7 Common Myths about Financial Aid

College application deadlines are fast approaching and you may be wondering if you can even afford to go to college. What you might not know is that the federal government provides almost $150 billion a year to help students just like you pay for college. Right now, you’re probably thinking of all of the reasons why you won’t qualify for financial aid. Please don’t waste your time worrying- you could be using this time to complete the Free Application for Federal Student Aid (FAFSA®). Here are some common myths about financial aid that you shouldn’t believe.

Myth #1: My family makes too much money for me to qualify for aid.

There is no income cut-off for federal student aid. Your eligibility for financial aid is based on a number of factors and not just your income. Plus, many states and schools use your FAFSA data to determine your eligibility for their aid. If you’re not sure what you will get, the best way to know for sure is to complete the application!

Myth #2: I need to file taxes before completing the Free Application for Federal Student Aid or (FAFSA).

You can use estimated information on your FAFSA so you’ll be able to submit it before you file taxes. In fact, many states and schools have financial aid deadlines well before the tax deadline. So completing your FAFSA earlier is a good idea. You might want to base your estimates on last year’s tax return, and once you file your taxes, you can log back in and update the information. You may even be able to use the IRS Data Retrieval Tool to automatically import your tax information into your FAFSA. 

Myth #3: The FAFSA is too hard to fill out.

This is a very common misconception, but the FAFSA has come a long way! It’s easier than ever to complete online. The form uses “skip logic,” so you are only asked the questions that are relevant to you. And if you’ve filed your taxes, you can transfer your tax return data into your FAFSA automatically. As a result of improvements like these, the average time to complete the FAFSA is now less than 21 minutes. If you do get stuck, help is available by Web chat, e-mail and phone.

Myth #4: My grades aren’t good enough for me to get aid.

Eligibility for most federal student aid programs is not linked to your academic performance. However, you will need to maintain grades that your school considers satisfactory in order to continue receiving financial aid. 

Myth #5: My ethnicity or age makes me ineligible for aid.

There are basic eligibility requirements, but ethnicity and age are not considered.

Myth #6: I support myself, so I don’t have to include parent info on the FAFSA.
This is not necessarily true. Even if you support yourself and file taxes on your own, you may still be considered a dependent student for federal student aid purposes. You can determine your dependency status by answering these questions. If you are independent, you won’t need to include your parents’ information on your FAFSA. But if you are dependent, you must provide your parents’ information.

Myth #7: I already completed the FAFSA so I don’t need to complete it again.
You need to complete the FAFSA every year you plan to attend college or career school. Don’t worry; it will be even easier the second or third time around since a lot of your information will be pre-populated on the application.

Millions of students complete the FAFSA each year and receive financial aid to help pay for college. Don’t let these myths stop you from achieving your goals. Take the first step by completing the FAFSA at fafsa.gov.

Tara Marini is a communication analyst at the Department of Education’s office of Federal Student Aid.

7 Common FAFSA Mistakes

  1. Not Completing the FAFSA®

I hear all kinds of reasons: “The FAFSA is too hard,” “It takes to long to complete,” I never qualify anyway, so why does it matter.” It does matter. By not completing the FAFSA, you are missing out on the opportunity to qualify for what could be thousands of dollars to help you pay for college. The FAFSA takes most people 21 minutes to complete, and there is help provided throughout the application. Oh, and contrary to popular belief, there is no income cut-off when it comes to federal student aid.

  1. Not Being Prepared

The online FAFSA has gotten a lot easier over the last few years. We’ve added skip logic, so you only see questions that are applicable to you. There is also an option to import your tax information from the IRS directly into the FAFSA application. But, the key to making the FAFSA simple is being prepared. You’ll save yourself a lot of time by gathering everything you need to complete the FAFSA before you start the application.

  1. Not Reading Carefully

You’re on winter break and probably enjoying a vacation from reading for a couple weeks. I get it. But when it comes to completing the FAFSA, you want to read each question carefully. Too many students see delays in their financial aid for simple mistakes that could have been easily avoided.

Don’t rush through these questions:

  • Your Number of Family Members (Household size): The FAFSA has a specific definition of how your or your parents’ household size should be determined. Read the instructions carefully. Many students incorrectly report this number.
  • Amount of Your Income Tax: Income tax is not the same as income. It is the amount of tax that you (and if married, your spouse) paid on your income earned from work. Your income tax amount should not be the same as your adjusted gross income (AGI). Where you find the amount of your income tax depends on which IRS form you filed.

