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College Students and Recent Grads

Applying for Public Service Student Loan Forgiveness: A Step-By-Step Guide

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Public Service Loan Forgiveness (PSLF) is a program designed to attract workers to jobs in the public sector by wiping clean remaining federal student loan debt after 120 qualifying payments.

Those payments represent 10 years’ worth of work with a qualifying public service employer, so because PSLF began in October 2007, the first applicants are just beginning to submit their forgiveness forms.

Qualifying for PSLF means meeting specific requirements for the employer, the loan type and the repayment plan — and the details can be overwhelming.

With that in mind, here’s a step-by-step guide to applying for PSLF.

Step 1: Figure out if you qualify.

First, it helps to understand why PSLF exists.

“It’s meant to be a light at the end of the tunnel for public service jobs, when people know they could make much more money going private,” says Betsy Mayotte, director of consumer outreach and compliance at the nonprofit American Student Assistance. “A lot of the careers — social workers, teachers, public defenders — require advanced degrees. The problem there is that people would accrue all this debt, then find they couldn’t stay in these public sector careers because they didn’t pay well.”

But the definition of public service is strictly defined, and “it’s not your job that matters, but your employer,” Mayotte adds. “It matters who signs your paycheck. You can be a groundskeeper at a state school and qualify. Conversely, you can feel as if your job is public service, but if your employer doesn’t meet the specific definitions, you don’t meet PSLF requirements.”

Employers that qualify for PSLF, per the U.S. Department of Education

  • A government organization (including a federal, state, local, or tribal organization, agency or entity; a public child or family service agency; or a tribal college or university)
  • A nonprofit, tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code
  • A private, nonprofit organization (though not a labor union or a partisan political organization) that provides one or more of the following public services:
    • Emergency management
    • Military service
    • Public safety
    • Law enforcement
    • Public interest law services
    • Early childhood education (including licensed or regulated health care, Head Start and state-funded pre-kindergarten)
    • Public service for individuals with disabilities and the elderly
    • Public health (including nurses, nurse practitioners, nurses in a clinical setting and full-time professionals engaged in health care practitioner and support occupations)
    • Public education
    • Public library services
    • School library or other school-based services

Employers that DO NOT qualify for PSLF

  • For-profit organizations (this includes for-profit government contractors)
  • Nonprofits that are not tax-exempt under Section 501(c)(3) of the Internal Revenue Code or that do not provide a qualifying public service as their primary function
  • Labor unions
  • Partisan political organizations

You must work full time (whatever your employer characterizes that to be — though it must be an average of at least 30 hours per week by the PSLF definition) for one of these qualifying employers, or part time for two or more as long as it adds up to 30 hours per week, while you make your 120 on-time payments. You’ll also need to be in qualifying employment when you apply for your loan forgiveness.

Because you won’t be able to apply for PSLF until you have completed qualifying payments, it helps to build up a paper trail over the years. You should fill out and send an employment certification form (ECF) to FedLoan Servicing, which handles PSLF, each year and whenever you change employers. You’ll fill out personal information and have your employer sign the form before sending it in. The form isn’t required, but you’ll receive a response detailing your progress toward your 120 payments and confirming your eligibility — great for peace of mind as well as record-keeping.

“While you’re not required to submit the ECF at any point, it’s always a great idea to keep records,” says Adam Minsky, a Boston attorney who specializes in student loan and consumer issues. “An employer could go out of business, or lose the records of your employment. Mistakes can be made with paperwork. So if you find yourself having to make a case for yourself later, it helps to have all of this on record.”

FedLoan Servicing says my employer isn’t eligible. Can I appeal?

If the response to your ECF comes back and someone says your employer does not qualify you for PSLF, that’s generally the final decision, says Mayotte. “You can theoretically appeal, but these employer types are all pretty straightforward,” she adds. “The overarching rule is that there’s no wiggle room: You work for the government, a 501(c)(3) nonprofit or another qualifying nonprofit. The exception might be if you work for one of these other qualifying nonprofits, but you’ll need to make a case.”

To appeal, you can resend your ECF to FedLoan Servicing and ask for another review, or contact the Department of Education’s ombudsman unit. In both cases you should include evidence to show why you think your employer should qualify, Mayotte says.

But barring a clerical mistake by FedLoan Servicing, a change in decision is exceedingly rare.

Ensure your loan type and repayment plan qualify

PSLF provides forgiveness only for federal Direct Loans: Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans and Direct Consolidation Loans. Private loans, including bank loans that are “federally guaranteed,” do not qualify.

