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Do You Have To Pay Back Financial Aid?

After filling out the FAFSA and getting your estimated award, do you ever wonder if you have to pay back your financial aid? And if so, how much of your student aid will have to be paid back?

Paying Back Financial Aid

FAFSA and Financial Aid

If you are a current or former college student, then it’s likely that you may have received at least some amount of financial aid to help you pay for your education. With the high cost of a college education today, financial aid can be a necessity for many people, as it can allow you to go to a university that you may not have otherwise been able to afford. And, in some cases, it may even make the difference between being able to attend a college or university at all.

There are a number of different sources of financial aid. These can include the federal government, state governments, private lenders, and even colleges and universities themselves. In qualifying for many types of financial aid, you will need to complete a FAFSA (Free Application for Federal Student Aid) form. By doing so, you can gain access to federal student loans, grants, scholarships, and work-study programs.

Some of these financial aid sources will be provided without the need to repay the provider, while others will require payment. With that in mind, if or when you qualify for financial aid, it is important to understand what your future obligation will be.

Do You Have To Pay Back FAFSA?

When it comes to your repayment responsibilities, there are essentially three main categories from which student aid comes from. The amount of money that you will be required to pay back – if any – will depend in large part from where you receive the funds.


A scholarship is considered to be a type of gift that does not have to be paid back. These financial vehicles can be awarded by any number of entities, including colleges and universities, private companies, non-profits, religious organizations, employers, and individuals.

Being awarded a scholarship typically means that you have met certain criteria, such as having good grades, being an exceptional athlete, or being a member of a certain organization. While you do not need to repay your scholarship funds, in order to remain eligible for this money over time, you will usually need to maintain certain requirements, such as maintaining a certain GPA.

Obtaining a scholarship can be more difficult than getting a student loan. In most cases, you will need to find and apply for scholarships that you are interested in and beat other applicants. However, if you are awarded scholarship funds, it could mean that you won’t have to borrow money – or at least as much money – for attending your college or university.

Look for scholarships online, through your community, and other niche organizations or groups you may have relationships with.  We have also listed some easy scholarship to apply for below:

-“Because College is Expensive” Cedar Ed Scholarship
-Enter Easy Scholarships, for seamless scholarship matching opportunities.
-Another Scholarship to enter is the $1,000 Cappex Easy Money Scholarship
– For those of you who have taken the GMAT, just Rate &Review your GMAT Test Prep Company to enter.



A grant can also be a form of student aid that is not required to be paid back – at least in most instances. There are many different grants that students can qualify for but most are need-based, meaning your family’s income dictates your need for financial support.

Grants are often available from the federal government (FAFSA), non-profit organizations and schools, with the most commonly-known grants being Federal Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), and Teacher Education Assistance for College and Higher Education (TEACH) Grants.

One of the few times a grant would need to be repaid is if a student withdraws or is expelled from school prior to completing the semester. If your grant comes with any special terms and conditions, be sure to read them carefully before accepting.

It may be more difficult to obtain a grant than to receive a student loan; however, qualifying for a grant could end up saving you a great deal of time and money in loan repayment.

Student Loans

Student loans can also be received via numerous different sources. These include the government (federal and state) and private lenders, as well as from private individuals and institutions.

If you obtain a student loan, it is likely that you will not only have to pay it back, but you must repay it with interest. This is the case even if you do not obtain a degree and whether or not you are able to secure employment upon leaving school. However, keep in mind that you may be able to get on a repayment plan that fits your specific financial needs.

Qualifying for a federal student loan is based on need, whereas private lenders mostly look at your credit-worthiness. In cases of no credit history, private lenders will require a cosigner. Because this type of student financial aid is generally much easier to qualify for than a scholarship or a grant, many people will automatically apply for this type of aid first, without looking into other forms of assistance.

If you are a recent graduate and believe your student loans are carrying interest rates that are too high, you may want to consider refinancing.
You can can also check your new rate by using the refinance calculator and/or by doing a soft credit pull to check if you are approved and what your new monthly payment would be..

Applying For Student Financial Aid

If you are still in the process of applying for student financial aid, there are some important steps that you should take in the process. Doing so could potentially end up saving you thousands of dollars in student debt, as well as many years of loan repayment.

For example, be sure to apply for scholarships and grants, even if you think that you may not qualify. You could find that you will be able to obtain this type of aid, and can therefore relieve yourself of a long line of future student debt.

If you are now out of college, but you have a large amount of student loan(s) to repay, you may be able to refinance this debt. By going this route, a lower interest rate and / or a longer repayment period could allow you some relief by way of a lower monthly payment.

Student Loan Interest Rates

Because of the variety of federal and private student loans available, finding the best student loan interest rates can be confusing. This is further compounded by the need to compare fixed and variable interest rates.

