Monday, 15 September 2014

Posted: 08 Sep 2014 09:01 PM PDT

Many college graduates are delaying some of life's most important decisions – including starting a family and buying a home – because they face a pile of debt with no job prospects. A record number of young adults live with their parents and roughly half of college graduates under the age of 26 rely on mom and dad for financial help.

President Obama wants people to believe that shaving a few dollars off monthly student loan payments will solve the problems plaguing graduates. That's the essence of a proposal being touted on the campaign trail that would raise taxes and allow some graduates to refinance federal student loans.

Let's be honest: This scheme is more about helping politicians survive an election than helping graduates survive the Obama economy. Sadly this is not the first time young Americans have been used as pawns in political messaging.

In the summer of 2013, interest rates on most federal student loans were set to double. The president included a long-term, market-based solution in his budget proposal and urged Congress to pass it to prevent an interest rate spike.

[How to Pay for College Without Building a Mountain of Debt]

The Republican-led House passed a bill mirroring the president's request. Yet the Obama administration rejected it and the Senate refused to back it, demanding instead a short-term fix.

Why the flip-flop? According to one press report, Democrats hoped to kick the can down the road to "rally younger voters to the polls" in the 2014 elections.

Fortunately, a long-term solution became law. We averted an interest rate spike and provided students and families more certainty. We did the right thing by taking the threat of an interest rate hike off the table, leading to some politicians' current search for another election-year gambit to rally voters.

This political gambit fails to address the core of the problem: graduates entering a job market that lacks good-paying jobs. No monthly payment is affordable if you are underemployed or out of work.

[Eric Cantor: 'Let's Restore Hourly Wages Cut By Obamacare']

The best way to help young Americans with debt burdens is to get our economy moving again – precisely what House Republicans are trying to do. The House has advanced more than 40 jobs bills, many with bipartisan support, that would open new doors of opportunity for struggling graduates. Yet all of these bills are collecting dust in the Senate. Sen. Harry Reid (D-Nev.) may not agree with every detail of every bill, but that is no excuse for his total inaction.

Recently, Congress did come together to pass a bipartisan fix for our broken workforce development system. We got the job done because the House acted, the Senate came to the table, and the administration got out of the way. Now we have a reformed law that will help put people back to work.

Our nation desperately needs more bipartisan successes like this. Job creation will remain the House's number one priority until every graduate and struggling worker who needs a job can find one. Meanwhile, we are also taking steps to strengthen higher education for current and future graduates.

If we enact a series of commonsense reforms, the federal government can help more Americans turn the dream of a college degree into reality. For starters, Washington should encourage more innovation, such as competency-based education, so students can earn a degree at a faster pace and lower cost.

[How Long Will You Be Paying Your Student Loans?]

Federal policymakers should empower students and families to make smart decisions by enhancing financial counseling and delivering better information to students looking for the right college or university.

We should improve federal student aid. Many students take out loans when other financial assistance is available. It is time to streamline the confusing maze of aid and grant programs, and make it easier for students and families to apply for help.

Congress should also strengthen the options available for students to repay their loans. The current system encourages students to borrow more than they need and can afford. We should pursue policies that ensure low-income individuals get the help they need, while also protecting taxpayer dollars.

The House has already passed legislation addressing some of these issues, often with overwhelming bipartisan support. These efforts would make a real difference in the lives of students and they deserve consideration in the Senate.

Life after graduation should be filled with hope and excitement. For far too many, it's become a time of hopelessness and anxiety. Countless college graduates are struggling because of the president's failed economic and education policies. Let's stop treating young adults as political pawns and start working together to ensure they can build the future they deserve.

Read Sen. Elizabeth Warren's op/ed on the student loan bill hitting the Senate floor this week.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its affiliates.

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Congresswoman Virginia Foxx is currently in her fifth term as the Representative of North Carolina's 5th Congressional District and is the elected Republican Conference Secretary. Dr. Foxx is the chair of the House Education & the Workforce Subcommittee on Higher Education and serves as Vice Chair of the House Rules Committee.

Student loan debt is exploding. It has grown so much and so fast that ...

Posted: 14 Sep 2014 09:24 AM PDT

Student loan debt is exploding. It has grown so much and so fast that it not only crushes millions of young people, but it also has started to weigh down our entire economy. Total nationwide student debt now stands at $1.2 trillion, more than the total credit card debt owed by everyone in America.

