Zuckerberg's Loan Gives New Meaning to the 1%

Zuckerberg's Loan Gives New Meaning to the 1% - Billionaire Mark Zuckerberg is giving new meaning to the term "the one percent."

The Facebook Inc. (FB) founder refinanced a $5.95 million mortgage on his Palo Alto, California, home with a 30-year adjustable-rate loan starting at 1.05 percent, according to public records for the property.

While almost all lending rates have reached historical lows this year, the borrowing costs available to high-net-worth individuals are even lower if the person is willing to bear the risk of monthly interest rate adjustments, said Greg McBride, senior financial analyst with Bankrate Inc., a North Palm Beach, Florida-based firm that tracks interest rates. Large increases are unlikely anytime soon with the Federal Reserve signaling it will keep interest rates near zero for at least two years.


"When you can borrow at a rate below inflation, you're borrowing for free," McBride said in an e-mail. "This is the concept of using other people's money and it preserves financial flexibility for the borrower."

"The one percent" is a phrase popularized last year by the Occupy Wall Street movement to protest growing U.S. income inequality. The top one percent of Americans earns a fifth of the country's income and controls more than a third of its wealth, according to Joseph E. Stiglitz, a Nobel Prize-winning economist, whose book "The Price of Inequality," was published last month.

The average rate on a one-year adjustable mortgage was 2.69 percent on July 12, up from a record low 2.68 percent a week earlier, according to Freddie Mac, the McLean, Virginia-based mortgage-finance company. The average rate for a 30-year fixed loan fell to a record low 3.56 percent on July 12. Freddie Mac doesn't survey rates for loans that adjust monthly.

World's Wealthiest

Zuckerberg, 28, is the world's 40th wealthiest person, with a net worth of $15.7 billion, according to the Bloomberg Billionaires Index. His company went public in a $16 billion initial public offering in May. The shares were down 19 percent since trading began as of July 13.

Facebook spokesman Larry Yu declined to comment on Zuckerberg's mortgage.

"We're not going to get into the personal finances of executives," he said in an e-mail.

The Palo Alto house cost $7 million in March of last year, purchased in the name of a limited liability company, according to a deed filed with the Santa Clara County Clerk-Recorder.

Zuckerberg's address was published by Palo Alto Online and Burbed.com, a Silicon Valley real estate blog. Three neighbors reached by phone at their homes said Zuckerberg lives at the address. They asked that their names not be used because of concerns for their privacy.

Page, Jobs

The five-bedroom, 5-1/2-bath house was built in 1903 on a 9,011 square-foot (837 square-meter) lot, according to Redfin Corp. The two-floor white wood-sided home is ensconced behind a gated drive and a wall of groomed shrubbery, about three miles (4.8 kilometers) from Stanford University and three miles from Facebook's Menlo Park headquarters. Zuckerberg was married to Priscilla Chan in the backyard on May 19.

Homes in Zuckerberg's ZIP code, 94301, sold for a median $1.875 million, or $968 a square foot, in June, up 1.7 percent from a year earlier, according to Redfin. Google Inc. co-founder Larry Page owns a home in 94301 and the late Apple Inc. founder Steve Jobs also lived there.

‘Huge Run up'

"There was a huge run up before the Facebook IPO and it cooled off after the Facebook fizzle," Ken DeLeon, a Palo Alto real estate broker, said about local home prices.

First Republic Bank (FRC), which provided Zuckerberg's mortgage, doesn't comment on specific loans or clients, said Greg Berardi, a spokesman for the San Francisco-based company.

"First Republic, like most banks, prices its credit products based on the strength and totality of the entire client relationship," he said in an e-mailed statement. "This is our approach with all of our clients."

The bank's high-net-worth customers include Stephen Ross, the chairman of developer Related Cos.; Peter Thiel, the chairman of hedge fund Clarium Capital LLC and an early Facebook investor; and former New York Police Chief William Bratton, the current chairman of Kroll Inc., according to First Republic's website.

