Saturday, 17 May 2014

Posted: 14 May 2014 09:33 AM PDT

Younger Americans who are still paying off student loans have a lot less money — and a lot more overall debt — than those who don't have any student loans, a new report finds.

It's not clear why, but the report from Pew Research Center said one possible explanation is that people paying off hefty student loans have trouble gaining financial footing because they are bogged down by those college bills. Another possibility is that, as more people go to college, the wealth gap between those who borrow for college and those who don't is widening.

The Pew report found that nearly four in 10 households headed by a person under 40 has some student loan debt, a record high. The median student loan debt for that group was about $13,000.

The difference between those households and the ones with no student loan debt was striking.

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Among college graduates, the report found that younger households with student loan debt had a median net worth of $8,700. For college grads without student loans to worry about, median net worth was $64,700.

The college graduates with student loan debt also had nearly twice as much overall debt as those without student loans. The median total debt for those younger households was $137,010, compared to $73,250 for those without student loans. Total debt includes things like mortgages, car loans and credit card debt.

The Pew analysis was based on the 2010 Survey of Consumer Finances, a detailed look at Americans' financial well-being.

It did offer one bright spot for those burdened by student loan debt: They are making a lot more money than those who didn't get a college degree at all.

The Pew researchers found that the typical household income of college-educated households with student loan debt was $57,941, compared with $32,528 for those headed by someone without a bachelor's degree.

That's in keeping with other Pew research showing that despite the costs, it pays to go to college — perhaps more than ever.

First published May 13 2014, 11:25 AM

Allison Linn

Allison Linn is a senior business and economics writer for NBC News. Linn started in this role in November of 2006. She is responsible for reporting on the economy, consumer issues and personal finance for NBCNews.com, CNBC.com and TODAY.com.

Linn joined NBCNews.com from The Associated Press, where she was a business writer. In that role, Linn was responsible for covering Microsoft, Boeing, Starbucks, Amazon.com and other major Seattle companies. At the AP, Linn regularly broke major stories, including the theft of a portion of Microsoftâ€™s source code and Boeingâ€™s decision to lay off thousands of workers just days after the Sept. 11 terrorist attacks.

Prior to her work at The Associated Press, Linn worked at newspapers in Colorado, Washington and Oregon and spent nearly two years as a reporter and editor in Germany.

Linn is the recipient of multiple regional and national journalism awards. Her honors include three Society of American Business Editors and Writers awards for The View From the Auto Mall Darkens, Still Made in America and We are the Median. Linn also was a recipient of the Arthur F. Burns Fellowship. She speaks fluent German and lives in Seattle, Wash.

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Student loan | Sallie Mae to Pay $96.6 Million Over Military Student Loans - NBC ...

Student loan | Sallie Mae to Pay $96.6 Million Over Military Student Loans - NBC ...

Sallie Mae to Pay $96.6 Million Over Military Student Loans - NBC ...

Posted: 13 May 2014 02:55 PM PDT

By Kelley Holland

Attorney General Eric Holder and Education Secretary Arne Duncan on Tuesday announced a lawsuit and proposed settlement with Sallie Mae over its practice of charging illegally high interest rates on student loans to military service members. Under the terms of the settlement, Sallie Mae will pay $60 million in restitution to about 60,000 service members.

Image: Attorney General Holder and Education Secretary Arne Duncan Announce Action To Protect Military From Unfair Lending Practices

Chip Somodevilla / Getty Images

Attorney General Eric Holder (R) and Education Secretary Arne Duncan announced that the Justice Department has reached a $60 million settlement with Sallie Mae after it was discovered the student loan giant charged roughly 60,000 military service members excessive interest rates.

The enforcement action, which the Attorney General said was the first of its kind under the Servicemembers Civil Relief Act, came as Sallie Mae also reached a settlement with the FDIC over its practices with student loans to military service members. Under that agreement, Sallie Mae will pay $36.6 million in penalties and restitution.

The settlements come eight years after Congress passed the Military Lending Act, or MLA, which capped interest rates on certain loans, like some payday loans or tax refund anticipation loans, to military service members.

Lenders, however, have continued to market loans to service members that are not covered under the MLA, and the Consumer Financial Protection Bureau in late 2013 issued new guidelines to its examiners to help them identify violations of that act.

"We are sending a clear message to all lenders and servicers who would deprive our service members of the basic benefits and protections to which they are entitled: this type of conduct is more than just inappropriate; it is inexcusable," Holder said in a prepared statement.

In addition to the financial settlement, Sallie Mae is required to ask all three credit bureaus to delete negative credit histories service members had as a result of the unfair lending, and to simplify the process for service members to receive the interest rate reductions they deserve in the future.

First published May 13 2014, 2:41 PM

Kelley Holland

Kelley Holland is a CNBC contributor and longtime business journalist who has covered everything from municipal bonds to management, major banks and MBA programs.

