Getting Savvy About Your Student Loans

student loans

You did it! You got the degree, graduated college, and are ready to branch out into your career. Graduation is a time to look forward to your bright future after years of hard work. But it’s also worth taking a look back—especially at your student loans. Many college students graduate without really knowing how much they owe, when payments are due, or even who they owe. How long will these loan payments be in your life? Organizing your student loan debt is a big first step towards your bright future after graduation. Here are six steps you can take to get on top of your student loan debt.

1. Who do you owe?

Are your loans federal or private? This is a good time to figure that out. Most college students have some kind of federal student loan debt. Go to studentloans.gov and enter your FAFSA information to see what loans you have and to find the government-hired company that services the loan. This will be the company you contact for all future interactions concerning your loan.

If you have private student loans this can be a little more difficult to track, especially if you weren’t exactly the world’s most organized filer when you were 17 years old. Your loan(s) also could have been sold to a completely different company than you initially used. In these instances, your college admissions office should be able to lend a helping hand. Your alma mater should have a copy of any loan agreements with your records that can tell you who your loan servicer is. Your credit report can also help you determine information about any private loans.

2. How much do you owe?

This is really a two-fold question: What is the amount you initially borrowed and what is the current amount of principal you owe? If you have been making some payments towards your loan, it is important to find out if these payments went towards the principal of your loan or if they went towards interest. Federal student loan balances are frequently not up to date, so contact the lender directly for the true amount of your loan. Private student loans should be up to date with your most recent statement, but it never hurts to make direct contact if you have any questions about what you owe and what you’ve already paid.

3. What is the interest rate?

Knowing which loans have higher interest rates can help you determine which loans should take priority as you begin repaying your debt. All federal loan interest rates after 2006 are fixed, meaning the rate remains the same over the duration of the loan. Private student loans as well as federal loans taken out prior to 2006 may have variable interest rates. Find out how often the rate changes and if there is a cap on how high the rate can go. If you have an unreasonably high interest rate, it is likely due to a poor credit score when you applied for the loan. Ask us how to refinance your student loan!

4. What are my payment options?

Your lender should be able to tell you the estimated payoff dates of your loans which can help you establish a payment plan that works for you.

  • Federal loan monthly payments will automatically calculate based on a standard 10-year repayment plan. If you cannot afford these payments, there are many income-driven repayment plans that can allow you to make smaller payments more in line with your budget. It’s important to understand any special conditions of these plans and how smaller payments may impact your loan balance.
  • Private loans are much less flexible when it comes to payment options. Review your loan agreement. Most private loans will spread out payment equally month by month for the duration of the loan. If you are struggling to pay back your private student loans, reach out to your lender to discuss payment alternatives. They would much rather you be making smaller payments than none at all.

Student loans will be part of your financial reality until you pay them off. It can be daunting to think about paying back this debt while you’re still establishing yourself professionally, finding a place to live, and making your mark on the world. Don’t panic! Answering the above questions can help you create a plan of action to pay off your debt and get back to planning for your bright financial future. If ever in doubt, reach out to Veitengruber Law. We can help you make sense of your loan repayment options.

Private Student Loans: What You Need to Know

private student loan

You did it! You worked hard, got a college acceptance letter, and graduated high school with a crisp, new diploma. Now is when the excitement and celebration of getting into college typically starts to give way to some anxiety. College is expensive and very few of us can afford to pay for a degree out of pocket. Most people know how federal student loans work, but what’s the skinny on private student loans? Here we look at the difference between the two and when you might need a private student loan.

Federal Student Loans

If you will be borrowing money to attend school in the fall, you’ll want to start with federal loans first. Federal loans are much more flexible in the repayment process, offering income-driven repayment plans as well as loan forgiveness programs. The terms and conditions of federal student loans are set by law with fixed interest rates. You will not be required to make any payments until after you graduate, leave school, or if change your enrollment status to less than half-time. However, sometimes federal loans will not cover the entire cost of attending college. This is where private student loans come in.