In the coming days, the Senate is expected to vote on the Bank on Students Emergency Loan Refinancing Act, which would help ease this debt burden for millions of borrowers by cutting the interest rates on existing student loans. Earlier this summer, a large majority – 58 senators, including every Democrat, every Independent and three Republicans – were ready to take up the bill, but Republicans filibustered it, refusing to even debate the legislation. We may have lost that vote, but we're not ready to give up. More than 750,000 people have signed petitions in support of student loan refinancing, and momentum continues to grow.

Every Democrat, every Independent, and even three Republicans were willing to advance the Bank on Students Act because they recognized that we are facing a crisis. Federal agencies like the Federal Reserve, the Treasury Department and the Consumer Financial Protection Bureau are already sounding the alarm. Student debt is keeping borrowers from buying homes, moving out on their own, buying cars and opening small businesses. It's keeping them from making the purchases that will help our economy grow.

With interest rates near historic lows, homeowners, businesses and even local governments have refinanced their debts. But a graduate who took out an unsubsidized loan before July 1 of last year is locked into an interest rate of nearly 7%. Older loans run 8-9% and even higher. These higher interest rates are producing billions of dollars in profits for the government. According to the Government Accountability Office, just one slice of the loans – those from 2007 to 2012 – will produce $66 billion in profits.

Our bill lowers the rate to 3.86% for undergraduate loans and a little higher for graduate and parent loans. These new rates are exactly the rates nearly every Republican in the House and the Senate voted for just last year as the fair rate for new student loans issued in the 2013-2014 school year. If these lower rates are good enough for new borrowers, they should be good enough for the older borrowers, too.

Instead of running up the deficit, we propose to offset the lost profits from the higher student loans rates. By stitching up a loophole in our tax code that allows some millionaires to pay a lower tax rate than middle-class families, we can reduce loan rates for our kids and make sure that the wealthiest among us pay their fair share. In fact, closing these loopholes will fully cover the cost of refinancing student loans and will reduce the federal deficit by about $14 billion, according to the Congressional Budget Office.

This legislation doesn't solve every problem that we have in higher education. We need to bring down the cost of college, and we need more accountability for how schools spend federal dollars. But the need for more reforms shouldn't stop us from doing what we can to help the 40 million Americans with existing student loan debt right now.

What is a 1098-E: Student Loan Interest - TurboTax® Tax Tips ... - Intuit

Posted: 08 Apr 2014 12:00 AM PDT

Updated for Tax Year: 2013

If you're currently paying off a student loan, you may get Form 1098-E in the mail from each of your lenders. Your lenders have to report how much interest you pay annually. Student loan interest can be deductible on federal tax returns, but receiving a 1098-E doesn't always mean you're eligible to take the deduction.

What Form 1098-E tells you

Your lenders are required to send you Form 1098-E only if you paid at least $600 in interest during the year. If you have several student loans with the same lender, the financial institution applies the $600 threshold amount to the total interest paid on all of your loans; you may get a separate Form 1098-E for each loan, though. The amount you see in box 1 reflects your total interest payments for the year.

When to deduct student loan interest

The student loan interest deduction is taken as an adjustment when calculating your adjusted gross income, or AGI. This means you don't have to itemize your deductions to take it.

To qualify, the interest payments you make during the year must be on a student loan that you took out to put yourself, your dependents or spouse through school. If you're married filing separately, or if your modified adjusted gross income, or MAGI, is $75,000 or more, you can't deduct any student loan interest. Your MAGI is essentially your total income minus the other adjustments you take, except for the tuition, student loan and domestic production activities deductions.

When you use TurboTax to prepare and file your taxes, you don't need to do any of these calculations on your own. We'll ask you questions in plain English, handle all the calculations, and put all of your answers on the appropriate tax forms.

How much interest is deductible

If you're eligible to deduct student loan interest, TurboTax will put your information into Form 1040 to write it off. Have your 1098-E forms available when preparing your return to determine your total student loan interest paid. You can also add student loan interest payments you made that aren't reported on Form 1098-E to this total as long as the interest is paid on a qualified loan. Regardless of how much interest you paid, the maximum you can deduct is $2,500.

