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🎓 A Look At Millennial Student Debt
« Reply #195 on: October 07, 2019, 12:48:09 AM »

Oct 3, 2019, 01:21pm
A Look At Millennial Student Debt

Wesley Whistle
I write about education, including policy, student debt, and more.

Comedian Hasan Minhaj calls on Congress to address the student loan debt crisis as he and others testify before the House Financial Services Committee at a hearing on protecting student loan borrowers, on Capitol Hill in Washington, Tuesday, Sept.ASSOCIATED PRESS

The “student debt crisis” has become a common phrase used by many, so much so that celebrities have engaged in the conversation. Comedian Hasan Minhaj even included an episode on student loans in his Netflix series and recently testified at a congressional hearing on the subject. His interest in this issue—and that of other celebrities—shouldn’t be that surprising given his audience of Millennials, many with student debt.

Millennials came of age during a time of transition in both the economy and in the landscape of higher education. During their lifetimes, college costs have risen significantly, with the net price of tuition, fees, and room and board at a public, four-year college increasing 68% since the 1999-2000 academic year. The sheer amount borrowed annually for higher education has doubled since then too. Despite growing evidence that a college degree leads to higher incomes and career success, students’ perceptions of debt are deeply negative. In a recent poll, 57% of Millennials thought student debt was the largest source of consumer debt, even though student debt pales in comparison to mortgages.

The Pew Research Center defines Millennials as those born between the years 1981 and 1996. That means the oldest Millennials graduated high school around 1999, while the youngest graduated high school around 2014. The economy plays a big role in student debt—especially for this generation—but with such a large time span the economy can differ over that time period. It certainly did from 1999 to 2014. The Great Recession plays an important role in Millennial student debt and, though its impact varied across different ages within the generation.

Unemployment for 18- to 35-year-olds hit 13% at the height of the recession in 2010, a time when many Millennials were in high school. Due to such poor economic conditions, college enrollment spiked as many enrolled in college though they might not have otherwise. Others already working lost their jobs and enrolled in an effort to reskill and increase their chances of better employment once the economy recovered. And while public institutions—who were forced to charge higher tuition to make up for the difference in state funding—absorbed most of the increase, the for-profit sector more than doubled its undergraduate enrollment within six years. The for-profit sector is already more expensive on average and for-profit institutions have been plagued with dismal graduation rates, poor job placement success, and even fraud, leaving students saddled with debt they often can’t afford. Even as the economy has recovered, the problems of the for-profit sector have persisted.
Today In: Leadership

Distinguishing Among Millennial Student Debt

Student debt data is somewhat limited, inhibiting experts’ ability to diagnose the different problems around student debt. The federal student loan portfolio offers a snapshot of the existing cumulative debt for Millennials. As of Q2 of the 2019 fiscal year, for borrowers ages 25 to 34—a significant share of the Millennial population—there was $497.6 billion in outstanding student loan debt for about 15.1 million borrowers. This translates to an average student debt of around $33,000 dollars for each borrower. For those ages 24 and younger, there was a cumulative loan balance of $124.6 billion for 8.1 million borrowers—an average of about $15,000 per borrower, though many of those borrowers may still be in school.

These numbers mask several important distinctions. Many of these loans are already in repayment and have been for some time—particularly for the older borrowers. This means they have left school already and begun to repay their loans. Some are reducing their debt, and those who are paying something but not enough to cover their full obligations may actually be seeing their debts grow. The cumulative balance also includes those from graduate school, likely increasing the average debt load per borrower, given that undergraduates are tightly limited in how much they can borrow. And the data does not reflect if a student has graduated, dropped out, or is still enrolled.

Millennial Undergraduate Debt by Degree

Survey data from the U.S. Department of Education allows us to see how Millennials borrowed for their undergraduate degree at different times. The table below depicts the borrowing of Millennials for their undergraduate education across four separate snapshots of academic years in which they received their degrees. It shows the percentage of graduates who borrowed and the median debt at graduation of those who did borrow. Depending on the year in which a student graduated, they borrowed at different rates and borrowed differing amounts.
Millennial borrowing rates and median debt of undergraduate degree holders.

Source: “National Postsecondary Student Aid Survey.” National Center for Education Statistics, U.S. Department of Education, 2019“National Postsecondary Student Aid Survey.” National Center for Education Statistics, U.S. Department of Education, 2019

It is not surprising that over time, as college costs increased, more students borrowed and those students also borrowed more. While borrowing rates increased for both bachelor’s and associate degree recipients, the percent increase for associate degree graduates was much higher at 46%, compared with a 13% increase for bachelor’s degree graduates. Dollar amounts—adjusted for inflation—also increased over time. Not surprisingly, the largest increase in total borrowed was from the 2007-2008 graduates to the 2011-2012 graduates, during the height of the Great Recession.