Wealthy individuals who have a lot of business with a bank may be eligible for the best rates, said Rob Kricena, a regional managing director at Wells Fargo Private Bank, which has technology entrepreneurs as clients in the San Francisco Bay area.

Favorable Terms

"In our experience the majority of high-net-worth individuals do have a mortgage," he said. In many cases, they can get favorable terms because of their wealth.

Zuckerberg's 30-year mortgage started with an initial rate in May of 1.05 percent, which also is the minimum rate for the loan, according to a document filed with the Santa Clara County Clerk-Recorder's Office. It adjusts each month starting in June with interest payments calculated as the London Interbank Offered Rate, or Libor, plus 0.8 percentage point. The maximum rate cannot exceed 9.95 percent.

Monthly principal and interest mortgage payments on the $5.95 million loan would start at $19,275.

The Fed has kept its main interest rate at zero to 0.25 percent since December 2008 and has said it will probably keep rates "exceptionally low" at least through late 2014. The central bank last month extended a program called Operation Twist aimed at lowering long-term interest rates by swapping shorter-term securities with the same amount of longer-term debt.

Morgan Stanley

Zuckerberg's latest mortgage replaces an adjustable-rate loan from Morgan Stanley (MS) recorded in June 2011 that started with a 1.75 percent rate, which would've had a monthly payment of $21,256. Zuckerberg got the loan at the same time Morgan Stanley was seeking to lead manage Facebook's initial public offering, which it won earlier this year.

Christine Pollak, a spokeswoman for New York-based Morgan Stanley, declined to comment.

The mortgages were signed by Tom Van Loben Sels, a partner at Apercen Partners LLC, a Palo Alto tax consulting firm for high net worth clients. Van Loben Sels didn't reply to a phone message seeking comment.

Banks like to provide home loans to high-net-worth clients because they can pay off the loan quickly, if needed, and are better credit risks, said Sandi Bragar, director of planning at San Francisco wealth manager Aspiriant. Her firm recommends variable, interest-only loans in many cases because of the tax deductibility of mortgage-debt payments and the adjustable rate, which places the rate risk on the borrower and generally makes the loan cheaper, she said.

Low-Cost Debt

Wealthy individuals often choose to finance a home purchase rather than pay cash because of the overall low cost of mortgage debt and the additional access to liquidity, Kricena said. In many cases, they invest excess cash that they would have used to purchase the home into higher-yielding assets, he said.

"Even if someone would be able to pay off that mortgage with cash or other assets, they don't want to tie up their holdings in real estate because they may have access to other types of more attractive investments," he said.

Still, in the current environment of tight underwriting, it can be difficult to navigate the process for even the wealthiest borrowers, Bragar said in a phone interview.

"Getting a mortgage these days is very tricky even for the wealthiest," she said. "They are by no means exempt."

DeLeon, the Palo Alto real estate broker, said adjustable rates below 2 percent have become common for high-net-worth borrowers. He has handled about 65 sales worth $120 million this year in the area.

"I have a 1.8 percent rate and I'm not too special," he said in a telephone interview. "A lot of my tech clients are doing it. Those rates exist for clients who don't need a mortgage. I tell them to enjoy the free money and pay it off when the rates spike up." ( Bloomberg )

READ MORE - Zuckerberg's Loan Gives New Meaning to the 1%

Congress passes student loan-rate extension

Congress passes student loan-rate extension - The House of Representatives on Friday passed a transportation bill that included an extension of the low interest rate on government-subsidized student loans, just days before the rate would have doubled.

The bill, which includes more than $100 billion in funding for highway projects over two years, extends the current 3.4 percent student loan rate for one more year at a cost of an estimated $6 billion.


The measure passed 373 to 52. All of the members who opposed it were Republicans.

The path toward passage was a bumpy one, and it looked as though the parties would not be able to find agreement on the many provisions throughout the bill.

NBC's Frank Thorp has a rundown of what ultimately survived:

The package lumps together some of the biggest stumbling blocks to beguile lawmakers in the past few months. Squabbling over how to finance each priority had divided the Republican-controlled House and the Democratic-run Senate.

