Misconceptions About Letting Student Loans Go into Default

Written by adminSeptember 21, 2018
Student Loan Consolidation

Every year, millions of Americans rush to college. It’s part of the American dream. We’ve been told since we were little. If you want to make good money, you need a degree. So, that’s what we do. If someone can’t pay for their schooling, they take out student loans. It’s not a big deal at the time. They sign the dotted line and figure they’ll deal with it later.

Then, later comes. The student graduates, and before they even get a chance to breathe, the bills start coming in. It’s time to pay back your lenders. But, what happens when the economy isn’t doing too well and jobs aren’t aplenty? Is the lender going to wait for you to find gainful employment?

Maybe. There are forbearances that allow you to take some time, but while you’re doing that, interest still accumulates. But many student loan borrowers shrug their shoulders. They think they will be able to tackle the problem later on. That’s when the nightmare turns into a catastrophe.

When Student Loans Become a Burden

Student loans aren’t something that should be taken lightly. There’s a reason why the debt has reached an epidemic level of $1.5 trillion. Actually, there are numerous reasons. Predatory lending, fake claims by colleges, economic hardships, and years of taking out increasing amounts of loans pile on to the problem.

For many who have no options, they have nowhere to turn. They decide that the default is okay for a few years until their situation turns around. If that sounds like you, there are things you should be aware of. You have other options. Here are several misconceptions and consequences of allowing your student loans to default:

Misconception #1: Your Loan Will Just Go Away

There are a lot of people out there who believe if they just stop paying their student loans, they’ll magically go away. The lenders will stop hunting them down, the interest will stop flowing, and life will get back to normal. This is not true!

According to Teri Williams, who is the President of OneUnited Bank, student loans “cannot be discharged or ‘erased’ without payment in full.” There is no bankruptcy option that will wipe it out. With the exception of a fraudulent case or other parameters under the law, your loan will follow you everywhere you go.

Some of those parameters include student loan forgiveness, but that requires qualifying conditions that must be strictly met. There were plenty of students who felt they would qualify, but they didn’t have the right type of loan. And sometimes, the government changes the rules, depending on who is in power.

Misconception #2: Lenders Won’t Work with You

Say what you want about lenders and debt collectors. Many can be downright mean and will use every tactic in the book to get their money. But as long as you’re open, honest, and communicate with them, they will often work with you. They want their money and if you reach out to them, the more options they have for helping you.

Rachel Rabinovich, a financial planner with Society of Grownups, believes debtors want to help. “They are there to help you and the earlier you reach out, the more options they’ll have,” she says. “They don’t want to deal with the paperwork and mess any more than you do.”

http://financialhelpers.com/what-does-it-mean-to-have-excessive-student-loan-debt/

At the end of the day, you borrowed the money, and no matter what situation you’re in, you have to pay it back. Contacting your lender and working out a deal will bode much better for you than ignoring the problem and letting it go into default. They will help you go over repayment plans and more.

“Most lenders prefer to modify terms to make it possible for you to make regular monthly payments rather than taking you to court to obtain a judgment,” said Rabinovich.

Misconception #3: You Can Just Declare Bankruptcy

This topic was briefly covered earlier, but there are no bankruptcy protections against student loans. This is considered the nuclear route for so many people. They turn the key and have all their debts obliterated. With student loans, that’s not the case. The odds of a judge forgiving those is nearly zero.

So, even if you’re declaring bankruptcy, you will still have your loans haunting you.

The big question now is: what happens if you default? Well, the consequences vary. It can extremely complicate your life. Kevin O’Leary of Shark Tank said its best for young people to make paying off their student loans a priority before anything else.

The reason is, if you have a high amount of debt, it can impact your credit score negatively. That makes it that much harder to secure a loan for necessities, like a new car, to get a new credit card, and to even secure a mortgage. Life only gets more expensive once a person starts to settle down, get married, and have children.

