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College Students and Recent Grads Study: College Students Face High Interest Rates on Student Credit Cards

Paying with credit card

It is that time of year: millions of students will be heading to college. For many students, this will be the first time that they will be the targets of banks’ marketing departments.

While the CARD Act changed how lenders can offer college students credit cards, young adults are still able to acquire these potentially expensive products. A study of college student credit cards by shows that a student new to credit is likely to pay an average APR of 21.4%. And taking out cash is even more expensive, with an average APR of 24.1%.

  • We reviewed the Top 50 banks in the US by deposits
  • We reviewed credit cards specifically targeting students and actively marketed on the banks’ websites
  • All credit cards, with the exception of Capital One Journey, offer a range of Purchase APRs. CapitalOne offers a single, flat APR of 19.8%
  • For credit cards that offer a range of APRs, the average range is nine percentage points
  • The lowest possible APR is 10.99%, offered by Bank of America on the BankAmericard Credit Card for Students

Note: Bank of America charges higher APRs on student products that earn rewards. A no rewards card has a range of 10.99% – 20.99%. The cash rewards card has a range of 12.99% – 22.99%. The travel rewards card has a range of 14.99% – 22.99%. Remember: rewards can be very expensive!

  • The highest possible APR is 23.99%, offered by Citi (both the ThankYou Preferred for College Students and Dividend Platinum Select Visa for College Students)
  • If your student credit card is your first credit product, then you will likely have no score. No score means you are the highest risk, and it is highly likely that you will receive the highest price point. The average of the highest price points is 21.4%

If a student charges $1,000 on a credit card and only pays the minimum due at the average rate of 21.4%, it will take 7.6 years to pay back the debt. And the total amount repaid would be $1,941.

Noticeably absent from the list of banks offering credit cards that target students are American Express and Chase. Chase recently exited the business, recognizing that earning interest rates more than 20% on students still in college didn’t feel right.

The CARD Act restricted, but certainly did not eliminate, credit cards that target students. In 2012, applications for student credit cards were at 43.5% of 2007 levels. The CARD Act put the following restrictions into place:

  • No pre-approved offers to people under 21, without consent
  • If you are under 21, you need to prove that you have income (a part-time job, for example), or have a cosigner older than 21
  • Credit card companies can no longer give out free gifts on campus to induce people into signing up for a credit card. No more frisbees or beer mugs

However, there are still plenty of student credit card offers out there. While they don’t give out frisbees, they do offer sign-on bonuses. Citi, for example, gives you 2,500 Thank You points if you spend $500 within 3 months of opening the card. We find that worse than the free frisbee. Before, they would incent you to open a card. Now they are incenting you to spend on the card!

While credit cards can be a great way to build your credit while in college, they can turn into expensive traps that send you down a dangerous path.

The only reason you should apply for a student credit card is to build your credit score. And follow these three tips:

1.Your statement balance should never be more than 30% of your limit. High utilization, early in your credit history, can have a meaningful negative impact. So, just make one to two purchases a month on the card.

2.Pay your balance in full. Credit cards are expensive, and you should not use them to borrow.

3.Never use a credit card for a cash advance. It may seem like easy money, but you will be paying for it.

Have questions for us? Get in touch via TwitterFacebook, email or in the comment section below!

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College Students and Recent Grads, Reviews

Review: MOHELA Student Loan Servicer

MOHELA Student Loan Servicer

The Missouri Higher Education Loan Authority, better known as MOHELA, has over 30 years of experience assisting students and parents with student loans. It has been servicing federal student loans since 2011.

If your student loans are serviced through MOHELA, and you’re not sure how to contact a representative, or where to find information on the website, read on for a review of the services it provides to borrowers.

Overview of MOHELA

MOHELA doesn’t have the most user-friendly website out there, especially for a student loan servicer. If you’re a little lost as to where you can find things, the first page to check is the FAQ. (You’ve probably already done this, but if not, register for an account online. It will make communication and paying your loans easier.)

MOHELA also has an information center you should look at which answers questions on repayment options, benefits, and general account management.

Loan forgiveness and discharge programs: The contact information and qualifications you need to meet for the various student loan forgiveness and discharge programs is listed here.

Military benefits branch chart: Have you served in the Armed Forces or the National Guard? Depending on the branch of service, you may be eligible for additional benefits, such as a reduced interest rate, military deferment and forbearance, and more. It’s worth looking into.

Repayment Plans: As a federal student loan borrower, you have many repayment options available to you in case you can’t afford the minimum payment under the standard repayment plan. MOHELA encourages borrowers to contact a representative if they’re experiencing difficulty paying. The last thing you want to do is become delinquent or default on your student loans.

[Creating an Emergency Fund While You’re Saddled with Student Loan Debt]

What Borrowers Are Saying

While MOHELA has a BBB rating of A+, there have been 182 complaints closed in the last 3 years, with 127 of those involving a billing or collection issue. You can read the complaints, but MOHELA provides the same canned response to each one – that financial privacy laws prevent borrower-specific information from being shared. Other student loan servicers, such as Great Lakes and Nelnet, have provided correspondence via BBB.

One of the most common complaints on the BBB website is that MOHELA “harasses” people with phone calls – even people who don’t have loans serviced through the company. It seems that MOHELA frequently has incorrect information on file, which may result in receiving phone calls that aren’t meant for you.

Additionally, back in 2012, a large amount of student loans were transferred to MOHELA, and the process was anything but smooth. Many complaints were made that terms of loans were changed in the midst of the transfer; others reported receiving no warning as to when their next payment was due. There’s a relevant complaint on the BBB from September 2015 citing that a borrower’s loan was transferred to MOHELA, and a payment made to the company was never posted, even though it was deducted from their account.

Need to Resolve a Dispute With MOHELA?

The complaints listed above shouldn’t be taken lightly. If you’ve been experiencing difficulty when dealing with MOHELA, you need to make your voice heard. The Federal Student Aid office offers tips on how to prepare to contact a representative to resolve an issue.

It seems like many people prefer to take the email route when contacting a company, but a phone call can often resolve matters more quickly (provided you can navigate the menu easily, which some borrowers have also complained about).

You can call MOHELA at 888-866-4352 to speak with a representative from 7:00AM – 9:00 PM CT Monday through Thursday, and from 7:00AM – 5:00PM CT on Friday. The website also offers an option to schedule a representative to call you when convenient.

MOHELA also encourages borrowers to connect via social media. A quick look at its Facebook page shows that representatives are there responding to comments and concerns. Similarly, representatives are reaching out to unsatisfied borrowers on Twitter. One Tweet recommended sending feedback to

You can also choose to send a secure email via the site if you’re having a specific issue. Otherwise, you can send a letter to:

633 Spirit Drive
Chesterfield, MO 63005-1243

Finally, while there’s the Student Aid Ombudsman Group through the U.S. Department of Education, MOHELA has its own Ombudsman and will take your complaints into consideration here. Even if you’re skeptical of receiving help, it can’t hurt to fill out the form, especially as it’s short. MOHELA states that it will answer complaints within three business days of receiving your form.

Student Loan Borrower Assistance has specific contact information as well. If you don’t hear back using the generic form, try contacting Paul Voigt (listed as the Federal Reporting Officer on MOHELA’s site) at 636-532-0600 ext. 3465, or emailing him at

[Beware of Student Loan Debt Relief Scams]

Taking Complaints to the Student Aid Ombudsman Group

Even though you’d probably prefer to go straight to the Student Aid Ombudsman Group first, the Federal Student Aid office strongly recommends contacting your loan servicer beforehand. You need proof that you’ve attempted to resolve the dispute, and having records of communication helps as well. This checklist will help you gather the necessary information the Ombudsman will want to see.

Keep in mind that the Ombudsman is not an advocate. They’re a neutral third-party mediator. That means they won’t take sides, but they will assist you in resolving the issue you have if they determine MOHELA’s efforts have not been satisfactory.

There are a few ways you can contact the Ombudsman. The easiest is to go here and fill out the short form. You can also send a letter or form to this address:

U.S. Department of Education
FSA Ombudsman Group
830 First Street, N.E., Mail Stop 5144
Washington, DC 20202-5144

Lastly, you can call 1-877-557-2575 or fax your letter or form to 202-275-0549.

Have Private Loans? Go to the CFPB

If you have private loans (which include federal loans consolidated into private loans), and not federal loans, the Student Aid Ombudsman Group can’t help you. That’s where the Consumer Financial Protection Bureau (CFPB) comes in. It can assist you in handling complaints you have about MOHELA if you have private loans serviced there.

The process of submitting a complaint is very simple and can be done online in just five steps. Be prepared with information before you fill out the form, as you’ll be asked about the problem you’ve experienced and what your desired resolution is. Refer to the same checklist as cited above to ensure you have everything you need.

Once you’ve completed the form, the CFPB gives MOHELA 15 days to address your complaint. If a resolution can’t be reached, the CFPB will assist you in resolving the issue.

Always Stay in Contact With Your Student Loan Servicer

Whether you like it or not, your loan servicer is MOHELA, and its representatives are the most well-equipped to handle any concerns you have about your student loans. MOHELA places emphasis on calling, so your best bet is to pick up the phone and get in touch with a representative that way. If you don’t feel like your concerns are being addressed, get on social media, send emails, and continue calling.

If that doesn’t work, contact the Student Aid Ombudsman Group or the CFPB to see if your problem can be laid to rest. Issues with loans can be difficult to deal with, but the sooner you address them, the better off you’ll be.

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College Students and Recent Grads, Reviews, Strategies to Save

Review: PNC Solution Loan for Students

PNC Solution Loan

PNC is one of the larger banks in the United States, and it offers private student loans through its Solution Loan. Existing PNC customers may benefit from this loan the most, as it includes a 0.50% interest rate reduction if you have a checking or savings account with PNC and enroll in automatic payments.

Let’s see how it compares against federal student loans and other private lenders.

Details of PNC’s Solution Loan

The minimum amount you can borrow is $1,000, and the maximum amount you can borrow is $40,000 per year. Your total student loan debt (federal and private loans) can’t exceed $225,000. Fixed APRs on the Solution Loan range from 6.19% to 12.99% and variable APRs range from 3.49% to 10.44%.

You have up to 15 years to repay the loan. You can choose to have payments deferred as long as you’re enrolled at least half time, and payments won’t be due until six months after you graduate. You can also start paying right away or make interest-only payments while in school if you want to reduce how much you pay in interest over the life of the loan. Either of these last two choices will save you money in the long run, but they don’t come with the six-month grace period.

Don’t have the greatest credit, or a lengthy credit history? You can apply with a cosigner, and a cosigner release is available after 48 consecutive on-time monthly payments have been made.

Remember, if you have a PNC checking or savings account, you can receive a 0.50% interest rate deduction by enrolling in automatic payments.

An example payment looks like this: If you borrow $10,000 at a fixed APR of 6.19% on a 15 year term, your monthly payment will be $111.07, and the total cost of your loan will be $19,992.60.

[Student Loan Disbursement 101]

How Does the Solution Loan Compare to Federal Student Loans?

Federal student loans are known for having lower interest rates than private loans, and that holds true in this case. Direct Subsidized and Unsubsidized Loans have a fixed interest rate of 4.29% as of the 2015 – 2016 academic year. While the variable APR for PNC’s Solution Loan begins at 3.49%, you (or your cosigner) will need excellent credit to obtain that low rate. Additionally, variable rates aren’t set in stone. That rate could increase over the next few years, potentially making the loan more expensive.

Federal student loans also come with a host of benefits for borrowers, including: Income-Driven Repayment Plans, deferment forbearance, forgiveness, cancellation and discharge. Private loans don’t come with these guaranteed benefits and PNC makes next to no mention on its site about repayment assistance.

At the very least, the Solution Loan doesn’t include any fees, whereas there’s a 1.068% disbursement fee associated with Direct Subsidized and Unsubsidized Loans as of the 2015 – 2016 academic year.

However, not everyone can fund his or her college education strictly on federal loans, as the amount you can borrow is capped. Do your research to find a private lender willing to offer you rates as close as possible to the rates offered on federal loans.

[How to Find All Your Student Loans]

Eligibility Requirements

There are a few eligibility requirements borrowers need to meet to apply for the loan:

  • You must be a U.S. citizen or permanent resident
  • Borrower needs to be age of majority in the state where they reside, otherwise they need to apply with a cosigner who is at least the age of majority
  • Borrower has to be enrolled at least half time in an eligible program in an eligible school
  • Borrower must have at least two years of employment, otherwise, the cosigner must
    • If you or your cosigner are self-employed, you’ll need to have been in business for two years

PNC takes debt-to-income ratio and credit history into account as well, though it doesn’t specify what debt-to-income ratio or score it looks for.

[18 Common Loan Terms Explained]

Application Process and Documents Needed

The application process is quick – you can receive an answer in just a few minutes. When applying with a cosigner, the borrower will complete the application first. There will be a place to enter the cosigner’s contact information. Once complete, a link to the application will be emailed to the cosigner so he or she can fill it out.

Information you should have ready includes:

  • Personal information, including Social Security number, address, Driver’s License number, etc.
  • The school you’re attending, your major, and expected graduation date
  • How much you need to borrow
  • Employment information (if applicable)
  • Proof of income

If approved and you accept the loan, the funds will be sent directly to the school.

[6 Things to Know Before Taking Out a Student Loan]

The Fine Print

There’s no application or origination fee associated with the loan. If you’re late making a payment, the late fee will be 5% of your past due amount, or $5.00, whichever is less.

Repayment Assistance Options

Forbearance is available if you can prove an inability to pay back your loans. It’s available for a total of 12 months over the life of your loan, and you can enter into a period of forbearance for up to two months. Keep in mind that interest will continue to accrue while your loans are in forbearance, meaning you’ll end up paying more for the loan if you use this option.

Pros and Cons of the Solution Loan

Pro: In the event the borrower dies, the outstanding balance will be forgiven. Not all private lenders offer this benefit.

Con: The interest rates on the Solution Loan are some of the highest of the private lenders we’ve covered. The 0.50% discount only applies if you have a checking or savings account with PNC, and some borrowers may not want to open additional accounts to receive this benefit.

Pro: In case you have any questions, there’s a live chat option as well as a phone number (1-800-762-1001) you can call to contact an education loan specialist.

Con: There’s not as much emphasis placed on repayment assistance, even though forbearance is offered. It’s wise to look for private lenders who are willing to work with borrowers in case of financial hardship.

Con: The annual $40,000 limit on how much you can borrow is low compared with lenders who allow you to borrow up to the cost of attendance.


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For Graduates, Health Professionals, and Law Students

Aside from offering the Solution Loan to undergraduates, PNC also offers graduate and professional loans, a health professions loan, and a bar study loan. These loans all have the same APRs as undergraduate loans.

[Why You Should Make Bi-Weekly Student Loan Payments]

Private Student Loan Alternatives

Are the interest rates on the Solution Loan too high for your liking? There are other alternatives to choose from as there’s no shortage of private lenders offering student loans.

Sallie Mae’s Smart Option Student Loan offers variable APRs ranging from 2.25% to 9.37%, and fixed APRs ranging from 5.74% to 11.85%. There’s no cap on how much you can borrow, and a Graduated Repayment Plan is offered. You have 10 years to repay the loan, and can choose to defer payments, make interest-only payments, or make monthly payments while attending school.

sallie mae

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Citizen’s Bank also offers a private student loan solution. Variable APRs range from 2.69% to 9.15%, and fixed APRs range from 5.76% to 11.51%. You can borrow up to $90,000, though your combined federal and private student loan debt can’t exceed $120,000. Repayment terms of 5, 10, and 15 years are available.

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While your first stop in financing your education should be maximizing federal loans, make sure you shop around for the best deals if you have to resort to private loans. As you can see, lenders offer a variety of interest rates, and it’s important to secure the lowest rates possible. If you shop around within a 30-day period, the credit bureaus will count all inquiries as one, meaning your credit won’t take a huge hit. While you’re at it, you might want to check with your local credit union or the bank you use to see the rates on loans they offer.

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College Students and Recent Grads, Reviews, Student Loan ReFi

Review: DRB Parent PLUS Loan Refinancing

Loan Refinancing

DRB is one of a select few lenders that will refinance Parent PLUS loans. You may qualify for this refinance if your child has graduated and is now employed.

This refinance can potentially save you a great deal of money if you have a strong credit history because the interest rates are so competitive. For example, currently Parent PLUS rates are 6.84% for loans disbursed between July 2015 and July 2016. DRB offers fixed rates from 3.50% to 6.25% APR depending on creditworthiness, so even those getting the high-end of interest rates could see savings

Another benefit of the DRB refinance is your child may qualify to refinance Parent PLUS loans with his or her own student loans from DRB to relieve you of financial responsibility.

DRB Parent PLUS Refinance Overview

Fixed interest rates range from 3.50% to 6.25% APR. Variable interest is 1.90% to 4.53% APR. Unlike fixed interest, variable interest can fluctuate during the life of your loan depending on market conditions. DRB has an interest cap of 9% for the 5, 7 and 10-year loan terms. For the 15 and 20-year loan terms, the variable interest cap is 10%.

In most cases, fixed interest is your preferred method of refinancing. Because even a high-end APR with DRB is lower than the federal Parent PLUS loan APR, the only scenario where variable interest may be a good choice is if you plan to pay off the loan quickly to take full advantage of low interest rates. Otherwise, a variable rate for a long-term loan can be risky and can rise to 9% to 10% APY based on DRB’s rate cap.

The minimum amount you can refinance is $5,000 and DRB will refinance up to 100% of your Parent PLUS loans. DRB interest rates include a 0.25% discount for using auto-pay, which is a common discount with student loan refinances.

However, with this refinance you have to make your auto-payments through a DRB checking account to qualify for the discount, which can be a hassle if you don’t bank with them. The DRB checking accounts are free and if you don’t have one you can apply for one during the application process, but they don’t have many branches, so you’ll most likely have to deal with them via ATMs and direct deposit. There are no ATM fees and DRB will refund up to $25 for fees charged by other bank ATMs.

[5 Options to Refinance a Parent PLUS Loan]

 DRB Parent PLUS Loan Qualifications

To qualify for a DRB loan, you must be a U.S. Citizen or permanent resident and your child must have completed his or her degree. In terms of creditworthiness, DRB looks for borrowers who have loans in good standing, make more than $50,000 annually and have no adverse credit history. DRB does accept cosigners if you don’t meet the eligibility requirements on your own or if you want to qualify for a lower rate.

Fees & Gotchas

The DRB Parent PLUS refinance is low on fees. There are no application fees, processing fees or prepayment fees. You’re given a 15-day grace period before you get a late fee. After the 15th day you’ll get a 5% or $28 late fee, whichever one is less. The returned payment fee is $20.

Pros and Cons

The clear pro of refinancing a Parent PLUS loan with DRB is the savings on interest payments. Generally, parents have many years worth of credit history, which puts them in a good place to nab a more competitive interest rate.

DRB also offers full or partial forbearance to pause payments without penalty if you experience financial hardship. Of course, you have to apply for it and get approved. A DRB loan can also be forgiven if you pass away or become disabled.

The key disadvantage of refinancing a government-backed loan (like the Parent PLUS) is missing out on federal loan protections. These protections come in handy if you fall on hard times. They include income-contingent payments, which can lower your monthly payment if your income is below a certain level, as well as forbearance. Forbearance allows you to stop making payments for up to 12 months, but interest will still accrue during this time. With discretionary forbearance, such as financial hardship or illness, your lender will decide whether or not to approve you.

[Making a Parent PLUS Loans Eligible for Income-Driven Repayment Plans]

Before you refinance a Parent PLUS loan, you should be 100% confident you can make on-time payments with the monthly payment you have today. You should also have a solid understanding of what benefits you’ll no longer qualify for when you refinance to a private loan.


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Parent PLUS Refinance Alternatives

How does DRB stack up to other available Parent PLUS refinances?

SoFi offers a Parent PLUS refinance as well. SoFi currently has variable rates from 1.90% to 5.20% APR. The variable interest cap is 8.95% APR, a bit lower than DRB’s. Fixed interest rates range from 3.50% to 7.24% APR (if you sign up for auto-pay). Like DRB, SoFi offers some benefits if you face financial hardship like unemployment insurance if you get laid off. It has no application, origination or prepayment fees.

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Citizens Bank has fixed interest from 4.74% APR and variable interest from 2.34% APR. The interest rates include up to 0.50% in discounts. You get a 0.25% discount for using auto-pay and another 0.25% discount if you have an open Citizens Bank account before applying. Citizens Bank allows you to use a co-signer and the co-signer can be discharged after you make 36 on-time payments.


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Who Will Benefit Most From the DRB Parent PLUS Refinance?

If you’re a parent with a PLUS loan in good standing, excellent credit and a stable income, you can benefit from the DRB Parent PLUS loan. Keep in mind, the lowest interest rates are for people with the very best credit. So, the interest rate you receive may or may not be less than the one you already have. Even if DRB sounds like the fit for you, take the time to shop around and find the best rate. Checking rates will only be reflected as one inquiry on your credit score if you shop around within  30-day window.


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College Students and Recent Grads, Pay Down My Debt, Student Loan ReFi

The Student Loan Consolidation Hack That Could Save You Thousands

Mixed Race Young Female Agonizing Over Financial Calculations in Her Kitchen.

If you’re thinking about consolidating your federal student loans, read this post before taking another step.

It could save you a lot of money.

Why Consolidate?

Before we get into the interest rate hack that could save you thousands of dollars and shave months off your debt repayment period, let’s quickly talk about why you would and wouldn’t consider consolidating your federal student loans.

First, consolidating will not get you a better interest rate. You might get a better interest rate if you refinance with a private loan, but that’s a separate topic. When you consolidate, you end up with a weighted average interest rate of all the loans in the consolidation and not just slashing to the lowest possible rate.

The main reason to consolidate is to qualify for income-driven repayment plans. Certain federal student loans disbursed before July 1, 2010 (called FFEL loans) aren’t eligible, but you can make them eligible through consolidation. That can be a big benefit.

You might also consider consolidating if you have variable rate loans and you want to lock in a low fixed rate.

If you’re in one of those two situations, consolidating could make a lot of sense. And there’s a strategy you can use that might save you a lot of money.

[Federal Direct Consolidation Loan Review]

Meet Hailey

To show you how this works, we’re going to talk about a fictitious person named Hailey.

Hailey is single, living in New York, and makes $50,000 per year. She’s also dealing with the following two federal student loans:

Loan #1

  • $20,000 balance
  • 6% interest rate

Loan #2

  • $40,000 balance
  • 5% interest rate

Hailey can afford to put $500 per month towards her student loans right now, which is enough to cover the minimum payments with an extra $75 to spare.

But she’s a little uncertain about her job prospects over the coming years and she’d like to apply for income-driven repayment just in case she needs it.

The problem is that both of her loans are FFEL loans and therefore aren’t eligible for income-driven repayment. Which is why consolidating makes a lot of sense for her.

So how should she do it? Let’s look at the normal way most people would do it, and how she could save herself a lot of money doing it differently.

[When You Shouldn’t Aggressively Pay Off Your Student Loans]

The Wrong Way to Consolidate

Most people would assume that Hailey should consolidate her two loans into a single loan.

If she did that, she would end up with a single $60,000 loan with a 7.63% interest rate (the interest rate is actually rounded up to the nearest 1/8 percent during consolidation).

Using the repayment estimator, her standard monthly payment would be $424, with the option of paying as little as $270 under the Pay As You Earn repayment plan.

But remember, Hailey can afford to put $500 per month towards her student loans right now. Using this debt snowball calculator, and assuming that she pays $500 every month for the life of the loan, here is the result:

  • The loan would be paid off in 228 months (19 years exactly).
  • She would pay $53,572.99 in interest over the life of the loan.

Luckily for Hailey, there’s a simple way she could save a lot of money without paying any more each month.

The Right Way to Consolidate

You may not know this, but you don’t have to consolidate all of your loans together.

You can actually consolidate a single loan all by itself. And with two loans, you have the option of doing two different consolidations.

If Hailey did this, she would end up with two loans with the same balances and interest rates as before.

However, they would now be federal consolidation loans and therefore eligible for income-driven repayment.

And doing it this way would end up saving Hailey a lot of money.

Because now her extra payments could go towards the loan with the 8.5% interest rate instead of a loan with a 7.63% interest rate, which would have been the case if she had consolidated them together.

And remember, directing extra payments towards your highest interest rate loans is the most efficient way to pay off your debt. So by preserving that higher interest rate, she’s allowed herself to get a better return on every single extra payment she makes.

Assuming she makes the same $500 monthly payment as above and applies the extra payments to the 8.5% loan first, here are the results:

  • The loan would be paid off in 218 months.
  • She would pay $48,909.94 in interest over the life of the loan.

In other words, with the exact same monthly payment she would save herself $4,663 in interest and be debt-free 10 months sooner.

Not bad!

[How Student Loans Affect Your Credit Score]

Are There Downsides to This Strategy?

Obviously this strategy can save you a lot of money, but are there any ways it could potentially backfire?

The short answer is, not really.

It takes a little more work to perform two consolidations instead of one.

And in order to make sure your extra payments are directed correctly, you should send a letter to your servicer letting them know exactly what you want them to do.

But other than that, there’s really nothing to worry about here.

Save Away

The moral of the story is this: if you’re consolidating your federal student loans, doing separate consolidations for loans with significantly different interest rates could save you thousands of dollars and shave months off your debt repayment period.

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College Students and Recent Grads, News

Top 6 Things to Know Before Taking Out a Student Loan

mortar board cash

Landing that college acceptance letter is only half the battle when it comes to attending a university — you still need to find a way to pay for it.

With something like 40 million Americans juggling student loan debt, it’s no surprise that paying for school with a loan is a popular way to handle those fees. Before getting too far down the rabbit hole, here are six things to keep in mind:

1. Your loan will either be federal or private

Loans come with different terms and conditions, but in general a student loan will come in one of two forms — federal (funded directly by the government) or private (from individual lenders like banks and credit unions.). Federal student loans tend to come with across-the-board incentives like fixed interest rates and the ability to restructure payments based on income, but with a little research, you may be able to find a private loan with lower interest rates. However, it’s better to maximize your federal student loan options first before tangling with private loans.

2. Short means less, long means more

When it comes to repaying your loans, the faster you agree to pay off your debt, the more you’ll likely pay per month, but you’ll be spending less in interest over the life of your loan. Conversely, if you decide to make smaller payments towards your debt over a longer period of time, you may end up paying significantly more interest over the years.

3. Get to know your grace period

A grace period is the set of time you can wait to make your first loan payment. Unfortunately, not all loans come with the same grace period, which means you need to be sure to know the due date of your first payment. Grace periods are helpful if you’ll need time to get a job and earn a couple paychecks before making payments. But you don’t have to wait until the grace period is up to make your first payment. Making payments during the grace period can offset some of the interest accruing.

4. Deferment and forbearance may help in times of need

Again, every loan is different, but it’s not uncommon for you to need to take breaks in payments from time to time. Forbearance and deferment can help in these situations. Forbearance, for example, allows you to either stop making loan payments or have them reduced for a certain amount of time, but interest will likely still accrue. Deferment allows you to stop making payments on both principal and interest for a number of specific reasons. The government may subsidized your interest while in deferment if the loans are Federal Perkins, a Direct Subsidized Loan or a Subsidized Federal Stafford Loan. Check with your loan to see if one or both is available to you, and what the circumstances must be to qualify. 

5. There’s a difference between refinancing and consolidation

Besides getting debt free, you probably want to focus on one other factor: paying less each month. Two options to help with this are consolidation and refinancing. Consolidation is the act of combining all of your loans into one payment with an interest rate that will likely be an average of your existing loans. Consolidation simplifies your payment process, but doesn’t necessarily reduce your debt burden. Refinancing uses a new loan (hopefully with a lower interest rate) to pay off your existing debts. You’ll then make a single payment per month towards your new loan. The lower interest rate can help you dig out of debt faster. You’ll need to do a little research to determine which is best for your particular situation. (This piece can help you decide if refinancing options might be good for you, while this one talks more about debt consolidation, and the pros of going that route.)

6. Is Taking Out a Student Loan Even Worth It?

It’s not an easy question to ask yourself, but it’s one worth considering — will the amount of money you’re projected to make from your career be enough to pay off your student loan debt? For example, some lower paying jobs may not actually end up being worth the price you’ll pay in the end. Before you sign on to any loan, do the math to determine how long it will take you to pay back that loan at the average salary you’re meant to make in your job, and determine whether or not you’re willing to be in debt for that amount of time.

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College Students and Recent Grads, News

18 Common Student Loan Terms, Explained

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Whatever stage of the student loan process you’re in — whether you’re a seasoned pro with years of payments under your belt, or you’re just starting off with the research to find the right one for you — there are a ton of terms that you’ll need to be familiar with during the long process of getting and paying off those loans.

To help, we’ve come up with a glossary of 18 commonly used terms that you should be familiar with. Learn what these words mean with regards to your student loan, and it’ll help you stay educated along the way.

Acceleration: A borrower may be required to pay an acceleration — or demand for immediate repayment — on their loan under certain circumstances, like if they receive loan money but do not enroll for at least part-time student status, or if the loan money is used to pay for expenses other than those determined as educational expenses.

Accrue: The accumulation of interest on a loan.

Annual Percentage Rate (APR): The rate that you will be charged annually for borrowing your money, including fees or additional costs.

Capitalized Interest: Unpaid interest on your behalf that has been added to the principal balance of your student loan is known as capitalized interest. For example, the interest that accrues during your grace period will be capitalized when the period ends and added to the principal balance of your loan. This generally increases the overall amount you owe.

Consolidation: The act of combining two more loans into a single loan. (Find out more about when you should consider consolidation of your loans here.)

Co-signer (or Endorser): In certain situations, someone with excellent credit history may be asked to sign a form agreeing to repay your student loans should you not be able to. This person is referred to as a co-signer or an endorser. (You can find out more about what happens when a borrower defaults on a co-signed loan here.)

Deferment: A federal student loan benefit that allows students to temporarily stop making payments under certain circumstances. The government may also subsidized your interest while in deferment if the loans are Federal Perkins, a Direct Subsidized Loan or a Subsidized Federal Stafford Loan.

Financial Aid Package: Federal and non-federal aid a student may be offered by their school to help pay for educational costs.

Forbearance: A federal student loan can also be postponed using forbearance, but interest will be most likely be accruing during this time. You can learn more about the difference between deferment and forbearance here.

Grace Period: Certain loans afford students a period of time — generally beginning once the school declares you’ve graduated, you leave school or drop below half-time enrollment status and usually ending six to nine months later — during which payment is not expected on loans. This is referred to as a grace period. (Find out more about the ins and outs of a student loan grace period here.)

Income-Driven Repayment Plan: If your debt is high compared to your overall income level, you may qualify for an income-driven repayment plan. Federal student loan borrowers are eligible for this type of repayment plan based on certain factors like income, family size, state of residence and type of loan. 

Interest: Calculated as a percentage of your unpaid principal balance, interest is the additional cost of borrowing money.

Loan Forgiveness: The remaining balance of a loan that gets discharged (forgiven) after a borrower fulfills certain obligations. An example would be the Public Service Loan Forgiveness (PSLF). A borrower works in public service 10 years and makes 120 payments, and then his or her remaining balance would be forgiven.

Principal Balance: Your current loan amount, plus your capitalized interest on that loan. (See also capitalized interest.)

Refinance: To refinance your student loans means to use a new loan (hopefully with a lower interest rate) to pay off your existing debts. Refinancing could save you thousands of dollars over the long run, but remember that refinancing a federal loan to a private one may mean losing certain protections, like special repayment plans. Find out more about refinancing options here.

Servicer: A loan servicer will assist you with tasks related to your student loan such as billing, repayment plans and loan consolidation. 

Subsidized Loan: A type of Federal loan where the borrower is not responsible for paying interest accruing on the loan while in an in-school, grace or deferment period. The government pays interest for subsidized loans during these periods.

Unsubsidized Loan: A type of Federal loan where interest accrues on the loan while you’re in school or deferment.


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Student Loans 101

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When it comes to student loans, the information available can be daunting, and it might be difficult to decide where to start. We’ll walk you through three common questions so you can get educated before accepting loans.

Question 1: What is a student loan?

Simply stated, a student loan is a loan designed to help you pay for all things related to your college expenses, which includes tuition, books and housing expenses. With any type of student loan you will be required to both pay interest on the money you borrow and meet certain standards in order to be and stay eligible for the loan. For example, you’ll need to be enrolled at least part-time as a student or else repayment may begin. Finding a loan that works for your future lifestyle — projected income and time required to repay the loan — will be key factors that go into your decision of which one to pick.

Question 2: What are the different types of loans available to me?

In general, there are two different types of student loans: federal (those funded by the federal government) and private (those made by individual lenders like banks, credit unions or even schools themselves). There are some big differences when it comes to how these two types of loans are handled, which is why it’s usually best to maximize federal student loans first. Some of those differences include:

1. Repayment Structures

For Federal Offers, the following are available:

  • Income-driven repayment plans: These plans help ensure your monthly payments do not exceed a certain percentage of your discretionary income, which makes your payments more affordable. Remaining balances will be forgiven after 20 to 25 years of payments.
  • Forgiveness: The government offers a variety of forgiveness programs that will allow you to discharge your remaining debt after meeting certain requirements.

[How to Set Up Income-Driven Repayment Plans]

For Private Offers:

  • These types of loans typically require you to start making your payments immediately, and there are usually no income-driven repayment options and no forgiveness options.

2. Protections

Federal student loans provide more protections and are more forgiving if you fall on hard times. Some of those protections include:

  • Forbearance or deferment: These options allow you to stop making payments for a set period of time due to hardship. In forbearance, interest still accrues, but deferment is interest free.
  • Grace period: Usually a six-month window in which you don’t have to make a loan payment after you’ve graduated or dropped below part-time student status.
  • Loans forgiven in death: Almost all federal student loans are forgiven in the case of death.

[The Consequences of Refinancing Federal Student Loans]

Private loans may offer a grace period like federal student loans, but there are no forgiveness programs nor income-driven repayment plans. You may also have a co-signer on a private loan, which means if you fail to pay it, your co-signer will be obligated to handle the payments, often even in the case of death. If you already have a private student loan, and you’re interested in learning more about what happens when you have trouble making payments, this piece about settling private student loan debt might help.

Question 3: How can I refinance my loan?

If you’re already making payments on a student loan, and want lower monthly payments, then you may want to consider refinancing. You can check directly with your lender for any options it offers in terms of refinancing, but better offers tend to come from working with a new lender. (You can find a list of qualified options here.) Refinancing is often ideal for lowering interest rates on private loans, but think twice before you refinance a federal loan. Refinancing a federal loan means giving up options like income-driven payment plans or student loan forgiveness.

If finding the right student loan for your needs seems impossible, remember that you’re not alone. Ask around for about which loans have worked for friends and family in the past, and don’t be afraid to ask as many questions as you need to feel comfortable before signing on the dotted line.

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College Students and Recent Grads, Life Events

You Can Remove Student Loans Buyer’s Remorse

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It’s happened to all of us. We’ve bought something we wish we hadn’t. The purchase seemed like a great idea at the time, but in retrospect it was a poor money decision. If we’re lucky, we realize this within the return policy time frame. If we’re not, we’re stuck with the purchase and out the money it cost us.

This is buyer’s remorse. It’s not an uncommon experience in a society where we’re inundated with marketing messages promoting immediate gratification. It’s also not an uncommon feeling amongst recent grads who are looking over their loan balances upon graduation.

There is a way to for current college students to free themselves from some of that guilt and lessen your burden after you complete school. It’s much akin to taking that amazing coffee maker back to the store, receipt in hand, except resolving buyer’s remorse on your student loans could save you thousands of dollars instead of one hundred.

Funding Lifestyle Over Education Ends in Buyer’s Remorse

Many times when you’re in school, you’ll be eligible for loans in excess of your tuition and fees. When these loans are disbursed to your school, the financial aid office will see the difference and cut you a check for the excess. When you receive that check, it can feel like manna from heaven. On a tight student budget, anything extra can help you have a social life, update your wardrobe, or even travel.

