Scammers Gonna Scam--Beware of Student Debt Relief Scams

Because the housing crisis had to slack up (but is by no means entirely finished), scammers had to move on to the next pool of people in financial trouble.  That would be former students who have racked up a bunch of student loan debt.  It's hard to get out of, and  hard to have discharged in bankruptcy, and those things tend to make people desperate.  So out come the scammers, and Illinois is the first state to legally come after one.

The thing to remember is that you shouldn't pay anybody money up front for this.  And all the information you need is available for free on the internet.  If you need to find your student loan holder, for instance, the National Student Loan Data System can help.  If you're not in default, you can call 800-433-3243 as well.  For loans in default, call the Department of Education’s FSA Collections Office at 800-621-3115 for the information.

A great, one-stop shop to explore your options is the Student Loan Borrower Assistance website set up by the National Consumer Law Center. It has a link to think out your solutions, depending on where you are with your debt (default or not?), or possible solutions.  It has a link with federal, state, and private loan cancellation plans. It has steps to see if you can possibly get it discharged in bankruptcy.  The site is a gem, but also check out the federal government's site on student loans.

What's This New Student Loan Repayment Option?

There was a big deal of interest in student loans this month.  While Elizabeth Warren's Senate legislation was shut down by Senate Republicans, President Obama signed an executive order that eventually expands income-based repayment options to a lot more borrowers than were previously eligible.  Before the executive order, income-based repayment plans were only an option for people who borrowed in 2007 or after. 

Eventually, it should be available for people who had federal student loans before that, and caps repayment at 10% of "discretionary income."  What does that mean?  That's simply 10% of your income minus whatever the poverty level is for your household size.  The loan can be forgiven after 20 years of on-time payments, or 10 years in a public service job. 

This does not come into effect immediately--rules and regulations will need to be created, and it's aimed for the middle of 2015.  In the meantime, see this page to find out what your federal loan forgiveness/repayment/ plans you might be eligible for.

More Stuff on Teacher Student Loan Forgiveness and Cancellation

In the previous posting, we noted that student loan forgiveness and cancellation for doctors and other health professionals was not confined to the feds.  The same is true of teachers.  There are a couple of federal programs for teachers, and you do not necessarily have to be teaching in impoverished public schools.

There are two major federal programs: one is loan forgiveness for Direct Subsidized Loans, Direct Unsubsidized Loans, Subsidized Federal Stafford Loans, and Unsubsidized Federal Stafford Loans.  These are for teachers that do indeed teach in poor areas.

However, there is a loan cancellation program for those with Perkins Loans, and eligible teachers include those not only teaching in poor schools, but those in special education and teaching in math, science, foreign languages, and those teaching in subject areas deemed to have a teaching shortage in that state.  Even teachers in private schools qualify.

However, there are state programs for loan forgiveness too. 

More Medical and Health Care Student Loan Forgiveness Programs

The beauty of financial help (and the reason I can general post twice a week) is that it's like an onion, that reveals more as you peel away each layer.  I've posted before on student loan aid, cancellation and forgiveness.   

But there's always more to uncover.  In poking around for more items to help teachers (more on that at a later posting), I found more sources of student loan forgiveness and loan repayments for health care professionals on the state level.  In particular, a database of over 70 state and federal programs listed at the website of the American Association of Medical Colleges.  They cover mostly doctors, but also other allied health programs, like therapists, too.  They also cover some scholarships.  But they are quick to point out that this is not a comprehensive database.

Indeed it's not.  Another source of information is at the National Health Service Core website, in its list of state loan repayment programs.  While the NHSC does not run state directly to students,, you can follow the list to find state programs that do. 

But even this is not comprehensive.  Try googling yourself by using search terms like "allied health," medical, or nursing, with the name of your state and "loan repayment" or "loan forgiveness." 

