student loan

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.


Women hold a major share of student loan debt in the US – Any reasons behind this?

Image source Pixabay

As per a recent report, women are carrying around 2/3rds of the outstanding student loan debt of the nation. This alarming statistic has been given by a new report offered by the American Association of University Women which is an education advocacy group. In order to be sure about the statistics, 58% of the college students are women and hence it can be easily concluded why so many women are carrying student loan debt. Student loans are gradually becoming a burden as too many of them are pursuing their higher education.

At present, 7 among 10 students take resort to loans so that they could obtain their degree. The average student leaves school with $30,000 in debt and nearly 25% of them owe more than $100,000. Majority of the Americans are extremely burdened with educational loans and these loan amounts are way more than what they owe on car loans and credit cards.

Implications of student loan debt on the economy of the nation

As long as the conversation on student loan debt is concerned, this starts with definite demographics which are harder and tougher than others. Even though you might compare apples to apples, still women are carrying more debt individually. As per recent statistics, in the year 2016, the average woman left undergraduate education owed $22,620 as against $18,650 for men. Hence there is a huge difference between the two amounts. In fact, black women are taking on disproportionate debt amount and they’ve racked up $25,000 in the form of student loans to obtain bachelor’s degree.

Besides, women are more likely than men to have household responsibilities to balance their coursework and hence they might take too long to graduate. As they spent more time in school, this can lead to more and more loans.
Is there a wide wage gap too?



The fact that as compared to men, more women are borrowing in bigger amounts is troubling the women. It is also true that women earn 28% less as compared against their male counterparts outside school. This clearly implies that women will take longer than men to pay back their student loans and hence they can dig deeper into debt.

What do the personal finance experts have to say?

While the men are seen to pay back 14% of their debt annually, women can just pay off 10% of their debt, as per a recent study. 3 years post graduation, women have been seen to pay back less than a third of their debt and during the same time period, men has successfully paid back 40% of the entire amount. These numbers can clearly indicate the irony of education and the system that prevails in the country.

Education certainly plays the role of an equalizer within the nation and in case the rising tuition costs are setting an impact on few people, few more than others, this is now demotivating them to take any step. Hence, as long as you wish to pay off your student loan debts, make sure you are proactive about them.


Keep budgeting while you struggle through your student loan payments

Image source

Over the past 2 decades, the annual cost of college education is rising steadily and the level of student loan debt has accelerated to a jaw-dropping $1.35trillion in America, which is spread among 45 million people, as per recent statistics from the New York Federal Reserve. The study ranks student loans are the second largest debt, the largest being mortgage debt. This shows that student loan debt is even higher than credit card debt and auto loan debt.

It is surprising to note that there are considerably large numbers of borrowers who go through a tough time in repaying their student loans and it is also noticed that 15% f debt is more than 90 days delinquent. If you want to reverse this worrying trend, you have to imply a clear financial strategy. Here are few budgeting tips to follow if you’re struggling with your student loan debt.

#1: Be angry about your debt

You have to be angry with the debt that you accumulated while studying. You shouldn’t feel comfortable with the debt that you accumulated in college as this will make you delay about taking action against it. Once you reach the ultimate level of infuriation, you will be hell-bent to pay it down and become debt free as soon as you can. If required, opt for second jobs or federal programs or debt forgiveness programs through which you can chuck off a portion of the debt.

#2: The 20-30-50 method is a successful one

If you think that the budget is not a worthy option, the 20-30-50 plan can be one of the most flexible ways of accounting for your expenses. Initially, make sure you keep aside 20% of the take-home pay towards your financial future. Here you could use that money to direct it towards paying off the loans. Next, allot 30% towards wants/fun like eating out or going for parties with friends. Ultimately, spend 50% of your income on the essential expenses like rent.

#3: You should save money for yourself

Irrespective of the debt that you’re carrying, if you don’t pay yourself, you’re committing a huge blunder. In case you earn a decent amount of money, make sure you stack aside 10% of your month towards your debt payments and another 10% towards savings. Keep track of it and whenever you get extra funds, increase the payments.