“Defaulting on federal loans could make it impossible for you to participate in other federal loan programs,” Rabinovich adds. “For example, defaulting on a federal loan would likely disqualify you from receiving an FHA Loan (Federal Housing Administration). FHA Loans are popular with first-time homebuyers due to their minimal down payment requirements.”

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Kevin O’Leary’s Advice for Paying Off Student Loans

Written by adminSeptember 20, 2018
Student Loan Consolidation

Mr. Wonderful himself, Kevin O’Leary, has made a career out of giving financial advice to struggling entrepreneurs. As one of the mega-stars of ABC’s Shark Tank, O’Leary also frequents CNBC and Fox Business networks. Now, he has a word to share with millions of Americans suffering under the burden of student loans.

Recently, the amount of student loan debt has topped $1.5 trillion and growing with each passing year. It has become an epidemic of biblical proportions, higher than a credit card and auto loan debt. Only mortgage debt is higher. By 2023, it’s estimated that 40% of all student loans will default as it becomes unmanageable to borrowers.

So, what is O’Leary’s sage advice? Pay off your loans immediately.

“Get rid of that student debt right up front while you’re young and frisky, that’s the time to do it,” O’Leary told CNBC’s Make It. “You should pay that loan off in 36 months if you can do it.”

Paying Off Student Loans Should Be Your Priority

When students graduate college, their focus might be getting settled into a career and starting a family. They want to buy that house or a new car, but O’Leary thinks that’s a bad idea. Piling debt on top of debt is setting yourself up for a financial disaster later. Plus, having a large amount of student loans will make it more difficult to get other loans.

Instead, you should make paying off your student loan your main priority.

“It means you’re cutting back your lifestyle significantly. You’re spending up to 40 percent of your paycheck just to get rid of it. Why? Because it’s a very nasty thing to have hanging over your head for a very long period of time,” said O’Leary.

He makes a really good point. According to Experian in a 2017 study, even the generation known as Baby Boomers are still paying off their student loan debt. This generation is between 50-70 years old! The next generation down, 40-49-year old’s, still hold $229 billion in student debt. These loans do not just go away and can take decades to pay off.

Don’t Wait Because You Think It Will Be Easier

One strategy a lot of college students use is putting off their payments. They use forbearance and deferments, thinking it will be easier to pay off once they’re making more money. According to O’Leary, that’s not a good plan at all. In fact, it makes the problem larger and harder to deal with.

“The minute you establish a lifestyle and you start going out for dinner, and you start dating or you get married, all of a sudden, you have all kinds of other expenses, not necessarily just paying off your loan,” O’Leary says.

http://financialhelpers.com/why-you-should-skip-student-loan-forbearance/

“That’s why you want to pay your loan off as fast as you can before your lifestyle starts to really creep in on you and make you spend more on things like vacations, and dating, and dinners, and when a child comes along, all of those expenses.”

Interest rates also play a huge part in this. When you start out, you might think the interest rates are great, but over the life of the student loans, paying decades later, the interest has really piled on thousands of extra dollars. Student loans are “generous at the beginning, but over the long term that interest really adds up,” O’Leary says.

If you have a $50,000 student loan with a 5% interest rate (which is the current rate), you’d add $14,473 in interest. This is only paying the minimum balance over a decade. On the other hand, if you pay $1,500 per month, you can get out from under your loan in three years, reducing the interest to $4,616.

“I know it sounds like a lot, but really smart people figure this out pretty quickly and they focus on getting rid of that debt,” O’Leary says.

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What Does It Mean to Have Excessive Student Loan Debt?

Written by adminSeptember 19, 2018
Student Loan Consolidation

As millions of people across the country go back to their college dorms, many aren’t thinking about the future ramifications. They know they’ll have student loan debt (unless they got a free ride), but they underestimate how it will play out. No one goes to college and believes they’ll have a difficult time finding work once they graduate.

