The Angel of Independence at Mexico City, Mexico
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What do I do NOW???
That depends - have you already taken the plunge? If not, other borrowers want you to know a few things before YOU borrow money for college:
A) What to do before you take out
before you take out student loans:
First and foremost: figure out what you will be good at and enjoy. I recommend exploring
O*NET OnLine , americanjobcenter , The Job Seeking Skills Handbook, and the 'all-time go-to' reference for figuring out what you're good at and will enjoy, What Color is Your Parachute by Richard Nelson Bolles, Ten Speed Press, Berkeley, CA 1978, WHICH IS NOW PARTNERED WITH ITS OWN OFFICIAL WEBSITE: JobHuntersBible.com. If your money's tight, look up a slightly used version of 'Parachute' on Amazon
1. Apply for a Pell Grant and try to get any other grants and scholarships you may be eligible for before you borrow. (For a good start, see pages "Opportunities" and "Grants/Scholarships/Fellowships".) If you must borrow, try at all costs to NOT get a private loan!
2. Get a job. Many financial aid offices will put you to work on campus (work-study program) or you may be able to get an internship and start working in the field of your choice. If not, get at least one part time job, if not more. Strike a balance between work and classes - you CAN do both and you will be more motivated to do well, at both work and school, because they will be more important to you. Also, consider going to community college for the first 2 years, going to college online, or a hybrid of online and in-class courses. Any of these options should help save your money considerably.
3. Know the field you wish to go into, the availability of work in that field, the average starting salary for your choice, and the educational requirements and cost to get the degree you need. Can you realistically obtain your degree and find and land a job that pays enough money to live on and make your loan payments? Go here to check out your school(s): http://www.whitehouse.gov/issues/education/higher-education/college-score-card . Go here to find calculators to determine your cost of living, tuition, and books: http://studentaid.ed.gov/prepare-for-college/choosing-schools/consider/budget-calculator. There are several links to budget-calculators, to help you choose a school, and to how the loans work. Look under the Labor section on the "opportunities" page to find statistics on jobs, including availability, pay, and comparisons between different locations.
4. Consider going into a field that offers loan forgiveness.
5. Don't borrow any more than you absolutely must have to exist and to get through school!
6. Educate yourself about the different kinds of loans. When you've made your decision (or they make it for you), make sure you understand completely ALL the terms of your loan: especially what can and will happen when you run into payment problems.
Educate yourself about the differences in public and private loans, especially. Above all else, try NOT to get a private loan - there's even less protection for them than for federal loans.
7. Consider an apprenticeship, on-the-job training program, or a trade.
B) What to do after you've already taken out student loans:
1. Educate yourself about income-based repayment plans NOW. That way, when the problems come, and they will, you will know exactly what to do to keep your loan under control during the hard times.
2. Don't use email. Use "snail" mail - USPS. Save every scrap of paper you ever get about your loan and make copies of everything you turn in. It has been suggested that you send your correspondence through certified mail with a return receipt requested. This will cost you $5.65 a letter, but it will be worth it in the end, I promise. Keep your records in a fireproof safe - $20 at WalMart (I had a fire and lost everything, inc. my diplomas).
3. WHATEVER YOU DO, DO NOT DEFAULT! NO ONE WILL TELL YOU THERE ARE PLANS BASED UPON YOUR INCOME (if you have federal loans)- THEY WANT THE FULL LOAN PAYMENT, THE PAST DUE PAYMENTS, PENALTIES, FEES, CAPITALIZATION, REINSTATEMENT FEES, FORBEARANCE INTEREST, AND ABSOLUTELY EVERYTHING THEY CAN GET OUT OF YOU. NOW IS THE TIME TO CONSOLIDATE YOUR LOANS AND GET ON AN INCOME-BASED RE-PAYMENT PLAN. If you do not know who your lender is, go here to retrieve all info on your student loans. Also, under current law, you only get to consolidate and re-finance your loans ONCE. ASK YOUR LENDER FOR THE APPROPRIATE FORMS AND GET YOUR LOANS CONSOLIDATED INTO ONE LOAN (2 IF YOU HAVE BOTH SUBSIDIZED AND UNSUBSIDIZED LOANS).
