Over the years there’s been hundreds of thousands of student loan borrowers who have questions about their student loan payments and their repayment options.
Here are some of the most frequently asked questions we receive on a daily basis…
1. Do I qualify for a lower payment?
You actually absolutely qualify for a lower payment when it comes to your loans.
If you’re in the standard payment plan, the payment plan that you’re under automatically when you graduate is too high for you, you can also consider getting under an income-driven repayment plan that’s based off your income and family size.
As long as you can submit all the documentation proving your income and your family size, it’ll cause you to have a lower payment.
Even after you submit that application, if your pay does reduce, if you have lesser hours on your job, or what have you, or you lose your job, you can submit over an application concerning your circumstance and your payment will lower accordingly.
2. What happens when I can’t afford my payment? Do I have options?
Yes. If you find yourself in a situation where you can not afford your loan payment, you do have options on how to help you out in that situation.
The first thing you can use is something called forbearance.
Forbearance is a hold on your loan, so that there’s no amount that’s due, and it’s actually at your leisure.
You have 36 months of forbearance time to use at your disposal, and it’s as simple as a phone call to your servicer requesting for forbearance over the phone, or you can submit a form to your servicer to place you on forbearance, or you can do it online through your servicer’s interface on their website.
Also, you have the option to place your loans on deferment.
Deferment is kind of the same thing — it’s a hold on your loan so that there’s no amounts that’s due, but the difference is it’s not entitled to you. You actually have to apply for it, and prove a hardship that you are going through, a hard situation.
Then if you are approved, then they’ll place you on hold, which is deferment for the set amount of time that you’ve requested.
3. What is teacher student loan forgiveness?
Teacher student loan forgiveness is a program that’s dedicated towards teachers to get their loans forgiven quicker than the average person. Teacher student loan forgiveness is actually five years, but you have to be employed as a teacher full time for the whole term and under an income-driven repayment plan for the whole five years.
But once you complete the five years, only up to $17,000 will be forgiven off of your loans.
So it’s very important to know the balance and know where you are, because even after they forgive $17,000, if you still have a balance left over, you still need a game plan on handling the remaining balance that’s left.
4. How do family size and income affect my payment?
Family size and your income — if you’re under an income-driven payment plan, it affects your payment directly, because your payment is stemmed off of that. If your income is low, then your payment will be low.
If your family size is high, then your payment will be lower also.
So it’s based off of your income and your family size. The Department of Education — they take a look at your family size and your income to see what kind of a hardship situation that you’re in. So the higher your family size is, and the lower your income, the lower payment you will have, and so forth.
5. I graduated, and my servicer says I’m in a standard plan. How is this different than other plans?
So a standard repayment plan is not based off your income at all, but is based off paying the loan off with your hard-earned cash for a set amount of time.
The usual time frame is 240 months, but if you consolidate and extend it, standard is 300 months.
So you’re thinking about paying off your whole loan balance over a span of 240 months.
That is where they calculate what your monthly payment is. So it’s not based off your income like other payment plans. But it’s just based off of paying the loan off over that set amount of time.
6. Does tax filing status affect my student loans?
If you’re under a payment plan that’s based off of your income and your family size, the tax filing status does directly affect what your student loan payment will be.
The reason being, is because when you’re considering your household income, if you’re filing jointly, they take into consideration both you and your spouse’s income.
So a loan, if you make $50,000 and your spouse makes $50,000, they will consider your household income of $100,000 and it will base your payment accordingly.
But, if you do the filing status of married filing separately, there are certain repayment plans that you could be under that can only take into consideration your income, versus you and your spouse.
Obviously, if you’re single or head of the household, only your income will be taken into consideration which will cause you to have a lower payment.
7. What is an FSA ID, and how can I use it?
Your FSA ID is similar to your social security number. It’s your identification in the Department of Education’s system.
Back in the days, they used to use the format of a pin number, and that was your identification that you can use to access your loans and to submit applications to the Department of Education, but now they’ve changed the format to a user name and a password.
So the user name and a password is your unique identification with the Department of Education, and that is how you can submit your applications to get under loan forgiveness, to consolidate your loans, and to submit a request to the Department of Education, and so that you can be able to view your loans in their system as well.
8. How do interest and fees accrue on my student loans?
Interest accrues daily, compounds daily, when it comes to student loans, versus other types of loans that you may have.
Even if you’re under a forbearance, which is a hold on your loans. Interest still accrues daily.
So you want to be mindful of that when you’re placing loans on forbearance or on hold — that interest is still accruing and the loans are still growing during those spans of times.
So, yes. If you’re planning on paying your student loans based just off your hard-earned cash, you want to understand that the loans accrue interest daily.
9. If I go back to school, do I get an additional grace period the second time?
First let’s answer — What is a grace period?
A grace period is a time frame that they give you so that you don’t have to make any payments toward your loans right after you graduate. They believe once you graduate from school, you’ve done a great job, they want to give you some time to get a job in your field, to get yourself situated before you begin paying on your student loans.
So that’s that time frame of preparation that you don’t have to make a payment.
If you’ve done that and you’re going back to school, once you graduate — yes, you are going to be able to have another six months of grace period.
Yes, you can always have a grace period when you do graduate school.
It’s just that time that they give you so you can be able to prepare yourself for your repayments.
What is Obama Student Loan Forgiveness?
Believe it or not, this is one of the most popular questions, because Obama has been associated with loan forgiveness.
But the thing is, loan forgiveness has been available since 2007 — actually before his term.
The reason why Obama is even associated with the term of “loan forgiveness” is while he was in office, there was a new repayment plan, called “revised pay as you earn” that goes towards your loans being forgiven, and when that plan came out, it was the lowest income type of repayment plan there was.
So they automatically associated it with Obama, because it became a very popular thing while he was in office.
But in all actuality, loan forgiveness was available since 2007, as long as you were under an income type of repayment plan.
When it comes to student loans, it can be tricky to find the best options.
But by asking the right questions, you can find yourself in the right repayment plan; one that best fits your financial needs.
If there’s any questions we missed, or if you’d like further explanation of anything here, don’t hesitate to reach out to us.
We’d love to send you some free information so you can make an informed and intelligent decision.