All Articles Tagged "student loans"
In a move to give college students more power over their debt, the Obama Administration has made it so students can apply to have their federal loans discharged if they are able to prove a school used illegal or deceptive tactics in violation of state law to persuade them to borrow money for college. Under the “borrower defense to repayment” process the “government would also consider wiping away debt in the event of a “substantial misrepresentation” by the school about the nature of the program, financial charges or the chance graduates have of finding work, according to the proposal,” reported The Washington Post. While the legislation was passed in the 1990s, the Obama Administration revised the rules to give students the power to sue a college for back tuition and fees if they felt “substantially misrepresented” by the institution.
In fact, according to the government’s student aid website, students may be able to have their entire outstanding federal Direct Loan forgiven and be reimbursed for amounts you have already paid.
Sounds like it was a move in the right direction, considering student loan debt is estimated at about $1.3 trillion, spread out among about 43 million borrowers. But some say this provision could harm Historically Black Colleges and Universities (HBCUs) which might become the target of frivolous lawsuits. “Surveys show that African-American students who graduate from HBCUs often feel more nurtured and supported than Black students who attend predominantly white institutions. However, socioeconomically, there is more overlap between most HBCU student populations and for-profit and community college student populations than large PWIs or state institutions: precisely the kinds of students this legislation purports to help,” The Root’s Jason Johnson wrote.
That’s why HBCUs are pushing back at this new revision of the legislation, arguing the wording is too broad.
“[W]hat about a regular college that says, “Going to [fill in the blank] private college will change your life”? Did it fail if you didn’t become all you could be between trips to the cafeteria and the quad? Should you be able to blame the career-services office if it can’t get you any decent paid internships? This is why dozens of HBCUs have rallied against this legislation. The stipulations for being able to sue your college for “failing to meet” expectations are just too broad and too vague and open the door to all sorts of punitive shenanigans that many small HBCUs can’t afford to battle,” Johnson explained.
Some observers claim the Obama Administration has already failed HBCUs and this new revision could officially ruin them.
John Singleton’s Son Launches Go Fund Me To Pay For College…Are Parents Obligated To Pay Their Child’s Tuition?
I had a good friend who, after our freshmen year of college, learned that her parents would no longer be paying for her education. She was on her own. They hadn’t lost their jobs. In fact they were doing quite well financially. And, as far as I knew, she hadn’t done anything to displease them. She’d done well her first year. But for one reason or another, her parents felt it was time she stand on her own two feet and pay for school. So she had to take out some additional loans and work a part time job in addition to her coursework.
And while she made it, graduating a semester earlier than the rest of us, I know it wasn’t easy.
Apparently, my friend is not the only one facing this type of challenge.
Director John Singleton’s son, Maasai, has created a Go Fund Me page to help finance his last semester of college.
“So I’m using Go Fund Me to get tuition for the final semester because I was fortunate enough to be helped by my father up to this point but I need to make it this last semester on my own. And the timing of this information is such that I’m not eligible for a lot of financial aid options.”
In an update for the page, Maasai writes that he was denied for a Sallie Mae student loan because he doesn’t have an established credit history of his own. So this means he applied without a cosigner.
I don’t want to be all up in the Singleton family business, but since Maasai is appealing for money, I do wonder why.
Is this some type of test to prove that Maasai can make it on his own in the real world? Is John trying to teach his song about the ways in which less privileged children live? I don’t get it. Perhaps this was Maasai’s idea. Maybe the two had a falling out and now the elder Singleton is forcing his son to come up with nearly $30,000.
It’s all strange to me.
I get parents not being able to pay for a child’s education. I even understand the merits and character paying for your own schooling will allow some people. What I don’t understand is leading your children to believe you’re going to be taking care of the bill only to spring a surprise on them later.
But that’s just me. I only know how my parents and I financed my education. They paid and I took out loans to make it happen.
Perhaps some of you have a different experience.