She created and wrote a monthly management column, "Under New Management," for The New York Times. Prior to writing her column, she was a business editor for The Times with responsibility for weekend business news and more. Earlier, she was an editor at Business Week, where one of her cover stories helped the magazine win a National Magazine Award for general excellence.

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Wednesday, 14 May 2014

Student loan | After rate jump, Senate Democrats push new student-loan plan ...

Student loan | After rate jump, Senate Democrats push new student-loan plan ...

After rate jump, Senate Democrats push new student-loan plan ...

Posted: 14 May 2014 12:00 PM PDT

WASHINGTON — The U.S. Senate appears ready to refight last year's battle over student loan interest rates.

A group of Democratic senators, led by Massachusetts Sen. Elizabeth Warren and including Sen. Al Franken, introduced a bill last week to allow borrowers to refinance their student loans to last year's low 3.9 percent interest rate (for federally subsidized undergraduate loans). That rate was borne out of a deal setting annual student loan interest rates at the yield of Treasury bonds, plus a few percentage points.

Congress easily passed that plan last summer, and President Obama signed it into law, though it inherently meant rates would rise as Treasury bond yields increased. And that's exactly what happened last week: bond rates went up, and undergraduate borrowers will now pay a 4.6 percent rate on their new student loans.

The Democrats' bill allows borrowers to refinance their student loans to the flat 3.9 percent rate, much as a homeowner could do with his mortgage.

Borrowers currently can't refinance their students loans, which Democrats said Wednesday is unfair given the increase in American student loan debt. At a press conference, Franken told the story about a Hamline University student who will graduate $100,000 in debt, whose loan payments equal half his current income.

"We need to do this, we need to let students refinance their debt the same way that people do on their homes, the same way that everybody is able to do, except for students," he said.

New York Sen. Chuck Schumer said the Senate will vote on the bill in early June, but it's unlikely to go anywhere this session. The government stands to lose money by allowing refinancing of student loans, but the senators didn't know how much on Wednesday. Likewise, they plan to pay for the bill by raising tax rates on millionaires, though they didn't have an estimate on how much that new tax would bring in. Republicans in the Senate and House — where Minnesota Rep. John Kline chairs the education committee and helped craft last year's deal — are certain to oppose anything that raises tax rates or otherwise costs the government money.

"This is a matter of values," Franken said. "There are people who make a lot of money who pay a very low rate on their income. And it's really about: Are we subsidizing millionaires or billionaires, or are we trying to help our students?"

Democrats have political reasons for bringing up a bill as likely to fail as this one. It's part of Senate Democrats' "fair shot agenda," an effort to force Republicans to vote against potentially popular legislation in an election year. The student loan bill will follow the path set by equal pay legislation and a minimum wage hike — it will fail on the Senate floor, but live on when campaign season begins in earnest.

"There's a real question here: Does Congress work for the rich and the powerful, for those who can hire armies of lobbyists and lawyers, or does Congress work for the rest of America?" Warren said Wednesday. "We believe the rest of America should have a fair shot at an affordable education."

Devin Henry can be reached at dhenry@minnpost.com. Follow him on Twitter: @dhenry

Just Released: Young Student Loan Borrowers Remained on the ...

Posted: 13 May 2014 08:15 AM PDT

Meta Brown, Sydnee Caldwell, and Sarah Sutherland

Last year, our blog presented results from the FRBNY Consumer Credit Panel (CCP) indicating that, at a time of unprecedented growth in student debt, student borrowers were collectively retreating from housing and auto markets. In this post, we compare our 2012 findings to the news for 2013.

Between 2012 and 2013, U.S. auto and housing markets recovered substantially. The CoreLogic national house price index rose by 11 percent from December 2012 to December 2013. According to the Los Angeles Times, "It was the [auto] industry's best year since 2007." Last summer, this blog post discussed the sources of the ongoing auto recovery. Here we pose two questions: What part have young borrowers, with and without student debt, played in the recent housing and auto market recoveries? And, have the housing and auto purchases of young student borrowers at last accelerated past those of nonstudent borrowers, to once again reflect their skill and earnings advantages?

The share of twenty-five-year-olds with student debt continued to increase in 2013, as the group's average student loan balance reached $20,926. For those twenty-five-year-olds with student loans, student debt now comprises 69 percent of the debt side of their balance sheets. Given the increased popularity of student loans, some have questioned how taking on extensive debt early in life has affected young workers' post-schooling economic activity.

As in last year's blog post, we address the association between student debt and subsequent economic activity by examining trends in homeownership, auto debt, and total borrowing at standard ages of entry into the housing and vehicle markets for U.S. workers.

The first post-schooling economic activity we explore is homeownership. The chart below shows the trends in the rates of (inferred) homeownership over the last decade for thirty-year-olds with and without histories of student debt.

