Tuesday, December 21, 2010

Names can be confusing – especially when it comes to student loans.

A Rose is a Rose is a Rose … Names can be confusing – especially when it comes to student loans. You thought you paid that loan yet you are still getting late notices! What’s going on???

The student loan industry is still undergoing monumental changes that can be confusing for student loan borrowers. Even though Direct Loans became the single source for student loans as of July 1, 2010, life is not necessarily simpler. Direct Loans is now using several private companies to service their student loan portfolio. You may think of Direct Loans as your lender but they probably will not be the company servicing your loans. As of December 2010, in addition to the original Direct Loan Servicing, there are now four additional servicers who are handling student loan accounts for the Direct Loan Program. They are:
· DOE/Great Lakes
· DOE/NelNet
· DOE/Sallie Mae
· FedLoans (also known as PHEAA or AES)

It is important to understand that these DOE servicers are separate companies from their FFELP counterparts, with separate mailing addresses and phone numbers. They all also service loans under the FFEL loan program so you may have other student loans handled by Great Lakes, NelNet, Sallie Mae or PHEAA (AES). You may have the phone number for this servicer programmed into your speed dial. However, as separate companies, the DOE/servicer will have separate phone numbers and mailing addresses. Now that I have probably confused you, let’s review a few situations and see if we can help make your student loan life a little easier.

First Scenario – you thought you had a handle on who had your student loans; now, you called your servicer and they no longer have your loans. Yikes! Where are they? What’s going on? There was a large volume of FFELP loans that were sold to DOE in October 2010. This resulted in a lot of loan movement for borrowers. The good news is that this was the final loan sale authorized under the PUT program. However, as other loans were sold under the PUT program over the last few years, borrowers often went from one FFELP servicer to two or more DOE/servicers. Something simple became very bewildering. The DOE (Department of Education) has recognized the confusion created by this program and they are in the process of re-sorting their DOE/Servicer accounts to group all of a borrower’s DOE accounts to one DOE/Servicer. This may result in some additional, initial confusion as the loans are sorted and reassigned, but the DOE assures us that this process should be complete by mid-January and all borrowers with Direct or DOE held loans will have their loans serviced by one servicer. Happy New Year!

Second Scenario - you thought you were paying those loans and yet you keep getting a late notice or calls about delinquent loan payments. There are two possible answers to this scenario. The quickest and easiest explanation is that you have a loan or loans that were recently sold to another servicing company. Contact the company at the phone number referenced in the letter to see what is going on. You should be able to resolve this fairly quickly. The slightly trickier and more common problem occurs when you have loans serviced by both the FFELP servicer and the DOE servicer. For example, you have loans with Sallie Mae and you are making payments; however, you are getting letters from DOE/Sallie Mae saying you are delinquent. You must remember that, even though the names are similar, your loans are being serviced by two different companies. To resolve the current situation, call DOE/Sallie Mae and get a solution in place (payment, adjusted payment plan, deferment or forbearance). Our Tip for Future Contact: If you have the dual servicer situation, make it a habit to always contact the DOE/servicer first. This is based on a provision regarding federal payments, “lockboxes” etc. It can be confusing, but if you will simply get into the habit of contacting the DOE/servicer, you may still resolve your dual serviced student loans with one phone call. The customer service representatives from the DOE side are allowed to discuss both sets of accounts with you; however, the customer service representatives from the FFEL side are not allowed to discuss the DOE accounts with you. So… if you contact your FFELP servicer first, unless you ask to be transferred to the DOE/Servicer, you will have to call back to resolve those accounts.

Resources for Student Loan Management
A student loan borrower’s best source of student loan information remains NSLDS. The website, http://www.nslds.ed.gov/ will provide you with the most current information on all of your student loans and can be easily accessed 24/7 with your PIN. (Our Tip: If you have forgotten your PIN, visit http://www.pin.ed.gov/ and request a duplicate PIN). If you receive any mail from a student loan company, always open the mail and read the information. Trust me, in today’s economy, a company is not going to go to the expense of mailing letters or making phone calls (even “robo” phone calls) without a valid reason. As the borrower who can potentially be negatively impacted by adverse actions on student loans, you cannot afford to ignore any correspondence regarding your student loans. If you do not understand the information, either contact the customer service number listed on the letter or contact your school’s Financial Literacy department for assistance.

Each DOE/Servicer has a website where borrowers can download forms, review their accounts, make payments and request payment relief assistance. If you are a SWFC student or alumni, you can contact our financial literacy department and we will be happy to help locate your servicer’s website and set-up your account for easy management. Just e-mail me, mjoffe@swfc.edu and I will be happy to help.