Tip: If you use the IRS Data Retrieval Tool, this number will be pulled for you, directly from your income tax return.

  • Legal Guardianship: One question on the FAFSA asks: “As determined by a court in your state of legal residence, are you or were you in legal guardianship?” Many students incorrectly answer “yes” here. For this question, the definition of legal guardianship does not include your parents, even if they were appointed by a court to be your guardian. You are also not considered a legal guardian of yourself.
  1. Inputting Incorrect Information

The FAFSA is an official government form. You must enter your information as it appears on official government documents like your birth certificate and social security card. Examples:

  • Entering the Wrong Name (Yes, I’m serious): You wouldn’t believe how many people have issues with their FAFSA because they entered an incorrect name on the application. It doesn’t matter if you’re Madonna, or Drake, or whatever Snoop Lion is calling himself these days. You must enter your full name as it appears on official government documents. No nicknames.
  • Entering the Wrong Social Security Number (SSN): When we process FAFSAs, we cross check your social security number with the Social Security Administration. To avoid delays in processing your application, triple check that you have entered the correct SSN. If you meet our basic eligibility criteria, but you or your parents don’t have a SSN, follow these instructions.
  1. Not Reporting Parent Information

Even if you fully support yourself, pay your own bills, file your own taxes, you may still be considered a dependent student for federal student aid purposes, and therefore, you’ll need to provide parent information on your FAFSA. Dependency guidelines for the FAFSA are determined by Congress and are different from those of the IRS. Find out whether or not you need to provide parent information by answering these questions.

Bonus: Who is my parent when I fill out the FAFSA?

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  1. Not Using the IRS Data Retrieval Tool

For many, the most difficult part about filling out the FAFSA is entering in the financial information. But now, thanks to a partnership with the IRS, students and parents who are eligible can automatically transfer the necessary tax info into the FAFSA using the IRS Data Retrieval Tool. This year, the tool will launch on February 1, 2015. In most cases, your information will be available from the IRS two weeks after you file. It’s also one of the best ways to prevent errors on your FAFSA and avoid any processing delays.

Tip: If you used income estimates to file your FAFSA early, you can use the IRS Data Retrieval Tool to update your FAFSA two weeks after you file your 2014 taxes.

  1. Not Signing the FAFSA

So many students answer every single question that is asked, but fail to actually sign the FAFSA with their PIN and submit it. This happens for many reasons, maybe they forgot their PIN, or their parent isn’t with them to sign with the parent PIN, so the FAFSA is left incomplete. Don’t let this happen to you. If you don’t have or don’t know your PIN, apply for one. If you would like confirmation that your FAFSA has been submitted, you can check your status immediately after you submit your FAFSA online.

Nicole Callahan is a Digital Engagement Strategist at the U.S. Department of Education’s office of Federal Student Aid.

Parents: Tips To Help Your Child Complete the FAFSA

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If you’re a parent of a college-bound child, the financial aid process can seem a bit overwhelming.  Who’s considered the parent? Who do you include in household size?  How do assets and tax filing fit into the process? Does this have to be done every year?  Here are some common questions that parents have when helping their children prepare for and pay for college or career school: 

Why does my child need to provide my information on the FAFSA®?

While the federal government provides nearly $150 billion in financial aid each year, dependency guidelines for the FAFSA are determined by Congress. Even if your child supports himself, he may still be considered a dependent student for federal student aid purposes. If your child was born on or after January 1, 1992, then he or she is most likely considered a dependent student and you’ll need to include your information on the Free Application for Federal Student Aid (FAFSA).

Who’s considered a parent when completing the FAFSA?

If your child needs to report parent information, here are some guidelines to help:

  • If the child’s legal parents (biological and/or adoptive parents) are married to each other, answer the questions about both of them.
  • If the child’s legal parents are not married to each other and live together, answer the questions about both of them.
  • If the child’s parent is widowed or was never married, answer the questions about that parent.
  • If the child’s parents are divorced or separated, follow these guidelines.

More information on who’s considered the parent can be found here: http://1.usa.gov/1AbWmp6

Who’s considered part of the household?

When completing your child’s FAFSA, you should include in the household size: parents, any dependent student(s), and any other child who lives at home and receives more than half of their support from you.  Also include any people who are not your children but who live with you and for whom you provide more than half of their support.

Do we need to wait to apply until I file my income taxes?

