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aaronsniderus · 5 years

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What Is a Home Equity Line of Credit (HELOC)?

A home equity line of credit, also called a HELOC, uses a certain percentage of

your home equity to provide you with a revolving line of credit for large expenses. Maybe you need a new roof on your house or want to add an in-law suite. A HELOC can help.

Instead of a set dollar amount, a HELOC lets you borrow up to a certain amount, typically 75%–85% of your home’s value.

You can take a HELOC out on a home that has a mortgage or is fully paid off. A HELOC usually has a lower interest rate than other types of loans, such as home equity loans, and the interest may be tax deductible.

How Does a HELOC Work?

A HELOC works like a credit card, in that you are allowed to borrow up to a certain amount for the life of the loan, carry a balance from one month to the next and make minimum payments.

Although a HELOC gives you ongoing access to your home’s equity, credit bureaus don’t necessarily treat it the same as your credit card accounts when it comes to your credit score. Some bureaus treat HELOCs like installment loans rather than revolving lines of credit, so borrowing 100% of your HELOC limit may not have the same detrimental effect as hitting your credit card limit. But like any line of credit, a new HELOC on your report could temporarily reduce your credit score.

Other characteristics include a “draw period,” typically 5–10 years. During this time, your monthly payments will be only for the interest on the loan.

After the draw period, many HELOCs have a repayment period of 10–20 years when you’ll make regular payments of principal and interest until the loan is paid off. With other HELOCs, the entire balance becomes due when the draw period ends, and you would need to pay the amount still owed as a lump sum.

And unlike home equity loans, HELOCs have variable interest rates, meaning your rate could fluctuate based on the Fed’s Prime benchmark interest rate. Lenders will typically charge the amount of the index plus a “margin,” say 2 percentage points or “Prime plus 2%.” If the index rises, so will your rate, although most HELOCs set a ceiling (or cap) on how high rates can go in certain time frames or over the life of the loan.

Here’s how your payment could change: If the current Prime rate is 4%, a HELOC with a rate of Prime plus 2% would have a total APR of 6%. So, if you borrowed $10,000 at 6%, you’d be paying $50/month in interest. However, if the Prime rate went up to 10%, your interest rate would rise to 12%, and your interest payments would be $100/month.

How much you can borrow on a HELOC depends on the value of your home, how much you owe, your credit history and other factors. There are online calculators, such as this one from The Motley Fool, to help you estimate how much you may be able to borrow.

Wise (and Unwise) Uses for HELOCs

The federal Tax Cuts and Jobs Act eliminates the interest deduction for equity loans unless the money is spent on improvements that raise property value, such as renovating existing rooms or adding usable space.

While it may be tempting to use the HELOC for a new car or vacation, those purchases won’t help you build wealth and could, in fact, hurt you in the long run. Failure to repay the HELOC according to the loan terms will damage your credit score and could result in you losing your home through foreclosure.

Also, your bank may decide to freeze your HELOC if your home value drops dramatically or the bank reasonably believes you won’t be able to repay the loan. A frozen HELOC doesn’t mean foreclosure, but it does cut off the line of credit.

An even bigger drawback is that if your home value falls, you could end up owing more than your home is worth. This situation, known as being “underwater,” means you won’t be able to refinance your mortgage, and it could be difficult to sell your home.

HELOC Alternatives

There are a few alternatives to HELOCs to consider, based on your financial goals.

Home equity loans are similar to HELOCs, but you get a lump sum instead of a line of credit and most of these loans have a fixed interest rate. The interest rate may be slightly higher at the start, but it will not rise, providing payment stability.

A cash-out refinance allows you to take cash out of your primary mortgage while leaving some equity in the home. The exact amount you can take out depends on the type of loan. With a conventional loan, you need to leave 15%–20% equity in your home. FHA loans allow you to leave 15% equity, but you’ll have to pay mortgage insurance premiums. If you’re an eligible active-duty service member, veteran or surviving spouse, you can take out a loan for up to 100% of the appraised value of your property.

If you need only a small amount or don’t want to tap into your home equity, a personal loan or low-interest credit card, perhaps one with a low-interest introductory period, could be better options.

Would You Qualify for a HELOC?

To qualify for a HELOC, you’ll need to have enough equity in your home, at least 15%–20% of its value, which is determined by an appraisal.

You’ll also need a credit score of 620 or higher, a debt-to-income ratio in the low 40s or less and a strong history of paying your bills on time.

Pros and Cons of HELOCs

There are advantages and drawbacks to getting a HELOC. Here are a few to keep in mind:

Pros

Interest rates tend to be low, and you are charged interest only if you withdraw the money.

Some HELOCs may not have any closing costs.

Cons

HELOCs are similar to an adjustable rate mortgage, so your rate can go up or down as the market changes (so that low introductory may quickly change).

Fluctuating monthly payments due to interest rate adjustments can make it difficult to budget and plan.

Costs can add up. Some HELOCs have interest-only payments or prepayment fees.

There tends to be a small fee for setting up the account and an annual fee for keeping it open.

Like with a credit card, you could be tempted to spend beyond your means.

Interested in a HELOC?

Quicken Loans does not offer HELOCs, however, a Home Loan Expert can talk to you about your financial goals and help you make a decision that’s right for you.

If the interest-only period of your HELOC is expiring soon, you might want to consider refinancing to get out of your HELOC. You can roll your HELOC into your new mortgage and make one low monthly payment, which could save you from fluctuating amounts or large jumps in your monthly payment.

Everyone’s financial situation is different, so be sure to consider all of the pros and cons and speak to a professional before deciding what’s right for you.

Thoughts, questions or concerns about HELOCs? Let us know in the comments!

The post What Is a Home Equity Line of Credit (HELOC)? appeared first on ZING Blog by Quicken Loans.

from Updates About Loans https://www.quickenloans.com/blog/home-equity-line-credit-heloc

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aaronsniderus · 5 years

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Here’s the Difference Between Federal and Private Student Loan Consolidation

Most college graduates leave school with a number of different student loans, racked up throughout their years of study. Each of these loans can come with different terms, payments, servicers and statements. The sheer amount of numbers and other information can be difficult to track.

If you feel overwhelmed with managing your student loan debt, don’t panic — you do have options. One way to make student loans easier to deal with is through federal and private student loan consolidation.

When you consolidate your debt, you combine all those loans into one. You do this by taking out a new loan for the amount of the balances of the existing loans, use the newly borrowed money to repay all the older debt, and then focus on repaying your one new loan.

This simplifies your financial situation and makes your debts easier to keep track of. Other benefits of consolidation could include securing more favorable interest rates (if you also refinance) and lower monthly payments (by extending your repayment term).

Federal and private student loan consolidation: What you need to know

Before you choose to consolidate your loans, examine your situation carefully to determine if this is the best course of action. This isn’t a solution that works well for everyone.

Consolidation doesn’t always result in a lower interest rate — even if you refinance — and lower monthly payments usually mean paying the loan over a longer period of time and spending more on interest.

You also need to know that the process is different for federal student loans and private student loans, especially if you’re trying to manage both kinds of loans. Private lenders may be able to consolidate both private and federal loans, but you cannot roll private loans into a new federal Direct Consolidation Loan.

And just because you can use refinancing to consolidate private student loans together with your federal loans doesn’t mean it’s a good idea either. Doing so eliminates any benefits or eligibility for federal repayment plans or loan forgiveness that you could have received from a federal program.

If you think you’ll need an income-driven repayment plan or want to pursue federal forgiveness options, it’s best not to mix federal and private loans.

Should I consolidate my federal student loans?

When you choose to consolidate your federal student loans, the government will combine all your separate debts into a single new loan, known as a Direct Consolidation Loan. You can apply once you graduate, otherwise leave school or become enrolled less than half-time; these events will trigger the start of your repayment.

Most federal student loans are eligible for consolidation, including subsidized and unsubsidized Direct loans, subsidized and unsubsidized federal Stafford loans, Direct PLUS loans and others. Although the Perkins loan program came to an end in September 2017, old Perkins loans are still eligible for consolidation, as well.

If you have a PLUS loan in the name of a parent, that loan cannot be transferred to the student during consolidation. Also, you can’t consolidate a defaulted loan until you make a repayment agreement with the loan’s servicer or agree to repay the new consolidated loan with one of the government’s eligible repayment plans.

Pros of consolidating federal student loans Direct Consolidation loans offer one single payment and potentially lower monthly payments. Consolidating federal loans is free via the federal government. Beware of companies which offer to help you consolidate federal student loans for a fee. No credit check is required to consolidate federal student loans, and you can apply online.

On the other hand, if you’re only interested in simplifying your situation, consider finding other ways of tracking your debt and managing repayment. That’s because Direct Consolidation Loans have drawbacks, too.

Cons of consolidating federal student loans A lower monthly payment means paying the loan over a longer period of time, which will cost you more money due to interest charges. When you consolidate your federal student loans, you lose the ability to strategically target your highest interest and/or highest balance loans using a method such as the debt avalanche or debt snowball. Federal consolidation doesn’t result in a better interest rate. Rather, the new rate is a weighted average of all the interest rates on your student loans, rounded up to the nearest one-eighth of a percentage point. Some federal consolidation loans may come with higher interest rates than private loans. For example, the average interest rate for Direct unsubsidized loans for graduate or professional students is 6.6%, while some student loan refinancing lenders offer rates below 3% if you qualify. That difference can really add up over time — you can check our refinancing calculator to see how much.

Be sure to explore all your options and weigh which benefits — those from Direct Consolidation loans or those from other strategies, such as refinancing — will help you the most.

Should I consolidate my private student loans?

While private student debt isn’t eligible for federal loan consolidation, you can still consolidate your private loans by refinancing with a private lender. Requirements and eligibility will vary from one financial institution to another.

Some private lenders may require you borrow a minimum amount. Some might use different criteria to evaluate your creditworthiness than others. It’s best to reach out to individual lenders to ask for their specific rules around eligibility. You can compare the results to determine what might be a good fit for you.

Some of the benefits and drawbacks of consolidating your private student loans are similar to those for consolidating federal loans:

Pros of consolidating private student loans You may benefit by creating an easier-to-manage financial situation, getting better terms or securing lower monthly payments. One big benefit of consolidating private student loans through refinancing is potentially securing a much lower interest rate. Your rate will be based on your creditworthiness or that of a cosigner. If your credit score has significantly improved from the time you took out your loans, or you have built a solid income and employment history, you’re more likely to get a low rate that could make refinancing a smart financial move. Cons of consolidating private student loans When considering consolidation, keep in mind whether you’re also extending the repayment term. Again, with more payments comes more interest. While there’s no cost to originate a federal Direct Consolidation Loan, some private lenders will charge an origination fee. A credit check is required to consolidate private student loans via refinancing, which may be a downside, depending on your credit history.

Again, it’s important to evaluate all your options before making a decision.

Consolidation vs. refinancing

As you probably noticed, consolidating private student loans is generally done by refinancing. However, you don’t necessarily have to consolidate in order to refinance. You can cherry-pick just the loans that would save you money by refinancing, while leaving other debt (perhaps including your federal loans) as they are.

This might make more sense if you have fewer loans and just one has a very high interest rate. You can refinance to a lower rate and maintain the original benefits and rates on all your other loans.

Remember that the federal government will not refinance your loans — they only offer Direct Consolidation loans. Private lenders will refinance both federal and private student loans.

If you want to compare the immediate benefits of Direct Loan consolidation vs. private consolidation and refinancing for your situation, check out the calculator below:

Consolidation vs. Refinancing CalculatorStep 1: Current loan infoFederal student loan balanceAverage interest rateCurrent monthly paymentStep 2: Refinancing infoNew interest rateNew loan term (yr)15 57101520Total interest paidMonthly paymentInterest ratePayoff date

CurrentConsolidationRefinancingTotal amount paid———Monthly payment———Interest rate———Payoff date———

Consolidating your federal student loans through the Direct Loan Consolidation program would set your new interest rate at —, slightly higher than your current rate of —. If you chose to remain on the standard repayment plan, you would pay — and would finish paying off your loans in —. If you refinanced your student loans, with a — and 15 year term, you would pay — and pay off your loans by —.Refinancing is the only way to lower your interest rate but you may lose some of the safeguards associated with having federal loans, so make sure you are fully educated on the decision by reading our recommended resources below:Consolidation vs. Refinancing Student Loans: Which Is Right for You?6 Best Banks To Refinance Your Student LoansShould You Refinance Your Federal Student Loans?