Except, that’s what happens. In the crux of the Great Recession, there were as many people with bachelor’s degrees working fast food as there were unemployed. Jobs are still coming back, but studies show they aren’t the high-paying jobs our parents and grandparents had. Everyone is still reeling, even if consumer confidence is growing at record rates.

Despite the horror story playing out in the news every night, more and more kids gear up for college. They take out student loans with no fear of not being able to pay it back. Yet, the debt continues to climb. Recently, student loan debt reached a peak of $1.5 trillion. In the next few years, 40% of that will go into default. Many will suffer from excessive student loan debt.

What is Excessive Student Loan Debt?

Some debt is reasonable after leaving college. A few grand here or there for books and tuition is reasonable. Some people leave college $50,00-$150,000 in debt. In a lot of cases, this can take the next 25 years of your life to pay off. Again, these students borrow that amount with the full expectation that they can graduate and get an adequate job to pay for it.

The problem is, it can become a vicious cycle. Having a lot of student debt can seriously interfere with a person’s life. Monthly repayment can cost more than a mortgage. Your credit score can be affected and it can cause other lenders not to loan you more for things like a house or a car.

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In specific terms, excessive student loan debt is when a person has too much debt that they can’t pay it back in a reasonable amount of time. It will seriously impact the financial stability of the individual. Interest is also a major factor most don’t consider. It can add thousands to your total debt, putting students in a vicious cycle they will never dig out of.

There is Help Available

If you find yourself stuck with excessive amounts of student loan debt, there is help available. The worst thing you can possibly do is not pay your bill. Interest will still add up and going into loan default will only make the problem worse. There are government programs that will assist borrowers based upon their income and ability to pay.

Financial Helpers is here to help as well. We’ve helped thousands of people struggling under the burden of student loans. We listen to their stories and work with their budget to find a plan that works for them. We even find if they qualify for student loan forgiveness, deal with the paperwork, and make the process easy.

If you’d like to know more about your options, you can call Financial Helpers at:

Call Now 844-332-2079

Excessive student debt will cripple your life. You shouldn’t have to put off financial freedom until 20 years down the road. There are options, you only need to know where to look. Financial Helpers will get you there.

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Why You Should Skip Student Loan Forbearance

Written by adminSeptember 18, 2018
Student Loan Consolidation

With the student loan crisis in full swing, millions of students graduate college with no idea what to do next. They may have a brief reprieve, but for the most part, repayment of loans begins immediately. With their shiny degree in hand, did the student find a great job right away? Odds are, the answer is no, but the lenders don’t care either way.

There’s a reason why the elite mock millennials for being the generation that still lives at home with their parents. It doesn’t mean they’re lazy and refuse to work. Student loan debt has become a crippling problem for this generation. For the last decade, the economic crisis made finding meaningful work nearly impossible.

The economic climate doesn’t matter to lenders. They want their money back, job or not. The monthly payments can be as high as $800-$1,000, depending on how much you borrowed. That’s the cost of rent. With so many students graduating and facing immediate hardship, many turn towards forbearance to give them some time.

What is Forbearance?

After a student leaves college, their student loan is due immediately. The amount of the payment depends on a variety of factors. In the event of an economic or financial hardship on the student, they can decide to apply for forbearance.

Forbearance is a process that allows students to put their student loan payments on hold for a temporary period, usually up to 12 months. This is a good thing for people suffering with financial difficulty to get a little extra time, but it should only be used for emergencies. Yet, its usage is becoming a trend among people with debt.

http://financialhelpers.com/how-the-great-recession-caused-the-current-student-loan-crisis/

Because you can get an unlimited number of forbearance deferments, a lot of students are putting their payments off for years, at a great cost to themselves. In the second quarter of 2018, 2.8 million student loan borrowers are considered in forbearance. A number of these cases remained in forbearance for 18 months or longer.

