Student loan | <b>Student loan</b> interest rates just went up, and Congress is OK with <b>...</b> |
- <b>Student loan</b> interest rates just went up, and Congress is OK with <b>...</b>
- <b>Student loan</b> debt: Learning to save yourself - Get Rich Slowly
- <b>Student Loan</b> Interest Rates Are Set to Rise - NBC News
- Presidential Memorandum -- Federal <b>Student Loan</b> Repayments <b>...</b>
- One University Saved Students $31M In <b>Student Loans</b> By Sending <b>...</b>
- FACTSHEET: Making <b>Student Loans</b> More Affordable | The White <b>...</b>
| <b>Student loan</b> interest rates just went up, and Congress is OK with <b>...</b> Posted: 02 Jul 2014 12:08 PM PDT Student loan interest rates went up July 1 for the academic year that starts this fall. But unlike last year, there's no political uproar: Congress intended this to happen. Student loans for undergraduates will have an interest rate of 4.66 percent, up from 3.86 percent last year. For graduate students, the interest rate on Stafford loans will be 6.21 percent, up from 5.41 percent. PLUS loans, which are available to parents and graduate students and don't limit how much they can borrow, are more expensive, as always. The rate for those loans will be 7.21 percent, up from 6.41 percent last year. Congress knew this would happen, and doesn't plan to change itThe interest rates are going up because last year Congress voted to tie student loan interest rates to market rates. In the past, interest rates were set by Congress and didn't have much relation to what borrowers were paying for other loans. This is just the beginning of annual interest rate increases, according to the Congressional Budget Office. The interest rate on 10-year Treasury notes, which determines student loan interest rates, is projected to rise: (The new interest rates actually came in slightly under these CBO projections, issued in May, but the overall trend still holds.) And Congress isn't proposing to change this. Senate Democrats unveiled their vision for reauthorizing the Higher Education Act, the federal law that controls student financial aid, last week. It includes several provisions aimed at helping student loan borrowers control their debt, but the proposal wouldn't change how interest rates are calculated. Instead, the focus has shifted to helping borrowers who can't afford their monthly payments. Student advocates want a lower interest rate for everyone up front. But unless annual interest rate increases become politically untenable, that doesn't seem likely to happen.  |
| <b>Student loan</b> debt: Learning to save yourself - Get Rich Slowly Posted: 02 Jul 2014 04:00 AM PDT This article is by staff writer Holly Johnson. In late 2008, Lance Cothern reunited with his high school girlfriend Tori after several years apart. Lance was almost ready to earn a bachelor's degree in accounting, and Tori was a sophomore studying nursing at a four-year public university at the time. After a few years of dating, the conversations turned serious and they started planning a future together. Unfortunately, unbeknownst to either of them, Tori had a problem that was much bigger than she had ever realized – a lot of student loan debt. Because of some scholarships and work during school, Lance managed to graduate college debt-free. That freed him up to focus solely on his future wife's debt, which eased the burden somewhat. However, as she pushed through her final semesters at school, they could only watch in horror as interest piled on top of interest to push her total burden up over $80,000. The piling on of student loan debt Yes, you read that right. Tori owed $80,000 for a bachelor's degree in nursing. Right about now, you're probably wondering how on Earth that happened. Unfortunately, it's a lot more commonplace than you might think. In fact, Tori's student loan debt story isn't unlike any of the other tired old clichés relentlessly portrayed by the media: the struggling social worker who ends up 100K deep in student loans, the humanities Ph.D. who is forced to live with her parents well into her 30s, or even Kasey O., the woman I wrote about last year who still owes over $95,000 for a bachelor's degree in media arts and animation. And just like many others who find themselves in this precarious situation, Tori didn't really know how much she had borrowed until it was far too late. Part of the problem, according to the pair, is that she went to college during the credit crunch, which temporarily made it difficult to access the most attractive student loans. So instead she took out loans with high or variable interest rates, with her largest balance teetering around 11 percent. "To make matters worse, none of her student loans were subsidized," says Lance. "That means that her loans were charging her interest the entire time she was attending school. The interest would then be added to the principal of the loan and would incur even more interest charges over the course of her four-year college career." Gulp. Looking for a way