Student loans – Informare Wissen Und Koennen Thu, 29 Sep 2022 11:40:54 +0000 en-US hourly 1 Student loans – Informare Wissen Und Koennen 32 32 Michigan won’t tax canceled student loans Thu, 29 Sep 2022 01:13:00 +0000

LANSING Michigan (WNEM) – Student loan forgiveness will not be taxed in Michigan.

Governor Gretchen Whitmer made the announcement today.

This will affect anyone who receives the Civil Service Loan Forgiveness Program or other student loan forgiveness.

Whitmer says about 1.4 million Michigan residents are eligible for assistance.

“Michigan PSLF recipients who serve their community will not be taxed for the amount of student loan relief they received,” Whitmer said.

The program that forgives the remaining student loan balance for qualified individuals.

Individuals seeking assistance must work in public service, which includes eligible nonprofit organizations, military, state, local, federal, or tribal governments. They must also have made 120 student loan payments on time with 10 years of service.

New temporary changes to the program make it easier to qualify for debt relief, including allowing for periods of prior payment that previously would not have been eligible.

The temporary changes to the PSLF are scheduled to end on October 31.

Civil service workers are encouraged to apply here.

Generally, the Internal Revenue Service considers debt relief as a source of taxable income.

Any federal loans repaid between 2021 and 2025 will not be considered taxable income by the federal government.

This will also include state tax law, as it aligns with federal law. This temporary relief will also be in effect in Michigan through 2025.

PSLF was created by Congress to help recruit and retain top talent in the public sector workforce.

The U.S. Department of Education is offering public servants working in government and eligible nonprofits a second chance for student loan forgiveness through October 31.

To apply for the PSLF waiver, borrowers must:

  • Visit PSLF Employer Search to verify that their employer is eligible for PSLF.
  • Submit a certified copy of the PSLF certification form to the US Department of Education by October 31.

If borrowers have questions about their personal circumstances, they can visit or call FedLoan Servicing at 1-855-265-4038.

Michigan does not tax canceled student loans Wed, 28 Sep 2022 22:18:00 +0000

LANSING, Mich. (WILX) — Michiganders who get some of their student loans forgiven won’t have to pay state income tax.

The state announced Wednesday that the loan forgiveness will not be considered taxable income.

“It opens up a lot of opportunities for me,” Brandi Pettway said.

Pettway is one of 1.3 million people in Michigan eligible for student loan forgiveness. She gets over $80,000 forgiven.

“I dropped out of school because the debt was so big and I didn’t want it to keep growing. Now I feel like I can go back and complete my education,” Pettway said.

Normally, the IRS treats canceled debt as taxable income. This rule is temporarily lifted as part of the US bailout.

This means that federal loans canceled between 2021 and 2025 are not federally taxed. Now Michigan is doing the same to help people like Pettway.

“I’m very grateful for that because I didn’t want to be penalized for something that’s going to help me,” Pettway said.

This is exactly why Lt. Gov. Garlin Gilchrist announced that the state was not collecting pardon taxes during a roundtable discussion at Lansing Community College.

“We also recognize that this loan forgiveness is an accelerated program, a resource to invest in people,” Lieutenant Governor Gilchrist said.

“The tax is not something that you can spread out over 20 or 30 years like you can for your loan repayments, so that tax would be due this tax year, which would be a heavy burden on those students,” said Ryan Fewins-Bliss, executive director of the Michigan College Access Network.

Pettway said she was thrilled to be able to pay off her debt.

“I have five classes left, so it’s very important for me. It’s a personal goal of something I want to accomplish that I started,” Pettway said.

People will have to apply for student loans to be forgiven.

The White House expects the application process to begin next month.

He said the loans were to be canceled six weeks after someone applied for them.

People who earn less than $125,000 per year are eligible for the rebate.

