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.

http://financialhelpers.com/baby-boomers-are-not-doing-as-well-financially-as-you-might-think/

“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.

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

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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How Trump Looks to Change the Student Loan Landscape in 2019

Written by adminSeptember 6, 2018
Student Loan Consolidation

Yesterday, we reported on President Donald Trump’s new law designed to help students with a disability. Making student loan forgiveness tax-free for the permanently disabled is an excellent start. However, what other ideas does he have for the future? How will these plans affect you?

Just a quick note: these are only proposals. No laws have been signed or changed. Remaining vigilant about fluid shifts within the industry is essential. Let’s look at three areas where Trump hopes to get involved with the student loan crisis.

1) Will It Be the End of Student Loan Forgiveness?

From the beginning, President Trump planned to do away with forgiving student loans. Of course, the exception is, if you cannot pay for your loan due to a disability. Otherwise, should the individual be responsible for their taxes? Is it fair that a student racks up $100,000 in debt, but it comes at a cost to taxpayers?

Betsy DeVos, the U.S. Secretary of Education, doesn’t feel taxpayers should foot the bill. With the president, they hope to cancel student loan forgiveness soon. They attempted to do just that with their first budget proposal. They decided to keep it another year in a compromise with Democrats to get the 2018 budget passed.

As of right now, the law is intact. For how long, no one knows. Trump and DeVos are already looking to cut it from the 2019 budget. So, if you’re hoping to get your student loans forgiven, call Financial Helpers today. We can help you go over your options while this option is still available to you. Call at the number below:

Call Now 844-332-2079

2) A Restructure of Repayment Plans in the Works

Currently, there are two ways to repay your loans. PAYE (Pay As You Earn) and REPAYE (Revised Pay As You Earn). These two plans are complicated and confusing. Trump hopes to fix that by combining the programs into a more straightforward single plan. As the two programs are currently separate, they differ on the amount of interest paid, and how long it will take to pay back the loan.

http://financialhelpers.com/president-trump-has-changed-student-loan-forgiveness-laws/

Students need a plan of action to repay their student loan successfully. They should prepare for every outcome before they decide to borrow the money, rather than being blindsided after they graduate. Knowing how the repayment program works, the future potential changes will give the student an upper hand.

3) Trump Wants to Give Students Better Borrowing Choices

If you think removing student loan forgiveness options is a bad idea, Trump may have a better opportunity instead. The president wants to give a boost to the private sector. It boosts competition and can lower prices. He hopes to inspire the same for student loans. Moreover, it might just work.

Right now, the federal government has control of the loans. Trump believes that they try to profit too much off of a student’s misery. This opens the doors for private lenders to get involved, and it’s going to give students better (and cheaper) options.

In all, the student loan debt problem is going to remain unsolved for some time to come. As long as the government continues to subsidy colleges and universities, the prices will keep climbing. Each administration seems to have their ideas about how to fix the problem.

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President Trump Has Changed Student Loan Forgiveness Laws

Written by adminSeptember 5, 2018
Student Loan Consolidation

Student loan forgiveness programs can be helpful to many students who struggle under a mountain of debt. Attempts were made by the Obama administration to ease the burden somewhat, but the epidemic continues to get worse. 44 million U.S. citizens carry over $1.5 trillion worth of debt.

Despite these astonishing numbers, the Trump administration came out swinging for the financial instructions. The student loan watchdog, who protected students from scams, abruptly resigned. He cited in his resignation letter that the federal government no longer cared about struggling students.

This news can be unsettling for students. New student loan forgiveness laws were within reach, but the Trump administration seems hellbent on destroying them. Thankfully, in signing the latest budget for 2018, Trump was able to compromise and leave current laws in place. How long they will last, no one truly knows.

One Positive Change for Student Loan Forgiveness

It’s important to note that while Trump targeted these laws, he hasn’t done anything negative yet. Proposals aren’t law, so students should continue watching what’s going on. Financial Helpers is available to help you in this process. All it takes is one phone call to see if you qualify for student loan forgiveness programs. Our team is made up of debt experts who will take you through your list of options and get you on the path towards financial freedom. Give us a call at the number below:

Call Now 844-332-2079 

Despite showing a willingness to cut programs to save money, President Trump made one big positive move in the right direction.

On January 1st, 2018, Trump’s Tax Cuts and Jobs Act went into effect. If it’s one thing the president has been great at, it’s been helping to grow the economy. The Tax Cuts and Jobs Act has done precisely that. It cut a lot of red tape, regulations, and taxes for business owners. Even small businesses have benefited tremendously from this law.

This law also helps those seeking student loan forgiveness. It made the death and disability discharge tax-free for students. Why is this important and how does it help? Let’s take a look at what it does and the advantage it gives students.

What is the Death and Disability Discharge?

