By Michael Crowe Esq FitzGerald Morris Baker Firth wwwfmbflawcom Student Loans Federal vs Private Federal loans are those either lent directly by the federal government or backed guaranteed by the fed gov ID: 605589
Download Presentation The PPT/PDF document "Everything You Need to Know About Studen..." is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
Everything You Need to Know About Student Loans and Protecting Your Credit
By: Michael Crowe, Esq. FitzGerald Morris Baker Firth
www.fmbf-law.comSlide2
Student Loans – Federal vs. Private
Federal loans are those either lent directly by the federal government or backed (guaranteed) by the fed gov. Offer a variety of repayment options and deferment/forbearance but have no statute of limitations on enforcement & can use other gov benefits to satisfy.
Examples – Perkins, Stafford, Parent PLUS
Private loans are not originated or backed by the federal government.
Usually originate from banks or Sallie Mae.Easier to obtain but have less options for structuring repayment.
www.fmbf-law.comSlide3
Federal Loan Repayment Options
Balance Based Repayment – Term of 10 to 30 years. Duration dictates monthly payment.Income Based Repayment:Income Contingent (ICR): capped at 20% of
discretionary
income. Monthly payments adjust yearly. After 25 years the balance is forgiven.
Income –Based (IBR): same as ICR but capped at 15%. Pay As You Earn (PAYE): capped at 10%, forgiven after 20 years, available only for direct federal loans i.e. not Perkins or Parent PLUS.
www.fmbf-law.comSlide4
Deferment and Forbearance
Both allow the borrower to postpone payments for a set amount of time. The main difference is how the interest is handled.During deferment interest does not accrue for subsidized federal loans and for unsubsidized the interest does not get added to principal until the deferment period is over.
During forbearance interest continues to accrue.
www.fmbf-law.comSlide5
Default and Rehabilitation
www.fmbf-law.com
Entire balance is due immediately, additional fees and penalties accrue.
Wages can be garnished without court order, tax refund and benefits can be seized without court order.
Rehabilitation
9 out of 10 timely “reasonable and affordable” payments.
Consolidation with payment plan.Slide6
Why Does it Matter?
Interest! A $45,000 loan at 6.8% can add up to over $60,000 before you even graduate and can start paying on it. Under a balance based plan over 30 years, the amount paid off will be over $110,000.
www.fmbf-law.comSlide7
Protect Your Credit
Check your credit card statements and dispute charges!Check your credit report regularly (www.annualcreditreport.com
) and well before applying for any major loan – auto or home.
Dispute inaccuracies and mistakes.
Add an explanation.Add positive information that is otherwise unreported (employment, residence, contact information).
www.fmbf-law.com