Tag: my student loan

How to Avoid Defaulting On Student Loans: Money 101

Posted on | by Katherine Davis
Man counting college savings fund, tuition fee or student loan with calculator

Debt is one of those ugly four-letter words that no one wants to deal with. And yet, millions of Americans seem to survive on debt. One of the most common forms is, of course, student debt. How many people could really afford a college education out-of-pocket?

The answer is very few. And that is why so many people are in massive amounts of student loan debt – wondering how to keep from defaulting on student loans. This guide is designed to help answer that question.

What Happens When Defaulting On Student Loans

Defaulting on student loans does more than add the stress of knowing you’re in debt. There are actually some pretty serious consequences. One of these is losing access to some programs that help, such as income-driven repayment plans and even loan forgiveness. While some loan service providers will work with you to get back on track, getting off track in the first place is risky, as you might not get the help you need.

Another potential problem is the actual collection methods. First and foremost, you have to understand that your interest is constantly accruing. And when you’re in default, collection fees are added that can be as high as 25 percent of both the loan principal and the interest.

These fees added to your loan balance can lead to some hefty payments. And if you can’t make them, you risk having your wages, income tax returns, and more garnished. I know someone who dealt with this, and she had an incredibly hard time paying her regular bills for years due to these garnishments.

And, of course, you have to remember that your student loans are reported to the credit bureaus. If you’re not paying and you go into default, it can impact your ability to get a loan for a home, vehicle, or just to get some breathing room to pay your bills. If you do manage to get a loan, you’re likely going to pay high interest rates.

If you don’t pay your student loans or work with your loan service provider, you go into default. And, if you go into default, any money coming your way can be garnished. If you have to get another loan, you pay out more in interest than you normally would. Bottom line: going into default on your student loans can cost you more than the payment itself.

So it is vital that you don’t default. I know that this can be easier said than done, which is why the following section will walk you through how to make sure you don’t.

How to Avoid Defaulting On Your Loans

Again, this is where we’ll talk about ways for you to stay out of default from the beginning to the end of your loan term. However, there are also some tips below to help you get out of default if you’re already there or on the brink.

Start Before You Sign the Line

The best way to avoid defaulting on your loans is to start before you ever even sign your loan paperwork. Take a good look at that paperwork and gather all of the necessary information, such as the interest rate, when your loan is due, what exactly happens if you miss a payment, and so on.

Next, take some time to think about other options. This can, of course, include other loan options. Gather information on several different loans and compare the terms.

Also, consider other ways to pay for your education. Grants and scholarships are available for people of all ages, occupations, genders, races, and more. If you do the research, you’re bound to find one or more that you can take advantage of. Every dollar you can get for free to help pay for your education is a dollar you don’t have to repay. So, whether it’s a $200 grant or a $10,000 scholarship, it’s worth the effort to apply.

Don’t forget that you can also pay cash for your education – and you don’t have to do it all at once. You can pay for a few credits at a time if you need to. This path might take a little longer to complete your program, but you won’t be graduating with debt, so it’s definitely worth considering.

If you like the idea of paying cash but don’t want to wait forever to graduate, take a look at other schools and compare the costs. Look into online programs or determine if a certificate program would be enough for your career goals. And you can split the cost of your program by paying cash for one or two classes a semester and getting loans for the others. Anything you can pay in cash means less debt when you graduate.

Take the Least Amount

If you’ve decided to go with loans, that’s okay. There’s still a way to save. When you apply for loans, they’ll typically offer you the maximum amount you qualify for. What most people don’t realize, however, is that they don’t always need that much for their schooling.

Instead, they’ll often get quite a bit back as a stipend. Some people use it to pay for a laptop or internet service. Some spend it on things they want. In either case, it’s money you don’t necessarily need. So, when you agree to a loan, ask for the minimum amount you need. This alone will make a big difference to the amount you owe at the end of your degree program.

Know Your Agreement

Your next step after taking out loans is to know the terms of your agreement – front, back, and sideways. Read over your paperwork several times until you understand fully what is expected of you, when you need to make your payments, how you need to set those payments up or make them manually, and so on. And be sure you understand exactly when and how interest accrues as well as what actions the loan provider will take if you miss a payment.

Understand, also, that most loans don’t come due until after you’ve graduated. However, others do. You need to know now which type of loan you have.

Make a Plan and a Budget

Alright, you know the terms of your agreement. Now, it’s time to make a plan to carry out that agreement. That starts by adding your payments to your budget. If you happen not to have a budget yet, it’s time to start one. Take advantage of the Budgetry store in the Goalry Mall to help you create and implement a budget that will keep you on track.

After adding your payments to your budget, you need to make sure you have the funds to cover them. Do some calculations to determine if there’s already enough money in your income to make those payments. If not, you’ll need to find a way to squeeze them in. This might be through cutting down on your coffee shop runs, picking up extra shifts at work, or being more careful with your grocery shopping. In either case, it’s time to determine where exactly your loan payments are going to come from, and commit to putting that money towards your loans.

Keep Up Online

Most loan service providers allow you online access to everything pertaining to your loans. Take advantage of this, as it can help you keep up with payments, access repayment options, and much more.

Defaulting on Student Loans – What to do?

While the steps above can definitely help prevent defaulting, we all know that things can go wrong. Sickness can keep you out of work. Your vehicle might decide it’s time to break down. In any event, stuff happens. Life throws curveballs, and it can throw you off track. So how do you keep from defaulting in those cases? The following tips can help.

Determine the Problem

First of all, you have to figure out what the problem actually is. Is it that your loan payments are due at the same time of the month that everything else is due? Do you just not bring in enough to cover the payments? Are there more unexpected expenses popping up than ever before and you simply don’t have enough savings to cover them?

