American Education Services

Student loans issued through the Federal Government will mostly have a third party in charge of servicing them. If you have taken out a loan to pay for college, then American Education Services is a name you may hear often.

AES as its commonly known as one of the most popular student loan servicing companies in the US. It handles more students than any other company because it deals with both personal as well as federal student loans.

What exactly do they do?

One of their main tasks is to handle billing when it comes to student loans. The, however, do not originate the loans, so, you cannot apply through them. They access these loans for management from the US Department of Education database.

Other services include;

• Helping borrowers to change and manage their repayment dates.
• Supporting the various Income-driven plans of repayment in addition to the other standard methods.
• Qualifying their borrowers for discharge and forgiveness.
• Helping their customers to understand their options in terms of forbearance and deferment. This is in case they are unable to repay their loans in time.
• They receive and update student loan payments on behalf of the student.
• They operate a program called ‘you can deal with it’ that gives students advice on how to deal with financial situations while in college.

AES payment solutions:

IF you have a student loan that is being serviced by AES, you can use any of the following methods to send your monthly installments for the repayment of your loan;

Send a check by mail – If you are still old school and are finding it hard to believe in the latest forms of technology, then you can send your monthly loan repayment check via mail. You should, however, ensure that you send the check at least 5-7 days before the due date so that they can be able to receive it on time and make the payment.

Phone – You can also choose to call AES and make your payments through the phone. Any calls made in regards to loan repayment must be made between Monday and Friday, during the regular working hours. The payments will be posted in 2 business days.

Through their mobile app – You can download the AES app on your phone and log into your account. It allows you to make direct payments on to your account, and since this is real time, once the payment is received, your account is updated immediately.

Online – Yet another option. Log on to the AES website and sign into your account. Once you are signed in, you can be able to easily make payments to your account. This payment will, however, reflect after two working days. In addition to making payments, online access also allows you to schedule your payments in advance and you can make up to 8 schedules.

Direct Debit – When you sign up for a direct debit, it will directly deduct monthly installments of your loan and deposit them directly into your account on the specific due date.

What will happen if you default?

Defaults in Loan repayments that are more than 30 days old will lead to a negative entry into your credit report. It is important to ensure that you make your payments on time at all times. If you are unable to make your payments for whatever reason, please take the following steps;

Changing the due date:

In case you realize that you will not make the due date for your loan, it is important to change this date, so that it coincides with the specific date of the month that you shall receive the payment so that your loan doesn’t go into arrears.

The best thing would be to choose a date that is immediately after you get paid so that you can ensure that it is the first thing you do.

However, it’s not that simple. When you need to make a due date change, you must have followed these rules;

You must be in repayment, meaning you haven’t missed an installment and that your account is active and up to date.

If your loan is new, you must have already made the first scheduled payment without fail and in good time.

You must also have an eligible loan type. This simply means that there are some loans where the option to change the due date isn’t available. These are mostly private loans.

One thing you should keep in mind is that the available due dates are between 1^st and 28^th of each month.

Reduction of your monthly payments:

AES offers a variety of repayment plans, that can help you reduce your monthly installment if you feel that you are unable to handle it. These include;

The standard repayment plan – in this plan, you shall pay the same amount every month, for the loan repayment period.

Graduated plan – This is a gradually increasing plan, that enables you to make small payments in the beginning and then the installments increase gradually over the life of the loan.

Income-sensitive repayment plan – This is a great repayment plan, whereby your monthly installment is directly determined by your monthly income and your total student loan debt.

Income-based – this allows you to have low monthly installments that extend way beyond your 10-year repayment plan.

25-year extended plan – as the name suggests, this is a long repayment plan. When you prolong the length of your loan, you definitely end up paying lower amounts in terms of monthly installments. It may work for a while, but having a loan extend more than 10 years is never a good idea, and hence you must think clearly before agreeing to this repayment plan.

Each of these plans has different requirements and are available to any borrower that is servicing a federal loan.

AES encourages their clients to contact them whenever they wish to make changes on their repayment plans.

