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.

Domestic, Dating, and Sexual Violence: Resources and a Call to Action

Americans nationwide are helping increase the awareness of domestic violence. The issue has dominated headlines recently in the wake of multiple incidents involving professional athletes in addition to Domestic Violence Awareness Month in October. It is a far-reaching crisis that can have life-altering and often deadly consequences.

If you, a friend, or a loved one, is in an abusive relationship, the National Dating Abuse Helpline will offer immediate and confidential support. To contact the helpline, call 1‑866‑331‑9474, text “loveis” to 22522, or visit LoveIsRespect.org.

Every year, on average, more than four people  a day are murdered by their romantic partners in the United States. Men and women of all ages are at risk for domestic and sexual violence and its effects, which include: long‑lasting pain, increased risk of substance abuse, depression, poor academic performance, suicidal ideation, and future violence. Sexual and domestic violence are linked to a wide range of reproductive health issues including sexually transmitted disease and HIV transmission.

The fight against sexual violence on campuses is gaining momentum. Universities are working to educate students about Title IX through innovative new programs and reviving old ones, and students are increasing awareness and placing pressure for change on institutions. ED’s Office for Civil Rights (OCR) has published new guidance assisting counselors and advocates in helping and supporting victims. OCR has an increasingly important role in helping universities take responsibility for sexual misconduct on their campuses and in the reevaluation of sexual misconduct policies.

East Tennessee State University, for example, started an outreach and awareness program: Sexuality Information for Students; George Washington University is launching a new response committee to stop sexual assault on their campuses; the California State System is hiring a system-wide Title IX Compliance Coordinator; and in Kansas, the Board of Regents met with six state universities to coordinate their action to prevent offenses.

ED is dedicated to working with students, families, educators, and communities to prevent abuse and support survivors. The department, federal partners and countless schools and colleges nationwide continue to raise awareness, develop effective prevention strategies, and educate young people about healthy relationships. They recognize that the real work of preventing domestic violence, teen dating violence and sexual assault, happens at the local level, in schools, in homes, and in community centers across the nation.

Schools must clearly communicate that they will not tolerate violence of any kind, they will respond to any students who report it, and they will hold offenders accountable. ED is also vigorously enforcing compliance with Title IX and the Clery Act—laws that help make our schools safer.

The following resources provide more information to support schools and communities in their efforts to create safe, healthy learning environments and identify, investigate, and remedy domestic violence, teen dating violence and sexual assault:

Sarah Harris is an intern in the Office of Safe and Healthy Students at the U.S. Department of Education.

More States with High Graduation Rates

As a nation, it is critical that we prepare all students for success in college, careers, and in life. High school graduation is a vital point along that path, and the latest state-by-state graduation rates demonstrate our continued progress as a nation tackling this challenge.

This is the third year that states are using a common method, called the adjusted cohort graduation rate, to calculate four-year high school graduation rates. The new data, for the 2012-13 school year, indicate that 18 states have graduation rates at or above 85 percent, up from 16 states in the 2011-12 school year and nine in 2010-2011. This progress is a tribute to the tireless efforts of teachers, principals, parents, and other educators and staff, and of the students themselves. In this progress is consistent with the announcement this year that the nation’s overall graduation rate has hit 80 percent – the highest in our history.

It’s also worth noting the performance of individual states with the highest graduation rates, both for all their students and for traditionally underserved populations:

  • For the third year in a row, Iowa has the highest overall high school graduation rate at 89.7 percent
  • Kentucky, at 85.4 percent, had the highest graduation rate for economically disadvantaged students
  • West Virginia leads the nation with an 83 percent graduation rate for English Language Learners[1]

These 2012-13 graduation rates are state-reported data – states are responsible for verifying the accuracy of these data. States that have been approved for ESEA flexibility are using these four-year adjusted cohort graduation rates as a significant element in their school accountability systems.

In 2015, the National Center for Education Statistics will release a report updating the national on-time graduation rate for school year 2012-2013. These on-time graduation rates provide a measure of the proportion of students who successfully completed high school in four years with a regular high school diploma.

To explore the 2012-13 data use the ED Data Express Build a State Table Tool, and navigate to Achievement Data > Graduation Rate Data > Regulatory Adjusted Cohort Graduation Rates: 2012-13. This tool will also provide State Snapshots, and allow you to build cross-state comparisons using the Data Element Explorer.