Whatever the reason you’re having trouble making your payments, write it down. In some cases, you might be able to fix the problem simply by revisiting your budget, cutting down in some other areas, or being more vigilant with things like car maintenance. However, if you’re having an ongoing struggle to pay your loan payments, the following tips can help.

Communicate with Your Loan Provider

One of the first steps to take is to communicate with your loan service provider. Believe it or not, most people are willing to help you as much as they can. And collection methods cost money, so they’d much rather find a way to work with you than have to pay to collect their money. Call your provider, discuss the situation, and find out what options they have to help.

Look At Repayment Plans and Other Options

When you’re having a hard time paying because you don’t have enough income, there are a few ways to address this. Consider ways to make some extra cash, like a side hustle or working a few extra hours a month. You might dig into blogging, selling printables, or other ways to make side cash without spending too much time doing so.

Another option is to look into Income-Driven Repayment options. These base your payment amount on your income and can significantly decrease your monthly payment. In fact, if your income is low enough, it might just take your payments down to zero.

Please understand, though, that this doesn’t make your loans go away. It will actually increase the length of time you owe them. So if you need an income-driven repayment plan, take advantage of it. However, while you do, try to formulate a way that you can start paying your loan payments in full so that you’re not paying for them until past retirement.

Getting Out of Default

What happens if you’ve already defaulted on your loans? Well, you’re probably overwhelmed and afraid of what’s going to happen, but take a breath. You can still get out of this with some commitment and work.

Do An Assessment

Just like handling mishaps, the first step should be understanding what went wrong. What situations caused you to default? Are the payments too high? Did you lose a job? Did you miss work due to a death in the family? Write down everything you can think of that went wrong so you can take the necessary steps to address it.

Talk to Your Loan Service Provider

This should be your next step. Depending on the reason you defaulted, there are often programs available to help. For example, some providers offer help if you’ve suffered a job loss, medical issue, or loss of a loved one. However, you might not find out about any of these programs until you communicate with them.

There are also options like loan consolidation and loan rehabilitation. Loan consolidation means that you pay off all or a portion of your student loans by taking out a new loan. This can be helpful for some people, especially if they are able to get lower interest rates or more favorable terms.

Loan rehabilitation is a program through which your loan service provider agrees to accept “reasonable” payments for a set period of time, and then your loans come out of default status. Typically, “reasonable” payments mean they calculate 15 percent of your annual discretionary income, divide it by 12, and then accept that amount for around nine months.

After talking to your provider, you will get a better idea of what’s available to you and how it might help. Be sure to compare all the options provided so that you can make the best choice.

Look Into Other Loans

Let me start this by saying that this is not the best choice for everyone because you’ll not always find a loan that matches your needs. However, it is a good option to consider and look into. All you need to do is determine what – if any – personal loans you might get approved for. Compare their terms and interest rates with those of your student loans. If the terms and interest rates are better, consider applying for those loans and pay off your student debt.

Conclusion

Defaulting on student loans can lead to many problems, but it can be challenging to prevent it from happening. Remember the old saying, “Where there’s a will, there’s a way.” This saying is true, but it can take some time and dedication to find that way. Still, take heart. Remember, you’re not the only one fighting this battle, and even in the toughest times, it’s a battle you can win.

Loanry

How to Avoid Common Student Loan Scams

Posted on | by Brandy Woodfolk
Worried graduate student shaking a piggybank isolated on white background.

Student loan debt is extremely high and is a major topic of conversation. With financial topics like these, they tend to be the target of scammers. At least three out of five people have received a phone call from an illegitimate company that claims they are the solution to your higher education loan debt.

Sadly, due to desperation, fear, and other emotions, many borrowers fall for the tactics of these scammers. Don’t be one of them. Below, we are going to discuss common student loan scams, how to spot them, and how to protect yourself from them.

How to Recognize and Avoid Student Loan Scams

When looking for a lender, you need to be very careful and do your research. Make sure you are choosing the best option for you. You can always look for help here, on Loanry!

Pay full attention if you want to sign up for a student loan or maybe for a personal loan for students. These are some of the most common signs of fraud that have been detected up to this point:

Upfront Fees and Monthly Fees

Most student loan scams will require that you pay upfront fees for their services or monthly fees. You will likely hear this a couple of times through this article, but it is important. Charging a fee for services does not automatically point to a scam. However, it is against the law for any debt relief help to charge fees before getting your results. There should be no upfront fees for the service at all, so if someone is trying to charge you before they do anything, run the other way.

As far as monthly fees go, they are not necessary. Understand something: You do not have to pay to receive grants or scholarships. Even if you get private student loans, you do not have to pay upfront. You also do not have to pay for things like:

  • Filling out the FAFSA
  • Changing your repayment plan or payment amount
  • Loan consolidation
  • Deferred payments
  • Loan forgiveness or other government programs

Every bit of those things is free of charge. Occasionally, scholarship providers may require an application fee. This is not necessarily unusual or a scam. If you are trying to apply for one that does ask for a fee, look into the scholarship first. Your school should be able to help you do this. A simple Google search can usually find pertinent information as well.

As far as any current student loans go, you can handle any business you need to directly with the loan service provider. My student loan service provider has an excellent website- as most of them do. I have the ability to change my payment plans, apply for an income-driven repayment plan or other plans, and more. I even have the ability to choose which of my loans get my payment if I want to pay a different one than the one they have placed as first in line.

