Student loan servicers might give you the wrong information

Our team was alarmed to learn that recently, the Consumer Financial Protection Bureau found that many loan servicers actually give student loan borrowers incorrect or insufficient information about public-service loan forgiveness. There are currently several money-saving options for many student loan borrowers. However, if borrowers are unaware of these options, these programs become useless, and the borrower is left missing out on potentially, significant savings on their monthly student loan payments.

In another alarming moment, in the student loan industry, the U.S. Consumer Financial Protection Bureau and the Illinois and Washington attorneys general sued Navient Corp, the nation’s largest student loan servicer, in January. They lawsuits are alleging that it harmed student loan borrowers throughout the repayment process.

Among other things, the CFPB alleges that since at least January 2010, Navient misallocated payments, steered struggling borrowers toward multiple forbearances instead of income-driven repayment plans, and provided unclear information about how to re-enroll in income-driven repayment plans and how to qualify for a co-signer release. The CFPB is asking Navient to compensate the borrowers the agency says were harmed.

The Illinois and Washington suits make similar claims to the CFPB’s allegations and also allege that Navient, when it was part of Sallie Mae, made subprime loans to students, particularly those attending for-profit schools. Navient broke off from Sallie Mae Bank, one of the largest private student loan lenders, in 2014.

Navient has filed motions to dismiss all three cases and says the suits are based on new servicing standards that are being applied retroactively, according to a March 2017 fact sheet.

The lawsuits could potentially take years to play out “because of the sheer amount of evidence” that the CFPB, Illinois, and Washington have gathered during their investigations, says Suzanne Martindale, a staff attorney at Consumers Union, the policy, and action arm of Consumer Reports.

Regardless of the outcomes, it’s a good idea for borrow’s to regularly check their student loan accounts and make sure their student loans are being serviced correctly. Luckily there are a lot of tools and services that can help borrowers get an overview of current loan balances and repayment options. For more information

 

 

 

 

 

 

Keeping Those Part-Time College Jobs In Perspective

Many many young adults are starting college this month. For most of them, this also means, starting their first jobs. One common struggle for new college students is managing school, work, and their new found income. This tends to be a great lesson in prioritization and time management. It can be tempting for young college students to focus on making money in their part-time jobs, but their priority should be on studying and finishing that college degree.

For those that have scholarships, they may lose thousands of dollars in scholarship money if grades don’t meet a high average. No part-time minimum wage job in the world could make up for this type of loss. For others, college tends to get paid primarily through student loans and school-based grants. In this case, these loans and grants also depend on the student’s ability to stay in school and maintain a passing GPA.

Income from a part-time job can quickly become a distraction for college students. This supplemental income can start to provide students with spending power that they’ve never had before. However, it’s important to remember that the bulk of college and living expenses are coming from scholarships, loans, and grants, and all these can depend on the student maintaining high grades and or graduating.

In the case of student loans, if the student doesn’t maintain good grades and remain in school full-time, they can be required to start paying back their loans immediately. These loan payments would more than likely put the student in a position where their part-time job would no longer provide the income they need to live.

The point here is if you or your child is starting college it’s important that they keep those part-time college jobs in perspective. Remember that good grades and staying in school are a much higher priority than a part-time job income. Especially if you are using scholarships, student loans or grants to pay for college and living expenses.

Betsy DeVos Rolls back Obama-Era Student Loan Guidance

Education Secretary Betsy DeVos on Tuesday 4/11/2017 rolled back two Obama-Era memos intended to help protect student loan borrowers.

Student loan contracts aren’t serviced in-house by the Federal Student Aid Office. Instead, they are managed by third-party companies, which are awarded contracts by the government. Before the Obama memos, those contracts went to the companies that were best at collecting the debts.

Rather than rewarding the companies that cashed in on debts, the now-rescinded Obama guidance incentivized a good track record and sought to award contracts to companies with a history of helping borrowers.

While the Obama memos sought to give borrowers more options, transparency and better services as a means to prevent them from defaulting on loans, DeVos said that withdrawing the memos is intended to limit “the cost to taxpayers” and “increase customer service and accountability.”

Devos’ withdrawal memo cited “a lack of consistent objectives” as the reason for rescinding the previous administration’s guidance.

The Department of Education did not immediately respond to NBC News’ request for comment.

So what does DeVos’ mean for those who have loans?

Attorney Adam Minsky, who has dedicated his practice to helping those with student loans, said the withdrawal only creates more frustration for borrowers.

