FAQ

What Are The Top 5 Advantages to Federal Student Loans?

The student loan problem is running rampant throughout America. There seems to be no end in sight for borrowers. Whether they are getting ready to take out some loans or you’re entering repayment the weight of student loans is firmly set upon your shoulders. The question remains if student loans are so bad then why are so many Americans relying on them for their higher education?

The question remains if student loans are so bad then why are so many Americans relying on them for their higher education?
The student loan problem is running rampant throughout America. There seems to be no end in sight for borrowers. Whether they are getting ready to take out some loans or you’re entering repayment the weight of student loans is firmly set upon your shoulders. The question remains if student loans are so bad then why are so many Americans relying on them for their higher education?

1. No Credit History Required.

Most loans require you to have a good credit history to take out loans. This is why many first-time loan borrowers entering college look toward student loans to supplement their tuition and living expenses. Filling out a FAFSA for federal student loans is built to be a lot easier than approaching any private loans

2. The Ability to Postpone Payments

The ability to apply for forbearance or deferment really helps out borrowers and is one of the more tangible benefits of federal student loans. If you have federal student loans then you have the right to three years of forbearance. However, if you went the route of private loans you are at the mercy of your lender. Private loans aren’t required to have any form of payment suspension and can have very strict rules.

3. Income-Driven Repayment Plans

Federal loan borrowers have access to many different plans for their repayment. Typically, you start out with a standard repayment plan and if you can’t afford those payments, you have options. There are four different types of income-driven repayment plans. Chances are that one of them is right for your specific needs. Private loans will not have access to varying plans.

4. Consolidation is Available Even with Bad Credit

Often times borrower can find themselves taking out several loans over their college career. Whether they asked for a small loan, to begin with, and outlived that loan or maybe they stayed in school longer than they thought they would. Having multiple loans can be confusing. You could have multiple payment dates and plans. Perhaps you have a high-interest rate and consolidation will help. Consolidating your federal student loans is easy. It doesn’t take your credit score into effect and can be submitted quickly and easily.

5. Student Loan Forgiveness

tudent loan forgiveness is very real. The best form of forgiveness is available to borrowers who work in public service. Through the Public Service Loan Forgiveness program if you remain with a job within the public service and make 120 on-time monthly payments under an income-driven repayment plan you will then become eligible for loan forgiveness and the remaining amount of your loan will be forgiven.

Options are available to help

Most people do not realize that there are programs designed to help those who may be struggling with their student loan payments. Thousands of borrowers have trusted Financial Preparation Services to be their advocate. Click here to find out what options are available. Our services could help you get back on track.

Is a Deferment Better than a Forbearance?

If you’re a student loan borrower, there is a lot of information out there that can be overwhelming and it can be hard to keep all the information straight. Maybe you’ve heard some terms but don’t remember what it is or how it applies to you. You may have heard of a deferment and you may have a vague idea what it is. But what happens to your loans while they are in a deferment?

You may have heard of a deferment and you may have a vague idea what it is. But what happens to your loans while they are in a deferment?
If you’re a student loan borrower, there is a lot of information out there that can be overwhelming and it can be hard to keep all the information straight. Maybe you’ve heard some terms but don’t remember what it is or how it applies to you. You may have heard of a deferment and you may have a vague idea what it is. But what happens to your loans while they are in a deferment?

A deferment is a period of time in which repayment of your principal loan balance and interest of your loans are temporarily delayed. So, unlike a forbearance, your loans do not accrue interest while in deferment. The government, depending on what type of loans you carry, will actually take care of the interest for you. The government will pay interest on Federal Perkins Loans, Direct Subsidized loans, and/or Subsidized Federal Stafford Loans. They do not pay interest on any unsubsidized Forbearance loans or and PLUS loans. The borrower is responsible for paying the interest that accumulates during the deferment period. However, your payment will not be due during the period.

Some reasons you might find yourself eligible for deferment might be:

  • In-school deferments for at least half-time study
  • Graduate fellowship deferments
  • Economic hardship deferment granted one year at a time for a maximum of three years
  • Unemployment deferment not to exceed three years
  • Military deferment
  • Rehabilitation training program deferment
  • Finding out if you’re eligible for a deferment can be tough to figure out. There is a chart on the Department of Education’s website that can provide more in-depth look at eligibility.
  • Most of the deferments offered are not automatic. For the most part, you will need to request that your loans are put into a deferment with your loan servicer. If you’re attending school at least half-time or more you must contact your financial aid office and loan servicer for an in-school deferment. If you hold Perkins Loans you will contact the school, you were attending when you received that loan. For Direct and FFEL Loans you will contact your loan servicer.
  • Options are available to help
  • Most people do not realize that there are programs designed to help those who may be struggling with their student loan payments. Thousands of borrowers have trusted Financial Preparation Services to be their advocate. Click here to find out what options are available. Our services could help you get back on track.

How to Deduct Your Student Loans?

Under some specific circumstances, you may be able to save on your tax bill by deducting the interest you pay on your student loans. You can make a total deduction of as much as $2,500 from your taxable income. You don’t even need to itemize to claim this deduction.

If you’re one of those lucky enough to have navigated your way into college, chances are you have student loan debt. The massive $1.3 trillion national student loan debt is still trending upwards, but you can leverage it in your favor. Do you need extra cash to put toward your student loans? Then pay attention and put this in motion next tax season.

Under some specific circumstances, you may be able to save on your tax bill by deducting the interest you pay on your student loans. You can make a total deduction of as much as $2,500 from your taxable income. You don’t even need to itemize to claim this deduction.

Unfortunately, not every loan is eligible for this deduction. Your student loan must have been made to cover qualified education expenses, defined by IRS Publication 970. This would include tuition, fees, and most room and board charges. The loan can’t have come from a relative or employer plan. Also, the educational expenses must be incurred by you or your spouse or your dependent for a qualified educational institution. You also must be enrolled half-time or more as defined by your college. Furthermore, the half-time designation must meet certain Federal Standards. The above linked, IRS Publication 970, will contain more details.

However, you are not eligible if you can be claimed as a dependent on someone else’s taxes. You are also not eligible if your spouse can be claimed if you are filing married, joint.

The Student Loan Interest Deduction is limited based on your modified adjusted gross income (MAGI). The MAGI is your adjusted gross income from your tax form with various subtractions based on which tax form you are submitting. The phase-out period for eligibility begins at $65,000 for single taxpayers and $130,000 for those married and filing jointly. Beyond a MAGI of $80,000 for a single taxpayer or $160,000 for married filing jointly, you cannot claim the Student Loan Interest Deduction at all.

If you paid at least $600 of interest on your student loans you will receive a Form 1098-E from your loan servicer. You can still make your deductions if you paid less than $600. In Publication 970 there is an example of how to do so. Make sure you take advantage of this student loan hack to save yourself some money and pay off your loans sooner.

Most people do not realize that there are programs designed to help those who may be struggling with their student loan payments. Thousands of borrowers have trusted Financial Preparation Services to be their advocate. Click here to find out what options are available. Our services could help you get back on track.

What can you do if a tax deduction is not enough?

A tax deduction is great…but what happens when the payment is still a financial struggle each month? Most people don’t realize that there are programs available to help, yet we have assisted thousands of families and individuals lower their payments. Click here to find out what options are available. Our services could help you get back on track.