Student Loans Information

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Overview

Learn How to Find the Right Student Loan and Your Repayment Options

A college education is expensive and the costs increase every year. Rising college tuition and living costs mean you will need to come up with more funds to pay for a college education. You must plan carefully to accomplish your education goals and not end up burdened by debt.

Currently, about two-thirds of students who graduate carry student loan debt. The average of those with debt is more than $25,000 in student loan debt. Amazingly, many don’t understand how much their monthly student loan payment will be when they finish their schooling.

Are you shopping for student loans? Looking for student loan rates and information? Whether you are a current student or about to be one, a student’s parent, or someone that already has student loans, you need to take time to research all of the options available to you.

Federal vs. Private Student Loans

There are two main categories of student loans: federal student loans and private student loans. Federal student loans are based on need, generally, not on your income or credit score. Federal loans usually have lower interest rates and more flexible repayment terms than private student loans. So, check out your federal student loan options first. However, the amount you can borrow in federal loans is capped, so it may not cover all your expenses.

If you need to take out private student loans, Bills.com partners with private student loan lenders, to help you find the best rates available.

If you are currently making payments on your student loans, be sure to look into consolidating them. Consolidating your student loans can help you lower your interest rate and monthly payment.

Millions of borrowers are unable to make their monthly student loan payment. If you struggle to make your loan payments, make sure you understand the deferment and forbearance options available. If you’re in collections for your student loans, it’s crucial for you to know exactly what kind of harm you can suffer, such as a wage garnishment.

Use Bills.com as your online resource for learning about student loans, finding the best student loans available, and understanding your options for paying back your student loans.

  • + Are student loans a good way to finance my education?

    Many students use student loans to finance their education. Student loans are a reasonable solution to pay for school. You just need to make sure you understand the repayment requirements before you take on a loan.

  • + How do I apply for a federal student loan?

    Go to the Dept. of Education’s FAFSA Web site and complete the form you find there. Several types of federal loans and grants are available. See the Bills.com article Federal Student Loans to learn more.

  • + How do I remove a co-signer from a student loan?

    It is possible to remove a co-signer from a student loan under certain conditions. See the Bills.com article Cosigning a Student Loan to learn more.

  • + Is it possible to have a student loan forgiven?

    Yes, it is possible to have a student loan forgiven. If your loan is federal and you work in public service, you may apply for public service loan forgiveness. If your loan is private, read the Bills.com article Private Student Loan Forgiveness to learn about the current proposals before Congress.

  • + What if I can't afford my federal student loan payments?

    You have many options if you cannot afford your payments on your federal student loans. See the Bills.com article How to Avoid Defaulting on a Federal Student Loan to learn what payment programs are available to you.

  • + What if I can't afford my private student loan payments?

    You have few options if you cannot afford your payments on your private student loans. However, your lender may offer deferment or forbearance options.

  • + Adjusted Gross Income (AGI)

    Your or your family's wages, salaries, interest, dividends, etc., minus allowable deductions as reported on a federal tax return.

  • + Administrative Wage Garnishment (AWG)

    A tool that allows the Dept. of Education or other federal agency to withhold a portion of your earnings to collect unpaid non-tax debts that a borrower owes to the federal government. If you have a federal student loan in default, up to 15% of your disposable pay could be taken by the federal government to repay your debt.

  • + Alternative Documentation of Income (ADOI)

    Form used to accurately identify the income level of borrowers on, or requesting to be on, the Income Contingent Repayment (ICR) or Income-Based Repayment (IBR) Plan. The Alternative Documentation form is used in situations when obtaining income information from the IRS is inappropriate such as the first year or two of repayment on your loan(s) or when the Dept. of Education is unable to obtain income information from the IRS.

  • + Capitalization

    Regarding student loans, this is the adding of unpaid accrued interest to the principal balance. Capitalizing interest increases the principal amount of the loan and the total cost of the loan. This occurs at the end of a deferment, forbearance, or grace period on federal Unsubsidized Loans, and at the end of a forbearance period on a federal Subsidized Loan.

  • + Consolidation

    The process of combining one or more eligible educational loans into a single new loan. The federal Direct Loan Program offers a Direct Consolidation Loan for those borrowers who are interested in consolidating their eligible educational loans.