Joshua Pollack is in the Office of the Secretary at the U.S. Department of Education. 


[1] Although the adjusted cohort graduation rate provides a common measure of 4 year graduation rates for all states, there are still some differences across States in how they implement the rate, particularly for English learners and students with disabilities.

Continuing to Serve: The Path from Afghanistan to the Front of the Classroom

“Mr. Thompson! What does this book have to do with you being in the Army?” asked a curious Suzanne.

I had prepared a special lesson for my tenth grade world history class around Veterans Day; students were assigned several artifacts to analyze from my years of service with the 82nd Airborne Division. Suzanne noticed other groups handling more enticing objects like my helmet, which had once protected me on parachute jumps and dismounted patrols.

“I want to see the helmet, not this book,” demanded Suzanne.

She was about to put the book down, initial curiosity having given way to clear disappointment, when I provided some needed redirection.

“Remember, Suzanne, that a historian is like a detective. There’s always more to investigate; don’t give up,” I urged.

Suzanne still visibly frustrated, opened the paperback edition of Frank McCourt’s Teacher Man, which details the author’s experiences as a high school teacher at several New York City schools. McCourt, who is known for his Pulitzer Prize winning Angela’s Ashes, would have understood my challenge with engaging Suzanne in the lesson.

Brian Thompson in Afghanistan.

Brian Thompson in Afghanistan. Over the next several years, the number of service members transitioning from military to civilian life is expected to increase significantly.

The book was among many items—AA batteries, beef jerky, headlamps, candy, magazines, powdered drinks, socks—my mom carefully packed up in hundreds of boxes. She would make weekly trips to her local post office in Tucson, Arizona, for 13 consecutive months, fill out a customs form, hand over the package to a supportive postal employee, and it would always find its way to my small outpost in the rugged mountains of Afghanistan.

Suzanne’s curiosity returned as she opened the book and looked at the inside cover. She read my mother’s inscription to me out loud, “You would make a terrific teacher — just like Mr. McCourt — especially with that sarcastic sense of humor.”

Suzanne smiled and looked up at me and without any hesitation asked question after question about my mom, the book, and my time in the military. Suzanne was now acting like a good detective, and with her interrogation nearing its end, asked one final question.

“Did you become a teacher because of this book?”

It was an excellent and timely question.

Over the next several years, the number of service members transitioning from military to civilian life is expected to increase significantly. A growing number of these veterans will be enrolling at colleges and universities as they seek to become career-ready and improve their future prospects for employment.

I know firsthand about this transition. While deployed, I often thought about my life after the Army, and I wanted to do something where I could still continue to serve my country. After reading Teacher Man, I realized the best way to do just that was to go back to school, so I could one day stand in front of a classroom as a teacher.

I encourage my fellow veterans to consider teaching as your next career step; you will realize soon after leaving the military that the passion to serve others does not subside when you take off that uniform. You will not only discover that teaching provides a sense of challenge and purpose that you once thought could only be found with a career in the military, but you will also be surprised just how good you are at doing it.

The skills you learned in the military—whether the leadership you experienced conducting patrols or the teamwork you developed fixing helicopters—will translate to success in the classroom. It was my own experience in the military that contributed in my development as a teacher and led to my 2012 Excellence in Teaching Award. There are many stories of other veterans succeeding in the classroom such as Air Force veteran Daniel Lejia who was the 2011 Texas Teacher of the Year. The anecdotal evidence and academic research proves that veterans make great teachers.

Brian Thompson at school. (Photo courtesy of Standing Ovation for DC Teachers)

Brian Thompson at school. (Photo courtesy of Standing Ovation for DC Teachers)

The good news for veterans interested in pursuing a teaching career is they can turn to programs that are designed to help them get in front of a classroom. ED is a proud supporter of the U.S. Department of Defense’s Troops to Teachers (TTT) program. TTT provides counseling and referral services for interested veterans to help them meet the education and licensing requirements necessary to secure a teaching position. Since 1994, TTT has helped over 17,000 veterans become teachers. Even non-profit organizations have launched initiatives designed to bring more veterans into the teaching profession such as Teach for America’s “You Served America, Now Teach for America.”

