Ask Jeni: Can I Add My Family’s Parent PLUS Loan to My Student Loan Total?

Ask Jeni: Can I Add My Family’s Parent PLUS Loan to My Student Loan Total?

by | May 15, 2018 | Ask Jeni

Ask Jeni is brought to you in partnership with tuition.io, a company dedicated to helping the best companies free their employees from student loan debt.

 

My parents took out a separate loan under their name for my school. How do I add that amount to my current loan? It seems to be easier if it remains under their name, but I still would like to figure out how to consolidate.

 

Unfortunately a Parent PLUS loan can’t be consolidated with your federal student loans. The loan is owned by your parents and the Department of Education views your parents as responsible for repaying it.
If you want to be responsible for payments there are two options:
1. You can log in to your parent’s loan account and make the monthly payments on this loan. This option doesn’t make you legally responsible for the loan and the loan will remain under your parents name. However, it does allow you to make the loan payments so your parents don’t have to.
2. You can consider refinancing their Parent PLUS loan with a private refinancing company. This option will require that you have a fairly high credit score, a high income, and steady income. It also comes at the expense of losing the option for loan forgiveness and federal student loan benefits. However, this option will transfer ownership of their loan to you. Your name will be on the loan and your parents won’t have any further obligations to repay the loan.
Ask Jeni: Can I Add My Family’s Parent PLUS Loan to My Student Loan Total?

Ask Jeni: Should I Refinance or is it Too Risky?

by | May 8, 2018 | Ask Jeni

Ask Jeni is brought to you in partnership with tuition.io, a company dedicated to helping the best companies free their employees from student loan debt.

 

I have $245,000 in federal student loans with an interest rate of about 7% and I’ve been repaying under the income-based repayment plan. I’ve recently had a salary bump to $175,000 and expect to get a $100,000 bonus this year. If I keep this income I could pay off my loans in about three years and it seems like refinancing would make a lot of sense. But I’m worried my income might change. Should I stay on IBR and put away all the money I make until I have enough to pay off the whole loan? That way, if I lose my job, I haven’t spent all that money on loans, and could just wait out the IBR term?

 

This is a great question! Here’s my understanding of your situation: In the past you previously made an lower income that necessitated and income driven repayment plan. That’s the plan you’re making payments under right now. Now, your income has greatly increased and you can afford to repay your student loans more aggressively. You also expect to receive a large bonus this year. You have some uncertainty about the stability of this job and how long you will continue to make this income, and worry you may return to a lower income in the future. So wonder if refinancing is a good option or if you should hedge your bets and let the interest accumulate in case you end up wanting income driven loan forgiveness in 2032-2037.
From your description, you’re making too much money to consider an income-driven repayment plan a smart option. The interest that accrues by making minimal payments is a waste of money at this point. Your income-driven payment is going to increase in response to your higher income and I think it puts more control in your hands if you bet on having a future with higher income.
You have a few options. You can switch to a more aggressive federal repayment plan, you can consider refinancing, or you can do nothing.
I’m not sure what the status of your savings account is. Before aggressively repaying your student loans you will need to have at least three months of expenses saved up, if your job seems unstable I would make that six months. If you don’t have that emergency fund yet, savings should be your first use of your extra monthly income.
Regardless of whether you stick with your income-driven repayment plan or choose a more aggressive federal repayment plan, I suggest you start paying a higher monthly payment right now. Don’t “save up” your extra money to make one big payment, use your extra monthly income right now to pay down your student loans bit by bit. Interest accumulates constantly and on $245,000 it’s a lot of interest. Saving up money for one big payment costs you a lot of money with no financial benefit. It only makes it more difficult to pay off your debt in the future.
When it comes to refinancing, I would be cautious. The fact that you’re concerned about your income being unpredictable leads me to think refinancing isn’t a great choice for you right now. The interest is going to keep killing you but you will be in a much tougher spot if your refinance and your income gets reduced significantly.
If you have separate loans and haven’t consolidated, one option is to consider refinancing only a set dollar amount of your student loans that you can comfortably afford to repay within the next year or so. Refinancing companies buy your loans from your current servicer and you can pick and choose which loans to refinance.
For example if you have a $15K loan and a $12K loan with the highest interest rate and then a ton of other loans you could consider refinancing only those two loans for a total of $27,000 refinanced. You can keep repeating this as you pay them off while you have high-income employment. This option is sort of a compromise between getting slammed with the high federal interest rate and the safety federal loans provide.
Ask Jeni: Can I Add My Family’s Parent PLUS Loan to My Student Loan Total?

Ask Jeni: How do I Apply Extra Payments to Principal?

by | May 8, 2018 | Ask Jeni

Ask Jeni is brought to you in partnership with tuition.io, a company dedicated to helping the best companies free their employees from student loan debt.