  • + Credit Bureau

    An organization that tracks and reports your credit, including your history of paying bills and your ability to repay future loans. For example, if you default on a student loan, it is reported to a credit bureau.

  • + Default

    Failure to repay a loan according to the terms agreed to when borrowers signed their promissory notes. Default occurs when a federal Direct Loan borrower becomes 270 days delinquent in making payments on their loan(s). The consequences of default can be severe.

  • + Deferment

    A deferment is a temporary suspension of a borrower's monthly loan payment. There are many different types of deferments available. During deferment of subsidized loans, principal payments are postponed and interest does not accrue. During deferment of unsubsidized loans, principal payments are postponed but interest continues to accrue. Accrued unpaid interest will be added to the principal balance (capitalized) of the loan(s) at the end of the deferment period. This will increase the amounts borrowers owe.

  • + Delinquent

    Delinquency status indicates that borrower's accounts are past due on payment. This occurs when a borrower's loan payments are not received by the due dates. Accounts remain delinquent until a borrower brings their accounts current with payments, deferments, or forbearances. If a borrower's accounts become delinquent and the borrower is unable to make payments, then deferments or forbearances should be considered.

  • + Diploma Mill

    An unaccredited school (or a business claiming to be a school) that awards a degree without requiring classwork meeting college-level standards.

  • + Endorser

    An endorser is someone who does not have an adverse credit history and agrees to repay the loan if the borrower does not repay it. See "co-signer."

  • + FAFSA

    Free Application for Federal Student Aid

  • + Federal Family Education Loan Program (FFEL)

    A federal program authorized under Title IV of the Higher Education Act that provides loans to eligible student and parent borrowers. The program consists of Subsidized and Unsubsidized Federal Stafford Loans, Federal PLUS Loans, and Subsidized and Unsubsidized Federal Consolidation Loans. Funds are provided by private lenders such as banks, credit unions, and other private financial institutions. The federal government backs the loans.

  • + Federal School Code

    An identifier the Dept of Education assigns to each college or career school that participates in the federal student aid programs. To send your FAFSA information to a school, you must list the school's Federal School Code on your application.

  • + Federal Student Loan

    Money you borrow from the federal government to help pay for your education. You must repay your loan with interest.

  • + Forbearance

    A period during which your monthly loan payments are temporarily suspended or reduced. You may qualify for forbearance if you are willing but unable to make loan payments due to certain types of financial hardships. During forbearance, principal payments are postponed but interest continues to accrue. Accrued unpaid interest will be added to the principal balance (capitalized) of the loan(s) at the end of the forbearance period. This will increase the amounts borrowers owe.

  • + Grant

    Financial aid, often based on financial need, that does not need to be repaid (unless, for example, you withdraw from school and owe a refund).

  • + Income Contingent Repayment (ICR) Plan

    A federal repayment plan that bases your monthly payment on your yearly income, family size, and loan amount. As your income rises or falls, so do your payments. After 25 years, any remaining balance on the loan will be forgiven, but you may have to pay taxes on the amount forgiven. Each year your monthly payment will be based on your family size, annual Adjusted Gross Income (AGI) as reported on your federal tax return, and the total amount of your Direct Loan(s). To participate in the ICR Plan you must authorize the U.S. Internal Revenue Service (IRS) to inform the Dept. of Education of the amount of your income. This information will be used to calculate your repayment amount, which will be adjusted annually to reflect changes in your AGI. If you select the ICR Plan, you will be billed for only the interest amount that accrues on your loan each month until you complete and return the required documentation. The Dept. of Education cannot place you on ICR Plan until it receives your completed forms.

  • + Income-Based Repayment (IBR) Plan

    The Income-Based Repayment (IBR) Plan is designed to cap your required monthly payment at an amount that is affordable based on your income and family size. You must have a partial financial hardship to initially select the IBR Plan and to continue to make income-based payments. After 25 years of qualifying repayment, any remaining loan balance will be forgiven, but you may have to pay taxes on the amount forgiven. The IBR Plan is NOT available for repayment of Direct PLUS Loan(s) made to parent borrowers or Direct Consolidation Loan(s) that repaid Direct PLUS Loans or Federal Family Education Loan (FFEL) Program PLUS Loans made to parent borrowers. If you consolidate any parent PLUS loans into a Direct Consolidation Loan, the new Direct Consolidation Loan cannot be repaid under the IBR Plan. To participate in the IBR Plan, you must provide the Dept. of Education with information about your current income and family size each year.