Student loan refinancing rates as low as % APR. Check your rate in 2 minutes.

TotalMonthlyCurrent

CurrentConsolidation

ConsolidationRefinancing

Refinancing$0

Again, just like with consolidation, you may not want to refinance any federal loans because you’ll lose your eligibility for government-backed repayment plans. But if you don’t plan to use those programs and can financially benefit by refinancing to a lower interest rate, this may be a viable option for you.

Bottom line on federal and private student loan consolidation

While consolidating student loans may seem like an attractive option, there are many factors to consider in determining if it’s the right move for you. Make sure you ask the right questions and weigh all the pros and cons before deciding, so you can pay your student loans off as quickly and economically as possible.

Julie Evans contributed to this report.

Interested in refinancing student loans? Here are the top 6 lenders of 2019!

LenderVariable APREligible Degrees Check out the testimonials and our in-depth reviews! 1 Important Disclosures for SoFi. SoFi Disclosures Student loan Refinance:

Fixed rates from 3.890% APR to 8.074% APR (with AutoPay). Variable rates from 2.500% APR to 7.115% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.500% APR assumes current 1 month LIBOR rate of 2.50% plus 0.00% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org) 2 Important Disclosures for Earnest. Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.50% APR (with Auto Pay) to 7.27% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 17, 2019, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 04/17/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.

3 Important Disclosures for Laurel Road. Laurel Road Disclosures

FIXED APR Fixed rate options consist of a range from 3.75% per year to 5.80% per year for a 5-year term, 4.25% per year to 6.25% per year for a 7-year term, 4.55% per year to 6.65% per year for a 10-year term, 4.85% per year to 7.05% per year for a 15-year term, or 5.30% per year to 7.27% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan). The monthly payment for a sample $10,000 loan at a range of 3.75% per year to 5.80% per year for a 5-year term would be from $183.04 to $192.40. The monthly payment for a sample $10,000 loan at a range of 4.25% per year to 6.25% per year for a 7-year term would be from $137.84 to $147.29. The monthly payment for a sample $10,000 loan at a range of 4.55% per year to 6.65% per year for a 10-year term would be from $103.88 to $114.31. The monthly payment for a sample $10,000 loan at a range of 4.85% per year to 7.05% per year for a 15-year term would be from $78.30 to $90.16. The monthly payment for a sample $10,000 loan at a range of 5.30% per year to 7.27% per year for a 20-year term would be from $67.66 to $79.16.

However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.

VARIABLE APR Variable rate options consist of a range from 2.75% per year to 6.30% per year for a 5-year term, 4.00% per year to 6.35% per year for a 7-year term, 4.25% per year to 6.40% per year for a 10-year term, 4.50% per year to 6.65% per year for a 15-year term, or 4.75% per year to 6.90% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.25% to 3.80% for the 5-year term loan, 1.50% to 3.85% for the 7-year term loan, 1.75% to 3.90% for the 10-year term loan, 2.00% to 4.15% for the 15-year term loan, and 2.25% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 2.75% per year to 6.30% per year for a 5-year term would be from $178.58 to $194.73. The monthly payment for a sample $10,000 loan at a range of 4.00% per year to 6.35% per year for a 7-year term would be from $136.69 to $147.77. The monthly payment for a sample $10,000 loan at a range of 4.25% per year to 6.40% per year for a 10-year term would be from $102.44 to $113.04. The monthly payment for a sample $10,000 loan at a range of 4.50% per year to 6.65% per year for a 15-year term would be from $76.50 to $87.94. The monthly payment for a sample $10,000 loan at a range of 4.75% per year to 6.90% per year for a 20-year term would be from $64.62 to $76.93.

However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.

All credit products are subject to credit approval.

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.

4 Important Disclosures for LendKey. LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.

5 Important Disclosures for CommonBond. CommonBond Disclosures

Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.

All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.49% effective March 10, 2019.

6 Important Disclosures for Citizens Bank. Citizens Bank Disclosures Education Refinance Loan Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of April 1, 2019, the one-month LIBOR rate is 2.50%. Variable interest rates range from 3.00% – 9.74% (3.00% – 9.74% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 3.89% – 9.99% (3.89% – 9.99% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled. Applicants with an Associate’s degree or with no degree must have made at least 12 qualifying payments after leaving school. Qualifying payments are the most recent on time and consecutive payments of principal and interest on the loans being refinanced. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a co-signer who is a U.S. citizen or permanent resident. The co-signer (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a co-signer will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply. Borrowers whose loans were funded prior to reaching the age of majority may not be eligible for co-signer release. Note: co-signer release is not available on the Student Loan for Parents or Education Refinance Loan for Parents. 2.50% – 7.27%1Undergrad & Graduate

Visit Earnest

2.50% – 7.12%3Undergrad & Graduate

Visit SoFi

2.53% – 8.79%4Undergrad & Graduate

Visit Lendkey

2.50% – 6.65%2Undergrad & Graduate

Visit Laurel Road

2.55% – 7.12%5Undergrad & Graduate

Visit CommonBond

3.00% – 9.74%6Undergrad & Graduate

Visit Citizens

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The post Here’s the Difference Between Federal and Private Student Loan Consolidation appeared first on Student Loan Hero.

from Updates About Loans https://studentloanhero.com/featured/federal-private-student-loan-consolidation-difference/

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aaronsniderus · 5 years

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Consolidation vs. Refinancing Student Loans: Which Is Right for You?

When you think about consolidating student loans, you’re probably thinking about a Direct Consolidation Loan involving federal student debt. But there are actually two different ways to combine your school debt, so you’ll need to decide on student loan consolidation vs. refinancing.

Both processes (consolidating and refinancing) combine multiple loans into a new one for easier repayment — but the similarities mostly stop there. Here’s a basic rundown of the differences between them, as you decide whether to consolidate or refinance student loans:

Direct Loan Consolidation is a process that combines only eligible federal student loans, and it doesn’t lower your interest rate. You do not need strong credit to qualify. Refinancing can combine both federal and private loans into one loan, and you may qualify for a lower rate which could lower your monthly payments. You or a cosigner will need strong credit to qualify.

Confused yet? Read more to learn what’s involved when you consolidate or refinance student loans.

Student Loan Consolidation vs. Refinancing

As noted, you have two options for combining your various student loans: Take out a Direct Consolidation Loan from the government or refinance student loans through a private lender.

While consolidation and refinancing are similar — they both combine your loans into one — they go about it in different ways. Let’s run through three differences between federal student loan consolidation and private student loan refinancing.

1. Types of loans that are eligible

Different loans are eligible for student loan consolidation vs. refinancing. Specifically, Direct Consolidation Loans are only available for federal student loans, such as Direct or FFEL Loans. Private student loans do not qualify for federal consolidation.

Refinancing, on the other hand, applies to both private and federal student loans. When you refinance, you combine one, some, or all of your old loans into a single new loan with a private lender. This lender could be a bank, an online lender, or a credit union. Because the new private loan replaces your old ones, you’ll essentially no longer have federal student loans.

2. Impact on your interest rate

Another key difference is that federal loan consolidation doesn’t lower your interest rate, but refinancing with a private lender can. In fact, federal consolidation could even slightly raise your interest rate.

When the government issues you a Direct Consolidation Loan, it takes the weighted average interest rate of all your loans and rounds up to the nearest one-eighth of a percent.

Refinancing with a private lender, however, can give you a new interest rate entirely. Depending in part on your creditworthiness and income, you could qualify for a significantly lower rate, saving you money over the life of your loan. You also have the option to choose a fixed rate or variable rate.

3. Repayment term options

When you consolidate your student loans, you’ll choose a new repayment plan. But Direct Consolidation Loans and private student loan refinancing each come with different options.

If you select federal loan consolidation, repayment terms range from 10 to 30 years, with the option to choose an income-driven repayment plan.

Income-driven repayment extends your term to 20 or 25 years, depending on the specific plan, and it caps your monthly payment amount at a percentage of your disposable income. At the end of the repayment term, any remaining balance will be forgiven.

If you refinance with a private lender, on the other hand, you have a few more options for repayment terms. Most lenders offer five, seven, 10, 15, and 20-year repayment plans. A shorter term might be good if you’re able to handle bigger monthly bills and want to get out of debt as fast as possible. However, if your goal is to lower your monthly payments, a longer repayment period could help you achieve that.

One thing to note is that private lenders might not be very flexible if you run into economic hardship. As mentioned, federal income-driven plans adjust your monthly payments based on your income, but most private lenders don’t offer such options. Still, there are some private lenders that will allow you to pause payments temporarily if you go back to school or experience financial hardship, including SoFi, CommonBond, Laurel Road, Earnest, and LendKey.

If your income is unstable, it might not be wise to refinance federal student loans with a private lender just yet; that way, you can keep access to federal deferment and repayment options. But if you’re confident about your ability to pay back your loan, refinancing could benefit you overall, especially if you can save money on interest.

Who should take out a Direct Consolidation Loan?

When does it make sense to take out a Direct Consolidation Loan? There are two main reasons to consolidate your federal student loans this way:

You want to simplify your monthly payments. Maybe you have so many different federal student loans and loan servicers that you’re having trouble keeping track. By consolidating, you’ll make one monthly payment and will no longer have to worry about multiple due dates. You need to get on an income-driven plan. Depending on the types of loans you have, you might need to consolidate them to qualify for an income-driven repayment plan.

For instance, Perkins Loans aren’t eligible for income-driven repayment unless you consolidate them first. After consolidating, you can apply for an income-driven plan that extends your loan term and adjusts your monthly bills based on your discretionary income.

When does it make sense to refinance your student loans?

As with federal student loan consolidation, you should consider refinancing with a private lender if you want to simplify your monthly payments. Beyond this, there are some other reasons why you may choose to refinance vs. consolidate your student loans:

You have a solid income and are confident you can make your student loan payments each month. You have a strong credit history and will be offered a competitive rate. Your loans have high interest rates, and you want to lower them with a new loan. You want to reduce the amount of time it will take to pay back your student loans, even if it means paying more each month. You want to choose a longer term to lower your monthly payments. You don’t need federal programs such as income-driven repayment or Public Service Loan Forgiveness. Is consolidation or refinancing better for you?

Both consolidation and refinancing have certain benefits and drawbacks, so deciding whether to consolidate or refinance comes down to your personal situation.

If your main goal is to simplify your federal student loan payments or get on an income-driven repayment plan, consolidation would be the right move. But if you have a steady income and a good credit score, refinancing with a private loan could get you better loan rates.

Just be certain you understand that if you refinance, you’re switching your federal loans for a private one, and you’ll lose those federal loan benefits mentioned above. You should also make sure you shop around for a good refinancing deal — doing a little research could save you a bundle.

There might also be a scenario when both options make sense: You could consolidate your federal loans to simplify your payments. Then, once you improve your creditworthiness, you could apply for refinancing to get a lower interest rate.

As long as you do your homework, you’ll be able to choose the solution that works for you.

Taylor Gordon contributed to this report.

Interested in refinancing student loans? Here are the top 6 lenders of 2019!

LenderVariable APREligible Degrees Check out the testimonials and our in-depth reviews! 1 Important Disclosures for SoFi. SoFi Disclosures Student loan Refinance:

3 Important Disclosures for Laurel Road. Laurel Road Disclosures

All credit products are subject to credit approval.

