now browsing by author
Student loans can be intimidating.
There are so many technical terms you need to learn in order to maximize your redemption strategy. Terms such as IBR, REPAYE, excess deductions and depreciation.
Let’s do this last, shall we? What is student loan depreciation and how does it affect your monthly payments?
What is depreciation?
To understand depreciation, let’s begin with a brief overview of loans.
There are two types: the first is a revolving credit, like a credit card. With a revolving loan, you have a credit line of a certain amount (say, $ 1,000) that you can borrow over and over. Your monthly payment depends on how much of this amount you borrowed at present. As long as you do not exceed the limit and make at least a monthly payment, you can borrow the same money many times.
The second type of loan is an installment loan that includes mortgage loans, car loans, and student loans. This is a loan that you lend once, and then gradually return. As a rule, these loans have a fixed monthly payment — part of this payment goes to the principal amount, and a certain amount to the interest.
Depreciation refers to the process of repaying a loan in installments on a fixed payment schedule. Unlike a revolving loan, you cannot “borrow” the money that you returned, but the amount of the monthly payment on a loan in installments will also not fluctuate in the same way as with a revolving loan.
How depreciation affects the monthly student loan payment
It may be illogical, although your payment on a regular loan in installments is the same every month, the amount of your monthly payment, distributed to the principal amount and the percentage change over the life of the loan.
Almost always, most of your monthly payment goes on interest in the early years of repayment. Below is a table of my student loan payments for 2013.
You can see that, despite the fact that I paid over $ 3,300 for this loan over the course of a year, I reduced my balance by about $ 700 – and this is only because I started making additional payments.
Since the balance of this loan was more than $ 55,000, it was quite difficult to swallow. So, if you only started paying student loans, you could pay hundreds of dollars a month just to see how your balance decreases by a fraction of that amount. Breakdown! #AmortizationInAction
Depreciation and return on income
In accordance with some redemption plans, especially income-based plans, such as IBR, PAYE and REPAYE, your monthly payment is not fixed – it depends on your income.
However, the amount of interest you earn does not change. This can lead to a situation where your monthly payment not only fails to pay the principal amount, it does not even cover the interest due! This is called negative depreciation.
Observing the growth in balance due to negative depreciation can lead to frustration, but it is worth it in the long run if you are waiting for forgiveness of loans. Just remember that if you leave the income-oriented plan, your interest may be capitalized (added to the main balance sheet). When this happens, you pay interest on your interest. Not good.
Fortunately, you can make additional payments, even if you have an income-based plan, which helps avoid negative depreciation.
In addition, if you use an income-based repayment plan, the government will pay the remaining unpaid accrued interest on your subsidized loans, including the subsidized portion of the consolidated loan, for up to three consecutive years after you start paying off the MDBs or paying the salary The new REPAYE plan will also have similar benefits.
For more info : https://studentloansresolved.com/
Things you need to know about points and student loan refinancing
Now, more than ever, various private lenders are helping refinance borrowers on student loans at lower rates and save thousands of dollars in interest, that is, borrowers with good credit.
If you are thinking about refinancing or in the process, you can ask how your loan affects your options. How important is credit really? And how will refinancing affect your credit?
Read on to find out five things you need to know about the loan and the refinancing of your student loans.
You probably need good credit for qualifying.
Refinancing companies check their borrowers to make sure that they can undertake financial obligations to repay a new loan.
In general, refinancing companies, as a rule, impose more stringent requirements than the requirements of federal loans. A credit score is one of the main ways in which lenders can determine whether you are a suitable candidate for refinancing.
Your credit rating is a numerical representation of how much you are responsible for the borrower. Your FICO credit rating, which lenders usually check, is determined by a number of factors:
Payment history (35 percent)
Indebtedness (30 percent)
Length of credit history (15 percent)
New loan (10 percent)
Credit Structure (10 percent)
FICO score diapozon from 350 to 900 – the higher your score, so will be good. Each lender will have their own credit score requirements, but usually you need to have a credit rating of 700 or higher.