Of course, this data is based on those who completed a degree. That doesn’t capture the full experience of students who start college and don’t finish, but are still saddled with student debt. Quality varies greatly across institutions of higher education. Many colleges and universities would be labeled dropout factories if they were a K-12 school given their abysmal graduation rates. Non-completers are nearly three times as likely to default as those with a college degree, even though they have less debt. The majority of defaulters (65%) have relatively low loan balances, under $10,000. On average, a college degree pays off for most borrowers—even accounting for cost—as long as they graduate. If they don’t graduate, they typically can’t reap the earnings premium a college degree affords them, leaving them with difficulty repaying their obligations. Even if their outstanding balances are below average—sometimes just a few thousand dollars—non-completers are often in greater financial crisis. 


While experts often disagree about the “student debt crisis,” concerns regarding college costs and debt are legitimate. This is especially true for a generation where many entered the workforce at a time when the economy was weak after paying more for college than previous generations. However, the details matter and there is nuance in what the debt looks like and how it impacts borrowers. In future posts, I will further examine Millennial student debt and how it looks across demographics, for graduate students, and more.

Wesley Whistle
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Sallie Mae execs tan at Maui retreat while student debt crisis tops $1.6 trillion
As borrowers struggle to keep up with their payments, Sallie Mae flew more than 100 employees on its sales team to Hawaii to celebrate $5 billion in sales.
Sallie Mae celebrates at luxury resort while Americans struggle with student loans

Oct. 17, 2019, 12:12 PM AKDT
By Catie Beck, Jackeline Pou and Ben Kesslen

WAILEA, Hawaii — As 1 in 5 American adults wonder how to pay off their combined $1.6 trillion in student debt, Sallie Mae executives and sales team members wrestled with a different question: Between meetings, how should they spend their time on their five-day paid trip to the luxury Fairmont resort on Wailea beach in Maui?

Sallie Mae brought more than 100 of its employees to Hawaii in August to celebrate a record year — $5 billion in student loans to 374,000 borrowers. The company said it didn’t pay for employees’ families to attend, but some did tag along.

“We said, ‘Hey, look, Maui is a pretty nice spot.’ And so if you wanted to stay a few days or want to bring family, that's up to you,” Ray Quinlan, CEO of Sallie Mae, told NBC News on the grounds of the Fairmont Hotel.
Ray Quinlan, CEO of Sallie Mae, told NBC News the trip was in part to celebrate a record year of $5 billion in sales.NBC News

Quinlan, in a walk-and-talk with NBC News, said the trip to Maui was not an “incentive trip.”

“This is a sales get-together for all of our salespeople,” he said, adding the publicly traded company has been taking retreats like the Maui one since it was founded in the 1970s to service federal education loans.

Since then, the lender's trajectory has changed, now offering private loans. But in 2014, the company split into two: Sallie Mae Bank, which offers private loans, and Navient, a newly formed offshoot which services and collects loans, including those that Sallie Mae sold. Sallie Mae’s borrowers, however, have said the company doesn’t treat them nearly as well as it does its sales team.

Paige McDaniel, 39, took out a federal Sallie Mae student loan to pay for her undergraduate degree 20 years ago. Six years later, before the Sallie Mae split with Navient, she took out a private loan with the company to pay for her grad school.
'Brazen act of lawlessness': Inside Education Department's effort to 'obstruct' student loan probes

“I thought they were the same kind of loans,” McDaniel, of the Denver suburb Elizabeth, said. A mother of two, she borrowed $120,000 for her tuition at Lakeland College for a master's in business administration, to help with the cost of living as she worked through school.

The agreement, which included a warning to read it before signing, said the interest rate was variable, but she says she doesn't remember being told the rate was much higher on the private loan.

After graduation, Sallie Mae expected McDaniel to pay “well over $1,500 a month,” she said.

“When I told them that, you know, I couldn't afford that, could we make some payment arrangements, they essentially said, 'So sorry, we'll put a lien on your house and garnish your wages if you don't make those payments,'” McDaniel said.
Paige McDaniel, 39, owes $304,000 in student loans, after taking out a $120,000 loan with Sallie Mae 14 years ago. NBC News

Now, McDaniel owes $304,000, even though she declared bankruptcy to protect her house after being unable to make her payments. She’s hired an attorney to sue Navient, arguing that bankruptcy should have cleared her debt because it was a private loan.

“There’s no way anybody can ever dig themselves out from underneath that,” McDaniel said. "They just don't see that there are families on the other side of this. It's not just my generation cause I have the loans, it affects my children. How am I going to send them to college?"

McDaniel's experience isn’t an outlier.

The attorney general of Illinois sued Navient and Sallie Mae in 2017, accusing the company of deceptive subprime lending, a failure to offer proper repayment options, and faulty collection practices.
Black school officer was fired for repeating racial slur used by black student
Sallie Mae celebrates at luxury resort while Americans struggle with student loans

“We worry about private student loans,” said Ashley Harrington, senior policy counsel on student debt at the nonpartisan Center for Responsible Lending (CRL). “They don’t have the same protections for borrowers” that federal loans have, she said.

