Student Loans Becu

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Student loans do not have to be repaid until you graduate college or drop out.

You can’t be fired if you default on your student loan payments.

Your parent’s income is considered taxable income if they co-sign for your student loans.

If you default on your student loans, you’ll owe more than $10,000; however, if you declare bankruptcy, you can only repay about half of what you originally borrowed.

Federal law prohibits private lenders from suing borrowers who fall behind on their repayment plans.

You could earn up to 12 months of interest on unpaid balances while you’re in school.

While you’re working, you still need to pay off some portion of your student loans each month.

After you’ve paid off all your debt, you won’t get any additional federal financial aid.

Depending on how much you borrow, you may be able to receive up to $5750 in tax credits per year.

Student loans have become increasingly popular among students across the nation over the last few years. While some believe that student loans are a great way to finance their education, others think they’re just another example of financial exploitation. Student loan debt has increased dramatically since the late 1990s, with the average borrower owing about $33,000 and graduating with approximately $10,000 in debt. According to the National Consumer Law Center (NCLC), student loans have gone from being a relatively minor issue to a major problem in recent years. As of May 2018, total student loan debt owed was $1.51 trillion. In fact, the average college graduate owes close to $37,172 in student loan debt.

In addition to the increase in student loan debt, students have been able to get much worse terms than before. In 1999, the interest rate on federal Stafford Loans was 6.8 percent; today, the same type of loan carries an 8.25 percent interest rate. However, these rates were capped at 10.66 percent in 2010. Since then, rates have continued to rise.

According to NCLC, the average college graduate makes less than what is needed to pay back his/her loans even after taking into account the cost of living. The group claims that only half of borrowers are making payments on time. Meanwhile, many graduates end up paying higher-than-anticipated amounts in interest charges. As a result, many graduates find themselves unable to afford basic necessities like food, healthcare and housing.

When a student defaults on her student loans, she becomes ineligible for future federal aid. She may also lose eligibility for state grants. Additionally, the U.S. Department of Education can garnish wages and tax refunds, seize property, and collect unpaid debts through wage garnishment, bankruptcy proceedings, and lawsuits. These types of actions make defaulting on a student loan even more difficult.

Many students who borrow money to fund their educations feel pressured into doing so. Many schools require students to take out a certain amount of loans each year in order to attend school. In fact, 44 percent of institutions use financial aid calculations to determine how much a student needs to borrow. If a student doesn’t meet the minimum requirements set by a school, he/she may not be eligible for any financial aid. In addition to having to repay loans, students may face additional costs like tuition and fees.

Students typically borrow money for three reasons: 1) to cover the difference between the cost of attending school and the amount of money a student receives from family members and private lenders; 2) to help pay off parents’ student loans; and 3) to pay for postsecondary education expenses including room and board, books, transportation and supplies. All told, the average student borrowed $26,400 while completing his/her undergraduate studies.

As long as students continue to borrow money, the number of people who default on their student loans should remain high. In 2017, about 5 million Americans had unpaid balances on their federal student loans. Another 4.9 million people had delinquent federal student loans, meaning they had fallen behind on payments. More than two-thirds of those people (68 percent) did not make a payment in the previous 12 months.

The problem with student loans is that they aren’t created equal. Undergraduates generally receive larger loans than graduate students, and women tend to receive smaller loans than men. Students who received scholarships or whose families earned below the median income also tend to receive smaller loans. Most importantly, low-income students tend to have fewer options to pay back their loans. For instance, some states cap how much public colleges and universities can charge in tuition increases. Those caps don’t apply to private universities.

If you do decide to borrow money to fund your education, plan ahead. Make sure you understand the interest rates and repayment plans. Talk to your lender about deferment options. You might be able to stop repaying your student loans until your career prospects improve. Also, once you graduate, you should look for ways to reduce monthly payments. For example, refinancing your student loan could lower the interest rate on your loans. Finally, if you can’t afford to pay back your loans, ask your lender for forbearance, which stops the collection process on your loans.

Federal Student Loan Debt Rises

For the first time ever, student loan debt surpassed credit card bills in 2014. In 2015, the amount of outstanding student loans hit $1.1 trillion. That figure climbed to $1.49 trillion by the end of 2016. At the beginning of 2018, total student loan indebtedness reached $1.52 trillion. Currently, there are 78 million borrowers with $1.08 trillion in outstanding student debt. This means nearly one-third of American adults owe student loan debt. Of those borrowers, roughly 70 percent currently carry loans from the government.

A record number of students graduated with student loan debt in 2017. According to data collected by the New York Federal Reserve Bank, 22.7 million people started classes in the fall of 2017. Roughly 11.3 million of those new students had student loan debt. Graduating with a mountain of debt isn’t uncommon anymore. In fact, the national graduation rate rose to 83.1 percent in 2017. Unfortunately, the number of graduates with student loan debt grew along with it.

Although the Obama administration made changes to federal student lending policies during its tenure, the current administration hasn’t done anything significant to address the problem. President Trump signed legislation that made it easier for older students to refinance their student loans. However, the bill didn’t provide any relief for younger students.

Student Loan Defaults Rise