Here is one final tidbit for your consideration. The Department of Education is reaching out to student loan borrowers and they have added two trendy contact resources for borrowers. Check these out:
The page features weekly tips, info and links for future, current and former students.
www.youtube.com/collegedotgov This site features more than 60 videos, inspirational videos from peers and advice from current college students.

Wednesday, September 15, 2010

Could You Use an Additional $1,259?

Let’s face it – that is a no brainer! Everyone would like to have an additional $1,259 and it is actually quite simple to get your hands on the money. For example, if you have student loan balance of $20,000 and pay an additional $30 per month towards your student loans, you will save $1,259 in interest charges and you will pay off your student loans 1.5 years sooner! Gosh – then you’ll just have to decide how to use the additional $4,680 you will have saved (that’s would be the amount you will pocket by not having to make 18 months worth of $260 student loan payments to the Department of Education!)

Ok you say – so I’m in, but just exactly where will I find an extra $30 a month? The answer is really surprisingly easy. You’ll just need to make a little a little sacrifice. Hey, I am not talking starvation here, just give up one vending machine or convenience store purchase a day! If you can forgo one snack a day with an average cost of a $1, you’ll have the $30 easy! So seriously, couldn’t you manage to skip the chips, or soda or coffee? Remember, just a dollar a day will end up saving you over $1259 in interest over the next 8.5 years.

OK! Hopefully, by now you are motivated! Now, let’s really think big. What if you gave up 3 fast food meals a week and browned it? Based on a $5 average cost per meal, you would be saving $15 a week – that would let you double your additional payment to $60. Now we are talking $ 2,149 in saved interest and cutting your loan’s term down to 7.2 years! Not having to make those $290 payments for 33 months will be putting another $9,570 at your disposal after your loans have been paid in full!

Gosh – skipping 3 fast food lunches a week? Forget the money – at 1,190 calories per meal (based on information from
http://www.calorieking.com/), that’s 3,570 calories per week and, guess what? You need to reduce your calorie intake by 3500 calories to lose one pound. I like saving money but I’d love to lose the 52 pounds this year!

Bottom line, it only takes a little effort to add a lot of money to your wallet (and lose a lot from your hips). Take a few moments to visit SWFC's Cashcourse page and see how much you can save by making extra monthly payments to your student loan. Just click on the link and Do the Math! (

Wednesday, September 1, 2010


There is an advertisement that is all over the Internet right now with the title "Return To School With A Grant". There are several versions of the ad and I seem to see it everywhere one MSN and other news websites.

This signifies that it is back to school time and people are out searching for Obama student grants and loans and anything else they can find that might help them pay for schooling. This happens every year but this year it is likely that more people than ever are looking.

One of the reasons for this is the bad state of the economy. Jobs have been lost, money is tight, and yet college tuitions are still as high as ever. This means more people need financial aid and they are desperately looking for any way to get it.

With no hint of college costs going down, this seems like a trend that is going to continue into well into the future. Additionally, more people are trying to return to school because that seems like the best option if they can't find a job. But money is always a problem and while going back to school seems like a good plan for many, figuring out how to pay for it is a problem.

If you can't find any grants or student loans that will work for you, there is always the two FREE scholarships drawings to enter below:

Scholarships 4 Moms - (FREE) Both men and women over 18 can sign up for this free drawing.

Monday, August 9, 2010


It's time to think about going back to school and figuring out how to pay for it. For most students, that means trying to get a college grant, a student loan, or both.

Student loans have changed now that new legislation has come into being. Lets call them Obama student loans as he is the one who put through the legislation and then Congress and the House passed it. Several things have changed but most notably student loans are now from controlled by the government instead of private banks and lending companies like it was before. Still, a college loan is still the same in that it has to be paid back.

College grants are usually given out in the form of Pell grants. People are busy trying to find back to school grants for moms and other types of school grants but it all really boils down to Pell grants. Unlike student loans, the good things about a grant is that it doesn't have to be repaid and that is a very important decision.

You can watch an interesting short video where Suze Orman outlines the dangers of student loans and her belief that they are going to be a big drag on the economy as more and more students start defaulting on them. Student loans are becoming too big with the price of college continuing to rise and students who have recently graduated are now finding it almost impossible to pay back.

With student loans you can't declare bankruptcy and in many cases the jobs graduates are getting are not paying enough to live and also repay the loans. And that is if you can even get a job in the first place!

She suggests going to a community college for the first two years (which is much cheaper) and then go to a state or private college for the last two.

So, if you can get a pell grant or college grant of any kind you should take that first as it doesn't have to be repaid. Unfortunately, most grants are just a small portion of the amount you need to attend college and so you will still need to get a loan for the rest and hopefully a good college job to help you start repaying that loan.

Thursday, July 29, 2010

GOOD NEWS: Student Loan Interest Rates Have Fallen - a little!

If you have variable interest rate student loans, you are probably already used to looking forward to July 1st each year – the day you rate will either go up or, hopefully, down. However, even students who are signing up for a fixed rate loan can look forward to the date!

Let’s look at the older loans first. If your student loans were issued between July 1, 1998 and June 30, 2006, as of July 1, 2010, your student loan’s interest rate has fallen by .01%. Now that does not sound like a big deal, but the current year’s rate is 2.47% for loans in Repayment or Forbearance. If your loans are in Grace, In-school or in another Deferment status, your rate is even lower, down to 1.87%. While the 0.01% decrease may not sound like much, over a standard 10 year repayment term, it represents $ 63.15 for every $10,000 in student loans. If you have $25 K in student loans and consolidate to lock your interest rate in, you will save $157.88 over the next ten years. The true beauty of the 2.47% when compared to 2.48% comes with the practice of rounding of interest to the nearest 1/8th percent. The 2.48% will round to 2.50%, while 2.87% will round to 2.475%. (The same will hold true for the 1.87% grace rate when compared to the old grace rate of 1.88%)

There is also good news for most undergraduate students who are currently taking out student loans. Your subsidized undergraduate Stafford rates will also drop. In fact, if you have been receiving subsidized Stafford student loans since July 1st, 2008, you have been enjoying a rate decrease each year.

  • Subsidized Undergraduate Stafford Loans from 7/1/08–6/30/09 are 6.00%

  • Subsidized Undergraduate Stafford Loans from 7/1/09–6/30/10 are 5.60%

  • Subsidized Undergraduate Stafford Loans from 7/1/10–6/30/11 are 4.50%

  • Subsidized Undergraduate Stafford Loans from 7/1/11- 6/30/12 are 3.40%
Interest rates for unsubsidized undergraduate Stafford and Graduate Stafford loans (both subsidized and unsubsidized) have a fixed rate of 6.8%. I am sorry to close on a bit of bad new; however, as current legislature stands, the subsidized undergraduate Stafford rate will increase to 6.8% beginning 7/1/2012. That should be a bit of motivation to kick your studies in gear and graduate by June 2012!

Tuesday, June 29, 2010

Where ARE my Student Loans?

Before we see where those peaky loans have gone, let’s take a nostalgic look back: Once upon a time, not so very long ago, a student went to college and used Federal Financial Aid to help pay for their education. The student kept a copy of all of their loan paperwork, all of their loans were with one lender/servicer and, when their Repayment date arrived and the borrower was ready to make a payment, they had their payment coupon booklet in hand, with all of their payment coupons in place. The monthly payment amount was easy to locate, the mailing address was very clear – everything went smoothly. The borrower made regular monthly payments and received a Paid-in-Full statement after the 120th payment. Those were the days!

As many of you already know first-hand and many more of you will soon discover, the life of a student loan holder is not so simple anymore. The student loan industry has entered a brave new world! Over the past two years, many lenders have exited the student loan industry. Some will continue to service their FFELP loans until they are paid in full. However, many lenders choose to sell the FFELP loans and the next thing you know, you are getting letters and e-mail from lenders or servicers you never heard of. What’s a person to do?

It can become even more confusing for borrowers returning to school or who are still enrolled. If you are attending school and using federal student loan monies to fund your education, you have probably recently been contacted by your Financial Aid office asking you to stop in for an appointment. If you fall into this category, please make that appointment now! You will probably be asked to sign a new promissory note. This is necessary because, as of July 1, 2010, the U. S. Department of Education’s Direct Loans is the only source for federal student loans or consolidated federal student loans. For many borrowers, this will just add one more name to their ever growing list of loan servicers.

Now, more than ever, student loan borrowers must take control of their accounts and stay in contact with their lender/servicers. Do you know the answers to these 3 questions?

1. How many student loans do I have?
2. Who is servicing my student loan account(s)?
3. What is my approximate balance on my student loan account(s)?

You should know the answers to each question. Want to check your accuracy? Log onto http://www.nslds.ed.gov/ and see how you did. Were you correct? Any surprises? At this point, if you are still not completely comfortable with your student loan contact information, take a few moments to contact your lender or servicer and get everything straightened out. Even if you scored 100 on the 3 question quiz, follow these few simple guidelines to stay straight with your student loans. Notify your loan’s servicer if you:

· Change your mailing address
· Change E-mail address (Please note: if you no longer check an e-mail address, inactivate the account. If your lender/servicer has the address, they will send E-statements as opposed to “snail mail”. This will not help you if you never check or read mail in that mail box.)
· Change or disconnect your phone
· Change Employers or become unemployed (
Remember there is an Unemployment Deferment available for anyone who is not working or is working less than 30 hours per week)

One final piece of advice; be sure to keep your school in the loop too. Lenders do not notify the borrower’s school when loans are bought or sold, so make sure you keep your alma mater updated on the latest changes to your accounts. Your alma mater is also a great source for answers to the latest, confusing correspondence you've received. Your school’s Default Management office still speaks and can translate that foreign language called Financial Aid!