Harrington said private student loans often employ subprime lending practices and give loans to people who will likely be unable to pay them back, adding the issue disproportionately affects black, Latino, Native American and female students.

Black undergraduate students with debt are unable to afford their loans at five times the rate of white bachelor’s degree graduates, a 2019 study in part done by the CRL found.
At HBCUs, crushing student loan debt is a symptom of even bigger problems

“Sallie Mae had a big part in creating a place where we are in the student debt crisis,” Harrington said, and student debt stalls people from buying homes and starting a small business, dragging the economy.

Sallie Mae says it’s not liable in McDaniel’s suit, saying the current bank wasn’t making loans when she took hers out.

“We believe Navient — a separate and independent company from Sallie Mae — is responsible for all liabilities that are at issue,” the company said in a statement to NBC News.

But putting the blame on Navient doesn’t square with the company’s own advertising. On its website, Sallie Mae advertises 43 years of “helping America pay for college,” ⁠— more years than McDaniel has even been alive.

Navient told NBC News the AG's suit is "baseless," and said it had no comment on McDaniel's case. Referencing allegations that it gave out private loans knowing students wouldn't be able to repay them, the company insisted all loans were issued in "good faith."

In Hawaii, Sallie Mae's lawsuits and controversies seemed lost in the sand.

“So we've had good years, we've had bad years,” Quinlan said. The conference, in Sallie Mae’s eyes, was a "recognition of the hard work” of the sales team.

Beachside, employees planned and strategized for the upcoming year, were awarded prizes, and soaked up the sun.

“We do it every year,” Quinlan said.

CORRECTION (Oct. 17, 2019, 7:00 p.m.): An earlier version of this article misidentified the company that Paige McDaniel plans to sue. It is Navient, not Sallie Mae. It also misstated in a photo caption when McDaniel took out loans. It was 14 years ago, not six.
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🎓 Congress: Pay Off Student Loans This Way
« Reply #197 on: October 20, 2019, 01:39:12 AM »

Oct 17, 2019, 08:30am
Congress: Pay Off Student Loans This Way

Zack Friedman
Senior Contributor
Personal Finance
Author, The Lemonade Life. I write about leadership and greatness.

Speaker of the House of Representatives Nancy Pelosi (D-CA) (Photo by Zach Gibson/Getty Images)Getty Images

Congress is trying to make college more affordable.

Here’s what you need to know.

College Affordability Act

The College Affordability Act, new legislation which was introduced by House Democrats Tuesday and would update the Higher Education Act of 1965, offers a simple promise: combat the rising cost of tuition and increase federal student aid so that every student can afford to attend college and earn a quality degree. The College Affordability Act, which is expected to cost $400 billion over 10 years, seeks to reshape higher education in several ways:

Makes Community Colleges Tuition-Free

Through federal-state partnerships, tuition would be reduced at public colleges and universities. Federal funding would be allocated to states that make community college tuition-free and that continue to invest in public colleges and universities. The legislation also would increase Pell Grants to help cover tuition and room and board, among other expenses. High school students also could earn free college credit while still in high school, which would lower their overall college tuition costs and limit student loan borrowing.

Makes Student Loans More Affordable and Practical

The College Affordability Act also revamps student loans in several ways.

    Eliminates origination fees

Today In: Money

When you borrow student loans, the federal government charges you an origination fee. Under the College Affordability Act, this origination fee would be eliminated.

    Simplifies Student Loan Repayment

Today, the latest student loan debt statistics show that there are more than 44 million borrowers who collectively owe $1.6 trillion of student loan debt. If you have federal student loans, there are many, and often confusing, income-driven repayment plans. Each have different requirements, which may be complicated for student loan borrowers to follow.

The College Affordability Act replaces the current student loan repayment plans with two plans: one fixed student loan repayment plan and one income-based repayment plan. Borrowers also could automatically re-certify their income each year, which would save time from the current task of completing annual paperwork.

    Allow Borrowers To Refinance Student Loans

The federal government does not refinance student loans. If you want to refinance student loans, you can refinance your federal student loans, private student loans or both with a private lender. Student loan refinancing helps you get a lower interest rate, lower your monthly payment and pay off student loans faster.

The College Affordability Act would enable borrowers to refinance their existing student loans to today’s interest rates.