Before refinancing, check the requirements for the lender, as some of them may be higher or lower than this standard. However, as a rule, bad credit will make it difficult to obtain permission to private student loan refinance.
Credit check can help.
Before refinancing, it is important to conduct a credit check: check your credit reports to make sure everything is correct and take steps to improve your credit.
Start by getting free credit points on a site like Credit Karma. Also, get free credit reports at the three main credit bureaus on the AnnualCreditReport.com portal and look for errors. If there are any errors, you must take the necessary steps to remove these incorrect entries from your credit profile.
Also, take a look at your credit behavior:
Do you always make payments on time?
Do you carry high balances?
Being a responsible user of the loan means making timely payments every time. Even a late payment can seriously affect your credit rating.
To simplify the process, sign up for automatic payments that keep your monthly payments from your bank account. If you don’t think this will work, at least sign up for an online reminder.
Although the payment history is very important, as is the use of credit (the amount of available versus used credit). It is important that your balance sheets are low and pay them monthly to keep credit rates low.
So, if you have a credit limit of 10,000 dollars and you get a maximum of 10,000 dollars a month, you will look like a risk to lenders. As a rule, you should spend less than 30 percent of your credit limit. In this case, it will be 3000 dollars. Avoid maximum use of cards and try to completely pay off your balance.
For more info : https://studentloansresolved.com/
What to do when your student loan service changes
After paying off my student loans for several years, I received a letter informing me that my student loans were being transferred to another service loan. What kind? Whyyyy?
Despite the fact that I did not particularly like my student lender, I had absolutely no choice in this matter, and I experienced very little support when my biggest financial commitment instantly shifted to another. I was not sure what to expect. But now that my creditors have changed twice, I know what to do.
If you are in the same situation, follow these steps for a smooth transition to a new company serving the loan.
What is a student loan?
A loan service is a company that manages your student loan payments. Your loan agent is assigned to you by the US Department of Education, so you cannot “search” for the best loan advisor. You are dealing with what you are given, for better or worse.
Currently there are 10 student loan service companies that manage student loan repayment and act as a link between the borrower and the lender.
What to do when a student loan service goes
A change in lender service may mean some backstage cases from your current loan officer. It can also be a step on behalf of the Ministry of Education, which is making efforts to help borrowers with more than one loan agent, transferring their loans so that they have only one serving agent.
A student loan change can also occur if you are participating in a government employee forgiveness program. All loans under this program are managed by FedLoan.
If you are not sure who your borrower is, you can get information about your federal loan through the National Student Loan Data System. For private student loans, borrowers can check their credit reports at AnnualCreditReport.com to find out.
For more info : https://studentloansresolved.com/
If you want to travel the world
Tip # 1: Use Credit Card Glasses
If you want to travel the world, but student loan debt holds you back, one way to help pay for the trip is to use credit card points using a method called “knock down credit cards.” In essence, you sign up for new credit cards, fulfill the minimum expense requirements, and earn register bonuses and points.
You can do some research to find the best cards for you, but I only recommend this way if you have no credit card debt and you have a lot of discipline when it comes to spending.
When done responsibly, the strategic use of rewards indicates a great way to travel on the cheap. I myself have done this many times to get free airfares and free hotel rooms.
Tip number 2: work remotely
In our technological age, there are so many ways to work remotely, from opening your own online business to conducting online lessons and freelancing.
When you work remotely, you do not need to bind yourself with a rental or mortgage. You can live in different places month after month, stay at home, surf, and find many other ways to get housing on the cheap. At the same time, while you work and earn money, you can afford to live and pay your bills.
This requires a certain organization, but by working remotely (and regularly!), You can pay bills on time and visit new places.
If you want to start a family
Tip # 1: Create an Emergency Fund
You can create a family, even if you have a student loan debt. I had children, although we have six-digit student loan debt, but I planned it very carefully. The best thing I have done and that I recommend to anyone who wants to become a parent is to create an emergency fund.
My husband and I saved $ 10,000 in a fund specifically designed for the child. Then we learned that we have twins, and we were so grateful that we saved so much. Between medical expenses, delivery and initial child expenses (bottles, cribs, clothes, etc.) We completely destroyed our savings fund of $ 10,000 only in the first few weeks when our children were near.