Despite an 11 percent house price recovery over the course of 2013 and an increase in overall mortgage debt, thirty-year-olds with and without student loans continued to retreat from the housing market.

Further, student borrowers failed to exhibit the differential recovery one might expect in 2013. Prior to the most recent recession, homeownership rates were substantially higher for thirty-year-olds with a history of student debt than for those without. This pre-recession pattern is typically explained by the fact that student debt holders have higher levels of education on average, and hence, higher income potential. Simply put, these more educated, often higher-earning, consumers were more likely to buy homes by the age of thirty.

However, the recession brought a sudden reversal in this relationship. As house prices fell, homeownership rates declined for all types of borrowers, and declined most for those thirty-year-olds with histories of student loan debt. In last year's blog, we reported that 2012 was the first time in at least ten years that thirty-year-olds with no history of student loans were actually more likely to have home-secured debt than those with a history of student loans.

Did student borrowers regain their homeownership advantage in the course of the broader recovery? They did not. Surprisingly, student loan holders were still less likely to invest in houses than nonholders in 2013, despite the marked improvements in the aggregate housing market.

The next chart presents auto debt market participation among twenty‑five‑year‑olds. As discussed in the previous post, auto debt offers an informative, if incomplete, picture of young consumers' participation in new and late-model used auto markets. The trends through 2012 for student borrowers and nonstudent borrowers in the auto market followed a similar pattern to that observed in the housing market.

Unlike housing market participation, however, auto market participation in 2013 began to improve for young people regardless of whether they had student loan debt. Further, the levels and trends of auto debt were roughly identical for twenty-five-year-olds with and without student loans from 2010 through 2013. While the broad return of twenty-five-year-olds to debt-funded auto purchases is certainly positive news for auto markets, it is surprising that (comparatively skilled) student loan holders have still not shown signs of accelerating auto consumption.

One possible reason for the failure of student borrowers' housing and auto consumption to return to pre-recession levels is the growing burden of student debt. As reported in the previous post, the total debt per capita of student borrowers and nonstudent borrowers followed approximately parallel increases during the boom and approximately parallel declines during the Great Recession. In 2013, student borrowers did experience a small uptick to $30,227 in average total debt from $29,872 in 2012. This marks their first increase since 2008. The debt of nonstudent borrowers continued its decline from 2012 to 2013. Hence there is now a noticeable divergence in the total debt of student borrowers from nonstudent borrowers, as we might have expected all along.

A second candidate explanation for the failure of these comparatively skilled student borrowers to consume more from debt is limited access to credit. Indeed, our previous post revealed a substantial recession-era divergence between the Equifax risk scores of student borrowers and nonstudent borrowers, favoring nonborrowers. The news for 2013, shown in the chart below, is that the average risk scores of student borrowers and nonstudent borrowers at ages twenty-five and thirty each increased by 2 or 3 points. The positive momentum in credit scores for all types of young borrowers, and the popular return to debt-funded auto purchases, represent perhaps the most promising green shoots to emerge from this analysis.

However, the failure of young consumers, and particularly the comparatively skilled young consumers of our student loan group, to re-enter the housing market remains a puzzle. Many factors could be contributing to this phenomenon, including growing student debt balances, limited access to credit, lowered expectations for future earnings, and perhaps even a cultural shift by which young people—whether they went to college or not—are deferring home purchases. Whatever the cause of student borrowers' reticence, the housing market rebound of 2013 appears to have proceeded without the help of this skilled set of young buyers.

Disclaimer
The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

Meta Brown is a senior economist in the Federal Reserve Bank of New York's Research and Statistics Group.

Sydnee Caldwell is a former senior research analyst in the Research and Statistics Group.

Sarah Sutherland is a senior research analyst in the Research and Statistics Group.

Student loan | Sallie Mae, Navient To Pay $97M To Settle Servicemember Student ...

Student loan | Sallie Mae, Navient To Pay $97M To Settle Servicemember Student ...

Sallie Mae, Navient To Pay $97M To Settle Servicemember Student ...
Debt Forgiveness: How to Get Out of Paying Your Student Loans
Student Loan Debt – It's Not Just Impacting Finances Anymore ...
Plan proposed to help lower student loan interest rates | WQAD.com

Sallie Mae, Navient To Pay $97M To Settle Servicemember Student ...

Posted: 13 May 2014 02:04 PM PDT

Sallie Mae, Navient To Pay $97M To Settle Servicemember Student Loan Violations – Consumerist

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Debt Forgiveness: How to Get Out of Paying Your Student Loans

Posted: 12 May 2014 12:30 PM PDT

With student loan figures soaring, debt-saddled students and graduates are desperate for any strategy that may help them escape their burden. For many, the prospect of debt forgiveness may seem like a dream come true. In reality, only some borrowers may be eligible for forgiveness – and their window of opportunity may be closing.

