Student Loans : News, Updates and Blog Posts

With graduation right around the corner for many-a-senior, the thoughts that occupy the minds of future grads probably revolve more around finals and parties than around repaying their loans. While graduation is absolutely a time for celebrating accomplishments, it also means that loan repayment is looming. Start planning now so that when the time comes, you’re ready and not scrambling to locate your loan paperwork.

Here are five ways you can prepare for repayment right now:

1. Locate your loans

This may sound simpler than it is. Many students lose track of their loans while in school. Whether due to neglect or the buying/selling of private loans, students can have a hard time tracking down who they owe. If you have federal loans (this includes Stafford, PLUS, Perkins) you can log in to NSLDS.ed.gov and find out all of your loan information, including who services the loan. Yes, the Department of Education outsources loan servicing, so while you may have a Direct Stafford loan, your payments may need to go to Great Lakes, for example. If you need to track down your private loans, request a copy of your credit report. This will list all of your loan lenders, plus it’s always good to know how your credit stands.
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If you have had any issues with your federal student loans, you may be familiar with the Federal Student Aid Ombudsman office. This office is responsible for mediating issues with your federal student loans or financial aid office. Students weren’t lucky enough to have this luxury for private student loans, that is, until now.

The Consumer Financial Protection Bureau created a private student loan Ombudsman office to handle consumer complaints with loan lenders, servicers, and collectors.

What does it really mean for you, the borrower? Well, for starters, a single federal agency is now responsible for overseeing private student loans, which will hopefully provide easy answers to families seeking assistance. This new office will allow families to file complaints, at which point the office will contact the loan lender to help resolve any issues. These could be issues such as you were billed while loans were in deferment, or your payments were not applies as specified. The CFPB will now be able to help resolve loan repayment issues between you and your private loan lender.

While this office does handle complaints, they are also available to answer questions you may have about borrowing a private student loan. For more information or to submit a complaint or question, visit http://www.consumerfinance.gov/complaint/ or call 1-855-411-CFPB.

In a recent State of the Union Address, President Obama mentioned a Special Direct Consolidation Loan available to some borrowers with federal loans. This loan is not your typical Direct Consolidation Loan, and is only available for a brief period this year. This is a great opportunity for borrowers with the old, FFEL loans, as it will make managing repayment a much simpler task. Let’s take a look at how this loan works.

Background

First, let’s understand a little bit about historical student loans. Before Direct Loans came into play, the Federal Family Education Loan (FFEL) Program included four types of loans: Stafford, Unsubsidized Stafford, PLUS, and Consolidation. These loans, while still federally guaranteed loans, were made by private lenders and serviced privately. Now under the Direct Loan Program, federal loans are funded directly through the government (though there are four companies who service the loan on behalf of the Dept. of Education).
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Public Service Loan Forgiveness is a federal program that rewards public service employees for working in their chosen professions. As you might suspect, the reward is forgiveness of your student loan balance, an offer that many seek but few are able to take advantage of.

The Department of Education has recently made improvements to the PSLF process. While the requirements remain the same, they are more clear, and there’s a variety of new documentation to help get you through the application process.

If you’re not familiar with Public Service Loan Forgiveness here’s a brief overview:

Who is it for?

Employees who have worked for a qualifying public service organization for a minimum of 10 years. This does not mean your specific role at the organization needs to qualify, you simply must work for a qualifying organization.

Qualifying organizations include:

• Federal, state, or local government organizations/agencies
• Non-Profit organizations that are tax-exempt under Section 501©(3) of the IRS guidelines

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I recently released my co-signer (my dad) from the burden of being responsible for my student loan payments. A co-signer is responsible for the payment of a student loan if the student who ‘owned the loan’ was unable to make payments, and deferment or forbearance wasn’t an option.

I thought this would be an easy, no ceremony (or notification) process needed. I didn’t realize how big of a deal this can be to your co-signer, the relief, and the adult-like responsibility you embody when you complete this process.
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The Occupy Wall Street movement has been going on for a couple of months now, and as I’m sure many are aware, the subgroup of Occupy Student Debt has captured the media’s attention. With tuition at astronomical numbers, and unemployment at a high rate, many students and graduates are unable to repay their loans. Because of this, OSD has a new plan to encourage higher ed reform: refusing loan repayment. In the Inside Higher Ed article Refusing to Pay, Libby Nelson writes:

“Most experts, even those who agree with the movement’s aims, would describe these goals as unattainable. The theory behind the campaign is that if 1 million students refuse to pay, they would face minimal consequences due to safety in numbers. But many experts on student finance worry about the impact on anyone who stops paying: student loans cannot be discharged in bankruptcy; lenders — especially the federal government — will go to great lengths to go after debt; and some borrowers currently frustrated by their debt may not realize the impact of non-payment on future financial goals.”

