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Your Federal Loan Repayment

23 Sep repay-banner

Honest businessman

Alanna Ritchie is a content writer for Debt.org, where she writes about personal finance and little smart ways to spend (and save) money. Alanna has an English degree from Rollins College. Join our Debt.org Google+ Community

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As you fill out your intent to graduate forms and begin looking into the post-college future, your stomach might start to turn. You might start to panic and it may become difficult to breathe as you start imagining your monthly student loan payments. Stop, take a step back, BREATH, and let’s think about the situation.

But guess what? There’s good news!

Not only do you have a six month grace period after you leave school or drop below half-time attendance for your federal student loans, you also have numerous options for repayment plans. A grace period is a period of time after borrowers graduate, leave school, or drop below half-time enrollment where they are not required to make payments on certain federal student loans. Some federal student loans will accrue interest during the grace period, and if the interest is unpaid, it will be added to the principal balance of the loan when the repayment period begins. Repayment plans are designed to accommodate the needs of graduates entering the job market and receiving introductory salaries, while carrying the responsibility of handling additional bills, like rent, insurance, gas and groceries.

You do have options. If the standard ten-year plan with fixed payments is too much for you to handle, contact your lender to negotiate payments that match your budget. Not sure who your lender is? You can view all your federal loans and their lenders online from the National Student Loan Database.

Which Plan Meets Your Needs?

Cartoon Family Portrait

Federal student loans come with a variety of repayments plans that are offering based on requirements such as income, family size, or loan type. Examples of federal loans include Direct Loans or Federal Family Education Loans, which could be Subsidized Stafford loans, Unsubsidized Stafford loans, or PLUS loans. There are three main categories of repayment plans for you to consider.

First, the Graduated Repayment plan will allow you to begin making lower payments. Although, like the Standard plan, this plan must be completed in ten years, the lower payments gives you time to increase your salary. Every two years, your monthly payments will increase.

Second, if the Graduated plan is still more than you can afford, the Extended Plan allows you to take up to 25 years to repay loans. There is more flexibility with this option, as you can choose between a fixed or graduated payment.

Finally, there are four different repayment plans that consider your income as a factor. Some of these plans also consider factors like family size, spouse’s income, and total amount of loans. Although these have similar-sounding names, each has specific requirements and formulas which influence the monthly amount you will owe.

Four plans with income factors:

Federal Loan Consolidation

While you are researching different payment cycles and methods, you may consider a Federal Loan Consolidation. A Federal Loan Consolidation allows you to merge all your Federal Student Loans into one loan. This can include your Subsidized Stafford Loan, Unsubsidized Stafford Loan, and Perkins loans. Once all your Federal Student Loans are merged into one loan, you will only have one monthly payment and one interest rate attributed to the loans. However, note that this will likely not reduce your overall interest rate since it is weighted by loan. As you can see, a Federal Consolidated Loan may allow for an easier way to manage monthly repayment.

How Can You Prepare Now?

cartoon roadmapGet in the habit of putting a portion of your paycheck in savings now, before you start paying back your loans. This will force you to make a budget and spend less every month, so when the time for repayment comes, it will be easier to part with this percentage of your paycheck.

The money you save up during your grace period can also be used as an emergency fund of accessible cash for unexpected situations. This cushion can enable you to afford your loan payments even when you have unexpected expenses such as a flat tire, broken arm or speeding ticket. Preparing yourself for the future can protect your loan debt from growing any larger.

Make sure your loan servicer has updated information, including your phone number and email. Your servicer will need this information in order to communicate any new information on your loans, including when your next bill is due.

Choosing a plan and taking a proactive approach with your finances can help you smoothly adjust into your repayment period.

Your Federal Loan Repayment

19 Oct

Honest businessman

photo by: Debt.org

Alanna Ritchie is a content writer for Debt.org, where she writes about personal finance and little smart ways to spend (and save) money. Alanna has an English degree from Rollins College. Join our Debt.org Google+ Community

 

As you fill out your intent to graduate forms and begin looking into the post-college future, your stomach might start to turn. You might start to panic and it may become difficult to breathe as you start imagining your monthly student loan payments. Stop, take a step back, BREATH, and let’s think about the situation.

But guess what? There’s good news!

Not only do you have a six month grace period after you leave school or drop below half-time attendance for your federal student loans, you also have numerous options for repayment plans. A grace period is a period of time after borrowers graduate, leave school, or drop below half-time enrollment where they are not required to make payments on certain federal student loans. Some federal student loans will accrue interest during the grace period, and if the interest is unpaid, it will be added to the principal balance of the loan when the repayment period begins. Repayment plans are designed to accommodate the needs of graduates entering the job market and receiving introductory salaries, while carrying the responsibility of handling additional bills, like rent, insurance, gas and groceries.

