Student loan | Not Even Seniors Can Escape <b>Student Loan</b> Crisis | The Daily Caller |
- Not Even Seniors Can Escape <b>Student Loan</b> Crisis | The Daily Caller
- 8 Ways to Pay Off Your <b>Student Loans</b> Faster - Morningstar
- <b>Student Loan</b> Debt Can Lead to Poorer Health, Middle-Age Malaise <b>...</b>
- <b>Student Loan</b> Update: A First Look at the 2013 Survey of Consumer <b>...</b>
| Not Even Seniors Can Escape <b>Student Loan</b> Crisis | The Daily Caller Posted: 10 Sep 2014 01:11 PM PDT 4313270 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. Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@ dailycallernewsfoundation.org.  |
| 8 Ways to Pay Off Your <b>Student Loans</b> 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. |
| <b>Student Loan</b> Debt Can Lead to Poorer Health, Middle-Age Malaise <b>...</b> 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.
- Martha C. White First published August 7 2014, 7:03 AM |
| <b>Student Loan</b> Update: A First Look at the 2013 Survey of Consumer <b>...</b> Posted: 07 Sep 2014 09:00 PM PDT 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. |
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