Deadlines in some states are before the tax filing deadline so you’ll want to ensure your child files his or her FAFSA as soon as possible after January 1st to maximize financial aid. You do not need to wait until you file your federal tax return.  If you haven’t done your taxes by the time your child completes the FAFSA, you can estimate amounts based on the previous year if nothing has drastically changed.  After you file your taxes, you’ll need to log back in to the FAFSA and correct any estimated information.  If you’ve already filed your taxes, you can use the IRS Data Retrieval Tool to automatically pull in your tax information directly from the IRS into the FAFSA. The IRS Data Retrieval Tool will be available February 1, 2015.

Do I need to do this every year?

Yes, you and your child need to complete the FAFSA each year in order for your child to be considered for federal student aid.  The good news is that each subsequent year you can use the Renewal Application option so you only have to update information that has changed from the previous year!

What else do I need to know before I begin?

You’ll need to get a PIN and have all the necessary documents before you begin.  Here’s a handy checklist: http://studentaid.ed.gov/fafsa/filling-out

Susan Thares is the Digital Engagement Lead at the Department of Education’s Office of Federal Student Aid.

5 Reasons You Should Complete the Free Application for Federal Student Aid

Did you hear? The 2015-16 FAFSA became available on January 1, 2015! Fill it out: fafsa.gov

If you will be attending college between July 1, 2015 and June 30, 2016, you should complete the FAFSA. Here are some reasons why:

It’s FREE!

The FAFSA is free to complete and there is help provided throughout the application. Several websites offer help filing the FAFSA for a fee. These sites are not endorsed by the U.S. Department of Education. We urge you not to pay for assistance that you can get for free at the official government website: fafsa.gov.

It’s easier than ever.

We’ve done a lot over the past few years to simplify the FAFSA. One of the most exciting enhancements has been the launch of the IRS Data Retrieval Tool. The tool allows students and parents to access the required information from their IRS tax return to complete the FAFSA, and transfer the data directly into their FAFSA from the IRS website with just a few clicks. This year, the IRS Data Retrieval Tool will launch on February 1, so be on the lookout for that. Also, for those who have completed the FAFSA in the past, when you go to renew your FAFSA for the upcoming school year, a lot of your information will automatically roll over, saving you lots of time.

It takes less than 21 minutes to complete.

Did you know that, on average, it takes less than 21 minutes to complete the FAFSA? That’s less time than it would take you to watch your favorite TV show! And think of the benefits! Spend 21 minutes completing the application and you could qualify for thousands of dollars in financial aid. Talk about return on investment…

More people qualify than you’d think.

If you don’t fill out the FAFSA, you could be missing out on a lot of financial aid! I’ve heard a number of reasons students think they shouldn’t complete the FAFSA. Here are a few:

  • “I (or my parents) make too much money, so I won’t qualify for aid.”
  • “Only students with good grades get financial aid.”
  • “The FAFSA is too hard to fill out.”
  • “I’m too old to qualify for financial aid.”

These are all myths about financial aid. The reality is, EVERYONE should fill out the FAFSA! Don’t leave money on the table.

You may need it to apply for state and college financial aid and even private scholarships!

Completing the FAFSA is the first step toward getting financial aid for college, career school, or graduate school. The FAFSA not only gives you access to the $150 billion in grants, loans, and work-study funds that the federal government has available, but many states, schools, and private scholarships require you to submit the FAFSA before they will consider you for any financial aid they offer. That’s why it’s important that every college-bound student complete the FAFSA. You’ll never know what you get unless you apply.

For information and tips on completing the FAFSA, visit StudentAid.gov/fafsa.

Nicole Callahan is a Digital Engagement Strategist at the U.S. Department of Education’s office of Federal Student Aid.

6 Steps to Filling Out the FAFSA

Need to fill out the FAFSA® but don’t know where to start? We’re here to help. You’ve already done the hard part and gathered all of the necessary information, so now it’s time to complete the FAFSA. Let us walk you through it step by step: 

  1. Go to fafsa.gov. One thing you don’t need in order to fill out the FAFSA? Money! Remember, the FAFSA is FREE when you use the official .gov site: fafsa.gov.
  2. Choose which FAFSA you’d like to complete. The new FAFSA that becomes available on January 1, 2015, is the 2015–16 FAFSA. You should complete the 2015-16 FAFSA if you will be attending college between July 1, 2015 and June 30, 2016. Remember, the FAFSA is not a one-time thing. You must complete your FAFSA each school year.

Note: The 2014–15 FAFSA is also available if you will be attending college between July 1, 2014 and June 30, 2015, and you haven’t applied for financial aid yet.

