Student Loan Consolidation

Many people in American enjoy taking advantage of charitable giving. Maybe they tithe to a church or gave money to help support research. Regardless of what people give their money for, they often qualify for a tax write-off. With the new tax law in place, records show that more people are giving college donations than ever before.

Donations given to universities and colleges are up 7% compared to last year. This is according to a new survey by the Council for Advancement and Support of Education’s Voluntary Support of Education. Americans gave to college donations as much as $46.73 billion during the last academic year. That’s a lot of extra dough!

The winner in all of this is Harvard University. It collected the most college donations at $1.42 billion. Sanford ranks #2 with $1.1 billion. The University of California hit the #3 and #4 spots. UofC Los Angeles and San Francisco received $790 million and $730 million respectively. The top ten schools received 18% of all the funds compared to over 900 schools surveyed.

College Donations and Charitable Giving

Last year, charitable giving in the form of college donations were increasing in popularity. People saw this as a type of charitable investment account. Once they gave to the school of their choice, they were able to add what they gave as a write-off in their taxes. College donations work in their favor as a tax break.

It’s understandable that people would want to give donations to schools of their choice. They get a big write-off, so there is a benefit to giving. Still, the big question is whether these college donations should result in lower tuition. More people are giving these schools money. Why can’t they do something about insanely high tuition?

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Most of these schools also make millions in profits from sports all without having to pay their student-athletes a dime. Colleges also benefit from government subsidies. They get to continue to increase their tuition while money flows into their coffers from all directions. Yet, Harvard still gets to accept a billion dollars in college donations on top of everything else.

But, instead of tackling issues like student loan debt or lowering tuition, these schools raise it. The American university is all about the profits and nothing more. While millions of students are suffering under the weight of high tuition, they get billions in college donations. It doesn’t seem fair to the students, but that ultimately doesn’t matter when profits are being made.

As more people become trapped by student loan debt, the larger the crisis becomes. While some people are able to keep up with their payments, many Americans cannot. When that happens, they become seriously at risk for defaulting on their loan. Defaulting on your student loan can negatively impact your credit score and more.

Before a person is considered to be in default, they are considered delinquent. According to Bloomberg, the amount of delinquent student loan dollars has reached a new record high. The Federal Reserve Bank estimates that around $166 billion is currently overdue. To be considered delinquent, you must miss 90 days’ worth of payments.

This only goes to show the extreme situation caused by student loan debt. Many people are desperate for help, begging the government to forgive what they owe. However, that idea doesn’t seem likely, even with the push from younger Democratic candidates in recent years. The entire program needs to be overhauled to allow the government to recoup its losses.

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Causes of the Student Loan Delinquencies

The crisis really started in 2008 as a result of the beginning of the Great Recession. By 2012, so many people were out of work that they decided to go back to school. They were enticed by fraudulent job-placement claims and the promise of a good job once they graduate. When they did leave school with a shiny new degree, the job situation remained equally as bad.

That meant millions of Americans had an abundance of student loan debt and no job to make payments. Delinquencies and cases of default increased dramatically, as did the total amount of debt owed. Currently, Americans owe $1.53 trillion worth of student loan debt, a number that might hit $2 trillion soon.

Even now, as unemployment rates have fallen below 4%, the problem continues. We’re seeing the strongest job market in many decades. The problem is, wage growth hasn’t increased too much. People still aren’t making enough money to pay for their student loan debt. They’re also fighting to be able to afford other basic necessities.

We’ve extensively covered how much the economy is due to be impacted by this crisis. A large portion of millennials are fighting to keep their financial heads above water. Even income levels among college graduates remain low and is a major hindrance.

Income levels for graduates “are not necessarily high enough for debt payments overall,” said Ira Jersey, Bloomberg Intelligence interest-rate strategist. “If you have a choice to pay your student loan or for food or housing, which do you choose?”

Higher Deficits on the Way

Student loan delinquencies and non-payments hurt the U.S. economy in a number of ways. As just stated, if you can’t afford the basics, you’re not spending money on the big things. Many millennials are putting off major life decisions, like buying a home and getting married. They simply can’t afford these things like our grandparents and parents did before them.

