Student Loan - Know Before You Owe Questions & Answers Prepared by: The Counselor s Corner, Inc. April 25, 2018

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1 Question: I'm interested on Student Loans, but for a Master s degree. Will this series of webinars provide information about this? Answer: Yes, we will provide a limited amount of information on Federal loans that may be helpful to your Master's program. Question: Could scholarships impact a student's qualification for federal/state grants? Answer: YES, because all student aid added together can t be more than your cost of attendance at your college or career school. So, you ll need to let your school know if you ve been awarded a scholarship so that the financial aid office can subtract that amount from your cost of attendance (and from certain other aid, such as loans, that you might have been offered). Then, any amount left can be covered by other financial aid for which you re eligible. Question: I found out by accident that private student loans may be covered in bankruptcy. Answer: Whether a student loan is discharged based on hardship is not automatically determined in the bankruptcy process. You must file a petition (called an adversary proceeding) to get a determination. Question: Are Private channeled school loans interest rates close to the same interest rates as the Perkins/Direct loans? Answer: No there is a difference. Private Student Loan Rates vary from a Fixed rate of: 4.99% to 11.24% and a Variable Rate of: 2.20% to 9.29%. Federal student loan interests vary based on the type of loan - Direct Subsidized Loans (Undergraduate) 3.76% 4.29%; Direct Unsubsidized Loans (Undergraduate) 3.76% 4.29%; Direct Unsubsidized Loans (Graduate) 5.31% 5.84%; Direct PLUS Loans (Graduate and Parents) 6.31% Question: What do you think about the commercials that offer to help you pay off loan debts. I called it before and the person on the other line said that I would need to pay them about $300 and they would work on my behalf. I found that is absolutely crazy. Answer: That's why we're working to made sure that provide this FREE information to make you aware of your options. Beware of scammers. Question: Are the maximum limits/caps on all of the different types of loans? Answer: Private student loans usually have an annual limit equal to the cost of attendance minus other financial aid. Most private student loans have aggregate loan limits of $75,000 to $120,000 for undergraduate students and higher limits for graduate and professional students. These aggregate loan limits usually include all student loan debt, including both federal and private student loans. Federal student loan limit is based on the maximum amount the school can approve for you to borrow. Your school might give you less than the loan limit. The annual and aggregate borrowing limits on federal student loans vary based on many factors. Question: What role does your credit play when your obtaining a private loan that is channeled through the school/university? Answer: Very important. They're looking for a strong credit profile. 1

2 Question: There are not as many programs to repay for private. Answer: Correct Question: Will any of the sessions cover military related education/loans? Answer: We will try to provide some information on this topic. Question: Will there be coverage on how working for a non-profit will assist in repayment of federal loans? Answer: YES Question: Is completion of FAFSA mandatory if parents know they have to pay all monies out of pocket? Answer: The FAFSA form is required for Federal aid. Question: Does anyone know when the College Compendiums are released? Answer: This link will take you to the Delaware Compendium for pdf Question: Are Perkins loans private school loans? Answer: No, Perkins Loans, are low-interest federal student loans for undergraduate and graduate students with exceptional financial need. Question: Is it a separate application or is it part of FAFSA? Answer: Students must file a Free Application for Federal Student Aid (FAFSA) as part of the application process for a Perkins Loan. The FAFSA can be completed on the Web at Question: From past experience I know no credit has stopped any loan. Do you have more information about this? Answer: Lenders want the lowest possible risk that means they want to be very confident that they will be paid back. If you do not have an established track record with borrowing and don t have a very high credit rating, you are questionable as far as the private lender is concerned. You may be the most responsible person in the world, but since you have no financial track record to prove this, a cosigner in most cases will be required. Question: What is Deferred Action for Childhood Arrivals (DACA)? Answer: DACA is the name used of a process announced by the Secretary of Homeland Security on June 15, Under this process, if you came to the United States as a child and meet several key guidelines, you may contact U.S. Citizenship and Immigration Services (USCIS), a component of the Department of Homeland Security, to request consideration of deferred action. Deferred action refers to a decision to defer (delay or put off) removal action of an individual. DACA may be granted by USCIS for a period of two years and may be renewed under certain circumstances. Deferred action does not provide an individual with lawful status; however, recipients of deferred action may obtain work authorization. 2