#4: Keep tracing everything that you spend

When you aren’t tracking your finances carefully, it’s easy for you to spend more money. You should ideally track all expenses, even those that you have paid in cash. The best way is to automate your savings and checking account so that a portion of your funds get deduced from your account. This way you can continue with saving even though you may forget.
Even after you follow the above mentioned steps to follow a budget when you’re struggling with the student loan payments, you should still avoid taking on additional debt. Owing too much of debt at a very young age can bar you from taking out new lines of credit in the near future.

 


Different Types of Student Loans Explained

Students seeking financial assistance to attend college have many options. Ideally, you have some money set aside and your parents are willing and able to help you pay for a college education, but if you still need money for tuition, books, and living expenses, there are a variety of loan options available to you. Here are a few different types explained.

Image and video hosting by TinyPic

Direct Student Loans

The most common type of loan that college students receive is a direct student loan, which is granted by the federal government (through the U.S. Department of Education) when students apply for federal financial aid through FAFSA (the Free Application for Federal Student Aid). Within this category, there are Stafford loans, federal plus loans, and consolidated loans.

Stafford Loans

There are two types of Stafford loans: subsidized and unsubsidized. Subsidized Stafford loans are so named because they are government subsidized, which means the Department of Education pays the interest on the loans while you’re in school (at least half-time), for six months after you graduate, and during a deferral period. In addition, subsidized federal loans are based on financial need, with the amount determined by your school.

Unsubsidized loans do not require you to prove financial need, but your school still determines the amount, factoring in the cost of attendance, as well as any other financial aid you already receive (i.e. grants, scholarships, etc.). Also, you’re responsible for all of the interest accrued on your loans.

Federal Plus Loans

This type of direct loan is intended to cover the gap in expenses not already paid for by other types of financial aid (grants and Stafford loans). These loans are still federal, but they are based on credit score and may have less favorable terms for repayment, although the interest rates are still low.

Consolidated Loans

Students may take out several loans throughout the course of their college career. This type of direct loan consolidates all of these student loans into a single loan so that students paying down debt need to only make one payment.

Perkins Loans

While this loan program falls under the scope of federal loans, it is actually administered by individual schools and granted only to students with extreme financial need. For this reason, Perkins loans are not nearly as common as, say, Stafford loans.

Private Loans

Suppose you’re unable to receive all the funding you need for your school expenses through federal financial aid. If you can’t earn enough at a job or gain other funding through grants and scholarships, you’ll have to look for another source of funding.

Luckily, you can also take out student loans from private lenders to make up the difference and meet all of your financial obligations while you’re in college. Just keep in mind that private loans have very different terms, so make sure you understand the loan agreement.

References:
https://studentaid.ed.gov/types/loans/subsidized-unsubsidized
https://www.nerdwallet.com/blog/loans/debt-consolidation-loans/


The burgeoning student loan crisis in America – Staggering changes to student loans in 2016

profits-618373_960_720

Image via pixabay

Gradually it’s getting tougher and tougher to graduate from college without taking resort to student loans. About 75% of the recipients of bachelor’s degree leave their school not only with a degree but also with huge amounts of debt. Research reveals that the humongous amount of $1.2 trillion in student loan debt is playing a role in preventing the Americans from making any type of big purchases which drive the growth of the economy. Not many are being able to buy new homes to rent an apartment only because they have huge amounts to pay back on their student loans.

The student debt crisis has in fact become so huge that it has even gained attention of the presidential candidates who are watching out for different ways in which they can make college affordable by reducing college and tuition costs. Approximately, around 40 million Americans with student loan debt are desperately looking for ways to manage debt.

Student loans – A sneak peak at the recent changes that can help them pay off debt

After reading such gloomy student loan debt statistics, you must be looking for something positive. Well, students are lucky enough that there are so many new programs which are being brought into effect in an effort to relieve the borrowers from debt. Here are some developments to take note of.

? The REPAYE Program: This program was introduced in 2016 as along with the income-based repayment programs. The REPAYE or the Revised Pay As You Earn programs provides assistance for repayment to a supplementary of 5 million borrowers each year. Borrowers can easily cap the student loan installment in a month to around 10% of their discretionary income. Those seeking help of this program can have their remaining balances waived off or forgiven after they have been making timely payments for 20 years. However, the amount forgiven is taxable.