Earning Debt Forgiveness

Student loan forgiveness can be earned in two ways: by working in public service or by making payments through income-contingent payment plans for a (long) period of time. Each has its own conditions, requirements and limitations. Neither route is quick or easy.

Still, borrowers have rushed to get on board. According to figures released by the Department of Education, there are currently more than 2.2 million Americans enrolled in income-based repayment plans that offer a chance of forgiveness. These borrowers account for a total outstanding debt of more than $108 billion.

The surge in enrollments can likely be attributed to the two-pronged appeal: the possibility of lower monthly payments now, plus the chance for balances to be forgiven later.

Potential Pitfalls

Experts and lawmakers fear there might now be an unintended consequence of these plans, in that borrowers will take forgiveness for granted and intentionally incur more debt than they can afford to repay. At the same time, there's the worry that colleges will take advantage of this mindset and charge students more or coerce them to take on debt by promoting these forgiveness programs.

In an apparent attempt to limit the potential financial fallout, the President proposed a cap of $57,500 in total forgiveness per borrower.

How Public Service Forgiveness Works

In order to get some debt forgiven under the public service program, you must first make 120 qualifying payments (meaning, required payments made on time). These payments must be made while you are working for a qualified employer – generally, a government organization or a non-profit with tax-exempt status. Only payments made after October 1, 2007, qualify towards earning eligibility so borrowers won't reach the 120-payment milestone to qualify for forgiveness until 2017.

Other Debt-Forgiveness Programs

If you aren't working in a public service position, you may still be able to get some of your student debt forgiven – but it will take longer. Federal income-based repayment plans allow for some debt forgiveness after a minimum of 20 years (terms and conditions vary by program).

Which Loans Are Eligible?

Only direct loans made by the federal government are eligible for forgiveness. If you have other federal loans, you may be able to consolidate them all into one Direct Consolidation Loan that would make you eligible. Non-federal loans (those handled by private lenders and loan companies) aren't part of this program.

Finding a Plan

All federal repayment plans allow for eligibility for public service forgiveness. The income-based repayment plans also include forgiveness for borrowers not in the public sector after a certain period of time. These plans include:

Income-Based Repayment (IBR): Maximum monthly payments will be 15% of discretionary income. Forgiveness eligibility after 25 years of qualifying payments.
Income-Contingent Repayment: Payments are recalculated each year based on gross income, family size and federal loan balance. Forgiveness eligibility after 25 years of qualifying payments.
Pay as You Earn Repayment (PAYER): Maximum monthly payments will be 10% of discretionary income. Forgiveness eligibility after 20 years of qualifying payment.

How to Enroll

Your student loan servicer handles the repayment for your federal student loans, so work with the servicer to enroll in a repayment plan or change your current plan. You can usually do this online via the company's website. To apply for the public service forgiveness program, both you and your employer need to complete and file a specified form.

The Future of Forgiveness

As with anything related to the federal government, the terms related to student loan forgiveness are subject to change. As mentioned previously, the President is already proposing a limit to the total that can be forgiven for each person.

Mark Kantrowitz, senior vice president and publisher of Edvisors.com and author of "Filing the FAFSA," suspects it's unlikely that this particular provision will pass. However, some changes are possible – and it's not known how they will affect borrowers currently in repayment. "It is unclear whether or how existing borrowers will be grandfathered in," he says. "Congress could make changes effective only for new borrowers as of July 1, 2015. So it isn't clear whether borrowers can do anything to retain eligibility for the current version of public service loan forgiveness."

Regardless of any changes that may be on the horizon, Kantrowitz warns borrowers against betting their financial future on the hope of debt forgiveness, especially the kind that's tied to public service. For one thing, there's a rigid time limit: "Public service loan forgiveness occurs after 10 years of full-time service. It is an all-or-nothing benefit, so borrowers who stop working before reaching the 10-year mark will get no forgiveness."

Other Considerations

Income-based plans can also have another downside – more interest will accrue because the repayment is stretched over a longer period of time. "Loan payments under IBR and PAYER can be negatively amortized, digging the borrower into a deeper hole," Kantrowitz notes. "Borrowers who expect to have a significant increase in their income a few years into repayment should perhaps prefer a repayment plan like extended repayment or graduated repayment, where the monthly payment will be at least as much the new interest that accrues and the loan balance will not increase."

Reyna Gobel, author of "CliffsNotes Graduation Debt: How to Manage Student Loans and Live Your Life, 2nd Edition," puts it more bluntly: "If you're currently racking up more debt because you expect these plans in the future: stop! You never know what will or won't exist for graduates if the law changes in the future. Ask yourself, 'Could I afford to repay this on a regular extended repayment plan?' If not, you could be getting yourself into very high debt and a difficult situation. Also, remember payments change annually based on income. When your income rises, your payment can, too."

The Bottom Line

Student loan forgiveness might be a welcome possibility, offering some relief to student borrowers toward the end of their repayment period, but its future is uncertain. Students should be wary of incurring debt beyond their means based on the assumption that a good chunk of it will be forgiven.

