NASFAA News...
Getting Out of a Bases Loaded Jam-Helping Borrowers with Repayment
by Charla Rasmussen National Student Loan Program

• Deferment. Make sure students know they're eligible for deferment if they re-enroll in school. Encourage them to report the enrollment to their lender.
• Ombudsman. Appoint an ombudsman to help resolve disputes. NSLP, other guaranty agencies, and the Department of Education all have ombudsmen. Schools and lenders are also beginning to appoint ombudsmen. Inform borrowers about your ombudsman service.
• NSLDS. Use NSLDS to access information about a borrower's loans, including who owns the loan, then call the lender to learn more about the student's loans. According to ED, the Privacy Act does not prohibit a lender or collector from releasing information to a school even if the student did not receive the loan at that school. If you have problems getting specific loan information, contact your regional ED office for help.
• Coordinate payment due date with payday. Encourage borrowers to ask if their lender can coordinate the payment due date with their payday. Some lenders are more flexible about this than others.
• Electronic repayment. Encourage borrowers to set up electronic repayment. They may receive interest breaks or other incentives from the lender for using it. Electronic funds transfer usually reduces servicing costs, makes it easier for borrowers to pay on time, and reduces the chance of default.
• Forbearance. Suggest forbearance for borrowers who can't make full payments or any payments at all. Encourage them to make small monthly payments during forbearance to help reduce their debt and maintain a payment habit.
• Consolidation. Consolidation may offer great benefits for some borrowers, but it may also have drawbacks, so counseling is critical. Borrowers can often manage debt more successfully if they have one loan, one lender, and one payment. Borrowers now retain the interest subsidy benefit on any subsidized loans they consolidate, but consolidation may reduce deferment or cancellation options, and any unpaid interest becomes part of the principal. Finally, consolidation may increase or reduce interest costs. The borrower should consider all the pros and cons. Most consolidators offer websites to help borrowers explore consolidation options.
• Repayment plan options. Help borrowers choose the best repayment plans for them, including alternatives such as graduated payment, income-sensitive, and extended payment plans. ED can offer an income-contingent repayment plan for overburdened borrowers with lower incomes. Because their earnings tend to be lower when they first leave school, repayment based on income may be the best initial option.