? Loan repayment assistance is now a workplace benefit: As per a study from the SHRM or Society for Human Resources Management, around 3% of the US employers have started offering loan repayment options as a part of employee benefit. This number will most likely grow as more and more employers start understanding the importance of this benefit. Almost more than half of the respondents of a survey said that student loan assistance was better than 401(k) contribution match.

? Refinancing options sponsored by state: As federal benefits are done away with and eligibility criteria tightened for the large number of graduates, more states now started offering student loan refinancing options for the borrowers in debt. Through their new SELF Refi program, residents in Minnesota with debt could be able to refinance at rates which are as low as 3%. By offer state help, students might just waver from seeking help of private loan options.

? Get On Your Feet Loan Forgiveness Program: This is yet another one-of-a-kind loan assistance program offered on the state level. The Get On Your Feet Loan Forgiveness Program has started in New York and the program provides up to 24 months of debt relief to college graduates who live in the state and meet few eligibility requirements.

? A hope for a new President: It has been unanimously acknowledged that President Obama made a number of changes to the landscape of student loans during his terms. With the 2016 presidential elections, people can again expect a new President and along with him a set of new policies for the students. Though it is unsure about who is going to serve the nation, yet all the Presidential candidates have shared their student loan reform plan. Federal student loan refinancing, reducing loan rates are some changes that would definitely be included.

We have to leave it on time to know whether or not the above mentioned changes will remain or disappear but for now the students have definitely been given easier ways to pay off their student loan debt and live a debt free life.


Solved: The Biggest Financial Problems Students Will Face

student-loan-debt-1160848_960_720

Pixabay File

When we look back on university, we often remember the challenge to get good grades. We completely forget about the challenges of handling money effectively or the issue of paying for everything we need. In some cases, this will be because our parents paid for most of what we needed. Or, because we were lucky enough to get a scholarship for our chosen course. However, the cases of this are fewer than most people realise. For many, college is not just an academic challenge. It is a continuous financial struggle. That’s why you need to know how to deal with the greatest expenses during college and after you graduate.

Living Expenses

If hall accommodation is included in your college fee, you might want just to stick with that. However, if you need to find your own accommodation after your first year, you may want to think of options that will reduce the cost considerably. First, you can think about moving back home, if it’s not a commute that’s unmanageable. Most college students will hate the idea of living at home when they complete their college degree. We understand it’s a complete turn-off. You want your freedom when you’re at college and your independence. However, you have to decide whether that’s worth the financial debt you’ll face after you finish. Another option to consider is having a few roommates. Living with five or six people is financially easier, as you can share costs.

Recreational Expenses

College isn’t just about learning, and you would be wise not to forget this fact. There are parents out there who would love if their kids focused on classes and avoided going out at college, completely. However, if you do this, you are probably going to burn out pretty fast. Unfortunately going out and other recreational activities are expensive. So what’s the solution here? Well, budgeting is key, and you should watch how much you’re spending each month. Have a fixed amount that you can spend and don’t go over it. You might also want to look into getting an interest-free credit card. This is going to make those costs a lot easier to manage. They can build up on the card, and you won’t need to pay them off for a year or two.

Handling The Loan

Of course, one of the greatest financial hurdles is working out how to pay off the loan at the end of your college life. We recommend you look into a nonprofit service loan forgiveness. With this type of service, part of your loan will be forgiven, and you should find it easier to pay. Remember, there are plenty of repayment plans to consider when managing your student loan. It’s a burden; there’s no doubt about that. But it doesn’t have to be one that’s long lasting.

Low Income

Lastly, many grads will find themselves on lower incomes than they expected once they finish college. Unfortunately, this is just a fact of life. If you get great grades, you might win your dream position. But you’ll probably still need to climb the ranks. Living on a low income is difficult but possible, without going into debt. Again, budgeting is key, and you need to make sure you’re not spending over your level of income.


