Ask Me About Student Loans!

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Ask Me About Student Loans!

10-8: Oct 2, 2003; Level 14 Bureaucrat

Wiggy Marie posted:

North Texas Higher Education Authority.

Do they only work with Texas students?

Also, the NTHEA website says that their Income Sensitive Repayment is only available for five years. I was under the impression that ISR is always available depending on income, and that any unpaid balance after 25 years is forgiven. Does this only apply to non-consolidated loans?

# ¿ Dec 31, 2006 04:46

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# ¿ Apr 28, 2024 16:14

10-8: Oct 2, 2003; Level 14 Bureaucrat

Wiggy Marie posted:

Income sensitive is limited to 5 years to prevent abuse. Plus you�re basically paying interest only, and that sucks for the borrower too. Your principal balance would stay almost exactly the same. There are also two other programs: graduated repayment (interest only for 2 year, then it increases, then after another 2 years increases again, etc.), and extended repayment, which depending on your principal you can get for up to 25 years. Those are unconsolidated loan options; once you�ve consolidated, there�s a different program available.

The only unpaid balance that is forgiven is when you�ve died or become permanently disabled. Federal loans are not forgiven due to bankruptcy, extreme debt, or length of having them. I�ve had people who filed for bankruptcy back in �75, not realizing that Uncle Sam still had their loans. Once you have these loans, assuming you are gonna be healthy and fit, you�re keepin� them until they are paid.

From http://studentaid.ed.gov/students/publications/student_guide/2004_2005/english/types-stafford.htm:

quote:

The Income Contingent Repayment Plan: Your monthly payment is based on your yearly income, family size, interest rate, and loan amount. As your income rises or falls, so do your payments. After 25 years, any remaining balance on the loan will be forgiven, but you�ll have to pay taxes on the amount forgiven.

I'm confused. How does this reconcile with what you're saying? (I have Direct Loans, not FFEL.)

10-8 fucked around with this message at 19:07 on Dec 31, 2006

# ¿ Dec 31, 2006 19:04

10-8: Oct 2, 2003; Level 14 Bureaucrat

lewisje posted:

You should also set up your account on http://nslds.ed.gov (National Student Loan Data System), but for your private loans you will need to go to your lender's website.

This is the most useful website ever. Thanks so much for this.

I just looked at my account through the NSLDS website and in addition to my Direct Loans, which I think I will leave as-is so that I can take advantage of their unique Income Contingent plan, I also have about $30,000 in federal loans that aren't direct, from the school I attended prior to my current school. I will graduate law school in May 2008 and all loans for next year will be Direct Loans so they won't need to be consolidated; at this point, I've accumulated all the non-direct loans I'll ever get. Since I won't take out anymore non-direct loans, should I consolidate my $30,000 of non-direct federal loans through NTHEA now? All of these loans were made before the 6.8% fixed rate.

I saw that the new Congress intends to cut the interest rate in half from 6.8% to 3.4%. If this law passed this year, would this interest rate cut apply to new consolidation loans as well? In that case, I should wait to consolidate my $30,000, right?

10-8 fucked around with this message at 23:27 on Dec 31, 2006

# ¿ Dec 31, 2006 23:11

10-8: Oct 2, 2003; Level 14 Bureaucrat

blackjack posted:

It has them listed as deferred. I probably won't have a job until the end of the month, so would it be better for me to wait until I can begin payments, then ask the school to send notification, then consolidate?

Also, my private school loans don't appear on my credit report. They were done through the institution I attended, so is this typical?

I have two tiny loans from my school and they don't show up on my credit report. I think only federal loans and big alternative loans (e.g., Sallie Mae Signature) are reported to the credit reporting agencies. It probably isn't financially practical for schools to bother reporting their institutional loans as long as they're current. Most are for small amounts.

# ¿ Dec 31, 2006 23:29

10-8: Oct 2, 2003; Level 14 Bureaucrat

splok posted:

Ah thanks, knowing that consolidation eliminates the co-borrower connection is really helpful. One more question (well, two maybe), if I may. I understand that there is no technical yearly cap on the GradPlus and that it funds whatever portion of the "cost of attending" isn't covered by Stafford loans. Am I correct in thinking that this "cost of attending" includes such things as room and board? If so, is this a standard number that the university comes up with based on the cost of living in its area, or is it somewhat individualized to take your expenses into account (such as, things like previous student loan payments)?

