How to Qualify for Student Loan Forgiveness

To most, loans are the only solution to pay their tuition fees and complete education. Student loans also help students pay for books and living expenses while schooling. Even though these loans are refunded at low interest rates, they can be a burden depending on the job, salary, or how fiscally savvy an individual is.



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If you find yourself forced to live below your means or struggling to pay bills, applying for loan forgiveness will ease the financial encumbrance. Not everyone qualifies for loan forgiveness but most public servants do. Public Service Loan Forgiveness (PSLF) can be a thank you gift to public servants for dedicating their time and energy serving their country.

Organizations that offer student loan forgiveness

The following are not the only organizations that will offer loan forgiveness. Therefore, it's wise to consult with your employer, or carry out research online to find if your profession qualifies for loan forgiveness.

• The Association of Medical Colleges

• The American Federation of Teachers

• Providers of Intervention Services for Disabled Students 

• Peace Corps Financial Benefit and Loan Deferment

• Nursing Education Loan Repayment Program (NELRP)

• National Health Services Corp

• Head Start Staff Student Loan Forgiveness Program

• College Cost Reduction and Access Act

• Child Care Provider Loan Forgiveness

• Armed Forces Student Loan Forgiveness Programs

• Americorps

• American Bar Association

According to the AES, “loan forgiveness programs encourage students to pursue an education that will lead to employment in specific occupations.” Loan forgiveness programs focus towards forgiving all or part of the loan as long as the borrower fulfills specific professional requirements.  The government also uses loan forgiveness to increase personnel in areas that lack enough. An example is nursing shortage in the U.S.

The programs are only applicable to students who secured loans through the government. Such loans include Federal Ford Loan, Federal Stafford Loan, Federal Consolidation Loans, and Federal PLUS Loan. However, you qualify for Public Service Loan Forgiveness only if you have already made 120 payments under any of the programs while still employed although they don’t have to be concurrent.

To qualify for Indian Health Service Loan Repayment Program, health professionals should sign a two-year contract with an Indian health program. The program offers up to $48,000 coverage on student loans.

The Child Care Provider Loan Forgiveness Program will cover 20% of a borrower’s loan after serving two years, 20% for the next three years, and 30% onwards. To qualify, one must have served in a childcare facility and hold an early childhood education bachelor's or associate degree.
 
For vets, the Veterinary Medicine Loan Repayment Program (VMLRP) can offer up to $25,000 yearly. For approval, one has to serve in the National Institute of Food and Agriculture (NIFA).

Nursing Education Loan Repayment Program helps qualified nurses pay up to 60% of their education loan balance. The catch is they have to commit to a two-year contract and get 25% for a third year.

 More information on Public Service Loan Forgiveness (PSLF) is available at studentaid.ed.gov.

By Eileen Eva
 

When Can I Get a Home Loan After Foreclosure or Bankruptcy?

Are Consumer Purchased Credit Scores Different from Financial Institution Credit Scores?

 “When consumers buy a credit score, they should be aware that a lender may be using a very different score in making a credit decision.” Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), said in an email statement.

The three main credit reporting agencies; Equifax, Experian & Transunion, use their own algorithms to calculate credit scores and they each have several ways to calculate it.  Fair Isaac Company also computes and sells credit scores, known as FICO Credit Score, has more than 50 scoring models.  This means that there are numerous variations of a credit score. The good news is, based on CFPB’s research found that most of the scores pulled by consumers and other organizations are consistent by at least 75%. Between 20% - 25% of the scores that consumers purchase were moderately different enough to move them into another credit grade that financial institutions use to determine what consumers may qualify for loan rates. The remaining 1% - 5% of the consumers’ scores was significantly different.

Note:  FICO offers a calculator that lists the range of interest rates offered based on FICO score.  This of course may differ based on the financial institutions rates offered.

What is not widely known is that there different types of scoring models that are based on the information the financial institution or business wants to analyze.  For example, a credit score for a credit report pulled by an auto dealership may differ from the credit score of a credit report that is pulled by a financial institution. This is because the auto dealer may mainly want to focus on a consumer’s payment history on auto loans, regardless of the financing company or financial institution.  However, the financial institution’s credit score may be based on a consumer’s entire payment history on all trades reporting on the credit report. Another familiar type of scoring model is the one used by Utility Companies.

Regardless the scoring model, the fact holds true that if you have good credit, you will have high or good credit scores on them all and if you have “colorful” or bad credit, you will have low or bad credit score on them all.  What important is that you understand the “Anatomy of the Credit Score.”

• 35% is based on your payment history.
• 30% is based on how much of your available credit you've borrowed against.
• 15% is based on the length of your credit history.
• 10% is based on the diversity of credit you carry.
• 10% is based on the number of “hard inquiries” from creditors to qualify you for credit or open an account.

Other types of scoring modes are Bankruptcy Scores and Fraud Shield Scores.  

A Bankruptcy Score determines the likely hood of a consumer to file for bankruptcy.  Many lenders use it to determine whether or not they will loan you money. A bankruptcy score also may influence the interest rate that you may qualify for on a loan. Bankruptcy Scores are not generally shared with the public.  The lower the Bankruptcy Score the better. A Bankruptcy Score of 1 – 100 is ideal. A score of 300 to 900 indicates that you need to improve your credit by paying down debt especially on revolving lines of credit, like credit cards.

A Fraud Shield Score identifies inconsistencies between application information and credit report data. Just as the credit score, the higher the score the better.  If you have low Fraud Score, the lending institution many request or require additional document to verify your identity.  Don’t give them a hard time though, it is for your protection.