Why You Shouldn’t Put Off Your Student Loan

Forbearance isn’t a long-term strategy to avoid paying your loans. It should only be used in cases of a financial emergency. For example, if you injure yourself and cannot work, or the loss of a loved one. Students all over the country keep making the same mistakes. They jumped at a chance for an education, but weren’t prepared for what came next.

So, they avoid paying their loans as long as possible. They push it out further and further, but don’t realize they’re only making the situation worse for themselves. Even during forbearance does interest accrue on a student loan. That means the amount you owe will continue getting bigger during that time.

Over the period of a year, depending on the amount of interest, your loan could grow by $1,000-$2,000. That’s only the first year. Over the life of your loan, the interest continues to grow. Some students can never get out from underneath the revolving cycle of interest and actually pay down their loan.

Better Options

To recap, forbearance should only be used in a time of crisis. If you absolutely cannot pay your monthly bill, you can get it push off by a month or two. Your student loan will not go anywhere or magically disappear just because you push it off. In fact, the interest rate will only further grow your ending balance.

If you’re struggling to pay off your student loan, there are other options available to you. The PAYE and REPAYE are income-based programs that allow students to remain up-to-date on their payments. If you have a limited budget, you can pay what you can afford. As time goes on, as you make more money and your credit score improves, you can refinance your loan.

The worst thing you can do is get frustrated and give up. It will only add to your problems. Pay your balance down and keep to a schedule.

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4 Facts You Should Know About Student Loan Forgiveness

Written by adminSeptember 17, 2018
Student Loan Consolidation

Sure, everyone who takes out student loans would love to be awarded complete student loan forgiveness. Just one wave of the magic wand by someone sitting in a federal office, and POOF! The loan is gone. But sadly, most people misunderstand what it takes to get there. Not everyone can apply and the rules are strict.

So, the first thing about getting a student loan is you need to be prepared to spend at least the next decade of your life paying it back. Depending on the amount you owe, monthly payments are about as expensive as a cheap apartment rental. For this reason, a large percentage of people default on their student loans.

In fact, but 2023, it’s estimated that 40% of borrowers will default on their loans. As the amount of debt surpasses $1.5 trillion and climbing, student loan forgiveness is the only hope a lot of Americans have. If that sounds like you, here are four facts you could consider:

1) Student Loan Forgiveness Takes A LOT of Time

Barring a fraudulent case, you’re not going to apply for forgiveness and get it granted within a few months’ time. There are even a lot of stipulations and conditions to receive it. Currently, there are three programs that offer it: PAYE, REPAYE, and Public Service Loan Forgiveness.

With the Public Service Loan Forgiveness plan, it’s a 10-year process. Therefore, you have to be a federal, state, or local service worker who makes regular (around 120) payments over a ten-year period to qualify.

PAYE (or Pay As You Earn) is a 20-year program for student loan forgiveness. This is more income-driven. There’s a revised (REPAYE) program that can take up to 25 years. These programs help former students pay less each month based upon their income. At the end of the day, they might not be worth the trouble.

2) Good Chance Your Balance Will Increase

Getting on a student loan forgiveness program might be helpful for a lot of students. They can pay lower monthly payments, but there’s a reason why it can take as long as 25 years. Accruing interest is the major killer here. The interest doesn’t stop accumulating and will likely grow your balance.

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Every year, you have to re-certify your income. If you get a new job, a raise, or if your income changes under any circumstances, it can boot you out of the repayment program. You can even eventually take longer to repay than you would’ve done if you hadn’t joined the program. There are a lot of different scenarios to consider.

3) Student Loan Forgiveness Dollars Become Tax Debt

At the end of the day, you will have to pay off your debt. Any student loan forgiveness you receive only changes from loan debt to tax debt. That’s because the IRS still counts the amount forgiven as income you’ll have to pay taxes on. If you’re disabled or under the Public Service Loan Forgiveness program, this doesn’t apply to you.

