All Articles Tagged "student loans"
By now you might have heard the news that President Obama wants to make college free, at least for the first couple of years.
According to the fact sheet on White House.gov, the America’s College Promise proposal aims to provide free college, up to two years, for “responsible” American students. The proposal is estimated to save 9 million students, on average, $3,800 in tuition per year.
As the White House writes about the “whys” of this proposal:
“By 2020, an estimated 35 percent of job openings will require at least a bachelor’s ecegree and 30 percent will require some college or an associate’s degree. Forty percent of college students are enrolled at one of America’s more than 1,100 community colleges, which offer students affordable tuition, open admission policies, and convenient locations. They are particularly important for students who are older, working, need remedial classes, or can only take classes part-time. For many students, they offer academic programs and an affordable route to a four-year college degree. They are also uniquely positioned to partner with employers to create tailored training programs to meet economic needs within their communities such as nursing, health information technology, and advanced manufacturing.”
According to the proposal, students with a GPA of 2.5 or above and who are already attending college half-time will be eligible to have their tuitions waived. Likewise, the program aims to work with community colleges to help them offer “programs that either (1) are academic programs that fully transfer to local public four-year colleges and universities, giving students a chance to earn half of the credit they need for a four-year degree, or (2) are occupational training programs with high graduation rates and that lead to degrees and certificates that are in demand among employers.”
The proposal doesn’t say specifically how it plans to pay for the tuition waivers, which is estimated to cost $60 million over a decade. However, the White House writes that it is hoping to partner with interested states and will reimburse them for seventy-five percent of tuition costs for each individual student.
Admittedly, I haven’t been the biggest fan of all of the president’s policies; however, I must tip my hat to him for taking on such an ambitious proposal. If he is able to pull this off, he might be the most socially progressive president in our history. And that is a big “if.”
First, what I do like about the program is that it acknowledges what has long been a widely-known, but closely-held secret among many students and even faculty at four-year institutions: the first two-years of college are kind of bullshit. Okay, not exactly…
But there is a reason why most college guidance counselors advise students, particularly those who have yet to decide their majors, to explore and sample a variety of disciplines in your first couple of years in college before committing to a program in your final two years.
Personally speaking, I loved my humanities, political science and sociology classes. They added much needed perspective to my learning experience. However, there were other classes, which felt more like refreshers from high school. And while those classes were also helpful, I didn’t feel like they should have cost the same amount, per credit, as classes, which were more directly related to my major.
And this is important to note, as my tuition costs for the first two years of classes, which were unrelated to my major, started around $12 thousand. (That number includes on-campus living expenses.) That was the cost in the late ‘90‘s. Well over a decade later and the price of higher education has risen to astronomical levels. Even worse than the cost of college is the questionable job market, which in spite of its recovery, fails to produce sustainable incomes to college students upon graduation. This is important to highlight as American students are currently over $1 trillion dollars in debt and it is starting to have an effect on the overall economy, according to this article in Time magazine. Therefore, this proposal has the potential to make a four-year educational experience more cost-effective, which means less student loans.
Not to mention the proposal also seeks to make community college credits more easily transferrable to four-year institutions. As this report from the National Center for Public Policy and Higher Education notes, both “affordability and transfers” have long been major obstacles to four-year degree programs for over the 40 percent of all American students currently enrolled at community college.
Of course, this proposal is contingent on Congress’ approval and as Ben Miller, senior educational policy analyst at the New America Foundation tells the LA Times, “Anything involving more money to pay for things is going to be difficult in this Congress.”
Likewise there are concerns about the impact such a change will have on cheapening standards at traditional four-year universities and colleges. Public eduction advocate Diane Ravitch highlighted some of the opposition to the White House’s proposal on her personal blog. In particular, she references a letter she received from a college faculty member working at a university in Tennessee, which already offers free tuition for two years at community colleges. More specifically, the faculty member notes:
“Here is a concrete example from my university, The University of Memphis (UofM), that should give a pause to the celebration of free higher education. Last year, shortly after the announcement of a $20 million cut to UofM’s budget, came the announcement of Tennessee Promise that offers free education to all TN residents at public community colleges. In my opinion, TN Promise is a perfect example for taking money away from high quality education (UofM, in this case), and use the extra funds to invest in low quality education (community colleges). Then this lower quality education is offered to the masses as a solution to their educational needs.
