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Federal government shutdown Q&A: How NJ will be affected – The Star-Ledger

By Kelly Heyboer and Mike Frassinelli/The Star-Ledger

NEWARK — The first government shutdown in 17 years would close offices and furlough hundreds of thousands of federal workers. But the effects of the shutdown would also ripple through the day-to-day lives of New Jerseyans. Here are answers to some frequently-asked questions:

Q: Will I still get mail delivery?
A: Yes. Neither snow nor rain — nor government shutdown — will keep you from getting the mail. The U.S. Postal Service runs independently and does not rely on U.S. Treasury appropriations for day-to-day operations — it derives its income from stamps and other fees.

Q: Will I still receive my Social Security or Medicare checks?
A: Yes. Those are considered “entitlement” programs that are buffered from politics and required to be paid. But new applications could be affected if the shutdown becomes lengthy.

Q: Will public schools be affected? Will my kids still get their federally-funded school lunch?
A: Public K-12 schools will remain open. The U.S. Department of Agriculture, which oversees the federally-funded school lunch program, said schools should have enough funds to continue providing free and reduced-price lunch for low-income students at least through the end of October.

Q:Will college students still get their federal student financial aid funds?
A: The federal Education Department expects to continue distributing Pell Grants, Federal Direct Student Loans and other financial aid on a short-term basis. But if the shutdown extends longer than one week, the flow of money from the government to colleges could be disrupted.

Q: Will federal buildings and offices be closed?
A: It depends on the agency and building. Many federal agencies will furlough part, but not all, of their staffs and close some offices. Federal courts will remain open for at least two weeks.

Q: Will I still be able to visit the Statue of Liberty?
A: No. Lady Liberty will be lonely. National parks — which includes Gateway National Recreation Area, home of Sandy Hook — will close.

Q: I was just laid off. Will I continue to receive my unemployment benefits?
A: Yes, but a protracted shutdown could eventually delay checks.

Q: Can I still get a passport?
A: The State Department will continue processing applications for passports and visas because the services are funded by application fees, not federal funds. But there could be a slowdown in fulfilling requests if the shutdown is lengthy.

Q: Will the rollout of Obamacare still go on, as scheduled?
A: The new state-based health insurance exchanges will open Tuesday so Americans can shop for health care plans — even as Congress continues to debate delaying the Affordable Care Act. For those who enroll, coverage is still scheduled to begin Jan. 1. Information is available at


• For N.J., a federal shutdown would hit full force in two weeks

• Obamacare: The answers to 7 big questions about the Affordable Care Act

Student-Loan Defaults Rise in U.S. as Borrowers Struggle

About one in seven borrowers
defaulted on their federal student loans, showing how former
students are buckling under higher-education costs in a weak

The default rate, for the first three years that students
are required to make payments, was 14.7 percent, up from 13.4
percent the year before, the U.S. Education Department said
today. Based on a related measure, defaults are at the highest
level since 1995.

The fresh data follows the announcement by Barack Obama’s
administration that it would seek to restrain skyrocketing
college expenses by tying federal financial aid to a new
government rating of costs and educational outcomes. The rising
number of defaults shows the pain of borrowers, said Rory
O’Sullivan, policy and research director at Young Invincibles, a
Washington nonprofit group.

“Our generation is behind in the economic recovery and not
recovering as fast as we need to,” said O’Sullivan, whose group
represents the interests of people ages 18 to 34. “It’s
financial disaster for borrowers. Defaults can dramatically
affect their credit rating and make it harder to borrow in the

270 Days

Today’s report covers the three years through Sept. 30,
2012. The default rate, which includes graduates and those who
dropped out, shows the share of borrowers who haven’t made
required payments for at least 270 consecutive days.

The rate doesn’t include those who are putting off
payments, through deferral or economic hardship called
forbearance, or borrowers who are on federal income-based
repayment programs, meaning it understates their hardship,
O’Sullivan said.

U.S. borrowers owe $1.2 trillion in student-loan debt —
including government loans and those from private lenders such
as SLM Corp. (SLM), commonly called Sallie Mae. That sum surpasses all
other kinds of consumer borrowing except for mortgages.

Last year, the Education Department revamped the way it
reports student-loan defaults after Congress demanded a more
comprehensive measure because of concern that colleges counsel
students to defer payments to make default rates seem low.
Previously, the agency reported the rate only for the first two
years that payments are required.

Worst Performers

Public colleges reported a 13 percent default rate while
nonprofit private schools had a rate of 8.2 percent. For-profit
colleges fared the worst, at almost 22 percent.

