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Responsibilities of Cosigning A Loan

It’s often thought about pretty commonly that people will attend college. What often isn’t discussed is how people will afford to pay for their college degree. When looking for available financial aid options many look to private student loans to pay for college. Once completing the application don’t be surprised if it is denied because of your financial history or lack thereof. Unless your parents opened up a credit card account for you as an authorized user when you born, you probably won’t have a long enough credit history. Don’t be overly heartbroken, since you aren’t the only one without a long credit history. A way around not having an established credit history is to talk with a parent or guardian about being a cosigner on your student loan. This isn’t an easy process, but it can be worthwhile if both parties understand the responsibilities that are associated with cosigned student loans. Additionally, adding a cosigner to a loan may not be the right answer.

 

Having a cosigner can help qualify you for a student loan because the right cosigner should have an established credit history. As a lending institution, it would be too difficult to lend to a borrower who hasn’t yet shown that they are financially responsible. Adding a cosigner who is financially responsible, for a loan assures the lender that the loan is less of a risk and is more likely to be paid back.

 

If you like sports, think of it like a basketball game. If you’re injured and can no longer play, a substitute or someone on the team plays the game in your place. A cosigner would be your financially responsible substitute in the game of loans. If you are unable to carry the financial burden of a loan at any time and take a knee, a cosigner is expected and legally responsible to repay the debt.  Though the concept of adding a cosigner can seem fairly simple, there is a lot that goes along with it. Here are a few things to understand, before you even consider asking someone to cosign your private student loan.

 

 

Why would you need to add a cosigner to a loan?

 

There are multiple different cases why you may need a cosigner. If you have never owned a credit card, had a loan before or held any type of credit, you may have no established credit history. Even if you have had credit for a short time, there may not be enough history for the private loan company to evaluate. If you have a large loan you’re interested in taking out, it’s highly unusual that the loan will be provided to someone with a year or less of credit history. Based on your credit history a student loan company can see how often a person is paying off debt and what their credit score is. Without a credit history, it can be hard for a student loan company to evaluate if you will be on time for loan payments.  With a cosigner, the student loan company can evaluate the financial history of the cosigner and see that they are a reliable applicant.

 

Another reason that you may need a cosigner is that you have a bad credit score. If your debt-to-income ratio is too high, you have an unsteady income, or you have previous defaults on your credit history, this could be a reason why you’d need to add a cosigner. A cosigner can help qualify you for a private student loan. When having a cosigner, it is the cosigner’s loan and they are fully responsible for that loan too. Though your cosigner is not using the loan, it is equally their responsibility to make sure the loan is paid off. If you choose to ask a family member or friend to be a cosigner, it is important they understand the financial responsibility that they are taking. For example, if you do not pay your loan, your cosigner will have to pay it off. A cosigner will need to have a good credit history and consistently have responsible financial habits. You may be thinking of multiple different people who could be your cosigner. Before diving in, be sure to understand who can cosign your loan.

 

Who can cosign a loan for college?

 

When evaluating the need for a cosigner, you will need to know who is eligible. Undergraduate and graduate private loans lenders have a list of criteria that a cosigner must meet. The criteria for a cosigner will be different based on each lending institutions policy and eligibility requirements. Here’s a breakdown of some of the general eligibility requirements needed.

 

  • A cosigner must be a United States citizen and of legal age.
  • Legal age will vary by state, so it is important to look up the legal age for your state of interest.
  • As for your preference, it needs to be someone you trust. Maybe start by asking a parent or close relative.
  • Needs to have a good credit score, and has to know all the financial responsibilities of a cosigner.
  • The cosigner will be required to have a consistent employer or a steady income. If a family member is not an option, consider a dependable, close friend.
  • Some private loan companies require that the cosigner have the same address as the applicant.

 

Cosigner Responsibilities

 

Make sure your cosigner fully understands what they are committing to and that you both discuss the responsibilities needed from a cosigner. Being a cosigner can be unpredictable. As a borrower, you may not be able to pay off a loan that you have taken on and your cosigner will be accountable for the remainder of the student loan payments. This could affect a cosigner and their future. Go over the cosigner paperwork and discuss all the options you have. You both will have equal responsibility throughout the life of the loan.

 

Cosigner responsibilities include payment on any late or missing payments as per the contract of the private loan. The cosigner’s credit report will show the student loan, therefore, any late payments will affect the cosigner’s credit score. A cosigner, by cosigning, is adding more credit to their credit history. Therefore, if the cosigner needs their own loan, they may find it difficult due to the additional credit added from the private loan.

 

A creditor may have different ways of collecting loan debt, but they can garnish wages depending on the state the loan is originated in. If the loan is not paid, you or the cosigner’s employer may be required to refuse a portion of your paycheck and send it to the creditor. In addition, a private loan may have clauses included in the document. Be aware that a clause may require the loan amount paid in full at the time of a cosigner’s death. Meaning if you ask someone to be a cosigner and they pass away the debt may have to be paid in full at that time. The same can go for the cosigner if the borrower passes away, the full debt balance could be expected at the time of the borrower’s death. Open communication between you and your cosigner is vital. Go over all clauses, liabilities, and possibilities to ensure you are both aware of the circumstances.

 

Factors to consider when selecting a cosigner

 

A cosigner needs to be someone who is completely able to pay off your loan. The private loan company will want to see that the cosigner has a steady income. A steady income means that they have reliable employment or a consistent form of payment. Without a steady income, the loan company will have no evidence that your cosigner has the funds to help pay off the loan.

 

Your cosigner will need to have a decently lengthy credit history. Along with the cosigner’s credit history, the lender will review their credit score. A credit score will illustrate to the loan company that the cosigner has borrowed money previously and was able to pay it back on time. A private loan company is always looking for a trustworthy candidate that will be capable of paying back their debt. While the loan company will decide if you and your cosigner are qualified, it is important that you have a dependable cosigner.

 

Cosigning will be a long term commitment and all clauses must be considered. Good health will be a factor when choosing a cosigner. Good health may seem like an odd qualification to have. If your cosigner dies, your loan could automatically be placed in default regardless of the payments you have made. Due to unfortunate circumstances, this could have a harmful effect on your credit score.

