No. of Recommendations: 0
DS was shocked to get a loan repayment bill today. He was on IBR (ACS administers) with a monthly payment of zero, after being unemployed. He was taking a machining course at a community college, of 3 credits, paid cash, and the school sent in his data for a student loan deferment.

ACS cancelled the IBR, denied the student loan deferment (less than half time), and wants him to start making payments again. They offered to put him on forebearance when he said he couldn't afford the payments.

My suggestion to him will be to first talk to financial aid at the school, then ask to speak with a supervisor at ACS, get her name, and ask for the text of the regulation that gave them the authority to do what they did.

Any other ideas?
Print the post Back To Top
No. of Recommendations: 0
I was able to speak to an ACS person on the phone in DS's presence. She had an India accent. She told me that his school had reported him as a part time student. I replied that then he should either have an in school deferment or have an IBR payment of zero, but not a standard repayment.

She said a supervisor would call in "24 business hours".

In the meantime, DS had consented to be put on forebearance.
Print the post Back To Top
No. of Recommendations: 1
She told me that his school had reported him as a part time student.

So how many hours is he taking? Is it less than half-time, as you said in your previous post? Because my understanding of in school deferments was that the student had to be at least half time.

I replied that then he should either have an in school deferment or have an IBR payment of zero, but not a standard repayment.

Well, there's a lot of information missing, but I'm not convinced that the IBR is going to be zero, assuming you have income. My understanding for Income Based Repayment for married couples is that it is based on joint income, not just his income, unless you file Married Separate. Here is an income based repayment calculator that should help you figure out what the IBR payment will be. http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRC...

If, based on your joint income, and the amount that he owes on his student loans, his minimum payment based on a 'standard' 10 year repayment is less than his IBR payment would be, his payment will be the 'standard' payment.

AJ
Print the post Back To Top
No. of Recommendations: 0
First, I'm talking about DS (my son).

Second, DS received a statement from ACS that his IBR payment was zero. He was unemployed at the time. I just ran the calculator (he got a job and just finished his income tax). His new payment should be around $20.

Finally, based on my conversation with ACS (and a very confused-sounding interlocutor there), DS started with 6 credits or half time, then dropped one class.

So apparently the IBR went away when the in-school deferment was executed by the school (without DS's authorization--he paid cash for the class). When he dropped below half time, he got put on standard repayment. All grace periods had long since gone away.

So without warning, he was suddenly faced with $260/month of payment in his $10/hr job.

Apparently he needs to refile for IBR.

He's supposed to get a phone call from a supervisor at 10 AM today.
Print the post Back To Top
No. of Recommendations: 1
First, I'm talking about DS (my son).

Sorry - I misread that.

Finally, based on my conversation with ACS (and a very confused-sounding interlocutor there), DS started with 6 credits or half time, then dropped one class.

Okay, so he was half-time, but then dropped to less than half-time, thus making him eligible for the deferment, then making him ineligible for the deferment.

So apparently the IBR went away when the in-school deferment was executed by the school (without DS's authorization--he paid cash for the class).

So apparently the school was the one that initiated the in-school deferment by indicating that DS was eligible for it? Whether DS paid cash or not is irrelevant - the fact that he was a half-time student is the critical item. He should have gotten some notification that the deferment was granted - he might want to look through his correspondence from ACS to see if he can find it.

When DS signed up for classes, did he also sign up for something that would prompt the school to send his student status to ACS? Or does ACS go to a database that your sons' school provides information to for a list of students eligible for deferments, and proactively grant those deferments? If DS is going to continue to take classes, it would probably behoove him to find out what triggered the deferment, so if he would rather stay on IBR in the future, he can figure out how to block the deferment.

DS received a statement from ACS that his IBR payment was zero. He was unemployed at the time. I just ran the calculator (he got a job and just finished his income tax). His new payment should be around $20.
.
.
.
When he dropped below half time, he got put on standard repayment. All grace periods had long since gone away.

So without warning, he was suddenly faced with $260/month of payment in his $10/hr job.

Apparently he needs to refile for IBR.


Yeah, that sounds correct. Getting the deferment wiped out his IBR status. Becoming ineligible for the deferment by dropping below half-time would trigger his payment to go back to the 'standard' payment, until he applies for, and is approved for, IBR again.

The fact that he was on IBR before the deferment doesn't mean that he goes back to the same IBR payment, or even an IBR payment at all - he needs to re-validate his income, family size, etc. before getting re-approved for an IBR payment. If he had, instead of getting a $10/hour job, gotten a $100k/year job, he may not have been eligible for IBR at all.

AJ
Print the post Back To Top
No. of Recommendations: 0
We agree on the logic. I wonder if the regulations back that up? IBR grantors, after all, check the income tax return each year to at least annually reset the payment.
Print the post Back To Top
No. of Recommendations: 0
One further question. Is it possible for a student loan debtor to change servicers? ACS has lost forms and taken months to act on anything. And he can't understand the English of the person he's talking to.
Print the post Back To Top
No. of Recommendations: 1
I wonder if the regulations back that up? IBR grantors, after all, check the income tax return each year to at least annually reset the payment.

I'm pretty sure that the regulations would support going back to the 'standard' payment after coming off of a deferment, since it is the 'standard'. In addition, IBR repyament must be applied for, and you generally have to acknowledge during that application that you know it will take longer to pay off the loans, and it will cost you more in interest, under IBR, so automatically moving someone back to an IBR, even if they had it before the deferment, probably isn't an option.

But I am not a lawyer, so you may want to consult a lawyer if you think that ACS is not following the regulations.

AJ
Print the post Back To Top
No. of Recommendations: 1
Is it possible for a student loan debtor to change servicers?

Student loan servicers are chosen by the loan guaranty agency, so he may want to contact them with that question.

He may also be able to change his servicer by consolidating his loans, if he is eligible for consolidation. I moved away from Sallie Mae by doing that when I had student loans.

AJ
Print the post Back To Top
No. of Recommendations: 0
If you can swing a consolidation (i.e. if you have federal loans with more than one servicer) you can go to the Direct Consolidation loans from the Department of Education. See here for details:
http://loanconsolidation.ed.gov/help/faq.html

no idea if it applies in your situation-- I did a consolidation but it was years ago, and I know the rules have changed.
Print the post Back To Top