In general, before you have children, you need a strong emergency fund. This gives you flexibility in case you have problems with payment or if you have emergency medical care with children.
Tip number 2: buy a used
A common opinion is that children are incredibly expensive – and they certainly can be. However, people often overspend. Children do not need new clothes or every toy on the market.
Buying used things is often a good idea, because growing children almost never wear their clothes more than a few times each. I donated a lot of outfits that my children outgrown before they could wear them.
When it came to security items such as car seats and cots, we bought them new ones. But almost everything else we bought was used, and our children are fine. This way you can save a lot of money and use it to pay off a student loan.
You can have it all
The bottom line is that you can have everything if you plan it. I was able to have children and travel, although I have a student loan debt. We make concerted efforts to reduce the burden on student loans payments every month, but we have two beautiful children, and we like to take them to see new places.
We have reduced in many areas, such as buying used ones and doing without TV over the past few years. We also live a full life in which we make an informed choice of money, stick to the budget and pay our bills on time.
In order for you to have all of this, also make sure that you do not live far beyond your means. If you want to buy a house, focus on this goal. If you want to have children, save this emergency fund. Be strategic in choosing money, stick to your budget and make a plan. If you do this, you will be surprised at how much you can achieve, even paying off a student loan debt.
For more info : https://studentloansresolved.com/
For many, to succeed in life means to buy a house, start a family, see the world and fulfill many other dreams that are unique to each person. However, many people postpone these dreams because of the significant debt on student loans.
The truth is that you can do all these things and even more, even if you have a student loan debt. You just need to have a strategic choice and have a specific financial plan.
If you want to buy a house
Tip # 1: Start with an advance payment
If you want to buy a house, one of the most important things is to save on a down payment. There are many options when it comes to buying a home, some of which involve less than 20 percent down payment. However, if you save 20 percent, you will usually be in the best financial position. This allows you to own ⅕ of your home right away, avoid private mortgage insurance (PMI), and find better mortgage rates.
I know that it’s difficult to save tens of thousands of dollars for a down payment, especially if you want to pay student loans. However, maintaining a down payment is the best way to buy a home and minimize financial risk.
Tip number 2: buy a start house
Of course, having a four-bedroom house on the lake would be amazing, but it’s very important to take small steps when looking for a home ownership. Buying a home is a serious decision – one of the biggest financial decisions you are likely to make in your life.
Because of this, it is important to buy a house that you can really afford. For most young people who have student loan debts, this usually means buying a “start house”. The starting house is usually smaller, needs some updating and is cheaper than your dream home.
The purpose of the starting house is to get used to owning real estate and the pros and cons associated with it.
And remember, the fact that your mortgage payment will be lower than your rent does not mean that household ownership will be generally more affordable – maintenance and taxes will accumulate. Buying a house while you are in arrears on a student loan is good, but you should have a comfortable financial buffer and a clear plan for how you will respond to financial situations that arise.
Tip # 3: Get a roommate
Living with a roommate is a great way to save on expenses when you have a home. Whether you are single or married, your roommate definitely has its pros and cons. From a financial point of view, however, this is a great professional.
A roommate can help you pay most of your mortgage and utility bills every month. Or you can set aside your roommate’s rent for an additional student loan monthly. In any case, having a roommate can definitely help you manage your mortgage and student loan payments at the same time.
For more info : https://studentloansresolved.com/
Before cursing the end of the grace period, here are some tips that will make the transition easier and less stressful.
1. Check if you can further delay payments.
As a rule, the grace period for a student loan ends six months after the student’s attendance at the college has fallen below half the time. For graduates, this period begins six months after receiving a degree.
However, some grace periods do not end after six months. In certain situations, you can postpone payments longer.
As a rule, if you return to school at least half the time until the grace period expires, your loan hours will be reset. You will not need to make payments when you attend classes, and you will receive a new six-month grace period after you finish your studies or fall below the attendance level.
If you are on active duty, then you also have a break. If you are called up for service for more than 30 days, then upon return you will receive another six-month grace period for the student loan.
