Student loan | 24% Of Millennials "Expect" <b>Student Loan</b> Forgiveness | Zero Hedge |
- 24% Of Millennials "Expect" <b>Student Loan</b> Forgiveness | Zero Hedge
- <b>Student loan</b> payment strategies can ease some of the debt burden <b>...</b>
- Burdened with Record Amount of Debt, Graduates Delay Marriage <b>...</b>
- Corinthian, giant for-profit college with 900 local <b>students</b>, accused <b>...</b>
| 24% Of Millennials "Expect" <b>Student Loan</b> Forgiveness | Zero Hedge Posted: 13 Nov 2014 06:10 AM PST It appears the concept of no consequences is now deeply embedded in the American society. As Student loan debtloads surge ever higher - and opportunities grow ever lower - NBC News reports a rather stunning 24% of Millennials said they expect their loans will ultimately be forgiven, according to study released Wednesday by Junior Achievement and PwC US. That helps to explain why delinquency rates are at record highs - aside from the massive debtloads and no high-paying jobs - as students see bankers rigging every market in the world with little to no consequence, one can only imagine the lessons being learned. Heavily delinquent student loans hit a fresh record high of $124.3 billion, up from $121.5 billion in the prior quarter. NBC explains...
* * * Given the following, it is hardly surprising they hope and expect for forgivness... The following are 18 sobering facts about the unprecedented student loan debt crisis in the United States… #1 According to the Wall Street Journal, the class of 2014 is "the most indebted ever"…
#2 In 1994, less than half of all college graduates left school with student loan debt. Today, it is over 70 percent. #3 Approximately 15 percent of graduate and professional school students leave school with student loan debt balances in the six figures. #4 At this point, student loan debt has hit a grand total of 1.2 trillion dollars in the United States. That number has grown by about 84 percent just since 2008. #5 According to the Pew Research Center, nearly four out of every ten U.S. households that are led by someone under the age of 40 is paying off student loan debt right now. #6 The median net worth of young households that have student loan debt is 20 percent lower than the median net worth of young households that do not have any student loan debt and that are led by someone with only a high school education. #7 Among college educated people, the median net worth of young households that do not have student loan debt is seven times higher than the median net worth of young households that do have student loan debt. #8 In 2008, approximately 29 million Americans were paying off student loan debts. Today, that number has ballooned to 40 million. #9 Since 2005, student loan debt burdens have absolutely exploded while salaries for young college graduates have actually declined…
#10 According to CNN, 260,000 Americans with a college or professional degree made at or below the federal minimum wage last year. #11 Even after accounting for inflation, the cost of college tuition increased by 275 percent between 1970 and 2013. #12 Debt for law school students has risen dramatically over the past decade or so…
#13 Last year it was being reported that 34.9 percent of all student loan borrowers under the age of 30 are at least 90 days behind on their student loan payments. #14 One survey found that 27 percent of those with student loan debt moved back in with their parents after college. #15 Another survey found that 70 percent of all college graduates wish that they had spent more time preparing for the "real world" while they were still in school. #16 Student loan debt is causing many young Americans to delay getting married. The following is from a recent NBC News article…
#17 Many Americans are not even using most of their student loan money to pay for college. Instead, many are using much of that money to pay bills or stock the fridge…
#18 Only 28 percent of Americans know that the U.S. government can garnish wages and withhold tax refunds if student loan debts are not repaid. It should come as no surprise that the delinquency rate on student loan debt in this country is far higher than the delinquency rate on mortgages, auto loans and credit card debt. This is a financial bubble that gets worse with each passing year, and if we continue on our current course it is going to end very, very badly. * * * Now where would they get the idea that forgiveness will happen? "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," notes the always astute White House... and so it's time to do something about that... by bailing the bad debtors out with US taxpayers money. As we have been vociferously warning, not only has the student loan debt bubble expanded massively (as the easiest credit substitute for real-world working and unemployment) but delinquencies on the 'easily available' credit is soaring with "consequences such as a damaged credit rating, losing their tax refund, or garnished wages." Consequences, as we have been taught now, are not acceptable for this administration and so President Barack Obama issued an executive action in June aimed at making it easier for young people to avoid trouble repaying student loans. A Federal Government bailout...?