 

Whether it a relative or close friend, you and your cosigner must be on the same page. Once you have a loan you both will share the responsibility of getting it paid off. Talk about financial barriers together. If you are unsure you can pay off the loan, let your cosigner know ahead of time. This could help prevent any devastating effects on your credit scores in the future.

 

Benefits of using a Cosigner

 

While having a cosigner is a serious decision, it does include benefits. One of the biggest advantages to adding a cosigner is that it could help you to have a better interest rate. Adding a cosigner with a good credit history, and income, private loan companies may give you a lower interest rate. How can having a cosigner get you a lower interest rate? Since your cosigner should have an established credit history and income, it means that the loan is less risky for the lending institution. If the loan is more likely to be paid back based on previous borrower history, then the lending institution will provide a more attractive interest rate on the loan. Having a lower interest rate on your loan could mean thousands of dollars saved from debt repayment.

 

Secondly, having a cosigner could assist you with your own credit. Since a cosigner gives you a better chance at receiving the loan, you’re more likely to establish the credit to further build out your credit history. Assuming you’re able to make the monthly payments on your student loan, you will start to build a credit history. If you are paying on time, this will help you to improve credit for future needs and purchases for both you and cosigner. Without a cosigner, you may not be eligible for the loan and would not be able to get a jump start on your credit. Cosigning for a debt is not something that should be taken lightly by anyone. This could be the right answer for you or it could be the wrong answer. It’s important to review all your options as a borrower and discuss the liabilities and responsibilities of cosigning with your cosigner.

 

10 Facts About Student Loans That Can Save You Money

 

Marriage and Student Loan Debt

Ever been on a date where the other person doesn’t stop talking about their ex? If you’ve had this experience, you can likely relate it to discussing your student loan debt in your relationship. Talking about finances is a necessary evil in a marriage. It can be difficult to discuss finances in a marriage because many people handle finances different based on their personal experiences and how their parents handled them. You might be great at adulting, but if your parents were never open about managing money, you’re probably unsure of how to bring it up. You might even be unsure as to where to start when it comes to managing finances together. Student loans are a big part of many couples’ financial reality. Figuring out how marriage will affect your student loans is an important part of managing your money together.  Here are some main points that we think you should know about marriage and student loan debt.

 

Honesty

The fastest way to create a rift and cause problems in your relationship is to hide information about your finances. According to CreditCards.com, 6% of Americans in a relationship have hidden credit cards or checking/savings accounts from their partner. That total adds up to about 7 million, for perspective, that’s the size of the state of Massachusetts.  It’s not uncommon especially in younger people ages 18-29 to withhold some financial information. It’s when a partner begins to lie about large purchases that a partner should become concerned.

 

People might think that love solves everything, but it’s better to be on the same page and realistic about the situation. If you are mature enough to get married and really want to work together to succeed, you need to face your finances.  As a couple, you need to get over any fears about assessing the financial situation and air everything out. It doesn’t have to be painful but it needs to be an honest outlook. For some couples, this can seem really overwhelming but it doesn’t have to be.

 

Get Tips on How to Talk Finances With Your Partner

 

Get a Plan

Have a conversation about how to best review everything. Discuss each of your finances and then surmise a plan to tackle them. Now in some cases, it may not be this simple depending on your income level, occupation, and level of debt. You may want to meet with a financial counselor first and go over everything together, or sit down as a couple at home and discuss the basics before moving any further. It’s totally up to you both, as a team.

 

Don’t be shy or embarrassed by your financial situation as a couple. There are people who make a living on making sure couples are financially confident and ready to tackle financial goals together. Don’t overlook this benefit of consulting with an outside source about finances—especially if you feel like you don’t know what you’re doing. If you can’t afford an outside counselor check online, you may be surprised at the educational resources available for free. When it comes to self-learning about finances just be careful how you select your resources. As the old saying goes not everything you see online is true!

 

Loan Responsibility

When the person you’ve chosen to marry has student loan debt you can face some challenges. If you haven’t co-signed for a spouse and it’s just their name on the loan, this won’t be something that shows up on your credit report. Beware that even if you did not co-sign your partner’s loan there are instances when you might be responsible for paying the loan. Student loans aren’t that different from other types of loans.

 

For example, if someone passes away, the rest of their loan will likely be forgiven and the spouse would not have to continue making those payments. There are some cases where death will not discharge the remaining debt and the loan company may contact the estate for payment. If your spouse ever lost their income and went into default, the loan companies will look for someone to pay. If your spouse doesn’t have an income, your wages could be garnished. It’s a pretty extreme scenario, but it also happens and is something you should be aware of.

 

If you are choosing to marry someone with student loan debt, it’s important to talk about this. You’ll want to have a plan set up for each of these scenarios. Though they are extreme if you have savings and you pay down your debt responsibly you shouldn’t have any problems.

 

Repayment Plan Adjustments

IBR and other types of repayment plans are often used when paying back student loans. We would caution against using these programs. In some cases, your monthly student loan payment may not be covering the interest accrued that month and therefore your balance will continue to increase.

 

Repayment plans can be based on your household income and family size. When you get married your income and family size may change. If your spouse makes a considerable amount of money, your minimum payments could go up even with your family size going up. If your spouse makes less than you or is not working, your loan payment could go down. It all depends on the details of your financial situation and your loan servicer, but it’s worth noting that this is a possibility.

 

Refinancing

Fairly often we receive request to refinance couple’s student debt together. Many see this as creating a lot less hassle for themselves by creating only one bill.  That’s not always possible, and many experts suggest keeping your loans separate in case your relationship status or financial situation changes in the future. You are not always able to refinance together, either.  Whether or not you can refinance your student loan with your spouse will depend on the loan type and servicer you have. If you’re looking into refinancing, talk to each other about goals. Do you want a lower payment so you can save for a house or do you want to pay loans off sooner so you can live abroad or go to grad school? Again, it’s up to the two of you, but you can’t be on the same page if you don’t talk about it.

 

Don’t stress.