Another impact to the U.S. deficit. The national debt recently reached $22 trillion. $1.53 trillion of it is due to the student loan deficit. That’s because the majority of student loans are given by the federal government. While this type of debt most likely won’t cause another Great Recession, it still hurts the economy.

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As the cost of a college education continues to climb, this problem will only grow. Tuition has more than doubled in the last twenty years. More than ever, young adults have to ask whether a degree is right for them. It’s not a simple answer anymore if spending four years in college will enslave you to your student debt for decades to come.

Student loan debt currently hovers around $1.5 trillion dollars. Right now, there are 44 million Americans, mostly millennials, who are fighting for their financial lives. Student loan debt is #2 nationally, second only to mortgage debt. According to the experts, this much debt is going to seriously harm the economy, if it isn’t already.

Desperate for help, many of these students are begging the government to come up with a solution. In fact, many candidates promise to make college free or even offer full loan forgiveness. On the other hand, the government says it’s not fair to the taxpayers. If someone takes out a student loan, they should be required to pay it back.

That leaves lawmakers trying to figure out other solutions. A new idea is being floated around Congress and the Senate that is gaining support from both houses. It would allow employers to make tax-free contributions to their employee’s student loan debt problem. The amount could equal as much as $5,250 every year.

“That takes an existing legislation and just makes a slight tweak to make it the cover the cost of taking class or covering a student loan,” said Mark Kantrowitz, president and vice president of research at Savingforcollege.com. “That might be an elegant way to do this.”

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A Student Loan Problem

Bills like this have been proposed before. More people are looking to the government to help with their student loan problem. That means lawmakers are listening and are at least proposing helpful solutions. If they don’t come up with something soon, it’s going to become a major detriment to the U.S. economy.

If you graduate college with massive piles of debt, it’s difficult to get by. By the time a person pays rent, utilities, and buys food, there’s not much left. What we’re seeing as a result of this problem are people entering their 30s with virtually no savings. Many people are also skipping out on health insurance because they simply can’t afford it.

Student loan debt is already impacting the economy in several ways. If you have a new generation upcoming who can’t afford to buy things, it’s going to struggle. Millennials are putting off major life decisions and it’s hurting several industries. They’re waiting to get married, have children, buy houses, and more.

It’s getting to the point where young people are regretting going to college. They often don’t feel it was worth the immense amount of debt. It many cases, it can take 10-20 years to fully pay off. With stagnant wages and the rollercoaster economy, the situation will only get worse.

Tax Exemption Help

Because student loan debt is such a major problem, it’s going to take more than one solution to solve it completely. “Paying off student debt is something all of America is going to decide to get aggressive on and go after. It’s a huge number. We can only hope to contain it and hope to get it down,” said Aaron Pottichen, president of Texas-based CLS Partners.

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Lawmakers are hoping that more employees will consider offering these types of benefits. Surely, if there’s a tax incentive for companies, they will be more likely to sign on. It’s also a great recruitment and retention tool for businesses. It’s expected that this bill will pass hopefully in the next few months.

“Republicans love tax cuts, and Democrats love making college more affordable,” Kantrowitz said. “This fits in the center of their Venn diagram.”

If you have a student loan, you might soon be forced to have your payment automatically deducted from your paycheck. This is usually a tactic used by collection agencies. If you’re not paying your debt, they have a variety of tools to get you to pay. Those tools can include docking your pay and taking your tax refund.

This time around, it’s a lawmaker who wants your student loan to be paid through your paycheck. Senator Lamar Alexander hopes to make this new process into law. The Republican senator from Tennessee laid out his plan earlier in February. He hopes to completely update the financial aid and student loan repayment systems.

Currently in the United States, 44 million Americans owe $1.53 trillion worth of student debt. This isn’t just a major problem for the students. It’s also a problem for the government who keeps issuing loans to people who can’t pay them back. While many of these students hope the government would just forgive the debt, the government, so far, doesn’t agree.

If you sign the dotted line to take out a student loan, it is your job to pay it back. That is the expectation when you take out any loan. But a larger portion of these borrowers are going into default and it’s leaving taxpayers to fill in the gaps. The Republicans in office don’t think that’s fair to the rest of the country.

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A New Student Loan Plan?