Sid Ellington, who made the transition from Navy SEAL to teacher and now directs the initiative, has said, “Students will greatly benefit from a veteran’s depth of experience, strength in leadership, and desire to serve their country.”

Suzanne was one of these students. After the school bell ended the day’s lesson, she approached me with an interesting idea.

“I like your mom, Mr. Thompson. I’m glad she sent you that book because you make history interesting. I think more veterans should teach.”

I encourage my fellow veterans to consider teaching as a way to continue serving this great country and making an impact on the lives of students like Suzanne.

Brian Thompson is a Presidential Management Fellow with the Military Affairs Team in the Office of Innovation and Improvement at the U.S. Department of Education. He served as a Sergeant in the U.S. Army.

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.

Higher Education Programs Make A Difference

Recently, I had the opportunity to take a small team to visit Cal State Long Beach and Long Beach City College. We were there to meet with faculty and campus leaders who are administering Department-sponsored programs that support student success. I was impressed with their understanding of the student population, the variety of programs they were using to support degree attainment, and their collective commitment to making a difference in the lives of the students they serve.

My favorite part of site visits is the opportunity to meet with students. During this visit, I had the chance to talk with students from a variety of backgrounds, all of whom face serious barriers to obtaining a college degree. Some were veterans struggling to afford college, children of migrant workers, or adults recovering from addiction, while others were technically homeless or battling learning disabilities. All of these students made it clear that the help they received from Department-sponsored programs was giving them the tools, resources, and guidance they needed to obtain a college degree. Setting my federal position aside, as a human being I was moved by their optimism, resilience, persistence, and dedication to obtaining a college education. Each of them made a direct connection between postsecondary education and the ability to fulfill their hopes and dreams.

The Department-funded Higher Education Programs I visited support these students and their successes. The students on these two campuses are among millions who benefit from our initiatives. There are a range of competitive and formula-based programs and student support services across the United States and its territories that are federally funded. Many of these initiatives aim to improve the capacity of colleges and universities to provide essential support to students and aid them in graduating.

In preparation for our 2015 grant competitions, the Department’s Office of Postsecondary Education recently posted an eligibility notice for the Title III and V programs in the Federal Register. Across these grant programs, we’ll target over $400 million to U.S. colleges and universities, resulting in over 1,000 new and continuing grants. That’s a big opportunity for those who seek government assistance to improve, accelerate, evaluate and expand their efforts. These programs include the Strengthening Institutions Program, Predominantly Black Institutions Program, Asian American and Native American Pacific Islander-Serving Institutions Program and many others designed to improve affordability, quality, retention and completion.

We encourage all institutions to review our grant programs and submit an eligibility application by December 18, 2014.

We know these programs make a difference, and we are encouraged by students across the United States and its territories, whose progress reaffirms our work each day.

To learn more about OPE visit our web page or follow us on Twitter @EDPostsecondary.

Dr. James T. Minor is the Deputy Assistant Secretary for Higher Education Programs at the Department of Education.

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!

10.10-repayment-estimator-screenshot

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.

11.5-Missed-a-few-student-loan-payments-We-can-help-you-get-back-on-track

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.

The 5 “Qs” of Public Service Loan Forgiveness

#StudentLoanForgiveness. It’s a hashtag now, so you’ll all pay attention, right? Everyone wants their student loans forgiven. The perception is that very few qualify for any forgiveness programs. But did you know that there is one broad, employment-based forgiveness program for federal student loans? Most people don’t, or misunderstand how it works. Let me break down some key points of the Public Service Loan Forgiveness Program to help you figure out if you could qualify.

10.31 How to Determine if You Qualify for Public Service Loan Forgiveness

Can you check the all the boxes?

[ 1 ] Work in “Qualifying Employment”

First, you need to work in “qualifying” employment; that is, you must work in “public service.” But what does that mean? Everyone seems to have a different definition. Ours is based on who employs you, not what you do for your employer. The following types of employers qualify:

  • Governmental organizations – Federal, state, local, Tribal
  • Not-for-profit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code
  • A not-for-profit organization that provides some specific public services, such as public education, law enforcement, public health, or legal services

The following types of employers do not qualify:

  • Labor unions
  • Partisan political organizations
  • For-profit organizations

[ 2 ] “Qualifying Employment Status”

If you work at one of these types of organizations—great! That’s the most difficult criteria to meet. Next, you need to work there in a “qualifying” employment status, which means that you must be a full-time employee of the organization. Full time, for our purposes, generally means that you meet your employer’s definition of full time or work at least 30 hours per week, whichever is greater.