When you accept this money, though, you’re also agreeing to interest rates and loan origination fees. Let’s say one semester you get $2,000 back. Under current rates on federal student loans, you’ll be paying back $21.46 in origination fees and $423 in interest over the course of the loan, for a grand total of $444.46. If you return that money, not only do you not have to pay that $444.46, but you also won’t owe the original $2,000 principal.

Long term, saving that $2,444.46 may not seem like a big deal, but let’s say you did it every semester. If you complete your degree within four years, that would mean taking out $16,000 in student loans. Origination fees would add up to $171.68. Total interest paid on a standard repayment schedule would be $3,705. After you are done paying off your loans, you’ll have spent $19,876.68 not on your education, but on funding your lifestyle.

If this seems like a bad idea to you, there is a resolution. You can return that excess portion of your federal student loans. The return will erase any origination fees, and reduce the amount due upon graduation, which eliminates that interest you would have been paying.

[How to Set Up Income-Driven Repayment Plans]

Returning Student Loans

After your student loans are disbursed, you have 120 days to return the money to your lender. Schools may have a shorter time frame to help you facilitate that process. Some institutions require that you submit your written request to return the available balance within as little as fourteen days of the date on your disbursement notification. If you miss this small window, you can still return your loan, but you will have to handle the return directly with your lender rather than having the school handle it for you.

It’s important to note that the date on your disbursement notification versus the actual date of disbursement may differ. If you wait until the tail end of the 120 day period, it will be vital to know the exact date of disbursement. Don’t rely on the notification letter alone.

Initiating the Process

Whether you are completing the process through your school, or directly through your lender, it is mandatory that you submit your request to return the money in writing. Simply telling someone in your financial aid office of your intent, or talking to your lender on the phone will not suffice.

In order to make the request, you can mail a letter to your financial aid department. If you do this, it is recommended that you send the letter via certified mail to ensure you have the date of delivery in your own records. If your school fails to return the money on time, you will then be able to get an extension past the 120 day mark because the error was perpetrated by the school. If you do not have evidence of when the letter was received, you can’t make a case for the extension.

The Federal Government also allows you to submit your request via email. Check with your financial aid office to make sure this practice is in keeping with their individual school policies. The email will have a time stamp, which should be sufficient for your records as long as your school has a history of communicating important, aid-related information to students in this medium. Whether you send a letter via snail mail, or email, best practice would be to follow up with the office to be sure they received it, and have begun processing.

[Saving for Retirement While Paying Down Student Loans]

Don’t Fund Today at the Expense of Tomorrow

It can be extremely tempting to take that money. You anticipate making more when you get out of school, and think the potential increase in income will make paying off those loans easy. These lifestyle loans are not the only thing you will be paying off, though. You’ll also be paying off tuition, fees, and, where applicable, room and board. Those are massive bills, and anything you can do to alleviate your future burden will ultimately be a gift to your future self. In the case of $2,000 per semester, it will give you an advantage of almost $20,000 less in debt.

If you don’t know how to make ends meet while you’re in school, learn to budget. If returning those loans means you don’t have any money to budget with, seriously consider picking up a part-time job. Living on a shoestring is tough, but it’s much better than financing today at the expense of tomorrow.

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Review: Sallie Mae Smart Option Student Loan

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Sallie Mae has long been known as a popular lender for private student loans. In fact, on its website, it states it has “helped more than 30 million Americans pay for college since 1972.”

Does that mean it’s the best choice? Not necessarily, and there are other alternatives out there. Here are the details you should be aware of before applying, and how the Smart Option Student Loan for undergraduates and graduates compares to federal student loan options.

Details of Sallie Mae’s Smart Option Student Loan

With the Smart Option Student Loan from Sallie Mae, you’re eligible to borrow up to 100% of the cost of attending college, though it says you may be approved for less.

Sallie Mae offers variable and fixed rates. Variable APRs range from 2.25% to 9.37%, and fixed APRs range from 5.74% to 11.85%. If you enroll in automatic payments, you’ll receive a 0.25% discount.

There are a few options you have when it comes to repayment:

  • Deferred repayment: This is how federal student loans function. You won’t be required to make a payment while you’re in school, but you can pay if you want to. Interest will capitalize (become due) once the six-month grace period ends after graduation (or you fall below a part-time student).
  • Fixed repayment: This requires a monthly payment of $25 while you’re in school. According to Sallie Mae, this can save you 10 percent or more on the cost of your loan.
  • Interest only repayment: You’re responsible for making payments on the interest that accrues on your loans each month. This option can save you over 20 percent, but will likely require payments over $25 per month.

Similar to federal loans, Sallie Mae offers a six-month grace period before principal and interest payments are required. It also offers a Graduated Repayment option, where borrowers in good standing can make interest only payments for 12 months after the grace period ends.

An example payment: if you borrow $10,000 with an APR of 8.0% on a term of 10 years, your monthly payment will be $121.32, and the total cost of the loan will be $14,556.97.

How Does the Smart Option Student Loan Compare to Federal Loans?

It’s important to note that federal student loans are capped, and the amount you’re eligible for depends on many factors. You may not be able to fully finance your college education with federal loans, and that’s where private loans come into the picture. However, it’s always worth looking into federal student loans before private loans, as they typically come with lower interest rates and more consumer protections.

As of the 2015 – 2016 academic year, Direct Subsidized and Unsubsidized Loans are at a fixed 4.29% interest rate. That’s lower than Sallie Mae’s 5.74%, and you’d need to have excellent credit to receive that Sallie Mae rate in the first place.

Federal student loans (aside from PLUS loans) don’t require a credit check. Sallie Mae’s variable loans have lower rates, but this rate is can change throughout the life of your loan, which means you’ll have less stability when it comes to budgeting for your payments.

An additional factor to consider is that Direct Subsidized and Unsubsidized Loans have fees associated with them – 1.068% if a loan is disbursed on or after October 1st, 2015 and before October 1st, 2016. That’s not very high, but Sallie Mae’s loans don’t have origination fees.

Eligibility Requirements

There are no strict eligibility requirements stated on Sallie Mae’s website. It’s recommended to apply with a cosigner if you don’t have existing credit, or if you have a thin credit history, as you’ll be eligible for better rates.

Application Process and Documents Needed

Sallie Mae’s application can be completed online within 15 minutes, and you might be able to get notice of your approval as soon as you submit it.

You’ll be required to fill out general personal information, including your address and school information, as well as the type of loan you’re for which you’re looking to apply. Co-signers can fill out the application alongside you. Completing the application gives Sallie Mae permission to conduct a hard inquiry on your credit report.

You should have the following information ready before applying:

  • Social Security number for all parties applying
  • Your GPA in school and when you’ll be enrolled
  • How much you’re requesting, and any other financial aid you’re receiving for college
  • Employment information, if applicable (will be needed for co-signer)
  • Financial information such as mortgage or rent payment
  • Two personal contacts

You can check the status of your loan at any time by signing into your account. If extra documentation is needed, you’ll receive an email.

The Fine Print

There are no origination fees or prepayment penalties. Sallie Mae notes a late fee will be assessed if you fail to make a payment within 15 days of your due date. The late fee amount is included on the Disclosure form.

Repayment Assistance Options

Sallie Mae offers a few solutions to borrowers having difficulty paying back their student loans. First, it offers forbearance, which means your payments are temporarily paused. There’s no form to fill out, you simply call customer service and request it. If approved, you can enter into forbearance of a period of 3 months at a time, for up to 12 months over the entire life of your loan. Interest will continue to accrue during this time.

Sallie Mae doesn’t expand on any of its other repayment assistance options, but states that it’s committed to helping borrowers avoid delinquency, default, and bankruptcy.

Pros and Cons of the Smart Option Student Loan 

Pro: Unlike other lenders, Sallie Mae offers a quarterly FICO score (based on TransUnion) for free. You can see it by logging into your account.

Con: Compared to other lenders (and especially to Federal loans), Sallie Mae’s interest rates are on the higher side, especially considering fixed rates are as high as 11.85%.

Pro: Sallie Mae is integrated with Upromise, which is a cash rewards system. If you make payments while in school, you can receive 2% of your scheduled monthly payments into your Upromise account as a reward.

Con: Sallie Mae only seems to offer a standard 10-year repayment plan, when other private lenders have flexible terms.

Pro: You can apply with a co-signer if your credit isn’t up to par. You can also apply for the co-signer to be released after making 12 consecutive and timely payments, provided you meet credit requirements.

Smart Option Student Loan for Graduate Students

Are you looking for private loan options for graduate school? Sallie Mae offers its Smart Option Student Loan for graduate students as well, and it’s very similar to its undergraduate counterpart.

You can borrow up to 100% the cost of attendance. Variable APRs range from 2.25% to 7.27%, and fixed APRs range from 5.74% to 8.56%. There are no origination fees or prepayment penalties. It has the same exact payment options as the undergraduate loan, so you can defer all payments, pay a small amount each month, or pay the interest. It also features the Graduated Repayment option.

How does this compare to federal loans? Direct Unsubsidized Loans for graduates or professionals are at a fixed interest rate of 5.84%, and the Direct PLUS Loan is at a fixed rate of 6.84%. Both loans have fees: the Unsubsidized loan has a disbursement fee of 1.068%, and the PLUS loan has an origination fee of 4.272%.

Sallie Mae’s graduate loan is fairly competitive so long as you have a great credit score and can get approved for the lower rates.

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Other Private Student Loan Alternatives

In case you’re not eligible for approval at Sallie Mae, you can try Discover and Citizen’s Bank for private student loans.

You can borrow up to 100% of the cost of attendance with Discover. Its variable APR ranges from 2.99% to 9.12%, and its fixed APR ranges from 6.15% to 11.99%. You have up to 15 years to repay the loan. It also has a deferred payment or in-school payment option, and there are no fees associated with the loan at all.

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With Citizen’s Bank, you can borrow up to $90,000, and you can’t exceed $120,000 combined Federal and private student loan debt. The minimum amount to borrow is $1,000. You have the option to repay your loans on a 5, 10, or 15 year term. Variable APRs range from 2.69% to 9.15%, and fixed APRs range from 5.76% to 11.51%.


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Always make sure you shop around with different lenders to find the best deal. You can also look to your bank or local credit union to see what rates they offer. As long as you send out applications within a 30-day period, the credit bureaus will count all inquiries as one so you won’t be penalized. Take advantage and work with a lender that’s willing to work with you.

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College Students and Recent Grads, Student Loan ReFi

Review: Great Lakes Educational Loan Services, Inc.

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Great Lakes is one of the largest student loan servicers that work with borrowers who have loans from the U.S. Department of Education. It also services loans from private lenders, but if you use Great Lakes to pay your loans, chances are, they’re federal.

Unfortunately, when you have federal student loans, you don’t get a choice of which student loan servicer you’ll work with. Your loan servicer can actually change because your loans can be sold to other servicers.

This review provides information about people’s reported experiences with Great Lakes as well as how to contact customer service and get disputes resolved.

Overview of Great Lakes

According to its website, Great Lakes is a non-profit organization that is partnered with the U.S. Department of Education and private lenders. It’s headquartered in Madison, Wisconsin, and its mission is “doing what’s right to change lives for the better.”

Great Lakes provides a good overview of what it offers on its website, so if this is your first time figuring things out, you should look there first. Key pages to look at are:

  • Know Your Repayment Options – An absolute must-read for any borrower, whether you can afford to make your payments or not. You should always know what options are available to you in the event you hit a financial rough spot.
  • Repayment Planner – You can get a visual look at how your payments will determine when your loans will be paid off. This includes the amount of interest that will accrue as well, which might motivate you to pay extra on your loans. Unfortunately, it’s not interactive, so you can’t make adjustments to your repayment schedule to see how making larger payments will affect your pay off date, but it’s a good place to start.
  • Knowledge Center – This is a quick overview of the different sections of the site that you’ll be visiting the most, such as managing your accounts, making a payment, and retrieving your monthly billing statement. Consider it a mini-tour of the website so you know how to access the information you need.

If you’re someone who loves to bank via mobile, you might appreciate the fact that Great Lakes has a mobile app that you can use to make payments and monitor your account. It’s available for both iOS and Android.

Great Lakes Repayment Planner

[How to Set Up Income-Driven Repayment Plans]

What Borrowers Are Saying

Great Lakes has a rating of one and a quarter stars on Consumer Affairs. There are many reports of customer service being unhelpful, rude, or misinformed. A few other borrowers have had trouble with the way payments have been applied to their loans, or how payments aren’t going through at all.

The story is the same on the Better Business Bureau website, where borrowers cite Billing/Collection Issues as the most common problem. Out of 48 reviews, only 5 are positive.

Yet another complaint was posted on Blogging Away Debt. While this post is older, there are still comments coming in from 2015 reporting poor experiences with Great Lakes’ customer service. At the very least, its social media department has reached out and responded to comments, but many borrowers remain upset at the lack of user-friendliness on Great Lakes’ website.

I can tell you first-hand that all of this is true, as Great Lakes is my student loan servicer. I pay more than the minimum on my student loans, and like the post from Blogging Away Debt says, it’s extremely difficult to choose how payments are applied. Great Lakes has a detailed post on that, but it can still be confusing to understand.

It seems like they’ve updated it with more examples since I last looked, but suffice to say, making a payment and then emailing customer service with directions on how to apply the excess payment can be frustrating. Other loan servicers, such as Nelnet, allow you to choose how much you want to pay toward each individual loan. This makes it a lot easier to target loans with higher interest rates or loans with the lowest balance, if you’re following the debt avalanche or snowball method.

Additionally, the few times I’ve had to call, I’ve been met with unhappy and unhelpful service. I had changed my bank account information in the system, but it apparently never updated on their end. A payment was pulled from my old account, causing an overdraft (I was in the process of closing it out), and they said it wasn’t their fault because they couldn’t see the new bank account I had entered into the system.

When I logged onto my Great Lakes account, the only bank account I saw was the new one I had entered. Thankfully, my bank waived the overdraft fee, and you’ll notice a disclaimer on Great Lakes’ website that says it’s not responsible for any overdraft fees that may occur. I also never received an email from Great Lakes stating the payment didn’t go through – it was my bank that contacted me.

Lesson learned – stay on top of your communication with representatives, each and every day. Don’t let them brush your issues off. If you don’t receive notice, call up or email so you have a paper trail.

[Creating an Emergency Fund While You’re Saddled with Student Loan Debt]

How to Get Disputes Resolved: Contact Great Lakes First

Have you experienced customer service issues when dealing with Great Lakes? There are a few avenues you can take to make a complaint and get a dispute resolved.

First, as much as you might not want to hear it, you need to contact Great Lakes to attempt to straighten things out. recommends you follow this checklist before moving on to contacting the Federal Student Aid Ombudsman Group. It lists common issues borrowers have and the steps they can take to resolve them. You must have contacted your loan servicer before forwarding disputes to the Ombudsman Group.

You can call Great Lakes at 1-800-236-4300; representatives are available Monday through Friday from 7:00am to 9:00pm Central Time. You can also send an email by logging into your account, going to this page, and clicking on “Email us.” Lastly, you can also write to them at this address:

Great Lakes
PO Box 7860
Madison, WI 53707-7860

 If you’re still unsatisfied with the response you’ve received (or haven’t received), you can file a complaint with Great Lakes directly on their website by clicking here (you’ll need to log into your account).

Next, Contact the Federal Student Aid Ombudsman

Once you’ve followed the steps above and have exhausted all of your options, you can then contact the Federal Student Aid Ombudsman Group. Before reporting a dispute, you should gather all the information on this list. The Ombudsman Group needs all the relevant information you can give them to reach a decision on how to help you resolve your dispute.

You can contact the Ombudsman Group by calling 1-877-557-2575, you can fill out the short online dispute form here, or you can write to them at

U.S. Department of Education
FSA Ombudsman Group
830 First Street, N.E., Mail Stop 5144
Washington, DC 20202-5144

Keep in mind, you should only contact the Ombudsman Group if you have Federal student loans with Great Lakes. In the event you have private student loans, you should direct your complaints and concerns to the Consumer Financial Protection Bureau (CFPB).

[Beware of Student Loan Debt Relief Scams]

How to Submit a Complaint With the CFPB

The CFPB is in charge of fielding concerns from borrowers with private student loan debt, and you should make them aware of any issues you’ve had with your private lender. The CFPB has been cracking down on student loan servicers to ensure that they’re providing adequate help to borrowers. After all, if you’re looking to make any changes to your repayment plans, you’ll need to contact your loan servicer. It’s important that they give you the knowledge you need to adjust your student loan payments accordingly.

How can you submit a complaint? It’s easy. Go to the CFPB website here and fill out a 5 step form. The CFPB outlines what happens after you submit a complaint, but in short, the loan servicer has 15 days to give you a response, and the CFPB will work on your behalf to get that response. Most disputes are resolved within 60 days.

Bottom line: there are a few ways you can act to get a response. The CFPB and Ombudsman Group can help if Great Lakes does not. If you have an online presence with a blog or social media account, you can always try calling attention to your issue there as well.

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How to Reduce the Stress of Moving Back in With Your Parents


It’s no secret that many millennials have moved back in with their parents after graduating from college. Some may have never left. According to a recent PEW study, 26 percent of 18 to 34 year olds are living with their parents.

With a difficult job market to battle and student loans galore, living on your own, or even splitting rent with a roommate, can be an impossible financial feat.

I chose to live with my parents throughout college and for a year and a half after graduating. It made the most financial sense for me. I was able to create an emergency fund and never had difficulty paying my student loans. However, I’m one of the lucky ones who has a good relationship with her parents.

Here’s my advice on how to make living with your parents easier should you find yourself needing to call on them for help.

Offer to Pay Rent

This might seem counter-intuitive, but I fully believe millennials need to pay their way somehow. Your parents are not responsible for you past age eighteen. Don’t take advantage of their generosity. If you don’t pay rent, at least offer to cook meals and generally take care of yourself. Function as an independent person while living with them. They’ll appreciate not having to clean up after you!

At the very least, pay for your share of the utilities, and any other costs you incur on your own, such as a cell phone bill and car insurance. This isn’t the time to be siphoning from mom and dad. You need to focus on earning a living so you can move out.

In my case, my parents were generous and didn’t charge me rent while I was in college. When I started working, my mom asked for $100 per month.

Compared to the going rates of apartments in the area, that was nothing. I agreed, and always offered to help with any other expenses that came up. For example, when the water heater died, I asked if they needed help paying for it. I did whatever I could to ease the financial burden while I was there.

[When to Cut off Your Boomerang Kid]

Establish Boundaries Ahead of Time

Obviously, things aren’t the same at age 22 as they were when you were 16 and in high school. You don’t need a curfew, and you’re going to feel very limited if you don’t set boundaries ahead of time.

Make sure your parents are on the same page. Give each other space and tell them how important it is to you to have some privacy. If possible, move to another part of the house that offers more room and privacy and convert it yourself if necessary.

Let your parents know you can take care of yourself by showing them (see above!). Do your own laundry, and go grocery shopping and cook your own meals. Hopefully, they’ll realize that babying you isn’t necessary anymore.

[Why You Need to Focus on Increasing Your Income Right Out of College]

Always be Respectful

That being said, you still need to respect their boundaries as well. After all, you’re staying in their house. Even if you’re paying rent, realize your parents are doing you a favor. There are many people who are forced to move out before they’re adults because of a toxic relationship with their parents.

Be grateful and show thanks by treating their house with a little more care than you did when you were a teenager. That means not throwing parties when they’re not around, doing the necessary chores, and not leaving a mess in your wake. You want to make this easier on your parents, too.

It’s also a good lesson for you to learn before moving into an apartment. Landlords want tenants who will treat the space like they own it. You also can’t call on your parents to come over and cook or clean for you once you move out.

Know How to Handle Dating

This is probably the toughest part about living with your parents past college. If you’re dating someone, what’s the best course of action to take to make it less awkward for everyone involved?

If you have a great relationship with your parents, they probably already know you’re seeing someone. There’s nothing wrong with asking if they can be invited over for dinner. The key word is ask. Don’t demand.

Your parents may not feel comfortable with you having your significant other over no matter how old you are. At the end of the day, you need to respect their rules. If your date has his or her place, or more accommodating, then spend time over there.

This goes along with setting boundaries early on. You shouldn’t have your date over and have it be a surprise for your parents. Think about how you would feel if you had someone living with you, and they invited a random guest over. You probably wouldn’t appreciate it!

Also, get expectations straight with your partner beforehand. Be honest and say you’re still living with your parents. As you saw from the statistics, it’s not abnormal anymore, and you shouldn’t feel ashamed. Tell your partner you’re working on improving your financial situation and he or she should be supportive. If not, the relationship might not last. Honesty is always the best policy when it comes to these things.

Don’t Get Forced Into Uncomfortable Situations

Living with your parents may be tolerable at best. Perhaps you have no other choice, and they haven’t objected. Unfortunately, that can make for a tough living situation.

I have a friend who has been living with his parents because it’s difficult to find a job in the small town where he lives. He agreed to help them out with financing repairs for a house they inherited from a relative. He also put his name on the deed to the house.

This is an extreme example, but please don’t let your parents hold anything over your head. Yes, they’re doing you a favor, but if they’re abusive in any way, it doesn’t pay to get yourself involved with something that could tie you to them, or the home, forever.

My friend is going to have an extremely difficult time trying to move away if the opportunity ever arises because he has to deal with the repairs on the house. He doesn’t have much left in his savings either. When it comes down to it, I suggest making the best financial moves for yourself with your future in mind. Don’t cosign anything for friends or family while trying to get your finances in shape to move out.

Make Good Financial Decisions

Living with your parents shouldn’t be a permanent solution for you. I’m sure most of you reading aren’t looking to stay in the basement forever, but it’s important to actively work toward the goal of moving out and becoming independent.

That means saving up enough to cover yourself in the event of an emergency, and looking for a job if you’re not already employed. If you are employed and not making enough to afford living on your own, then you should be learning new skills and applying for better paying jobs, or creating your own.

Of course, if you have student loan debt, you want to get that under control before moving out. Ideally, you should be sticking to a budget while living with your parents to maximize your savings. If you have any consumer debt, get that paid off as quickly as possible.

You’ll be ready to move out once you’ve established a good financial foundation. You don’t want to be calling your parents after you move out, asking them for money because you’re living paycheck to paycheck. You want to be self-sufficient!

Have Other Solutions

In the event that your relationship with your parents becomes rocky, it’s absolutely worth having a backup plan for peace of mind. Do you know if any of your friends or relatives would be willing to house you for a bit? Don’t feel guilty for asking; if you spend a lot of time at home, you want to be in a good place with the people you’re living with, otherwise you’ll be miserable.

Rooming with friends can be a good solution if you can work out a plan beforehand and know that they’ll be responsible with paying rent. Never room with people just because you get along with them. That won’t pay the bills!

Keep tabs on the price of rent in your area and continue saving, as having the money to move out at a moment’s notice will help immensely should the situation arise.

Keep Your Eye on the Prize

As tempting as it might be to blow your savings because you have minimal expenses, always keep your sights set on moving out. Don’t get lazy and don’t fall into the trap of acting entitled. Again, you’re no longer the responsibility of your parents. The sooner you get your act together, the sooner you can move onto the next stage of your life.

Do what you can to make your parent’s lives easier, and they’ll most likely do the same for you. Otherwise, have a backup plan you can turn to if things get too tough to handle.


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5 Millennials Get Aggressive with Big Student Loan Debt

Mixed Race Young Female Agonizing Over Financial Calculations in Her Kitchen.

Natalie Bacon did everything right. She went to graduate school for a law degree and worked as a corporate attorney making a six-figure salary.

But this came at a cost: she graduated with $206,000 of debt and she no longer wants to practice law. Natalie’s now a fee-only financial planner.

Despite the looming debt, Natalie is working hard to pay it off. She’s currently down to $124,000.

Unfortunately, Natalie’s story isn’t unique. According to the Consumer Financial Protection Bureau, the total outstanding student loan debt is more than 1 trillion dollars.

With the burden of debt looming over them, some millennials are using aggressive strategies to get back in the black quickly. 

An Extra $10 a Month Shaved Off a Year in Repayment

Zina Kumok, a freelance writer and founder of Debt Free After Three, finished paying off $28,000 in student loans in November of 2014. When she started her three-year pay-off journey, it was easy to get overwhelmed by her debt burden.


“I know I used to look at that number and it would just seem really daunting,” Zina explains.


But her debt payoff started small with adding an extra ten dollars to each payment, and it made a big impact. “When I called the loan servicer to what difference that would make, I didn’t expect much. But they said that that $10 a payment would shave a year off the total time I’d be paying.”


After seeing what impact the ten extra dollars had on her debt payoff, Zina was inspired to do more.


“Ten dollars done consistently can make a big difference,” Zina says. “So that’s when I started thinking if that’s what ten dollars can do, what can twenty or fifty dollars do?”


Eventually, Zina was putting about half of her paycheck towards loans every month.


Getting Extreme: Sacrificing Heat for Debt Freedom


If you want to find money to pay off debts, cutting expenses is an essential piece of the puzzle.


Andrew Kaslewicz, a nurse, and Veronica Kaslewicz, a pharmacist, living in Pittsburgh, made major changes to their living quarters in order to pay off their $96,500 of student loans in two years. When they cut expenses, everything seemed like a sacrifice at first. The couple cut cable, switched the expensive gym for a cheap one, and started buying used and shared their journey on


But to really reduce expenses, they changed their accommodations by renting a house with no central heat. Instead of a simple way to heat the home, Andrew and Veronica used a wood stove and a gas heater for two years.


While they did save a bunch in rent, it was a bit too far.


“On very cold winter nights, the house would drop to 40 degrees and frost would climb up the inside of some of the walls, even with the gas stove on full blast,” Andrew says. “The only way to warm it up would be to chop up some wood and start a fire. If you’ve ever had to go outside in the middle of a below-zero winter night to grab wood from the wood pile, baby the fire until it lit, and wait 40 minutes for the stove to heat up enough to warm the room you’re in, you know what a sacrifice that is.”


While not all student loan borrowers have to go so far to pay off debt, cutting major expenses like housing by sharing with roommates and living in a less expensive area of town goes a long way.


You Aren’t Stuck: Change Your Loan Terms


When it comes to tightening the purse strings, there’s one expense everyone wants to get rid of: interest. Optimizing payment plans can give borrowers lower monthly payments at lower interest rates.


Ethan Hancock, a software engineer living in Buffalo, NY, graduated with $90,000 in debt from his undergraduate degree. After graduation, he put his federal loans in forbearance to concentrate on paying down his $70,000 of private student loans. Ethan refinanced his private student loans with He was able to slash his interest rates from 9% to 2.2%. He then focused on paying off one loan at a time to reduce his four figure student loan payment down to approximately $450 a month. His payment is now much more manageable.


Natalie switched from the 10-year plan to a 25 year extended repayment plan so she could focus her extra payments down on the principal towards the loan she’s paying off. She still plans to pay it off in 10-years, but lowered her current monthly payments. Natalie now feels like she has a laser focus on paying off debt and isn’t worried about switching to a 25-year plan.


There are many ways to manage your loans so you don’t pay more than you can afford. You can switch payment plans to make the amount owed fit in your budget, and then focus on paying extra principal towards your loan of choice. Students can refinance high interest loans for better interest rates with private lenders. Some federal payment plans, like the Income-Based Repayment plan and the Pay-As-You-Earn plan, make payments affordable and forgive any remaining debt after 20 or 25 years.


Earn More and Work Like Crazy


Expenses can only be cut so far. In order to make big progress on student loans, earning more is necessary. Ethan made several moves to new companies to take his $45,000 starting salary to $72,000 in six years. Eventually, he was able to find a better paying job closer to home. Getting a better paying job was a crucial part of Ethan’s ability to pay off his loans.


Andrew and Veronica earned also extra money to accelerate debt payoff. The couple started a side business selling second-hand items on Ebay.


For Natalie, working like crazy is how she earns extra income to pay off the loans.


“Honestly, the big wins in paying off big debt are making large payments, which means you need to make a lot of money,” Natalie explains. “The bigger your payments, the faster you’re tackling your debt… I work all the time. I blog, freelance write, babysit, make jewelry, anything I can to make money.”


Debt Payoff is the #1 Priority


One thing was clear from all four of the student loan slayers. Paying off debt was their top priority.


“The goal and vision of being debt free are greater than anything else for me right now,” Natalie emphasizes. She knew she would never get ahead with over $200,000 of debts.


Zina echoes this point. “I made the decision early on that [debt repayment] was my priority. I knew that it was really important.”


She realized she could afford to pay off her loans quickly, but she couldn’t afford to do that and go shopping, go out to eat, or do a whole host of other things. 

On the Other Side of Debt


While student loan debt can be overwhelming, the other side is worth it. Zina and her husband are now both self-employed and have just moved to Denver. She doesn’t think they would have felt confident enough to make the move if she hadn’t paid off her student loans.


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REPAYE Student Loan Repayment: Is it Better and How to Qualify

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The federal government just made student loan debt repayment easier for millions of Americans. The Revised Pay As You Earn (REPAYE) plan lets any federal student loan borrower with a Direct Loan cap monthly loan payments at 10% of discretionary incomes. You are no longer limited by when you took out loans or your debt-to-income ratios.

Who is Eligible 

You are able to enroll if you have any Direct Loan. If you have non-Direct Loans such as a Stafford Loan or Perkins Loan, then you could consolidate the loans using the Federal Direct Consolidation Loan in order to make them eligible.

Parents who borrowed with a federal Parent PLUS loan are still not eligible.

When it’s Available

Enrollment opens in December 2015. You can compare your options between REPAYE and other income-driven repayment plans at, or contact your servicer starting in December. 

When Loans are Forgiven

Undergraduate borrowers

If you’re repaying undergraduate student loans, then you will have the remainder of your loans forgiven after 20 years of payments.

Graduate school borrowers

If you’re seeking to forgiven graduate school loans, then you will be on a slightly extended repayment program. Those loans will be forgiven after 25 years of qualifying payments instead of 20. 

How it Differs from PAYE

Like REPAYE, the existing PAYE program also allows for a monthly payment of no more than 10% of discretionary income and the difference is forgiven after 20 years. But there are some key differences:

REPAYE is available to borrowers of all years

That’s a big expansion beyond the existing Pay As You Earn (PAYE) plan. That’s only available to a borrower who is new as of Oct. 1, 2007, and received a disbursement of a Direct Loan on or after Oct. 1, 2011. The PAYE plan also requires you to declare financial hardship as a reason for payments need to be lowered.

The new REPAYE plan offers the same payment level (10% of discretionary income) as PAYE, but makes many more borrowers eligible.

For married borrowers both incomes will be counted

Even if you file taxes separately, the government will add up both of your incomes to determine your monthly payment under REPAYE. Previously, under PAYE, if a borrower filed separately only one income would be used to calculate the payment, which let some borrowers enjoy a much lower payment than if they filed taxes jointly.

How to Sign Up

The new REPAYE repayment plan will be available to borrowers starting December 2015.

You can call your loan servicer for details. If you have no questions, you can proceed to, log in and fill out the application for an Income-Driven Repayment Plan.

[Not sure which loan servicer you have? You can check in the National Student Loan Data System.]

The application is called the Income-Driven Repayment Plan Request, which can be done all online via or in paper form via your servicer.

Before getting started, be sure to collect the following information:

  • The income-driven repayment plan in which you want to be enrolled
  • Your income information, specifically your adjusted gross income (AGI). You can get your AGI off your most recent federal income tax return if it is not significantly different from your current income.
  • You could also use the IRS Data Retrieval Tool in the application to transfer income information from your federal income tax return.

While the application doesn’t take too long, it can be a few weeks before the repayment plan kicks in. Don’t forgo making payments on your plans before you’ve received confirmation that your REPAYE plan is up and running.

Learn more about setting up income-driven repayment plans here.

It Isn’t One Application and Done

Unfortunately, you can’t just apply once and just make payments until your debt is forgiven in 20 years (or 25 years for graduate students). You’ll be required to submit your proof of income on an annual basis, because as your income changes, so does your payment.

Public Service Loan Forgiveness Eligibility & Lump-Sum Payments

Borrowers enrolled in REPAYE and working for the government or a non-profit job for ten years and make 120 on-time payments can have their debts forgiven in 10 years under the Public Service Loan Forgiveness (PSLF) Program.

All income-driven repayment plans will now allow lump-sum payments made on behalf of borrowers through student loan repayment programs administered by the Department of Defense to count toward Public Service Loan Forgiveness. This is similar to lump-sum payments made for Peace Corps and AmeriCorps volunteers.


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Should Millennials Use a Robo Advisor?

Millennials - large

If you’re like most 20- and 30-somethings, you don’t feel so sure about investing in the stock market. After all, it’s a volatile place that can take a nosedive based on factors outside of your control. Investing in stocks feels a little like gambling with your hard-earned money, and Wall Street is the house.

Of course, the reality is that investing to grow wealth is a savvy money move – but you need to know how to invest wisely. If you’ve worked through your fear of putting money in investment accounts, you may get tripped up by another common stumbling block for Gen Y: one in four millennials doesn’t trust anyone for financial advice.

But figuring out investments on your own is not easy (or smart). Traditionally, people have turned to financial advisors – but millennials may struggle to find an advisor they can connect with. Most require asset minimums that people in their 20s and 30s can’t afford and the average age of an advisor is about 55 (which creates a big disconnect between them and their young clients).

So where do you turn to if you don’t feel like you can trust the advice you’re getting? How can you find a way to get help in managing your money to grow your wealth?

Automated investment platforms, nicknamed robo advisors, hope to provide you with a solution.

What Are Robo Advisors?

CNN called robo advisors the next big thing in investing for younger generation, and for good reason. These platforms are technology-driven, run off algorithms that consider the variables you plug in and then manage your money for you. That’s all there is to it – no broker to worry about, no “advisor” who’s actually a commission-based salesperson and provides you with bad advice to enrich themselves.

Computers automatically adjust your asset allocation, attempt to help you save in taxes, and provide beautifully designed dashboards so when you log in to check on your money, you can get a big-picture view of your investments all in one place. You can get simple and affordable investment management without having to figure it out all by yourself.

There are a number of robo advisors out there, including:

  • Betterment
  • Wealthfront
  • Personal Capital
  • Jemstep

Each one offers something a little different, but at their cores they’re all striving to make investment simple, straightforward, and easy for beginner investors to use.

Is a Robo Advisor Right for You?

One of the biggest advantages to robo advisory platforms is the fact that most don’t require asset minimums out of the reach of the average millennial investor. Many traditional RIAs (or registered investment advisors) required you to already have $500,000 or more before they’d work with you as a client. And not many Gen Yers have half a million lying around just waiting to be invested with an advisor.

Robo advisors provide you with a way to get your money in the market, which is a huge hurdle for most people to overcome. Confusion over what to do or who to do it with prevents many people from getting started at all.

A robo advisor may be right for you if you know you need to get started investing — with whatever you have – but aren’t sure how to do it yourself and feel uncomfortable paying a traditional financial advisor. As your financial situation changes, you may want to find a way to acquire individualized guidance. But an automated approach from a robo advisor can help you get started on the right foot.

The Drawbacks of Automated Investment Platforms

Some argue that robo advisors are much too simple for serious investors with big money to invest. Most use Modern Portfolio Theory to determine where to place your money. For those willing to do some research, they can set up similar portfolios on their own and cut out the robo advisor’s fee.

For example, Betterment uses Vanguard ETFs in its investment plans. You could easily go straight to Vanguard and buy into those funds yourself instead of doing it through Betterment.

Essentially, the robo advisors offer a one-size-fits-all solution. And you’re an individual, so these plans may not be the absolute best option available. It makes it simple and easy and keeps you from having to figure it out all by yourself, yes. But it may not be as robust of a solution for you as it is for the person down the street who has a different financial situation.

And the biggest drawback to these platforms is also the most obvious: there’s no one to talk to about your money. While it may be easier for Millennials to trust they’re getting objective financial advice from an unbiased, completely logical computer, you do lose something in the technology translation.

When It’s Time to Call in the Pros

Not everyone should rely on robo advisors for their investment management needs. That human connection is incredibly valuable.

Here’s the deal: developing a good financial situation is like developing good health. We all know the fundamentals are simple. Eat healthy and exercise. Save money and invest wisely.

Simple, but not easy.

This is the value of an advisor who can work with your individually and have real, live, human conversations with you. They can talk about your goals, walk you through complicated situations, and stand between you and a silly mistake — like pulling your money out of the market when it’s crashing (when the rational move is to leave your money alone and stay the course so you can ride the wave back up).