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Why You Shouldn’t Refinance Your Federal Student Loans Tue, 27 Sep 2022 20:38:22 +0000

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  • Only loans held by the federal government are eligible for Biden’s student loan forgiveness.
  • If you refinance your student loans with a private lender, those loans are no longer eligible.
  • You may benefit from a lower interest rate by refinancing, but you will lack forgiveness.

Refinancing your federal student loans is one option that can lower your interest rate, but in most cases, it’s not the best choice.

On the one hand, you will lose many protections offered by the federal government. Sonia Lewis, a student loan expert who has helped over 20,000 clients manage their federal student loans, says refinancing your student loans will make you ineligible for protections such as:

  • future payment pauses, such as the pandemic payment pause
  • access to income-driven repayment plans, which can lower your monthly payments based on your income
  • access to occupation-based rebate programs, such as the Civil Service Loan Rebate

On top of that, you’ll lose access to the student loan forgiveness President Biden announced on August 24: $10,000 in federal student loans per borrower, $20,000 if you received a Pell Grant.

To qualify for Biden’s discount plan, you must meet income requirements of $125,000 or less for individuals and $250,000 or less for married couples filing taxes jointly — and you to have to have loans held by the federal government.

You must have the right type of federal student loan to be eligible

Generally, only loans held by the federal government are eligible for Biden’s forgiveness plan. Here are the types of federal loans eligible for student loan relief:

  • Undergraduate and graduate direct loans
  • Parent PLUS Loans
  • Direct PLUS Loans for Graduate and Professional Students
  • Consolidation loans (with underlying loans disbursed no later than June 30, 2022)
  • FFEL loans held by National Education
  • Perkins loans held by the Department of Education
  • Delinquent loans (including subsidized Stafford loans held by the Department of Education or commercially serviced, unsubsidized Stafford loans, Parent PLUS and graduate PLUS loans, and Perkins loans held by the Department of Education)

Another way to check if your loans are held by the US government is to check with your student loan officer. Here is a complete list of federal student loan services:

  • FedLoan Service (PHEAA)
  • Great Lakes Education Loan Services, Inc.
  • Edfinancier
  • Advantage
  • Nelnet
  • OSLA interview
  • ESCI
  • Default resolution group

If your loans are managed by managers not listed above, they are private. If you refinance your student loans with a private lender, your loans will no longer be held by the federal government and, therefore, will become ineligible for forgiveness.

What will I lose if I refinance my student loans?

If you refinance your student loans, you won’t be eligible for Biden’s forgiveness plan up to $20,000. You will also lose the following protections:

  • the ability to choose an income-based repayment plan with a lower monthly payment if you are experiencing financial hardship
  • payment pauses, such as the pandemic payment pause
  • loan release if you die before you can repay your student loans; your next of kin will inherit any private loan balance you may have
  • access to future rounds of student loan forgiveness, if applicable, and beneficial changes to repayment programs

What are the benefits of refinancing my federal student loans?

The main reason a borrower might refinance their federal loans with a private lender is for a lower interest rate (although private lenders don’t always offer lower rates).

Now that the pandemic pause is ending, Lewis predicts that companies will start offering sign-up bonuses to attract federal borrowers who reduce your loan principal balance, as well as competitive interest rates based on your credit score. credit.

Generally, a lower principal balance and lower interest rates can help you pay off your student loans faster, but not necessarily (for example, if Biden’s forgiveness plan wipes out most or all of your debt ).

Lewis says, “I wish I could wear a sign on my forehead that says, ‘Don’t quit your lender! refinancing with a private lender.

What are my student loan cancellation options if I have already refinanced?

Unfortunately, loans that have already been refinanced with a private lender are no longer eligible for student loan forgiveness.

How to pay off your student loans faster Tue, 27 Sep 2022 15:55:03 +0000

Our goal at Credible Operations, Inc., NMLS Number 1681276, hereafter referred to as “Credible”, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are our own.

You can pay off your student loan sooner by paying more than the minimum and refinancing. Here’s how to pay off student loans faster. (Shutterstock)

Living with student loan debt can be stressful. This strains your budget and can prevent you from achieving your financial goals, such as buying a home or saving for retirement. But it is possible to repay your student loans rapidly.

The sooner you pay off your student loan, the less interest you will pay over the life of the loan. And removing student loan stress from your life can also improve your mental health.

Refinancing is an option to pay off student loan debt faster. Visit Credible for learn more about refinancing student loans and compare rates from several private student lenders.

5 ways to pay off student loans faster

If you have student debt, you don’t have to spend decades paying it off. With the right strategies in place, you can repay your student loans much faster — even before the end of your repayment period. Here are five ways to pay off your student loans fast.

1. Pay more than the minimum each month

You’re going to have to make more than the minimum payment each month if you want to quickly pay off your debt. If you don’t have a lot of extra money to spend on your debt, don’t worry, even an extra $50-100 a month will help you get ahead.

You can also start making bi-weekly payments instead of monthly payments. With bi-weekly payments, you will repay your loan every two weeks. You won’t feel like you’re paying extra, but this strategy means you’ll end up making one extra payment per year.

It’s a good idea to automate your monthly payments so that your lender automatically deducts your payments from your account. Not only does this ensure that your student loan payments are made on time, but many loan officers offer an interest rate discount for automated payments.

2. Repay capitalized interest

Capitalized interest occurs when unpaid interest is added to the principal of your student loan. This increases your overall student loan balance, which means you’ll pay even more interest in the future.

Capitalized interest usually occurs during loan forbearance or during your grace period after you graduate from college. Repaying this capitalized interest can reduce your overall loan amount and allow you to pay off the debt more quickly.

3. Avoid extending your repayment period

If you have federal student loans, one of the benefits of enrolling in an income-driven repayment plan is that it helps make your monthly payments more affordable. IDR plans extend the time to fully repay your loans. If you request a deferral or forbearance, this will extend your refund window even further.

But it also means you’ll end up paying your loans for longer. If your goal is to pay off your loans as quickly as possible, you may want to avoid making payments under an IDR plan.

4. Consider refinancing

When you refinance, you replace your current loans with a new private loan with different rates and terms. Refinancing can help you repay your student loans faster by lowering your interest rate or shortening your repayment period. To qualify for refinancing, you’ll need a good credit rating, stable income, and a low debt-to-equity ratio.

You can refinance federal loans, private loans, or a combination of the two into a new private loan. But keep in mind that if you refinance your federal student loans into a private student loan, you will lose federal benefits, such as loan deferral and loan forgiveness.

If your goal is to pay off your student debt faster, be careful not to extend your repayment term. Refinancing over a longer repayment term will give you a smaller payment amount, but it will increase your total interest costs and the time it takes to repay your loans.

Credible, it’s easy to compare student loan refinance rates from multiple lenders without affecting your credit score.

5. Get help paying off your student loans

You may be able to access other resources to help pay off student debt faster. For example, ask your employer if they offer benefits for student loan repayment. Some plans offer employees up to $5,250 per year in student loan repayment, but it depends on the employer.

Certain professions may even be eligible for loan forgiveness. For example, the Civil Service Loan Cancellation Program is available to federal student borrowers working full-time for a qualified government or nonprofit organization. After you make 120 qualifying payments under an income-based repayment plan, your remaining loan balance will be forgiven.

And you may qualify for student loan discharge if you are totally and permanently disabled. To be eligible for a total and permanent disability leaveyou will need to complete an application and provide the necessary documentation.

Reasons why prepaying student loans is a good idea

Paying off your student loans earlier than expected has a number of benefits, including:

  • Reduce stress – Studies have shown that student debt can lead to long-term stress and mental health issues. Borrowers may wonder if the cost of their degree was worth it. Paying off your student loans quickly will reduce this stress and free up space in your budget.
  • Pay less interest — The longer you carry student loan debt, the more interest will continue to accrue. Paying off your loan before the end of your repayment period can save you quite a bit of money in interest.
  • Improve your debt-to-income ratio — Getting rid of your student loan debt will improve your debt-to-income ratio. This is the percentage of your monthly income that goes towards paying off debt and is a major consideration for things like buying a home.
  • Achieve other financial goals — While paying off student debt, many borrowers are forced to delay important life milestones, such as buying a home or starting a family. By paying off your student loans sooner, you can pursue other financial goals.

