Your Questions About Direct Loan Servicing

Nagesh answers:

Your loan was disbursed by the Department of Education and is likely managed by a loan servicer, like Great Lakes, PHEAA, MOHELA, etc.

You probably received statements in the mail, or have documentation telling you who services the loan (hopefully!). Go to the National Student Loan database: http://www.nslds.ed.gov/nslds_SA/

Enter your info, find out who services the loan and call them to pay it off. They’ll probably ask you for bank account info for an EFT or give you an address to send a check.

Nagesh answers:

Http://www.DiscountAdvances.com/index.php?em=ce1d4ab4dc03015f4a7417851dfb64f8&rid=51&ref=friend

They are a direct lender, not one of those crazy matching sites. If you do use them, use referral code: GGYTBJ for a 50% discount

They charge $8.75/$100.

Nagesh answers:

From the Federal Trade Commission (FTC) website, an advisory on loan scams and what you can do to protect yourself when applying for a loan:

Specifically, “don’t make a payment to an individual for a loan; no legitimate lending organization would make such a request.”

Read the whole advisory below, or at the FTC website
http://www.ftc.gov/bcp/conline/pubs/tmarkg/loans.shtm

The Truth About Advance-Fee Loan Scams

Advance-fee loan sharks are preying on unwary consumers, taking their money for the promise of a loan or credit, and leaving them in hot water. The scam artists often impersonate legitimate lenders to entice consumers into falling for their bogus offer.

According to law enforcement agencies in the U.S. And Canada, ads and promotions for advance-fee loans suggest — or even “guarantee” — that there’s a high likelihood that a loan will be approved, regardless of the applicant’s credit history. But to take advantage of the offer, the consumer has to pay a fee. The catch? The scam artist takes off with your fee, and the loan never materializes.

Many advance-fee loans are promoted in the classified sections of daily and weekly newspapers and magazines. Often, the ads feature toll-free 800, 866, or 877 numbers, or area codes from Canada, such as 416, 647, 905, or 705. The loans also are promoted through direct mail, radio, and cable TV spots. The fact that an ad is in a legitimate media outlet — like the local newspaper or radio station — doesn’t guarantee that the company placing it is trustworthy.

Legitimate offers of credit do not require an up-front payment. Although legitimate lenders may charge application, appraisal, or credit report fees, the fees generally are taken from the amount borrowed. And the fees usually are paid to the lender or broker after the loan is approved. Legitimate lenders may guarantee firm offers of credit to “credit-worthy” consumers, but first, they evaluate the consumer’s creditworthiness and confirm the information in the application. Canadian law enforcers caution that it is highly unlikely that legitimate Canadian lenders would take a risk on U.S. Citizens whose credit problems preclude them from getting a loan in the U.S.

Often, advance-fee loan sharks claim that their fees will go to a third party for credit insurance or a related service. Sometimes, they even fax materials using stolen or forged logos and letterheads from legitimate companies. The materials are fakes, according to enforcement officials, and the contracts the scam artists ask consumers to sign are worthless. Adding insult to injury, some scammers have used the information they collect from consumers to commit identity theft.

Often, advance-fee loan scammers direct applicants to send the fees via Western Union money transfers payable to an individual, rather than a business. They ask applicants to use a “password code” with their Western Union payment, which allows the scammers to hide their identity.

U.S. And Canadian law enforcers say consumers can avoid being taken by advance-fee loan sharks. Here’s how:

Don’t pay for the promise of a loan. It’s illegal for companies doing business by phone in the U.S. To promise you a loan and ask you to pay for it before they deliver. Requiring advance fees for loans also is illegal in Canada.

Ignore any ad — or hang up on any caller — that guarantees a loan in exchange for a fee in advance.

Remember that legitimate lenders never guarantee or say that you will receive a loan before you apply, or before they have checked out your credit status or contacted your references, especially if you have bad credit or no credit record.

Don’t give your credit card, bank account, or Social Security number on the telephone, by fax, or via the Internet unless you are familiar with the company and know why the information is necessary.

Don’t make a payment to an individual for a loan; no legitimate lending organization would make such a request.

Don’t wire money or send money orders for a loan through Western Union or similar companies. You have little recourse if there’s a problem with a wire transaction. Legitimate lenders don’t pressure you to wire funds.

If you are not absolutely sure who you are dealing with, get the company’s number in the phone book or from directory assistance, and call it to make sure you’re dealing with the company you think you are. Some scam artists have pretended to be the Better Business Bureau or another legitimate organization.

