Things You Should Know About Your Student Loans

When it comes to student loans nothing is straight forward, which is why it’s important to stay informed and fully understand the small print.

Student loans come with a lot of work, a lot of paperwork, and a lot of fine print. There are many things that people aren’t aware of until a mistake has already been made and it’s too late to fix it. With that in mind, here is a basic list of things you might not know about your student loans.

1. Bankruptcy will not erase your student loans.

Once you have committed to borrowing funds, you will be paying them back in full. The only exceptions to this rule is loan forgiveness, which comes with a strict list of stipulations and requirements, including working for a non-profit government facility, and death. These are hard times financially for a lot of Americans, but unfortunately not even bankruptcy will get you a free pass on your loans. Make sure you have a plan in place to pay them off, and stick to it as much as you are able.

2. Interest consolidation can catch you off guard.

This one certainly took me by surprise. I woke up one day, logged into my student loan account online, and saw that my principle balance had increased by over $100 overnight. An email arrived shortly after announcing the previously unexpected interest consolidation. My student loan provider took the interest that had accrued and consolidated it into my balance, thereby increasing the amount of interest that could further accrue. Luckily I was able to keep paying my loans down quickly and it wasn’t too much of a setback, but it certainly was a shock.

3. Subsidized vs. Unsubsidized Loans can make all the difference.

When you hear “grace period”, it sounds amazing. You get six months interest free to figure out your debt payoff plan? But there’s a bit of a catch to that. Federal loans will come as either subsidized or unsubsidized loans. Subsidized loans are offered when there has been proof of financial need. While you are enrolled in school at least half time, the government will pay the interest on the loan until you either graduate or leave school, followed by a six month grace period. Unsubsidized loans on the other hand, do not require proof of financial need, but you are responsible for paying interest, even while still in school. If you go into deferment, the same conditions apply. Interest can build up quickly, so be aware of how your loans operate.  Private student loans also accrue interest during the grace period.

4. Tax and wage deductions can be applied if you aren’t paying on time.

There are consequences for failing to make consistent on-time payments. Your wages can be garnished, and your tax return can be withheld and rerouted for repayment of your loans if you are behind on payments. It can also have negative long term effects on your credit score, so be sure you are on top of your payments as often as possible, and in touch with your loan provider when you are having trouble. Communication can save you a lot of trouble in the long run.

5. If your parents sign the loan, they are responsible for the costs.

Often it’s difficult to take out loans for school simply because many students are too young. At 18, there is usually little to no viable credit, which limits or eliminates options. Often, parents have to sign or cosign loans for their children. When parents sign the papers, they are held responsible, often under terms of collateral, such as losing their house or other assets if payments aren’t made. Many people aren’t aware of this, and often make irresponsible spending choices because of it rather than consistent payments on their loans. Don’t put your parents in a difficult position. Know about your loans, your payment schedule, and your budget plan and stick to it!

6. It’s not as scary as it sounds.

A lot of big words and scary paperwork comes with student loans. Pay attention and ask questions when you have them. Your parents, loan providers, and even helpful bloggers on the internet (like me) are happy to answer your questions. You’ll feel much better and less stressed once you take the time to learn about and understand your loan’s terms and conditions. It’s all going to be OK!

Interest On Your Student Loan Save You Money On Your Taxes?

Student loan holders, check your emails and your mail boxes! A form might be coming your way that could save you some money!

Student Loan Interest = Tax Deduction?

Student loan interest, in some cases, is tax deductible. As we head into tax season, some student loan providers will be giving online access to a 1098-E form so that you can claim your student loan interest as a deduction. You can claim up to $2500 if you are eligible! As always, however, there are some requirements that must be met first.

What are the Requirements?

According to the IRS, “you may be able to deduct interest you pay on a qualified student loan. Generally, the amount you may deduct is the lesser of $2,500 or the amount of interest you actually paid.”

If all of the following apply to your situation, you can claim the deduction on your taxes:

• If you are legally required to pay interest on an approved student loan
• If you then paid a minimum of $600 of interest on a student loan within the year 2015 (or the tax year in question)
• If you are filing your taxes as single or joint/married, but not married filing separately
• If you make less per year than a specific amount which is set by the IRS
• If you cannot be claimed as dependent on someone else’s taxes.

If all of these apply to your situation, then you should have no trouble filing a deduction for your student loan interest. Any payment towards student loan interest made before December 31, 2015 (through certain loan providers) is eligible as a deduction this spring.

How Does It Work?

When you file your taxes, the federal government will see your paperwork and say, “You made (insert amount here) this year.”

