Be informed, not afraid, about student loan repayment

Upon graduating, I consolidated my undergraduate loans with a company called CFS. A few months later, I decided to go to grad school and qualified for in-school deferment.

Now I have completed grad school (in December 2007) and haven't heard anything from CFS. Since there were rumors that the interest rate might drop after the T-bill was set (May 31), I have been waiting to consolidate those loans.

I'm a bit lost now. I know a lot of companies have recently opted out of loan consolidation and last I checked with CFS, they have been bought by another company. I wanted to consolidate all my loans with the same company so it's easier to keep track of my repayment. What are the chances that CFS cancelled my first consolidation? Should they be contacting me, or is it my job to track them down? Since my 6-months grace period is ending soon, would it be wise to consolidate my grad loans with another company now?

Thanks!

Hi Candice--Thanks for your question.

I did a bit of research, and it appears that CFS was purchsed by Chase. While I can't speculate on what happened with your loans, my advice to you would be to contact Chase directly to find out. Go to the Chase Student Loan Servicing web site (www.cslservicing.com) and click on "Contact Us" in the right-hand navigation bar.

Even if you haven't received a notice from your lender/servicer, you are still responsible for repaying the loan--with or without a monthly statement. It is likely your lender/servicer will send something around 60 days before the due date, but you should contact your lender if you haven't heard from them about repayment of the Consolidation Loan or your graduate school loans.

If your loans have variable interest rates, those rates will drop significantly on July 1. Therefore, it may be better for you to apply for the new Consolidation loan in early July because the new repayment rate will be lower than your current grace rate.

Hope that helps. Please let me know if I can answer any other questions.

My daughter is having a hard time getting in college she went for a year then she couldnt get no finanial assistance she been trying find low rate student loan can u help and long would this take she dosent have but like a couple weeks to get evrything worked

Donna, has your daughter spoken with the financial aid office at her school? That's the first and best place she should go for help.

Depending on what type of school she attends, most likely the financial aid office will encourage her to apply for federal aid first. In order to do so, she'll need to complete the FAFSA (Free Application for Federal Student Aid). If she hasn't already submitted the FAFSA, she needs to do it immediately because it takes a couple of weeks to get the results.

Even if she doesn't qualify for need-based aid, she should be eligible for some federal loan funds. Federal loans have the lowest interest rates and the most options for repayment, so after any grants or scholarships, these are your daughter's best bet. If she needs additional funding once she has exhausted those resources, she could seek a private student loan from a lender like Wells Fargo.

The process can take awhile, though, so encourage her to get started now!

I recently applied for a student loan online. I have a previous student loan with Wells Fargo and Iam going back to school this Fall and needed a loan to pay for it. How long does it take before Wells Fargo gives me a yes or no answer to the loan?

Hi Courtney--Sorry for the delayed response to your question! If you didn't receive an instant credit decision online, you should've received a phone call from our fulfillment team within 24-48 hours (two business days) after you applied. You also should have received a letter.

Hi my name is kiya I'm looking for additional fundind for my exspense. I attend colorado technical university. What do I need to do to help my problems in try to get this funding. how long will it take.

My dad cosighned a loan for hi grand kid. The grandkid was kicked out because he droped out the first week. My dad can't find the papers he sighned and wants to know the name of the loan company. My brother says his son has the papers and does not know the name. How does my 82 year old dad find out the name of the loan company before the loan goes from $8,000.00 to $32,000.00.

Allen -- Because we're talking about a private student loan, there is no centralized location where the cosigner could check (for Federal loans, borrowers can access the National Student Loan Database, http://www.nslds.ed.gov/nslds_SA/). If you can't get the information from the student, the best bet is to ask the school's financial aid office. If they don't have information on which lender disbursed the payment, they should be able to provide you with a list of lenders, so you can contact them directly to inquire about a loan they may hold.

I do not understand why student loans, once consoladated, cannot get the interest rate lowered. My loan has had the rate raised twice over the life of the loan. Something needs to be done about this because it is not fair to the people who get stuck with high interest rates. I have written my congresseman and complained to anyone who would listen. Are there other avenues I can take? Thanks

Taken, I'm guessing you have a private consolidation loan, because Federal Consolidation Loans do have fixed interest rates. The interest rate for Federal Consolidation Loans is based on a weighted average of the loans being consolidated, rounded up to the nearest eighth of a percent and capped at 8.25%.