4 Important Disclosures for LendKey. LendKey Disclosures

5 Important Disclosures for CommonBond. CommonBond Disclosures

Visit Earnest

2.50% – 7.12%3Undergrad & Graduate

Visit SoFi

2.53% – 8.79%4Undergrad & Graduate

Visit Lendkey

2.50% – 6.65%2Undergrad & Graduate

Visit Laurel Road

2.55% – 7.12%5Undergrad & Graduate

Visit CommonBond

3.00% – 9.74%6Undergrad & Graduate

Visit Citizens

The post Consolidation vs. Refinancing Student Loans: Which Is Right for You? appeared first on Student Loan Hero.

from Updates About Loans https://studentloanhero.com/featured/consolidation-vs-refinancing-student-loans-which-is-right-for-you/

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aaronsniderus · 5 years

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American Education Services (AES): Information and Resources for Borrowers

If you’re going to take out loans to pay for college, you may soon become very familiar with American Education Services (AES). As one of the largest student loan servicers in the country, AES handles both federal and private loans for millions of students each year.

About American Education Services and AES student loans

AES was initially founded by the Pennsylvania Higher Education Assistance Agency (PHEAA) to help service loans through the (now defunct) Family Federal Education Loan Program (FFELP).

AES — known formally as “American Education Services — Pennsylvania Higher Education Assistance Agency” — is one of four primary federal student loan servicers (the other three being Nelnet, Navient and Great Lakes, which is owned by Navient but operates independently).

Note that you don’t get to choose your federal service provider. Instead, the government assigns you one.

AES and PHEAA also run the websites aessuccess.org, You Can Deal With It, and EducationPlanner.org in order to educate student borrowers on both the loan application process and their repayment options after graduation. Each provides various resources to help borrowers successfully manage education expenses.

As a student loan servicer, AES functions much like the others. While they don’t grant loans themselves, they’ll handle the monthly billing of your loan payment and field any repayment- or consolidation-related questions and concerns you may have about your loans.

Making AES student loan payments

American Education Services offers a variety of ways for borrowers to make student loan payments, including traditional options like paying via mail or telephone, and newer ones like paying online or on your mobile phone.

Students with loans serviced by AES can go to their website and sign up for an online account for instant access to their loans and a library of resources.

Through the online portal, borrowers can arrange to make a monthly one-time payment, and even schedule up to eight payments (in advance) every 60 days.

You can also take advantage of the direct debit program. This allows borrowers to automatically debit their payment (auto-pay) from a validated checking account and potentially qualify for an interest rate reduction for doing so.

AES student loan repayment options

Those having trouble making federal student loan payments can take advantage of AES sister company FedLoan Servicing to make a plan.

Some borrowers work with AES directly by calling customer service to discuss pausing their loan through deferment or forbearance. But there are other repayment options available through American Education Services, including:

Graduated payment plan, where borrowers make smaller payments at first, with the amount increasing over time as the borrower’s income (hopefully) rises as well. Income-sensitive repayment plans, where the repayment amount is set based on net monthly income. 25-year Extended plan, which draws the typical 10-year repayment term out to 25 years, decreasing the monthly payments but increasing the total interest cost.

Borrowers with federal loans may also qualify for a variety of income-driven repayment and forgiveness programs.

AES also helps borrowers with their private student debt, which it refers to as “alternative loans.” AES may not have as many options available for private loan repayment, but the website suggests calling customer service to discuss any issues in the event of financial difficulty.

It’s worth noting here that AES also works with borrowers seeking to consolidate or refinance their loans into a lower interest rate. Although it may be easier to consolidate with your provider directly, you can also look into refinancing your loans with a private lender. An extra benefit to refinance is that you might be able to get a lower interest rate, saving you a bundle of money, though you’ll need to shop around for the best deal and possibly find a cosigner if your credit isn’t strong.

Challenges with AES

Student loan servicers are often the subject of complaints by borrowers who feel they didn’t get the help they needed. According to a Consumer Financial Protection Bureau (CFPB) ombudsman report, in terms of the volume of complaints against the federal loan servicers, AES came in second to Navient (albeit a distant second), with almost 2,000 customer complaints between September 2016 and August 2017 (Navient had more than 10,000).

Based on the Consumer Financial Protection Bureau data, the top two complaints were receiving bad information about a loan and issues with how payments are handled.

Note that you can’t change your federal student loan service provider unless you consolidate or otherwise refinance your loans. Your federal loan could, however, be transferred to another provider by the government.

AES Contact Information

Office Hours: 7:30 AM – 9 PM (EST) Phone: 1-800-233-0557 Email

Mailing address for general correspondence: American Education Services P.O. Box 2461 Harrisburg, PA 17105-2461

You can also contact AES via Facebook or Twitter.

Julie Evans contributed to this report.

Interested in refinancing student loans? Here are the top 6 lenders of 2019!

LenderVariable APREligible Degrees Check out the testimonials and our in-depth reviews! 1 Important Disclosures for SoFi. SoFi Disclosures Student loan Refinance:

3 Important Disclosures for Laurel Road. Laurel Road Disclosures

All credit products are subject to credit approval.

4 Important Disclosures for LendKey. LendKey Disclosures

5 Important Disclosures for CommonBond. CommonBond Disclosures

Visit Earnest

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2.53% – 8.79%4Undergrad & Graduate

Visit Lendkey

2.50% – 6.65%2Undergrad & Graduate

Visit Laurel Road

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3.00% – 9.74%6Undergrad & Graduate

Visit Citizens

The post American Education Services (AES): Information and Resources for Borrowers appeared first on Student Loan Hero.

from Updates About Loans https://studentloanhero.com/featured/american-education-services-aes/

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aaronsniderus · 5 years

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When Can You Refinance Student Loans?

Maybe you’ve heard the buzz surrounding student loan refinancing — that you could save money in interest and merge your loans into one simple monthly payment.

Some private refinancing companies are rolling out unique perks to their customers. SoFi, for example, offers unemployment protection and a cool entrepreneurship program. For socially-conscious borrowers, CommonBond is a lender who funds educational causes through its Pencils of Promise program.

As you see, there can be a lot of benefits (but some drawbacks too). So when can you refinance student loans?

When can I refinance student loans?

For eligible candidates with good credit and a stable income, the sooner you refinance, the better. This is because of the potential interest savings.

Let’s say you have a Graduate PLUS loan with an interest rate of 7% and a $50,000 balance. If you refinance to 4.99% over a 10-year repayment period, you could save roughly $50 a month, according to our refinancing calculator. In other words, you’d save more than $6,000 in interest over the life of the loan.

With that extra cash you could put more money toward principal payments, save for a rainy day, or invest for retirement.

Even if you just graduated, you could benefit from refinancing. For example, some lenders — including SoFi and CommonBond mentioned above — honor grace periods, so if you just graduated and don’t have to pay your loans right away, you could benefit from a lower interest rate.

The catch? Most refinancing companies want you to have a job lined up already and sufficient income to pay back your loans — or else to have a cosigner with strong credit. If you’re lucky enough to score a job right after graduation, you could save money on interest before your first payment is even due.

Some refinancing companies, also want to see a positive repayment history before you are eligible for refinancing, so you may not qualify right after graduation. Likewise, most (but not all) refinancing companies require you to complete your degree in order to be eligible. An exception is Citizens Bank, though if you have an associate’s or no degree, then they require 12 on-time payments before you refinance.

Once you decide refinancing is for you, and you meet the requirements for the lender you’ve selected, then the sooner you act, the better, so as to maximize any interest savings.

What you need to be able to refinance

While knowing when you can refinance student loans is pretty straightforward, you’ll also need to answer the question “Can you refinance a student loan?” Here are a few key factors to consider when looking to refinance your student loans.

Good credit: You’ll likely need a credit score of 700 or higher in order to be eligible to refinance your student loan, unless you have a cosigner. History of on-time payments: If you are always on time with your monthly payments (student loans, credit cards, etc), you’re more likely to be eligible to refinance because you seem like less of a risk to lenders. Enough income to pay your debts: You should be making more money than you have to repay in debt each month. The lower debt-to-income ratio you have, the better. Employment history: Having a stable job with a stable income can make you appear more desirable to a lender because you’re more likely to make payments on time, every time. Savings account(s): A lender may look to see if you have savings in order to ensure you have something to cover your debts if your income suddenly decreases. Things to consider before refinancing: pros and cons

“When can you refinance student loans?” is an important question, but perhaps more crucial is whether refinancing is a good fit for your particular situation.

Although refinancing may seem like a sweet deal, there are drawbacks. For instance, if you have federal student loans, you’ll lose the option to pursue benefits such as loan forgiveness or an income-driven repayment plan.

What makes this all the more serious is that the process of refinancing is irreversible. You won’t be able to return to your old payment plan with your old terms, and you will forfeit federal student loan protections. On the other hand, if you only have private student loans to begin with, refinancing may be less of a risk.

Here are four downsides to refinancing your student loans:

Your debt will take longer to pay off: If your loan term is extended, you’ll be making payments for a longer period of time. For example, many refinancing companies offer new terms of five to 20 years. You won’t necessarily save more money with lower payments: An extended term with a lower monthly payment can sometimes be more costly because you may end up paying more in interest over the span of the loan. You will no longer be eligible for federal government programs: If you refinance federal student loans, you will no longer be able to select opt-in income-driven repayment plans that cap your monthly payment at a percentage of your disposable income. You also won’t be able to access federal forgiveness programs, such as Public Service Loan Forgiveness. Your credit score can be impacted (a little): A hard credit check may be needed to review your credit, which means your score can drop a few points. When can’t I refinance student loans?

If you’re still in school, you may not be eligible for refinancing until you graduate. One of the very few lenders that offer student loan refinancing in such a case is Earnest, but it requires students be in their last semester of college to qualify.

As mentioned, you’ll also need to have solid credit and a strong, stable income (as dictated by the lender). If you don’t meet this threshold and don’t have a cosigner to bridge the gap, then you might be better offer exploring income-driven repayment for your federal loans — an option that could lead to payments as little as $0 if your income is low enough.

Of course, if you are currently in default on your student loans, you probably won’t be eligible for student loan refinancing. In that case, you’d want to look into other options first.

When should I refinance student loans?

So you know refinancing sooner rather than later is a good option. You know what you may be giving up if you pursue this option. But is it the right time for you to refinance?

Before you begin the process of refinancing, start preparing first. There are a variety of ways to check your credit report and credit score for free. If your credit is weak and you lack a cosigner, then you may want to work on building credit, or improving damaged credit, before trying to refinance.

You’ll also want to shop around for the best lender and the best deal. Fortunately, some online lenders (including those on this list) offer instant rate quotes to give you an idea of what kind of rate to expect. Do your research first before refinancing.

And even as you investigate refinancing, make sure to look at all of your repayment options to see what’s best for you and your financial situation.

Carissa Chesanek contributed to this report.

Interested in refinancing student loans? Here are the top 6 lenders of 2019!

LenderVariable APREligible Degrees Check out the testimonials and our in-depth reviews! 1 Important Disclosures for SoFi. SoFi Disclosures Student loan Refinance:

3 Important Disclosures for Laurel Road. Laurel Road Disclosures

All credit products are subject to credit approval.

4 Important Disclosures for LendKey. LendKey Disclosures

5 Important Disclosures for CommonBond. CommonBond Disclosures

Visit Earnest

2.50% – 7.12%3Undergrad & Graduate

Visit SoFi

2.53% – 8.79%4Undergrad & Graduate

Visit Lendkey

2.50% – 6.65%2Undergrad & Graduate

Visit Laurel Road

2.55% – 7.12%5Undergrad & Graduate

Visit CommonBond

3.00% – 9.74%6Undergrad & Graduate

Visit Citizens

The post When Can You Refinance Student Loans? appeared first on Student Loan Hero.

from Updates About Loans https://studentloanhero.com/featured/refinance-student-loans-how-soon-can-you/

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aaronsniderus · 5 years

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Can You Settle Student Loan Debt for Less Than You Owe?

It’s safe to say that none of the millions of student loan borrowers with defaulted debt ever thought they would wind up in such a precarious situation when they originally borrowed their loans. No one starts out intending to end up in student loan settlement.

The very real threat of debt collectors knocking at your door, wage garnishment, offset taxes — or worse, legal action — are consequences that can pose major personal and financial damage if you’ve let your loans go unpaid.

