While a college degree is well worth the money, student loans can give anyone the blues. According to the Consumer Financial Protection Bureau, student loan debt is more than $1.3 trillion and continues to rise. For many younger Americans, it has become the largest household debt.The Department of Education offers forgiveness programs to help borrowers with student loan debt. These programs include the Public Service Loan Forgiveness program and the Teacher Loan Forgiveness program. Both programs are designed to alleviate the student loan burden. [Read more…]
College can be expensive! But there are still ways to help with the cost of college without getting into debt. Here are five ways to pay for college. [Read more…]
Yes, graduating from college is great but student loans sometimes can be a headache! However for many grads, this is becoming a common story. Approximately 70% of 4 year college graduates are leaving not only with a college degree but student loan payments.
According to the Consumer Financial Protection Bureau (CFPB), student loan debt has risen to more than $1.2 trillion dollars, a more than 20% increase from the year 2011. Furthermore, student loan debt is rising at an alarming rate, only second to household mortgages.
Although the burden of student loan debt can be a bit overwhelming, there may be some relief in sight. The Department of Education offers the Public Service Loan Forgiveness (PSLF) program to individuals who qualify. The PSLF program allows for student loan forgiveness for borrowers who work in the area of public service full time. If you are having making payments, also consider exploring payment options.
Here are some helpful tips to determine if it would work for you: [Read more…]
Student loans for the last few years have exponentially grown to more than $1 trillion dollars according to the Consumer Financial Protection Bureau. Coupled with the rising costs of college, which has risen on average of 1.6 percent over inflation according to the College Board, student loan debts are becoming way too common.
More than 60% of students are graduating with an average student loan burden of close to $30,000 according to the American Student Association.
While President Obama’s student loan relief plan expects to help more than 5 million struggling Americans with their student loan debt, the question remains – is it enough?
The Pay as You Earn Program
The executive order signed by President Obama expands the current program – Pay as You Earn. This program allows students to cap current student loan payments to 10% of their income and provides forgiveness after 20 years. However, only certain loans qualify and borrowers must show a partial financial hardship.
Currently, the program excludes borrowers who have taken out loans prior to October 2007. The President’s executive order would extend the program and allow those who have taken loans prior to this date to qualify.
In addition, the executive order aims to work with student loan providers to help borrowers remain out of default. Keep in mind, the executive order does not go into effect until December 2015.
College grads need jobs
While the student loan relief plan is a step in the right direction, there are many other issues that still need to be addressed. One of the key issues is college students are finding it difficult to find employment. According to a survey conducted by Accenture, only 46% of the 2012-2013 graduates were able to gain full time employment upon graduation. The 46% represents a significant decline from the 68% of the 2011-2012 able to obtain full time employment.
Accordingly, many college graduates are forced to forego the work place and pursue advanced college degrees in lieu of employment. One such example is Ellissia Hill, a graduate student at Old Dominion University in Norfolk, VA. “I made the decision to get my masters degree the summer before my senior year. My advisor informed me that obtaining my advanced degree would increase my chances of gainful employment,” Hill says.
So, while Obama’s plan with help some individuals, there is still much more work to be done.
Kemberley Washington is a professor at Dillard University and certified public accountant. Follow her on Twitter @kemwashcpa.
However, there is no need to simply default on the loan. Fortunately, you do have other options.
If you have been having trouble repaying your student loans, these alternatives may be worth a look:
Graduated Repayment Plan
The advantage of the Graduated Repayment Plan is your payments start low and are scheduled to increase gradually, usually every two years.
Depending on the type of loan, the repayment period is up to 10 years and will not ever be greater than three times any payment throughout the life of the loan.
The graduated repayment plan is best for individuals who expect their income to increase in the future. This may be ideal for those just entering the workforce.
You will pay more in interest costs under this plan than you would under a Standard Repayment Plan.
Extended Repayment Plan
The Extended Repayment Plan extends the payment terms of your loan beyond the traditional standard repayment of 10 years.
Payments may be extended up to 25 years, thus lowering the monthly payment amount on the loan.
With this plan, payments may be fixed or may change over time. And as with the Graduated Repayment Plan, you will pay more in interest costs with this type of plan than you would under a 10-year standard plan.
Income-Based Repayment Plan
The Income-Based Repayment Plan allows you to make student loan payments based on current income. A partial financial hardship is required to be eligible for this plan.
Maximum monthly payments are limited to 15 percent of your discretionary income. In addition, any remaining balance is forgiven after 25 years.
As with the other plans on this list, you will pay more in interest costs under the income-based plan than you would under a standard plan. Still, if current payments are relatively high in relationship to your income, this plan may work for you.
In addition to these alternatives, there are many more that may fit your needs. Visit the Federal Student Aid website to explore all payment options and utilize the repayment estimator to determine which plan works best for you.
Kemberley Washington is a certified public accountant and a professor at Dillard University in New Orleans. She writes a personal finance blog at Kemberley.com. Follow her on Twitter: @kemwashcpa.