New IBR Retrieval Tool to Help Make IBR Process Easier
White House and Education Department officials recently announced a new tool aimed at streamlining the application process for the Income-Based Repayment (IBR) Program. The new "IBR Retrieval Tool" will help borrowers to import their tax data and loan information directly to loan servicers.
Also, the federal government as announced more favorable IBR terms. Under current IBR criteria, eligible borrowers will pay no more than 15% of their discretionary income and receive loan forgiveness after 25 years of successful payments. Beginning in 2014, eligible borrowers will pay no more than 10% and receive loan forgiveness after after 20 years.
Graduate Students No Longer Eligible for the Interest Subsidy on Direct Loans
Congress passed The Budget Control Act of 2011 on August 2, 2011. Some of the provisions in the act impact federal student loan programs. These changes WILL NOT affect the amount of loan funding available. However, loan funding will become more expensive. Here are the key provisions affecting future federal graduate student loans:
1. Beginning July 1, 2012, all graduate and professional students will no longer be eligible for the interest subsidy on the Direct Stafford loan (also known as the William D. Ford Direct Stafford loan). The graduate Stafford loan program will become entirely unsubsidized, which means the loan will accrue interest while a student is in school. These changes WILL NOT affect the annual and aggregate borrowing limits. The maximum Stafford loan amount a student can borrow will remain at $20,500 per academic year for most graduate programs; up to $37,667 for doctoral students in clinical psychology; and up to $47,167 per year for medical students.
2. Currently, there is a 1% origination fee on a Stafford loan and a 4% fee on PLUS loans, but a portion of the fee, .5% for a Stafford and 1.5% for a PLUS, is rebated at the time of disbursement. Beginning July 1, 2012, the full fee will be charged.
3. The last change is the loss of the .25% interest rate reduction if you pay your loans electronically while in repayment. However, the discount will remain for borrowers who repay their loans via auto-debit.
We recommend that students monitor their Federal Loan borrowing history online at www.nslds.ed.gov.
You may also be interested in using a federal loan repayment calculator to better understand your total loan amounts, repayment options, and overall loan costs. As always separate your “needs” from your “wants” and borrow only what you truly need, particularly in light of the elimination of the interest subsidy.
Want to Make Payments Towards Your Direct Loans?
After the first disbursement of your Direct Stafford or Direct Graduate PLUS loan is made, the loan is then transferred to a company that services your loans. These are known as loan servicing companies or servicers.
If you wish to make a payment towards your federal student loans, you first have to determine which company is the servicer to your loans. You can look this up at www.nslds.ed.gov. This is the web site of the National Student Loan Data System (NSLDS). It contains your complete federal student loan borrowing history as well as the name and telephone number of your loan servicers.
Be sure to click on each loan because each loan may have a different servicer. You can also call the Federal Student Aid Information Center at 1-800-433-3243 to speak with a representative in regard to securing the names and contact information of yout servicers.