Republicans had also insisted on including a measure to move the Keystone XL oil pipeline forward. President Obama and Democrats opposed it, though, and it was ultimately omitted from today's bill.

Instead, Republicans were able to use funds set aside for "beautification, bike paths, and sidewalk lighting" for higher priority infrastructure projects such as the national highway system instead. They were also able to keep funding at current levels.

The package also cuts the average review and permitting process for new infrastructure projects in half, done mostly by streamlining environmental reviews so they can run concurrently, something for which Republicans had also fought.

The Senate passed the measure not long after the same day by a vote of 74-19. President Barack Obama is expected to sign the bill before the July 1 deadline. ( The Ticket )

READ MORE - Congress passes student loan-rate extension

Student loan borrowers flood government website with complaints

Student loan borrowers flood government website with complaints - Thousands of student loan borrowers wrote occasionally heartbreaking complaints about dealing with their debt burden to the federal Consumer Financial Protection Bureau, which is soliciting comments from people who have taken out private student loans to finance their education.

"My own children will not be able to get the help they need to go to college because I will STILL be shackled to my debt," one woman wrote.

"I want to work hard, marry my girlfriend, buy a house, and start a family. I am barely treading water right now," a young lawyer said of his $130,000 loan burden.


Graduates of Emory's School of Theology in May 2011. (David Goldman/AP)

The consumer protection group asked the public for responses to help the Department of Education conduct a study on the private student loan market, and it published nearly 2,000 comments and complaints on its website. The group also released a student loan complaint system, where borrowers can report their grievances.

Private student loans often have higher interest rates than public ones and do not always offer income-based repayment plans for borrowers who get into financial trouble. Neither type of loan can be discharged in bankruptcy.

Many of the commenters say they are unable to pay their student loans or their children's loans, and some complained that the loan companies have aggressively gone after their cash, driving them into poverty. Some borrowers wrote that they regret going to college altogether, or that they were uninformed about how quickly the debt would balloon. Many mentioned that they are unable to consolidate their various loans into one, lower-interest loan. A few people, however, wrote in to defend private loans, saying they had no difficulty paying them off.

Read some of the comments—spelling and grammar unchanged from the originals—below:

When I left my job in 2007 to remarry late in my 40's, I had no idea that it would be so difficult finding a new job. My youngest son (17) has Autism Spectrum Disorder. Each year at tax time I receive the child tax credit. Recently, our taxes have been intercepted due to my stepdaughter's PLUS loan which was taken by my husband before we were ever married. They laugh at me when I tell them how needed that child tax credit is for our family of five, making just over $45k per year. Are they allowed to take my tax credit when I had nothing to do with taking the PLUS loan?

As a single mother, I put off getting my degree until my children were raised. I obtained my Bachelor's degree Summa Cum Laude. Since then, I make 25% less money than when I had no degree. I cannot afford to pay. The collection agency said it doesn't matter if I can't afford to pay. They will take the money from my bank accounts, retirement, and social security until it is paid in full. I do not make enough money now to feed myself and pay rent. PLEASE HELP.

I am writing to simply share my story in hopes that others will have more information when making the decision to pursue post-graduate education by taking out massive educational loans. I spent three years in law school and borrowed approximately $130,000 to pay for tuition and living costs in San Francisco. To pursue a law degree, I had no other option to fund my education - both my parents being disabled. Currently, my financial situation is abysmal, and frankly it is quite depressing to even think about. I have been practicing law for well over a year now, however earning annually only about $70K, which is the median for graduates in my position. I pay $800 in interest each month, which is more than my rent. Note: that is interest alone. I attempt to make payments towards my principal too, however it is grim. In over a year and a half of working and making dutiful payments, I have whittled my previous balance down to about $120,000. In 2011 alone, I have paid a total of about $16K in interest. That is clearly not progress. (Sidenote: After the economic crisis caused by the banks in 2009, why are they still profiting at the the expense of honest people's livelihood?) I'm not quite sure what other people's experience is, but this doesn't feel like what I signed up for. Part of the problem is that I anticipated earning $120K-$160K upon graduating from law school, but that is another story. No matter how hard I work, I am unable to save money to fulfill those dreams that truly make life meaningful. I want to work hard, marry my girlfriend, buy a house, and start a family. I am barely treading water right now. It is ironic because, as the first attorney in my immigrant family, we were all elated -- I even thought that the age-old American Dream would unfold for me. None of us realized the full financial extent of my education. We were only overjoyed that I would have the opportunity to become an attorney.