If none of these situations apply, you may have other options. It is best to apply for a delay or waiver of your loans.
Keep in mind, however, that even if you are allowed to defer payments, you may not want to, or simply do not have to. No option makes student loans disappear, and some even increase the balance you ultimately need.
2. Set up your redemption system
Returning student loans can be confusing, especially if you have applications flying from different places. Believe me: I hate trying to keep track of your bills just like you. Why not make it easier for yourself?
One way to do this is to keep track of all your student loans from one place. Of course, I’m biased, but you can do it for free with your Student Loan Hero account.
It is easy to set up, and it can save you from the frustration of individually processing all your loans. Student loan hero even explains how you can save on your loans, which will help you to repay them faster.
After you have organized your loans, determine the best repayment strategy. If you sign up, the Student Loan Hero dashboard can even help you with options for paying off your credits.
One of the popular strategies is to make automatic payments. Instead of manually paying each bill every month, it is easier to set them up on autopilot. In addition, some federal student loan services will lower your interest rate by 0.25%. Although it is not so much, it is free money. Why not take it?
3. Think carefully about consolidation.
By now, you have probably heard about the consolidation of the federal loan. While this may be a good strategy, you need to know a few things before you unite.
Consolidation takes all your loans and groups them together. Interest rates are averaged on the basis of the balances of each loan, which means that in the end you will pay the same interest, regardless of whether you consolidate them or not. The main advantage of consolidating a loan is paying only one bill instead of many.
So when should you not come together? In particular, if you have 1) loans with different interest rates and 2) you plan to pay more than the minimum payment for each payment cycle, consolidation can cost you. Since you will not be able to first repay loans with the highest interest rates, you will not save on interest.
Keep in mind: after consolidation, this cannot be undone. Choose wisely.
4. Look at your interest rates.
There are only three ways to save when paying off student loans:
Lower interest rates
Having forgiven loans
A popular option to lower interest rates is to refinance with a private lender. Current rates are only 1.95% per annum, but you must meet the requirements. Want to know more? Check the questions before refinancing student loans.
Increasing payments without refinancing or consolidation can be an excellent option for faster repayment of loans while saving money. As mentioned above, it is best to first pay student loans with the highest interest rates.
For example, let’s say you have three credits:
Credit 1: a balance of $ 8,000 at 11%
Credit 2: a balance of $ 6,000 at 3.5%
Credit 3: a balance of $ 5,000 at 6.8%
Since each month you are charged the highest interest rate on loan 1, you must repay this loan as soon as possible.
To do this, monthly produce minimum payments on loans 2 and 3, and do the rest in the direction of the loan 1.
As soon as loan 1 is repaid, pay at least loan 2 and put everything else in the direction of loan 3.
By following this strategy, you will save as much interest as possible on each subsequent payment. Just make sure your service staff knows how to apply additional payments to the main balance, not to future payments.
5. Do not skip payments.
If you have a loan, one of the worst options you can do is skip the payment.
For more info : https://studentloansresolved.com/
How big is the student loan debt when it comes to the ability of Americans to buy houses? It is widely believed that cutting student debt does not allow many college graduates to save money on the initial mortgage payment, and missed loan payments ruin their credit scores.
Although these factors account for lower homeowner rates among recent graduates, new numbers show that the impact is minimal. Here is a closer look at how student loans and mortgage rights are related.
New student loans and mortgage data
A new study Zillow showed that student debt does not significantly affect your likelihood of home ownership, if you have completed at least a bachelor’s degree.
Graduates of colleges with a four-year education and no debt on student loans have a 70 percent chance of owning their own home. This probability is reduced by only 4 percent for bachelors from $ 50,000 in student debt.
Although obtaining a mortgage loan or maintaining a down payment can be a daunting task in managing significant debt, studies show that student loans should not be a serious obstacle to home ownership – and not for most graduates.
If at least one of the spouses has a four-year education and does not have student loans, the probability that the couple will own the house is about 69.8%. If the same couple divides $ 30,000 in student debt, their chance of home ownership drops slightly to 67.7 percent – a 2.1 percent difference.
