Student Loan Consolidation

While President Trump seems to want to make student loan forgiveness tougher, the Democrats have other ideas. They appear to be teaming up to rework the current Public Service Loan Forgiveness program. This program allows for people who work in service-related industries to have their loans forgiven.

President Trump has called for the dismantling of this program. He doesn’t believe the taxpayers should foot the bill. The Dems feel differently. Ultimately, they would love to make all college tuition-free. That appears to be a non-starter at the moment, but will take all the help they can get. For now, an updated proposal will do.

Senators Kirsten Gillibrand of New York and Tim Kaine of Virginia are co-sponsors of the bill. Other senators, like Cory Booker (NJ), Kamala Harris (CA), Amy Kombucha (MN), Elizabeth Warren (MA), and Bernie Sanders (VT) all back this proposal. It looks to make student loan forgiveness more available to students.

Student Loan Forgiveness Extension

The Public Service Loan Forgiveness program was stated in 2007 by President Bush. Back then, the student debt problem was growing, but wasn’t the epidemic it is today. One way to help was to offer full student loan forgiveness to public service workers. In a way, that was intended to convince more people to get into trade and public service work.

While President Trump wants to make it tougher to get student loan forgiveness, the Dems want to expand it. Still, they want to grow the number of people would qualify for service work. They also hope to simplify what both sides consider a complicated process full of stringent requirements.

The plan is to make all federal student loans qualify for PSLF. It would also make all federal loans eligible for student loan forgiveness. They even want to cut down the amount of time it takes from 10 years down to 5. This is really the first major proposal set to make its way through congress soon.

President Trump’s Opposition

It’s unknown whether this bill will successfully make its way through the House and Senate. We know that President Trump cut the student loan forgiveness program from his 2020 budget proposal. Therefore, this is all up in the air as Republicans still control the Senate.

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As it stands, 44 million people hold $1.53 trillion worth of student loan debt. The only way the government will be able to lower that is by legislation. Still, the government only can do so much.

Businesses all over the country are constantly looking for ways to attract new talent. They know it’s crucial to growth. That’s why these businesses offer a ton of perks to keep their employees happy. Maybe they pay for their healthcare or give extra breaks. You might even find employers putting in a ping-pong table or paying for in-house massage therapists. The newest trend is for offering student loan repayment programs.

Currently, in the U.S., 44 million people owe $1.53 trillion in student loan debt. Most people who graduate college are saddled with an insane amount of debt. In fact, they can spend the next two decades paying it off. That’s a major problem. It’s a problem that employers can seize if they truly care about attracting prospective talent.

Goodly is one service that helps employers provide benefits. 86% of employees will stick around if their boss has student loan repayment programs. They’d stay for five years or longer if their employer helps to pay down their student loan. This is super important to employers. They often spend a lot of money hiring and training staff.

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Goodly Wants to Improve Student Loan Repayment Programs

Goodly is a new start-up that hopes to wake up the corporate world to this new benefit. By offering student loan repayment programs, they can save a ton of money. The CEO of Goodly knows there’s a crisis out there that needs to be addressed. He personally went through it himself and is now trying to give back.

“When I was in school, my father passed away very unexpectedly due to a heart attack. I had to borrow $80,000 for college at Dartmouth,” said Goodly CEO Greg Poulin. “I’ve seen first-hand how challenging it is for employees to save for retirement or start a family when they’re strapped with debt.”

Student loan debt is like a poison that can ruin lives. 21% of employees with this debt have delayed getting married. 28% refused to start a family. One-out-of-eight marriages now end in divorce because of student loan debt. It prevents them from buying a house or even saving for retirement and health insurance.

Student loan repayment programs really are the only way students can receive help. The government keeps changing its mind whether it wants to help. Yet, they keep making money off of interest, so they’re not inclined to help. Colleges are making record profits, so they enjoy upping the cost of tuition.

Goodly Helps Employers

Goodly charges $6 per employee. It creates a ‘set it and forget it’ way to help automate the process. Therefore, employers can decide how much they want to help contribute to their workers. It’s student loan repayment programs like this that will retain employees. That saves companies a lot of money in recruiting and training. That’s money that can go back into helping their workers with student loan repayment.

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“We found that our people put off contributing to their 401ks and buying a house because of their student loan debt. We thought that offering a Student Loan Repayment Benefit would be a great low-cost and high-impact benefit to attract and retain talent while alleviating some of the stress and the financial burden on our employees,” says Kim Alessi, an HR generalist.