Private Student Loans

Banks or credit unions issue private student loans, typically with less repayment flexibility than federal student loans. The biggest reason to go for federal loans first is because private loans typically end up being more expensive than federal loans. Because the terms of the loan are at the discretion of your individual lender, different private loans can vary greatly from lender to lender. Depending on your specific circumstances, you could have a higher or lower interest rate, it could be fixed or variable, you may have to start paying for your loan while you’re still in school, or you may be able to hold off on payments until after graduation. The biggest drawback of private student loans is their variability, which can lead to confusion.

That being said, many students every year will take out private student loans to cover the costs of attending college. If you find yourself in need of a private student loan, don’t panic. There are plenty of good private loans out there, you just have to find them. This means putting in the time to do your research to find a loan with the best rates, fees, and terms for your situation. Don’t just settle for the first private loan you find. Compare interest rates, fees, and borrower protections across different lenders to identify the most affordable offer.

Which Private Loans have the Best Rates?

To compare all of the available private loans, check out your local banks and credit unions, but don’t be afraid to look online too. Some of the better deals on private student loans can be found through online lenders. One of the best ways to do this is through Credible, an online private student loan marketplace. Students (and parents co-signing for their children) can enter basic information to see multiple loan offers online. Credible allows you to compare terms, interest rates, and fees all on their website. Because many of these lenders operate via the internet, their overhead costs are lower, which could mean lower interest rates and fees for you.

How Much Should You Borrow?

As with any student loan, you will want to minimize the amount you borrow. This is especially true with private student loans, which tend to have limited repayment or forgiveness options if you have financial difficulty in the future. It is very common for students to take out loans for more than they really need. People overestimate their income after graduation and end up with loans they cannot afford to pay back. Unlike federal loans, there is no cap on private loans. A lender may let you borrow much, much more than you can realistically afford. In order to avoid being crushed under a pile of debt after graduation, only borrow what you absolutely have to and keep yourself on a budget throughout the duration of your college career.

Pay Back Private Loans First

If you do end up with a private loan, make sure this is your top priority when you start the repayment process. Many private loans begin accruing interest from the moment they are disbursed. If you can start making payments on these loans while you are in school, it is a good idea to do so. This can help you save substantially on interest in the long run.

If you are having difficulty paying back your private student loans, you’re not alone. Managing student loan debt is a heavy burden for many Americans. Veitengruber Law is a NJ legal team experienced in all types of debt management. We can provide customized debt solutions for your specific needs so that you can get the degree you need without fear of financial ruin.

Student Loan Relief for NJ Retirees

NJ retirees

A growing number of people entering retirement are struggling to afford their student loan payments. Some older borrowers may have taken out loans for themselves to go back to school later in life, while others co-signed loans for their children or grandchildren. As of 2015, the average student loan debt owed by borrowers 65+ was $23,500 and nearly 40% of those loans were in default.* Carrying student loan debt into your 60’s can make it extremely difficult to sustain your standard of living through retirement.

 

Even worse news is that an increasing number of borrowers in retirement have had portions of their Social Security retirement and disability benefits garnished for nonpayment of federal student loans. If a loan is in default, lenders can take up to 15% of a retiree’s monthly Social Security benefits. This can affect retirees’ ability to buy food, pay for housing or afford needed medication. If you are struggling to make student loan payments under a retirement budget, consider the following options.

 

Many lenders offer loan modification options for borrowers struggling to keep up with their payments. Some offer ways to temporarily reduce student loan payments through deferment or forbearance. Deferment will allow you to put off your loans for a designated time period, usually no longer than three years. Borrowers approved for deferment will not have to make payments during that time. Under some loan agreements, you may even be able to defer interest accrued during the deferment period.

 

Forbearance is similar to deferment, with some slight differences. Under forbearance, your loans will be paused or reduced for up to a year. Your interest, however, will still continue to accrue under forbearance. Many times, lenders will allow borrowers to apply for an elective forbearance with the understanding that this kind of loan modification can only be utilized a limited number of times. It is important to note that these types of interventions are effective for momentary financial struggles, but are not long-term solutions. These options will allow you to postpone repayment, but they do not take away the debt.