“[The Obama memo] alerted servicers that how they deal with borrowers – the outcomes would be a factor in if they’re awarded a contract,” Minsky told NBC News. “[The memo said,] ‘We’re going to consider that.’ And the idea there was to incentivize the servicers to work harder to help borrowers.”

Now, borrowers are going to have to work much harder to figure out the best way to repay their loan and research programs that might benefit them, he said.

Student loan expert Heather Jarvis said the changes Obama made where long overdue, and walking them back sends a message to borrowers that the government values the businesses over those loans.

“Borrowers don’t get to decide who their servicers are and [the servicers] can make your life miserable if they’re not,” Jarvis told NBC News. “For years, the government was content to award contracts based on the collection success of servicers. But Obama became aware of the problems students and families face and decided we want you to do better.”

Jarvis said because the contracts are lucrative, companies will be responsive to the signals the government is sending.

Another issue Jarvis and Minsky took with the DeVos memo is the justification for the withdrawal.

Minsky said DeVos’ logic doesn’t make sense, as taxpayers aren’t affected by the provisions in the Obama memos, but are affected by borrowers defaulting on loans.

“I don’t understand her reasoning,” Minsky said. “I don’t understand how it’s costly to taxpayers – it costs taxpayer money when borrowers default on loans and don’t pay their loans. She certainly hasn’t, I think, made an effective argument to justify saving money.”

Jarvis called the withdrawal “ridiculous,” adding that student loan borrowers are American taxpayers.

Jarvis and Minsky offered the following advice to those who currently have student loans and could be impacted by DeVos’ withdrawal of the Obama guidance:

Do homework to find out what plans you are eligible for, don’t rely on your servicer to provide you with the correct information
Don’t take advice from your debt collector
Keep meticulous records on your loan
Ask to speak with a member of your servicer’s management, rather than the customer service representative who answers your call
If you have a dispute, try to send it to your servicer in writing
Contact the student loan ombudsmen group at the Department of Education – it’s their job to resolve conflict between borrowers and servicers
Contact your local representative and make them aware of existing problems with your servicer

In a statement, the Consumer Financial Protection Bureau, a government agency charged with protecting consumers from unfair, deceptive, or abusive practices in the financial sector, said borrowers deserve the best possible service from those issuing their loans.

“Borrowers deserve to be treated fairly and should be able to repay their debt without having to deal with illegal loan servicing practices. The CFPB will continue to find ways, working with all of our partners, to support and protect the 44 million Americans with student debt,” a CFPB spokesperson said in an email to NBC News.

Jarvis agreed, saying to treat the borrowers fairly isn’t asking for much.

“[Obama’s memo] was the latest they could do, and it was hardly anything,” Jarvis said. “It wasn’t a requirement, and I think pulling that back – it’s a signal to big businesses that [the government is] on your side. You’re more important to us than student loan borrowers.”

Things To Know About Refinancing Student Loans

Refinancing your student loans is a great way of ensuring you have a debt free future. When taking out a student loan, it is required that prospective borrowers sign a promissory note. This serves as a form of contractual agreement between the individual collecting the loan and the party giving out the loan. This is basically an agreement to pay off the amount collected together with an interest. It also includes other forms of agreements between both parties. A lot of students sign this agreement without putting sufficient thought into it. Borrowing the money is often received with more optimism that repaying the loan. Students, therefore, look for ways to adjust the terms of agreement. This is mostly because the interest rate increases the actual amount owed. This then leads to the issue of refinancing loans. This refinancing is usually at a lower rate of interest. However, it is also possible to go into this blindly. We will be taking a look at some of the things to know about refinancing student loans.

 

Things to know about refinancing student loans

 

Consolidating and refinancing your student loans are two different things: A lot of students who borrow funds for college often mistake consolidation for refinancing. While consolidating your student loans would also lower your interest rate, they are not the same thing. Both options are largely similar because they replace your former loan with a new loan on new terms. However, studies show that consolidating your loans would not reduce your interest rate. Consolidating your loan has its benefits, such as choosing the services you would prefer to work with. It also gives you the option of additional repayment on loans, but it will not still give you lower interest rates.

 

Refinancing your loan changes the terms of your loan: When you refinance your student loans, it changes the terms of the loan you collected. It may decrease the interest rate on your loan, but this depends upon whether you have a good credit score or not. If you have a cosigner, it would also help to reduce your loan’s interest rate. Refinancing basically puts you on a new loan structure, with new terms and new interest rates. A downside of this is that your interest rate could also increase.

