There are a lot of ads popping up on Facebook that mentionGlobe University & Minnesota School of Business that are promising students loan relief. Many of the companies posting these ads have come under fire for trying to get students to pay for assistance they can get for free.
Since the beginning of 2016, state and federal agencies have announced significant enforcement actions targeting companies that purport to offer consumers student loan forgiveness, loan consolidations and affordable payment schedules, according to a recent report. The Consumer Financial Protection Bureau (CFPB) and attorneys general in Minnesota and other states including Florida, Illinois, Kentucky, Massachusetts and Washington determined that many of the companies falsely advertise special relationships with the U.S. Department of Education and then cheat their customers with worthless services and exorbitant fees.
To get more information, we talked with Kelly Running, director of student finance for Globe University & Minnesota School of Business.
What do you want students to know?
I think this Department of Education video with the Secretary of Education, Arne Duncan says it best. I would be hesitant to say that all the ads are scams, or not legit but I would always suggest that a student work with their lender to consolidate, put loans in forbearance or defer payments. Companies that are in the business of buying loans are also in the business of making money off of them. Typically they are unable to give a better interest rate and payment option for a student. It is important to remember that a lower payment doesn’t mean a lower loan amount. These companies may be stretching out loan repayments, which allows for additional interest to compile or they give a lower interest rate but have higher payments. It is very unlikely they are offering both a lower interest rate and less repayment time.
What should students looking for help or relief paying back loans do?
It depends on the lender. If it is a Federal Stafford or Direct Loan there are so many options for help in repayment. They also make it really easy to use the options. People can call and talk to someone about options, or read about options online and apply that way. There are ways to reduce your monthly payments based on income; you can ask for temporary forbearance or deferment to help during tough financial times and also consolidation options.
There are also private loans students take out. Private lenders can be harder to work with, but some have lightened up on their flexibility in repayment. The key is always to contact your servicers. See what they can offer you. Private lenders have consolidation program as well. A student could also talk with a financial advisor. There are different ways to consolidate or buy off debt that may be in a student’s best interest that isn’t a student loan. I have heard students use private lines of credit or second mortgages to buy off their student loans at a lower rate, but I would never suggest a student take those actions without knowing everything about the amortization and repayment terms for both options.
If they live in MN they should check out the MN SELF Refi loan option. It works with all student loans that our school has offered and has great interest rates and repayment plans.
Who qualifies for relief? Are there certain criteria they should know about?
You don’t know until you ask. When it comes to a federal loan, pretty much anyone can get help as long as they can show the need for it. Knowledge is key, though. They should know what their current situation is, to ensure they are doing what is in their best interest. Know your interest rate, your payoff date, and total payoff amount. Is the option you are considering going to help in the immediate future but long term put you in a worse position? It might be better to look for ways to help make ends meet then to restructure your loan but pay far more in the long run.
What can or do our schools do to help students?
We are always willing to help current or past students get contact information or point them to the sites that have information. However, we are unable to know what a student qualifies for without them contacting their servicer. If a student feels they need more help than just a number, when I was on campus I would set up appointments with students, and they would make the call, but I would be there to listen. Almost like the translator; we can help make sure the student understands.
Who do they contact at the schools?
They can contact their financial aid manager on campus or call the FA hotline, 1-877-862-0662.
Explain the SELF Refi- how it works and how the changes will impact our students.
The SELF Refi Loan is a refinance option for students who have graduated with a degree and are a Minnesota resident. The best way to get all the criteria and application information is to go on to the state website dedicated to the program. The applicant did not need to earn their degree at a Minnesota college, but they need to be a Minnesota resident. They also must be credit eligible or have a credit eligible cosigner. Depending on the degree type, there are varying amounts that can be consolidated. They will consolidate federal and private loans, including our institutional loans.
It is important to note that this might not be a better option for some students. Student loan interest rates vary from year to year and person to person. Although the interest rates are attractive to many people, some may already have better rates. If you are going to go through the process of consolidating your loans take the time to learn all of your options. See what your current lenders can offer you and make sure you are going with the best option.
Is there any other important information you want students to know?
For the most part, you get one shot at consolidation, make sure you are doing it at the right time for the right reasons. For example, if you are planning on going back to school in the near future, it probably isn’t the right time to consolidate your loans. Once you are back in school, your loans will most likely go into forbearance. If you have already consolidated your past loans, the student loans you take out in the future will most likely never be able to be combined with your past loans.
Lastly, if you call a servicer and they are not helpful, don’t give up. Not everyone is customer friendly or good at their job. Hang up and call back. A different person might be much friendlier and more knowledgeable.