out Just like the many thousands of students stuck in this unfortunate situation, Lance and Tori wanted a way out. They wanted to begin a life together, and they didn't want to spend the best years of their lives struggling under the weight of nearly six figures of debt. After briefly researching income-based repayment and loan forgiveness options, Lance and Tori decided that their best option was to try to get out of debt as quickly as possible so they could move on with their lives. The prospect sounded daunting for sure, but they felt it was the best option they had. The minimum payments on her student loans were around $700 per month, says Lance. "To pay off our debt, we lived frugally and used a very large percentage of our income to pay off her student loans, sometimes as high as 50 percent or more of our monthly income." In an effort to earn more, Tori picked up some extra shifts at work and Lance switched to a less-demanding job with higher pay. "We had to decide that some of life's conveniences would be put on hold while we paid the debt off," says Lance. "We didn't eat out often, we didn't have smartphones, we had a very small entertainment budget and we made sure we weren't wasting money on things that weren't more important to us than paying off her debt," he says. "Student loan debt had to be our No. 1 priority." And it worked. In a matter of three years, the two focused almost all of their attention on completely annihilating her student loan debt. And now, in their late 20s, they've earned the right to start their adult lives with an entirely clean slate. A generation of debt slaves There's no longer a doubt that student loan debt places an enormous burden on today's young people. With the average student loan debt now over $29,000, it's no wonder that the average Millennial is struggling, and why USA Today recently referred to student loan debt as an entire generation's ball and chain. "For many 20- and 30-somethings, paying off the cost of college takes priority. Marriage, a house and family will have to wait," wrote Hadley Malcolm in USA Today, after sharing one of the saddest charts I've ever seen. A few highlights:
Note from editors: The Brookings Institution recently published a report that examined student loan debt between 1992 and 2010, and concluded that typical borrowers were no worse off now than they were 20 years ago. Interesting alternate viewpoint based on looking at the data differently… Refusing to be a victim But that's what makes Lance and Tori's story so intriguing. Just like so many other student loan debt horror stories, it has all the makings of a segment on the nightly news, but with a twist. Lance and Tori didn't allow themselves to become a pawn in the growing student loan debt crisis. They took control of their situation instead. Here's how they did it (and how you can do it too):
Even though the journey was sometimes painful, the now debt-free twosome is glad they went through it. "We learned a lot during the process," says Lance. "We learned that we could be happy even without a lot of money to buy things that many people consider necessities. We learned you have to take action or things will never get better," he says. Lance and Tori's story proves that paying off a huge loan is possible, even over a short time frame, if you're willing to make it a priority. And, even though the steps they took might seem simple from a distance, the truth is, they're the only ones that work. It doesn't matter whether you're struggling with a giant mortgage, student loan debt, or credit card debt, the story is the same. Short of winning the lottery, you have to put in the work. You have to go without. You have to be willing to make sacrifices. One of the basic tenets of GRS (and one of my favorite sayings) is that "no one cares more about your money than you do." And it's true. I'd also add that "no one else can save you." The painful truth is, sometimes you have to save yourself. Are you still paying off student loan debt? What is your plan to pay it off once and for all? |
| <b>Student Loan</b> Interest Rates Are Set to Rise - NBC News Posted: 01 Jul 2014 04:57 AM PDT Students, you may have to give up that grande mocha cappuccino once a month. Interest rates are rising on Tuesday for students taking out new loans, thanks to a bipartisan deal brokered by Congress and signed by President Obama. The deal tied rates to financial markets. Interest rates go from 3.86 to 4.66 percent on undergraduate Stafford loans. Graduate student loans go from 5.41 percent to 6.21 percent. Interest rates on Plus loans for parents go from 6.41 percent to 7.21 percent. For every $10,000 borrowed, the average borrower under the hike will pay back about $4 more every month when they begin paying back the money — about the price of a fancy latte. Buy that coffee, or pay the loan? Hmmm, tough choice. Sign up for top Business news direct to your inbox. IN-DEPTH
-- By The Associated Press and NBC News staff First published July 1 2014, 4:57 AM |