Loans made under other federal student loan programs, like Perkins Loans, aren’t eligible for PSLF on their own. They may become eligible, if they’re consolidated into a Direct Consolidation Loan — but it’s important to know that only payments toward that consolidated loan will count toward the 120-payment requirement.

Speaking of consolidation, here’s another thing you should know: If you consolidate qualifying loans, the clock resets to zero payments. A consolidation is considered a new loan, and again, only payments toward the consolidated loan will be counted toward your 120.

Don’t know which types of federal student loans you have? Check the Education Department site My Federal Student Aid. A pro tip from the Education Department: “Generally, if you see a loan type with ‘Direct’ in the name on My Federal Student Aid, then it is a Direct Loan; otherwise, it is a loan made under another federal student loan program.”

Additionally, you must be enrolled in the right type of repayment plan. Qualifying repayment plans include all four of the income-driven repayment plans, which base your monthly payment on your income and family size: Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE), income-based repayment (IBR); and income-contingent repayment (ICR).

Payments under the 10-year standard repayment plan qualify, but you’ll want to switch to an income-driven plan as soon as possible. If you stick with that 10-year repayment you’ll have paid off the loan, with nothing left to be forgiven under PSLF when you become eligible for it.

Make 120 qualifying payments

You’ll need to make all of those 120 payments during qualifying employment to apply for PSLF, but you don’t need to provide proof of those payments. Again, Minsky advises that it’s wise to keep your own records just in case there’s a clerical issue later — but generally, FedLoan Servicing will confirm the payments itself.

Note that the 120 payments do not have to be consecutive (nor, then, must be your employment with a qualifying public service employer). If you had periods of deferment or forbearance and stopped paying your loans, the count will pick up where you left off once you begin paying anew. Even defaulting on your loan payments doesn’t disqualify you, but you’ll need to rehabilitate the defaulted loan with your servicer before the payments can count toward your 120 again.

The payments do need to be on time, defined as “those received by your federal loan servicer no later than 15 days after the scheduled payment due date.” If your payment isn’t on time, or you pay less than what you’re required to that month, it won’t count toward your 120. You may make multiple smaller payments, but they must add up to at least the minimum payment amount for that month.

Step 2: Apply for loan forgiveness

After you’ve completed your 120 payments — phew, you did it! — go to the PSLF application here. The form is six pages long, but the actual application is only two. And you, the employee, must fill out only the first page: basic personal information like your date of birth, Social Security number and contact details. You’ll also need to certify under penalty of law that the information you’re submitting is truthful.

The second page is for detailing the employer’s information, and either you or your employer can fill out the top part. Here’s what it requires:

  • Employer’s name
  • Federal Employer Identification Number (FEIN, which can be found on your W-2 — or ask your HR department)
  • Your dates of employment
  • Whether you were a full- or part-time worker
  • Which category of public service your employer falls under

At the bottom of the page, there’s a section for your employer to sign, certifying that the information above is accurate.

You’ll need to repeat that process for every qualifying employer. (That’s why it’s smart to keep track of it all by submitting ECF forms annually and whenever you change employers.)

The remaining four pages of the application form reiterate the details of what it takes to qualify for PSLF. They also explain where to send the completed application form:

  • You can mail to

    U.S. Department of Education, FedLoan Servicing
    P.O. Box 69184
    Harrisburg, PA 17106-9184

  • Fax to 717-720-1628; or
  • More information here

In rare cases, you may not be able to obtain employers’ certification. There’s a checkbox on page 1: “Check this box if you cannot obtain certification from your employer because the organization is closed or because the organization has refused to certify your employment. The Department will follow up to assist you in getting documentation of your employment.”

“That’s another reason it’s prudent to send the ECF forms every year, because you’ll already have a signature on record,” Mayotte says. “I’ve heard of a few cases where employers were not comfortable filling out the form for privacy reasons, but usually if you show them the form and explain a bit, you can change their mind.”

Mayotte says borrowers should contact FedLoan Servicing for alternatives if they find themselves in this situation.

FAQ and other things to know

The process is estimated to take up to 60 days, a Department of Education spokesman confirmed to MagnifyMoney.

Yes. If you’ve made your 120 payments and are looking to switch to an employer who isn’t eligible, be sure to file your PSLF application first. You must also be employed full time at a qualifying employer or employers at the time the forgiveness is granted, according to the Department of Education.