You will then be able to come back with a rebuttal in the form of your deduction and say, “No, I didn’t take home that much, because (insert amount here) went to my student loans.”  They will then decide whether or not you have a lower taxable income, based on how much of your money went to paying your loan interest.

Contact your loan provider, or use their online calculators to figure out your interest for the year, or log into your online student loan management account to see if they have provided you with a 1098-e form. Keep it handy so that you have it when it comes time to file your taxes.

Anything I Should Keep In Mind?

One thing I cannot stress enough, don’t change your repayment schedule. While there is a good chance that if you meet all the requirements, you will receive a larger tax return and a bigger tax break, you are not guaranteed either of those things and the possibility shouldn’t play a large factor in your payoff plan.

Here’s to hoping for savings!

What will your student loan cover?

When most people think about loans, it’s in the context of borrowing money to pay for something they want, such as a home, car or in the case ofstudent loans, a college education. Many students, however, are unsure about what expenses a student loan can actually cover. Most understand that the funds should be used for education-related expenses and not wasted on unnecessary items, such as alcohol or a new PS4, but determining what qualifies as an eligible expense may not be as easy as it seems. The most simple way to determine your borrowing limit is to refer to your school’s Cost of Attendance (COA).  In general, a student may not borrow more than the COA provided to them in their financial aid award letter.  To help students understand what expenses their student loans should cover, we’ve put together this list of college expenditures that are generally accepted under federal and/orprivate student loans.

1. Tuition

The majority of students who take out student loans use the funds to cover their college tuition each semester. This is the amount charged per credit or clock hour to enroll in classes and varies depending on the type of college students attend.

2. Room and Board

Student loans will cover the cost of on-campus housing (otherwise known as a dorm room) and meal plans. Commuter students, or those who live off campus, may have a portion of their living expenses covered through student loans, as well. This may include rent, utilities and food expenses.

3. Fees

Along with tuition, most students will need to cover fees for student services on campus. Some common fees include: activities, athletics, health and counseling, technology, transportation and student union fees.

4. Books and Supplies

According to College Board, students will spend an average of $1,200 a year on textbooks. In addition, they may also need to purchase other supplies, including: notepads, paper, writing implements, folders and other items necessary to complete assignments.

5. Equipment

Equipment typically includes computers, printers, scientific calculators and other materials required for classes, but may also cover microwaves, refrigerators, lamps and other dormitory necessities.

6. Travel

Students who live off campus may use student loans to cover the expense of travel to and from campus, including gas and maintenance on their personal vehicles. On-campus students may also use the funds to cover travel during school breaks.

7. Miscellaneous

Additional expenses that may be covered by student loans include study abroad trips (through the student’s home university/college), child care for dependent children, clothing and even cell phone plans.

Students should always check with their financial aid office and student loan lenders if they have questions about college-related expenses that may, or may not, be covered by their loans. Another thing students should keep in mind is that many of the expenses allowed under student loans are not considered a qualified education expense for tax purposes. For example, those who plan to take either the American Opportunity Tax Credit or Lifetime Learning Credit will not be able to include room and board, transportation, or health fees as an educational expense. To limit their tax liability, students should only borrow what is needed and consult a tax professional for advice.

10 Companies That Will Help You Pay for College Fee's

One of the best ways to pay for college is to get someone else to foot the bill. And as luck would have it, there are quite a few companies that offer tuition assistance or tuition reimbursement as an employee benefit–even if you’re only there a few hours a week. Why would they offer such a lucrative perk to someone working part time? It’s really quite simple. Many employers understand that this type of incentive may actually tempt you to work for and stay longer with the company. I know I would feel a sense of obligation if someone gave me $12,000 for college. Wouldn’t you? If you have to work to help pay your college expenses, consider looking into one of these companies that will actually pick up part of the tab.

1. UPS

Part-time employees of UPS are eligible to receive up to $5,250 in tuition assistance per year, up to a lifetime maximum of $25,000. Eligibility begins on the date of hire. Also, most full-time UPS employees started at the company as part-time or non-manager employees, including managers and executives!

2. Publix

According to the company’s website, employees may be reimbursed for not only traditional degree programs, but also some individual courses and online programs. Any associate with at least six months of continuous service, who works an average of 10 hours per week is eligible. Associates enrolled in a four-year college or university, may be reimbursed up to $3,200 annually, with a lifetime limit of $12,800. Associates enrolled in undergraduate courses at a two-year community college, technical program or individual course program may be reimbursed up to $1,700 annually, with a lifetime limit of $3,400.