Options If Your Student Loan Arrives Late

Even though student fees have tripled in the last few years the number of people applying for university places hasn’t slowed down at the same rate. Rather than easing the pressure on the student financial services some of the problems it faced in the past are continuing.

Every year there are always a number of students who receive their loans late for various different reasons. Sometimes it may be through a fault of their own, at others the student services just struggle to deal with such a great demand. Either way, when you’ve got bills to pay not having the money in your account on time can lead to relying on other sources.

Bridging Loan

The first thing to do if your student loan doesn’t arrive on time is check that you’ve got the right payment date.Ensure your application has been approved, you have done everything and been registered at university, as only then will your loan be paid, before getting in contact with the student finance services.loans

If you have and the problem is with them, then applying for a bridging loan from your place of study is a good idea. The purpose of this is to tide you over until your loan arrives and is repaid after two weeks of receiving the full student grant/loan. All that’s required is evidence that you should receive a student loan and a bank statement showing you have below a certain amount in your account.

Student Payday Loan

Having to pay for the first month’s rent on your new student flat, bills and internet installation, along with other essential purchases such as books and equipment for your coursebecomes a real struggle if your expected loan doesn’t arrive. For those who haven’t got enough savings, taking out another quick loan is one option.

Unlike a normal payday loan, short-term personal loans from Smart-Pig.com have been designed by students for students. Available in 60 minutes means you have near instant access to the funds. Ten days without late payment fees and interest which never rises above 50%, mean paying it back should be affordable for most students when their loan arrives.

Borrow from Family

You may think the moment you set off for university is when your full independence and freedom from your family starts. However, most people still return home every holiday and often move back in after their time studying has finished. It can be hard asking to borrow money as this seems like further relying on them.

Borrowing from family or even friends should hopefully result in far fewer interest costs (if any) compared to payday lenders. Plus there’s even more of an incentive to repay on time as you don’t want to ruin these relationships.


How to keep a check on your credit card debt

Carrying a debt forward is a natural habit with most of us. A debt might appear in various forms like home equity credit, mortgage and student loan. It isn’t bad to carry your debt forward and at times it becomes absolutely necessary. At the same time, you must keep your debt under control; if you can’t, you’ll find yourself in crisis.

In case you aren’t careful, you may end up experiencing creditor calls, late payments, and high credit card balances.

In order to keep your debt under control, you’ll need to pursue a few good steps –

1) Know and accept the actual cost of credit

Do you really need to pay much when you use your credit card for meeting bills on purchasing a pair of sunglasses or having your dinner at a restaurant? Not considering the actual cost of credit is one of the primary causes of concern when you find yourself under the debt burden. Know and accept the actual cost of credit. You’ll be paying more than the initial cost of purchases till your monthly credit card balance is paid off consistently.Credit_Card

2) Meet your card balance each month

Emergencies compel us to use credit cards, although we may try to remain committed about not using credit cards. Once you receive a new credit card statement, pay off your credit card in full after you’ve utilized it for meeting unforeseen expenses like sudden tire replacement.

3) Track your expenses

You might need to spend some time for keeping a track of your expenses. Take notes and carry it with you regardless of whether you’re meeting your expenses with credit or cash. You may try this out for a month or at least for a couple of weeks. The entries shown in your notebook ought to be reviewed. You’ll be in for a surprise when you check out the irrelevance of some of the items that you pay for.

4) Check your impulses

Curbing your impulses isn’t that tough and you don’t need to worry. Your budget planner won’t be able to save you if you make impulsive buys. You must draw certain lines to avoid them. Keep track of your rising debt as much as possible. Although it may seem impossible, it is actually possible. You mustn’t raise your hands in despair, if you can’t manage things on your own. You may start all over again if you remain committed to the path of hard work and honesty.


Is student loan forgiveness a helpful way to repay your loans?

You may have heard about student loan forgiveness. But do you have any idea of whether or not it is really possible to get your loan repaid or if you qualify for this forgiveness program? Well, you have come to the right place. We will help you find out answers to all your questions in this regard.

Let’s find all the nitty-gritty of student loan forgiveness.

Education savingsWhat is student loan forgiveness?