“No concrete proposal seems imminent, but whenever something happens, there’s a general view among experts that a change to PSLF won’t be retroactive to existing borrowers,” Minsky says.

The payment count restarts, back at zero. The consolidated loan is considered a new loan, and only payments toward it will count.

No. If you have private student loans that you are struggling to repay, be sure to reach out and talk with your lender. While most private lenders do not offer forgiveness they still may be able to help you out. Additionally, consider looking into student loan refinancing as a way to lower your monthly payments and make them a bit more manageable.

Here are the employer certification form and the PSLF application.

While studentaid.ed.gov has all of the official information, it’s spread across different pages and can be unwieldy. American Student Assistance offers an excellent guide that breaks down the basics and also links to official webpages and forms.

Alternative loan forgiveness programs

Beyond PSLF, there are other federal programs to forgive or discharge federal student debt. These include:

Industry-specific forgiveness programs

  • Perkins Loan Cancellation and Discharge: This applies to people who perform certain types of public service or are employed in certain occupations. According to the Department of Education, for each complete year of service a percentage of the loan may be forgiven. That percentage varies by job/employer type, and the following workers qualify:
    • Volunteer in the Peace Corps or ACTION program (including VISTA)
    • Teacher
    • Member of the Armed Forces (serving in area of hostilities)
    • Nurse or medical technician
    • Law enforcement or corrections officer
    • Head Start worker
    • Child or family services worker
    • Professional provider of early intervention services
  • Teacher Loan Forgiveness: Teachers who work full time for five complete and consecutive academic years (in certain elementary and secondary schools and educational service agencies that serve low-income families, and meet other qualifications) may be eligible for forgiveness of up to a combined total of $17,500 on Direct Subsidized and Unsubsidized Loans and Subsidized and Unsubsidized Federal Stafford Loans. (Those who have only PLUS loans are not eligible.) Read more about loan forgiveness programs available to teachers, including TEACH Grants and state forgiveness programs.
  • Programs for lawyers: Lawyers with at least $10,000 in federal student loans may qualify for the Department of Justice Attorney Student Loan Repayment Program (ASLRP). Additionally, the John R. Justice Student Loan repayment program provides assistance for state and federal public defenders and state prosecutors for at least three years and is renewable after 3 years. Benefits cannot exceed $10,000 in a calendar year and cannot exceed $60,000 per attorney total. .) Read more about programs for lawyers, including forgiveness programs through specific law schools and certain states.
  • Programs for doctors and health professions: Several programs are available, including multiple military doctor loan forgiveness options through the Army, Navy and Air Force. Other options include state-specific forgiveness and the National Health Service Corps (NHSC), which can provide up to a $50,000 to repay a health profession student loan in exchange for a two-year commitment to a NHSC site in a high-need area.

Income-based repayment plans

  • This isn’t a traditional cancellation program like what’s above. These four federal income-driven repayment plans base your monthly payment on your income: Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE), income-based repayment (IBR) and income-contingent repayment (ICR).The payment terms vary, and your outstanding balance is forgiven after your repayment term of 20 to 25 years is complete. Because the monthly amount you owe will fluctuate based on your income, you could end up repaying your loans before your term is up, or you could have a balance that will be forgiven. However, if you receive student loan forgiveness this way, the canceled debt is taxable. (Only borrowers whose loan forgiveness stems from their employment are exempt from paying taxes on canceled student loan debt.)

Loan discharges for special circumstances

There are a few other times you may be able to get your student loans forgiven, but they’re relatively rare, and they’re generally because of bad circumstances. You can find out more about these discharges on the Department of Education’s website:

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.

Julianne Pepitone
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Julianne Pepitone is a writer at MagnifyMoney. You can email Julianne here

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College Students and Recent Grads

Can You Really Get Rid of Student Loans by Leaving the Country?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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A college degree that didn’t lead to your ideal job. A stack of student loan bills you can’t afford. A collections agent blowing up your phone.

For any of these reasons, you might be seeking a way out — even out of the country. Leaving the U.S., however, might not solve your education debt.

Can you escape debt by leaving the country?

The short answer is no. The debt will still be there.

There’s no statute of limitations on federal loans, meaning that you’d be responsible for repaying your debt when or if you return to the U.S.

For private loans, on the other hand, state laws do put limitations on lenders’ ability to sue over your old loan debt. However, these statutes last years and won’t stop collections agencies from contacting you, regardless of where you reside.

If you abandoned your debt, you would need to establish an income and credit report in your new country and otherwise lay down roots.