To make the high-to-low quality education transformation explicit, I remark that we at UofM are now pressured to start accepting lower level courses to our major requirements to “ease the transition of students from community colleges to our university.”
In addition to the questions of who will pay for it and the impact such a proposal will have on traditional four-year institutions, I do also wonder the impact this proposal will have specifically on historically Black colleges and universities. Recent federal changes to the Pell Grant and to student loan qualifications have been really tough on many HBCUs that largely serve an economically-insecure student body who rely on federal assistance. This proposal has the potential to financially cripple those institutions even more by transferring a big chunk of dollars into the hands of community colleges.
Hopefully, the White House can get those issues sorted before – and if – this becomes an actual program. Or else the old adage about the road to Hell being paved with good intentions might ring true…
College acceptances in some ways are easier to come by than financing the education that comes with them. Despite the various financial aid/ loan packages one can sign up for, many students still fall short on payments needed for their housing or class materials. While some students turn to part-time jobs to relieve financial burdens, others decide to enter escort services.
The Atlantic reports that 44 percent of the 2.3 million women who are enlisted escorts — “sugar babies” — on the site Seeking Arrangement are in college. If the “babies” sign up to Seeking Arrangement with an .edu email address they receive free premium membership whereas male users must pay $1,200 for it. The “dating” site also claims the sexual relationships created between their “babies” and users are natural. Seeking Arrangement also upholds the illusion that its services are not prostitution despite the clear sex-for-money exchange.
Even though the relationships can get very physical, many of the sugar daddy/sugar baby relationships have an added dimension. It’s not just about physical looks, but also intelligence. It was duly noted in The Atlantic’s investigative piece, “some men on the site use it exclusively for sex, the majority want sex and something else. They want someone to come along on business trips, go to company events, and meet their friends—someone who understands and appears interested in what they have to say. Most importantly, they want someone who will help them pretend that the relationship is not a transaction.”
The “babies” interviewed by Caroline Kitchener, author of the investigative article, told her when they do not ask for their payments upfront, they receive more funds. Some of men even give the young women credit cards to make the exchange feel more personable. One woman, named Wanitwat shared:
“I found that some, if not most, of the guys don’t want to talk about money. I suspect that’s because it kills the fantasy. They’re trying to pretend that these smart, beautiful women actually want to hang out with them.”
Though these men may try to avoid the reality of the relationships they have with their “babies,” Kitchener challenges readers and even the “babies” to break through another illusion. The “babies” may be brilliant college students trying to fund their education, that does not exempt them from the label of prostitute. Or does it?
Earlier this month, I promised that I would share some of the hidden forms of student loan relief for your private loans. While the opportunities to reduce the interest rates attached to your private loans may not be as robust as those of federal loans, they, nonetheless, do exist. My hope is that is article will inform you about your options so you can make the best financial decisions for you.
If you have private loans with Sallie Mae…
As of July 1, 2013, Sallie Mae introduced the Graduated Repayment Period (GRP). Sallie Mae offers a six-month grace period after graduation. During this time, a borrower is excused from making payments toward his/her loans. Traditionally, the borrower would then have to begin making monthly payments that include principal and interest. Under the GRP, however, the borrower only has to pay accrued interest for the first 12 months of repayment. This means that recent graduates have 18 months before being required to pay toward the principal. As with many repayment programs, this can lead to higher payments later and a more expensive total loan amount, but it helps consumers get on their feet after graduation. This is particularly important for those who struggle to find work.
In addition to the Graduated Repayment Period, Sallie Mae has the 12-month rate reduction program. This program offers lower interest rates, as low as 1 percent, and sometimes includes a modification of the loan term. To qualify, borrowers must first make three consecutive on-time monthly payments at the reduced rate.
If you have private loans with Wells Fargo…
Private student loan borrowers who are interning, in a residency or fellowship, or are even still enrolled less than half-time as a student might be eligible for its forbearance policy. Wells Fargo also offers an extended grace period for those who qualify.