Key Issues For Consideration

While Democrats have offered their plan to reshape higher education, many of the priorities run contrary to Republicans’ vision to limit the federal government’s - and by association, taxpayers’ - role in student loans. Further, the proposed legislation omits several proposals offered by some 2020 presidential candidates:

    Free College: There is no mention of “free college” (Bernie Sanders)
    Cancel Student Loan Debt: There is no mention of student loan debt cancellation (Sanders and Elizabeth Warren)
    Federal Spending: The legislation depends heavily on federal spending. Do taxpayers want to subsidize student loan borrowing and student loan repayment?
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America's student-loan debt is so bad that Ashton Kutcher produced a new reality-TV show tackling the issue, and it gets a few things right about millennials and money
Hillary Hoffower
23 hours ago

A new reality-TV show highlights the student-debt crisis in America. Brendan McDermid/Reuters

Review banner

    "Going From Broke," a new reality-TV show that tackles student-loan debt, highlights just how bad America's debt crisis really is.
    The episodes feature indebted millennials and their financial progress after getting advice from a financial expert.
    While it is reality TV, the show gets a lot of things right about millennials and money, from classic wealth-building advice to common financial hardships.
    I've been writing about millennial wealth for Business Insider for almost two years, so I decided to watch two episodes of the show and see how it stacked up against what experts had told me.
    Visit Business Insider's homepage for more stories.

Debt in America is so bad that it's made its way onto reality TV.

Enter "Going from Broke," the Ashton Kutcher-produced series that recently premiered on the free streaming service Crackle and aims to tackle America's student-debt crisis.

Each 30-minute installment, of which there are 10, features an indebted millennial living in Los Angeles. Dan Rosensweig, the CEO of Chegg, and the financial expert Danetha Doe play bad cop and good cop, respectively, advising the millennials on how to ease their debt load. Rosensweig offers the tough love, while Doe serves as the source of financial wisdom.

"We need real solutions, in real time, to end the vicious cycle of debt and get hardworking young people on the road to financial freedom," Rosensweig said in a press release. "My hope is that the stories in this show shine a light on the crippling impact debt and financial instability has on our kids, our future workforce, and our economy."

While "Going From Broke" is first and foremost a reality show — a TV genre that should always be taken with a grain of salt — there are a lot of things about it that ring true when it comes to millennials and money.

I've been writing about financial literacy for Business Insider for almost two years, specifically focusing on millennial wealth in the US, so I decided to watch the show and see how it stacked up to what experts had told me.
The fact this show even exists says a lot of about the state of debt in America

The mere existence of a reality-TV show centered on debt paints a much bigger picture of how prominent debt has become in America.

Student-loan debt has risen to the forefront of the 2020 presidential race, with Democratic presidential candidates proposing policies to offset the cost of college. "Going From Broke" poignantly puts a face to these problems.

In episode two, we meet 28-year-old Miracle, a media planner who dreams of making enough money playing the violin around the world to quit her job. At the start, she's earning $3,600 and spending $5,000 a month, putting herself $1,400 in the hole. She also owes $74,000 in student loans and isn't making her $1,000 monthly payments.

Episode three focuses on Megan, 28, and Max, 32, a married couple with two children. Max is on disability leave from his job as a firefighter following a car accident, and Megan was recently laid off from her job as a behavioral therapist.

Between Max's disability leave and Megan's side hustle selling elderberry syrup, they're earning $2,300 a month but spending $5,000 — leaving them $2,700 in the red. That's created a huge problem: $100,000 in credit-card debt across 14 credit cards.
Max and Megan monthly budget
A look at Max and Megan's monthly budget at the beginning of the episode. Going From Broke

Miracle, Max, and Megan aren't alone. As of 2019, student-loan debt is at an all-time high with a national total of $1.5 trillion. According to Student Loan Hero, the average student-loan debt per graduating student in 2018 who took out loans was a whopping $29,800.

Read more: 11 mind-blowing facts that show just how dire the student-loan crisis in America is

But it's not just student loans. Slightly more than half of millennial respondents in an Insider and Morning Consult survey said they carried credit-card debt. Of those with credit-card debt, more than half said they owed less than $5,000, while nearly a quarter owed $5,000 to $10,000.

These heavy debt loads help explain why most young adults define financial success as being debt-free, according to a Merrill Lynch Wealth Management report, which called it an "elusive goal."
The show offers some sound advice — but it's still reality TV

In each episode, the millennials receive financial homework. Max and Megan are told to journal their spending habits, and Miracle is tasked with reducing her expenses. Both groups are told to find ways to increase their income.

Each of these homework assignments lines up with what financial experts and self-made millionaires advise.

William D. Danko, the coauthor of the best-seller "The Millionaire Next Door," is a huge proponent of maximizing income to build wealth. In a Q&A with The Washington Post, he advised having more than one income stream to maximize your savings and investments.

The financial planner Eric Roberge and his wife, Kali, said in a recent episode of their podcast "Beyond Finances" that they'd rather find ways to increase their income than cut spending, Business Insider's Tanza Loudenback reported. "If you can't increase your income, I think it's always going to be a struggle to get to where you want to go," Kali said, adding that it's still important to keep expenses low.

