Your Questions About Direct Loan Servicing

Nagesh answers:

Actually sallie mae is a third party. The department of education owns all of the direct loans, but they dont have the time/resourses/care to deal with them so they send them off to “servicers” to do it for them. Sallie mae is one of those servicers. As well as great lakes, nelnet, fedloan, and others. They don’t bid for or buy the loans, the government chooses who gets loans based off of surveys showing which of the servicers are doing a better job handeling the loans. Unfortunatly the borrower has no choice in the matter as to who gets to service their loans. The best you can do is consolidate and hope the new loan gets sent elsewhere, or take out a private loan to pay it off

Nagesh answers:

You may complete the consolidation application at www.loanconsolidation.ed.gov. Direct Loans (Dept. Of Education) is the only lender with which you may apply for federal student loan consolidation at this point
(unless you are eligible for the current “special” consolidation, in which case the lender will contact you. . Http://studentaid.ed.gov/PORTALSWebApp/students/english/specialconsolidation.jsp). If the consolidation is completed and processed before the end of your grace period, you will lose the remainder of your grace period.

Ps – You should be able to determine the interest rates on Great Lakes loans by logging into www.mygreatlakes.org.

Just in case you don’t know, you may see an overview of your federal loans at www.nslds.ed.gov. It is always good to double-check this site to makes sure that you are aware of all of your federal loans and their statuses. Any private loans will not be available to view on this site.

Nagesh answers:

There are two types of student loans: federal loans (i.e. Direct Stafford loans and Perkins loans) and private loans that are issued by banks and loan companies like Sallie Mae.

With federal loans, you borrow directly from the U.S. Government. The amounts you can receive each year is limited, and is based on your dependency status (dependent or independent) and your grade level. The rates are fixed for the life of the loan and there are a number of protections that assist students, such as the opportunity to defer payment while you are in school, flexible payment plans, options for loan forgiveness, etc. There are two types of loans: subsidized and unsubsidized. With a subsidized loan, no interest accrues until you graduate or leave school. With an unsubsidized loan, interest accrues while you are in school, even it you have deferred paying until after graduation. When you eventually enter repayment, this accrued interest is added to the principal of your loan, so the amount that you repay is actually more than the original amount thanyou borrowed. You cannot choose subsidized or unsubsidized loans–the amount of subsidized loan (if any) is determined by financial need and awarded by your school. Federal loans that are in the student’s name are not based on credit (but parent PLUS loans, which are loans in the parent’s name taken out on behalf of a student, are based on credit).

With private student loans, each company sets its own terms, but in most cases the rate is variable and higher than the federal rate, and the terms are not as flexible. Private loans are based on credit, so most students will require a credit-worthy co-signer. For the most part, the amount you can borrow is limited to the cost of attendance at your school. Generally speaking, most students will only choose a private loan if the have no other option. However, private student loans do have one advantage over federal loans: they can be discharged in bankruptcy more easily than federal loans if you are unable to pay.

In most cases, for both federal and private student loans, the money is sent to the college first, where the school’s charges, such as tuition and fees, are deducted. After the charges are paid, if there is money left over it is sent to the student, usually in the form of a check or debit card, so it can be used for other educational expenses such as books and transportation. It can also be used for living expenses for off-campus students, or saved to help pay for summer classes. Not all students receive refunds because sometimes the entire amount is needed to pay for the school’s charges.

A student always has the right to choose how much he/she wants to borrow, so even though you may have been awarded a large amount, you can always refuse part or all of it and only borrow what you need.

After you graduate or cease to be enrolled in school, your loans will enter repayment after 6 months. During that time, you will be given information about different payment plans and how to begin paying. If you have difficulty paying, there are programs such as deferment or forbearance that permit you to postpone your payments for a period of time. There are also payment plans that are based on your income so you can arrange for a comfortable payment. In addition, there are programs that can lead to some of your loan balance being forgiven, such as the Public Service and Teacher Forgiveness programs. You can also have portions of your loans forgiven for volunteering with organizations like Americorps or Vista, or for service with the National Guard.

That is just a broad overview of information about student loans. It’s really too broad a subject to cover in depth here. However, for more information, you might visit the following websites:

http://www.finaid.org/loans/

http://www.direct.ed.gov/

Nagesh answers:

STUDENT FINANCIAL AID
Men, born after December 31, 1959, who aren’t registered with Selective Service won’t qualify for Federal student loans or grant programs. This includes Pell Grants, College Work Study, Guaranteed Student/Plus Loans, and National Direct Student Loans.

CITIZENSHIP
The U.S. Immigration and Naturalization Service (INS) makes registration with Selective Service a condition for U.S. Citizenship if the man first arrived in the U.S. Before his 26th birthday.