Financial Helpers has been covering the story regarding President Trump and his views towards student loan debt. He wants to strike a compromise that helps students without burdening taxpayers. Currently, 44 million Americans owe $1.53 trillion worth of student loan debt to the federal government. One way might be to put some of the burdens back on public institutions.

Last Thursday, Trump signed an executive order that did exactly that. Not only that, but the executive order looks to protect the first amendment free speech rights of students. In the past few years, we’ve seen colleges ban speakers and cancel appearances. Usually, those guest speakers are of the conservative variety, of which very liberal universities are hostile towards.

According to the president, despite accepting “billions and billions of dollars from taxpayers, many universities have become increasingly hostile to free speech. Taxpayer dollars should not subsidize anti-First Amendment institutions,” he added. “Universities that want taxpayer dollars should promote free speech, not silence free speech.”

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Free Speech and Student Loan Debt

Trump’s new executive order is simple. If you, as a college or university violate free speech, you can lose your funding. That’s a major boon for colleges, many of whom receive billions of dollars in subsidies. “If a college or university does not allow you to speak, we will not give them money. It is very simple,” said Trump.

The order also asks agencies to start rating colleges and the output they provide. That gives students the opportunity to see how much student loan debt they might accumulate. It also looks at their prospective earnings. It’s all a bid to see exactly how good the schools are you might want to attend.

Still, these schools are great at bragging about themselves, but you might not see the full picture. Many such colleges and universities advertised great job placement rates. It was all a lie to get desperate people to go to their school during the recession. Those lies are the bulk reason why we have a student loan debt crisis today.

Shifting Blame

Currently, it’s the federal government’s job to back up students when they can’t afford their student loan debt. These loans are guaranteed, so colleges have no problem upping the cost of tuition and books. They know that money is coming no matter what. Yet, if a student cannot pay his debt, it ultimately falls on the backs of taxpayers.

With this executive order, Trump is attempting to shift some of the blame. Students are required to pay back their hefty student loan debt regardless of the quality of the education they received. For example, the lack of a good education, while expensive, can prevent a student from finding a great job.

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In the end, Trump is looking to shift some of the student loan debt burden back onto schools. He wants them to have “skin the game” by creating a loan risk-sharing program. This order goes along with his proposition to cap student loan debt borrowing. That cap would be 12% of the person’s income. That prevents them from borrowing more than they can afford to pay back.

On Monday of this week, President Trump proposed an idea that he believes will help curb student loan debt. By setting a cap on how much money students can take out, it can lower the cost of college. This was just one of several sweeping changes the president wants to make to the Higher Education Act. This legislation is due for an overhaul since it was first enacted a decade ago.

Ivanka Trump, an advisor to her father President Donald Trump, revealed the plan. It was shared in front of the National Council for the American Worker This is a group that Ivanka helps lead and is a passion project for the president. His main goal since being in office is to help the American worker and promote job growth.

“We need to modernize our higher-education system. We need to make it more affordable, flexible and outcomes-oriented. So, all Americans, young and old, can learn the skills they need to secure and retain good-paying jobs,” Ivanka Trump said on a call with reporters. This plan won’t just cut the amount of student loan debt, but will lower tuition as well.

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How to Cut Student Loan Borrowing

Over the last decade, student loan debt has reached a record $1.53 trillion. This new proposal is looking to reverse the trend. By capping the student loan amount a person can take out, it prevents them from getting too deep. Whether you agree with the president on other issues, this one could finally help lower student loan debt.

One of the reasons why student debt has climbed has to do with the colleges themselves. The schools only care about profit. If they’re getting subsidized by the government, why keep the cost down? The more involvement the government has in student loan debt, the more they’ve hiked the prices.

The more access colleges have had to the federal government in the form of unrestricted student loans, the more expensive college became. On the other hand, colleges continually say the opposite. According to them, they’ve increased costs because local state funding has been reduced. But that doesn’t make too much sense if they’re getting increasing amounts from the feds.

Sen. Patty Murray, the top Democrat on the Senate education committee, says the plan misses the “root cause” of the problem: “that college costs are rising exponentially and most students can’t afford college without taking on massive amounts of debt. In fact, this proposal would end up hurting students by reducing the amount of federal aid for students and taking billions out of the pockets of borrowers,” she said.

Another Approach?

While the president maintains his position, Democrats and borrower advocates say the opposite. James Kvall works with the Institute for College Access & Success. It’s a non-profit that looks at student debt problems. He says there’s absolutely no evidence at all that higher federal loans lead to high costs overall.

