Student Loans: The Fund-Eating Dragon : Throughline

Student loans have changed dramatically over the past decade, with borrowers having less control over their debt load. As interest rates rise due to rising inflation, the cost of student loan payments continues to climb – meaning that many students are stuck in a cycle of debt from which they cannot escape. In fact, since 2012, average undergraduate student loan debt has increased by $1,300 per borrower, according to the Institute for College Access & Success (TICAS). And while tuition at four-year institutions has remained relatively flat, student fees have risen significantly, increasing the number of students facing financial challenges throughout higher education. Meanwhile, the federal government’s share of the total student loan portfolio has ballooned to over 80%, leaving students increasingly reliant upon private lenders who offer higher interest rates than the government.

There are currently two types of student loans: subsidized and unsubsidized. Subsidized loans are offered to those attending public colleges and universities and are generally based on need. Unsubsidized loans are offered only to those attending private schools, and are often packaged into variable-rate mortgages. Currently, both types of loans carry fixed interest rates, but under current law, these rates are set to double by July 1, 2020. At that time, interest rates for subsidized loans will begin to accrue at 8%, just above the 6.8% projected general inflation rate. Interest rates for unsubsidized loans will increase to 15.24%.

According to the Project on Government Oversight (POGO), over half of all college graduates take out student loans. However, POGO also reports that about one-third of borrowers never make any payments on their student loans. Additionally, TICAS reports that the delinquency rate among borrowers has nearly doubled since 2010.

The majority of student loan holders pay interest on their loans. The current national median payment amount was $350 per month in 2016. Despite the growing burden of student debt, few borrowers seek help. An estimated 4 million borrowers could benefit from lower monthly payments, yet fewer than half seek assistance.

A recent report from the Consumer Financial Protection Bureau (CFPB) found that nearly three-quarters of all student loan borrowers struggle to manage their expenses. The CFPB found that 32% reported missing bill payments or being delinquent on bills; 26% reported going without basic necessities like food, rent, or medicine; 24% had experienced problems paying medical bills; and 22% missed mortgage payments.

While government-backed student loans are eligible for income-based repayment plans, not everyone qualifies. To qualify, you must have either graduated from an in-state or low-income institution, have completed a full course of study, earned a baccalaureate degree, or have been enrolled as a graduate student. You may also be able to work part-time while making payments if you’re able to prove you’re working toward a job that pays enough to cover your loan payments.

The U.S. Department of Education offers some grants and loans aimed specifically at assisting students who want to pursue post-secondary education beyond high school. These programs can provide additional funding for specific majors, including engineering and business, through funds that range from $500 to $10,000. Another grant program, called the Federal Pell Grant Program, provides assistance to undergraduates with demonstrated financial need. This award covers the remaining costs of attendance after subtracting expected family contributions.

Unlike traditional bank loans, private student loans do not require approval of credit scores. Therefore, people who don’t necessarily have good credit histories can still apply. Private student loans also allow borrowers to pay back loans even when employment opportunities aren’t ideal. But despite these perks, private loans can charge higher interest rates than traditional bank loans.

Private lenders use a variety of methods to assess risk. Commonly used tools include credit scores, prior bankruptcy filings, previous default history, and information collected from co-signers. Lenders can also look at information collected from third parties, like tax records and wage garnishments.

Borrowers can protect themselves from private student loan companies by researching potential lenders before committing. If possible, consider applying for a direct loan rather than a consolidation loan. Consolidation loans require borrowers to repay multiple debts, which means that the interest rates on each loan go up.

Federal student loan consolidation is an option available to current students and recent grads who’ve exhausted their eligibility for federal student aid. Consolidation loans may save borrowers money by reducing monthly payments. However, consolidation comes with its own set of risks. Borrowers are required to consolidate within 30 days of graduating or dropping below half-time enrollment. For example, if you drop below half-time status, you’ll forfeit all accrued income from the year you dropped below half-time. Furthermore, interest begins to accrue immediately following graduation. Finally, consolidating federal loans doesn’t mean you’ll be done repaying loans altogether. Depending on your loan type, you may still be responsible for paying off your original loan balance plus interest and penalties.

Though not all private loans are bad, it’s important to know what kind of terms you’re signing. Many private student loans have fixed interest rates, and others have variable interest rates tied to LIBOR, an international index of interest rates derived from trading in government bonds. When you sign a private loan agreement, be sure to read the fine print carefully. Make sure the term length, loan size, and APR match up with how much you actually owe—otherwise, you might end up owing more than you anticipated.

The key takeaway here? Pay attention to your loan statements! If you spot any unexplained increases in interest rates, speak with your lender right away. Don’t let them sneak up on you.

What’s your biggest concern regarding student loan debt? Let us know in the comments section below. We’d love to hear your thoughts.