  1. Enter your personal information.* This is information like your name, date of birth, etc. If you have completed the FAFSA in the past, a lot of your personal info will be pre-populated to save you time. Make sure you enter your personal information exactly as it appears on official government documents. (That’s right, no nicknames.)
  2. Enter your financial information.* All of it. You should use income records for the tax year prior to the academic yearfor which you are applying. For example, if you are filling out the 2015–16 FAFSA, you will need to use 2014 tax information. If you or your parent(s) haven’t filed your 2014 taxes yet, you can always estimate the amounts using your 2013 tax return; just make sure to update your FAFSA once you file your 2014 taxes. Once you file your taxes, you may be able to automatically import your tax information into the FAFSA using the IRS Data Retrieval Tool. It makes completing the FAFSA super easy!
  3. Choose up to 10 schools to which you wish to apply, and we will send the necessary information over to them so they can calculate the amount of financial aid you are eligible to receive. Make sure you include any school you plan to attend, even if you’re not sure yet. This will prevent your financial aid from being delayed. If you’re applying to more than 10 schools: http://1.usa.gov/1mHPD1F
  4. Sign the document with your PIN.* The PIN serves as your electronic signature, or e-signature. You’ll use it to electronically sign and submit your FAFSA. If you don’t have a PIN, you’ll need to get one. If you’ve completed the FAFSA in the past, you probably already have a PIN. You can use the same PIN you used in the past to renew your FAFSA each school year, so keep it in a safe place. If you have forgotten your PIN, you can retrieve it. If you’re considered a dependent student, at least one of your parents or your legal guardian will need a PIN as well. If you or one of your siblings have completed the FAFSA within the last 18 months, your parent(s) will use the same PIN they used before. If not, your parent(s) may need to apply for a new PIN.

*If you are considered a dependent student, your parent(s) will also need to do this.

I’m finished. What’s next?

That’s it. You’ve filled it out. We told you it wasn’t so bad. With the hard part over, check out this page to learn what you should do next.

Still have questions?

We’re here to help. Connect with us: StudentAid.gov/social.

Nicole Callahan is a Digital Engagement Strategist at the U.S. Department of Education’s office of Federal Student Aid.

7 Things You Need Before You Fill Out the FAFSA®

If you need financial aid to help you pay for college, it’s important that you complete the Free Application for Federal Student Aid (FAFSA®). The good news? The FAFSA is simpler than ever! Did you know that, on average, it only takes 21minutes complete? That’s less time than it takes to watch an episode of your favorite TV program, so no excuses about not having the time. Record that TV show and watch it later.

The 2015­­–16 FAFSA becomes available on January 1, 2015, at 12 a.m. Central Time. You can fill it out for FREE on the official government site, fafsa.gov. To speed up the FAFSA process, get prepared early. Here is what you’ll need to fill out the FAFSA:

  1. Your Federal Student Aid PIN* — In order to sign your FAFSA electronically, you’ll need a Federal Student Aid PIN. You can help to prevent processing delays by getting a PIN before you begin the FAFSA. Find out how to get a PINand what to do if you forgot your PIN. It only takes a minute.
  2. Your social security number* — If you don’t know it, it can be found on your social security card. If you don’t have access to that, it may be on your birth certificate or permanent resident card. If you don’t have one of those, or don’t know where it is, ask your parent or legal guardian. If you’re a dependent student, you’ll need their help with portions of the FAFSA anyway. If you are not a U.S. citizen, but meet Federal Student Aid’s basic eligibility requirements, you’ll need your Alien Registration Number.
  3. Your driver’s license number — If you don’t have a driver’s license, then don’t worry about this step.
  4. Your tax records* — Use income records for the tax year prior to the academic yearfor which you are applying: so if you are filling out the 2015–16 FAFSA, you will need 2014 tax information. If you haven’t filed your taxes yet, you can always estimate the amounts using your 2013 tax return, just make sure to update your FAFSA once you file your 2014 taxes. Once you file your 2014 taxes, you may be able to automatically import your tax information into the FAFSA using the IRS Data Retrieval Tool.
  5. Records of your untaxed income* — This includes a whole bunch of variables that may or may not apply to you, like child support received, interest income and veterans non-education benefits. Parents can find specific details here. Students can find details here.
  6. Records of all your assets (money)* — This includes savings and checking account balances, as well as investments like stocks and bonds and real estate.
  7. List of the school(s) you are interested in attending — The schools you list on your FAFSA will automatically receive your FAFSA results electronically. They will use your FAFSA information to determine the types and amounts of financial aid you may receive. You can list up to 10 schools on your FAFSA. If you’re applying to more than 10 schools, you can add more later. Be sure to list any school you’re considering, even if you’re not sure yet.

