Student Loan Payments and Corona Virus Stimulus Plan F.A.Q.

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Image by Phil Roeder

On March 27, 2020, the ‘‘Coronavirus Aid, Relief, and Economic Security Act’’ or the ‘‘CARES Act’’ was signed into law. If you have a student loan, here are some frequently asked questions to help you understand what that act does for you if you have an outstanding student loan balance.

The federal government has already waived two months of payments and interest for many federal student loan borrowers. Is there a bigger break now with the new bill?

Yes. Until Sept. 30, there will be automatic payment suspensions for any student loan held by the federal government, and it’s retroactive to March 13. It is hard to contact many of the loan servicers right now, so check your account online in the coming weeks. Once you are logged in, look for the current amount due. There, you should be able to see if the servicer has reset its billing systems so that you are showing no payment due.

How do I know if my loan is eligible?

If you’ve borrowed money from the federal government — a so-called direct loan — in the past 10 years, you’re definitely eligible. According to the Institute for College Access & Success, 90 percent of loans (in dollar terms) will be eligible.

Older Federal Family Educational Loans (F.F.E.L.) that the U.S. Department of Education does not own are not eligible, nor are Perkins loans that your school owns (ask your financial aid office if you’re not sure), loans from state agencies, or loans from private lenders like Discover, Sallie Mae and Wells Fargo. The holders of all those kinds of loans may be offering their own assistance programs.

Within a few weeks, you are supposed to receive notice indicating what has happened with your federal loans. You can choose to keep paying down your principal if you want, and you should contact your loan servicer if that is the case. Then, after Aug. 1, you should get multiple notices letting you know about the cessation of the suspension period and that you may be eligible to enroll in an income-driven repayment plan.

I’m signed up for automatic payments. Will my servicer turn them off by itself during this period?

Yes, that is how it’s supposed to happen, according to information that the Education Department posted.

What happens if I’ve already made a payment since March 13?

You can ask your loan servicer to refund it to you. But keep in mind that it is taking time for servicers to interpret Education Department guidance so they can change their websites and update their customer service representatives.

Will my loan servicer charge me interest during the six-month period?

The bill says that interest “shall not accrue” on the loan during the suspension period.

After repeated questions, the Education Department said any unpaid interest from before the period began will not be added to your loan’s principal — a process known as capitalization — because of the six-month suspension.

In short: No one is supposed to have a larger balance after the suspension than before. At the end of the suspension, keep a close eye on what your loan servicer does (or does not do) to put you back into your previous repayment mode. Servicer errors are common.

Will the six-month suspension cost me money, since I’m trying to qualify for the public service loan forgiveness program by making 120 monthly payments?

No. The legislation says that your payment count will still go up by one payment each month during the six-month suspension, even though you will not actually be making any payments. This is true for all forgiveness or loan-rehabilitation programs.

Is wage garnishment that resulted from being behind on my loan payments suspended during this six-month period?

Yes. So is the seizure of tax refunds, the reduction of any other federal benefit payments and other involuntary collection efforts.

Are there changes to the rules if my employer repays some of my student loans?

Yes. Some employers do this as an employee benefit. Between the date the bill is signed and the end of 2020, they can offer up to $5,250 of assistance without that money counting as part of the employee’s income. If the employer pays tuition for classes an employee is taking, that money will also count toward the $5,250.

This information was taken from the April 2, 2020, New York Times article by Tara Siegel Bernard, Ron Lieber New York Times,

 

Can you Imagine Paying Off Your Student Loans Today?

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If you cannot, below is the Foreword to my latest book Student Loan Exit Plan that will help you do exactly that.

Foreword

Imagine it’s your college graduation day. Your friends and family are in the audience. You’re so happy you are almost levitating above your seat. This was not high school, where someone woke you every day and made sure you did your homework. This was college, where you woke yourself up and decided to complete your assignments. Every day was not pretty, and all classes weren’t fun, but you did it.

