Wednesday, February 25, 2015

Student Loan Series: Tax Opportunities You May Be Missing


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The tax filing deadline is creeping upon us.  If you’ve made student loan payments, make sure you claim those credits and deductions for which you qualify.  Each one could mean a reduction in the amount owed or even a tax refund!
For those enrolled in school during the last tax year, there are a few credits you might take.  The Lifetime Learning Credit is available to you, your spouse, or dependents if enrolled at an eligible educational institution and were responsible for paying college expenses.  The credit is for a 20% credit for up to $2,000 on a $10,000 in tuition expenses.  This credit may drop your tax to a zero balance, but any leftover credit is not refunded.  An exciting requirement is that you don’t have to be in undergraduate school to receive the credit and may have only taken one course to qualify.
The American Opportunity credit allows for a credit of up to $2,500 on the first $4,000 of qualifying undergraduate college education expenses.  There is a phase-out range based on the total amount of income, which you can review here.  The credit is currently only available for the years 2009-2017, so make sure you use it before you lose it!  Further, up to 40% of the credit is refundable, which means if you have a zero balance, then you may receive some of this money in a tax refund!
There are two deductions which you may be able to take advantage of whether you’re in school or out.  The first is a deduction for up to $2,500 in qualified interest payments made during the tax year.  The second deduction is for up to $4,000 in qualified tuition and fee payments made during the tax year for you, your spouse, or dependents.  Both of these deductions are subtracted from your reported income, which can change how the amount you owe is calculated. 
Requirements for the credits and deductions must be met, so make sure you read the fine print to avoid facing issues with your filings.

Until Next Time,
Jenny L. Maxey

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Wednesday, February 18, 2015

Student Loan Series: Transferring Affects Your Student Loans

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The decision to transfer schools might cross your mind, and can become something of a conflict of interest. Transferring schools can allow you to trade-up, so to speak. If you attended a school with a mediocre reputation, poor job market location, or expensive tuition, you might consider a transfer to a school that will boost your objectives.  However, keep in mind that transferring may also affect your financial aid.  And, some of the changes may be affected based on when you decide to transfer.  Here’s how.
Regardless of your transfer date you’ll need to resubmit your FASFA form.  Your financial status and eligibility to receive financial aid shouldn’t be affected by a change in schools.  This also means that your expected family contribution (if in undergrad) will also remain the same.  Further, make sure you check the amount of credits that transfer to remain eligible for financial aid under the satisfactory academic policy.  Federal subsidized loans can also be affected greatly if you are transferring from a four-year to two-year program.  Any campus-based aid provided by the previous school will not be transferred.  Further, you may receive less institutional aid than you may have received at your previous school because each school is different, may have differing amounts of available money to give out, and most campus aid is distributed on a first-come, first-served basis.  On the plus side, if your new school is cheaper you may receive a smaller financial aid award than your previous school, but this only means that the cost of attendance is cheaper and the amount of loans you have to repay will be less!
Transferring Mid-semester:  Your financial aid is “earned” after 60% of the semester has been fulfilled.  If you leave before this is met, the school will return unearned aid to the federal government.  This can affect how much you’re able to borrow at your new school.
Transferring Mid-year:  FASFA forms are for the academic year; so a mid-year refiling means that most of the financial information will be the same and your eligibility for financial aid should be the same as well.  However, depending on how much you earned at the previous school, you may qualify for less financial aid as you did as a first-time or returning student.
Transferring For a New Academic Year:  If you don’t know where you’ll be attending school for the next academic year, then your FASFA form will not reflect the school by the deadline (you can always add potential schools on your filing), but this could mean you are awarded less aid than had you filed on time.
Keep in mind your previous school’s existing loans.  Those loans will begin their grace period (or repayment based on the terms) as soon as you drop to below full-time/half-time enrollment (based on the terms).  Therefore, it is important that you contact the lenders to work out a continuing education deferment or other repayment option.

Until Next Time,
Jenny L. Maxey

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5 Financial Aid Mistakes to Avoid at the Beginning of the Semester

Tuesday, February 3, 2015

Student Loan Series: Private Lenders Making Changes

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Federal loans aren’t the only hardship for college graduates.  Many students also relied on private student loans to finance their education.  Typically, private lenders are stricter on repayment terms, offering little to no grace period, no flexible repayment options, rare deferments, and capped forbearances.   And while for many student loans, these strict standards remain in place, other private lenders are willing to make changes to help make repaying debt more manageable in today’s economy.

For instance, Wells Fargo – a private lender with borrowers in $11.9 billion outstanding student loan debt – recently announced that it will lower interest rates for borrowers meeting certain requirements.  Staff will review supporting documentation proving financial hardship including paystubs, other types of income documentation, and any other documentation showing the borrower’s full financial picture.  If you are a Wells Fargo borrower and believe you may qualify for a lower interest rate, you can call 1-800-378-5526 or visit this website In addition to lower interest rates, it has also been reported that this month (February 2015) Wells Fargo plans to extend repayment periods.  These changes have the potential to save Wells Fargo borrower’s thousands in interest payments.

Another private lender, Discover Financial Services is rumored to be making similar changes.  Other than lowering interest rates for some of its borrowers, the hardest-hit borrowers may also be forgiven for a portion of their outstanding debt!  The company, which holds $8.3 billion in outstanding student loan debt, is still working out the details.

     If you’re a borrower with a different private company, continue to check with your lender.  These changes mentioned above could mean less defaults and consistent repayments for these lenders, which may interest other private lenders to make changes as well.


Until Next Time,
Jenny L. Maxey

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