Take a deep breath and know that it’s normal for people to get stressed out talking about money, but it doesn’t have to be that way. No matter how much money you make, you will have to work together as a team to set priorities. This isn’t a blame game. Just talking about finances doesn’t mean that you’re secretly harboring any resentment or grudges. No one is being attacked and no questions are stupid. You both have to agree to create an open dialogue where you both feel good about discussing money and plans. Know that sometimes there are compromises, or one of you might change your personal plans to advance the other. That’s what it means to be a team.

 

Tips for Finding the Perfect Lender to Refinance Your Student Loans

 

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Glossary of Student Loan Refinancing Terms

There are so many terms that borrower’s encounter in the student loan application process, most borrowers may not be exactly sure what each means. If you’re getting ready to apply or just want to know what the documents are talking about, here’s our glossary of common student loan terms that you should know.

 

Adjusted Gross Income (AGI) and Gross Income

Gross income is the total income you earn in a year before deductions for federal or state taxes, credits, and so on. Adjusted gross income is the income you earn in a year which is eligible to be taxed after accounting for deductions. AGI is usually lower than your gross income and is what many institutions use to determine if you can get perks like loan tax benefits or financial aid, grants, etc. The easiest place to find these are on your official tax return.

 

Adverse Action Letter

When you apply for credit, insurance, a loan, or sometimes even employment, and are denied due to something negative on your credit report, the organization inquiring might be required to send you one of these. It explains why you were turned down and it’s important because it gives you a reason to see if something is wrong on your credit report.

 

Amortization

This term describes how the principal is paid over the course of a loan.  Most student loans are fully amortized, meaning that if all payments are made as scheduled over the life of the loan the principal balance will be fully repaid at the maturity date.  Other types of loans, including some types of mortgage loans, have a feature known as a balloon payment.  With a balloon payment, regularly scheduled payments do not fully repay the principal amount borrowed, so when the loan matures the final payment contains a larger, or balloon, payment of all remaining principal.

 

Annual Loan Limit

This is the maximum loan amount you can borrow for an academic year. Loan limits can vary by facts like grade level and loan type.

 

Award Letter

If you received financial aid, expect to see an award letter that explains the different types of aid for which you are eligible. The document will also include information about your loans, grants, or scholarships, and you’ll see a new one each year that you’re in school.

 

Borrower

The person who is responsible for paying back a student loan. You may not be the only one responsible, like if you signed with a cosigner, but the loan is for you and your academic fees and tuition. You’re the borrower.

 

Capitalized Interest

When unpaid interest gets added to the principal balance (increasing your overall balance and future interest), this is called capitalization. This is why it’s important to pay interest whenever possible. Capitalization might happen at the end of a grace period or deferment, or after forbearance, depending on whether it’s a federal or private loan. When a loan is consolidated or if it enters default, capitalization may occur.

 

Cosigner

If needed, borrowers can add a second person who shares responsibility for a student loan. This second person co-signs the loan and becomes partially responsible for repayment in the event that the primary borrower is not able to pay.

 

Consolidation Loan

Consolidation is when a new loan replaces your current student loans. People might do this to make payments easier to manage or to reduce the amount you owe each month or in total. There are lots of things to know about consolidation.

 

Default/Delinquent

A loan is considered delinquent when a scheduled payment is not made in a timely manner.  Delinquency can result in the imposition of late charges, collection calls or letters, and negative information being placed on a credit report.  Default is when the lender determines that the borrower has failed to honor the terms of the loan agreement in such a way that the lender is entitled to declare the entire loan balance due and payable, even if the loan has not yet reached its maturity date.  Serious delinquency is very often the reason for a loan being declared in default, but loan agreements typically provide that certain other events can trigger a default.  Before entering into a loan agreement, always read the loan agreement carefully and understand what can constitute a default under that loan.

 

Deferment

Students can usually postpone loan repayment if they meet certain criteria. This might be a pre-set time limit or can be when someone is in school and not able to make payments. Unsubsidized loans accrue interest while being deferred, but subsidized loans do not accrue interest while in deferment.

 

Disbursement

This is when your school receives funds like financial aid money or student loan funds. The institution then applies it to your bill for tuition and school-related fees. If you consolidate, the disbursement happens when money is sent to pay off your old loans.

 

Discharge

When some or all of your student loan debt is canceled, this is called discharge.

 

Entrance/Exit Interview or Counseling

Schools provide entrance or exit counseling to help students understand important financing topics like how to repay loans and stay in good standing with student loans. This can happen during enrollment as an entrance to the process, and after graduation as part of leaving the school system.

 

Expected Family Contribution (EFC)

This amount is an estimate based on how much money you, your spouse, and/or family can contribute to your tuition for the academic year. It’s calculated with information provided on your FAFSA and helps determine your financial need. Financial need is calculated as the cost of attendance minus your EFC. This determines your eligibility for aid including Stafford loans, Perkins loans, scholarships, and grants.

 

Fixed or Variable Interest Rate

If an interest rate cannot change over time, it is fixed. A variable interest rate can change over the life of the loan.  Variable rates can move up or down based upon changes to an identified index, such a prime rate, a particular U.S. Treasury note, or LIBOR.  LIBOR stands for the London Interbank Offered Rate, and is an index commonly used with student loans.  Some variable rate loans may have a “cap” and/or a “floor.”  A cap is the maximum rate that can be applied to the loan, regardless of changes to the index.  A floor is just the opposite – the minimum rate for the loan regardless of changes to the index.

 

Forbearance

Forbearance is when you can postpone or reduce student loan payments, but interest continues to accrue and increase the total amount you owe.

 

Free Application for Federal Student Aid (FAFSA)

FAFSA is the application a student must complete to apply for any type of federal student aid including loans, grants, or scholarships.

 

Full-Time/Part-Time Enrollment

Whether you are enrolled or not, and your status as part-time or full-time can affect different aspects of student loan financing and repayment. Part-time is usually six credit hours and full-time is twelve, but this can vary.

 

In-School Deferment

While in actively enrolled in school, you might be able to postpone your federal or private student loan payments until you graduate or drop below half time.