3. Wells Fargo

Wells Fargo offers several scholarships to children of employees, ranging from $1,000 to $3,000 each. In addition, they offer their employees up to $5,000 in tuition reimbursement annually, for eligible tuition expenses.

4. Baxter

Regular employees may receive up to $5,250 per year for undergraduate courses at accredited colleges and universities. Upon management approval, employees may also receive tuition reimbursement for graduate-level coursework, as well.

5. Comcast

Comcast’s Education Assistance Program will reimburse approved tuition, books, and other educational fees up to$5,750 per calendar year.

6. Starbucks

As part of the Starbucks U Program, part-time and regular employees have the opportunity to take advantage of special student discounts (on books, tuition and more) and scholarships offered at select schools, as well as receiving up to $1,000 per year in tuition reimbursement. Eligible employees must have at least one year of continuous service before their classes begin.

7. Verizon

Verizon offers one of the better tuition reimbursement packages, providing its employees with up to $8,000 a yearin education benefits. In 2012, more than 23,000 employees took advantage of the program.

8. Bank of America

Associates, who have been employed for six months and work a minimum of 20 hours a week, are eligible to receive tuition repayment through Bank of America. Under the program, 100 percent of tuition-related expenses (up to $5,250 per calendar year) will be reimbursed for both undergraduate and graduate programs.

9. Oracle

Regular, full-time employees may receive up to $5,250 per calendar year in tuition reimbursement for courses related to their current or future responsibilities at Oracle. Management approval is required. Download PDF with full details.

10. Fidelity

Full-time employees with at least six months of service may apply for tuition reimbursement for up to 90% of of certain costs, up to $10,000 per year (!). Eligibility is subject to manager approval and the coursework must be at an accredited college or university and be work-related.

Of course, getting these benefits is not as simple as submitting your college tuition bill. Some companies will only reimburse your fees after you have completed the courses with a minimum grade (usually a ‘C’ or better) or can show that your college degree is related to your position within the company. Even those that do reimburse upfront may place conditions on your benefits, such as a requirement to stay with the company for at least two years after completing your degree. To ensure you get every dime available to you, contact your company’s HR department and ask about your educational benefits.  You may have to jump through a few hoops, but every little bit helps.

What's free money for college or career school!

Find and apply for as many scholarships as you can.

Start researching early, and meet deadlines, and you may be on your way to scholarship success.

Scholarships are gifts. They don't need to be repaid. There are thousands of them, offered by schools, employers, individuals, private companies, nonprofits, communities, religious groups, and professional and social organizations.

What kinds of scholarships are available?

Some scholarships for college are merit-based. You earn them by meeting or exceeding certain standards set by the scholarship-giver. Merit scholarships might be awarded based on academic achievement or on a combination of academics and a special talent, trait, or interest. Other scholarships are based on financial need.

Many scholarships are geared toward particular groups of people; for instance, there are scholarships for women or high school seniors. And some are available because of where you or your parent work, or because you come from a certain background.

A scholarship might cover the entire cost of your tuition, or it might be a one-time award of a few hundred dollars. Either way, it’s worth applying for, because it’ll help reduce the cost of your education. 

How do I find scholarships?

You can learn about scholarships in several ways, including contacting the financial aid office at the school you plan to attend and checking information in a public library or online. But be careful. Make sure scholarship information and offers you receive are legitimate; and remember that you don't have to pay to find scholarships or other financial aid. 

Try these free sources of information about scholarships:

• the financial aid office at a college or career school
• a high school or TRIO counselor
• the U.S. Department of Labor’s FREE scholarship search tool
• federal agencies
• your state grant agency
• your library’s reference section
• foundations, religious or community organizations, local businesses, or civic groups
• organizations (including professional associations) related to your field of interest
• ethnicity-based organizations
• your employer or your parents’ employers

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When do I apply for scholarships?

That depends on each scholarship’s deadline. Some deadlines are as early as a year before college starts, so if you’re in high school now, you should be researching and applying for scholarships during the summer between your junior and senior years. But if you’ve missed that window, don’t give up! Look at scholarship information to see which ones you can still apply for now.

How do I apply for scholarships?

Each scholarship has its own requirements. The scholarship’s website should give you an idea of who qualifies for the scholarship and how to apply. Make sure you read the application carefully, fill it out completely, and meet the application deadline.  

How do I get my scholarship money?

That depends on the scholarship. The money might go directly to your college, where it will be applied to any tuition, fees, or other amounts you owe, and then any leftover funds given to you. Or it might be sent directly to you in a check. The scholarship provider should tell you what to expect when it informs you that you’ve been awarded the scholarship. If not, make sure to ask.