You should consider getting in touch with a financial advisor if you want a comprehensive financial plan, and not just help in managing your investments. Remember, investing is only one part of your much larger relationship and situation with your money.

You should know how to look for the right financial advisor for you, and you should know where to look too. Start by searching NAPFA, the largest professional organization of fee-only financial planners, or check out XY Planning Network, the leading group of fee-only financial planners who specialize in helping Gen X and Gen Y.

Both groups adhere to a fiduciary standard and do not earn commissions off product sales. Also, you may want to focus on only considering financial planners who don’t have asset minimums.


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College Students and Recent Grads, Life Events

Decoding Proposed Fixes to the FAFSA

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Before making a major financial decision, you want to have all the facts. You want to know the price tag, and if there are any competitors willing to give you a product of equal quality for less money. At this point in time, that information is not available to would-be college students until late in the decision-making process.

The Problem With the FAFSA: Making a Decision Without All the Information

Some students make a final decision on where they will be going to school in the fall of their senior year of high school or are at least applying to a variety of colleges. At that point in time, they have little to no idea what their financial aid package will look like. All schools require that the Free Application for Federal Student Aid (FAFSA) be returned before a school-sponsored financial aid package offer is cobbled together. These students decide where they will go to school before they know how much the college or university will ultimately be charging them.

Currently, the FAFSA is not available until the January 1st prior to fall semester. That means for the 2016/2017 school year, you cannot apply for federal aid until January 1, 2016. When you apply you must use the prior year’s tax information, which in our example would from the 2015 tax year.

This presents yet another problem: employers are not required to mail or otherwise distribute W2s and 1099s until January 31st. This means many students do not have their parents’ tax information until a month after applications have opened. Some approximate their numbers, going back to file amendments later. Some wait until taxes are filed, which gives them a very short or non-existent time frame between filing for federal aid, and filing for state grants. Some state grants close their application window as early as March.

[Students Remain Confused About the True Cost of College]

The Fixes

These problems have not gone unnoticed. On September 14, President Obama announced some major changes to the FAFSA application process for the 2017/2018 school year and all subsequent years. These changes will help prospective students and their parents makes better financial decisions when it comes to selecting a school for their post-secondary education.

Fix 1: FAFSA Available on October 1, 2016

The first change is that the application window for FAFSA will open on October 1, 2016. This coincides with the timeframe when most students are trying to make decisions about where they will spend the next four years of their lives. It also allows them time to obtain institutional financial aid packages, compare them, and use them to get the schools to bid against each other, which could drive prices even lower.

How it Helps: Knowledge Earlier + Ability to Apply for State Funding

Even if they can’t get the schools to participate in a bidding war, they can make an educated decision once armed with full knowledge about what each school will actually cost them out-of-pocket. The widened application window also means students will have a greater opportunity to apply for state funding.

Fix 2: Tax Information Will be Prior-Prior Year’s Data

You may be wondering about tax information. Since the application process opens sooner, there will be no way to use 2016 tax information for the 2017/2018 school year. Instead, students and parents will use prior-prior year’s tax data. Because of this change, 2015 tax information will be used two years in a row.

How it Helps: The Government Can Use IRS Data Retrieval Tools

By pulling the prior-prior year’s data, the government enables itself to use IRS data retrieval tools for everyone, making the process easier on both sides of the equation. Parents no longer have to scramble to file their taxes early, or amendments later. The government and colleges no longer have to spend valuable time verifying the accuracy of submitted tax information on FAFSA forms, as the information will come directly from the IRS itself.

[Questions You Need to Ask Before Refinancing Your Student Loans]

What Will Not Be Fixed

Pulling IRS data does not mean there is no paperwork involved. Assets will still need to be reported. Retirement accounts are immune, but you will have to report the following:

Other Assets You Have to Report:

  • Contributions to retirement accounts in the prior-prior year
  • Investment real estate
  • Checking account balances
  • Savings account balances
  • CDs
  • Brokerage accounts
  • Stocks
  • Bonds
  • ETFs
  • Commodities
  • Mutual Funds
  • 529 plans
  • Grandparent-owned 529 distributions
  • Present value of trust funds as calculated by your trust officer

How a Student is an Independent for FAFSA

You do, and still will, have to report these assets for both the student and the parents unless the student does not qualify as a dependent student according to FAFSA rules. To become independent for FAFSA, you must meet at least one of the following qualifiers: be 24 years of age, be in the military or a veteran, be in graduate school, be married, have legal dependents of your own, be an orphan or ward of the court yourself, or have your school’s financial aid administrator manually change your status due to extenuating circumstances.

Issues Remain for Military Families and Parents with Student Loans

There are additional FAFSA complaints that the new changes do not address. Military families with a parent stationed at certain bases receive a Cost of Living Allowance (COLA) to offset just that: the cost of living. This income is not taxable as far as the IRS is concerned, but is included as non-taxable income on the FAFSA. The same is true for military members’ Basic Allowance for Subsistence (BAS.)

A common complaint among middle-class Americans is that debt, particularly the student debt of parents, is not taken into consideration when the Estimated Family Contribution (EFC) is calculated. The EFC determines the size of the student’s aid package. This leaves many students with no aid, and parents who are unable to assist their children in paying for college because of their outstanding obligations from their own days in the halls of scholarship.

Not Perfect, But Certainly Better

If these changes are to be made, the legislation to do so needs to be passed by Congress. While still not a perfect system, the deadline and tax data changes made by the president go a long way to help ease the paperwork burden on all those involved, and help students make a more informed financial decision when selecting their school.

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Brynne Conroy of Femme Frugality

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Why You Need to Focus on Increasing Your Income Right Out of College

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Many young adults struggle to get a job after graduating from college. According to an October 2015 update by the Bureau of Labor Statistics, 20 to 24 year olds face an unemployment rate of 9.1%, while those over 25 have an unemployment rate of 4.1%.

I know I faced this struggle when I graduated back in 2012. Most of my friends who graduated around the same time are currently working two jobs: a full-time job and odd jobs here and there to fill in the gaps, or numerous part-time jobs which equate to a full-time salary.

Increasing your income probably isn’t on your radar as you’re just happy to be employed in the first place, right? Unfortunately, settling for less is a huge mistake that can cost you thousands of dollars over the life of your career.

A Hypothetical Situation – Where Would You Rather Be?

Think about it. Say you graduate at 22 and start earning $35,000. You shoot for $45,000 by the time you’re close to 25, figuring you now have enough experience to leverage. You then go for $55,000 by the time you’re 28. Sounds decent, right?

What if, instead of starting out lower, you snagged a job for $45,000 at 22? You’re already ahead of the curve. By 28, you could be asking for $60,000 – $65,000 instead of $55,000. Think of how much that difference could impact your life. You’d have an easier time paying off student loan debt, saving for a house, saving for a baby, or treating yourself to a yearly vacation overseas.

While I’m using hypothetical numbers, the point still stands. Increasing your earning power early on is critical to your ability to continue to earn more later on.

Don’t Make the Same Mistake I Did

My dad lost his job a year before I graduated college, and I felt pressured to get a job – any job – to help my parents make ends meet.

I majored in Criminal Justice. While I loved learning about it, job prospects weren’t that great. I didn’t want to become a cop, and getting my Master’s degree didn’t seem worth it at the time. The last thing I needed to do was add to my student loan debt. I had to focus on becoming employed.

I gave myself a few weeks after graduation to “enjoy life”, and then I began to scour Craigslist in hopes of finding something in the $10 – $12 per hour range. I had three interviews within a week, and took the highest paid position at $12 per hour. Unfortunately, it was salaried, which meant no opportunity for overtime (which was a mistake considering I stayed late many times).

I didn’t negotiate, either – yet another mistake many young adults (especially women) make. When you graduate from college, it’s easy to feel worthless. I looked through so many job listings and felt completely unqualified. It’s common to see companies asking for 3 to 5 years of experience for an entry-level position, and you’re left wondering how the heck you’re ever supposed to get experience when no one will hire you without it.

However, a company wouldn’t consider hiring you if you were completely worthless. When you get a second interview, they see some potential, or they wouldn’t be wasting their time. It’s up to you to get creative and show what you can bring to the table. Don’t be afraid to ask if there’s room to negotiate. Any reasonable employer will expect you to ask for more, as long as you’re not completely off-base with your request.

What Failing to Negotiate Your Salary Can Cost You

While we’re on the subject, let’s briefly talk about negotiating your salary. Negotiating can make or break your earning power just as much as getting a low-paying job out of college. It can mean the difference of earning $5,000 or more per year, compounded over your entire career.

For example, this article from Fast Company states that women stand to lose out on $500,000 by age 60 if they fail to negotiate their salary at the first job they hold. That can apply to anyone who isn’t proactive about earning more.

$500,000 is a lot of money. Is not asking for more worth that loss? Besides that, if you stay with a company for 5 years (which isn’t very typical anymore) without getting a raise, and the cost of living continues to rise, you’ll have a tough time affording basic necessities.

Don’t put yourself in such a situation. Get comfortable negotiating and know your value ahead of time so you can approach an interview with confidence. Negotiating your salary doesn’t make you demanding and it doesn’t reflect poorly on your character.

If an employer is against negotiating, or if you know the salary they’re offering is lower than the average salary offered for the particular city the job is in, then they’re likely not worth working for anyway. You want an employer who can recognize your value and reward you for it. You don’t want to have to wait years for a raise. Don’t shortchange yourself.

How to Focus on Earning More Out of College

I know it’s easy to say you need to go for the bigger and better jobs, but when opportunity is seemingly limited, how do you succeed? This was a question I often pondered as I saw my peers begin to pick up freelance gigs here and there a few years ago.

I was finally earning $14 per hour after working for two years, and was still dissatisfied. Overworked and underpaid had become my motto, yet I didn’t do anything to change it. I accepted the situation for what it was and figured I’d never earn more than $60,000 per year.

That’s the worst mindset you can be in. If you’re not happy with your current salary, you need to get it in your head that you can improve it. Don’t seal your fate like I was tempted to do. There are opportunities out there for everyone if you’re looking for them.

First, I recommend networking. That’s another thing I failed to do after college. Most of my friends were interested in becoming teachers, which didn’t help me. Stay in touch with people from college, especially those in your major. You never know what may come of a connection, and being recommended by someone will make the interview process go smoother.

Second, always continue to learn. Figure out what you’re passionate about, where you want to work, and what you want to do. Sure, this may change down the road, but knowledge is always valuable. Pick up skills and experience that employers value.

Third – and this goes along with the bit above – don’t be afraid to work on your skills (or passion) outside of a job. For example, I began blogging back in 2013, and I’m now a full-time freelance writer. However, I started for free. I never set out to be a freelancer or to earn a cent from my blog. Luckily, the skills I learned from blogging (and the networking I did) helped me launch a completely new career that also happens to pay more. If you’ve been thinking your hobbies are too trivial to devote time to, you might want to think again.

Additionally, this helps you gain that elusive experience. You can totally re-work something like this and put it on your resume. I’ve learned how to manage social media and use the WordPress platform (among other things), which can be valuable to any number of employers. My blog also serves as a portfolio and proof of what I can offer. Don’t underestimate what you can offer.

Lastly, I don’t recommend working for free for long. You can always turn your hobbies or skills into a side hustle to earn more alongside your day job. If earning more money is your goal, then polish your skills and put them to work! I started off earning hundreds per month, but after a few months, it became thousands. I’ve seen many friends start off with side hustles that have blossomed into self-employment. You just have to keep your eyes on the prize and constantly work toward that goal.

Don’t Lose Out on Potential Earnings

You may not be very confident in your ability to earn more when you graduate from college, but don’t stay stuck in a low-paying dead-end job forever. It might take a move, it might take learning extra skills on the side, and it might take a lot of networking, but there are opportunities to be had in the places you least expect it.

You can cut back your expenses all you want, but there’s no limit to how much you can earn. It’s foolish to get stuck in such a self-fulfilling prophecy where you think you’re destined for a cubicle or a $12 per hour desk job the rest of your life. You have the power to change it – start now.


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19 Options to Refinance Student Loans – Get Your Lowest Rate

Mixed Race Young Female Agonizing Over Financial Calculations in Her Kitchen.

Updated: October 21, 2015

Are you tired of paying a high interest rate on your student loan debt? Are you looking for ways to refinance student loans at a lower interest rate, but don’t know where to turn?

Below, you’ll find the most complete list of lenders currently willing to refinance student loans. You can also go directly to our comparison tool, which lets you see student loan terms all at once, with no need to give up personal information.

But before you do that read on to see if you are ready to refinance your student loans.

There is good news: in recent years, the student loan refinancing market has started to come back. Not just with traditional banks, credit unions and finance companies, but even the addition of new businesses that specialize in refinancing student loan debt.

Loan approval rules vary by lender. However, all of the lenders will want:

  • Proof that you can afford your payments. That means you have a job with income that is sufficient to cover your student loan and all of your other expenses.
  • Proof that you are a responsible borrower, with a demonstrated record of on-time payments. For some lenders, that means that they use the traditional FICO, requiring a good score. For other lenders, they may just have some basic rules, like no missed payments, or a certain number of on-time payments required to prove that you are responsible.

If you are in financial difficulty and can’t afford your monthly payments, than a refinance is not the solution. Instead, you should look at options to avoid a default on student loan debt.

This is particularly important if you have Federal loans.

Don’t refinance Federal loans unless you are very comfortable with your ability to repay. Think hard about the chances you won’t be able to make payments for a few months. Once you refinance, you may lose flexible Federal payment options that can help you if you genuinely can’t afford the payments you have today. Check the Federal loan repayment estimator to make sure you see all the Federal options you have right now.

If you can afford your monthly payment, but you have been a sloppy payer, than you will likely need to demonstrate responsibility before applying for a refinance.

But, if you can afford your current monthly payment and have been responsible with those payments, then a refinance could be possible and help you pay the debt off sooner.

Is it worth it? 

Like any form of debt, your goal with a student loan should be to pay as low an interest rate as possible. Other than a mortgage, you will likely never have a debt as large as your student loan.

If you are able to reduce the interest rate by re-financing, then you should consider the transaction. However, make sure you include the following in any decision:

Is there an origination fee?

Many lenders have no fee, which is great news. If there is an origination fee, you need to make sure that it is worth paying. If you plan on paying off your loan very quickly, then you may not want to pay a fee. But, if you are going to be paying your loan for a long time, a fee may be worth paying.

Is the interest rate fixed or variable?

Variable interest rates will almost always be lower than fixed interest rates. But there is a reason: you end up taking all of the interest rate risk. We are currently at all-time low interest rates. So, we know that interest rates will go up, we just don’t know when.

This is a judgment call. Just remember, when rates go up, so do your payments. And, in a higher rate environment, you will not be able to refinance to a better option (because all rates will be going up).

We typically recommend fixing the rate as much as possible, unless you know that you can pay off your debt during a short time period. If you think it will take you 20 years to pay off your loan, you don’t want to bet on the next 20 years of interest rates. But, if you think you will pay it off in five years, you may want to take the bet. Some providers with variable rates will cap them, which can help temper some of the risk.

Places to Consider a Refinance

If you go to other sites they may claim to compare several student loan offers in one step. Just beware that they might only show you deals that pay them a referral fee, so you could miss out on lenders ready to give you better terms. Below is what we believe is the most comprehensive list of current student loan refinancing lenders.

You should take the time to shop around. FICO says there is little to no impact on your credit score for rate shopping as many providers as you’d like in a 30 day period. So set aside a day and apply to as many as you feel comfortable with to get a sense of who is ready to give you the best terms.

Below we highlight the student loan refinance companies that offer the lowest interest rates.

  • SoFi*: Fixed interest rates start as low as 3.50%, and variable rates start as low as 1.90%. SoFi offers student loans to borrowers who graduated from a selection of Title IV accredited colleges and universities. You need to be employed, or have a job offer with a start date in 90 days. You also must be able to demonstrate a strong cash flow. To get the lowest rate, you need to sign up for automatic payments.
  • CommonBond*: CommonBond offers fixed rates from 3.74% and variable rates from 1.94%. You need a degree, a job and a stable cash flow. They will also review your payment history with other lenders. CommonBond is now available to students with both graduate and undergraduate degrees. There is no maximum loan amount.
  • Earnest*: Earnest offers fixed interest rates starting at 3.50% and variable rates starting at 1.90%. Unlike any of the other lenders, you can switch between fixed and variable rates throughout the life of your loan. You can do that one time every six months until the loan is paid off. That means you can take advantage of the low variable interest rates now, and then lock in a higher fixed rate later. You need to have a job or an employment offer. You need an emergency fund of at least one month. You also must have a positive bank account balance and a budget that makes sense. If you have had credit in the past, you need a history of on time payments.
  • LendKey*: LendKey works with community banks and credit unions across the country. Although you apply with LendKey, your loan will be with a community bank. They have recently become very competitive on price, introducing a 3.25% fixed-rate 5 year loan. Variable rates start as low as 1.93%.
  • DRB Student Loan*: DRB offers a variable APR range from 1.90% – 4.50%. Their fixed APR ranges from 3.50% – 6.25%. This is bank that started expanding aggressively into student loans two years ago, and has already booked over $950 million of student loans. If you do not sign up for automatic monthly payments, your rate will be 0.25% higher.

Below is an alphabetical listing of all providers we have found so far. This list includes credit unions that may have limited membership. We will continue to update this list as we find more lenders. (If you are counting, there are now more than 19 providers. Our list has continued to expand since we first created this post.)

  • Alliant Credit Union: In order to qualify, you need to have a bachelor’s degree. The minimum credit score is 700, and you need two years of employment and a minimum income of $40,000. They offer variable interest rates, starting at 6%. Anyone can join this credit union by making a $10 donation to Foster Care for Success.
  • Citizens One (Citizens Bank): To get the best deal, you should have at least a bachelor’s degree. They will look at your credit history, and want to make sure that at least the last three payments on your student loans have been made on time. If you don’t have your degree, you need to have made the last 12 payments (principal and interest) on time. You must make at least $24,000 per year. They offer fixed rates starting at 4.74% and variable rates from 2.33%.
  • CommonBond*: CommonBond was highlighted earlier in this post, with fixed and variable rates available. Variable rates start at 1.94% and fixed rates start at 3.74%.
  • CommonWealth One Federal Credit Union: Variable interest rates start at 3.04%. You can borrow up to $75,000 and need to be a member of the credit union in order to qualify.
  • CordiaGrad: Fixed rates range from 3.95% to 6.75% APR and variable from 2.75% to 4.95% APR. The lowest range is only available if you sign up for an automatic payment from a CordiaGrad Checking Account. You must have at least $20,000 of debt.
  • Credit Union Student Choice: This is a tool offered by credit unions. The criteria and pricing vary by credit union. The credit unions have limited membership, but you can find out if you qualify on this site.
  • LendKey*: You will need to have graduated from an eligible school in order to qualify. You need to make at least $2,000 per month, and they will review your credit history. Variable rates are available, starting at 1.93%. You will be matched with a community bank or credit union that anyone can join.
  • DRB Student Loan*: They will refinance undergraduate, Parent PLUS and graduate loans including MBA, Law, Medical/Dental (Post Residency), Physician Assistant, Advanced Degree Nursing, Anesthetist, Pharmacist, Engineering, Computer Science and more degrees. Variable rates as low as 1.90% with a rate cap and 3.50% fixed.
  • Earnest*. They will look at alternative criteria to try and approve you for a lower rate, like your employment history or bank account balances. Variable rates as low as 1.92%.
  • Eastman Credit Union: They don’t share much of their criteria publicly. Fixed rates start at 6.5% and you must be a member of the credit union. Credit union membership is not available to everyone.
  • EdVest: They offer refinancing options for private loans used to finance attendance at a Title IV, degree-granting institution. If the loan balance is below $100,000 you need to make at least $30,000 a year. If your balance is above $100,000 you need to make at least $50,000. Variable rates start at 3.580%, and fixed rates start at 4.40%.
  • Education Success Loans: You must be out of school for at least 30 months, and you must have a degree. You also need a good credit score, with on-time payment behavior. Variable and fixed loan options are available, with rates starting at 4.99%.
  • IHelp: This service will find a community bank. Community banks can actually be expensive. You need to have 2 years of good credit history, with a DTI (debt-to-income) of less than 45% and annual income of at least $24,000. Fixed rates are available, starting at 6.22%.
  • Mayo Employees Credit Union: You need at least $2,000 of monthly income and a good credit history. Variable rates are available, starting at 4.75% and you would need to join the credit union.
  • Navy Federal Credit Union: This credit union offers limited membership. For men and women who serve, the credit union can offer excellent rates and specialized underwriting. Variable interest rates start at 3.51%.
  • RISLA: You need at least a 680 credit score, and can find fixed interest rates starting at 4.49% if you use a co-signer.
  • SoFi*: You must have a bachelor’s or graduate degree in order to apply, and you must have demonstrated on-time payment behavior. Both fixed and variable rates are available, with rates starting at 1.90% and fixed rates starting at 3.5%.
  • Upstart*: You need to have a degree (or be graduating within 6 months). A minimum FICO of 640 is required. Fixed interest rates starting at 4.67%. This is more of a traditional personal loan than a long term student loan refinance.
  • UW Credit Union: $25,000 minimum income required, with at least 5 years of credit history and a good repayment record. Fixed and variable interest rates are available, with variable rates starting at 3.51% and fixed rates starting at 7.49%. You need to join the credit union in order to refinance your loans.
  • Wells Fargo: As a traditional lender, Wells Fargo will look at credit score and debt burden. They offer both fixed and variable loans, with variable rates starting at 3.49% and fixed rates starting at 6.74%. Wells Fargo does not have a tradition of being a low cost lender.

You can also compare all of these loan options in one chart with our comparison tool. It lists the rates, loan amounts, and kinds of loans each lender is willing to refinance.

Don’t forget to follow us on Twitter @Magnify_Money and on Facebook.

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Balance Transfer, College Students and Recent Grads, Pay Down My Debt

Guide to Paying off a Student Loan With a Balance Transfer

Pretty Young Multiethnic Woman Holding Phone and Credit Card Using Laptop.

Do you have a loan with a high interest rate you’re trying to pay off? Is it frustrating you to see so much of your monthly payment going toward interest instead of principal?

If you’ve been looking for solutions, chances are you’ve come across 0% interest balance transfer offers from credit card companies. What you might not be aware of is that you can use these offers to pay off personal loans and student loans – not just other credit card debt.

How a Balance Transfer Works

Is the concept of a balance transfer new to you? Here’s a quick example of what it looks like:

You have a $2,000 balance on Credit Card A with a 15% APR. You get a 0% APR balance transfer offer from Credit Card Company B.

You can transfer the $2,000 from Credit Card A onto Credit Card B (you may incur a balance transfer fee, depending on the offer), and pay 0% APR for a select period of time instead of the 15% APR you were paying.

Note that you’re not actually completely paying off your debt. The balance from Credit Card A might be paid off (thanks to Credit Card B), but you’re still on the hook for repaying the $2,000 you transferred to Credit Card B. Balance transfers simply mean you’re shuffling your debt around to a lower interest rate in order to pay it down faster, not eliminating it with the move.

Many credit cards offer 0% APR periods from 12 to 18 months, with some even over 20 months. Why bother with a balance transfer? You’re saving money because you’re paying less interest. With a 0% APR, your payments go directly toward the principal of the balance.

There is one catch, though – you must be able to pay off the balance by the time the 0% APR promotion expires.

We used credit cards in this example, but the same holds true for other loans. If you have a personal or student loan, you can transfer that debt to a credit card with 0% interest while paying off your original personal or student loan. Let’s take a look at how this is possible.

How to Pay Off a Loan With a Balance Transfer

Before you consider using this strategy, you should have a decent credit score; at least 700 and above. People who have been completely responsible with credit in the past (they haven’t missed any payments, and can afford to pay extra) would be the best candidates for this strategy. They simply have debt that’s costing them too much.

You can use a variety of methods to transfer a balance: you can call the credit card company offering the 0% APR promotion and inquire about it; you can log onto your account online if you already have a card with an offer; or you can use a balance transfer check that was mailed to you to write a check to yourself, and receive the funds in your bank.

Just beware, if you log into your account for an offer, it likely won’t be the most competitive option on the market. Instead of getting 0%, you might get 5% APR or something similar. The best offers come when you actually move your debt from one bank to another.

Warning before you proceed. Different lenders have different policies on whether or not you can pay using a credit card. Check with your lender first to see what payment options are available to you. A balance transfer check may be the only option for you.

Calling a credit card company may be the best idea as you can ask the representative questions about fees and the overall process. You can also attempt to negotiate the balance transfer fee. That might sound a little crazy, but Sandy Smith of Yes I am Cheap has successfully negotiated her balance transfer fee down a few times and highly recommends others do the same. You have nothing to lose by asking.

Stephanie from Six Figures Under used this strategy to pay off student loan debt as well, and recommends calling and asking for a better rate if you’re unable to receive a 0% APR offer (some credit card companies offer 1% – 2%).

What happens after you write a balance transfer check? Once the check is cashed, the balance is drawn from your credit card. If you have a limit of $10,000 on your credit card, and you write a check for $5,000, you’ll then owe $5,000 on your card. It’s very similar to a “traditional” balance transfer.

In some cases, you may be able to call a representative from the credit card company and give them the loan account information. They can then initiate the pay off and transfer on their end, with the same result of your credit line being drawn upon.

Please be wary of using balance transfer checks as there can be a lot of hoops to jump through. Some credit card companies won’t send you balance transfer checks, even if you call and request them, until months after you’ve been approved for the card. Unfortunately, balance transfer offers typically expire after 60 days, so this might not work out.

Others have had trouble cashing the checks. If you’re considering using a balance transfer check, read the fine print to make sure the math works in your favor, as some have higher balance transfer fees than credit cards.

When Should You Consider a Balance Transfer?

There are many factors to take into consideration. Besides being able to pay off the balance in full before the 0% APR rate expires (which will require a large monthly payment in some situations – be sure you can afford it), you have to see if you’re actually saving money. 0% interest sounds great, but if you’re paying off student loans, you should be aware the interest you pay on them is tax deductible.

To compare whether or not you’re saving money, consider the balance transfer fees you’ll have to pay, the amount of interest you’ll be able to deduct on your taxes (if applicable), or the amount of money you’ll be saving by transferring. Is it worth it?

For example, let’s say you have a $10,000 balance with a 6.8% APR and you have 5 years left on the loan. Your monthly payment is currently $197.07. You’ll pay a total of $11,824.20 over those 5 years.

If you were to transfer this loan to a 0% APR credit card with a promotional period of 18 months, you’d be paying $558.33 per month, saving you $1,774.18 in interest (paying nearly $10,050 total). This is assuming balance transfer fees cap out at $50 – each credit card is different.

You need to be very disciplined in making your payments. Your current loan is likely an installment loan, which means a set amount is due every month to pay off the loan in a certain period of time.

Credit cards are revolving, which means it will take you longer to pay off your balance if you only pay the minimum each month as interest continues to accrue. Obviously, this is the perk of the 0% APR balance transfer; all your money is paying down principal. Know what you need to pay each month to pay off the balance in full before the introductory 0% APR expires!

What to Watch Out for in the Process

Balance transfers might sound like a great solution, but they are not for everyone. We mentioned this before, but you should only consider doing this if you know without a doubt that you can pay off the balance in full by the end of the 0% APR period.

Why? Credit cards still have very high interest rates. If you don’t pay off the balance, then you’ll start accruing interest at the regular APR for your credit card. These can be as high as 11% to 15% – not what you want to deal with, especially if your original loan had a lower APR.

Also, depending on the card, if you miss a payment, your 0% APR may expire as a penalty. It’s extremely important to keep on top of your payments.

[Balance Transfer Traps to Avoid]

You should only be using this strategy if getting out of debt – for good – is your goal.

The other thing you must watch out for is the terms of the balance transfer, especially if you’re using a balance transfer check. Do not confuse a balance transfer offer with a cash advance offer. There are times credit card companies will send out blank checks for both in the same envelope. You have to read the fine print on the check. The last thing you want to do is take out a cash advance because those have higher rates.

You also need to watch out for balance transfer fees (typically around 3% of the balance you wish to transfer), which may be capped at a certain dollar amount. You should do the math before deciding a balance transfer is right for you.

Lastly, we want to repeat that this strategy is not for everyone, especially for those who haven’t been responsible with credit in the past. You should not add any additional debt onto this balance transfer card – you should only use it to transfer your existing debt. Otherwise, the balance will be more difficult to pay off.

Credit card companies bet on this happening, which is why they’re able to offer the 0% APR balance transfer in the first place – they make money off of the offers. Keep in mind that on most cards, new purchases aren’t covered under the 0% APR offer – they accrue at regular (high) rates. Read the fine print!

Parting Advice

Using a balance transfer check is one way to get around not being able to pay off a student or personal loan with a credit card, but you must be 100% aware of the terms and how the math works.

Don’t be afraid to call up the credit card company presenting you with the 0% APR offer to get clarification on what is or isn’t allowed with the balance transfer. If your credit isn’t sufficient, you may not be approved for a credit line that will allow you to transfer over all your debt. You may only be able to transfer over a portion.

If getting out of debt quickly is your goal, and you don’t qualify for a balance transfer (or a check won’t work out for you), then consider making extra payments on your debt. You’ll still save on interest, and you won’t have to worry about fees or having your payments denied.



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Should You Settle Your Private Student Loan Debt?

Depressed man slumped on the desk with his hands holding credit card and currency

If you’re asking yourself whether to settle your private student loan debt, then you’re probably in a bit of financial trouble with your student loans. The first thing you should do is take a step back and assess what’s happening. Understanding the full picture will help you make the right decision.

Doing that requires looking at the type of debt that you have – specifically whether you have private or federal student loan debt. Private loans are different than federal loans in many ways, including the repayment options available to you. With private student loans, you will not be eligible for many income repayment plans, forbearance, or deferment. Your specific options will depend on the terms of your loan and how willing your lender is to work with you. But, in general, if you cannot make your private student loan payments, your options are more limited.

How your private student loans can end up in collections

If you stop making payments on your private student loans, a private lender can call you and send you letters as a method of pursuing payment. Often, your private lender will have a third party debt collector do this. However, the private loan lender cannot pursue other avenues of repayment (such as wage garnishment) unless it first gets a judgment against you (by a court of law). This means that the private lender will have to sue you in order to take more action than phone calls and letters. This is different than federal loans because the Federal government does not need a judgment against you to take further action.

What it means if your private student loan lender sues you

If you default on your private student loans, then your lender can take action against you. The terms of your private student loan will define what constitutes a “default” (there is no one definition, as is the case with federal loans). If you default, your lender can file a lawsuit against you in court. The lender must be successful in order to pursue collection beyond phone calls and letters.

Once a lender has a judgment against you (i.e. that a court of law has entered a judgment stating that you are in fact in default on your student loans), it can use other collection methods, including: 1) garnishing your wages, 2) garnishing your tax return, 3) freezing your bank accounts, and 4) getting a lien on personal or real property. However, there are laws in place that limit the amount of money a lender can recover from you. For example, the Consumer Credit Protection Act limits the amount of money that lenders can garnish from your wages (roughly 25% of your disposable earnings or the amount by which your disposable earnings are greater than 30 times the Federal minimum wage). So, if you are facing garnishment, know that you have certain protections under the law.

Your options once your loans are in collections

If your private student loans are in collections or you have a judgment against you, you have the following options. You can 1) pay the amount in full, 2) negotiate a repayment plan or, 3) settle your debt. All of these options will vary depending on your debt collector and how much the collector is willing to work with you. Obviously, if you can pay the debt in full, you should. This is unlikely to be the case, though, or else you probably wouldn’t be in this situation.

The second option is to workout a repayment plan that you can afford. Some lenders or collection agencies will work with you to get on a repayment plan that you can afford. Debt collectors can be tricky to work with, though. A piece of advice: do not give the collector your bank account information (ever). The debt collector could use that information to take money from your account, and you may have great difficulty proving you didn’t authorize it. Whether you are negotiating a repayment plan (or a settlement), make sure you get the terms of your agreement in writing. How much your private loan lender is willing to negotiate a payment plan with you will depend on your specific lender. A good piece of advice is to learn a few negotiating tips before you start discussions.

Finally, you have the option of settling your debt. Usually, you’ll need at least 50% or more of the money you owe (including penalties and fees), for a lender to consider settling. The most important thing to remember when you settle your debt is that the forgiven amount is reported to credit bureaus, so it may hurt your credit (and you may owe taxes on this amount if the lender reports it to the IRS and you’re not insolvent). It’s up to the lender (or collection agency) to decide whether to settle with you.

When you negotiate a settlement, get everything in writing and keep all documentation. You want to have a paper trail to prove what actually happened in case something is mixed up in the process.

Because student loan debt is usually large, it’s a good idea to speak with an attorney who can help you through the process. An attorney can help you understand your specific options based on the law and the specific terms of your loan. Settling your student loan debt is not necessarily always the best way to get out of debt, but it may be a good fit for you, depending on your specific financial circumstances.


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Maximizing Special Benefits for Teachers

Maximizing Special Benefits for Teachers

As James was driving to school to start another day of teaching, he had a sinking feeling in his stomach that things weren’t supposed to be this way. As he shopped last night at Target for pens and notebooks for his students who couldn’t afford them, he fought the demon on his shoulder that told him, “This isn’t your responsibility, stop spending your money on people who should be buying these things themselves.” 

It wasn’t that he minded buying supplies for his students – they needed them to learn – but it stretched him financially. He had just bought a house and the mortgage was higher than the old rent payments; his credit card balances had an interest rate that was climbing for reasons unknown to him; his student loans weren’t going away fast enough; and things he knew he should have – like life insurance – didn’t make the cut. There wasn’t enough money left at the end of the month. 

Would things ever change, or was this the way life was going to be from now on? 


James is feeling the pinch, but he’s not alone. Many teachers who try to manage spending in the classroom along with their personal finances have to be careful to make sure they don’t derail financially.

Even teachers who don’t have buy supplies for their students need to keep a close eye on their finances.

But there are some benefits available – only to teachers – that may relieve the burden of this financial situation.

Educator Expenses Deduction

For those teachers who find themselves buying supplies for their classroom or students, and do not get reimbursed by their school, relief comes during tax season.

This relief comes in the form of a $250 tax deduction (a reduction used in lowering the amount of income used to calculate your tax bill), each teacher in the family can claim $250 of unreimbursed expenses that they have incurred throughout the year. If both spouses are teachers, then this can total $500, but not more than $250 per person.

It doesn’t just have to be pens and notebooks like James experienced – this can be used for books, computer programs and services, and other learning materials. Even if this amount goes over $250, then the remainder can be used in another section of your tax return to further reduce your tax liability (called Unreimbursed Employee Expenses).

Teacher’s Credit Union

As James is seeing his credit card rates climb, a bank that understands his situation probably isn’t serving him. That’s where teacher-focused credit unions can be an advantage. Credit Unions are different from banks in that they are member-owned (not publicly traded) and, in this case, are only available for teachers and their families. By restricting access and not having to worry about profits to shareholders, these credit unions offer lower rates, have less fess on their accounts, and are more lenient in their underwriting of certain products. Just Google “teacher’s credit union” and you’ll be able to see all the choices available.

Teacher-focused Insurance

James, like many others, decided to forgo life insurance when his budget got tight. But instead of just sacrificing a major need in his financial life, he should be educating himself on the options. If he’s a member a teaching organization (like NEA or one of its state affiliates), then there are insurance options available through those organizations. These are sometimes priced lower than what he may find on the market, given that it is just serving a certain class of people (teachers). Even if they are priced a little higher, then underwriting standards (i.e. blood work, urine samples, health exam) are more relaxed as the insurance is only being offered to teachers.

Car Insurance, Just for Teachers

Some teacher organizations are now providing car insurance, but many insurance companies have been offering “teacher’s auto insurance” for a while. This insurance is able to provide lower rates and more customized insurance to meet the needs of educators. As teachers are believed to be a more conservative class of people (own it – you are!), they are less likely to get into accidents, and can therefore be offered cheaper rates on car insurance. (As companies will limit the school boundaries and teachers they offer this to, it is essential to research companies to make sure they offer coverage in your area.)