[ 3 ] Have a “Qualifying Loan”

A “qualifying” loan is a Direct Loan. It’s that simple. Of course, it’s the government, so nothing is actually that simple. You see, there are (or were) three big federal student loan programs:

  • The Direct Loan Program, which is now the biggest program,
  • The Federal Family Education Loan (FFEL) Program, which is what many students borrowed from until mid-2010, and
  • The Federal Perkins Loan Program, which is a relatively small program.

You may have loans from just one of these programs, or you may have borrowed from all three. If you’re not sure which loan program you borrowed from, I can’t blame you—I had 20 separate loans by the time that I finished graduate school! You can use the National Student Loan Data System to determine which program you borrowed from. Here’s a tip from me to you: basically, if you see “Direct” in the loan type name, it’s a Direct Loan. Otherwise, it’s not.

Don’t have a Direct Loan? Don’t despair! You can consolidate your other federal student loans into a Direct Consolidation Loan and qualify that way. Not having a Direct Loan is the biggest reason that borrowers who are seeking Public Service Loan Forgiveness aren’t on the right track, so be sure that all of your loans that you want forgiven are Direct Loans before you proceed to the next step. If you do need to consolidate, be sure to check the box in the application that says that you’re consolidating for the purposes of loan forgiveness. It will make your life easier, I promise.

[ 4 ] Have a “Qualifying Repayment Plan”

Next, you need a “qualifying” repayment plan. All of the “income-driven repayment plans” are qualifying plans for Public Service Loan Forgiveness. So is the 10-year Standard Repayment Plan, but if you’re on that repayment plan, you should switch to an income-driven repayment plan straight away, or you will have a drastically lower loan balance left to be forgiven after you meet all of the criteria.

If you’re consolidating your loans, you can apply for an income-driven repayment plan in the consolidation application, but if you don’t, you will be placed on the Standard Repayment Plan for Direct Consolidation Loans, which is almost never a qualifying repayment plan for Public Service Loan Forgiveness. If you already have Direct Loans, you can submit an income-driven repayment plan application on StudentLoans.gov.

[ 5 ] Make 120 “Qualifying Payments”

Lastly, you need to make “qualifying” payments—120 of them. A qualifying payment is exactly what you would expect it to be. You get a bill. It has an “amount due” and it has a “due date”. Make the payment in that amount by the due date (or up to 15 days after), and the payment is a “qualifying payment”. If you make a payment when you’re not required to—say, because, you’re in a deferment or you paid your student loan early—then that doesn’t count. But if you reliably make your payment every month for 10 years, you should be okay. The best way to ensure that your payments qualify is to sign up for automatic payments with your loan servicer.

Note that these payments do not need to be consecutive. So, if you had made 10 qualifying payments, and then stop for a period of time (say, you go on a deferment), then start making qualifying payments again, you don’t start over; instead, you pick up where you left off.

And, I’m sorry to have to mention a seemingly arbitrary date, but a payment only qualifies if it was made after October 1, 2007, so nobody can qualify for Public Service Loan Forgiveness until 2017 at the earliest.

Ok, so do I qualify?

Now that you have the details, let me explain how all of the criteria work together. For any payment to count toward Public Service Loan Forgiveness, you need to meet all of the criteria when you make each payment. Stated differently, you need to be working for a qualifying employer on a full-time basis when you make a qualifying payment under a qualifying repayment plan on a Direct Loan. When you break these criteria down separately, it seems simpler. It’s when you try to pack it into one sentence that it seems overwhelming.

