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3 Steps to Handle Being Mistreated by a Student Loan Servicer

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A college diploma no longer promises a guaranteed path to success. A harsh reality that hits after the excitement of finally completing college dwindles down and the pressure to find a good paying job sets in. Deciding on whether or not you should embark on an extended vacation after four grueling years of study should be a no brainer, but the reality of student loan repayment quickly extinguishes any thoughts of lying on a beach.

Borrowers know that time is of the essence. The six-month grace period post-graduation is crucial in building a solid financial future. However, some borrowers aren’t able to find a job within that six-month time span, and if they do, their entry-level pay may barely cover living expenses. The last thing borrowers need in times of financial hardship is maltreatment by their student loan servicer. In fact, servicers are required by law to work with struggling borrowers, yet some do the complete opposite.

The alarming part of all this is that a majority of borrowers aren’t even aware of the fact that they’re being mistreated. In fact, in the midst of supervising for compliance with federal consumer financial laws, the Consumer Financial Protection Bureau (CFPB) found that one or more student loan servicers were:

  • Allocating payments to maximize late fees
  • Misrepresenting minimum payments
  • Charging illegal late fees
  • Failing to provide accurate tax information
  • Misleading consumers about bankruptcy protections
  • And abusing the ever-popular debt collection calls to consumers at illegal times.

If you believe that you’re a victim of mistreatment by your student loan servicer then you’ve already started the three-step process.

Step 1: Identify problems

You have successfully identified your issue and are ready to start the resolution process.

Step 2: Gather relevant evidence

Just saying that you have an issue isn’t enough; you need relevant proof to support your claims. Relevant evidence includes:

  • Promissory Notes that outline the any agreements made between you and your loan servicer
  • Bills
  • Canceled checks
  • Correspondence between you on your loan servicer via phone, email or snail mail

Step 3: Make Contact

Now that you’ve identified your problem and gathered relevant evidence to support your case, you can now contact your loan servicer. If you’re not sure who your loan servicer is, you can find out at http://www.nslds.ed.gov. Prior to making contact with your servicer keep the following tips in mind:

  • Take detailed notes of all conversations and be sure to follow up in writing so there is a physical record of what has been said and done.
  • Request a copy of your customer service history. Some loan servicers make available copies of the notes that customer service representatives make on their accounts.
  • When you speak with someone on the phone, take down the representative’s name, when the call took place, and what was said.
  • Save the originals of all receipts, bills, letters, and e-mails regarding your account. Be sure to provide copies of the originals if you are asked for them. Send letters via certified mail, with return receipt requested.
  • No matter how frustrating the situation, always be polite and courteous.
  • Request for a response at a reasonable times, and be sure to tell the customer service representative how you can be reached.

Problem not solved?

To be sure that you’ve done everything in your power to resolve your student loan problem take this self-resolution test.

For Federal Student loans: If after completing the self-resolution test you find that you are in need of further assistance, contact the Federal Student Aid Ombudsman Group to request a consultation. They will collect information about your case and offer assistance in identifying a suitable resolution.

For Private Student Loans: The Consumer Financial Protection Bureau recently started accepting student loan complaints. They will forward your issue to the company, provide you with a tracking number and keep you updated on the status of your complaint.

Need more help?

Although there is little recourse for private student loan issues, you can still get help with federal student loans through the Federal Student Aid’s Myeddebt.com. Through this portal, you can get information on how much you owe on your defaulted federal student loans, your payment history, and options for resolving your issues. You can also access forms to request a hearing, review, or discharge of your debt, as well as forms to submit a complaint.

Ignoring your own debt won’t make it go away, so do yourself a favor and seek help as soon as possible.

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College Students and Recent Grads

10 Questions Every Student Should Ask the Financial Aid Office

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Congratulations! You’ve been accepted into the college of your dreams, unfortunately, that acceptance letter didn’t state that you’ll be attending college tuition free. Perhaps your parents saved up for you to attend or maybe you plan on taking on a part-time job. Either way, tuition plus those extra expenses that come along with being a student are a bit too much to bear.

Luckily, you’ve got options. Colleges have financial aid offices, which may feel for some like a magical place you can go to receive money. If you both qualify and uphold your end of the bargain, you can actually receive money to cover most, if not, all of your educational expenses. But, don’t just walk in there blindly and expect a handout.