And if I have any questions, I can contact them directly through the website- no middle man required. Don’t pay for something that you can do yourself for free. And do not be fooled into thinking you cannot do it yourself. Take a look at StudentLoans.gov, too, for anything related to federal student loans.

Aggressive Sales Tactics and Urgency

Everyone I know has experienced the tactics of a salesperson. They push and push and push to get you to buy. They make you fear missing out on a deal so you hurry and sign up immediately. The harder they push, the more you know that their paycheck probably relies on the commission from your purchase.

Unfortunately, student loan scams tend to be worked by experienced salespeople. They know what to do to push you into a decision you probably would not make otherwise. If you feel pressured to sign up, take a step back, and look into the company.

Tips for Avoiding Student Loan Scams

Improper Grammar and Spelling

Grammar and spelling mistakes are not all that odd. It is easy to accidentally press a “T” instead of an “R” on your keyboard, or something similar. It is also not unusual to get so caught up in your writing that you type “your” when you mean to type “you’re”.

While everyone can make an occasional spelling or grammar mistake, many communications from companies that pull student loan scams contain a good deal of them. It is not always the number of errors, though. Sometimes it is the errors themselves. Unusual errors are a good sign that the company is fraudulent.

Most legitimate companies have fewer errors. This is because many of them have a spell check program on their computers. They also tend to actually double-check their work.

Don’t get me wrong- bad communication does not necessarily mean that it is one of the student loan scams. Even those of us who write for a living like me make mistakes and do not always catch them. These mistakes are more of a red flag than a full stop sign. If you receive a communication like this, take a beat and check into the company.

Asking for Authorization

A lot of companies committing student loan scams ask for things that they have no business asking for, such as your social security number, your FSA ID, your sign-in information on your loan service provider websites, or even for you to sign a power of attorney agreement giving them the power to “negotiate” your accounts. Please pay attention: No legitimate source of student loan help will ask you for any of that information. If you give these scammers any of that information, you could end up in a lot of financial trouble. You absolutely never know what they will do with it.

If messing up your finances is not scary enough, think about all of the information that your student loan service providers have: Your identifying information, any income verification you turn in, family information, your home address, your telephone number, credit card information, and more. They can use this to steal your identity, clean out your bank account or credit accounts, and more. And, let’s just be honest, there are stalkers and others out there who might use your home address for other reasons. So, do not give out this information.

Steps to Determine if a Website is Fake

The Threat of Legal Action

Have you ever received one of those phone calls that tell you if you do not take immediate action that day, a law enforcement officer will be at your house that afternoon? I have, and the first time, I was scared to death. Fortunately, I had missed the live call and heard this threat on my voicemail, so I did not have to respond to a person immediately.

Instead, I searched my brain for anything that would warrant such action and finally called a friend to share my fear. Turns out, she had just experienced something similar and told me that it was a scam. After no law enforcement officer showed up at my house that afternoon- or any afternoon thereafter- I realized that she was right.

People that scam others play on their emotions. One of those emotions is most definitely fear. If they can make you afraid enough to believe that you will be in jail, there is a good chance you will do what they ask. Let’s alleviate some fears, shall we?

I cannot think of one single civil or consumer debt that you can be jailed for in America. If any debts can put you in jail, it is those such as unpaid taxes or unpaid child support. However, even those do not typically put you in jail automatically. There are court proceedings and warnings and a process.

Additionally, you do not get phone calls for stuff like that- unless it is from a lawyer you hired. Courthouses do not call. They send out official letters, usually dropped off by an official delivery person or process server.

Other debts, however, like credit cards, loans, and such do not put you in jail. They can ruin your life in ways like keeping you from getting credit, buying a home or car, getting good interest rates, and possibly even getting certain jobs. Imprisonment is a totally different story.

Affiliations

A lot of companies running student loan scams will claim to be affiliated with the Department of Education. While the Department of Ed does work with some companies, most companies that claim an affiliation are lying. You can look at the Department of Ed’s website to see what trusted companies they work with, but remember, you are not required to pay for help with student loans. If someone is trying to charge you, know that you have many free options.

Common Student Loan Scams

The number of student loan scams in play will likely continue to grow over time. And they will probably get more and more creative. Don’t let them fool you and don’t think that you will save money on your student loan with their loan options. For now, though, there are some common ones to look out for:

A Stop in Your Loan Forgiveness

Scammers use fear and urgency to get results. If someone calls you or sends you a notice that your loan forgiveness is about to end, ignore it unless it is straight from the Department of Education or your loan service provider. If there really is going to be a change, one or both of these two organizations will send you an official notice.

Additionally, even if the government decides to make changes, it will not happen overnight. Things like that take time to move through all parties that must agree on them. It also takes time for things to be put in place. So, if there is going to be a change, you will know about it way ahead of time- not a few days or a few weeks beforehand.

Total Loan Forgiveness

One of the most common student loan scams is when companies offer total or fast loan forgiveness. There are a couple of things for you to know here. First, only special circumstances can completely discharge your student loans. This tends to be things like:

  • Death– and no one wants to die to avoid student loan debt
  • Disability– not a temporary disability but extreme and permanent disability
  • Bankruptcy– in some very, very rare circumstances
  • Public Service Loan Forgiveness and Teacher Loan Forgiveness– for borrowers who work in certain job types for a specified amount of time

The second thing to know is that none of these circumstances can get your loans discharged quickly. They all require a certain process and can take up to years to work fully. Companies claiming that they can do this for you are committing student loan scams- stay away from them. If you feel that you qualify for student loan forgiveness, you can speak to your loan service provider about it.