3 Here s an excellent cheat-sheet regarding DACA and student loans Question: If the student has no credit history will the cosigner satisfy the approval requirement if they meet the eligibility guideline? Answer: Great question, the answer is YES. Question: Will unpaid student loans become a lien? Answer: If your student loans became delinquent less than seven years ago, they still will appear in your history. Additionally, if an account was charged off/written off as a loss, it will continue show the amount that was written off as well as the original loan amount. A lien is usually reported in the public records sections of the report after a law suit. However, remember there s no need for a law suit on a student loan, because of their legal status. Question: Can you consolidate a private student loan if the person does not yet have their degree? Answer: Yes, however remember that you would have to credit qualify. Question: Can you consolidate a private student loan if the person does not yet have their degree? Answer: Yes, however remember that you would have to credit qualify. Question: Is there an age limit for cosigners, what if the cosigner dies? Answer: The only age limit that legally determines whether someone can be a cosigner is the threshold of adulthood. A cosigner must be at least 18 years old. Some lenders may make other stipulations, such as that a cosigner live within the state or be a U.S. citizen. Question: Are housing counselors training on student loans? Answer: Not all are trained in this area, you must do you due diligence. Question: Is your student loan obligation eliminated if you have been awarded SSDI benefits due to disability? Answer: Not automatically, the consumer would need to provide documentation of the disability to the lender or servicer. You may not be able to have your private loans forgiven. Question: Is there a simple document that explains student loans for dummies? Answer: Here are few pdf documents that might help you:

4 Question: Can you become eligible for new student loans if the complete amount has already been garnished and you return to school? Answer: Yes, for federal loans. However, remember a record of the delinquency and default will appear on your credit report. Question: Would DACA students be eligible for FAFSA? Answer: Students who have been granted DACA can now use their Social Security Number (SSN) to complete the Free Application for Federal Student Aid (FAFSA) form. DACA-mented students are NOT eligible for federal financial aid, but completing the FAFSA form allows DACA students to receive a Student Aid Report (SAR). Here s a great document: Question: Hi. I am a high school math teacher and would like to know about loan forgiveness vs debt cancellation? Answer: Here s the application for the Teacher s Loan Forgiveness Application: Question: If a student works for a senior center will that qualify for the loan forgiveness program? Answer: To qualify for student loan forgiveness for nonprofit employees, you must: Have an eligible loan (only Federal Direct loans qualify for PSLF benefits). Have an eligible job (only Public Service jobs qualify for PSLF benefits). Make 120 monthly student loan payments, then you'll receive forgiveness. Here s a great supportive document: Question: What's the process for applying for debt forgiveness? Answer: Question: Can you provide us with a list of all forgiveness programs? Answer: Here s a link that outlines federal loans that are eligible for loan forgiveness, School Closure: Total & Permanent Disability: False Certification: Unpaid Refund: 4

5 Question: Is there a website to check the expected salary after graduation by major? Answer: Here s a site that might be helpful: Question: If a person is 62+ what can they do to stop the Student Loan repayment being levied on their Social Security? Answer: When a borrower is delinquent on her student loan for at least 425 days, the Department of Education has the authority to initiate the process of administrative offset. Through this mechanism, the Treasury Department withholds portions of a borrower s tax refund or Social Security benefits and puts it toward paying off the loan. Exemptions: Question: How about those students from ITT Tech? Are their loans going to be forgiven? Answer: Here s a response from Federal Student Aid Question: How will my outstanding student loan debt impact my child s ability to get a student loan? Answer: It is important to note that there are different types of financial aid available, and the majority of federal student aid is not contingent on student or parent credit history, including student loan debt the parents may have. Question: Can the 62+ that has her SS income funds levied can she file for the IBR and she is not working. The SS income is her only income. Answer: Yes, here are some ways to stop the social security from being garnished: Temporary Fix: Demonstrate to the Department of Education that the offset is creating a financial hardship. The Department of Education may require other information, so follow the instructions you receive carefully. If you are granted a reduction or suspension due to hardship, it will usually be good for twelve months, and must be renewed every year. Permanent Fix: Get out of default. Once you get your federal loan out of default, you can apply for incomebased repayment which could bring your payments down to zero. That program also comes with loan forgiveness for balances remaining after 25 years. Question: With garnishments - can they be stopped or revoked? Answer: The goal of any loan servicer is to set up regular payment on your debt. Even if you have experienced garnishment for many months, you may be able to stop the garnishment by contacting the loan servicer to set up a payment plan. 5