But just because you could abandon your American debt doesn’t mean that you should.

For one, you have a moral dilemma on your hands: You borrowed money to fund your education, and although the borrowing and repayment process might seem unfair, you did agree to repay it.

But even if that’s not an issue, you still have to ask yourself whether you’re willing to face the consequences of creating zombie debt that will hang over your head.

Consequences of a move overseas to escape student loans

It’s impossible to say whether you’d need to look over your shoulder, wary of creditors on your tail. They might not have the willingness or the wherewithal to track you down.

You also can’t be arrested for your debt, and, no, your passport isn’t at risk. Still, the punishments of ignoring your debt can be severe. Some effects include:

Your loan balance will balloon

Just because you disappear doesn’t mean your debt will too. Quite the opposite — it’ll continue to grow. Interest will accrue and capitalize onto your balance each month that passes without payment.

If you skip town $40,000 in the hole at 7.00%, for example, your balance would collect about $16,000 worth of interest after 10 years, and almost $35,000 after 20 years.

Your credit score will tank

Although your credit score won’t follow you overseas, it will only worsen while you’re away.

After all, more than a third of your score’s composition rests on your payment history. By ignoring your payment due date, your score will take a nosedive. And when you default, the status will show up and stay on your credit report for up to seven years.

With such poor credit, you’ll have a hard time after your stateside return borrowing money in any form, including a home mortgage, car loan or credit card.

Your wages could be garnished — and worse

Once you default on your federal loans — that is, fail to make a payment for more than 270 days — your servicers could send your debt to a collections agency, where it will incur more fees.

The Department of Education could then take the following measures to collect your debt:

  • Treasury offset: The government could withhold any federal money you were set to receive, such as income tax refunds and Social Security benefits. Your driver’s license and/or other state-issued licenses could even be forfeited.
  • Wage garnishment: Your collections agency could require your employer to hand over 15% of your paycheck to put toward your defaulted loan. If it’s unable to take your income — perhaps because you’re self-employed — then you might face a lawsuit from the Department of Justice.

Private lenders vary in their practices, but you can bet they’ll farm out delinquent loans to their debt collection agencies. They can also sue you to secure a percentage of your income.

Your cosigner could be left hanging

Federal loans are borrowed in the student’s name, so you — and only you — are on the hook for them. The family you leave behind in the U.S., however, might have to deal with phone calls or mail from collections agencies.

Private loans are a different story. In all likelihood, you asked a family member to cosign your loan as an undergraduate, since about nine of 10 private loans are cosigned.

By leaving your debt and country, however, you’d be passing the buck to your cosigner. Mom, Dad or whoever else could be legally responsible for repaying your debt, potentially putting a stranglehold on their finances.

Can you even move to another country with student loan debt?

Just because you shouldn’t leave the U.S. to flee your student loans, however, doesn’t mean you’re trapped inside the country until your debt is repaid. If you’re motivated to live abroad for reasons other than escaping your education debt, consider that you could take your debt along for the ride.

You might make progress in repayment, for example, if you can earn an American salary but reside in a country with a lower cost of living.

No matter where you decide to shack up while repaying your education debt, consider these tips.

Explore repayment plan options

Whatever ails your loan situation so much that you’re considering quitting your repayment, know that there are debt relief options, including:

Income-Driven Repayment (IDR)

On the federal loan front, consider switching repayment plans. IDR would allow you to limit your monthly payment amount to a percentage of your discretionary income, making it a good option if you’re out of work or climbing the career ladder from the bottom. Keep in mind though that when you lower your payments and extend your loan term, your debt grows because of accruing interest.

Unfortunately, private lenders generally don’t offer IDR, but they could be willing to adjust your repayment if you fall on hard times.

Deferment or forbearance

There are more than a dozen types of eligibility for deferment and mandatory forbearance on federal loans. These measures pause your payments while you get back on your feet. To cure your wanderlust, you could even defer your loans for up to three years by joining the Peace Corps.

Private lenders’ protections are typically less comprehensive, so talk with your lender about what it offers.

Student loan refinancing

You’ll need good credit and steady income (or a cosigner) to qualify, but student loan refinancing could solve several of your repayment problems simultaneously. It could consolidate your debt into one new loan, potentially lower your interest rate and give you the power to choose your new (private) lender.

Just be aware that by refinancing federal loans, they’ll be stripped of the federal safeguards that come with them, such access to IDR and some loan forgiveness programs.