In terms of relief from student loans because of economic hardship, the following is available: short-term payment relief, payment relief of up to six months, and “payment options” for those who are past due.
If you have private loans with Discover…
Discover offers in-school deferment for students who are enrolled with at least half-time status. They then allow deferment for certain occupations:
- On active military duty (up to 3 years).
- In public service with certain organizations (up to 3 years).
- In a health professions residency program (up to 5 years).
- Discover likely has other options available to borrowers, too. Discover encourages struggling borrowers to call its “Repayment Assistance Department.”
If you want to refinance your private loans…
If you are interested in refinancing your loans for lower rates, SoFi is an excellent resource to know about. SoFi stands for Social Finance and the company brings together alumni from universities and colleges with investors to refinance loans, offering variable rates as low as 2.92 percent and fixed rates as low as 4.99 percent.
This is a viable option for borrowers with a very good credit history. On top of that, SoFi provides users with access to alumni-driven SoFi network, which comes with additional career services for borrowers.
So what say you? Feeling a tinge better about how to repay your private loans?
Connect with Kara on Twitter. Learn more about The Frugal Feminista and download her free ebook The 5-Day Financial Reset Plan: Eliminate Debt, Know Your Worth, and Heal Your Relationship with Money in Just 5 Days.
Do you have a student loan? Are you struggling to pay it? With today’s economy still in recovery mode there are many college graduates rethinking their decision to earn their degree as the debt of student loans are zapping paychecks — so much so that money is being garnished from accounts. Whether you have a few more payments to make or will owe institutions for the next couple of decades, there are some do’s and don’ts you need to consider. Here are some tips on handling student loans.
Data analyzed by The Wall Street Journal shows that paycheck garnishment for student loan borrowers was up 45 percent over the previous decade for the fiscal year ending September 30, 2013. The Education Department is actively collecting from borrowers who have defaulted on federal student loans even as debate rages on about what the government should do to help.
Borrowers are in default after missing 12 monthly payments. The government can begin taking as much as 15 percent of post-tax wages without court approval at that point. Though there are different circumstances that land borrowers in this position, many of those who are falling into default, according to the WSJ, are professionals who borrowed a ton to get their advanced degrees, or those who never finished. And many who find themselves getting their wages garnished end up in that position for quite some time.
“Wage garnishment is a tool of last resort used by the department to recover defaulted loans,” said Dorie Nolt, the spokesperson for the Education Department.
Some say the Education Department shouldn’t lend quite so much money. Others say there isn’t enough being done to let borrowers know about the repayment options.
And then there are the legislative measures that could be taken but haven’t. President Obama just signed an executive order to put a cap on student loan payments. An executive order doesn’t require Congressional approval, but they are also usually limited in scope.
The Senate voted this week on legislation that would allow borrowers to refinance their loans, legislation that was heavily supported by Massachusetts Sen. Elizabeth Warren and the President. How do you think that went? The legislation failed. Democrats thought it would be a good idea to let borrowers find a way to reduce student loan interest — which can get as high as nine percent — to as little as 3.86 percent. Republicans thought it wouldn’t be effective.
“Students can understand that this bill won’t make college more affordable. They understand it won’t reduce the amount of money they have to borrow. And students know it won’t do a thing to fix the that’s depriving so many young Americans of jobs,” said Sen. Mitch McConnell (R, KY).
However, there are others who say that this sort of help is necessary if borrowers are to reach their potential.
“This issue deserves more than a partisan response. Allowing students and families to refinance their student loan debt should not be a partisan issue; it’s the right thing to do,” reads a statement from Randi Weingarten, president of the American Federation of Teachers.“We will continue to fight alongside Sen. Warren and others, including the courageous few Republicans who stood today with students and families, to chip away at this mountain of debt and reclaim the promise of higher education as a pathway to opportunity and success.”
The student loan crisis (yes, crisis, with a trillion dollars in debt) is hampering the financial efforts and stability of many Americans. In turn, it’s become a hurdle to greater economic growth for the country as a whole. Clearly we have to start somewhere, and helping those who are already in debt is a great place.
Due to towering student debt and costly higher-education expenses, young America is struggling to build wealth and gain financial stability — and students are blaming the nation’s colleges and universities for this issue, The Huffington Post reports.
