The Education Department has reversed an Obama administration rule that limited fees that guaranty companies could charge distressed borrowers. The new rule allows guaranty companies to charge borrowers 16% of their loan balance, even if they agree within 60 days to make good on their debt. This article on Bloomberg details the rule change and its impacts. You can read the Education Department memorandum on the change here. Guaranty agencies are state or private agencies that administer the federal student loan program. In addition to insuring lenders against default and paying them off when loans default, they also play a collections role with debtors.
On Wednesday the Fed raised short-term interest rates by 0.25%, with additional rate hikes expected over the course of the year. What does this mean for student loans? Several things.
First, federal student loans have fixed interest rates; those rates are fixed at the time of Continue reading Rising Interest Rates and Student Loans
If you tried to fill out the FAFSA this month, chances are it wasn’t easy. That’s because the IRS Data Retrieval Tool has been disabled. The IRS and Department of Education said in a joint statement last week that it will be several weeks until the tool is back online. Continue reading FAFSA IRS Data Retrieval Tool
Since taxes seem to be top-of-mind for everyone, here’s a quick tip for bringing your income down on the FAFSA or CSS PROFILE: Don’t get a state tax refund. If you do, you have to report it as income. Check with your tax preparer to determine the right amount of state withholding that avoids both a refund and a penalty for underpayment. If you use tax software like TurboTax, it can calculate correct state withholding as well.
Do you need to report 1099 q income on your tax return? As long as none of the distribution is taxable (i.e., you have qualifying expenses to offset it), NO, you do not have to report it.
However, you should keep records of your qualified expenses. That’s especially true if the Continue reading Tax Time Reporting: 1099 Q
This is a question for the parents, not the students. For better or, often, for worse, parents can borrow the entire cost of college through parent PLUS loans. And for multiple children. If the lenders won’t cap what you can borrow, then it’s up to you to make good Continue reading How Much Can You Borrow for College?