When Box 2 is checked

If Box 2 of Form 1098-E is checked, it means that the amount reported in Box 1 doesn't include the loan's origination fees and/or any capitalized interest. Only loans you took out before Sept. 1, 2004, however, should have box 2 checked.

An origination fee is typically a percentage of your loan that's withheld from the disbursed funds. You can include a portion of this fee as deductible interest. Dividing the origination fee by the number of years you have to pay off the loan gives you the amount you can treat as student loan interest each year. And if the lender capitalized (increased the principal loan balance) for unpaid accrued interest, you calculate the portion that's deductible each year in the same way as the origination fee.

Again, when you use TurboTax to prepare your taxes, we'll handle all of these calculations for you.

Friday, 12 September 2014

Student loan | Report: Student Loan Debt Isn't Just An Issue For Young Americans ...

Student loan | Report: Student Loan Debt Isn't Just An Issue For Young Americans ...

Report: Student Loan Debt Isn't Just An Issue For Young Americans ...
8 Ways to Pay Off Your Student Loans Faster - Morningstar
Should I Pay Off My Credit Card Debt With Excess Student Loans?
Retired and in hock for a student loan « Bankrate, Inc.

Report: Student Loan Debt Isn't Just An Issue For Young Americans ...

Posted: 11 Sep 2014 08:20 AM PDT

Report: Student Loan Debt Isn't Just An Issue For Young Americans – Consumerist

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8 Ways to Pay Off Your Student Loans Faster - Morningstar

Posted: 09 Sep 2014 05:00 AM PDT

Question: I'm a recent college graduate who would like to start saving for retirement, but right now my college-loan payments take up a big chunk of my paycheck. Any ideas about how I can pay them off faster?

Answer: Trying to pay off loans from the past in order to begin saving for the future is an all-too-common predicament among young adults these days. About seven in 10 graduating seniors leave school with loan debt, with the average amount owed around $30,000. Meanwhile, nearly 70% of people age 18-29 say they have yet to start saving for retirement. Clearly, many young adults have put retirement savings on the backburner while focusing on making their monthly student-loan payments.To help you and others in your situation clear this financial hurdle, we offer the following tips for paying down your student loans faster. They may not all apply to you, but chances are you'll find something here that can help you get out of debt sooner than you would by continuing to make minimum payments each month on your student loans.Make Extra Payments, Even If Just a Little: Both federal and private student loans can be prepaid without penalty, which means you are allowed to pay more than the required minimum each month and have the extra amount applied to the loan's principal. (To do this, include a letter with your payment telling the lender what the extra money is for so it doesn't get applied to next month's payment by mistake.) Any extra amount that you can put toward prepayment gets you that much closer to saying goodbye to your loans. For example, let's say the monthly minimum payment on your loans is $345 (which is the amount someone who borrows $30,000 at 6.8% interest would owe each month if he or she is repaying over 10 years). Rounding up and paying $400 per month, with the extra $55 applied to the principal, shaves nearly two years off the length of the loan. Target your highest-interest loans for prepayment first and then work your way down as loans are paid off. That way, you'll save more in interest payments overall than you would by prepaying smaller amounts on all your loans simultaneously. Look Into Loan Forgiveness Programs: Borrowers who go into certain career fields may be eligible to have part of their loans forgiven, or wiped away. The federal Public Service Loan Forgiveness Program is open to those who pursue careers in the military, public safety, public health, education, and other fields and kicks in once they've made 10 years' worth of on-time payments. Other programs, such as the Teacher Loan Forgiveness Program, which forgives up to $5,000 in loans for those who teach for at least five consecutive years in low-income schools, also are available. And some colleges offer their own loan forgiveness programs for graduates who go into public service. The Short Answer took a closer look at student loan forgiveness here. Don't Wait to Start Paying: Borrowers typically have six months after graduation or after leaving school before their first student loan payments are due. The problem is that interest on unsubsidized federal loans continues to accrue over that time and eventually is added to the loan principal, thus increasing the overall borrowing costs. If you can at least pay interest on the loans during that grace period, you'll be saving yourself additional money down the road. Consider using cash gifts you received for graduation for this purpose. Put Your Tax Break to Good Use: Interest on student loans is deductible on your federal income tax return up to $2,500. That means that if you pay $1,000 in interest charges on your loan in a given year and you are in the 25% tax bracket, you will save $250 in taxes. If you receive a tax refund, avoid the temptation to blow it on a weekend getaway and use the money to make extra payments to pay off your loan faster. Leverage a Cash Gift or Bonus: Still getting a yearly birthday check from Aunt Gertie? Using those funds and any other cash gifts or work bonuses you receive to help prepay your loans boosts the value of the windfall by saving you interest costs down the road. And trust me: It'll make your aunt proud. Make a Personal Budget: Few things will help you pay off your loan faster--as well as help you manage your financial life--more than setting a personal budget. You may be accustomed to glancing at your checking account balance each month and doing little else; but by taking a closer look at your spending habits, you can better assess your financial priorities and identify places to cut spending. The good news is it's easier than ever. Many credit card companies provide cardholders with a breakdown of their spending by category, and services such as Mint.com (which is free and online) and Quicken (which charges a fee for its downloadable software) can help you easily track your monthly spending. Once you have a handle on your budget, you can prioritize making extra student-loan payments. That may mean some financial belt-tightening--cooking at home more, canceling an underused gym membership, and looking for a cheaper cell phone plan, for instance--but you'll have a better handle on where your money goes each month. Take a Roommate--Even If It's Your Parents: Many college grads would rather not move back home with Mom and Dad for the long term, yet it has become commonplace. The New York Times recently reported that one in five people in their 20s and early 30s lives with his or her parents. While it may cramp your style, living with your parents is a great way to pay down your loans more quickly, even if you are chipping in to help pay for groceries and other household expenses. Alternatively, living with roommates in a place of your own (well, sort of your own) can also be a big money-saver as compared with living alone. Sharing your living space may feel a bit like college to you--for better or worse--but if it helps you get out of debt sooner and into a place of your own, it's probably worth the hassle. Work a Side Job: Finding a good-paying, full-time job is a real challenge for today's recent college grads. Nearly half are working jobs that don't require a college degree. But even if you aren't exactly in your dream job just yet, the fact remains that the more you work the more you make, and the more you make the faster you can pay off your student loans. If you are working a nonsalaried job that offers overtime, make the most of the opportunity. Also, consider making extra money on the side through part-time gigs such as providing child care, working for a retailer that needs extra help around the holidays, or doing odd jobs. It may not be what you pictured when you were pulling all-night study sessions as an undergrad. But working extra and earmarking the money to pay off your loans early will provide you with greater financial flexibility down the road. Have a personal finance question you'd like answered? Send it to TheShortAnswer@morningstar.com.