 

Under some circumstances, you may be able to file a special request to get your student loan debt forgiven. This request must include a written Complaint indicating the student loan debt is causing undue hardship on the borrower. The official legal Complaint will be served in court together with a Summons on the applicable lender(s). A judge will then decide whether or not to forgive all or some of the student loan debt. This decision will be based on the borrower’s income, their financial hardships, any medical hardships and whether or not the individual has previously tried in good faith to make the loan payments.

 

While you can file this Complaint yourself, the document must be in a special format and include very specific information about the borrower’s financial situation. Up to 40% of these cases result in at least a partial loan forgiveness for the borrower. While law firms do charge a fee to assist in these filings, it’s easy to see that you’d likely get a huge return on your investment of the expert help of an experienced attorney. At Veitengruber Law, we know what judges are looking for in these filings and can help you present a detailed case that is likely to be decided in your favor.

 

Student loan debt can be hard to manage at any age, and especially so for those living on a fixed income. Don’t let student loan debt drain your financial resources in retirement. Call us today to get individualized advice on your specific case.

 

*Statistics from AARP

No Debt vs College Degree: Which Wins?

student loans

If you’re strategizing to keep your debt burden low throughout the first phases of your adult life, you’re probably considering whether or not it’s worth it to assume a large amount of student debt. After all, 70% of college graduates leave their alma mater with a burdensome level of student debt. Today, more than 44 million US residents are struggling to repay a collective $1.5 trillion in college loans alone.

For many people, a college degree is a necessary step toward creating the adult life they’ve dreamed of, and assuming some level of student debt is likely unavoidable. However, it’s absolutely imperative that students fully comprehend the long-term impact of the loans they’re agreeing to.

If a college graduate is unable to repay their loans in a timely manner, or doesn’t prioritize repaying them, financial disaster looms ahead. Graduates face severe financial penalties for not repaying their loans, including additional fees, mounting interest fees, potential wage garnishment, and negatively impacted credit ratings. Keep in mind that New Jersey is not an inexpensive place to live, so if you play to return to your home state after school, you’ll need a savvy financial plan to do so.

The following quick guide will help you determine whether the cost of student loans will make sense for you in the long term. The answer to this question varies from individual to individual, so it’s a decision you’ll need to make for yourself. Carefully weigh the pros and cons, advantages and disadvantages, and do your best to make the most beneficial decision for your situation.

Remember, too, that if you do end up (or have already ended up) with a significant amount of college loans, it’s going to be okay. You’re not alone by any means; as we’ve discussed, 1 in 4 adults in our country are still repaying their loans.

The Pros and Cons of Student Loans

Pros:

  1. Student loans can make college possible, or make it possible for you to attend a school that would otherwise be unattainable. If a student loan makes the difference between you attending your dream school or a local state school, it may well be worth it to bridge the gap with a loan.
  2. In certain fields, if pursuing a higher quality (or more widely respected) education positions you to earn significantly more over the life of your career, then your student loans may represent only a small fraction of your potential earnings. In such situations, assuming responsibility for a larger loan is almost certainly worth it. Study hard, network with grace and skill, and set yourself up to bring home the kind of money you’ll need.
  3. Student loans can be spent on more than just tuition. Choosing a student loan may make the difference between you having to work full-time during your education and instead having the luxury of focusing solely on your studies. You can use student loans to pay your rent or car payment, purchase a laptop and textbooks, or even just buy groceries. Postponing your financial troubles until after you graduate can have a positive impact on your mental health and resources during the few years you’ll have to pursue your education goals.

Remember, too, that even though student loans are pretty terrible, they’re still more affordable than credit card debt or other high-interest personal loans!


  1. Paying off student loans on time will help you build credit. You’ll need a positive credit rating to get a good interest rate on significant purchases like a car or home, so having this opportunity to build credit right out of college can be very positive. Please be aware that you will need to make prompt payments every month in order to benefit from an improved credit score.

 

Cons:

  1. Interest is a pain in the neck. When you repay your student loans, you’ll be repaying the amount you initially borrowed plus the interest that’s accrued over the years you’ve been in college. As of 2018, interest rates on student loans range from 4.5% to 7% for federal to 11% – 15% for privately-held loans.