As much as I’d like to think that all of you now have a perfect understanding of this program and how it works, I know all of you are thinking—“okay, but do I qualify?” Here’s how you find out. Download this form. Fill it out. Have your employer certify it. Send it to FedLoan Servicing (one of our federal student loan servicers), queue up How I Met Your Mother on Netflix, and wait for an answer. FedLoan Servicing will do the following:

  • Check whether you have any qualifying loans.
  • If you have qualifying loans, validate that your employment qualifies. If none of your loans qualify, they’ll tell you so.
  • If your employment qualifies, they will send you a letter confirming that your employment qualifies. Then, any of your federally held loans that are not serviced by FedLoan Servicing will be transferred to them so that we can keep better track of your loans and payments for Public Service Loan Forgiveness. If your employment doesn’t qualify, they’ll tell you so.
  • After your loans are transferred, they will match up the dates of employment on the form that you submitted to the payments you made during that time and determine how many qualifying payments you made. You’ll receive a letter with a count of qualifying payments and an anticipated forgiveness date (which assumes that all your future payments also qualify).

It’s after you get this payment count back that you’ll know whether you’re on the right track. So, it really is a good idea to submit this form early and often. We recommend that you submit the form once per year or when you change jobs. The beauty of submitting these forms early and on an ongoing basis is that it means that you won’t have to submit 10 years’ worth of them when you ultimately want to apply for forgiveness. It also means that when you apply for forgiveness, that you’ll be able to do so with confidence that you qualify for it.

One more piece of good news: Public Service Loan Forgiveness is not considered income by the IRS. That means that it’s tax-free.

Ian Foss has worked as a Program Specialist for the Department of Education since 2010. He’s scheduled to be eligible for Public Service Loan Forgiveness on October 6, 2021, if all goes according to plan.

Doing it for Me: A U.S. Department of Education Documentary Screening and Panel Discussion on Personal Struggle and Supporting Youth

School dropouts are saddled with so many preconceptions. The popular narrative is that they are either lazy, they give up, or they simply don’t want to go to school.

To many students who decide to leave middle or high school, these stereotypes couldn’t be further from the truth.

Recently, the student-produced documentary Doing it for Me was screened at ED’s Washington, D.C. headquarters. The audience was given an intimate look into the personal story of D.C. high school dropout Precious Lambert, and learned how she got back on track and helped her two best friends – Victoria Williams and Jessica Greene – navigate tough life-altering decisions.

Before an audience of ED staff and policy makers, panelists gave examples of how both the arts and the concern of teachers for their students can promote successful learning. (Photo credit: Meridian Hill Pictures)

Before an audience of ED staff and policy makers, panelists gave examples of how both the arts and the concern of teachers for their students can promote successful learning. (Photo credit: Meridian Hill Pictures)

Following the screening, Leah Edwards, the film’s co-director; Jessica Greene, who is featured in the film; Maureen Dwyer, executive director of Sitar Arts Center; and former high school dropout and current alternative school student Cristian A. Garcia Olivera, participated in the panel discussion. Before an audience of ED staff and policy makers, they gave examples of how both the arts and the concern of teachers for their students can promote a successful learning environment.

Despite being in the top 2 percent of her high school class, Jessica lacked relationships with her teachers. “It was up to me to drive myself,” she explained. She believed there was a major problem in her education due to poor communication between students and teachers, and discovered that the only way to get back on track was to take personal responsibility.

Jessica found an outlet and a path to success at Sitar Arts Center, a local organization that advances life skills for underserved youth through holistic arts programs. Though she often denied her feelings at home, Jessica said, “At Sitar I could be me; I could let loose.”

Through the work of Sitar Arts Center, Maureen was able to show how the arts are essential to critical and creative thinking — and how arts education can help students at risk of dropping out persevere beyond school. This aligns with the National Endowment for the Arts research that show students with low socioeconomic status perform better when they are engaged in the arts, and are two times more likely to enroll in four-year colleges.

Christian said that when teachers show an interest in their students it can make a huge impact on their lives. He dropped out of his traditional school and is currently (and happily) enrolled in an alternative school. “At alternative schools the teachers are really nice. The classes are really small, with only 20 kids per class, and . . . teachers teach you in a way to get to know you better,” he said.

Getting a second chance can make all the difference in the world for students like Precious, Victoria, Jessica and Christian. An audience member summed up his understanding of the film’s powerful message: “If you’ve made the bad choice, you can still fix it.”

Watch the entire discussion on ED Stream.

This event was a part of the ED Youth Voices Policy Briefing Session program, aimed at providing U.S. Department of Education staff and stakeholders with student perspectives on educational policy issues.

Samuel Ryan is a special assistant and youth liaison in the Office of Communications and Outreach at the U.S. Department of Education.