Senator Alexander is a chairperson on the Health, Education, Labor, and Pensions Committee. It’s his job to help figure out solutions to these problems, including the mounting student loan crisis. Still, while it may seem extreme to expect these student loan payments to come directly out of your paycheck, the plan might be helpful in other ways.

For example, the individual will be placed in a repayment plan that would be based on your income. So, if you’re not making a lot of money, the amount taken out of your check would reflect that. The plan would never require a person to pay more than 10% of their current income. If you’re not making anything, you get a bit of a break.

“It makes sure if there were no money earned, there would be no money owed,” Alexander said. “And that would not reflect negatively on a borrower’s credit.” This new student loan plan would be equivalent to a 10-year mortgage with equal monthly payments.

An Accountability System

In addition to the idea above, Sen. Alexander’s plan would also come with some type of accountability system. The details of that system are unknown currently. Still, the senator believes there needs to be one in place to ensure you’re making payments on your student loan. If you’re doing as expected, the benefits would be positive.

Alexander believes this accountability system would lower the cost of tuition in many instances. It would also discourage schools from offering programs that aren’t worth it to students. “All three of these proposals should help students afford college and make sure that the degree they earn is worth the time and money they pay for it,” he said.

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Whether you agree this student loan program would work, at least they’re trying. It offers both benefits to the borrowers and ensures the government gets their money back. Federal Reserve chair Jerome Powell warned that this crisis could severely harm the economy. Millennials are hurt the most by student loan debt and it’s not looking good for the future if nothing is done.

When the government offers federal student loans to citizens, they task companies with the job of overseeing the process. Currently, the U.S. has hired nine different companies specifically for this job. A student loan servicer has the task of ensuring that everything is being done by the book. This is to protect both the student and the government.

But a new report is revealing that all nine student loan servicer companies have failed their jobs. Not only that, but they’ve been failing for several years. The Department of Education hired an independent inspector who revealed this new data in a report. What’s worse is, these companies have regulators who neglected to hold the servicers responsible.

This report focuses on how each student loan servicer oversaw the loans under their jurisdiction. That includes giving the right advice and are in compliance with the government. As it turns out, they weren’t following the rules and no one held them accountable. This, in turn, hurt a lot of people with student loan debt.

According to the report: “In most cases … FSA did not take actions stronger than correcting the accounts of those affected (and) rarely did the FSA require the servicer to conduct a full file review,” the report said. “FSA also rarely penalizes servicers for recurring noncompliance.”

The FSA wasn’t having it. They replied:

“We fundamentally disagree with the (Inspector General’s) assertion that we do not have processes and procedures in place to ensure loan servicing vendors provide high-quality, compliant service to borrowers,” said Liz Hill, a spokeswoman for the Department of Education. “That said, we also are continuously looking for ways to improve.”

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The Student Loan Servicer and their Failed Responsibility

One main reason why people get government student loans is they are safe. They’re backed and protected by the federal government. What’s frustrating is seeing that the nine companies they hired to oversee their loans are effectively screwing people. Each student loan servicer is guilty of improper handling of accounts.

This report revealed how they’ve been improperly dealing with borrowers by lying to them. We know that millions of Americans are struggling with their student loan debt. Because of that, the government has created a few programs to help get people on track. Those avenues can include repayment programs and even total loan forgiveness.

Of course, a student loan servicer doesn’t want the borrower to get any kind of break. They want the total amount due. So, how have they handled their job so far? They’ve been outright dishonest. They failed to alert borrowers to all of their options and generally guided them against their best interest.

“The report makes clear that the issues borrowers have been facing in the student loan market are far more pronounced and more significant than we even realized,” said Seth Frotman, president of the Student Borrower Protection Center. Frotman was the former student loan ombudsman who resigned last year.

Holding the Servicers Accountable

Currently, no student loan servicer is doing the right thing. They can be penalized for not following the rules, but it appears very little has been done thus far. Yet, the government has paid these servicers $1.7 billion for the sole job of properly managing these accounts.

According to the report, both students and taxpayers have been harmed by this lack of oversight. Not only are students being lied to, but tax money is being managed poorly. “FSA’s not holding servicers accountable could lead to a servicer being paid more than they should have (and) borrowers might not have been protected from poor services,” the report says.

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Navient is one of the big student loan servicer companies out there. They are currently in a major lawsuit against five states. The allegations against Navient include failing to direct borrowers into the right repayment programs. It wasn’t just Navient, though. All nine companies engaged in the same deceptive practices.

