• Lower your monthly payments
  • Reduce stress and live your life
  • Avoid personal bankruptcy court

The Tricks of Student Loan Servicers

Who would have known that the road to student loan is has been made even more difficult because of the secrets and trickery done by the student loan servicers? Yes, it is true—there are things that these student loan servicers are not telling you, and below is a list of those things you may not have known regarding your student loans.

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What Your Student Loan Servicers Don’t Tell You

Here are a few things that your student loan servicers do not tell you unless you ask them.

·         When Your Late Fees Are Added To Your Loans.

Whenever you have a student loan and you are given specific payment requirements, you are expected to meet those payment deadlines or risk having to pay a late fee. However, there are times when your student loan servicer fails to inform you of when the late fees are added. This could be an even bigger problem when late fees start to build on multiple loan accounts. Some companies take a payment on one loan and access it evenly among all of your loans. This is an illegal action, and if your servicer is responsible for doing this without your knowledge, you should report the company.

·         Whether Or Not Your Minimum Payments Are Correct.

Most student loans require you to make a minimum payment each month. However, when you have your loans deferred, your minimum payments could be the wrong amount. If there is a misunderstanding of what your minimum payments should be, it could result in your underpaying causing a late fee to be added to the loan. To prevent this, make sure to understand every aspect of your loan to know what you are required to pay. If you suspect foul play with your student loan servicing company, you should contact them immediately for answers.

·         What Happened To Your Grace Period?

In most cases, lending companies give you a grace period where you are not charged any late fees if you make a payment after the due date. Some grace periods last for 30 days up to 45 or 60 days. If you are not aware of any grace periods with your loan, ask to see if a grace period was included with your loan. If you do have a grace period and discover that late charges were still placed on the loan, contact your student loan servicer to get the charge removed.

·         Tax Information Needed For A Tax Deduction.

When you are paying back student loans, you are eligible to receive tax deductions on the interest you are paying back also. Some student loan servicers do not inform you of this or provide you with the documentation to be able to do that. It is important to understand that you are entitled to this information and should be given it automatically. With this tax deduction, students can receive up to $2,500 in funds.

·         How Bankruptcy Affects Your Student Loans.

If you have student loans and need to file for bankruptcy, you should understand that no student loan is erased when you file bankruptcy unless you show proof of an extreme hardship that prevents you from being able to repay your loans. Some student loan servicers may tell you that student loans cannot be erased in bankruptcy. In some cases, you can get is taken away.

·         Being Protected From Creditors.

Student loan servicers typically assume the role of creditors when student loans become past due. However, just like all other creditors, there are legal limits that must be set when informing borrowers of what they owe. Creditors are not supposed to contact borrowers during a certain time of the day and for a set number of times each month. It is important that you know your rights to not be harassed by any creditors and exercise those rights if you ever need to do so.

What You Can Do

Your student loans are definitely something that should be taken seriously. After all, this may be the first loans that are in your name, so you must take of them in order to keep your credit in good standings. Depending on the types of loans that you have, there are different times you will be required to start paying back the loans. You want to make sure you are ready to take on the challenge of repaying your student loan debts. For further information on any student loans that you may have, consult the Federal Student Aid website, and you should be able to find the answers to any questions you may have.

Student loans can be a hassle to handle, and your student loan servicers may be there to help you handle them, or can hurt you by not telling you certain things that you should know. When you are ready to repay your loans, look at this list to remind of what your servicers will not tell you.

Alternate Ways to Handle Student Loan Debt

Parent’s that have one or more children in college will have accumulated student loan debt. Furthermore if the child is placed on college suspension or graduating will owe on the average $30,000 in student loan debt.  In fact those graduating this year the debt may even be more simply because Congress was unable to reach a decision regarding the interest rates on government issued student loans.  The interest rates just doubled from the 3.4% to 6.8% for federal student aid which includes both subsidized and unsubsidized loans.

Handle Student Loan Debt

This of course does not apply to a child taking out or the parent signing a promissory note to obtain a loan through a financial institution. At the same time young adults between the ages of 19 to 28 have to worry about the professional job market. The job market for many of these college graduates will be bleak to say the least. Since they will be up against adults that have lost their job because of outsourcing or the business has foreclosed do to the economy. These adults have experience along with high education will most like get the job before the new graduate from college.

Of course if the bachelor degree is in the following fields of science, technology, medical, research, STEMS or mathematics then finding a job is slightly easier compared to other saturated fields. Unfortunately for these individual’s it might take months to years before they can find employment in their field of study. While the graduate is continuing to look for employment and still not working then how will they handle student loan debt?

Ways to Qualify for Repaying Student Loans

Consequently parents, graduates or young adults have two options when it comes to handling student loan debt and the interest of loans that equaling $30,000 or more. Parents and young adults struggling with student loan payments may qualify a deferment or make payments on the interest during forbearance. Many of the deferments are not done automatically so the individual would need to submit a request to the financial institution that services the loan. In addition the person would also need to contact the college or university financial aid office. If at any time the student is in college part-time, in grad school or a career/technical school, along with not being able to find full-time employment or unemployed are all ways a person may qualify for a deferment from the loan. Another way to have a student loan deferred if they have experience economic hardship do to being away for military service, natural disaster and being in the Peace Corps. There are several websites that have information available about getting a loan deferment. One of the websites that is important to check with at the beginning of each New Year is the Federal Financial Aid or FAFSA at the www.FAFSA.GOV.  The application should be completed no later than the first of March each year or as soon as all the prior year’s tax information is available to them.

Two Types of Forbearance

  • Mandatory is for students who do not qualify for a deferment.  However it can be requested if the student is in a dental/medical internship, medical residency program, a national service program, providing teaching service, or have been activated by the governor as a member of the National Guard. The other way a person may receive mandatory forbearance if the student loan payments each moth totals more than 20% or more of their gross income.
  • Discretionary is only granted by the financial institution that gave the student loan. This helps the student to learn the best way to handle student loan debt.

If the choice is not to pay the interest but to let the interest of the student loan accumulate then this may also be capitalized. Capitalized means that it can be added to the principal balance resulting with the person paying interest on it as well. Then again if they do not qualify for either deferment or forbearance the next step is to negotiate a change in the repayment plan. Parents and college graduated adults for this reason should go to the Studentloans.gov website. There they can use a repayment estimator to see if they are eligible for a variety of payment plans and give them an estimate of monthly payments. This way they can begin to handle student loan debt in their budget.

Consolidate Student Loan Payments

However parents and college graduates might find that this simplifies to a onetime payment each month.  People need to look at all payment plans before making an important decision and learn how to handle student loan debt. These loans usually have a 30-year term which will increase the interest in the long run. This will also mean for the college graduate that they will be paying on the student loan until they are in their 50’s and have a family to take care of along with its responsibilities. Of course if the parents are paying for more than one child in college and financial responsibilities until that graduate student gets on their own. These individuals will be paying on student loans until their 60’s before the student loan is completely paid off.

In this case parents and young adults should compare any new payment to their current monthly payments to make sure the best option is a direct consolidation loan. Provided below is several types of loans that can be placed into a direct consolidated loan. People should check on the financial aid government website to see if there have been any changes to the loans for college students.

  • Direct subsidized/unsubsidized
  • Federal Family Education Loan Program (FFEL)
  • Parent Plus Loans
  • Federal subsidized/unsubsidized Stafford Loans
  • Supplemental Loans for Students (SLS)
  • Direct Plus Student loans
  • Federal Perkins Loans
  • Health Education Assistance Loans

A final point is there is a movement to forgive the debts of student loans. The following video discusses the idea of forgiveness and why it might not be such a good idea for the economy.