Did your parents stop paying for school at some point, before you graduated? Did they give a reason? Were you able to make ends meet and pay tuition or did you have to drop out?
In the case of John Singleton and his son, should people give to him, knowing his father has the means to pay for at least some of his schooling?
What do you think?
Many of us know the struggle of being a college student or are experiencing it right now as we speak. In particular, the financial burdens of college are plenty and heavy. Between paying tuition while you’re enrolled and paying off student loans upon graduation, many are left in whopping debt that forever (or until you pay it off) looms over your head like a rain cloud.
A recent report by American multinational investment banking firm Goldman Sachs suggests that the expense of a college degree is increasing to the point that it might not be worth the money anymore. “The average return on going to college is falling,” Goldman researchers wrote, and “many students are better off not going to mediocre colleges — ones that rank in the bottom 25% of all universities.”
Goldman also broke down the how exactly a college degree doesn’t pay itself off or even break even. The investment banking firm found that in 2010, the average college student had to work 8 years to break even on their bachelor’s degree investment– they’d be nearly 30 years old.
Goldman also offered projections of breaking even for future graduates:
— 2015 graduates won’t break even until age 31
— 2030 graduates won’t break even until age 33
— 2050 graduates won’t break even until age 37
However, Goldman did also note that the payback time varies widely by major, as some degrees are more valuable than others. “The choice of college and major are more important than ever to students given the changing return profile,” writes Goldman. In particular, students who also attend top-tier universities and major in business, health care and teach, regularly have higher salaries. “Graduates studying lower paying majors such as arts, education and psychology face the highest risk of a negative return,” notes Goldman. “For them, college may not increasingly be worth it.”
For myself, who has now been out of college for a year and a half and graduated with a B.A. in Print Journalism/Film Analysis, college was a great experience. I can attest to the fact that my friends and peers who did study in fields like health and business got jobs and way higher salaries than I did straight out of college. However, the experience and knowledge I learned along the way equipped me with the skills to get out in the real world and find a way to make a living off of writing — my true passion.
So, would I say that college isn’t worth it? Yes and no. The amount of loans I have to pay off are a headache and a real pain in the a**, but for someone like myself who loves learning and believe in making do with what I have, I understand the trade-off.
What do you think?
Unless I win the lottery, rob a bank or am somehow excused from having to pay back the money I borrowed to fund my post-graduate education, I don’t know how I’ll ever get the massive debt monkey off my back. It’s not an impossible feat, mind you, but I am realistic about what it will take to make that happen. I just wish that realism was alive and well when I decided to borrow the money in the first damn place.
If I could go back and do it all over again, I would have borrowed only what I needed to pay my school fees. While that seems both obvious and logical, I made a conscious decision during that time not to work while I was earning my degree. I wanted to be laser-sharp focused and fully immersed in honing my craft. I planned to take advantage of every class and internship of interest and spend all of my free time writing, rewriting and then writing some more. If ever there were a perfect time to be selfish and to alleviate some of the responsibilities and burdens that come with being an adult, grad school was it. So I borrowed enough money to attend school full time and pay my bills without having to work a 9 to 5 or any other shift. When will I ever have it this good? I thought.
But there’s nothing good about being knee-deep in debt. And the crazy thing is, I didn’t borrow an unreasonable or astronomical amount of money to fund everyday living expenses. Even if I received only what I needed to pay for school, I would still be singing the student loan version of Angie Fisher’s “I.R.S.” song. I also had a naïve understanding of the harsh realities of being a writer and, more importantly, the reality of having a master’s degree in a creative, non-doctor, non-engineer or similar field of study where an advanced degree is required, field. Nobody cares. And the second you move that graduation cap tassel from the right side to the left, they might as well hand you your first student loan bill payment.