Under the older two-year measure, the rate for all colleges
was 10 percent, up from 9.1 percent the year before — and the
highest since 1995.

“The growing number of students who have defaulted on
their federal student loans is troubling,” U.S. Education
SecretaryArne Duncan said in a statement. “The Department will
continue to work with institutions and borrowers to ensure that
student debt is affordable.”

To contact the reporters on this story:
Janet Lorin in New York;
John Hechinger in Boston at

To contact the editor responsible for this story:
Lisa Wolfson at

Enlarge image
College Graduates

College Graduates

Jim Watson/AFP via Getty Images

The federal student loan default rate, for the first three years that students are required to make payments, was 14.7 percent, up from 13.4 percent the year before.

The federal student loan default rate, for the first three years that students are required to make payments, was 14.7 percent, up from 13.4 percent the year before. Photographer: Jim Watson/AFP via Getty Images

5 Things You Need To Do With Your Student Loans Right Now

Congrats, Class of 2013! Not only have you graduated, you have survived four months in the real world (assuming you graduated in May). The transition can be overwhelming, between looking for a job, possibly starting a job, moving into a non-campus dwelling and realizing that dealing with the cable company can be more hassle than it’s worth. And now on top of all of that, there is the looming threat of student loan payments. (There is also the looming threat of a government shutdown, but the Office of Federal Student aid announced on Monday that it anticipates a “limited” impact to the federal student aid application process, loan disbursements or loan repayment processes.)

When you graduate with student loans (or leave school without a degree), you are automatically granted a six-month grace period before monthly payments begin. Depending on your graduation date, that means you have a month or two left before you must start paying back.  And if you’re like many student borrowers, you may be depending on your loan issuers to contact you and tell you when they want your money, rather than proactively planning for it. That could be a mistake.  Not only is it better to know what you owe and to what’s coming down the pike, but there’s always a chance that some lender doesn’t have your current address. The fact that you didn’t get a notice doesn’t relieve you from the obligation to start paying back.  So it’s time to put down the pumpkin spice latte and start coming up with a repayment plan.

But just like crash dieting, if you do too much too soon, you’ll give up. Here are five manageable steps you can easily accomplish between now and November:

1. Get organized.

“I think that one of the first tips every borrower should understand is how to get a clear inventory of their student loans. Many of us have a lot of kinds of student loans. It can be confusing to remember who you’re supposed to be dealing with,” says Heather Jarvis, a public interest lawyer and student loan expert. For a handy list of all your guaranteed loans (that includes “direct loans” from Uncle Sam and the guaranteed student loans that were made by private lenders through June 2010) go to enter your social security number, your birthday, the first two letters of your last name, and your student loan four-digit PIN. This last piece of information might be the trickiest bit, because this is the federally-issued PIN that you (or your parents) used every year when you completed the FAFSA form that determined your eligibility for federal student aid, including loans. So the last time your family likely needed the PIN was in early 2012, when you filled out the application for your senior year. If a search through your financial records doesn’t unearth your PIN, you can request a duplicate copy here. It should come via email within a day.

What about private nonguaranteed loans? To make sure you know about them all, Jarvis recommends pulling a copy of your credit report, which you can do for free at

Once you’ve gathered all the data, make a list containing the name of each lender, the lender’s website, your log-in information, the balance and the interest rate on the loan. That last metric will be helpful later if you decide to consolidate your loans or decide to pay off higher interest date early. Even if you don’t have private (non-government guaranteed) bank loans, this can get pretty complicated since government backed loans come in three varieties. “You could have a subsidized loan, unsubsidized, or a Grad Plus—those three loans have different interest rates,” notes Rick Ross, co-founder of fee-only financial advisory College Financing Group.  (Just to complicate matters, the rate on subsidized loans has changed nearly every year. A table is here.)


2. Learn about alternate repayment options (and figure out which, if any, is right for you).

The standard repayment schedule extends your loan payments over ten years, or 120 payments. However, if the standard monthly payments aren’t manageable on your budget – or if you’re unemployed or otherwise unable to repay your loans – the federal government has some alternative repayment plans for you, as well as some deferral options.  The primary repayment options: Income-Based Repayment (IBR), Income-Contingent Repayment (ICR) and Pay-As-You-Earn. Each program caps your monthly payment at a fixed percentage of your income and extends the repayment period beyond ten years, but there are some important differences.