If you choose high-interest student loans, the interest rates can be almost as disastrous as those on credit cards! If you can afford college without assuming any student loans, clearly it is in your best interest to do so.

  1. Choosing student loans will mean that you’ll begin your adult life with debt. Your financial freedom will be significantly impacted by this burden; you’ll probably need to delay other life goals like home ownership or international travel until you’re able to pay off a significant portion of your student debt.

Home prices in New Jersey don’t show any signs of halting their steady climb, so delaying your entry into the housing market could mean paying as much as tens of thousands more for your first home.

  1. It is nearly impossible to discharge student loans without paying them directly. Unlike many other kinds of personal debt, student loans cannot be eliminated by declaring bankruptcy. If you assume responsibility for a student loan, you will have to repay it.
  2. Missing payments on your student loans can destroy your credit score, which will negatively impact your financial opportunities for many, many years to come. You’ll have difficulty renting or purchasing a home on your own, applying for a loan on a car, and could even lose your job along with your financial credibility.

 

The truth is that student loans can be a net positive in your life and can be relied upon to help you create a better future for yourself and others. In real-life application, though, slow job growth, high interest rates combined with punitive laws preventing struggling graduates from discharging their debts through bankruptcy, and skyrocketing tuition prices are factors that work against even the most well-intentioned students.

That’s why if you do decide to assume student loans, it’s important that you try to live frugally and limit the amount of debt you need to take on. If you can work part-time and still maintain your grades, consider doing so. Purchase clothing second-hand when possible, for example, and keep your wardrobe streamlined until you have more financial freedom.

You’ll find that the fiscally wise habits you can cultivate during these lean years will serve you well in the future, even after you’ve paid off your debts. Remember that being conscious and intentional about your spending is always a healthy decision. Frugality is never something you should be ashamed of!

Getting Out of Student Loan Debt: Public Service Employees in NJ

Are you working as a New Jersey firefighter, police officer, teacher, nurse, principal, or hospice care worker? Employees working these jobs, along with many others, have one major thing in common: a motivation to serve others. When people have access to services and education, even if they cannot afford them, society benefits. You’re playing a role in the well-being of society. Though it may seem like you could earn more money in another field, there are unmatched benefits to working as a public service employee.

Unbelievably, 40 million Americans have student loans to pay off; there’s a high chance that you’re one of those 40 million. The good news for you is that if you’re a public service employee, you could be eligible for student loan forgiveness. That sounds awesome, right?

In 2007, Congress formed the Public Service Loan Forgiveness Program (PSLF) to embolden individuals to enter the public service work force and to continue working as public service employees. Again, although these jobs may not be the highest paying, they are absolutely necessary, which is what Congress wanted to reinforce. To qualify for this program, your job must be in a nonprofit organization, the government, or a specific not-for profit program.

How can you qualify for student loan debt relief – is it enough to simply be a public service employee?

It’s necessary to be employed full-time by a public service program, and under certain repayment plans, it’s required that you have made at least 120 payments on the eligible federal student loans. Every payment must meet or exceed the required amount and must be paid on time, meaning no later than 15 days after the due date. October 2017 was the first month that any remaining loan balances were eligible to be eliminated. This program is not unique to New Jersey, but all New Jersey public service employees can apply to the program, as long as all stipulations are met.

In addition to the public service jobs already listed, employees in the following sectors can also benefit from the PSLF Program:

  • Government organizations
  • Non-profit, tax-exempt organizations (listed under 501(c)(3) of the Internal Revenue Code
  • Private, non-profit organization that provides any of the following services:
  • Law Enforcement
  • Military Service
  • Public Safety
  • Public interest law services
  • Early childhood education
  • Public services for the elderly and disabled individuals
  • Public library services
  • Public education
  • Public health (nurse practitioners, nurses, full-time health professionals in healthcare practitioner occupations)
  • Emergency management

How do you know what loans fall under the PSLF Program?

All non-defaulted loans under the William D. Ford Federal Direct Loan Program meet the requirements. Basically all Direct Subsidized and Unsubsidized Loans as well as Direct Consolidation Loans are eligible. In addition, Direct PLUS Loans for parents and graduate or professional students fall under the PSLF Program.