Read more: Millennials are swamped in debt, and it's not just student loans

That's where documenting your spending comes in. Douglas A. Boneparth, a certified financial planner who is president of Bone Fide Wealth, previously told Business Insider that to build wealth, one needed to build a strong foundation by "mastering cash flow."

"This means diving into the data," Boneparth said. "What did you spend your money on over the past six to 12 months? What can you consistently save? Define a comfortable and realistic lifestyle."

Consider the NFL player Brandon Copeland: At age 27, he saves nearly all of his salary. Saving money starts with tracking your expenses, which will help you figure out where to cut spending, he previously told Business Insider.
Max and Megan budget progress
Max and Megan's monthly budget after cutting back expenses and increasing their income. Going From Broke

The advice proved fruitful in "Going From Broke." By the end of each episode, the millennials had documented their spending habits, identified areas to cut, and developed side hustles: Megan expanded her business, and Miracle began charging for violin performances.

It's worth noting that, as a viewer, you don't know what goes on behind the scenes in these happy endings. Did people really pay for Miracle's performances? How much of a market is there, really, for elderberry syrup? Regardless, the show illustrates the financial progress that can occur when you commit to taking actionable steps, and it makes good use of charts to do so.

But keep in mind that you should always consult a financial adviser or planner about your situation.
It highlights the financial realities millennials are facing

"Going From Broke" also depicts millennials' financial realities beyond debt.

For one, it demonstrates the impact of unforeseen circumstances. That both Max and Megan found themselves unexpectedly out of work highlights the importance of having an emergency fund, which should consist of six months' worth of living expenses for emergency life events, like a medical emergency or job loss. It's the first line of defense against high-interest debt, Erica Lamberg wrote for Business Insider.

Miracle, too, found herself in an unexpected situation. When she was in college and working full time, her grandma had a stroke, and Miracle took care of her by paying rent and battling lawyers on her grandma's behalf.

It's a situation becoming more common for millennials, who are finding themselves caring for aging parents, Clare Ansberry of The Wall Street Journal reported. It's a debilitating expense considering that they're already putting income toward higher costs of living and crushing student-loan debt.
megan and max
Max and Megan said their debt took a toll on their relationship. Going From Broke

Read more: Meet the average American millennial, who has an $8,000 net worth, is delaying life milestones because of student-loan debt, and still relies on their parents for money

But these aren't the only millennial realities "Going From Broke" depicts. As Megan and Max struggled to reel in their spending, Megan had to ask her mom for money. A 2018 Country Financial report found that more than half of Americans ages 21 to 37 had received financial assistance from a parent, guardian, or family member.

The couple also said their finances took a toll on their marriage. More than half of American millennials who are married or living with a partner say money is a point of stress in their relationship, according to the Insider and Morning Consult survey.

But what really strikes a chord is the moment when Rosensweig is going through their debt, and Megan says, "I'm so uncomfortable right now."

Money makes people uncomfortable, which is why it's so rarely discussed. "Going From Broke" brings a taboo topic to the forefront. Like all reality TV, the show has something voyeuristic about it: Viewers at home get access to a dialogue and an inside look they wouldn't ordinarily hear or see from a friend, coworker, or family member.

While the show has certain reality-TV hallmarks — think product placement and dramatic music — the show is also relatable, a learning lesson, and, hopefully, a changemaker, even if just to inspire millennial households to take control of their finances.
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🎓 Big changes could be in store for student loan borrowers
« Reply #199 on: October 25, 2019, 04:55:06 PM »

Big changes could be in store for student loan borrowers
Published 3 hours ago
Annie Nova   @AnnieReporter

rachel brandt student debt   CNBC | Jaden Urbi
Key Points

    Presidential campaign proposals and recently introduced legislation aim to rewrite the rules around student loan interest, repayment and refinancing.
    Some of the plans would reduce – or altogether erase – people’s balances.
    It’s no surprise politicians have turned their attention to the topic: More than half of Americans say student debt is “a major problem” for the country, according to a Politico/Morning Consult poll.

Big changes could be coming down the pipeline for the 44 million Americans with student debt.

Presidential campaign proposals and recently introduced legislation aim to rewrite the rules around student loan interest, repayment and refinancing.

Some of the plans would reduce — or altogether erase — people’s balances.

More from Personal Finance:
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Tips to get your Medicare drug coverage right

It’s no surprise politicians have turned their attention to the topic: More than half of Americans say student debt is “a major problem” for the country, according to a Politico/Morning Consult poll.

Outstanding education debt has outpaced credit card and auto debt. The average college graduate leaves school $30,000 in the red today, up from $10,000 in the 1990s. Every day, 3,000 borrowers go into default.

