Tuesday 5 January 2016

Student loan | Unleash the next generation of homeowners: Renegotiate student ...

Posted: 05 Jan 2016 05:00 AM PST

Drive through the neighborhoods of Ohio. You will observe thousands of vacant homes devoid of a generation of aspiring young homeowners. The opportunity for this generation to buy a first home has been thwarted by sluggish income growth in the job market often made worse by the overcharge of student loan debt. That debt has put home ownership out of reach for millions of credit worthy borrowers.

All across America, this story repeats itself. Millions of habitable homes sit unoccupied. In 2014, the percentage of houses sold to first time homebuyers dropped to 33 percent, the lowest level in three decades. These separate but related conditions retard economic growth, depressing home purchases across our country. These trends must be reversed. Debtors must become equity stakeholders.

The current slow recovery is the first since World War II where housing has not led our economy forward. At the end of last year, nearly 17 million homes sat vacant in the United States. That's enough empty homes to house the combined populations of Ohio and Indiana. Vacant structures also drag down adjacent property values and contribute to a downward spiral in neighborhood stability and worth.

Last year, more than 57,000 homes sat vacant in my congressional district alone. Just in October 2015, there were more than 5,300 homes in my home state of Ohio that remained on the market for nine months or longer. Those homes have a combined value of $1.9 billion. These under-invested assets represent a vast untapped source of wealth creation for families and our nation.

Meanwhile, student debt in the U.S. currently totals $1.3 trillion. More than 40 million Americans have at least one outstanding student loan, a number that is up significantly from 29 million Americans just ten years ago. Student loan debt is weighing down millions of young families, effectively locking out their buying power to purchase their first home, the most common way in which Americans have grown wealth in previous eras.

There is a popular lending instrument already in widespread use that could serve as a bridge for credit-worthy student borrowers to become homeowners: the home mortgage. This common lending tool has the power over time to transform the stream of student loan repayments by credit worthy individuals into home ownership.

Building a road forward for student debt holders through the home mortgage instrument would require cooperation of three federal departments: the Department of Education, Department of Housing and Urban Development (HUD), and the U.S. Treasury Department. This presents a surmountable challenge. An initial test of this concept could take the form of a pilot project directed through HUD's Federal Housing Administration (FHA). Credit worthy federal student debt holders could be connected with available housing properties held by or serviced through the federal government or local county land banks.

By arranging prudent financing alternatives that recalculate terms, debt-to-income ratios, mortgage interest rates and other factors, FHA could transition shorter-term student debt into longer term home ownership. The economic and financial gains are potentially even greater in the long run as housing values rise. Over time, participants would help restore neighborhoods, transform their debt to equity, buoy property values locally and improve the FHA ledger simply by maintaining and investing in a home.

The status quo has created a permanent debtor class of millions of student borrowers. This is not in the public interest. Instead, America needs home equity stakeholders. If America continues to do nothing, thousands more student debt holders will live, work, and eventually retire without ever escaping the burden of their sunk debt. At the same time, first time housing purchases will continue to be retarded, and our neighborhood housing stock deteriorate.

Congress has the power to unleash the debt stranglehold on the next generation. Let's transform student loan repayments into equity stakeholds. We have the resources, the power, a compelling economic interest, and a moral responsibility to do something about unshackling the aspiring generation. Let's get started.

Kaptur has represented Ohio's 9^th Congressional District since 1983. She sits on the Appropriations Committee.

New York will pay your student loan bills for two years | WTVR.com

Posted: 04 Jan 2016 03:18 PM PST

NEW YORK — It just got a little easier for recent grads to make it in New York.

The state will pay up to two years of student loan bills for residents who are struggling to pay down their debt.

The loan forgiveness program, called "Get on Your Feet" by the Cuomo administration, aims to help out grads who maybe haven't landed their dream job just yet. You're only eligible if you earn less than $50,000 a year and live in state.

You must also have graduated after December 2014 from a college or university in New York and you must be enrolled in an income-based repayment plan with the federal government. These plans typically cap your monthly bill at 10% or 15% of your discretionary income, but are only an option for those with a lot of debt and little earnings.

New York will only cover the cost of your monthly bill on federal loans. If you borrowed from a private lender, you're still on the hook for those payments. The program went live on December 31 and you can apply online.

