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5 Things I Didn’t Know About Student Loans

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Student Loans are big business unbeknownst to me 15 years ago. There is a lot I didn’t know, I didn’t know about college loans. Waldo Emerson said “A man in debt is so far a slave”. Yes, I defaulted on my student loans, but I was young, no one taught me about credit. I thought that an education would make me financially free. I’d be one of the educated. I imaged walking around at parties Wowing people with my educational achievements. I thought my degree in the Fine Arts of Fashion Design, would qualify me to style for Usher. We could have gotten married, had babies, and I would live happily ever after in my mansion.

When I started college I told them I didn’t have enough money to pay for it. My counselor told me “Sign here and you will get the money you need”. So, I did. I struggled, slept late to finish deadlines, and at the beginning of each semester I signed another paper. By the third time around I found out I hate sewing. That is a big part of fashion design, so needless to say I had to change my dream.

I got married and he got to share my debt. I had two more kids who will get to inherit my debt when I’m gone. Life happened. I wanted things. I need a house, a car in my name, a loan for my mascot character business, a credit card to give my family experiences. Why am I paying for a mistake that I made back in college? I should get a break. Apparently my student lenders felt I deserved wage garnishments and harassing phone calls.

My husband, Schimeon Frederick started a company Trusted Debt Solutions with the intentions of not only educating the public about student loans, but providing a service for those borrowers behind in their student loan debt. That was me! Naturally I was his first customer. He and his team of “Debt Angels” went to work on me.

I sent in some papers and then the default payment calls magically stopped. I got my full amount owed to me on my checks. I still had no idea about my student loans and what I was getting into once I consolidated them. So, I started a quest to find out about student loans to share them with you.

5 Things I Didn’t Know About Student Loans:

What the H*ll is the Difference Between a Private Loan and A Federal Loan?

One major misconception is that federal loans and private loans are similar, since they both cover the cost of college and need to be paid back after graduation. Wrong! A private loan can never be consolidated. They are through private companies that hold your loan. Private loans, which are heavily advertised and usually owned by banks, do not have the forbearance and deferral options available with federal loans (which are never advertised). In contrast with federal subsidized loans, interest accrues while the student is in college, although repayment may not begin until after graduation. While unsubsidized federal loans do have interest charges while the student is studying, private student loan rates are higher, sometimes much higher. Federal loan interest are fixed private are not. Private loan fees vary greatly, and legal cases have reported fees reaching 50% of amount of the loan. From what I gather people who didn’t know they were sold a private loan should just crawl in a hole and never come out. If you have a federal loan it is being overseen by the Department of Education and has flexible payment options.

Why Should I care about the Interest and The Principal of My Student Loan?

Interest is money paid to the lender in exchange for borrowing money. Interest is calculated as a percentage of the unpaid principal amount (loan amount) borrowed. The interest rates for federal student loans are determined by federal law. The principal refers to the loan amount you borrowed plus any capitalized interest.

What is Student Loan Forgiveness?

Under certain circumstances, federally backed student loans – such as Direct, Stafford and Perkins loans – can be discharged or forgiven. For a loan to be discharged, circumstances beyond the borrower’s control that prohibit the repayment of the loan must be identified. What is Public Service Loan Forgiveness?

Teachers, firefighters, police officers, oh my! If you plan to work in public interest, the Public Service Loan Forgiveness program is one of the most significant breakthroughs in a generation. Public Service Loan Forgiveness (PSLF) offers tax free forgiveness for your eligible Federal Direct Loans after you make 120 qualifying monthly payments while working full time in a qualifying public service position. The benefits can be considerable when combined with qualifying income-driven repayment plans such as IBR, ICR or Pay as You Earn.

Why Not Consolidate My Own Federal Loan?

I’ve spoken to many people who didn’t even know student loan consolidation was even an option for them. In a World where big companies are always looking to fool us with their fine print, it’s hard to fathom that there may be someone who actually makes money by doing what’s right for the customer. You can consolidate your own loan. You can change the oil in your car, but you don’t. There are experts out there where all they do is fight to get people the best possible rate on their student loans. Trusted Debt Solutions specializes in filing the necessary paperwork and continue to make sure you are making the lowest payments year after year. They study the law and know how to battle the big loan companies that try their hardest to fool us. How do I know? My husband is the owner of Trusted Debt Solutions and I have had the pleasure of living in financial freedom for the past 2 years. I know firsthand that an education can be liberating and debt can be enslaving.

Resources:
http://equaljusticeworks.org/ed-debt/students/public-service-loan-forgiveness
https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service

Categories: diyers, For DIYers, Loan Consolidation

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