*If you’re a dependent student, you will need this information for your parent(s) as well.

Still have questions?

We’re here to help. Connect with us: StudentAid.gov/social.

Nicole Callahan is a Digital Engagement Strategist at the U.S. Department of Education’s office of Federal Student Aid.

3 Ways to Get Your Loan Out of Default

You didn’t pay your federal student loan for several months, and now a collection agency is calling you telling you your loan has defaulted. If you’re like many borrowers in this situation, you are probably freaked out and don’t know what to do.

options

Don’t worry — you still have options to remedy your situation. You don’t have to run from your debt; you can face it head-on and we can help you.

When you default on a federal student loan, you have three basic options to get your loan back in good standing:

  1. Loan Repayment: You can repay your defaulted loan, but just know that your lender will ask for the full amount. When you default, the entire balance of the loan is due immediately. If you are able, you can pay by check, money order, or credit or debit card. Get more info on where to send your payment. If this isn’t an option for you, keep reading.
  2. Loan Rehabilitation: You can rehabilitate your loan by voluntarily making at least nine payments of an agreed-upon amount over a 10-month period. You can choose your due date, and your payment has to arrive at the Department payment center within 20 days of that due date. You and the Department of Education must work together to agree on a reasonable and affordable payment plan. After you’ve successfully rehabilitated your loan, you may regain eligibility for benefits such as choice of repayment plan, loan forgiveness, deferment, and forbearance. However, it is possible that your monthly payment could increase after you make those initial nine payments due to the additional collection costs that are added to your principal balance.
  3. Loan Consolidation: You may be able to combine all of your federal student loans, including defaulted loans, into a new Direct Consolidation Loan. Usually, you are required to make at least three consecutive, voluntary, and on-time payments on your defaulted loans prior to consolidating. Please note that the principal balance of your new Direct Consolidation Loan may include accrued interest and collection fees. There is also an option to consolidate without making any payments; however, you must agree to one of our income-driven repayment plans as part of this consolidation, and you are required to complete income verification documents. Learn about your options for consolidating.

Now that you understand your options, it’s time to take action. First, contact the agency that is billing you to explain your situation, ask for more information on your options, and let them know that you want to work out a plan to get your loan back on track. In no time, you will be out of default and your loan will be back in good standing.

Tara Marini is a communication analyst at the Department of Education’s office of Federal Student Aid.

5 Ways to Pay Off Your Student Loans Faster

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The first thing people say when they find out where I work: “Can you delete my student loans for me?”

If only I had that power. Just like many of you, I am a student loan borrower. Each month, my federal student loan servicer, withdraws my $381.35 student loan payment from my bank account and I still cringe every time. (Do you know how many trips I could take with that money?) Point is, I understand what you’re going through.

That said, there are manageable ways to pay off your student loans faster than you had planned and save yourself money by doing so!

Here are some ideas:

1) Pay Right Away Even though you’re usually not required to, consider making student loan payments during your grace period or while you’re still in school. If you’re short on cash, consider at least paying enough each month to cover the amount of interest you’re accruing. That way your interest doesn’t capitalize and get added to your principal balance. Not doing this was one of the biggest mistakes I made with my student loans.

2) Sign up for Automatic Debit If you sign up for automatic debit, your student loan servicer will automatically deduct your student loan payment from your bank account each month. Not only does this help ensure that you make payments on time, but you may also be able to get an interest rate deduction for enrolling. Contact your loan servicer to see if your loan is eligible for this benefit.

3) Pay More than Your Minimum Payment Even if it’s $5 a month!  Paying a little extraeach month can reduce the interest you pay and reduce your total cost of your loan over time. (Pay attention! This next part is important!) If you want to ensure that your loan is paid off faster, make sure you tell your loan servicer that the extra amount you’re paying is not intended to be put toward future payments. If given the option, ask your servicer if the additional payment amount can be allocated to your higher interest loans first.

4) Use Your Tax Refund One easy way to pay off your loan faster is to dedicate your tax refund to paying off some of your student loan debt. Part of the reason you may have gotten a refund in the first place is because you get a tax deduction for paying student loan interest. Might as well be smart about the way you spend it.