Should I Pay Off My Credit Card Debt With Excess Student Loans?

Posted: 12 Sep 2014 10:06 AM PDT

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If you're a college student on a tight income, you know that every penny counts, and freeing up cash is paramount. As such, you may be tempted to end your stint on the credit card minimum payment hamster wheel by paying off your consumer debt with excess student loans. But before you do, read on for the potential issues with this plan.

It may be in violation of your student loan agreement

Student loans are meant to pay for your tuition and fees, as well as the other expenses of attending college. This may include necessary living expenses — like transportation, room and board, and miscellaneous personal expenses. And while personal expenses can be defined differently for different people, the vacations or bar tabs you ran up on your credit card probably wouldn't count by most people's definitions. Therefore, you aren't supposed to use this money to pay off your credit card.

Understand that these rules aren't well enforced, so you can likely pay off your credit card with student loans without consequences. However, it's important to know that this may be a violation of your student loan agreement and you could be pursued by your loan facilitator for incorrect loan usage.

Student loans aren't eligible for bankruptcy

Unlike credit card debt, student loan debt isn't eligible for bankruptcy (in almost all cases). That means if you stay unemployed or underemployed for an extended amount of time after graduation, your options for reducing your debt will be limited. Of course, you can defer these loans until you're making adequate income, but this won't stop the onslaught of student loan interest from accumulating on a balance that just keeps growing every month.

Moving debt isn't the same thing as paying off debt

Mathematically, it makes sense to move debt from high-interest financing to low-interest financing. And the Nerds love math! However, it doesn't make sense mathematically to put off paying off debt and let the interest accumulate for years to come without the option of bankruptcy for those in a really tight spot. But there's also the chance you'll pay your loans off right away and that low interest will save you cash! Let's examine two scenarios.

Scenario #1: Your student loan balance is low and you get a job directly after college and pay off your loans within a year. In this scenario, you'll come out ahead by paying off credit card debt with student loans.

