PHEAA, Upromise help students pay off loans

Once many students finish college, they are faced with the problem of repaying back their… Once many students finish college, they are faced with the problem of repaying back their student loans.

American Education Services, a division of Pennsylvania Higher Education Assistance Agency, is teaming up with Upromise to try to find a creative way to make the repayment process easier for borrowers and lenders.

By shopping at stores that have an agreement with Upromise and AES, students can put a percentage of their purchase toward paying off student loans, said Keith New, vice president of communication for AES.

“Any purchase you make, you can designate the given percentage decided upon between the store and Upromise toward paying off your student loans,” New said, who has been with AES for more than six years. AES is a nonprofit financial aid service organization that works to better serve students, families, schools and lenders throughout the nation.

Upromise is a free service that helps America’s leading companies give families money back for college, according to Vice President Jim Doyle.

“This service will give students the peace of mind that they will be able to pay off student loans in a shorter period of time, thus lowering their interest payments,” Doyle said.

Doyle gave the example of a $10,000 loan at 7 percent more than 10 years, which has payments of $116 each month. If a given borrower were able to pay $10 more each month, they would be done more than a year earlier.

“Family members and friends who join Upromise can also help a borrower pay off student loans by directing their savings to the borrower’s account,” he said. “Upromise members can earn up to 10 percent back on the price of select everyday purchases.”

Upromise offers an account free registration online at www.upromise.com.

Members can save at more than 15,000 grocery and drugstores, thousands of retail locations, more than 7,000 restaurants nationwide and 100 online shopping sites, according to Doyle.

“By simply being an consumer, shopping online, buying groceries and eating out, AES borrowers who join Upromise will earn a percentage of every day purchases that can be automatically put towards their loans,” Doyle said.

“This idea of teaming up with Upromise is a value-added benefit,” New said. “There is nothing out there like it now and we feel it will have a positive impact.”

Another beneficial feature of this idea is the money a student gets for his or her loan goes toward the principal. That basically means that any money earned goes toward the amount of the loan before interest costs, which could potentially reduce payments.

Despite only being around since April 2001, Upromise has already acquired more than 2 million members.

AES and PHEAA, on the other hand, have been around for about 38 years.

“We’ve been a household name in Pennsylvania as PHEAA, and it will take time until AES is recognized as one in the same,” New said.

PHEAA handles student grants and AES manages student loans since last year, but they are the same organization as a whole, according to New.

“It’s very difficult to change identities and will be a long process, but students will find that it is just a name change,” New added.

According to New, there are four million student borrowers of AES or PHEAA service loans in the nation, and most of the loans are primarily Stafford student loans.

AES and Upromise plan to launch the partnership in November.