Monthly Archives: September 2013

Loan Repayment

Repay your Direct Loan / Federal Stafford Loan

Here are a few details about repaying Direct Loans and Federal Stafford Loans:

  • After you stop attending school at least half time, withdraw, or graduate, a 6-month grace period begins. You receive only one grace period per loan.
  • Repayment begins after the grace period ends, with your first payment usually due 45-60 days later.
  • The maximum repayment period ranges from 10-25 years, depending on the repayment plan.
  • Payments are expected each month.
  • The minimum monthly payment is generally $50, but this amount may be different depending on your loan balance and your repayment plan.
  • You may prepay your loan at any time without penalty. Prepayment may substantially reduce the amount of interest you pay.

Repayment plans

Below are brief explanations of the variety of repayment plans available to Direct Loan and Federal Stafford Loan borrowers.

Standard:

  • Minimum monthly payment is $50, but may be higher depending on balance.
  • Maximum repayment period of 10 years

Graduated:

  • Begins with lower payments that increase over time
  • Maximum repayment period of 10 years
  • More interest accrues over the life of the loan because the principal balance decreases at a slower rate.

Income-contingent for Direct Loans:

  • Adjusted payment amount based on gross income and family size
  • Payments cannot be lower than your monthly interest amount
  • Eligibility and payment amount adjusted annually
  • More interest accrues over the life of the loan because the principal balance decreases at a slower rate.
  • If you do not repay your loan after 25 years, the unpaid portion is forgiven. You may have to pay income tax on any amount forgiven.

Pay as You Earn for Direct Loans:

  • Available to new borrowers if:
    • you have no outstanding  balance on a Direct or FFEL Program loan as of October 1, 2007 or have  no outstanding balance on a Direct or FFEL Program loan when you obtain  a new loan on or after October 1, 2007, and
    • you receive a  disbursement of a Direct Loan or a student Direct PLUS loan on or after  October 1, 2011, or you receive a Direct Consolidation Loan based on an  application received on or after October 1, 2011 (unless your loans repaid by the Direct Consolidation Loan make you ineligible because of the criteria in the preceding bullet).
  • Payment is not more than 10 percent of the amount by which your adjusted gross income exceeds 150 percent of the poverty line for your family size.
  • If your monthly payment amount is not enough to pay accrued interest on a Direct Subsidized Loan, the Department of Education will pay the remaining interest for a period of three years.
  • Eligibility and payment amount adjusted annually.
  • More interest may accrue over the life of the loan because the principal balance decreases at a slower rate, resulting in paying more money over the life of the loan.
  • Any outstanding loan balance after 20 years is forgiven. You may have to pay income tax on any amount forgiven.

Income-sensitive for Federal Stafford Loans:

  • Adjusted payment amount based on gross income
  • Payment is the greater of your monthly interest amount or 4 percent of your gross monthly income
  • Eligibility and payment amount verified annually
  • More interest accrues over the life of the loan because the principal balance decreases at a slower rate.

Income-based:

  • Available for payments made on or after July 1, 2009
  • Adjusted payment amount based on income and family size
  • Payment is not more than 15 percent of the amount by which your adjusted gross income exceeds 150 percent of the poverty line for your family size.
  • If your monthly payment amount is not enough to pay accrued interest on a Direct Subsidized Loan / subsidized Federal Stafford Loan, the Department of Education will pay the remaining interest for a period of three years.
  • Payments re-evaluated annually
  • More interest may accrue over the life of the loan because the principal balance decreases at a slower rate, resulting in paying more over the life of the loan.
  • Any outstanding loan balance after 25 years is forgiven
    • Very few borrowers will have  a remaining balance after 25 years.
    • The amount forgiven may be  taxable.
  • Estimate payment under the income-based repayment plan.

Extended:

  • Available to new borrowers on or after October 7, 1998, who have a minimum balance of $30,000 in loans
  • Payment amounts can be either fixed annually or graduated.
  • Maximum repayment term is 25 years
  • More interest may accrue over the life of the loan because the principal balance decreases at a slower rate, resulting in paying more over the life of the loan.

Budgeting

Start budgeting

Establishing  a budget and sticking to it isn’t easy, but it’s the best way to be in control  of your finances and make sure your money is going toward the expenses that  matter most to you.