 

Loan Forgiveness

When you qualify for certain programs, you may be able to have the final balance of your loans forgiven after a certain period of time. There are specific criteria for eligibility and usually a detailed application process.

 

Master Promissory Note (MPN)

This document states the terms of repayment for your student loans and is the official document proving your commitment to repay the money you borrowed with interest. To receive federal loans, all borrowers must sign an MPN.

 

Principal Balance

The principal balance is the amount of money borrowed under the loan that you currently owe. It doesn’t include interest or fees that are either unpaid or yet to accrue.

 

Repayment Period

This amount of time is what you have to repay your student loans. Standard for Stafford loans is ten years, but this can be extended with reduced repayment plans. The longer you take to pay your loans, usually, the more you end up paying in interest. A repayment plan is the formal agreement you have with a servicer that details how you plan to repay your loans each month.

 

Repayment Terms

These terms represent all of your rights and responsibilities for the student loan, including what you’ll pay for monthly payments. Lenders are required to disclose repayment terms to you before you can commit to borrowing a loan.

 

Right to Cancel

Once an approved application has been accepted by the borrower, the federal Truth in Lending Act requires the lender to provide a Final Truth in Lending disclosure statement.  This final disclosure statement includes a three business day right to cancel, during which time the borrower can change their mind and cancel the loan.  To protect borrowers, the lender cannot disburse the loan proceeds until the right to cancel period has expired.

Servicer

The loan servicer handles your student loan billing like collecting payments and offering customer service between you and the lender.

 

Student Aid Report (SAR)

The SAR is a detailed list of all of the financial and personal information you submitted for your FAFSA, including financial info for your family. Your school receives a copy of this and you should receive one as well.

 

Subsidized and Unsubsidized Loans

While in school and during your grace period, the government pays the interest on your subsidized loans so you don’t have to. Federal loans that are not based on financial need are unsubsidized, meaning you’re responsible for paying the interest that accrues.

 

Top Tips for Finding the Right Student Loan Refinance Lender

Our Simplest Guide To Student Loan Refinancing – Part II

We covered some of the nuts and bolts of refinancing your student loans in Part I of this guide, but there’s still more to learn before you can confidently approach refinancing your loans. So strap yourself in for Part II of Education Loan Finance’s Simplest Guide to Student Loan Refinancing!

Refinancing Different Types of Student Loans

How and why you refinance your student loans depends a lot on what type of loans you have. Here’s why:

Private Loans

When considering refinancing private loans, it usually comes down to the math of how much you’ll save. Because there are so many private servicer options, you can take time to compare the customer service, terms, and interest rates. Since you’re refinancing a private loan, you probably aren’t losing any benefits moving from one servicer to another. Make sure you understand how much you’re saving because that will be a major factor in choosing the company, along with their service.

Federal Loans

Some people believe that federal loans can’t be refinanced, but they totally can. They’re actually the most common loans to refinance because so many people can get better rates now than they did with the federal loans initially.

You can easily find private companies that will refinance your federal loans. The reason why people don’t choose to refinance their federal loans is because you can lose benefits that are only available on federal loans if you refinance them. Federal loans might have more payment options or qualify for programs like loan forgiveness where private loans won’t have those same benefits. But if you’re not counting on loan forgiveness and you are set with private payment options, refinancing your federal loans might be a great financial choice for you.

Keep in mind that you don’t have to refinance all loans of either type. You might have one or two private federal loans that are a higher rate and you want to refinance those, but you keep others as-is because the rates and servicers still fit your needs. How you do it is up to you.

Other Loans

You can also refinance other kinds of student loans like PLUS loans. PLUS loans can be refinanced by the parent who holds them or can be transferred to the student/child from whom the money was borrowed. If the child recipient of these loans has a good credit score and good credit history along with sufficient income and an appropriate debt-income ratio, this might be a good solution. Just keep in mind that these new payments have to fit into the budget and you want to make sure you’re ready.

 

What to Consider When Refinancing Student Loans

Interest Rates

If you’re not going to save money (either monthly or by reducing the length of time you’re paying back your loans) then it usually doesn’t make sense to refinance. That’s why most people look first to interest rates to understand whether they should refinance or not. If you qualify for significantly lower interest rates than what you currently pay, then take a look at how much you’ll save and see if it makes sense to move forward. Online student loan refinance calculators can give you an idea of what difference those small percentages can make depending on how much time you have left to pay your loan.

Loan Terms

Another factor for student loan refinancing can be the terms of your loans or the amount of time that you’ll continue to pay these loans before they are paid off. For example, say you have ten years left to pay off your student loans, but you can refinance. When you refinance, you make the same payment amount but finish payments in seven years instead of ten—heck yes! That’s three fewer years that you’ll be making that payment. On the other hand, maybe you want longer terms to pay off your loan so that you can get a lower monthly payment. Some people refinance into the same length of time for their loan but take the savings from refinancing and use that to save for something else. This is why it might make sense to refinance even if your payment isn’t going down.

Servicer Considerations

You might find that more than one loan servicer can give you a good drop in interest rates or better loan terms—so how, then, do you decide between them? There are lots of things that matter to you that may not be apparent at first. How you pay, like whether you can pay online or make automatic payments, can be a big one. Customer service is crucial when you are dealing with something that can be difficult to navigate on your own or as a first-timer, too. Plus, not all servicers are equally reputable. Check out information about companies you’re considering and make sure you’re not signing up for a shady new student loan.

When is it time to refinance your student loans?

Understanding when is the right time to refinance is a whole other can of worms. There are several markers or goals you might want to reach before looking into refinancing. Check out our article on signs that it’s time to refinance.

Should I refinance?

It’s a personal decision to decide if now is the time to refinance. The best thing you can do is to understand your current situation and equip yourself with information on refinancing and personal finance. Look for help connecting your specific situation to good advice. Consult trusted sources and look at the big picture. How would refinancing help you hit your goals? Are you doing something right now that would make refinancing tough and maybe it could wait a month or two, or does it make sense to get started today?

You can always reach out to us and speak to an expert at ELFI. We help people with their unique refinancing situations every day. You’ll get connected with someone who can help you through the entire process so that you never get left in the dark. What could be simpler than calling your own personal advisor today?