While 10 percent of college attendees say that students, not institutions, are at fault for America’s student debt problem, 39 percent disagree. They point to colleges and universities as the culprits behind the staggering levels of student debt. This survey, conducted by the Harvard University Institute of Politics, also finds that 58 percent believe that skyrocketing student debt is a “major issue” — even those who aren’t even enrolled in college agree (54 percent).
“Young people who are coming of age today understand that getting a postsecondary education is important [but] they have a lot of fear about the rising cost of higher education,” said Rory O’Sullivan, Policy and Research Director at Young Invincibles.
Over the past three decades, the cost of a college degree in America has increased by 1,120 percent! More than seven million borrowers have defaulted on their loans as the nation’s student debt swells up to $1.2 trillion. Tuition and fees in America’s public colleges averages to about $8,400 for the 2013-2014 year. For private colleges, that number nearly quadruples to $30,500.
As a college degree is nearly essential for scoring a well-paying job, students are welcoming the crushing debt. But these outstanding student loans takes a toll on the economy as college graduates are less likely to pursue mortgages or car loans. There is a new generation of thirty-somethings that “subsequently don’t have enough cash to make investments in assets that can appreciate in value,” MN wrote.
Colleges simply focusing on aesthetics rather than academics adds to rising tuition costs. University of Pennsylvania, for example, must have put in tons of cash for their new golf simulator in one of their fitness centers. Iowa State University dropped $46.2 million for a new rock wall and hot tub. While these sound nice, college students are footing the bill for these lavish amenities.
“Too many colleges are acting in the interest of building prestige over providing an affordable pathway to higher learning for their students,” Matthew Segal said, head of millennial advocacy nonprofit OurTime.org.
Going back to Harvard University’s survey, another 32 percent shift the blame to the federal government. “The U.S. Department of Education collected $42.5 billion from borrowers in fiscal year 2013 alone,” HuffPo added. Only eight percent said that their state government is fault.
More than 70 percent of the Harvard poll’s participants admitted that their financial circumstances determined whether or not they attended college.
“People are finally realizing that the college arms race must stop if we are ever going to rein in costs,” Segal said.
The aftermath of higher education leaves the average student drowning in nearly $29,000 in loans. For many, the prospect of buying a home or car is completely dashed by the entanglement of debt. But there is a light at the end of the tunnel. Should you choose to work in public service, your student loan debt may be forgiven, MSN Money reports.
“More than 33 million workers qualify to have their student loans forgiven because they work in schools, hospitals, firehouses, police stations, city halls, the military,” MSN added. But not many participate in these student loan forgiveness programs because of their complexity, and well, no one really knows they exist! The Consumer Financial Protection Bureau (CFPB) has implored Congress to enforce better regulation on these programs so workers know they are available.
“[T]he CFPB says U.S. workers are sending millions of dollars to lenders instead of keeping that cash in the local communities. It also actively discourages college graduates from entering public service fields,” the story says.
With public service positions, such as education, offering starting salaries at just $36,000, many students overlook these jobs. These student loan forgiveness programs would make those jobs more attractive. “The demand for nurses, police officers and social workers face […] supply problems thanks to low starting salaries,” MSN Money said. “The government is willing to help them out, but it seems content to just let student loan cash flow to big lenders instead.”
While teachers, military personnel, police officers and other public servants are kept in the dark about these debt forgiveness programs, they remain chained to a low-paying job with hefty debt.
“People give up higher incomes to serve their city, their state, or their country,” said Richard Cordray, director of the CFPB. “We believe that people who contribute part of their talents, part of the benefits of their education, to society as a whole should not be mired in debt because they stir themselves to the calling of public service.”
The CFPB estimates that about 25 percent of America’s workers qualify for student loan forgiveness programs and these public service workers are eligible to have their debt wiped out within 10 years.
After all the talk about student loans and the massive amount of debt it saddles Americans with, we should turn an envious eye to Sweden, which offers a free college education. However, the average student has about US$19,000 in debt, far lower than the US (over $24,000) but still a lot. And 85 percent of students graduate with debt in Sweden whereas only 50 percent of Americans do. How can this be?