Scenario #2: You paid off your credit card debt with student loans and then ran up more consumer debt. After all, you can just use excess student loans to pay it off and deal with the loans later. Then you don't get a job in your field after graduation and you end up underemployed making minimum wage. In this scenario, you're likely unable to make the minimum payments on your loans, which are much higher because you used the excess loans to pay off your credit card debt.

So you see there's a level of risk here. If you're comfortable with it, just keep in mind that you can't declare bankruptcy on student loan debt, and check your agreement to make sure your payments are legal. If you're risk averse, don't pay off your credit card debt with student loans.

Tough love coming your way: You have to pay off your consumer debt eventually — putting it off doesn't change that fact. If you want or need some interest relief, it's a better idea to get a balance transfer credit card and pay it off before the 0% introductory period ends. If you're struggling to pay off your debt — no matter the interest rate — you need to increase your income and/or decrease your expenses.

Bottom line: Though it typically comes with a lower interest rate, using a student loan to pay off your credit card debt may not be the best idea. It could be a violation of your loan agreement, student loans aren't bankruptable, and moving debt from one place to another isn't the same thing as making real progress. If you're having trouble paying off your credit card debt, consider a balance transfer card while also increasing the gap between your income and expenses by making more and/or spending less.

Coins with graduation cap image via Shutterstock

Retired and in hock for a student loan « Bankrate, Inc.

Posted: 11 Sep 2014 09:23 AM PDT

Student loan debt is burdening an increasing number of people age 65 and older, according to a report released Wednesday by the Government Accountability Office, or GAO.

While the percentage of people in this age group with student loan debt remains relatively small, growing from 1 percent in 2004 to 4 percent in 2010, the amount of the debt has skyrocketed -- from about $2.8 billion in 2005 to about $18.2 billion in 2013. The median student loan debt for those 65 and older is $11,800. That's not a huge amount, but it is enough to weigh you down if you are living in retirement.

About 20 percent of those with debt are paying off loans incurred by their children or grandchildren through government-backed Parent PLUS loans, but the majority -- about 82 percent -- are paying off their own loans. The GAO pointed out that payoffs of student loans can now be extended for as long as 25 years, so some of this debt could have been racked up when borrowers were much younger. Fortunately, only 1 percent of those aged 75 or older had student loan debt, the GAO says.

Older borrowers are less able to pay off their debt, with 27 percent of borrowers ages 65 to 74 defaulting, and more than 50 percent of loans held by people 75 or older in default. Borrowers were more likely to be current on loans they took out to help their children. In 2013, the GAO says, 17 percent of Parent PLUS loans held by borrowers ages 65 to 74 were in default, while 30 percent of the loans that this age group took out to fund their own educations had gone bad.

What happens when you are old and fail to pay your student loan? Nothing good. The government will let you get 14 months behind before it takes action, the GAO says. After that, it is likely to charge collection costs of up to 25 percent of the interest and principal.

Between 17 and 29 months after you stop paying, the government will certify the loan as "eligible for offset" -- garnishment of wages, Social Security, etc. Tax refunds are taken right away. Delinquent borrowers with with monthly benefits for offset (i.e., Social Security) get another 60 days to begin repayment.

In 2013, about 33,000 people 65 and older lost -- on average -- $130 a month of their Social Security payment to Uncle Sam because they were behind on their student loans.

The government can't take all your Social Security. It is limited to the lesser of 15 percent of your total benefit or the amount by which your benefit exceeds $750 per month. For instance, if you get a $1,000 per month, the government could take no more than $150, leaving you with an $850 benefit. But as the GAO points out, this is enough to put your income below the federal poverty level.

No matter what your age, if you owe money on a student loan, don't ignore the debt and hope it will go away. Here's what you can do to manage your student loan debt if you get behind.

Wednesday, 10 September 2014

Student loan | Not Even Seniors Can Escape Student Loan Crisis | The Daily Caller

Student loan | Not Even Seniors Can Escape Student Loan Crisis | The Daily Caller

Not Even Seniors Can Escape Student Loan Crisis | The Daily Caller
8 Ways to Pay Off Your Student Loans Faster - Morningstar
Student Loan Debt Can Lead to Poorer Health, Middle-Age Malaise ...
Student Loan Update: A First Look at the 2013 Survey of Consumer ...