Today, millions of people are saddled with student loan debt – a burden that can literally follow you around for the remainder of your lifetime if you are unable to pay back these borrowed funds in a timely manner.

One of the biggest reasons why this debt in particular can be so burdensome is because many people accept the interest on student loans, as well as the other loan terms, without question upon origination. Then, when it comes time to repay these funds, indebted college students experience financial hardship and the inability to make payments.

Here’s some background information on private and federal student loan interest rates, including the average rate in the industry, to help you find the lowest cost student debt for your education.

Student Loan Interest Rates

Determining Student Loan Interest Rates

Contrary to what some borrowers may believe, it is not the loan servicer that sets the interest rate on student loans – at least not the Federal Direct Loans. Nor can the loan servicer make changes to these student loan interest rates.

Rather, it is the U.S. Congress that sets the interest rates on the Direct Loans from the United States Department of Education via legislation that actually ties the interest rate to financial markets.

Federal Student Loan Interest Rates

The average interest rate on student loans (for Federal Direct Student Loans with a first disbursement date between July 1, 2016 and June 30, 2017) will vary based on the type of student loan that you are applying for.

However, for Federal Direct loans, the current student loan rates are:

  • Direct Subsidized Loans and Direct Unsubsidized Loans for Undergraduate Students – 3.76%
  • Direct Unsubsidized Loans for Graduate and Professional Students – 5.31%
  • Direct PLUS Loans for Parents of Undergraduate Students – 6.31%
  • Direct PLUS Loans for Graduate / Professional Students – 6.31%

Average Student Loan Interest Rates From Private Lenders

Because private lenders can set their own rates according to their underwriting standards, the average student loan interest rate for private lenders varies greatly. Private student loans tend to have higher interest rates than federal loans, with the industry average between 9% and 12%.

In addition to the interest rate depending on the lender, choosing a fixed or variable rate will affect your interest payments in the future. The rates can also be based on whether or not you have a cosigner, the amount that you are borrowing, and on the strength of your credit.

Can You Change Your Student Loan Interest Rate?

When you take out a Federal student loan, the interest rate on that loan is fixed for the life of the loan. That means that you cannot change the interest rate on that particular loan, nor will that rate adjust.

You can, however, obtain a lower student loan interest rate by refinancing with a private lender, provided that you qualify. Private student loans may be obtained through banks and other traditional lenders.

Private Student Loan Interest Rates

The interest rates on private student loans can be either fixed or variable. Oftentimes, the fixed rate loans that are offered by private lenders are somewhat competitive with the Federal PLUS loans for parents and undergraduates.

Loan Origination Fees

In addition to the interest rate that is charged on Federal PLUS loans, however, there is also a loan origination fee that can range between 4.272% and 4.276%, depending on the loan’s first disbursement date.

Because of the additional loan origination fee charged for the Federal PLUS loan, it could actually be cheaper in the long run to obtain a private student loan – depending on other factors, such as credit, income, and overall financial stability.

Variable Interest Rates

Private lenders may also offer student loans with variable interest rates. A variable interest rate will generally fluctuate throughout the lifetime of the loan. Currently, variable interest rates are still sitting at historic lows – and because of that, it may be possible to obtain a rate on a variable rate private loan that is below that of a Federal PLUS loan.

However, even though you may be able to obtain a private student loan that comes with a low initial variable interest rate, it is important to be careful, as the rate could rise considerably over time and make your payments unmanageable.

This is why is it essential to read over any and all loan information that you receive prior to moving forward with changing and / or obtaining a student loan. This includes loans from both Federal and private sources.

Student Loan Consolidation

Another potential option you may have for lowering your student loan interest rate is to consolidate multiple student loans – especially those student loans with higher rates of interest – into one single private loan with a lower interest rate. If done properly, this can potentially save you a great deal over the life of the loan.

If you opt to go this route, you will want to be sure that, while you may be saving money on your monthly payment, the new loan could end up costing you by having a much longer term. With that in mind, make sure that you calculate your total cost of the new consolidation loan as versus what it will cost you to keep your current loans. If it turns out that the new, single loan is cheaper in the short and long run, then you should take steps to move forward with it.

Final Word

Having a good understanding of the interest rates on your student loans can be an important first step in your overall financial success. One reason for this is because the interest rate on student loans is a key determinant of what your monthly amount will be when the time comes to start repaying the balance.

Keeping your payment low can help to ensure that you don’t get into financial difficulty right out of the starting gate as you exit college and begin your career. A low interest rate can allow you the ability to pay your student loan off faster – something that all borrowers ideally strive for. Lower student loan payments can also mean the ability to move forward financially with other important endeavors, such as saving for a home and investing for the future.