 

Student loans may also come with federal protections: One of the benefits of a student loan is the fact that it comes with a number of federal protections just in case you are finding it hard to keep up with payments. There are some repayment plans that can entirely pause your loan or decrease the amount you have to pay. This, coupled with refinancing your student loans can make it more bearable when dealing with repaying your student loans.

 

Putting all of these things into consideration would help you make the right decisions when it comes to refinancing your student loans. Refinancing your loans can greatly reduce the amount you have to pay back to the financing party, you just need to go about it wisely.

Betsy DeVos- About the Secretary of Education

DeVos, a billionaire philanthropist, has been involved in public education for decades, yet has never worked as an educator herself. Here is what her controversial appointment may mean for the state of education and student loans.
Who is Betsy DeVos?
DeVos is the daughter of Edgar and Elsa Prince. Her father was the founder of the Prince Corp., an automobile parts supplier based in Michigan. She graduated from Calvin College, a Christian Reformed Church School.

Like her parents, DeVos is a staunch Republican and has been a lifelong supporter of the party.

She was the chairwoman of the Michigan Republican Party, and her husband ran for governor in 2006, but did not win.

DeVos and her husband have given generously to different charities, particularly those involved in the arts and education. They run the DeVos Family Foundation together, which provides funding for pediatric oncology programs, aviation training, and art development initiatives.
What is DeVos’s connection to Trump?
Interestingly, DeVos was not a Trump supporter. Instead, she actively supported Marco Rubio and campaigned aggressively against Trump.

In fact, in March 2016, she told the Washington Examiner in no uncertain terms that Trump was not her idea of a strong presidential candidate. “I don’t think Donald Trump represents the Republican Party,” she said in an interview.

Despite her deep connections to the Republican party, she has been known to cross party lines for the greater good of education. She even donated to the Clinton Foundation, showing she is willing to support causes she believes in, no matter where they originate.
What are her views on Education?
One of the biggest points of controversy around DeVos is her position on the common Core curriculum. Some organizations have accused her of being a supporter of common Core, something she refutes.

“I am not a supporter [ of Common Core] – period.” she stated in a November 2016 Tweet.

Some organizations she provided funding to did support the program, but she states that their stance on common Core was unrelated to her position or choice of donation.

One of her biggest areas of focus is on school choice, signaling that Trump intends to make private selection and voucher programs for low-income families one of the focal points of his educational goals.

That’s sure to raise the ire of teacher unions and public school advocates, who view voucher programs as taking away funding from their schools. But proponents of school choice, like DeVos, say voucher programs give parents and students a valuable voice in the direction of their education.
What will she do about Student Loans?
DeVos has focused most of her work on the K-12 space, and in fact, has no ties to higher education at all. Not much is known about where she stands on college and student loans, and Trump’s own stances are evolving, too.

In October 2016, Trump announced his proposals for reforms to the student loan system. His plan includes capping income-driven repayment plans at 12.5 percent of borrowers’ income and forgiving the loan balances after 15 years of payments. Currently, the government forgives balances after 20-25 years of qualifying payments.

Trump has also said he will hold schools accountable for reducing tuition costs and would institute a system that allows private institutions to manage lending.

To date, DeVos has not publicly commented on Trump’s proposals. But DeVos has campaigned heavily in Michigan for the privatization of many aspects of education, including voucher programs and charter schools. It is likely that she would support the privatization of student loans as well.

The Senate committee on Health, Education, Labor and Pensions seems optimistic that DeVos will make headway on student loan and education reforms. In November 2016, Senator Lamar Alexander, a Republican and the chair of his committee, posted on Twitter that he looked forward to working with DeVos:

“ I also look forward to working with her on the upcoming reauthorization of the Higher Education Act, giving us an opportunity to clear out the jungle of red tape that makes it more difficult for students to obtain financial aid and for administrators to manage America’s 6,000 colleges and universities.”
Looking Ahead
DeVos is a bold choice, given that she has no experience in higher education and yet will be responsible for overseeing $127 billion in annual federal student loans and the Pell Grant Program.

though her views on student loan debt are not entirely known at this point, based on her history, we can guess she will be an advocate for more choice and privatization.

Here’s What Student Loan Borrowers Can Expect With President Trump

With the recently new administration, Americans are wondering how many campaign promises President Donald Trump will keep. That includes Trump’s plan for tackling student loan debt.