Follow @bobbidempsey

Bobbi Dempsey is a freelance writer/editor for numerous major publications and websites, including NY Times, Family Circle, CreditCards.com and many others. She specializes in personal finance, with a particular focus on paying for college, finding bargains and living on a tight budget. She is the founder of BrokeParents.com and is also the author of a dozen nonfiction books, including Don't Break the Bank: A Student's Guide to Managing Money (published by Peterson's). Her website is www.bobbidempsey.com

Student Loan Debt – It's Not Just Impacting Finances Anymore ...

Posted: 12 May 2014 03:43 AM PDT

PLAY AUDIO

For iPhone: http://ioneblackamericaweb.files.wordpress.com/2014/05/051214money.mp3

Mellody Hobson is President of Ariel investments, a Chicago-based money management firm that serves individual investors and retirement plans through its no-load mutual funds and separate accounts. Additionally, she is a regular financial contributor and analyst for CBS news.

Tom: We are talking about the student loan problem this morning?

Mellody: That's right, tom. It seems like every month or so we get more information that highlights just how out of hand the student loan debt problem is in this country, and how it is impacting young Americans. This month is no different. A recent study from Gallup and Purdue University has found that student loan debt not only stunts people financially, but it also impacts personal well-being.

Tom: What are we talking about when we say personal well-being?

Mellody: We are talking about the whole spectrum of an individual's life, tom. The survey asked over 30,000 college graduates about their finances, their health, their social lives, sense of purpose, and happiness within their community, and then inquired about whether grads like what they do every day and if they have enough money to meet their needs in these different categories. What the researchers found was that not only do students with higher levels of student loan debt face financial limitations – they are less likely to start a business, or own a house for example – they also suffered decreased well-being in all of these categories, across the board. Overall, college graduates without any student loan debt were seven times more likely to be happy in most areas of their lives compared to those with more than $40,000 in debt

There are many examples of the non-financial consequences of debt. Take marriage, for example. In the last few years, there has been a flood of stories that document how some individuals in relationships are postponing marriage due to the debt burden of their partner. One researcher found that women with student loan debt are less likely to get married than women without it. Another study found that high student loan debt leads to increased likelihood for depression, as well as physical illness. Alone, these are big problems, but when combined with the financial impact, the can obviously have very, very negative consequences for individuals.

Tom: There doesn't seem to be a solution on the horizon. Costs continue to rise – interest rates are expected to go up this year – and this hurts graduates.

Mellody: You are right, tom. Interest rates on loans are set to rise for students this fall. Students taking out government student loans could pay nearly a percentage point more in interest rates, based on rates set at Wednesday's Treasury bond auction.

But the broader problem is really that the cost of education is rising much faster than inflation. Since 1982 a typical family income increased by 147%, while college tuition prices have risen nearly 500%. According to the book the college trap, if the cost of college tuition was $10,000 in 1986, it would now cost the same student over $21,500 if education had increased as much as the average inflation rate. Instead that education now costs an average of $59,800 rising by over 2 ½ times the rate of inflation.

This is bad for all graduates, but it impacts minorities in America disproportionately. Education is the great equalizer in this country, but these costs are making it more difficult for students of color. For example, 27% of black bachelor's degree holders had more than $30,500 in loans, compared with just 16% of white bachelor's degree holders. more black students who left school without finishing a degree cited student debt as the reason than their white peers – 69% versus 43% – and 74% of Latinos who opted out of attending college cited finances as the reason. I believe wholeheartedly that college is worth it, and the data backs that up. However, when students have to saddle themselves with debt to get an education, there is an increasing belief that the short-term costs are not worth the long-term benefits, and that is a problem.

Tom: How should parents and prospective students approach paying for college these days then?

Mellody: The most important thing is to begin preparing early, by saving up over time. But on this front, my first piece of advice might throw you for a loop: avoid a savings account. If you are working hard to put money away for college, the very least you can do is make that money work for you in return. Invest that money in stocks, so that you get a good return. When you run the numbers, this becomes very clear. If you invest $1,000 per year for 18 years in a savings account, on a good return of 1% you would have around $21,000 by the time your kid goes to college. If you invested the same amount in the stock market, at a low rate of return of 5.5%, you would have nearly $32,000. That is $11,000 that won't be student loan debt. So save up over time, and make your money work to pay for your children's future.

The second thing is to really consider all of the options. In the same study that showed student debt was correlated with negative impacts on well-being, researchers found that elite colleges are not correlated with graduate happiness. So perhaps your child can explore junior colleges, or in-state schools, for the first two year before transferring to her preferred school. This will help keep the need for large amounts of student loans to a minimum.

Tom: Great! Anything else you would like to share today?