We often hear about credit card debt settlement, but is student loan settlement an option too?

In a word, yes. Achieving a settlement on student loans is possible, and borrowers can often arrange to pay less than what they originally owed. But it does come with some considerations, and there are alternatives that might be a better approach if you find yourself in default.

Student loan settlement: Can it be done?

If you’re current on your loans (in other words, not in default) or if you have enough cash in the bank to pay down your debt, you won’t be eligible for settlement. It is only available if you’re in default on your student loans.

In general, the prime time to pursue debt settlement is after you’ve gone into default (and the collections process has begun), but before any legal moves have been made.

Before going any further, though, note that a loan settlement isn’t the same thing as loan forgiveness or discharge, where your loan balance is canceled under special circumstances. With a settlement, your lender is essentially striking a deal to “settle” for a lower amount than what you originally borrowed if it means resolving your debt without the need for collections, court judgments or other actions.

If you go for a federal student loan settlement (rather than one of alternatives we’ll discuss later in this post), then the collections agency used by the Department of Education will be authorized to offer these three standard payment options:

Option #1: Pay all your current principal balance, plus any accrued unpaid interest, with all future collection surcharges and fees waived Option #2: Pay the total principal with half of your interest balance (the other 50% is forgiven) Option #3: Pay 90% of the total principal and balance owed (10% discounted)

If you’re in default, you might be happy with any reduction of your debt at all. But note that with the above options, you’ll generally be expected to pay your student loan debt settlement in one lump sum, usually 90 days from the settlement agreement date.

In some instances, the Department of Education may allow you to pay your settlement balance in monthly installments (just like you would with regular monthly loan repayments), but they’ll typically need to be paid within one fiscal year.

Even with collection fees waived (option No. 1) or a percentage of your principal/interest deducted (options Nos. 2 and 3), that’s still a lot of money to pay at once. You may also owe taxes on any unpaid interest forgiven as part of a debt settlement.

Unless you’ve received a sudden windfall of cash, you’d probably need to borrow money from friends or family. Or you could raid your 401(k) savings, but this is often a bad idea.

While the above refers to federal loans, which are far more common, know that private student loans can also be settled. Here, however, options can vary from lender to lender, so the terms, conditions and amounts you may be able to negotiate could be quite different from those available for federal loans.

When you can’t settle student loan debt

In some cases, student loan debt can’t be settled. Specifically, if any of the following apply to you, you could be ineligible.

1. You’ve deliberately defaulted on your loans just to settle

Also called “strategic default,” this is a form of fraud that can land you in bigger trouble. By holding off on your payments, it sends the message to your lender that you’re forcing them to settle.

If you hold off making your payments and become delinquent with the intent to go into default on purpose, you’ll lose the chance to settle, and you’ll still owe your entire balance as interest continues to accrue.

2. A court judgment has already been issued against you

Once lawsuits have been filed, judgments have been made, and you’ve been ordered to pay your lender what you owe, it’s too late in the game to request debt settlement.

3. You’ve come into a disproportionately large sum of money

Lenders won’t typically approve a settlement if you have enough cash to make your loan payments or pay your debt balance in full.

If, for example, you received an inheritance, won the lottery or were given a big raise at work, it’ll be more difficult to prove the financial hardship necessary to seek out a debt settlement to begin with.

How to settle student loan debt

A collection agency, whether through the U.S. government or private lender, might not settle a defaulted student loan debt if it’s less than the amount that the lender is likely to receive over the life of the original loan. Because of this, negotiation is essential during settlement talks.

Do you go it alone or hire a student loan attorney? While you can navigate through the process on your own, a lawyer can be a great asset and can handle the negotiation. The fees and rates the attorney charges may still be worth the cost if they can get you a good settlement, and you could be able to find low-cost or pro-bono legal aid options.

When a settlement is reached, always make sure to get it in writing. Here too, it’s recommended to have an attorney review the contract to ensure it’s legally binding.

This will also guarantee that your lender fulfills their end of the settlement, too, which should include a final statement indicating that you’ve paid off your debt in full. Ensure that your agreement includes all of the debts you’re intending to settle and that no loans are omitted.

Alternatives to student loan settlement

While student loan settlement can be helpful in some circumstances, it’s definitely not for everyone. If you’re in danger of falling behind on your student loan payments, consider these alternatives:

1. Sign up for an income-driven repayment plan

If you have federal loans and can’t afford your current payment, you may be eligible for an income-driven repayment (IDR) plan. Under these plans, the government extends your repayment term and caps your monthly payments at a percentage of your discretionary income. Some people qualify for a payment as low as $0.

2. Enter into deferment or forbearance

If you’re facing a financial hardship, such as unemployment or a medical emergency, you may qualify for a deferment or forbearance. With this approach, you can postpone making payments without entering default, giving you time to get back on your feet.

Federal loans and some private loans offer forbearance options. Contact your lender to see if you are eligible for any financial hardship programs.

3. Look into student loan forgiveness

If you have federal student loans, there are some situations where you may qualify for student loan forgiveness or discharge.

There are various forgiveness options for both federal and private student loans. There are also possibilities for discharge — for instance, if you became totally and permanently disabled, you could be eligible for Total and Permanent Disability Discharge, with the remaining balance of your student loans forgiven.

4. Consider student loan refinancing

If you can’t afford your payments, but you can afford a smaller monthly bill, another option is to refinance your student loans.

With refinancing, you work with a private lender to take out a loan for the amount of your current debt. The new loan can have different repayment terms, including length of repayment and minimum payment. If you opt for a longer loan term, you’ll pay more in interest, but you could significantly reduce your monthly payment. You might also qualify for a lower interest rate.

Note, however, that refinancing requires strong credit to be eligible (or a creditworthy cosigner), and there are some downsides.

Impact and consequences of student loan settlement

A student loan debt settlement can have a negative impact on your credit report and FICO score, since it indicates that you’ve gone into both delinquency and default on a loan. However, a settlement may be the lesser of two evils and doesn’t affect your credit score as badly as a collection or judgment might.

In addition to building a budget and paying down your student loan balance on time, make sure you’re aware of how much you owe, how many loans you have, the total balances for each, and what your terms and interest rates are.

By keeping track of your debts, you can avoid falling behind on your loans, so that default and student loan debt settlement never enter the picture.

Kat Tretina contributed to this report.

Interested in refinancing student loans? Here are the top 6 lenders of 2019!

LenderVariable APREligible Degrees Check out the testimonials and our in-depth reviews! 1 Important Disclosures for SoFi. SoFi Disclosures Student loan Refinance:

3 Important Disclosures for Laurel Road. Laurel Road Disclosures

All credit products are subject to credit approval.

4 Important Disclosures for LendKey. LendKey Disclosures

5 Important Disclosures for CommonBond. CommonBond Disclosures

Visit Earnest

2.50% – 7.12%3Undergrad & Graduate

Visit SoFi

2.53% – 8.79%4Undergrad & Graduate

Visit Lendkey

2.50% – 6.65%2Undergrad & Graduate

Visit Laurel Road

2.55% – 7.12%5Undergrad & Graduate

Visit CommonBond

3.00% – 9.74%6Undergrad & Graduate

Visit Citizens

The post Can You Settle Student Loan Debt for Less Than You Owe? appeared first on Student Loan Hero.

from Updates About Loans https://studentloanhero.com/featured/student-loan-debt-settlement-possible/

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aaronsniderus · 5 years

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How to Tell If That Student Loan Debt Relief Letter Is Legit

It’s not unusual for student loan borrowers to receive letters promising debt relief. Some may be desperate enough over their debt to respond — but student loan borrowers beware: Some college debt relief offers could be scams, eager to charge you outrageous fees or worse.

If you’ve gotten a student loan debt relief letter (or text, email, or phone call), here are some red flags to look for as you determine whether the offer is legitimate or not.

Signs your student loan debt relief letter might be a scam

Caution is a good watchword to have when evaluating promises of student debt relief. Consider these seven signs of danger — if any of them show up in an offer you’re looking at, it could be worth doing some deeper research to avoid problems down the road.

1. You’ve never heard of the company or program

When it comes to federal loans, you should be dealing with your student loan servicer or getting your information from the Federal Student Aid website, run by the Department of Education.

For private loans, meanwhile, you should be dealing directly with your lender or servicer regarding any programs they have available — all of which should be clearly explained on the servicer’s website.

If the communication is from a third-party company that you’ve never heard of, or if it references a program you’re unfamiliar with, be suspicious of their student loan relief offers.

2. You’re pressured to ‘act fast’ because of new laws or limited-time offers

Since a new administration has taken office, scammers may tell you a benefit like Public Service Loan Forgiveness (PSLF) is going away and you need to act fast to take advantage of it. Be wary and do your own research — in the case of PSLF, for example, the program is still open to eligible applicants, and you can apply for free without forking over cash to a third-party company.

While there are some deadlines associated with federal student loan programs where you do need to “act now” — for example, recertifying income-driven repayments on an annual basis — you would likely be made aware of these deadlines well in advance.

Legitimate programs should always be open to those who qualify. Companies that contact you to say that an offer will only be available for a limited time are often scams.

3. You are asked to pay a fee upfront for services

Applying to consolidate your federal loans is always free. Any company that attempts to have you pay for this service is not legitimate. While some private companies may charge you to refinance your student loan debt, many do not — and those that do will charge any fees at closing, not during the application process.

4. You’re told your student loan balance can be canceled or reduced

The only way to reduce your student loan balances is to make payments on your loans.

While some federal student loans may be eligible for forgiveness, there are strict criteria for participating, and the balance is forgiven once those criteria have been met — not at the time of refinancing. Any company that promises that they can reduce the amount you owe is almost certainly lying.

5. The email or letter looks like an advertisement

A legitimate letter will come in an envelope, have a letterhead and clearly outline terms of eligibility without any pressure sales or fancy gimmicks. The use of postcards, excessive exclamation points and hyperbolic language are all potential red flags.

Likewise, if you receive an email, make sure to check where it comes from. Emails sent from free online services like Hotmail, Gmail and Yahoo — or anywhere other than the organization offering the debt relief — are suspect and should be treated cautiously.

6. You’re unable to find reviews of the company and its services

Student Loan Hero offers reviews of many reputable student loan refinancing companies. Similar reviews are also available from other sources.

If you’re considering refinancing your student loan debt, you should be able to easily obtain as much information about the company as you need to feel comfortable entrusting it with your financial information. Determining whether a company has Better Business Bureau (BBB) accreditation is another way to put your mind at ease regarding an organization’s legitimacy.

7. You’re asked to give them power of attorney or your FSA ID

Your FSA ID code is akin to a written signature. The Department of Education and its affiliates will not ask for this ID. Don’t give it to a third party, even if they promise to wipe your slate clean of student loans. With this ID and your password, changes can be made to your account.

Debt relief scammers may also ask for the power of attorney, which gives them permission to make account changes on your behalf. Rather than doing what they promise to do (like pay off your bill), they may change the contact information on your account so you don’t get unpaid bill notices. This is bad news — you think they’ve gotten your loan forgiven because bills aren’t showing up, but in actuality, your account is in default.

What if you’re already a victim of a debt relief scam?

Don’t panic. Change the passwords to your accounts so the company can no longer log in. Contact your loan servicer to remove any power of attorney documents in your file. Revoking power of attorney will take away their ability to make decisions for you.

If possible, order a stop payment on checks or wire transactions and dispute credit card purchases with the fraudsters.

Don’t wait until you’re desperate to seek help

One of the reasons companies running student loan debt relief scams are able to stay in business is that they approach those who are scared or desperate for relief from student loan debt.

If you’re overwhelmed, one of the best things you can do is to be proactive. This means contacting your student loan servicer as soon as you are experiencing challenges with the repayment process. Often, there is a lot that your servicer can do to help you get your payments under control without having to resort to another entity, particularly if you have federal loans.