It took several months after graduation to land a job, but that, of course, didn’t keep student loan payments from rushing in. And with that job, I didn’t make enough money to afford the payments established for me. While there are different repayment options and plans available that supposedly cater to your financial needs, they don’t take a lot of factors into consideration and often end up being infeasible. So you fall behind in payments, you defer, or you declare forbearance – all temporary solutions that delay the inevitable and pile on interest. If you’re overwhelmed, you might even completely ignore your student loan payments when they come in the mail or appear in your inbox. I’ve done all of the above.
And don’t let your account be in default or delinquent. That’s giving permission to creditors to call you and anyone you’ve ever known incessantly. I get incensed whenever I receive a call from Navient talmbout, “Would you like to make a payment to bring your account up to date?” Uh, yeah, let me write a check for $11,000 real quick.
And it’s the seriousness with which they pose such a stupid question that makes me angry. Anyone who can afford to make such a payment probably wouldn’t have borrowed the money to begin with.
There are times when the amount of money I owe is debilitating and downright depressing. Other times, I can see the light at the end of the student loan debt tunnel. But no matter where my thinking rests, interest on my accounts accrue and option number two (robbing a bank) looks more and more likely.
In all seriousness, I sometimes wonder whether my education was worth the stress and a lifetime of loan repayment. What I learned in grad school, the friends I made – all of that is invaluable. But being saddled with debt somewhat undercuts the promise of higher education.
Our economy has drastically changed. Having a degree, advanced or not, doesn’t guarantee employment, nor does it guarantee that you won’t be underemployed or unemployed, for that matter. Former students who have loans to repay are in debtors’ prison. Because of it, they’re unable to get regular consumer credit and purchase homes. Some are even delaying marriage. This is no doubt a crisis, one that will take decades to solve, let alone reform. But I’m no Marty McFly. I don’t have Doc or a flying DeLorean to transport me back in time so I can avoid the reality I now face. All I can do is make smarter choices and hopefully educate people along the way about what it’s like living with lots and lots of student loan debt.
Bringing up student loans is kind of like bringing up STIs: it’s an uncomfortable topic we’d rather ignore and you can never be sure who has them. Sadly, because loans are such a taboo subject that is wrongly tainted with a certain degree of shame, the knowledge of those who have dealt with the realities of student debt is often not shared. When I took out $20,000 of student loans I didn’t have a resource to help me better understand just how debt could affect my life post-graduation. I graduated five years ago and I’m still paying off my loans. Occasionally I wonder how my peers are dealing with debt. So I set out to hear the stories of other millennials who graduated five-seven years ago with debt balances at graduation ranging from $10,000 – $90,000. Here’s what some of them had to say.
Madame Noire: How has student debt affected your life?
Sarah: Student debt has definitely affected my life in a huge way. One major aspect is the fact that I am still living with my parents in order to pay off my debt as fast as I can. Over half of my paycheck is going towards these loans and this is what makes it so difficult to move out and start my life. So for now, I am living with the feeling that life has yet to begin for me.
Dylan: I’ve talked about [debt] with my current girlfriend as we’ve gotten more serious. After we decided to move in together, we made a decision to live in a smaller apartment than I might otherwise if I didn’t have debt. I made a conscious decision to not take on other large amounts of debt, like a mortgage, until I can pay off what I currently owe.
Mike: Student debt has definitely been a burden since leaving college several years ago. It’s had a direct impact on where I live, the type of car I drive, the number of vacation trips I take, and just the overall financial quality of my everyday life. I lived at home with my parents for five years after graduating, rather than getting an apartment. I bought my first real car three years after graduating college. [My wife and I] actually just moved to a more modest apartment to get some extra cash to pay off [debt] faster.
MN: How do you feel about debt now?
Sarah: I feel debt is stopping me from fully living life and I don’t want this feeling to linger on when I get married and have a family. I like the feeling of knowing that everything is fully paid off. It’s a feeling of freedom. I would definitely borrow money if I had no other choice. However, this would now be my last resort as opposed to a few years back before graduating college and really understanding the power of debt.