Student Loan Forgiveness for Teachers 

Knowing how much it costs to get a degree, but also how little some teachers get paid, there are Federal programs in place to forgive some student loans held by teachers. If a teacher teaches in a Title 1 school in a certain subject area (often math, science or special education) for a period of 5 complete and consecutive years, then up to $17,500 of certain loans can be forgiven.

It gets better for school counselors – should they still be paying their student loans 10 years after graduation, and meet certain criteria, then the balance of their federal loans will be cancelled and forgiven.

If you’re like James and struggling to make ends meet each month, take a few hours to do some research and see if teacher benefits could help lighten your financial burden.


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Why I Won’t Refinance My $123,000 in Student Loans

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There’s so much talk right now about refinancing student loans – especially among those with massive debt (like me). Yet, I have decided not to refinance my loans. I don’t think the lower interest rate is worth the additional risk that comes with refinancing, especially when dealing with a debt as large as mine.

My Massive Student Loan Debt

I graduated law school in 2011 with $206k in student loan debt. This is an enormous amount of debt that made me feel overwhelmed, trapped, and miserable.

About $60,000 was from undergrad at Wittenberg University in Springfield, Ohio, and the rest was from law school, at The Ohio State University Moritz College of law. I had a combination of federal and private loans for undergrad, but my law school loans are all federal.

I’ve paid off all of my undergrad debt (woohoo), but my law school debt stands at $123,000 as of September 2015.

The interest rates on my undergrad debt ranged from 3%-6%, but the interest rate on my law school debt averages out to be 7.9% (with ranges including 6.5%-8.5%). With this high of an interest rate, I looked into refinancing my student loans.

What Happens When You Refinance Your Student Loans

Unlike when you consolidate or switch to a different repayment plan, when you refinance your student loans, you sell your loans to a new lender who repays your federal loans and gives you a new private loan. When you consolidate or when you switch repayment plans, like IBR or PAYE, you change the terms of your current loan but the loans still stay federal. This is not the case with refinancing because the only entities that currently offer refinancing are private companies. When a private company buys your loan, pays it off, and offers you a new loan with new terms, your loan becomes a private student loan. This could change in the future. The federal government could add a program that allows you to refinance your student loans (I would definitely do this). For now, this is not available.

By selling your Federal loans to a private lender, the private lender offers you a new loan, with new terms. These terms could be more favorable to you – or they could not. It completely depends on the loan. One thing is for sure, though: you are not afforded the same protections with private loans as you are with Federal loans. You will not automatically have access to income repayment plans or forgiveness options. Forbearance and deferment are not certain. Your lender could have clauses addressing these situations in your loan terms, or it could not. When you refinance your student loans, the terms will change to reflect those determined by the lender (not the Federal government).

Why I’m Not Refinancing My Student Loans

After a lot of research and consideration, I decided not to refinance my student loans. The main reason that I am not refinancing my student loans is because I don’t think benefit of a lower interest rate outweighs the additional risk I would take on if I refinanced.

Ironically, I am not on an income repayment plan, and I am not on track for student loan forgiveness. So, as of today, I am not actually taking advantage of any of the benefits that makes federal loans better than refinanced student loans. But, you know what? I could if I wanted to. And to me, that is worth paying the extra interest.

For example, a few months ago, I quit my six figure job to be happy, changing careers completely – I quite being a lawyer and transitioned into a career in financial planning. I’m much happier. While I am managing to pay my bills without switching repayment plans, that may not always be the case. I’m only a few months in. I’m hoping to stay on the same plan, but if I can’t, then I have the option of going on an income plan. If I refinance my loans, I won’t have the income repayment options currently available. Quite frankly, had a refinanced my loans prior to switching careers, I’m not sure I would have switched because I wouldn’t be sure I could afford the payments. With federal loans, I have more options and that’s worth paying more in interest.

Some student loan refinancing companies offer to “help” you if you lose a job, but to me that’s not enough. Lose your job also means get laid off and not quit to transition careers to a lower-paying position. My federal loans can go into deferment, forbearance, and I know the exact income plans that are available to me (there are several). I’m not planning on using any of these options if I can help it – I’m committed to being debt free as soon as possible. But given the amount of my student loan debt (given how massive it is) it could take years to repay. And over years, things can change. I don’t feel comfortable taking on the extra risk of a private loan for a lower interest rate.

For me, the flexibility and availability of protections that come with federal student loans make it worth it to pay more in interest. I feel more secure with federal student loans than private student loans. I know if times get tough, I can have options.


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College Students and Recent Grads, Reviews, Student Loan ReFi

SoFi Parent PLUS Loan Refinance Review

Senior Couple Talking To Financial Advisor At Home

Are you a parent who wanted to help your child finance his or her education, and ended up taking out more loans than anticipated? Many parents find themselves in a precarious situation as they try to plan for retirement and while balancing student loan debt.

If you’re looking to save on the amount of interest you’re paying, SoFi’s Parent PLUS loan refinance program may be right for you.

Details of the Parent PLUS Loan

You can refinance a minimum of $10,000 under SoFi. Fixed rates range from 3.50% to 6.99% APR and variable rates range from 1.90% to 4.92% APR (these rates assume you enroll in autopayment).

Terms of 5, 7, 10, and 15 years are available. Variable rates on terms of 5, 7, and 10 years are capped at 8.95%, while the 15 year term is capped at 9.95%.

An example payment looks like this: if you refinance $10,000 on a 5 year term with a fixed APR of 5.49%, your monthly payment will be $190.97 and you’ll pay a total of $11,457.93 over the life of the loan. If you refinance $10,000 on a 5 year term with a variable APR of 4.2%, your monthly payment will be $185.07 and you’ll pay a total of $11,104.43.

How Does the Parent PLUS Loan From SoFi Compare to a Federal PLUS Loan?

The interest rate for Federal Direct PLUS Loans disbursed on or after July 1st, 2015 and before July 1st, 2016 is 6.84%. During much of the 2000s, interest rates were higher. Currently, interest rates are fixed – variable rates are unavailable.

Most people are looking to refinance to save money, and SoFi offers very competitive rates compared with the Direct PLUS Loan, especially on variable rates.

While there are no fees to refinance, you should calculate your estimated savings before going through the process. Be aware if you do refinance, you’ll lose out on certain benefits that come with having Federal student loans, such as deferment, forbearance, and various repayment options.

PLUS loans made to parents are eligible for the Graduated or Extended Repayment Plans, and Direct PLUS loans are also eligible for forgiveness. In some cases, PLUS loans can be discharged due to the death of the borrower (or student).

Private loans often don’t extend these same benefits. In fact, SoFi explicitly states on its legal page that this loan “is not discharged in the event of death or permanent disability of the borrower or student on whose behalf the loan is taken out.”

Eligibility Requirements

You must be a U.S. citizen or permanent resident and employed to be approved. SoFi is unable to lend in Nevada, and variable rates aren’t offered in Illinois, Ohio, or Tennessee. The loans must have been used to obtain at least a Bachelor’s degree with an eligible school as well.

There are no specific credit score requirements as SoFi tries to take a broader view of borrowers. It focuses on income and credit history instead.

Application Process and Documents Needed

The application process to refinance a PLUS Loan with SoFi is easy and can be done completely online. The application takes around 15 minutes to complete, and you’ll know whether or not you qualify by going through the pre-approval process first. During this portion of the application, a soft credit inquiry is used. If you decide to move forward with the loan offered to you, a hard credit inquiry will be used.

You’ll be asked to upload a few documents, so it’s a good idea to have the following ready to go:

  • Proof of residence – ID with matching address, otherwise a utility bill dated within the last 60 days is okay
  • Proof of income – most recent pay stubs
  • Proof of citizenship – a passport or birth certificate can be provided
  • Verification of loans – most recent loan statements for the loans you’re refinancing

Once you submit this documentation, SoFi’s review team gets to work on evaluating your loan. If no other documentation is needed, reviews can take anywhere from 2 to 3 weeks to complete.

The Fine Print

There isn’t an origination fee or application fee, and there are no prepayment penalties. Rates are determined on a number of factors, including the term you choose, your income, and your credit history.

There are late fees associated with the loan. The Parent PLUS Refinance program is currently offered through SoFi’s lending partner, Mohela, and it assesses any fees owed. When you receive the paperwork for the loan, the fees can be found under the disclosures.

Repayment Assistance Options

If you’re struggling to repay the loan after refinancing with SoFi, we recommend you contact a representative and make them aware of the situation. The worst thing you can do with any loan is not make a payment.

SoFi offers unemployment protection on a case-by-case basis, during which payments can be paused for a period of 3 to 12 months.

Pros and Cons of SoFi Parent PLUS Loan

Pro: SoFi offers much better rates than the 6.84% fixed rate that comes with Direct PLUS loans. If you have a higher interest rate – around 8% – you’ll stand to benefit even more.

Con: As we mentioned, refinancing means losing out on benefits associated with Federal student loans. If you’re not as concerned about needing repayment assistance, the savings might be enough to make refinancing worthwhile.

Pro: SoFi also offers variable interest rates, whereas the most recent Direct PLUS loans don’t. Variable rates can be tricky, though – SoFi says rates may change on a monthly basis. If you value stability and peace of mind, variable rates may not be for you. If you’re trying to pay off your balance quicker, and a lower interest rate would help, then it might be worth considering this option. 

Con: You may have to extend the repayment term to get a lower monthly payment, as SoFi offers terms up to 15 years. Unfortunately, this increases the amount of interest you’ll pay over the life of the loan. It’s important to use a calculator to estimate how much your savings will be to make sure refinancing is worth it. For example, if you have less than 5 years remaining on your loan, refinancing may not save you a lot of money.

Pro: SoFi offers unemployment protection, and you can also take advantage of SoFi’s career assistance program. If you or your child is experiencing trouble finding employment, it will connect you with its network of alumni and give you tools and tips to succeed in your job search.

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Other Parent PLUS Refinance Alternative

If you don’t qualify with SoFi, you can try these lenders that also offer refinancing options:

CommonBond: Fixed APRs range from 3.74% to 6.49%, and variable APRs range from 1.95% to 4.94%, and terms offered are 5, 10, 15, and 20 years. CommonBond also has hybrid APRs, which range from 4.22% to 5.64%. Only a 10 year term is offered with this choice; it starts off as fixed for 5 years, and changes over to variable for 5 years. There are no origination fees or application fees, no prepayment penalty, and CommonBond actually allows you to transfer your loan to your child (which isn’t allowed with Federal loans). You can borrow a maximum of $110,000.


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Citizens Bank: Citizens Bank refinances Parent PLUS and Direct PLUS loans through its Education Refinance program. The minimum amount you can refinance is $10,000 and up to $90,000 for Bachelor’s degrees and below, $130,000 for graduate and doctoral degrees, and $170,000 for professional degrees. For a Bachelor’s degree and above, you must have made 3 consecutive monthly payments to refinance. For anything less than a Bachelor’s degree, you must have made 12 consecutive monthly payments. The loan you’re refinancing must be in repayment status and can’t be enrolled in an Income-Based Repayment plan. Fixed APRs start at 4.74%, and variable APRs start at 2.34%. Terms of 5, 10, 15, or 20 years are offered. You need a minimum income of $24,000 to qualify.


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Be sure to shop around as there are other lenders out there that will refinance PLUS loans – you want to make sure you’re getting the best rates and terms available to you so you can save the most. Shopping around within 30 days will only count as one credit inquiry, so your credit won’t get penalized heavily. Take advantage of this and lessen the burden of student loan payments so you can focus on saving for your future.

We’ll receive a referral fee if you click on the “Apply Now” buttons in this post. This does not impact our rankings or recommendations You can learn more about how our site is financed here.


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College Students and Recent Grads, Strategies to Save

Using a Roth IRA as a College Savings Account


Many parents start stressing about the affordability of college well before application time. Given the steady rise of college expenses, some parents start saving as early as infancy.

If you’re worried about saving enough for college, there are several different planning strategies you could implement as part of your overall plan to pay for your child’s college education. A 529 College Saving plan is one of the most popular tools, but it’s not the only option.

One often overlooked way to help save and pay for tuition is to use your Roth IRA retirement account as a college savings account.

Why would someone tap a retirement account to save for college? Because there are some unique advantages:

  1. You can withdraw without penalty or taxes before retirement
  2. The balance isn’t counted against you when determining financial aid
  3. The money is still yours, without penalty, if your child doesn’t go to college

You should consult a tax professional before making any decisions about utilizing a retirement fund to save for college. Also keep in mind that tax laws and loopholes can always change between now and when your child will be attending college, so saving exclusively in a Roth IRA is probably not your best strategy.

1. Financial benefits of Roth IRA accounts

Roth IRA accounts offer a rare break from the usual tax disadvantages of withdrawing from other assets and savings accounts. According to Scott Hanson with CNBC, “Roth IRAs enjoy a rather unique tax treatment. Withdrawals are treated as a ‘return of contribution’ first and as earnings second.”

What this means is that you are always allowed to withdraw from your Roth IRA, tax and penalty free, up to the amount that you have contributed. For example, if you have saved the maximum allowable amount (usually $5, 500) into your account for 5 years, you will be able to withdraw $27,500 without penalty. Having access to that amount of money, penalty free, is enormously beneficial for helping to pay for the rising costs of college.

2. Roth IRA accounts aren’t considered for FAFSA

Any student looking to receive federal aid for their higher education costs needs to fill out the Free Application for Federal Student Aid Form (FAFSA). FAFSA will assess your child’s ability to pay, including the Expected Family Contribution (EFC). The EFC takes all of your family’s income, savings, and benefits into account for deciding the level of financial aid necessary for your child’s college education.

This is where Roth IRA accounts become a valuable asset as part of your overall college saving plan. When you report all of your assets on the FAFSA application form, 529 College Saving Plans also have to be reported as part of your overall income. This means that you will actually be penalized for saving into a 529 account, and you won’t receive as much financial aid as you could have, had you not done your due diligence by saving for your child’s college education.

3. It can be used if your child decides not to go to college

At the end of the day, a Roth IRA is still a retirement savings vehicle. No matter whether you choose distribute the funds for other purposes or not, it will always be there to use during retirement. There won’t be any fees or penalties for re-designating the account’s purpose.

If however, you choose to save all of your money for your child’s college fund into a 529 account, you will end up facing severe tax penalties to withdraw or transfer that money for a non-education related reason if you child ends up not attending school.

By taking a non-qualifying distribution, you would likely pay a 10% penalty on the earnings as well as have to pay taxes on the distributions.

Disadvantages of using a Roth IRA

Please note that while Roth IRA’s are not included as part of your taxable income on the FAFSA, any amount that you do withdraw this year from your account will be considered as taxable income on the next year’s form. For example, if you decide to withdraw from your IRA to pay for child’s dorm living costs instead of getting a loan, when you fill out the FAFSA form for their sophomore year, you may be denied as much aid as you received the year before, since you technically had an increase in income when you had access to the money from your account.

One loophole to employ as a method to bypass that penalty is to wait to withdraw any money from your Roth IRA account until after you have filled out the FAFSA for your child’s last year of college. You could have your child take out loans for the interim and then withdraw from your accounts once they finish school to help pay off those loans. Even if you are not yet the required 59 ½ years old to pull money from the account penalty free, the usual 10% penalty fined for early withdrawals from your account will be waived for any college related expenses.

Also, as a parenting bonus, it’s a helpful method for ensuring that your child does graduate, because they will know that you won’t help them pay back their school loans until after they’re finished.

Can Anyone Use the Roth IRA?

The IRS does have income limitations for who is eligible for a Roth IRA. The chart below from outlines income limitations from the IRS.

Roth IRA contribution limits

Married parents filing jointly who more than $193,000 are not eligible to contribute to a Roth IRA. Single parents who earn more than $131,000 are also ineligible. In these cases, a 529 Plan may be the best course of action when saving for college.

A Roth IRA is good for diversifying your payment methods

A Roth IRA can be just one part of a healthy retirement and college planning strategy. Having penalty free access to your account is just one beneficial way to save for college, but it shouldn’t be your only way to pay for the rising costs of college.

Also, while using a Roth IRA as a college savings account has its merits, I absolutely caution against using the entirety of your retirement savings account to pay for your child’s college education. Your child will always be able to get a school loan, but you won’t have forever to save for your retirement living expenses.

Only use your Roth IRA as a college savings account if you have access to other retirement funds for your actual retirement expenses. Take care to not let your college saving plan negatively affect your own ability to live and save money for retirement.

Kristi Muse of Moderate Muse


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College Students and Recent Grads

5 Ways to Effectively Utilize Community College

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Community college gets a bad rap. Considered a lesser option, intelligence, ambition, and ability are called into question when students identify it as their school of choice. Contrary to popular opinion, community college students may just have something over those headed straight to four-year schools. That something is a brighter financial future.

The Two-Year Transfer

The most traditional way to use community college is as a two-year transfer program. If students take their general education courses at a public, in-state college during the first two years of school, they end up spending an average of 173% more than students who take the same courses at a community college according to The College Board’s statistics. That savings should be enough to convince anyone to delay their university days for a couple of years, but the vast majority of the college-bound are still held back by the stigma.

English 101 at a community college is viewed as less rigorous than the same course at a four-year institution. In reality, many community colleges hire professors that work at four-year institutions as adjunct faculty. This is especially true in towns or cities that have more than one collegiate institution. For a dramatically lower price, students are taking the same course from the same professor as their peers at more expensive schools.

Community college provides opportunities for financial advantage beyond sticker price. After financial aid, and potential scholarships, tuition and fees can become non-existent. Schools can even end up owing students money if the aid package is large enough. When students are ready to transfer, they are often eligible for more scholarships through unique partnerships with local universities, and honors societies specific to 2-year schools.

The benefits of community college extend beyond traditional college students. These organizations add cost-effective value to everyone in the community.

Master a Trade

Just like community college, careers in the trades are often looked down upon. They should not be. The average college student has a starting salary of $48,127. They are also saddled with an average of just over $35,000 in student loan debt.

Compare this to someone who entered a trade career straight out of high school. We’ll look at plumbers as an example. Initially, they enter a four-year apprenticeship program. This apprenticeship includes classroom training that can be found at community colleges, but also includes a rigorous on-the-job work schedule. During this time, not only are they paying lower, community college rates for a lighter course load, but they are also required to complete an average of 2,000 hours of on-the-job training which earns them a rate of $16-$20 per hour. That adds up to $32,000-40,000 per year each year, while their peers are acquiring similar amounts in debt.

After the apprenticeship is over, they are eligible to become journeyman plumbers. With a median hourly pay of $30 per hour, journeyman plumbers can make $60,000 per year, without accounting for any overtime. They are making over 24% more than their college-going peers after the same four years, and they don’t have oppressive student loan debt hanging over their heads.

Some apprenticeships take five years, but the numbers still don’t add up in favor of taking the traditional college route. Especially when you factor in that journeyman isn’t the last rung in the ladder. After journeymen have worked in the field for a state-specified amount of time, they can apply to become a master plumber. Once they have passed the certification test, they stand to make significantly more money. In top paying areas, salaries can reach over $80,000. Careers in many trades are often considered recession proof as well.

[Trade School or College: Which Should You Choose?]

Meet Professional Requirements

Beyond those seeking to start a career, community colleges provide services and opportunities for local professionals. Many professions require that practitioners in the field stay current via continuing education units, or CEUs. While CEUs are often provided by professional organizations, if there is not a chapter close to individuals, they can end up paying massive travel expenses in order to obtain them.

Community college courses often satisfy CEU requirements. With night and online classes readily available, they are conducive to a 9-5 work schedule. While many professional organizations offering CEUs to meet state-set requirements mandate a lofty membership fee, community colleges do not. All that is required is tuition and fees for the specific course. The costs are nominal, and employers may be willing to reimburse them.

If an entire course is too much, professionals can look into one-time seminars and lectures that community colleges also regularly host.

Earn Extra Income as an Adjunct

Along with professors from other area schools, community colleges pull in professionals from the community as adjunct professors. Marketing professionals may be a good fit for specific courses in the school’s business program. English majors can serve as adjuncts to teach courses in language, literature, reading, and writing. The pay often isn’t enough to serve as primary income, but if someone is a professional in a specialized field, teaching as an adjunct professor can be a worthy side hustle.

Explore a New Field

Thinking about switching careers? Non-credit classes are a cost-effective, laid back way to explore potential interests. There are no grades, so there is no pressure. Those same professionals who work as adjuncts in for-credit courses often teach the non-credit courses. This opens up the opportunity for students to ask day-in-the-life questions to people who live it, and can answer knowledgeably. By taking a single non-credit course, potential career jumpers dodge sunk costs that would accompany pursuing an entirely new degree should they decide the new field isn’t for them, after all.

Rethinking the Ways to Use Community College

The next time a peer or family friend announces their decision to go to community college, celebrate with them. While the stigma around their decision is still prevalent in our society, they are making a smart money choice that will positively affect their long-term financial station.

Don’t stop your celebration there. Look into the various ways community college can help you, whether it be through obtaining lower-cost CEUs, earning additional income, or exploring a possible career shift. Saving money isn’t just for two-year transfer students. It’s for the entire community.

Brynne Conroy of Femme Frugality


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College Students and Recent Grads, Life Events, Strategies to Save

Creating an Emergency Fund While Saddled With Student Loan Debt


One of the most popular pieces of financial advice is for everyone to build an emergency fund. However, if you’re saddled with student loan debt, you might be wondering how in the world you can possibly prioritize anything aside from your loans. After all, you’ve got a limited amount of money to work with, and for some graduates, a large percentage of earnings is already earmarked for student loan debt.

While it may seem like you’ve got nothing to spare for savings, there are several ways you can create an emergency fund in spite of your student loans. It’s worth putting these practical tips to use in case you ever do face an emergency as you don’t want to deal with putting an unexpected expense on a credit card. Then you’ll have consumer debt and student loan debt to worry about!

As someone who’s still wrestling with student loan debt and made saving a priority as soon as I graduated, here are the tips I used to create my emergency fund.

Start Off Small

You may have read you need to save 3 – 6 months’ worth of living expenses in an emergency fund. That’s prudent advice for people who can afford it, but not the best advice for recent college graduates.

Unless you own a house, you probably don’t have a lot of liabilities to take into consideration. That means the chances of a huge bill coming your way are (hopefully) less. The only things you might have to worry about are your car, potential medical bills, and pets (if you have any).

Instead of being overwhelmed trying to save $3,000+, start small. Aim to save $500 to $1,000 instead of $3,000 or more. You don’t have to save all of it right away, either. Saving $166 each month will get you to $500 in 3 months. Not bad! You can always bolster your emergency fund further down the road; simply try and save enough to make you sleep better at night.

Take Windfall Money and Put it Toward Savings

Okay, now that you realize you don’t have to save an astronomical amount for an emergency fund, you might be wondering where this money going to come from. You don’t necessarily have to scale back on your student loan payments to create an emergency fund as long as you get creative.

One of the easiest ways to save is to take any money you get for your birthday, holidays, bonus, or tax refund, and put it toward your emergency fund.

If you happen to get a larger windfall, try splitting it up and putting 50% toward savings, 40% toward debt, and giving yourself 10% to have fun with.

Lower the Cost of Your Living Situation

Rent is going to be one of your largest expenses aside from your student loan debt. My boyfriend and I split $1,250 for a basement apartment with one bedroom and one bathroom with because that was one of the more affordable options available to us.

Neither of us could afford to move out on our own right away, so we chose to live with our parents immediately after graduating. It might sound lame, but I don’t regret doing it for a second. I paid my parents $100 per month (my boyfriend paid his mom $250 per month), and I still had access to delicious homemade meals and a washer and dryer. Living with my parents made the biggest impact on my ability to save.

I’m also very lucky to have a good relationship with my parents. I realize this isn’t the case for everyone. If living at home is unbearable, at least be mindful of how much you’re paying in rent. Look for house shares or utilizing roommates as they tend to be the cheapest options. If you spend a lot of time outside your living space, living in tight quarters might not be that painful.

Run the numbers to see if it’s worth living closer to your job, too. You might be able to decrease how much you spend on transportation enough to make it worthwhile.

Track Your Spending and/or Budget

Tracking your spending will help you out a lot when it comes to “finding” extra money in your budget to put toward savings.

Keeping a budget isn’t for everyone (it’s not for me), but I’m still a fan of knowing where my money is going. Too many people have a habit of underestimating how much they’re paying for certain things – it’s good to be aware of the exact numbers.

Let’s say you budgeted $100 for gas this month. You end up only spending $70, leaving you with $30 leftover. You can then transfer that $30 to your savings. If you don’t budget or track your spending, you’d probably just spend it!

Being aware of how much you’re spending on certain things can also be a wakeup call. For example, you might think you’re spending $200 on groceries every month, when in reality, that number is closer to $400. This awareness allows you to take action to cut your expenses accordingly.

Spend in Line With Your Values

This ties in with tracking your spending. If you’re spending way too much money on things like entertainment, dining out, or travel, it might be time to evaluate your priorities and values.

If you want to get serious about saving while paying off your student loan debt, you have to figure out how to get the most out of the money you have.

You don’t want to spend your money in a way that’s not meaningful to you, always try and spend it in a way that brings you happiness. The easiest way to do this is to define your values.

Maybe traveling is really important to you, but going out to eat isn’t. Maybe the real reason you go out to eat is to see friends. Instead of saying “yes” every time a friend asks you out to lunch or dinner, ask if there’s any other way you can connect. My friends are huge fans of board game nights, movie nights, and potluck dinners – all cheap options.

Go through your expenses and question the importance of what you’re spending your money on. Create a list of things you’ve spent money on in the past that have made you happy for longer than a week. Most people find spending on experiences brings them more joy than spending on items, as experiences give memories, whereas items give temporary highs. The sparkle of new gadgets, cars, and clothes wears off quickly.

Once you have that list, prioritize spending on those categories, and spend the minimum (or nothing at all) on others. You’re bound to experience some savings this way, and as a bonus, you’ll be able to live life more intentionally and say “no” to things that don’t matter.

Don’t Spend More than You Earn

It goes without saying, but this is a key financial tenet you should be living by at all times. Never spend more money than you earn, otherwise you’ll end up in debt. Considering you’re already strapped for cash because of your student loans, you don’t want to tack consumer debt onto that total.

Always be mindful of how much is in your bank account so you don’t find yourself in a situation where you either can’t pay off your credit card, or you’re faced with numerous overdraft fees (if you are, look into a bank with no overdraft fees!). Again, tracking your spending, your income, and having a budget to follow will keep you in check if this is a problem area for you.

Work Toward Earning More Money

If you’ve continued living like the stereotypical broke college student since graduating, you’ve probably implemented all of these tips. Hopefully you realize cutting back can only get you so far.

I hit that roadblock early on. I lived fairly frugally, but I wasn’t seeing the progress I wanted. That’s why, in the last year or so, I started focusing on earning more money.

If you don’t think earning more is possible because it’s difficult enough to find a regular job, let alone start a side business, you’re limiting yourself. I got stuck in the “scarcity” mindset, too – never giving a thought as to how I could be earning more outside my regular job because I was lucky enough to have a job in the first place.

There are opportunities; you just have to be open to finding them. Plenty of people are making a living doing what they love without being stuck in a cubicle. I never thought I could do it, but here I am, self-employed going on a year, and earning more than I used to working for an employer.

Earning more money gives you more choices, which is great if you’re not someone who takes kindly to adjusting their lifestyle. It’ll help you accelerate your savings and your debt repayment.

Good Habits to Keep for the Future

The good thing about implementing these tips is they can also be used if you want to pay extra on your student loan debt. Getting into the habit of saving money carries over into other areas of your finances, which is never a bad thing. By developing these habits now, you’re building a good financial foundation for yourself later on. This will help when you’re saving for the bigger things in life like retirement or a down payment on a home, or when you’re trying to pay off your mortgage.

Take these tips and create a plan to start saving! Take it one step at a time and remember to leave room in your budget for fun.



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College Students and Recent Grads, Consumer Watchdog, Reviews

Review and Warning: Irvine Web Works, Inc. (Student Loan

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Have you experienced trouble making the minimum payment on your Federal student loans? If so, you might have been contacted by a so-called “student loan debt relief” company looking to “help” you out. Unfortunately, the help these companies want to offer isn’t free. The good news? You can take control of your situation yourself without having to pay a third-party company.

Irvine Web Works, Inc. is one such “student loan debt relief” company, and it operates at and The website says the corporation is headquartered in California, while the office is located in Dallas, Texas. Interestingly, Irvine Web Works, Inc. isn’t registered in California or Texas.

Before agreeing to work with this company to lower your student loan payments, read this warning and review of how the company works.

[Beware of Student Debt Relief Scams]

Sued by the Consumer Financial Protection Bureau

Yes, you read that right. Irvine Web Works was sued by the CFPB in 2014. It claims the company was charging illegal advance fees with “upfront enrollment fees of 1% of the balance or $250, whichever is higher.”

The company is also misleading about additional fees tacked onto payments. For example, customers are led to believe they can have $0 monthly payments, but are told to pay $39 per month toward their loans. In reality, that payment is being pocketed by Irvine Web Works.

It’s great to see the CFPB cracking down on these companies, but it’s still up to you to safeguard your student loans and educate yourself on how to lower your payments.

Services Offered by Irvine Web Works

When it comes to the services it offers struggling borrowers, Student Loan Processing has information on forgiveness programs, repayment programs, getting out of default, and consolidation.

First, Student Loan Processing urges visitors to the site to call for a “free consultation” where a representative will ask you about your student loans and determine what programs you qualify for.

Did you know you can go through this same process with your student loan servicer? You can call for free and speak with someone who can access your account and go through your options with you. Alternatively, you can go to the Repayment Estimator (a tool from the Department of Education) that will show you the repayment programs for which you are eligible.

[Learn how to set up an income driven repayment plan here.]

Student Loan Processing also offers to check your loans to see if you qualify for any of the forgiveness programs available. Again, your student loan servicer can provide you with that information and help you apply if you qualify.

Consolidating federal loans is also mentioned by Student Loan Processing. It says, “Only by consolidating your federal student loans into the William D. Ford Federal Direct Loan program can you take full advantage of all the federal programs offered.” This isn’t entirely true. You can take advantage of many federal student loan benefits you’re entitled to as long as your loans are in good standing. Consolidation may be required for certain income-driven repayment plans, but you 100% don’t have to pay to consolidate your loans.

Student Loan Processing offers to apply on your behalf to get your loans discharged due to total and permanent disability. Instead of using their help, you can complete the application for that and get more information on how to qualify at

Lastly, Student Loan Processing briefly mentions helping you get out of default. If you’ve defaulted on your student loans, there is a way out, and you don’t need the help of a company to restore your loans to good standing. We’ll cover how shortly.

How the Process Works

Student Loan Processing isn’t very transparent about how its process works. It directs visitors of the site to call a representative, though an email address is available. You can also choose to schedule an appointment on the site, or fill out a contact form to ask a question.

More than likely, once you contact a representative, you’ll be “pre-approved” for a program and have to sign paperwork and an agreement stating you’ll make a certain payment to the company every month.

How You Can Lower Your Student Loan Payments for Free

Are you interested in exploring these options? The good news is you can do all of this yourself, for free, without the help of a third party company. There’s so much information on the various repayment, forgiveness, discharge, cancelation, and consolidation programs on, and on itself.

Empower yourself by learning about these programs and figuring out if you’re eligible on your own. If you’re struggling to make ends meet with your student loan payments, then you shouldn’t be paying hundreds of dollars to a company to fill out paperwork for you.

How to apply for a different repayment program: As we mentioned, the Repayment Estimator tool is very useful in seeing what programs your loans qualify for, and as you can guess by the name, it also gives you an estimate of what your monthly payments will be on that plan.

You can also just call your student loan servicer and they’ll let you know the repayment programs available to you.

Applying to change your repayment plan isn’t difficult. If you’re already on the phone with your student loan servicer, ask them to help you with the next steps. Otherwise, if you’re applying for an income-driven repayment plan (Income-Based, Income-Contingent, or Pay As You Earn), you can do so at It takes approximately 30 minutes to complete the application online.

How to apply to consolidate your Federal student loans: Similar to changing your repayment plan, you can apply for a Direct Consolidation Loan on It’s a five-step process and takes around 30 minutes to complete the application. Make sure consolidating is the right move for you beforehand, as you can’t reverse it.

How to get your loans out of default: Getting your student loans out of default isn’t as difficult as you might think. Applying to consolidate your loans and agreeing to repay under the Income-Based, Income-Contingent, or Pay As You Earn plans will get them out of default. Alternatively, you can go through a loan rehabilitation program where you’re required to make monthly payments based on your income for nine out of ten consecutive months. Once the rehabilitation program is complete, the default is erased from your credit history, and your loans enter repayment status and regain all Federal benefits.

How to get your loans forgiven, canceled, or discharged: Loan forgiveness programs have strict eligibility requirements that must be met. You can find out about all the available programs on The two most well known programs are the Public Service Loan Forgiveness program and Teacher Loan Forgiveness program, but there are also programs out there for professionals and volunteers.

Lastly, don’t forget you can apply for forbearance or deferment if you only need a short time to recover from a financial setback. Student Loan Processing isn’t a fan of this, stating, “While your third party loan servicer will certainly put your loans into forbearance or deferment which will have you paying a substantial amount of interest on your loans…”

If you can get your loans deferred, the government will pay the interest that accrues on any subsidized loans you have (unsubsidized is still subject to interest). Under forbearance, you’re responsible for paying the interest that accrues, but the lower payments will still help you. Your loan servicer won’t automatically put you into deferment or forbearance – you must apply for it and meet certain eligibility requirements.

Do You Have to Pay Fees?

In case you skipped over the part that mentioned the CFPB is suing Irvine Web Works for charging illegal advance fees, yes, fees are associated with this third party company. There’s no mention of the exact amount charged, and there’s also no mention of the fact borrowers can apply for these programs on their own.

The only time fees are mentioned is in client testimonials:

  • Gass from Iowa said, “…I was taking responsibility for my loans for a low monthly fee…”
  • Frank F. from Rhode Island said, “…and the service fee is well worth it.”
  • Jason G. from Arizona said, “You pay a low maintenance fee and in some cases like mine, that’s all you pay, depending on family size and income.”
  • Finally, R. Reed from Tennessee said, “This program has allowed me to pay a monthly fee in order to stay in the program…”

The point is you shouldn’t have to pay any fees. If you apply by yourself and enroll in another repayment program, there’s no fee to pay to stay in it.

What to do if You Have Private Student Loans

Sadly, private student loans don’t get the same guaranteed benefits federal student loans do. Most “student loan debt relief” companies aren’t targeting those with private student loans because of this. That doesn’t mean you don’t have any options.

First, call your lender and tell them about your situation. Ask if there’s any repayment assistance it can offer you. While benefits aren’t guaranteed, many private lenders are offering forbearance and extended repayment terms to help borrowers.

If you hit a wall, consider refinancing your student loans with lenders that do offer repayment assistance. SoFi* and Earnest* are two of the leading student loan refinance companies, and they offer flexible repayment terms.

[19 Options to Refinance Your Student Loans]

Don’t Pay Fees to Third Parties

Don’t let these third party companies convince you that you’ll be better off with their assistance. They don’t have any competitive edge over anyone else. Always direct your payment concerns to your student loan servicer. There should be information about repayment programs on their website, which means they can offer you help. The worst thing you can do is wait until your situation gets worse.

* We’ll receive a referral fee if you click on offers with this symbol. This does not impact our rankings or recommendations. You can learn more about how our site is financed here.


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College Students and Recent Grads, Consumer Watchdog, Reviews

Review and Warning: Consumer Financial Resources (Student Loan Resolve)

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Student Loan Resolve’s main focus is on helping federal student loan borrowers file and process paperwork for the U.S. Department of Education. It also helps struggling borrowers with consolidating student loans, putting a stop to wage garnishment, and getting student loans out of default. Of course, they’ll handle all of this for a fee, when you can do the same for free.

[Beware of Student Debt Relief Scams]

Big Red Flag – Warning Issued by the Government

Before we begin this review, it’s important to note Lisa Madigan, Illinois Attorney General, filed a suit against Student Loan Resolve in May 2015. In summary, “The Illinois Attorney General further alleges the company charged illegal upfront fees for the services offered, illegally misrepresented the scope of services that the company is able to perform and illegally misrepresented the promised benefits of their offered services.”