But what do actual student loan borrowers want to happen?

It turns out that borrowers would like to see implemented under the Trump Administration is pretty close to what he promised on the campaign trail.

Even so, though student loan borrowers generally like Trump’s ideas, they aren’t sure their situations will improve while he’s president.

Demand For Federal Student Loan Forgiveness
When asked about what changes they want to see during a Trump administration, nearly half of respondents (44.3% selected “federal student loan forgiveness after 15 years.” For more than one-third of respondents (33.9%), student loan forgiveness after 15 years is the only change they most want implemented.

Right now, it’s possible to receive student loan forgiveness through a few programs. For example, borrowers on income-driven repayment plans can have their remaining debt discharged after 20-25 years, depending on the program. Public Service Loan Forgiveness wipes away remaining debt after 10 years of consistent payment (made after October 2007) and working in a qualifying public service position.

Unfortunately, not all borrowers qualify for these types of forgiveness programs. And considering the long repayment time lines, it’s possible that there is no debt left to be forgiven by the end of the term for those who do qualify.
Federal Student Loan Refinancing
In addition to a national student loan forgiveness program, a significant number of borrowers (31%) are also interested in a federal program to refinance student loans.

Right now, it’s only possible to consolidate federal student loans through the Department of Education – but it’s not possible to refinance to a lower interest rate.

Borrowers do have the option to refinance student loans with private lenders, but there are a few potential downsides. For instance, refinancing federal loans with a private lender means permanently giving up access to government programs such as income-driven repayment and Public Service Loan Forgiveness.

A federal refinancing program could help a wider group of borrowers save money on interest charges, allowing them to pay off their deb faster, while retaining important federal protections.
Borrowers Unsure About Trump’s Impact on Student Loans
While on the campaign trail, Trump indeed talked about offering federal student loan forgiveness after 15 years. Yet borrowers aren’t exactly sure that a Trump Administration will actually be good for them.

About 40% of borrowers feel the Trump Administration will have a “somewhat negative” or “very negative” effect on their student loans. Another 41% of respondents stated they don’t think the Trump administration will have either a positive or negative impact on their student loans.

Only the remaining 19% were optimistic about Trump’s impact on their student loan debt.

So even though Trump’s campaign presented some ideas that resonate with student loan borrowers, they aren’t sure he will deliver.

What’s worrisom is some have reported they are changing their payment behaviors in hopes that someday the U.S. Government will forgive student loan debt. 20% are either not making student loan payments or have lowered their payments, instead holding out for a national forgiveness program.

The problem is that nothing is set in stone. Just because Trump presented the idea of a national forgiveness program doesn’t mean one will definitely be implemented – especially within four years.

Meanwhile, these borrowers are racking up interest charges, late fees, and putting themselves in danger of default by not making their payments on time and in full.
Cutting the Costs of Your Student Loans
No matter what happens under this new Trump Administration, you need to stay on top of student loan payments. There are resources available to help you effectively pay down your debt right now – and you don’t have to wait for the politicians to make their move.

Here are four strategies to consider when it comes to managing your student loan debt:

Income Based Repayment: If you’re struggling to make payments on your federal loans, consider applying for an income-driven repayment plan. Your payments are reduced according to your discretionary income, opening up monthly cash flow.
Student Loan Refinancing: Even though there isn’t a federal program for refinancing your student loans, you can refinance both federal and private loans through a private lender. If you can afford your payments, but want to lower interest rate, refinancing could save you thousands of dollars over the life of your loan.
Student Loan Forgiveness Programs: In addition to the Public Service Loan Forgiveness program, many states and schools offer help with student loans when you agree to take certain jobs, including teaching and nursing. Review the full list of student loan forgiveness programs to see if any match your background.
Employee Benefits: More companies are beginning to offer student loan repayment help as part of their employee benefits packages. Check with your HR representative to see if you can get help paying off your loans through your employer. If there isn’t a program, ask if one can be implemented. Student loan repayment help is one of the hottest up-and-coming job perks.

Student loan debt continues to put financial on many of us, regardless of political affiliation. Only time will tell what types of policies will be implemented to assist borrowers. But no matter what, we can all work together to find solutions to this problem.

Have you looked into the Student Loan Tax Break Yet?

Your student loans may be able to get you a tax break – here’s how.

Paying interest is no fun. But if you have student loan debt, you don’t have much of a choice.