Dylan: I think if you’re smart about it and don’t take on more debt than you can handle, it’s an effective tool to be able to purchase things that you may not be able to otherwise. I’m in favor of debt, but I think that people need to be better educated about debt, especially going into college. It’s not a good idea to take out $200K of debt if you don’t have a career path in mind that wouldn’t allow you to pay off that kind of debt.
Mike: We’re committed to not borrowing money again, except most likely a 15-year mortgage. We avoid debt and credit cards like the black plague. We believe that “the borrower is a slave to the lender” (Proverbs 22:7), and are going to cancel our credit cards as soon as the balances hit zero. We plan to save up for everything and pay with cash.
MN: Was borrowing worth it and would you do it again?
Sarah: Although I want to say that I wouldn’t be where I am today without the degree that I received and the debt that I took out to pay for my college, I don’t think this is true. I know many students that went to a public college for their undergraduate and then a private college for their graduate school and they still got to where I am in the very end. The thing is that I loved my experience at the college that I went to and I wouldn’t change that for anything. I would definitely do it over again just for this reason.
Dylan: Given that my graduate degree (which is what I took on debt for) is completely different from my undergraduate degree in liberal arts, I absolutely wouldn’t be where I am career-wise without debt. I absolutely would take on the debt again, because I have a career that allows me to repay the debt at a reasonable pace.
Mike: It’s hard to say. I’m of the mindset that everything happens for a reason but if I had to do it all over again I would not have borrowed any money for college. I was the first in my family who even had the option of attending a four-year college, so I believed that I had to do whatever it [took] to go to a big school and graduate in four years. I think the best path to take is to pay your own way through college, even if that means community college for two years then attending a four year college after.
If we solely focus on the economics of borrowing money for post-secondary education then, as reported by The Atlantic, in the long run school loan debt is largely a good decision. However, the thing that I drew from the conversations with my peers is that there are so many other highly subjective variables that determine your perception of how worthwhile it is to borrow. My economist friend shed light on possible factors such as the cost of worrying about not having enough money to make tuition payments on time if you don’t borrow, or on the flip side, the cost of choosing a career path you hate but need in order to pay off your incurred debt. Yet despite our unique dispositions and circumstances that influence our feelings about debt, the single unifying theme from all whom I spoke with was that we wished we had received more education on debt earlier on in life: things like refinancing options, fixed vs variable rates, what is a good interest rate, the concept of compounding, how interest payments work, what it means for your take home pay etc. One friend said, “[He] should have taken a more proactive view of the realities of lending starting at age 16.”
Was your student debt worth it?
You might want to be careful how you treat your folks. They just might hit you up for the money that helped to pay for your college education.
Forbes magazine reveals a growing trend where parents help finance their child’s higher education, so long as they get their money back. It looks like the days of saving for your child’s college because you want to help are over.
I’ve heard of a few parents asking for their money back after college, but it certainly wasn’t the norm. Most parents I knew (mine included) did what they could to help make sure their child earned a degree. While I took it upon myself to search for scholarships my junior year in high school, I can remember a period of time when my dad worked additional hours to bank money for tuition payments. Luckily 80 percent of my college was financed by grants and scholarships, but I can’t imagine my parents tapping me on the shoulder after I graduated looking for their money.
Now that I’m a mom, I want nothing but the best for my children. Yes they’ll need to work hard and establish independence, but that doesn’t mean my husband and I won’t come out of pocket when needed to make the road a little easier to navigate. When it comes to their college education, they too will have to search for scholarships and grants. We have 529 college savings plans in place that will help cover some — not all — of the costs. Sure it’s not a parenting “mandate” but something we want to do and think is right.
Everyone has their own stipulations when it comes to who gets their money and requirements for keeping up the arrangement. Some parents just aren’t willing to foot a college bill if their kid fails to get good grades, or messes up in another way.
That’s pretty understandable.
