I have $60,000 in various student loans, but since consolidating my combined payment is only $300/month. I have no other debt. Do lenders view student loan debt differently due to the flexibility of the loans? Also, would they look more at the total amount of the debt or the monthly payment when determining the rate and loan amount?
With 20 years experience in the mortgage business, I have never seen a student loan that was in repayment treated any differently than any other long term debt. While you may be able to ask for a hardship deferal in the future, which is the only advantage on a student loan that doesn’t exist on a standard installment loan, no lender wants to anticipate that circumstance. As long as the payments extend past 10 months in the future, the lender will only use your monthly payment as part of your qualifying ratios. The total debt is not that important and would only be a minor factor. What will matter more is your payment history on the student loan: it should be perfect. It all comes down to the quality of your credit history (your FICO score) and your qualifying ratios of debt/income.
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Free College information on financial aid for students, scholarship, student loans and more.
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Like if I have $1000 now gathered from working as a student for 2 years, can I use that to pay some of the loan back? Or, is it that once I start paying back loans, I can't stop, and I must consistently pay them back every month?
Also, do student loans have minimum sums we are allowed to pay every month? Like can it be that i'm only allowed to pay if i'm paying in a minimum sum of $800 or $1000?
P.S. this is not for me, so its not like I can look over a contract or anything like that.
It seems like everyone who answers on this subject just refer you to a website. Here's my knowledge so far on my son's student loan… He just got accepted for his first fiscal year in school and the fine print states that if you pay $1000 when your payment is only $250 (example), then your next payment wouldn't be due until after those other payments are paid from what was left of the $1000, meaning, you have an extra three months of payments paid from that money before you had to pay again. Make sense? But no matter if you overpay or pay monthly, you do need to make sure you pay on time, or it could affect your credit rating. I'm not sure what you're saying on your second part, but all loans have a minimum payment due each month, if that's what you're talking about. So what it comes down to is that you can always pay more than what you owe. No bank will turn down money early.
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My student loans are through NelNet and I received a letter from NelNet instructing me to stop making payments. The reason they give is that my student loan account has been paid by a claim and now has a zero balance. I have had student loans since 1995; but I also have filed bankruptcy. What does all this mean? What claim paid my loans off? Did I or someone else get sued for the money?
That is a question they should be able to answer for you. Is it possible there was a class action suit? Or included in bankruptcy? Contact them and find out.
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Default: The Student Loan Documentary is a feature-length documentary chronicling the stories of borrowers from different backgrounds affected by the private student lending industry and their struggles to change the system.
In 2005 private student loans were exempted of ALL consumer protections. No matter when their loans were taken, many borrowers now find themselves in a paralyzing predicament of repaying two, three or multiple times the original amount borrowed, with no bankruptcy protection, no cap on fees and penalties and no recourse to the law. The consequences are dire, with stories of borrowers in financial and emotional ruin.
www.defaultmovie.com
A film by Aurora Meneghello and Serge Bakalian
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Federal student loan consolidation is a free federal program that allows anyone with outstanding federal student loan debt to combine their loans, extend their repayment term, and lock in their interest rate. The terms and conditions on all federal student loan consolidations are set by the U.S. Department of Education, meaning that all federal student loan consolidations are, at least initially, created equal. There are no prepayment penalties or fees, and every lender has to offer the same federal forbearance and deferment options and the same initial consolidated interest rate. This rate is based on a weighted average of the interest rates of all the outstanding student loans rounded to the nearest 1/8th percent.
So, if every lender is offering the same federal terms and conditions, and every consolidated loan will have the same initial rate, what’s the difference between consolidation lenders? The difference between lenders is in the borrower benefits that are offered. These differences can be pretty substantial, and by asking the right questions, smart borrowers can get the best deal on their federal student consolidation loan.