The same marginal effect of student loans persists even at the graduate level. Persons with medical, legal or doctoral education have the highest probability of owning their home, despite the high prices that often accompany graduate school.
A release without a master’s loan program gives you an 80 percent chance of owning your own home. Add to this amount 50,000 dollars of student loans, and your probability will fall by only 5 percent.
According to the study, achieving a higher level of education protects borrowers from the negative effects of debt on student loans when they are ready to buy.
Associated or not degree
Possession of less than undergraduate is where sensitivity to credit is increased. For those who have a university degree as a junior specialist, the likelihood of owning a house drops sharply from 73 percent without debt to 57 percent if they complete their studies with debts of $ 50,000.
Those who do not have a diploma are the worst; the probability of owning a home starts at 48 percent and decreases if the student has accumulated a debt on a student loan, but has not received a diploma.
Are you ready to buy a house?
Although student loans have little effect on home ownership for most graduates, other factors need to be considered before buying a home.
One of the most important factors affecting student debt is the debt to income ratio (DTI). Lenders calculate DTI by dividing your total monthly debt by your gross monthly income. If you already have a hefty student loan balance or other debts, such as credit cards or car payments, your income-to-debt ratio may exceed the lender’s limit. Deal with this by paying the highest loan balances to reduce your DTI.
Also consider what you can afford. Your annual income, monthly debt and down payment all affect the determination of a reasonable mortgage payment. Insert numbers into a calculator and play around with numbers to see how much you can afford at home. Your results can help determine whether you are willing to look for creditors or you need to postpone the purchase until you have mastered your finances.
The impact of student loans on your ability to buy housing has long been exaggerated. It’s time for a new story.Doing math and knowing your options will help you determine your priorities – whether it’s paying off your student loans or home hunting.
For additional info : https://studentloansresolved.com/
It is not surprising that forgiveness of loans to public services is one of the most talked about student loan programs. But this is often misunderstood. Trying to find out if you have the right, and when to apply, seems as difficult as getting a diploma.
To answer some questions and clarify misconceptions, here are four amazing facts about the Forgiveness Program for Public Service Loans.
Fact # 1: Your employer, not you, must meet the requirements.
To qualify for the PSLF program, your employer must be a very specific type of organization. The focus is not on the work you do, but on the organization for which you do it.
Qualifying employers whose employees can apply for PSLF are:
Non-profit organizations that are exempt from taxes under Section 501 (c) (3) of the Tax Code
Any local, state, federal or tribal government organization
Some non-profit organizations with relevant government services
Some volunteer organizations, such as the Peace Corps and AmeriCors
There are certain groups that may seem to fall under the category of public service, but do not. For example, trade unions, political parties, commercial groups or non-profit groups that are not subject to Section 501 (c) (3) of the Tax Code cannot be considered employers of the public service.
If you are not sure that your employer is a valid PSLF employer, click on the link to the relevant government services above or contact your company’s personnel department.
Fact number 2: You must be a full-time employee.
Part-time workers will not be eligible for forgiveness of a government service loan, even if they work for a current employer PSLF. You must work at least 30 hours a week, or as much as your employer considers full-time.
In addition, it should be noted that the more than 30 hours rule deserves to be mentioned that none of this time can be spent on any religious functions, such as teaching, worship or proselytism.
Fact number 3: You must have appropriate loans.
Only loans received under the Direct Loan Program can be forgiven for a loan to government employees.
The only way to get federal Perkins loans, federal family education loans, or any other type of federal loan that meets the PSLF requirements is to combine them into a direct consolidation loan.
Unfortunately, none of your previous payments prior to consolidation using a direct consolidation loan will be considered one of the 120 required qualifying payments.
If you do not know if your federal student loans match the PSLF program, log in to the Federal Student Aid website to find out what loans you have.
Fact number 4: You must make 120 suitable loan payments.
First, only payments made after October 1, 2007 will potentially qualify as one of the 120 mandatory payments required for forgiveness of a loan.
Secondly, the redemption plan that you used to make these payments matters.
