Frequently Asked Questions
The following answers can help you to understand the process of Student Loan Freedom. If you have any other questions don't hesitate to ask. Talking to us costs you nothing & we are happy to help!
How will working with CLF affect my credit score?
Short answer: No, it won't affect your score
1) If a consolidation is necessary to change your loan types, essentially what is happening is that we are moving debt around. We are not adding debt or taking it away therefore your credit will not be affected
Is interest on student loans tax deductible?
What is the fee for CLF's services?
We charge 30% of the amount we can save you in the first year of working with us.
This fee covers all of our services for the period of one year from the date you decide to work with us. This includes all document preparation, a custom student loan plan, all questions answered, expert advice, as well as up to date changes in the laws that might affect you and your plan.
The yearly recertifcation fee is greatly reduced from the first years fee allowing you to even further enjoy the savings of working with CLF.
What if I am a nurse who doesn’t work for a community hospital? Can I still get Public Service Loan Forgiveness?
With Public Service Loan Forgiveness, it all depends on the hospital or employer you work for and how they are set up. If it is a non-profit like a 501(c)3 then yes, you do qualify. For more answers about PSLF please reach out or go the the PSLF FAQ's at MyFedLoan.org.
Is student loan forgiveness a taxable event?
Public Service Loan Forgiveness, Teacher Forgiveness, and Disability Forgiveness are all tax free.
However under our current tax plan, forgiveness on IBR, ICR, PAYE, and REPAYE are all taxable events.
There are two very important strategies we use at CLF to minimize the tax liablity and make it a non-issue. Please reach out for more information on this.
Can't I do this myself, why do I need CLF?
Of course, yes you could do a consolidation yourself at StudentLoans.gov.
However - do you know when to do a consolidation? Do you know when doing a consolidation could hurt you? Do you know the dangers and pitfalls in the application itself?
And yes, you can even do an Income-Driven Request on your own as well. But do you know the best repayment plan, the best servicer, and all the 5 different ways to show income to ensure you get the lowest payment and the shortest forgiveness period?
And what happens if you make a mistake? Or even worse, if you do everything correctly and the servicing companies make a mistake (this happens about 30% of the time).
Are you going to keep up with all the changes and be on time to recertify every year (50% of people who put themselves in these programs fall out for not recertifying - real statistic, look it up!)
What if the laws change, how will that affect forgiveness etc.?
Great question. We understand the fear that comes with the current law makers in place today.
The quickest answer is that you will be grandfathered in if you get into these programs before the law changes. In the promissory note that you signed with the federal government on your "Direct" loans, it outlines all 5 of the repayment plans and all 6 forgiveness types.
So if the laws change, they will only affect borrowers in the future because no one can change the terms of a loan’s promissory note after they have been agreed upon.
Do my payments to CLF go toward my student loans?
Absolutely not. Any money paid to CLF is a fee in exchange for our services and it will not go toward your student loans. You will still be responsible to pay your servicer each month.
Side note: if you are investigating companies, stay far away from any company that promises to pay your loan for you, that is not only illegal but a safe way to wind up in serious hot water.
How do I get my student loans forgiven?
Student Loan Forgiveness is not a reduction in debt principal, it is like a payment clock. No matter what you pay while the clock is running and whatever amount of debt is left over after the clock runs out is completely forgiven. So in a nut shell, it is our job to leave as much debt left over to be forgiven as humanly possible.
This is all depending on the amount of debt, of course. Someone who only owes $10,000 for instance might not ever see any forgiveness.
If you lower my payment will interest continue to grow?
Yes. Interest on student loan debt is one of the most aggressive types of interest on the planet - and it never sleeps.
Interest will continue to accrue and capitalize if you are paying anything less than the 10-Year Standard payment (roughly 1% of the total loan amount each month). We like to use the analogy that this interest is like walking up the down escalator - you can put tons of energy into it and still not get anywhere. That is why it is so important to have a plan and professionals behind you to ensure that you are headed toward forgiveness and not disaster.
Should I pay extra to my student loan each month to pay it off faster?
That depends ultimately on the type of debt and the amount of debt. First, everyone's situation is unique, so giving blanket advice won't work. That said if you have a small amount of debt, under $20,000, then paying extra (if you can afford it of course) might be a good idea. Especially if that debt is private.
Also, if you have both federal and private student loans, we might advise to save money on the federal using IDR, take that savings and put it toward the private. The private student loan monkey is one you want to get off your back but it still depends on the amount. If you owe over $40,000 you might be paying extra for a very long time and the money could be better used elsewhere.
So the answer is: it depends. Please reach out to us so that we can discuss your personal situation and make a custom plan for you.
Is there such a thing as good debt or bad debt when it comes to student loans?
Yes. In our opinion, Federal Student Debt is good, and Private Student Debt is bad.
Simply because private debt is so much more difficult to deal with.
Never EVER refinance and turn a Federal Student Loan into a Private Student Loan!