FEDERAL JOB TRAINING
The Workforce Investment Act (formerly called the Job Training Partnership Act – JTPA) offers programs that can train young men for jobs in auto mechanics and other skills. This program is only open to those men who register with Selective Service. Only men born after December 31, 1959, are required to show proof of registration.

FEDERAL JOBS
A man must be registered to be eligible for jobs in the Executive Branch of the Federal government and the U.S. Postal Service. Proof of registration is required only for men born after December 31, 1959.

Some states have added additional penalties for those who fail to register. See State Legislation.

Selective Service wants young men to register. It does not want them to be prosecuted or denied benefits. If a draft is ever needed, it must be as fair as possible, and that fairness depends on having as many eligible men as possible registered. In the event of a draft, for every man who fails to register, another man would be required to take his place in service to his country.

What is involved the security clearance process?
The clearance process considers such factors as registration for the Selective Service, failure to repay U.S. Government-guaranteed student loan, credit history, violations of the law, drug or alcohol abuse, or a less-than-honorable discharge from the armed forces. Background investigations may take several months (longer if a candidate has moved frequently or lived overseas for extended periods of time), and may include interviews of supervisors and coworkers. These investigations are conducted by the Department of State in cooperation with other federal, state, and local agencies.

What is the background investigation?
Applicants who are successful in the Oral Assessment will be asked to submit forms for a security clearance required for appointment to the Foreign Service. The clearance process considers such factors as: registration for the Selective Service; failure to repay a U.S. Government-guaranteed student loan; past problems with credit or bankruptcy; failure to meet tax obligations; unsatisfactory employment records; violations of the law; drug or alcohol abuse; a criminal record; extensive travel; education; residence and/or employment overseas; dual citizenship; foreign contacts; immediate family or relatives who are not citizens of the United States and/or a foreign born spouse; or a less- than-honorable discharge from the armed forces.

The Department of State conducts background investigations on each candidate to determine eligibility for security clearance. Investigations include interviews with current and previous contacts, supervisors, and coworkers.

I have dual citizenship – can that be a factor in obtaining my security clearance?
Security clearance evaluations/determinations must assure that access to classified information for a specific individual is “clearly consistent with the interests of national security.” Under the adjudicative guidelines, “any doubt as to whether access to classified information is clearly consistent with national security will be resolved in favor of the national security.” When making such a determination, DS must consider all available information, both positive and negative. This is the “whole person” concept. Dual nationality is a relevant element in some cases.

While U.S. Citizenship is a basic eligibility requirement to be considered for access to classified information, it does not automatically confer the right to a security clearance. Dual citizenship must be considered in context of other circumstances in an individual’s background. For more information on Dual Citizenship please download our in-depth page.

What happens if I do not receive clearance?
Candidates who do not receive security clearances are ineligible for appointment. Potential Candidates who have any serious issues which could prevent them from receiving their clearance should give some thought to the likelihood of their being found ineligible before starting this process. These investigations are conducted by the Department of State in cooperation with other federal, state, and local agencies.

Nagesh answers:

You need to contact them as soon as possible, I used to work for a credit card company (among other financial services companies) and it will be in your credit agreement for the loan that the payments have to be made as specified, it is their mistake if they haven’t taken the direct debit but in the eyes of the law it is your responsibility to make sure that the payments are coming out when they are supposed to even if a direct debit is set up to cover it.

I had a friend whose car insurance came out of his account via direct debit and one month when the insurance company didn’t request the direct debit (there was sufficient money in the account) they cancelled his insurance due to non payment, and as always happens that was two days before he had a bad crash, the insurance company refused to pay out and he was prosecuted for driving without insurance, the fact that it was down to the insurance company’s mistake made no difference.

Banks have to pay out direct debits by law (as long as there is enough money to cover it in the account) but if the loan company doesn’t request the payment (which is what will probably have happened here, even if your loan is from the same bank as your account it will usually still behave as if it was from a seperate company, and may even be from a separate company) then your bank isn’t at fault and you won’t have much legal backing to cover you.

If you contact them before they contact you, then you will be in a much better position to ask them to refund any charges/penalties that they have applied to the account, and it will show as missed payment’s on your credit record so the longer you leave it the worse it will look. A few missed payments on your record are not really a problem, especially if you add a note explaining why they were missed and that it was down to a bank error (visit the experian or equifax websites to do this, and also to check your record) but if it goes on for a while it will count against you when you are trying to obtain credit in future.

The sooner you contact them the better, it will save you a lot of time and money in the long run, because if you miss a certain number of payments they can request that the loan be repaid in full immediately (this is a standard clause, check your credit agreement as it may not apply but you can bet it will), and although you should still be able to sort it out, it will be a lengthy and stressful process.
Hope this helps, and good luck getting it sorted out.
James.