 

10 Facts About Student Loans That Will Save Your Money

Student Loan Refinance Head Barbara Thomas’ Advice to Those Caught in the Gender Gap

The gender gap, sounds like something that ended when women gained the right to vote, but think again. Every day women are fighting for the same treatment as men. Not only do women get paid 80 cents to the dollar that men receive, but recent research from Pew Research Center shows that women hold only 10% of the top executive positions. The same report goes on to illustrate that in the financial sector, women make up only 8.1% of executive level positions. Basically, what all these stats are showing is that women not only get paid less, but they also don’t have leadership positions. If you’re like us, you’re thinking finding a woman executive in the financial sector is like finding a unicorn, but we did it! Luckily, we have the pleasure of working with SouthEast Bank Executive Vice President and Head of its student loan refinance division Education Loan Finance, Barbara Thomas. We sat down with Barbara and discussed what her long and successful financial career has been like and if she has been affected in the past by the gender gap.

How did you start working in the financial industry?

My first job out of college was a credit research analyst for a municipal bond insurance company. After graduate school, I went into investment banking.

Why did you want to work in finance?

My BS degree is in mathematics, and MBA in Finance, so I consider myself quantitative and highly analytical. I always had a knack for numbers so a career in finance was a natural fit.

Did you ever feel that people in your personal life tried to deter you from working in the finance industry?

My family and friends have been very supportive of me and my career throughout my life.

Did you have moments when you reconsidered your career? How did you move past them?

Yes for sure. I have three children – I traveled a lot and worked very long hours, including weekends, throughout my career so I was away from them quite a bit. The work life balance just doesn’t exist in investment banking. However, I achieved so much in my career, and my children have been so supportive of me and are proud of my accomplishments. I believe I set a great example of how hard work and perseverance can lead to success and all three of my children are successful in their own right. In addition, I always made sure that I was there for them when they needed me most and for the important events in their life. Whether it was editing their papers at midnight when I arrived home from work or driving for hours after a long business trip to make my daughter’s field hockey game, I made sure I was there for them.

Can you explain a bit about the gender dynamics in the finance industry at that time?

No doubt, the finance industry has been and still remains today an old boys’ club. I believe that not much has changed to promote women, including providing the proper mentoring and advancement opportunities, in the past 25 years that I have been in the business. When I finally achieved Managing Director status at Morgan Stanley, so many of my clients and professionals outside of the firm thought that I was already an MD for years.

Can you share some moments that you think may have been different, if you were of a different gender?

There are so many moments- from being promoted long after demonstrated success, lack of invitations to casual events (i.e. golf outings and yes I play!) outside of the office, lower compensation than my male peers and lack of opportunity for lateral moves within financial firms. Just to name a few.

There is often a stigma associated with women – you have to choose between your career or a family. Do you have any comments regarding that statement?

Yes, in fact, when I had my third child and was an investment banker, my colleagues thought I was going to retire. So I left that firm to take on a new investment banking position in a more exciting industry at another investment banking firm – that showed them all that they truly misjudged me!

Were there other women that you had worked with in finance? Did they too notice the gender dynamics of the industry?

There were very few women and most left after they made vice president because the opportunities for advancement were slim and the uphill climb was just too steep. We all felt it.

Have you seen gender dynamics change in the finance industry within the last decade?

Nothing has really changed other than the creation of “Heads of Diversity” and “Diversity Committees” in corporations. It is very hard to change the dynamics when men continue to serve in the vast majority of leadership and management roles in the finance industry.

Have you had similar experiences in your current role? 

In my current role as an Executive of Southeast Bank, I have been presented with opportunities to take on new challenges and leadership roles with the full support of our CEO. As head of certain of the Bank’s business lines for the bank, including Education Loan Finance, mentoring and promoting women is a high priority for me.

What advice can you share with women today who may be facing similar challenges in industries like technology? Where the gender dynamics may not be equal?

Always stay true to who you are, demand to take the lead on those plum assignments, prove that you are the right choice for the position, have a voice and speak up but make sure what you say is relevant and toot your own horn, because no one is going to promote you like you can!

 

Should You Join a Local Professionals Group ? 

Refinancing Your Student Loans With Confidence

You’re out of school and thinking through your financial life more clearly, you’ve hopefully looked into refinancing student loans. Whether you’re looking for a lower monthly payment, lower interest rate, or even if you just want to consolidate multiple loans into one. Refinancing is a great way to get some serious traction on the long journey to being student loan debt-free.

With dozens of lenders enticing you with the ‘lowest interest rates’ on the market, how do you know which one to trust?

When a lender says they can offer you a lower rate, perhaps you suspiciously scan the room for conspirators hiding in the shadows waiting to stab you in the back. Sound dramatic? It happens to thousands of unknowing borrowers every day. “Et tu, Brute?”

The Street Cred of Credit Ratings

It is important to find a student loan refinance company that has credibility in the marketplace and you can trust. Fortunately, credit rating agencies who evaluate the creditworthiness of a student lending company and its operations can provide an independent assessment of the lender. A credit rating agency conveys the creditworthiness of a company and its debt financing with a letter grade. The grading system is similar to the way your credit score numerically reflects your own borrowing history.

Credit ratings are awarded by independent rating agencies, like Standard and Poor’s and DBRS. Rating agencies are hired to analyze a lender’s financing and operations. Since the rating agency’s reputation is on the line, they scrutinize every possible detail of a lending company. These agencies can be quite difficult to impress.

AAA is the highest rating a lending company can be awarded, and subsequent ratings drop in value (and confidence) – AAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB, and so on, all the way to lowest rating – D..

‘AAA’ Straight Out of the Gate

Because of the premier quality of an AAA rating, it frequently takes a lender several years to earn. But we, at Education Loan Finance, recently became the first student loan refinancing lender to receive the AAA rating with our inaugural financing in the market.

This recognition from both Standard & Poor’s and DBRS (two of the nation’s top rating agencies) is a testament to the stability of our platform and the high quality of service and products we offer.