I am a mother of 2 children with student loans. My son is 26 and has completed his education online with 2 different colleges. He has about $52,000 in loan money and a degree in forensic science in computers and teaching but is working as security for a carbon company and a second job in an auto parts company just to start making payments on his loan which will take him 30 years to pay off. He has tried to consolidate all his bills but they refuse to give him a low rate of interest on them. My daughter has about $22,000 in loans, didn't finish her degree online in web graphic design and has no work. My ex husband thinks they double billed the amount as it seems strange that 2 different organizations she owes the same amount. My ex co-signed the first loan so he is paying on this loan and he is on disablilty and the second loan they told us we have to make 6 payments and then she can re-apply for yet another loan as she would like to change fields and study to be a veteranian assistant. Both loans she has now are not low interest and my husband who is retired from the UK and living legally with me in this country (Im not working) cannot afford this but were told that if she finds work they will go after her earnings. She has no car, no drivers license (she is 22) and can't get a job without a car. It's like both are trying to do something with their lives but can't.

I paid $500 a month for 8 years on my student loans, which repaid the principal that I borrowed. Then my spouse fell into drugs and I had to file chapter 7 bankruptcy, and I wound up getting divorced for fear for my life. I have , for the last 8 years, had financial hardship as a single parent of 2 children who gets no spousal support or child support. I work full time as an art teacher in a public school. I will not be able to retire until 25 years has passed since I refinanced my student loans- and because I supposedly "make too much", I am unable to get a deferment for financial hardship- which means my loans continue to accrue interest. My total student loan amount I borrowed was about $55,000-- and thanks to capitalized interest, I now owe in excess of $130,000. The education I signed in blood for is going to keep me enslaved until I am at least 68 years old. People who are public school teachers, medical professionals, or social workers should have their loans completely forgiven after ten years. My own children will not be able to get the help they need to go to college because I will STILL be shackled to my debt. It is predatory, and I grew up poor- so there was no other way but to sign in blood with good intentions. You need to loans so you can afford the education- but you are enslaved for the rest of your adult life. How does this make anything better for future generations? ( The Lookout )

READ MORE - Student loan borrowers flood government website with complaints

Student Loans: Cities Offering to Pay Debt to Gain Young Residents

Student Loans: Cities Offering to Pay Debt to Gain Young Residents - In Niagara Falls, N.Y., a man shortly will attempt a daring feat—and he isn't Nik Wallenda: Seth Piccirillo, Niagara Falls' new director of community development, will attempt to lure young professionals to live in his city's beleaguered downtown, which for decades has been hemorrhaging residents--young ones especially.

He'll do it, he says, by offering to help them pay down their college loans. Here and there around the U.S.—from rural Kansas to Detroit—communities concerned over shrinking, aging populations are attempting novel experiments to attract the young and zippy. If they're not offering to pay off student loans, they're dangling other incentives aimed at budding professionals.

Student Loans: Cities Offering to Pay Debt to Gain Young Residents (ABC News)

Niagara Falls' population 50 years ago teetered at 100,000. Then it began to fall and today it's half of what it was. If by the time of the next census it's under 50,000, leaders fear the city will risk the loss of some forms of federal assistance.

"We've lost a lot of talent, a lot of brain power," admits Piccirillo. "For 50 years we've been asking ourselves: how do we keep our young people?" The city, he says, never really had a plan. Now it does: It will attract them from elsewhere by offering to pay their student loans.