To start refinancing your student loans, visit Credible and compare prequalified rates from several lenders.

Income Contingent Student Loans 2 (2007-2009) PLC UK Regulatory Announcement: Income Contingent Student Loans 2 (2007-2009) PLC Mon, 26 Sep 2022 14:49:00 +0000



If you are in any doubt as to what action to take, you are advised to seek financial advice immediately from your stockbroker, bank manager, solicitor, accountant or other financial adviser authorized under the Services Act 2000 and Financial Markets (if you are in the UK), or other duly authorized independent financial adviser and such other professional advice from your own professional advisers as you consider necessary.

This Notice is directed only to holders of Notes (as defined below) and to persons to whom it may otherwise be legal to distribute it (“Relevant Persons”). It is directed only to data subjects and should not be used or relied upon by persons who are not data subjects. Any investment or investment activity to which this notice relates is available only to relevant persons and will be engaged in only with relevant persons.

If you have recently sold or otherwise transferred all of your holdings of the Securities mentioned below, you must immediately deliver this document to the buyer or transferee or stockbroker, bank or any other agent through whom the sale or transfer was made for transmission to the purchaser or transferee.


Income-contingent student loans 2 (2007-2009) PLC

(Registration number: 11493196)

10th floor, 5 Churchill Square

London, UK, E14 5HU

(there “Transmitter“)

to the holders of the following notes of the Issuer currently in circulation

£545,916,307.67 Grade A1 Floating Rate Asset Backed Notes due 2058 (ISIN: XS1915118910),

£677,576,900.00 Fixed Rate Grade A2 Asset Backed Notes due 2058 (ISIN: XS1915119132),

£184,304,000.00 Class B Notes due 2058 (ISIN: XS1915119215),

£1,791,439,000.00 Class X bonds due in 2058 and

£168,382,873.51 Retention bond due 2058

(there “Ticket holders” and the “Remarks“, respectively)


We refer to the note trustee dated December 11, 2018 between the Issuer and Citicorp Trustee Company Limited as note trustee (the “Note Trustee”) (as amended, supplemented and updated updated from time to time, the “Note Deed of Trust“).

NOTICE IS HEREBY GIVEN to Noteholders that the Issuer has requested and obtained an extension for the approval and filing of the Issuer’s annual financial statements from September 30, 2022 to December 30, 2022 with Companies House. This extension was necessary due to a tight deadline to accommodate the audit, which includes the completion of a third party assessment report. Waiting times were provided to ensure that the audit was of sufficient quality, but a number of issues raised took longer than expected to gather evidence and information from all parties.

Accordingly, the Issuer is unable to comply with its obligation under Clause 2(a) of Schedule 5 of the Trust Deed of the Notes to deliver to the Trustee of the Notes, to the Holder of Registrar and to the Principal Paying Agent two copies of its audited financial statements at the latest. more than 180 days after the end of the relevant financial year, i.e. 31 March 2022. The Issuer’s audited financial statements should be finalized and provided to the Notes Trustee, the Registrar and the Principal Paying Agent within the extended filing period granted by Maison des Entreprises.

Any inquiries or requests for additional information regarding the matters referred to in this notice should be addressed to the issuer as follows:

Contact: Administrators

Address: 10th Floor, 5 Churchill Place, London E14 5HU


This Opinion is given by:

Income Contingent Student Loans 2 (2007-2009) PLC as issuer

September 26, 2022

Category Code: MSCU

Sequence number: 994401

Received time (offset from UTC): 20220926T154543+0100

Student loans: can you declare bankruptcy for loans? Sun, 25 Sep 2022 14:52:09 +0000

Bankruptcy can be used to eliminate student loans. The bankruptcy court will decide if you meet the rigorous criteria that courts generally adopt to assess whether your student loans are eligible for discharge. However, that doesn’t mean you have to give up.