Loan Repayment or Loan Debt Relief

If a company claims that they can settle your debt for lower than anyone else or that they can get you a special deal, it is not true. While debt relief companies can help you settle your debts for lower than the original amount, they cannot get better results than you or any other company can. If you choose to use a debt relief company, that is up to you. However, do not hire a company over because of an untrue guarantee.

Taxes

The Better Business Bureau warns of another of the popular student loan scams: Federal student tax. Scammers call unsuspecting borrowers claiming to be IRS agents or even FBI agents saying that they owe a federal student tax. This scares borrowers into paying these scammers to stay out of legal trouble. Here is what you need to know:

  • There is no such thing as a “federal student tax”. This is a completely made-up term
  • If you owe the IRS for anything, you will receive an official notice– not a phone call
  • The FBI does not collect debts, and they certainly will not call you asking for money to do such. If any legitimate agency needs to contact you, they will send official notices or show up at your door with official badges. Even then, you can make calls to verify their identity. The FBI is no stranger to scammers, so the legitimate organization will have no issue with you verifying someone’s identity. But again, they are not debt collectors, so if someone shows up or calls about your debt, hang up or shut the door

Reduce Your Risk of Being Scammed

  • Only apply for student aid on the official FAFSA website to prevent illegitimate sites from intercepting your information. After completing the application, completely close out of your browser.
  • Your FSA ID and your login information are for you and you alone. Do not give them out to anyone. Remember, legitimate sources will not ask for them.
  • Keep as much of your personal information as possible securely at home. Do not carry it around with you.
  • If you feel you have given your information out to any illegitimate source, reach out to the supplier of that information- such as your student loan service provider, your credit card company, and so on. And immediately change any login information and passwords, cancel credit cards, and take any other precautions you can. The quicker you make these moves, the better chance you have of stopping trouble before it starts.
  • Always, always, always check that any website you are entering personal information on is secure. You can easily do this by looking in the web address bar for a little lock. If it is there, the website should be secure.

Companies Known for Student Loan Scams

There are several companies that are known for student loan scams. Unfortunately, these scammers often simply just open up under another name. However, the FTC does share a list of companies that are known for student loan scams here, so be sure to check it out.

Conclusion

While organizations do work hard to prevent scammers from succeeding, it is up to each one of us to protect ourselves and our families. Learn all you can about scams as they are outed so you know what to look for. Above all, remember that if you need any help with your student loan debt, you can go straight through your loan service provider or the federal government for help.

If you are contacted by what you feel is an illegitimate company, report it so that others can be made aware. You can do this through your loan service provider, the FTC, or your state attorney general’s office. These complaints are taken seriously and you can trust that they will be investigated.

Loanry

How to Get Grants for College to Avoid Student Loans

Posted on | by Brandy Woodfolk
Happy smiling millennial girl holding paper document, received good news letter, university admission notification.

College is not cheap- this is a widely known and well accepted fact. While tuition varies depending on the college and degree, you are looking at spending at least tens of thousands of dollars. As nice as it would be, most of us do not have that kind of money lying around, so we have to find a way to pay for it.

Grant Options for College to Avoid Student Loan Debts

For many people, student loans immediately come to mind, but those should be a last resort. Student loan debt is difficult to get out of, and most people stay stuck in it for years and decades. The average student debt ranges from $26,900 to $55,882 depending on the state and the type of school the student attends.

Before you resign yourself to debt, you should look for grants for college. Grants do not have to be repaid, so if you can get grants for college, you can avoid that student debt. At the very least, even if you have to get some student loans, you can minimize your student debt by getting grants for college.

This guide is intended to give you a starting point for getting grants and some information on grants that you might qualify for. It is in no way all-inclusive, but it can give you a great start.

Fill Out the FAFSA

The first step you need to take for any type of financial assistance is to fill out the FAFSA- the Free Application for Federal Student Aid. It asks you a series of questions regarding your financial information. If you lived with your parents the previous year, it will also ask for their information.

Before going any farther, let’s address the fact that not every student’s parents will be willing to help with the FAFSA and some are not able to. This does not automatically disqualify you for aid. If your parents are unable to provide their information due to being mentally incapacitated, incarcerated, or they are abusive, you can fill out the FAFSA, indicate that you cannot provide their information, and then call the financial aid office to apply for a student dependency override.

If your parents are simply unwilling to help, it changes things a little. You should still fill out the FAFSA and indicate that you cannot provide your parents’ information. Then, as soon as possible, call the financial aid office at your school to explain the situation. The lack of parental information may disqualify you for some aid, but not all. If there is anything you can apply for, the aid office should be able to help you. Many grants are not dependent on parental information, anyway.

After you have filled out the FAFSA, you will receive a Student Aid Report (SAR). It will provide your EFC, or Estimated Family Contribution, and the estimated amount of aid you might qualify for. This report will let your college know if you will qualify for grants, how much of your tuition should be covered, and if you will need additional aid.

Even if you do need more aid for school, you do not immediately have to jump to student loans. There are other grants for college that you may be able to receive and you should exhaust those possibilities first. Let’s go over some of the most common grant options.

Federal Grants for College

Federal grants include Pell grants, one of the most well-known grants in America. These are grants that are based on financial need. Most Pell grant funds go to students whose total family income is less than $20,000, though the family income of up to $50,000 sometimes qualifies.

There are other stipulations, such as the student is looking to earn their first Bachelor’s degree, but exceptions are made for some post-graduate degree programs. The amount of the Pell grant often changes every year, and student awards are determined by different factors. However, the maximum Pell grant amount for the 2022-2023 school year is $6,895.

That amount is enough to cover some community college tuition. When I attended my local community college, the Pell grant was enough to pay for all of my classes and my textbooks. Even if it does not pay all of your tuition, it can still help tremendously.

