Posts Tagged ‘Student Loans’
Student Loan Cancellation Programs—Big Hassles, Even Bigger Payoff
Under federal law, you can get your federal student loans canceled or discharged for many different circumstances.
Reasons for loan discharge:
- Death
- Total and permanent disability
- School-related issues or improper certification by your school
- Full-time teaching or public service work
- Military service
- Bankruptcy
Before I explain the nuts and bolts of what’s required for these various loan cancellations, let me first say that there are a multitude of scenarios that won’t get you a loan discharge.
Reasons that won‘t get you a loan discharge:
- If you dropped out of school for any reason
- experienced personal problems that forced you to abandon your studies
- didn’t like your instructors
- couldn’t get a job after graduation
- were plagued by financial difficulties
- if you thought the quality of the instruction you received was sub-par
None of those reasons will hold weight with the Department of Education.
Perserverance Required
Let me also caution you that getting a student loan canceled or discharged is rare and often requires tremendous perseverance, know-how, and work on your part.
Having said that, even though obtaining a discharge can be a big hassle, it is nevertheless certainly worth the effort and frustration you may experience in the process.
Tuesday through Friday this week I will post a few tips on how to get your student loans canceled, so please check back.
For more information on paying off your student loans, check out my book Zero Debt for College Grads: From Student Loans to Financial Freedom. Get the book now at Amazon.com.
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Student Loan Defaults Rise; Unpaid College Debt Likely Worse Than Government Says
The Department of Education is out with its latest numbers on student loan defaults, and the data isn’t pretty: The government says the overall default rate on federal student loans grew to 7% in fiscal 2008 from 6.7% in the prior fiscal year.
That marks the highest default rate since 1997, when 8.8% of borrowers defaulted on their federal college debts.
I hate to be the bearer of bad news. But these government numbers are likely understating the problem.
For starters, this data is two years old. The fiscal 2008 year that the Education Department is referring to captures data on borrowers whose first loan repayments came due between Oct. 1, 2007 and Sept. 30, 2008.
We know that the Great Recession only technically started in December 2007. So if the numbers were bad in fiscal 2008, it’s very likely that they got a lot worse over the past two years.
Also, the way the Department of Education calculates defaults is questionable. Essentially they look at a recent group of cohorts – graduates or dropouts who’ve left school in the past two years – to determine whether or not they’re repaying their student loans. But what about people who’ve been out of school 3 years, 5 years or longer? Don’t you think a lot of them are behind on their student loan payments too?
Lastly, there’s no official source that I know of which tracks national default rates on private student loans. But loan defaults for these debts obviously aren’t included in the federal statistics.
So, as bad as it seems, the student loan debt problem is likely worse than government figures indicate. In fact, student loan expert Mark Kantrowitz, who runs FinAid.org told me: “The primary causes of changes in cohort default rates are graduation rates, job placement rates and interest rates. Job placement rates are down because of the recession.” Plus, Kantrowitz adds, “The average interest rate at graduation has been increasing.”
Consequently, “I expect cohort default rates to continue to increase for at least one more year because of job placement rates and interest rates, and then start decreasing,” he said.
Meantime, StudentLoanJustice.org estimates that the true federal student loan default rate is between 25% and 33%. Downright depressing.
To get tips on eliminating your student loan debt, check out Zero Debt for College Grads: From Student Loans to Financial Freedom.
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Student loan horror stories: What’s the worst that can happen?
With $830 billion in student loans outstanding in America, mounting student loan debt is increasingly wreaking havoc on the lives of U.S. college graduates and dropouts alike.
As unemployment remains stubbornly high, delinquencies and default rates are rising as indebted borrowers struggle to repay hefty student loans that often reach six-figures.
Unfortunately, college debt isn’t just taking a financial toll on millions of borrowers. It’s also inflicting staggering costs on the health, careers, emotional well-being and personal relationships of those burdened with big college loans.
At StudentLoanJustice.org, where people share their stories about living with college debt, one person talks about suffering a mild heart attack, while another laments having panic attacks – both due to the stress of student loans. Others admit having sleepless nights, migraines and even thoughts of suicide.
In fact, in a poll currently running on ForgiveStudentLoanDebt.com, 8% of those surveyed said they would be willing to commit suicide “as an aggressive form of protest” in order to be heard by Congress about their student loan plight.
So if you think the worst that can happen with hefty student loans or unpaid college debt is money problems and bad credit, think again.
It can actually get worse. Much worse.
Continue reading Student loan horror stories: What’s the worst that can happen?
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Where Can I Find the Government Agencies That Pay Your Student Loans?
As you probably read in one of my previous articles on this topic, the program in which the government will pay off your federal student loans is called The Federal Student Loan Repayment Program. It’s run by the Office of Personnel Management (http://www.OPM.gov). Here is a direct link to more information about the program.
http://www.opm.gov/oca/pay/studentloan/index.asp
Fact Sheet, Q&As and Annual Report to Congress
At the website, be sure to click on the Fact Sheet and the Questions & Answers on the left side of the page for additional details. But to answer your question, in a nutshell, any participating federal agency for which you might work can help pay your student loans through this program, as long as that agency participates in this program. Each year, participating agencies report to Congress about their activities in paying off employees’ loans. The 2008 Report to Congress from the Federal Student Loan Repayment Program is the most recent report available. Here is a link to that 38-page report. http://www.opm.gov/oca/pay/studentloan/html/CY2008StudentLoanRepaymentReport.pdf. In it, you will find listings of every single government agency that participated in the Federal Student Loan Repayment Program for that year.
For more information about this program and about paying off student loans, be sure to read a copy of my book, Zero Debt for College Grads: From Student Loans to Financial Freedom.
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