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Know Your Options to Reduce Student Loan Payments

By U.S. News & World Report

The Student Loan Ranger receives many questions from readers. On occasion, we like to share some queries that other borrowers are likely to relate to .

Here’s a sample of some we’ve addressed recently. Letters have been edited for clarity and to protect readers’ privacy.

[Read stories about how real borrowers repay their student loans.]

Q. I have student loans in my name and in my mother’s name. I’m looking into consolidating them and applying to reduce my monthly payments like with an income-driven repayment plan.

At the moment, I owe about $1,200 a month from the two. I’m also starting a new job right now. I’ve been in training, not really getting paid, for six weeks. I actually start working on June 1 but won’t get paid until July 1 at the earliest.

I’ll be making about $2,300 a month. On top of all of that, I’m being relocated from Texas to Colorado so I have a lot of moving expenses right now. Do you have any suggestions or advice on how I should handle my situation? -Too Many Expenses

A. I’m afraid you cannot consolidate your mom’s and your loans together without using a private loan, and there are no income-driven plans in the private student loan market.

Instead, I would go to studentaid.ed.gov and use the repayment calculator to find a payment plan for the loans under your name and for the parent PLUS loans, which will remain in your mother’s name, that will give you the best payment overall.

PLUS loan payments will be based off of her information — but if she has a low income, you could have her consolidate just those PLUS loans at the same website — and request income-contingent repayment to help get the payments down further.

Parent PLUS loans are only eligible for income-contingent repayment and only if consolidated under the direct loan program. Depending on your mom’s income, the consolidation itself may give you the lowest payment.

Unfortunately, no payment plans under either the federal or private loan products take expenses into account. But if your income is very low right now, your payment for your loans under an income-driven plan will likely be $0. Hopefully, that will help making the overall amounts affordable.

The Parent PLUS loans are your mom’s legal responsibility, so if you can’t make the payments, make sure you let her know so she can make them and avoid hurting her credit or worse.

[Discover four things borrowers don’t always know about parent PLUS loans.]

Q. Is there a service for consolidating student loans for individuals with disabilities? I do not qualify for the Obama Loan Forgiveness Program, nor full-disability status. My disabilities make it difficult to work full time, so I work from home part time.

I have more than $60,000 in student debt and cannot repay at the expected rate, and it continues to grow uncontrollably with interest.

Please let me know if there is an option for me. -Looking for Options for Disabled Borrowers

A. If you are disabled, are on a certain level of Social Security disability and do not make more than the poverty level, you may be eligible to have your federal loans discharged due to total and permanent disability. You can see the full requirements and apply at disabilitydischarge.com — despite the address, this is actually a Department of Education website.

[Learn about new help available for disabled student loan borrowers.]

If you are not eligible for discharge, I would apply for one of the income-driven repayment plans, such as Revised Pay As You Earn or income-based repayment. You can read about these plans, and find out how much your payment would be under each one, at studentaid.ed.gov.

These plans keep the payments in line with your income and have a forgiveness component after 20 or 25 years, depending on the plan. If you income is very low, you could end up with a payment of zero dollars.

There is no such thing as the “Obama Loan Forgiveness Plan.” Any ads or discussions you have with organizations that use this term are usually indicative of a scam. The public service loan forgiveness program was actually written into law under the Bush administration, and forgives the balance of eligible federal student loans for borrowers working in public service after they have made 120 payments.

As you stated, you are not eligible for this, I’m guessing you don’t work for a government or eligible nonprofit employer. Those income-driven plans may be your best strategy to prevent default and ensure the loans will be paid off or forgiven.

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Know Your Options to Reduce Student Loan Payments originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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