In addition to the Pell grant, you might qualify for the Federal Supplemental Education Opportunity Grant (FSEOG). Every year, the schools that participate in this program receive a set amount of funds. The school then determines which students have the greatest financial need and award them some of those funds, which could be anywhere from $100 to $4,000. This is a program you should look into as early as possible. The schools only receive these funds once a year, and once the money is gone, you have to wait until the following year.

State Grants for College

After federal grants are state grants for college. The types of grants available vary according to the state.

Some states provide grants to minorities. Others might specialize in assisting those with a disability or who were in the foster care system. Other states might award grants to students in certain fields that desperately need to be filled in that state. Your school or state agency should have the necessary information for these grants.

Grants for Women

As there is an apparent difference between men and women in their opportunities and income levels, some organizations have taken an active role in making changes. There are several grants available specifically for women, including The P.E.O. Program for Continuing Education and the Soroptimist Live Your Dream Award.

Grants for Minorities

There are also grants geared toward ethnic minorities, such as Asian Americans, Hispanics, Native Americans, and more. Sometimes, these grants will be made available through filling out the FAFSA. Others take more research, but your school should have some information on them.

Do not just think about the federal grants available to minorities, either. Check with any ethnic organizations or groups. I am Native American. The tribe I am registered with provides a certain amount of grants and scholarships each year. These are apart from any that my schools knew of. It is always best to do your own research as sometimes private organizations do not advertise their grant programs.

Minorities illustration

TEACH Grants for College

If you are going to school to be a teacher, you should look into TEACH grants for college costs. While these do not have to be repaid, you do have to agree to teach in a school that is in an underserved area for four years after graduation. It seems like a pretty good trade off – you get help with college costs and you get the chance to impact the lives of children who need caring teachers.

Military Grants for College

If one of your parents served in the military in Iraq or Afghanistan after 2001 and passed away because of it, there are grants available to you. Talk to your school counselor or the financial aid office at your college of choice for information on these.

School Grants for College

Individual colleges also sometimes have grants and scholarships for their students.

I was once awarded a scholarship for keeping my GPA high in the first two terms of college. The award was only about $800 each term, but that definitely helped cut back on my student loans.

Talk to your school about what is available from them. They might not be available in your freshman year, but you can start working toward them from the beginning.

Academic Competitiveness Grant (ACG)

The Academic Competitiveness Grant is an additional aid for those who qualify for the Pell grant. In order to be eligible, you have to have completed what is termed a “rigorous secondary school program of study” with a minimum of a 3.0 GPA. The Secretary of Education determines what programs qualify each year, but it is referring to programs such as Honors and AP courses. You can speak to your school counselor about the ACG- he or she can help you determine if you are eligible.

SMART Grants for College

Pell grant recipients should also consider the SMART Grant program, which is the National Science Mathematics Access to Retain Talent. It is awarded to students who are entering STEM college programs, foreign languages, and other high demand careers. There are other requirements, including being a junior or senior in your degree program and having a minimum 3.0 GPA. This award is up to $4,000 per year.

Special Interest Grants

If you are a musician, artist, photographer, vocational student, or something similar, you might be able to find grants for your specific interest. These may require a little more research on your part as they will likely come from local organizations, but you might find some that are nationwide. Talk to your teacher as they probably have some inside scoop.

Competitions

Every year, there are writing competitions, art competitions, science competitions, and more. Some of the prizes include grant and scholarship money. Whatever you are interested in doing, look for competition. Enter as many as you can that award college aid or cash to the winners.

Employer Grants

If you have a job, your employer may have their own grant program. I have heard of quite a few companies having grant and scholarship programs. Some were large and others were small. If your employer does not, ask your family members if any of their employers do. You never know what you might run across.

Tips for Getting Grants for College

There are a couple of things you can do to make your chances of getting a grant higher.

Start Early

One of the biggest mistakes among college students is waiting until the last minute to apply for their financial aid. Doing so is only working against yourself, though. If you can, it is a good idea to start your research in your freshman year of high school. Even if you cannot yet apply, you will know what you need to do to be eligible and can mark the application date down now.

If you are past your freshman year, it’s okay. Just start as soon as you can. Even if you do not have time to apply for them all this year, you can always apply next year.

Apply for as Many as You Can

As you can see, you can get more than one grant at a time, so there is no reason to only apply for one. You should take the time to apply for as many as possible. Who cares if you have to get 10 small grants? It all adds up. If you apply for enough, you might not need a penny of student loan money.

Apply Every Year

Applying for grants should not be a one time thing for your entire college career. You should be searching for and applying for them every single year. Some grants are not available until you have completed a certain number of classes, like the SMART grant mentioned above. The award I received only came after I completed a full year with that high GPA. Take some time each and every year to research what you qualify for.

Stay Organized

In the midst of applying for 35 grants for college, it is easy to forget what you have and have not yet done. You should try to maintain a list of the grants you have applied for and need to apply for. You can keep this on a sheet of paper if you like, but if you have a spreadsheet program, you can keep up with more details to help you stay on track. Start by making the following column headings:

  • Grant Name
  • Grant Purpose: Is it for minorities, STEM, simply income based? This will help you remember what you actually applied for.
  • URL for application: Whether you need to revisit the site later or you have not yet filled out the application, keeping up with the website to apply on is a wise move. And, if you are going to reapply the following year, you already have the information on where to do so.
  • Status: Have you applied yet? Are you awaiting results? Have you been approved?
  • Date of Application: It is important to remember when you applied. Many times, an application will tell you about how long it takes to receive results. Keeping up with your application date will let you know how much longer it should take or if you should reach out to someone because it is taking too long.
  • Approval Amount: If you are approved, type the amount into this box. This will help you keep up with how much of your college costs are currently covered and how much farther you have to go.

