VA Student Loans
Did you know that VA has a new policy for calculating student loan payments?
Considering the Payment:
• If the student loan repayments are to begin within 12 months of closing, the debt will be considered.
• If the student loan payment is being deferred for a period longer than 12 months after closing, the debt does not need to be considered.
Calculating the Payment:
• Calculate each loan at a rate of 5% of the outstanding balance then divide that by 12 months. Example: $25,000 x 5% = $1,250 divided by 12 months is $104.17 per month.
• If the student loan payment reported on the Borrower’s credit report is greater than the calculated payment, then the credit report payment will be used.
• If the payment reported on the credit report is less than the calculated amount, the lender must require a statement (dated within 60 days of closing) from the student loan servicer that reflects the actual terms and payment information for each student loan.
• If the student loan payment is in an Income Based Repayment Plan and the current payment is documented to continue for at least 12 months after closing, the lender may use the IBR amount. If the payment is not expected to continue for at least 12 months after closing, a monthly statement is required. If a statement is not available, the calculation of 5% of the balance, divided by 12 will be used.
Documentation for payments and 12 months continuance will be required