You must demonstrate that loan repayment places you and your dependents under “undue hardship” in order to actually have private and federal student loans fired bankrupt.

This is a higher bar than bankruptcy filers must set to get discharged from overdue credit card debt, personal loans, or utility bills. However, if you have a case for it, it’s often good to make an effort to demonstrate that you meet these requirements.

If your loan repayments are unmanageable, there are alternatives to bankruptcy that you should investigate first, as filing for bankruptcy has negative effects on your credit and financial future.

Here are some ways bankruptcy, if it’s the best option for you, can eliminate or significantly reduce student loan debt.

Types of bankruptcy filing for student loans

Chapter 7 bankruptcy is the most common variety, and Chapter 13 bankruptcy. If you successfully file in either situation, you will not be required to repay certain debts, and wage garnishment and other debt collection actions will cease.

People who file for Chapter 13 Bankruptcy and earning a stable income receive a three to five year payment plan to pay off their debts. After that, the remaining obligation is discharged.

There is no payment schedule and a release under Chapter 7 Bankruptcy, but your eligible assets will be liquidated to meet your obligations. Any unpaid debt will then be cancelled.

Bankruptcy will appear on your credit report for 10 years if you file a claim Chapter 7 and 7 years if you apply Chapter 13 in both cases.

Also, if you don’t choose Chapter 13, you risk losing assets that you used as collateral for an unpaid secured debt, such as a mortgage, that is protected by a lien or other legal claim.

Biden’s next debt crisis after student loans could be medical bills Sun, 25 Sep 2022 11:28:15 +0000
  • America’s medical debt problem has parallels to the student debt crisis, experts told Insider.
  • Both are financially debilitating, putting people at risk of not being able to afford rent and food.
  • The Biden administration is already taking steps to address this, but the challenge of helping more low-income borrowers remains.

The Biden administration is finally delivering long-promised relief to more than 40 million Americans with federal student loans, half of which will see their debt completely erased. But medical debt experts say student loans are just one part of the household debt crisis that is crippling millions of Americans.

In late August, President Joe Biden announced up to $20,000 in student debt for federal borrowers earning less than $125,000 a year, which should completely eliminate the balance for 20 million borrowers. It takes away some of what is often a prohibitive burden for many Americans, with interest snowballing into an ever-growing collection of bills that become impossible to pay.

For some, medical debt can be just as prohibitive. Medical debt in the United States currently stands at around $195 billion, according to the Kaiser Family Foundation, and 23 million Americans have medical bills of at least $250. Three million people have unpaid medical bills totaling more than $10,000. Like student loan borrowers, those with medical debt aren’t immune to unfair practices — the Consumer Financial Protection Bureau previously found that inaccurate medical billing cost Americans $88 billion a year last.

When medical and student debt snowballs, they become vectors for potentially devastating financial consequences, leading to people losing their homes and facing lawsuits, for example. Medical debt experts only see a parallel between the two crises. On the other hand, a major difference is that medical debt is usually an unavoidable life or death situation, whereas student loans are often a choice.

“You literally had no choice because this was an emergency situation,” Berneta Haynes, an attorney at the National Consumer Law Center, told Insider. “The difference is that medical debt can happen to anyone, and it can’t be planned.”

Medical debt creates ‘a racial wealth gap and a racial health gap’ in addition to burdening young and old

Black college graduates are more likely to be in debt than their white peers, data shows, and that’s because they historically have less wealth than their white counterparts. It’s a wealth gap that also translates into medical debt, Haynes said; one in three black adults has overdue medical bills, compared to less than one in four white adults, she found in a study she published this year. She added that black households are disparately impacted by aggressive medical debt collection practices, such as civil lawsuits and arrests for unpaid medical bills.

