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Tag: sallie mae

  • Student Loan Debt: More Parents Not Helping

    Student Loan Debt is becoming more and more the responsibility of the student, and less that of the parents. According to a Discover student loan survey, only 52% of parents said they were going to help their kids pay for student loans. That’s down from 58% last year.

    This news comes as student loan debt is skyrocketing and one in 10 student loans across the nation are at least 90 days delinquent.

    Danny Ray, the president of Discover Student Loans, doesn’t know why more parents are refusing to help their kids with their student loans. Could they be more confident in their child’s ability to pay them back or could they be just plain ready to say “no” and let kids learn to deal with student loan debt?

    Outstanding student-loan debt hit $1.08 trillion, up $114 billion over the course of 2013.

    For those who cannot pay student loan debt, there are many repayment options that you could exercise before you go into default. Options such as the consolidation or income-based options are readily available. Also, Obama has recently extended the Pay As You Earn initiative that could benefit many students that are exiting college and trying to find steady work.

    Pay As You Earn helps those with mounting student loan debt, as it caps your payment at 10% of your income.

    If you lose your job or have a major life change that effects your ability to pay, deferment or forbearance could help by hold off payments for a period of time until you can get back on your feet.

    However, forbearance should only be a last resort to keep your student loan debt from going into default according to Abby Harper, spokesperson for Upromise by Sallie Mae. Forbearance allows you to stop your payments for a time, but interest continues to build up.

    As parents, if you do plan to help your kids pay back their student loans, it’s a good idea to sit down with them and write up exactly what you expect to do and exactly what is expected of your student.

    If you don’t, you could at least be sure they know all of their options so that student loan debt doesn’t ruin their bright future!

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  • Student Loans: Sallie Mae To Refund Military Members Who Paid Too Much Interest

    Student loans are already bad enough, but the interest rates are what kills most graduates trying to pay it all back. With interest rates capped at 6 percen for military members, it’s not as bad as it could be. Unfortunately for some, their interest rates were not capped at the federal maximum. For those suffering under the burden of high interest rates, you might soon have a refund check on the way.

    The Justice Department announced today that it has reached a settlement with Sallie Mae that will see the loan provider refunding $60 million to military members that were paying more than the maximum 6 percent interest under federal law. Under the settlement, some 60,000 service members will receive a refund check from Sallie Mae. Don’t go counting your money just yet though as the settlement has only been brought before a federal court. That being said, the court is pretty much guaranteed to approve the settlement as Sallie Mae would like to have the matter settled as soon as possible.

    According to the Department of Justice, Sallie Mae has been charging more than the federal maximum of six percent for service members since 2005. The Department also says that Sallie Mae improperly obtained default judgments against servicemembers during that time.

    To help set things right, the Department of Justice didn’t just request a refund. The settlement requires Sallie Mae to have all three major credit bureaus delete negative credit caused by its charging of high interest rates and default judgments. It must also streamline the process that servicemembers use to request benefits under the SCRA.

    “Federal law protects our servicemembers from having to repay loans under terms that are unaffordable or unfair,” said Attorney General Eric Holder. “That is the least we owe our brave servicemembers who make such great sacrifices for us. But as alleged, the student lender Sallie Mae sidestepped this requirement by charging excessive rates to borrowers who filed documents proving they were members of the U.S. military. By requiring Sallie Mae to compensate its victims, we are sending a clear message to all lenders and servicers who would deprive our servicemembers of the basic benefits and protections to which they are entitled: this type of conduct is more than just inappropriate; it is inexcusable. And it will not be tolerated.”

    If you are a servicemember affected by this settlement, you won’t have to do much. The government is putting together a group that will identify those affected by Sallie Mae’s actions and get the refund to you. There’s no information available just yet, but the government says it will have a Web site up when it’s able to start distributing refunds to those affected.

    Image via Thinkstock

  • Debt Consolidation: Beware of Student Loan Scams

    It seems that just about everyone has student loan debt at one time in their lives, and as far as debt is concerned, that seems to be the kind that holds on the longest.

    If you’re having trouble paying down your student loans, debt consolidation is sometimes the way to go. Wrapping several loans into one can make the payment easier to handle, and sometimes you can get a better interest rate.

    However, experts say that these days the student loan debt consolidation market is ripe for fraud. It is recommended that if you have federal loans, you should always consider consolidating through the federal government’s own programs first, according to MainStreet.

    “Scammers are definitely taking advantage young adults’ needs for student loan repayment options,” says Reyna Gobel, student loan expert for Wisebread.com and author of CliffsNotes Graduation Debt . “If you have Federal student loans, you automatically qualify for free debt consolidation programs offered by the U.S. Department of Education (ED), the agency that oversees federal student loan programs, which offers the best repayment plans and terms on Federal student loans.”

    If you have private loans, it is a good idea to try to work with your lender directly before contacting a student loan consolidation company. By simply calling and asking what your options are to lower your payment, you could avoid dealing with a scammer who may have some pretty harsh tricks up their sleeves.

    Just how common is student loan scamming and why should you be so careful? Surprisingly, it is quite common and widespread. New York Governor Andrew Cuomo announced the creation of a new student protection unit to investigate the student loan “debt relief” industry just last month. Already, the unit has issued 13 subpoenas to student loan debt relief companies for false advertising, unreasonable fees, and enrolling people in programs for a fee which are supposed to be free.

    If you decide to try an outside company, there are a few things to watch for. First, be sure you are the one that contacted them.

    “Chances are, if you didn’t contact them, they are looking to sign you on to collect fees you would not have to pay by going through the Federal Student Loan Consolidation program or even through your own private lender for personal loans, and that’s a scam,” says Gobel.

    Second, a reputable company won’t pressure you to complete the deal. Beware the “expiring interest rate”, “urgent” deadlines, and the like.

    Third, be leery of discounts. Scam companies sometimes promise discounts, only to put conditions on them in the fine print. You may fall into a trap wherein that discounted rate only applies to part of the loan, or goes away after a time. Sometimes the rate is low until you miss a payment, then it skyrockets for the rest of the life of the loan.

    And of course, never, ever, ever give personal info over the phone or email. Ever.

    Again, if you have federal loans always check first with the federal government’s options. They will most likely have the best terms, best rates, and you don’t have to worry about getting scammed.

    Image via Wikimedia Commons