Under current student loan forgiveness laws, you’re able to have your loans wiped away under specific qualifications. For example, if you end up permanently disabled or die, your loans are forgiven. It’s as simple as that. However, other types of disability aren’t as clear-cut, and forgiveness can be more difficult to obtain.

According to the Department of Education, you must prove your permanently disabled, as some disabilities can be temporary. Here are some of the guidelines:

• If you have any impairment related to service in the military. The Department of Veterans Affairs will have to certify you’re 100% disabled and unable to work.
• If you receive Supplemental Security Income or Social Security Disability Insurance and your new review is 5-to-7 years out.
• You have a doctor who certifies that you are 100% disabled and your condition will last longer than 60 months.

http://financialhelpers.com/trump-administration-signs-massive-student-loan-forgiveness-bill/

These are conditions that will make it nearly impossible for the student to repay their loans so that the government will give them a pass. What they may not realize is, having debt forgiven is considered taxable income.

Tax Implications of Student Loan Forgiveness

Any forgiven debt, including student loan debt, is considered by the government to be income you didn’t earn. You’d have to fill out a 1099-C and report it as such. It can raise the amount of taxes you owe by tens of thousands of dollars, depending on how much you had forgiven. This is a significant obstacle for anyone with a disability.

Worse yet, under the Parent PLUS Loan, parents who have a child die can have their loan forgiven. That sounds great, but the parents would still be on the hook for paying the tax hit that comes with it.

President Trump’s Death and Disability Discharge provision in the new law is a win for borrowers. They will receive student loan forgiveness that’s tax-free, so they aren’t suffering from thousands in extra charges. This problem is massive in another way: disabled people can lose their benefits if they have additional income.

Disabled individuals often receive both state and federal benefits to help with care. If they were to have their student loans forgiven suddenly, that would count as income. That much ‘income’ reported could cut their benefits altogether. This law is incredibly helpful for those in need of assistance.

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The Student Loan Watchdog Has Abruptly Resigned

Written by adminSeptember 4, 2018
Student Loan Consolidation

You may not know who Seth Frotman is, but he was a beacon of hope for many who struggled with their student loan debt. He was put in charge of a department in the Consumer Financial Protection Bureau designed to protect students against unfair and deceptive practices.

Frotman’s primary job was to assist borrowers of student loans by resolving complaints against private lenders. He prevents students from getting scammed. Of the thousands of claims of wrongdoing by lenders, he read them all and responded accordingly.

Frotman should be considered a hero for consumers everywhere. He oversaw the return of over $750 million to students. On September 1st, Frotman is officially retired from his role as ombudsman. The reason why he left should upset and terrify everyone who has a student loan.

Why Did the Student Loan Watchdog Quit?

You may be wondering why such a hero would quit. If he was genuinely helping students recover money after improper student loan practices, he should continue his work. However, as he put it, the government under the Trump administration no longer cared. In his resignation letter, Frotman blasted the current regime for handcuffing his ability to solve problems.

“It has become clear that consumers no longer have a strong, independent Consumer Bureau on their side. Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting. Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America,” the letter read.

http://financialhelpers.com/5-student-loan-debt-statistics/

Sadly, the CFPB’s former protector no longer believes the bureau is empowering students and their families to make informed financial decisions. The government is instead backing the financial industries and letting them get away with murder. This problem is hurting students and their ability to overcome massive amounts of student loan debt.

What to Do Next

Thankfully, there are still options available to help protect those with student loan debt. For one, Financial Helpers is available to help you navigate the troubling waters. If you want to know what your options are, or whether you qualify for loan forgiveness, give us a call. You can reach us at the number below.

Call Now 844-332-2079

The best thing you can do is remain vigilant and understand your options. There are currently over 44 million borrowers in the U.S. Over 10% have defaulted on their loans. With each passing year, the amount of average debt each student carries grows. The situation is only getting worse.

As student loan debt crosses the $1.5 trillion-mark, federal protection is more critical than ever. One wrong move in handling your loans can hurt your credit score. Whatever you do, don’t take a passive approach to your student loans. Defaulting your loan is the worst thing you can do. Now with fewer protections, they can come after you harder than ever. They can garnish your wages and take your tax return. Don’t let the sharks ruin your life. Call Financial Helpers today.

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The Student Loan Debt Problem is Worse than We Could Imagine

Written by adminAugust 31, 2018
Student Loan Consolidation

It might seem like the title of this article is a sensational headline to instill fear. In reality, the student loan debt problem continues to grow out of control in this country. According to the National Center for Education Statistics, the typical student will loan $6,600 this year. That averages out to be around $22,000 by the time they graduate.

It’s one thing to look at the numbers. Most college students have already resigned to the fact that they will have student loan debt once they graduate. Yet, it’s the default rate that’s concerning. In 2012, just over 10% of students defaulted on their loans. Over the next few years, that rose by 16% and continued to climb.