Or you decided later in life, you wanted more and went back to school as an adult. With all the adult responsibilities—maybe a spouse, a child, an elderly parent—you still got your butt back in school and now it is graduation day. You finished.

Now, imagine you are debt free. Even if you’re not, you can imagine you are and remember Einstein said, “Imagination is more important than fact.”

A lot of today’s student loan debt in fact comes from a lack of or the wrong kind of imagining. Many debtors imagine themselves hopelessly in debt, while others imagine they can defer payments indefinitely, and others imagine somehow their debt will be magically forgiven. The result of these three imaginings is burgeoning debt, decreasing net worth, and the emergence of the working-class poor.

How the Student Loan Exit Plan was Born.

I was in Broward County, Florida, giving a presentation, on personal money management, explaining the powerful effect of your mindset about money. I was explaining how giving and saving as little as a dollar-a-day could change your financial future. Michelle, a medical school student, raised hand and when I called her said, “But I have $240,000 in student loan debt.” Fiddlesticks me, I thought—actually that’s not the word I thought, but in case kids are is reading this, that’s the word I will go with. I did not know what she should do, but that statement lit a fire in me to learn what someone in her situation could do.
From there, I learned about half the people I was speaking to had student loan debt ranging from $6,500 to her staggering $240,000. Yikes! For them my dollar-a-day message sounded like someone giving a person dying of thirst an eye- dropper full of water and saying it’s going to be alright.

Michelle’s question was the flashpoint that launched me on a quest to understand the breadth and scope of student loan debt in America. After speaking with hundreds of families who either did or did not use student loans to finance their educations, I arrived at two conclusions. First, a student loan is a mortgage on the student’s future and should only be used with proper advice and a payoff plan. Second, whether you are managing a dollar-a-day or a thousand-dollars-a-day, your mindset towards money can make you or break you. Consequently, the Student Loan Exit Plan was founded with a focus on guiding people with student loans from loaning their futures to owning their futures. My heart’s desire is that the ideas in this book will be plans to prosper you, not to harm you, plans to give you hope and a future.
What is the Student Loan Exit Plan?

The Student Loan Exit Plan is a multi-step approach for people who are either heading to college and plan to take out loans; are in college and already have loans; or have graduated or dropped out of college and have to pay back loans.
The plan provides online or in person; one-on-one or group coaching that covers:
• Loan Disclosures Explained
• Real Time, Real Money Payback Plans
• Borrower / Lender Collaboration
• Parent—Faculty—Student—Lender Cohorts
• Partnerships with Other Organizations
• Accountability Partners

You can learn more about us at https://giveandsave365.com or contact us at info@giveandsave365.com.

 

Student Loans: Do you know how much you owe?

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The percentage of students who take loans in America is staggering. What is even more alarming is the percentage of those with student loans, so does the burden on students to pay them. This then leads to a never-ending cycle of debts. According to Forbes, in 2019, student loan debt is the highest it has ever been. It does not stop at that. It is reported to be the second-highest consumer debt category. This means that it is way ahead of debts due to credit cards and even auto loans.

Interestingly, this situation cuts across all age groups and demographics. A 2018 study conducted by the Federal Reserve Bank of New York found that more than 44.7 million Americans have student loan debts. Although it is safe to say that the bulk of these Americans  are young people, NBC News reports that there is another age group whose percentage is just as high as that of the young people. They are the geriatrics, adults aged 60 and above. How could this be? For some, it is the debts of their student loans that they are yet to pay up. For others, it is the debts they had to take on for either their children or grandchildren. These reasons and more are why there is a student loan debt accruing to about $1.6 trillion in America in 2019.

If you are one of these students in debt, we are going to guide you from loaning your future to owning your future.

GOOD MONEY GIFT WEEK 19—WOUNDED WARRIORS PROJECT

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In my free ONE-PAGE / ONE-YEAR PLAN for personal money management, I underscore the importance of giving money to a person or cause at least once a week.