Which proposals come to fruition remains to be seen, but one thing is clear: As discontent with the current system remains, discussions about changing it will, too, wear on.
A fresh start
U.S. Representative Alexandria Ocasio-Cortez & U.S. Senator Bernie Sanders on stage at Bernie Sanders Rally “Bernie’s Back” in Queensbridge Park. She endorses him for President of USA.
Lev Radin | LightRocket | Getty Images

Most people struggling with student loans probably didn’t imagine debt forgiveness could be in their future. Now, leading presidential candidates are calling for such a reset.

Bernie Sanders has proposed wiping out the country’s $1.6 trillion outstanding student loan tab. Essentially, all borrowers would be freed from their debt. “This is truly a revolutionary proposal,” Sanders told The Washington Post.

Under Elizabeth Warren’s plan, borrowers with household incomes of less than $100,000 would get $50,000 of their student debt forgiven. People who earn between $100,000 and $250,000 would be eligible for forgiveness on a sliding scale – that $50,000 in debt relief drops by $1 for every $3 a person earns over $100,000. And those who earn more than $250,000 would be ineligible for debt forgiveness.

At a recent campaign event, Kamala Harris hinted that she’d be rolling out a plan soon to forgive the student loan debt of families who earn less than $100,000 a year.

This week a senior government official appointed by Education Secretary Betsy DeVos resigned, saying the current student loan system is “fundamentally broken” and calling for billions of dollars in debt to be forgiven.

A. Wayne Johnson proposes to forgive $50,000 in student debt for all borrowers, about $925 billion. “It’s the first Republican support for widespread student loan forgiveness,” said Mark Kantrowitz, a higher education expert. “That makes it a bipartisan issue.”
Higher Education Act

Every four or five years, The Higher Education Act, which controls the shape and scope of federal student aid, is updated. It’s gone more than a decade without a tweak this round, making the changes likely to be rolled out next year highly anticipated.

House Democrats introduced this month their plan to overhaul the bill. “I think it’s a really constructive first step toward reauthorization,” said James Kvaal, president of the Institute for College Access & Success. “There’s a lot of potential common ground in the bill, particularly around student loan issues.”

Republicans and Democrats have shown interest in reducing the number of repayment plans to just two — there are currently 14 ways to repay your student loans, a complicated system critics say lead to needless defaults.

One plan would simply spread a borrower’s monthly payments across a decade. The other would cap monthly payments at a percentage of a borrower’s income, and their repayment timeline could be 20 or more years.

There is also bipartisan support for eliminating the origination fees on student loans. “It doesn’t make sense that if you borrow $1 for college, the check is actually 99 cents,” Kvaal said.

Democrats want to cut interest rates on student loans and make it easier for borrowers to refinance their debt. They also want to allow people who’ve climbed out of default to get their credit reports cleared of the incident.

At least one Republican, in addition to a host of Democratic lawmakers and presidential candidates, wants to allow student debt to be discharged in normal bankruptcy proceedings. Currently, borrowers can have to exhibit a “certainty of hopelessness” to walk away from their student debt in court.

Federal Reserve chairman Jerome Powell has said he’s “at a loss to explain” why student loans are treated differently than other types of debt in bankruptcy.

There’s no sound reason that struggling student loan borrowers shouldn’t be able to get a fresh start, Kantrowitz said.

“Credit cards can be discharged, but not student loans?” he said.
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🎓 Expect These Student Loan Changes In 2020
« Reply #200 on: October 29, 2019, 12:46:17 AM »

Editor's Pick99,225 views  Oct 28, 2019, 08:30am
Expect These Student Loan Changes In 2020

Zack Friedman
Senior Contributor
Personal Finance
Author, The Lemonade Life. I write about leadership and greatness.

Education Secretary Betsy DeVos (AP Photo/Jose Luis Magana)ASSOCIATED PRESS

There may be major changes to your student loans on the horizon.

Here’s what you need to know.

Student Loans

If you follow the headlines, there have been multiple twists and turns this year regarding student loans. Billionaires have paid off people’s student loans. Student loan scams have run rampant. Student loan forgiveness programs have faltered. With legislative proposals, major lawsuits and 2020 presidential campaign rhetoric, there may be major student loan changes in the coming year.

Of course, all, some or none of these proposals could be implemented. Look to Congress as the branch of government to have the biggest (or smallest) impact on the future of your student loans.

Here’s a snapshot of the hot button issues regarding your student loans:

Student Loan Forgiveness
Today In: Money

Should your student loans be forgiven? Sen. Bernie Sanders (I-VT) and Sen. Elizabeth Warren (D-MA), both 2020 presidential candidates, says yes. A top U.S. Department of Education official even resigned last week to run for the U.S. Senate in Georgia and now says he supports student loans forgiveness.

However, U.S. Secretary of Education opposes wide-scale student loan forgiveness and said it would be “crazy.” Her primary issue is: who will pay for student loan forgiveness? DeVos believes that, ultimately, federal taxpayers will foot the bill. Other have asked: what about borrowers who already paid off their student loans?