Budget for travel — and loan payments

Once you know how much you need to spend to keep pace with — or, better yet, attack — your loan balance, it’s time to budget. This step is crucial if you’re planning to live abroad. A budget will serve as your roadmap, helping you to estimate the affordability of the life you want to lead and the debt you’re due to repay.

Cutting U.S. expenses like apartment rent and utility bills is a great start. You can also maximize your money by choosing the right country. You might have designs on visiting Scandinavia, for example, but then find that Southeast Asia is more in your price range. Nomadlist is an excellent resource to help plan for potential monthly costs on a city-by-city basis.

Increase your income

You can budget until you’re blue in the face, but eventually you’ll run out of expenses to trim. Give yourself more wiggle room by increasing your income at home or abroad.

If you’re fortunate enough to work remotely and take your American salary with you, you might already have the cash flow necessary to travel cheaply and still pay down your debt. You might also seek side gigs like teaching English as a second language in another country.

Keep your American bank account

Even if you’re not sure when you’ll return to the U.S., keeping your American bank account will ease your student loan payments. You won’t want to deal with foreign transaction fees, for example.

Additionally, by keeping your domestic checking account, you can score an interest rate reduction with some lenders and servicers by signing up for autopay.

You can repay your debt and still wander the world

Leaving your home country for a clean slate elsewhere is an age-old strategy. But unless you’re planning to leave the U.S. permanently, it could wreck your student loan debt situation.

Before you book a flight, consider the consequences of wandering the world without a repayment plan. Whether you choose to live in the U.S. or abroad, there are plenty of ways to get back on track. You just have to look for them.

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.

Andrew Pentis
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Review: SunTrust Custom Choice Loan

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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SunTrust offers students a good option to finance their education with its Custom Choice Loan. Interest rates are fairly low, students may apply with a cosigner, and it comes with several repayment options. As a bonus, SunTrust offers graduates a 2% principal balance reduction as long as students graduate with at least a Bachelor’s degree.

 

Details of SunTrust’s Custom Choice Loan

The minimum amount you can borrow is $1,001 and the maximum amount you can borrow is $65,000. The total amount of Federal and private student loan debt you take out per year can’t exceed $150,000. You can choose a 7- or 10-year repayment term, and a 15-year term is available for borrowers taking out $5,000 or more.

Fixed APRs range from 5.35% to 14.05%, and variable APRs range from 4.37% to 13.38%.

You have four choices of repayment plans:

  • Immediate Payment – There’s no grace period as you begin full payments while in school
  • Interest-only Payment – You pay the interest that accrues on your balance while in school
  • Partial Payment – Available on loans $5,000 or more, you can make payments of $25 per month while in school
  • Full Deferment – You get a grace period of six months when you choose this option, and you’re eligible for deferment as long as you’re enrolled in school part-time at an approved school (this option is the closest to how Federal student loans function)

The interest rate you get approved for is based on your credit history, loan term, amount requested, and other information provided on your application.

A 0.25% interest rate reduction applies if you set your loans to autopay, and SunTrust customers benefit from an additional 0.25% reduction if they pay through their SunTrust bank account.

How Does the Custom Choice Loan Compare to Federal Student Loans?

Before applying for the Custom Choice Loan, you should exhaust all of your federal student loan options first. Make sure your family fills out the FAFSA form to see what you might be eligible for. Federal student loans have lower fixed interest rates, and come with more benefits than private student loans do. These benefits will help in case you hit a rough patch with your money.

For the 2018 – 2019 Academic year, Direct Subsidized and Unsubsidized Loans have a fixed interest rate of 5.05%. That makes the 5.35% fixed APR and 4.37% variable APR of the Custom Choice Loan comparable. However, those are the lowest possible APRs available, and if you don’t have excellent credit, you may not be eligible to receive them. Variable rates are also subject to change, which means they can increase over the life of your loan and become more expensive.

SunTrust doesn’t have an origination fee with its loan, but the Direct Subsidized and Unsubsidized Loan has a 1.062% disbursement fee from October 1, 2018 through September 30, 2019.

SunTrust’s APRs aren’t horrible, though. If you can, apply with a cosigner who has better credit, as you’ll be eligible for lower rates. You want to get as close to Federal interest rates as possible to get the best deal.

[7 Things You Need to Know about Private Student Loans]

Eligibility Requirements

You must be a U.S. citizen or permanent resident to apply. A majority of four-year public or private colleges are eligible – you can check eligibility on the first page of the application.