New Good News on the Student Loan Front--Easier Application, Better Terms, Easier Application for Disability

The new month brings some good news on the student loan front.  There are new federal repayment policies that will help recent graduates.  The new pay-as-you-earn plan for people whose first federal student loan was taken out after September 30, 2007, AND who has at least one after September 30, 2011.  The payments are lower, and loan forgiveness after 20 years, rather than 25.  For more information and to see if you are eligible, see this page.

Besides, the federal government has a new page for student loans and their repayment.  Applicants can retrieve their own tax information electronically and access their own information--and apply for relief--more quickly.

Finally, new procedures for discharging federal student loans due to total and permanent disability are easier and less cumbersome.  Applicants can now just supply one application, rather than submit applications to each lender.

Some Follow-Up on Appealing FAFSA Decisions and Job Retraining

Readers sometimes write.  We got a good posting from an anonymous person the other day, full of good stuff, and worth posting for more readers. It was written in response to a posting on retraining/education for older workers:

FAFSA does indeed use an applicant's previous year's tax return to make financial aid decisions BUT the decisions (usually "turndowns") can be appealed with the information about the applicant's current status. This requires "lead time" so a prospective student for Fall 2013 should begin the process no later than January 2013 - because by April 2013 the grants, need scholarships and federal loan availability will largely already be spoken for. SECOND beware of the "Plus" programs, not all are good. In my area (Oregon) the "Plus" program only gets you trained for and then employed in a minimum wage/part-time call center job - few people's idea of gainful employment - a minimum wage part time (20-30 hours) job isn't even a decent "survival" job. THIRD - in some states there is a federal continuing education grant offered through a state's unemployment department twice yearly.

1) On the possibility of appealing the decision to not provide financial aid for a student because of changing financial circumstances, such as a job loss.  Anonymous states that you can do this, and a check of various college, university and government websites prove that this is true.  In fact, some institutions have several forms depending on the cause of the appeal--job losss, loss of dependency on parents, etc.  When you are hit with unemployment or another disaster you should check with the institution that turned you down.  But the devil of it is that you still need some "lead time" to appeal while the institution still has funds available.  If you have a calamity after they run out of money, you're still stuck.

2)  "Beware of PLUS programs."  The funding behind the PLUS program that I mentioned as a career training program for people over 50 in that same entry is specifically to enter careers in health care, education and social services, but many programs aim to retrain workers, may use the word PLUS, and essentially train you for stuff that is low-paying and a waste of time.  You should beware of PLUS as much as any other offer for job training.  Take the time to check out how well-paying and in-demand the job for which you would be training is. In this entry, I mention some research you can do to find out.  You can also check the salaries in job sites for positions offered in indeed.com. 

3) Some states do offer job retraining through whatever agency handles unemployment in your state in various forms and guises, because it may come through different federal funding streams.  It may be twice a year, or it may be continuous.  And by "continuous," we mean until the money runs out.  And since a program might be funded by programs meant to serve different constituencies (displaced workers, veterans, etc), there might be funding for you if you fall into one category of worker, but not another.   Still, the department that handles unemployment claims is an underrated source of retraining money.  In this blog, we have covered stuff from the Ohio Department of Jobs and Families, including their listing of eligible training places that you can get funding to enter (when the department has money for your type of worker).    To identify the department in charge of unemployment in your state, see this site, then check out the site for worker and job retraining, or contact them.

 

Another Place to Find Out About Student Loan Forgiveness and Income Based Repayment Plans

In a previous posting, we found a federal website that is dedicated to federal student loan forgiveness and income based repayment (IBR) plans.   And while it's good, we found another private site that helps sketch out things more clearly, and allows you to get notices of when there are changes that effect you.

Ibrinfo was created by the Institute for College Access and Success, a nonprofit advocacy group that pushes for student debt relief, and preaches its gospel, and their many partners.  They spell out all the options for eligibility, and answer questions you may have.  For instance, you may have eligible federal loans forgiven if you have been making payments for 25 years already.  When does this eligibility start counting? Find out here.  What kinds of jobs are eligible for public service student debt forgiveness?  When does the 10 year clock of public service/debt payments start?  Find out here.   What is the link to my lender, and how do I apply to them?  A page full of links to lenders and their applications is right here.  While the federal ombudsman page is good, this fills in a lot of the blanks. 