IBR and ICR extend the payment period to 25 years, while Pay-As-You-Earn is a 20-year repayment period. The monthly payments under ICR are calculated based upon your adjusted gross income, family size, and overall amount of Federal Direct loans. IBR caps monthly payments to 15% of your discretionary income (which is the difference between your adjusted gross income and 150% of the poverty guideline for your family size and state of residence), and Pay-As-You-Earn caps monthly payments at 10% of discretionary income. But the most important difference between the three is this: Pay-As-You-Earn is only available to people who were new borrowers on or after October 1, 2007 and who have received a loan disbursement on or after October 1, 2011. In short: Class of 2011 and earlier, you likely won’t qualify.

“One reason to be cautious,” notes Jarvis, “is they let you pay very little, but it can mean higher interest costs over time.” However, Jarvis adds, you can always pay more than you owe if it’s to your advantage.

Finally, it’s worth noting that if you work in a full-time public service job, you may qualify for loan forgiveness on Federal Direct loans after just 10 years of on-time payments. The Federal Direct distinction is key here: loans made under Federal Family Educational Loan Program or the Perkins Loan program are not available for public service forgiveness. If you have a Federal Direct loan and work for a federal, state, or local government agency, entity, or organization or a not-for-profit organization that has been designated as tax-exempt by the Internal Revenue Service (IRS), you very well may qualify to have your loans forgiven after 10 years – but to find out for sure, head here.

According to recent figures released by the government, just 1.6 million borrowers are in an income-linked debt relief program, but many of the 600,000 borrowers who defaulted on their loans in the last fiscal year could have qualified and possibly avoided default. As a result, the Department of Education has announced that starting in October, it will contact borrowers who are struggling to repay their loans to make sure they know all the repayment options that are available to them.


3. Figure out how much you can pay. And remember: “can pay” is different than “want to pay.”  Student loans are virtually impossible to discharge in bankruptcy (you have to prove “undue hardship”), and there are enough federal options to help with repayment that you don’t need to let the balance sit accruing interest in deferment and forbearance.

7 Credit Score Myths Debunked

Why Your Credit Score Matters


Your credit measure is some-more critical than ever, as loans and credit have turn increasingly tough to come by. Credit scores establish either we can financial a automobile or a house, get an unit and presumably either we will be hired for your subsequent job. If we do validate for a loan, your measure will establish how many seductiveness you’ll pay. And word companies, wire companies and even application providers use your credit measure to establish a rates or deposition amounts to assign you.

But like many critical things in life, credit scores are mostly misunderstood. Many of us trust renouned untruths about credit scores and how they work, when meaningful a law could assistance us improved boost or strengthen a scores. Here are 7 common misconceptions about credit scores and a genuine story behind them.

The Myth: Checking your credit measure will harm your credit.


You can check your credit once per year yet spiteful your score, says Kimberly Foss, approved financial planner and owner of Empyrion Wealth Management in Roseville, Calif. Checking your possess measure is a “soft” exploration and does not impact your score, yet when lenders and others check your score, those are “hard” inquiries and can impact a numbers.

For soothing inquiries, Foss recommends visiting, a government-run site that provides a no-cost credit news (and your credit measure from one of a 3 credit stating agencies for a tiny fee) once per year.  

While tough inquiries are infrequently necessary, try to keep them within a 30-day period, Foss says. When she was selling for a home mortgage, she had several lenders checking her credit measure and, since her hunt lasted some-more than 30 days, they updated her credit information any month. Those mixed credit checks over a longer duration negatively influenced her score, Foss says.

The Myth: It’s bootleg for employers to check a pursuit applicant’s credit.


Actually, it’s authorised for an employer to lift a credit news on a pursuit applicant or employee, yet they do have to have a applicant’s permission, Foss says. Employers that many mostly examination credit reports before employing are those in fields like banking, financial and supervision agencies, where employees might have entrance to vast amounts of income or supportive information.

While reviewing a impending employer’s credit news is ideally OK, “It is bootleg for credit scores to be used as a apparatus for screening intensity employees,” Foss says. The credit measure will be enclosed on a credit report, yet rather than focusing on that number, employers are ostensible to be looking for financial habits or failings that could impact an applicant’s work. 

As a financial attention employer, Foss frequently reviews applicants’ credit reports before hiring, yet instead of looking during a credit score, she says, “I’m looking during a credit of a person. I’m unequivocally looking during either they have defaults or foreclosures, not either they have a low credit score.”

The Myth: If we get married, we and your associate will share a credit score.