It is the cancellation of entire or some part of your existing student loan balance. In other words, it is a program designed for cancellation of your student loan balance. If your existing loan is forgiven through this program, then you won’t be required repaying the loan any more.

Is it possible to get the loan forgiven?

Yes, federal student loans can be forgiven through this program provided you should meet certain eligibility criteria. If you meet the requirement, you must go for investigating matters you need to know in order to get your loan waived.

How to get your loans forgiven?

There are many situations under which you can surely have your loan balance forgiven. Some of them are given in this article. However, you can find information of student loan forgiveness options at https://www.studentaid.ed.gov/repay-loans. You can also find information on repaying your loan at http://nomorecreditcards.com/debt-consolidation/student-loan-consolidation/ . You must talk to your loan provider for any query regarding forgiveness of your student loan.

Here are some situations in which your federal student loan can be waived.

  • Public Service Loan Forgiveness or PSLF – If you’re a public servant, you may be qualified for waiver of remaining balance of your existing Direct Loans only if you’ve made at least 120 qualifying payments or about 10 long years of payment on those loans. If you’re employed in AmeriCorps or Peace Corps, then also you’re likely to qualify for the forgiveness program. You may refer to Public Service Loan Forgiveness for more information.
  • Teacher Loan Forgiveness – If you’ve been teaching for 5 consecutive and complete academic years in some particular elementary and secondary schools as well as educational services agencies that work for low-income households and meet other required qualifications, you might be eligible for forgiveness up to certain amount on some specific federal student loans.

There are some other situations that may also allow you to apply for waiver of federal student loans. For instance, if you’re completely and permanently disabled, working in the U.S. armed forces that serve in places of hostility, employed at Peace Corps, or corrections or law enforcement office, you may qualify for waiver of a part of existing federal student loan. You may refer to http://nomorecreditcards.com/ for loan relief programs.

Please note there are many resources that may help you repay your loan. Apart from loan forgiveness and other benefit programs, you may also find some other options if you’re facing hard time or troubles in making loan repayment. You must consult your loan provider for all such options.


The Ideal Way to Put A Few Bucks Aside When Dealing Student Debt: Paying It Off Quickly

Paying back your student loan or even just aiding your own kids look after their financial debt can easily be very time consuming. Don’t worry! You can actually pay off any student loan. It will take energy and probably a lot of time. You’ll also definitely need to have a strategy. You’ll need some tips that provide you with the instruments to go from having thousands of dollars of student financial debt to getting debt-free. You might even be capable of doing it faster than you anticipated. But first, let’s talk about just why it is advisable to try to pay off your college loans off earlier than needed.

Most Important Advantage

You’ll save some money. Let’s say you have got a $30,000 loan using a 4.5% rate of interest which you pay off over 20 years – you’ll fork out $15,550 in interest. Nevertheless, if you pay it off in exactly 10 years, you’ll save $8,240. If you happen to repay it in 5 years, you’ll save $11,993. That’s sufficient money to obtain an exciting new automobile. Or maybe, based on where you reside, a whole year or two of mortgage payments.

Getting rid of your student loan debt additionally will provide you with a lot of liberty – the liberty to adopt a lower-paying profession that you value more, the liberty to travel abroad, even the liberty to accept alternative “good” loans – like a home loan for a new residence.

Student_DebtIt’s also essential to remember that defaulting on your student loan could have some very serious outcomes; actually, not repaying student loan financial debt could be a whole lot worse when compared to not refunding other sorts of debt. Defaulting on your loans can damage your credit history, rendering it difficult to do just about everything from subscribing to standard utilities to getting your first condo. Your credit balances could very well increase thanks to accumulating interest. Of course, if you have government financial loans, the government could add premiums or simply garnish your wages, requiring your boss to hold back money out of your pay checks and ship it straight to the government.

There are times when it is more intelligent to repay different loans before student loans – if you have other personal debt with a greater annual percentage rate, pay that down initially, and it’s a very good idea to create a tragedy fund with a minimum of $1,000 when you start repaying student loan debt. But in addition to that, it is usually honestly beneficial to pay down your current school loans as quickly as possible. It’s not always simple and easy, but it’s manageable.


%d bloggers like this: