Kara Sat in Fear at Her College Graduation Ceremony
She had no job lined up, and owed a bunch of student loan debt — but that didn’t stop her.
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She had no job lined up, and owed a bunch of student loan debt — but that didn’t stop her.
The student debt burden to call yourself doctor outweighs its average income.
Where will consumers go with their complaints about loan servicers now? Certainly not the Education Department.
Hiring managers list the 8 biggest mistakes they see from the Class of 2018
Experts say there’s a definite relationship between debt and depression. But we don’t like talking about either one.
I don’t know when the next recession will hit, but I know exactly what will happen when it does.
Our president made big promises to our nation’s military during the 2016 election. Even if Big Media isn’t focused on it, Trump continues to deliver.
Paying your tax refund toward debt is one claim anyone can be proud to make.
Students borrow money without questioning the interest rates.
Now his goal is to build his own financial kingdom.
Money crises aren’t rare. So why do we pretend they are?
It took tough love, but he paid off his debt and prospered.
Betsy DeVos is asserting her right to be useless and fighting back against states that want to help student loan borrowers, insisting they have to be just as useless as her.
Everyone knows you can slash payments on public student loans. Here are the secrets for private loans.
A reader has some debt, but no savings. Thankfully, he has several excellent options.
Despite earning more than women and having higher homeownership benefits, men are failing to launch at a higher rate.
But before he earned that title, he made many “idiotic” mistakes.
Students say they need the degree to get ahead even if that means starting off behind financially.
It’s cheaper to pitch a tent outside the admin building than pay for a dorm.
It took hard work, sacrifice and a lot of sweat.
Trump hit on unemployment, GDP, taxes, and deregulation. He needs to talk more about wages, infrastructure, and education.
If we have to resign ourselves to never passing a budget, we might as well get something good out of the next few shutdowns. Let’s fix student loans.
Can’t afford college? Don’t go. There are other options, and they’ll help bring costs down.
Don’t make promises you can’t keep. Make money instead.
A reader has heard about “secret government programs.” He might be right.
More than half of undergraduate students believe college is more expensive than they originally planned.
Parents are underestimating the cost of college for their children by tens of thousands (and sometimes hundreds of thousands) of dollars.
That’s why she applies for 10 scholarships a week.
Betsy DeVos already manages the smallest Cabinet agency, but she wants to cut her way to more savings. It won’t work, and it’s awful for struggling students.
Those closest to retirement are the most optimistic about getting out of debt.
A reader owes nearly $100,000 but takes home $850 a week.
It’s a cliché but it worked for Lance and his wife.
This year, 1.2 million high school grads didn’t fill out a FAFSA, leaving $2.3 billion of free money behind.
No savings, poor credit are adding up as problem for the generation.
Donald Trump’s student loan plan would save students more money than Obama’s in the long run. It’s also better for the national debt.
The Witch of Debt hits the street to ask people about their money nightmares and other tales of financial woe.
They’ve got — and are ignoring — a bill on bankrupting student loans. But what about these ideas states are considering?
Some financial experts believe the president will find a way to help students with their loans — others not so much.
A reader earns only $11,000 a year, but she’s being garnished $300 a month.
The CFPB tried to pick up the department’s slack. Now the Education Department is pushing back.
More Americans living in Southern states can put more money toward their student loan debt since cost of living is cheaper.
With more than $1.3 trillion in student loan debt in this country, it’s long been a mantra that “student loans are too big to fail.” However, they might now be too big to succeed. In July, Citi released a 166-page report innocuously titled, Education: Back to Basics. Buried on page 81 was this hand grenade… […]
And we’re not getting any relief from Donald Trump.
They’re worried about money more than their jobs and relationships
For the first time in a decade, scholarships and grants cover a third of college costs.
What not to do: Join a pyramid scheme
The biggest risk to the economy is this $1.3 trillion consumer debt — which Trump is doing nothing about
Our favorite answer: Marrying the wrong person.