6 Question: With garnishments - can they be stopped or revoked? Answer: The goal of any loan servicer is to set up regular payment on your debt. Even if you have experienced garnishment for many months, you may be able to stop the garnishment by contacting the loan servicer to set up a payment plan. Question: If the parent (co-signer of a Sallie Mae loan) has a total and permanent disability will a loan cancellation or discharge apply? Answer: A Sallie Mae loan may be discharged if the child for whom you borrowed dies, or if you die or become totally and permanently disabled. We may discharge some or all of a Sallie Mae loan in any of these circumstances: The school closed before the student completed the program. The school forged the signature on your promissory note or falsely certified that you were eligible for aid. The loan was falsely certified through identity theft. The student withdrew from school but the school didn't pay a refund that it owed. Check with the school to see how refund policies apply to federal aid at the school. The loan was discharged in bankruptcy claim. This is not an automatic process - you must prove to the bankruptcy court that repaying the loan would cause undue hardship. Question: Is there a way to find out what your projected monthly payments will be while you are still in your grace period? Answer: Here s a great calculator - Question: Does Peace Corps volunteers, qualify for Public Service forbearance? Answer: Here s a great website for you - Question: If a student loan is in collection, can it be settled? Answer: The US Department of Education will never settle for less than the default claim it paid for a FFELP loan or the principal balance on a Direct Loan. Settlements are almost always for much greater amounts. The US Department of Education is also unlikely to settle debts at less than the current recovery rate. The recovery rate is the percentage of disbursements on defaulted loans that are recovered and includes interest and penalties in addition to the payments toward the principal balance. Question: Is there a loan forgiveness program for students who entered certain for-profit schools? Answer: Yes, there are for some schools. I would suggest that you research each specific school. Question: Can you make a payment on a deferred loan? Answer: Yes, making a loan payment during a period of grace, deferment or forbearance can greatly lower the total amount you pay over the life of your loan. For loans that do not charge interest during grace or deferment, any payments you make during this period will reduce your principal balance. 6

7 Question: If the private loan goes to a collection agency, can a Private Student Loan be included in bankruptcy? Answer: In order for private student loans to be discharged, you must prove that paying them causes undue hardship. Question: Are there tax implications of student loans that have been forgiven? Answer: Some loan forgiveness programs are taxable and some are not. Under current law, the amount forgiven generally represents taxable income for income tax purposes in the year it is written off. There are, however, a few exceptions. Generally, student loan forgiveness is excluded from income if the forgiveness is contingent upon the student working for a specific number of years in certain professions. Public service loan forgiveness, teacher loan forgiveness, law school loan repayment assistance programs and the National Health Service Corps Loan Repayment Program are not taxable. Loan discharges for closed schools, false certification, unpaid refunds, and death and disability are considered taxable income. The forgiveness of the remaining balance under income-contingent repayment and income-based repayment after 25 years in repayment is considered taxable income. Question: How can you get a private student loan out of the charge off status so that you can get a mortgage loan? Answer: Private loans may go into default as soon as one payment is missed. This severely limits borrowers opportunities to try to resolve problems and opens them up to onerous collection tactics, credit damage, and possible litigation. There are not a lot of options. Question: Can a borrower do a direct consolidation loan with the FFELs to make it eligible under the Forgiveness program? Answer: FFEL Loans do not qualify for PSLF, but they may become eligible if you consolidate them into a Direct Consolidation Loan. Question: If someone is a children's pastor at a church, do they qualify? Wow, this is such a great question, here s what I found. Answer: It depends on how much of your job is related to religious activities. When determining whether you are a full-time employee for PSLF, your employer may not include the time you spend participating in religious instruction, worship services, or any form of proselytizing. What is proselytizing? The act to convert or attempt to convert (someone) from one religion, belief, or opinion to another. Question: What happens if you change jobs and have some time off between eligible jobs? Answer: Here s a comprehensive Q & A on the Loan Forgiveness Program. This list was developed the Department of Education: 7

8 Question: Do they consider Public Housing Authority workers as a Public Service job under forgiveness program? Answer: Qualifying employment is any employment with: a federal, state, or local government agency, entity, or organization (including entities such as a public transportation, public water, or public bridge district, or a public housing authority) or a not-for-profit organization that has been designated as tax-exempt by the Internal Revenue Service (IRS) under section 501(c)(3) of the Internal Revenue Code (IRC). Question: Are there other federal agencies that student loan financial information is shared with; i.e. IRS, treasury etc.? Answer: Not sure, unable to locate information this topic. Question: I ve paid for my student loan for more than 40 years and the balance is not going down. Where do I go for help. Answer: Here s two great links: and If all else fails, here s the FSA Ombudsman Group number