* * * Welcome to the real world, debt serfs... (5 votes)  |
| <b>Student loan</b> payment strategies can ease some of the debt burden <b>...</b> Posted: 27 Nov 2014 10:00 PM PST By now, many of you probably know that student loan debt is $1.1 trillion and counting, making it second only to mortgage loan debt. The numbers also show about 42 million people have college loans — with the average amount owed hovering around $28,400, according to the latest federal data. But what do the numbers mean for college graduates who earned their diploma last spring and are starting to pay back their loans now that their six-month grace period has ended? And what do those numbers mean for high school seniors who will be filling out federal financial aid applications come January 2015? Here's one thought: Whether you're a past, present or future borrower, be aware of financing strategies that can ease some of the hand-wringing that naturally occurs when the bills come due. The editors of Edvisors.com, a college planning and financial aid website, recently released a report that lists 13 common mistakes to avoid in repaying college loans. Here are some of their suggestions to help borrowers stay on the straight and narrow path: ▪ Don't be late on a payment. It only takes a single late payment to mess with your credit and cause problems when applying for a mortgage, car loan or credit card. Borrowers generally have 10 to 25 years to repay a federal student loan, depending on the repayment plan. That's a long time to pay like clockwork and keep track of vital loan information. To get organized, Edvisors has designed a student loan checklist at www.edvisors.com. ▪ Put repayments on autopilot. When you receive your first billing statement, you'll learn how to sign up for an automatic debit plan, which will transfer the payment directly from your account to the lender. Many loan servicing companies even offer a sign-up incentive — a 0.25 percent or 0.50 percent reduction in the loan's interest rate. If you lose your job or run into other financial problems that throw your budget out of whack, you can stop the electronic debit program at any time. ▪ Beware of long repayment plans. To be sure, longer repayment terms mean lower monthly payments. But going long also increases the amount of interest you'll pay over the life of the loan. ▪ Look out for snowballs. There are no penalties for paying off federal or private student loans early, Edvisors said. So, if you received a year-end bonus or bought a winning lottery ticket, consider making extra payments on your loan to knock it down more quickly. It's often best to apply the funds to the loan with the highest interest rate, which should save you the most money and lead to a quicker exit from all your loans. Many borrowers mistakenly believe that paying off the loan with the lowest loan balance is best. "This approach, called the snowball method, argues that the borrower will pay off that (smaller) loan quicker, yielding a psychological boost," Edvisors said. "But this does not necessarily save the most money." ▪ Free is good. If you have several student loans to repay, consolidating them into one payment might be a good option. You can consolidate federal loans for free at studentloans.gov. Be wary of businesses that offer this service for a fee. According to Edvisors, some of these companies might be identity thieves hoping to pry loose your personal information. |
| Burdened with Record Amount of Debt, Graduates Delay Marriage <b>...</b> Posted: 07 Oct 2014 07:28 AM PDT I now pronounce you in decades of debt. Student loans have hit a record high of $1.2 trillion, putting a crimp in The American Dream of owning a home and starting a family. And it's affecting the broader economy too. "People cannot participate in the American dream because of student debt," said Natalia Abrams, executive director and co-founder of StudentDebtCrisis.org. Cody Hounanian, 23, graduated from University of California, Los Angeles last year with about $30,000 in debt. He worked part-time at an In-N-Out Burger restaurant near campus throughout college and now works full-time as a manager at Whole Foods in his hometown of Santa Clarita, Calif. He is in the process of applying to law school. He's not married, doesn't expect to be anytime soon and puts part of the blame on the burden of student debt. "I'm sure there are people who say, 'I don't want to have a husband or a wife who is $100,000 in debt,' but I think the real problem is more indirect. There's almost not enough time to go out and start a family," he said. "It's an aspect that people forget. Planning and investing: forming relationships get in the way of that."