| Presidential Memorandum -- Federal <b>Student Loan</b> Repayments <b>...</b> Posted: 09 Jun 2014 11:24 AM PDT The White House Office of the Press Secretary For Immediate Release June 09, 2014 June 9, 2014 MEMORANDUM FOR THE SECRETARY OF THE TREASURY SUBJECT: Helping Struggling Federal Student Loan Borrowers Manage Their Debt A college education is the single most important investment that Americans can make in their futures. College remains a good investment, resulting in higher earnings and a lower risk of unemployment. Unfortunately, for many low- and middle-income families, college is slipping out of reach. Over the past three decades, the average tuition at a public four-year college has more than tripled, while a typical family's income has increased only modestly. More students than ever are relying on loans to pay for college. Today, 71 percent of those earning a bachelor's degree graduate with debt, which averages $29,400. While most students are able to repay their loans, many feel burdened by debt, especially as they seek to start a family, buy a home, launch a business, or save for retirement. Over the past several years, my Administration has worked to ensure that college remains affordable and student debt is manageable, including through raising the maximum Pell Grant award by nearly $1,000, creating the American Opportunity Tax Credit, and expanding access to student loan repayment plans, where monthly obligations are calibrated to a borrower's income and debt. These income-driven repayment plans, like my Pay As You Earn plan, which caps a Federal student loan borrower's payments at 10 percent of income, can be an effective tool to help individuals manage their debt, and pursue their careers while avoiding consequences of defaulting on a Federal student loan, such as a damaged credit rating, a tax refund offset, or garnished wages. While my Administration has made significant strides in expanding repayment options available to borrowers and building awareness of income-driven repayment plans, more needs to be done. Currently, not all student borrowers of Federal Direct Loans can cap their monthly loan payments at 10 percent of income, and too many struggling borrowers are still unaware of the options available to them to help responsibly manage their debt. Therefore, by the authority vested in me as President by the Constitution and the laws of the United States of America, I hereby direct the following: Section 1. Expanding the President's Pay As You Earn Plan to More Federal Direct Loan Borrowers. Within 1 year after the date of this memorandum, the Secretary of Education shall propose regulations that will allow additional students who borrowed Federal Direct Loans to cap their Federal student loan payments at 10 percent of their income. The Secretary shall seek to target this option to those borrowers who would otherwise struggle to repay their loans. The Secretary shall issue final regulations in a timely fashion after considering all public comments, as appropriate, with the goal of making the repayment option available to borrowers by December 31, 2015. Sec. 2. Improving Communication Strategies to Help Vulnerable Borrowers. By December 31, 2014, the Secretary of Education shall develop, evaluate, and implement new targeted strategies to reach borrowers who may be struggling to repay their Federal student loans to ensure that they have the information they need to select the best repayment option and avoid future default. In addition to focusing on borrowers who have fallen behind on their loan payments, the Secretary's effort shall focus on borrowers who have left college without completing their education, borrowers who have missed their first loan payment, and borrowers (especially those with low balances) who have defaulted on their loans to help them rehabilitate their loans with income-based monthly payments. The Secretary of Education shall incorporate data analytics into the communications efforts and evaluate these new strategies to identify areas for improvement and build on successful practices. Sec. 3. Encouraging Support and Awareness of Repayment Options for Borrowers During Tax Filing Season. By September 30, 2014, the Secretary of the Treasury and the Secretary of Education shall invite private-sector entities to enter into partnerships to better educate borrowers about income-based repayment plans during the tax filing season in 2015. Building off of prior work, the Secretaries shall further develop effective ways to inform borrowers about their repayment options during the tax filing season in 2015, as well as through personalized financial management tools. Sec. 4. Promoting Stronger Collaboration to Ensure That Students and Their Families Have the Information They Need to Make Informed Borrowing Decisions. By September 30, 2014, the Secretary of Education, in consultation with the Secretary of the Treasury, shall develop a pilot project to test the effectiveness of loan counseling resources, including the Department of