Mellody: Tom, I really want to highlight the impact of the student loan debt on younger people, and our country as a whole. 60% of students incur student loan debt, with the average per person debt being over $24,000. Student loan debt has passed credit card debt to be the second largest debt category for Americans, after mortgages, with more than $1 trillion dollars in debt outstanding. These numbers are huge numbers, and the burden of paying off debt hurts other areas of the economy, such as the housing market and consumer spending. Graduates who are able to enter the workforce without a debt burden have huge financial and personal advantages, so it's important to remember this when considering your future or your child's future!

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Plan proposed to help lower student loan interest rates | WQAD.com

Posted: 09 May 2014 01:44 PM PDT

Posted on: 3:44 pm, May 9, 2014, by Angie Sharp, updated on: 05:45pm, May 9, 2014

More people have it than credit card debt.

Approximately 40 million Americans are paying student loans, according to U.S. Senator Richard Durbin, (D) Illinois, who was in the Quad Cities on Friday, May 9th, 2014.

During his visit, he spoke at Augustana College in Rock Island about a new piece of legislation that would help students dealing with education debt. The Bank on Students Emergency Refinancing Act includes three bills. The biggest allows students with higher interest rates to refinance to a lower rate.

"For some students and their families, this is the only way to escape what is an impossible burden when it comes to student loans and student debt," he told an audience of students and school leaders.

"We want to make sure that students from lower-income, middle-income, and working families have a fair shot at a higher education that they can afford," Sen. Durbin continued. "We want the college experience to be an enrichment for their lives and not shackle them to a debt that is going to drag them down for decades to come."

The other bill would create a "Student Loan Borrower Bill of Rights." Sen. Durbin says it would require colleges and universities to give students all the information they need to make an informed decision about their loans.

"A student should know the difference in the interest rate between a government loan and a private loan," he says. "The student should know the chances for consolidating loans later in life to bring them down to lower interest rates. The student should know if there's any forgiveness, because under some government loans there's forgiveness if you go into certain professions."

The final bill would make certain colleges and universities responsible if they are "sinking their students too far into debt," according to Sen. Durbin.

The legislation would help students like Cameron Onumah, who is graduating from Augustana College in two weeks.

"I had to take out a private loan this August so I could afford to continue my Augustana education and come November, it'll cost more for me to pay my student loans than it will for me to pay rent," he explained. "I'm willing to pay for my Augustana education, but I want it to be fair. I want a fair shot in this world. I want to be able to live comfortably. I want to be able to enjoy my youth. I want to be able to save to buy a home."

"I want that American dream."

The legislation would also help alum like Joshua Schipp, who says he graduated in 2010 with $80,000 in student loans.

"I've already chipped away $30,000 since graduating, but $10,000 of that alone was just in interest payments," he said. "It seems like I'll never be able to catch up.

"I should be spending my money more wisely by putting it towards a down payment on a home, saving for my retirement, planning for a family, or making larger purchases in my community. For me, this legislation would allow me to save nearly $15,000 over a lifetime of my repayment."

Schipp's interest rates are as high as 9.25%. If the bill passes, they would drop to 3.86%.

Augustana President Steven Bahls was also at today's press conference. He says loans are important, but they need to be more affordable.

"[If it weren't] for federal loans and the Pell Grant Program, 80% of students here today would not be here," President Bahls said. "For us to be accessible and provide you with the highest quality outcomes, we need to do it in a a way that you can afford affordable loans."

The cost of the legislation is controversial, though. Sen. Durbin says they want to use the "Warren Buffet Rule" to pay for it. The "rule" requires anyone who makes more than $1 million a year to pay a 30% income tax rate. Sen. Durbin says he expects Republicans to fight that idea, since it includes some to pay more in taxes.

Saturday, 10 May 2014

Student loan | 4 Things to Do Before Making Your First Student Loan Payment | ED ...

Student loan | 4 Things to Do Before Making Your First Student Loan Payment | ED ...

4 Things to Do Before Making Your First Student Loan Payment | ED ...

Posted: 28 Apr 2014 05:00 AM PDT

One perk of having a federal student loan instead of a private student loan is that you are not required to start making payments right away. In fact, many federal student loans have a grace period*, or a set amount of time after you graduate, leave school, or drop below half-time enrollment before you must begin repaying your student loans. For most student loans, the grace period is 6 months but in some instances, the grace period could be longer. The grace period gives you time to get financially settled and to select your repayment plan.

For those of you who are getting ready to graduate, your grace period is about to begin. You'll be contacted by your loan servicer, a company that works on behalf of the U.S. Department of Education to process and manage student loan payments, letting you know how the repayment process will work.

In the meantime, here are four things you should do now, before your first student loan payment is due:

1. Get Organized

Start by tracking down all of your student loans. Did you know that there is a website that allows you to view all your federal student loans in one place?

You can log into www.nslds.ed.gov using your Federal Student Aid PIN to view your loan balances, information about your loan servicer(s), and more.

