student debt

American students to collectively owe $2 trillion by 2021 – What is Trump planning?

Image source: businessinsider

As per a recent analysis, it has been seen that the student loan debt in the US is gradually moving towards a new milestone and it will witness a 30% rise in the approaching 36 months. The Federal Reserve Bank of New York says that as the debt climbs higher in order to reach a record high level, up from $1.55 trillion, the ROI for fresh college graduates is shrinking pretty fast. As the student loan debt costs is growing by $30 billion in every quarter and hence it is soon racing towards $2 trillion by 2021. As there were hosts of protests regarding the crossing of $1 trillion in 2012 and now it is even going to cross that level too.

What are the experts saying?

As the overall population of the nation grows and as college tuition costs keep rising, the US student loan debts will also continue to soar like never before. The CEO of an online lending platform has seen a noteworthy rise in the total number of student loans being taken out from community banks and credit unions.

Since the year 2010, there has been an increase in the number of federal loans that are being made available to the students. Students are also taking up second jobs in order to pursue passive income so that they could pay off the $20,000 in the form of student loans. Whenever you make free flow of credit with access to credit, this inflates the asset class. If you take a glance at the Great Recession, mortgages were made available and then you remember what had happened.

The constant rise in student loan debt

It was just in the last decade that student loan debt had surged by around 60% and if you take a look at the recent forecast, this will only speak about the financial pain. Millions are joining the latest cadre of 45 million American education loan borrowers and it is seen that an average undergrad in 2017 has owed $40,200. There are couple of people who owe $200,000 and this is a rather scary amount.

How is Donald Trump planning to solve this debt dilemma?

Donald Trump is also alarmed at the burgeoning student loan debt level. Here are few things to watch out for.

  • PSLF can be stopped for new borrowers

As the Congress passed a measure to boost the amount of funds available for PSF by $350 million, Donald Trump has chosen to stop this program. PSF is a federal program which forgives federal loans of the borrower who work in the public or non-profit sector.

  • Federal loan repayment options can be changed

Presently there are 8 different categories of loan repayment programs under the federal government loans. The Trump administration simplifies the choices of the borrowers by creating a repayment plan which is income-driven. Under the repayment plan, monthly payments will be capped at 12.5% of the discretionary income of the borrower.

  • Changes in discharging debt during bankruptcy

The Department of Education issued a request for comment on evaluating undue hardship claims, which is the standard used to check if a debt is discharged through bankruptcy.

Therefore, with the current state of student loan debt that is grasping the entire nation, it is vital to repay your student loan debt as soon as possible in order to avoid a bad impact on your credit score.


A Simple Way to Clear Student Debts

Studies get hampered to a great extent when debt takes a permanent place in the life of a student. The problem arises when the debt burden becomes unmanageable due to additional expenses to meet the basic needs. The features of providing loans to students are included in the debt consolidation loan facility to meet the urgent need of money to students. This kind of loan facility differs from regular payment schemes and reduces the debt burden that the borrower has to pay every month. Everything related to the payment of the loan amount is consolidated and streamlined into a single payment every month.

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Any student with a loan amount exceeding $7,500 can apply for student loan debt consolidation but the prevalent criteria vary to a certain extent for private and federal loans. So, it is better to check the terms and conditions of the lending company to avoid any ambiguous situation arising in future. Once the applicant has been considered for such consolidation facility the concerned company will get in touch with the present lenders personally to start making the repayment process. The best part is that this facility keeps the interest rate fixed while waiving the penalty in case of early repayment.

The best time to apply

The recent global scenario has made loan debt consolidation for students a necessity rather than just an option, to handle the overall financial burden in an orderly manner and for timely arrangement of debts. Not only this, the personal credit rating is also affected to a great extent with the incurring of debts which can only be improved by consolidating student loan. This in turn will allow for improvement in life through the acquisition of car and personal property.

Most of the loans taken by students are required to be repaid after the student completes his/her course while certain federal loans for students provide a time period of up to three months post completion of course after which the loan amount needs to be repaid as per stated installments. Some of the loans provided to students cannot be consolidated until the end of his/her study career. This is why it is better to initiate the enquiry process for loan consolidation prior to completing studies so that as soon as the applicant becomes eligible to apply for such loan the process can begin.

Applying for a loan online

In this tech-savvy environment everything is just a click away making even the most strenuous and burdensome tasks look easy and quick. The student loan debt consolidation can even be acquired through the online mode. All the hard works like research and scrutiny are performed by the internet to make the search process easier and convenient for students. Everything related to the terms and conditions of different loan consolidation companies including the latest news and information can be acquired from the World Wide Web. This provides an opportunity to students to compare among different available options and select the best one that gives the maximum benefits.


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