There’s a new student loan repayment program that you should know about. This new program can help students repay their debt at a tune of $75,000. It was created to help fight back against two different epidemics currently ravaging the United States: opioid addiction and student loan debt.

Currently in the United States, 44 million people owe $1.53 trillion in student loan debt. This type of debt is second when it comes to all types of debt. Only mortgage debt is higher than the amount owed on student loans. These numbers only continue to climb as college becomes more expensive.

And while these numbers are bad, the number of people who die due to opioid-related drug overdoses is horrifying. The Department of Health and Human Services says that around 130 people die each day due to opioids. Around 2 million Americans abuse drugs and almost 50,000 have died from an overdose.

Thankfully, a new loan repayment program is helping to fight back against both epidemics.

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The Student Loan Repayment Program

The National Health Service Corps is a division of HHS. They created the Student Loan Repayment Program to help fight back against opioid addiction. How does it work? It helps by enticing healthcare professionals to work in the field of substance abuse. And this new program will give up to $75,000 to qualified healthcare participants.

These professionals must work for three years at an approved drug disorder site to qualified for this program. This program is looking to help usher new workers into areas where there are massive shortages. Therefore, there simply aren’t enough healthcare professionals helping to battle against opioid addiction.

Even working part-time in this field can grant you $37,500 in student loan repayment. This is how desperate they are for help. Without medical professionals in this field, the opioid crisis will only deepen over the next few years. The federal government, including the Trump administration, have made battling opioid addiction a top priority in their agenda.

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The purpose of the Student Loan Repayment Program is to attract more high-quality doctors and nurses into this field. They want to give specific attention to under-served communities that are being ravaged by drug addiction. Still, these communities are in desperate need for preventative measures, top-notch treatment, and even recovery services.

How to Apply for the Student Loan Repayment Program

Officially called the NHSC Substance Use Disorder Workforce Loan Program, there are several requirements and qualifications.

Here’s a list of the eligible and much-needed healthcare professionals who can apply:

• Physicians
• Pharmacists
• Midwives
• Nurses
• Behavioral Health Professionals
• Substance Abuse Counselors
• PAs

Besides that, there is a deadline for applying for this student loan repayment program. You have until February 21, 2019 at 7:30 PM Eastern.

So, it’s important to note that this program is different than the typical Public Service Loan Forgiveness program. Contact Financial Helpers today for more information.

As we’ve all heard, the federal government has decided to once again raise interest rates. The economy is booming, and when that happens, the fed gets eager. Several times they’ve raised the interest rate in 2018. They’ll raise it a few more times in 2019, much to the detriment of people with student loans

Increasing interest rates makes things more expensive. If you have student debt, you’ll end up paying more money towards your total. High interest is what makes all forms of debt harder to pay off. More increases in 2019 could cause substantial problems for those with student loans. First, you have to understand the two types of student loans.

Student loans come with two different types of interest. The first is a fixed rate. This rate is locked in from the moment you get your student loans approved. This rate will not move, regardless of how the fed works their numbers. The sad part is, most students have a variable interest rate.

A variable interest rate means you’ll be paying different amounts throughout the life of your student loans. In most cases, the interest rate you pay is tied to the Fed’s decision. These interest rates are adjusted at least once per year, but like 2018, can be changed multiple times. This can make keeping up with your student loans a difficult task.

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Fixed Rate Student Loans

While it may seem like getting fixed-rate student loans is the answer, it may not be. The government anticipates these changes ahead of time. While you receive a fixed rate that won’t change, they know how to game the system. Federal loans have their interest rates set by Congress.

They determine where to fix the interest rate by the 10-year Treasury yield. That means the new interest rate could get a major push upward. If you plan on returning to school or taking out student loans in the future, even the fixed interest rate will be high. This will often incorporate any increases made to the variable interest rate.

Advice for Student Loan Borrowers

People who borrow money in the form of student loans are hit with a higher interest rate. That’s because when they apply for the loan, they are younger, have little (or no) work history, and no credit history. In most cases, these people would be denied a bank loan. But, because federal loans are guaranteed.