Student loans are one of the largest debt traps in America. By the time borrowers graduate college, they owe over $50,000.00. Borrowers often try to pay off their student loan debts by taking out additional loans or increasing the amount borrowed. In fact, today’s students borrow about $1,200 per year, compared to just $900 two decades ago. Most people think of paying down a mortgage as being the best way to reduce debt, but many experts believe paying off a student loan is the most effective strategy.

The average monthly payment is around $150.00. That means if you have 10 years left before repayment begins, you’ll have paid back about $15,000.00. To repay this amount, a borrower would need to earn about $35,000.00 annually for 10 years. If you’re making less than that, then you cannot afford to pay off your student loans. A report from the New York Federal Reserve Bank shows that almost half of recent graduates (48%) with student loan debt could not even make the minimum payments of $100.00 a month due to low incomes.

Even though we are in a recession, interest rates on student loans continue to rise. According to the Department of Education, private student loans now carry an APR of 13.71%. Public Stafford Loans currently have an APR of 8.25%, but the government plans to increase them to 11.9% by July 2012.

As long as there is a federal law preventing bankruptcy judges from discharging student loan debt, lenders stand to make lots of money. There was a time when discharge in bankruptcy was a privilege of the wealthy. However, since the economic crisis began in 2008, student loan borrowers have become much more vulnerable to going bankrupt.

Since 2009, the Department of Education has increased its collection efforts and begun garnishing wages at higher levels. So, if you are a struggling single mother who is trying to get ahead and pay off her student loans, she should know that her creditors may soon start collecting from her paycheck.

When I graduated from college, I had no idea how difficult it would be to find full-time employment. I am lucky enough to work in my field, but it took me several months of unpaid internships and some pretty tough job interviews to land a position. My advice to you is the same thing I told myself when I started working towards my degree: Be persistent. You don’t want to give up when things seem hopeless.

While having student loans can definitely be discouraging, it doesn’t have to be a death sentence. Many people have successfully managed to build successful careers while dealing with heavy debt loads.

If you do decide to take out financial aid, your lender will likely require you to put your loans on a plan to pay them off. These plans generally consist of three different options: an income-based repayment plan, a graduated payment plan, and a standard repayment plan. Each option offers varying levels of flexibility, but they all tend to allow you to gradually lower your monthly payments until you’ve repaid your entire balance.

Another option is consolidation. Consolidation lets you combine your various loans into one new loan with a fixed rate and fewer monthly payments. However, consolidation isn’t right for everyone. It only works if you have a few types of loans and good credit. Also, consolidating your loans won’t affect your total amount of debt.

And lastly, there are government programs that may help. One option is to apply for the William D. Ford Federal Direct Loan Program. Another program is called Pay as You Earn (PAYE). It lets you use any extra income you receive after taxes to pay down your debt.

Student Loans: The Fund-Eating Dragon : Throughline

Student loans have become a way for students to fund their education without having to pay money upfront. However, student loans can eat away at a person’s personal savings account over time. In some cases, student loans can lead to bankruptcy if not paid off properly. Students who take out loans should have a plan in place before they start taking them out. If you want to learn more about how to build up your savings account, check out our financial guide here!

According to the Federal Reserve Board, student loan debt now stands at $1.53 trillion. That means $40,000 for each American. While many people will argue that college should be free, others may disagree. They say that you shouldn’t be able to go to school without paying for tuition and fees.

We don’t know what’s going to happen in the future, but we do know that it’s impossible to predict the stock market. One day, stocks could drop significantly; the next, they might skyrocket.

People who get student loans often find themselves struggling to pay back their debts after graduation. As soon as they begin working, their income level drops drastically. This causes them to use credit cards more often than usual. If they aren’t careful, they’ll spend more money than they make, which then forces them to borrow even more money.

There are ways to stay on top of your finances while still being able to pursue your dreams. When you’re looking to go to school, it’s best to save as much money as possible. You can look into grants, scholarships, and low interest rates to help reduce the amount of money you need to borrow. Also, you should always keep track of where your money goes and whether or not you can afford to spend more than you earn.

Many companies offer incentives to those who graduate from college. These rewards can range from cash prizes to company training programs. Find out if your employer provides any financial reward programs to encourage graduates to stick around.

Most people think that the government will bail them out if they lose their job. However, some employers actually provide unemployment insurance. If you work hard and put yourself out there, you will eventually land a great job. Check out our guide on unemployment insurance here!

If you’re interested in starting your own business, you’ll probably need capital. If you don’t already have enough saved up, consider getting a small business loan. A business loan isn’t just for big businesses. Smaller companies can benefit too.

You can apply for a private student loan or a federal loan. Private loans require less documentation than federal loans. Plus, you’ll have more control over when you repay your loan.

Don’t let your student loans prevent you from pursuing your education. Make sure you understand the terms and conditions of your loan before signing anything.

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