Yes, GradPLUS includes room and board. If you call your financial aid office, they'll tell you the estimated student budget for the year and that's the maximum you can take. There is a theoretical annual limit for GradPLUS, but it's something like $45,000, so they advertise the loan as having no real limit since only a very few grad students would need that much.

# ¿ Jan 2, 2007 20:26

10-8: Oct 2, 2003; Level 14 Bureaucrat

drawkcab si eman ym posted:

I'm sorry if I wasn't clear in my post, but I know that all loans have interest.

I was looking for loans that would give me the best chance of NOT having to pay interest. For example, a loan that wouldn't start requiring payments with interest until 6 months after I graduate, or one that wouldn't require payments with interest until I am done with medical school.

Thus, the loan that gives me the best chance to pay back in full without any interest.

Your only option is the Subsidized Stafford Loan. While you are in school or in deferment, the government pays the interest on the loan. Therefore, if you were to completely pay the loan back in full prior to interest beginning to accrue, you would pay no interest.

# ¿ Jan 2, 2007 23:09

10-8: Oct 2, 2003; Level 14 Bureaucrat

DOUCHEBAG SMILES posted:

...they've been calling me, sending me "THIS IS YOUR LAST OPPORTUNITY TO CONSOLIDATE YOUR LOANS, THIS IS THE FINAL NOTICE YOU'LL RECEIVE FROM US" letters (which I wish they would stop sending me that crap).

Is there any way to remove my name from the loan consolidation company mailing lists? I don't mind the junk mail myself; I just throw it all away. However, my 85-year-old grandma, who cosigned some of my private loans, gets the same offers at her address, which all use deceptive phrases like FINAL NOTICE on the envelope. Not a week goes by that I don't get a phone call from her asking if I've fallen behind on my loan payments (which are in deferment right now).

# ¿ Jan 10, 2007 07:14

10-8: Oct 2, 2003; Level 14 Bureaucrat

Wiggy Marie posted:

10-8, the only thing I can recommend is to contact the NSLDS and see if you can have your information removed from their site. All lenders have access to this system, which is where they're finding your information at. (800) 999-8219

I called NSLDS and they told me there was nothing they can do. Once a lender has access to the system, they don't care how they use the information. I seriously am contemplating a lawsuit against the next lender who sends my grandma a deceptive letter. There's no way I'd win the suit but it costs me next to nothing and it'd certainly tie up the company's resources for a while.

# ¿ Jan 10, 2007 23:11

10-8: Oct 2, 2003; Level 14 Bureaucrat

Wiggy Marie posted:

If you still do not pay, they will threaten to take away whatever degree you got. Yes, they can do this. The government paid for that degree, not you, and since you haven't paid, they will take it away.

Wiggy Marie posted:

Private loans work nearly the same way. It's the same idea - this loan paid for your degree, not you. If you do not pay the loan, they will take away what it paid for. Some private loans will go another route - they will remove the funds from the school, and then the SCHOOL will be on your case for the missing funds. And you will be expected to come up with the totals out of pocket, because you won't be able to take out a loan due to ruined credit.

Do you have a source for the lender's authority to do either of these things? I can't find any legal basis for revoking a degree or somehow taking funds from a school by force.

According to http://www.finaid.org/loans/default.phtml:

quote:

Consequences of Default

If you default on your student loan:

* Your loans may be turned over to a collection agency.
* You'll be liable for the costs associated with collecting your loan, including court costs and attorney fees.
* You can be sued for the entire amount of your loan.
* Your wages may be garnished. (Federal law limits the amount that may be garnished to 15% of the borrower's take-home pay.)
* Your federal and state income tax refunds may be intercepted.
* The federal government may withhold part of your Social Security benefit payments. (The US Supreme Court upheld the government's ability to collect defaulted student loans in this manner without a statute of limitations in Lockhart v US (04-881, December 2005).)
* Your defaulted loans will appear on your credit record, making it difficult for you to obtain an auto loan, mortgage, or even credit cards. A bad credit record can also harm your ability to find a job.
* You won't receive any more federal financial aid until you repay the loan in full or make arrangements to repay what you already owe and make at least six consecutive, on-time, monthly payments. (You will also be ineligible for assistance under most federal benefit programs.)
* You'll be ineligible for deferments.
* Federal interest benefits will be denied.
* You may not be able to renew a professional license you hold.