How does a scholarship affect my other student aid?

A scholarship will affect your other student aid because all your student aid added together can’t be more than your cost of attendance at your college or career school. So, you’ll need to let your school know if you’ve been awarded a scholarship so that the financial aid office can subtract that amount from your cost of attendance (and from certain other aid, such as loans, that you might have been offered). Then, any amount left can be covered by other financial aid for which you’re eligible. Questions? Ask your financial aid office.

Learn about the eligibility criteria for the federal student aid programs.

Different types of aid (private scholarships, state grants, etc.) have different rules, called eligibility criteria, to determine who gets the aid. Here are the eligibility criteria for the federal student aid programs.

Basic Eligibility Criteria

Our general eligibility requirements include that you have financial need, are a U.S. citizen oreligible noncitizen, be enrolled in an eligible degree or certificate program at your college or career school, and more. Make sure you’re familiar with our basic eligibility criteria, and ask a collegefinancial aid office if you have any questions about whether you qualify.

Most students are eligible to receive financial aid from the federal government to help pay for college or career school. Your age, race, or field of study won’t affect your eligibility for federal student aid. While your income is taken into consideration, it does not automatically prevent you from getting federal student aid.

To receive federal student aid, you’ll need to…

Qualify to obtain a college or career school education, either by having a high school diploma orGeneral Educational Development (GED) certificate, or by completing a high school education in ahomeschool setting approved under state law

AND

Be enrolled or accepted for enrollment as a regular student in an eligible degree or certificate program

AND

Be registered with Selective Service, if you are a male (you must register between the ages of 18 and 25)

AND

Have a valid Social Security number unless you are from the Republic of the Marshall Islands, Federated States of Micronesia, or the Republic of Palau

AND

Sign certifying statements on the Free Application for Federal Student Aid (FAFSA) stating that

- you are not in default on a federal student loan and do not owe a refund on a federal grant and

- you will use federal student aid only for educational purposes

AND

Maintain satisfactory academic progress in college or career school 

In addition you must…

Be a U.S. CITIZEN or U.S. NATIONAL

You are a U.S. citizen if you were born in the United States or certain U.S. territories, if you were born abroad to parents who are U.S. citizens, or if you have obtained citizenship status through naturalization. If you were born in American Samoa or Swains Island, then you are a U.S. national.

OR

Have a GREEN CARD

You are eligible if you have a Form I-551, I-151, or I-551C, also known as a green card, showing you are a U.S. permanent resident

OR

Have an ARRIVAL-DEPARTURE RECORD

Your Arrival-Departure Record (I-94) from U.S. Citizenship and Immigration Services must show one of the following:

-Refugee

-Asylum Granted

-Cuban-Haitian Entrant (Status Pending)

-Conditional Entrant (valid only if issued before April 1, 1980)

-Parolee

OR

Have BATTERED IMMIGRANT STATUS

You are designated as a “battered immigrant-qualified alien” if you are a

victim of abuse by your citizen or permanent resident spouse, or you are the child of a person designated as such under the Violence Against Women Act.

OR

Have a T-VISA

You are eligible if you have a T-visa or a parent with a T-1 visa.

Start filling out the FAFSA at www.fafsa.gov.

The U.S. Department of Education’s office of Federal Student Aid provides more than $150 billion every year in grants, loans, and work-study funds to students attending college or career school. Visit StudentAid.gov today to learn how to pay for your higher education.

There is no age limit when it comes to receiving federal student aid.

Students With a Parent Who Was Killed in Iraq or Afghanistan

If your parent died as a result of military service in Iraq or Afghanistan after the events of 9/11, you might be eligible for additional Federal Pell Grant funding or for an Iraq and Afghanistan Service Grant.

Non-U.S. Citizens

Generally, if you have a “green card” (in other words, if you are a permanent resident alien), you will be considered an “eligible noncitizen” and will be able to get federal student aid if you meet the other basic eligibility criteria. Full details of which immigration statuses make you an eligible noncitizen are at our Non-U.S. Citizen page.

Students With Criminal Convictions

If you are incarcerated, have a conviction for a drug offense, or are subject to an involuntary civil commitment after completing a period of incarceration for a sexual offense, your eligibility for federal student aid may be limited.

Students With Intellectual Disabilities

Students with intellectual disabilities may receive funding from the Pell Grant, Federal Supplemental Educational Opportunity Grant, and Federal Work-Study programs in certain circumstances.

Staying Eligible

Once you’re in college or career school, make sure you stay eligible for federal student aid by paying attention to a few things, including keeping on track toward graduation. And remember to fill out your Free Application for Federal Student Aid (FAFSA^®) every year.