Better yet, you can register to get free updates, or you can register on their Facebook page to get a continuous stream of breaking information, like the newest plan to make enrollment in the program even easier.  If you a debt-carrying student, the parent of one, or know one, keep this page bookmarked and sign up for updates.

Student Loans That Aren't From the Feds.

A lot of news stories have been generated about federal student loans for higher education.  But the feds aren’t the only source of loans.  Some private organizations that give scholarships may also provide low or no-interest educational loans for population groups that they serve.  Sure we love the truly free money.  But cheap money is a positive occurance, too.

There's this link to a CNN story with a list of no-interest student loans, courtesy of a couple dozen nonprofits across the USA.  They are open to targeted groups, mostly by geography, but check them out anyway--you could be in a target population.

For instance, The Evalee C. SwartzCharitable Trust for Education provides interest-free loans for needy students, and the Military Officers Association offers not only scholarships, but interest-free loans to the children of current and retired U.S. military officers. The Orphan Foundation gives loans and scholarships to former foster care children.

The P.E.O. Foundation gives low-interest loans to women who need help in completing their higher education.  The woman must be recommended by her local PEO chapter and be within two years of finishing their schooling, with a current interest rate no higher than 4% that must be repaid within six years of completing school.   The Pickett and Hatcher Educational Fund gives low-interest loans to undergrads who are not in the field of medicine, law, ministry or vocational education.

The most interesting of the bunch is the Theater Communications Group.  People are always beating the bushes for money to repay the student loans that are already out, but if you are a promising young professional in theater direction or design, they may provide money to help pay outstanding student loans. 

New Regulations Coming on Recruitment of Veterans to For Profit Schools. Also, Some Student Veteran Scholarships

The president signed an executive order on April 27th aimed at dealing with the high-pressure recruitment of veterans to for-profit colleges.  In the order, colleges will be required to create a transparent document, (something like this one), showing how much you will owe if you sign up for the college, and compare it to the cost of going to another public or private school. Rules would be created barring some schools from doing their high-pressure recruiting right on or near military bases.  And rules will be created to keep private schools from creating government-looking websites that fake out potential students into thinking that they are official sites of the U.S. government or the military.

The stakes are huge: federal law bars private schools eligible for Title IV federal aid from getting more than 90% of their revenue from federal student loans. BUT...the big loophole is that military aid does not count as federal aid, so some colleges have worked hard to get GI benefits.  As shown in this PBS documentary, some of them don't do it in nice, fair ways.

How can veterans protect themselves right now?  They can see that the schools they are considering is accredited.  Here's also a sheet of information from the VA Office on choosing a school. 

And, in related news about bad actors, the Student Veterans of America just ran down a list of its chapters that had their charter revoked.  The SVA is an organization by and about student veterans, but the chapters that got kicked out for having leadership not by the students, but by school officials. 

In better news for scholar veterans, there are some SVA scholarships available, such as the STEM scholarship for those in science and technology, the Google scholarship for those in computer science, and the Yellow Ribbon scholarship for outstanding students in private or out-of-state schools facing financial hardships. 

New Consumer Hotline for Mortgage and Credit Card Complaints

The feds have created a new place for homeowners with mortgage complaints to contact and (hopefully) get them resolved.   This includes escrow disputes, mortgage modification issues, or mortgage fraud.  you can go online to www.consumerfinance.gov, or call toll-free 1-855-411-2372.  It was created through the Dodd-Frank banking law that passed in 2010.  What can they do for you?    They are supposed to mediate complaints, and if a complaint isn't within their sphere of power, they will refer you to an appropriate agency.

They also field credit card disputes.  If you run into your very own "Peggy," or have other credit card problems that can't be resolved you can file a complaint. 

It's got other good stuff: a page on student debt--with information to know BEFORE you get into student debt, and an online "assistant" to walk you through your options now that you have a ton of student debt. 