4) The Future is Wide Open

Here at Financial Helpers, we’ve been regularly offering updates to the student loan forgiveness program. Each administration seems to have a different idea on the best way to offer help to students. The Obama administration created a lot of these programs at the height of the debt crisis, but the Trump administration seems to be more interested in protecting banks.

We recently reported that Betsy DeVos, the education secretary, was in favor of a tiered forgiveness program based on income. A federal judge ruled against her just last week. With this being said, there are a variety of different ways to pay off student loans quicker. There’s refinancing, repayment, and consolidation.

To learn more about your options and what plan works the best for you, call Financial Helpers today. We’ve love to hear from you. Our team of student loan debt experts is ready to assist in creating a plan around your budget and needs. You can call us at:

Call Now 844-332-2079

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Federal Judge Rules Against Betsy DeVos in Student Loan Forgiveness Case

Written by adminSeptember 14, 2018
Student Loan Consolidation

It was only a few days ago that Financial Helpers reported on this developing Education Secretary Betsy DeVos story. She, along with the Trump administration, was purposely keeping students from obtaining student loan forgiveness. This is in direct violation of an Obama-era law that offered amnesty in the event of for-profit scams and fraud.

Instead of offering full student loan forgiveness, DeVos was in favor of a tiered program. This program would award differing amounts of loan forgiveness based on their income. If they made more money from their degree, the less they’d have forgiven. Rather than 100% of their loans wiped clean, the average was about 30%.

http://financialhelpers.com/new-partial-student-loan-forgiveness-tiered-program-being-worked-out/

According to the DeVos, it’s unfair for the taxpayers to brunt the full burden of student loan forgiveness laws. However, on Wednesday, a federal judge rebuked the education secretary. It delivers a substantial blow to the Trump administration’s desire to cozy up to financial institutions rather than defrauded students.

The Ruling Against DeVos

Many critics of DeVos argue that she’s a shill for the financial institutions that offer student loans. She brought several big names from for-profit schools onto her staff. It’s easy to see why the Trump administration was in favor of reducing strict regulations that prevented the predatory behavior. Yet, according to a federal judge, they were breaking the law.

According to the judge, DeVos’ actions against delaying rules enacted under President Obama were “arbitrary and capricious.” Attorney Generals from 19 states, all Democrats, filed a lawsuit against DeVos for not following these rules. She defended her actions, saying Obama’s ruling was “a muddled process that’s unfair to students and schools.”

“It’s a really big deal, it’s an incredibly important win for student borrowers and really for anyone who cares about having a government that operates under the rule of law as opposed to as a pawn of industry,” said Toby Merril, a litigator at Harvard University’s Project on Predatory Student Lending.

Actions Towards Student Loan Forgiveness Laws

It’s still unknown how this ruling will impact how the Trump administration will handle student loan forgiveness going forward. They have an appointment later today with the judge to discuss possible remedies. Advocates for students hope the judge restores the Obama rules to ensure they have protection from predators.

Another lawsuit is waiting in the wings to tackle the partial loan forgiveness program again. Until the case is settled, DeVos will most likely be ordered to abide by the current rules. It’s unknown whether Wednesday’s ruling will impact how the Department of Education will handle defrauded student cases moving forward.

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How Volunteer Work Can Help Pay Back Student Loans

Written by adminSeptember 13, 2018
Student Loan Consolidation

For millions of people struggling with their student loans, many of them are searching desperately for options. For those who couldn’t find work after obtaining their degree, going into default seemed like their only choice. The problem with that is, it made paying their student loans much more difficult, as interest piled on.

However, students have other options they may not be aware of. There are a lot of non-profit organizations looking to help students pay off their loans.

Danny McGee, a Michigan father who racked up $85,000 in student loans to become a building system engineer. After getting his Master’s degree from Tufts University, he was paying $850 per month on his loans. To make up for his lost income, McGee started working restaurant gigs, but it didn’t fit into his schedule.

