Consequences of Student Loan Default

Defaulting on your student loan has some expected consequences such as being reported to the Credit Bureaus, which will definitely impact your credit score negatively.

You may also find yourself impacted by any or all of these other situations:

• Your federal or state income tax refunds or other federal or state benefits will be used to reduce your loan balance.
• Collection fees and costs, court costs and attorney fees will be added to your loan.
• If you have a state professional license you may lose that license, or be

Student Loan Debt Hampering Your Start Up Business Desires?

So, you graduated college, haven't been able to find a job, you have a few ideas to start a business, but at the back of your mind you are probably thinking that there is no way you can make your student loan payments and undergo the uncertainty of a start-up, well consider the income-based repayment (IBR) programs that exist for federal student loans.   Under this program graduates with lower incomes or families are required to make loan repayments on a sliding scale.  See what your repayment amount might be with this IBR calculator.   Learn more about the program here.   Read Sean Greene's piece on Student Start-Up Plans.

Graduated in 2011? Check your repayment due date.

If you graduated in May or June of this year - 2011 - then your 6 month grace period is probably up this month (November) or next.  Perkins Loans have a 9 month grace period - mark your calendars now.  If you haven't heard from your lender or servicers - contact them.  If you aren't sure who your loan servicers are - look it up here at www.nslds.ed.gov  - the National Student Loan Data

Wondering what the limits are on your federal student loans?

So are you wondering whether you got the maximum amounts for grants and subsidized student loans in your financial aid package?   The numbers change depending on where you are in your college career, e.g. if you are in your first year of college (undergraduate) the maximum amount you can be awarded as a subsidized loan is $3,500.  The number stays the same whether you are considered a dependent or an independent student, but if you are in graduate school that number goes up to $8,500.  For undergraduate school, the amount increases by a $1000 a year through your third year and then remains constant (of course until the rules change) - so as a 3rd or 4th year student your max subsidized loans would $5,500.  For graduate school - the amount for all years is $8,500.  See a handy chart here.    The chart will also tell you the maximum federal debt you will be allowed to aggregate for your program, including unsubsidized loans, the numbers may be higher if you are in a health professional program.

For Grants the maximum annual award currently is:  Pell Grant - $5550; Federal Supplemental Educational Opportunity Grant - $100 - $4000; Iran and Afghanistan Service Grant - $5500; and the Teacher Education Assistance for College and Higher Education (TEACH) Grant - allows up to a maximum of $4000 per year to students who intend to teach in a public or private elementary or secondary school that serves students from low-income families.

Have questions? let me know in comments.

It's time to file your FAFSA - Free Application for Federal Student Aid

Nation,

It’s that time of year again, it’s time to file the FAFSA, the Free Application for Federal Student Aid which most colleges require that you file in order to determine your qualification for financial aid.  If you are attending a private college you may be required to file a CSS/Financial Aid Profile, in addition to the FAFSA.

To get started with the process print the worksheets here.   Gather your data and start