Education's Financial Awareness Counseling Tool. The Secretary of Education shall convene higher education experts and student-debt researchers to identify ways to evaluate and strengthen loan counseling for Federal student loan borrowers. Additionally, the Secretaries shall collaborate with organizations representing students, teachers, nurses, social workers, entrepreneurs, and business owners, among others, to help borrowers represented by these organizations learn more about the repayment options that are available to them in financing their investment in higher education and managing their debt, and to provide more comparative, customized resources to those borrowers when possible. Sec. 5. General Provisions. (a) Nothing in this memorandum shall be construed to impair or otherwise affect: (i) the authority granted by law to an agency, or the head thereof; or (ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals. (b) This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations. (c) This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person. (d) The Secretary of Education is hereby authorized and directed to publish this memorandum in the Federal Register. BARACK OBAMA |
| One University Saved Students $31M In <b>Student Loans</b> By Sending <b>...</b> Posted: 03 Jul 2014 10:23 AM PDT Consumerist is currently testing a new user experience. If you received an invitation to participate in the beta test, please sign-in below. Interested in participating? Learn more here. {* #userInformationForm *} {* traditionalSignIn_displayName *} {* traditionalSignIn_password *}{* traditionalSignIn_signInButton *} {* /userInformationForm *} {* #forgotPasswordForm *} {* traditionalSignIn_emailAddress *} {* /forgotPasswordForm *} If you are part of the beta test group, you will receive a link that will allow you to create a new password. If you are not part of the test group, you can learn more here.  |
| FACTSHEET: Making <b>Student Loans</b> More Affordable | The White <b>...</b> Posted: 09 Jun 2014 04:55 AM PDT The White House Office of the Vice President For Immediate Release June 09, 2014 President Obama declared 2014 a year of action – vowing to use the power of his pen and phone to help ensure that hardworking Americans have the opportunity to succeed. And this week will be no different. With a focus on supporting hardworking Americans and upholding our country's commitment to provide a quality education for all of our students, the President is again taking action. Today, he will deliver remarks at the White House, announcing new executive actions to further lift the burden of crushing student loan debt, including a Presidential Memorandum that will allow an additional 5 million borrowers with federal student loans to cap their monthly payments at just 10 percent of their income. A fact sheet detailing these new steps is below. Tomorrow the President will do a live Q and A with Tumblr, answering questions directly from consumers across the country about this crucial issue. At both of those events, and throughout this week ahead of their upcoming vote, the President will use every opportunity to urge Congress to do their part by passing Senate Democrats' bill to help more young people save money by refinancing their federal student loans. From reforming the student loan system and increasing Pell Grants to offering millions of students the opportunity to cap their monthly student loan payments at 10 percent of their income, making a degree more affordable and accessible has been a longtime priority for the President. But he knows there is much more work to do and that's what this week is all about. FACTSHEET: Making Student Loans More Affordable A postsecondary education is the single most important investment that Americans can make in their futures. Higher education results in higher earnings and a lower risk of unemployment, but for too many low- and middle-income families this essential rung on the ladder to opportunity and advancement is slipping out of reach. Over the past three decades, the average tuition at a public four-year college has more than tripled, while a typical family's income has barely budged. More students than ever are relying on loans to pay for college. Today, 71 percent of those earning a bachelor's degree graduate with debt, which averages $29,400. While most students are able to repay their loans, many feel burdened by debt, especially as they seek to start a family, buy a home, launch a business, or save for retirement. The President and his Administration have a long track record of taking steps to make college more affordable and accessible for families. And as part of his year of action to expand opportunity for all Americans, the President is committed to building on these efforts by using his pen and his phone to make student debt more affordable and more manageable to repay. Today the President will use the power of his pen to help millions of borrowers afford their student loan payments. He will sign a new Presidential