Know Your Federal Student Loan Repayment Options

KEY RATING DRIVERS Collateral Quality: The MHEAC 1999 trust is collateralized by approximately $328.32 million, and the MHEAC 2004 trust is collateralized by approximately $72.78 million FFELP student loans as of Sept. 30, 2013 with guaranties provided by eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. Interest Rate Risk: The main driver of the downgrades is the interest rate risk embedded in the tax-exempt auction rate securities which make up approximately 40% of the MHEAC 1999 outstanding notes, in addition to the taxable auction rate securities, which are paying interest at a contractually determined maximum rate due to failed auctions. The tax-exempt auction rate securities do not benefit from a net loan rate, and as such, interest rates can increase to maximum rates which range between 14% and 16%, and the multipliers associated with tax-exempt bonds further magnify interest expenses and create negative carry as interest rates rise. Interest rate risk is also embedded in the MHEAC 2004 tax-exempt auction rate securities which make up the entire trust’s outstanding notes.

Service members struggling with student loan debt can find relief through federal programs that cap interest rates and offer loan forgiveness. Public Service Loan Forgiveness Active-duty members serving full-time can have any remaining balance on their direct loans canceled after 10 years, if they make 120 on-time, full, scheduled monthly payments. Only payments made after Oct. 1, 2007, count toward the requirement. Loan forgiveness doesn’t come without paperwork, though. The Department of Education recommends graduates submit an annual employment certification form to help track their eligibility over the 10-year span.

According to figures released Thursday from the Federal Reserve Bank of New York, the amount of education loans outstanding nationwide, which has increased every quarter since the New York Fed began tracking these figures in 2003, rose $33 billion to $1.027 trillion. Meanwhile, the share of student-loan balances that were 90 or more days overdue rose to student loans Obama 11.8% from 10.9% , even as delinquencies on other debts dropped. Student-loan balances have roughly tripled since 2004, and roughly 9% of all consumer debt is now student loans, up from 3% a decade ago. Mid-November marks about six months since most of this years crop of college and professional-school graduates tossed their capsand for those who graduated with outstanding federal student loans, it means the end of an optional six-month payment-free grace period that follows graduation. In other words, mandatory federal student-loan payments are about to kick in for the youngest group of borrowers. The six-month grace period begins the day after a student stops attending school on at least a half-time basis, according to the U.S.

Your monthly payments are adjusted each year based on your income. The repayment period may extend to 25 years. Remaining debt after 25 years of repayment may be excused. Public service employees may have debt excused after 10 years. If in any month your payment does not cover accrued interest, the government will pay the interest up to three consecutive years.


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