The Wounded Warriors Project’s mission is to help veterans and service members who incurred a physical or mental injury, illness, or wound while serving in the military on or after September 11, 2001. If you have not already given at least $7.00 this week to someone or something you care about, I believe that money donated here https://www.woundedwarriorproject.org/  is a good gift for a good cause. See you next week! 

#giveandsave365 #thegiveandsaveguy #easymoneymanagement #goodmoneygifts #woundedwarriorproject

GOOD MONEY WORD WEEK 18—LOVE

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GOOD MONEY WORD WEEK 18—LOVE…a feeling of great interest, affection, or enthusiasm for something. One of the core values of my plan is love. By giving money to others you demonstrate your love for helping them, by saving money you demonstrate your love for helping yourself; because “…where your treasure is, there your heart will be also.” See you next week!

#giveandsave365 #thegiveandsaveguy #easymoneymanagement #goodmoneywords

GOOD MONEY GIFT WEEK 18—WOMEN IN DISTRESS

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WOMEN IN DISTRESS, of Broward County, Jim and Jan Moran Family Center, in honor of M.G. Their mission is to stop domestic violence abuse for everyone through intervention, education and advocacy. If you have not already given at least $7.00 this week to someone or something you care about, I believe that money donated here  https://www.womenindistress.org/ is a good gift for a good cause. See you next week!

#giveandsave365 #thegiveandsaveguy #easymoneymanagement #goodmoneygifts #womenindistressofbrowardcounty

GOOD MONEY GIFT WEEK 17—JDRF

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JDRF, South Florida Chapter in honor of K.R. and A.B. The Juvenile Diabetes Relief Foundation is the leading global organization funding type 1 diabetes (T1D) research. Their strength lies in their exclusive focus and singular influence on the worldwide effort to end T1D.. Type 1 diabetes (T1D) is an autoimmune disease in which insulin-producing beta cells in the pancreas are mistakenly destroyed by the body’s immune system. If you have not already given at least $7.00 this week to someone or something you care about, I believe that money donated here http://www.jdrf.org/southflorida/  is a good gift for a good cause. See you next week!

GOOD MONEY WORD WEEK 16—FAITH

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FAITH…strong belief or trust in someone or something. My program is faith based and without a strong belief or trust that it will work for you, it will most likely not work for you. To quote Henry Ford, “Whether you think you can or you think you can’t you’re right.” Believe you can do good things with and learn good things about your money and you will. #giveandsave365 #thegiveandsaveguy #easymoneymanagement #goodmoneywords #faith

GOOD MONEY GIFT WEEK 16—ROBERT PARKER FOUNDATION

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Robert “Bobby” Parker was a Director of the Miami-Dade Police Department from 2004 to 2009. On Saturday, July 21, 2018, State Road 7 between Northwest 155th Lane and 151st Street (Miami-Dade County) was co-designated as Robert “Bobby” L. Parker, Sr., Memorial Highway. I had the honor of working for and serving with Director Parker at different times in our careers; he was a man among men and I miss him. The Robert Parker Foundation was established to promote education and provide scholarship opportunities. If you have not already given at least $7.00 this week to someone or something you care about, I believe that money donated here is http://therobertparkerfoundation.org/ is a good gift for a good cause. See you next week!

#giveandsave365 #thegiveandsaveguy  #goodmoneygift #robertparkerfoundation

GOOD MONEY WORD WEEK 15—NET WORTH

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GOOD MONEY WORD WEEK 15—NET WORTH… the excess of the value of assets over liabilities. When it comes to owning a home, the net worth is the value of the home minus what is owed on the mortgage. If you home is worth $100,000, but you owe $150,000 on it, you have a net worth of -$50,000. If you home is worth $100,000, but you owe $50,000 you have a positive net worth of $50,000. The difference is critical if the home is damaged sold or the market values go down as they did in 2008.

#giveandsave365 #thegiveandsaveguy #goodmoneywords #homeownership #networth #asset #liability