We believe that knowledge is power, and providing you with comprehensive refinancing and consolidation options enables you to step forward on your financial journey with confidence. That is why we created a state-of-the-art loan application platform and a customer service delivery model (through our Personal Loan Advisors) that provides you with personalized service throughout the refinancing process.

High Credit Rating Means Lower Interest Rates

Our AAA credit rating means that we attract responsible borrowers and bring a high credit quality to the market. We take pride in our ability to save our borrowers an average of $280 per month and more than $26K over the life of their loan*.

Empowering a Brighter Future

We want to help you make educated financial decisions and offer practical advice for achieving balance in life, business, and finances. In just a few minutes, you can find out how much we can save you per month, as well as explore repayment terms and interest rates that best fit your budget.

 

10 Facts About Student Loans That Will Save You Money

* Member Lifetime Savings – Average member lifetime saving calculation of $26,215.92 total savings is based on information provided by Education Loan Finance customers who refinanced their student loans between 08/16/2016 and 10/07/2017. While these amounts represent average amounts saved, actual amounts saved will vary depending upon a number of factors.

 

Student Loan Repayment: Grace Periods What to Know

If you got a loan for school, you should have had some counseling regarding your debt. Student loan debt is probably the least exciting part of graduating from college. If you are a recent graduate, you may hear a whole lot about a 6 month grace period. Let’s explore exactly what a 6 month grace period is, how to prepare for the end of the 6-month grace period, or how your approach to the grace period will affect you in the future.

 

Grace Periods

“No one told me about this” if that’s what you said when you read the intro paragraph; well you wouldn’t be the first, but you are in the right place! As a borrower, you are responsible for your financial decisions. It’s your responsibility to assure your loan gets paid on-time. If you don’t make payments on your loan in time it will affect your credit and could take a long time for that delinquency to be removed. A grace period is provided by the lender to a borrower. Grace periods are common for any type of loan not just student loan debt and can be common with credit cards too. The lender will allow you a specified period of time in which you are excused from making payments towards the debt. If you’re a recent college graduate, you’ll likely receive a 6 month grace period. The length of the grace period you’ll receive can change based on the types of student loans you have and who your loan provider is.

 

Unsubsidized Stafford Loans Vs Subsidized Stafford Loans

If you have a  Stafford Loan after Graduation you’ll be granted a 6 month grace period in which you are not required to make payments. If you have a Subsidized Stafford Loan that was originated before July 1, 2014, it will not accrue interest during the grace period. If you have an Unsubsidized Stafford Loan you will be responsible to pay the interest that is accrued while you utilize in-school deferment, grace period, or once the interest is capitalized upon repayment.

 

Direct PLUS & Parent PLUS Loans

Direct PLUS loans are taken out by graduate students without a cosigner. There is a 6 month grace period after the student is no longer enrolled for atleast half-time. Interest is accrued from the time of disbursement and is capitalized at repayment.

 

Parent PLUS loans are taken out by parents or guardians, of dependent undergraduate students. Repayment is expected when the loan is disbursed. Interest will begin to accrue from the time of disbursement. There is an optional 6 month grace period once the student is no longer enrolled for atleast half-time.

 

Federal Perkins Loans

These loans are provided to students that have “exceptional financial need.” After you graduate, withdrawal, or drop under half-time status you have a nine-month grace period. Borrowers with Perkins loans shouldn’t be charged during the initial grace period.

 

Private Loans

Private loans vary, so if a grace period is permitted it is ultimately up to the lender who provided you with the loan. Typically you should be able to find any information regarding a grace period in your loan agreement. When using a private lender it’s likely that interest will be accrued during the grace period and then ultimately capitalized upon repayment.

 

What is Capitalized Interest?

Capitalized Interest can seem pretty complex, but it’s fairly simple and REALLY important that you understand what it is. When your loan is disbursed or the funds are sent to your institution, the interest on that loan starts to accrue. Yes, even if you are still in school interest is being accrued on those funds. Upon your repayment that interest will get added onto the principal balance of your loan. Now, capitalized interest will depend on the type of loan that you have. As we discussed above some loans will accrue interest and some will not so be sure to know the types of loans that you have.

 

So how exactly does capitalized interest work? Let’s say that you went to school for 4 years, borrowed $10,000 a year with a 7% interest rate. So you borrowed a total of $40,000 from your lender.  If you didn’t make payments during school and you had a 6-month grace period (no payments) you would have acquired $1,412 in interest only, after the grace period! If you had a 10-year loan term, the total amount that you’ll have paid on the loan with interest capitalization is $57,700.  That equates to an additional penny for every dollar you borrowed. Try calculating your capitalized interest here

 

Financial Planning

It should go without saying, but if you can make payments while you’re in school or payments while you’re in your grace period, do it! If you are the last minute type of person and didn’t know about capitalized interests until just now, it’ll be okay. Step one- don’t panic! Here are some ways that you can pay down your debt.

 

Pay over the minimum payment. Regardless, if you’re on an Income-Based Repayment plan or just making the minimum payment, interest is still being accrued! In order to cut down on the interest being accrued and concentrate more of those payments onto the principle of your loan, you need to pay more. It’s easier said than done, but any additional money that you can put towards the debt will help you to pay less overall. Try making a budget that will allow you to make bi-monthly payments towards the debt. Bi-monthly payments will allow you to pay down the interest sooner so your payments are concentrated on the principle of the loan.

 

Look to an Employer

A benefit that companies recently have found beneficial is helping employees with student loan debt. Some companies offer resources for graduates like paying contributions toward the debt and offering other financial resources. If you are in the market for new employment, try looking into this as a company benefit. If your employee can contribute to your debt pay down you’ll have the ability to pay it down sooner!

 

SideGigs

Lucky for you, the gig economy has become rather popular! Try picking up an extra side job, where the profits can all go straight towards your debt. You don’t need a special talent to have a side job. Though a talent helps there are always jobs like babysitting, dog walking, or even housesitting. If you aren’t sure where to start there are a ton of websites that you can use to create a profile and get connected with people locally.