Other places you might want to go if you have mortgage or credit card issues: your own state consumer protection office,  or your state's attorney general office. 

New Student Income Repayment Program, and Other Forgiveness/Cancellation/Discharge Options

Barak Obama got a fair amount of p.r. mileage out of expanding the student loan income repayment option.  In this proposed plan (the details which need to be hammered out), repayments will be limited to 10% of the student's income, with a forgiveness of loans after 20 years of payments.  However, a plan of this sort has already been in place for a couple of years.  In the current scheme, students can have their payments reduced to 15% of their income, with forgiveness after 25 years of payments.

There are other plans for federal student loan reduction, forgiveness or cancellation, too.  If you are a teacher, explore this page to find forgiveness (for teaching in low income areas, under certain circumstances) and other options.  Nurses also have options for partial loan forgiveness for public service.  And there is another program for public service for other professions, too--assuming you have already made 120 payments towards your loans.  You may be eligible for total cancellation of a federal student loan if you are permanently disabled.  You may also be eligible for loan cancellation if the school closed down before you could graduate, or within 90 days after you quit studying there.

To check out all your cancellation options, see this page.  For more options for delay,  forebearance, or "income sensitive" options (like the new one announced last week) check out this page.

New Rules on Title IV Student Loan Schools

As mentioned in a previous post, the federal government was planning to tighten the rules on which colleges and vocational schools are eligible to receive Title IV funding (eligibility for federal student loans).  This has been in response to issues with for-profit higher education institutions that have been accused of creating big debts for students who graduated, got jobs that didn’t pay well, and left the federal government holding the bag for student debt.  The rules have come out.  They are not as tough as originally proposed, but tougher than what is on the books now.  In order to be eligible for Title IV aid (federal student loans), schools must have: at least 35% of their graduates repaying their federal loans, grads must have a debt to income ratio of at least 12% of their total income, and 30% of their discretionary income, for the school to retain Title IV eligibility.  If not, the school loses their Title IV eligibility in 2015.  In other words, they have to have a track record of providing an education that will lead to a good job, and establish a track record of not stiffing the federal government on student loans.

Still, the burden falls on you to check it out ahead of time.  Most specifically, will the amount of debt you take on by borrowing the money to attend be worthwhile?  There’s a couple of ways to do this: check out the actual job prospects and pay levels for a job you are considering training for.  Are there other schools in the area that train you for the same jobs, but cheaper?  Will you actually get the credentials you need to practice your new occupation?  Sources of information on these questions follow.

In Ohio, you can look up which proprietary schools teach particular programs, and then compare them.  Nationally, there is the college navigator, in which you can put in your zip code, the radius you want, and the type of school (public or private, 4 year or 2, etc.), and have a list pulled up for you.  You can find tuition costs, programs, and more, and create lists of schools that you can compare.  If you are looking for retraining-oriented schools, this website will allow you to search for the schools in your state that provide education in particular fields—at least theschools that have been o.k.’d for Workforce Investment Act reimbursement.  Even if there’s no WIA money in your state (more than likely, given the bent of the current Congress), it still gives you an idea of what vocational programs are out there for you to compare.

As for good credentials, remember to check two places: find out (the Occupational Outlook Handbook is a good place to start) what organizations offers accreditation in the field you are thinking of entering, and if licensing is required in your state for the career you want.  If your state licenses this occupation, does the school have requirements that matches your state?  If not, you may spend a lot of money for training that your state--or your new profession's accrediting agencies--don't recognize.

A New Student Loan Repayment Plan

...rolled out by the federal government gives you the option of repayments that are based on your income. The page has a chart of monthly repayments, determined by your income and household size.

The loans that can be adjusted include Stafford, Grad PLUS or Consolidation loan made under either the Direct Loan or FFEL program UNLESS the loan is currently in default. Also ineligible are parent PLUS Loans, or consolidation loans that repaid a parent PLUS Loan.

In addition, there is a public service loan feature that allows the loan to be forgiven entirely after 10 years of reduced payments if the student does public service work as defined here. If you may be eligible, it's worth checking out.