“There’s a racial wealth gap and a racial health gap,” she explained. “Black people have less wealth, black families are less able to meet those bills when they come in.”

Haynes also noted that young adults are more likely to have student debt, medical debt, or both. Nearly half of medical debt is owed by young heads of households – those under the age of 44 – the US Census Bureau found last year. Likewise, more millennials, the oldest of whom are 41, according to the Pew Research Center, have student debt than any other generation.

This does not mean that the elderly are not affected. As Insider previously reported, student borrowers over 50 continue to carry decades-long debt, forcing them to postpone retirement, and older Americans who are not yet eligible for Medicare may experience similar issues with medical debt.

Unpaid medical bills have significant financial consequences

Experts also said the financial consequences of defaulting on medical debt, such as student loans, can be devastating. Haynes cited liens on a person’s home — a legal claim on property that can be used as collateral to pay off a debt — as one way medical debt can become parasitic. If you default on student or medical debt, lenders can also take a portion of your paycheck directly, up to 25% of it.

“People are less likely to get a loan, and there are aggressive collection practices like lawsuits,” Ruth Lande, vice president of hospital relations at RIP Medical Debt, a health-focused charity, told Insider. elimination of personal medical debt.

Medical debt lawsuits are more common than student debt lawsuits, but both happen. And while medical debt is the most common business line of collection in the United States, it also occurs for student loans. And collection agencies often employ strong tactics for both. According to the National Consumer Law Center, collectors often misrepresent the rights of borrowers, and government oversight of collection agencies is generally weak.

“There are a lot of things we don’t see because of the opacity of the medical industry”

Recent legislation aimed at tackling student debt is a helpful first step, but only scratches the surface of debt.

The No Surprises Act came into force this year, which aims to restrict surprise billings under certain conditions, was one of the measures taken by the federal government. Senator Bill Cassidy called it “an important step in our efforts to reduce health care costs.” Additionally, three major credit bureaus have chosen to remove 70% of medical debt from credit reports, after working with the Consumer Financial Protection Bureau.

In April, the White House also unveiled ways to help Americans with medical debt, including increasing oversight of inaccurate medical bills and equipping consumers with educational tools to help them manage confusing billing practices.

They ease the burdens that many Americans face, but have blind spots, advocates said.

Haynes pointed out that a lot of medical debt is paid by credit card, meaning it’s not recorded as medical debt — it’s anonymized as credit card debt. This means that medical debt paid with credit cards will still show up on credit reports in the future.

Lindsey Muniak, medical debt program manager at Debt Collective, a debtors’ syndicate and nonprofit, told Insider that while nonprofit hospitals receive billions of dollars in tax relief in exchange for providing “charity care” to low-income patients hospitals often skimp on, the Wall Street Journal reported this year. The majority of American hospitals are non-profit. She wants the IRS to set clearer guidelines for vetting hospitals, she said.

“There are a lot of things that we don’t see because of the opacity of the medical industry,” Muniak said.

Jobs available at Darlington’s Student Loans Company right now Sat, 24 Sep 2022 07:00:00 +0000 From a site at Lingfield Point in Darlington, the Student Loans Company processes around two million applications worth over £22 billion for student loans and grants.

The service employs over 3,000 people at four sites in Darlington, Glasgow and Wales – and now you could be one of them.

The service is looking for eleven new people to join its team in a variety of roles ranging from managers to analysts.

Read more: Search 20,440 jobs in the North East

Outsourced services manager

Salary: £53,000 – £63,000

The successful candidate will lead the development of SLC’s contract services management approach for all outsourced operations services, while managing contracts.

Senior Domains Manager

£53,000 to £63,000

The Senior Estates Manager leads the procurement and administration of office facilities at five sites and contributes to the formulation of estates policy as a subject matter expert. The incumbent will lead succession management for the organization supporting all employees.

Service Now Manager

£37,400 – £42,900

The field of IT service management strategy is relatively new and was created to help develop IT service management. ServiceNow was recently implemented to help drive change.