You do have options. If the standard ten-year plan with fixed payments is too much for you to handle, contact your lender to negotiate payments that match your budget. Not sure who your lender is?  You can view all your federal loans and their lenders online from the National Student Loan Database.

Which Plan Meets Your Needs?

Cartoon Family Portrait

photo by Yesenia603

Federal student loans come with a variety of repayments plans that are offering based on requirements such as income, family size, or loan type. Examples of federal loans include Direct Loans or Federal Family Education Loans, which could be Subsidized Stafford loans, Unsubsidized Stafford loans, or PLUS loans. There are three main categories of repayment plans for you to consider.

First, the Graduated Repayment plan will allow you to begin making lower payments. Although, like the Standard plan, this plan must be completed in ten years, the lower payments gives you time to increase your salary. Every two years, your monthly payments will increase.

Second, if the Graduated plan is still more than you can afford, the Extended Plan allows you to take up to 25 years to repay loans. There is more flexibility with this option, as you can choose between a fixed or graduated payment.

Finally, there are four different repayment plans that consider your income as a factor. Some of these plans also consider factors like family size, spouse’s income, and total amount of loans. Although these have similar-sounding names, each has specific requirements and formulas which influence the monthly amount you will owe.

Four plans with income factors:

Federal Loan Consolidation

While you are researching different payment cycles and methods, you should consider a Federal Loan Consolidation.  A Federal Loan Consolidation allows you to merge all your Federal Student Loans into one loan.  This can include your Subsidized Stafford Loan, Unsubsidized Stafford Loan, and Perkins loans.  Once all your Federal Student Loans are merged into one loan, you will only have one monthly payment and one interest rate attributed to the loans.  As you can see, a Federal Consolidated Loan allows for an easier way to manage monthly repayment.

How Can You Prepare Now?

cartoon roadmapGet in the habit of putting a portion of your paycheck in savings now, before you start paying back your loans. This will force you to make a budget and spend less every month, so when the time for repayment comes, it will be easier to part with this percentage of your paycheck.

The money you save up during your grace period can also be used as an emergency fund of accessible cash for unexpected situations. This cushion can enable you to afford your loan payments even when you have unexpected expenses such as a flat tire, broken arm or speeding ticket. Preparing yourself for the future can protect your loan debt from growing any larger.

Make sure your loan servicer has updated information, including your phone number and email. Your servicer will need this information in order to communicate any new information on your loans, including when your next bill is due.

Choosing a plan and taking a proactive approach with your finances can help you smoothly adjust into your repayment period.

Your Federal Loan Repayment

25 Nov

Honest businessman

photo by: Debt.org

Alanna Ritchie is a content writer for Debt.org, where she writes about personal finance and little smart ways to spend (and save) money. Alanna has an English degree from Rollins College. Join our Debt.org Google+ Community

 

As you fill out your intent to graduate forms and begin looking into the post-college future, your stomach might start to turn. You might start to panic and it may become difficult to breathe as you start imagining your monthly student loan payments. Stop, take a step back, BREATH, and let’s think about the situation.

But guess what? There’s good news!

Not only do you have a six month grace period after you leave school or drop below half-time attendance for your federal student loans, you also have numerous options for repayment plans. A grace period is a period of time after borrowers graduate, leave school, or drop below half-time enrollment where they are not required to make payments on certain federal student loans. Some federal student loans will accrue interest during the grace period, and if the interest is unpaid, it will be added to the principal balance of the loan when the repayment period begins. Repayment plans are designed to accommodate the needs of graduates entering the job market and receiving introductory salaries, while carrying the responsibility of handling additional bills, like rent, insurance, gas and groceries.

You do have options. If the standard ten-year plan with fixed payments is too much for you to handle, contact your lender to negotiate payments that match your budget. Not sure who your lender is?  You can view all your federal loans and their lenders online from the National Student Loan Database.

Which Plan Meets Your Needs?

Cartoon Family Portrait

photo by Yesenia603

Federal student loans come with a variety of repayments plans that are offering based on requirements such as income, family size, or loan type. Examples of federal loans include Direct Loans or Federal Family Education Loans, which could be Subsidized Stafford loans, Unsubsidized Stafford loans, or PLUS loans. There are three main categories of repayment plans for you to consider.

First, the Graduated Repayment plan will allow you to begin making lower payments. Although, like the Standard plan, this plan must be completed in ten years, the lower payments gives you time to increase your salary. Every two years, your monthly payments will increase.