To enroll in the PSLF Program, you need to print and complete the Public Service Loan Forgiveness Employment Certification Form, and Section 4 must be filled out by your employer. Once the form is completed, send it in to the U.S. Department of Education FedLoan Servicing. Each year, the form needs to be resubmitted.

If you have student loans and you meet the requirements for eligibility under the PSLF Program, don’t hesitate to enroll. You could potentially save a substantial amount of money each month – freeing up that capital to pay for your monthly expenses.

Image: “Teachers Union” by Kevin Dooley – licensed under CC 2.0

The Best Tips for Paying off Student Loans Quickly

At the time you applied for and were granted a federal student loan, there’s very little chance that you were thinking about how long it would take you to pay it back. We’re all a bit naive and wet behind the ears when just starting our college studies. Buoyed by the prospect of a “well paying job” after your time at university, you, like many others, most likely figured that paying back your student loan debt would be a piece of cake.

As we all know, student loans are a whole lot less fun after college ends. No one likes the harsh reality of knowing that a large portion of your (newly acquired) paychecks will go toward paying back your student loans. Real life take home pay is usually a lot less than you thought it would be, and subtracting even more money from your net income can feel almost physically painful.

On top of how depressing it can be to fully realize just how much you owe, it can feel like you’ll be paying for your student loans forever. However, there are things you can do to make sure that feeling doesn’t become your reality.

Stop deferment as soon as possible

As a general rule, most student loans, both federal and private, will continue to accrue interest while in deferment. This means the longer you put them off, the more you’re going to owe.

Avoid income-based repayment plans

Also known as ‘pay as you earn’ or ‘income contingent’ plans, these repayment methods are geared toward college graduates who can demonstrate at least a partial financial hardship. In theory, limiting how much borrowers have to repay each month based on how much money they’re earning might sound like a good idea. The problem with dramatically lowering your monthly loan payments again lies in the staggering amount of interest that will be tacked onto the total amount due.

Be aware of income taxes if considering loan forgiveness programs

There are currently a number of federal and New Jersey loan forgiveness programs available for borrowers who have made a set number of payments over a given time period (usually 10, 20 or 25 years). While just knowing that the remainder of your loan will eventually be forgiven can be a light at the end of a tunnel, you may have to pay income tax on the amount that is forgiven.

If you’ve deferred your loan several times and then paid the lowest payments possible via income-based repayment, the interest will have been compounding for a long time. That interest will be added to the remaining balance, which may be a significant sum by the time you qualify for forgiveness. While you will be able to celebrate the debt forgiveness, you’ll still need to foot the hefty NJ income tax bill.

Refinance and consolidate your student loans

One of the best steps to take when trying to get a handle on your student loan debt is to lower your interest rate. You should first consolidate (combine) any loans that are eligible for refinancing. If your original student loan interest rates were high, you’ll save a lot of money over the course of your repayment plan by refinancing to get a lower rate. This can also shorten the length of time required for you to pay back your loans and, in turn, lower the amount of income taxes you’ll owe on any remaining balance if you qualify for forgiveness.

Earmark your yearly tax refund for student loan repayment

Each time you receive extra money, whether from your tax refund, a lawsuit settlement, an inheritance, etc., resist the urge to spend it frivolously and instead apply as much of the total windfall to your student loan balance. You can do the same every time you receive a raise at work, too. Set aside the extra income and pay that much above and beyond your monthly minimum loan payment.

Look for employment opportunities that offer loan forgiveness

The Public Service Loan Forgiveness Program forgives student loan debt in teaching and certain public and nonprofit jobs. You’ll have to meet a whole host of requirements in order to have your loans forgiven through your job, but it is something extremely well worth looking into.

In addition to the above strategies to get out of student loan debt quickly, you should consistently re-work your budget so that you can trim as much excess spending as possible. This will allow you to put more of your income toward repaying your debts faster. Your budget will only be stilted temporarily – so remind yourself that the end justifies the means.

 

Image: “Calculator and Money” by Reyner Media – licensed under CC by 2.0