The best way to combat this is to stick with the system. Don’t default, don’t skip payments, and keep working towards your goals. Over time, you will build credit and job history. Your credit score will go up, which would allow you to refinance your student loans. That means you can get a loan with much less interest to pay off the student loans.

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This new loan would have a much lower fixed interest rate. This means you’ll save thousands of dollars over the length of your repayment term. In order to qualify for this type of loan, you will need to have decent credit. You’ll also have to prove a consistent income over that time. So, the best thing to do is to keep fighting.

When we think about student loan debt, our minds automatically think about millennials. The reality is, it’s not just young adults struggling to pay back their loans. A large number of senior citizens are also fighting with their loans during a time when they should be enjoying retirement. As you can imagine, this debt makes life difficult for all.

The Wall Street Journal released a new report about senior citizens and their student loan debt. This age group owes more than $86 billion! It’s a small chunk of change when compared to the $1.53 trillion of total debt. Yet, we wouldn’t expect seniors to still owe that much and it contributes to the total.

It would appear as if the last decade was tumultuous for everyone, even seniors! Their overall student loan debt grew 161% since 2010. This is the largest increase among any other age group. This type of debt is wreaking havoc on the lives of senior citizens. So, what is happening and why is it hurting the older generation?

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How the Student Loan Debt Crisis Happened

After the 2008 Recession hit, Americans were suffering. Jobs were scarce. Factories were closing at a record rate. People could afford their houses or to pay the bills. More people than ever were on food stamps and receiving government assistance. This disaster also led millions of people to decide to want to do better for themselves.

Going to college and getting a degree appeared to be the only way to find a job that was recession proof. The problem is, a lot of colleges took advantage of the situation. They started putting out false advertisements about their job placement rates. That essentially guaranteed a job if you went to their school.

In order to afford the expensive classes, you had to get yourself deep into student loan debt. And at the time, it was worth it. You got a degree, a guaranteed job, and so the debt wouldn’t be a problem. Except, these students didn’t realize they were being lied to. There was no real job placement guarantee to fall back on.

Sure, a few people found some employment, but the jobs still weren’t there. Many new college graduates with a bachelor’s degree were forced to work minimum wage jobs. That’s all the work that was available to them at the time. Their degree was worthless at helping them solve the situation.

How this Impacted Senior Citizens

You wouldn’t think of too many senior citizens as the generation eager to go to college. Yet, at the time of the economic collapse, most of them were still at a working age. It’s not uncommon for an older person to desire to improve their life. Older generations tend to be passed over to make room for younger employees. That makes having a degree worthwhile.

But the main reason why they got caught up in this mess wasn’t necessarily because they went to college. It’s because they helped their children and grandchildren. They became victims of student loan debt just by co-signing loans. When their kids got caught up in the scams and couldn’t pay, the banks went after the co-signers.

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In 2015, over 40,000 senior citizens were forced to hand over Social Security checks and other benefits because the defaulted. All their money, including any tax refunds, went towards their student loan debt. This is a 362% increase in the last decade. It just goes to show how deep this crisis has become.

You’ve probably read all the scary headlines. They bemoaned the fact that 99.5% of all people who applied for student loan forgiveness were rejected. They even tried to make it into a political stunt, suing the government. But the reality is, those people didn’t read the fine print. There are valid reasons why those people were rejected.

Signed into law by President Obama, the Public Service Loan Forgiveness law offers full student loan forgiveness to those who qualify. To qualify, they have to make 120 on-time payments while being employed full-time by a public service job. It sounds easy enough, but too many people applied believing they qualified for the program.

Except, it’s not enough to just say you work a public service job. Again, it’s all about the fine print. For example, you can work in a non-profit but still be employed by a private company. That would disqualify you for student loan forgiveness. There was a teacher who thought she qualified, but her district was controlled by a private company and it disqualified her.

What matters here is who your employer is, not the role that you play within the company. You can still be doing public service work, but be employed privately. That means only 300 of the 73,600 applicants actually received student loan forgiveness. In order to receive a full pardon from your federal student loan, there are ways to ensure it gets done.

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How to Make Sure You Get Full Student Loan Forgiveness

If you’re not sure if you qualify for student loan forgiveness, there are several things you can do. In fact, you should do these things even if you’re certain you qualify. There may be a circumstance you don’t realize. You don’t want to wait until the end of your 120 payments only to find out you didn’t fully qualify.

Here are three things you can do to prevent getting rejected:

1) Complete the Employment Certification Form

This is the best thing you can do to ensure you qualify for student loan forgiveness. When you take this step, you’ll know whether your employment is actually considered public service. Again, if your employer is a privately-owned company, you will not qualify. You shouldn’t just send it once, either.

This form should be submitted:
• When you begin your public service work
• When you switch employers
• Every year

2) Check your Employment Certification Form for Errors

This is another major issue people were coming across. It was found that many were filling out their forms incorrectly and were denied student loan forgiveness. Issues included:

• Mismatched information
• Missing information
• Not completing all required fields
• Correcting errors, but not initialing corrected errors
• Failing to get authorized signature from your employer

3) Failing to Enroll in an Income-Driven Repayment Plan

In order to receive student loan forgiveness, you have to enroll in a repayment plan. Only people with federal student loans can get their loans forgiven, so it would require you to ensure you’re eligible. You can choose the best repayment plan that works for you and your budget.

4) Failing to Re-certify Your Income Yearly

Because you have to enroll in an income-driven repayment plan, you have to certify your income. The government wants to make sure you still qualify and your repayment plan will depend on what you make. By not certifying, you can be denied student loan forgiveness.

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The process can be tricky, but as long as you follow these steps and stay on top of it, you will be good to go. Be sure to contact Financial Helpers if you have any questions.

Throughout their schooling years, most kids have big dreams about their career. Maybe they want to follow in their parent’s footsteps or branch out into adventures of their own. Either way, from the moment they start high school, the prep for college begins. It’s almost expected, but not many teens are prepared for student loan debt.

Going to college is an automatic decision many families make. But do they really sit around and plan a budget? Not really. Many parents even co-sign without realizing what they’re getting themselves into. You would think that once the student graduates, a good paying job will be there to cover student loan debt payments.

That’s not always the case. All you have to do is look at the crazy numbers associated with student loan debt. Many students even graduate and begin to regret taking the path they did. They didn’t prepare or plan for what comes next after college. They just assumed that everything will be fine.

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Scary Student Loan Debt Statistics

In the United States, there are over 44 million people suffering under the burden of student loan debt. Collectively, they owe over $1.53 trillion dollars, a number that continues to climb with each passing year. The average amount of debt each student has is around $37,000. This is a lot of debt to be carrying around at the prime of someone’s life.

That’s why 20% of the average millennial’s income is spent on their student loan debt payments. That’s a huge chunk of money that is causing them to miss out on a lot of other milestones. Reports are being released regularly now showing the economic impact student loan debt is having on this generation.

Millennials are waiting longer to get married, have kids, buy a home, and more. Even worse is the fact that they’re not saving money for retirement or buying health insurance. Their student loan debt is sapping any available money from their purses and wallets. That can put them in a dangerous position.

Student loan debt can wreck their credit and stick with them for decades after they graduate. This type of debt shackles itself to the student and won’t let go until it’s completely paid off. You can’t just declare bankruptcy or wait for it to fall off your credit report. This is definitely a sticking point every parent should discuss with their teen.

Teach them About Smart Financial Choices

The worst thing a parent can do is assume that getting into student loan debt is the best option for paying for college. It’s not. Plan for college ahead of time by applying for as many scholarships as possible. Get a part-time job and start saving money years ahead of time. Help them understand the type of commitment a student loan requires.

Federal loans are the best to take out because they’re protected. The government also offers loan forgiveness for public service workers and repayment plans. The problem with federal loans is there is a cap on how much you can take out. This is why a plan needs to be created before they graduate high school.

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One great strategy is deciding to start paying back the loan while still in college. That’s four years you can get ahead of it. Don’t push it off until after you graduate. Any little bit you can pay ahead of time will benefit you greatly. Another strategy is not using every dime you receive. Perhaps stay close to home and save big on housing costs.

Your teenager may also assume that you’ll be helping them pay for college. Perhaps you will, but a lot of the slack will fall on their shoulders. If you co-sign and they don’t pay, it will leave you in a lot of trouble. You’ll be responsible for the loan. In the end, preparing for this massive undertaking ahead of time will make it much easier to deal with after graduation.