Interest Rate Reductions
The most common benefit offered on a federal student loan consolidation is an interest rate reduction. This benefit is usually offered in two parts: a .25% reduction for auto debit and a 1% interest rate reduction after 36 months of on-time payments. This is a great benefit that can greatly reduce the total amount of interest paid on the consolidated loan. On a $30,000 loan, this benefit alone can save a borrower over $6,500 in interest! Although this is an attractive benefit, there are a couple things to ask your consolidation lender before proceeding with the loan:
1. Ask the lender if the benefit will lock in after you’ve made 36 months of on-time payments. This means that, after the 1% interest rate reduction is awarded, the benefit can never be taken away, even if payments are made late in the future. Most consolidation companies will add the 1% back in if any payment is late after the benefit has already been awarded. Many people don’t worry about this, assuming that they will always make their payment on time. However, most consolidation loans will take over 10 years to pay back and the odds are a payment will be late eventually. Clarify with the lender when a payment is considered late. Any reputable company should provide at least a 10-day grace period before a payment is considered late. Remember, just because you have your payments set up to be auto-debited from a bank account doesn’t mean they will always be on time. If there are insufficient funds in the bank account, the payment can be rejected and considered late.
2. Ask the lender if the on-time payments have to be consecutive to receive the interest rate reduction. Many companies will take away the benefit if you put the loan into a forbearance or deferment. This can even include a deferment on payments if you decide to go back to school. Reputable lenders will not take away your benefit for exercising your federal right to put your consolidation loan into a deferment or forbearance.
3. Ask the lender what will happen to the benefit if the loan is sold. Regardless of what a lender tells you, many consolidation loans are sold. Make sure that if your loan is sold, you will not lose your rate reductions. There are horror stories of borrowers making 30 on-time payments to find out that their consolidated loan had been sold to a new lender who will not honor the 1% rate reduction they were initially promised.
Cash Back Rebate
A relatively new benefit being touted by consolidation companies is the cash back rebate. This is usually a percentage of the principal loan balance that is either applied to the outstanding loan or sent to the borrower as a cash payment. This can be a very attractive offer, especially when in the form of a cash payment to the borrower.
It’s hard to resist a check for thousands of dollars, but when compared to the savings from the interest rate reductions, the cash back rebate is usually not the best financial discount.
For example:
One lender is offering a 1.25% rate reduction for on-time payments, and the other lender is offering a 3% cash back rebate on a $60,000 consolidated loan. The lender offering the cash back rebate will mail the borrower a check for $1,800 after they make 10 payments on time. The other lender will give the 1% rate reduction after 3 years of on-time payments. The cash rebate sounds tempting, but when you realize that the 1.25% rate reduction could save over $32,000, it is clear the interest rate reduction is the superior benefit.
1. If you decide to go with a company offering the cash rebate option, make sure to read the fine print. Many companies require that a rebate form be submitted by a certain deadline to process the cash back benefit. If the cash back rebate form is not received, they will disqualify the borrower from the rebate.
2. Ask the lender what exactly is required to receive the cash back rebate before submitting a signed consolidation loan application. Many companies combine the cash back rebate with other borrower obligations. One company requires that a borrower enroll in their electronic newsletter with a valid email address before the rebate is awarded.
The federal student loan consolidation program is an excellent way to manage student loan debt as well as save thousands of dollars in interest payments. By asking the right questions and knowing what to look for, you can maximize your savings and make sure that you get the best deal possible on your consolidation loan.
Why should you consolidate student loans? The answer is simple – you lower your monthly payments to fit your budget, make repayment much easier and save money on lower interest rates.
Whether you have federal, private, graduate student loans or parent PLUS loans, you should consolidate those loans so you can manage your monthly finances.
As you start your new life and new career, you need your money for rent, new furniture and maybe a new car. You could be considering buying a home, getting married or starting a family. Whatever the case may be, this is the time when you need your money the most.
With the average post-secondary student graduating with over $20,000 in loans (Stafford and Perkins loans), you can see why it’s important to consolidate student loans and make them financially manageable.
When you consolidate debt, you lump your existing student loans into one large loan. By doing this, your monthly payment on the consolidation loan is much less than the total monthly payments of all your existing loans. And that provides you with the much needed money to get your life started the way you want.