To save yourself from an overwhelmingly long wait, schedule a formal interview with your financial aid officer. This way, you have ample time to ask all the necessary questions needed to be sure that your specific needs are met.

According to Patrick Wong, a financial aid representative at Brooklyn College, students should be prepared to ask the financial aid office at their school 10 important questions to maximize the odds of receiving financial aid or obtaining scholarships.

1) What is the total cost of the program including books, fees, tuition and housing?

“Once a student receives a financial aid offer, knowing the true cost can help the student compare the bottom line at any of the schools they’re considering,” Wong explained.

Don’t assume the sticker price on the college’s website is showing you the full picture of what it costs to attend the school. Wong insists that students inquire about student fees, room and board, average book costs per semester, and miscellaneous items that will appear on your student bill.

2) Does your college have a full-need financial aid policy?

The majority of U.S colleges and universities are committed to meeting the full amount of demonstrated financial need for all admitted students. This aid may be met through grants, scholarships, work-study, and loans (federal or institutional). However, if your college doesn’t offer a full-need policy, you may need to find alternate funding sources, such as private student loans to help cover left over expenses.

3) Is there one application for financial aid?

Many schools use one form to determine your eligibility for any and all financial aid available, but according to Wong, not all schools work this way.

“Some colleges require individual applications for separate awards, such as department grants or alumni scholarship programs. Ask the financial aid office to ensure that you aren’t missing any opportunities,” says Wong.

4) Is there a deadline to apply for financial aid?

You definitely don’t want to be the one that misses out on receiving money for school because you were unaware of the deadline.

“There are many deadlines to meet during the college application process, so it’s easy to get confused or even miss a date if you’re not careful,” explains Wong.

Although the federal deadline for filling the Free Application for Federal Student Aid (FASA) is June 30th of each year, every state and college has its own deadline. Be sure to ask the college’s financial aid office for deadlines concerning the FASA and any scholarship applications you may be submitting.  It will be best to set reminders in your phone calendar or write down deadlines on a desk calendar to remind yourself of impending due dates.

5) How do I know if I qualify for financial aid?

There are a number of factors that determine whether or not you qualify for aid like: the number of people in your household, number of students in college, price of the college, parents’ income, income taxes paid and so forth. Wong suggests that students use the Expected Family Contribution (EFC) Calculator to determine their eligibility to receive aid.

6) What types of scholarships are available?

Depending on the college, grade point average, and other factors, you may be eligible for need-based, merit-based, or other types of scholarships.

“Some schools will offer generous scholarships based on your academic and athletic abilities, as well as participation in certain clubs, organizations, and societies,” says Wong.

Be sure to ask sure to ask if the awards are competitive or given to any admitted student who meets the criteria.

7) Are scholarships renewable?

If any one of the available scholarships is renewable, it’s important that you inquire about what you must do to keep the awards. Wong insists that students ask about required enrollment (full-time or part time), expected grade point average, and other stipulations that may result in the loss of the award.

8) How will outside scholarships affect my financial aid?

Some colleges offer a very attractive financial aid package the first year, only to reduce the aid offer the following year. Knowing this upfront will help you determine the long term costs of attending the school of your choice.

9) When will my financial aid offer be mailed to me?

“It’s good to know when to expect offer letters so that you can give yourself time to review and consider all possibilities,” says Wong.

All too often, students will accept admission to one college, only to receive a better financial aid offer from another later. Save yourself the regret by waiting for all prospective offers before making a decision. Remember, you can always change your mind after sending in your deposit – and sometimes even after decision deadlines depending on the school. You may have to sacrifice your deposit, but a few hundred dollars is likely worth changing your mind if it saves you thousands in the long run.

10) Will you match another college’s financial aid offer?

Hey, doesn’t hurt to ask right? If you find that you really love one college, but another is offering a better financial aid package, check to see if the financial aid department will match the offer.

“Depending on the type of year, the college may have access to additional funding and may be able to offer you more generous package, so go ahead and ask,” insists Wong.

Knowing how you’re going to finance your education is the most important part of your college career. By visiting the financial aid office and asking the right questions, you can attend the college of your dreams for a lot less than the advertised sticker price.

Have questions? Get in touch with us via Twitter (@Magnify_Money) or email ([email protected]).