Follow  the steps below as you set up your own, personalized budget:

  1. Make a list of  your values. Write down what matters to you and then put  your values in order.
  2. Set your goals.
    1. Write down your goals.
    2. Think about what you want to       accomplish financially in the next three months, the next year, and the       next three years.
  3. Determine your  income.
    1. Figure your available income (the       amount of your take-home, or net, pay).
    2. Do not include overtime pay,       because you shouldn’t rely on that as regular income.
  4. Determine your  expenses.
    1. Review your checkbook register,       credit card statements, store receipts, and more.  Where is your money really going?
    2. “Fixed expenses,”       such as a rent, auto, or student loan payments, are easy to determine.
    3. “Flexible expenses,”       such as food, clothing, and entertainment, vary from month to month.
    4. Don’t forget about expenses,       such as taxes or insurance, that are billed quarterly, semi-annually, or       yearly.
    5. Look into personal finance       software programs that offer a budgeting feature to help you track these       expenses.
  5. Create your budget.
    1. Think of your budget as a “spending       plan,” a way to be aware of how much money you have, where it needs to go,       and how much, if any, is left over.
    2. Your budget should meet your       “needs” first, then the “wants” that you can afford.
    3. Your expenses should be less       than or equal to your total income.
    4. If your income is not enough to       cover your expenses, adjust your budget (and your spending!) by deciding       which expenses can be reduced.
  6. Pay yourself  first!
    1. Saving is a very       important part of protecting yourself financially.
    2. Save as much as you can every       month.  Even a small amount can make       a big difference if you keep it up. Check out our savings calculator to learn       more.
    3. A great goal is to establish an       emergency savings fund large enough to cover three to six months of your living       expenses.
    4. After you have an emergency fund,       your savings can go toward meeting your goals.
  7. Be careful with  credit cards. Learn more.
  8. Check back periodically.
    1. Be sure to review your budget       regularly.
    2. Does the plan still meet your       needs and help you achieve your goals? If not, make some adjustments or       create a new budget that better meets your needs.

Ready to budget? Use our budget calculator!

Difference between Loans

What’s the difference between Direct Subsidized Loans and Direct Unsubsidized Loans?

In short, Direct Subsidized Loans have slightly better terms to help out students with financial need.

Here’s a quick overview of Direct Subsidized Loans:

  • Direct Subsidized Loans are available to undergraduate students with financial need.
  • Your school determines the amount you can borrow, and the amount may not exceed your financial need.
  • The U.S. Department of Education pays the interest on a Direct Subsidized Loan

○     while you’re in school at least half-time,
○     for the first six months after you leave school (referred to as a grace period*), and
○     during a period of deferment (a postponement of loan payments).

*Note: If you receive a Direct Subsidized Loan that is first disbursed between July 1, 2012, and July 1, 2014, you will be responsible for paying any interest that accrues during your grace period. If you choose not to pay the interest that accrues during your grace period, the interest will be added to your principal balance.

Here’s a quick overview of Direct Unsubsidized Loans:

  • Direct Unsubsidized Loans are available to undergraduate and graduate students; there is no requirement to demonstrate financial need.
  • Your school determines the amount you can borrow based on your cost of attendance and other financial aid you receive.
  • You are responsible for paying the interest on a Direct Unsubsidized Loan during all periods.
  • If you choose not to pay the interest while you are in school and during grace periods and deferment or forbearance periods, your interest will accrue (accumulate) and be capitalized (that is, your interest will be added to the principal amount of your loan).

Debt & Savings

How can we avoid becoming part of the debt trap?

  • Recognize the Trap. Traps work because they’re disguised – they’re not easily seen or recognized. A trap is a lie.  Ask yourself these questions: What’s the lie of debt? How is it disguised?  Here’s how it is commonly misrepresented – “You need to build your credit to improve your FICO score., You deserve it!,  It’s a part of the American Dream., Everybody’s got debt.”  Who would want you to believe a lie about debt?  Credit card companies, banks, credit institutions make TONS of money when you live in debt!
  • Escape the Trap.  GO, to the point of exhaustion!  Don’t sleep until you’re free!

Three steps to getting out of debt:

(1)    Stop borrowing money!

  • You can’t get out of a hole if you keep digging it.

(2)    Get gazelle intensity.

  • You don’t ease your way out – you break out.
  • Cut spending.
  • Go bare-bones.
  • Sell stuff.  You’re in debt because you bought stuff you couldn’t afford – sell some of it!
  • Get a part-time job.  Not a long-term workaholic, but this is a sprint – get crazy.