Sweden in particular — and Scandinavia in general — is an expensive part of the world. Quartz links to a story that shows how expensive Stockholm is, adding, “In Sweden, young people are expected to pay for things themselves instead of sponging off their parents.” Moreover, they tend to live on their own at a younger age than other Europeans. Adult children live at home until about the age of 30 in some countries.
“[W]hereas in the US parents are expected to help pay for the their children’s college education, in Sweden parental income levels are just not part of the equation. Students are viewed as adults, responsible for their own finances,” the article says.
Even with a student debt load, they manage to have a comparatively comfortable lifestyle. It should be noted that Swedes also have the support of a government that keeps interest rates low. President Obama is fighting to keep student loan rates from doubling in just a few weeks. Going forward, it’s important that we question political candidates about their views on help for students and managing student loans.
So the lesson here is to closely monitor, not just the cost of college tuition, but the cost of living as a student. It’s important to keep the prices for housing, entertainment, cable (why does anyone have more than one cable box… or one TV for that matter?), and other expenses low when income is low. When making the college decision, be sure to weigh all of the considerations and options. Should you or your child go to a community college first for a couple of years in order to live at home and save tuition money? Should the geographic location of the college be a consideration? Perhaps going to school in a small town is the better option versus choosing a school in a pricier city. Can you room with friends? Should you restrict yourself to only a night or two per week for dinners out and socializing, even if it looks like everyone else is having much more fun? And how big of a student loan do you really need?
Moreover, monitor your spending when you graduate. Loans need to be paid back and savings accounts built up. Just because work and income are the full-time priority, it doesn’t mean you’re flush with cash.
Finally, we have to be sure we’re thinking about debt in the right terms. While debt might be unavoidable, we must have a game plan for managing it and paying it off. In other words, look at your career path, your expenses, and where you hope to be in the longer term to determine the level of debt you can handle. You don’t want to have to put your life plans on hold later because you have to pay off debts you’ve accumulated now.
Many ladies in the hunt for a sugar daddy want one that’s got the money to finance either their plastic surgery desires or their student loan repayments.
A study done by SugarDaddie.com (not a typo) found that the top reason women seek out a sugar daddy is to pay for cosmetic procedures that include Botox and — most requested — breast augmentation. This is also the number one cosmetic procedure overall in the country. According to the press release with the study’s findings, one top-notch SugarDaddie wrote, “I could work 24/7 and would never be able to aford [sic] to pay for my own boob job.” Oh.
The second most popular reason was to pay Sallie Mae, showing that relationships are being impacted by the huge student loan debt in this country in more ways than one.
Rounding out the top five reasons women seek out sugar daddy, in order, are shopping, car payments, and travel.
SugarDaddie.com polled its 100,000 members for this survey.
We’ve asked before for your thoughts on sugar daddies. We’ll ask again. Is this whole set up OK?
There is a pattern for some people within the black community of poor financial education. A pattern I didn’t know existed until I fell prey to the pitfall of misinformation where money was concerned.
It was 2009 and I was in grad school. I had stopped going to class regularly. I only left my dorm room to eat. I stayed in bed all day, every day watching television. I was more than stressed. I was literally becoming more and more depressed with every debt collection phone call I ignored into the voicemail folder of my phone.
I didn’t mean to rack up almost $8,000 in credit card debt in less than two years. Somehow the idea that I needed to begin building credit was implanted in my naïve brain the summer between freshman and sophomore year of college. I had heard that if I did not get a credit card and begin building credit in college, I wouldn’t be able to buy a car or a house later in life because I would have no credit history to draw from.
That freaked me out. So, having done little to no research, I grabbed the MTV University Platinum card. It featured a bunch of perks and rewards and goodies and what-nots. It also featured a $4,000 limit and a 32 percent interest rate, but I had no clue what that would mean so I had no worries. Wasn’t I the frugal young lady who had stretched $20 every week during freshman year? Please, $4,000 was going to be no problem. I would only use the card for emergencies anyway.