I can't speak for other lenders, but the Wells Fargo Private Consolidation Loan has a variable rate that is based on an index, plus a margin. When that index changes, the rate changes. The promissory note that you signed when you borrowed the money should clearly outline the terms and conditions of your loan. Have you reviewed that, or contacted your lender with your questions?

Keep in mind that the one good thing about having a variable-rate loan is that in a low interest rate environment (like the one we have now), the rate goes down.

I have Federal loans and private student loans through sallie mae from my undergrad and I am now in repayment. Some are subsidized and some are unsubsidized. If I go to graduate school full time, will i still be responsible for making payments and will the loans still accrue interest?

Hey James--Thanks for your question. On subsidized federal loans, interest does accrue, but the government pays the interest while you're in school, in your grace period, or in periods of deferment. On unsubsidized federal loans and private loans, you are responsible for paying the interest.

If you return to school full-time, you should be able to qualify for an in-school deferment on your federal loans and a forbearance on your private loans. I'd suggest you ask Sallie Mae these questions about each of your loans before you go to graduate school--that way you can complete all the necessary forms and keep the line of communication with your lender open.

Best of luck at grad school!

Hello,
I currently have a stafford loan, and graduate in May. I'm thinking about medical school in the future. Will I be able to get a deferment if I attend medical school?
Thanks.

Rob, if you're attending medical school at least half time at an eligible school, you should qualify for an in-school deferment. Just remember that interest continues to accrue on your loans during a deferment (except with subsidized Stafford loans, where the government pays the interest), so you may end up increasing the total amount that you repay.

I'd suggest you contact your lender to find out what forms you need to complete--be sure to give yourself plenty of time to get the deferment processed. If your lender is Wells Fargo, more information can be found at wellsfargo.com/student/repay/deferment.

Hope that helps!

How many days are required to notify a borrower of a required payment? I have several loans with Sallie Mae, one that was in repayment and one that was on a grace period. I made my required payment of $120 on 2/18 (the amount listed on their website and my last statement) and on 2/19 they sent me a letter stating an additional $320 payment was due by 2/25, 6 days later! Unfortunately, I was out of town and did not receive the notice until 3/1. I have brought my account current and contacted Sallie Mae regarding it, but I feel that it is an unfair and deceptive business practice to send a statement requiring an additional large payment within 6 days. I have always received at least 30 days notice for my Wells Fargo loans. Is there a government agency that oversees the business practices of student loan companies that I can make a formal complaint to?

Lied to, I'm not sure what types of student loans you have with Sallie Mae (Federal, private, or a combination), but Federal Family Education Loan Program regulations do not specify time frames with regard to coupon books or monthly billing statements. So there isn't a "required" time period.

I can tell you that if you had a Federal Stafford Loan in grace, lenders are required to send a repayment disclosure, which would provide the payment amount and first payment due date (in addition to other data elements) no earlier than 150 and no later than 30 days before the first payment is due.

Did Sallie Mae give you an explanation for why you were billed that way? Have you requested combined billing for your student loans so you only have to make one monthly payment? Or have you looked into student loan consolidation as an option to simplify repayment?

If you've made every effort to resolve an issue with your lender regarding federal student loans on your own but still can't reach a solution, a good resource is the Federal Student Aid Ombudsman (ombudsman.ed.gov). They have a process to assist you.

Not sure if that's the information you were looking for, but does it help?

I have some college student loans that have gone into default. My Mom is willing to give me cash to pay off a huge chunk of the loan and she wants to assume the remainder of the debt (in her own name). We had initially agreed that she will bear the burden of paying for my college education and that I pay my own way for grad school. But, at the time I went to college, my Mom's credit line was really bad, so she couldn't put my college loan under her own name.

I just graduated from grad school and will soon begin paying off my grad school student loans. I want to move forward with my life without the burden of bad credit history following me around (due to my defaulting college student loan debt). I am also hoping that I will be able to purchase my own home at some point in the near future.

My question is: can my Mom or some other party assume the remaining balance of my defaulting college student loan debt in her/his own name? And if so, how long will the negative/default remarks stay in my credit history?