While the promises made by such “student debt relief companies” might sound nice, there’s no reason to pay a third party company to fill out paperwork for you. You’re already struggling to afford your student loan payments, and this arrangement will only make your situation worse.

Services Offered by Consumer Financial Resources

Student Loan Resolve mainly focuses on helping borrowers consolidate their federal student loans. It also says it can give borrowers information on teacher loan forgiveness and removing student loan defaults (along with the negative side effects that go with it).

When you first look on Student Loan Resolve’s website, you’ll notice two phone numbers – one for the sales department, and one for the support department. The fact “sales” is even a thing should be a red flag.

When you’re dealing with federal student loans, you’re working with the government, and they’re not trying to sell you on anything. They’re just trying to help you figure out the best solution to make your student loan payments more manageable.

How the Process Works

Student Loan Resolve has two phone numbers you can call, an email address, a contact form to fill out, and a physical address listed on its website. The contact form doesn’t even ask for your student loan debt amount.

There’s next to no information offered as to how Student Loan Resolve will help you. It only says it will help you fill out the necessary paperwork for consolidation and teacher loan forgiveness. It pushes calling for a “free student loan consultation,” but you can call your student loan servicer for free and receive the same (or better) service.

How You Can Stop Struggling for Free

Let’s talk about how you can take control of your student loan debt situation yourself – for free. Many third party companies aren’t willing to break down the exact process of how they’ll work for you, and it’s better to educate yourself.

Student Loan Consolidation: Student Loan Resolve provides the most information on this solution. Are you aware you can fill out the application online in around 30 minutes just by going to All you need is your FSA ID and password. You don’t even have to leave the house or pick up the phone.

Applying for a Direct Consolidation Loan is beneficial for those who owe multiple servicers throughout the month. If you can’t keep track of when your payments are due because you have five or more bills, consolidating allows you to owe one servicer so you only have to make one payment per month. It’s much easier to handle.

If you have any other questions about consolidating your loans, you can always call the Loan Consolidation Information Center: 800-557-7392.

Teacher Loan Forgiveness: This is the second thing Student Loan Resolve says it can help borrowers with, but it only has a little blurb of information about it on the “FAQ” page. Teacher loan forgiveness is one of the more popular forgiveness programs, but it might not completely forgive your entire student loan balance.

You must meet several eligibility requirements, and only “up to a combined total of $17,500 on your Direct Subsidized and Unsubsidized Loans and your Subsidized and Unsubsidized Federal Stafford Loans” can be forgiven. You can only apply to get your loan forgiven after you’ve been teaching for five years. The application can be found here, and the chief administrative officer of the school where you taught has to complete it. It can then be sent to your student loan servicer.

Removing Student Loan Defaults, Preventing Wage Garnishment, and Stopping Student Loan Tax Offsets: All of these can be lumped together as the solutions are the same. If you’ve fallen behind with your student loan payments, you’re either delinquent or in default. Neither is a good place to be, but defaulting has worse consequences and is harder to bounce back from. Harder, but not impossible.

The first step you can take to get your loans out of default is to simply consolidate them under an income-driven repayment plan. By doing this, your monthly payments will be less, and you’ll have a greater amount of time to pay back your loans. Be aware this means the overall total cost of your loan increases if you never pay more than the minimum payment. You can always pay extra once your situation improves.

[Learn more about the Federal Direct Consolidation loan here.]

If consolidating isn’t an option, you can look into rehabilitating your student loans. You must be able to make some sort of payment in this scenario. A monthly payment amount that’s “reasonable and affordable” will be determined based on your income, and you’ll be responsible for paying that amount for nine out of ten consecutive months. Once your loan has been rehabilitated, the default will be erased from your credit, and your loan will be back in repayment status with the original benefits federal student loans get. You can talk to your student loan servicer about this option.

Generally Making Student Loan Payments More Affordable: This isn’t something Student Loan Resolve mentions, but you should know there are many repayment options available to federal student loan borrowers. These repayment options exist solely to make your monthly payments more affordable. Looking at the Repayment Estimator is an easy way to see which repayment plans you might be eligible for. You can always call your student loan servicer and ask them about your options as well.

For short-term debt relief, you can also inquire about deferment or forbearance. Under these two options, you won’t be required to make student loan payments for a set period of time. This gives you a little breathing room while your finances recover.

What Fees Need to be Paid?

There’s only one mention of fees, which is on the “Disclosures” page: “The Consolidation fee has been earned by SLR once SLR has submitted the direct consolidation loan paperwork…” so there are fees associated with the process.

A look at the BBB and Ripoff Report shows borrowers having to deal with a monthly fee on top of their student loan payment. In essence, their payments aren’t much lower than what they were paying before – $50 fees are being tacked onto their monthly payments.

Honesty and Transparency Levels

On its “About” page, Student Loan Resolve is transparent about the fact borrowers can go to for free to apply for a Direct Consolidation Loan and find additional information on student loan debt solutions. It claims some borrowers are too overwhelmed and don’t know where to start with the process, which is why they turn to a third party company for help.

On its “Disclosures” page, it says customers are eligible for a full refund if it fails to submit the paperwork to the Department of Education. It also makes it clear it’s not affiliated with the government in any way, and goes so far as to say it’s a “private ‘for profit’” organization.

However, there’s another physical address provided on the “Privacy Policy” page, which can be traced to America’s Credit Resolve, LLC. Another company, American Financial Concepts, LLC., is also active in Texas. Student Loan Resolve is registered in Texas under the name Consumer Financial Resources, LLC., although that name doesn’t appear on the website. All three companies have the same registered agent with complaints on the BBB, so it’s likely that these people have been in the “debt relief scam” business for years.

What to do if You Have Private Student Loans

If you don’t have federal student loans, you may be wondering what solutions are available for you. Most student debt relief scams are going after Federal borrowers, but if you have both Federal and private student loans, you should know what options you have.

It doesn’t matter if you have Federal or private loans, you should make every effort to contact your loan servicer or lender to talk to them about the difficulties you’ve been having with your loans. If you can’t afford to pay, they need to know about it.

Some private lenders will be able to offer you repayment assistance while others may not have those programs in place. There’s no rule governing private lenders, so they aren’t required to offer benefits like the government does.

That’s okay. If your current lender can’t do anything for you, you might want to look into refinancing with a company that will work with you. SoFi* and Earnest* are the top two student loan refinancing companies, and they both offer a wide range of repayment assistance programs you can take advantage of. Both companies work with borrowers because they don’t want to see anyone default.

[19 Options to Refinance Your Student Loans]

Don’t Rely on Third Party Companies

Hopefully by now you realize relying on third party companies to fill out paperwork on your behalf isn’t the answer. You’re much better off educating yourself for free, while taking the necessary steps to improve your situation. Dealing with third party companies can be a headache, and not worth your time or the stress. Call your student loan servicer instead and ask them what solutions are best for your situation.

* We’ll receive a referral fee if you click on offers with this symbol. This does not impact our rankings or recommendations. You can learn more about how our site is financed here.


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College Students and Recent Grads, Consumer Watchdog, Reviews

Review (and Warning): Student Aid Center, Inc.

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Student Aid Center, Inc. is based in Florida and its mission is to help student loan borrowers file documentation with the Department of Education. It also helps place borrowers struggling to make payments in the federal student loan program for which they qualify. It focuses on loan forgiveness, consolidation, and income-based repayment plans. Unfortunately, this company charges fees for its services when you can do what it’s offering to do for free.

It has three websites:,, and Student Aid Center is listed as being in Miami, FL, whereas Student Loan Forgiveness Plans is in Doral, FL. The address Student Aid Center, Inc. is registered with is Doral.

If that’s not enough to question the legitimacy of this company, a complaint has been filed against it from the Minnesota Attorney General.

[Beware of Student Debt Relief Scams]

Huge Warning From the Government

If you look at Student Aid Center, Inc.’s profile on the BBB, you’ll see an alert there for the business. The Minnesota Attorney General filed a complaint against the business in July 2015 with allegations that it’s extremely insincere in its offerings.

The complaint states, “Student Aid Center, a Florida corporation, ‘baits’ and entices borrowers to speak with its sales agents – who it calls ‘student loan forgiveness counselors’ – by promising to help get student loans ‘forgiven’. The company then uses a variety of misleading sales pitches to get students to pay it as much as $1,500.”

There are several other complaints about fees being charged on top of the monthly student loan payments as well, and these fees have been north of $500. There’s no reason to pay anything for these services.

Services Offered by Student Aid Center wants to help college graduates fill out the documentation required by the Department of Education. There isn’t much information on its site, as its mission statement doesn’t speak to the services it provides. The disclosure only says it’s not affiliated with the government.

On the other hand, Student Loan Forgiveness Plans says it wants to help borrowers qualify for the different types of Federal student loan programs available while helping them fill out the required paperwork. It offers student loan consolidation, loan forgiveness, and income-based repayment services. It’s essentially a “one stop shop” for anyone struggling to make their minimum student loan payments.

How the Process Works doesn’t give you much information at all as to how its process works. It doesn’t even tell you what paperwork it helps you fill out – it only mentions that it’s for the Department of Education.

There’s a contact form you can fill out, an email address and phone number listed, and a live chat feature.

Student Loan Forgiveness Plans has a FAQ section, but it only talks about the programs offered by the Department of Education (and you can get all of this information for free on

You can fill out a contact form or call them – there’s no email listed, and no chat feature.

You Can Make Your Student Loan Payments More Manageable for Free – Here’s How

Since neither website gives you a good idea of what exactly it can do for you, it’s better to figure it out on your own. Plus, it’s free! Here are the different options you might be interested in:

Student loan consolidation: Consolidating your student loans might not be the best solution for you. It’s a good solution if you have several different payments due at different times during the month and you’re struggling to keep up, but your interest rate won’t decrease by much. This is because the interest rate on a consolidated loan is the weighted average of the loans involved in the consolidation rounded up to the nearest one-eighth of 1 percent. However, repayment terms can be extended, so you may end up with a more affordable payment.

Interested? All you have to do is fill out the application here – it takes approximately 30 minutes, has 5 steps, and is completely free.

Income-driven repayment plans: If you’re having difficulty affording the minimum monthly payment on your student loans, an income-based repayment plan can help. There are quite a few available and you can find out which ones you qualify for by using the Repayment Estimator offered by the Department of Education.

Once you take a look at that, call up your student loan servicer and ask them which plan they think is best for your situation. Don’t be afraid to talk with them and let them know you’re having trouble paying. You need to communicate with them, otherwise you risk your loans becoming delinquent or default.

Again, you can speak with your loan servicer for free, and they can place you on a different repayment plan for free as well.

[Learn how to set up an income driven repayment plan here.]

Student loan forgiveness programs: Loan forgiveness is a little tricky to navigate as there are a lot of requirements that need to be met to get your loans forgiven. Become familiar with all the ways you can get your loans forgiven and then contact your student loan servicer to discuss the programs for which you are eligible.

Deferment and Forbearance: If you’re temporarily in a rough financial situation, deferment and forbearance might be better solutions, as you won’t have to make payments on your loans for a certain amount of time. You can apply for either through your account on your loan servicer’s website, or you can call.

Getting out of default: This isn’t one of the services Student Loan Forgiveness Plans markets directly, but other “student debt relief” programs may try to sell you on it. It’s important to know you can work your way out of default by yourself (for free).

You can consolidate your loans under one of three income-driven repayment plans, or you can enter into a loan rehabilitation program where you make nine out of ten consecutive and affordable monthly payments. Once you’ve completed the program, your loan enters repayment status again and the default is erased from your credit history.

Whichever path you choose to take, continue making your monthly payments as usual until you’re told otherwise. Being in talks with your loan servicer doesn’t exempt you from making your scheduled payments.

Are There Fees?

Under the Disclosures on, it says, “Student Aid Center charges a fee to prepare all pertinent paperwork through the Department of Education on behalf of our clients.” It then lists why it charges a fee, but it does not give the exact amount a user will incur. It does go on to say that if a customer drops out of its program, they’ll receive 100% of their money back.

Student Loan Forgiveness Plans doesn’t mention fees on its website at all, but it clearly charges fees given the complaints on the BBB website.

Level of Transparency Offered

Student Aid Center makes it very clear it’s a document processing company and that it’s not affiliated in any way with the Department of Education. It states it charges fees, why it charges fees, and lets potential customers know they can go ahead and do everything themselves for free. It’s transparent except for the fact it doesn’t tell you what the fees are, or what paperwork it helps you fill out. There’s no mention of student loan consolidation or loan forgiveness programs.

Student Loan Forgiveness Plans has a disclaimer at the bottom of the site that states borrowers can process paperwork on their own.

It also has “As reported on: ABC, NBC, CBS, CNN, Forbes” on its page, but it links to the FAQ section rather than proof that these news outlets have actually reported on it.

Additionally, a banner at the bottom of the site says the company has been helping people become debt free since 2003. The corporation has only been registered since 2013.

Have Private Student Loans?

If you have private student loans along with federal student loans (or just private student loans), these repayment options might not apply to you. Private student loans aren’t guaranteed to have repayment assistance, but many private lenders are expanding their programs to accommodate borrowers.

It’s worth taking the time to call your lender to ask what help it can give you. If there’s nothing it can do, consider refinancing with a lender such as Earnest or SoFi, as they both offer flexible repayment solutions and assistance.

Don’t Pay for What You Can do Yourself

Bottom line: there’s no reason to pay loads of fees for a third party company to complete paperwork on your behalf or to “qualify” you for a program. You’re capable of filling out the paperwork and checking your eligibility. Your student loan servicer should also explain which options are available to you. Don’t waste what little money you might have in hopes of a magical solution with your student loans, because there isn’t one. It just takes a little work on your part to get your student loan payments to a manageable level.


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College Students and Recent Grads, Pay Down My Debt, Reviews

CommonBond Grad Student Loan Refinance Loan Review

CommonBond Grad Student Loan Refinance Loan Review

Updated September 21, 2015

CommonBond was founded by three Wharton MBAs who felt the sting of student loans after they graduated. The founders decided to provide a better solution for graduates, as they thought the student loan system was broken and in need of reform. As a result, they strive to make the refinance (and borrowing) process as simple and straightforward for graduates as possible.

CommonBond* began by servicing students from just one school, and has rapidly expanded. Today, CommonBond loans are available to graduates of over 2,000 schools nationwide. Although the business started servicing only students with graduate degrees, today CommonBond is also available to refinance undergraduate degrees as well.

As you might be able to tell by the name, CommonBond thinks of its community as family. There is a network of alumni and professionals within the community that want to help borrowers. This alone sets it apart from other lenders, as members often meet for events.

While these are all great things, we know you’re more interested in how CommonBond might be able to help you make your student loans more affordable. Let’s take a look at what terms and rates they offer, eligibility requirements, and how they compare against other lenders.

Refinance Terms Offered

CommonBond offers low variable and fixed rate loans. Variable rates range from 1.94% – 4.93% APR, and fixed rates range from 3.74% – 6.49% APR.

It even offers a hybrid loan option, with APRs ranging from 4.22% – 5.64%. Note that these rates take a 0.25% auto pay discount into consideration.

There is no maximum loan amount. CommonBond will lend what you can afford to repay. CommonBond offers fixed and variable rates with terms of 5, 10, 15, and 20 years.

The hybrid loan is only offered on a 10 year term – the first 5 years will have a fixed rate, and the 5 years after that will have a variable rate.

CommonBond has a great chart listing repayment examples based off of borrowing $10,000, which can be found on its rates and terms page.

To pull an example from that, if you borrow $10,000 at a fixed 4.74% APR on a 10 year term, your monthly payment will be $104.80. The total amount you will pay over the 10 year period will be $12,575.90.

The Pros and Cons

CommonBond is available to graduates of 2,000 universities. While that is a very long list, not all colleges and universities are included.

One pro to consider is the hybrid loan option available. It might seem a little confusing at first – why would someone want a variable rate down the road?

If you’re confident you’ll be able to make extra payments on your loan and pay it off before the 5 years are up, you might be better off going with the hybrid option (if you can get a better interest rate on it).

This is because you’ll end up paying less over the life of the loan with a lower interest rate. If you were offered a 10 year loan with a fixed rate of 6.49% APR, and a hybrid loan with a beginning rate of 5.64%, the hybrid option would be the better deal if you’re intent on paying it off quickly.

What You Need to Qualify

CommonBond doesn’t list many eligibility requirements on its website, aside from the following:

  • You must be a U.S. citizen or permanent resident
  • You must have graduated

CommonBond doesn’t specify a minimum credit score needed, but based on the requirements of other lenders, we recommend having a score of 660+, though you should be aiming for 700+. The good news is CommonBond lets you apply with a cosigner in case your credit isn’t good enough.

Documents and Information Needed to Apply

CommonBond’s application process is very simple – it says it takes as little as 7 minutes to complete. Initially, you’ll be asked for basic information such as your name, address, and school.

Once you complete this part, CommonBond will perform a soft credit pull to estimate your rates and terms.

If you want to move forward with the rates and terms offered, you’ll be required to submit documentation and a hard credit inquiry will be conducted. CommonBond lists the following as required:

  • Pay stubs or tax returns (proof of employment)
  • Diploma or transcript (proof of graduation)
  • Student loan bank statement
  • ID, utility bills, lease agreement (proof of residency)

CommonBond also notes it can take up to 5 business days to verify documents submitted, so the loan doesn’t happen instantaneously.

Once your documents are approved, you electronically sign for the loan, and CommonBond will begin the process of paying off your previous lenders. It notes this can take up to two weeks from the time the loan is accepted.

Who Benefits the Most from Refinancing Student Loans with CommonBond?

Borrowers who are looking to refinance a large amount of student loan debt will benefit the most from refinancing with them.


Apply Now

*referral link

Keeping an Eye on the Fine Print

CommonBond does not have a prepayment penalty, and there are no origination fees nor application fees associated with refinancing.

As with other lenders, there is a late payment fee. This is 5% of the unpaid amount of the payment due, or $10, whichever is less.

If a payment fails to go through, you’ll be charged a $15 fee.

It’s also noted that failure to make payments may result in the loss of the 0.25% interest rate deduction from auto pay.

Transparency Score

Getting in touch with a representative is simple and there is a chat and call option right on the homepage. Some lenders have this hidden at the bottom, or they don’t offer a chat option at all.

CommonBond also lets borrowers know they can shop around within a 30 day period to lessen the impact on their credit.

It does not list its late fees on its website, unlike other lenders. However, after making a chat inquiry, the question was answered promptly.

CommonBond does offer a cosigner release and is ranked with a A+ transparency score.

Alternative Student Loan Refinancing Lenders

The student loan refinancing market continues to get more competitive, and it makes sense to shop around for the best deal.

One of the market leaders is SoFi. It’s always worth taking a look to see if SoFi* offers a better interest rate.

The two lenders are very similar – CommonBond offers “CommonBridge,” a service that helps you find a new job in the event you lose yours. SoFi offers a similar service called Unemployment Protection.

SoFi’s variable rates are currently 1.90% – 5.18% APR, and its fixed rates are currently 3.50% – 7.24% APR, which is in line with what CommonBond is offering.

SoFi also doesn’t have a limit on how much you can refinance with them.

SoFi logo

Apply Now

 *referral link

Another lender to consider is Earnest. There is no maximum loan amount, and Earnest has a very slick application process.

Its variable rates are currently 1.90% – 5.75% APR, and its fixed rates are currently 3.50% – 7.25%.

Apply Now

*referral link

Lastly, you could check out LendKey. It offers student loan refinancing through credit unions and community banks, but only offers variable rates in most states and fixed rates in a select few. The maximum amount to refinance with an undergraduate degree is $125,000, and the maximum amount to refinance with a graduate degree is $175,000.

All three of these options provide forbearance in case of economic hardship and offer similar loan options (5, 10, 15 year terms).


Apply Now

*referral link

Don’t Forget to Shop Around

As CommonBond initially conducts a soft pull on your credit, you’re free to continue to shop around for the best rates if you’re not happy with the rates it can provide. As the lender states on its website, if you apply for loans within a 30 day period, your credit won’t be affected as much.

Since CommonBond does have strict underwriting criteria, you should continue to shop around and don’t be discouraged if you are not approved. The market continues to get more competitive, and a number of good options are out there.

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*We’ll receive a referral fee if you click on offers with this symbol. This does not impact our rankings or recommendations. You can learn more about how our site is financed here.


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College Students and Recent Grads, Life Events, Strategies to Save

Saving for Retirement While Paying Down Student Loans


The definition of retirement is changing. The idea that you’ll work until you’re 65 then stop working for the rest of your life doesn’t necessarily make sense anymore. We’re living longer, and therefore it’s very difficult to save enough money by that stage of life so you never have to work again.

Not to mention, a lot of people find that work provides more than just an income. It offers a sense of purpose, an identity, which is beneficial to your life no matter how old you are.

So really the goal isn’t about retirement. It’s about saving up so you can live a financially independent life. This means you can choose to do what you want to do, rather than being forced to go into a job because you have to make money. The more you can you save, the more flexibility you have.

However, it’s challenging to save when you’re in your 20s and dealing with student loan debt – challenging, but not impossible. You just need a strategy to help you pay down debt and save for your future at the same time.

Building Out a Framework for Multiple Financial Priorities

The whole idea is to organize yourself, so you have a clear understanding of what you are doing and why. By doing this, you can remove the guesswork, which will help alleviate your financial concerns. Knowing you’re on track to achieve the goals that are most relevant to your life can do wonders for your mindset. Implementing this process may reduce stress around money so you can actually enjoy your life now.

There are several questions to ask in order to find the right strategy. Start by getting a better understanding of your student loan debt:

  • What is your total student loan debt balance (how much do you owe)?
  • What are the interest rates on your loans?
  • When must you start making payments?
  • How much are the monthly payments that you need to make?

Then, evaluate your options for retirement savings:

  • Do you have a retirement plan at work?
  • If so, will you receive a company match to invest in your retirement account?

Let’s take a look at how to address these questions and build a framework based on your answers.

Making a Plan for Student Loan Debt

Paying off debt reduces the amount of interest you pay on a loan — and it may even improve your credit score. To determine how to set up a basic repayment strategy, you need to understand how much student loan debt you have, what the interest rate is, what the monthly payment will be, and when you have when to start paying your loans. It’s also important to know when your balance will be paid off.

Once you know these factors, you can then set up an automated process to pay your student loans every month. Your student loan company should provide an option to set up an automatic monthly payment.

In a way, you’re setting it, but not forgetting it. You’ll need to come back to this process in the future as your financial circumstances change.

[Can’t cover the minimums due? Learn about Income-Driven Repayment Plans.]

And remember: debt is more than just a financial conversation. Your loans can cause you to develop a negative mindset around money because it may feel like a burden. You might make yourself feel “wrong” for having debt to begin with, and this distracts from taking action with your personal finances.

It’s okay to have these emotions, and you shouldn’t ignore them. After all, you’re human. Depending on how strong these emotions are for you, it may make sense to pay down your debt at a faster pace to alleviate that burden and stress. It’s a very subjective area, and it has to be approached on an individual basis.

Getting Started with Retirement Savings

When it comes to saving for retirement, or as referenced above, financial independence, it’s important to start early. The goal is to save consistently so you can take advantage of the compounding effect and build a substantial nest egg to tap into down the road.

We often hear this compounding effect referred to as compound interest, where you earn interest on your money and that interest then earns interest as well. When this happens year after year, your account balance has the potential to grow significantly. By investing now for your future “retirement” years, you can grow your retirement account steadily over time and not be forced to work longer than you have to.

One of the best retirement savings tools is your 401(k) plan at work. This is a tax-advantaged account that allows you to contribute money before taxes and grow it tax-deferred until you withdraw it after the age of 59 and 1/2. It’s a cool savings program because you’re providing yourself with an income stream later on in life. The bigger the balance, the more income you can generate from it, which contributes directly to your ability to achieve financial independence.

The first step is to ask your employer if you’re eligible to contribute to a 401(k), and if so, do they offer a matching program. This means if you invest a certain percentage of your salary into your retirement account, the company will match at least a small percentage of that. You don’t want to miss out on this because it’s basically free money.

[Sometimes a company 401(k) isn’t the best option. Learn why here.]

If possible, contribute enough of your salary to your retirement account to get the full employer match. If your cash flow doesn’t allow for that, start small (two or three percent). The important thing is that you just get started with what you can.

Don’t have access to a 401(k) plan? You can open an individual retirement account (IRA) on your own. From here, the same idea applies: look at your cash flow and determine what you can contribute each month. Again, it’s more important that you just start, even if just putting aside $10 a month seems pointless to you now.

Why Starting Today Matters

Building good habits is easier than trying to play catch-up later in life. Putting these systems into place is a big first step in managing your money so you can achieve your goals. Organize your financial life as you start out, so you can be present and enjoy yourself today while still planning responsibly for the future.


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College Students and Recent Grads, Reviews

Review: Student Debt Center (

Review: Student Debt Center (

Student Debt Center offers student loan borrowers a service to help them consolidate their student loans, as well as get their loans forgiven. It claims its mission is “to educate people on the different student loan relief programs” available, and “to assist people with student loans on qualifying, applying, and enrolling on the best available program.”

You may have seen a few of these “student loan relief” companies around, or have been contacted by them before. The first thing you need to know is the help of another company to apply for any sort of loan forgiveness or repayment assistance program offered by the Federal government isn’t necessary. Especially as they charge for their services. You can do it yourself for free.

Student debt relief companies try to market themselves as a convenient solution because they take care of all the paperwork, but do you really want a company (that isn’t certified in any way) working on your behalf to place you into these programs? If you’re already struggling to afford making payments, you should be aware of how you can get the same results for free.

Let’s take a look at why you’re better off improving your student loan debt situation on your own.

[Beware of Student Loan Debt Relief Scams]

Services Offered by Student Debt Center

Right off the bat, Student Debt Center gets a strike as it says, “Want relief on your student loans? Act now before these programs are no longer available.” Please don’t buy into this sense of urgency. Student loan forgiveness programs and repayment assistant programs aren’t likely to go anywhere anytime soon, at least for federal student loan borrowers. You have access to these benefits as long as your loans are in good standing.

It also says there’s a “huge conflict of interest” when working with your student loan servicer to get placed in another repayment plan, as the servicer stands “to lose a lot of money on interest they will no longer collect.” However, it’s in Student Debt Center’s best interest to help you because it charges for the service!

In any case, the Consumer Financial Protection Bureau works to ensure that all federal student loan servicers are complying with Federal consumer financial protection laws, and it has been very clear it expects more out of loan servicers. If you ever feel your loan servicer is hindering your ability to pay off your student loans, rather than help, you should submit a complaint.

Under its “Student Loan Forgiveness” section, it just says there are several programs out there you can use to get your loans forgiven, canceled, or discharged. Under its “Public Service Forgiveness” section, it goes a little more in-depth as to how you can qualify and what the program does for borrowers.

Under its “Student Loan Consolidation” section, it briefly explains under what circumstances a borrower should consider applying for a Direct Consolidation Loan. It doesn’t offer many additional details beyond what repayment programs you can choose.

The FAQ page, on the other hand, offers all the details you might be looking for, except that much of the information (word for word) is taken from

How the Process Works

There are a few ways you can contact Student Debt Center – you can call, email, or chat with a representative on the website. It also provides a mailing address and a fax number.

There’s a form you can fill out to find out what programs you qualify for. It requires basic personal information along with your total amount of student loan debt. Be careful when filling out these forms from any of these companies, because you’re required to give them your email and phone number. If you read the fine print, that gives them permission to contact you, regardless of whether or not you’re on a “do not call” list.

Student Debt Center only details how the loan consolidation process works. It will locate your student loan information and apply for a consolidation on your behalf. You’ll then be mailed the application, which you have to sign and mail back. Your new lender will confirm how much is left on your balance with your old lender, pay off the loan, and then send you a statement so you can begin paying your loan under the new terms. The entire process can take up to 90 days.

The Free Options Available to You

If you’re looking to make your student loan payments more manageable, you can apply to consolidate your Federal loans through the Direct Consolidation Loan, all for free. The application takes approximately 30 minutes to fill out on, and it has five steps to it. It’s not worth paying a third-party company to do it for you.

Note that consolidating isn’t always the best route to take as you may lose certain benefits in the process. It also doesn’t always lower your monthly payment by much as your new interest rate is the weighted average of your loans rounded up to the nearest 1/8th of 1 percent. It’s a good option to choose if you owe more than one servicer and can’t keep track of all your payments.

Another option is changing your repayment plan to an Income-Driven repayment plan, or the Extended or Graduated repayment plan. Most of these should provide you with a lower monthly payment, although Income-Driven repayment plans have stricter eligibility requirements.

[Learn how to set up these programs here.]

An easy way to see the plans you’re eligible for is to use the Repayment Estimator provided by the U.S. Department of Education. If you log into your account, you’ll see the estimated payments you’d be required to make under each plan you’re eligible for. After doing your research, call your loan servicer (or go online to your account) and ask them if they can place you in a different repayment plan. They can do it for you, for free.

Have you already missed payments, or possibly entered into default status on your loans? Consolidating your loans may help here, too. You can consolidate a defaulted loan as long as you agree to pay under an income-based repayment plan, and it will take your loan out of default.

You also have the option of entering a loan rehabilitation program where you’ll need to make nine out of ten consecutive “reasonable and affordable” monthly payments. You won’t have to pay what you were previously paying under the standard 10 year repayment plan, and once you’ve completed the payments, your loan will be restored to good standing, and the default will be erased from your credit history.

Lastly, if you’re in a temporary rough financial situation, you can apply for deferment or forbearance, depending on your situation. This can also be done through your loan servicer.

Above all, always speak with your student loan servicer and keep them in the loop. The worst thing you can do is stay silent and try to ignore the issue. It won’t go away, and being in default can severely damage your credit score. Your student loan servicer can give you advice and tell you how to take action if you don’t know where to start.

Are There Fees?

There is no mention of fees on the website other than on its referral page. If you refer someone who signs up and applies with Student Debt Center, you’ll get $50 off your “enrollment fees.” Considering it also offers a money back guarantee, you will be paying for the services it offers, one way or another.

Honesty and Transparency and Other Claims

Student Debt Center says it has a 100% money back guarantee and also claims it’s honest and transparent for your peace of mind.

It at least mentions you can enroll in the programs offered for free if you do the work yourself, but goes on to say, “These programs are also budget based and will not be around forever.” That creates a false sense of urgency, as we pointed out in the first section of this review.

While it’s true that any government program can eventually be changed or stopped, the likelihood of that happening is very low at the time of publication. With so many borrowers struggling to afford their student loan payments, there would be a huge uproar if any of these programs were taken away. Besides that, the programs wouldn’t be gone overnight. There’s no reason to rush through this process.

Interestingly, on its “10 insider tips” page, it recommends not falling “for the trap of pushing selling techniques or discounts being offered if you act NOW.”

On the same page, it says to “never hire a company that charges you for their services by incorporating a monthly payment throughout the term of the new program in which you are being enrolled.” While we wholeheartedly agree with that (and not paying at all), Student Debt Center doesn’t make its fee structure known.

Lastly, “As seen on: ABC, Forbes, CNN, CBS, Fox News” appears as a graphic on the homepage, but doesn’t provide any links to the articles where the company appears.

What if I Have Private Student Loans?

Wondering if there are any solutions if you have private student loans along with your Federal student loans? There are several companies out there, like Earnest* and SoFi*, which will consolidate both federal and private loans. Consolidating may give you a lower monthly payment and a lower interest rate, and both companies currently offer flexible payments with repayment assistance options available.

You should take the same steps as those with federal student loans and speak with your lender. Let them know you’ve been struggling, and they may be able to offer you another solution such as a loan modification. While there aren’t any standards private lenders have to follow as far as repayment assistance goes, many are willing to work with borrowers as they would rather not have you default on the loan.

Take the Do-It-Yourself Approach

We’ve said it many times throughout this article, but it’s worth repeating: your limited money shouldn’t be going toward a service available for free elsewhere. Paperwork might be a pain, but getting your money tied up with a third-party company isn’t worth the additional stress. You should be talking with your student loan servicer, not a “student debt relief” provider.

You have all the steps you need to take outlined here. Take advantage of the many benefits offered to Federal student loan borrowers, and don’t fall for these companies trying to sell you on convenience.

*We’ll receive a referral fee if you click on offers with this symbol. This does not impact our rankings or recommendations. You can learn more about how our site is financed here.


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College Students and Recent Grads, Life Events

Decoding a Teacher’s Benefits Package

Depressed man slumped on the desk with his hands holding credit card and currency

Written by Dave Grant of Finance for Teachers

Suzie was exhausted. She had not been this tired since getting used to the social scene as a freshman in college. 

But this was a different kind of tired. The “I earned this Netflix binge” kind-of tired. After finishing her first week of teaching 4th grade, she collapsed on the couch in her dimly lit apartment and eagerly started spooning the Chinese take-out into her mouth.

As the TV screen flickered across the room, she barely saw the characters moving about the screen. The piles of papers on her coffee table distracted her eyes.

“Oh crap.” She muttered under her breath. The papers were those thrown into her lap by the HR Director during her new teacher orientation. Health insurance, teachers union, retirement savings, and pension details – it was so overwhelming when all she wanted to do was teach eight and nine year olds about the world.

Determined to finish her food before diving into this world of confusion, she savored every last bite of her chow mein. But the bottom of the carton came too soon, and she did the responsible thing, and grabbed the looming stack in front of her. 

Suzie’s plight is not unlike those of new teachers I work with every year.

As if starting a job in teaching wasn’t overwhelming enough, deciding what benefits package are right for you when you’re not versed in “Employee Benefits” is enough to push anyone over the edge.

So let’s go through some common benefit choices you can be faced with, and take you through how to evaluate which one could be right for you.

Health Insurance

The first thing you need to determine is whether you are eligible to stay on your parent’s health insurance plan. If you’re under 26, then this is a good possibility and if your parents are willing to still pick up the tab, then that is great news for your wallet.

But if you need to choose a plan for yourself, see if you can find a summary of what your district provides. All districts should provide a PPO, HMO and HSA plan.

Not sure what makes these different from one another?

PPO = Preferred Provider Organization. This is coverage that is typically more expensive in it’s premiums and benefits but gives you the most flexibility in which doctors you use for health care. You can choose which dermatologist, OBGYN, or foot doctor you see without anyone saying that you can’t. They have to be in your insurance’s network, but that’s pretty much the only barrier.

HMO = Health Maintenance Organization. This coverage is cheaper every month, and caps out quite quickly in how much you have to pay, but there are trade offs. Before going to see any type specialist, you have to get a referral from your general practitioner, and only use those on a list of preferred HMO specialists. If the dermatologist your Mom recommends is not on the list, then you insurance won’t cover you paying them a visit.

HSA = Health Savings Account. This account accompanies a health insurance plan that has high deductibles, but the lowest premiums of the three plans. The account that goes along with this plan (the HSA) allows you to save money pre-tax to pay these deductible costs later on.

Determining which plan you use depends on how often you go to the doctor, if your current doctors are in your network, and how much money you can afford to spend on health insurance premiums. Before you decide, check with your district. While they may list premiums, if you’re single and not covering anyone else, they may provide health insurance as a free perk.

Retirement Savings

It’s not every day that you get to choose which account to use to save money for the rest of your life. But, unfortunately, choosing the wrong one can shave thousands off the amount you have to your name when you reach retirement.

You’ll no doubt have been told about the 403(b) plans during orientation. You may have one provider / vendor in your district or you may have as many as 15. Too much choice can be a bad thing!

Let’s explore what a 403(b) is before jumping on the bandwagon. A Traditional 403(b) is used to save for retirement with contributions that have not been taxed. While you won’t pay taxes on the money you contribute now, you’ll pay taxes on it, and the amount it’s grown to, when you withdraw it in retirement.

For those with big paychecks, avoiding taxation now is a great thing to do. But what about those with a first year’s teacher salary? Probably not. You just aren’t paying enough in taxes right now for it to make a big enough impact.

You should be using an account where you pay taxes on your contributions now, but where everything the account grows to can be withdrawn tax-free in retirement. This is called a Roth account. It can either be a Roth 403(b) or a Roth IRA.