Note: Don't forget to check your personal records to see if you have private student loans.

2. Contact Your Loan Servicer

Your loan servicer is the company that will be collecting payments on your federal student loan on behalf of the U.S. Department of Education. They are also there to provide support. Your loan servicer can help you choose a repayment plan, understand loan consolidation, and complete other tasks related to your federal student loan, so it's important to maintain contact with your loan servicer. If your circumstances change at any time during your repayment period, your loan servicer will be able to help.

To find out who your loan servicer is, visit www.nslds.ed.gov. You may have more than one loan servicer, so it is important that you look at each loan individually.

3. Estimate Your Monthly Payments Under Different Repayment Plans

Federal Student Aid has a great Repayment Estimator tool that allows you to compare our different repayment plan options side by side. Once you log in, the repayment estimator pulls in information about your federal student loans, such as your loan balance and your interest rates, and allows you to estimate what your monthly payment would be under each of our different repayment plans. It also allows you to compare the total amount you will pay for your loan over time depending on the repayment option you choose. Try it!

4. Select the Repayment Plan That Works for You

One of the greatest benefits of federal student loans is the flexible repayment options. Take advantage of them! Although you may select or be assigned a repayment plan when you first begin repaying your student loan, you can change repayment plans at any time. There are options to tie your monthly payments to your income and even ways you can have your loans forgiven if you are a teacher or employed in certain public service jobs. Once you have determined which repayment plan is right for you, you must contact your loan servicer to officially change your repayment plan.

* Not all federal student loans have a grace period. Note that for many loans, interest will accrue during your grace period.

Nicole Callahan is a digital engagement analyst at the Department of Education's office of Federal Student Aid.

Friday, 9 May 2014

Student loan | Dems Plan to Use Elizabeth Warren's Student Loan Bill Against the ...

Student loan | Dems Plan to Use Elizabeth Warren's Student Loan Bill Against the ...

Dems Plan to Use Elizabeth Warren's Student Loan Bill Against the ...
UNCF President Tackles Student Loan Debt Crisis | WOLB Talk 1010
Student Loans Rising | Brookings Institution
Student Loan Prices | WREG.com

Dems Plan to Use Elizabeth Warren's Student Loan Bill Against the ...

Posted: 09 May 2014 03:00 AM PDT

Cliff Owen/AP Photo

Democrats plan to use a student loan bill introduced Tuesday by Sen. Elizabeth Warren (D-Mass.) as a wedge issue in the 2014 mid-term elections, forcing Republican candidates to either support it or explain why they don't. Dem strategists think Warren's legislation—which would lower interest rates on most federal student loans below 4 percent, reducing millions of Americans' bills by hundreds or thousands of dollars a year—could help turn out young people, who tend to vote for Democrats. Fifty-seven percent of Americans aged 18-24 say student loan debt is a "major" issue for them, according to a recent Harvard poll.

Senate Democrats plan to hold a vote on Warren's bill, or a version of it, it early June, and to hold Republicans who vote against it accountable. The bill, which would be funded by eliminating tax breaks on millionaires, is one plank in what Democrats have dubbed their "Fair Shot Agenda," an election-year slate of proposals aimed at highlighting Republican opposition to politically popular legislation. (The Fair Shot campaign also includes raising the minimum wage and equal pay legislation, measures Senate Republicans have blocked.)

Some Dems are already on the attack. Sens. Al Franken (D-Minn.) and Brian Schatz (D-Hawaii), as well as Shenna Bellows, who is running against Sen. Susan Collins in Maine, and Rick Weiland, who is hoping to replace outgoing Democratic Sen. Tim Johnson in South Dakota, are holding events this week aimed at pressuring their Republican opponents to support Warren's legislation—or embarrass themselves by publicly opposing it.

Warren's student loan bill "is a perfect messaging item for the Democrats," says Ross Baker, a professor of political science at Rutgers University. He expects Democrats to continue to use the student debt issue to hammer Republicans, who generally oppose debt relief, over the next six months. "Republicans, in general, will oppose [Warren's bill]," Baker adds, which he says could raise the ire of young voters—a large portion of whom are currently expected to sit out this election—and push them to the polls.

Adam Green, the co-founder of the Progressive Change Campaign Committee, a liberal PAC that supports progressive candidates and calls itself the "Elizabeth Warren wing of the Democratic Party," says that Warren's bill is already having an effect. His group has launched a national petition in support of Warren's bill, which the group is sending to all Republican Senate candidates this week. The progressive PAC is also organizing events aimed at pressing four more Senate GOP candidates on the student loan issue.

The PCCC is not the only outside group hoping use student loan debt to take down GOPers. In April, Student Loan Debt Crisis, a group that advocates for student loan interest rate reform, nominated Rep. John Kline (R-Minn.) for television host Bill Maher's "Flip-A-District" contest, a campaign Maher launched to find the worst member of Congress and boot him from office. The group chose Kline because he is one of the few members of Congress who has proposed raising student loan interest rates. A few weeks after the group entered Kline in the running, he shot from 75th to first on Maher's list of terrible lawmakers.

