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What are some common financial aid scams which students should be wary of?

November 28, 2012 Leave a comment

Financial_aid_scams

Hey guys … I just answered this question for a reporter working on a financial aid piece and thought I would share. Feel free to add your own answers below.

What are some common financial aid scams which students should be wary of?

One most common financial aid scam is companies that charge money for services that are typically free.  The FAFSA is a common target for this.  Many websites charge students money to submit their FAFSA, even though it is a free federal application (FAFSA actually stands for FREE Application for Federal Student Aid).  Even if these websites are assisting students in completing their application, this assistance can typically be found for free online as well.  More importantly, a FAFSA submitted by one of these websites is much more likely to be flagged for verification, compared to a FAFSA completed electronically on the Government’s website (FAFSA.ed.gov).  Verification means much more work for the student, as they will need to compile tax returns and other documentation, and it could also mean a delay in receiving the financial aid.

I hope this helps!

Kris

iGrad Financial Literacy

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When do loans accrue interest??

November 21, 2012 Leave a comment

Stafford_loan

Hey guys … I just answered this question on a forum thread at FinancialAidForum.com.

Hello,
1. When does a loan begin to accrue interest – for both subsidized and unsubsidized Stafford loans?
2. Are subsidized and unsubsidized loans lumped together for payments or are they separated?
3. Can a graduate pay loans online?
Thank you.
Allison

Hey Allison, good questions!

1) An unsubsidized Stafford loan will begin to accrue interest as soon it is fully disbursed. That means it will accumulate interest while you’re still enrolled in school. A subsidized Stafford loan on the other hand, will not accrue interest until your school deferment and grace period are over. So it will not accrue interest until you begin payments on it.

2) Subsidized and unsubsidized loans are lumped together for ease of payments but they are still tracked separately. That means that if you do want to make a payment towards one and not the other, you should be able to make arrangements to do so through your servicer. Make sure to contact them and find out the best way to handle that as each Federal loan servicer is going to be a little bit different. It is usually not as simple as just writing a note on your check. You can pay loans online whether you’re a student or a graduate. Now most Federal servicers do have functionality on their websites to allow you to make payments, whether those are your regular monthly payments or just interest payments while you are in school. While most current Federal student loan servicers do allow online payments, the Department of Education has been adding several new servicers lately. So you may want to check with your servicer to make sure that they do allow that. A list of all the Federal student loan servicers can be found at studentaid.ed.gov/repay-loans/understand/servicers.

I hope that helps and good luck!

Kris

iGrad.com

* Note: This response was transcribed and posted by my virtual assistant.

150K in debt. Can I quit med school?

November 18, 2012 Leave a comment

Check_thumbs_up

Hey guys … I just answered this question on a forum thread at The Student Doctor Network

I’m 38, about to start 2nd year, and realize this is not the path for me. Oops. I have a BA in Psychology. Is there any way to get out with this much debt? -GotstaGo

Hey GotstaGo. Sorry to hear about that debt total, that’s painful. Fortunately, the Department of Education has repayment plan that should be beneficial to you. The IBR plan (or Income Based Repayment plan) is a plan setup by the Department of Education to keep payments manageable in situations like yours. For most eligible borrowers your loan payment should be less than 10% of your income. Also, any balance left over after 25 years of qualifying payments will be forgiven by the Government.

A word of warning though, the balance that’s forgiven will likely be taxed as income so it’s a good idea to pocket some savings along the way. Hope this hopes and good luck!

Kris

iGrad.com

* Note: This response was transcribed and posted by my virtual assistant.