Not Even Seniors Can Escape Student Loan Crisis | The Daily Caller

Posted: 10 Sep 2014 01:11 PM PDT

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Even American seniors are starting to feel the tightening grip of student loans, a new report from the Government Accountability Office (GAO) says.

The amount of student debt held by those over 65 remains comparatively small — about $18 billion dispersed across 700,000 households, which is just 3 percent of seniors (in comparison, 24 percent of non-seniors have student loans). However, the volume of this debt is growing rapidly. Just eight years ago, seniors had only $2.8 billion in student debt, meaning their debt burden has sextupled in under a decade.

The rapid increase in debt reflects both the soaring cost of college tuition and also the recent recession. Many adults found themselves laid off in the twilight of their careers and turned to education as a possible remedy. For some, that debt is turning into yet another burden that is delaying or outright preventing retirement.

Senior student debt is disconcerting for several reasons. While young adults have their whole lives to pay off their debt and ideally will have acquired higher earning power with their degree, seniors are at the tail end of their working lives and often hoping to retire. In addition, seniors are more likely than young people to carry other kinds of debt such as mortgages.

Unsurprisingly then, the GAO found that seniors are significantly more likely to be in default on their student loans, which is undermining the retirement of thousands of people. Over 150,000 seniors are having Social Security benefits garnished to pay student loan debt, with the amount protected from garnishment insufficient to keep seniors above the poverty line. Student loan debt typically cannot be discharged in bankruptcy, meaning there is no easy way out besides repayment, or death.

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Tags: Government Accountability Office

8 Ways to Pay Off Your Student Loans Faster - Morningstar

Posted: 09 Sep 2014 05:00 AM PDT

Student Loan Debt Can Lead to Poorer Health, Middle-Age Malaise ...

Posted: 07 Aug 2014 06:59 AM PDT

People saddled with big college loans are more likely to suffer from poor health and have a less upbeat attitude to life in middle age, a poll of graduates shows. Gallup Education and Purdue University asked some 30,000 Americans who earned four-year degrees in the last 24 years to gauge their well-being by evaluating their physical health, ties to community, financial stability and sense of purpose in life. Debt-laden graduates scored lower in all four than their debt-free counterparts, sometimes by a wide margin. Only 25 percent who started with more than $50,000 in debt are thriving financially, 15 percentage points lower than debt-free grads. Even among those graduating prior to 2000, there was a 13-percentage-point gap. Older grads also scored lower on measures of physical health and a sense of purpose in life, although they pulled nearly even in community ties.

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- Martha C. White

First published August 7 2014, 7:03 AM

Student Loan Update: A First Look at the 2013 Survey of Consumer ...

Posted: 07 Sep 2014 09:00 PM PDT

Paper | September 8, 2014

By: Beth Akers and Matthew M. Chingos

Earlier this year, Beth Akers and Matthew Chingos released a report aimed at injecting some much-needed evidence into what has become an often-hysterical public debate about student loan debt. Their report, "Is a Student Loan Crisis on the Horizon?" used data from the Survey of Consumer Finances (SCF) administered by the Federal Reserve Board to track how the education debt levels and incomes of young households evolved between 1989 and 2010. The data showed large increases in average debt levels over time, but also revealed some surprising findings.

First, the authors found that roughly one-quarter of the increase in student debt between 1989 and 2010 can be directly attributed to increases in educational attainment, especially at the graduate level. Second, the increases in the average lifetime incomes of college-educated workers appear to have more than kept pace with increases in debt loads between 1992 and 2010. Specifically, the increase in earnings received over the course of 2.4 years would pay for the increase in debt incurred. Third, the monthly payment burden faced by student loan borrowers stayed about the same or even lessened between 1992 and 2010.

One limitation of the June 2014 report is that its authors could only examine data through 2010, the last year of SCF data that was available at the time. Consequently, the analysis could have missed recent trends in borrower well-being. Last week, the Federal Reserve Board released the 2013 SCF data, which enabled Akers and Chingos to extend their analysis to capture a snapshot of education debt through just last year.

In this research brief, the researchers update key indicators from their earlier report with data from the 2013 SCF. In general, the 2013 data paint a broadly similar picture to the 2010 data, and do not reveal any sharp departures from prior trends. Debt levels continued to increase, but at a slower pace than in previous years. Average incomes of borrowers fell slightly, but the decrease was small enough that monthly loan payments as a share of monthly incomes remained the same.