Second, if the Graduated plan is still more than you can afford, the Extended Plan allows you to take up to 25 years to repay loans. There is more flexibility with this option, as you can choose between a fixed or graduated payment.

Finally, there are four different repayment plans that consider your income as a factor. Some of these plans also consider factors like family size, spouse’s income, and total amount of loans. Although these have similar-sounding names, each has specific requirements and formulas which influence the monthly amount you will owe.

Four plans with income factors:

Federal Loan Consolidation

While you are researching different payment cycles and methods, you should consider a Federal Loan Consolidation.  A Federal Loan Consolidation allows you to merge all your Federal Student Loans into one loan.  This can include your Subsidized Stafford Loan, Unsubsidized Stafford Loan, and Perkins loans.  Once all your Federal Student Loans are merged into one loan, you will only have one monthly payment and one interest rate attributed to the loans.  As you can see, a Federal Consolidated Loan allows for an easier way to manage monthly repayment.

How Can You Prepare Now?

cartoon roadmapGet in the habit of putting a portion of your paycheck in savings now, before you start paying back your loans. This will force you to make a budget and spend less every month, so when the time for repayment comes, it will be easier to part with this percentage of your paycheck.

The money you save up during your grace period can also be used as an emergency fund of accessible cash for unexpected situations. This cushion can enable you to afford your loan payments even when you have unexpected expenses such as a flat tire, broken arm or speeding ticket. Preparing yourself for the future can protect your loan debt from growing any larger.

Make sure your loan servicer has updated information, including your phone number and email. Your servicer will need this information in order to communicate any new information on your loans, including when your next bill is due.

Choosing a plan and taking a proactive approach with your finances can help you smoothly adjust into your repayment period.

Image

How Student Loan Debt Adds Up

2 Aug

College is all fun and games until your student loans and credit card payments are due. With the cost of college rising and more students attending than ever before, it is imperative that students consider how much debt they are willing to consume to pay for their higher education. The information graphic listed below shows a national snap shot of student loan and credit card debt.

But what happens after college? Students with federal loans are going to be expected to start paying off those loans as early as 6 months after they’ve graduated. Get ready and research your repayment options.

Student Loans Add Up

Infographic provided by Debt.org

 

The information graphic was provided by debt.org, America’s debt help organization. Their website is dedicated to educating students and parents on how to get out of debt.

The Extra Expenses After Tuition for Parents

1 Jul

Graduate Thinkining

At first glance, tuition seems like it should be the biggest and most important college expense. Nowadays, however, other fees and cost of living can add up to many times the simple cost of tuition, and parents need to be aware of what it will really take to put a kid through college.

Fees

Raising base tuition has become so unpopular for schools that many are turning to fees to raise revenues that once would have been covered by tuition. At Florida’s flagship school, the University of Florida, such as, students pay a $101 capital improvement trust fund fee, a $126 transportation fee and a $29 athletic fee, even if they aren’t athletes.

Other schools have it even worse. At the University of California Santa Cruz, more than 30 fees hike tuition from its base price of $11,220 to almost $15,000 — that’s a 34 percent increase.

Room and Board

Room and board is often the biggest college expense, especially for students who are attending public universities that don’t have a tuition price in the tens-of-thousands of dollars like private schools. The average room and board allowance is $9,205 – well in excess of the price of tuition at most public universities.

Cost of living also increases like clockwork every year, a fact to keep in mind if you’re saving up money well in advance.

Travel

If you don’t live within a couple hours of your kid’s school, then costs for moving and visiting can add up quickly. Purchasing a round-trip plane ticket for your son or daughter to come home for Thanksgiving, Christmas and summer vacations can add up quite quickly.

Extracurricular Activities

Joining clubs and organizations is a vital part of the college experience. If your child is particularly active in campus life, then dues of $50 and $75 every semester can start to add up fast. Other expenses, like T-shirts or convention travel, often come as a surprise to parents’ wallets.

The ultimate club expense, however, is Greek life. Sorority membership costs an average of $2,000 a year, according to the National Panhellenic Conference. That doesn’t include costs for activities, such as pledging, initiation, formals and travel.

Study Abroad

The popularity of study-abroad programs has exploded in recent years, and many students now feel like an undergraduate experience isn’t complete without some time in another country. However, with costs averaging around $3,400 according to a 2012 survey, that decision doesn’t come cheap.

Miscellaneous Fees

Random fees and charges are sometimes hard to plan for. Getting socked with an overdue library fine or parking ticket can be a very unpleasant surprise. Other fees may not be random, but still might have been overlooked in your planning. Most schools will require health insurance or a health fee (average: $2,200), a parking fee ($20 to $175), and books (average: $450).