I have a little trouble understanding a parent’s reasoning for wanting their money back considering many today allow their children to move back home, and in some cases, still help pay their bills. Obviously these “allowances” have the potential for parents to come out of their own pockets. So what’s the difference? There are some people who believe providing financial assistance to a child in college is more acceptable than a grown adult who can work for themselves.
Maybe these parents are experiencing hard times of their own and can’t afford to help their child with college. If that’s the case, is it better for the student to apply for tuition assistance like a student loan? It’s certainly not uncommon to take one or a few out. The average amount of student loan debt is on the rise.
Parents who expect college contributions repaid should establish this sooner rather than later. The last thing anyone needs is to assume one thing and have something completely different occur. I can only imagine the impact that would have on future communication and the relationship between a parent and their child.
Money has a way of making situations very ugly. It’s important to be upfront and honest so it doesn’t get in the way.
Do you think it’s right for parents to ask for their money back?
Student loans are a pain, but they don’t have to be for long. These tricks to paying off your student loans faster will put you at the top of the debt-repayment class.
Earlier this week, former college student Mallory Heiny wrote a piece in The Washington Post about not paying back her student loans for the now-defunct Everest College.
In her article, Heiney says Everest lied to her about the education she would receive, and her adviser told her she could defer student loan payments until after graduation. Unfortunately for Heiny, two months into her nursing program she received loan payment notices.
To make matters worse, she says her professors only read aloud from textbooks and did not teach the material she needed to pass the nursing license exam. Thanks to YouTube and online practice tests, Heiny was able to pass the exam. Despite her success, Heiney along with 15 other students who attended Everest College have refused to pay pack the loans they acquired during their enrollment.
Everest College —which was under the Corinthians Colleges Inc. — closed after its parent company came under investigation for financial wrongdoing. The Consumer Financial Protection Bureau (CFPB) and the Department Of Education worked together to claim $480 million for debt relief to students who were enrolled in colleges under the Corinthians Colleges umbrella. Though debt relief was earned for the students, their federal loan debt cannot be waived.
Heiny, who is upset that she must still pay back federal loans for a school that no longer exists, compared her struggle to that of Rosa Parks:
“In 1955, Rosa Parks refused to give up her seat on a bus. This soon led to the revolutionary Montgomery bus boycott. If those who came before us can take a stand in the face of persecution, harassment, beatings, imprisonment and even death, I will certainly stand in the face of wage garnishment and a tarnished credit report.”
While many people understand Heiny’s frustrations, some believe she should not compare her financial struggle to the Civil Rights Movement. Corinthians Colleges could have filed Chapter 11, but since they didn’t Heiny claims she and other students must pay back the school’s debt even though their institutions no longer exist. By going to the press Heiny hopes she can show the financial aid practices used to make students poorer.
Do you think Heiny is the Rosa Parks of college students?
Don’t try this at home.
Although a group of students are going on a debt strike against Corinthian Colleges and boycotting their student loans, it’s not a good idea for everyone to do the same.
A little more than 11 percent of student loans were delinquent at the end of 2014, which is double the numbers compared to a decade ago. But as we all know, being late in repaying your student loans can have negative consequences.
Here are the five most important things that can happen, according to Yahoo’s Mandi Woodruff.
–Your credit score will drastically drop and a low credit score will make it much harder to get approved for new lines of credit. And in some cases, it could affect your job prospects.
–You could default if you skip making payments for more than 270 days, and default is nothing to take lightly. As a result, the bank could demand the payment in full and give the account over to a collections agency. A loan that is in default can do more damage to your credit score than a delinquent loan, and it can be very difficult to get approved for any new credit (auto loans, mortgages, etc). It can even impact a simple cell phone plan and make it tough to get a job with a default loan on your credit report.
–Forget your tax refund. If you allow your student loan to go into default, you can forget about getting your tax refund check–it will go instead to paying off your federal debt.