Even if your current servicer does not have a program that’s a good fit for you, the sooner you know that, the sooner you can begin to compare and contrast the offerings of legitimate student loan refinancing companies so you can seek relief from student loan debt.

rather than waiting for a company to contact you, you stand a better chance of ending up with a legitimate student loan debt relief company by initiating the process yourself and conducting your own research. You will also likely find a program that it will address your current financial needs.

Taylor Gordon contributed to this report.

Interested in refinancing student loans? Here are the top 6 lenders of 2019!

LenderVariable APREligible Degrees Check out the testimonials and our in-depth reviews! 1 Important Disclosures for SoFi. SoFi Disclosures Student loan Refinance:

3 Important Disclosures for Laurel Road. Laurel Road Disclosures

All credit products are subject to credit approval.

4 Important Disclosures for LendKey. LendKey Disclosures

5 Important Disclosures for CommonBond. CommonBond Disclosures

Visit Earnest

2.50% – 7.12%3Undergrad & Graduate

Visit SoFi

2.53% – 8.79%4Undergrad & Graduate

Visit Lendkey

2.50% – 6.65%2Undergrad & Graduate

Visit Laurel Road

2.55% – 7.12%5Undergrad & Graduate

Visit CommonBond

3.00% – 9.74%6Undergrad & Graduate

Visit Citizens

The post How to Tell If That Student Loan Debt Relief Letter Is Legit appeared first on Student Loan Hero.

from Updates About Loans https://studentloanhero.com/featured/student-loan-debt-relief-letter-legit/

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aaronsniderus · 5 years

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Choosing Between Colleges? Try a Cost-Benefit Analysis

From dorm rooms to cafeterias, student clubs to study-abroad programs, you’ve probably considered a ton of factors while trying to pick a college. But have you thought about the financial costs and benefits of college?

If you’re trying to choose a school for next year, conducting a cost-benefit analysis of your options could help. After all, tuition is more expensive than ever, so you’ll want to make sure you get a solid return on your investment.

Before National College Decision Day is upon you, take the time to weigh the economic benefits of a college education at your schools against their overall cost.

How to weigh the financial costs and benefits of college

The concept of a cost-benefit analysis is simple. You’re spending a certain amount of money, time and energy on college, so you want to make sure the rewards are worth the investment.

“When deciding on your school of choice, weighing the cost of attendance with the resulting benefit (return on investment) is imperative,” said Riley Adams, a certified public accountant and founder of the personal finance website Young and the Invested. “Not doing so can run the risk of carrying an unaffordable debt burden without the matching career outcomes resulting from your choices.”

Of course, a college education also comes with intangible rewards, like personal growth, learning and transformation. But since tuition costs have been steadily rising for decades, we’ll focus on the financial aspects of this decision.

Compare your costs of attendance

To start your cost-benefit analysis, estimate the costs of attendance for each school you’re considering.

Along with tuition and fees, remember to list various living expenses, like room and board, meal plans, books and any other costs involved. While one school might have lower tuition rates than another, your cost of attendance could shoot up if, for example, it’s located in an expensive big city versus a more affordable rural area.

Make sure to include all the supplemental costs that go into attending a school, so you can make an apples-to-apples comparison among your choices.

Take financial aid and student loans into account

Once you’ve tracked down the cost of attendance for each school, take a closer look at your financial aid offers. Your financial aid package might include grants and scholarships, which you don’t have to pay back, along with student loans, which you do.

That last point may seem obvious, but it’s key to keep in mind that although student loans are often framed as part of your “award,” they come out of your own pocket, and — because of interest — you’ll very likely end up paying more than you initially borrowed.

“Consider the full cost of a loan,” advised Sabrina Manville, cofounder of Edmit, a company that helps families plan financially for college. “A benchmark we use is simple: Don’t take more in loans over four years than you’ll make in your first year out of college. This ensures you will be able to comfortably pay them back after interest is added on.”

Examine the details of your financial aid package at each school so you have a clear sense of how much each will cost you, both today and in the future, and keep applying for grants and scholarships to reduce the amount you’ll have to borrow in student loans.

Consider graduation and retention rates

Once you have a deeper understanding of the costs of college, it’s time to take a look at the benefits. One way to measure a school’s value is by looking at its graduation and retention rates. Graduation rates suggest how many students earn their degree, while retention gives insight into how many students return year after year — and how many transfer elsewhere or drop out.

“Graduation rates will likely differ between your school selections and should be used as a weighting on your choice,” said Adams. “If a school costs more and has a lower graduation rate on average, this should drop the school’s attractiveness because the cost heads higher, and the risk of not graduating to finance the possible cost increases as well.”

In fact, students who take on student debt but don’t finish college tend to have lower net worth down the line than those who never went to college at all. So if a school on your list has an alarmingly low graduation or retention rate, this could be a red flag about the value of its education.

Dig up data on job placement, incomes, other outcomes

Perusing some post-graduation data will also give insight into the economic benefits of a college’s education. What’s the employment rate for graduates, particularly for those who majored in the subject you wish to study? Do they go on to high-paying jobs?

“Look at the average starting and mid-career salaries of people in your major who graduated from the same school,” said Stacy Caprio, blogger at financial markets website Fiscal Nerd. “Calculate how long it would take the average graduate of your college and major to make back what you’ll be paying for tuition, and then decide if that sounds reasonable to you or not.”

Of course, statistics are only a benchmark — they won’t necessarily describe your individual experience.

“If graduation rates or earnings are lower at one school, it doesn’t mean you won’t graduate and will live a life of debt and unhappiness,” said Manville. “But it means that maybe that choice could be considered riskier — positive outcomes are more rare than in the comparison school.”

Outside of the data, you might also speak to alumni about their experiences, or talk with the career services office to find out what kind of support it offers students. Underemployment is a problem for many college graduates, so it’s helpful to think about career plans before you attend, in order to ensure you’re fully reaping the economic benefits of a college education.

Weigh both costs and economic benefits of your college education

Before spending your savings or borrowing loans for college, consider the return on your investment. While money isn’t the only factor that matters when choosing a college, you also don’t want to take on burdensome debt that’s difficult to pay off.

“Running a cost-benefit analysis in deciding what college to choose can save thousands, likely tens of thousands of dollars, in both the short term and long term,” said financial coach Kristine Stevenson. “Creating a framework that takes the emotion out of the decision-making process will help eliminate costly mistakes.”

While you don’t have to go with the cheapest school, you want to make sure you’re comfortable with the cost and confident about the education you’ll receive. That way, you can find an affordable school that will fit your preferences and help you achieve your goals.

Need a student loan? Here are our top student loan lenders of 2019!

LenderVariable APREligibility 1 Important Disclosures for Ascent. Ascent Disclosures

Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.

Ascent rates are effective as of 05/01/2019 and include a 0.25% discount applied when a borrower in repayment elects automatic debit payments via their personal checking account. Competitive rates calculated monthly at the time of loan approval. Ascent Tuition Cosigned Loan: Variable rate loans are based on a margin between 2.00% and 11.00% plus the 1-Month London Interbank Offered Rate (LIBOR), rounded to the nearest 1/100th of a percent. The current LIBOR is 2.481%, which may adjust monthly. Your interest rate may increase or decrease, based on LIBOR monthly changes, resulting in an APR range between 4.23% – 13.23%. Fixed rate loans have an APR range between 5.08% – 14.16%. For Ascent Tuition loan current rates and repayment examples visit www.AscentTuition.com/APR. Ascent Independent Non-Cosigned Loan: Variable rate loans are based on a margin between 4.00% and 12.50% plus the 1-Month London Interbank Offered Rate (LIBOR), rounded to the nearest 1/100th of a percent. The current LIBOR is 2.481%, which may adjust monthly. Your interest rate may increase or decrease, based on LIBOR monthly changes, resulting in an APR range between 5.87% – 13.15%. Fixed rate loans have an APR range between 6.71% – 13.47%. For Ascent Independent non-cosigned loan current rates and repayment examples visit www.AscentIndependent.com/APR. Payments may be deferred. Subject to lender discretion, forbearance and/or deferment options may be available for borrowers who are encountering financial distress. Making interest only or partial interest payments while in school will not reduce the principal balance of the loan. There are three (3) flexible in-school repayment options that include fully deferred, interest only and $25 minimum repayment. Flexible repayment plans may be offered up to a fifteen (15) year repayment term for a variable rate loan and ten (10) year repayment term for a fixed rate loan. Students must be enrolled at least half-time at an eligible school. Minimum loan amount is $2,000. Interest rate reduction of 0.25% for enrollment in automatic debit applies only when the borrower and/or cosigner signs up for automatic payments and the regularly scheduled, current amount due (including full, flat, or interest only payments, as applicable) is successfully deducted from the designated bank account each month. Interest rate reduction(s) will not apply during periods when no payment is due, including periods of In-School, Deferment, Grace or Forbearance. If you have two (2) returned payments for Nonsufficient Funds, we may cancel your automatic debit enrollment and you will lose the 0.25% interest rate reduction. You will then need to re-qualify and re-enroll in automatic debit payments to receive the 0.25% interest rate reduction. All applicants (individual and cosigner) are required to complete a brief online financial literacy course as part of the application process to be eligible for funding. Eligibility, loan amount and other loan terms are dependent on several factors, which may include: loan product, other financial aid, creditworthiness, school, program, graduation date, major, cost of attendance and other factors. Aggregate loan limits may apply. The cost of attendance is determined and certified by the educational institution. The legal age for entering into contracts is eighteen (18) years of age in every state except Alabama where it is nineteen (19) years old, Nebraska where it is nineteen (19) years old (only for wards of the state), and Mississippi and Puerto Rico where it is twenty-one (21) years old. 1% Cash Back Graduation Reward subject to terms and conditions. >Click here for details. In order to be eligible for the 1% Cash Back Graduation Reward, borrower must meet the following criteria after graduation: · The student borrower has graduated from the degree program that the loan was used to fund. · The student borrower may change majors and/or transfer to a different school, but must obtain the same level of degree (e.g. – undergraduate or graduate) · The graduation date is more than 90 days and less than five (5) years after the date of the loan’s first disbursement. · Any loan that the student has borrowed under the Ascent loan is not more than 30-days delinquent or in a default status as of the graduation date and until any Graduation Reward is paid. Students can apply to release their cosigner and continue with the loan in only their name after making the first 24 consecutive regularly scheduled full principal and interest payments on-time and meeting the other eligibility criteria to qualify for the loan without a cosigner.

* Application times vary depending on the applicants ability to supply the necessary information for submission.

2 Important Disclosures for College Ave. CollegeAve Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

All rates shown include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation. This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7% variable Annual Percentage Rate (“APR”): 96 monthly payments of $179.28 while in the repayment period, for a total amount of payments of $17,211.20. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. As certified by your school and less any other financial aid you might receive. Minimum $1,000.

Information advertised valid as of 4/1/2019. Variable interest rates may increase after consummation.

3 Important Disclosures for Discover. Discover Disclosures At least a 3.0 GPA (or equivalent) qualifies for a one-time cash reward of 1% of the loan amount of each new Discover undergraduate and graduate student loan. Reward redemption period is limited. Please visit DiscoverStudentLoans.com/Reward for any applicable reward terms and conditions. View Terms and Conditions at DiscoverStudentLoans.com/AutoDebitReward. * The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers. 4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply. 5 Important Disclosures for SunTrust. SunTrust Disclosures

Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.

Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.