Coming Next Month: The Rates are Falling, The Rates Are Falling …… July 1st means the annual adjustment in variable rate student loans – and they are falling. Is it time to finally consolidate your student loans?

Other Coming Attractions:
A Rose is a Rose is a Rose … Names can be confusing.
You thought you paid that loan and now you are still getting late notices! What’s going on???

In-School Consolidation – What’s the Buzz? A look at the pros and cons of this 1 year window for in-school consolidation; it’s not for everyone.

Tuesday, January 26, 2010


There are four tax benefits for college education expenses:

· Tuition and fees tax deduction
· The American Opportunity Credit
· The Hope Credit
· The Lifetime Learning Credit

The Tuition and Fees deduction will reduce your taxable income. The Hope Credit, Lifetime Learning Credit and American Opportunity credit can reduce your tax bill. The American Opportunity credit replaces the Hope credit for 2009 and 2010, and provides a partially refundable credit. Taxpayers should investigate all of their options and choose the credit that will give them the lower tax; however, they cannot claim more than one credit or a credit and deduction for the same expenses. You cannot “double dip”. The education tax credits are calculated on IRS Form 8863 (PDF).

The American Opportunity Tax Credit is a refundable tax credit for undergraduate college education expenses. This credit can provide up to $2,500 in tax credits on the first $4,000 of qualifying educational expenses. Forty percent of the credit (up to $1,000 maximum) is refundable. This is unique to the American Opportunity Tax Credit. The tax credit is scheduled to have a limited life span and, unless Congress extends the credit to additional tax years, it will be available only for the 2009 and 2010 tax years.

The Hope Credit is a tax credit for college students in their first two years of college. It provides a tax credit of up to $1,800 on the first $2,400 of college tuition and fees. The Hope Credit can be claimed on your tax return if you, your spouse, or your dependent are a first-year or second-year college student, is enrolled at least half-time at an eligible education institution, and you were responsible for paying college expenses. If you missed this credit in the past, it might be possible to file an amended tax return for the year(s) in question.

The Lifetime Learning Credit is a tax credit for any person who takes college classes, even if you took only one class. It provides a tax credit of up to $2,000 on the first $10,000 of college tuition and fees. The total credit is limited to $ 2,000 per return, but you can claim the Lifetime Learning Credit if you, your spouse, or your dependents are enrolled at an eligible educational institution and you were responsible for paying college expenses.


American Opportunity Credit

  1. $2,500 in tax credits on the first $4,000 of qualifying educational expenses. Up to $ 1,000 may be refunded.
  2. Can be used for Education expenses paid with borrower funds (student loans)
  3. Can be claimed for the first 4 years of post-secondary education expenses.
  4. Available ONLY for 2009 & 2010
  5. Applies to all four years of undergraduate college education
  6. The American Opportunity credit also features an expanded definition of qualifying expenses.

Hope Credit

  1. $1,800 of qualifying educational expenses paid for each eligible student. Can reduce taxes to $0. Excess funds cannot be refunded.
  2. Can be used for Education expenses paid with borrower funds (student loans).
  3. Available ONLY until the first 2 years of post-secondary education are completed.
  4. Available ONLY for 2 years per eligible student.
  5. Student must be pursuing an undergraduate degree or other recognized education credential.
  6. Student must be enrolled at least half time for at least one academic period beginning during the year.
  7. No felony drug conviction on student's record

Lifetime Learning Credit

  1. Credit of up to $2,000 based on qualified tuition and related expenses paid for all eligible students. Can reduce taxes to $0. Excess funds cannot be refunded.
  2. Can be used for Education expenses paid with borrower funds (student loans).
  3. Available for all years of post secondary education and for courses to acquire or improve job skills.
  4. Available for an unlimited number of years.
  5. Student does not need to be pursuing a degree or other recognized education credential.
  6. Available for one or more courses.
  7. Felony drug conviction rule does not apply.

A final word of caution – Patience is a virtue that can pay BIG $s. Do not fall victim to so-called "instant" or "same-day" refunds. These are actually short term bank loans, and most have exorbitant fees. According to Brendan Conway (Contributor to The Christian Science Monitor / March 2, 2009), in some cases, that means a mind-boggling 1,300% when calculated like a credit-card’s annual percentage rate. Electronic refunds are generally processed within 15 days and a refund returned by mail will usually be received within 3 to 4 weeks.

This information is provided by SWFC to increase student awareness of possible Education Tax Credits and Deductions. We are not Tax Preparation experts. If you are interested in using any of these credits or deductions, please consult a Tax Expert or the IRS.