Should I Pay Off My Student Loans Early?

Paying off your student loans early seems like a dream come true. However, while paying off any type of loan early would seem to be ideal, the reality is that there could be some viable reasons to consider waiting before you fully pay off the balance on your student debt. This is because, in some instances, it may actually make more sense to put your money to work in other areas first.

There can be strong arguments for either side. So, before you actually pay off your student loans early, be sure that you are aware of which direction is really right for you. And for those of you that it makes sense for, we’ll recommend a few tips on how to pay it off faster.

Should I Pay Off My Student Loans Early

Pros to Paying Off Your Student Debt

It can be such a great feeling to finally have your student loans paid off. For many recent graduates, this is the only large debt that you currently have. However, if you ever plan on getting a mortgage or other large loans in the future, ridding yourself of your student loan balances can be extremely beneficial.

Lowers Debt to Income Ratio

One big factor on the plus side for paying off your student loans is that it can help in lowering your debt to income ratio. What this means is that you will have more income than outgo – which shows up as a positive factor to lenders if you are applying for financing such as a mortgage or a car loan.

More Funds Available to Invest

Having less money going towards your student loan payments means that you can put more towards saving and investing for your future. While retirement may seem like it is eons away, the more you sack away now, the more time it has to grow and compound exponentially over time.

Reasons Not To Pay Off Your Student Loans Early

While there are certainly many reasons to rid yourself of student loan debt, there can be some good arguments for hanging on – provided that the payment isn’t detrimental – and moving forward with some additional perks.

The Tax Deduction

You may qualify for a tax deduction on the interest that you pay on your student loan. Depending on the situation, you could be able to deduct up to $2,500 in interest each year. This, however, could still be a double-edged sword in that being rid of the debt completely may be the better option.

Build an Emergency Fund

Many financial advisors suggest having a readily available “emergency fund” in case of, well, an emergency. This could include the need for cash for anything from a fender bender to an unexpected period of unemployment.

Being able to pull cash from a savings account can be much more beneficial than having to dip into your retirement fund – or worse yet, having to put your emergency expenses on a credit card with 20% (or higher) interest charges.

Ideally, your emergency fund should have between three and six months’ worth of living expenses in it. But, when just starting out, any amount can be helpful. Funding this account can be another factor to consider in lieu of putting all of your extra cash towards paying down your student loan balances.

Enjoy Life Now

While paying your bills is always an important piece of advice, the truth is that you are only young once. So, in some cases, as long as you are able to keep a handle on making your student loan payments, you may not want to over-burden yourself financially by trying to pay off your loans early. In other words, don’t strive so much on just paying off your student loans right now that you neglect to experience and enjoy life as a young adult.

Important Factors to Consider

Even after jotting down your pro / con list, there are still some additional factors that are important for you to consider when deciding whether or not you should pay off your student loans in full right now.

For example, even if you are able to deduct student loan interest on your taxes, it is important to determine just how much the debt is actually costing you each month because of the payment itself. In other words, what is the possible opportunity cost that you may be missing out on?

In order to get a better idea of this figure, consider the difference between what you are paying on the loan versus the amount of return that you could be earning on an investment in a certain mutual fund. Because you have a student loan payment to make each month, it could essentially be holding you back from having or doing other things.

How to Get Your Student Debt Paid Off

If you do opt to go the route of paying off your student loans early, there are some strategies that you may want to consider for speeding up the process and crossing this big task off your list.

One way to pay off the loans more quickly is to make a higher amount of payment each month. Oftentimes, people will use this same strategy for paying off a mortgage faster. By making the additional payment, you will be paying down your principal more quickly, and potentially cutting years from your total payoff.

You may also want to check for possible refinancing options. If there is a way to move the loan over to a lower interest rate option, you might be able to lower your payment and / or the term of the debt.

Other Options for Easing the Student Loan Burden

Even if you don’t get all of your student debt paid off in full, it can help to pay more than just the minimum payment each month. This can help you to save on the interest, and it will also result in shortening the overall length of the loan repayment period.

If you have more than just one student loan, another potential option could be to consolidate all of your loans into just one. This can provide you with just one simple monthly payment – which may be less than the total of what you were paying previously.

If you do decide to go this route, though, be sure that you don’t end up taking on a higher amount of debt overall. This is because sometimes, consolidating multiple loans can result in a lower monthly payment, but it can also mean making payments on the new loan for a much longer period of time.

Student Loan Debt Statistics For 2016

Student loan debt statistics for 2016 look as gloomy as ever. With record average student loan debt and increasing college education costs, the burden on young adults isn’t easing. In fact, the average college debt is roughly $37,200.

While the stock market has enjoyed record-setting gains, gas prices have fallen, and employment figures and wages have increased, those saddled with student loan debt continue to struggle to make interest payments, start families, buy homes and start saving for retirement.

According to the White House, almost 70% of those who receive a bachelor’s degree will leave their higher education institution with at least some amount of student loan debt. As of early 2016, the total amount of that tab was hovering above the $1.27 trillion mark.

If you’re one of the 43 million Americans who is currently carrying student loan debt, it can be frightening to know that this debt could essentially follow you for many years. But, it can also be at least somewhat comforting to know that you’re not alone. Knowing what you and your peers are facing on a day-to-day basis when it comes to the battle of paying off your student loans can be helpful in providing you with a direction for future planning.

Student Loan Debt Statistics

Student Loan Debt Statistics

It can be tough making that student loan payment every month. But, knowing that you are one of 43.3 million other Americans who are also facing this very same type of debt may help to soften the blow – at least somewhat.

Today, borrowers who are between 20 and 30 years old are paying an average of $351 per month to chip away at their student loan debt. If you graduated or left school in 2016, the average amount of debt for your college peers is just over $37,000 – which is actually up slightly from the year prior. This level of debt may explain why the student loan delinquency rate is at 11.6%.

Other interesting student debt statistics include:

  • In 2012, 71 percent of students graduating from 4-year colleges had student debt.
  • In 2012, 20% of graduate loans were private.
  • 66 percent of graduates from public universities had loans averaging $25,550.
  • 75 percent of graduates from private non-profit colleges had loans averaging $32,300.
  • 88 percent of graduates from for-profit colleges had loans averaging $39,950.

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Average Student Loan Debt

According to the College Board, the average tuition and fees at a four-year in-state public college for the 2015-2016 school year were approximately $9,410, with room and board costing an additional $10,140, making the total tab per year roughly $20,000.

Given these figures, it is no surprise that the amount of student loan debt in the United States today is considered to be the second highest level of consumer debt behind only mortgages – and most of the student loan debt is held by the Federal government.

Unfortunately, according to the Consumer Financial Protection Bureau, it is estimated that one in four students who have borrowed funds are either in delinquency or in default on their student loans. This can lead to other negative consequences, such as low credit scores and the inability to obtain home and car loans in the future.

But the actual cost of your higher education can have a lot to do with not just going to a college or university in general, but specifically where you go as well as the degree program that you choose to pursue. For example, even as far back as 2012, approximately 40% of the $1 trillion in student debt came from financing graduate and professional degrees. These can be broken down even further by the type of degree and their average amount of student debt:

  • Master of Business Administration – $42,000
  • Master of Science – $50,400
  • Master of Education – $50,879
  • Master of Arts – $58,539
  • Law Degree – $140,616
  • Medicine and Health Sciences – $161,772

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Federal Student Loan Portfolio 2016

Here’s a breakdown of federal student loan debt by type.

Student Loan Debt By Loan Type

  • Direct Loans – $840.7 billion; 29.9 million borrowers
  • FFEL Loans – $363.6 billion; 17.9 million borrowers.
  • Perkins Loans – $8.1 billion; 2.8 million borrowers.
  • Stafford Subsidized – $264.8 billion; 29.1 million borrowers
  • Stafford Unsubsidized – $404.9 billion; 27.1 million borrowers
  • Grad PLUS – $46.8 billion; 1.0 million borrowers
  • Parent PLUS – $71.1 billion; 3.3 million borrowers
  • Consolidation – $416.7 billion; 11.9 million borrowers

The Bottom Line

Student loan debt in America has done more than just cause an inconvenience for college grads and others who have completed their studies in one form or another. Today, this massive amount of debt is actually preventing people from making the types of large purchases, such as homes and cars, that can drive economic growth across the country. It is also impeding the ability of people to save for retirement.

So, what can you do to avoid going into student loan debt for the rest of your life? There are a couple of ways to go about it. First, it is absolutely essential that you have a plan going in. This means getting a good grasp on your overall financial situation in terms of your income and your outgo. Developing a budget can help.

You should also read up on and research all forms of student loan debt prior to moving forward with borrowing. That way, you will know exactly what you are in for – both while you are attending school, and when you get out.
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If you have already borrowed your student loan funds, then you may be able to lower your rate of interest and/or your monthly payment amount by refinancing through a private loan or by obtaining a consolidation loan. Before signing on the dotted line for a new loan, though, you need to be sure that the new debt really is going to be a better deal in terms of what you owe and what you’re required to pay back. A quick calculation of your total repayment amount should help you in making this determination.

Remember, student loan debt can essentially be either a blessing or a curse. It all depends on how you go about obtaining the borrowed funds, and your plan for paying them back – and that plan begins with having a good understanding of student loans and how they will work for you.

How To Stop Student Loan Wage Garnishment

While most people love happy surprises, it’s no fun to get a notice in the mail from the U.S. Department of Education stating that your wages are being garnished due to non-payment of your student loans.

Not only can this put additional pressure on your personal finances, it can be extremely embarrassing and possibly cost you your job. That’s because the situation is now between you, the disgruntled lender and your employer who is now required by law to implement a wage garnishment for student loans.

While you should never stop making payments on your federal student debt, extenuating financial circumstances may arise and it is important you learn how to stop the student loan wage garnishment and get your debt payments back on track.

Wage Garnishment for Student Loans

How Your Student Loans Could Cost More Than Your Education

For millions of former students each and every year, student loan debt is a ball and chain that can cast a shadow for many years – for some, even till retirement. And unfortunately, unless or until this debt has been paid back, there can be some fairly hefty consequences if the balance goes into default.

Some of the many ways in which the non-payment of student loans can affect you include:

Credit Report and Score

Just as with any other loan that is overdue, if you default on your student loan, it can be turned over to a collection agency – and this, in turn, can show up on your credit report. It can also lower your credit score. The blemish can remain for as long as seven years, resulting in difficulty getting a car loan, a mortgage, or even renting an apartment.


Defaulting on your student loans can also have an impact on your employment situation. For example, individuals who don’t pay back these types of loans are not allowed to work for a federal agency. This can also ring true for most state, city, and county government jobs.

In addition, the situation could even prevent you from joining the military – and, if a job position requires you to obtain a security clearance, having a defaulted student loan may even prevent you from getting that, too.


Your student loan default may also make it more difficult to obtain various plans such as utilities, cell phone service, cable television, and Internet.

Student Loans

It probably should go without saying that if you default on your student loans, you won’t be able to obtain other student loans in order to complete or continue your education in the future.

How To Stop Wage Garnishment For Student Loans

If your wages are being garnished because of your student loan debt, there are some things that you can do in order to help in alleviating the situation.

Connect With Your Loan Servicer

The first step in this situation should be to immediately discuss any possible options with your student loan servicer.

Doing so can oftentimes help you come to an agreement with them in terms of getting your student loan back on track. Because lenders don’t like seeing borrowers default on loans, they are often very receptive to discussing various repayment possibilities.

Another possible option for you would be to contact the U.S. Department’s Debt Collection Service Center. The number for this organization should be listed on the letter for your wage garnishment.

Consolidate Your Student Loans

One of the best ways to get out of student loan default is to obtain a direct consolidation loan. Doing so can take multiple loans and roll them into just one single loan with one monthly payment – which may be lower than the cumulative sum that you are currently paying now. Prior to going this route, however, be sure that you will be able to easily make this payment and that it, too, will not get or keep you in financial hardship.

In any case, it will be important for you to develop a plan for making on-time loan payments going forward. Designing a personal or household budget can be a good start for getting – and keeping – yourself on track for success in this area.

Challenging the Garnishment

In some situations, it may be possible to challenge and stop the garnishment of your wages. Because the Department of Education or guaranty agency is required to notify you prior to making the actual garnishment, this means that you must also be provided with the opportunity to have a hearing to challenge it.

During this hearing, you may challenge one or all of the following:

  • The amount of the student debt
  • The terms of the repayment schedule
  • The existence of the debt altogether

Should you request a hearing within 30 days of receiving your notice, the wage garnishment may not be able to move forward – unless you are unable to prove your case.

Other common challenges against having your wages garnished may include:

  • The loan is not yours
  • The garnishment would cause financial hardship to you (and your dependents)
  • You have filed for bankruptcy
  • The educational institution failed to pay you a refund that it owed to you
  • You have already entered into another repayment agreement

How To Avoid Student Loan Wage Garnishment

While challenging a student loan garnishment of wages may be a way to temporarily stall the situation, it is not always possible to completely avoid paying what you owe. For example, even if you have lost your job or you are having other financial hardship, you may or may not always be able to get around your making your student loan payments.

In some cases, for example, debt collectors may end up freezing the money in your bank account(s). It is also possible that the creditor may even go after the income of your spouse. And, years down the road, it is possible that your Social Security retirement benefits could even be affected.

What To Do Next…

If you are having trouble with paying your student loans, the best course of action is typically to keep an open line of communication with your loan servicer. That way, you can all work together in determining a plan that can work best for everyone that’s involved.

The worst thing you can do is just the opposite – avoid communication and try to ignore the issue. Unfortunately, when it comes to wage garnishment for student loans, this is an issue that isn’t likely to go away quietly.

Public Service Loan Forgiveness – Do You Qualify?