 

How can I have the $100.00 my employer pays towards my student loan go directly to the principal? I make the full monthly payment.

Your best bet is to contact your loan servicer (whoever holds your student loans) directly, either through their website or via phone or email. Let your servicer know that you want all extra payments applied to principal rather than used to pay ahead. Some servicers (like Great Lakes) do this automatically unless a borrower indicates a custom allocation of their extra payment.

 

Typically, the payment will be applied to any accrued interest since your last payment, then the remainder to principal.

 

For example, if you made your required monthly payment 5/1 and the employer benefit payment was applied 5/7, your payment would first be applied to the six days of interest that accrued  since your monthly payment was made. The remainder of your extra payment would be applied to principal.

 

Then, next month when you made your monthly payment on 6/1 you would only be paying 25 days of accrued interest before the remainder was applied to principal.

Ask Jeni: Can I Add My Family’s Parent PLUS Loan to My Student Loan Total?

Ask Jeni: Are Loan Forgiveness Phone Calls Real?

by | Apr 24, 2018 | Ask Jeni

Ask Jeni is brought to you in partnership with tuition.io, a company dedicated to helping the best companies free their employees from student loan debt.

 

How do I know if I am eligible for any sort of loan forgiveness? I get calls often about this and assume they are fake – but I’d like to know if any sort of program is out there that I am eligible for and where I can find information on this.

 

You are 100% right, any calls you get about loan forgiveness are fake. They’re scams trying to steal your money and information 🙁 The US Dept of Education doesn’t call borrowers to sign up for loan forgiveness.

 

The first place to start with loan forgiveness is by answering a few questions.

 

What type of student loans do you have? Federal or Private?

Private loans aren’t eligible for student loan forgiveness.

 

What do you do for employment and who do you work for?

There are loan forgiveness programs based on the type of work you do (such as Teacher Loan Forgiveness) and who you work for (any 501c3 employer).

 

If none of those situations apply and you have federal student loans, you may be eligible for income-driven loan forgiveness. You must be enrolled in an income-driven repayment plan and make payments for 20-25 years. After that point in time your remaining balance will be forgiven (however it is taxable as income).

 

I definitely understand not wanting to miss out on an amazing opportunity if it exists, but like you said the loan forgiveness calls are too good to be true.

Ask Jeni: Can I Add My Family’s Parent PLUS Loan to My Student Loan Total?

Ask Jeni: The Best Strategy for Extra Payments

by | Apr 16, 2018 | Ask Jeni

Ask Jeni is brought to you in partnership with tuition.io, a company dedicated to helping the best companies free their employees from student loan debt.

I have 5 loans with different interest rates through Great lakes. I have set it up so that extra payments go to the loans with the highest interest rates. Is this a good strategy or should I set it up so that the extra payments are spread out over all 5 loans?

Great question! You’re making the right choice. Your extra payments should definitely go to your highest interest loan first. That’s the most efficient use of your extra payment and will save you the most money.

 

On the Great Lakes website they define their standard process for excess payments to your account. They apply excess payments first to any accrued interest (interest since your last payment) then apply the remainder to your highest interest loan first. It looks like Great Lakes will indicate on your account that you are “paid ahead” even though they’re applying your extra payments to principal.
Great Lakes also indicates that you can set up a custom allocation.
Here’s the link to the FAQ on the Great Lakes website with more details.  https://mygreatlakes.org/educate/knowledge-center/how-payments-are-applied.html
Essentially, unless you’ve elected a custom allocation your extra payments should be being applied in the way that will save you the most money!
Ask Jeni: Can I Add My Family’s Parent PLUS Loan to My Student Loan Total?

Ask Jeni: Can I Use my GI Bill to Repay My Student Loans

by | Apr 5, 2018 | Ask Jeni

Ask Jeni is brought to you in partnership with tuition.io, a company dedicated to helping the best companies free their employees from student loan debt.

I’m a veteran of the US Navy. I don’t know why I didn’t take advantage of the GI Bill for college, but I got talked into taking out regular student loans. Is there a way to have my student loans covered by the GI Bill or is it too late?

Thank you for your service in the Navy.

Are you finished taking out student loans? If you’re still going to college and taking courses you can use your GI Bill for new tuition and other qualifying college expenses.

If you’re done with school and strictly wondering about repayment, unfortunately the GI Bill can’t be applied to repay student loan debt.

There is a benefit program available for military folks who enlist for three years of active duty that repays a capped amount of student loan debt. I believe that benefit may be targeted to new enlistment not veterans but you could check with your VA office or a recruiter. It also means you would have to re-enlist for three years which may interrupt your current career track.