This spreadsheet can make the application process a little smoother. You can pull it up again next year when it is time to start applying for grants, too. You might also use it to keep up with information on grants that you do not yet qualify for but will in the future. It is a lot easier to make note of that information now than to try to remember where you found it next year.

Conclusion

After you have exhausted all other possibilities, you may still need to consider student loans. If this is the case, be sure that you shop around for the best ones. Different student loans have different terms and interest rates, so you need to research what you are getting. You can rely on Loanry to help you with this.

Additionally, keep in mind that student loans are not the only way to pay for school. Compare the rates and terms to personal loans as well. You might find one that is more affordable and that you can pay off much easier. You do not want to end up as another student loan debt statistic, so you should do all that you can to minimize student debt or avoid it altogether.

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What Student Loan Forgiveness Options are Available?

Posted on | by Brandy Woodfolk | Leave a Comment on What Student Loan Forgiveness Options are Available?

A few days ago, I received a notice in the mail that my student loan payments are coming due. I had been dreading the payments for years, but I was honestly shocked at the amount of my monthly payments: $1153.35. Who has that kind of money left over each month? Not me. I do not mind paying what I owe, but good grief, that is more than I can handle at once. I am on a mission to figure out another way, and I want to share my research with others in my predicament. We are going to take a look at ways to prevent needing student loans, student loan forgiveness, and alternative repayment options.

What Are Loan Forgiveness Programs?

You hear about student loan forgiveness programs all the time, but it really is not what you think it is. In fact, if you call most of those places that offer loan forgiveness, they are actually loan consolidation places that want you to pay them to consolidate your loans. The only way to get any kind of student loan forgiveness is through the federal government’s approval, but it is not so easy.

Most student loan forgiveness programs are only available after a set amount of years of payments- yes, years. For instance, some student loan forgiveness programs only apply after 20 or 25 years of on-time payments. If you are screaming, “But I can’t afford my loan payment,” it’s okay. In a moment, we will talk about getting those payments lowered until you qualify for forgiveness.

It’s important to note that besides the term forgiveness, terms ‘cancelation’ and ‘discharge’ are also used. They essentially mean the same thing, but are used in different contexts. Forgiveness and cancellation is used when you’re no longer obliged to make payments because of your job. In other circumstances, such as permanent disability, discharge is used.

What Happens If I Do Not Pay?

Before we look at student loan forgiveness and repayment alternatives, let’s be clear on how non-payment of loans can hurt you. It goes beyond showing up on your credit score. These are federal loans we are talking about. The federal government has the power to get their money back in any way they can. This means that if you do not pay, they can garnish your wages– something most people cannot afford. They can also keep any tax refund payments you should receive. It just is not worth the risk. Instead, put in the work to get one of the following options working for you.

Types of Forgiveness/Cancellation/Discharge

Here’s an overview of different types of forgiveness available to you if you qualify.

Public Service Loan Forgiveness (PSLF)

This type of forgiveness is for people who choose to work in public service jobs and used direct loans. It does not kick in immediately, though. You will still need to make 120 payments- that’s about 10 years. However, if you do this, you qualify for 100% forgiveness.

Teacher Loan Forgiveness

If you are a teacher and work at a qualifying school for a minimum of five consecutive years, you can receive anywhere from $5,000 to $17,500 in student loan forgiveness. This is only available for users of direct and FFEL Program loans.

Perkins Loan Cancellation and Discharge

This is available only for Federal Perkins Loans and you can get a portion or the entire loan discharged or cancelled.

Total and Permanent Disability Discharge

If you’re an individual with total and permanent disability, you may qualify for this discharge type. You need to have a direct, FFEL program or Perkins loan.

Closed School Discharge

You may be eligible for discharge if your school closes while you’re attending it or soon after you’ve withdrawn.

There are several more options due to death of the borrower, bankruptcy, false certifications and more. For more information, make sure you visit StudentAid.

How Do I Qualify for Student Loan Forgiveness/Cancellation/Discharge?

By visiting studentloans.gov, you will be in front of a wealth of information about student loan forgiveness and repayment plans. By filling out some information, you should receive a summary of what you can qualify for. This will also show you your student loan balance and let you control some parts of payments you make.

What Do I Do If I Do Not Qualify?

Even if you do not qualify for student loan forgiveness, you can likely qualify for much lower repayment plans. These include:

  • Income Based Repayment (IBR)
  • Pay as You Earn (PAYE)
  • Income Contingent Repayment (ICR)

Each of these can help lower your payment. Some people will even qualify for payments as low as $0 per month, but you have to recertify, usually once per year.

Student Loan Consolidation

If you do not qualify for student loan forgiveness, another option you have is student loan consolidation. You can shop around for a loan company that will offer a lower payment and lower interest rate. You will still be paying your payment every month, but it will only be one payment. And it should be way less than my $1153 payments, especially if you shop around enough. In fact, loan consolidation may give you a much longer repayment period. If there are no other options in your path, take a look into consolidating your loans.

Conclusion

Trying to repay your student loans can be stressful, especially when your payments are more than your monthly rent. Fortunately, there are options that can help borrowers pay back with more ease. Take some time to research options available to you and apply. Always keep loan consolidation on your mind in case no other options work out as you need them to.

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What is the Impact of a Student Loan on Your Credit Score?

Posted on | by Kevin Strauss | Leave a Comment on What is the Impact of a Student Loan on Your Credit Score?