The city is putting an initial $200,000 behind the idea. The first applications should arrive in the next couple of months, says Piccirillo, but "The graduating class of 2013 will be our first real swing at it."

He says he got the idea by reading news headlines. "College debt is at the forefront of so many stories you see now," he says. "The New York Times just reported that student debt has topped $1 trillion; 94 percent of students now have some amount of debt." At the same time, he says, Niagara needs those very same graduates. "We need to grow our population base. Having young professionals is the key to a modern economy." The solution seemed obvious: Offer debt relief to attract graduates.

Under Niagara Falls' plan, graduates who have earned a 2- or 4-year degree in the past two years can apply for up to $3,500 a year (for two years) towards repayment of their student loans. The same deal would be offered to graduate students. Graduates of Niagara University and Niagara County Community College will be targeted at first, though the city hopes eventually to recruit graduates from other parts of the country.

To qualify, applicants will have to rent an apartment or buy a home within a designated downtown area. "We're not talking city-wide. We're taking acres," explains Piccirillo. "There's no doubt in my mind that getting even 100 to 150 people could revitalize the neighborhood."

In rural Kansas, a similar experiment is underway.

Fifty counties in the state have established Rural Opportunity Zones (ROZs) authorized to offer one or both of the following financial incentives to new full-time residents: Kansas income tax waivers for up to five years and/or student loan repayments up to $15,000.

To be eligible for loan repayments, applicants must hold an associate's, bachelor's or post-graduate degree; must have an outstanding student loan balance; and must establish residency in a ROZ county.

Chris Harris, manager of the Kansas program, says the idea is "to provide incentives for rural counties that have lost population over past decades." Applicants can come from any state. To date, he's received 338 applications, of which 111 have been from people out of state. About 75 percent qualify for one or both of the incentives. Applications now are being received at the rate of one a day.

"Our hope was that we'd get young professionals to move," he says. "Physicians, nurses, lawyers, accountants. And that's what we have seen--health professionals, teachers, veterinarians, accountants and a surprising number of lawyers. Our hope in the beginning was to attract individuals who would have a disproportionate economic impact on a region."

By way of example, he points to Dr. Aaron Zook, who, after doing his medical residency in Denver, relocated to rural Pratt, Kan., in part because of Kansas' debt-reduction offer. Zook told KSN TV in an interview that he had student loans totaling about $200,000. "Any help I can get is going to be real nice," he said.

So well is the Kansas program working that Harris' office has received expressions of interest from Nebraska, which, he says, is interested in establishing a similar relocation incentive.

Piccirillo in Niagara Falls says he's under no illusions that his debt repayment plan will fix his city's population problem. "Some have said that this, in and of itself, won't fix the city. And that's accurate."

Houses need to be spruced up. Old buildings need to be demolished. Concerns about crime and public safety will have to be addressed. But he points to other cities that have earned a new lease on life by reviving just a few square blocks.

One in particular inspires him: the Columbia City neighborhood of southeast Seattle, which, he says, was depressed, crime-ridden and post-industrial before renovation. "They set up a young and artistic neighborhood in a small area that included yoga studios, music venues, coffee houses. If you do a search online for Seattle, you'll see you'd want to spend time in Columbia City. That's the model in our minds."

He looks forward to the day when downtown Niagara Falls would be ranked with Columbia City among the top 10 neighborhoods in the U.S. ( Good Morning America )

READ MORE - Student Loans: Cities Offering to Pay Debt to Gain Young Residents

Differences Persist in Congress’ Struggle to Extend Student Loan Rate

Differences Persist in Congress’ Struggle to Extend Student Loan Rate - The top congressional leadership was out in full force today as leaders from both political parties in both chambers of Congress promoted the position of their respective caucuses in the latest battle over congressional funding on Capitol Hill.

At issue is finding an amicable way to pay for or offset the costs of extending the current student loan interest rate of 3.4 percent, rather than permitting the rate to double on July 1 to 6.8 percent.