If your credit history isn’t sufficient enough, you can apply with a cosigner, and there’s a cosigner release option available after 36 consecutive, on-time payments.

You must also be the legal age of majority when completing the application. Applicants residing in Iowa or Wisconsin aren’t eligible for this loan.

[How to Tell if Your Loans are Federal or Private]

Application Process and Documents Needed

You can apply online by yourself or with a cosigner. After your application and credit (a hard credit inquiry is used) are reviewed, you’ll be presented with your loan options. If you choose to move forward with the loan, you’ll be provided with a list of documents you need to upload.

Once you’ve submitted everything, an Approval Disclosure will be sent to you for acceptance. You have 30 days to accept the terms of the loan before they expire.

Upon acceptance, SunTrust will contact your school to request certification of the loan, as you’re only allowed to borrow enough to cover your education expenses. This also ensures you don’t take out more student loan debt than necessary.

Once everything is complete, you (and your cosigner, if you applied with one) have three days to back out of the loan. After that, the loan is finalized, and the funds are sent directly to your school.

Have these documents ready to submit when applying:

  • Proof of income – the student or cosigner must show proof of positive income in the form of a recent W2, paystub, or tax return
  • Photo ID
  • Proof of residency may be required if Photo ID isn’t sufficient

The Fine Print

There are no origination, application, or prepayment fees for this loan. If you’re 10 days past due on a payment, you’ll be charged 5% of the unpaid amount as a late fee.

The minimum loan amount is different in certain states: $5,001 in Alaska, $3,001 in Colorado, $2,501 in New Mexico, $5,101 in Oklahoma, $5,001 in Rhode Island, and $3,701 in South Carolina.

[Student Loan Disbursement 101]

Repayment Assistance Options

American Education Services is the loan servicer for SunTrust. If you experience any difficulty repaying your student loans, you’ll have to contact them for repayment assistance options. You may be able to apply for a deferment, forbearance, or interest-only payment for an extended period of time.

Pros and Cons of the Custom Choice Loan

Pro: If the borrower dies, then the balance of the loan may be forgiven as long as SunTrust is contacted and provided with proof of death. (If the cosigner dies, the student remains responsible for the loan.) Students who become permanently disabled can apply for a loan discharge as well.

Con: The loan isn’t available to those living in Iowa or Wisconsin, and minimum loan amounts differ in six states. Make sure that doesn’t apply to you in case you’re not looking to borrow a large amount.

Pro: The Custom Choice Loan fittingly gives you a few choices when it comes to loan repayment options. Choosing partial payments or interest-only payments can help lessen the amount of interest you’ll pay over the life of your loan, and are easier to manage than going into immediate repayment.

Pro: SunTrust offers a Graduation Reward where 2% of your principal balance will be reduced, provided you graduate with at least a Bachelor’s degree. The principal balance is based off the net total of all disbursements you receive from SunTrust.

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Private Student Loan Alternatives

Not eligible for a loan with SunTrust? There are many other private lenders offering student loans, such as Citizen’s Bank and Sallie Mae.

Citizens Bank: You can borrow up to $90,000 and your combined Federal and private student loan debt can’t exceed $120,000. Fixed APRs range from 6.39% to 11.65%, and variable APRs range from 6.14% to 11.40%. Repayment terms offered are 5, 10, and 15 years.

Citizens Bank (RI)

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Sallie Mae: One of the most well-known private student loan lenders, Sallie Mae has a Smart Option Student loan with fixed APRs ranging from 6.25% to 9.16%, and variable APRs ranging from 4.00% to 9.04%. You can borrow up to the cost of attendance, and this loan comes with a Graduated Repayment option.

Sallie Mae Bank

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It’s also worth checking with your bank or local credit union for their rates. If you or your cosigner have an existing relationship with a bank, that could help you secure lower rates.

Are you afraid of your credit being negatively affected if you apply with too many lenders? As long as you complete applications within a 30-day window, then the credit bureaus will count all inquiries as one inquiry, ensuring your credit doesn’t take a huge hit. Shopping around for the best deal is worth the effort with student loan debt being such a burden. Lower interest rates will make your loan more affordable.

A Solid Option if You Have to Use a Private Lender

The SunTrust Custom Choice Loan is a solid option for students requiring more financial assistance than what the Federal government can provide. SunTrust customers benefit more with the 0.50% interest rate deduction, and no one can complain about receiving a 2% principal reduction on their loans upon graduating.

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Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

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