Having to pay back a student loan can be a real bummer and it’s a frustrating process, especially because of the student loan impact on credit score. But there can be an upside if you pay back the loans on time. In fact, regular payments can help your credit.

How Can a Student Loan Impact On Your Credit Score

There can be both a negative and positive student loan impact on credit score depending on your payment practices. A student loan typically has a long repayment period so the score will get a boost from a long credit history. Your payment history has a big impact on your score so if you make your payments on time every month, it helps build up your credit. However, if you do default on the loan or have late payments, it can hurt the score.

Positives Impact of Student Loans on Credit Score

Student loans are not impossible to deal with. There are some positives when it comes to a student loan impact on credit score. If you make at least the minimum payment and make those payments on time, you can build the score with a positive credit history.

Paying On Time Makes Up 35% of the Score

Payment history has a big student loan impact on credit score. Many things you make a payment on, such as car insurance and rent, aren’t usually reported to credit bureaus until you stop paying them.

Even though some payments aren’t reported to credit bureaus and don’t have a positive impact on your score, student loans do. The payments you make on your student loans can help you establish a good payment history. If you don’t have any other loans in your name then paying a student loan on time can help you start building credit from a younger age.

Easier to Build a Credit Mix

A credit mix doesn’t have as big of an impact on your credit score but it’s still important. A credit mix is the mixture of credit you have and this can include auto loans, credit cards, and mortgages. The more you have and the better variety, the better it will look on a credit report. If you already have a credit card then a student loan will help give you more credit mix.

Long Repayment Means Long Credit History

Another positive student loan impact on credit score is the following. The length of your credit history will influence about 15% of the score. Since student loans usually come with 10-year repayment plans, having a student loan can help you build a long credit history. If you do have the opportunity to pay off your loans faster, you should still take it since there’s no reason to stay in debt for longer.

Loan officer sends credit burear reports to bank manager.

Negatives Impact of Student Loans on Credit Score

If you aren’t properly handling your repayments then student loans can wreak havoc on your credit score and you can get a negative student loan impact on credit score.

Paying Late

Since paying on time has a good impact on the score, paying late will have the opposite effect. In fact, paying late can be the most negative student loan impact on credit score. Getting behind on paying your loan will hurt your score as well as your credit history. Bad marks can stay on the report for seven years.

Your student loan servicers can report the delinquency as early as 30 days after payment is due so don’t think you can just skip a month and it won’t have an impact. If you can’t afford to make your student loan payments, you may qualify for an income-driven repayment plan if you have federal loans. If you have private loans, you may be able to refinance for a lower monthly payment.

Defaulting Greatly Damages Score

Another negative student loan impact on credit score is an account in collections. This is even worse than a late payment. Accounts in the collection will stay on your credit score for seven years, just like late payments. These accounts stay on your credit report even after you pay them off.

Creditors don’t want to lend you money unless you can be trusted to pay it back and defaulting will show creditors you can’t be trusted. Defaulting on student loans means that it can be harder to get credit for other things in the future.

Types of Student Loans

There are different types of loans for students. No matter which one you choose, the student loan impact on credit score will be similar.

Private Loan

Private loan can be hard to get if you don’t have a good credit score or someone with a good credit score who can co-sign your loan. A private lender will run a credit check to decide if you qualify. If your credit score passes but is still low then you will likely have to pay more in interest. A private student loan impact on credit score can be possible if you qualify.

Federal Loan

You may not have a credit score when you are just starting out in life and a fed student loan can be a good option. You can get a federal loan without a credit check and it can have a positive student loan impact on credit score.

Personal Loans for Students

A personal loan can be helpful to students who are drowning in debt and aren’t able to make ends meet. Students don’t have that many lending options that are available to help them get out of debt. Credit cards can only make the matter worse and it can be frustrating to keep borrowing from friends and family. A personal loan for students can come with a lower interest rate that is more manageable. The lower rate can help you invest money in other projects that can help your income grow.

If you have already gotten into some bad borrowing habits and your credit is not that great then you can still get a personal loan for students. Some lenders may offer slightly higher interest rates if your credit isn’t that great and others will shorten the amount of time you need to repay the loan. Personal loans can be processed quickly, allowing you to have the money that you need. Personal loans don’t need any collateral, which makes them easier for students to get since the chances are likely students don’t have a lot to borrow against.

Should You Do Debt Consolidation for Student Loans?

A personal loan will allow you to do debt consolidation. This process allows you to take your accumulated debts and make one payment with hopefully a lower interest rate. It can help to start getting your debt under control after graduation and when payments for student loans begin.

Since you already know about the student loan impact on credit score, does debt consolidation also hurt your credit score? Determining if debt consolidation can hurt your credit score will depend on the different options you choose. When you first are selecting a loan for debt consolidation, you are applying for new credit, which means a hard inquiry on your credit report. Any time you do have a hard inquiry, your credit score can suffer.

While it initially seems that getting a loan for debt consolidation can hurt your credit score, adding new credit or a new loan can cause your utilization ratio to go up and this can actually help your score. However, for this to work, you need to not be acquiring any new debt.

Is There Help for Student Loans?

Chances are if you are applying for college and are looking at how to afford it then you have heard of FAFSA. This stands for Free Application for Federal Student Aid. If you want to be considered for financial aid or even have a work-study job during your college years then you will need to fill out this form. The form will take your income and your family’s income into consideration. It will then determine your aid eligibility for loans or grants. Grants are financial aid you want since they won’t need to be repaid.

Even if you think your family earns enough money to prohibit you from qualifying for aid, it is still a good idea to complete the form. The form is needed if you are going to receive any scholarships and will also be needed if you want access to federal student loans. Even if you do have to take out student loans, and many people do, it helps to have the most options for paying for college. If you don’t fill out the form, you can miss out on student loans and scholarships, which you may have been eligible to receive.