Allowances

Once all the mandatory fees and costs of college are met, there’s still the need to have a college experience. If your child isn’t working on his or her own, then “beer and pizza money” has to flow through you or a student loan, and this can sometimes be the hardest expense to control.

Consider encouraging your kid to work during school holidays or take an on-campus work-study job for a few hours a week.

This article was provided by Debt.org. We can help inform students on financial planning when heading into college. Whether it is help with the financial aid process or consolidate their student loans or how to budget, our site has access to free information that can guide them through the process.

Using Your Credit Report to Dispute Old Debt

15 Apr

credit report cartoon

reviewing credit report

Your credit report is supposed to tell a lot about your financial background, but it may be saying too much.

Most negative financial information should not remain on your credit report indefinitely. The Fair Credit Reporting Act requires credit bureaus to remove most instances of debt after seven years.

If you are unsure of what your credit report looks like, you can go to annualcreditreport.com to get a free copy from each credit agency (Equifax, Experian and TransUnion). If you find that debt from over seven years ago is still present on any of your credit reports, disputing the obsolete debt with one of the credit agencies may help to remove the information and should help your credit score.

When looking over your credit reports, you may also find incorrect information like debt that isn’t even yours; this, too, can be disputed and corrected.

Steps to Remove Old Debt from Your Credit Report

  1. Obtain All Three of Your Credit Reports. Request a copy of your credit report from each of the three credit reporting agencies to confirm all information is correct and consistent. Old debt may show up on one of your credit reports and not the others.
  2. Confirm that it Has Been Over Seven Years. Calculate the time between the date the account was charged off (as uncollectible) and the current date. Keep in mind that an account is not charged off until you have failed to make a payment for 180 days. This means that a debt must be 7 years and 180 days old before you can dispute it and consider it obsolete.
  3. Contact the Credit Bureau. After you find your three credit reports, one or more of them will contain the credit bureau that listed your debt. Your credit report will include contact information for the credit bureau. There are also dispute forms available online that will help quicken the process. When you dispute an old debt, the credit bureau will ask the creditor reporting it to verify. If it can’t, the debt will be removed from your credit report.
  4. Contact the Reporting Creditor. It doesn’t hurt to send the same information that you sent to the credit bureau to the reporting creditor directly. This may help speed up the process.
  5. Follow Up. To keep your file on the top of the pile, call to follow-up a few weeks after you send your first form of communication.

Disputing Debts that Aren’t Yours

 call center

It can be frustrating to receive a phone call from a collection agency trying to collect a debt that is not yours, but worse, it can damage your credit. If this has happened to you, these steps can help:

  1. Check Your Credit Report. If you find incorrect information, follow the dispute process detailed on your credit report.
  2. Talk to the Debt Collector. No one can correct the mistake if the mistake has not been pointed out, and the faster you point out the mistake, the faster it can be resolved.
  3. Write a Letter to the Debt Collector. It is best to send your dispute in writing even after speaking over the telephone, for documentation. In the letter, note the date, time and person you spoke with on the phone and what was said, and explain your dispute in as much detail as possible.
  4. Know Your Rights. According to the Federal Trade Commission, a debt collector cannot keep contacting you after you’ve sent a letter disputing the debt. If you keep receiving phone calls and think you are being harassed, you can file a complaint at http://www.ftc.gov/.
  5. Never Pay a Debt that is Not Yours. Once you make a payment, you are assuming responsibility for the debt, and no matter how large the debt is, it will still count against you.

The best way to make sure your credit report isn’t selling you out is to stay up to date with your credit history. Take advantage of the free annual credit reports, and stay informed. If you spot an error, work to get it fixed immediately.

Bio: This is article was provided by debt.org, America’s debt help organization. Debt.org educates students and parents on how to get out of debt.

When Should I Start Paying Off Debt?

3 Dec

College is a time when students worry less about incurring debt and more about learning and enjoying new-found freedom. But as graduation nears, you’ll have to test the debts you’ve taken on during school.

Getting out from underneath debt

Graduate carrying heavy debt load

If you’re like most students, you’ll have thousands of dollars in student loan debt. You might also have some credit card debt or a car loan to pay off. Becoming debt-free is made even more challenging because you may not yet be settled in a permanent job or career. Just remember that countless other new graduates are in the same place. While many young adults go about debt payment in less-than-ideal ways, this is your opportunity to get out of debt, develop good financial habits and possibly even save money along the way.

Plan of Attack

Before you start repaying your debts, go over what types of debts you have and find out when payments will be due. If you have credit card debts, you probably already know that you have to start making payments immediately.