And of course, you will still owe the full amount of your loan.

Obviously finaid.org isn't the end all of authority but I can't find any other source for the claim except in this thread.

10-8 fucked around with this message at 03:53 on Jun 18, 2007

# ¿ Jun 18, 2007 03:40

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# ¿ Apr 28, 2024 16:14

10-8: Oct 2, 2003; Level 14 Bureaucrat

Wiggy Marie posted:

10-8, the lender doesn't do this, and the guarantor tries not to. It only happens when a person has double-defaulted - defaulted once, then defaulted again - or gone so far into delinquency that the guarantor gives the loan over to the Department of Education. The loan must be in collections status with a very very severe delinquency...and that is the point where the Department of Education actually steps in.

The only reason I know it's done is because a friend of mine works at a collections agency who collects on the Department of Education's behalf, and they have this legally granted capability. They have the ability to revoke your degree or license for whatever employment you may have if you do not pay - and they will do it with a smile.

You don't hear about it often because God willing someone scares you enough before this point for it to never come up, but there are those who receive a call which states if they do not pay their loans, in full, then their doctor's license (or whatever else) will be revoked. But again, the lender does not do this. It's done by the guarantor or the Department itself.

I think you are confusing professional licenses such as those granted by state bar associations and medical boards with the actual conferral of a degree, be it a J.D., M.D., or B.A.

You are correct that in many regions defaulting on a student loan can be grounds for having one's professional license revoked; this would prevent a doctor from practicing medicine or a lawyer from practicing law. Even in this case though, the only agency with authority to revoke such a license is the authority that granted such license in the first place, e.g., a state bar association or medical board. Yes, these licensing boards tend to respond favorably to notices by the DOE that an individual has defaulted. Nevertheless, it is still the licensing board itself, and not the DOE, that does the actual revocation of a license.

You're speaking of "legally granted capability" to revoke the actual degree itself, but I can't find any statutory authority for the Department of Education or any other guarantor to revoke a degree after default of a student loan. I'm interested in this topic and I've been searching Lexis for a few hours now trying to get to the bottom of this. I just can't find anything to corroborate what you've said.

I'm planning on taking the bar exam in a few months, and while I don't plan on defaulting on any of my law school loans, it's always good to know what's what. I agree with you that if I were to default I'd run into trouble with my state bar. But nobody can take away my actual J.D., nor my underlying B.A., except for the schools that granted those degrees. Perhaps my J.D. is largely useless without an accompanying license to practice law, but I would nevertheless still have my J.D.

It's important to make the distinction between professional licenses and the actual degrees upon which the licenses are granted because only a very few industries are required to be professionally licensed. If I had just stuck with my B.A. in English and gotten a job as a copy editor, there isn't anything the DOE could do to touch me so far as my degree is concerned. In such a scenario, I don't have a license to revoke.

I'm also curious about the second point I raised above. I have never heard anything about private lenders being able to "take back" the money previously given to schools after a student defaults. I can't even imagine where the private lenders, or their guarantors, would believe they have the legal right to do such a thing. Not to mention, having worked closely with school bursars offices in the past, any of the bursars I know would tell the lender to stick it and leave the school out of the collection process. It isn't the school's problem.

What you've described in both cases -- the DOE revoking degrees and private lenders getting their money back -- is just not how unsecured loans work. A lender or guarantor, even the DOE, can only act within the authority granted it by law, and both of these concepts just run contrary to every bit of public policy that forms the cornerstone of unsecured lending law and bankruptcy law.

I hate to say it, but both of these concepts sound like scare tactics used by lenders/guarantors to get deadbeats to pay. I don't believe there's any basis in law for any of it. I'm open to being corrected if you can cite to any specific law or regulation that allows for either of the two issues we're discussing.

# ¿ Jun 18, 2007 06:24

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Ask Me About Student Loans!