Student loan default can have massive consequences to the borrower, and it’s important to know what your options are if you cannot afford your loan payments.
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Let’s face it, financial strategy and planning is not always on the forefront of college students’ minds. There is a lot of great information out there to help students budget while in college, but many busy students don’t have the time or will to read it. Enter Financial IQ Webinars by Great Lakes.

Great Lakes is a student loan servicer that is providing free webinars to students on financial literacy topics. Open to all students (not just those whose loans are serviced by GL) the webinars will focus on Money 411, Credit Card Smarts, and Student Loan Repayment – Everything you need to know.

For busy students, these hour-long webinars can be a relatively quick and easy way to get a little more finance-savvy. Below you can find a list of these webinars with dates, times, and more detailed information.
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Student loan repayment is a constant struggle for many students and grads. From working 2 jobs to cutting back on other expenses, repayment is no easy task. That’s why we’re bringing you some creative solutions to solve your financial woes.

1. Start cyber-begging

It’s becoming more and more common to see students start their own blogs and websites dedicated to soliciting donations for their student loan accounts. This is now known as cyber-begging. If you’re even a little web-savvy, this could be a great way to share your story with the world. Keeping a blog lets donors know how you’re progressing in your career, showing them they donated to a worthy cause – you.

2. Join an existing repayment site

If blogging or web development isn’t your thing, don’t sweat it. There are existing sites that do the grunt work for you. One such website it Lily’s List. Started by four mothers wanting to make a difference, this student loan gift registry allows people everywhere to donate to a student’s loan. There is a $15 membership fee, but well worth it for students with family and friends willing to donate.

Another website that offers a similar service is SponsorMyDegree.com. This website allows students and grads to either pay off their current tuition or repay their student loans through the donations of sponsors. Sponsors can be people you know, complete strangers, or even corporations. It’s free to register, so why not?
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Robert Applebaum has an innovative idea, one that has been gaining popularity nationwide since 2009. What if to boost the economy, we forgive student loans? A radical idea, but it’s an idea that has been adopted by congressman Hansen Clarke (D-MI) who recently introduced the bill H. RES. 365, but more on that in a minute.

Applebaum’s website “forgivestudentloandebt.com” is dedicated to providing information about this idea and inspiring people to join the movement. The thought behind this grassroots movement is to stimulate the economy by allowing people to spend more money, rather than using it to solely pay off debt. Here’s some background straight from the source:

“ForgiveStudentLoanDebt.com is a grassroots movement that began as a proposal authored by Founder, Robert Applebaum, entitled “Forgive Student Loan Debt to Stimulate the Economy”  which he posted to a Facebook group by the same name in late January, 2009… ForgiveStudentLoanDebt.com was founded so as to take this growing grassroots movement to the next level through lobbying, education and advocacy for a complete overhaul to the way higher education is financed in this country.”

Congressman Clarke’s bill has the same goal. The short version is that this bill seeks to eliminate personal finance burdens of Americans in order to stimulate the economy by alleviating debt. This not only includes student loans, but mortgages and other types of personal loans as well. To read the full bill text, click here.

While Student Loan Forgiveness is not a new idea, the wide-spread, federal implementation of it has been called an idealistic and unlikely approach to stimulating the economy. However, individuals wishing to support this movement can sign the petition at SignOn.org. Whether you support or oppose this idea, change can not be effected without your input; write to your congressperson to voice your opinion on this issue!

To learn more about other forgiveness and repayment options, visit StudentLoanNetwork.com.

And don’t forget to let us know what you think. Does this bill seem reasonable? Do you think it will or will not work? Leave a comment below to share your thoughts!

The Department of Education is planning a transfer of federal loans to various loan servicers, including Great Lakes Educational Loan Services, Inc. The transition is part of a plan to have all of a borrower’s loans handled by one servicer, making it easier to manage your loan payments.

Who’s affected

This transition is planned for two categories which are as follows:

• “Rehabilitated/Reinstated loans with the Department of Education Student Loan Servicing Center”
  Students who have loans which have been rehabilitated or reinstated currently have them serviced by the DoE Student Loan Servicing Center. These will be transferred to Great Lakes Educational Loan Services, Inc. and this transfer is scheduled for September 21, 2011.
• “Direct Loans and FFEL Purchased Loans Split Across Great Lakes and Other Servicers”
  If you have federal loans which are serviced by Great Lakes, along with other services such as NelNet, your loans will be all be transferred to one servicer. For loans being transferred to Great Lakes, the transfer is scheduled for September 21, 2011. The transfer of loans to other servicers will commence upon the completion of step 1, which is tentatively scheduled for October 3, 2011.

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