"I don't want to sound materialistic, but there's a financial aspect," he said. "In finding someone, there has to be a cash flow in order to take someone out." Abrams said that even people with decent-paying jobs are delaying that walk down the aisle because of debt. "If you owe $100,000 to $150,000 in student loans, you're paying $1,000 to $1,500 a month. It's cost-prohibitive," she said. "Everything from saving for a home to saving for retirement is completely off the table," Abrams said. Student debt isn't the only reason young people are putting off marriage, of course. Women are putting significantly more time into earning advanced degrees. And jobs for less-educated Americans have withered, causing a longer search for a career that can provide a middle-class lifestyle. While there is no specific data on student debt-related delays to marriage, a recent study by the Pew Research Center shows that a record number of Americans have never married. The study found the median age at first marriage is now 27 for women and 29 for men. In 1960, the median age was 20 for women and 23 for men. Student loan experts say indebtedness is weighing heavily in the young adults' decisions to get married, buy homes, and save for retirement, however. Heather Jarvis, an attorney in Wilmington, N.C., who specializes in student loans and student loan education, said she considered her student debt when getting married and merging finances with her husband. "Getting married actually reduced the loan payment assistance benefits from my law school. My debt became more squarely on my shoulders upon marriage," said Jarvis. According to the Internal Revenue Service student loan interest deduction regulations, graduates may not claim tax deductions on their qualified student loans if they are married and file separately from their spouse. If a married couple chooses to file jointly for a student loan interest deduction, they cannot be claimed as dependents on someone else's tax return. Debt burdens "do limit students and graduates' choices, influencing their timing," she said. Jarvis, who graduated from Duke University School of Law in 1998 with $125,000 in student debt, just recently finished repaying her private loans. She now has to pay off her federal loan debt from law school, which is about $30,000 – just above the current national average for undergraduate borrowers. "People are delaying marriage, looking for more fulfilling partners, delaying childbearing. This demographic is people in their late 20's, and most demographers would agree with that," said Dr. Robert Bozick, a sociologist at the RAND Corporation in Santa Monica, Calif. Bozick published a study in June that found student loan repayment affected marriage timing for women, though less so in men. As college tuition rises, Bozick said, it's likely that "we are going to see more non-traditional lifestyles" than in generations past, emphasizing the "greater levels of debt." He has found more young people have changed how they weigh whether or not they're going to disrupt their careers for marriage, when in previous years, it was often the reverse. Dr. Bozick himself earned his master's degree from the University of Maryland, College Park, in 2001, and his doctorate from Johns Hopkins University in 2005. He has not yet finished repaying his student loans. First published October 7 2014, 5:57 AM |
| Corinthian, giant for-profit college with 900 local <b>students</b>, accused <b>...</b> Posted: 20 Nov 2014 01:59 PM PST Corinthian Colleges Inc. has preyed on unsophisticated and "isolated" students with expensive tuition and bogus job-placement promises, federal regulators say. Corinthian, whose Everest and Heald career schools boast about 1,000 local students, intentionally set tuition so high that traditional federal student aid wouldn't cover the tab, forcing students into the company's expensive in-house loan program, according to regulators. Corinthian has continued to push students into the loan program for six years, the feds say, even though it knows 60 percent of them will default. In a confrontation that could change American higher education, federal regulators now maintain that one of the largest for-profit colleges in the country is a predatory lender, targeting the young, the poor and financially unsophisticated. The U.S. Consumer Financial Protection Bureau sued the company in September seeking to force the company to refund more than half-a-billion dollars worth of student loans. Three months earlier, the U.S. Education Department crippled the company when it restricted its access to federal student aid money. "If you're a bad actor, the government is taking a much harder line," said Michael Tarkan, a financial analyst who follows for-profit colleges. "And based on all the regulatory issues out there, Corinthian has demonstrated they are one of the bad actors." Corinthian spokesman Kent Jenkins argues the for-profit serves its students well and its loan program was a sincere effort to provide students with alternative financing. In response to the federal crackdown, Corinthian has launched an effort to sell all 100 locations by year's end, including its four campuses in the Portland area. Two local companies, meanwhile, have found themselves near the center of the Corinthian controversy. Genesis Financial Solutions, a Beaverton consumer finance company founded by prominent Portland philanthropist Irving Levin, has originated and serviced Corinthian's in-house student loans since 2008. Genesis' Levin said his company played a relatively minor role and did nothing wrong. "We did the servicing and that was it," he said. "We didn't have anything to do with the underlying structure of the loan." ASFG LLC, a subsidiary of Lake Oswego-based Aequitas Capital, agreed to buy Corinthian student loans, which enabled Corinthian to originate $444 million worth of loans. The deal provided a desperately needed source of liquidity. In return, ASFG reaped millions of dollars in fees. ASFG declined to discuss its work with Corinthian. Neither company has been charged with wrongdoing. But an examination of their relationship with Corinthian offers an inside look at the for-profit college business and the enormous sums of money at play in today's higher education industry. RISE OF THE FOR-PROFITS Corinthian is one of several national companies that thrived in the career-school niche during the last two decades, attracted by a river of federal student aid money. These operations often get at least 80 percent of their total revenue from taxpayer-funded federal student loans and grants. In 2013, Corinthian's total revenue exceeded $1.6 billion, 84 percent of it from federal student aid. The rapid growth of the for-profits has contributed to the tripling of U.S. student debt in the last 10 years to $1.3 trillion. Their students borrow more to cover the for-profits' relatively high tuition. After bankrolling the industry for years, the federal government is now taking a more critical view. In recent federal filings, Corinthian divulged it is being investigated by the Consumer Financial Protection Bureau, the Securities and Exchange Commission and the Justice Department. Eleven attorneys general, including Oregon's, also have launched investigations. The for-profit schools argue they serve poor, older and nontraditional students. Corinthian also defended its Genesis program. "Corinthian wants every student to have the opportunity to succeed, so it arranges through a third party to make funds available without regard to the students' credit history," the company said in a statement. "A student who commits herself to a program is likely to succeed and pay back her student loans." ONE STUDENT'S STORY Sharnee Norwood has a starkly different view. In 2008, the Stockbridge, Ga., resident signed up for a one-year medical assistant program at Corinthian's Everest College. She said that Corinthian officials told her she would be able to cover the $14,615 cost with government student loans and a $5,500 federal Pell grant. But Norwood didn't get the grant. Only later, she says, when she got a copy of her file from Corinthian did she learn she owed $5,353 on a Genesis loan -- a loan she said she had not applied for. In her file was a master promissory note but she says the signature on it was not hers. Norwood sued Corinthian and Genesis, its Beaverton-based partner, which originated the loan, sold it to Corinthian and continued to service the loan. The companies tried to collect the debt, which had grown to more than $7,000. Genesis reported the loan in default in June 2013 to a credit-reporting agency. Norwood's credit took a damaging hit because she didn't repay a loan she claims she never applied for. Norwood accused Genesis of violating federal credit reporting and debt collection laws and of defaming her. She accused Corinthian of fraud, contending the company falsified her financial aid application. Genesis CEO Bruce Weinstein dismissed Norwood's complaint as a "nuisance suit." Genesis settled with Norwood for what he said was a minimal amount of money. Neither Norwood nor her attorneys would comment, citing a nondisclosure clause in the settlement agreement. Norwood's lawsuit against Corinthian is still pending. CORINTHIAN FINDS GENESIS Six years ago, the big for-profit colleges seemed on a roll. Corinthian's