Free College

Could college become free? Not exactly. While many Democratic presidential candidates have called for “free” community college, others are divided on tuition-free public colleges, which would require federal funding and at least some degree of state cooperation.

Eliminate Origination Fees On Student Loans

House Democrats have proposed The College Affordability Act, which would update the Higher Education Act of 1965, and among other proposals, eliminate origination fees when you borrow student loans. This issue has bipartisan support, which if implemented, would save borrowers money.

Income-Driven Repayment

If you are repaying federal student loans, one option is income-driven repayment. Each income-driven repayment plan - such as PAYE and REPAYE - caps your monthly student loan payment based on your discretionary income and then provides student loan forgiveness after 20 to 25 years of on-time payments.

Former vice president Joe Biden, a 2020 presidential candidate, wants to simplify income-based repayment for federal student loans:

    If you make less than $25,000 per year: you would owe no payment on your undergraduate student loans and also no interest would accrue.
    If you make more than $25,000 per year: you would pay only 5% of your discretionary income over $25,000 toward federal student loan payments.

After 20 years of student loan repayment, the remainder of your federal student loans would be forgiven. The amount of student loans forgiven also would not be subject to income tax.

Public Service Loan Forgiveness

President Trump proposed to eliminate the Public Service Loan Forgiveness program, and instead he called for a single income-driven repayment plan that would cap monthly student loan payments at 12.5% of discretionary income and forgive federal student loans after 15 years.

Biden says the current Public Service Loan Forgiveness program is broken. So, Biden would create a new program that offers $10,000 of undergraduate or graduate student loan debt relief for each year of national or community service, up to five years. If you work in a school, for the government or for a non-profit, you would be automatically enrolled in this student loan forgiveness program.

Discharge Student Loans In Bankruptcy

There is bipartisan proposed legislation that would allow borrowers to discharge their student loans in bankruptcy.

Student Loan Refinancing

The College Affordability Act would enable borrowers to refinance their existing student loans to today’s interest rates.

The federal government does not refinance student loans. If you want to refinance student loans, you can refinance your federal student loans, private student loans or both with a private lender. Student loan refinancing helps you get a lower interest rate, lower your monthly payment and pay off student loans faster.
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Erasing student debt would be a small stimulus but would create a ‘moral hazard,’ Moody’s says
Published Fri, Nov 1 20196:53 AM EDTUpdated Fri, Nov 1 20198:50 AM EDT
Jeff Cox   @jeff.cox.7528   @JeffCoxCNBCcom

Key Points

    Eliminating student loan debt would provide a “tax-cut-like” stimulus to the economy, according to Moody’s Investors Service.
    However, the move also would bring possible “moral hazard” and have only limited macroeconomic benefit, the firm says.
    Democratic presidential candidates have come up with a variety of proposals to address the issue.
    Total student debt is now $1.5 trillion, about four times what it was in 2005.

Wells College, Aurora NY.  Google Earth

Forgiving student loan debt would provide a modest bump to the economy but could risk “moral hazard” and eventually make the problem worse, according to Moody’s Investors Service.

Some Democratic presidential candidates, including Sens. Bernie Sanders and Elizabeth Warren, have proposed wiping out a debt load that has exploded from $363 billion in 2005 to nearly $1.5 trillion now.

Sanders wants to make college free while Warren has proposed a billionaires’ tax that she said would pay to eliminate up to $50,000 in education loans.
Former Trump official who called student loan system broken proposes forgiveness program

However, a Moody’s analysis suggests that the benefits at a macro level would be fairly restrained.

“In the near term, we would expect student loan debt cancellation to yield a tax-cut-like stimulus to economic activity, contributing to a modest increase in household consumption and investment,” William Foster, the firm’s senior credit analyst, and others wrote in a report. “The magnitude of the stimulus would depend on the size of the debt relief and income level of the beneficiaries.”

In dollar terms, Foster cited studies showing that canceling debt would add $86 billion to $108 billion a year to GDP over a 10-year period. Less aggressive measures to forgive some loans and restructure payments for others would amount to $120 billion over a decade.

In a $21.5 trillion U.S. economy, those kinds of gains won’t move the needle very fair from a broad sense.

However, the issue of student debt and its role in growing wealth inequality is a popular one on the campaign trail and could bring fundamental change to the way higher education is financed in the U.S. The issue has a disproportionate impact on younger people and has led to a variety of legislative proposals to tackle the problem.

Further benefits would include more money freed up for household and small business formation.

Moody’s cautioned, though, that the measures being discussed now could end up being counterproductive.

“Over the longer term, debt forgiveness could lead to an improvement in small business and household formation, as well as increased homeownership,” Foster wrote. “However, it could also increase the risk of moral hazard and the accumulation of even higher student debt burdens.”