As with anything, financial and credit knowledge is Key to your Prosperity. 

STEP 1: Understand where you are with your credit.

• Pull your credit report to see what is reporting.  You are able to get a least one free copy of your credit report from all credit bureaus. Go to AnnualCreditreport.com.
• If there are several past due payments or lots of collections reporting, you may want to save your money and work on restoring your credit.  Try the myFICO.com Credit Score Calculator to start. 
• If all accounts are paid as agreed with no collections reporting, you may want to invest in purchasing your credit score to see where you are. 

Start at FreeCreditScore.com.  The score may be free, but make sure you read the disclosures to ensure that you are not required to sign up for a monthly monitoring service.

STEP 2:  Ask for help.

Regardless of whether you need assistance with restoring your credit or improving your credit to increase your credit score, don’t be afraid to ask for assistance.  Below are a few great options to assist you.

Anngie Jenkins, Credit Score Queen

www.CreditScoreQueen.com

National Credit Educational Services

www.NCESNow.org

STEP 3: Assess your spending habits, budget and savings plan.

This is crucial with rebuilding or maintaining your credit.  Feel free to contact me for assistance through

• My monthly Common Cents Newsletter,
• My weekday Madam Money Minute Financial & Credit Tip Texts by texting MADAMMONEY to 46786,
• Registering for a Madam Money Financial BootCamp, or
• For One on One Financial Coaching contact me at the information below:

   

Tarra Jackson, Financial Coach

Prosperity Now Financial Management Services

Tarra@ProsperityNowFMS.com

(404) 852-6295

  
We are all looking forward to being a resource to you towards your Prosperity Now!

What to Do When You Can’t Pay Your Bills

There is no doubt that one of the most horrifying experiences is struggling with money and not being able to pay bills.  I've overcome and am still overcoming financial struggles but there are so many more people and families that are in a more difficult situation. 

There is no magic pill or “one size fits all” method of fixing financial struggles or what I call “financial dis-eases.”  However, here are a few tips to help you get started.

Tip # 1: Assess the Problem

The most important step is to assess why you can’t pay your bills.  This could be because of a job loss, a pay cut, increase in fixed expenses, unexpected medical bills, an expensive mistake or poor spending habits.  After understanding the cause of the problem, the next phase of this step is to write out your budget. I encourage you to download and read “5 Steps to Building a Budget That Works.”  You may of course see that you are spending more than you make.  By writing this down in detail, you will understand your fixed verses flexible expense. 

  

Tip # 2: Fix the Problem

Once you understand what the problem is, you can now begin the process of fixing the problem.  Most people’s problem (like mine was) may be overspending.  If this is your issues, the best cure for this financial dis-ease is financial abstinence by eliminating the use of credit cards or unsecured lines of credit.  Also, cut back on eating out and reduce or eliminate flexible bills like cell phone, land line phone, cable or any other unnecessary expenses.

However, many people aren't overspending at all.  They are dealing with being under paid.  Their income does not meet their baseline budget of their fixed expenses.  If this is your issue, it is now a matter of increasing your income.  This is not an easy cure and may require lots of hard work to find and work a part-time job. You may want to establish a home-based business that generates extra income. 

Here are few ways to handle your financial situation:

1. Ask your family or friends for a loan or gift to assist you during your short-term struggle. Make sure that you only ask them once and make it clear that it is a gift (you do not have to pay it back) or it is a loan (you will pay back).  If it is a loan, establish the payment arrangements and make sure you pay them back on time.  Don’t be that family member that everyone ignores phone calls from because they know you are just going to ask them for money.
2. Contact the company(ies) and creditors to explain your temporary financial hardship and request to skip a payment for the month to get back on your feet or to modify your payments, permanently or for a limited time.  Many financial institutions have a loan modification program that you may qualify for.
3. Contact a debt management organization, like CCCS, to assist you with communicating with your creditors to reduce your monthly payments.  There are many organization out there, some free and some with a cost.  Make sure you do your research before you commit to their services and program, especially if they are requiring a fee up front.  I recommend that you find a non-profit debt management organization that does not charge a fee to assist you.
4. Although I am not an advocate of and try to sway my clients away from this, you may need to consider a short-term loan, payday loan, title loan, etc.  This should be your LAST resort and make sure that you understand the terms, rates you will have to pay and all of the fees.  If this is used the wrong way, you could find yourself in a worse financial condition than you were before you got the short-term loan.  Proceed with caution.
5. When all else fails and you have honestly tried everything stated above as well as other tips you've learned, another last resort option is bankruptcy.  “Bankruptcy is a tool, nothing more, nothing less” says Bankruptcy Attorney & Trustee Angelyn Wright of The Wright Law Alliance, P.C.  When used appropriately it can be the financial major surgery necessary to rebuild your financial well-being and give you a Fresh Start.  If you are considering this option, please make sure you understand what bankruptcy is and does.  When done the wrong way or with the wrong attorney, it may put you in a worse financial situation than you are now.  Get educated and ask questions before you proceed with caution.

Based on personal experience as well as observing and working with others who are dealing with and have resurrected from financial struggles, your financial situation can change if you are willing to work hard enough and can be disciplined.

By the way, don’t be afraid to ask for help.  There are many banks, credit unions, non-profit organizations, and financial coaches like myself that want to assist you.  Contact me at info@ProsperityNowFMS.com for consultation.