“The solution is to invest more in Pell scholarships for low-income students, to work with states to make public colleges and universities more affordable,” said Kvaal. He is also a former policy adviser to President Barack Obama. Republicans, on the other hand, disagree.

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“I share the administration’s goals to make a college education worth it and to make it simpler to apply for federal student aid and pay back student loans,” said Sen. Lamar Alexander, R-Tenn., who chairs the Senate education committee. He’s currently making the largest push for the education reform bill.

At the end of the day, it’s a good thing they’re at least talking about the problem. Years of inactivity have allowed the crisis to grow even stronger. Either way, capping the amount of debt is one possible solution for solving the problem. Time will only tell if it actually works.

New revelations were revealed this week about how wealthy and influential parents get their kids accepted into college. And no, it’s not based on merit. Come to find out, it’s all about money. Hollywood celebrities, CEOs of major companies, wealthy lawyers and doctors…it’s all the same. Is it really a big surprise to the rest of America?

These people already have the best of everything. They have the wealth to go to virtually any college they want to in the world. They get the best private education money can buy. Why go to these lengths when you already have so much privilege? Average Americans don’t get the opportunities they deserve because their parents aren’t rich. That’s not fair at all.

“Lots of parents throw money at it, that’s nothing new,” says Jill Shulman, who has been working in college admissions as a coach, teacher and evaluator for 20 years. “Alums will throw a big event when the president comes to town. They’ll meet with their contacts at the school, they become donors. None of that is new. But the level of this scandal is a symptom of helicopter parenting on steroids.”

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Ethical or Legal College Standards?

While you might consider this bribing practice unethical, it’s technically not illegal. And no said it was fair. Maybe even if you had the money, you wouldn’t mind throwing in extra contributions. If it meant your child got to go to the school of their dreams, who wouldn’t be on board?

That’s where things get a bit tricky. It’s easy to be outraged hearing the rich and famous doing this. Still, plenty of parents bribe college consultants. William Rick Singer is the alleged ringleader in the college admission scam that hit the front page recently. He presented himself as a lawful college consultant.

“Some parents think they can buy their child a place into top schools,” says Pierre Huget. “We have had clients who want us to write the college essays. Who want us to place them. That’s not what we do.”

One of the court filings found that one Ivy League consultant charged a parent for college services. The price was $1.5 million to ‘assist’ in her child applying for 22 top colleges. Another tutoring company was charging upwards of $500 per hour. Yet, these tutoring opportunities aren’t for helping the students develop better skills.

The Highest Bidder

A “sad crime of desperation” is how Matthew Fraser, who runs a college test prep camp, described the scandal. “These parents could have taken a fraction of the resources they paid to get their kids in and worked with a writing teacher to improve their writing,” says Fraser. Really, it’s the work of their parents paying gobs of money in a fundraising bid to raise money.

Technically, it’s cheating. Yet, in a lot of ways, it’s understandable. As stated previously, if we had the funds, we would do it ourselves. The competition to get into the country’s best schools is incredibly fierce. The problem is, it’s not the healthiest way to go about the situation. Getting into college should be based on merit, not how much money the parent donated to cheat the system.

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This is also why the student loan debt problem is so bad for average Americans. If the highest bidders get placed automatically, there’s no reason to care about upping the cost. They’re going to get the money they want and then some. So, while millions of Americans are struggling with their debt, others get in without merit.

We knew it was coming. Since the start of President Trump’s presidency, we wrote that he had his eye on the student loan forgiveness program. He attempted in 2017’s budget to wipe out the program but made a compromise to keep it. Now, in 2020, it looks to be getting the ax as part of a massive cut in education spending.

Trump’s 2020 budget includes $60 billion for the Department of Education. That’s 10% less than last year’s budget for the department. In all, Trump hopes to cut $7.1 billion. The student loan forgiveness program will be one of those cuts. While on its face this looks like a very bad thing, Trump has several goals in mind.

The first is his desire for more fiscal discipline. The U.S. is already $21 trillion in debt. $1.53 trillion of that is student loan debt. This is debt that people take on for themselves to better their lives. Yet, it’s expected that the government pays this debt? In the eyes of the president, it’s wholly unfair.

That leads to Trump’s second goal, which is being fair to taxpayers. He wants to create a better student loan forgiveness program that bridges the needs of students and taxpayers alike. Once again, it’s unfair to expect taxpayers to carry the student loan burden. Don’t worry though, Trump still has a plan for making college affordable.

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Is Student Loan Forgiveness Truly Gone?