Wouldn’t it be great if the government gave you a break on the student loan interest you pay each year?

Well, here’s some good news: You might be able to deduct a portion of student loan interest from your taxable income – up to $2,500 – thanks to the student loan interest tax deduction.

How the Student loan interest tax deduction works.
The IRS lets you claim the student loan interest tax deduction on From 1040, Line 33. Because it’s considered an “above the line” deduction (i.e., an adjustment to your income), you don’t have toitemize your taxes in order to claim it.

Keep in mind, this is a deduction and not a credit. That means, claiming this deduction will reduce your taxable income by up to $2,500. In terms of real dollars saved, your total tax bill could be reduced by up to $625, depending on your income and how much student loan interest you pay.
who qualifies for the deduction?
There are 3 qualification criteria you need in order to claim the student loan tax deduction:

Have a Qualified Student Loan: First, you need to have a qualified student loan. The IRS says that the loan must be taken out to pay for qualified education expenses. Not only that, but it can’t be a loan from someone related to you, or provided as part of a qualified employer plan. So, if your grandma offers you a loan for your education, and you pay interest to her on top of making principal payments, you can’t deduct that interest. The same is true if your employer offers student loans as part of a company benefit. Only loans from the federal government or a private lender will qualify.
Be a Qualified Student: Next, the loan must be taken out on behalf of a qualified student in order to deduct the interest. The student can be you, your spouse, or dependent. So, you can still deduct student loan interest from your income, even if the loan is financing your spouse’s or child education and not yours. However, no matter who that student is, they must have been enrolled at least half-time in a program at an eligible educational institution when the loan was taken out. The program should lead to a degree, certificate, or other recognized credential.
Meet Income Requirements: Finally, there is an income requirement. The IRS won’t let you claim the student loan interest deduction if your modified adjusted gross income (MAGI) is more then $160,000 (married filing jointly) or $80,000 (other filing statuses).

To see if you qualify and find out how much you might personally save on your taxes, you can use a student loan interest deduction calculator to run the numbers. The IRS also offers a handy tool to determine if you qualify for the deduction. It takes about 10 minutes to complete.
How the deduction impacts your tax bill.
Realize that a tax deduction reduces your income; it doesn’t mean a dollar-for-dollar reduction in what you pay in taxes (that’s credit). With a tax deduction, your tax bill is smaller because your taxable income is lower.

In the case of the student loan interest tax deduction, the maximum tax benefit is $625. Your actual tax benefit is determined by your income, filing status, and how much you paid in student loan interest.

Let’s say you file single, your MAGI is $45,000, and you paid $800 in student loan interest. Your income might be reduced by $800, but the actual impact on your taxes is to lower what you pay by $200.

It is still a reduction in what you owe, and when you combine the student loan interest tax deduction with other deductions and credits, it can make a big difference in your final tax bill (or refund).
How to claim the student loan interest tax deduction.
Start by taking a look at how much you paid in interest (not your total student loan payments). That information can be found on Form 1098-E. Each of your student loan services should send you a copy. You con find the interest you paid in Box 1.

Add up the amounts from all your forms and enter it on your tax form in the appropriate place. However, you might need to make sure you meet the income requirement.

According to the IRS, your MAGI is basically your adjusted gross income (Line 37 of the Form 1040) after adding back in certain deductions. Some of the deductions you add back include:

Student loan interest
One-half of your self-employment tax
Tuition and fees deduction
IRA contribution deduction
Certain investment losses
Exclusion for adoption expenses

For example, your adjusted gross income might be $40,000. However, you claimed $3,000 in IRA contributions and $1,000 in student loan interest. Plus, your side gig meant a self-employment tax deduction of $500. That’s $4,500 in deductions. To calculate your MAGI, add that $4,500 back to your adjusted gross income. You end up with a MAGI of $44,500

As long as your MAGI meets the IRS income requirements, you can still claim the deduction. If all those deductions you’re claiming put your MAGI over the top, you have to erase the deduction from your form.

The student loan interest deduction can be a great way to reduce your taxable income and lower your tax bill. It’s best used in conjunction with other tax breaks, so consider consulting a tax professional to find out how to best take advantage of your options.

Trump Takes Aim at the Dodd-Frank Act- What Does This Mean for your Student Loans?

One of President Trump’s latest executive orders aims to begin the rollback of legislation and financial regulations tied to the Dodd-Frank Wall Street Reform and Consumer Protection Act passed by Congress during the Obama administration.