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“I spend a couple of hours each week looking for additional ways to pay off my debt,” said McGee. As he continued to search, he found out about one such organization called the Shared Harvest Fund. The Shared Harvest Fund works to connected volunteers with paid opportunities and nonprofits that they are passionate about. Also, they will help pay back student loans.

For former students like McGee, it was the perfect opportunity. “Hopefully, debt freelancing is a way I can be a little bit more efficient with my time and that I can combine my passions in things that I care about with supporting myself,” he said.

How Shared Harvest Fund Works

If you care about social work to benefit others, you can do great work within that community and receive a monthly stipend. It can be anything from community development projects to helping solve homelessness. Just create a profile on their website, and they’ll pair you up with a project you care about. The stipend will pay out as much as $1,000.

This money is paid directly to your student loans. Even if you’re unable to do significant community projects, other odd jobs might fit within your expertise, such as accounting and legal assistance. It’s all about user experience to help others in a way that uses their time wisely. Jan Overton, a USC grad with six-figure debt amounts agrees.

“I’m really looking for work that’s more conducive to my schedule. Even if it’s only an extra $250 – at least those hours I work are giving to someone else to help someone,” she said. “If I could help other people at the same time while paying off my loans, not just for a job, but enriching my life, it’s such a better way to do it.”

Other Organizations to Help Repay Student Loans

Shared Harvest Fund isn’t the only organization that helps repay student loans. SponsorChange and Zero Bound are two others that use philanthropic work in this manner. The National Health Service Corps is a group that is in desperate need of health care professionals to volunteer in underserved areas.

AmeriCorps is a government program that matches professionals up with service programs. They can aid with natural disaster response and other relief efforts. Users who participate can receive the Segal AmeriCorps Education Award that grants the equivalent of the Pell Grant.

Students should know that there are options to help them pay for their student loans. It may be a struggle for a while, doing volunteer work at your own pace while paying off loans will be worth it. Gaining financial freedom while benefiting the community is something no one should regret.

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One Million Student Loan Borrowers Default Each Year

Written by adminSeptember 12, 2018
Student Loan Consolidation

The number of people who have student loan debt continues to skyrocket. In fact, the amount of student loan debt has tripled in the last decade alone. At $1.5 trillion, this staggering burden is hitting Americans harder than a credit card and auto loan debt.

The estimates say that by 2023, 40% of student loan borrowers will be in default. To be in default means you haven’t made a payment in about a year. When that happens, the lender sends your account to be dealt with by a third-party collector.

The Economic Climate

A lot of it has to do with the economic climate and fraudulent claims made by the for-profit school. When the Great Recession hit in 2008, millions of people found themselves without work. To boost themselves, they decided to get a college degree. The prevailing thought is, if you have a degree, you could find better work and make more money.

That didn’t exactly happen. For-profit school latched on and made promises towards students. If you go to their school, they have a high job-placement percentage. So, the student flocked. They later found out that it was tough even to hire people with college degrees. You were more likely to have a bachelor’s degree working fast food than a sustainable career.

http://financialhelpers.com/student-loan-debt-crosses-the-1-5-trillion-mark/

Those who borrowed a student loan tended to be in financial stress already. They weren’t working, could barely afford the rent, and were likely living at home. After they graduated, nothing changed for them, other than a pile of debt they were required to start paying back. The problem is, monthly payments cost nearly as much as a cheap apartment.

Student Loan Debt Hardship

Kristin Blagg, a research associate at the Urban Institute, says default problems mostly impact urban communities and people of color.

“The issue of default appears to be more concentrated in neighborhoods of color. People who default on their student loans are more likely to live in Hispanic and black neighborhoods,” she said. Minority families have less parental wealth to help. Whites also have better employment opportunities.

It’s also true that people who default on their loans live in communities with a lower median income. They can’t find the work necessary to pay back their loans. Non-defaulters are more likely to have a higher salary and can afford their bills. Still, there are plenty of young adults living at home rather than embarking on their journey.