The budget has to be passed by the Congress and Senate. It may not pass, considering the president is still pushing for money for the border wall. That’s an issue Congress refuses to allow Trump a victory on. They will undoubtedly vote down Trump’s proposed budget. That’s where negotiations and compromises will take place to get a new budget passed.

What that looks like for student loan forgiveness programs is unknown at this time. It could very well be on its way out. If not now, at some point, Trump will get what he wants. And what he wants is the end of student loan forgiveness. In particular, the Public Service Loan Forgiveness Program.

Created by President George W. Bush, this gives public service workers a chance to be debt free in ten years. They have to fulfill a variety of requirements to do so. The problem is, the student loan debt problem back during his administration was nowhere near as bad as today. It’s becoming a massive burden on taxpayers.

Saving the Government Money

Whether you agree with Trump’s proposal or not, his rationale is in-line with wanting to save money. He has proposed cutting back other programs as well. But saving the government money could really hurt the number of people doing public service work. Many people take on these jobs because they receive student loan forgiveness.

This means we can see a decrease in the number of first responders, public defenders, police officers, nurses, and even military going to service. It’s unknown whether this would change anyone’s career path for the future. Still many may decide to go down a path where they won’t incur as much debt.

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Trump’s plan also includes carving down the number of repayment programs to one. He hopes this will simplify choices for borrowers. Many people get into the wrong repayment program because there are so many to choose from. And lenders haven’t been as forthcoming about making sure borrowers get into the right program.

Impact to You

If you have student loan debt, how will this new proposal impact you? In truth, it’s unknown whether this budget will be passed. But at the end of the day, your chance is right now to be grandfathered into the program. If you hoped to apply for student loan forgiveness, your chances to do so are closing fast.

Contact Financial Helpers today to learn whether you qualify for student loan forgiveness.

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A crisis is emerging for millennials and it’s threatening to engulf their whole generation. Currently, 44 million Americans hold $1.53 trillion worth of student loan debt. That’s a lot! But what’s even scarier is the majority of that is from millennials. The amount they owe has just topped $1 trillion. This is new data according to the New York Federal Reserve Consumer Credit Panel.

42% of people aged 19 to 29 have student loan debt. The average debt payment for this age group is $393 per month. That’s just average, with just as many millennials paying more than that as there are paying less. For many, that’s a rent payment. Worse yet, they’re stuck paying that student loan debt for decades, unable to get ahead of it.

This crisis is changing the way millennials buy goods. Because student loan debt has sapped their budget, they can’t afford basic goods. They view buying a home, a car, and other major purchases less favorably than other generations. They’re even putting off getting health insurance, getting married, and starting a family. They simply can’t afford it.

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Student Loan Debt Causing Economic Havoc

79% of young adults think that student loan debt is a major problem for the younger generations. They understand what’s going on, but still decide to go to college. 70% say financial circumstances led them to go to college. Chasing the American dream and finding a good career is why you go to school in the first place.

The problem is, student loan debt is making going to college almost not worth it. Many millennials are regretting going to school. They spend four years getting their degree and the next 10-20 paying off the loans. They end up not getting the good job they thought they would. Many even spend several years after graduation looking for work and taking fast food jobs just to survive.

Still, it’s not just millennials who are worried about the impact of student loan debt. The Federal Reserve is getting afraid as well. They released a quarterly report on household debt and found that student debt jumped by $79 billion in 2018 alone. These are scary numbers that are threatening to doom the economy.

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Student loan debt is currently ranked #2 behind only mortgage debt. It’s more than credit card and auto loan debt. Considering how many people own cars and carry credit cards, this is a ridiculous amount of money owed! As it keeps growing, it will only serve to stunt the economy even further.

The reality many people face when it comes to having student loans is its impact on their credit. Whether you just now signed the first loan, or you’ve been working on paying for years. Student loans can be troublesome, or they can be a blessing in disguise. It all depends on your outlook and how seriously you talk situation.

The sad truth is, too many people to sign the dotted line without much thought. They believe student loans are a way to unlock their brilliant future. They can’t afford college on their own, so they get help paying for it without thinking about future repercussions. This is extremely dangerous and detrimental.

Currently, in the United States, 44 million Americans owe $1.53 trillion worth of student loans. A lot of these people go into default. It hits their credit hard, because they couldn’t figure out a way of making monthly payments. Imagine having to pay rent twice a month. Still, the struggle is fitting student loans into your budget.

There’s the process of navigating repayment programs. In a lot of cases the student loan servicer themselves in the process increasingly difficult. There’s a lot of dancing and maneuvering to ensure that your student loans don’t destroy your credit score. But a lot of that has to do with whether you were prepared to take care of the problem ahead of time.