Foss says she is frequently astounded by a series of immature people who contend they don’t worry about their credit scores since their fiancés or spouses “are good with money.” That logic is injured since we don’t automatically take on your spouse’s credit measure when we get married. “You have credit together, yet we also have your possess credit score,” Foss says.

Even if we and your associate share a same final name, we any have your possess credit score, says Andrew Housser, CEO of Freedom Financial Network. “Each chairman needs to obtain his or her possess credit reports, examination for correctness frequently and scold errors on his or her possess credit report.”

Foss cautions opposite inventory customarily one spouse’s name on all credit documentation, as both partners need to build their credit and say a clever score. “It’s dangerous to equivocate regulating your credit or gripping adult with your score,” she says. “You don’t wish to get divorced or widowed and have no credit.”  Foss says she frequently speaks with clients who are recently singular again and are incompetent to obtain a debt or other credit since all a credit used during their marriages was in their former spouse’s name. Suddenly they contingency start during a bottom again, rebuilding their possess credit.  

The Myth: If we news an blunder on your credit report, it will be changed.


Suppose we find an blunder after requesting your giveaway annual credit report. Maybe your name appears with a wrong center initial, withdrawal we obliged for debt due by someone else. 

Or remuneration dates have been entered inaccurately, creation it seem as yet we have done late payments. Whatever a blunder is, many people trust that all they need to do is call a credit business and news a error, yet that’s not true. 

“Just since we let them know there’s an error, they won’t examine it,” Foss says. “It’s your shortcoming to get all a contribution in writing, send it to all 3 credit bureaus and follow adult to make certain a blunder is corrected.” Even if a blunder customarily appears on one report, Foss records that it’s essential to send all a support to all 3 credit bureaus to make certain a blunder is private from your credit history. And keep following adult until it’s gone.

If an blunder leads to calls from collectors, that can impact your credit as well. Typically, once a creditor sends your comment to collections, that will stay on your credit news for 7 years. When we warning a credit bureaus about a blunder in your report, remember to also warning them to any actions by collection agencies that might have been compared with a blunder so that effect can be wiped from your news as well. 

The Myth: Occasionally profitable bills late won’t harm my credit score.


The Credit Card Accountability, Responsibility and Disclosure (CARD) Act, that upheld in 2009, helped palliate chastisement fees for late or missed payments, yet that doesn’t meant those late payments aren’t inspiring your credit score.

“Some people incorrectly suspicion that [the CARD Act] loose a impact of late payments on credit scores,” Housser says. “In reality, CARD has helped customarily with chastisement fees for late or missed payments. Before, these fees were about $39; a new law boundary late fees to $25 in many cases.”

Even yet a fees are lower, “late payments are still late payments,” Housser says. “They do repairs your credit score.” In fact, on-time payments are a many critical means in building good credit, as they comment for 35 percent of your credit score.

The Myth: Carrying a change on your credit label can assistance build certain credit.


While credit agencies rest on your past remuneration story to sign how we will do in a future, we don’t have to say delinquent balances to uncover we have a credit history. If we wish to build credit by regulating a credit card, Housser suggests charging something any month and profitable it off in full and on time. “This is opposite from carrying a change month to month and profitable a seductiveness and fees that go with that,” Housser says. Just remember to keep your monthly charges next 30 percent of your accessible credit. (In other words, if your credit extent is $1,500, don’t appropriate your label for some-more than $500.) 

If we don’t wish to supplement losses to your monthly budget, compensate one of your unchanging bills around credit card. That way, you’re building credit yet spending income we wouldn’t normally.

It isn’t positively required to have credit cards to build your credit profile. On-time payments can be done on a tyro or automobile loan and on rent, phone, Internet and application bills to assistance build a credit history, Housser says.

The Myth: A failure or foreclosure will hurt your credit forever.


A vital eventuality such as a failure or foreclosure isn’t desirable, yet it doesn’t symbol a finish of your life as a credit user. A failure filing can sojourn on your credit news for adult to 10 years, and a foreclosure for 7 years. 

“Creditors can sign either we are a good risk to do business with by how good we hoop your finances post-bankruptcy,” Housser says. “While it can take years of obliged spending habits to get a good credit form behind to good health, it is not impossible.” Those who attain learn to residence a issues that caused problems in a past, compensate bills on time and closely follow a devise systematic by failure court. 

While a foreclosure will means your credit measure to dump sharply, customarily by some-more than 100 points, “a foreclosure is a singular disastrous item,” Housser says. “If we keep this object isolated, it will be many reduction deleterious to your credit measure than if we had a foreclosure in further to delinquent on other credit obligations.” 

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