Student loan lenders understand that graduates often need time to find jobs and begin earning a steady income. Because of this, there’s almost always a grace period, a time of about six to nine months between your graduation date and the date your first payment is due. Even during the grace period, however, you may still be responsible for paying interest charges. Check the details of your loan to find out when you’ll be responsible for paying interest.

Once you understand the bills you face, you’ll be better prepared to create a plan of attack.  Decide how much money you can afford to put toward paying down your debts. You’ll need to cover at least the minimum payments each month on your debts. If you haven’t found a job yet, are using savings to pay down debts or are borrowing from your parents, it’s usually best to keep your focus on the minimum payment.

Paying Down Debt

Paying down debt

counting money

Reevaluate these payments after you begin earning an income. Once you have a job, make it a goal to start making significant progress on your debts rather than just paying the minimum amounts. It’s helpful to keep in mind that for each month you stay in debt, it actually costs you more money by accruing interest. So if you make larger payments each month, you’ll get out of debt faster and save more money in interest.

You’ll need to once again reevaluate your monthly payments after the grace period ends on your student loans. Having this additional financial responsibility will usurp some of your monthly funds, taking away from your ability to pay down your other debts like an auto loan and credit card debts.

Even so, if you still have credit card debt, this should be your top priority; credit cards usually come with inordinately high interest rates, so this type of debt will end up costing you a much higher percentage of your original loan. Until you have credit card debt under control, pay just the minimum on your student loans and divide any extra money toward reducing your credit card bill.

Again, reevaluate your monthly payments if there are any changes in your finances. You’ll have to adjust your budget, for example, if you finish paying off your credit card debt, earn a promotion or receive a raise.

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Katherine Pilnick writes and blogs about issues touching on personal financial well-being and issues that influence it for Debt.org, America’s Debt Help Organization.

5 Ways Credit Cards Manipulate You Into More Debt

26 Nov

Katherine Pilnick writes and blogs about issues touching on personal financial well-being and issues that influence it for Debt.org, America’s Debt Help Organization.

Of all the financial advice anyone with a credit card can give you, maybe the most likely thing you would hear again and again is, “Beware of the special offers.” People are inherently trusting and seeking acceptance. But that’s one of the things you need to be most cautious about when you are dealing with credit cards. They are like vultures. They prey on the behaviors and patterns of the weak, and how many of us won’t use something like credit when it is offered to us? Take this financial advice and be wary of these 5 ways in which credit cards manipulate you into greater chasms of debt:

credit cards

credit cards

1.) Introductory Interest Rates: Oftentimes providers will start their duplicity at the beginning of your relationship. By offering you “introductory 0% interest rates for six months,” you may think that you can just keep spending and those purchases won’t charge you any interest rates. That is true — for the period of six months. If you pay off your balance in full in 179 days or less, you have won. You are not charged any interest. If, however you don’t pay for your purchases by the time the introductory period is up, then in some cases you will pay for all the interest compounded since Day 1. It’s a tricky thing and something you should look over when they first mail you those really tiny print notices.

2.) Promotional Offer Rates: Another thing that credit cards may do that you have to watch out for is offering you promotional offer rates — say for all purchases made between Thanksgiving and New Year’s, you will pay very low interest rates. However if these balances are not settled in full, again, you could be on the hook for the amount due. Just because there was no interest over that time period, you need to be wise to the terms of the agreement or you could be on the hook for the thing.

mountain of debt

mountain credit card mountain

3.) Loyalty Programs: A third reason to reach out for deeper financial advice is when credit cards begin offering you loyalty programs. Because you are a “preferred customer,” they will entice you to want to spend more by dangling offers in your face that you just can’t say no to. Maybe they will offer you some “rewards bucks” or allow you “special offer days.” Whatever the offer is, these loyalty programs are just interested in getting you to spend more money than you want to.

4.) Shopping Days Bonuses: Another way that credit providers lull you into economic submission is through their special programs offering “shopping days bonuses!” If they want you to use their credit card, say, on Black Friday or the weekend after Thanksgiving, the credit providers can offer you special incentives to spend more over that time period and in return you will get some silly little trinket. Even when credit providers offer substantive rewards, it is usually only because their customers have spent sizable amounts of money.

5.) Extension of Credit: A final reason to cry for financial advice is when a credit provider offers you, as a regular, on-time paying credit card customer, more credit. Extending more credit, particularly to those waylaid by maxed out cards already, is dubious for sure. People who have reached their credit limit may feel as though they need to take a step back and settle their debts. But when a credit card says, “No, it’s OK. Here, take more!” they are deliberately making the easily victimized, victims themselves.

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