5) Seek Out Forgiveness and Repayment Options There are a number of situations under which you can have your federal student loan balance forgiven. There are forgiveness and repayment programs for teachers, public servants, members of the United States Armed Forces, and more. Most of these programs have very specific eligibility requirements, but if you think you might qualify, you should definitely do some research. Also, research whether your employer offers repayment assistance for employees with student loans. There are many who do!

Nicole Callahan is a Digital Engagement Strategist at The U.S. Department of Education’s office of Federal Student Aid. She is scheduled to finish repaying her student loans in 2021, but is hoping that by taking her own advice, she will finish much faster.

How to Decide Which Income-Driven Repayment Plan to Choose

If your student loan payments are high compared to your income, you may be eligible to switch your repayment plan to one that calculates your monthly payment based on your income and family size.

TIP: If you are seeking Public Service Loan Forgiveness, you should repay your federal student loans under an income-driven repayment plan.

If you need to make lower monthly payments, one of the three following income-driven plans may be right for you:

  • Income-Based Repayment Plan (IBR)
  • Pay As You Earn Repayment Plan (PAYE)
  • Income-Contingent Repayment Plan (ICR)

What’s the difference between the three plans?

While there are other minor differences between these three repayment plans, these are four significant ways they differ:

You can compare the high-level differences below:

IDR-Chart-Final

It’s also important to note that your loan types must also be eligible to be repaid under an income-driven plan.

How do I decide which income-driven repayment plan to choose?

1) See which plans you qualify for. Not everyone qualifies for an income-driven repayment plan. You can use our Repayment Estimator to estimate your payment amount for all repayment plans, including income-driven plans.

    • Check and see whether the types of federal student loans you have are eligible. In some cases, you may need to consolidate your student loans in order to be able to repay the loan(s) under an income-driven plan or the income-driven repayment plan that offers the lowest monthly payment.
    • If you’re considering our IBR or PAYE, you’ll need to make sure you meet the debt-to-income ratio requirement. To qualify, the payment that you would be required to make under the IBR or PAYE (based on your income and family size) must be less than what you would pay under the Standard Repayment Plan with a 10-year repayment period. Generally, you will meet this requirement if your federal student loan debt is higher than your annual discretionary income or represents a significant portion of your annual income.

2) Compare Plans Based on YOUR Circumstances. Using our repayment estimator, you can estimate your monthly payment amount, repayment period, projected loan forgiveness, and the total interest you’ll pay over the life of your loan. Just log in using your Federal Student Aid PIN, enter basic information about your income, family size, tax filing status, and state of residence and out pops a comparison based on your individual circumstances. You can also view the comparison in graph format!

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3) Weigh the Pros and Cons. Income-driven repayment plans may lower your federal student loan payments. However, whenever you make lower payments or extend your repayment period, you will likely pay more in interest over time—sometimes significantly more. In addition, under current Internal Revenue Service (IRS) rules, you may be required to pay income tax on any amount that is forgiven if you still have a remaining balance at the end of your repayment period.

Before you apply for an income-driven repayment plan, contact your loan servicer with any questions. Your loan servicer will help you decide whether one of these plans is right for you.

I’ve decided which income-driven plan is right for me. How do I apply?

If you decide that an income-driven repayment plan is right for you, there are a few steps you need to take. To apply, you must submit an application called the Income-Driven Repayment Plan Request. You can submit the application online at StudentLoans.gov or on a paper form, which you can obtain from your loan servicer. Along with the application, you’ll need to provide income information. Find out more information about the documentation you must provide.

FACT: The application allows you to select an income-driven repayment plan by name, or request that your loan servicer determine what income-driven plan or plans you qualify for, and to place you on the income-driven plan with the lowest monthly payment amount.

Is there anything else I should know about choosing an income-driven repayment plan?

      • You must provide updated documentation each year You must provide your loan servicer with updated income documentation and certify your family size on the Income-Driven Repayment Plan Request each year, generally around the same time of the year that you first began repayment under the income-driven plan that you selected. It’s important for you to provide the required information by the annual deadline specified by your loan servicer. If you miss the deadline, you’ll remain on the same income-driven repayment plan, but your monthly payment will no longer based on your income (this means your payment will increase).
      • Your payment amount can change from year to year. Your required monthly payment amount may increase or decrease if your income or family size changes from year to year.

Nicole Callahan is a digital engagement strategist at the Department of Education’s office of Federal Student Aid.

Missed a Few Student Loan Payments? We Can Help You Get Back on Track.