Deferment or forbearance:

If you have a federal student loan and are experiencing true financial hardship, you can apply for deferment or forbearance, where you put your repayment on hold for a while. This option is also available to some private student loans.

The deferment of student loans is a process that helps students take a sort of ‘sabbatical’ when it comes to loan repayment. You must, however, qualify after AES establish that you really are in some sort of financial hardship.

For private loans, this may not be an option depending on your lender, but in some cases, if your case is dire, you may just be lucky.

Now, if you wish to apply for deferment, you must fulfill the following requirements;

• Be enrolled in school at least half the time.
• You must be experiencing economic hardship such as being unemployed.
• You must have the types of loans that are eligible for deferment such as; Direct Loans, FFEL loans, and Perkins Loans.

Most people wonder if they will be paying interest on their loans while in deferment, and this actually depends on whether they are subsidized or unsubsidized federal loans.

What do they mean?

Subsidized loans:

These are loans specifically for Undergraduate students who have financial needs. They are determined by your overall cost of attendance less the expected contribution from your family and other sources of financial aid – this includes grants and scholarships.

These subsidized loans do not accrue any interest while you are in school.

If you are a first time borrow who applied for their loans on or after the 1st of July 2013, you are subject to a 150% loan limit. This also limits your eligibility to borrow at 150% of the program length, such that if you are doing a 4-year program, your eligibility time is six years.

Once you reach your time period, you shall no longer be receiving any subsidized loans, and in fact, all other loans you may have will start accruing interest.

Now, after completing your school, you have a 6-month grace period before you can start repaying the loan.

Non-subsidized loans:

These loans are for both the graduate and undergraduate students. They are not based on any financial needs, and their eligibility is determined by the cost of your attendance less the money you shall receive from other sources of financial aid.

Interest for these loans is normally charged during the school period, during the grace period and also during the deferment periods.

Unlike the subsidized loans, for these types of loans, you are responsible for the interest accrued from the time you applied for the loan until you pay it in full.

You are allowed to choose either to pay the interest or allow it to accrue or accumulate and become capitalized – this means the addition of the principal amount to the interest. Capitalizing the interest will definitely increase the total amount you have to pay.

For more on this, read this article – https://www.socialfish.org/subsidized-and-unsubsidized-loans/

Forbearance:

This is more or less, the same as deferment, where it gives you an option to pause your student loan repayment, and the only difference is that with forbearance, you are entitled to pay all of the interest that has accrued on the loan during the forbearance period. This means you shall pay even on a subsidized loan.

However, before using either forbearance or deferment, you need to do adequate research in order to understand each very clearly. What you should be looking out for is whether or not you shall be required to pay interest on the loan during the period of non-payment.

Refinancing your AES student loan:

Refinancing of student loans is an exercise that seeks to lessen the burden of loan repayment, especially where a student has too many loans.

Refinancing also has the following benefits;

• It enables you to get low-interest rates.
• Reduces your monthly installments.
• Shortens your loan repayment terms.
• Enables you to convert from a variable rate to a fixed rate.

With a refinancing, you are able to save thousands of dollars by simply paying less than you have been paying. You must, however, be extra keen in your research so as to find companies that are willing to offer you the lowest interest rates for your refinancing.

However, you need to keep in mind that federal student loans do not have a refinancing option, and hence, you will need to look elsewhere for this feature, which means that you may end up changing your student loan from federal to private.

I have written many articles on refinancing that you can read using the following links;

https://www.socialfish.org/commonbond-review/

https://www.socialfish.org/rise-credit-reviews/

Conclusion

What you should know about federal loans is that you do not get to choose the company that shall be in charge of your loan. The Department of Education normally assigns the students to their loan servicers randomly and you have not choice in the matter.

As such, it is important to understand how each company works and how they process loans. This information is important and it makes your relationship with the said company much easier.

Kindly go through my other articles about loan servicing companies because you can be assigned to any one of them;

https://www.socialfish.org/my-fed-loan/

https://www.socialfish.org/great-lakes-student-loans/

The American Education Services may have its limitations when it comes to processing and managing student loans, but since they are not a non-profit organization, their services are far better when you compare them to the other companies which are run as non-profits.

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