrower benefits. Many students consolidated their federal loans a few years ago when borrower benefit packages were prevalent, but that is not the case today.
My buddy Jason consolidated his loans in 2003 and was offered a .50 ACH and 1% rate reduction discount after 24 consecutive months of on time payments. If he wanted to reconsolidate his loans today with the Direct Loan Center he would lose his 1% rate reduction and reduce his ACH discount to .25.
Just be sure to weigh the pros and cons while looking at every possible angle. And remember, just because you’re out of school doesn’t mean the homework stops. It is just as important as ever.
Five most recent student loan consolidation blog posts:
An unsubsidized loan is a loan for which the borrower is fully responsible for paying the interest regardless of the loan status. Interest on unsubsidized loans accrues from the date of the disbursement and continues throughout the life of the loan.
For example, if your unsubsidized loan is disbursed during your first semester of school in September of ‘09 it will begin accruing interest each month thereafter, but you will not be required to begin repayment of said loan until you fall below a half time or greater status in school. If you are in school 4 years a $5,000 loan can easily turn into a $6,500 loan by the time you get out pending your interest rate.
tough to make your monthly loan payments when you don’t have a job. With unemployment rising, so to is people’s inability to keep up with their 