Regaining Eligibility

You might lose federal student aid eligibility in a number of ways. Some of the most common are that you

• are in default on a federal student loan,
• don’t maintain satisfactory academic progress in college or career school, or
• are convicted of a drug offense.

Know More about Loan Consolidation

A Direct Consolidation Loan allows you to consolidate (combine) multiple federal education loans into one loan. The result is a single monthly payment instead of multiple payments.

There is no application fee to consolidate your federal education loans into a Direct Consolidation Loan. If you are contacted by someone offering to consolidate your loans for a fee, you are not dealing with one of the U.S. Department of Education’s (ED's) consolidation servicers. To apply for a Direct Consolidation Loan, you must follow the process outlined below.

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Should I consolidate my loans?

Carefully consider whether loan consolidation is the best option for you. Loan consolidation can greatly simplify loan repayment by centralizing your loans to one bill and can lower monthly payments by giving you up to 30 years to repay your loans. You might also have access to alternative repayment plans you would not have had before, and you’ll be able to switch your variable interest rate loans to a fixed interest rate.

However, if you increase the length of your repayment period, you'll also make more payments and pay more in interest. Be sure to compare your current monthly payments to what monthly payments would be if you consolidated your loans.

You also should consider the impact of losing any borrower benefits offered with the original loans. Borrower benefits from your original loan, which may include interest rate discounts, principal rebates, or some loan cancellation benefits, can significantly reduce the cost of repaying your loans. You might lose those benefits if you consolidate.

If you want to lower your monthly payment amount but are concerned about the impact of loan consolidation, you can consider reevaluating your budget and income situation. You can also consider deferment or forbearance as options for short-term payment relief needs.

Once your loans are combined into a Direct Consolidation Loan, they cannot be removed. The loans that were consolidated are paid off and no longer exist.

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What types of loans can be consolidated?

Most federal student loans, including the following, are eligible for consolidation:

• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Subsidized Federal Stafford Loans
• Unsubsidized Federal Stafford Loans
• Direct PLUS Loans
• PLUS loans from the Federal Family Education Loan (FFEL) Program
• Supplemental Loans for Students (SLS)
• Federal Perkins Loans
• Federal Nursing Loans
• Health Education Assistance Loans
• some existing consolidation loans

Private education loans are not eligible for consolidation. If you are in default, you must meet certain requirements before you can consolidate your loans.
A PLUS loan made to the parent of a dependent student cannot be transferred to the student through consolidation. Therefore, a student who is applying for loan consolidation cannot include the PLUS loan the parent took out for the dependent student’s education.
A complete list of the federal student loans eligible for consolidation is available in the application.

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When can I consolidate my loans?

Generally, you are eligible to consolidate after you graduate, leave school, or drop below half-time enrollment.

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What are the requirements to consolidate a loan?

Here are some tips on qualifying for a Direct Consolidation Loan:

• You must have at least one Direct Loan or FFEL Program loan that is in a grace period or in repayment.
• If you want to consolidate a defaulted loan, you must either make satisfactory repayment arrangements on the loan with your current loan servicer before you consolidate, or you must agree to repay your new Direct Consolidation Loan under the
  
  • Income-Based Repayment Plan,
  • Pay As You Earn Repayment Plan, or
  • Income-Contingent Repayment Plan.
• Generally, you cannot consolidate an existing consolidation loan again unless you include an additional Direct Loan or FFEL Program loan in the consolidation. However, under certain circumstances you may reconsolidate an existing FFEL Consolidation Loan without including any additional loans.

There are no application fees for a Direct Consolidation Loan, and you may prepay your loan at any time without penalty.

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What is the interest rate on a consolidation loan?

A Direct Consolidation Loan has a fixed interest rate for the life of the loan. The fixed rate is based on the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of 1%. There is no cap on the interest rate of a Direct Consolidation Loan.

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When do I begin repayment?

Repayment of a Direct Consolidation Loan can begin 60 days after the loan is disbursed, or sooner. Your loan servicer will let you know when the first payment is due. The repayment term ranges from 10 to 30 years, depending on the amount of your consolidation loan, your other education loan debt, and the repayment plan you select.
Note: If any loan you want to consolidate is still in the grace period, you can delay entering repayment on your new Direct Consolidation Loan until closer to your grace period end date. You will indicate this when you apply, and the consolidation servicer will wait to process your application until the appropriate time.

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Are there different repayment plans?

There are several repayment plans that are designed to meet the different needs of individual borrowers. You will receive more detailed information on your repayment options from your consolidation servicer when you consolidate your loan.

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