The Public Service Loan Forgiveness program promises huge benefits for students with crushing education loans and debt. If you have student loan debt and work for the government or a not-for-profit organization, you could be able to receive loan forgiveness through the PSLF.

The Public Service Loan Forgiveness program was developed to reward public service employees by forgiving the remaining balance on qualifying direct student loans for full-time employees. If you are eligible, this could save you thousands of dollars in student loan payments and interest expense, so let’s find out if you qualify!

Public Service Loan Forgiveness

How Does Public Service Loan Forgiveness Work?

The Public Service Loan Forgiveness program is a federal government program that has the intent of getting individuals to enter into – and remain in – public service occupations. In doing so, the program provides the incentive of forgiving the student loans of those who qualify.

Depending on just how much student loan debt you have accumulated, the PSLF program can be extremely valuable. However, in order to obtain loan forgiveness, there are some qualification criteria that must first be met. For instance, there are only certain types of student loans that may be forgiven through this program.

What Type of Loans Are Eligible?

Under the Public Service Loan Forgiveness Program, any non-defaulted direct loan will be eligible for forgiveness, including:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct Consolidation Loans
  • Direct PLUS Loans (for parents and graduate students)

In addition, there are other types of federal student loans that may be able to become eligible for forgiveness under this program, provided that the loan(s) are consolidated into a Direct Consolidation Loan. Other qualifying federal loans may include:

  • Federal Family Education Loan (FFEL) Program loans, including the Subsidized Federal Stafford Loans, Unsubsidized Stafford Loans, Federal PLUS Loans (for parents and graduate or professional students), and Federal Consolidation Loans (except for joint spousal consolidation loans)
  • Federal Perkins Loans
  • Certain Health Professions and Nursing Loans

It is important to note that only the loan payments that are made on the Direct Consolidation Loan will be counted towards the 120 required payments that are necessary to qualify for loan forgiveness.
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How Do You Qualify For The PSLF Program?

In order to qualify for loan forgiveness under the Public Service Loan Forgiveness Program, there are several criteria that you will need to meet.

First, it is essential that you are not in default on any of the loans in which you are requesting the forgiveness. Then you will need to be employed full-time by a public service organization at the time that you apply for the loan forgiveness, as well as at the time that the remaining balance on your eligible loan(s) is forgiven.

You must also be a full-time employee of a public service entity when you are making each of the required 120 qualifying loan payments for your 10-year loan.

Qualifying Public Service Jobs

Some of the public service jobs that qualify include:

  • Law enforcement
  • Military service
  • Public safety
  • Emergency management
  • Public interest law services
  • Early childhood education
  • Public education
  • Public library services / School library or other school-based services

Furthermore, you could work for a government organization, which includes a federal, state, local, or a tribal entity or agency. You could also be employed by a public family or child services agency, as well as a tribal college or university.

What About Non-Profits?

Not-for profit organizations as well as tax-exempt entities under IRC Section 501(c)(3) also qualify as public service organizations for the Public Service Loan Forgiveness Program.

Who Is Considered A Full-Time Employee?

In order to be considered as a full-time employee of an organization or entity, you must work an average of at least 30 hours per week. This does not include time that is spent participating in activities such as worship services, religious instruction, and / or proselytizing.

In the case of teachers, if you work under a contract for at least 8 months in a calendar year, then you qualify as meeting the full-time employment criteria if you worked, on average, 30 hours per week and received credit from your employer for the full year’s worth of employment.

Qualifying Repayment Plans

As part of the eligibility criteria, you will also need to be enrolled in a qualifying repayment plan and have made 120 monthly (or 10 years) of payments. The payment plans that qualify include the following:

  • Pay As You Earn (PAYE)
  • Revised Pay As You Earn (REPAYE)
  • Income-Based Repayment (IBR)
  • Income-Contingent Repayment (ICR)

You may also be in a standard repayment plan, or in any other payment plan that has monthly payments that are equal to or more than standard monthly loan payments.
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Should You Consider Public Service Loan Forgiveness?

Prior to moving forward with the Public Service Loan Forgiveness Program, it will be important to ensure that doing so is right for you. For example, the PSLF program is typically the most valuable to those who have high loan balances in relation to their income.

If, however, you have a low student loan balance remaining, then it isn’t likely that you will have a lot left to be forgiven. This is especially the case after ten years of making the loan repayments.

How To Get Your Student Loans Forgiven

If it turns out that the Public Service Loan Forgiveness Program is the right option for you, then there are some steps that you should take in order to move forward. First, it will be important that you keep track of your eligibility. In doing so, the U.S. Department of Education has created a process for helping you to do so.

The Employment Certification for Public Service Loan Forgiveness Form, also referred to as the Employment Certification form, can be found here. You should complete the form and then submit it to FedLoan Servicing (PHEAA), the PSLF servicer, at the address that is listed in Section 6 of the form.

