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student loan help, student loan remedies
Compass Student Loan Remedies, student loan help
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Compass Student Loan Remedies

Glossary

 
Accrued interest - the interest your loan accumulates over time. The borrower is responsible for all accrued interest, unless they hold a subsidized loan.

Administrative wage garnishment - the Department of Education will mandate that your employer forward 15% of your disposable pay toward repayment of your defaulted student loan.

Co-maker, co-signer or co-debtor - Any person who co-signs and guarantees a debt. The co-signer will be personally responsible for repaying the debt (and any interest and late fees) if the borrower defaults on a loan.

Consolidation loan - This type of loan combines many types of loans into one new loan. When you consolidate into one new loan, typically you extend the length of the loan and lower your monthly payment.

Defaulted student loan - a student loan is considered defaulted when a borrower has not paid on their federally guaranteed student loan for nine consecutive months. The borrower loses their right to any deferments or forbearances, as well as being denied the ability to receive any additional Title IV federal student aid.

Deferment/deferral - When you get a deferral, you are able to postpone your loan repayment for a period of time. If you have a subsidized loan, the federal government pays the interest during any period of deferment.

Direct loan - Direct loans are federal Stafford, PLUS, or a consolidation loan that comes from the U.S. Department of Education and are made through the William D. Ford Federal Direct Loan Program.

Disclosure statement - When you take out a loan, you receive a disclosure statement stating the cost of the loan, including the interest rate and any additional fees you might possibly incur.

Due diligence - The government requires lenders to follow certain steps to try to collect on student loans, including calling and writing to request payments, extend new payment terms, and reporting late payments to the credit reporting bureaus before the lender is allowed to sell the loan back to the federal government.

Federal Family Education Loans - These types of loans are federally guaranteed loans. They have different repayment terms than those loans obtained through the federal Direct Loan Program.

Federal salary offset - Employees face the possibility of having 15% of their disposable pay offset by the Department of Education toward repayment of their defaulted loan through the federal salary offset program.

Forbearance - This is a temporary postponement or reduction of the current loan payment, or in some cases, an extension of the amount of time to repay the loan.

Grace period - During the grace period, you are not required to make any loan payments. This is typically following your graduation or departure from school. Interest may still accrue during the grace period.

Graduated repayment - This repayment plan allows for low payments in the beginning, with a gradual increase in payment over time.

Guarantee agency - An agency that acts as an insurance agency. Guarantee agencies insure your student loans and repay the holder if you default.

Holder - The holder is the company hired by the owner of your loan to service it. This company will receive your payments.

Income contingent repayment - This loan repayment plan is based on your annual income, family size and the amount of your loan. This loan plan is for those students with federal direct loans and the payment amounts rise and fall with your income level.

Income sensitive repayment - This repayment plan is similar to the income contingent repayment plan, but is available to those borrowers who borrowed from a financial institution.

Loan Cancellation - Cancellation of your loan relieves you of the obligation to repay your student loan by meeting certain specified criteria.

Loan Discharge - Loan discharge is extremely rare for student loans, but may be allowed if repaying the student loans would cause hardship.

Loan Rehabilitation - In student loan terms, loan rehabilitation occurs when - depending on the type of loan - you make nine to twelve consecutive, voluntary payments. At that point, your loan will no longer be considered in default status. You will be eligible for the same benefits that were available to you before the loan defaulted.

Promissory note - The promissory note is the legal document you signed when you took out your student loan. The document includes all the information about the interest rate, other costs, and options for cancellation, deferment and forbearance.

Rehabilitation - If you make 12 consecutive, on-time payments on your student loan, your loan will be considered rehabilitated.

Subsidized loans - Borrowers holding subsidized loans do not pay the interest on their student loan while they are in school or during other authorized periods of deferral. The interest is usually paid by the federal government.

Treasury Offset - The treasury offset program is a program that allows the Department of the Treasury to take your tax refund to offset your student loan balance.

Unsubsidized loans - All interest that accrues on a loan must be paid by the borrower, unlike subsidized loans.