Youll Establish Good Financial Habits
Another potential benefit of paying student loan interest while in school is the development of good financial habits. Youll learn to manage your money, including how to make on-time payments on debt and how to budget for monthly bills.
You might need to track your spending with a budget or pursue a side gig to make some additional income. These efforts might also pay off down the line, since making on-time payments on debt is an important part of building your credit score.
How To Stop Student Loan Debt Collectors From Calling
Its stressful enough to be behind on your student loan payments without having to cope with the constant assault of phone calls and letters. Fortunately, the laws give you an easy solution to prevent debt collectors from contacting you.
You can have a debt collector stop contacting you by submitting a formal request. The letter doesnt have to be fancy all it needs to say is that you dont want the collection agency to contact you about your defaulted student loan.
The letter will stop the
- phone calls
- and mail
but it will not prohibit the loan holder from moving the account to another collection firm. Theres also no reason they cant file a lawsuit or take other legal action against you. Even yet, you could discover that having a silent phone and an empty mailbox gives you the peace of mind you need to get through this challenging period.
Student Maintenance Loans Guide 2022
The Maintenance Loan will probably be your main source of cash while you’re at uni. But how does it all work? And how much money will you get? Allow us to explain.
Credit: Roman Samborskyi , Bayliss photography Shutterstock
According to our National Student Money Survey, the Maintenance Loan is one of the main sources of money for students while they’re at uni.
So, as you’ll almost certainly be taking one out, it makes sense for you to get clued up on the eligibility criteria, the application process and how big a Maintenance Loan you’ll get, as well as how to pay it back and what to do if your loan isn’t enough.
In trademark Save the Student fashion, we’ve got you covered read on and we’ll answer all of your questions to make sure you get the most out of your Maintenance Loan.
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Is A Spouse Responsible For Student Loans
Many married couples have a whats mine is yours mindset, but does that also apply to student debt? Fortunately, the answer is noat least, not when it comes to the legal responsibility for the debt in marriage.
Debt that exists before a couple gets married, including student loans, is individual property and remains the sole responsibility of the partner who initially borrowed it. The other spouse cannot be compelled to repay this debt.
Another clear-cut case is if you co-signed student loans with your partner. It doesnt matter whether you took these out before or after marriage or if youre the co-signer or primary borrower. Youre both be equally responsible for this student debt.
Things can get trickier, however, if you or your spouse take out solo student loans once youre married.
The specifics of who owns student loans taken on during marriage can vary from state to state, as each will have its own laws about whats considered community property. Student loans borrowed during the marriage, for example, might be considered marital property with shared responsibility if youre in a community property state.
If you have a complicated student debt situation or specific questions about how your states community property laws affect student debt, consider consulting a lawyer. They can give you the most complete and specific advice for your situation thats in line with local regulations.
Who Can’t Get It
You cant get a Student Loan if youre:
- at secondary school
- bankrupt
- behind on your Student Loan repayments by $500 or more and overdue on repaying any of this amount by a year or more
- studying for less than 32 weeks and your course has less than 0.25 EFTS.
If you’re under 18, you can’t get a Student Loan if you’re either:
- studying a fees-free level 1 or 2 qualification.
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How Can You Recover From A Defaulted Student Loan
You can still rebuild your credit even if youve defaulted on your loan or have any missed payment. Here are a few things you can do.
- Your credit utilization ratio must not exceed 30% of your credit limit
- Make timely payments
- Avoid applying for multiple credit cards in a small amount of time
- Monitor your credit regularly so you can make sure that there are no errors in your credit report
How To Get Your Federal Loans Out Of Collections
Youll need to take action if youre in collections. Ignoring the issue will not solve the problem.
If youve recently fallen behind on your payments, a straightforward solution is to catch up immediately.
You may be able to eliminate the default and collections status on a federal student loan if you make a qualified payment that puts you under 270 days late. If not, you still have four alternatives for getting your federal student loans refinanced:
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What Is The 28 36 Rule
A Critical Number For Homebuyers One way to decide how much of your income should go toward your mortgage is to use the 28/36 rule. According to this rule, your mortgage payment shouldn’t be more than 28% of your monthly pre-tax income and 36% of your total debt. This is also known as the debt-to-income ratio.