The education secretary is being sued for siding with for-profit schools over students. But at least she’s learning from her mistakes.
This week: A reader is trying to find legitimate ways to lessen his payments, but it’s not easy.
Not all student loans can use the same repayment strategies. That means you should really break your repayment strategy into two categories; you have one strategy for federal student loan debt and another for private.
This allows you to use federal repayment plans and loan forgiveness programs if you qualify. Those don’t apply to private student loans and you can’t include private debts in federal programs. Although you can use private loan consolidation on both types of debt, don’t do it! This converts federal debt to private, meaning you have fewer options available for relief.
If you have both types of loans, keep them separate and figure out the right repayment strategy for each.
With many types of debt reduction – credit cards, private student loans and even tax debt – reducing the interest rate applied to your debt is a big part of seeking debt relief. The more you can reduce interest charges, the easier it is to repay your debt quickly. So, a higher credit score means lower interest rates and faster repayment.
But that really doesn’t work with federal student loans. Interest rates are not dependent on your credit score. Instead, rates are set based on which academic year you took out your loans. The Department of Education announces new rates each year; in the current system, rates are based on the 10-year Treasury Note Index.
When you consolidate your debt or enroll in a federal repayment plan, the new rate is set by taking a weighted average of the loans you include in the program. Unless you convert your federal loans to private (which we advise against above), rate reduction should not be your goal. Instead, you should aim for:
As with any federal relief program, student loan repayment plans and forgiveness programs are subject to change. Both Congress and the executive branch through the Department of Education can change or cancel these programs.
Congressional changes tend to be more drastic, but they take longer. Meanwhile the DOE can make small changes at their discretion, meaning adjustments happen much faster. But even those small changes can have a significant impact on how you repay your debt. For example, the DOE under Betsy DeVos have “tweaked” the eligibility requirements for Public Service Loan Forgiveness. This led to people who had previously certified their eligibility receiving notices that they were no longer eligible.
The moral of the story is that you can’t wait around or procrastinate when it comes to student loan repayment. In most cases, if you enroll in a program that gets changed or cancelled, you stay in under the rules that were there when you signed up. But if you sign up the day after a rule change, things may be different. With that in mind, never wait on solving your student loan debt. If a program fits, get in before they have time to change it.
No matter whether you hold private student loans or federal, it doesn’t matter -neither can be discharged through bankruptcy. The federal government changed bankruptcy filing regulations to prohibit student loan discharge except in cases of extreme hardship. This is extremely rare.
Once those rules were in place, private lenders made sure that limitation would extend to private student loans as well. As a result, even private student loans taken out through a traditional lender can’t be easily discharged. You must prove that repayment of your loans will cause extreme financial distress – and given that you’re already sitting in bankruptcy court, you can imagine how hard that would be. Essentially, you have to show your loans would put you right back into bankruptcy and keep putting you there. And that no amount of payment restructuring or settlement is possible.
For what it’s worth, Rep. John K. Delaney (D-Maryland) proposed an amendment this year that would change this rule. It’s called the Discharge Student Loans in Bankruptcy Act of 2017. Unfortunately, we checked with our Senior Policy Editor Brandon Ballenger; after some checking, he says that the bill has a less than 1% chance of passing.
On a normal debt, when you default it leads to a negative item in your credit report; this occurs once the creditor moves your debt to “charge off” status. You also incur negative items for each payment you missed leading up to the charge off. These negative marks decrease your credit score, and they stick around for seven years from the date you incur them.
Federal student loans are different (again). But here the difference works in your favor. If you fall behind on a federal student loan, simply make payments on time for six consecutive months. This moves your loan back to a “current” status and erases any missed payments as if they never happened. You can eliminate the credit damage so it’s easier to borrow and get approved for new credit.
This only works on federal student loans. It’s also important to note that you lose that ability to erase credit damage by using a debt consolidation loan. You can use Federal Direct Consolidation Loan to consolidate student loan debt; it brings defaulted debt current automatically. However, it does not erase the credit damage caused by missed payments.
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