Nagesh answers:

You will have to ‘qualify’ your potential clients. For instance, if you sell gravel, you will instantly disqualify pillow makers. Ok?

In order to not waste time/resources, you should have an idea of who uses your product. An introductory letter is a perfectly legitimate and logical way to present yourself and your product.

Use pictures, make it attractive.

So. I make concrete and I see by your letter that you sell gravel. Fine. You’re over hurdle one.

Now convince me that your gravel is a) going to make my concrete better, b) going to make my business more profitable, c) going to make my life (and work) easier, d) bring me great success.

Skip everything else. For now.

Follow up with a phone call which includes a brief synopsis of your letter and (this is the hard part) ask them directly for a meeting.

Don’t hint, don’t fiddle. “May I make an appointment with you to go over the wonderful things I can do for you?” Be direct. Be firm. Be convinced that your gravel WILL INDEED benefit this client.

“Lines”, tricks, and bulldozer-style personal presentations (where you charge ahead with your script and never actually TALK to the client) are going to fail. Listen carefully. Repeat your strong points, and probe for their questions.

It may be as simple as “can you take payment 30-days from delivery?” “Can you deliver on 2 hours notice?” Or something that you could never anticipate!

There’s more, but… Well. You’ve got the idea!

Go get ’em!

Best wishes

Nagesh answers:

Under most circumstances allukcatsbaby would be correct, however, Government Backed Student Loans typically cannot be discharged by bankruptcy. In other words, if she files bankruptcy, she can wipe away her private debts, but this does absolutely nothing for her student loans.

With that said, once the foreberance/deferment options have been used up, there are some flexible repayment terms that can make repayment of student loans much easier to manage. Here are the options I recommend as listed on the studentaid.ed.gov website. Some of these options may require her to reconsolidate her loans and she should talk to the lender about her options.

Income-Sensitive Repayment Plan (FFELSM Loans only)
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With an income-sensitive plan, your monthly loan payment is based on your annual income. As your income increases or decreases, so do your payments. The maximum repayment period is 10 years. Ask your lender for more information on FFEL Income- Sensitive Repayment Plans.

Income Contingent Repayment (ICR) (Direct Loans Only)
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This plan gives you the flexibility to meet your Direct LoansSM obligations without causing undue financial hardship. Each year, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse’s income if you’re married), family size, and the total amount of your Direct Loans. Under the ICR plan you will pay each month the lesser of:

The amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or
20 percent of your monthly discretionary income.
If your payments are not large enough to cover the interest that has accumulated on your loans, the unpaid amount will be capitalized once each year. However, capitalization will not exceed 10 percent of the original amount you owed when you entered repayment. Interest will continue to accumulate but will no longer be capitalized (added to the loan principal).

The maximum repayment period is 25 years. If you haven’t fully repaid your loans after 25 years (time spent in deferment or forbearance does not count) under this plan, the unpaid portion will be discharged. You may, however, have to pay taxes on the amount that is discharged.

As of July 1, 2009, graduate and professional student Direct PLUS Loan borrowers are eligible to use the ICR plan. Parent Direct PLUS Loan borrowers are not eligible for the ICR repayment plan.

Income Based Repayment (IBR) – Effective July 1, 2009
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Income Based Repayment is a new repayment plan for the major types of federal loans made to students. Under IBR, the required monthly payment is capped at an amount that is intended to be affordable based on income and family size. You are eligible for IBR if the monthly repayment amount under IBR will be less than the monthly amount calculated under a 10-year standard repayment plan. If you repay under the IBR plan for 25 years and meet other requirements you may have any remaining balance of your loan(s) cancelled. Additionally, if you work in public service and have reduced loan payments through IBR, the remaining
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If still available, she can also continue to defer and/or get a forebearance however, that assumes she meets the criteria (have her check with her lender for this).

She will only have her wages garnished if she DEFAULTS and YES you should avoid this at all costs and it will not necessarily be easy. And if she does default, the consequences could be dire such as withheld tax refunds and even a loss of her social security benefits. With the flexibility the Governemt offers, this should be possible. Student loans don’t behave the same way a loan on a credit card would. Nevertheless, as long as she continues to work with the lender she will be fine.

If by chance, some of the student loans are private instead of Government back, then considering the circumstance, discharging them through bankruptcy would make the most sense.

If you decide to get married, you will not be responsible for the loans. With that said, definitely be cautious b/c she will be somewhat financially dependent on you unless her job situation changes. With that said, if you love her enough and you are sure she loves you, then this situation should be manageable but not easy. I hope this helps.