FFEL late fees assessed may increase to 16%

The Department of Education is recommending changes to FFEL late fees and default rules that increase FFEL interest rates to as high as 16% when a borrower defaults on student loan payments.  Current rules protect borrowers from high interest rate assessments on overdue student loans and stop collection efforts when borrowers enter payment rehabilitation programs within 60 days of defaulting on their FFEL student loans.

Under the proposed new rules, borrowers in default status could be charged interest rates as high as 16%. Collection efforts would start immediately upon default. A defaulted student loan is one that goes unpaid for 9 months or 270 days. FFEL loans are old federal student loans that were made prior to 2010. They account for approximately 25% of the existing 1.3 trillion dollars of outstanding student loan debt. If the proposed changes are approved by congress, the increased FFEL late fees and penalties could amount to an additional 65 billion dollars based upon the number of accounts presently in default.

How to consolidate federal student loans

How to consolidate federal student loansThere is over $1 trillion in student loan debt according to the U.S. Bureau of Labor Statistics. The percentage of population with student loans has more than doubled since 2003 to about 15% in 2012. The average student loan debt is approximately $30,000 among middle aged borrowers. Approximately 90% of those students loans are from the federal government. The William D Ford Direct Loan Consolidation Program switched all student lending over to the Direct Loan program in 2010 and made it possible for borrowers to pay back loans by consolidating them under favorable terms and various programs.

If you are looking for information on how to consolidate federal student loans, the Department of Education has not simplified the process in searching for the correct forms to file. For this reason, we point out that a simple internet search for “Free DIY Student Loan Consolidation” can direct you to resources that are devoted to assisting you in the preparation of the correct forms. Additionally, all of the links you need in order to see the various programs you qualify for as well as links to gain access to your loans are provided at https://studentaid.ed.gov/sa/repay-loans.

5 Key Differences between Credit Counseling and Debt Settlement

credit counselingBoth credit counseling (also referred to as debt consolidation) and debt settlement companies offer services to help you with your unsecured debt.  The similarities, however, end there. These are 5 key differences between the two services:

Credit Counseling

Debt Settlement

Normally non profit organization Normally for profit organization
Counsel consumers on budgeting and money management Offer to negotiate debts for a percentage of balance
Send proposals to creditors to remove late fees and lower interest rates Send no up front offers to creditors
Developed to prioritize the consumer’s credit rating over time Creditworthiness of consumer is destroyed
Consumer’s bills remain current and are paid in full on a monthly basis Consumer is advised not to pay bills resulting in possible legal action

Credit counseling agencies charge fees that are legally allowed depending on the state of residency of the debtor. These fees are small in comparison to the fees charged by debt settlement companies. The consumer makes a consolidated payment to the credit counseling agency and the agency then sends payment out to the various creditors. Credit counseling is the best course of action for a debtor to take when maintaining or attaining good credit is important and when a debtor wants to stay out of court.

Debt settlement companies normally charge a percentage of the amount saved per debt. If the debt settlement agency is a law firm, a retainer amount may be charged up front and held in trust while the debts are negotiated. The consumer is advised not to pay the creditors in order to gain leverage. Payments are then collected by the settlement agency on a monthly basis until there is enough in trust to settle with one of the creditors.  As the debts are settled, the agency collects its’ fees.  While this process is ongoing, creditors may send the debts to collections and commence legal action against the debtor. Some creditors will not settle and opt to take the debtor to court.

Buying vs Leasing a Car – Pros and Cons

 

buying vs leasingWhen it comes to obtaining a new car many people have a hard time with the buying vs leasing decision.  Sometimes, people make the wrong choice due to insufficient information.

Advantages and Disadvantages of Buying a Car

Buying a car guarantees that the car will be fully yours once you pay it off and much later after that, you can sell it if you want to.  A new car offers safety because no one has used the car before you.  You have warranty when you purchase a car at a dealership.  So far everything sounds really good; however there are a few disadvantages to consider.  In most cases, buying a car means you will have a higher monthly payment.  Also, after you pay the car off, you may start having serious problems with the car causing you to spend money constantly.

Advantages and Disadvantages of Leasing a Car

Leasing a car is a cheaper option because in most cases, you do not have to give a down payment and if you do have to give a down payment, it will be very low.  The monthly payment is also much lower than when you lease a car.  You  have the luxury of driving a brand new car every three years or so.  The cost of maintenance and repair is less because you only have the car for a short period of time.There are three main disadvantages to leasing a car.  The first disadvantage is that you never get to own your car and you have to worry about any minor scratch or stain because the dealer will charge you for that when you turn in the car.  The second disadvantage is that if you go over the mileage, you will have to pay mileage fees.  The third disadvantage is that you will be required to pay higher insurance for the leased car.

Beware of lease discontinuation fees. These fees are charged at the end of your lease and are usually waived only if you lease another car from the same dealership.

For assistance with your lease or purchase, you can employ an auto buyers agent. These auto buyers agents can help you make the best choice to fit within your budget and try to get you the best possible price on the car you want.

Free Credit Report

It’s QUICK, EASY and SECURE. Request your free credit report>>

The website, annualcredfree credit reportitreport.com, offers you the ability to pull your free credit report WITHOUT SCORES once per year from each of the credit reporting companies, Equifax, Experian and TransUnion. This process does not affect your credit in any way. It is important to see what’s on your credit report at least once a year to verify that there are no inaccuracies reported that may be affecting your score.

When pulling your free credit report online, there are a series of security questions that you will be asked to ascertain your identity prior to allowing you access. If you cannot answer them, you are still able to send a letter directly to the credit agency to make your request. Annualcreditreport.com gives you the information necessary to do so in the event this should occur.

There is an advantage to pulling all three credit bureau files at once. You have the opportunity to compare all three reports. You may find that not all credit reports will contain the same items. The only hitch is that you can only pull a free credit report once per year from each agency. If you have already done so and would like to repull your credit, there are other options to obtain the “tri-bureau” reports.


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