Future borrowers, for instance, might be encouraged to run up big loan balances on the assumption that their debts will be forgiven at some point.

It’s also unclear how much forgiveness would address wealth inequality. The New York Fed estimates that about two-thirds of outstanding debt is currently held by the upper-half of earners.
Move to this town, and they’ll pay off your student debt
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🎓 Student Loan Refinancing Just Got Absurdly Cheap
« Reply #202 on: November 07, 2019, 12:03:43 AM »
This is a GOOD Time to go to Skule if you don't got a job! No worries, you won't have to pay back the loans.  ;D


Editor's Pick39,716 viewsNov 6, 2019, 08:30am
Student Loan Refinancing Just Got Absurdly Cheap

Zack Friedman
Senior Contributor
Personal Finance
Author, The Lemonade Life. I write about leadership and greatness.

Student loan refinancing rates have plummeted even lower.

Here's why and what you need to know.

Student Loan Refinancing: Rates Drop Even Further

Rates for student loan refinancing now have dropped to as low as 1.81%.

Why? The Federal Reserve cut interest rates for the third time this year, and lenders have reduced student loan refinancing rates to a near-term low. That's great news for student loan borrowers who want to get a lower interest rate, save money and pay off debt faster.

Here's how to refinance your student loans.

Student Loan Refinance: Should I Refinance Student Loans?
Today In: Money

Many borrowers ask: Should I refinance student loans?

If you want to save money and pay off student loans faster, student loan refinance is an effective tool. When you refinance student loans, you exchange your current student loans for a new, single student loan with a lower interest rate.

Student loan refinancing has several advantages, including:

    lower interest rate
    single monthly payment
    fixed or variable interest rate
    flexible 5-20 year loan repayment term
    one student loan servicer
    pay off your student loans faster
    save money

Student Loan Refinancing: How To Apply

If you want to know how to refinance student loans, it's important to understand how to apply. The process is simple, and you can apply entirely online.

Step 1: Get the best interest rate

There are multiple trusted, online lenders that can refinance student loans with low interest rates and easy, online applications. Compare the best interest rates and loan terms. Most borrowers will refinance student loans with the lender who gives them the lowest interest rate. Most lenders allow you to check your preliminary interest rate online for free within two to three minutes without any impact to your credit score.

Step 2: Use a student loan refinance calculator

This free student loan refinance calculator shows you how much money you can save when you refinance student loans.

For example, let's assume you have $85,000 of student loans at an 8.0% interest rate and 10-year repayment term. If you refinance that student loan with a 3.0% interest rate and 10-year repayment term, you would lower your monthly payment by $211 and save $25,262 in total payments. If you are a doctor, dentist or pharmacist with a large student loan balance, your savings may be even higher.

Step 3: Apply online

You can apply online to refinance student loans in 10-15 minutes. You can also upload any supporting documents, which may include a copy of your driver's license, transcripts, recent pay stubs or job offer letter.

Student Loan Refinance: Key Questions

1. Do I qualify for student loan refinance?

The best candidates for student loan refinancing typically have the following:

    A credit score of 65o or higher
    Current employment or a written job offer
    Stable, recurring monthly income
    A low debt-to-income ratio
    No history of student loan default

If you have bad credit or don’t meet these other requirements, you can apply with a co-signer with strong credit and income. Your co-signer can help you get approved for student loan refinancing and receive a lower interest rate. While your co-signer will be equally financially responsible for the student loan, some lenders allow the co-signer to be released subsequently from any financial obligations.

To maximize your chances to get approved to refinance student loans, you can apply to multiple lenders. Since each lender makes a separate underwriting decision, getting rejected from one lender does not negatively impact your chances with another lender.

2. Can you refinance Parent PLUS Loans?

Yes, you can refinance Parent PLUS Loans. Parent PLUS Loans have relatively high interest rates, so refinancing can lower your interest rate and save money.

3. Is there a fee to refinance student loans?

There are no fees to refinance student loans. There are also no prepayment penalties, so you can pay off student loans anytime with no charge.

4. Should I refinance my federal student loans?

You should not refinance federal student loans if you plan to pursue public service loan forgiveness, an income-driven repayment plan, or deferral or forbearance options. You can still refinance your private student loans and leave your federal student loans outstanding. Most lenders today offer employment protection if you lose your job and want to pause your monthly payments.

5. How often can I refinance student loans?

Borrowers often ask: When should I refinance student loans? The answer: you should refinance student loans whenever you qualify for a lower interest rate. There is no limit to how often you can refinance student loans. If you can get a lower interest rate and save more money, then student loan refinancing may be a smart financial move.
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Zack Friedman
Zack Friedman

Zack Friedman is the bestselling author of the highly-anticipated, blockbuster book, The Lemonade Life: How To Fuel Success, Create Happiness, and Conquer Anything. Zac...
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