The Harsh Impact of Student Loan Default

The main difference between default and staying current is the impact to the user’s credit score. If you’ve fallen into default, then your score will most likely tank into the 500s. Students who keep up with their loans will be in the high 600s.

Having such a low credit score can derail your life plans. If you want to buy a house, get a new car, or even if you need a loan, your options will become extremely limited. If you do manage to find financing, the interest rates will be through the roof. That means you’ll have to pay a lot more over the life of that loan than you would if you had good credit.

Where many defaulters get into trouble is their loan keeps growing larger. If you stop paying for a year, the interest will keep piling up, and the loan will increase larger. So, even if they decide to start paying, it’s becoming a vicious cycle impossible to dig out.

If you’re a service worker that requires a license, you can be disqualified from work. Having a work license, such as a nursing or teaching license, needs you to remain in good standing with your loan. Many states will pull a person’s work license if they’ve defaulted.

“Negative effects of student loan default can be wage garnishments, tax offsets, and other methods of loan collections,” said Elaine Griffin Rubin, senior contributor at Edvisors. “In addition, some states suspend or revoke state-issued professional licenses, and some states suspend a driver’s license because of a defaulted loan.”

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New Partial Student Loan Forgiveness Tiered Program Being Worked Out

Written by adminSeptember 11, 2018
Student Loan Consolidation

At the start of September, the student loan watchdog abruptly resigned his post. He cited in his resignation that the Trump administration was doing little to protect students. His job is to take on legitimate fraud cases to keep the process fair for students. This type of fraud used to result in the student receiving full student loan forgiveness benefits. Not any longer.

In recent years, for-profit schools have developed a reputation for using aggressive marketing tactics. Likewise, these tactics include promising ultra-high job placement rates. They even offer to help the student connect with employers. These promises ultimately proved fruitless. Students continue to rack up massive amounts of student loan debt.

Student Loan Forgiveness Under Trump

President Trump and Education Secretary Betsy DeVos aren’t real fans of student loan forgiveness. Their attempt to wipe out the program instituted by the Obama administration wasn’t successful. At one time, if a student was swindled or defrauded by their school they could have their student loan debt forgiven. Reluctantly, the Trump administration agreed to keep the program intact for the 2018 budget season.

DeVos is in favor of a different type of program. She appears to be in favor of a new tiered relief policy based upon income.

There were 16,000 claims of fraud against for-profit colleges. Only 1,000 of those cases received full student loan forgiveness. The rest received varying degrees of forgiveness. It was all based around their income after they graduated. In total, only 48,000 claims of fraud and abuse were approved out of the 165,000 filed since Obama started the program.

A Balanced Approach?

On average, DeVos’s education department has only forgiven around 30% of a student’s loan. They compare the earnings after graduation to other students who have graduated from the same program at other schools. Still, while the Obama administration never denied a fraud request, the Trump administration has dismissed over 9,000 cases.

Because of this, critics of DeVos and this new tiered program say she’s in the pocket of for-profit schools. They say she brought in officials from these schools to help serve within the agency. They appear to be serving the interests of the schools by easing regulations and making it tougher for students. However, according to DeVos, this is just a more balanced approach.

http://financialhelpers.com/student-loan-watchdog-has-abruptly-resigned/

“No fraud is acceptable, and students deserve relief if the school they attended acted dishonestly. (This new process) will allow claims to be adjudicated quickly” and “also protects taxpayers from being forced to shoulder massive costs that may be unjustified,” said DeVos.

Along with President Trump, she believes it’s unfair for taxpayers to bear the brunt of paying for full student loan forgiveness. With this new program, she feels that it’s a more balanced approach to helping students. Yet, while fraud happens, students still receive a degree and find meaningful work after graduation.

The Crisis Rages On

The Obama administration appeared to take the situation much more seriously. They went after the significant for-profit schools that were using deceptive processes. ITT Tech and Corinthian College are shut down. Many thousands of students had their debt erased at a total of $550 million.