I think you’ll agree that it’s much easier dealing with one lender and one due date instead of multiple lenders with multiple due dates. By consolidating your student loans into one, you get to manage one loan with one lender so you don’t have to juggle due dates and payments. The risk is missing or forgetting a payment is greatly reduced.
Student loan consolidation gives you the opportunity to get a lower interest rate. Many lenders are interested in your business and the interest rates you receive can be very competitive.
Federal student loans need to be consolidated on their own, separate from private student loans. They receive beneficial conditions and rates already, which can be lost if they are lumped with private student loans.
When you consolidate student loans, the consolidation loan pays off the existing student loans. By doing this, you essentially have paid off several loans at one time. This gets recorded on your credit report as successfully paying off loans. And that improves your credit score.
How does that affect you? If you’re looking to buy a car or get a mortgage, a better credit score means lower interest rates for you. That can save you thousands of dollars over the life of a loan or mortgage.
When you consolidate student loans, you can lower your monthly payments and get a lower interest rate. Dealing with one lender saves you from juggling multiple loans with multiple due dates. You also get the added bonus of improving your credit score. All of this adds up to saving you money and making your student loan more manageable.
Learn more at http://www.Saberhacer.com - After looking for scholarships and grants to fund your college education, student loans are a third option to consider. Learn the basics of programs available to students and families.
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What Loan company will take over my federal student loans when the loans are in forbearance so I can go back to school?
My loans are government loans from Saillie Mae. I owe them under $5000.
I heard about this company that will take over your school loans from them but I don’t know the name of the company.
No one will "take over" your loans. You will still owe the money to your lender when you are in forbearance. They will simply add interest every month while you are making payments.
If you are asking about defaulting the lender will just contract out with a collection agency to start calling and hounding you to mail them payments. If you make 6 to 12 months worth of willing and reasonable payments you can ask your lender to "rehabilitate" your loan. This is when you are issued a new loan and pay off the one in default so you can get federal fin aid again. Again, rehabilitation can only be done after you have made 6 to 12 months of payments.
An in-depth exploration and expose of the predatory nature of the student loan industry
For the past thirty years, college tuition has risen at double the rate of inflation, with the cost largely shifting to student debt. Alan Collinge argues that student loans have become the most profitable, uncompetitive, and oppressive type of debt in American history.
In an unprecedented analysis of this $85-billion industry, Collinge covers the history of student loans, the rise of Sallie Mae, and how universities have profited at the expense of students. The Student Loan Scam includes stories from people across the country about how both nonprofit and for-profit student loan companies, aided by poor legislation, have shattered their lives–and livelihoods. With nearly 5 million defaulted loans, average undergraduate borrowers leaving school with $20,000 of debt, and average graduate borrowers accruing $42,000 in debt, this crisis is growing to epic proportions.
In this clarion call for social action, Collinge offers pragmatic solutions, including returning standard consumer protections to student loans.
“Collinge has lived through the national student debt crisis and has an astonishing tale to tell. Read and be outraged.”
–Anya Kamenetz, author of Generation
“Alan Collinge has been to student-loan hell, and has managed to survive to tell about the experience. Turning his personal nightmare into a cause for activism, Collinge has emerged as one of the most effective critics of the student loan industry and its patrons in Washington. Readers will be as outraged as he is with what passes for federal student loan policy.”
–Barmak Nassirian, Associate Executive Director, American Association of Collegiate Registrars and Admissions Officers (AACRAO)
“Students and parents planning to borrow money to finance a college or technical school education should read Alan Collinge’s warnings and advice before they sign any loan papers.”
–David Cay Johnston, author of Free Lunch and Perfectly Legal
“If you plan on borrowing money for college, spend a few extra dollars and buy a copy of The Student Loan Scam. Relevant and deeply timely, this book’s excellent advice could very well save you thousands of dollars and spare you a ton of grief.”
–Lynn O’Shaughnessy, author of The College Solution: A Guide for Everyone Looking for the Right School at the Right Price
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