ASK YOUR LENDER FOR THE INCOME-BASED REPAYMENT FORMS, FILL THEM OUT (DON'T LET THEM CONFUSE YOU), AND GET ON A PLAN. STATISTICS SHOW THAT ONLY ABOUT 7% OF THOSE ELIGIBLE FOR INCOME-BASED REPAYMENT PLANS ARE USING THEM. USE THESE PLANS! THEY WILL KEEP YOU OUT OF DEFAULT AND SAVE YOU THOUSANDS OF DOLLARS! YOU WILL HAVE A CHANCE AT GETTING RID OF YOUR STUDENT LOANS IN YOUR LIFETIME! (After so many years, your loans will be forgiven, depending on the plan.) Go here to sign in, get a pin number, and submit your form
(the IBR/Pay As You Earn/ICR Repayment Plan Request) electronically -OR- get in touch with your lender and have them send you the forms. Do this at the very first sign that you may be getting behind on your payments, if not SOONER! If you do not know who your lender is, go here to retrieve all info on your student loans.
Then go here to find the calculators for the different income-based repayment plans.
>>>>>>>>WHATEVER YOU DO, DO NOT DEFAULT!<<<<<<<<<
IF YOU DO DEFAULT ON YOUR LOAN, YOU NEED TO FIX THE PROBLEM AS SOON AS POSSIBLE! HERE IS WHAT YOU NEED TO DO NOW:
If you are determined to do this yourself: this is what I did, but it will not get rid of your loans. It should, however, get your credit straight and make them much more affordable. At that point, you can try to rid yourself of the loan or go after anyone who may have wronged you.
1. YOU ONLY GET ONE SHOT AT THIS, AND ONLY IF YOUR LOAN IS A FEDERAL LOAN, SO GET IT RIGHT AND KEEP CURRENT! Currently, you are only allowed to consolidate and rehabilitate your loan ONE TIME!
2. REHABILITATE YOUR LOAN as soon as possible to avoid getting in deeper. This means that you will consolidate all your loans into one under the Direct Loan Program.
At this point you must not disagree about the terms and amount of the loan. You must also agree to enter an income-based repayment plan.
3. Currently, after 6 on-time payments under this plan, you will again be eligible for federal student aid. After 9 on-time payments, again based on your income, the default is removed from your credit history. (May take longer due to red tape)
4. Then your loan is sold to another lender and you are under their terms (still income-based repayment, if you qualify). Bear in mind, this applies only to federal loans. For more info and info on private loans, go here.
C) What can I do to help reform student loans?
GET EDUCATED AND GET CURRENT! For the most current info on this site, go here (under What can I do? tab, under What's Happening Now?) or see the Action Blog.
I highly recommend putting your story on paper - believe it or not, many folks want your story. Go to http://reformstudentloansnow.weebly.com/tell-your-story-here.html to tell it here. Then look on the right side of the page, which gives you several places to share your story. I cannot emphasize enough how important it is for you to do this - you will help yourself and many others by doing so.
RIGHT NOW, the House Committee on Education and the Workforce wants input from the public on how Obamacare is affecting higher education. See the press release on the "What's Happening Now?" page.
- The Consumer Financial Protection Bureau is asking for input on a few issues. This is a great opportunity to directly affect what goes on in the student loan industry in the near future. If you have a story to tell, and I'm sure many of you do, they actually want to hear it! If you don't respond, you have nothing more to complain about - this is your big chance to make a difference, for real. They want to know about your experiences with "consumer financial products" so they can try to keep this crap from happening to more students.
See the page http://www.consumerfinance.gov/blog/category/students/ for further information. Click on the "participate" tab to tell your story.
If you have a current, valid complaint, go to the "submit a complaint" tab and make it. They refresh their data nightly and are really keeping track of what comes in.
What's REALLY interesting is that the CFPB is going to make some regulations about debt collection practices and they want our input on THAT! Go to page
https://www.federalregister.gov/articles/2013/11/12/2013-26875/debt-collection-regulation-f to find out more on this subject. You have until 2/10/2014. Sorry - too late now!
Also, they want to know if you have had problems communicating with your lender about making extra payments. (http://www.consumerfinance.gov/blog/category/students/) They also want to know what you would tell new borrowers, especially what did or did not work for you, when it came to dealing with your lender. The CFPB also reminds us that it's illegal for the student loan servicers to charge or penalize us in any way for trying to pay early. (Wow, that's about the only thing they can't "get us for" somehow!) The CFPB even gives you a sample letter to use to direct the lender about how to apply any extra payments, for the loan servicer will surely do what benefits them the most, if you don't get through tothem. The CFPB has more information on that here http://www.consumerfinance.gov/blog/consumer-advisory-stop-getting-sidetracked-by-your-student-loan-servicer/ and suggests you file a complaint with them if you have any trouble.
They asked students earlier this year about their financial habits: checking accounts, credit cards, debit cards, and other financial products. They still want your input (at Facebook or Twitter) and you can check out their presentation of what they've already learned.