Well, EVERYTHING soon became an emergency. Acrylic nails. Pizza. Trips to the city. The movies. I could NOT control myself when it came to that little piece of plastic. In my mind, as long as I paid something on it every month, I was good. I ended up getting another credit card with a lower interest rate to transfer my debt and save myself some money while I figured exactly how to pay off $4,000 when I was only making $500 per month on work study. I ended up canceling both cards and burying my head in the sand, scared to answer calls from debt collectors. Then, one day a collections agency called and basically threatened to take me to court OR garnish my wages if I did not set up an automatic payment with them right then for $325 each month. Scared out of my mind, I did it. Then I called my mother. She freaked. She told me I did not have to do that, especially since I didn’t have anywhere near $325 in my bank account.
I ended up having to freeze the account and pay my bank back the money they fronted for my stupidity, as well as a hefty overdraft fee.
From that moment, I knew I could not wallow in depression and anxiety about my money situation anymore. It was not going to get any better by avoiding my creditors. I had to educate myself and figure out how to confront the problem head-on. My finance professor happened to be discussing the difference between credit card interest and student loan interest one night during class. He expressed that student loan interest rates couldn’t exceed about 7.5 percent (at that time) while credit card interest rates could be as high as 30 percent. He said it was wise to take out a student loan to cover credit card debt (depending on the individual situation). Well, I looked at my debt situation, talked to my creditors to try to get my interest reduced, but to no avail. They weren’t budging. So, I took out a student loan to cover my credit card debt and ended up saving myself thousands in interest fees.**
Since 2009, I swore off credit cards for a long time and only decided to get another one in early 2011, which I didn’t even use until that summer. I paid the card off in full every time I used it.
My situation is not so different from many young people who are thrust into taking care of their own finances with little to no guidance or foreknowledge. The most important lesson I have learned in dealing with the depressing trial of massive credit card debt is this: DO NOT SPEND WHAT YOU DON’T HAVE.
If I know I can’t pay off at least 80-90 percent of what I want to purchase on my credit card, I don’t even try it.
What you’re not told is that every little thing affects your credit score. So, while building credit is important – having a job to pay off your credit card and the willpower not to live above your means is more important. It would be different if I had budgeted and used my credit card wisely for things like school supplies and the occasional treat, but I lost my ever-loving mind and charged everything. It’s so easy to swipe that bit of plastic and forget about paying it off.
- Educate yourself before you choose a credit card. Know the interest rates. Ask about monthly fees and balance fees (they add up). Or if you’re sinking in debt and burying your head in the sand like I was, get up, call your creditors and explain your financial situation. Get on a plan to pay them back little by little. Trust me, they want to help you pay them back their money. These are people with loans and debt just like you. They get it. More often than not, they are willing to negotiate terms.
- Create a budget for yourself. If you get into the habit of spending wisely, you’ll feel so accomplished you’ll continue. I use the 50/30/10/10 rule. Fifty percent goes to bills. Thirty percent goes to my treats, shopping etc. Ten percent is tithed to my church. And the last 10 percent is saved. Having a plan will always yield favorable results if you commit to it. Sites like Mint.com are super useful in setting up streamlined budgeting systems.
- Understand how credit cards work. Even if you pay your card off every month, maxing it out is no good. A consistently maxed out card signals an out-of-control spender to the credit bureaus and it decreases your credit score. Using 20 to 30 percent of your card and paying it off each month shows restraint and responsible stewardship.
- Find deals! You can still afford to have fun and purchase nice things even while on a restrained budget, you just have to search out great deals. And with sites like LivingSocial and Groupon it isn’t hard to find great deals anymore. There is no reason why anyone should be spending full price for anything, ever. Clip coupons! Be a loyal customer – the perks are AWESOME.
- Don’t focus on your past mistakes with money or all the things you wish you could do. Focus on the lessons learned and the courage you mustered to take back control of your finances. With time and a committed plan, you’ll be out of debt and more financially empowered than you dreamed.
Many churches and community centers offer free financial courses to help the community find financial freedom. Be active about taking control of your finances. Seek out the help and the tools. They are abundant and so severely under-utilized.
**Taking out a student loan to cover credit card debt is what worked for ME. I am not advocating this course of action for everyone. Find what works best for you.
La Truly seeks to encourage thought, discussion and change among young women through her writing. Follow her on Twitter: @AshleyLaTruly and AboutMe about.me/Ashley.hobbs.