Student Loan Payments Are On Hold Until May 2022 But Is It Wise To Pay Anyway
In the wake of the ongoing COVID-19 pandemic, the federal government has taken measures to provide temporary reprieve for borrowers with student loan debt. Since 2020, borrowers have not been required to make monthly payments on outstanding loans balances while that reprieve was initially going to end in September 2021, the pause has been pushed back to May 1 2022.
Although many borrowers are relieved by the pause, that doesnt mean these former students dont have questions. For example, even though loan payments are on hold until May 2022, is it wise to continue making payments if you can afford to do so? Were delving into everything you need to know about how the student loan landscape has changed in the face of the pandemic and how you can prepare yourself for the impending financial burden of loan payments resuming in a few months.
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Student Loan Company What Goes Wrong
The Student Loan Company receives around 12,500 complaints each year, according to an information request we submitted in 2018.
The SLC says that around 31% of these complaints are upheld . Although not directly comparable, thats higher than quite a few mainstream lenders, and most high street banks, including NatWest , Santander , Bank of Scotland , TSB , Nationwide as well as the government savings provider NS& I, where one in six complaints were upheld.
How To Pay Less Interest
You can reduce the amount you pay in interest or by refinancing your student loan to a loan with a lower interest rate. However, refinancing federal student loans into a private loan means a loss in many benefits income-driven repayment options, possible loan forgiveness or widespread forgiveness, generous deferment options, and a death and disability discharge.
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How To Make Interest
If you decide to make payments on your student loans while in school, you can get started by logging into your student loan accounts. For federal student loans, you can log into the Federal Student Aid dashboard to see details about your loans.
Ultimately, however, youll want to log into your loan servicers website to set up payments. A student loan servicer is a company that manages your loans, and the company you send monthly payments to.
Once youve logged into your account, you should see how much interest youve been accruing each month and how to set up automatic payments. You can also contact your loan servicer by email or phone for more information.
Its also worth finding out if you can make these payments automatic without having to manually input them each month.
Look Into Forgiveness And Reimbursement Programs
Public Service Loan Forgiveness is designed to offer student debt relief for students who pursue careers in public service. You make a set number of payments while working in a public service job and the remainder is forgiven.
If you don’t qualify for loan forgiveness, you may be able to get help with your student loans through your employer. Talk to your HR department about whether student loan reimbursement is available as an employee benefit and what you need to do to qualify.
In some circumstances, a debt relief company can assist you in negotiating lower payments or even partial debt reduction.
The American Rescue Plan passed by Congress and signed by President Biden in March 2021 includes a provision that student loan forgiveness issued between December 30, 2020, and January 1, 2026, will not be taxable to the recipient.
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Ask About Your Repayment Options
Once you find your loans, the next step is to figure out your repayment options. Federal student loan borrowers have four options to get out of default:
- Repayment in full
- Consolidation
The best option for you will depend on your personal finances and whether you’ve previously consolidated your loans or completed the loan rehabilitation program. If you have an FFEL Consolidation loan, you may be able to consolidate a second time. But loan rehabilitation is limited to once per loan.
Most borrowers will want to get out of student loan default quickly to avoid tax refund and wage garnishment.
Private loan holders and collection agencies don’t offer the same repayment options. Your best option will either be to negotiate a settlement or file student loan bankruptcy.
Student Loans: How They Work And What They Pay
All you need to know about official government funding for tuition fees and living costs
Stumped by student finance? Heres the Guardian Money guide to what it is, how it works and what you need to do.
Help, I havent applied!
Dont worry, its not too late, but you should get a move on. Some applications can be processed in two days, but some can take up to six weeks or more, says the Student Loans Company . It will try to make sure late applicants have at least some funding in place at the start of term.
Remind me how it all works
Student finance is the official government funding for university tuition fees and living costs.
The tuition fee loan covers course fees and is paid directly to your university or college.
The maintenance loan is designed to help with living costs such as accommodation and food. How much you get depends on your household income, where you are living and where youll be studying. It is typically paid directly into your bank account at the start of each term.
Both must be paid back once you graduate and are earning above a minimum salary.
You must apply to the student finance body in your country. You can do it online at gov.uk/apply-for-student-finance depending on whether you live in England, Wales, Scotland or Northern Ireland.
Im now going to a different university
How much maintenance loan do I get?
My family has suffered a big income drop because of coronavirus
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Rehabilitate Or Consolidate Your Student Loans
Consolidating your loans is another option for resolving debt in collections.