The Dodd-Frank Act, among other things, established the Consumer Financial Protection Bureau (CFPB) to regulate the consumer financial markets after the 2008 financial crisis. 

But what does this mean for your wallet? And how will it impact your ability to repay your student loans? 
Why did the President sign this executive order? 
 

President Trump has called the Dodd-Frank Act a “disaster” in the past, and one of his campaign promises was to “dismantle” the legislation. 

According to President Trump and his top policy advisers, the Dodd-Frank Act is an example of government overreach and unnecessary regulation. 

“We have the best, most highly capitalized banks in the world, and we should use that to our competitive advantage,” said Gary Cohn, a former Goldman Sachs executive who now serves as the director of the White House National Economic Council in an interview with The Wall Street Journal. 

Cohn went on to say that U.S. banks are overburdened and highly regulated. He believes that rolling back the Dodd-Frank Act will be good for the economy by allowing banks to do more with their money. 

Cohn also said that this executive order is a “table setter” for more deregulation to come. 

The executive order also focuses on amending the so-called Volcker Rule, which limits the way banks can make hedge fund and private equity investments. Opponents of the rule say that it’s too vague, according to Forbes, and that repealing the rule could lead to a power shift on Wall Street. 
How will rolling back the Dodd-Frank Act impact consumers? 
While there is a great deal of focus on the Volcker Rule and issues related to banking, the rollback of the Dodd-Frank Act is likely to affect you more due to its potential impact on the CFPB. 

The CFPB has done a great deal on behalf of student loan borrowers. They offer protection from predatory fees charged by services, as well as encouraging transparency from lenders and other financial service providers. 

It’s even possible for you to submit a complaint to the CFPB about services. 

However, it’s not just about student loan borrowing. The CFPB also looks at credit card services, mortgage lenders, and pretty much any other financial product company. 

And what about student loan rates?

“If they dismantle Dodd-Frank, the banks are free to come up with any type of loans like the sub prime, from 2008, which could include high-interest rate loans to students,” says Julian Rubinstein, the CEO of American Asset Management. 

“The repeal would bring us back to post-2008 where banks could do pretty much anything they wanted and get bailed out by taxpayers if they fail,” explains Rubinstein, citing issues that rose following the repeal of the Glass-Steagall Act during the Clinton administration. 
Is the “fiduciary rule” on the chopping block? 
President Trump’s order could also impact you in terms of whether or not you can trust your financial adviser. 

The Department of Labor had created a fiduciary rule that requires investment advisers to act in their clients’ best interest. The rule was set to go into effect this April, but now it might be delayed. 

Wade Henderson, president and CEO of The Leadership Conference on Civil and Human Rights, thinks that rolling back consumer protection is likely to have a major impact on the finances of many people, especially those who are the most vulnerable. 

“Making the financial system more fair and transparent is essential to providing low-income and minority communities with more economic stability,” said Henderson in a press release. 

“Over the past decade, our country has learned heard lessons about what happens when the game is rigged and regulators turn their backs to reckless sub prime mortgages, payday loan debt traps, and shady bank account fees,” Henderson said. 
What’s next for student loan borrowers under President Trump? 
Close to 40 percent of student loan borrowers are concerned that the Trump administration will have a negative impact on their student loans.

And even though President Trump talked about changing student loan forgiveness programs, not much has been done in terms of student loans- at least not yet. 

President Trump’s pick for Education Secretary, Betsy DeVos, hasn’t said much publicly about student loans either. 

What you might see during the Trump administration, though, is an increase in robocalls from student loan services. 

Consumer groups are worried that President Trump’s pick for the chair of the Federal Communications Commission might decide to roll back rules designed to protect student loan borrowers from these calls.

Student Loan Rehabilitation

Purpose of the Rehabilitation Program
The loan Rehabilitation Program is designed to demonstrate your ability to make monthly payments after removal of the default status from your loan. Therefor, your payments must be consistent for a 10- month period. 
Am I Eligible for Rehabilitation Your loan is ineligible for rehabilitation if…

You have been convicted of…
You have a plead guilty or nolo contendere (no contest) to…
Or a judge has ruled that the loan is involved in…
criminal fraud in obtaining federal student aid funds. 