They are looking especially hard at non-bank student loan servicers. As always, they seem to welcome your comments and complaints, so let them know if you have any trouble. (UPDATE ON THIS UNDER "What's Happening Now")
They're also coming down hard on predatory lending to the military. Even so, they are still getting complaints and are still looking into it.
The CFPB is pushing the Know-Before-You-Owe project, which culminated in a "financial aid shopping sheet"(http://www.consumerfinance.gov/students/knowbeforeyouowe/)
They want all students to become familiar with this info. They have worked with students, lenders, and institutions to develop this tool for comparing colleges and figuring out financial aid, including choosing loans. (When I went to school, they told us which loans we were getting.) If your school isn't using the Dept. of Education's "shopping sheet", CPFB suggests you find out why. As of June, almost 750 schools have adopted it.
They also have reports and updates on other information they are working on for students. You need to check this out. If you work for a public service employer, you may get some forgiveness on your loan - the CFPB is working on this. They have inclusive information on financial aid, banking, and managing your money. They have reports on student loan affordability, the ombudsman's reports, a compilation of borrowers reports on private loans, information for the media, and a plethora of other research they've done.
-- You can browse the petitions, sign and comment. Please sign the four petitions at the top of my home page! You can go to one of the petition sites listed on the "vital links" page and start your own petition. It's best to research first and see if there is already one on the subject you want. If there is, it's better to sign and support that one than to write another, for that just spreads the support around and does less to help matters. It's also best to thoroughly educate yourself on the subject first, so you can write an effective petition.
-- You can mail, email, or phone your Congressmen about any bill or subject you feel strongly about. I have found a Reddit.com piece that was written by someone who works in the Senate on "How to write a constituent letter that will actually make a difference." He also discusses the effectiveness of emails, phone calls, and town halls. I think this information is extremely useful and "on point", so I'm going to include it here and ask that you please read this and follow it. It's a waste of time to do any of these things if we can't do them right - let's get it right and make a difference!
On the "vital links" page you will find links to identify your Congressmen, as well as where to find addresses and phone numbers. Letters tend to make more of an impression, but due to security measures, US mail is very slow since 9/11, so if you need to voice your opinion quickly (like if a bill is coming up), call or use email. I would like to add that using the POPVOX feature is very effective - the system was designed with the representatives. It conveys the information they need, when and how they need it. It also gives you the chance to comment, which can take the place of an email and has just as much, if not more, chance to be read. I will have it installed here shortly - it's already been approved. Until it is installed PLEASE visit the POPVOX site about bills you feel strongly about and vote and comment. YOUR VOICE DOES COUNT!!!
-- You can add to the "blog" page. Feel free to discuss anything pertinent.
-- Please leave your email address in one of the comment boxes, so we can contact you if we need support on short notice, for an important petition, bill or event. I give you my word that I'll not be using it often and you can unsubscribe any time you wish. I hate spam just as much as you do. Besides, I'm much too busy to write and send emails constantly - I have to keep up with what's going on.
-- Also, please leave comments/criticism/complaints/questions in the comment boxes to help build the site. We especially need to address any errors and anything that is unclear or omitted.
No one needs to be confused about this subject, no matter how confusing the student loan industry tries to make it. There are links provided for you to thoroughly familiarize yourself with student aid, so that you know what you're getting into before-hand. The O'bama administration, the CFPB, the Senate HELP Committee, and the House Education and the Workforce Committee are doing their best to get lenders and schools to make everything clear, simplified and understandable; however, this is still a complicated and serious issue.
For those of you just starting out: you need to take the initiative and do the research.
Don't you end up like so many of us, with a mountain of debt that is inescapable. Remember, student loans are not dischargeable through bankruptcy and they follow you until you die (no statute of limitations, except in some private loans). Even if you do get forgiveness somehow, the IRS will tax the amount forgiven as Cancellation of Debt Income (CODI). The tax on that income will be due the year the loan is forgiven - all of it. You may be able to get an insolvency exclusion, but even that is risky. There are many pitfalls, hidden traps and unfair practices associated with student loans - I have tried to outline them for you under "unfair loans," but I'm quite sure there are some I've missed and some I don't even know about.
This decision is going to affect you for the rest of your life, in too many ways to count. Because student loans, unlike all other loans, are not subject to standard consumer protection laws, this is a dangerous undertaking and is not to be taken lightly. Please do your homework and make certain this is what you want to do and how you want to do it. I will try to provide as many good links to help you as I can. If you must borrow, borrow wisely. I wish you good luck with your loan and make the most of your education - this is the most serious investment you will probably ever make.