Consolidation and rehabilitation are only available for federal student loans. Private student loans can be consolidated by refinancing with a private lender, but youll have a hard time qualifying if youre in default on your payments.
You could discuss your alternatives with a lender and see if adding a cosigner to your refinancing application will help.
Need A Plan If Student Loans Don’t Go Away
While Congress has placed most federal student loans into forbearance and suspended collection activities like tax refund offset throughout the coronavirus pandemic, they still haven’t forgiven most federal student loans. While there are options to get out of paying student loan debt, most borrowers will be stuck with their loansâ at least for the next 20 to 25 years.
Schedule a free call where we can evaluate your student loan repayment options. With the right strategy, you can achieve your financial goals even if your student loans never go away.
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If You Have A Postgraduate Loan And A Plan 1 Plan 2 Or Plan 4 Loan
You pay back 6% of your income over the Postgraduate Loan threshold . In addition, youll pay back 9% of your income over the Plan 1, Plan 2 or Plan 4 threshold.
Example
You have a Postgraduate Loan and a Plan 2 loan.
Your annual income is £28,800 and you are paid a regular monthly wage. This means that each month your income is £2,400 . This is over the Postgraduate Loan monthly threshold of £1,750 and the Plan 2 threshold of £2,274.
Your income is £650 over the Postgraduate Loan threshold and £126 over the Plan 2 threshold .
You will pay back £39 to your Postgraduate Loan and £11 to your Plan 2 loan. So your total monthly repayment will be £50.
Example
You have a Postgraduate Loan and a Plan 1 loan.
Your annual income is £28,800 and you are paid a regular monthly wage. This means that each month your income is £2,400 . This is over the Postgraduate Loan monthly threshold of £1,750 and the Plan 1 threshold of £1,657.
Your income is £650 over the Postgraduate Loan threshold and £743 over the Plan 1 threshold .
You will pay back £39 to your Postgraduate Loan and £66 to your Plan 1 loan. So your total monthly repayment will be £105.
How To Open A Student Bank Account
Youll need to be over 18 to open a student bank account. Most banks will ask you for the following when you apply:
- Proof of ID
- Proof of address
- Proof of your unconditional acceptance to a university in the UK
This isnt an exhaustive list. Check with the bank youre intending to open an account with before you begin the application process.
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What To Do When Student Loan Debt Collectors Call About Your Student Loan
You wont like hearing this, but you must pick up the phone when it rings. You will remain at the top of the collectors list of persons to call if you do not answer the phone.
Its easy to let your emotions run wild when you pick up the phone rather than keeping calm and sensible. However, allowing your fight or flight instinct to take over increases your chances of doing what the collector wants.
When communicating with collectors about an outstanding student loan debt, observe these strict criteria to preserve your calm:
- When the phone rings, note the date and time and the number displayed on your caller ID .
- Use your complete name to identify yourself to the caller.
- Request the callers complete name and direct phone number, being sure to repeat and record the information
- Request the entire name of the company for whom the caller works, as well as the account or reference number of the collecting agency
- Find out the identity of the current student loan owner, as well as the total amount owed
- Inquire about the breakdown of the current balance between principal, interest, and collection fees.
- Make a list of everything you learn, and then write it down.
- If you dont recognize the loan, you have the right to demand validation and verification within the legal time frame.
Be Smart About Money While Youre In College
Once you start taking college classes, you can immediately create a plan for keeping your student loans under control while paying what you can.
The first step is to create a budget. Look at how much money you have coming in and account for every expense you pay on a monthly budget, including your school costs, books and supplies, how much you spend on food, and the cost of going out with your friends.
If there is a big gap between earnings and expenses, then you may have to cut something out. For instance:
- Do you need that streaming service at home if you are out at the library all of the time?
- How about your daily Starbucks run?
- Can you cut that off and get the dollar coffee at the cafeteria instead?
- You can save the money that you have left over and put it towards making early payments on your loans.
Although college is a busy time, you can also earn extra money for your student loans by finding a part-time job.
Even working 10 hours a week can give you some breathing room, and you can do any number of side gigs, from delivering food for a local restaurant to freelance writing, or you could tutor your fellow students online.
If you can direct all of this extra money towards paying back your loans, then you will make a big dent. A freelance job is a good idea because you can make your own hours, so if you have a big test coming up, then you can choose to work less so you can focus on your studies.
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