Senior Developer – Service Now


Join the IT Service Management Strategy area within the Technology Group leadership. The Technology Group provides technology solutions to support SLC’s operations and business objectives.

Business Improvement Manager Graduate

£23,750 rising to £25,000

The SLC is looking for an inquisitive individual with lots of energy, enthusiasm and ideas to help in a fast-paced environment and a demanding role.

Deployment Analyst

£33,500 – £39,500

The role is to ensure effective management of software deployment requests from a build and deployment perspective.

Senior Technical Architect

£60,400 – £91,500

Provide guidance and governance of ERP architecture development and ensure any changes consider relevant architectures, strategies, policies, standards and practices.

Software delivery manager

£75,000 – £117,800

SLC is currently undertaking a multi-year technology strategy program with the goal of transforming its technology capabilities. The incumbent will have to play a leading role in defining and implementing this strategy.

Student Finance Officer

£11,550 per year + benefits

SLC is looking for motivated and dynamic individuals with a passion for delivering customer service to join a busy contact center and assessment team in Darlington.

Independent member of the audit and risk committee of the Student Loans Company

£4,000 per year plus expenses

The Committee provides assurance to SLC and the Accounting Officer on the operation of internal risk and control systems to oversee the provision of internal and external audit services.

Workday Business Technical Specialist (Finance)


Provide full support to front line end users for technical issues encountered with systems. The role will be to triage, analyze and resolve issues.

If you need to know more about any of these jobs, CLICK HERE.

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Tyler Curtis: Require Down Payments on Student Loans Fri, 23 Sep 2022 21:00:00 +0000

President Biden’s student loan forgiveness plan is an unprecedented executive act. The plan to cancel up to $10,000 in student debt per person earning $125,000 or less will cost taxpayers $240 billion over the next 10 years. This is patently unfair; it’s probably illegal; but worst of all, it does nothing to address the root causes of the student debt problem.

Total federal student debt increased by nearly 650% between 1995 and 2017. This virtually unlimited increase in student loans has led to a sharp increase in the price of higher education: tuition at four-year public universities has increased than doubled over the period. You would think that instead of just slapping a short-term solution to the problem for students, the president would want to reverse these trends to reduce both tuition and debt for the next generation.

The good news is that we still can with a simple reform: we need to start requiring down payments on federally guaranteed student loans.

In the financial industry, down payment requirements are extremely common. For example, most borrowers must pay part of the purchase price out of pocket to purchase a home. Sometimes lenders require down payments on loans for cars and recreational vehicles. Why should it be any different with the purchase of an education?

Deposits serve several purposes. Obviously, they decrease the risk for the lender. The larger the down payment, the lower the risk of delinquency and default. The 90+ day delinquency rate on federal student loans is nearly 5%, which means the government is lending money to a lot of people — in the range of 2.17 million borrowers — who unable or unwilling to make their payments.

Installments are also good for the borrower: by putting money aside, borrowers lower their risk of default, reduce their loan principal balance, and pay less interest.

Wait, you might say, don’t down payments make buying a house and buying a car that much harder? Won’t they also act as an obstacle, preventing people from going to university who cannot afford to pay for their studies in advance?

The short answer is yes. Down payment requirements limit who can receive loans in the first place. But from another perspective, they would reduce the inflated demand for college degrees. Is this such a bad thing?

If students had to pay cash for part of their tuition fees, fewer people would go on to college, either because they can’t afford it or because, out of personal preference, they decide it isn’t. simply not worth it. The simple operation of the law of supply and demand would result in a decrease in demand and a corresponding decrease in tuition fees.

So what would a student loan down payment plan look like? Suppose someone wants to attend a school that charges $10,000 in tuition for one academic year – the average cost of tuition in the state at a public university. The student gets good grades and thus gets $5,000 in scholarships, which leaves her with $5,000 to cover. Under a hypothetical reform, she (or her parents) would have to contribute a certain percentage of the net cost. So if the student were to deposit 20%, she would have to give the school $1,000 up front. She may then decide to attend a more affordable school (perhaps a community college) or simply drop out of college and immediately enter the workforce.