Additionally, if it's not possible for my Mom to assume the remaining balance of my student loan debt, and if instead, she can somehow pay off the entire remaining balance, how long will the negative/default remarks stay in my credit history?

Any advice would be much appreciated. Thank you!

Hi JW--Thanks for your questions. No one is able to assume your defaulted student loan debt for you, but the consequences of default are severe. Not only will your credit rating be damaged for up to seven years (which will delay your homebuying plans and also could impact your ability to get a job), but your wages could be garnished and your federal and state income tax refunds could be intercepted. So it's in your best interest to take care of this as soon as possible.

There is a process for federal student loan rehabilitation. To do so, you'll need to make arrangements to repay the defaulted student loans with the guarantor of your loans. After you have made 9 of 10 consecutive payments within 20 days of the due date and applied for and received "rehabilitation," you will no longer be considered in default. At this time, record of the default will be removed from the reports to credit reporting bureaus and you can continue repayment--even paying off the loan with a lump sum from your mom.

For Federal Family Education Loan (FFEL) loans, once the loan has been rehabilitated with a guarantor, it has to be sold to an eligible lender to enter repayment. However, the current credit crunch has thrown a bit of a wrench in the loan rehabilitation program, and guarantors haven't been able to find lenders to purchase loans in the tight credit environment. If you have Direct Loans, this shouldn't be an issue for you. And if you have FFEL loans and begin the process now, the credit market could look much different in a year's time when your loans are considered rehabilitated.

Hope that helps. If you have additional questions, please ask.

Hi Staci,

Thank you for getting back to me. Just a quick follow up on your response to my earlier post:

Does it matter in terms of assuming another person's student loan, that my college loans are all private and not federal loans?

Also, if I decide to pay off the entire defaulting amount (or if the lender & I can reach a payoff figure), do you know if it still takes 7 years for the negative remarks to stay in my credit history? Will it also take just as long for my credit score to improve?

I'm still hoping that I could purchase a home sooner rather than later.

Thanks for your insight!

JW, thanks for following up, because private student loans have a completely different process. They go into default earlier than federal ones do--at 120 days past due instead of 270. And once the borrower has defaulted, the loan is charged off--there is no rehabilitation feature.

For Wells Fargo private loans, we pursue collections on the balance after charge off and are willing to make arrangements to pay in full for a term up to 36-48 months. We have a special recovery group that works with borrowers in these situations. If Wells Fargo is your lender, you can contact our recovery group at 1-888-299-4179 to settle the debt or pay in full.

I asked our collections team about the credit score impact and was told that the charge off can remain on the credit score for up to seven years. But there is no way for us to tell the specific impact to the credit score once the private student loan debt is paid off or settled. Depending on other things happening with your finances, the score could do any number of things--remain the same, increase slightly, increase significantly or even decrease. I'd recommend that you keep a close eye on your credit score and be diligent about paying all of your other debts on time.

Taking responsibility for your defaulted student loan debt and moving forward isn't easy, so I commend you for your efforts and wish you the best of luck.

We're working on a credit series that might have some additional tips for you. Watch for that in the next few weeks!

Hi Staci,

I went to school 17 years ago and borrowed about 16,000.

Last year was the first time since going to school that I've made any more money than poverty level survival.

I never paid on my loans and they are up to are up to about 45,000.

I am now making a decent living. I'd like to know if lenders will accept a significantly lower lump sum payment, and if so, what is common that I could expect them to accept?

Thanks,
Bob

Hi Bob--I'm not sure if you have a federal or private loan, but I can give you some general guidelines on settling the debt for both types.

Lenders don't have the authority to take settlements on federal loans. But if you haven't made any payments on a federal loan, it's likely in default. If your loan has defaulted and is with a guarantor or the Department of Education, you'll need to contact them directly to see if there are any settlement options. Also, I outlined the process of rehabilitating a defaulted student loan to JW earlier in this comment string, so that could be something to consider.

For private loans, each lender has its own policy for settlements, so I can't offer you much in terms of commonalities. I'd suggest that you contact your lender to see if they would consider accepting a percentage of the debt, and if you have to pay it all at once or if you could arrange a payment plan.

Hi Staci! Thanks for the information. I have a quick question regarding some wording. By "payment received within 20 days of the due date within a period of 10 consecutive months," does this mean you have 20 days to make sure the payment reaches the agency? This might sound like a dumb question, but I've never seen this before. Say your payment is due on the 10th of every month. As long as your payment is safely with the agency by the 30th, that means it's not going to throw you out of the running for your 10 consecutive months of on-time payment, right?