If you’re going to use a 403(b) through your school district, use a company that doesn’t sell annuities as a 403(b). Look for a company – and ask them to show you – that has a wide selection of investments to choose from – less than 50 investment choices are providers that aren’t worthy of your time.

Keep in mind that you probably don’t want to walk away from an employer match, unless the options are just truly terrible. If your employer offers to match your retirement contribution, it’s best to at least contribute enough to get the free money. Just know when that contribution vests (when you’ll actually get the money).

Hint: If the company has “Insurance” in the name, then avoid them altogether. Better still, use a company not tied to your district – like Charles Schwab, Vanguard or Fidelity – and open a Roth IRA to save for your retirement. It will be a lot cheaper, you’ll have more flexibility, and if you decide to leave teaching, it’s not an account that is tied to your job. This fact alone can cause problems and further expense down the road.

Paycheck Deductions

When that first paycheck comes, stand out amongst your peers – study and understand it. There’s a high likelihood that there’ll be lots of acronyms on your check and you should be trying to understand what all of things mean.

Play a game of elimination:

  • Find the line of your pension deduction and strike it out. Determine how much of your paycheck goes into funding your pension so you’re aware of how much retirement savings you may already be doing. (That will come in handy when you calculate how much to save later on.)
  • Find the amounts that you pay in Federal and State taxes, and strike them out. Understand if you are contributing to Social Security, or if you live in a state that doesn’t allow you do this along with a teacher’s pension. Medicare will be on there as well, which you are paying now to subsidize your premiums when you enter retirement.
  • There will likely be union dues (if you’re part of a union) – these are to pay for representatives to bargain on your behalf during contract negotiations, help represent you during trial hearings, and other expenses. Strike these out once you find them.
  • You will be left with some that you don’t understand. When you have time, send HR an email and ask them to explain what these acronyms mean and what they pay for. They could be to subsidize retiree health care, pay for early retirement options, or for other district activities. Being aware of this and how much they typically cost will give you peace of mind as to where your money is going.

Never be afraid to ask about where your money is going and what you’re getting in return. It’s your money and you have a right to know!


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College Students and Recent Grads, Reviews

Graduated Repayment Plan Review and Process

college-grad (1)

Are you struggling to make the minimum monthly payments on your Federal student loans? Are you aware of all the repayment plan options available to you? Even if you don’t qualify for income-driven payment plans, there’s another plan that may help to make your payments more manageable: the Graduated Repayment Plan.

This plan and the Extended Repayment Plan aren’t based on your income, can be easier to qualify for, and both options lower your monthly payment. If you need a break from trying to make ends meet when it comes to your student loans, read on to find out how the Graduated Repayment Plan can help.

How Does the Graduated Repayment Plan Work?

If you’re familiar with the Extended Repayment Plan, it has a graduated payment option within it that works much the same as the Graduated Repayment Plan itself. Essentially, you pay your loan back on the same 10-year term as you would normally, but your payments initially start out lower, and then increase every two years.

You can also choose to pay your loans back under the Graduated Repayment Plan if you consolidate them (using a Direct Consolidation Loan). In this case, you have up to 30 years to pay back your loans. Curious to know what your repayment term might be under consolidation? Check here for a chart that details what terms you’re eligible for based on your total amount of Federal student loan debt.

According to, under the Graduated Repayment Plan, your monthly payment “will never be less than the amount of interest that accrues between payments,” and it also “won’t be more than three times greater than any other payment.”

That means your payments will be high enough that you won’t fall behind with interest accruing month after month. For example, if you were paying $10 per month, but $20 in interest was accruing between payments, that wouldn’t be good. The last part is assuring you this payment option will never exceed three times any other payment option available to you. The Graduated Repayment Plan might not offer you the lowest monthly payments, but it will be lower than what you’re paying under the standard 10-year plan.

Which Federal Student Loans Are Eligible?

Only Federal student loans are eligible for the Graduated Repayment Plan. If you have private loans, you’ll have to speak with your lender to see if any repayment assistance options are available to you. Each one offers different programs. provides the following list of loans that are eligible for the Graduated Repayment Plan:

  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS Loans
  • Direct Consolidation Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • FFEL PLUS Loans
  • FFEL Consolidation Loans

There are no additional eligibility requirements you need to meet to make payments under the Graduated Repayment Plan.

How Can I Change My Repayment Plan?

If you’d like to change your repayment plan from the standard 10-year plan to the Graduated Repayment plan, call your student loan servicer and ask if they can make the change for you. You might be able to find the option to change your repayment plan online on your account as well.

Before changing, make sure to ask your loan servicer if you’re eligible for any other repayment plan options that provide a lower monthly payment. You can also check out the U.S. Department of Education’s Repayment Estimator to see what options are available for you.

How Does the Graduated Repayment Plan Compare?

Even though there isn’t a laundry list of eligibility requirements for the Graduated Repayment Plan, that doesn’t mean it’s automatically the best one to choose. If you’ve taken a look at the Repayment Estimator and aren’t sure which plan to choose, here are a few things to consider.

The Graduated Repayment Plan can be compared with the Extended Repayment Plan, as the latter actually has a graduated payment option. The two are quite different, though. The Graduated Repayment Plan is on a term of 10 years – the same as the Standard Repayment Plan. The Extended Repayment Plan offers terms up to 25 years.

With both plans, you’ll pay more money overall throughout the life of your loan than you would under the Standard Repayment Plan. You’ll likely pay more with the Extended Repayment Plan, given the extra 15 years you have to make payments.

If you’re wondering why you’d pay more over the Graduated Repayment Plan when it’s on a 10-year term, it’s because your payments start off lower and increase every two years. When your payments are lower, less is going toward principal and more is going toward interest. Most of the time, initial payments on the Graduated Repayment Plan are interest-only. As a result, your balance isn’t going down very quickly.

Aside from that, to be eligible for the Extended Repayment Plan, you need $30,000 in Direct Loans or $30,000 in FFEL Loans. The Graduated Repayment Plan doesn’t require you to have a certain amount of debt to qualify.

Income-driven repayment plans require proof of financial hardship, and some are based off your annual income, making them harder to qualify for.

Who Benefits the Most from the Graduated Repayment Plan?

Recent graduates just starting out in their career benefit the most from the initial lower monthly payments the Graduated Repayment Plan provides. Depending on how much student loan debt you graduated with, it can be tough to afford your minimum payment under the standard 10-year plan when you’re earning an entry-level salary.

The Graduated Repayment Plan gives you a little breathing room and allows your salary time to grow with your increased monthly payments. However, once your salary catches up, you might want to consider paying extra each month so you’re not paying as much in interest over the life of the loan.

What if I Have Private Student Loans?

As we mentioned, private student loans don’t have access to any of the Federal repayment programs. However, it’s still worth talking to your lender about your options. Some private lenders are willing to work with borrowers, giving them access to forbearance or the option to undergo a loan modification.

Additionally, you can also apply to consolidate your loans, as many consolidations offer extended repayment terms with lower monthly payments. Only do this as a last resort – some lenders charge origination fees to consolidate, and you want to make sure the savings are worth it.

Evaluate All Your Options

There are many repayment plans available to Federal student loan borrowers. If you’re eligible for more than one plan, do your research to ensure you go with the one that will save you the most money every month.

Take a look at the Repayment Estimator before calling your student loan servicer so you’re informed about the different plans, and don’t be afraid to ask for their opinion. Their job is to help place borrowers in the plan that makes the most financial sense for them – for free.

Don’t forget, you can always increase your payments as you go along if you find you have the extra money. This will help you pay less in interest over the life of the loan.


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College Students and Recent Grads

California’s Most Rewarding Colleges in 2015

Over the weekend, the White House released College Scorecard data which can help parents understand the value of an education by letting them compare colleges by actual incomes earned from recent graduates as well as the debt burden typical borrowers carry.

MagnifyMoney has analyzed the underlying dataset and is pleased to report a ranking of California’s most rewarding 4 year colleges.

Our method for ranking the schools is simple: the best schools help students generate the highest income after student loan expenses, and the worst schools have students with the lowest income after student loan expenses. So we rank on median income for recent graduates each school less the median student loan debt payments for new graduates of each school reported by the College Scorecard data.

You can view our national rankings here.

(Click on the graphic below to enlarge)



  • Stanford, Santa Clara University, University of the Pacific, USC, and Cal Berkeley are the top 5 California schools for recent graduate income, with graduates from all 5 earning a median of over $60,000 a year after factoring student loan payments.
  • While just 17 of the 57 colleges ranked are in Northern California, 4 of the top 5 are in Northern California.
  • 4 of the top 10 schools were public – Cal Berkeley, Cal Poly, UCLA, and UCSD.
  • Academy of Art University, Humboldt State, Vanguard University, Fresno Pacific, and Biola were the bottom 5 colleges, with recent graduates earning less than $40,000 a year after loan payments.
  • Students with the worst debt burdens – 9% of income or more – were from the Academy of Art University, Vanguard University, several University of Phoenix campuses, California Baptist University, and La Sierra University. Academy of Art’s burden of 13% was the highest among schools ranked.
  • Stanford University students with loans had the lowest debt burden at just 2% of income after loan payments, followed by Cal Berkeley at 3%.
  • San Jose State was the top ranking Cal State university, with graduates earning a median $52,435 after loan payments, and a debt to income burden of 4%. This compares to an average reported median salary of $43,779 across the Cal State schools.
  • Across all 57 schools in California with 2,000 or more undergraduate students, median debt to income burdens averaged 6%, ranging from a high of 13% to a low of 2%, with an average 50% of graduates taking Federal loans. The average of reported median salaries was $48,267, vs a national average of $41,712.
  • The average cost to attend net of scholarships and grants across the schools analyzed was $18,791, in line with the national figure of $18,783.


MagnifyMoney analyzed the College Scorecard database to derive the top schools for take home pay for student loan borrowers.

The College Scorecard database includes median income for graduates of schools who received financial aid as reported by the IRS, along with student loan balances from the Department of Education. MagnifyMoney’s analysis covers 884 U.S. schools in the 2015 College Scorecard database with 2,000 or more students granting Bachelors degrees. In California, 57 schools met this enrollment and degree criteria.

Combining reported income with payments on student loans factors in post graduation earning power, the cost of education, scholarships, grants, and student loans used to finance the degree.  The income reported by the College Scorecard database is for the 5th – 10th years after enrolling in a school, which for a typical 4 year school student represents the years immediately following graduation.

Data definitions:

  • Income after loan payments: Median annual income of graduates receiving Title IV aid less median student loan payments. Income is the average of the 6th to 10th year after enrollment in a school as reported by the College Scorecard database. So for a student who graduates in 5 years, it represents earnings 1 to 5 years after graduation. Students enrolled in graduate school during this period are excluded from the data.
  • Monthly loan payment: Median monthly federal student loan payment
  • Loan balance: Median loan balance of borrowers upon leaving the school
  • Debt to income: Median loan payment divided by median graduate income
  • Average Cost: Cost to attend, less stipends and scholarships
  • Graduate who borrow: Graduates with outstanding federal loans


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College Students and Recent Grads, Pay Down My Debt, Reviews, Student Loan ReFi

Understanding the Extended Repayment Plan

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Did you know that having Federal student loans gives you a host of repayment options to make paying back your loans easier? Along with income-driven repayment plans (Income-Based Repayment, Income-Contingent Repayment, and Pay As You Earn), you can also choose the Extended Repayment Plan.

Why is it beneficial? It does exactly what it says – it extends your repayment period from the standard 10 years to up to 25 years, resulting in a much lower (and more manageable) monthly payment.

How Does It Work?

While having a lower monthly payment sounds great, you should be aware that extending the term of your loan (and any loan, for that matter) would result in paying more money over the life of the loan. That’s because interest has a longer time to accrue. Let’s look at an example.

Say your student loan balance is $20,000 on a 10-year repayment term with a 4.29% interest rate. Your monthly payment is $205. Now, extend that repayment term to 25 years. You end up with a monthly payment of $109. It looks like you’re saving almost $100 per month, which sounds like a great deal.

Not so fast. We need to look at the interest being paid on the loan. In the first scenario, you’ll pay $4,630 in interest, for a total of $24,630. In the second scenario, you’ll pay $12,638 in interest, for a total of $32,638. That’s a difference of almost $8,300.

That’s not to say the Extended Repayment Plan isn’t worth it, but you should know exactly what it entails before signing up for it. Note there are two ways to make payments: you can choose a fixed monthly payment, where your payment stays the same each month, or a graduated payment, where your monthly payment increases at set points over the repayment term.

The graduated repayment is useful for graduates just starting out in their careers who aren’t earning much of a salary. As you gain more experience, your salary will grow, and you’ll be able to afford the increased payments in a few years.

The fixed repayment is good for those who would rather have peace of mind. The future is uncertain, and even if you advance in your career, you could decide to change paths and take a pay cut down the line. The consistent lower payments provide you with a nice buffer.

Regardless of which option you choose, the best way to use the Extended Repayment Plan is to pay the minimum payment (if that’s all you can afford) until you get yourself in better financial shape. As soon as you can afford to start paying extra toward your loans, you should. There’s no rule that says you need to take all 25 years to pay back your balance.

If you’re interested in doing the calculations on your own (and you should, to ensure you’re actually saving money in the long run), use this repayment estimator from the U.S. Department of Education. You can see which repayment plans you’re eligible for, and you’ll be able to compare monthly payments between all the plans to see which offers you the lowest payment.

Which Loans Are Eligible?

Even if you have Federal student loans, only select loans are eligible for the Extended Repayment Plan. It goes without saying, but if you have private student loans, they’re not eligible for any of the Federal repayment plans.

According to, if you have the following loans, you can enter into the Extended Repayment Plan:

  • Direct Subsidized or Unsubsidized Loans
  • Direct PLUS Loans
  • Direct Consolidation Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • FFEL PLUS Loans
  • FFEL Consolidation Loans

Your loans need to have been disbursed after October 7th, 1998, and you must have an outstanding balance of $30,000 or more to be eligible. Direct Loans and FFEL Program loans are considered separate, so if you have $33,000 in FFEL Program loans, but only $15,000 in Direct Loans, you’d only be eligible for Extended Repayment for your FFEL Program loans. If the amounts were switched, you could only choose the Extended Repayment Plan for your Direct Loans.

How Can I Change My Repayment Plan?

The easiest way to make changes to your repayment plan is to contact your student loan servicer. Most will let you request this option online via your account, but if you’re unable to find it, call or email to inquire about it.

Who Benefits the Most from the Extended Repayment Plan?

Income-driven repayment plans typically have stricter requirements that need to be met, such as proof of financial hardship. They’re also calculated based on your annual income. The Extended Repayment Plan only requires you to have $30,000 in eligible student loans, making it easier to qualify for. If you’re struggling to make payments and don’t qualify for any other repayment plan, the Extended Repayment Plan could be a good solution.

To avoid paying more over the life of the loan, only take advantage of the lower monthly payment when you need to. Consider paying extra every month you can so you can pay your loan off sooner than 25 years. Keep in mind that the Extended Repayment Plan isn’t like income-driven repayment plans – your balance won’t be forgiven; you’re expected to pay your loan off within the amount of time given.

What if I Have Private Student Loans?

If you have private student loans, you’re not eligible for the Extended Repayment Plan, but you could look into getting a loan modification, or you could apply to refinance your loans. Either of these options can extend your repayment term, offering lower monthly payments.

Go With the Plan That Makes the Most Sense For You

Remember to use the Repayment Estimator to compare your options. The Extended Repayment Plan may not provide you with the lowest monthly payment, or you may not be eligible for it (the Estimator will show you). Educate yourself on your options first, and then contact your student loan servicer to see what advice they can offer you. They’ll be able to place you in the repayment plan that best suits your financial situation.

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College Students and Recent Grads

The 20 Most Rewarding Colleges for Student Loan Borrowers

Given the increasing cost of a college education, and the record level of student loan debt used to fund that education, American families are increasingly focused on the value of their investment. In very simple terms, people want to know how much money they will they make after graduation, and will they be able to afford their student loan debt burden. Increasingly savvy parents and potential students will question the value of an education provided by institutions that consistently graduate students unable to earn good salaries.

Over the weekend, the White House released College Scorecard data which can help parents understand the value of an education. MagnifyMoney has analyzed the underlying dataset and is pleased to report a ranking of the 20 Best and 20 Worst Universities. The method for ranking the schools is simple: the best schools help students generate the highest income after student loan expenses, and the worst schools have students with the lowest income after student loan expenses.

Although many traditionally elite schools top the list (like MIT, Harvard and Stanford), the #1 school in the country is MCPHS University (Massachusetts College of Pharmacy and Health Sciences), where students earn $113k after student loan payments, and a large public university, the University of Colorado – Denver, also makes the list, with students earning over $70k a year after student loan payments . The worst school in the country is Benedict College, where students earn only $16k after student loan payments.


  • MCPHS University, MIT, Harvard, Babson, and Georgetown are the top 5 schools for graduate income after student loan payments are factored.
  • MCPHS graduates taking financial aid earn a median $113,069 after median loan payments of $278 among borrowers, compared to the average of all 884 schools analyzed at $41,712 in income and $261 in loan payments.
  • Across all 884 schools, median debt to income burdens averaged 7%, ranging from a high of 27% to a low of less than 1%, with an average 56% of graduates taking Federal loans
  • The average cost to attend net of scholarships and grants across the 884 schools analyzed was $18,783 with median debt for graduates of each school averaging $23,541.

(Click on the graphic below to enlarge)

most-rewarding-colleges-thumbnail (1)


MagnifyMoney analyzed the College Scorecard database to derive the top schools for take home pay for student loan borrowers.

The College Scorecard database includes median income for graduates of schools who received financial aid as reported by the IRS, along with student loan balances from the Department of Education. MagnifyMoney’s analysis covers 884 U.S. schools in the 2015 College Scorecard database with 2,000 or more students granting Bachelors degrees.

Combining reported income with payments on student loans factors in post graduation earning power, the cost of education, scholarships, grants, and student loans used to finance the degree.  The income reported by the College Scorecard database is for the 5th – 10th years after enrolling in a school, which for a typical 4 year school student represents the years immediately following graduation.

Data definitions:

  • Income after loan payments: Median annual income of graduates receiving Title IV aid less median student loan payments. Income is the average of the 6th to 10th year after enrollment in a school as reported by the College Scorecard database. So for a student who graduates in 5 years, it represents earnings 1 to 5 years after graduation. Students enrolled in graduate school during this period are excluded from the data.
  • Monthly loan payment: Median monthly federal student loan payment
  • Loan balance: Median loan balance of borrowers upon leaving the school
  • Debt to income: Median loan payment divided by median graduate income
  • Average Cost: Cost to attend, less stipends and scholarships
  • Graduate who borrow: Graduates with outstanding federal loans

Additional findings

  • At 7 of the top 20 schools 50% or more of graduates borrowed to finance their education.
  • At 15 of the top 20 schools the average cost of attendance after scholarships and aid is over $20,000 a year.
  • 13 of the top 20 schools have median graduate debt of $20,000 or more – illustrating how high debt in itself is not a barrier to high take home pay.
  • MCPHS University, the top school, has an average loan balance of $25,000, well supported by median income after loan payments of $113,069.
  • 17 of the top 20 are private universities.
  • 10 of the top 20 offer both liberal arts and scientific degrees.
  • 8 of the top 20 are institutes of technology, while #4 Babson offers all students Bachelors of Science in Business degrees, and #1 MCPHS only offers health science degrees


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College Students and Recent Grads, Consumer Watchdog, Reviews

Review: Student Debt Relief

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Student Debt Relief’s purpose is exactly what it sounds like. The company provides debt consolidation services to graduates who are struggling to make payments on their student loans. It operates under the business name Online Portfolio, Inc. and is based in Florida.

Student Debt Relief looks to target borrowers who decide not to go through the process of applying for a Direct Consolidation Loan on their own. It offers assistance, but for a fee, typically over $100.

Applying for a Direct Consolidation Loan isn’t that difficult. In fact, there are only five steps to the entire online application. Plus, you have the peace of mind that you’re managing your loans, and not a third-party. Make no mistake; companies like Student Debt Relief aren’t affiliated with the U.S. Department of Education (some claim to be, Student Debt Relief doesn’t).

Most of the information in this review is for those who have federal student loans. Those with private student loan debt can consolidate through private lenders that don’t charge astronomical fees, like SoFi, Earnest, and others.

Student Loan Consolidation Details

Student Debt Relief offers borrowers an option for consolidating both federal and private student loans.

On its Federal Loan Consolidation page, it says, “There is no cost to applying for a consolidation if you plan on applying on your own.  If on the other hand you need assistance and would like someone to represent you through the consolidation process, and to make sure you get the most benefits available to you, please contact us.”

The first part of that is right – there’s no cost associated with applying for a Direct Consolidation Loan. However, Student Debt Relief makes it seem as though you get an advantage by applying with them. That’s false. The U.S. Department of Education (and your student loan servicer) is there to help you through the process, step-by-step if need be.

You gain nothing by “being represented” by another company. There are no “inside” tricks you’re not aware of. Student Debt Relief is marketing itself as making your life easier, but in exchange for fees – upfront fees typically over $100. If you’re struggling to afford your student loan payments, you’re much, much better off getting the free assistance you’re entitled to from the government.

As for its Private Student Loan Consolidation section, it lists several private lenders that we recommend here on MagnifyMoney. However, it doesn’t offer to place you in a program, but it does provide referral links without a disclosure, so the company is still making money off of you.

Loan Forgiveness Programs and Knowledge Base

Student Debt Relief has a mix of factual and misleading information on its website, and it often quotes the good parts about consolidating (to make it look like the best solution), but leaves out the downfalls.

For example, on its loan forgiveness page, it says, “At the end of your consolidated loans term, any unpaid balance will be forgiven by the Department of Education.” What isn’t included is that you may be on the hook to pay income tax for any balance that is forgiven.

Student Debt Relief also has a “knowledge base” where you can educate yourself on the other programs and repayment options available to you if you have federal student loans. While most of this information is correct, you can find all of it on, and without a sales pitch.

[Beware of Student Loan Debt Relief Scams]

The Process of Working With Student Debt Relief

You can receive a free quote from Student Debt Relief along with a free assessment of your student loan situation. Be aware that the representative you may speak with is not likely to provide you with unbiased help, as they’re trying to sell you on the company’s services. If you contact your student loan servicer, you’ll receive factual information intended to help you. They’ll also be able to assist you in making any payment or program changes.

The form to receive a quote from Student Debt Relief is simple. You need to enter your loan balance, interest rate, adjusted gross income, marital status, number of dependents, and the state you reside in. Once you fill out the form, you need to provide your contact information. A representative will get in touch with you after that.

If, for whatever reason, you choose to reach out to them, make sure you understand exactly what they’re offering and what you’ll be paying for. Many of the BBB complaints were made because customers were unsure of what they were signing up for. Don’t let anyone pressure you into making a decision on the spot.

Throughout the site, Student Debt Relief urges visitors to call them. There is no email address listed; only a contact form. Most of your interaction with the company is likely to be over the phone, so make sure you take down names and numbers so you have a written record of what happened and when.

Warning – What Student Debt Relief Provides Can Be Obtained For Free

While it packages its services attractively and explains it wants to help those overwhelmed by applying on their own, the truth is, you don’t need Student Debt Relief’s services to consolidate your loans. You certainly don’t need to (and should not) pay for its services, either.

Why? Because most of the information they’re repackaging is available for free on If you want to consolidate your federal loans, you can do so for free (yes, free – there’s no application fee) on

Notice these websites have a .gov URL. That means these are legitimate government websites. In contrast, Student Debt Relief’s URL ends in .us, which is clever, but doesn’t mean anything. Anyone with a United States address can register a domain ending in .us.

If you look at any page on the website, you’ll notice several typos and grammatical errors as well. The Student Aid website provided by the government is much more polished and easier to read and understand.

Fees Charged

Student Debt Relief says it charges service fees for its “time and expertise in processing clients consolidation documents.” It also says its fees are listed on its website, but they’re not. There is zero transparency offered.

One BBB review made on November 12th, 2014 references a fee of $188, which the reviewer later found to be $245 on their statement. Reading through numerous BBB complaints, you can see others were charged varying upfront fees – all over $100.

If You’re Already Struggling, Be Aware of Your Options

Unfortunately, many students are having difficulty affording their monthly student loan payments, and that makes them a target for these so-called “debt relief” companies. If you’re in this boat, please know the proper help is available to you through the U.S. Department of Education and your student loan servicer. The latter should always be your first point of contact when you have any issues with your student loans. Your servicer needs to be made aware before it can take any action to help you.

Don’t buy into what these “debt relief” companies are trying to sell. There’s no reason to worsen your financial situation by paying to consolidate your loans, or paying to get your repayment plan adjusted. When you have federal student loans, these free benefits automatically apply to you.

The law does not allow companies to charge fees for their services unless they can renegotiate, settle, or reduce a minimum of one debt. They’re also not allowed to make false claims they can’t fulfill. If it sounds too good to be true, it probably is. Do your research before agreeing to anything.

Protect Yourself With Knowledge

It’s unfortunate there are companies trying to take advantage of unsuspecting borrowers like this. Students are extremely vulnerable; as many don’t realize the rights or benefits they’re entitled to when it comes to student loans. Don’t let that be you.

If something seems too good to be true, in this case, it most likely is. Student loan debt isn’t fun, but it’s much worse when you’re needlessly paying for services you can receive for free. Always verify the legitimacy of a company before signing on the dotted line – and when it comes to student loans – only trust your loan servicer and the U.S. Department of Education. Don’t be afraid to ask questions or ask for proof if you receive a call from a company claiming to be either. If any fees are involved, you know not to sign up.

You can always contact the Education Department at 1-800-557-7392 if you have any questions you’d like to ask regarding loan consolidation, and remember to reach out to your loan servicer if you’re having difficulty making payments. Loan consolidation is just one option you have with federal student loans, and it’s not the best option for everyone. There’s a great repayment estimator on the Federal Student Aid website that can help you understand which repayment options might be right for you.


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College Students and Recent Grads, Reviews

Review: Student Consulting Group, Inc. (

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Student Consulting Group, Inc. operates at As you can guess from the website name, the company is aimed at helping student loan borrowers either make their monthly payments more affordable, or helping them get out of default.

Student Consulting Group is located in Georgia, though there’s no physical address listed – only a PO Box. When looking at the “About” page, you’re introduced to its three founders who have “extensive experience in all aspects of the student loan industry.” According to Georgia business records, the company formed in 2012 and has been active since.

While it sounds like Student Consulting Group is out to help recent graduates make life more affordable, we advise you evaluate its offerings with a critical eye.

[Beware of Student Loan Debt Relief Scams]

Services Offered by Student Consulting Group

The services Student Consulting Group offers are mostly related to getting out of default, along with making monthly payments more manageable. Let’s take a look at each claim and the reality of what you could do yourself.

Offer: Put an end to administrative wage garnishment in as little as 8 weeks

Reality: When you default on your federal student loans, the government is entitled to garnish your wages. This means they use your wages as payment toward your loan.

Offer: Stop Federal tax offsets so you can receive your tax return

Reality: Similar to the above, the government can seize your tax return as payment toward your defaulted student loan. Both occur only if you voluntarily refuse to make payments on your loans. If you’re not in default yet, this can be avoided by getting in touch with your student loan servicer and working out a repayment agreement.

If you have defaulted on your loans, and your wages are being garnished, the best solution is to consolidate your Federal loans, as that will get you out of default.

Offer: Remove the default status from your Federal Student Loans to begin rebuilding your credit now

Reality: If you have defaulted on your Federal student loans, you can go through a rehabilitation program to get out of default. It’s a lengthy process (you must make 9 consecutive, agreed upon payments), but at the end, the default is removed from your credit report.

Offer: Lead you to eligible loan forgiveness programs

Reality: All available loan forgiveness programs are listed on the website. Many of them have special requirements that need to be met, but you don’t need to pay a company for this service when you can do the research yourself.

Offer: Restore your Title IV financial aid eligibility and benefits

Reality: Again, when you default on your Federal student loans, you aren’t eligible for any further financial aid. Once you get out of default, your eligibility is restored.

Offer: Stop harassing and embarrassing collection agency calls

Reality: When you default on your loans, the U.S. Department of Education’s Default Resolution Group takes over (with Perkins loans as an exception). You can get in contact with them easily. If you don’t, then an outside collection agency may be assigned to your loans, but all agencies are listed here on the website.

Offer: Consolidate all of your Federal student loans into one easy payment

Reality: You can consolidate eligible Federal student loans into one loan via the Direct Consolidation Loan. This can be done, for free, at

Offer: Lower your payments, in some cases to as low as $5 – $25!

Reality: This comes with a footnote that says, “Certain qualifying conditions apply. All candidates may not qualify.” You can lower your payments, for free, by switching to one of the many income-driven repayment plans offered through the U.S. Department of Education. This can be done by calling your student loan servicer. They’ll be able to recommend which repayment plan may be best for you.

Offer: Get flexible repayment options

Reality: Again, these repayment options are available to anyone who has a Federal student loan. You don’t need a third-party service to enroll you in a different payment program.

Offer: Have your Federal student loan rights such as deferment and forbearance restored

Reality: Unfortunately, as you can see, defaulting on your Federal student loans means forfeiting most of the benefits that come with them. A majority of these solutions can be brought about by simply getting your student loans out of default, which can be done on your own through loan rehabilitation, or by consolidating your Federal student loans with Direct Consolidation.

The Disclaimer – Yes, You Can Do This For Free

We’re glad to see “Can I do this myself for free?” answered with a “Yes” under the FAQ section. However, it goes on to say, “You can also represent yourself in a court of law or prepare your own tax return.” Comparing those two things to applying for consolidation, changing your repayment plan, or getting out of default comes across as a scare tactic.

Many companies offering to help students get out of a bad situation with their student loan debt are trying to make the process look much more difficult than it actually is. They’re trying to convince you that you need their help and “expertise” to apply for these programs.

That’s not true. Your student loan servicer should be able to help you with all of this, at no cost. There are only a handful of Federal student loan servicers out there (Nelnet, Great Lakes, Navient, MOHELA, among others). Each is very familiar with the student loan landscape and they are authorized to make changes to your student loans.

A third-party company doesn’t have the same relationship. While there’s no explicit mention of it on this website, some companies will ask for your FAFSA pin number to make changes to your student loans. This is highly-sensitive information that shouldn’t be given out so freely.

How simple is the process?

To make changes to your repayment plan, you should be able to access the option from your account online. For example, on Great Lakes, you can choose “my repayment plan,” and then “income-driven & standard repayment plans.” You’re brought to a page that asks what options you’re considering. Depending on which option you choose, you can “learn more and apply” right then and there, or check your eligibility.

To apply to consolidate your Federal loans, you need to go through a five-step application process on According to the site, it takes around 30 minutes to complete the application. Is 30 minutes really worth enough to you that you’d pay someone to enroll you in the program?

Lastly, getting out of default is the lengthiest process, and this does vary depending on circumstance. There are several steps you can take to get your loan back in repayment status, which include consolidating or going through a loan rehabilitation program.

How the Process Works

There are four options you can use to contact Student Consulting Group. You can fill out a form on the website under “Get started today,” you can call, you can email customer service, or you can use the chat function (after entering in your information).

As with other similar companies, you’re encouraged to call. If you do, be wary. Don’t accept any offers or agreements on the spot without researching your options. Take down the names of the people you speak with, as well as what was said.

Your best route is to email as you won’t have to hand your phone number over.

There is little to no information on the website about the actual process you’ll go through once speaking with a representative. There’s mention of a “100% Service Guarantee,” but there’s no details on what that gets you. It only claims to let borrowers know if they qualify upfront.

Additionally, Student Consulting Group doesn’t really provide any information on the repayment plans or programs offered. It simply gives you a rundown of the consequences you could be facing if you default on your loans, and tells you to call if you’re in such a predicament.

Are There Fees?

Yes, though specific fees aren’t disclosed anywhere on the site. Student Consulting Group only says that each person’s situation is different, so fees are evaluated on a case-by-case basis.

From the FAQ: “…our fees vary depending on the complexity and scope of work required.” A one-time service fee is mentioned, as well as “affordable payment options.”

What If I Have Private Student Loans?

Unfortunately, Student Consulting Group won’t be of any help to you. It only offers solutions for those who have Federal student loans.

However, that doesn’t mean your situation is hopeless – far from it. If you’re having trouble paying back your loans, the first step (for any borrower) should be to contact your student loan servicer. Speak with them about any options available. Some servicers offer repayment assistance, even if they’re not required to.

If you don’t have any luck there, you might want to consider consolidating your loans with a servicer that does offer forbearance or more payment flexibility. Additionally, you’ll want to look for an option that lowers your monthly payment so it’s more affordable for you.

[Look into refinancing student loan options here.]

Don’t Pay For What You Can Do For Free

Don’t let these companies intimidate you into thinking you can’t manage your student loans. Millions are doing it every day. The key is to educate yourself. We understand it can be difficult to sort through all the available information about student loans, but it’s your best line of defense when it comes to making informed decisions.

These companies may have “expertise” on their side, but they don’t have access to special information. Everything you need to know is out there, presented on the website. If you ever have any questions, you should call your student loan servicer, and they’ll be able to answer them, or direct you to someone who can.

Don’t pay for services you can do yourself. Getting out of default, into another repayment plan, or consolidating your loans isn’t something you need someone else to do for you. Get free advice from the Department of Education, educate yourself on your options, and take the necessary steps to get yourself into a better situation with your student loans.


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College Students and Recent Grads, Consumer Watchdog

Beware of Student Loan Debt Relief Scams

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Student loans are one of the most frustrating and often confusing payments to handle. 22-year-old recent graduates who might barely know how to balance a checkbook are expected to suddenly know how to find all the federal programs geared towards helping with repayment (like income-Based repayment and forgiveness) and how to keep track of multiple loans across different vendors that could be handed off to another owner at any time. Does your head hurt yet? Filing your own taxes is often much simpler than getting the hang of student loans.

So, it’s no surprise that people are more than happy to pay someone else to handle the stress of student loans, which is why student loan debt relief and repayment scams exist.

These companies offer to handle your student loans, get you low-low payments or forgiveness. All in exchange for a fee of course.

But you don’t have to pay anyone for help getting your student loan situation in order. In fact, you shouldn’t be wasting the money you could be putting towards getting debt free.

You should also be wary of any phone calls offering to help you gain access to a new federal program focused on student loan forgiveness. These are often predatory scam calls.

Get Help for Free

It’s important to note that most of the free help is centered on federal student loans. We’ll discuss private student loans later in this article.

There are several ways you can receive assistance on your federal student loans.

  • Use income-based plans to lower your monthly payments

These repayment plans include Income-Based Repayment (IBR), Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR). Each plan works a little differently and not everyone will be eligible based on when you took out loans and how much you make. The programs all help reduce payments in accordance with your current income. As you earn more, you pay more on your loans. The programs all allow for remaining federal student loans to be discharged after 20 – 25 years of consistent payments.

  • Consolidate your loans

Consolidating your loans into one easy payment could help remove some of the stress from your repayment process. You can consolidate federal loans using the Federal Direct Consolidation loan. There is no fee for this process. Just be aware you could lose out on potential benefits on your existing loans if you consolidate.

  • See if you’re eligible for forgiveness programs

There are a myriad of forgiveness programs for federal student loans. Most are focused on your career. For example, teachers may be eligible for the Teacher Loan Forgiveness program by working at a designated elementary or secondary school for five consecutive years. You could earn between $5,000 and $17,500 depending on your subject. Doctors, lawyers and other specialized professions can be eligible for certain forgiveness programs. There are also volunteer programs and forgiveness for military personnel.

  • Rehabilitate yourself by getting out of default

If your loan ends up in default, you’re far more likely to be on the receiving end of scam calls about fixing your student loans or being eligible for a phony forgiveness program. Your loans need to be in good standing in order to be eligible for any forgiveness programs or refinancing. Work with your student loan servicer to get out of default. You can reach out to student loan counseling services, but look for non-profit organizations offering free consultations.

You can track your federal loans via the National Student Loan Data System .

[Miss a Student Loan Payment? Where to Find Help and What Happens Next]

Need Help with Private Loans?

Unfortunately, private loans are not as flexible as federal loans. You will not have the same options for Income-based repayment programs nor forgiveness programs.