–Your wages could be garnished. The federal government can take up to 15 percent of your income if you default on your student loans. If you’re retired, they can even garnish your social security benefits. And yes, private lenders can garnish your wages, too, but they have to take you to court first. You can hire an attorney to fight it, but of course, that will cost you even more.
–If you had a co-signer for your loan and you’re in default, your co-signer will be in trouble as well. They can be at risk for credit damage, wage garnishment and even lawsuits. While it’s usually possible to remove your cosigner, if you’re already in default, it will be impossible.
But before things go left, know that there are steps you can take to get your student loan payments back on track. Prioritize your loans if you have several of them: “Loans that have the highest interest rate should go at the top of your payoff list,” says Woodruff. And also be sure to pay off private loans first because private lenders won’t be as flexible in offering such replacement plans as loan deferment and income-based repayment.
If you’re having trouble paying, contact the lender and explain your situation. They may offer a variety of repayment options such as income-based repayment, loan deferment or forbearance, and loan consolidation (all of which you can apply for free here).
To keep making payments on time, set up auto payments that will be taken out of your bank account on pay day. An added perk of signing up for autopay is that you may qualify for an interest rate discount (ranging from 0.25 percent to 0.50 percent) on your loans.
Student loan debt is out of control and now some students are fighting back by conducting a “debt strike.”
“Fifteen former students of the failing for-profit giant Corinthian Colleges are refusing to repay their federal student loans in a protest designed to pressure the government into forgiving their debt,” reports The Washington Post. Most often at for-profit colleges, African-American and Hispanic undergraduates are urged to take out student loans. In fact they are more than three times as likely to take out private, high-interest rate education loans as their counterparts at other colleges.
Corinthian runs Everest Institute, Wyotech, and Heald College and has a high number of loan defaults along with allegations of deceptive marketing and even misleading the government over its graduation rates. Because of all of this, Corinthian lost its access to federal funds in 2014, and this forced the company to either sell or close its schools. Feeling they did not get their money’s worth due to the upheaval, 15 current and former students of the for-profit schools have asked the Department of Education to erase debt they say Corinthian pressured them into taking. And they have some powerful political support. Sen. Elizabeth Warren (D-Mass) as well as other Senate Democrats wrote Education Secretary Arne Duncan in December pushing for him to erase at least some of the loans because Corinthian broke the law and “failed to hold up their end of the bargain.”
“Corinthian took advantage of our dreams and targeted us to make a profit,” the so-called Corinthian 15 wrote in a letter to Duncan. “You let it happen, and now you cash in. We paid dearly for degrees that have led to unemployment or to jobs that don’t pay a living wage. We can’t and won’t pay any longer.”
Of course, not paying the student loans could result in their paychecks being garnished, tax refunds withheld, or even a portion of their Social Security taken from them. But the students are willing to take that risk in their fight.
The 15 student protesters have partnered with an offshoot of the Occupy Wall Street movement known as the Debt Collective. Last year the group organized a program called Rolling Jubilee through which they buy student loans from debt buyers for cents on the dollar and wipe out the debt. So far, the campaign has wiped out more than $30 million in medical and education debt, including $13 million in private student loans for Everest students. It was Debt Collective that reached out to Corinthian students when the for-profit schools started to go under, and for several months tried to get the Education Department to forgive the federal loans to no avail. Hence the strike.
After the strike was launched more than 100 borrowers wanted to join. Before doing so Debt Collective insists they attend a financial literacy workshop on the consequences of not repaying their debt.
The Education Department has broad authority to cancel federal student loans when colleges violate students’ rights and state law. Already the department has worked with ECMC, the student debt collector which bought more than half of Corinthian’s campuses, to forgive many of the private loans in Corinthian’s Genesis program. Those students will get an immediate 40 percent reduction in the principal balances on their loans. The remainder is to be forgiven over the next few years. But this deal does not apply to students who took out federal loans; it’s only valid for private loans.
Word is still out on if a deal can be reached for the federal loan holders.