annual revenue had just topped $1 billion. The company earned $21.2 million in 2008, and enrollment had jumped nearly 12 percent to more than 69,000. There were clouds on the horizon, though. The financial crisis was devastating credit markets. Corinthian's preferred lender, Sallie Mae, pulled out of the market. Corinthian needed to find an alternative, and it found Genesis. Genesis is a quietly successful consumer finance operation based in Beaverton. Its primary business is private-label financing -- it runs internal finance operations for retailers such as Best Buy and Zale's. Levin has amassed a considerable fortune over the years -- he sold one of his companies for $300 million. He's used the money to fund a host of charitable causes, including higher education. He and his wife, former Oregon journalist and broadcaster Stephanie Fowler, fund college scholarships for low-income students. Levin minimized Genesis' role, saying Corinthian was always obligated to buy all the Genesis loans originated by his company. And Corinthian set the terms, he said. "We were strictly a contractor," Levin said. "We got paid a few bucks for every loan we originated and serviced." Levin declined to divulge how much Corinthian paid Genesis for its services. In 2012, Corinthian found another partner that was willing to hold its loans, cutting a deal with ASFG, the Aequitas subsidiary. ASFG purchased hundreds of millions of dollars worth of Corinthian loans, according to Corinthian SEC filings. Why would any company willingly buy into a loan portfolio with a 60 percent loan default rate? Corinthian's federal filings reveal that ASFG insisted on terms that minimized its credit risk. Their deal required Corinthian to buy back any loan that went delinquent after 90 days. There was also this: Corinthian paid ASFG more than $18 million in fees over two years. Aequitas officials declined to comment. GENESIS AND THE 90-10 RULE Under the scenario laid out by the Consumer Financial Protection Bureau, Genesis and Aequitas were little more than well-paid participants in a Corinthian scheme to leverage more money out of the federal government. Corinthian was willing to continue to operate a loan program with a 60 percent default rate because it was a necessary step, the bureau alleges, to gain greater access to the real mother lode -- federal student aid. Taxpayer-funded loans and grants dispensed by the U.S. Education Department are known as Title IV funds. The department enforces a strict 90-10 rule that prohibits schools from deriving more than 90 percent of revenue from Title IV student aid. Corinthian and other for-profits routinely flirt with the 90 percent limit. Genesis provided Corinthian the crucial internally generated revenue that constituted its 10 percent contribution. "Genesis was a loss leader," said Maura Dundon, a lawyer with the Center for Responsible Lending. "It was the vital source of non-Title IV money." Corinthian admitted to stock analysts in February 2011 that it increased tuition 11 percent in part to comply with the 90-10 rule. Students would have to turn to Genesis to cover the cost. "We've expanded our Genesis loan limits to accommodate the increase in tuition," Ken Ord, Corinthian chief financial officer told the analysts. Corinthian was thrown into crisis in June when the feds restricted access to student aid money. The Education Department put a 21-day delay on new releases, citing evidence Corinthian was falsifying job placement data for its students. That pushed Corinthian into a severe cash-flow problem. "ENABLING SOMETHING..." Genesis and ASFG cut ties with Corinthian in 2014. Dundon, the consumer lending expert, said the frequency with which Corinthian students fell behind on loans should have set off alarm bells at Genesis and ASFG long before. "Certainly anyone in the consumer finance industry knows that targeting subprime borrowers with a program that has a 60 percent default rate is a problem," she said. "The phrase is 'debt trap.'" Levin insists his company did no wrong. But he's also clearly pained. "It's a very fine line," he said. "When you're making the loan, you're definitely enabling something. ... Ultimately, the question is, did the loan support an unsavory product? Whether or not Corinthian's product was good or bad is certainly open to debate." There is little debate in the market about the value of the Genesis portfolio. Over the summer, Corinthian quietly sold off all of its approximately 170,000 Genesis loans. On a portfolio with a face value of $505 million, the unidentified buyer was willing to pay just $19 million. -- Jeff Manning |
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