Under our current federal loan system, she can receive a loan to cover 100% of her remaining balance. Whether she saves money or not, the student will still have to pay $5,000, but the current system allows her to defer as many fees as she wants. And, given that the government just set a precedent for canceling student debt, she’d be foolish to pay a penny of her own money.

By allowing the student to defer the cost until she graduates, the current system encourages her to think less about comparative pricing. As a result, she might choose to attend a much more expensive out-of-state school. What does it matter to her if she won’t have to pay a dime for years – if ever?

In this example, the student exhibits a present bias, a psychological tendency in which a decision maker will favor a particular present good over their future self. Requiring the student to pay a deposit would make the actual cost more immediate for her. A down payment on the remaining tuition after scholarships at an out-of-state school would likely be much higher. This differential would reduce her current bias, ensuring that she will be more price sensitive when choosing a college.

Of course, some students will not be able to afford to attend the school of their choice if they have to put money aside. As sad as it may sound, requiring deposits has many benefits for society and for students. Restricting student loans in this way would stop rising tuition fees, making them more affordable for those who really want to go to school. And because they won’t be able to get as much funding, students will be less in debt.

Requiring students to make installments on their university expenses would not be popular; necessary political reforms are often not. But if we’re serious about reducing tuition fees and student debt, we need to think outside the box. Having students pay for part of their tuition up front is one way to achieve both goals.

Tyler Curtis is a loan officer at a bank in Missouri. He collaborates with Young Voices. He wrote this for His column does not necessarily reflect the opinion of The Lima News editorial board or AIM Media, owner of The Lima News.

Spousal student loans may soon be eligible for forgiveness Fri, 23 Sep 2022 16:33:00 +0000

From 1993 to 2006, married couples were able to consolidate their student loans into joint consolidation loans (also called spousal consolidation loans) with a lower interest rate, making each spouse legally responsible for the other’s debt. Problems quickly arose, as couples who divorced were unable to re-share the debt, leaving them responsible for their ex’s debt, even though they were abused.

This can be difficult for a number of reasons, including if one spouse stops paying their debt completely. Then the other is fully responsible for the monthly payments for his and his ex’s debt, which could land them in hot water financially.

Under current law, joint consolidation loans cannot be separated for any reason or consolidated into the Direct Lending Program. This currently makes them ineligible not only for Biden’s relief package, but also for Public Service Loan Forgiveness (PSLF) and income-based repayment.

The bill, which passed the Senate in June and received bipartisan support in both houses of Congress, is now heading to President Joe Biden’s desk. If the President signs the bill, affected borrowers will be able to split their debt into two different direct loans held by the federal government, qualifying them for relief of $10,000 to $20,000, assuming they meet the requirements of revenue.

Borrowers will be able to submit a request to the US Department of Education and have their debt split “proportionally based on the percentages each borrower originally contributed to the loan.” The two new loans would have the same interest rate as the joint consolidation loan. Borrowers could also be transferred to an income-based repayment plan or apply for PSLF, if they meet the other conditions.

Both spouses will need to submit applications to be eligible, except in certain circumstances. For example, a single spouse can file for debt splitting if they have been the victim of economic or physical abuse.

The passage of this bill “ends the decades-long saga and shines light at the end of the tunnel on the struggling borrowers – including survivors of domestic and economic violence – who have been trapped by these joint loans”, Persis Yu , the deputy executive director of the Student Borrower Protection Center, said in a statement.

Some Republicans in the House and Senate voted against the bill, arguing the government is overstepping because loans are currently blocked by private companies.

Assuming Biden signs the bill, eligible borrowers will want to do so quickly. Biden’s Pardon Effort Requests Expected to Go Live in Weeks; the sooner applicants complete the online form, the sooner they will receive assistance.

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