Interest rates and APRs (Annual Percentage Rates) depend upon (a) the student’s and cosigner’s (if applicable) credit histories, (b) the repayment option and repayment term selected, (c) the requested loan amount and (d) other information provided on the online loan application. If approved, applicants will be notified of the rate applicable to your loan. Rates and terms effective for applications received on or after 5/1/2019. The current variable APRs for the program range from 4.251% APR to 11.300% APR and the current fixed APRs for the program range from 5.251% APR to 12.00% APR (the low APRs within these ranges assume a 7-year $10,000 loan, with two disbursements and no deferment; the high APRs within these ranges assume a 15-year $10,000 loan with two disbursements). The variable interest rate for each calendar month is calculated by adding the current One-month LIBOR index to your margin. LIBOR stands for London Interbank Offered Rate. The One-month LIBOR is published in the Money Rates section of The Wall Street Journal (Eastern Edition). The One-month LIBOR index is captured on the 25th day of the immediately preceding calendar month (or if the 25th is not a business day, the next business day thereafter), and is rounded up to the nearest 1/8th of one percent. The current One-month LIBOR index is 2.500% on 5/1/2019. The variable interest rate will increase or decrease if the One-month LIBOR index changes. The fixed rate assigned to a loan will never change except as required by law or if you request and qualify for the auto pay discount. Any applicant who applies for a loan the month of, the month prior to, or the month after the student’s graduation date, as stated on the application or certified by the school, will only be offered the Immediate Repayment option. The student must be enrolled at least half-time to be eligible for the partial interest, fully deferred and interest only repayment options unless the loan is being used for a past due balance and the student is out of school. With the Full Deferment option, payments may be deferred while the student is enrolled at least half-time at an approved school and during the six month grace period after graduation or dropping below half-time status, but the total initial deferment period, including the grace period, may not exceed 66 months from the first disbursement date. The Partial Interest Repayment option (paying $25 per month during in-school deferment) is only available on loans of $5,000 or more. For payment examples, see footnote 7. With the Immediate Repayment option, the first payment of principal and interest will be due approximately 30-60 calendar days after the final disbursement date and the minimum monthly payment is $50.00. There are no prepayment penalties. The 15-year term and Partial Interest Repayment option (paying $25 per month during in-school deferment) are only available for loan amounts of $5,000 or more. Making interest only or partial interest payments while in school deferment (including the grace period) will not reduce the principal balance of the loan. Payment examples within this footnote assume a 45-month deferment period, a six-month grace period before entering repayment and the Partial Interest Repayment option. 7-year term: $10,000 loan disbursed over two transactions with a 7-year repayment term (84 months) and 8.382% APR would result in a monthly principal and interest payment of $198.61. 10-year term: $10,000 loan disbursed over two transactions with a 10-year repayment term (120 months) and an 8.851% APR would result in a monthly principal and interest payment of $161.70. 15-year term: $10,000 loan disbursed over two transactions with a 15-year repayment term (180 months) and a 9.335% APR would result in a monthly principal and interest payment of $135.68. The 2% principal reduction is based on the total dollar amount of all disbursements made, excluding any amounts that are reduced, cancelled, or returned. To receive this principal reduction, it must be requested from the servicer, the student borrower must have earned a bachelor’s degree or higher and proof of such graduation (e.g. copy of diploma, final transcript or letter on school letterhead) must be provided to the servicer. This reward is available once during the life of the loan, regardless of whether the student receives more than one degree. Earn an interest rate reduction for making automatic payments of principal and interest from a bank account (“auto pay discount”). Earn a 0.25% interest rate reduction when you auto pay from any bank account and an extra 0.25% interest rate reduction when you auto pay from a SunTrust Bank checking, savings, or money market account. The auto pay discount will continue until (1) automatic deduction of payments is stopped (including during any deferment or forbearance) or (2) three automatic deductions are returned for insufficient funds during the life of the loan. The extra 0.25% interest rate reduction when you auto pay from a SunTrust Bank account will be applied after the first automatic payment is successfully deducted and will be removed for the reasons stated above. In the event the auto pay discount is removed, the loan will accrue interest at the rate stated in your Credit Agreement. The auto pay discount is not available when payments are deferred or when the loan is in forbearance, even if payments are being made. A cosigner may be released from the loan upon request to the servicer provided that the student borrower is a U.S. citizen or permanent resident alien, has met credit criteria and met either one of the following payment conditions: (a) the first 36 consecutive monthly principal and interest payments have been made on-time (received by the servicer within 10 calendar days after their due date) or (b) the loan has not had any late payments and has been prepaid prior to the end of the first 36 months of scheduled principal and interest payments in an amount equal to the first 36 months of scheduled principal and interest payments (based on the monthly payment amount in effect when you make the most recent payment). As an example, if you have made 30 months of consecutive on-time payments, and then, based on the monthly payment amount in effect on the due date of your 31st consecutive monthly payment, you pay a lump sum equal to 6 months of payments, you will have satisfied the payment condition. Cosigner release may not be available if a loan is in forbearance. If the student dies after any part of the loan has been disbursed, and the loan has not been charged off due to non-payment or bankruptcy, then the outstanding balance will be forgiven if the servicer is informed of the student’s death and receives acceptable proof of death. If the student becomes totally and permanently disabled after any part of the loan has been disbursed and the loan has not been charged off due to non-payment or bankruptcy, the loan will be forgiven upon the servicer’s receipt and approval of a completed discharge application. If the student borrower dies or becomes totally and permanently disabled prior to the full disbursement of the loan, and the loan is forgiven, all future disbursements will be cancelled. Loan forgiveness for student death or disability is available at any point throughout the life of the loan. 6 Important Disclosures for LendKey. LendKey Disclosures

Additional terms and conditions apply. For more details see

The post Choosing Between Colleges? Try a Cost-Benefit Analysis appeared first on Student Loan Hero.

from Updates About Loans https://studentloanhero.com/featured/choosing-colleges-try-cost-benefit-analysis/

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aaronsniderus · 5 years

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6 Best Banks to Refinance and Consolidate Student Loans in 2019

If you’re ready to refinance your student loans, your search for the best lender is finally over.

We compared banks and lenders across the country to find ones with the best terms for student loan borrowers. The six below could help you refinance and consolidate both private and federal student loans. With this move, you could snag a lower interest rate, decrease your monthly payment, or both.

You might even get out of student loan debt ahead of schedule.

To qualify for refinancing, you’ll need to meet requirements for credit score, annual income, savings, and college degree (or certificate of enrollment if you’re still in school). If you can’t yet qualify on your own, you could apply with a creditworthy cosigner to improve your chances.

Ready to take control of your student loans? Here are our top recommendations for student loan refinancing and consolidation.

Disclosure: Student Loan Hero is a free website to help student loan borrowers. We only evaluate lenders and do not issue student loans. This report was not chartered by or created on behalf of any lender listed below.

The post 6 Best Banks to Refinance and Consolidate Student Loans in 2019 appeared first on Student Loan Hero.

from Updates About Loans https://studentloanhero.com/featured/5-banks-to-refinance-your-student-loans/

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aaronsniderus · 5 years

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Segmenting Retirement Expenses Into Core Vs Adaptive To Create Retirement Buckets

In recent years, a growing number of retirement “bucket” strategies have been developed to tie specific portfolio allocations to specific expenditures – most commonly by tying “essential” expenses that a retiree cannot outlive to guaranteed income streams (or at least highly conservative portfolios with low withdrawal rates), while “discretionary” expenses are supported with more volatile portfolios in recognition of the fact that if the portfolio performs poorly the expenses can be cut (since they are “discretionary”).

The caveat, however, is that it’s not always easy to determine what constitutes an “essential” vs “discretionary” expense in the first place. The classic approach is to tag the food, clothing, and shelter kinds of categories as “essential” (along with perhaps health care in the modern era), while travel and entertainment expenses are discretionary.

Except in practice, if a retiree lost out on such “discretionary” expenses, it would likely not only be a traumatic impact to their real-world lifestyle, but such discretionary expenses often support genuinely psychological needs (e.g., funding activities that empower social wellbeing). And at the same time, many classically “essential” expenses in the areas of food, clothing, and shelter, really aren’t essential at all. From the house that’s bigger than what a retiree couple truly needs to survive, to eating out at expensive restaurants instead of dining frugally at home, or buying “designer” clothes versus generic or lower-cost brands (or buying at a second-hand thrift store).

In essence, separately “essential” vs “discretionary” expenses by looking at categories of spending doesn’t necessarily work. Instead, the better approach is perhaps to segment spending within each category into the “Core” expenses that form the nucleus of the household’s lifestyle, from the truly discretionary (and more easily adaptable) expenses within each category (from the upscale restaurants to the designer clothes). In other words, there’s a potential layer of Core vs Adaptive expenses in every spending category.

And importantly, the distinction isn’t mere semantics. By attaching specific portfolio “buckets” to each of the Core vs Adaptive spending types, it’s easier for retirees to actually see that their “Core” spending really is secure, while a more-volatile portfolio (with more downside risk but also more upside potential as well) is tied more directly to the expenses that are truly adaptable and flexible, while giving retirees a clear resource bucket to consume (and know when it’s exhausted). Which in turn opens up the door for retirees to decide how much they want tied to each of the associated retirement buckets.

The bottom line, though, is simply to recognize that what defines more flexible “discretionary” spending to fund wants (rather than needs) isn’t just a function of certain categories of expenses, or funding solely the expenses necessary to ensure base-level safety and survival needs. Instead, retirees can upgrade their lifestyle across any number of traditionally-“essential” spending categories as well… as long as there’s a clear resource bucket to show how long that spending can be sustained, and when the retiree really may have to adapt!

from Updates About Loans https://www.kitces.com/blog/regulation-187-ny-dfs-best-interest-rule-life-insurance-policy-illustration-comparisons/

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aaronsniderus · 5 years

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What Is the No-Guilt Budget? (And Why it Works)

As a hard-core money nerd, I’ve experimented with different budgeting styles and methods — the 50/30/20 budget, the zero-sum budget (where every dollar is assigned a task) and even color-coded spreadsheets.

I finally landed on the one that works best for me: a modified version of the guilt-free budget. Also known as the anti-budget, the guilt-free budget has simple rules: You pay yourself first, then spend the rest on whatever you wish. That’s pretty much it.

It’s not really a budget, per say. You don’t need to track your spending, nor expend time and energy figuring out how much to spend on food, going out, avocado toast and what have you.

There’s no getting into the nitty-gritty of categorizing expenses or allocating X amount to each type of spending. And because you’re staying on top of your money goals, you can spend your beans without getting swept away by a wave of guilt.

Here’s why it’s my preferred budget, and how you can go about adopting it as your go-to mode to spend and save.

The Feel-Good Factor

There’s no shortage of rules and information floating around online about creating a budget. Here’s what’s often missing from the equation: How to feel good about your financial decisions. Not only do you want to do what’s best for you in terms of dollars and cents, but you also want to build confidence and develop a positive relationship with your money.

I’ve found that it doesn’t matter whether I spent $100 over in food in a given month. Or that I spent more during the summer on clothes. That granular budgeting typically leads to feelings of regret, guilt, and sometimes, negative self-talk.

Because I’ve already set money aside for both short- and long-term goals such as an emergency fund, vacation and retirement, I can enjoy my everyday purchases.

Give Your Brain a Break

It’s estimated that we make an average of 35,000 decisions a day. The more choices you’re required to make, the greater the decision fatigue.

Why put yourself through that extra mental work with money decisions? Most people hate thinking about money, so why go through the process of deciding whether to spend $5 on a latte or put that money into savings? Instead, you can spend your brain space on other tasks and decisions.

I like to put as many of my financial decisions on autopilot as I can. That includes automating my savings and setting up autopay on my bills.

Your Saving Goals

When you pay yourself first, you don’t need to worry about the important goals falling by the wayside. The entirety of your paycheck won’t get devoured by bills, food and nilly-willy purchases. Instead, it will go toward building your wealth and, ultimately, your well-being.

Curious to try the guilt-free budget? Here’s how to go about it.

Prioritize Your Goals

Make a list of all your financial goals.

Next, list them in order of priority, as well as target dates and target amounts. This can be paying off credit card debt or student loans, going back to school, or saving to have a family or to buy your first home.

Next, whittle your list to a few goals. Focusing on just a few to make major headway on will help you stay focused and make larger strides.

For a short-term goal, I’m saving for a trip to Vietnam next summer. One of my super long-term goals is to save for retirement. It’s really hard to juggle financial goals, and if you try to aggressively save for all of them, you’ll find yourself stretched thin.

Figure Out how much to Pay Yourself First

You’ll want to figure out how much you want to save, and can afford to save.

Because I freelance full time and my income fluctuates, I’ve made a slight modification to the guilt-free budget: After I figure out how much I need for my monthly living expenses, I’ll pay myself that set amount as income. Next, I’ll save anything extra based on percentages. Anything that’s left over, I can spend on whatever I please.