The 2013 data confirm that Americans who borrowed to finance their educations are no worse off today than they were a generation ago. Given the rising returns to postsecondary education, they are probably better off, on average. But just because higher education is still a good investment for most students does not mean that high and rising college costs should be left unquestioned.

Tuesday, 9 September 2014

Student loan | Report: 40 Million Consumers Have At Least One Student Loan ...

Student loan | Report: 40 Million Consumers Have At Least One Student Loan ...

Report: 40 Million Consumers Have At Least One Student Loan ...
Will a Huge Amount of Student Loan Debt Hurt My Credit Score?
LendIt 2014 Student Loans Panel - LendKey – Cloud-Based ...

Report: 40 Million Consumers Have At Least One Student Loan ...

Posted: 09 Sep 2014 08:45 AM PDT

Report: 40 Million Consumers Have At Least One Student Loan – Consumerist

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Will a Huge Amount of Student Loan Debt Hurt My Credit Score?

Posted: 08 Sep 2014 12:30 AM PDT

This post may contain references to products from our partners. We may receive compensation when you click on links to those products. For an explanation of how we make money, please visit this page.

If you're coping with a mountain of student debt, you have a lot on your mind. Aside from how you're going to make the payments, you're probably also worried about how your loans are affecting your credit score.

Don't worry, the Nerds are here to explain all the important details about the relationship between student loans and your credit.

A big student loan bill won't hurt your credit if you handle it responsibly

First, take a moment to let out a sigh of relief: A huge amount of student loan debt won't necessarily hurt your credit score.

If you've done some preliminary research about the factors that affect your credit, you probably noticed that "amounts owed" accounts for 30% of your score. But this is most heavily influenced by your credit utilization ratio on revolving credit accounts, like credit cards. Since student loans are installment loans, they don't have a big impact on this portion of your score.

In fact, your student loans could potentially help your credit. If you pay your loans on time and in full, you're going to bolster the part of your score that's determined by payment history. Because this makes up 35% of your overall score, you could get a boost from handling your student loans responsibly.

Plus, having an open installment loan may also improve the 10% of your score that comes from the types of credit you have in use. Lenders like to see that you're good at managing different varieties of borrowed money, so having both revolving and installment accounts on your credit report is beneficial.

But you could have trouble getting other loans

Although making your student loan payments on time is a good way to keep your credit score humming, it's worth noting that a heavy student debt burden could still interfere with your ability to get other loans.

This might seem counterintuitive, because you probably know that good credit is key to qualifying for financing on competitive terms. But your student loans will have an impact on another key variable lenders look at when they're deciding whether to extend you credit: your debt-to-income ratio (DTI).

Your DTI is the ratio of your monthly obligations to your gross monthly income. We'll use an example to illustrate this point: Let's say you're making an annual income of $50,000 in your first job out of college. In this case, your gross monthly income would be $4,166.67 ($50,000/12).

Let's assume you're paying $800 per month in rent, $250 on your car payment, and $650 toward your student loans. Your total monthly obligations would be $1,700 ($800+$250+$650).

To figure out your DTI, you'd do a simple division problem:

$1,700 (your total monthly obligations)/
$4,166.67 (your gross monthly income) =
40.8% (your DTI)

Most lenders like to see a DTI of 36% or less; if your student loans are pushing your DTI above that mark, you might have trouble getting another loan.

Tips for managing your student loans

So it turns out that student loans can be helpful or hurtful when you're trying to get financing for a car or a home after college. They could boost your credit score, but there's also the possibility that they'll drive up your DTI.

Luckily, the Nerds have a few tips for successfully managing your student debt so that you'll be well-positioned for a bright financial future:

Pay your loans on time every month, no matter what.
If your minimum monthly student loan payments are too high, communicate with your lender. You might be able to defer them for a period of time or work out an income-based repayment plan.
If you work in public service (as a teacher in a low-income school, for example), look into loan forgiveness programs you might be eligible for.
Consider consolidating. This could help you score a lower interest rate on your student loans, and it will help simplify making your monthly payments.
Consider paying more than the required monthly minimums. This will help you pay off your student loans faster, which will cause your DTI to drop.

The takeaway: A huge student loan bill won't necessarily hurt your credit score, but it could make getting other loans more difficult. Use the Nerds' tips above to manage your student debt effectively.