However, you should always communicate with your loan provider if you feel you’ll have difficulty making a payment. There is no discharging student loans in bankruptcy, so burying your head in the sand and letting the situation build up will just create more pain. You should also see if you’re eligible for student loan modification.

You could consider refinancing your private student loans to another lender that may offer better interest rates and perks like forbearance in case you lose your job and can’t afford to make payments for a few months.

SoFi* offers unemployment protection for up to 12 months with fixed refinance rates as low as 3.50% and variable rates as low as 1.90% (with autopay).

Earnest* offers the ability to skip one payment a year without penalty (you make up for it over time), which certainly isn’t a long-term fix but could give you a little breathing room to figure out your financial situation.

[Sample Goodwill Letter to Remove a Late Student Loan Payment from Your Credit Report]

Already the Victim of a Scam?

You may have already become a victim of a student loan scam. If this is the case, you should report your situation to the Consumer Financial Protection Bureau.

Issues with Federal student loan servicers can be reported to the Federal Student Aid Ombudsman Group.

We’ll receive a referral fee if you click on a link with this symbol *. This does not impact our rankings or recommendations You can learn more about how our site is financed here.


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College Students and Recent Grads, Reviews

Wells Fargo Student Loan Review

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Is the Federal financial aid you received, along with scholarships and grants, not enough to cover the cost of your tuition? For some students it’s not, and private student loans can help bridge the gap.

Wells Fargo has undergraduate student loans for traditional colleges and universities, career and community colleges, and nursing and health programs. For the purpose of this review, we’ll be looking at the student loan covering traditional schools, but be aware there are other options if you’re considering a different path through college.

Details of the Wells Fargo Student Loan

Wells Fargo states its loan will cover 100% of your eligible college expenses, but there is a minimum of $1,000 and maximum of $120,000 you can borrow. Just like Federal loans, there’s a six-month grace period after graduation where you’re not required to make payments, and you also don’t need to make any payments while you’re enrolled.

The standard repayment term is 15 years with a Wells Fargo student loan, and you can choose to have a fixed or variable rate. Variable APRs range from 3.40% to 8.60%, while fixed APRs range from 6.17% to 10.51%. However, a 0.25% interest rate deduction applies if you enroll in automatic payments, and there are additional deductions that apply for Wells Fargo customers.

Wells Fargo also checks the amount of funds you request against what your school says you need. This allows you to borrow exactly what you need, so you don’t end up with more debt than you need to.

A payment example looks like this: if you borrow $10,000 on a 15 year repayment term with a fixed APR of 6.62%, your monthly payment will be $118.07. With a variable APR of 3.40% under the same conditions, your monthly payment will be $155.67.

How Does the Wells Fargo Student Loan Compare to Federal Loans?

Before you consider borrowing funds for school privately, you should fill out a FAFSA and see what Federal financial aid you qualify for. Grants and scholarships are always good to apply for as well, as they don’t need to be paid back. Private student loans tend to have higher interest rates and less favorable terms, and should be seen as a last resort to cover any tuition or living expenses you may have.

That said, how does Wells Fargo’s student loan stack up to Federal loans? On the lower end of the range, its interest rates are comparable – a Federal Stafford loan has a fixed APR of 4.29%, and a Federal Direct PLUS Loan has a fixed APR of 6.84%. Wells Fargo’s fixed APR starts at 6.17%, and its variable APR starts at 3.40%. Of course, you (or your cosigner) will need excellent credit to get the best rates offered with Wells Fargo, and on the higher end, its interest rates aren’t as competitive.

A word on variable rates in case you’re new to borrowing – they can change at any point. That means your loan can become more expensive a few years into repayment. Having a fixed rate loan means you’ll lock in the rate you were approved for over the entire life of the loan.

While fixed rates are higher, they provide peace of mind variable loans don’t. You may start out having a lower payment with a variable rate, but it could increase over the course of the ol15-year repayment term.

Speaking of, Wells Fargo has a repayment term of 15 years, and 10 years is standard for Stafford loans. An “extended” term is good and bad: you’ll likely have a lower monthly payment with a 15 year term, but a longer term also means you’ll pay more over the life of the loan (due to interest).

While it may seem like you have years until you need to worry about paying your loans back, it’s smart to consider the consequences now. As there’s no prepayment penalty with this loan, you can pay it back as quickly as you want so you don’t pay as much interest.

Eligibility Requirements

To apply for a Wells Fargo student loan, you must:

  • Be enrolled in an undergraduate program and working toward a degree, certificate, or license
  • Be a U.S. citizen, permanent resident alien without conditions, or an international student with temporary alien status (you’ll need a current U.S. address)
  • Have an existing credit history and be able to meet Wells Fargo’s income and employment requirements

If you don’t qualify based on these criteria, or you doubt your credit history is sufficient; you can always apply with a cosigner. The good news is cosigners may be released from the loan after 24 on-time, consecutive payments. Other private lenders may not offer cosigner release.

Application Process and Documents Needed

When you apply, you’ll be brought to a screen asking you to choose a loan type, your school, field of study, and citizenship.

Wells Fargo recommends having the following information available before applying to make the process go smoothly:

  • Your college or university information
  • Social Security Number
  • Personal information (address, contact information)
  • Salary
  • How much you need

If you’re applying with a cosigner, they’ll be able to fill out their section of the application after you’ve completed yours.

The entire loan process takes around two to three weeks, so be sure to start your application sooner rather than later. The funds will automatically be sent to your school according to when the school requires it.

Remember, when you apply, a hard credit inquiry will be run on your credit (and on your cosigner’s credit, if applicable).

The Fine Print

There are no origination or application fees, and there’s no penalty for making payments early. However, if you miss a payment, a late fee may be assessed. This happens at the individual loan level, so it will vary from borrower to borrower. Wells Fargo provides you with late fee information on your billing statement, though.

Repayment Assistance Options

Wells Fargo offers a few repayment assistance options in case you fall on hard times and can’t afford to make a payment. Forbearance options include an extended grace period, military forbearance, and deferred payments if the area you live in is affected by a FEMA disaster. Note that with these options, interest continues to accrue even though you’re not required to make payments.

Additional assistance options include no payments required for two months, provided you’ve made consistent on-time payments in the past; six months of no payments due to financial hardship; and a loan modification program that will temporarily or permanently reduce how much you have to pay per month.

Who Benefits the Most from a Student Loan With Wells Fargo?

Just about any student can benefit from a student loan with Wells Fargo. You don’t have to be an existing customer to apply, although it does make the application process a bit easier. If you or your cosigner has excellent credit, you may be able to receive rates comparable to the Federal Direct PLUS Loan.

Again, make sure you exhaust all your Federal options before going with a private student loan. They offer numerous benefits private loans don’t, and aside from PLUS loans, they also don’t require a credit check or a cosigner (in most cases).

Get the Best Rates Possible

Want to get the best rates available to you? Then be open to shopping around at a few different lenders. Filling out several loan applications within a 45-day window is looked at as one single inquiry by the credit bureaus, and your credit score won’t take a huge hit. The biggest factors you want to compare with each lender are the APRs offered (and if variable rate loans or fixed rate loans are offered), repayment term(s), and if repayment assistance options are available.


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College Students and Recent Grads, Pay Down My Debt, Student Loan ReFi

Are Parent PLUS Loans Eligible for Income-Driven Repayment Plans?

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Income-driven repayment plans provide a way for student loan borrowers to seek a little relief from the burden of debt. These programs are primarily focused on student borrowers, which can leave parents saddle with Parent PLUS loans dealing with hefty monthly payments and seemingly no way to get them under control.

But there is a way to make a Parent PLUS Loan eligible for both an income-driven repayment plan and even Public Service Loan Forgiveness.

Current Income-Driven Repayment Plans

There are three income-driven repayment plans:

  • Income Based Repayment (IBR)
  • Pay As You Earn (PAYE)
  • Income Contingent Repayment (ICR)

Each plan comes with stipulations about which borrowers and which loans are eligible based on dates of disbursement, income and type of loan.

Parent PLUS loans are only eligible for ICR, but not in their current state.

[How to Set Up Income-Driven Repayment Plans]

What makes you eligible for ICR?

ICR is the loosest of the three income-driven repayment plans and therefore also has the longest repayment period before forgiveness and the highest payments.

IBR payments (for borrowers before and after July 1, 2014) will either generally be 15% or 10% of discretionary income and never more than what you’d pay on the standard 10-year repayment plan. PAYE will generally be 10% and never more than what you’d pay on the standard 10-year repayment plan.

ICR will generally be 20% or what you would pay on a repayment plan adjusted to your income with fixed payments for 12 years. ICR also doesn’t have income caps in order to enroll, anyone with eligible student loans can make payments with this plan.

The Parent PLUS loan itself is not eligible for ICR, but you could use Federal Direct Consolidation in order to enroll in ICR. Both Federal Family Education Loans (FFEL) PLUS and Direct PLUS loans are eligible for consolidation and therefore refinancing with ICR.

Which loans are eligible for Federal Direct Consolidation?

These loans are all eligible for Federal Direct Consolidation:

  • Direct subsidized and unsubsidized loans
  • Subsidized and unsubsidized Federal Stafford Loans
  • Direct PLUS loans
  • PLUS loans from the Federal Family Education Loan Program
  • Supplemental loans for students
  • Federal Perkins and Nursing loans
  • Health Education Assistance Loans
  • Select existing consolidation loans

If you’ve already left school, fell below part-time employment, or graduated, you can consolidate your loans.

Private loans are not eligible.

[Learn How to Track Down all Your Student Loans Here.]

How many loans do you need to consolidate?

Consolidation seems like it would imply needing more than one loan, but you can actually consolidate just one loan. You need to have at least one Direct Loan or FFEL Program loan that’s either in repayment or a grace period.

How much will it cost?

There is no application fee for consolidating your loans. You can also prepay your loan at any time without a penalty.

How much will my monthly payments be?

ICR is typically based on 20% of your discretionary income. Discretionary income is calculated as the difference between your income and 150 percent of the poverty guideline for both your family size and state of residence. You can also use the Repayment Estimator to get an idea.

How is family size determined?

According to’s Repayment Estimator:

“Family size includes you, your spouse, and your children (including unborn children who will be born during the year for which you certify your family size), if the children will receive more than half their support from you. It includes other people only if they live with you now, they receive more than half their support from you now, and they will continue to receive this support from you for the year that you certify your family size. Support includes: money, gifts, loans, housing, food, clothes, car, medical and dental care, and payment of college costs. For the purposes of these repayment plans, your family size may be different from the number of exemptions you claim on your federal income tax return.”

How long will consolidation take?

It could take two to three months to finalize the consolidation process and begin repayment, so this isn’t an immediate fix. You will also need to continue making minimum payments on your loans until the consolidation takes effect.

Can I lose benefits by consolidating?

Parent PLUS loans aren’t exactly full of benefits to begin with, but consolidating does make some loans ineligible for interest rate discounts, principal rebates, or some loan cancellation benefits. It’s unlikely you have these benefits with a Parent PLUS loan, but if your child is interested in consolidating, you should review if he or she would lose any benefits.

What are the steps to get a Parent Plus Loan on ICR?

Step 1: Apply for Federal Direct Consolidation Loan

You can do it electronically or via snail mail.

If you prefer to keep everything digital, you can complete the electronic version of the Federal Direct Consolidation Loan Application and Promissory Note by logging into

Those who would rather handwrite all the information and mail it in can download the Federal Direct Loan Consolidation Application and Promissory Note here.

Step 2: Choose the loans to consolidate and the servicer

Fill out which loan (or loans) you plan to consolidate and your loan servicer.

The loan servicers responsible for Federal Direct Consolidation are:

You can also list any loans you don’t want to consolidate on the form.

IMPORTANT: If you’re planning to do Public Service Loan Forgiveness (PSLF), then you want to work with FedLoan Servicing (PHEAA) as that’s the servicer for PSLF.

Step 3: Pick your repayment plan

Those filling out the application online can select ICR when prompted.

If you’re using the paper form, you’ll need to complete the Income-Driven Repayment Plan Request form that accompanies the application. You may need to contact your servicer to get the paper form.

Step 4: Review the terms & conditions of your consolidation

This step is self-explanatory. Be sure to read all that fine print!

Step 5: Borrower and reference information

If you’re filling out the paper form, this step is at the top of your form.

Those filling it out online will now need to submit personal information including:

  • Name
  • Social Security Number
  • Date of birth
  • Address
  • Phone number
  • Driver’s License State and Number
  • Employer’s name and address
  • Work phone number

The references need to be two people with different U.S. addresses that do not live with you and have known you for at least three years. You’ll provide their names, addresses, phone numbers and describe their relationship to you.

Step 6: Review and sign

Check to make sure all your information is accurate and then sign and submit your forms.

[Have more questions? Check out or]

Tax Implications of ICR

The IRS could tax student loans forgiven after 25 years of repayments. By current IRS regulations, any outstanding balance forgiven can be considered income and therefore taxable. Outstanding balances forgiven under the Public Service Loan Forgiveness program are not consider income and thus aren’t taxable.

You can also refinance Parent PLUS Loans

Those with excellent credit could be eligible for competitive rates by refinancing a Parent PLUS loan with private companies like SoFi or Citizens Bank. This means you will need to repay the loan and it won’t be forgiven after 25 years of payments. But a lower interest rate could also help make your monthly payments more manageable.


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College Students and Recent Grads, Pay Down My Debt

Can You Get Retroactive Credit for Public Service Loan Forgiveness?

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There are a myriad of student loan forgiveness programs, repayment plans and ways to refinance student loan debt. Unfortunately, there is nothing simple about these programs and a few missteps could mean you’ve made yourself ineligible for student loan forgiveness or you never took advantage of a program when you had the chance. So, what happens if you worked in public service for 10 years? Can you still get credit towards Public Service Loan Forgiveness?

The Short Answer

No, you cannot get retroactive credit for Public Service Loan Forgiveness if you worked those jobs prior to 2007. You may be able to on jobs worked since October 1, 2007 and took out the eligible loan after 2007.

The Longer Answer

Public Service Forgiveness Program launched October 1, 2007. Anyone who worked eligible jobs before that date could not retroactively count his or her service towards PSLF. You also can’t get credit if you put in time after 2007, but are unable to get your supervisor from the job to sign off. For each job you worked, you’ll need to file an Employment Certification for Public Service Loan Forgiveness form. You could wait the full decade to fill these forms out, but it would require tracking down supervisors who may have retired from positions or moved on to other jobs or are just impossible to get in touch with. It’s also important to keep in mind, working in public service alone doesn’t make you eligible.

Deciphering Eligibility

Requirements to be Eligible for Public Service Loan Forgiveness

Only Federal loans disbursed after the program went into effect are eligible for Public Service Loan Forgiveness, private loans such as those with Discover or Wells Fargo are not eligible. In addition, you must have certain types of Federal loans. These include:

  • Loans received under the William D. Ford Federal Direct Loan Program. This includes: Federal Direct Stafford/Ford Loans (Direct Subsidized Loans), Federal Direct Unsubsidized Stafford/Ford Loans (Direct Unsubsidized Loans), Federal Direct PLUS Loans (Direct PLUS Loans)—for parents and graduate or professional students, Federal Direct Consolidation Loans (Direct Consolidation Loans).
    • It should be noted that parents who work in public service and receive a Direct PLUS loan could be eligible for this program. But it’s a little complicated. In order to have a remaining balance after 10 years, you’d need to enroll in an income-driven repayment plan. Parents are not eligible for income-based repayment (IBR) nor pay as you earn (PAYE). The only eligible plan would be Income-Contingent Repayment (ICR). In order to be eligible for ICR, the parent would need to have the Direct PLUS loan be turned into a direct consolidation loan. Then the loan eligible for ICR.
  • Other federal loans that have been consolidated into a Direct Consolidation Loan
  • Payments made on Federal Family Education Loans or Federal Perkins Loans do not count towards the 120 required payments

WARNING: Don’t wait too long to do a direct consolidation and enter an income-based repayment program, because consolidation restarts the clock. You’ll only be getting credit towards your 120 payments once you have consolidated the loans and started your income driven repayment plan. Any payments you made prior are not eligible. You can learn more about this in the Payments that Count Towards PSLF section below.

[How to tell if your loans are federal or private]

You must have full-time employment (typically at least 30 hours a week) with a qualifying employer.

Qualifying employers include: government organizations at any level (federal, state, local, or tribal), not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code, and some other not-for-profit organizations will count if they provide certain qualifying public services – you’d need to reach out to your loan servicer for details.

You must make 120 qualifying monthly payments in order to get forgiveness. These payments do not need to be consecutive, but have to have been after October 1, 2007. Qualifying payments cannot be made when you are: in-school status, in the grace period, in deferment, in forbearance or in default. Making a larger payment than required also doesn’t count for two. There is one catch: certain rules do allow AmeriCorps or Peace Corps volunteers to use their Segal Education Award or Peace Corps transition payment to make a single “lump sum” payment that may count for up to 12 qualifying PSLF payments.

[Find more details on]

You must be in a qualifying repayment plan in order to be eligible.

Payments that Count Toward Public Service Loan Forgiveness

  • Pay As You Earn
  • Income Based Repayment
  • Income Contingent Repayment
  • The 10-year standard repayment plan – however, under this plan you actually wouldn’t have any loans left to forgive at the end of ten years when the forgiveness kicks in to cover the remainder of your loans. If you’re repaying on this plan, you should switch to an income-drive repayment plan.

[How to set up income-driven repayment plans]

What if I Have a Graduated Repayment Plan or Extended Repayment Plan? 

The graduated repayment plan starts with low payments that increase every two years. The repayment period can last 10 to 30 years. The extended repayment plan provides fixed or graduated payments that are made for up to 25 years.

Payments made under these plans are not eligible for credit towards PSLF. If you’re currently enrolled in a graduated or extended repayment plan and believe you’d otherwise be eligible for PSLF, you can switch to an income-driven repayment plan in order to make qualifying monthly payments.

What if I Change Jobs During the 10 Years?

Let’s be realistic, odds are not high you’ll stay with the same employer for the decade it will take you to become eligible for PSLF. Each time you change jobs, you can submit the Employment Certification for Public Service Loan Forgiveness form to both prove eligibility and ensure you’re on track.

It’s highly recommended that you submit this form annually or at least each time you change jobs. If you don’t do it when you switch jobs, you will be required to submit this form for each job you held during the ten-year period when you officially submit for forgiveness.

Let’s use an example:

You worked at Happy Helpers (an eligible non-profit) from December of 2011 until August of 2014.

In September of 2014, you started working in the Parks and Recreation department of your local government (an eligible government position).

You didn’t fill out an employment certification form while you worked at Happy Helpers, but you were making payments under the IBR program. As long as you can get your supervisor from Happy Helpers to verify your employment and sign off on the Employment Certification for Public Service Loan Forgiveness form, then you can get retroactive credit.

However, if during your time working at Happy Helpers, you were making payments on a Federal Perkins Loan that wasn’t rolled into a Direct Consolidation Loan, your time in public service won’t help because you weren’t making qualifying payments.

What Happens at Forgiveness Time?

Loan Forgiveness Won’t Just Be Automatic 

No one can guide you through the end of PSLF yet, because not a single person has become eligible. The program launched in 2007, so the first wave of forgiveness won’t happen until 2017.

Currently, the government has stated you will need to submit the PSLF application in order to receive loan forgiveness. You can’t even get a sneak peak at the application though, because it’s still under development.

Just be sure you have all your Employment Certifications filled out. You can also allow the government to keep track of your progress towards forgiveness. Submit your employment certifications to FedLoan Servicing, which is the U.S. Department of Education’s federal loan servicer for the PSLF Program. This should also help prevent any nasty surprise of discovering part, or all, of your services was ineligible.

Will I Get Taxed?

One of the biggest perks of PSLF is that the IRS won’t consider the forgiven debt income. This means the forgiven amount will be tax-free. That’s a big win, especially for people with tens-of-thousands of dollars that will get forgiven.

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College Students and Recent Grads, Reviews

Discover Student Loan Review

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Have you exhausted all your options with Federal Student Aid, and still need extra help covering the costs of college? Applying for a private student loan may be your next step.

Keep in mind private student loans don’t offer many of the benefits Federal student loans do. Interest rates are often higher, and repayment assistance isn’t always available. That’s why it’s recommended you fill out a FAFSA and submit it first – you’ll want to claim any grants and scholarships available to you before turning to private student loans, as grants and scholarships don’t have to be paid back.

Thankfully, Discover’s undergraduate student loan is fairly similar to the Federal Direct PLUS Loan, which means it could be a good option if you need more money to cover tuition.

Details of the Discover Student Loan for Undergraduates

Discover’s undergraduate student loan claims to be a “zero fee loan” as there are no application, origination, or late fees associated with it. On top of that, you can apply to cover 100% of your cost of attendance (the minimum loan amount is $1,000).

Its variable interest rate ranges from 2.99% to 9.12% APR, and its fixed APR ranges from 6.15% to 11.99%. The standard repayment term is 15 years compared to the 10 year standard for Stafford Loans.

You can choose whether to make $25 fixed, monthly payments while you’re enrolled in school, or to defer your payments until 6 months after graduation. Choosing the first option results in less money paid over the life of the loan and lower monthly payments. If you can spare $25 per month while you’re in school, you should strongly consider this option.

Here’s an example of what repayment looks like: if you borrow $10,000 and have a variable 2.99% APR, your monthly payment will be $77.78, and you’ll pay a total of $13,999 over the 15 year repayment period. A variable 9.12% APR gets you a monthly payment of $141.64, and you’ll pay a total of $25,494 over the 15 year repayment period.

Under the same circumstances, but with a 6.15% fixed APR, you’ll pay $107.45 per month, for a total of $19,341 paid over the 15-year repayment period. An 11.99% fixed APR results in monthly payments of $181.03 and a total of $32,584 paid.

[7 Things You Need to Know About Private Student Loans.]

How Does a Discover Student Loan Compare to Federal Student Loans?

Discover includes a great chart on its website outlining the major differences and similarities between its loan, the Federal Direct Stafford Loan, and the Federal Direct PLUS Loan.

Not surprisingly, Discover’s student loan has a higher APR: 6.15% to 11.99% fixed APR, compared with 4.29% for a Stafford Loan, and 6.84% for the PLUS Loan. Its variable APR ranges from 2.99% to 9.12% APR, though variable loans can be riskier as they can increase depending on market volatility. This makes it a bit harder to budget for your future loan payments.

The Stafford and PLUS Loans both have origination fees and the Discover loan does not.

Discover’s student loan is also available to international students with an eligible cosigner, whereas Federal student loans are not.

Discover offers a unique program that rewards students for good grades. You can receive a one-time cash reward of 1% of your total student loan amount when you maintain a 3.0 GPA (or equivalent).

Similar to the Stafford and PLUS Loans, Discover offers borrowers a 0.25% interest rate discount when you enroll in its automatic payment program.

[How to Tell if Your Loans are Federal or Private.]

Eligibility Requirements for Discover’s Student Loan

Discover lists out its eligibility requirements on its website:

  • You need to be enrolled in a 4 or 5-year undergraduate program at least half-time, and be working toward a degree
  • You can be a US citizen, permanent resident, or international student, though international students need a cosigner who is a US citizen or permanent resident
  • You must be at least 16 years old to apply
  • You need to pass a credit check

If you don’t have an extensive credit history, Discover encourages you to apply with an eligible cosigner. This will increase your chances of being approved for a loan with more favorable terms and rates. A cosigner can either nominate themselves to be a cosigner for you, so you can select them as cosigner during the application process, or he or she can apply as a cosigner with your Cosigner Key.

Be aware there’s no cosigner release with a Discover student loan – the cosigner is on the loan for the entire duration.

The Application Process

Discover says its application takes about 15 minutes to fill out online. Before applying, have the following information ready to enter:

  • Your school’s information
  • Social Security Number
  • Loan amount requested
  • Amount of financial aid you’ve already received
  • If applicable, financial information such as salary and rent/mortgage payments
  • Your address (permanent and where you’ll reside once at school)

Discover makes the application process simple. You can select the state your school is in, and a list of schools in that state will populate. Choose your school from the list or search for it.

You’ll then be asked to enter all your personal information and any other details Discover needs.

If any additional documentation is requested, you can upload it online. By submitting your application, a hard inquiry of your credit will be conducted. The same is true if a cosigner applies with you.

During the application process, Discover will contact your school to verify your eligibility and requested loan amount. This means the loan is certified and ensures you don’t borrow more than you need.

Funds will be disbursed according to your school’s financial aid office deadlines.

The Fine Print

There really isn’t any. There are no prepayment penalties, and no origination, late, or application fees associated with the loan. It’s truly a “zero fee” loan.

A word of warning on choosing a variable interest rate, though – while variable rates are lower and look more attractive, keep in mind the rate can increase at any time. That means your loan will become more expensive.

No one can predict where the market will go, so rates may stay low, or they may skyrocket in the future. A fixed interest rate can provide valuable peace of mind, even if you have to pay for it.

Repayment Assistance Options

Discover has multiple options for you in case you experience financial hardship while paying back your loans. Federal student loans come with certain benefits such as deferment and forbearance, so you don’t need to make monthly payments during a period of financial difficulty. Private lenders aren’t required to offer these benefits, but some lenders do. Keep in mind they’re not guaranteed and can be taken away in the future.

While it may seem like paying your student loans off is years away, it helps to know what your options are as they vary among private lenders. You should take this into consideration when shopping around for private student loans.

Discover offers a range of solutions from deferment, to a grace period extension, to forbearance, to reduced payment. Take a look at what each entails and what it takes to qualify here.

[Do you have Federal loans? Here’s How to St up Income-Driven Repayment Programs.]

Who Benefits the Most from a Discover Student Loan?

Overall, students who have applied for Federal aid and have received the maximum amount they’re qualified for, but still need additional assistance to fund their college tuition, will benefit from Discover’s student loan. Its rates are somewhat comparable to Federal loans as long as you or a cosigner have excellent credit, and it offers great repayment assistance options along with a few bonuses that don’t come with Federal loans.

Consider All Options

While Discover has a decent student loan program to offer borrowers, it’s far from the only option out there. You may be able to get better rates and terms with another private lender. It’s a good idea to shop around to see the different loans you’re eligible for. As long as you apply with different lenders within a 45-day window, the credit bureaus will count all inquiries as a single inquiry. You won’t be penalized for it.

Also, remember to compare APRs and not just interest rates – other lenders may charge late, origination, and application fees that need to be factored into the cost of the loan. Check to see what repayment options are available, and any other “bonuses” lenders may be offering.

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Visa Classic Secured Credit Card by Justice FCU Review


Need to repair your credit history and score? Then a secured card is a good place to start. These secured cards are offered to consumers with no credit or poor credit as a tool to build positive history with limited risk for the lender. You’ll put a deposit into a savings account, which then acts as your credit line. If you fail to repay your debts, then the lender will simply keep your deposit.

If you make consistent, on-time payments the card issuer may bump up your credit limit. Or you can eventually apply for a regular credit card and have a better chance of getting approved. The Visa Classic Secured Credit Card by Justice FCU can help you boost your credit history. It requires a low minimum deposit, but it is a little heavy on fine print details.

Basics of the Credit Card Offer

The Justice FCU Visa Classic Secured Card has 16.90% APR and requires a minimum deposit of $110. The card offers cash advances for a fee, worldwide acceptance, travel assistance and emergency card replacement.

You must be a member of the credit union to apply. Justice FCU provides financial services to people affiliated with the Justice Department, Homeland Security and other law enforcement agencies. If you’re a part of that community (or have relatives who are) you can join with a $5 deposit into a Justice FCU share savings account. For a full list of Justice FCU eligibility requirements head over to its membership page.

Don’t worry, if you’re not affiliated with any of the organizations or companies on the list. Anyone can become eligible for membership by joining the National Sheriffs’ Association as an auxiliary or student member for $38. So in this scenario you should expect to pay at least $153 in dues and deposits to open an account.

Fine Print and Fees

You should be aware of a few details in the miscellaneous fees section of the credit card terms especially when it comes to disputing charges.

If you dispute a bill you can be charged $15 per hour for account research if the charges are found to be correct. If you request statement copies that aren’t related to a valid credit card dispute it’ll cost you $1 per page. You may also be held liable for unauthorized charges to the card that occur before you notify the credit union. However your liability won’t exceed $50.

Requested replacement cards cost $10. The late fee is $25 and applies if your payment is over 10 days late. You may be subject to a finance charge if the minimum payment isn’t received within 23 to 26 days of the card closing date. The returned payment fee is $30. The foreign transaction fee is 1%. There are no balance transfer fees or annual fees.

Pros and Cons

This card requires a low minimum deposit, which is a benefit if you don’t want to use up a lot of cash to rebuild your credit. Keep in mind that if you close your account in good standing you’ll get your deposit back. You’re also given a decent grace period before late fees and finance charges kick in. Plus there’s no balance transfer fee or annual fee.

On the flip side, the interest offered is higher than the interest of some other secured card competitors. Of course to rebuild your credit you should avoid interest altogether by paying your card off in full each month. But if you do carry a balance you can find lower interest elsewhere. Lastly, as mentioned this secured card has fine print fees and conditions that you need to consider.


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Alternatives to the Visa Classic Secured Credit Card by Justice FCU

The Visa Secured Card by MidSouth Community FCU and the EMV Savings Secured Visa Platinum Card by State Department FCU are two cards that we’ve given a top transparency score here at MagnifyMoney because of the straightforward terms.

First the Visa Secured Card by MidSouth FCU requires a $200 minimum deposit and offers APR at 8.90%. This card has no annual fee and the foreign transaction fee may be up to 1% depending on the transaction. Membership to the MidSouth FCU is limited to people who work, live, worship or go to school in Middle Georgia and you have to be a member to qualify for the card. If you’re not eligible for this offer the EMV Savings Secured Card is another good option that anyone can apply for.


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The EMV Savings Secured Visa Platinum Card by State Department FCU requires a $250 minimum deposit and offers 6.99% APR. There’s no annual fee, balance transfer fee or foreign transaction fee. Anyone can gain membership to the credit union by joining the American Consumer Council for $15. You may also qualify if you’re an employee (or family member of an employee) who works at one of the affiliated organizations.

1245_card.EMV Secured Visa Platinum Card By State Department FCU

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Who Will Benefit from the Visa Classic Secured by Justice FCU?

If you’re looking for a secured card to build credit with a low minimum deposit and no annual fee this one should be on your shopping list. It is a little heavy on the fine print so you should still take care to understand the ins and outs of the terms before committing. But if you plan to carry a balance, which you shouldn’t, you can save yourself some money with the EMV Savings Secured Card because it has a lower interest rate.

[Check our secured credit card table here.]


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2015 Study Reveals Best And Worst Student Credit Cards

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The CARD Act of 2009 made it much more difficult for credit card companies to target college students. The law created the following restrictions:

  • Credit card companies are restricted in their ability to market on-campus or near-campus. The days of credit card companies handing out free beer mugs and t-shirts have ended.
  • Any college student under the age of 21 would have to prove that he or she is independently able to make payments. If the student has a job that generates income, he or she could apply. But students can no longer receive a credit limit based upon “parental income,” which was common before the law. Students under 21 without a job can still receive a credit card, but they would need to have a cosigner who is older than 21 and can demonstrate an ability to make payments.
  • Pre-approved offers can no longer be sent to college students under 21, unless the student consents to receive such offers.

Student credit cards had become a public relations nightmare for banks and universities. Not only were banks making a lot of money, but many universities were generating significant revenue by signing marketing partnerships with banks. Countless stories of 18-year-old students drowning in high interest credit card debt became common. Two tragic stories of student suicides were highlighted in the film Maxed Out.

Since the law was enacted:

  • American Express and Chase decided to exit the business completely.
  • Marketing agreements between universities and credit card companies have declined 70%
  • Cards issued to students younger than 21 have reduced by 56%

However, student credit cards remain on the market and remain potentially expensive. Some of the largest banks and credit card issuers in the country continue to market and issue credit cards to students (including Bank of America, Capital One, Citibank, Discover and Wells Fargo).

In addition to the the largest banks, many smaller banks, community banks and credit unions offer student credit cards. MagnifyMoney reviewed 163 credit cards targeting college students and found that:

  • The average APR ranges from 12.12% to 21.64%. Incoming freshman with no credit history are much more likely to have interest rates closer to the 21.64%
  • The average cash advance APR ranges from 21.42% to 22.54%.

In short, credit cards remain incredibly expensive borrowing tools for college students.  Note: MagnifyMoney has no financial agreement to market college credit cards. The data in this study was obtained by reviewing the terms and conditions listed on bank websites. Where information is not available, a member of MagnifyMoney’s team would call the bank directly.

In this review, we will explain:

  • The reasons a college student should consider a credit card while still in college
  • A review of the products offered by the major banks
  • The biggest credit card traps to avoid
  • Alternatives to consider

At MagnifyMoney, we remain very cautious about credit cards targeting students. Credit card debt remains incredibly expensive. College students have limited earnings potential (while still in college), and the introductory offers and rewards scheme exist to encourage the accumulation of debt.

Reasons College Students Should Consider a Credit Card

There are only two reasons a college student should consider a credit card:

  • To get an early start building a credit score, and
  • To have a convenient method of payment for online purchases and traveling abroad (for example, if a student participates in an overseas study program)

Credit cards should not be used for the accumulation of debt.

Credit Score

Having a good credit score when graduating from college can be enormously helpful. Graduates often have to rent apartments, purchase automobiles, buy auto insurance and apply for jobs. A good credit score can help with apartment rentals, auto loans and even auto insurance premiums. And a good credit report can help with job applications.

A credit card in college can help students get a head start on building credit, which can help a student start to save money immediately upon graduation. To build a credit score, a college student should:

  1. Make at least one purchase every month. Ideally, the total value of the purchases should not be more than 20% of the available credit limit. Credit limits on student credit cards are often small. If the limit is $500, the student should never spend more than $100 per month on the card.
  2. Make the payment on time and in full every month. Paying on time means that expensive late fees are avoided and a good credit score is built. Paying in full means that the borrower will never be hit with interest charges.

If a student repeats recommendations #1 and #2 above during four years of college, he or she is likely to have a credit score above 700 at the time of graduation.

Online Purchases and Travel

To receive the most protection, consumers should generally use credit cards instead of debit cards. When students make purchases online or travel overseas, a credit card can be helpful.

When selecting a card, students should focus on student cards that offer no foreign transaction fees, so that any purchase made while outside of the country does not accrue costly transaction fees.

Product Reviews

MagnifyMoney believes that the primary purpose for obtaining a college credit card is to build a credit score. A card can also be useful for shopping online or traveling abroad. As a rule, the student should only charge an amount that he or she can afford to pay back in full. We believe these are the primary criteria a student should use when selecting a card:

  • No annual fee
  • No foreign transaction fee
  • Real FICO provided

There are two cards from leading issuers that meet all 3 requirements:

  • Capital One Journey Student Credit Card
  • Discover it Chrome for Students (one warning: international acceptance, particularly in Europe, is limited when compared to the Capital One Visa or MasterCard network)

Below is a summary:

College Credit Cards

Biggest Traps To Avoid

Credit cards are filled with traps. Here are the biggest traps to avoid:

  • Credit limits are usually a multiple of an individual’s income, and the credit limit will grow as on-time payment behavior continues. Credit card companies want to ensure that you can afford to make the minimum payment, which means you will be in debt for nearly 30 years. Given the high credit limits, it is easy to spend more than you should.
  • When people pay with plastic, they tend to spend more than if they use cash. Countless studies have demonstrated this finding over the years, and you should be honest with yourself about your own level of self-control.
  • Spending habits start early. If you start buying things you can’t afford while in college, and make only the minimum due, you will probably continue that behavior after college.
  • The interest rates on student cards are high. Although banks have lowered the low end of the interest rate range, most freshman in college will not qualify for that rate. Expect to pay close to 20%.
  • Late fees are incredibly high, typically between $35 and $38.
  • If you do not have the self-discipline to handle a credit card responsibly in college, you can end up hurting yourself after college. Student who max out their student credit cards and pay late will end up with a bad score. When graduating from college, a bad score is worse than no credit score.
  • College students should generally not worry about credit card rewards. Rewards typically offer a return of much lower than 1% of spend. Student credit cards have low credit limits. And if you are managing your utilization properly, you will be putting very few transactions on the credit card. As a result, the rewards value will be small. If you spend $100 per month on the Capital One Journey credit card, you would earn $15 of cash back in 12 months. It is a nice bonus, but certainly not life-changing.
  • 0% introductory bonuses and point sign-on bonuses for college credit cards should not be celebrated. These introductory offers exist to tempt students into spending more money than they should.