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The 4 Worst Financial Mistakes to Make in College

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College is one of the most exciting, memorable times in a young person’s life. It allows you to gain an education, meet lifelong friends, and discover new passions. College can also heavily impact your financial future, because earning a degree can open doors to lucrative careers with rewarding salaries. But, money mistakes during college years can leave graduates dealing with debt and ruined credit scores for decades after getting a diploma. Insight into mistakes made by others can protect future and present college students from falling into the same traps.

Clueless about Financial Aid

Many students attend college oblivious to the amount of financial assistance that is just waiting to be claimed. Mushy Borisute, a senior majoring in psychology, regrets not educating herself about financial aid sooner.

“My parents paid for my tuition out of pocket, so I didn’t see the need to look into any of these financial aid programs,” Borisute explains.

It wasn’t until her senior year that Borisute ventured into the financial aid office to inquire about the tuition assistance program.

“After spending no more than 40 minutes in the financial aid office, I learned that I qualify for full tuition assistance!” Bourisute exclaims. “My parents worked so hard to pay off the first three years of my studies. If only I was a bit more inquisitive, I could have saved them the financial burden.”

Interestingly enough, Borisute is not the only one to ignore tuition assistance programs. According to a survey done by the Institute for College Access and Success, 65 percent of college students are unaware of their eligibility to receive financial aid, and 72 percent are clueless to the amount of scholarships and grants they may qualify for.

Credit Card Abuse

Jeet Singh, a junior majoring in geology, shared his run in’s with his new shiny piece of plastic.

“My mother actually signed me up for my first credit card,” Singh says. “She told me that it’s only for emergencies, nothing more. But, I figured a few small purchases here and there wouldn’t hurt.”

Singh’s small purchases quickly added up to a hefty $7,000. With no job, Singh was unable to keep up with payments, which landed him and his mother who cosigned with him, in a pit full of credit card debt.

“I’ve long since realized that I can’t be trusted with money, even if its borrowed money, I’ll spend it,” Singh explains.

Credit cards have high interest rates and multiple layers of hidden fees. The damage of irresponsibly using credit affects both your financial state and credit rating for years to come.

Misuse of Student Loans

Student loans are supposed to be used to pay off education-related expenses, but some students misuse their borrowed funds, which causes a lot of financial pain post-college.

Joseph Dewitt, a graduate student, recalls his irresponsible use of student loans.

“I guess my worst financial mistake post college was using some of my student loans to catch up on bills,” Dewitt says.

At the time, Dewitt was newly married with two young daughters. As an undergrad, he worked as a security guard making only $10 an hour. When his salary didn’t make ends meet, Dewitt used $2,000 in student loans each year to stock his fridge and catch up on delinquent bills.

“I took whatever I could for student loans each year and put it towards food and outstanding bills” Dwight explains, who owes $51,600 in federal loans.

What most students fail to realize, until it’s too late, is that the interest on these loans can add up fairly quickly, sometimes defeating the whole purpose of attending college to increase salary potential. By the time Dewitt finished his undergrad and landed his first job, he ended up making less than he expected after his student loans, miscellaneous bills, and graduate tuition was paid off each month. His undergrad loans ate away a huge chunk of his income.

“If I used my loans for tuition, and tuition only, I could be contributing more to my 401(k) and enjoying more of my take home pay,” Dewitt says.

Staying in college too long

Yes, college is a great investment, but before enrolling, it’s important that you plan out the next four years. Extra semesters due to poor planning can cost thousands of dollars. For Sangee Kumar, a senior majoring in accounting, the extra year was needed for him to become a CPA.

“I knew that I needed 150 credits to become a CPA, but I thought that I could do it in four years,” Kumar says.

The intense accounting classes became too much for Kumar to bare, so, for the sake of maintaining a GPA above a 3.5, Kumar decided to stay in school for an extra year to reduce his workload.

“Financially, I didn’t plan on it. I mean, tuition rises every year, now I have to find the extra money to pay for the remaining two semesters,” Kumar explains.

The extra tuition payments could have been avoided if Kumar, planned accordingly. Students should not only look into the return on investment when choosing a degree, but whether or not the intended workload can be completed within four years or less. Some degree’s, like accounting require five years to complete. Proper research can prevent unexpected expenses in the future.

The Bottom Line

It’s important that you learn from these four financial mistakes that are frequently made by college students. Save yourself a future of financial heartache and make the necessary adjustments to your spending habits to guarantee you use your money (borrowed or not), wisely.

Be sure to check out the MagnifyMoney tools to ensure you are getting the best deals on your financial products.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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