I currently have student loans with Direct loans half subsidized and half unsubsidized in the amount of 168,000. They are currently in forbearance. They grew to this size after I consolidated them at 8% and had them deferred while I finished school. When interest rates went down briefly to 3.25% I did try to have them reconsolidated without success. I will probably never make enough on my teachers salary to pay off this debt that is growing daily due to interest. I want to pay my debts. Is there any way to qualify for a lower interest rate so that the loan doesn't continue to grow exponentially out of control and I can get a handle on it? I don't qualify for loan forgiveness because I consolidated my Pell grant years ago. Anyway with my debt 5,000 doesn't seem like that much anyway. I need help getting these loans repaid, and down to a lower interest rate where they are not growing faster than I can repay them. Is there anything I can do? Can I get partial forgiveness or a break on the interest so that I can make a dent on them? Do you have any advice for me?

Mary

Dumb Question?, it's not a dumb question!

I'd interpret it the same way you did--that you have 20 days within the due date for it to still be considered an "on time" payment. It's almost as if they're giving you a bit of a grace period. The guidelines on the Federal Student Aid site specify 20 days for both Federal Direct Loans and Federal Family Education Loans, but there's not a timeframe listed for Federal Perkins Loans: www.ed.gov/offices/OSFAP/DCS/rehabilitation.html

Of course, if you're in the process of rehabilitating your student loans, I recommend that you confirm this timeframe with your guarantor or lender just to be sure. Or, you could avoid the issue altogether by making your payment by the due date! :)

Thanks for asking!

Hi Mary--Well, here's the bad news. Since you've already consolidated your student loans with Direct Loans, you can't reconsolidate them. So there isn't a way for you to get a lower interest rate on your consolidation loan. I'm sorry about that.

I'm not quite sure what you mean about consolidating your Pell Grant--that doesn't have to be repaid. Did you mean your Perkins Loan?

You mentioned that you're a teacher. There is a Public Service Loan Forgiveness program that was established as part of the College Cost and Reduction Act of 2007. This program discharges any remaining debt after 10 years of full-time employment in public service. The borrower must have made 120 payments as part of the Direct Loan program in order to obtain this benefit. Only payments made on or after October 1, 2007 count toward the required 120 monthly payments. That means that the first cancellation of loan balances wouldn't happen until 2017.

I'm not sure if you would qualify for this program, but it's worth looking into. Here are some links with more information:

studentaid.ed.gov/students/attachments/siteresources/LoanForgivenessv4.pdf

www.finaid.org/loans/publicservice.phtml

Hope that provides a small glimmer of hope!

in 2006, i graduated with a bachelors in psych and immediately started a graduate school program working on my masters. a year and a half into my masters work, i decided the program wasn't for me and decided to switch to a different program - at a different school. there was only a month between when i left the graduate school and started my second undergrad degree at the "new" school.
a year into my second undergrad progam, the holders of the loans from my first bachelors have me in repayment even though i am in school currently.
i've always been told that as long as you are enrolled at least half-time in an eligbile program (i'm working on a nursing degree now) you shouldn't have to be making monthly installments (short of any required interest).
they had me get a letter from the school i'm currently attending to verify that i'm enrolled in a program and at least half-time but then when they got the letter stating all that to be accurate, they said i was denied in-school deferrment because the loans they have me in repayment on are from a different school that i did in fact graduate from - thus it makes no difference if i'm currently still enrolled in a fully eligible program. is this accurate?
and why would i suddenly be in repayment at the end of 2008 (i've been "in repayment" since about november of 08) when i graduated in may in 2006? i never applied for any kind of forebearance or anything like that - so why would i not have gone into repayment six months after graduation if they're saying once you get the degree, you start paying in six months whether your start a new eligible program or not?
i can't seem to get any answers from the company - every time i call someone has a different reason for why i'm paying or what paperwork i should have from the school that they already have and has then ultimately been denied by the lenders.
if i have to pay even though i'm still in school, i'm going to keep paying. but if i shouldn't be paying, i'd like to know that too.

thanks!