Autosave

This is an important step. Ironically, it’s one of the easiest things to do: You just set up auto deposits for each of your savings goals. If you’re nervous about autosaving too much or not the right amount, you can always make tweaks later.

Trust me: Automating your savings is one of the best things you can do for your financial situation.

For me, budgeting doesn’t really work. It’s time-consuming, granular and tough to stick to. The simpler the rules, the easier it is to live within my means.

Of course, it’s really up to you to decide your preferences and how you work best. But if you don’t like fussing over your money decisions on a daily basis, the guilt-free budget, or anti-budget, is worth considering.

What is your system for budgeting? Let us know in the comments below!

The post What Is the No-Guilt Budget? (And Why it Works) appeared first on ZING Blog by Quicken Loans.

from Updates About Loans https://www.quickenloans.com/blog/no-guilt-budget

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aaronsniderus · 5 years

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Home Equity Loans and How They Work

There are plenty of benefits to owning a home. One of the most important? You can build equity and borrow against it in the form of home equity loans. You can then use the money from these loans however you want. You could pay for a major kitchen remodel, pay off your high-interest-rate credit card debt or help cover the cost of your children’s college tuition.

But what exactly are home equity loans? How do you qualify for them, and how do they work?

Here’s a look at these important tools.

What Is Equity?

To qualify for a home equity loan, you’ll need to have built up enough equity in your home. Equity is the difference between what your home is worth today and what you owe on your mortgage. If you owe $150,000 on your mortgage and your home is worth $200,000, you have $50,000 worth of equity.

You build equity by making your monthly mortgage payments. But you’ll also build equity if your home goes up in value. If you owed $120,000 on your mortgage when your home was worth $150,000, you’d have $30,000 in equity. But if property values in your community were on the rise and this same home was worth $180,000, you’d have $60,000 of equity, without having made any extra payments.

When you apply for a home equity loan, your lender will usually approve you for a loan equal to a portion of your equity, not the entire amount. If you have $80,000 of equity, for instance, a lender might approve you for a maximum home equity loan of $70,000.

What Are Home Equity Loans?

Home equity loans are second mortgage loans that you pay off with monthly payments, just as you do with your primary mortgage.

Once you’re approved for a home equity loan, you’ll receive your money in a single lump payment. You then pay the loan back with interest over a set period of years. The number of years this will take depends on the loan term you agreed to when taking out your home equity loan. Your monthly payment will depend on the amount you borrowed and your interest rate.

Pros and Cons

There are several benefits to a home equity loan:

Your interest rate is usually fixed, so it’s easy to budget for your monthly payments.

Interest rates are usually lower than what you’d get with a personal loan.

You’ll receive your money in a single payment. You can then use that money however you want.

This doesn’t mean that home equity loans don’t come with potential drawbacks:

Your home is your collateral. If you fall behind on your payments, you could lose it.

They’re not free. You’ll have to pay closings costs, which vary by lender, for a home equity loan.

How Do You Get Approved?

Getting approved for a home equity loan is similar to earning approval for a primary mortgage. Your lender will study your credit reports and pull your credit score. The higher your three-digit credit score, the more likely you’ll be approved for your home equity loan. A higher credit score usually means a lower interest rate too.

Your lender will also look at your existing monthly payments – including what you pay on your primary mortgage loan – and your gross monthly income to determine if you can afford a new home equity loan payment.

Lenders vary, but most want your total monthly debts, including any mortgage payments, to equal no more than 43% of your gross monthly income.

When a Home Equity Loan Makes Sense

One of the greatest benefits of a home equity loan is that you can use the money from them for whatever you want. If you need to update a kitchen that was last renovated in the 1970s, you can use the cash from a home equity loan to pay your contractor. If you want to help your children cover their college tuition, you can use a home equity loan for this, too. If you have a specific project in mind, then, taking out a home equity loan might be one of the most affordable ways to fund it.

Maybe you are burdened with thousands of dollars of high-interest-rate credit card debt. Because your home acts as collateral with a home equity loan, lenders take on less risk than they do when passing out personal loans. Because of this, home equity loans come with lower interest rates. It might make financial sense to swap home equity debt, with its lower interest rates, with your more expensive credit card debt.

Can You Still Deduct the Interest You Pay on Home Equity Loans?

Before the Tax Cuts and Jobs Act of 2017 became law, homeowners could deduct on their taxes the interest they paid on home equity loans no matter how they used the money. That has changed. According to the IRS, you can now only deduct the interest on home equity loans if you use the money to substantially improve the home that secures the loan.

This means that you can’t deduct the interest if you use a home equity loan to pay off credit card debt or cover a child’s college tuition.

If you use your home equity loan to build a new master bedroom suite on your home, you can deduct the interest you pay on that loan. That’s because you are using the proceeds from the loan to improve the home.

The Dangers of a Home Equity Loan

While a home equity loan can help you improve your home or meet other financial goals, it does come with some possible pitfalls.

Your home acts as collateral for such a loan. If you can’t pay back your loan, your lender could take your home through the foreclosure process.

A home equity loan will also add to your monthly debts. Depending on how tight your budget is, that extra mortgage payment could prevent you from building your savings or adding to your retirement accounts. This is not a wise financial move. You should also have savings set aside for emergencies, and you should never neglect your retirement fund to help pay for a kitchen remodel.

Home Equity Lines of Credit

Home equity loans aren’t the only way to borrow against the equity in your home. You can also apply for a product known as a home equity line of credit.

A home equity line of credit, better known as a HELOC, acts more like a credit card than a loan, with a credit limit based on the equity in your home. With a HELOC, you only pay back what you actually borrow.

Say you get approved for a HELOC of $50,000. If you spend $20,000 to add a master bedroom to your home, you’d pay back that $20,000 – not the full $50,000 – in monthly payments with interest.

While a home equity loan is good for homeowners who have a specific plan in mind for the money they’ll receive, a HELOC is a good choice for those who want access to a line of credit for expenses that pop up over time.

Cash-Out Refinance

You might also consider a cash-out refinance. In a cash-out refinance, you refinance your existing mortgage loan into one that has a balance higher than what you currently owe. You’d then receive this extra money in a lump sum. You could use this money to pay for whatever you want.

Say you owe $150,000 on your mortgage. You can refinance that loan into a new one with a balance of $180,000. You’d then receive the extra $30,000 as a single payment.

One of the benefits of a cash-out refinance is that you’re still left with just one mortgage payment a month. Depending on the strength of your credit, you might also qualify for a lower interest rate.

A drawback? A cash-out refinance can be expensive. You’ll have to pay your lender closing costs. Depending on the amount of equity in your home, a cash-out refinance might not work. If you owe $150,000 on your mortgage and your home is only worth $160,000, a cash-out refinance probably isn’t worth it.

Talk to a Home Loan Expert today to see if a cash-out refinance is right for you by calling (800) 785-4788 or applying online.

The post Home Equity Loans and How They Work appeared first on ZING Blog by Quicken Loans.

from Updates About Loans https://www.quickenloans.com/blog/home-equity-loan

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aaronsniderus · 5 years

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Pennsylvania Scholarships and Grants: How to Find Them and Apply

Attending college in Pennsylvania isn’t so cheap — according to the Institute for College Access & Success, students in the state left school with the second-highest amount of debt in the country in 2017, second only to Connecticut. But there are ways to keep debt under control, and one of the best is to apply for grants and scholarships, which don’t need to be paid back.

The key to getting free money for college in the Keystone State is knowing where to look. Whether you’re planning to root for the Quakers at Penn or the Nittany Lions at Penn State — or to just avoid college sports altogether — here’s how to find grants and scholarships that will keep you from leaving school in the red.

Pennsylvania College Costs at a Glance Average in-state tuition and fees at public colleges (2018-19) $14,770 per year Average out-of-state tuition and fees at public colleges (2018-19) $27,180 per year Average college debt at graduation at public and private nonprofit colleges (Class of 2017) $36,854 Source: College Board and The Institute for College Access & Success (Tuition/fee data are for four-year institutions)

Applying for Pennsylvania financial aid awards

You can think of financial aid as coming in three main categories: grants and scholarships, work-study and student loans.

Your first stop in accessing financial aid is to fill out the Free Application for Federal Student Aid (FAFSA). In many cases, it makes you eligible not just for federal aid, but also for state and college-sponsored aid, too. You may also have to submit additional forms, like the CSS Profile and Pennsylvania state grant applications, to qualify for specific grants and scholarships.

Grants are available from the federal government and individual states, and they’re typically based either on financial need or specific characteristics, like your course of study. Scholarships can come from nonprofits, foundations or your college itself, and they can be need-based or merit-based, meaning they’re specifically for students who have certain academic or extracurricular credentials.

Work-study is available from the federal government. Student loans can come from the federal government, states or private lenders, but federal student loans generally offer the most flexible options in repayment.

Pennsylvania scholarships and grants

The Pennsylvania Higher Education Assistance Agency, known as PHEAA, administers the state’s grants for college students. Pennsylvania’s state programs are primarily need-based, with the exception of the Ready to Succeed Scholarship, which also has a GPA requirement.

Certain universities in Pennsylvania offer their own grants and scholarships to state residents too. The Mayor’s Scholarship at the University of Pennsylvania, for instance, is available to Philadelphia residents with financial need, and the award amount varies based on the student’s financial situation.

The following are state grants provided by PHEAA to Pennsylvania residents regardless of school choice:

Pennsylvania State Grant Program

The main college grant for Pennsylvania residents, the Pennsylvania State Grant Program, is available to those pursuing their first bachelor’s degree and who are enrolled at least half-time and have financial need.

The grant award is based on income and covers a portion of financial need after any federal Pell grant funds have been applied. However, Pennsylvania State Grants are disbursed without taking Pell grant funding into account if you’re a veteran, or your spouse or a parent died or became disabled after Jan. 1, 2017.

Awards range from $500 to $4,123 for in-state students. The maximum award for Pennsylvania residents attending school out of state is $600, or $800 for veterans.

You can apply for a Pennsylvania State Grant online directly, after you’ve completed the FAFSA. The deadline is May 1 for most first-time applicants, and Aug. 1 for those attending a community college or trade school.

Pennsylvania Targeted Industry Program

PHEAA itself — not federal or state tax revenue — funds the Pennsylvania Targeted Industry Program (PA-TIP), founded in 2012 to encourage Pennsylvania college students to pursue in-demand careers. To qualify, you must major in a field related to energy, advanced materials and diversified manufacturing or agriculture and food production. Check if your program of study is eligible before applying.

In order to qualify, you cannot have already received a Pennsylvania State Grant for the area of study you’ve chosen. However, unlike with the Pennsylvania State Grant, you are still eligible for PA-TIP even if you’ve already received a bachelor’s degree or are pursuing a graduate degree. The maximum award is the lesser of $4,123 or 75% of education costs after other grants have been applied. Applications are due by May 1.

Ready to Succeed Scholarship Program

The Ready to Succeed Scholarship is both a merit- and need-based award. It’s available to current college students in Pennsylvania who are succeeding academically and whose family’s income is $110,000 or less per year.

Participating colleges nominate eligible students who have at least 24 credits under their belt and a GPA of 3.5 or higher. While there’s no separate application for the program, students must have submitted the FAFSA and an application for the Pennsylvania State Grant to qualify.

Since scholarships are awarded on a first-come, first-served basis, submit the FAFSA and State Grant Form as close to Oct. 1 as possible, when the FAFSA application period first opens.

Awards range from $500 to $1,000 for part-time students and $2,000 for full-time students.

More scholarships and grants

Pennsylvania residents can — and should — also look into grants available nationwide. Many are for students with financial need. You can access these federal grants by filling out the FAFSA every year you’re in school.