Republicans and Democrats have both proposed alternative methods to cover the cost of the extension and, judging by their comments today, a huge gulf remains between the two parties. While House Speaker John Boehner, R-Ohio, announced Wednesday that the House would vote Friday on a one-year extension that is paid for by pulling funds from the president’s health care law, Democrats prefer to raise taxes on small businesses in order to cover the $6 billion cost of a one-year extension.

Senate Majority Leader Harry Reid, D-Nev., said he was “very disappointed” in Boehner’s plan to hold a vote on the GOP’s bill Friday, telling reporters that covering the cost by pulling from preventive health care funds “doesn’t sound like a very good deal to me.”

“We simply want to renew this, and it’s the right thing to do. This affects 7 million students. They’ll get an average of about $1,000 a year increase in their interest and that’s a lot [for those] struggling to get through school,” Reid told reporters today on Capitol Hill. “We believe there’s an easy solution. We can pay for this with a tax that people who make a lot of money have been avoiding for a long time by changing from ordinary income, they put this into sub-chapter S and avoid taxes.”

New York Democratic Sen. Charles Schumer, the No. 3-ranked Democrat in the Senate, said that the House’s way of paying for the rate is a “poison pill” that stands no chance of passing the Democrat-controlled Senate.

“If it’s true Republicans support stopping the rate hike, they have a weird way of showing it. In the House, the proposal they’re advancing has a poison pill attached to it,” Schumer said. “Their offset is a partisan proposal that tries to refight the debate over the president’s health care law. That’s not a serious attempt to pass this student loan bill.”

Schumer complained that Republicans are attempting to force Democrats to “choose between helping students afford college tuition or forcing women to go without mammograms.”

“They want to give to the middle class, but only when they take from the middle class and that’s because they don’t want to touch their true constituency, the wealthiest people in America who at every turn they try to make their lives even better,” he said. “They’re not the people who need help in America.”

House Minority Leader Nancy Pelosi, D-Calif., also does not like the House GOP’s proposed way of finding the money, instead proposing to cover the cost by taking subsidies from Big Oil and gas.

Coupled with the Senate Democrats’ way of paying, the House GOP is faced with two alternatives that aides say are poison pills in the House. Asked if he could think of any other offsets that might win bipartisan support in both chambers of Congress, Reid indicated he had exhausted all options.

“If I had come up with that, I would have put it in the bill,” Reid said incredulously. “The point is Republicans oppose anything that increases taxes even for people who manipulate the system and have been doing it for a long time. Republicans, I’ve indicated, will not vote for any tax increase no matter how fair it is. [Speaker Boehner] calls the preventive care a slush fund? I mean, they should be ashamed of themselves. This is saving people’s lives, saving the country huge amounts of money.

“We’re doing the right thing,” he added. “We want this done, we think it’s important it’s going to be done and we’re not going to back off until we get it done.” ( abcnews.go.com )

READ MORE - Differences Persist in Congress’ Struggle to Extend Student Loan Rate

A Step-By-Step Guide For Eliminating Private Student Loan Debt

A Step-By-Step Guide For Eliminating Private Student Loan Debt - You went to a good college. Got the awesome degree. And now you’ve got the private loan debt to match.

Private loan debt might seem like an overwhelming, scary green monster especially when you compare ‘em with federal student loans. But don’t worry. You can work with this.


The good thing with public loans is that if times get tough, you might qualify for extended, income-based repayment. Private loans usually don’t offer any of these options. Private loan holders sometimes offer forbearance, but generally not for an extended period of time.

If hearing that sort of thing tempts you to pretend your loans don’t exist and go play Angry Birds then keep reading. Put down the cell phone and tackle this problem one piece at a time. Here’s how:

First, sit down and look at your overall financial picture. Figure out how much you really need to live by calculating essential expenses like food and rent. In an interview, Mark Kantrowitz, publisher of Fastweb.com and FinAid.org, said things like cable and dining out aren’t necessities. Cancel the cable contract and look for entertainment options that are free instead.