Alternatives To Consider

If you do not trust yourself with a credit card while in college, do not worry. There will be plenty of time later in life to build a credit score. You will be fine.

If you actually have to borrow money, beyond your student loan debt, you should consider visiting a local credit union. For example, Apple Federal Credit Union (restricted membership) offers a flat 9.99% interest rate to college students. Visit your local credit union (many universities have one), and see if there are opportunities to borrow at a lower rate.

However, even if there are options to borrow at lower rates, you overwhelming goal needs to be the avoidance of debt wherever and whenever possible.

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When You Shouldn’t Aggressively Pay Off Your Student Loans

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If you’ve been reading posts about student loan debt pay off, it’s likely you’ve seen two distinct camps on the issue: prioritize your student loan debt and pay it off as soon as possible, and there’s no rush in paying off your student loans – invest instead.

There’s article after article published on how certain graduates have paid off their student loans in record time, possibly making you feel like you’re doing something wrong if getting debt free is not your sole focus.

Who’s right? It can be hard to determine what you should do when people are so divided over the issue. The truth is, it depends on your individual circumstance.

I’ve chosen to prioritize my student loans because aside from retirement, I have nothing else to save for, and no other debt. My emergency fund (and then some) is covered, and I’m tired of my student loans being the only debt I have to pay each month. The amount of interest they accrue is a pretty big motivator, too. I’m happy with the amount I have going toward retirement, and the extra amount I can pay toward my student loans.

However, not everyone should (or can) follow this route. There are a number of factors worth considering before you decide to aggressively pay off your student loans. Go through each of these and see where you stand so you can properly evaluate your situation.

What Are Your Interest Rates?

If the interest rates on your student loans are low (around 2%-4%), some would say you’re better off investing the extra money to see a higher return. In theory, this is true, but you have to be 100% committed to actually investing your money to realize those returns.

Being younger means time is on your side as far as compound interest goes. The sooner you start saving for retirement, the larger your balance will be when the time comes to say goodbye to the working world. You shouldn’t hold off on this, especially if you’re enrolled in a 401(k) program at your job that offers matching contributions. You should seriously consider prioritizing this over paying extra on your student loan debt if that’s the case.

If your balances are low and you have lower interest rates, it might make you happier to save for things more important to you, such as a wedding, starting a family, or a home. In this case, interest isn’t accruing as badly. If you can live with that and can’t wait to get started on your savings goals, then prioritize those instead.

One big thing you need to consider is any other debt you have. Credit card debt tends to have enormously high interest rates – around 15%-20%. That’s clearly much higher than student loan debts. If your credit cards are racking up too much in interest each month, then you should absolutely focus on paying them off first.

[The Fastest Way to Pay Off $10,000 in Credit Card Debt.]

The best mathematical way to approach debt pay off is to target the debt with the highest interest rate first, as this is likely your most expensive debt. Choosing to pay off your debt this way is called the “avalanche method.” You put all of your extra money toward paying off that one debt, and once it’s done, you move on to paying off your next highest interest rate debt. Rinse and repeat.

Are You Anticipating Large Expenses Soon?

While debt isn’t any fun to carry, sometimes student loans have to take a backseat to the other priorities we have in life.

Saving for a wedding, home, or family was mentioned briefly before. Those tend to be large expenses, and having a savings cushion is essential in each situation. You probably don’t want to start married life or parenthood off being in a boatload of debt, and having to pay PMI on your mortgage because you didn’t put a certain amount down isn’t great, either.

Perhaps your savings goals are a little less overwhelming. Maybe you want to save for a yearlong trip around the world, or for a newer car. The more you can save, the better off you’ll always be.

Unfortunately, you might have a limited amount of money to work with. Saving and paying extra on your student loans might not be possible. You need to be honest with yourself about your priorities so you can figure out which should come first: saving, or paying off your student loans.

There’s no right or wrong answer here. If starting a family, buying a home, or traveling is what makes you happy, and you find yourself wishing you were saving up for these things now, then that’s a sign you should focus your efforts there. You don’t want to end up regretting not taking the trip of a lifetime or starting a family earlier.

Do You Have Other Debt That’s Flexible?

Federal student loans come with many benefits such as deferment, forbearance, forgiveness (touched upon below), and income-based repayment plans. Some private student loan lenders offer these benefits as well. At the very least, there’s always the option to refinance your student loans to make them more affordable.

[How to Set Up Income Based Repayment Plans.]

You won’t readily find this type of flexibility with most types of loans or credit card debt. That means if something else comes up in the future, you can adjust your student loan payments accordingly to lessen the financial difficulty you’re experiencing. This is yet another reason to focus on paying off other debt before your student loans.

Do You Have an Emergency Fund?

The first thing I did when I got a full time job after graduating college was to save up for a rainy day. I learned the importance of having an emergency fund the hard way after watching my parents struggle to afford repairs on their home. They ended up charging everything, which perpetuated a vicious cycle of debt.

An emergency fund is your first line of defense should anything go wrong. If you have credit card debt, I’d argue it’s even more important to have one in place. Think about it – if your car broke down, your pet needed surgery, or you needed to fly back home for a family matter, how would you afford it?

Most people would swipe their card without a second thought, but that only gets you into (or further into) debt. It’s better for your sanity and your bank account if you have that emergency fund to use.

As a recent graduate, you probably don’t need much – $500 to $1,000 is a good place to start. For those who value peace of mind (and possibly have less student loan debt), go for 3 to 6 months of your living expenses.

Are Your Student Loans Eligible For Forgiveness?

We spoke about the other benefits of federal student loans, but if you qualify for loan forgiveness under one of the many programs out there, paying off your student loans aggressively isn’t worth it.

However, you should be absolutely certain you can get your loans forgiven before you form a plan. There are several stringent requirements that need to be met to qualify.

Note that we’re not talking about the loan forgiveness that can occur if you’re on an income-based, income-contingent, or pay as you earn repayment plan after 20 or 25 years. If you’re looking to pay off your student loans aggressively, you likely don’t need the aid these plans provide. In addition, this type of forgiveness shouldn’t be relied upon and the amount forgiven is taxable.

[How to Get Student Loan Forgiveness.]

Always Make Your Payments

With all that said, it’s critical to note you should still make your minimum monthly payment – on time, and every month. While you may not be paying down your student loans aggressively, you should stay on track with them. Treat your student loans like any other bill you have. The consequences of paying late or defaulting should be avoided at all costs.

Also, don’t be afraid to change your plans. Your circumstances may change in a few years, causing your priorities to change. If you’ve saved up for an emergency, any purchases that were important to you, and have nothing left on your plate but your student loan debt, by all means, focus on paying them off!

What Should You Do?

Ultimately, only you know what’s best for your financial situation. If you don’t have an emergency fund, save up for one. If you have high interest debt, pay it off before your student loans. If you have low interest rates, or a great 401(k) plan, take advantage of compound interest and invest. If you have other financial goals that are more important, then save.

Take all of these factors into consideration, and you should have a better idea of what to do with any surplus money you have left at the end of the month. Whatever you do, paying extra on your student loans shouldn’t come at the cost of your overall financial health. Keep the big picture in mind.


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8 Steps for Possibly Discharging Your Student Loans Through Bankruptcy

Students throwing graduation hats

Student loans are the one type of debt you can never discharge through bankruptcy. Or are they?

For years that’s been the case, largely because of a court ruling from 1987 that set an almost impossible standard for student loan borrowers to meet. But the student loan landscape has changed dramatically since then, and in recent years there have been some signs that borrowers in tough spots may in fact be able to find some relief.

If you’re struggling under the weight of your student loans, read on. In this post you will learn:

  • What the current (and strict) criteria are for having student loans discharged through bankruptcy.
  • Commonalities from recent cases where individuals were successful at having their student loans discharged.
  • A step-by-step process for getting on track with your student loans and improving your chances at discharge.

The Current Standard

Individuals hoping to have their student loans discharged through bankruptcy typically have to show “undue hardship” by passing the three-part Brunner test. This test was born from a court ruling in 1987 and it requires the individual to:

  1. Show that he or she has made a good faith effort to repay the loans.
  2. Show that he or she cannot maintain a reasonable minimum standard of living while paying back the loans.
  3. Show that this condition is expected to last for most of the repayment period.

It’s that third criteria in particular that has made student loans so difficult to discharge. After all, how can you convincingly demonstrate that your prospects aren’t likely to improve, especially when student loan repayment periods can extend for as many as 30 years?

It’s proven challenging, but a few recent rulings can give borrowers hope and may even provide a road map for at least opening up the possibility of discharging your student loans through bankruptcy.

Two Commonalities Between Successful Student Loan Discharges

Looking at a few high-profile stories of borrowers who successfully discharged their student loans, there appear to be two big commonalities that may show the path forward for others:

Time: In two cases of successful discharges from 2013, the student loans were 10 and 15 years old. Clearly these were not recent grads at the beginning of their repayment journey.

Significant current hardship: One woman had been unemployed for almost a decade and was caring for her elderly mother. Another woman was 64, on Social Security, working multiple jobs, and cited mental and physical ailments.

In other words, they seemed to be struggling with some of the same factors you might consider when filing bankruptcy for any reason. Which means that if you’re struggling with your student loans and your financial situation in general, it may in fact be possible to have them discharged through bankruptcy as a last resort.

With that in mind, here are some steps you could take to put you in the best situation to either repay your student loans or to successfully have them discharged so you can hit the reset button.

Step 1: Get Organized

Get a complete list of all your debt, both student loan and otherwise, in one place so that you know exactly what you’re dealing with. The most important information you need to know for each type of loan is:

  • The amount you owe
  • The interest rate
  • The minimum payment

For student loans specifically, you will also want to know the type of loan and when it was issued, as that information may impact your repayment options.

You can collect your student loan information from the national student loan data system, and information on your other debts from

Step 2: Pay the Minimums on All Debts

This one is for both you and the courts.

For you, this will keep your credit history in good shape and keep your debt from spiraling out of control.

For the courts, this is one step towards showing a good faith effort at repayment.

Step 3: Look into Income-Driven Repayment Plans

Just like the previous step, this will both help you immediately and help if you eventually move to bankruptcy.

In the short-term, income-driven repayment plans may help to lessen the burden of your student loans by decreasing your monthly payment. They can even provide a path to eventual discharge without bankruptcy.

And if you do end up in traditional bankruptcy, this will serve as more evidence that you have made reasonable efforts to repay.

Step 4: Track Your Expenses

Tools like and You Need a Budget will help you stay on top of where your money is going now so that you can make more informed decisions about how you want to use it going forward.

Many of my clients, when they sign up for a tool like this for the first time, are shocked to find out how much they’re spending in certain categories and can quickly find some big ways to cut down on their monthly expenses. If you can find one or two of those big wins, you may find that your loans become a little easier to handle.

Step 5: Create a Repayment Plan

Creating a repayment plan for your student loans will not only give you a better shot at repaying them in full, but will give you another thing to point to if the courts want to see that you’ve made a strong effort to repay.

Hopefully you’re able to enroll in one of the income-driven repayment plans mentioned above, but if you have any extra money available you should consider how you want to prioritize it. That is, which loans should you put your extra money towards first? A thoughtful strategy could save you a lot of money in the long-term.

Don’t forget to keep other financial goals in mind here. For example, taking advantage of a 401(k) employer match or setting up a starter emergency fund could be better uses of your extra money, depending on your situation.

Step 6: Find Ways to Free up Cash

There may be some relatively easy ways to free up cash that could either help with your regular living expenses or help you pay down your loans even faster.

Things like switching to a lower cost cell phone provider, cutting cable, or even bringing lunch to work are relatively small changes that could reduce a significant amount of financial burden.

Step 7: Find Ways to Earn More Money

It doesn’t have to be all about cutting costs. Could you negotiate a raise at your job? Could you start a side hustle? Even a small amount of extra income could give you a lot more breathing room.

Step 8: Consider Bankruptcy

If you’ve been doing all of the above for a number of years and your student loan debt still feels like too much to overcome, it may be worth considering bankruptcy.

Keep in mind that there are some real, negative consequences to bankruptcy, so it’s not a cure-all. And it’s likely still a long shot that you could get your student loans discharged.

But for many it can be a huge relief to hit the reset button on their financial situation, and as recent court cases have shown it is possible to have your student loans discharged. If you’ve been diligently taking the steps above, you’ll have a strong history of attempting to pay them back that the courts may look favorably upon and it may be worth giving it a shot.


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College Students and Recent Grads

Student Loan Disbursement 101

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If you have student loans, then there are certain terms you need to know in order to understand what you’ve gotten yourself into. One important term to know is “student loan disbursement”.  This refers to how you’ll actually receive the money you’ve borrowed – and that’s pretty important!

What is student loan disbursement?

Student loan disbursement is the pay out of funds (loan proceeds) to the borrower (student) by the school. Your school disburses both Federal student loans and private student loans alike (that is to say, whatever sources you borrow money from will be disbursed by your school). Students typically receive their federal student loan in two or more disbursements.

Generally, the school will disburse your loan by crediting your student account. This means that your school will use your student loans to pay tuition and fees. Any remaining balance will be credited directly to you (by check, direct deposit, etc). Contact your school to determine the exact method of disbursement.

How will you know about your disbursement?

Your school must notify you in writing of your student loan disbursement. The notice will include the amount of your loans and when and how you should expect to receive them. This notice will be sent before the disbursement is made. Your loan servicer will also notify you in writing of the disbursement.

How many days until you get your first disbursement?

Generally, you should receive your loans at least 10 days before classes start. However, if you’re a first-year undergraduate student and a first-time borrower, you may have to wait 30 days after the first day of your enrollment period for your first disbursement. Contact your school to determine whether this rule applies there and when you should expect to receive your loan disbursements.

How often are loans disbursed?

Your school will pay out your loan money in at least two payments (aka disbursements) that will cover a full academic school year. Usually, your school will pay out your loan disbursement once per term (this could be on a semester or quarterly basis, for example). If your school doesn’t run on semesters or quarters, contact your school to find out when it makes student loan disbursements (usually, it will be at least twice per school year).

What’s the difference between when federal loans and private loans are disbursed?

You will need to contact your private student loan lender and ask about your disbursement schedule. The private loan lender determines your private loan disbursements, which should be in the terms of your loan agreement.

What needs to happen before loans are disbursed?

If you’re a first-time borrower of a Direct Subsidized Loan or a Direct Unsubsidized Loan, you must complete entrance counseling before you receive your first loan disbursement.

Similarly, if you are a graduate or professional student taking out a Direct PLUS Loan for the first time, you must complete entrance counseling before receiving your first disbursement.

Can you cancel a student loan after disbursement? 

Yes, you can cancel your federal student loan after it’s been disbursed, but only within 120 days of the disbursement. No interest or fees will be charged if you cancel the loan within 120 days of disbursement. If you attempt to cancel your loans more than 120 days after disbursement, your loans will be treated as having been disbursed, fees and interest will apply, and you will have to repay your loans based on the terms (you can make a repayment with your full loan disbursement, but your loan will not be cancelled – it will be repaid).

Each private student loan lender will have its own policy as to whether you can cancel your loan prior to or after disbursement. For specific information regarding canceling your private student loans, contact your lender.

The Takeaway

Your student loans may be disbursed on a different schedule than someone else’s. It’s important for you to read any student loan correspondence you receive (and keep it in a safe place), so you know exactly what to expect. When in doubt, you should contact your school and student loan servicer and ask questions. When your school pays out (disburses) your loan money to you, it’s important that you understand the financial implications. The more you learn now, the more prepared you’ll be when it’s time to repay your loans.


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Best Bank Accounts for College Students

Best Bank Accounts for College Students

For most students, the college experience is like dipping one’s toes into the “real world”. Yes, a student may be living away from home but their parents are probably still helping financially. Before anyone blushes, it’s okay. According to a University of Michigan study, more than 60% of adults between the ages of 19 to 22 still receive financial support from their parents. They receive, on average, $7,500 per year. This includes costs like college tuition, rent, and transportation. This makes it important that parents find an economical, fee-free way to send money to their children.

But remember, college is typically a transition period in which child should begin having more control over their financial lives, which means finding the best checking and savings accounts. Our round up of bank accounts for college students below offer options for parents to send children money without fees, stellar overdraft protection and even foreign ATM reimbursements.

For Parents Sending Money to Students

Bluebird by American Express

You may have seen these blue cards at Walmart checkouts. They’re quite popular. The Bluebird card serves as a prepaid debit card of sorts. It’s free to set it up online. It costs $5 for an in-store Set Up Kit to begin using right away.

It doesn’t cost anything to send or receive money. Parents can load the card in a number of ways. The fastest way is to send money to the card via an electronic bank transfer (yes, there is an app). Simply connect a checking or savings account to the card and begin transferring funds. It’s just like transferring funds from one bank account to another. Funds can also be added at a Walmart checkout register via cash or debit. Finally, parents can also load the card even by sending in a paper check.

A cardholder can request money for free. They can simply send a request for ‘new shoes’ and a parent can simply transfer ‘x’ amount of dollars to cover the cost. It’s pretty simple.

Another unique aspect of this card is you can add Walmart Buck$. These are funds that can only be used at Walmart. The funds cannot be redeemed as cash, cannot be withdrawn at ATMs and cannot be transferred to a bank account. This may stop the hold holder from using the money irresponsibly.

Fees and Fine Print

  • No activation fee
  • No monthly fee
  • No annual fee
  • No overdraft fee
  • No ATM fees when in-network. Out of network ATM transactions are $2.50 each plus any surcharges from the bank that owns the ATM. $2.50 is a pretty high fee.


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Best Bank for Overdraft Protection 

Ally Bank

This is our pick because Ally Bank offers a unique overdraft protection plan. Simply link an Ally savings account to an Ally Checking account and it’s protected from overdrafts. However, if the savings account balance isn’t sufficient, an overdraft fee of $25 will be charged. The overdraft fee $25 and is charged a maximum of once per day. But that is still low compared with most banks, with the Big 4 Banks all charging over $30 per incident and often four or five incidents per day.

Ally also provides $10 worth of ATM fee reimbursements per monthly statement cycle, which enables you to take out money at out of network ATMs and still get refunded. But what about other fees?

Fees and Fine Print

  • No monthly maintenance fees
  • Free standard checks
  • Free cashier’s checks
  • No fee for having a zero balance
  • No incoming wire fees (domestic or international)
  • Free Allpoint® ATM usage (43,000+ in the US) plus $10 worth of ATM fee reimbursements each month.


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Best Bank Account for Free ATM Reimbursements

Charles Schwab High Yield Investor Checking Account

Thinking about studying abroad? The Charles Schwab High Yield Investor Checking account reimburses all ATM fees, even internationally. This account is ideal for traveling students. Even for those not studying abroad, this may be a good option for any travel overseas.

Charles Schwab High Yield Investor Checking Fees

  • No ATM fees
  • No monthly service fee
  • No overdraft protection fee. Although owners must also have a Charles Schwab brokerage account or savings account to link for overdraft protection. Should funds in the overdraft account be insufficient, a $25 fee will be charged for up to 4 incidents daily. This overdraft protection is pretty abysmal when compared with Ally.


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Brick-and-Mortar Options

If the parent is more comfortable with having physical locations, there are still brick-and-mortar banks, which offer good benefits and low fees. Before committing to a big bank, check the local credit unions. They often offer a better value. Compare the credit unions with the other banks listed in this post. Ask about overdraft protection, overdraft fees, minimum account balance, and monthly maintenance fees. The good thing about a local credit union is the customer service. Don’t be too shy to ask about fees.

The downside to local brick-and-mortar options is the parent may be in one location and the child in another, making it difficult for one party to withdraw or deposit money. However, most credit unions today have good online banking systems. They may not have mobile deposits or an intuitive app but they have what counts. If ease of use is still a concern, look for a big bank with many locations. Fees will likely be higher and interest lower, but convenience is very important for a college student. After all, they need to spend their time studying.

Don’t Be Afraid to Break Your Routine

Technology has really changed the way banking works today and it’s provided an option for fewer fees and easier transactions. Just because you’ve always banked at a certain establishment, doesn’t mean you should stay there – especially if you’re trying to make it cost-efficient and simple to send money to your college-aged children.


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College Students and Recent Grads, Life Events

The Best Ways to Pay Back Student Loans While in School

Students throwing graduation hats

You may be anxious about a variety of things when starting college; from new classes to new faces to living away from their parents for the first time, your life is about to be drastically turned upside-down. For those attending college for the first time this fall, you’ve probably already delved into the payment options for offsetting the costs of college tuition. Whether you’ve taken out student loans to foot the bill or you’ve acquired enough financial aid to get you through the beginning years, there’s a wide gamut of financial burdens that you taken on to afford a college education.

While many students choose to forego the stresses of paying their way through college by simply relying on loans and trying to forget they’ll one day come due, others are opting for a more direct solution: structuring their student loan repayment schedule to coincide with their attendance. While this strategy requires a strong work ethic, motivated repayment mindset, and ambitious financial goals, the result can pay off dramatically. You can actually graduate college with little to no debt accrued. So how does one do it?!

1. Plan to take out as few loans as possible

While it may be too late for the start of this semester, the best way to set yourself up for structured repayment success while attending college is to create a financial plan that has the smallest amount of loan debt to begin with. Apply for scholarships, keep your grades high, participate in extracurricular activities, and continue to strive for financial assistance even during your tenure. In this manner, you’re likely to get some sort of assistance along the way, which can set your starting point of debt accumulation at a lower number – and one that’s likely easier to overcome.

2. Apply for employment while enrolled

Just because you’re a full-time student doesn’t mean you can’t be employed. Many college students looking to chip away at their debt will get (or retain) a job during their college tenure. This allows them to continue to keep their debts low and chip away at existing loans in the process. Be sure to explore options for employment on campus including ones that aren’t tied to work-study like being a resident advisor.

3. Structure repayment terms in conjunction with ongoing costs and projected income

For college students, there are many more costs than just tuition alone. These can include housing, textbooks, and any other myriad of daily living supplies. Rather than pulling out loans to cover all of these costs, calculate how much you plan to make at a part-time job during your college stay, and offset the balance of loans you’ll need to request then based on those costs and your planned income.

Additionally, instead of waiting until you’ve graduated to start paying off loans, you may find that your part-time or full-time job allows for you to pay more towards your costs than you initially expected! In this case, you can opt to start repaying some of your loans while you’re still attending college. For many, they simply need a loan to pay for the bulk cost of tuition but can structure their income to pay off that loan during that very same school year. It’s a matter of paying a huge chunk of money at once in the beginning for the tuition versus accumulating a little interest and paying over the course of the year itself.

4. Make interest payments while in school

So it might be a bit ambitious to expect one to pay off their entire loan balance while attending school, especially if you’ve chosen a school with a high cost of tuition. Unless your student loan is subsidized, it starts accruing interest right away. Remember, student loans are borrowed money that you have to repay with interest and – more importantly – that interest can capitalize, a fancy way of saying be added to your total balance. Paying off this interest by contributing even a few dollars a month towards your loan can really save you money down the road.

[Learn How Interest Impacts Your Student Loans.]

5. As much as this may sting, take a look at what your repayment schedule may look like once you graduate

It’s easy to shove your student loans under the rug to be mentally and emotionally dealt with once you’ve graduated. You want to live a carefree life while in college. But do yourself a favor and use a repayment calculator now to see what your monthly repayment options will look like with your current and projected loan debts along with the different options that may be available. Sure, this may be a heavy hit, but it could also be the motivation you need to restructure your life and pay a little more during your college stay.

Making a Dent, Even a Small One, Is Worth Doing

Structure your student loan repayment while in school in part or in whole by considering your costs, potential income while attending, and the different repayment options available. You don’t have to pay off your entire loan to make a lot of headway towards full repayment in a more timely fashion! Even a little extra allotment towards accrued interest can really pack a punch if done correctly.



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College Students and Recent Grads, Reviews, Student Loan ReFi

Federal Direct Consolidation Loan Review

mortar board cash

Does your student loan debt only consist of federal student loans? Do you make payments to so many loan servicers, you can’t keep track of how much is due and when? You might want to look into how the Federal Direct Consolidation Loan works, or if it’s even worth consolidating your student loans. It can help in some cases, and harm in others. Let’s take a look at what you should know before consolidating with the government. 

When Does It Make Sense to Consolidate?

With so many refinance options available through private lenders, such as Earnest* and SoFi*, when does it make sense to consolidate through the government?

The built-in benefits you receive from federal student loans will be the biggest factors in making a decision. For example, you have access to deferring your payments, entering into forbearance, income-based repayment plans, and more.

With private lenders, those benefits may be available, but aren’t guaranteed. You’re taking a risk when you refinance your student loans using that avenue as benefits can change at the discretion of the lender.

Additionally, the repayment term on a Federal Direct Consolidation Loan is up to 30 years – there are no private lenders offering repayment terms that long. 25 years is the maximum.

It’s a double-edged sword, as a longer repayment term means a lower monthly payment, but it also means the cost of the loan increases. You’ll end up paying more money back over 30 years than you would on a 20-year term. For that reason, it’s best to go into it with a plan to ramp up payments if you think you’ll be in a better financial situation later on.

This goes for consolidating or refinancing, but if you owe multiple lenders and are having a hard time keeping track of all your payments and due dates, consolidating can make your repayment process easier. Once you consolidate, you’ll only have to make one payment per month to one lender. Essentially, refinancing or consolidating means your old loans are paid off, and a new one is formed.

Just in case it’s not clear – consolidating and refinancing pay off your old loans, and you get a brand new loan. That means you can’t undo the consolidation or refinance.

Overall, consolidating with the Federal Direct Consolidation Loan, rather than a private lender, makes the most sense for those struggling to make their minimum monthly payments. Should they ever need assistance, the guaranteed benefits offered through the government will help give them peace of mind.

Pros and Cons of the Federal Direct Consolidation Loan

No loan is without its downsides, and consolidating does have a few that those in special circumstances should take into consideration.

Pro: There’s no application fee or cost associated with the loan. Some private lenders charge an origination fee, so be on the lookout.

Con: You won’t be saving a lot of money by consolidating as your interest rate won’t change much. The fixed rate offered is based on the weighted average of all the loans you’re consolidating, which is then rounded up to the nearest 1/8th of 1 percent.

Pro: If your loans are in default, you may be eligible to consolidate them. This will actually bring your loan out of default.

Con: Different types of federal student loans have different types of benefits, adding a bit of uncertainty to the mix. Ultimately, you need to know whether or not these benefits apply to you. For example, if you have a Perkins loan, it can be forgiven when you join the military, enter the Peace Corps, or join a law enforcement agency. If you’re not planning on taking this route, then the loss of this benefit doesn’t affect you.

Pro: Unlike with private lenders, you will not have to undergo a credit inquiry if you consolidate through this program.

Con: If you choose to consolidate during your grace period, you will lose it and repayment will begin immediately after the consolidation goes through.

Pro: Because consolidating your loans effectively gives you a new loan, everything resets, including deferment and forbearance periods. Additionally, your loan term can be “extended” as it’s reset. If you’re on year 3 of a 10-year repayment plan, you’ll start at year 1 out of 10 years, giving you a lower monthly payment without actually extending your loan term.

The Application Process and Eligibility

First, you need to make sure your loan is eligible for the direct consolidation program. Most federal student loans are, but it’s worth checking:

  • Direct subsidized and unsubsidized loans
  • Subsidized and unsubsidized Federal Stafford Loans
  • Direct PLUS loans
  • PLUS loans from the Federal Family Education Loan Program
  • Supplemental loans for students
  • Federal Perkins and Nursing loans
  • Health Education Assistance Loans
  • Select existing consolidation loans

If you’ve already left school, fell below part-time employment, or graduated, you can consolidate your loans.

There’s no application fee if you’d like to consolidate your federal student loans, and you can do so online through There are only five steps to the application and it shouldn’t take you very long to complete. The downside is the entire process can take sixty to ninety days, so you’ll have to continue making your regular scheduled monthly payments in the meantime.

If you have any questions about the process as you’re going through it, contact the Loan Consolidation Information Call Center by calling 800-557-7392.

Repayment Programs Available

When consolidating your student loans, you might think you need to use income-based repayment plans, but that’s not always true. You can still keep the standard 10 year repayment plan when consolidating, depending on the amount you’re consolidating, which is great if you don’t want to extend your repayment plan and pay more interest.

You’ll also have access to the graduated repayment plan, the extended repayment plan, the Pay As You Earn plan, and the Income-Contingent and Income-Based repayment plans.

[Learn how to set up these programs here.]

The graduated repayment plan is a good option for those just getting started in their careers. If you’re not making much now, but expect to rise the ranks and have a higher salary in a few years, the graduated repayment plan will work well for you. You have 10 to 30 years to repay your loans under this plan.

The extended repayment plan has two options with a 25-year term. You can make fixed monthly payments for the entire length of your loan, or you can have a graduated repayment option, where your payments rise periodically.

The pay as you earn repayment plan is only on a 20-year term and typically has the lowest repayment amount out of all the income-based repayment plans. You must meet certain eligibility requirements to qualify, though. When applying for consolidation, you’ll have to choose “income-based repayment plan,” and then you’ll need to contact the loan servicer you end up with to see if you’re eligible.

The income-contingent repayment plan is what it sounds like – your payment is based on your income, amount of student loan debt, and family size. You have 25 years to repay it.

The income-based repayment plan is similar to the income-contingent plan, except you must show you’re experiencing partial financial hardship at the time of consolidating.

For more information, and for examples on what your repayment might look like, check out the FAQ section on Direct Consolidation Loans.

Consolidating Can Help You Get Out of Default

Did you know that consolidating with the government has one big bonus? If your loans are in default, then consolidating can get them out. However, there are a few things to be aware of.

You can’t just apply for consolidation. Typically, you need to make arrangements with the Department of Education first. You should be able to make three consecutive and timely payments on your loans before applying to consolidate. This shows you’re serious about getting out of default, and can afford to make some sort of payment.

You’ll be making payments under either the income-based, the pay as you earn, or the income-contingent repayment plan.

Should You Consolidate?

Overall, if you’re not having any trouble making your payments, and you’re managing them well, consolidating may not be worth it. This is especially true for those who are already making decent headway on their loans. If you’re close to paying off your loans, there’s not much to gain from consolidating.

You should think about consolidating if you want simpler monthly payments or lower payments. Remember that consolidating through the government over a private lender allows you to keep your benefits so you don’t need to worry as much about financial hardship should it happen.

Lastly, when applying to consolidate, keep the different servicers you can choose from in mind. Go with a servicer that has a good reputation that offers interest rate discounts. Some offer 0.25% discounts for autopayment, for example. Take the discounts and rebates where you can to keep costs low.

*We’ll receive a referral fee if you click on offers with this symbol. This does not impact our rankings or recommendations. You can learn more about how our site is financed here.


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College Students and Recent Grads, Life Events

Finding Success Without Going to College

Senior Couple Talking To Financial Advisor At Home

Millennials were born between 1980 and 2000, and grew up to be the most educated generation in history. No other group of adults holds as many postsecondary degrees as Generation Y.

It makes sense why this demographic would focus on higher education. College and advanced degrees have historically led to higher earnings after graduation. And many millennials who faced trying to find a job post-2008 and continuing on to more advanced degrees chose to just stay in school in an attempt to ride out the recession.

While millennials may be more highly educated than any other group of adults, they’re also dealing with the consequences of acquiring so many degrees. Collectively, America’s student loan debt burden is in the trillions and many young adults struggle to find financial stability after school. Student loan repayment eats away a big chunk of their earnings — even when their college degrees do allow them to bring in bigger incomes than their less educated peers.

But not everyone from younger generations like Gen Y (and Gen X) fresh out of high school went the traditional path of graduating high school, going to college and attaining four-year degree from a university. Some chose not to pursue those four-year degrees at all and found a different path to success.

Making Conscious Decisions to Avoid Debt

Jordani Sarreal chose not to attain a four-year degree for financial reasons. “I didn’t want to be in debt,” she explains.

Instead, the 24-year-old pursued a two-year associate’s degree. Then she spent the last four years building a business that now makes six figures in revenue. She started Le Pique Nique with $200 and handmade products and her bootstrapped company has, to date, sold over 22,000 bags.

Because she was able to start a successful business, Sarreal knew that a university degree wasn’t a requirement to enter the workforce and achieve her goals. She enjoys being free from student loan debt and the ability to travel while earning a comfortable salary from her company.

Choosing What You Can Afford

Chris Lynam jokes that he’s a “classic case” of someone who became a business owner after an injury sidelined him in his chosen sport. “My parents couldn’t afford college,” says Lynam. “I opted for a junior college to play basketball.” And then came the injury.

After his injury put an end to his collegiate basketball career, Lynam discovered dance — and eventually became a dance teacher. He took the step to business owner when he started opening studios.

“My wife and I own 5 Arthur Murray dance studios in the Bay Area,” Lynam says. “We’ve helped two of our management teams open two additional locations, and I’ve become a thought leader and worldwide consultant for our company.”

After going to a private high school where most of his classmates came from money (and went to universities like Harvard and Stanford) Lynam felt a bit out of place with his choice to go to a junior college. But by his 10-year high school reunion, he was a successful business owner and a competitive dancer – and won the “Best Job” award from his former peers.

“I have always wondered what would have happened if I had taken the traditional route to college,” says Lynam, “but I’m so glad I didn’t.”

Considering the Financial Flipside

While it’s always nice to avoid student loans, some students have other reasons than “avoiding debt” on their minds when they choose alternative paths. It’s a different aspect of the financial impact that matters.

“The financial aspect didn’t influence my decision in terms of what I had to spend to get my degree, but on the financial opportunities I was going to miss out over the next 4 to 6 years from my already established businesses,” says Tance Hughes.

Hughes dove into entrepreneurship early. He started a lawn care business with a friend at 16. Then he started a printing business that he still runs today, at 24. Focusing on his business allowed him to pursue opportunities that he might have missed out on had he continued on to get a four-year degree.

“When I left college I returned to work full time at my printing business,” Hughes shares.  “We are projecting to have revenues of $750,000 this year and projecting to be at $1,000,000 within two more years. We currently employ 12 people. We have expanded into custom home decor products that are cut out of steel and we are selling online primarily.”

Finding the Right Path Through Work Instead of Classes

Lauren Fairbanks didn’t plan to drop out of her university program, but after moving from Hammond, Louisiana to New York City she decided her new home was a better fit for her. She initially went to NYC for an internship, and when it was completed, she asked for a job and received a position.

Fairbanks knew she wanted to stay in NYC once she got there. She also knew that wouldn’t be financially feasible without a full-time income. “At the same time, I wasn’t entirely sure what I wanted to do career-wise, so I figured working full-time and even job-hopping was a good opportunity to try out a few things and see what stuck,” she explains. “Ultimately, what I realized is that I like the risk and thrill of starting my own thing was what I really wanted to do.”

“That was basically the launching pad for me jumping around to a bunch of different positions and ultimately ending up in journalism — after around 5 years,” she continues. “From there I ventured off to start my content marketing consultancy, taking what I learned from working in the media and using those same principles to create branded content for companies.”

Fairbanks started Stunt and Gimmick’s, the content marketing agency, in 2010. Thanks to little overhead and minimal startup costs, that company was easier to start than her next venture – a mobile device repair shop.

If that sounds a little unexpected, it probably should: Fairbanks says the second business was a “sort of an experiment.”

“My fiance and business partner was a Director of Marketing for a chain of repair shops based in NYC,” she explains. “We had an idea for a different take on the traditional repair shop.” The couple found a good location while visiting Fairbanks’ parents in her home state of Louisiana, and opened the first Digital Remedy shop a few months later.

“It took us about a year to feel comfortable with our processes and to iron out the kinks in our business model before we rolled out to a larger market in downtown Charleston, South Carolina. And we have our third store opening in Miami, Florida in a month,” says Fairbanks.

Sticking to the traditional path of college and a (hopefully) steady paycheck is still admirable, but young millennials are proving that it’s okay to take risks and see if you can accomplish a goal without the backing of a college degree.

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