Monthly Archives April 2013

Student debt worries? Options for paying it off

USA TODAY – Opening up the mailbox to find those long-awaited college acceptance letters is one of the high points for high school seniors. Incurring student loan debt, however, is the reality for millions of these young students who need a way to finance their education.

According to a TransUnion study, student loan balances increased a whopping 75 percent from 2007 to 2012. The average debt per borrower increased by 30 percent to $23,829.

There is some good news, however, for those who have taken out federal student loans. The interest rates on those loans are lower than private loan interest rates.Borrowers also have more legal rights with federal loans than they do with private loans. Here are some important rights to be aware of:

1. The Right to Defer Payment...

Read More

More bad news for student loan borrowers By Nin-Hai Tseng, Writer April 22, 2013: 7:00 AM ET CNN Money

Young, educated workers were once seen by banks as the most promising borrowers. That’s no longer the case, thanks to student loan debt.

unemployment-college-graduatesFORTUNE – Graduation season is upon us. It used to be that in the years after hopeful twentysomethings bid farewell to campus life, they’d start borrowing to buy many things typically associated with adulthood — namely, a car and a home. Many had college loans to repay, but that’s partly what made brainy go-getters so attractive to banks and lenders. They typically earn more over a lifetime, so they seemed like a safe bet.

They may still be, but times have changed. College debt may have once been the good kind ofdebt, but the scale has grown so big that in many cases it has become more burdensome than helpful.

For the first time in at least a decade, 30...

Read More

Michelle’s Mailbag: Co-signing on student loans

By , Monday, April 22, 1:49 PM

This week I’m starting a new feature. I’ll be answering the questions I couldn’t get to during my weekly live chat. I’ll also be pulling from questions you send to me thorough e-mail (colorofmoney@washpost.com), Twitter (@SingletaryM) or Facebook (www.facebook.com/MichelleSingletary.com).

Kids’ “life happens” funds gone

I wrote in last week wondering if I should use my kids’ “life happens” savings accounts (for proms, summer camps and braces) to put a big dent in my $11,000 credit card debt that snuck up on me. It took me less than five minutes after your advice to empty the accounts and pay $7,000 on the debt...

Read More

Four in ten students may default on their loans

  • An estimated 40 per cent will never be able to repay their student loans
  • The new figures come as a result of removing the cap on tuition fees
  • Students are left with the prospect of £36,000 in debt before living costs

By TAMARA COHEN

PUBLISHED: 18:21 EST, 21 April 2013 | UPDATED: 18:21 EST, 21 April 2013

Four out of ten student loans may never be repaid, amid fears that university funding is becoming unsustainable.

The Treasury is said to be concerned that the new system – which sees students borrow up to £9,000 a year for their course fees – will not recoup its costs.

Officials anticipated that 28 per cent of loans would never be repaid. It is now understood that their estimate stands at 40 per cent.

Four out of ten student loans may never be repaid, amid fears that universit...

Read More

Student loan borrowers shy away from buying new homes By Elvina Nawaguna

A sign near the Trades housing division built by Gentry Homes promotes special offers for potential buyers in Ewa Beach, Hawaii, March 6, 2013. REUTERS/Hugh Gentry

(Reuters) – Younger Americans are increasingly struggling with the burden of student loan debt, and appear to be retreating from homeownership and car debt, according to a recently released study.

Historically the median age of first home purchases has been about 30 years old, and homeownership rates were significantly higher for 30-year-olds with a history of student debt.

That’s because this population tends to have higher levels of education and higher income.

But the recession and the subsequent surge in student loan debt delinquencies appear to have flipped this trend, according to a study by Meta Brown, a senior economist in the Federal Reserve Bank of New York’s Research and Statistics Group, and Sydnee Caldwell, a senior research analyst in the same group.

By 2012, for the first t...

Read More

Student Loan interest rate proposal draws critics By Amy Tsai The Daily Tar Heel

http://www.dailytarheel.com/article/2013/04/student-loan-interest-rate-cap-proposed

President Barack Obama has offered a way to keep interest rates on student loans low, but critics say it might not be a long-term solution.

Under Obama’s proposed budget, the interest rates on subsidized Stafford student loans will fall to an all-time low of 2.79 percent next year.

Each year, the interest rate on subsidized loans would be based on the market value of a 10-year Treasury note.

But his plan does not include a cap on how high the market can drive up student loan interest rates.

The 3.4 percent interest rate on subsidized student loans was scheduled to double last summer, which Obama criticized in a speech atUNC-CH in April 2012.

Congress eventually delayed the increase until July 1.

Kris...

Read More

Ask Farnoosh: Best Ways to Pay Off Your Student Loans By Farnoosh Torabi

http://finance.yahoo.com/news/ask-farnoosh–best-ways-to-pay-off-your-student-loans-173529893.html

Kate asks: We can borrow equity against our home at 4%. Is it worth it to take out an equity loan to pay off our student loans (undergrad and graduate), the bulk of which are locked in at 6.8%? Also, I’m close to paying off my undergraduate student loan. Should I put the money I was placing towards that loan each month into savings or into paying off my graduate student loans? We are credit card debt free and at this rate will be free of all student loans in three years.

Dear Kate,

Home equity loans can be a relatively cheap way to borrow versus personal loans and credit cards, thanks to their low interest rates. But with only a few years left to pay off your student loans, it’s important to ...

Read More

3 Reasons Paying Off Student Loans With Credit Is A Terrible Idea

Deanna TempletonCredit.com | Apr. 17, 2013, 1:37 PM

In a recent article on little-known facts about student loan debt, we covered why bankruptcy is almost never an option for getting around overwhelming student loan debt burdens.

The article prompted a reader to pose the following question:

The other day I was participating in a discussion on Twitter. Someone suggested that using a credit card to pay off student loans was the way to go. Why? They felt as though they would then be able to have the debt erased in bankruptcy because it would now be considered credit card debt and not federal student loan debt. Any thoughts on this? I wondered how far back the bankruptcy courts would look to see if this is indeed what happened and, if so, if this could backfire on those who are using the...

Read More

3 Little-Known Facts About Student Loan Debt

by Deanna Templeton on 03/14/2013

n June of 2010, student loan debt made headlines when it surpassed credit card debt here in the U.S. Since then, outstanding student loan debt has surpassed the $1 trillion mark — making it the single largest form of household consumer debt outside of home loans.

There’s no question that student loan debt continues to be a growing concern — not only for students and graduates, but for parents, grandparents and policymakers alike.

With so much media attention on the state of student loan debt, public awareness of the issue has grown substantially...

Read More

How Much Money Does the Government Really Make From Student Loans?

Author : ANDREW P. KELLY

On July 1, the interest rate on roughly one out of every three new student loans is set to double, from 3.4 percent to 6.8 percent. Unless Congress steps in to stop it.Having déjà vu? You should be: We had this same conversation last year. Except this time, the arguments from student advocates have become even more divorced from fiscal reality.To refresh your memory: In 2007 Congress set the interest rate on subsidized Stafford Loans, which largely go to low-income borrowers, at 3.4 percent. The rate was due to sunset last July, but Congress, the President–even Nominee Romney–all sought to out-pander one another to extend the policy for a year. The temporary fix cost taxpayers about $6 billion.But surely the benefits to borrowers were huge, right? Hardly...
Read More