Be sure to get copies of your student loans and read the fine print. Heather Jarvis, an attorney and student loan consultant with AskHeatherJarvis.com, said you need to physically read what you’re entitled to. If you don’t have copies, call the lender and request them.

Next, make sure you have enough money to meet your monthly payments.
If you don’t, consider getting a second job or moving in with mom and dad. Yeah, it might not be the most appealing option but it’s better than having your credit history marked with a big red ‘X’. If you default on your student loans, your credit history and potential job offers will be affected for at least seven years.

Consider consolidating. If your credit score has improved since you took out your private loans, you may save some money by consolidating. But if you’ve borrowed loans at different rates and still have a low credit score, Kantrowitz said it may be wise not to consolidate. It’s also a good idea to work to improve your credit score.

Set up an automatic payment plan for paying down your private student loans. Doing this will ensure you’re always on time with your monthly payments. Some lenders will also reduce your interest rate when you set up an automated payment plan. Private loans sometimes offer other perks, like releasing a co-signer from being responsible for a loan after a certain amount of time. Research these options for each private loan.

If you have extra money after paying your monthly loan bills, put it towards the loan with the highest interest rate over its life. If a loan has a variable interest rate and you plan to pay it down over the entire time you are allotted, this will likely be the one you should pay first. “It may be low now but it won’t be a low rate indefinitely,” Kantrowitz said.

If you have both federal and private loans, see if you can reduce or delay paying back the federal loans.
If that isn’t an option and you are only going to pay one loan and default on the other, pay for your federal loans, Jarvis said. One of the only benefits of having private debt is there are fewer ways for private loan holders to get their money back. The federal government will “get their money one way or another and the collection powers are so intense that you absolutely have to pay your federal student loan debt back, period,” she said.

If you have a windfall that allows you to make a huge repayment on a loan, negotiate! A lender will sometimes agree to a settlement that treats your debt as paid in full though you pay a lower amount than the total. If you do this, make sure to get a paid in full statement that says your payment covered the whole loan.

So there you have it. Go deal with the debt and get those loans payed off! ( businessinsider.com )

READ MORE - A Step-By-Step Guide For Eliminating Private Student Loan Debt

The Types of Federal Student Loans

The Types of Federal Student Loans - Four major types of federal loans are available to students or their parents: Stafford Loans, PLUS Loans, Perkins Loans, and Consolidation Loans. Each type of loan is aimed at a different set of people, each has its own interest rate and repayment terms, and each has its own advantages and disadvantages.
  • Stafford Loans: Either the federal government or third-party lending institutions offer these loans. Stafford Loans are either subsidized or unsubsidized.

    • Subsidized: You won’t be charged any interest until after you leave school for whatever reason.

    • Unsubsidized: Interest is charged from the time they’re disbursed until you completely pay them off.

  • PLUS Loans: PLUS is an acronym for Parent Loans for Undergraduate Students. To qualify for PLUS Loans, parents must have children who are enrolled at least half-time at an approved educational institution.

    The maximum allowable amount that can be borrowed for a PLUS Loan is the difference between the cost of the student’s attendance and any other financial aid the student receives (a number set by the school’s financial aid office).

    Unlike Stafford Loans, PLUS Loans feature neither a grace period during which no payments are due nor any period during which interest doesn’t accrue.

  • Perkins Loans: Federal Perkins Loans are loans guaranteed by the U.S. Department of Education and are available for undergraduates and graduate students. Unlike Stafford Loans, however, federal Perkins Loans have a fixed rate of interest and are made by your college or other institution (the government gives the college the money, and the college distributes it).

    The Perkins Loan program is determined based on three factors:

    • When you apply

    • The level of need, as determined by your college

    • The funding level of your school

Typically, you have ten years to pay back any funds disbursed under the Federal Perkins Loan program, and you make your checks out directly to your school. ( dummies.com )

READ MORE - The Types of Federal Student Loans