Memorandum directing the Secretary of Education to propose regulations that would allow nearly 5 million additional federal direct student loan borrowers the opportunity to cap their student loan payments at 10 percent of their income. The Presidential Memorandum also outlines a series of new executive actions aimed to support federal student loan borrowers, especially for vulnerable borrowers who may be at greater risk of defaulting on their loans. Today the President will also reiterate his call for the Senate to pass legislation that could help an estimated 25 million Americans refinance outstanding student loans at lower interest rates, the same as those available to federal student loan borrowers taking out loans this year. This move could save a typical student $2,000 over the life of his or her loans. The Challenge of Student Debt: The challenges of managing student loan debt can lead some borrowers to fall behind on their loan payments and in some cases even default on their debt obligation, with such consequences as a damaged credit rating, losing their tax refund, or garnished wages. Because credit ratings are increasingly scrutinized in making employment offers, financing a home, or even opening a bank account, a damaged credit rating can further reduce borrowers' ability to repay their loans. Today's actions build on the Administration's significant progress in creating flexible repayment options for borrowers and raising awareness about the steps borrowers can take to responsibly manage their debt. Capping Student Loan Payments at 10 Percent of Income: Today, the President will direct the Secretary of Education to ensure that student loans remain affordable for all who borrowed federal direct loans as students by allowing them cap their payments at 10 percent of their monthly incomes. The Department will begin the process to amend its regulations this fall with a goal of making the new plan available to borrowers by December 2015. With legislation passed by Congress and signed by the President in 2010 and regulations adopted by the Administration in 2012, most students taking out loans today can already cap their loan payments at 10 percent of their incomes. Monthly payments will be set on a sliding scale based upon income. Any remaining balance is forgiven after 20 years of payments, or 10 years for those in public service jobs. However, this Pay As You Earn (PAYE) option is not available to students with older loans (those who borrowed before October 2007 or who have not borrowed since October 2011), although they can access similar, less generous options. No existing repayment options will be affected, and the new repayment proposal will also aim to include new features to target the plan to struggling borrowers. This executive action is expected to help up to 5 million borrowers who may be struggling with student loans today. For students that need to borrow to finance college, PAYE provides an important assurance that student loan debt will remain manageable. Because the PAYE plan is based in part on a borrower's income after leaving school, it shares with students the risk of taking on debt to invest in higher education. Many student loan borrowers are working and trying to responsibly make their monthly payments, but are nonetheless struggling with burdensome debt. For example, a 2009 graduate earning about $39,000 a year as a fourth year teacher, with student loan debt of $26,500, would have his or her initial monthly payments reduced by $126 under the President's Pay As You Earn plan compared with monthly payments under the standard repayment plan and would see a reduction in annual loan payments of over $1,500. Doing All We Can to Help Students Repay their Loans: The President today will also direct the Secretaries of Education and the Treasury to work together to do all they can to help borrowers manage their student loan debts. Specifically, the Departments will:
Additional Actions to Reduce Indebtedness and Promote College Affordability: Helping Students and Families Access Education Tax Benefits. In addition to helping borrowers manage their student loan debt, the Department of Education and the Department of Treasury will also work together to educate students, families, financial aid administrators, and tax preparers to ensure that all students and families understand what education tax benefits they are eligible for and receive the benefits for which they qualify. In 2009, the President created the American Opportunity Tax Credit (AOTC), which provides up to $2,500 to help pay for each year of college. But the process of claiming education tax credits like the AOTC can be complex for many students, including for the 9 million students who receive Pell Grants, and hundreds of millions of dollars of education credits go unclaimed each year. To help address this complexity, the Department of Treasury will release a fact sheet clarifying how Pell Grant recipients may claim the AOTC. |
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