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You’ve recently missed a few payments on your student loan. It might not seem like a big deal, but you are responsible for repaying your federal student loans and when you don’t, you could face huge consequences. You don’t need me to tell you about those; you probably already know what they are. (If you don’t, you can read more about those here.) Instead, let’s talk about how you get back on track. It may be easier than you think.

One of the many benefits of having federal student loans is the flexibility of repayment options. You owe it to yourself (and your credit score) to take advantage of these options.

First things first: whenever you are unable to make your federal student loan payments, you should contact your loan servicer. Your loan servicer can explain your options for lowering or temporarily postponing your payments and help keep your loan in good standing while you get your finances in order.

Here are some options that your servicer may suggest to help you:

  • Switch your monthly payment date: You may be able to change the date that your monthly payment is due. For example, if you get paid once a month on the 1st, you may request your federal student loan payment is due on the 2nd of the month instead of the 28th.
  • Switch your repayment plan: You may be able to change your repayment plan to one with lower monthly payments. Just beware that lowering your monthly payments may result in paying more over the life of the loan. You can compare your payments under each repayment plan using our Repayment Estimator.
  • Ask about income-driven repayment plans: You may qualify for a repayment plan that bases your monthly payment amount on your income. Depending on your income, your initial payment could be as low as $0 per month. This is a good option if you cannot afford your current monthly payment amount. Just note that income-driven repayment plans usually end up costing you more over the life of the loan.
  • Consolidate your loans: If you have multiple federal student loans, you may consider combining them into one loan. A Direct Consolidation Loan often results in a lower monthly payment, but does extend the amount of time you have to repay your loan which causes you to pay more over the life of the loan. Find out more about the .

If the options described above won’t work for you, there are a few other options to consider:

  • Ask for a deferment or forbearance: deferment or forbearance allows you to temporarily postpone or reduce your federal student loan payments. You may qualify for a deferment or forbearance for a variety of reasons, including financial/economic hardship, unemployment, or military service. It’s important to note that, in most cases, interest will continue to accrue on your loans when they are in a deferment or forbearance status (except for subsidized loans in deferment).

For more information about options for successfully managing your loans, visit https://studentaid.ed.gov/repay-loans or contact your loan servicer.

Tara Marini is a communication analyst at the Department of Education’s office of Federal Student Aid.

Is Student Loan Consolidation Right for You?

A Direct Consolidation Loan allows you to combine multiple federal education loans into one loan. Before making the decision to consolidate your loans, you’ll want to carefully consider whether loan consolidation is the best option for you. Keep in mind, once your loans are combined into a Direct Consolidation Loan, they cannot be removed.

FACT: You never have to pay to consolidate your student loans. If you have questions about consolidation, contact your loan servicer.

FACT: You never have to pay to consolidate your student loans. If you have questions about consolidation, contact your loan servicer.

Advantages of consolidating your student loans:

  • It’s Free!
    It’s free to apply to consolidate your federal student loans. If you are contacted by someone offering to consolidate your loans for a fee, you are not dealing with the U.S. Department of Education.
  • Simplified Payments
    You’ll have a single monthly payment and a single lender (the U.S. Department of Education) instead of multiple payments and multiple lenders.
  • Lower Monthly Payments
    You may get a longer time to repay your loans, often resulting in lower monthly payments.
  • Qualify for Income-Driven Repayment or Loan Forgiveness

Some benefits such as the Pay As You Earn Repayment Plan and Public Service Loan Forgiveness Program are only available for Direct Loans. If you choose to consolidate your Federal Family Education Loan Program loans into a Direct Consolidation Loan, you may be able to take advantage of these programs.

  • Fixed Interest Rate
    Direct Consolidation Loans have a fixed interest rate, meaning your interest rate won’t change year to year. The fixed interest rate is based on the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of 1%.

Disadvantages of consolidating your student loans:

  • More Interest Paid Over Time
    You will likely pay more money in interest over the life of the loan. The amount of time you have to repay your Direct Consolidation Loan can vary from 10-30 years depending on the amount of your Direct Consolidation Loan and the amount of your other student loan debt. The longer it takes to repay your loan, the more you will make in interest payments.
  • Loss of Borrower Benefits
    You may lose any borrower benefits, such as interest rate discounts, principal rebates, or some loan cancellation benefits, offered with the original loans.

In weighing your options, be sure to compare your current monthly payments to what your monthly payments would be if you consolidated your loans. If you’re just interested in temporarily lowering your monthly payment, consolidation might not be the answer.  Contact your loan servicer to consider alternative options such as switching repayment plans or requesting a deferment or forbearance.

