One of the major perks of taking on federal student loans is that many of them are eligible for an income-driven repayment plan.
Under one of these plans, student loan payments are based on a percentage of your income, typically 10 to 20 percent. This can be immensely helpful for borrowers who can’t afford their standard monthly payments.
But it’s not always easy for federal student loan borrowers to get approved for a plan. Or, maintain their status. Many also experience processing delays or wrongful rejections by their federal student loan servicers, according to a recent press release from the Consumer Financial Protection Bureau (CFPB).
That’s why the CFPB has created the income-driven repayment plan “Fix It Form.” It’s for servicers to use to improve their customer service for borrowers. Here’s how this CFPB student loans service can help you.
CFPB student loans report
Opting for an income-driven plan can be a great financial tool for federal student loan borrowers.
Yet according to the CFPB, a top complaint from student loan borrowers had to do with income-driven plans. These complaints cited delays, rejection, and recertification problems.
Essentially, any delays or wrongful rejections of income-driven plans by servicers can result in increased interest charges for borrowers. They could also lose eligibility for certain federal benefits and protections.
My boyfriend experienced this very thing just last month. He was recertifying his income-driven plan (which you must do annually) and sent in all the required paperwork.
He didn’t hear anything back from his loan servicer. But when his loans were due, the payment amount had increased significantly. Definitely a problem.
So he called them to rectify the situation. Sure enough, his loan servicer had yet to process his information. Luckily, they were able to take action and he didn’t end up having to pay the increased amount. But if he waited any longer, he might not have been so lucky.
How the “Fix It Form” can help borrowers
As of the first part of 2016, a total of 5 million federal student loan borrowers opted for an income-driven plan, according to the CFPB student loans press release.
Using the two-page “Fix It Form,” loan servicers can make it easier for student loan borrowers to understand what’s going on. Then borrowers can move forward with clear and concise information.
The form requires your first name, last name, and student loan account number. To make everything clear, there are only three statuses that loan servicers can choose: Accepted, Denied, and Incomplete.
Under each status, there are clear next steps and reasons listed for the decision. If your application is incomplete, your loan servicer can let you know what is missing and where to send the additional information.
The CFPB student loans “Fix It Form” aims to make the process of applying, recertifying and accessing an income-driven plan easier.
Income-driven plans remain significant
Many student loan borrowers are eligible for an income-driven repayment plan but aren’t taking advantage of it, according to a recent government report noted by the CFPB.
If you can afford your full monthly payments, then you’re in the clear. But if you are headed toward default and struggling to make payments, an income-driven plan can be a lifesaver. It can also keep you in good standing with your student loans.
The CFPB estimates in its press release that 25 percent of borrowers are in default or struggling to keep current with their student loan payments. An income-driven plan can make your payments more manageable. It can also help you avoid delinquency or default.
The “Fix It Form” comes on the heels of the U.S. Department of Education urging loan servicers to set the bar higher when handling income-driven plans. That’s why the CFPB is working to bridge the gap between loan servicers and borrowers with its new form.
If loan servicers adopt the “Fix It Form,” they may be able to increase transparency, improve access, and create a consistent servicing experience. This can help student loan borrowers enjoy the benefits of an income-driven plan. Without all the hassle.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.57% – 6.97%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|