 

Refinance Student Loans

If you have a high interest rate and a steady income refinancing student loans could be a good option. Refinancing allows you to combine multiple loans into one loan, allows you to select the repayment terms, and can help to cut down on the interest rate. In order to qualify for a student loan refinance you’ll need a steady income and usually a FICO score of 650 or higher. If you can’t qualify on your own, be sure to ask about adding on a cosigner.

 

Responsible Borrowing

If you’re a recent graduate or in-school currently, don’t try to hide from your debt. Avoiding making payments on your loan will only hurt you and your credit history. Do your research and talk with your lender. The more you can educate yourself as a borrower the better. Just remember, you’re building a strong foundation and you’ll be establishing yourself as a financially responsible borrower.  In a few years, you’ll be thanking yourself for the responsible financial choices that you’ve made!

 

Student Loan Refinancing or Consolidation?

 

 

NOTICE: Third Party Web Sites
Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the web sites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.

Student Loan Facts 2018

For most people in the United States, the cost of going to college represents a huge financial burden. The Federal Student Aid Portfolio Summary, issued by the office of Federal Student Aid and quoting data provided by the National Student Loan Data System (NSLDS), states that as of Q3 2018 approximately 42.2 million people hold outstanding principal and interest balances on federal student loans. These loan types include Direct Loans, Perkins Loans and Federal Family Education Loans (FFEL).

 

It is important to know the facts about student loans before borrowing. The statistics overwhelmingly point to a growing debt problem. According to the Federal Reserve System, the amount of student loan debt increased by 5.6% in Q3 of 2018, when compared to Q3 of 2017. That may not sound like much until you discover this amount equates to roughly $83,482.32.

 

The facts do not get any easier to digest for college students in 2018. Whether they attend public or private universities, many students rely on loans for tuition and other expenses. If you are among the more than 42 million borrowers with outstanding student loan debt in the U.S., you might be interested in ways to save, such as through student loan refinancing.

 

Check Out Our Guide to Student Loan Refinancing

 

Here are some of the latest statistics to be aware of.

  • According to a report issued by the Federal Reserve System, student loans in the United States currently account for approximately $1.5 trillion in debt.
  • According to the Federal Reserve data, student loan balances increased in 2017 by about $1,490 billion or 5.8%.
  • The data also shows that there are about $84 billion dollars in default.
  • According to Student Debt Relief, there is about $106.5 billion borrowed for student loan debt each year.

A Closer Look at Student Loan Debt

 

As noted above, debt associated with federal student loans accounted for nearly $1.5 trillion as of Q3 2018. According to the Federal Student Aid Portfolio Summary.

 

Average Student Loan Debt Borrowed Per Year

Outstanding interest and principal balances for Q3 2018 are as follows:

  • Direct loans – 33.3 million borrowers, representing $1,116 billion
  • FFEL loans – 13.8 million borrowers, accounting for $288.6 billion
  • Perkins loans – 2.4 million borrowers with roughly $7.4 billion owed
  • Stafford subsidized loans – 29.1 million borrowers distributed among $274.2 billion, according to the office of Federal Student Aid Portfolio by Loan Type.
  • Stafford unsubsidized loans – 28 million borrowers, whose loans total $477.8 billion.

 

Debt management programs get a lot of attention these days. Given the student loan facts, you can see why. It’s important to note that a majority of student loans are in repayment.

 

The Direct Loan Portfolio by Repayment Plan report issued by the office of Federal Student Aid shows that several million borrowers with direct loans were in the process of repaying their loans as of Q3 2018, including

  • 10 Years Or Less – 11.12 million borrowers with a level repayment plan, owing about $205.1 billion
  • More Than 10 Years – 1.69 million borrowers with a level repayment plan, owing about $76.4 billion
  • Income-Based Repayment (IBR) Plans – about 2.85 million borrowers, owing about $168.5 billion

According to the Direct Loan Portfolio by Delinquency Status report from the office of Federal Student Aid, as of Q3 2018, approximately 3.35 million borrowers had loans in default, with loans totaling about $89.6 billion not yet being repaid. Of that default amount, a little under a million loans are so delinquent as to have been transferred to the Debt Management and Collections System (DMCS). According to this report, about 16.02 million borrowers with direct loans are current on payments, representing an estimated $570.5 billion in debt.

 

Federal vs. Private Student Loans

According to Student Debt Relief, students borrowed about $125.6 billion in non-federal and federal student loans in the 2010-11 academic year, a number that has fallen to $106.5 billion by the end of the 2016-17 academic year. The drop in money borrowed can possibly be attributed to fewer students attending college. In 2011 16.63 million students enrolled in college, but by 2016 that number had also fallen to 15.74 million in 2016. Fewer students enrolling in college could be the reason for the drop in money borrowed.

 

Debt vs. Type of School

According to the Federal Student Aid Portfolio Summary, of those who attended a Public institution 24.9 million students borrowed loans and 13.5 million students borrowed loans from a private institution in Q4 of 2018.

 

Student Loan Debt Trends

Student loans are not limited to undergraduates. An increasing number of individuals pursuing graduate and professional degrees are borrowing for graduate programs on top of what they already owe for undergrad degrees, according to statistics revealed in “The Graduate Student Debt Review,” published in 2014 by the New America Foundation Federal Education Budget Project.

 

If you combine undergraduate and graduate debt based on degree, the average MBA graduate owes $51,000, a Master of Education grad owes $50,879, a Master of Science grad owes $50,400, a Master of Arts grad owes $58,539, a Law grad owes $140,616, and a Medicine and Health Sciences grad owes $161,772.

 

The bottom line is, if you are borrowing, then know student loan facts. You can get all the details from lenders or the Federal Student Aid website, an office of the U.S. Department of Education. Finally, review the payment terms and repayment plan options for any student loan you’re considering, including student loan refinancing alternatives, so you can choose a loan that best suits your income bracket, finances, and lifestyle.

 

Signs It’s Time to Refinance Student Loan Debt

 

NOTICE: Third Party Web Sites
Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.

 

Consolidation Vs. Refinancing: Which is Right For You?