"Ensuring students are able pay for college and not saddled with debt is critical for both their individual success and the continued economic growth of New York State," said Governor Andrew Cuomo.

New York is the first state to offer loan forgiveness on the basis of income. But at least 35 other states have a similar program that's based on the type of industry you work in and where you live, according to the National Conference of State Legislatures. They aim to encourage people to live and work in underserved communities and take public service-oriented jobs like teachers, social workers and health care workers.

The governor's office estimates that 7,100 recent grads will take advantage of the New York program this year. It expects 24,000 grads will be enrolled by 2020 and at that point cost about $41.7 million. It's unclear whether the income threshold will go up over time and the governor's office did not return a call requesting comment.

In 2014, 61% of New York grads left school in debt, averaging an amount of $27,822, according to the Institute for College Access and Success.

In Student Loan Default? How to Fix Your Credit | Refinance and ...

Posted: 30 Dec 2015 05:33 PM PST

When you go into student loan default, your credit takes a major hit. But if you're reading this, you probably already know that.

If student loan default has happened to you, know that the world isn't over. You can fix your credit and you will be able to borrow money again in the future, so long as you take the steps necessary to repair your credit.

These steps include getting out of default, paying your bills on time, paying off your debt, and eventually applying for credit as needed to improve your debt-to-credit ratio. I won't lie: this can be a lengthy process. Once you get started, however, you'll see that in just a few months, your score will start to go up.

How to Recover From Defaulted Student Loans

Step 1: Getting Out of Default

In order to repair your credit, you need to get out of student loan default first. When you default on your loan, it's sent to collections, and you will be notified. When you are notified, usually by mail, you should call the phone number on the letter sent to you to learn about your options.

Typically, you have three options in this scenario::

1. Pay Your Loans Off

The one simple way to get out of student loan default is to pay off your loan in full. This is obviously easier said than done, as the average student loan balance is in the tens of thousands of dollars.

However, if you have a family member who will help you out by loaning you money at a lower interest rate, or if you qualify for a personal loan, this might be a reasonable option. (Keep in mind getting a loan if you're already in default is unlikely).

2. Rehabilitate Your Loans

You might be able to work with your loan servicer or collections agency on a plan to make smaller monthly payments. When you call, explain that you want to get out of default and can only pay a certain amount each month.

The benefit of loan rehabilitation is that as long as you make your monthly payments on time for a certain period of time, as agreed upon with the collections agency, they will most likely be willing remove the default status from your credit report as well.

3. Consolidate Your Loans

If you have several student loans, you can choose to consolidate them into one, which will count as a payment and bring you out of default. You usually have to make three on-time payments, work out a payment plan with your servicer, or enroll in an income-driven repayment plan before you're eligible to consolidate.

Step 2: Pay Off Other Debts

Your credit utilization makes up 30 percent of your credit score, so if you have other debts such as credit cards, your next step should be to lower those balances once your student loans are under control..

If your credit card interest rates are well above your student loan interest rates, it would be wise to focus on paying those as quickly as possible, since mathematically speaking, paying off the higher interest rate debt first will save the most money over time.

Additionally, if your credit cards are maxed out, it will not reflect well on your credit score. You need to have as much "space" -- or available credit -- as possible. Consider opening a new line of credit in addition to paying down your loans so you can increase your debt-to-credit ratio (just don't rack up any new debt).

Step 3: Pay All Your Bills On Time

If you struggle with your other bills, like your phone bill or your mortgage, it's time to sit down and take a long hard look at your finances to ensure you always pay your bills on time. It's more important than you might think: your payment history is the most significant factor of your score at 35 percent.

If you are late on a payment, it will have a negative impact on your credit. Pay on time, every time and your credit score will improve as time passes.

Step 4: Rinse, Repeat, and Be Patient

Unfortunately, building up your credit is not an easy or quick process. You have to consistently repeat the steps above to make your score continue to rise. This means always paying your bills on time, maintaining low credit card balances, and periodically opening new lines of credit (that you don't max out) so that your debt- to- credit ratio and credit mix improve.

If you do all of these things and are patient, you will be well on your way to repairing your credit after student loan default. Many people have done it before you, and although going into default is never a good thing, you definitely have options for having financial success in the future.

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