Last year, GOP senators filibustered student interest rate relief before acquiescing to a compromise bill at the 11th hour. That legislation prevented interest rates on new federal loans from doubling to 6.8 percent. But the law didn't do anything to help the 40 million Americans swimming in existing student loan debt, some of whom are paying back loans with rates of up to 10 percent. Warren's bill—co-sponsored by 23 other Senate Democrats—would reduce most of these Americans' federal student loan interest rates to the current rate on new undergraduate loans: 3.86 percent.

Even if her bill is approved by Congress this year, Warren says she will keep pushing for further debt relief for students. She says she'll only stop when the government no longer profits off student debt. The feds will rake in $66 billion in revenue on the federal student loans the government doled out between 2007 and 2012. As Warren said on the Senate floor Tuesday, "Those are the kind of interest rates that would make a Fortune 500 CEO proud."

Watch Warren's full floor speech on the bill here:

UNCF President Tackles Student Loan Debt Crisis | WOLB Talk 1010

Posted: 09 May 2014 01:08 PM PDT

Michael L. Lomax, President and CEO of the United Negro College Fund, stopped by "NewsOne Now" Friday. He touched on a number of topics associated with the cost of higher education and weighed in on what some call a student loan debt crisis. Dr. Lomax also offered ideas on fixing the student loan system, one he says is "broken."

Be sure to listen to "NewsOne Now" with Roland Martin, weekdays at 7 a.m. EST and watch at 9 a.m. EST on TV One.

Student Loans Rising | Brookings Institution

Posted: 08 May 2014 08:49 AM PDT

Paper | May 2014

By: William G. Gale, Benjamin H. Harris, Bryant Renaud and Katherine Rodihan

As of 2013, outstanding student loan balances in the US exceeded $1.2 trillion, more than any other type of household debt with the exception of mortgages. Following several years of rapid growth in outstanding loan volumes, student debt burdens have attracted increased attention in recent years. This policy brief reviews trends, issues, and policy options related to student loans.

Federal student loans offer several important benefits. They help students attend institutions of higher education and help families cover or defer the costs of attendance. However, like other loans, student loans need to be repaid, which can strain borrowers' income and affect other economic choices. From the outset, we note that isolating the impacts of student loan debt is a difficult exercise. Student loan debt represents debt undertaken to finance an investment in human capital. Simply comparing the financial and economic circumstances of households with and without student debt can be misleading if it does not also account for the additional earnings capacity produced by the education that was financed by that debt. Put differently, the key question is how the combination of the debt-financed education and student loan debt affect outcomes. To date, few studies have been able to measure both aspects of student loan debt, and thus have instead focused on either the effects of education or the impacts of student loan debt. In this survey, we focus on student loan debt, but the fact that the debt is financing additional education should provide important context for interpreting the results.

Student Loan Prices | WREG.com

Posted: 07 May 2014 02:29 PM PDT

Posted on: 4:29 pm, May 7, 2014, by Ashley James, updated on: 08:30pm, May 7, 2014

College freshmen taking out government student loans will pay a bigger price this fall.

Interest rates could be nearly a percentage point higher than in previous years.

Under this rate, seniors with one year of school left could pay an additional $260 in interest over a 10-year period.

But analysts say freshmen with at least four years of college ahead of them could pay more than $1,000 in interest over the life of their loans.

Student Loan

Saturday, 17 May 2014

Student loan | Student Loan Debt Dragging On Young Households - NBC News

Student loan | <b>Student Loan</b> Debt Dragging On Young Households - NBC News

Allison Linn

Student loan | Sallie Mae to Pay $96.6 Million Over Military Student Loans - NBC ...

Student loan | Sallie Mae to Pay $96.6 Million Over Military <b>Student Loans</b> - NBC <b>...</b>

Kelley Holland

Wednesday, 14 May 2014

Student loan | After rate jump, Senate Democrats push new student-loan plan ...

Student loan | After rate jump, Senate Democrats push new <b>student</b>-<b>loan</b> plan <b>...</b>

Student loan | Sallie Mae, Navient To Pay $97M To Settle Servicemember Student ...

Student loan | Sallie Mae, Navient To Pay $97M To Settle Servicemember <b>Student</b> <b>...</b>

Saturday, 10 May 2014

Student loan | 4 Things to Do Before Making Your First Student Loan Payment | ED ...

Student loan | 4 Things to Do Before Making Your First <b>Student Loan</b> Payment | ED <b>...</b>

Friday, 9 May 2014

Student loan | Dems Plan to Use Elizabeth Warren's Student Loan Bill Against the ...

Student loan | Dems Plan to Use Elizabeth Warren's <b>Student Loan</b> Bill Against the <b>...</b>