Anyone who has taken out a student loan has probably been required to sign a promissory note, which confirms a borrower’s responsibility to pay back the money used to offset the cost of higher education. Many colleges and universities also require exit counseling to inform their graduates of the repayment options available through federal loan programs. However, with private financing companies now offering additional options that could possibly lower monthly payments or interest costs over time, many financially savvy individuals seek to minimize and simplify their financial debts.

Choosing the right student loan repayment program can be confusing, and borrowers need to be aware that both federal and private lenders offer plans designed to match their budgeting capabilities and financial goals. In today’s financial environment, graduates may want to take advantage of lower interest rates while paying off their debt as soon as possible, or they may prefer to free up extra cash by choosing an extended term with lower payments.  Specific student loan repayment options and what each means may not be so clear to each individual borrower, so we have outlined the differences between student loan consolidation and student loan refinancing of both private and federal  education loans.

Federal Student Loan Consolidation

Federal or Direct Loan Consolidation allows borrowers to combine multiple federally-funded subsidized or unsubsidized student loans, regardless of income or credit history, into one payment that uses a weighted average of all interest rates. Because this form of student loan consolidation is only available for federal loans, student loans acquired by a private lender are not eligible. The benefits of this form of consolidation include the ability to combine loans into one simple payment, the opportunity to switch from various variable rates to one fixed interest rate, and the ability to extend the life of the loan, thereby lowering the total of monthly payments. Borrowers in the federal program are also eligible to take advantage of programs such as deferments, forbearances, or grace periods that temporarily reduce or suspend monthly payments during times of financial hardship. The downside is that borrowers can be less likely to save money or see drops in interest rates with this plan. Also, borrowers who extend the life of the loan to lower their monthly payment will likely pay more in interest over the life of the loan.

Private Student Loan Refinancing

Similar to student loan consolidation, refinancing student loans involve combining multiple student loans into one loan with one monthly payment. However, unlike Direct Loan Consolidation, this option is only offered by private lenders and includes restructuring both private and federal education loans to reward borrowers who demonstrate responsible financial habits with rates and payment options not offered through the federal consolidation program. New interest rates are calculated based on the borrower’s credit history and overall financial health, as well as current financial market conditions, rather than the weighted average of the included loans. This option can offer the greatest opportunity for a borrower to save money since the new rate is applied to every loan refinanced. However, it is important to note that when borrowers refinance with a private lender, they may lose special benefits such as income-based repayment, loan forgiveness, deferments, and forbearances associated with federal loans. Although not guaranteed, reputable private lenders are interested in the success of their clients and offer support services to help keep their borrowers in good standing during unexpected financial hardship, so be sure to consider the level of customer service available when choosing to refinance your student loans.

Which Is Right For You?

Choosing the financial path that is right for you and your budget is paramount. Compare the terms, interest rates, and benefits of your current student loans to a new potential lender and decide if the potential savings and the stability of your financial situation make the switch worthwhile. Then, figure out what you can comfortably pay each month and how long you intend to make payments on the loan (our loan payment calculator helps borrowers choose a loan term that fits different budgets). Finally, take a look at our application process or give us a call at 1-844-601-ELFI. Whether you choose to consolidate federal student loans or refinance the combination of private and federal student loans, our team works as your advocate, steering you in the direction that is right for you and your budget.

Student Loan Refinancing Requirements: A Primer

With Education Loan Finance from SouthEast Bank, we successfully help many college graduates and professionals managing their education loan payments find a better solution. Our student loan refinancing program, which also offers consolidation of multiple education loans, is available to individuals with a variety of professional and financial backgrounds, but certain requirements do exist. We believe that being aware of these requirements, along with the available refinancing options, is the first step in achieving the financial benefits of student loan refinancing and consolidation. For a better idea of what to expect when refinancing your student loans, review the following factors involved in the application process:

  1. Good to Excellent Credit

Borrowers with good to excellent credit often have more options and are commonly offered better terms than those with lower credit scores. Borrowers with higher credit scores should take advantage of their credit status by researching lenders that offer more favorable benefits to individuals who display responsible financial habits. Alternatively, borrowers with lower credit scores should work diligently to increase their credit score by routinely making on-time payments and reducing unnecessary debt. Bottom line: Your credit rating helps determine new interest rates and terms, so it is important for you to build, protect, improve, and maintain your best possible credit score.

  1. Qualifying Loan Balance

Zero debt is the best kind of debt, and our goal is to help graduates reduce their student loan debt with a plan that fits their financial goals. To qualify for refinancing or student loan consolidation through Education Loan Finance, borrowers must have at least $15,000 in outstanding student loan debt. The maximum amount of debt that Education Loan Finance can refinance varies based on eligibility.

  1. Financial Documents

Refinancing student loans require proof that borrowers are financially eligible and able to repay their student loans. Documentation is required during the application process, but to make the process moves efficiently and smoothly, we recommend that you gather the following information as early as possible:

  • Most Recent Paystub (including servicer name, borrower name, loan account numbers, and payment mailing address)
  • Last W-2 Form
  • Current Loan Server’s Information
  • Current Loan Balance(s)
  • Current Loan’s Terms and Interest Rates
  1. Educational Requirements

To qualify for refinancing, borrowers must have earned a bachelor’s degree or higher from an approved post-secondary institution.

  1. Loan Program Benefits and Options

Benefits associated with federal and privately-offered student loans are very different. Borrowers should, therefore, know exactly what they have and could be giving up — especially when it comes to federal student loans. Refinancing a federal student loan means the loan will be consolidated into a private company’s loan package, thereby potentially removing the loan from its federal ties and its protective benefits (e.g. income-based repayment or loan forgiveness). However, many private education loan providers also offer similar benefits to help their borrowers remain in good standing, so be sure to ask an advisor about such programs.

Prepare Yourself Today

While the stipulations and requirements for refinancing will vary between lending institutions, this quick checklist will help prepare you for a few of the most common requirements, as well as those that are specific to Education Loan Finance, associated with student loan refinancing. With an understanding of our program guidelines, as well as by having required financial documents ready, borrowers will find our already simple and streamlined application process that much easier. However, if you should need help, Education Loan Finance representatives are only a short phone call away.

9 Signs It’s Time to Refinance