  • + Judgment Lien

    A legal claim to a home or property when the owner fails to pay a debt. A student (or parent in the case of a parent borrower) will not qualify for federal student aid if he or she owns property that is subject to a judgment lien for a debt owed to the United States.

  • + LIBOR

    London Interbank Offered Rate; the interest rate at which banks can borrow funds from other banks in the London interbank market. LIBOR is fixed on a daily basis by the British Bankers' Association. There are different LIBOR rates for different terms. Variable-rate PSLs often use 30-day or 90-day LIBOR as an index to reset rates.

  • + NSLDS

    The National Student Loans Data System is a centralized database that stores information on all Dept. of Education loans and grants. NSLDS also contains borrowers' school enrollment information. Borrowers can access this information online using their Department of Education PIN.

  • + PLUS Loan

    PLUS Loans, which are federal student loans, are available to parents of dependent graduate students and to students enrolled in graduate and professional programs. PLUS loans are unsubsidized loans that accrue interest from the date of disbursement.

  • + Private Student Loan

    Any loans made for post-secondary education that are not federal student loans. The term excludes 12 month payment plans that do not charge interest on short-term balances due to schools. Unlike federal student loans, the interest rate and fees paid on a private student loan are based on a borrower's and/or co-signer's current creditworthiness, as tested at the time of application.

  • + Reasonable and Affordable Payments

    Rehabilitating a defaulted loan or making satisfactory payment arrangements requires borrowers to make "reasonable and affordable" payments. The holder of a federal Direct Loan or FFEL Program loan determines on a case-by-case basis what constitutes a reasonable and affordable payment on defaulted loans. Loan holders consider disposable income and such expenses as housing, utilities, food, medical costs, work related expenses, dependent care, and other federal education loan debt. Borrowers are then provided with a written statement of the payment and an opportunity to object to those terms.

  • + Rehabilitation

    The process of bringing a federal loan out of default and removing the default notation on a borrower's credit report. To rehabilitate a Direct or FFEL loan, a borrower must make at least nine full payments of an agreed amount within 20 days of their monthly due dates over a ten-month period. To rehabilitate a Perkins Loan, a borrower must make 12, on-time, monthly payments of an agreed amount to the Dept of Education. Rehabilitation terms and conditions vary for other loan types and can be obtained directly from loan holders.

  • + Servicer

    An entity designated to track and collect a loan on behalf of a loan holder.

  • + Student Aid Report (SAR)

    A summary of the information you submitted on your FAFSA. You receive this report (often called the SAR) via e-mail a few days after your FAFSA has been processed or by mail within 7-10 days if you did not provide an e-mail address. If there are no corrections or additional information you must provide, the SAR will contain your EFC, which is the number that's used to determine your eligibility for federal student aid.

  • + Subsidized Loan

    A federal loan for which a borrower is not responsible for the interest while in an in-school, grace, or deferment status. Subsidized loans include Direct Subsidized, Direct Subsidized Consolidation Loans, Federal Subsidized Stafford Loans, and Federal Subsidized Consolidation Loans.

  • + Unsubsidized Loan

    A loan for which a borrower is fully responsible for paying the interest regardless of the loan status. Interest on unsubsidized loans accrues from the date of disbursement and continues throughout the life of the loan. Unsubsidized federal loans include: Direct Unsubsidized Loans, Direct PLUS Loans, Direct Unsubsidized Consolidation Loans, and Federal Unsubsidized Stafford Loans, Federal PLUS Loans, and Federal Unsubsidized Consolidation Loans.

  • + Variable Interest

    The rate of interest charged on a loan that changes annually and fluctuates with a stated index.

  • + William D. Ford Federal Direct Loan Program (Direct Loan Program)

    The Federal program that provides loans to eligible student and parent borrowers under Title IV of the Higher Education Act. The loan programs include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans. Funds are provided directly by the federal government to eligible borrowers through participating schools.

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