What is the Process? A representative from Default Collections will establish a monthly repayment plan for you. For 10 months, you must make the payments to meet the following criteria:

Payments must be voluntary. Payments received through garnishment or federal offset do not count. 
You made at least 9 payments within 20 days of your assigned due dates over the 10 consecutive months.
You cannot pay a lump sum or make double payments to qualify sooner in the 10-month period. Payments must be timely. 
You must have a minimum principal and interest balance of $500 at the time of rehabilitation (after you make you 9 payments). 

After the Rehabilitation Program, you will receive your Rehabilitation Approval Notice. 
Can You Make Monthly Payments? Before you decide to begin the Rehabilitation Program, make sure that you can make monthly payments. 
The most important aspect of the Loan Rehabilitation Program is that the payments must be consistent. Thus, even if you make 8 timely payments, or even if you make double payments 8 times, your loan will not be rehabilitated if you cannot make the 9th payment. 
Plan out carefully how you will make repayments for 10 months before beginning the program.
How to ApplyContact the Department of Education and inform them you would like to be placed on the Loan Rehabilitation Program. (800)621-3115.
Benefits and Drawbacks of Rehabilitation:Benefits:

Your rehabilitated loan will be eligible for future deferments and forbearance. This way, you can avoid a future default during financial hardship. 
You become eligible for future student aid if you decide to return to school. 
As compared to consolidation, the loan default notation on your credit report can be erased. 

Drawbacks:

You must make 9 consecutive monthly payments, without exception. It does not matter that you have made 8 qualifying payments if you fail to make the 9th one. 
There is no formula for determining your reasonable and affordable repayment amount, unlike through loan consolidation. Collectors can wrongly claim that you must pay higher amounts you may not find reasonable or affordable. 

Busting They Myths of Student Loan Forgiveness

 If you have student loans, you have no doubt heard about student loan forgiveness. You have probably seen ads on TV promising instant ‘student loan relief’ or even received promotional mailers from companies telling you they know the ‘secret’ to eliminating your student loans. Of course, they are willing to share that secret – for a price.
The number of scams involving high-priced student loan debt relief is staggering. It has gotten so bad that awhile back, Illinois Attorney General Lisa Madigan filed suit against two of these so- called student debt relief companies, charging them with deceptive marketing. It is only a matter of time before other states start cracking down.
But with student loan debt over $1.3 trillion and nearly 7 million student loan barrowers in default, there isno doubt borrowers need help finding real solutions. The hard truth is, there are not magical, instant tricks to make student loans disappear, but there are options that can make forgiveness an achievable goal.Take a look at the myths and the facts regarding student loan forgiveness.
MYTH: All student loan barrowers are entitled to enroll in the ‘Obama Forgiveness Program.
FACT: First, there is nothing called the ‘Obama Forgiveness program’ or ‘Obama Loan Forgiveness.’ There are a number of federal student loan repayment programs introduced in recent years that offer the potential for loan forgiveness. These plans include:

Income-Based Repayment (IBR): IBR is a federal repayment plan that allows you to make payments based on your income and family size. Payments are set for 12 months, and you must certify your income annually to stay on the program. Any balance remaining after 25 years on IBR will be forgiven. This forgiven balance may be subject to income taxes.
Pay As You Earn (PAYE): Similar to IBR, PAYE is a federal repayment plan that allows you to make reduced payments based on income. Only certain newer borrowers will qualify for PAYE. You must certify your income annually. Any balance remaining after 20 years on PAYE will be forgive; the forgiven balance may be subject to income taxes.
Public Service Loan Forgiveness (PSLF): This program provides opportunity for you to get out of your student loan debt in 10 years if you work in a public service job.

MYTH:  If I qualify for loan forgiveness, my student loan debt will immediately disappear.
FACT: Most borrowers who qualify for federal student loan forgiveness still have to pay back a portion of their debt – from 10-25 years’ worth – after which the remaining balance is forgive. However, these programs are designed to keep your payments affordable.
MYTH: If I don’t qualify for federal student loan forgiveness, I can just pay someone to arrange student loan forgiveness.
FACT: This is simply not true. Any person or company telling you otherwise is not being honest about what they can offer. Remember – if something seems too good to be true, it proably is.
MYTH: Without student loan forgiveness, I am stuck with whatever repayment terms my loan servicer gives me.
FACT:  Even if you don’t qualify for federal loan forgiveness under one of these plans, there are a number of repayment options, from Graduated and Extended Repayment to federal consolidation, that apply to much wider range of borrowers and may help make repayment more manageable.
 
Click here for more information on the Student Loan Forgiveness Programs!