Student loans image via Shutterstock

LendIt 2014 Student Loans Panel - LendKey – Cloud-Based ...

Posted: 13 Aug 2014 10:37 AM PDT

LendKey was excited to attend the second annual LendIt Conference in early May. We traveled to San Francisco to take part in the leading conference in the global online lending industry. With 950 attendees and 100 presenting companies, we were able to meet and network with many experts and enthusiasts in the online lending space all in one place. There was a strong sense of shared passion at the conference, making it feel less like a work commitment and more like a community meet up. LendKey CEO, Vince Passione, was invited to moderate the Student Loans Panel. The conversation centered on responsible lending and the significance of peer-to-peer lending (P2P) in the student financing sector. The panelists included Mike Cagney of SoFi; David Klein of Commonbond; Brendon McQueen of Tuition.io; and Cameron Stevens of Prodigy Finance.

Vince kicked off the conversation by first demystifying the student loan bubble and some of the concerns around it. With 21 million students enrolled in college, up by 6% from prior years, an estimated $100 billion in federal loans were given with little underwriting. Once students exhausted federal funding, they turned to private lending and received $8 billion worth of private loans, bringing the total private loan debt to $65 billion. The student loan bubble is primarily being driven by the increasing costs of attendance and an increase in the non-underwritten student loans that are available today. A recent study from the Brookings Institute, "Is a Student Loan Crisis on the Horizon?" cited the rising tuition costs account for about one-half of the increase in debt. Students carrying these debt burdens need a refinancing mechanism and the ability to manage that debt.

Vince led the panel through the following key topics of student financing:

Community

The community aspect behind P2P lending was a hot topic during the discussion. There is more emphasis on the community in the student lending ecosystem than any other sector. Community Enforcement is a concept that revolves around the idea that because a borrower acknowledges that an individual investor has essentially vouched for him or her, then the borrower will feel a sense of personal obligation to repay the loan. If a loan goes into default it becomes transparent to the community, enabling the community to act as a tangible risk management tool.

Financial Literacy

Even with strict underwriting requirements, if a borrower does not understand the costs of college and the associated costs of their debt (interest rates, fees, and repayment rates), then the likelihood that everyone involved in the lending process will suffer increases significantly. The panelists agreed everyone involved in the student lending space must take a proactive approach when it comes to financial literacy. Part of lending responsibility is ensuring borrowers and lenders know exactly what they are getting themselves into when this debt is provided.

Scalability

Of the $1.1 trillion of outstanding student loan debt, only 30% of that is in current repayment making it a very tough asset class for lenders to broaden their spectrum of schools. In order for institutions to achieve scalability in terms of capital, many are turning to loan participation networks. From a value proposition standpoint, offering private student loans forges relationships with young consumers and provides the opportunity for lenders to offer other loans in the future.

While these lenders face some challenges, the benefits of offering private student loans are evident as they are strong assets and perform quite well when coupled with rigorous underwriting requirements. To learn more about the private student loan asset class and why your institution should be offering this product, download our free white paper: Understanding Private Student Loans.

Student Loan

Monday, 15 September 2014

Student loan | Rep. Virginia Foxx: The Student Loan Debt Solution Is All About ...

Student loan | Rep. Virginia Foxx: The <b>Student Loan</b> Debt Solution Is All About <b>...</b>

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Friday, 12 September 2014

Student loan | Report: Student Loan Debt Isn't Just An Issue For Young Americans ...

Student loan | Report: <b>Student Loan</b> Debt Isn't Just An Issue For Young Americans <b>...</b>

It may be in violation of your student loan agreement

Student loans aren't eligible for bankruptcy

Moving debt isn't the same thing as paying off debt

Wednesday, 10 September 2014

Student loan | Not Even Seniors Can Escape Student Loan Crisis | The Daily Caller

Student loan | Not Even Seniors Can Escape <b>Student Loan</b> Crisis | The Daily Caller

Tuesday, 9 September 2014

Student loan | Report: 40 Million Consumers Have At Least One Student Loan ...

Student loan | Report: 40 Million Consumers Have At Least One <b>Student Loan</b> <b>...</b>

A big student loan bill won't hurt your credit if you handle it responsibly

But you could have trouble getting other loans

Tips for managing your student loans