Although you are not required to submit this form, it can help you in tracking your student loan payment progress – and in doing so, it can be extremely motivating to watch how close you are moving towards your loan forgiveness eligibility.

Student Loan Tax Deduction – Tax Credits For Loan Interest Payments

Student loans and taxes are an unlikely pair, but your student loan interest payments may be tax deductible. Although you can’t claim a student loan itself on your tax return, you are able to deduct some or all of the interest that you paid for various items such as tuition, room and board, supplies, and books – up to a certain amount each year. So, how much student loan interest can I deduct and get a tax credit for?

For example, even if you do not itemize, you could reduce your taxable income by up to $2,500 if you qualify for the student loan interest deduction. This deduction is typically reported on IRS Form 1098-E. If you paid $600 or more in interest for the year, you will typically receive this form in the mail by early February.

But even if you don’t receive the form directly from Uncle Sam or your loan servicer, you can still claim the student loan interest deduction if you paid less than $600 in yearly student loan interest and you otherwise qualify based on the IRS’s criteria. Let’s find out how you can claim a student loan tax credit and increase your tax refund.

Claim Student Loan Tax Credits

How Do You Qualify To Deduct Your Student Loan Interest?

In order to be qualified to deduct your student loan interest, there are a few factors that must be met. These include the following:

  • The student loan must be in your name, or in your spouse’s name, if you are filing your taxes jointly. This is the case, even if another person paid the interest. However, if the student loan is in your name, but another individual is claiming you as their dependent, then neither you nor they may deduct the student loan interest.
  • The student who uses the loan needs to be enrolled at least half-time in an educational program that leads to a degree or certification.
  • The deduction is not available to those who file their taxes as “Married Filing Separately”.
  • You cannot be claimed as a dependent by someone else.

What Qualifies as an Actual Student Loan?

According to the IRS (Internal Revenue Service), a qualified student loan is a loan you took out solely to pay qualified education expenses that were:

  • For you, your spouse, or a person who was your dependent when you took out the loan;
  • Paid or incurred within a reasonable period of time before or after you took out the loan; and
  • For education provided during an academic period for an eligible student.

There is also an income qualification for being able to deduct either some or all of your student loan interest. This will vary, depending on your marital status. For example, if you are a single tax filer, you will need to have a modified adjusted gross income (MAGI) of $80,000 or less, and if you are married filing jointly, you will need to have a MAGI of $160,000 or below.

It is important to note that there are some sources that are not considered to be “qualified” student loans. For instance, the interest that you pay back on loans that come from a family member or relative do not qualify for the tax deduction or credit. Neither will the interest on student loans that have come from a qualified employer plan.

How Long Can You Deduct Your Student Loan Interest?

It’s important to claim the interest deduction while you can, because you are only allowed to deduct the interest that is paid on your student loan throughout the remaining time period that you carry a balance.

The deduction can be taken, regardless of whether you’re only making the minimum payments on the loan or if you’re making extra payments – up to the maximum amount of $2,500 in interest.

A factor to take into account, though, is that you don’t want to prolong paying off your student loan in full in order to just take advantage of the deduction each year. This is because, while it’s nice to be able to deduct an amount from your income taxes, it is still much better to pay off your student loan as quickly as you possibly can so you can rid yourself of the debt completely.

Taking the Next Steps

As you prepare to move forward in life, having a large sum of debt right off the bat can slow you down financially. So, being able to get some relief from any viable source can make a big difference.

Paying back student loans can take a fairly hefty bite out of your income. So, it’s good to know that there may be at least some relief available at tax time. If you qualify, you may be able to deduct up to $2,500 of interest per year from your income.

Student Loan Interest Deductions Overview

If you want to bookmark this resource as a reference, here’s an overview of what you need to know about claiming a tax credit for student loan interest payments.

  • Maximum Benefit: You can reduce your income subject to tax by up to $2,500.
  • Loan Qualifications: Your student loan must have been taken out solely to pay qualified education expenses, and can’t be from a related person or made under a qualified employer plan.
  • Student Qualifications: The student with the loans must be you, your spouse, or a dependent who is enrolled at least part-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible institution.

Final Word

When claiming a student loan interest payment as a tax deductible expense, be sure that you qualify based on your tax filing status as well as on the type of student loan that you have. If you don’t receive an IRS Form 1098-E in the mail from the IRS, forms are also available online via the IRS website.

If you’ve met all the qualifications, moving forward can be easy, especially if you use a tax advisor or an online tax filing service that provides you with step-by-step assistance in walking through the process.