Student loan debt rose to over $1.5 trillion and continues to climb. It’s a crisis likely to continue. Now that the economy is doing better, students won’t be as desperate to seek a degree for meaningful work. They’ll have the tools they need to understand their student loans. It won’t be easy. Life can be difficult with the burden of loan debt. In fact, many students will suffer for decades. Still, the government will continue to debate this for decades to come.

Before starting college, educate yourself. Financial Helpers is here to get you through the process. If you have any questions, don’t hesitate to call us at the number below:

Call Now 844-332-2079

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How the Great Recession Caused the Current Student Loan Crisis

Written by adminSeptember 7, 2018
Student Loan Consolidation

Most young adults over the age of thirty remember what it was like during the Great Recession. Stores were closing. The mall was empty. No one was buying new cars or trucks. In the early 2000s, everyone was buying a home because the mortgage rates were perfect. By 2009, those same people were facing foreclosure. Students by the millions were willing to sign for a student loan just to go to college.

It was a scary time, especially if you were trying to take care of your family. Charles Newmeyer was one of those people. He’s one of the millions of people who were forced to make something out of the worst economic disaster to ever hit the United States. It wasn’t for lack of trying.

The Student Loan Crisis Worsened

Newmeyer thought he could improve his odds of finding a job if he got a degree, so he decided to get an advanced degree in automotive technology. The problem was, he didn’t learn anything he already didn’t know. Newmeyer racked up nearly $80,000 in debt for a degree he didn’t need that failed to help him find work.

After he graduated, Newmeyer regretted his decision to choose WyoTech, a for-profit school. He realized he could’ve spent much less going to a community college and get the same degree. Now, his family is still struggling, this time with the added burden of debt payments.

“Right now, it doesn’t fit into my budget, and I’m ignoring phone calls,” Newmeyer said about his student loan bill. He’s decided to take the route of going into default. He’s not the only one. It’s estimated that by 2020, 40% of all student loans will be in default.

In 2008, before the worst of the recession hit, Americans owed $651 billion. In less than a decade, that number shot up to $1.5 trillion. That’s because the downturn took money out of people’s pockets. If jobs are scarce and no one can even pay their necessary bills, how can they afford their student loans?

The Perfect Storm

The economy as a whole was suffering. If Americans weren’t working, then states were struggling with keeping their budgets in check. Individual states help to fund public colleges, so when money started getting short, the funding became limited. That forced those colleges to raise their prices.

Ben Miller, senior director of the Center for American Progress, knows just how much that further hurt students. “People had less money to pay for college, they had to pay more for it,” he said.

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Just like Newmeyer, millions of students flocked to these colleges, hoping the extra education would put them in a better position. Instead, they found themselves hurting from deep financial wounds nearly impossible to recover. This crippling only made the collapse that much worse. Many Americans are still suffering, even as the economy seems to be on fire.

“The thing that scares me the most is this is where we are years after this recession, so what’s going to happen the next time we have a recession,” said Miller. As bad as this sounds, it was the for-profit schools that made things worse.

For-Profit Schools Exacerbating Student Loan Misery

As the community colleges raised their rates, for-profit schools came rushing in. They knew students were desperate to improve their lives and took advantage. Colleges made all sorts of promises, using highly controversial marketing tactics, telling anyone who would listen that they had terrific job-placement rates. All they had to do was take out a student loan, and they were set. They’d have a job the second they graduated.

These schools even said they’d help their students fill out paperwork and connect them with the top employers in their field. Most of the time, these claims were fraudulent. These colleges were enrolling a record number of students who were merely trying to get through the recession.

More debt accrued, the lives of students became more burdened, and the cycle repeated. The debt added up dramatically to now $1.5 trillion. “We have a generation of folks who tried out college, and now have debt that is going to be very hard for them to walk away from,” Miller said.

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