Understanding the 5Cs of Credit

Getting a loan approval can be dependent on your credit score but the credit score is only a portion of the decision on whether or not you are rejected or approved. Anything that can show the lenders whether you can repay will have an impact. A single item doesn’t determine your credit. Instead, it’s an equation with multiple factors that speak to the possibility and ability to repay the loan. These factors can be referred to as the five C’s of credit.

Character

A person’s character can lead to decisions one makes, such as loaning money. Character is based on credit history. Your character is determined by your known financial actions. There is no way to see into the future about how your character can be so creditors go on past action.

Capacity

A character can be judged more subjectively but capacity is straightforward. It’s the ability to repay. Lenders will look at income capacity to see whether or not you can repay the loan. If the outgoing money is more than your current income then you don’t have the capacity to pay the loan.

Capital

When you apply for a mortgage, a lender will want you to pay for a portion upfront. This can be low or it can be as high as the lender wants. This is also true with car loans. When you make a down payment, this is considered capital and it shows that you are serious about the purchase. You have some skin in the game and are invested in so you are more likely to pay off the loan and not lose your investment.

Collateral

Collateral is slightly different than capital. In the loan world, this can be a check, piece of land, car title, or something else the lender sees as valuable enough to regain the money. Collateral can improve your chances of getting approved. Collateral is less of a financial risk for the lender.

Conditions

Conditions are the conditions surrounding the loan. This can seem straightforward but there are conditions that can affect approval. A lender has to consider all conditions. Things like the interest rate and terms of the loan will also need to be factored in.

Establishing a Credit History

A student loan can have an impact on credit score, but what do you do if you are trying to establish a credit history? Students and young adults often have this problem and it seems unfair that you have to have a good credit rating in order to pay for something as important as education. Credit isn’t just about credit cards anymore and there are ways to establish a credit history even if you don’t already have one.

Get a Credit Builder Loan

This is one of the easiest and painless ways so establish a credit history. This type of loan is one where you borrow a specific amount of money. The bank or credit union holds the money in an account you don’t have access to and you make monthly payments. When the amount is paid off you get the money minus any interest you needed to pay.

Many credit builder loans will be between $300 and $1000. It’s not about how much you can borrow but instead how much you can repay every month. You will need to be sure you can afford monthly payments before you begin the process. Otherwise, you can do damage to your credit score.

Build Credit with Parents' Help

Your parents will likely have a credit card. You can ask to be an authorized user of your parent’s credit card. This means you won’t have a card of your own but can use theirs. You do need to check with the credit card company to see if they report any authorized users’ payments to them. If they don’t then this won’t work.

Make payments on time each month. If you don’t, not only are you hurting your credit history but also your parents’. The biggest advantage of being an authorized user is that their credit history will also make yours look good. You don’t even really need to use the card.

Paying Your Bills

Some think that utilities, insurance, and rent are reported to credit bureaus. This is only true if you don’t pay. However, it’s still important to pay your bills in a timely manner. If you want credit bureaus to be notified of on-time payments then a third party reporting agency can be an option. You may have to pay for this service. But it can be worth it if you are trying to build up a credit history and do make all your payments on time.

Build Credit with a Co-Signer

If you have someone in your life with good credit you can ask them to co-sign a personal loan in order to build credit history. The payments you make on the loan will then be reported to the credit bureau so you can establish credit. It’s important that you don’t default on the loan since your co-signer will then be responsible for paying it and both your credit scores will be negatively affected.

Secured Cards

No one will get a credit card before there is an established credit history but you may be able to get a secured card. This is when you put between $200 and $300 in the bank and let it sit there for about a year. The credit union or bank can see this as collateral for a secured credit card. You aren’t able to make large purchases with a secured card. But when you make the payments on time each month, the credit union or bank may give you an unsecured credit card in a couple of years.

Secured cards aren’t meant to be used long term and the purpose is to build or rebuild credit.

How to Increase Your Credit Score

Using student loans to your advantage and allowing the student loan impact on credit score to be positive can help you increase your credit score. There are also other ways to improve your credit score.
what makes up a credit score

As it has been said time and time again, it’s extremely important to avoid late payments since this makes up such a big chunk of the credit score. If you aren’t able to remember your payments then sign up for automatic payments. If you can’t afford your payments then there are options you can consider, including debt consolidation.

Start Paying Down Revolving Debt First

Revolving debt includes credit cards. You want to keep credit card balances as low as possible and ideally at zero. Not only does this help with your credit but it also helps you avoid hefty interest fees. Pay off your debts to keep your credit utilization in check.

Since items like paying rent and other bills don’t help your credit score unless you are late, ask your landlord if you are able to pay for your rent on a credit card. Use the money that you would typically spend on rent and pay down the balance every month.

Be sure to review your credit report and check for any errors. Every year, you are entitled to one free credit report. Don’t miss this opportunity to check your score. Errors can be common and can be costly to your credit score. Review reports every year and then dispute anything that isn’t right.

Final Thoughts

When asking what is the student loan impact on credit score on my student loan, it helps to remember your specific situation. If you can pay your monthly payment on time and establish a good payment history then you can have a positive student loan impact on credit score. However, it’s easy to start having a negative student loan impact on credit score if you aren’t careful about making payments. For those having trouble making payments, debt consolidation can provide some relief.

There are ways to establish your credit for those who are just starting out. And ways to improve your credit score in the future. For students who want to travel, instead of taking out more student loans consider a travel loan for students.

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