Top 10 Things You Will Need For College As A Freshman

College DormThis here is a list in no particular order of 10 things college freshmen across the country will need (aside from obvious things such as bedding) heading into their first year in the big leagues and adjusting to dorm life.

1. Fan: Things are going to be cramped and there is an astounding lack of A/C in freshman housing. This fan will make the temperature in your room a bit more bearable.

2. Some sort of mattress topper for your bed: This will help the stale, stiff bed resembling object that you have to use as a mattress be less of a chore to sleep on.

3. Sandals: The communal showers have seen plenty, put a layer between your feet and that tile floor for your own good.

4. Shower caddy: This will aid in your organization and keep all your toiletries in one place so you aren’t fumbling around when trying to shower and freshen up.

5. Dry erase board: This can help you maintain some form of organization as you can leave reminders and important messages for yourself.

6. Hamper: Bring one of these so you can at least try and keep your floor from being
replaced by a layer of clothing.

7. Small trash can: Also to help you from keeping your room from resembling something like that of a landfill.

8. Desktop lamp: Bring this for all of your late night work. Instead of leaving your main light on in your room, you can have this so you don’t keep your roommate up while you cram all night.

9. Multi-outlet power strip: This allows for some electronic freedom and gives your more to work with than the 23 power outlets you are given in your room.

10. FirstAid kit/Emergency/other medical care items: Mom and Dad won’t be there to help so it’s up to you to care for your scrapes and colds.

Adjusting to College Life

College Lif

College is a time for young men and women to truly realize who they are and what they want to do with their lives. It’s a time of unlimited opportunity where you control how you perform and what you do. No longer are you constrained to the daily responsibilities of you parents and daily structured high school class schedule.

With that being said, however, it is a time of major adjustment for those who want to flourish in their new environment.

One major area of college life that is imminent to you being successful at whichever institution you are attending is proper time management. Yes, college is a place where you can have fun with your newly made friends but like everything, should come in moderation. You must know when it’s okay to go out and blow off some steam and when not to. If you have a paper or test at some point during the week, it may not be the best time to be away from your books and computer. Allocating regular time to doing your work will help you organize your life and, if done properly and efficiently, can still leave for you to take a break and hangout.

Another area in which students should pay particular attention is being able to handle stress and adversity on your own. Being away from home means that you won’t always be able to turn to your parent or guardian for help and they won’t be able to do as much for you as they may have done prior in your life. This is where the school’s guidance counselor may become of some use for you as they provide you with someone to talk to and seek advice right there on campus.  Finding an appropriate outlet for relaxation, whether it be working out, yoga, etcetera, would be a good idea for help with relieving the stress of college life.

Finally, an additional recommendation for adjusting to college life is getting involved in school extracurriculars. Things like clubs, intramural and club sports, and other activities offer a great way to meet new people and companions for your new student life on campus. Clubs allow you to reach out into areas that specifically interest you with likeminded people. Intramural and club sports allow you to participate in sports that you may have played your entire life without the commitment of a varsity sport. Being an active member of your school’s community is a great way to branch out and make new connections with people on campus.

All in all, college is a place of exciting new opportunities. You control your academic performance, social life, and how you live. There’s countless ways for you to thrive in your new life and your success ultimately resides in your hands.

Should You Consolidate Your Student Loans?

refinance student loansThe Federal Reserve Bank of New York estimates that Americans owe $1.2 trillion in student loans.

According to the most recent numbers from the U.S. Department of Education, approximately 1 in 6 borrowers, are defaulting on their student loans and haven’t made a payment in at least a year. For those of you that are in good standing, now may be the time to consider your loan options.

There are many important things to consider when attempting tackling your student loans. First off is whether to consolidate or refinance your loans. Consolidation is combining your student loan payments into one while refinancing is reconstructing your existing loans into new ones. Consolidation simplifies the payment process as you are only cutting once check or ACH debit a month. Refinancing more often than not results in your payments having a lower interest rate and thus a lower monthly payment

The decision process does not end here, however.

Another thing to consider is time and how long you want to be paying off your student loans. Appropriately spacing out your payments is a crucial part in the process. You need to find a plan that best suits you and your life. Having your payments stretched over a longer period of time will mean lower payment amounts, but you are also responsible for them for a much longer period of time. On the other hand, you can pay them off in a shorter amount of time but with a much higher cost.

In addition to time you must consider the interest rate of your loans. It would be an easy decision to refinance your loans so that they have a lower interest rate but it is not always that simple. Things like having a poor credit score could inhibit you from doing so. Also, if you have a federal loan, the only option of refinancing is through a private lender, who are much more complex than the federal government.

Ultimately, the path you wish to take when solving your student loan dilemma is based on how best you can handle the situation. You need to understand and decide how long you want to be paying your loans while still actually being able to pay them.