(3)    Attack debts one-by-one.

  • Use the “Debt snowball” technique.

If you made your decisions based on MATH, you wouldn’t be in debt. Debt/money is EMOTIONAL – use that to your advantage. There’s ONE MORE THING TO DO…Destroy the Trap. HOW? By SAVING!

Two simple saving steps:

(1)    Save $1000 for emergencies immediately.

  • Do this before you do the debt snowball effect.

(2)    Once you’ve eliminated all debts except your mortgage, save at least three months worth of expenses.

Then, even when life happens, debt has no hold on you. You’ll no longer feel caught in the debt trap because you’ll have destroyed it!

Manage Loans while in school

10 Tips to Stay on Top of Your Student Loans While You’re in School

We know there’s a lot of information to take in when it comes to your student loans. Here are some tips to help you manage your loans, including ways to save you money while you’re still in school.

Reveal Stay Connected contentStay Connected

Throughout the life of your loan, we’ll share important information with you. To make things quick and easy for you, and to save a tree or two, we suggest a couple simple things.

TIP 1 Sign up for account access at mygreatlakes.org. You’ll be able to track your loans and get important information about them.

TIP 2 If your email address or other contact information changes, update your Account Profile. We want to be able to reach you, so we can help with whatever you need.

Reveal A Change in Plans? contentA Change in Plans?

No two students take the exact same route in school. Some attend full-time, others part-time, and still others change schools. Whatever you decide, make sure your school enrollment status reflects your changes. For example, if you take a leave of absence or attend school less than half-time, there are specific things you’ll need to know about starting to pay back your loan. We want to make sure you have all of the information you need in order to help you make decisions.

TIP 3 Update your school enrollment status.

Reveal Know How Much You Owe contentKnow How Much You Owe

It’s easy to lose sight of the total amount you owe on your student loans. Each time you receive an additional loan, keep track of the total to prevent any surprises after you leave school.

TIP 4 Check out the U.S Department of Education’s (ED) financial aid central database, called the National Student Loan Data System (NSLDS). It receives information from the key players in the student loan industry to provide you with information about all of your student loans, not just those serviced by Great Lakes.

TIP 5 Use ED’s payment calculator to estimate what your monthly payment amount might be after you leave school.

Reveal Smart Borrowing contentSmart Borrowing

One of the best ways to limit your overall student loan amount is to only borrow what you need.

TIP 6 Don’t borrow the maximum amount just because you can.

Reveal Make Payments While In School contentMake Payments While In School

A great way to hold down costs is to make student loan payments while you’re in school.

TIP 7 Making payments while you’re in school can reduce what you owe in the long run. Depending on the type of loan you have and when you make your payment, it will either be applied to your principal loan balance or the interest that’s accruing (building up). Either way, you will have that much less to pay when you are required to begin making regular payments.

TIP 8 To make it a little easier, sign up for Auto Pay to make automatic student loan payments, or make one-time payments online, by phone, or by mail.

Reveal Know About Your 1098-E Interest Statement for Taxes contentKnow About Your 1098-E Interest Statement for Taxes

During each calendar year, the interest you paid on your student loans may be tax deductible.

TIP 9 You’ll want to have your annual 1098-E Student Loan Interest Statement on hand when you prepare and file your taxes. Your statement is available each January from your mygreatlakes.org account. After logging in, select 1098-E from the Quick Links menu.

Reveal Expect It contentExpect It

TIP 10 We’re your student loan servicer and we’re here to help you. Expect outstanding customer service from us. We promise to deliver.

Repayment

  • The Grace Period and Repayment counseling provides schools with an opportunity to stay in contact with borrowers and help them prepare for loan repayment. This session provides information on how to manage student loans after college and serves as a refresher course for students who may not remember all of their options as outlined in their exit counseling session taken prior to leaving school.

Loan Repayment

Your  loan repayment start date depends on the type of loan you borrowed. You are  required to begin making payments on time, even if you have not received a  payment notice or statement from your loan holder. If you do not receive a  payment notice, request one from your loan holder immediately.

To   find contact information for the loan servicer or lender for your loans, visit the National   Student Loan Data System (NSLDS®). You will need the PIN you established when completing the FAFSA to access your   information

http://www.dhe.mo.gov/ppc/studentloans/repaymentoptions.php