Student Loan Debt is Crippling Students

Overall, as many as 30% of the students who graduated struggled to repay loans. $23 billion was owed and $9 billion of it was in default this past year alone. This is a growing problem that has no end in sight. It is reaching crisis-levels as students become unable to pay back their loans. The number of defaults is rising significantly.

The worse part about it is, the government is overlooking it. Schools continue to rake in major profits in federal aid. Because they are subsidized, they can continue to raise the cost of college for everyone. Federal laws have attempted to keep colleges accountable. It requires them to keep the number of defaulted borrowers below 30% to remain in the student loan program.

There is hope for some students, but they must know their options. Student loan forgiveness is one option available, as well as lower monthly payments and interest. To find out if you qualify, call Financial Helpers today at:

Call Now 844-332-2079 

High Default Rates

Back in 2012, the government still cared about keeping the default rates low. 93 schools were at risk of being kicked out of the aid program due to having high default rates. In just a few years, the feds decided to stop tracking and suddenly the number rose to 636 schools. What do the colleges care? The government gives them money.

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

For-profit schools have an even worse track record. 44% of students who obtained student loan debt were facing major financial distress. 25% of them defaulted on their loans. This was only a few years after being in the repayment program. It often takes students a decade or longer to repay them in full.

Why is this Happening?

In order to maintain within federal levels of default, colleges have been using a nasty strategy. They have been aggressively telling students to use forbearances and deferments. This may pause their loans for the time being while they struggle, but it’s a sneaky way of avoiding the situation. As long as the schools get their money, they’re happy.

For many, high interest rates make it nearly impossible to pay back the loan. They owe too much money, and if something happens and they can’t afford the loan, that’s it. It grows exponentially larger. Yet, the government keeps avoiding the problem as they flow more money into schools.

The truth is, to tackle this problem, the federal government, individual states, and schools need to make changes. They should all work together to make college more affordable. By forcing students to rely on loans, they’ve turned what used to be a great investment into an economic nightmare.

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Student Loan Debt Crosses the $1.5 Trillion Mark

Written by adminAugust 28, 2018
Student Loan Consolidation

Student loan debt has long passed being an epidemic and has entered crisis territory. It was just announced that the amount due hit a record $1.5 trillion and continues to climb rapidly. A lot of it has to do with the increasingly higher cost of college, but students aren’t paying their bill.

The problem is, they can’t pay their debt and their rent at the same time. This is why a lot of young adults are living at home and working two jobs just to keep up with their bills. Depending on how much they owe, students pay as much monthly as it costs to rent a cheap apartment.

Repayment often begins as soon as the student graduates. This forces them to use payment adjustment schemes that might offer short-term relief by cutting monthly payments, but it doesn’t do the trick. You still owe the entire amount that you borrowed. This “strategy” only ensures that young adults carry student loan debt longer than they would normally.

Student Loan Debt Rising

Overall, the US student debt has grown by $500 billion since the 2010 to 2011 school year. It’s interesting to see that while the amount of debt piles up, actual lending volumes have been falling. The number of people obtaining student loans has been declining as well. This is causing a major problem.

Because students answer this repayment program that make monthly payments smaller, they don’t realize they’re not lowering the interest rate at the same time. That means they’re stretching out the life of their loan while even more interest keeps piling on. On top of that, if they miss a payment, additional fees are added.

Also: http://financialhelpers.com/5-student-loan-debt-statistics/

John Anglim of S&P agrees that the interest rates are what’s allowing the banks to make a killing off interest.

“By reducing the payments, they allow borrowers to stay current, but the balance keeps growing. That’s what we’re seeing now,” he said. “If the government is serious and concerned about growing student debt, then we need to come up with a broader plan rather than one that just helps a select few.”

Student Loan Debt Hurting the Economy

It’s easy to understand how debt can be a drag on the average U.S. household. Paying towards student loan debt takes money out of your pockets that can go towards your life. Because so many young people have debt, it has become a major drain on the economy. If more people are paying towards something, it’s not being reinvested back into the economy.

This is causing everyone from the poorest American to the highest-paid politician worried about the future of this country. How much more expensive will student loans get? Vincent Deluard, a strategist for INTL FCStone, sees it as a growing danger towards future economic growth.

“A significant portion of the millennial generation has gone bankrupt before it could start building wealth, which is a — still-unaddressed — threat to the long-term health of the US economy,” he said in a report.

In January, a report came out from the think-tank Brookings, revealing that the number of graduates who default on their student loans could reach as high as 40% by 2023. Overall, the government has to do a better job at creating student loan forgiveness programs.

Some currently exist, but no one knows how long they’ll be around. President Trump tried to cut these programs in his first budget, but had to give in to pass this year’s budget. Eventually, this problem will have to be passed to the government to figure out, as the amount of debt continues to climb.

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