Federal Iraq and Afghanistan Service Grant: Up to $5,717 for 2018-19 for eligible students with a parent who died while performing military service in Iraq or Afghanistan after 9/11. Federal Supplemental Educational Opportunity Grant (FSEOG): Up to $4,000 for students with high financial need, particularly those who have already received a Pell grant. College financial aid offices administer this program, and not all schools participate. Federal Pell Grant: Up to $6,195 for 2019-20 for undergraduates with financial need who are pursuing their first degree. Federal Teacher Education Assistance for College and Higher Education (TEACH) Grant: Up to $3,752 for 2018-19 for students pursuing a career as a teacher in a high-need field or school. Awardees must teach full-time for four years, or the grant converts to a loan. American Association of University Women (AAUW) Grants: Women who are international students or who are getting master’s degrees in fields traditionally dominated by men can receive grants from this nonprofit. For example, the Selected Professions Fellowship can provide funds worth between $5,000 and $18,000 to women pursuing degrees in areas such as STEM, law and medicine. National Health Service Corps: Students planning to provide medical care to underserved communities can apply for scholarships, plus a living stipend of nearly $1400, through this federal program run by the Department of Health and Human Services.

There is a huge variety of grants and scholarships out there, but in most cases it’s up to you to find them. Start with your college’s website, and look for any opportunities you might qualify for based on your personal characteristics or academic or extracurricular background. Check for scholarships with local community organizations and your parents’ employers, as well.

Private nonprofits and foundations provide scholarships to students with particular interests, like music, photography or poetry. There are also scholarships for you if you identify as LGBTQ, and scholarships for black and Latino students. Once you land on a major (say, for example, nursing), professional organizations and foundations offer scholarships, and if you plan to study abroad, there’s funding for that, too. Student Loan Hero even offers a scholarship.

Getting scholarships and grants in Pennsylvania

The more free money you’re able to get for college, the better, so take the time to research and apply for as many scholarships as you can. Don’t be discouraged by seemingly small award amounts — several of them can add up, and you could use them to help offset the cost of a new laptop or textbooks.

Once you’ve maxed out grant and scholarship aid, accept any work-study funding you’re offered — and make sure to submit the FAFSA as early as possible to get access to it, since it’s first-come, first served.

Next, apply for federal student loans, which typically have lower interest rates and more forgiveness and repayment options than private student loans. Consider private loans as a last resort if you have a funding gap to cover.

Financing college in Pennsylvania means doing your best to skip a big student loan bill when you graduate — and with determination and thoughtful research, you can do it.

Need a student loan? Here are our top student loan lenders of 2019!

LenderVariable APREligibility 1 Important Disclosures for Ascent. Ascent Disclosures

Ascent rates are effective as of 04/01/2019 and include a 0.25% discount applied when a borrower in repayment elects automatic debit payments via their personal checking account. Competitive rates calculated monthly at the time of loan approval. Ascent Tuition Cosigned Loan: Variable rate loans are based on a margin between 2.00% and 11.00% plus the 1-Month London Interbank Offered Rate (LIBOR), rounded to the nearest 1/100th of a percent. The current LIBOR is 2.491%, which may adjust monthly. Your interest rate may increase or decrease, based on LIBOR monthly changes, resulting in an APR range between 4.24% – 13.24%. Fixed rate loans have an APR range between 5.07% – 14.15%. For Ascent Tuition loan current rates and repayment examples visit www.AscentTuition.com/APR. Ascent Independent Non-Cosigned Loan: Variable rate loans are based on a margin between 4.00% and 12.50% plus the 1-Month London Interbank Offered Rate (LIBOR), rounded to the nearest 1/100th of a percent. The current LIBOR is 2.491%, which may adjust monthly. Your interest rate may increase or decrease, based on LIBOR monthly changes, resulting in an APR range between 5.88% – 13.16%. Fixed rate loans have an APR range between 6.69% – 13.45%. For Ascent Independent non-cosigned loan current rates and repayment examples visit www.AscentIndependent.com/APR. Payments may be deferred. Subject to lender discretion, forbearance and/or deferment options may be available for borrowers who are encountering financial distress. Making interest only or partial interest payments while in school will not reduce the principal balance of the loan. There are three (3) flexible in-school repayment options that include fully deferred, interest only and $25 minimum repayment. Flexible repayment plans may be offered up to a fifteen (15) year repayment term for a variable rate loan and ten (10) year repayment term for a fixed rate loan. Students must be enrolled at least half-time at an eligible school. Minimum loan amount is $2,000. Interest rate reduction of 0.25% for enrollment in automatic debit applies only when the borrower and/or cosigner signs up for automatic payments and the regularly scheduled, current amount due (including full, flat, or interest only payments, as applicable) is successfully deducted from the designated bank account each month. Interest rate reduction(s) will not apply during periods when no payment is due, including periods of In-School, Deferment, Grace or Forbearance. If you have two (2) returned payments for Nonsufficient Funds, we may cancel your automatic debit enrollment and you will lose the 0.25% interest rate reduction. You will then need to re-qualify and re-enroll in automatic debit payments to receive the 0.25% interest rate reduction. All applicants (individual and cosigner) are required to complete a brief online financial literacy course as part of the application process to be eligible for funding. Eligibility, loan amount and other loan terms are dependent on several factors, which may include: loan product, other financial aid, creditworthiness, school, program, graduation date, major, cost of attendance and other factors. Aggregate loan limits may apply. The cost of attendance is determined and certified by the educational institution. The legal age for entering into contracts is eighteen (18) years of age in every state except Alabama where it is nineteen (19) years old, Nebraska where it is nineteen (19) years old (only for wards of the state), and Mississippi and Puerto Rico where it is twenty-one (21) years old. 1% Cash Back Graduation Reward subject to terms and conditions. >Click here for details. In order to be eligible for the 1% Cash Back Graduation Reward, borrower must meet the following criteria after graduation: · The student borrower has graduated from the degree program that the loan was used to fund. · The student borrower may change majors and/or transfer to a different school, but must obtain the same level of degree (e.g. – undergraduate or graduate) · The graduation date is more than 90 days and less than five (5) years after the date of the loan’s first disbursement. · Any loan that the student has borrowed under the Ascent loan is not more than 30-days delinquent or in a default status as of the graduation date and until any Graduation Reward is paid. Students can apply to release their cosigner and continue with the loan in only their name after making the first 24 consecutive regularly scheduled full principal and interest payments on-time and meeting the other eligibility criteria to qualify for the loan without a cosigner.

* Application times vary depending on the applicants ability to supply the necessary information for submission.

2 Important Disclosures for College Ave. CollegeAve Disclosures

Information advertised valid as of 4/1/2019. Variable interest rates may increase after consummation.

Interest rates and APRs (Annual Percentage Rates) depend upon (a) the student’s and cosigner’s (if applicable) credit histories, (b) the repayment option and repayment term selected, (c) the requested loan amount and (d) other information provided on the online loan application. If approved, applicants will be notified of the rate applicable to your loan. Rates and terms effective for applications received on or after 3/1/2019. The current variable APRs for the program range from 4.251% APR to 13.250% APR and the current fixed APRs for the program range from 5.351% APR to 14.051% APR (the low APRs within these ranges assume a 7-year $10,000 loan, with two disbursements and no deferment; the high APRs within these ranges assume a 15-year $10,000 loan with two disbursements). The variable interest rate for each calendar month is calculated by adding the current One-month LIBOR index to your margin. LIBOR stands for London Interbank Offered Rate. The One-month LIBOR is published in the Money Rates section of The Wall Street Journal (Eastern Edition). The One-month LIBOR index is captured on the 25th day of the immediately preceding calendar month (or if the 25th is not a business day, the next business day thereafter), and is rounded up to the nearest 1/8th of one percent. The current One-month LIBOR index is 2.500% on 3/1/2019. The variable interest rate will increase or decrease if the One-month LIBOR index changes. The fixed rate assigned to a loan will never change except as required by law or if you request and qualify for the auto pay discount. Any applicant who applies for a loan the month of, the month prior to, or the month after the student’s graduation date, as stated on the application or certified by the school, will only be offered the Immediate Repayment option. The student must be enrolled at least half-time to be eligible for the partial interest, fully deferred and interest only repayment options unless the loan is being used for a past due balance and the student is out of school. With the Full Deferment option, payments may be deferred while the student is enrolled at least half-time at an approved school and during the six month grace period after graduation or dropping below half-time status, but the total initial deferment period, including the grace period, may not exceed 66 months from the first disbursement date. The Partial Interest Repayment option (paying $25 per month during in-school deferment) is only available on loans of $5,000 or more. For payment examples, see footnote 7. With the Immediate Repayment option, the first payment of principal and interest will be due approximately 30-60 calendar days after the final disbursement date and the minimum monthly payment is $50.00. There are no prepayment penalties. The 15-year term and Partial Interest Repayment option (paying $25 per month during in-school deferment) are only available for loan amounts of $5,000 or more. Making interest only or partial interest payments while in school deferment (including the grace period) will not reduce the principal balance of the loan. Payment examples within this footnote assume a 45-month deferment period, a six-month grace period before entering repayment and the Partial Interest Repayment option. 7-year term: $10,000 loan disbursed over two transactions with a 7-year repayment term (84 months) and 8.468% APR would result in a monthly principal and interest payment of $199.90. 10-year term: $10,000 loan disbursed over two transactions with a 10-year repayment term (120 months) and 8.938% APR would result in a monthly principal and interest payment of $162.92. 15-year term: $10,000 loan disbursed over two transactions with a 15-year repayment term (180 months) and 9.423% APR would result in a monthly principal and interest payment of $136.90. The 2% principal reduction is based on the total dollar amount of all disbursements made, excluding any amounts that are reduced, cancelled, or returned. To receive this principal reduction, it must be requested from the servicer, the student borrower must have earned a bachelor’s degree or higher and proof of such graduation (e.g. copy of diploma, final transcript or letter on school letterhead) must be provided to the servicer. This reward is available once during the life of the loan, regardless of whether the student receives more than one degree. Earn an interest rate reduction for making automatic payments of principal and interest from a bank account (“auto pay discount”). Earn a 0.25% interest rate reduction when you auto pay from any bank account and an extra 0.25% interest rate reduction when you auto pay from a SunTrust Bank checking, savings, or money market account. The auto pay discount will continue until (1) automatic deduction of payments is stopped (including during any deferment or forbearance) or (2) three automatic deductions are returned for insufficient funds during the life of the loan. The extra 0.25% interest rate reduction when you auto pay from a SunTrust Bank account will be applied after the first automatic payment is successfully deducted and will be removed for the reasons stated above. In the event the auto pay discount is removed, the loan will accrue interest at the rate stated in your Credit Agreement. The auto pay discount is not available when payments are deferred or when the loan is in forbearance, even if payments are being made. A cosigner may be released from the loan upon request to the servicer provided that the student borrower is a U.S. citizen or permanent resident alien, has met credit criteria and met either one of the following payment conditions: (a) the first 36 consecutive monthly principal and interest payments have been made on-time (received by the servicer within 10 calendar days after their due date) or (b) the loan has not had any late payments and has been prepaid prior to the end of the first 36 months of scheduled principal and interest payments in an amount equal to the first 36 months of scheduled principal and interest payments (based on the monthly payment amount in effect when you make the most recent payment). As an example, if you have made 30 months of consecutive on-time payments, and then, based on the monthly payment amount in effect on the due date of your 31st consecutive monthly payment, you pay a lump sum equal to 6 months of payments, you will have satisfied the payment condition. Cosigner release may not be available if a loan is in forbearance. If the student dies after any part of the loan has been disbursed, and the loan has not been charged off due to non-payment or bankruptcy, then the outstanding balance will be forgiven if the servicer is informed of the student’s death and receives acceptable proof of death. If the student becomes totally and permanently disabled after any part of the loan has been disbursed and the loan has not been charged off due to non-payment or bankruptcy, the loan will be forgiven upon the servicer’s receipt and approval of a completed discharge application. If the student borrower dies or becomes totally and permanently disabled prior to the full disbursement of the loan, and the loan is forgiven, all future disbursements will be cancelled. Loan forgiveness for student death or disability is available at any point throughout the life of the loan. 6 Important Disclosures for LendKey. LendKey Disclosures

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