Hey Heather -- I'm not sure whether you're talking about federal student loans or private student loans. The situation is a bit different for each type of loan. (If your loan is with Wells Fargo, please contact us through Ask the Expert so we can look up the specifics of your situation.) If you have federal student loans (like the Federal Stafford Loan) you are entitled to an in-school deferment as long as you meet the eligibility requirements. Generally, you have to be enrolled at least half time as certified by your school If you are attending less than half time, you wouldn't be eligible for this type of deferment. Private loans are a different story. Some lenders require repayment after a certain number of years from the initial disbursement date of the loan. Have you checked the details of your promissory note? It should lay out the specifics of what qualifies for an interim period or in-school period before repayment begins. If you were in your previous graduate program at least half time, your lender may have received an update from your school and that's why your loans didn't go into repayment until you switched schools. Whether students are dealing with federal or private loans, it's important to keep the lender up to date. They need to know when your situation changes, in fact it's generally a requirement you agree to through the promissory note.

First of all, Stacey thank you for taking time out to answer questions, this has been the best site that I have seen in my search to find answers.

The problem: The nearest question to my own was that of | JW, March 9, 2009 10:43 |. The differences are that my son who I co-signed with the load (Sallie Mae, Career Traning) is unable to pay the loan. I currently do not even know where he is. I have been paying the loan over a year in order to keep my credit rating in good standards. In order to get the bill I have been opening his mail from them.

Why this is a problem - We as a family will be moving soon

What I want to do, as the co-signer is there a way that I can assume the loan. I have asked some of the people at Sallie Mae (the customer service line) and they have assured me that there is not a way to do this. When we move, and his mail stops coming to us and then they take me to collections do I have any sort of recourse.

Once again thank you Stacey.

Owen, thanks for your question. I'm glad you're finding some answers here on the blog.

You're in a tough situation, and I certainly commend you for taking responsibility for your son's loan so you don't damage your own credit rating. A lot of people don't realize that as cosigners, they're just as liable for the debt as the borrower is. Having said that, even though you're equally liable for your son's loan, you are not able to "assume the loan" and be the primary borrower. I checked with our customer service folks to see what they might recommend in this situation. Our policies are most likely different from Sallie Mae's, but here are some options for you:

[1] Ask to set up automatic payment with the lender. Automatic payments will ensure that the loan is being paid on time, regardless of where the statement is being sent.

[2] Ask the lender if it's possible to have online access to the account so you can view the statement online.

[3] Consider consolidating the loan into a new private consolidation loan in your name only. Sallie Mae is not offering this type of product at this time, but Wells Fargo offers a private consolidation loan.

One of our supervisors suggested that it might be in your best interest to be as up front with Sallie Mae as possible. Let them know about your son's situation and that you want to ensure your credit is not damaged. Ask if there's any way the statements could be sent directly to you, or since they are currently coming to your son at your address, ask if the address could be changed when you move. You might even want to ask them about a partial balance settlement--this might be a long shot, but it's worth asking. I expect that Sallie Mae would work with you to find a solution that works for both parties.

If you are not getting the resolution you need from the representative, ask to speak to a supervisor. If that still doesn't work, let us know--we will try to find a contact for you.

Best of luck, and please keep us posted!

I have student loans with Wells Fargo, how do I know if they are federal loans or private loans.

I was reading the info about the Public Service Loan Forgiveness program, and I was wondering if ALL Stafford loans are direct? I have both subsidized and unsubsidized Stafford loans, but neither state that they are Direct. When I read about the Public Service Loan Forgiveness program, it only specified Direct and FFEL for PLUS loans, but did not specify different types for Stafford. I also have a FFEL PLUS loan- will I be able to consolidate this with my Stafford loans to qualify for this loan forgiveness program (I plan to be a public school teacher), and does it matter that my PLUS loan is in my dad's name?

I took out about $8,000 in student loans back in college from 1991-1996. I have defaulted on those loans and have just received a bill for $39,968.00

Is there a way I can get back into good graces with the loan and pay on the original amount? I originally had several loans and I paid some and my mom paid some. She thought I was paying it, and I thought she was paying it.

I'm afraid that if I contact them directly, they may garnish my wages without giving me the opportunity to set up some type of payment plan. finally, $39K is an awful lot to pay for a $8K loan. What are the odds of a settlement amount?