The Problem with Student Loans

Most college-aged students, under ordinary circumstances, would not qualify for a loan. They simply don’t have the credit, work experience, or salary that would allow a bank to trust him. So, the problem usually stems with guaranteed federal loans. The federal government is giving people money under ordinary circumstances wouldn’t be trusted.

These are people who don’t understand the concept of a budget. Their little work experience amounts to maybe part-time at a fast food joint. Still, the government gives them between $30,000 and $100,000 to go to school. As soon as they graduate, that loan is due and payments begin almost immediately. You get very little downtime to settle and decide your next step.

In reality, the best thing you can do is be prepared ahead of time. Understand the pros and cons of taking out student loans. Most college students wouldn’t have much experience in managing their credit. With little experience they have might come from their parents co-signing for an auto loan.

There are ways you can prepare this massive burden ahead of time. It’s better to know and have a strategy going forward than being bombarded with debt after you graduate.

Strategies for Protecting Your Credit

Your credit score is determined by a number of factors. Those factors include how many loans you have, on-time payments, and the length of your credit history. Having zero loans can actually harm your credit. That means you have a great opportunity to make a few right moves that can benefit your score.

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The first thing you should do is not waiting to start paying off your student loans until you graduate. If you can swing it, start making payments immediately. Having a job while going to school can take a bit of the pressure off. It means you’re not taking out loans for something you can pay on yourself up front.

Still, one of the major issues with student loans down the line is interest. You don’t just pay what you owe, but thousands of dollars in interest on top of it. If you’re paying off your debt over the years you’re in school, you will leave with good credit. That will set you up for future success.

What is the nature of student loans and how do they hurt Americans? Well, the first clue is to look at the structure of a normal loan in the free market. Loans allow people to borrow vast amounts of money they wouldn’t ordinarily have access to. This is great for the free market. If you want something you can’t afford outright, you get a loan.

In exchange for that loan, it’s expected that you make payments. Interest is most likely tacked on, making the loan worth it for the bank. They make money on their loans. If you don’t pay your loan back, the lender can come after you. They can repossess the item purchased with the loan. There’s always a bit of give-and-take.

In order to qualify for a normal loan, you have to show some type of responsibility. Credit history, work history. A record of on-time payments. A decent credit score. These are staples of the lending industry. Of course, student loans are completely different. They don’t operate the same way other loans do.

For one thing, consider your education. If you can’t pay back your student loans, no one can come in and repossess your education. Because of that, it makes offering student loans a risky proposition. Yet, the government guarantees loans to students through the Higher Education Act which was passed in 1965.

The Harmful Consequences of Guaranteed Student Loans

You might think guaranteed student loans is a great thing. Someone who wants to go to school gets the opportunity to do so. It’s the American Dream, right? You get to go to the school you want, have your education, and graduate. Then comes the part we all love, getting the job we worked so hard for!

But, in reality, that’s when the problems really start. Millennials are the most educated generation America has ever seen. No other generation saw as many students go to college and get a degree than this one. The problem is, so many of them had to rely on student loans. By the time they graduated, they racked up tens of thousands of dollars’ worth of debt.

For years, young Americans have had it pounded into their brains that they needed to go to school. It was almost as if going to college was an automatic decision and it was the ONLY way they’d make it. Sadly, that’s not true. There are plenty of better options for a lot of young Americans. For example, going to a trade school doesn’t require 4 years. Trade jobs are in high-demand and pay decently well.

Worthless Classes Never Pay Off

Having secured finance options saw a lot of students apply for college to get a 4-year degree. That’s where another phase of the problem set up. Schools had to create more programs and curriculums for the ever-expanding interests of their students. Colleges were mostly for those interested in math or science. So, what about the students not interested in those courses?

That’s right, schools expanded arts and humanities. As the demand increased, so did the price of tuition. Universities knew people would pay whatever they had to in order to attend. That meant schools could really charge whatever they want. Before anyone knew it, a single textbook could cost hundreds of dollars.

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It didn’t matter to students all too much. Why? Well, because they have access to student loans. They could take out more money as they needed it. With the expectation of their degree paying off, students didn’t care how much they borrowed. That mindset completely bites them in the end. They didn’t anticipate what would happen after they graduate.

People with no real work or credit history are able to take out between $38,000 and $165,000. Financially, that’s a major burden to really start life with. Even with a great job market, students aren’t entering the workforce making the kind of money they thought they would. In the end, their lives were ruined, unable to pay even basic bills.