Fortunately, the payments you make in accordance with the income-based redemption plan are recorded in the PSLF. Your payments are acceptable if you make payments on a direct consolidation loan using the following plans:
Revenue Based Redemption Plan (IBR)
Pay as you earn a plan (PAYE)
Revenue Based Redemption Plan (ICR)
Another factor to consider is: will you have a debt after 120 payments? It takes a lot of time to make 120 loan qualification payments (minimum 10 years), and many borrowers will not have much money left on their federal balance of student loan debt.
However, your payments can be as low as $ 0 per month, especially if you participate in the IBR program. It depends on your income and the repayment plan in which you are registered.
PSLF typically serves borrowers who have difficulty repaying loans due to low salaries and / or high student loan balances.
If you are eligible to participate in the Civil Service Loan Forgiveness Program, the balance after 120 qualifying payments will be forgiven.
To verify that you meet the requirements, it is recommended that you submit your job application form to your loan specialist each year. This way you can, rather than later, find out if you are in line with your current job.
Not everyone who thinks that they meet the requirements will actually do it, so be sure to spend your research
For additional information : https://studentloansresolved.com/
According to a recent study by Sally Mae, only 48% of parents are currently putting aside funds to educate their children in college. Whether due to poor planning, rising college expenses, loss of employment, or other extenuating circumstances, many parents take student loans on behalf of their child to pay for their education.
Although it is generous and sometimes necessary, it also burdens many parents. They are often left to pay the loan “Parent Plus” much later than their graduates, and sometimes retired.
So, should children repay their parents and help with the Parent PLUS loan repayment if their parents took out a loan on their behalf? Should they refinance loans in their own name? Or should they allow their parents to pay loans, since how did they get them?
There are no simple answers to these questions; however, it really depends on the circumstances of each case.
Sometimes children do not know much later that this is how their parents financed their education. At the same time, parents may not be aware of the burden that loans will place on them until many years have passed.
Who is legally responsible for parenting PLUS loans?
Legally, a parent who takes a loan in his own name is responsible for paying off the Parent PLUS loan. This is because the parents decided to take out a loan specifically for their child, agreeing to repay it.
The only way to change it now is to apply for a refinancing loan in the name of this child.
However, the child should do this only if he wants it, and can comfortably pay the student loan on time every month.
Should you take on the repayment of loans?
So what if you can’t or can’t refinance PLUS your parents ’loans to your name? Should you just offer to pay them?
This is a difficult question, and it definitely depends on the situation. But in some cases, the return of these loans may be the right decision. This may be the case if
you have a good relationship with your parents
you have a solid, highly paid job,
you can afford the payments and
You do not want to burden your parents in retirement.
Personally, I would not want to burden my parents with a student loan. If they had taken a loan on my behalf, I would probably have taken a loan or at least planned automatic payments for them from my current account until the loan was repaid. I do not like to feel that someone is stuck in debt or postpones retirement because of me.
However, I have a pleasant neighbor who is a retired teacher and a mother who pays a student loan on a Parent PLUS loan every month. She lives in the expensive part of the country next to her family, but since she is modest and does occasional work on the side, she can also regularly repay her Parent PLUS loan and still retire.
Facilitating loan repayment Parent PLUS
If you cannot afford to accept payments for your parents, but still want to help, you can recommend how your parents can make Parent PLUS loans more manageable.
On the one hand, they can consolidate and refinance PLUS loans into a private loan. If they qualify for a lower interest rate to help save money during the life of the loan. It will also reduce the number of loans that they need to track, simplifying payment arrangements.
Your parents can also check whether they have the right to a payment plan with a conditional income, which will require them to pay no more than 20% of their discretionary income to pay the student loan each month. After 25 years of payments, loans are forgiven.
Ultimately, leaving your parents burdened with student loan loans for your education is not an ideal situation. This can cause family disagreement about who should be responsible for paying off a student loan, and can burden your parents and possibly even delay their retirement.
It is best to talk with your parents, have an open dialogue and try to find a way through which you can work together to cope with debt, regardless of whether you contribute to repayments or fully accept the loan.
For more info : https://studentloansresolved.com/