To find out more information about loan consolidation, including eligibility requirements, visit https://studentaid.ed.gov/repay-loans/consolidation.

Tara Marini is a communication analyst at the Department of Education’s office of Federal Student Aid.

What You Need to Know About New Rules to Protect Students from Poor-Performing Career College Programs

Cross-posted from the White House blog.

Yesterday, the Administration announced new regulations to protect students at career colleges from ending up with student loan debt that they cannot pay. The new rules will ensure that career colleges improve outcomes for students — or risk losing access to federal student aid.

To qualify for federal student aid, the law requires that most for-profit programs and certificate programs at private non-profit and public institutions prepare students for “gainful employment in a recognized occupation.” The new rules are part of President Obama’s commitment to help reduce the burden faced by student loan borrowers and make postsecondary education more affordable and accessible to American families.

HOW ARE CERTAIN PROGRAMS LEAVING BORROWERS WITH THE BURDEN OF STUDENT LOAN DEBT?

Too often, students at career colleges — including thousands of veterans — are charged excessive costs, but don’t get the education they paid for. Instead, students in many of these programs are provided with poor quality training, often for low-wage jobs or in occupations where there are simply no job opportunities. They frequently find themselves with large amounts of debt and, too often, end up in default. In many cases, students are drawn into these programs with confusing or misleading information. The situation for students at for-profit institutions is particularly troubling:

  • Students who attend a two-year for-profit institution costs a student four times as much as attending a community college.
  • Eighty-eight percent of associate degree graduates from for-profit institutions had student debt, while only 40 percent of associate degree recipients from community colleges had any student debt.
  • Students at for-profit institutions represent only about 11 percent of the total higher education population but receive 19 percent of all federal loans and make up 44 percent of all loan defaulters.

HOW WILL THE NEW RULE HELP IMPROVE OUTCOMES FOR STUDENTS?

The Department of Education estimates that about 1,400 programs serving 840,000 students — of whom 99 percent are at for-profit institutions — would not pass the new accountability standards. All programs will have the opportunity to make immediate changes that could help them avoid sanctions, but if these programs do not improve, they will ultimately become ineligible for federal student aid — which often makes up nearly 90 percent of the revenue at for-profit institutions.

HOW WILL THE FINAL RULE IMPROVE ACCOUNTABILITY AND TRANSPARENCY?

The rule also provides useful information for all students and consumers by requiring institutions to provide important information about their programs, like what their former students are earning, their success at graduating, and the amount of debt they accumulated.

DOES THE NEW RULE ONLY APPLY TO FOR-PROFIT COLLEGES?

The final rule apply to all sectors of higher education. In order to receive federal student aid, the law requires that most for-profit programs, regardless of credential level, and most non-degree programs at non-profit and public institutions, including community colleges, prepare students for “gainful employment in a recognized occupation.” The new rule sets the standards for “gainful employment” programs to remain eligible to accept federal student aid.

So, to maintain federal student aid eligibility, gainful employment programs will be required to meet minimum standards for debt vs. earnings for their graduates. A program would be considered to lead to gainful employment if the estimated annual loan payment of a typical graduate does not exceed 20 percent of his or her discretionary income or 8 percent of his or her total earnings. Programs that exceed these levels would be at risk of losing their ability to participate in taxpayer-funded federal student aid programs.

HOW MANY INSTITUTIONS WILL BE AFFECTED BY THE NEW RULES?

The new rule is significantly stronger than the 2011 regulation, and followed an extensive rulemaking process that involved public hearings, negotiations and nearly 95,000 public comments. The new rule is tougher than the Department of Education’s 2011 rules because they set a higher passing requirement and lay out a shorter path to ineligibility for the poorest-performing programs. In 2012, the Department estimated that 193 programs would not have passed the previous regulations; with respect to these new rules, based on available data, the Department estimates that about 1,400 programs would not pass the accountability metric.

WHEN DO THE NEW REGULATIONS GO INTO EFFECT?

The rule announced today will become effective on July 1, 2015. Institutions will have the opportunity to make immediate changes that will improve their programs and avoid ineligibility. The first several years will include a transition period that will take into account any immediate steps by institutions to reduce costs and debt.

Stay informed on the Obama Administration’s commitment to college affordability by signing up for White House education updates here.

Cecilia Muñoz is Assistant to the President and Director of the Domestic Policy Council.