Why Private Student Loans Are A Dangerous Game
My best friend Samantha was always passionate about learning and furthering the field of science. As such, she was the first person in her family to earn a Bachelor’s degree, in Chemistry. We were so proud of her, and she had aspirations to do research to help find a cure for HIV. In order to be able to afford her degree and all of the associated costs of it (housing, etc.), Samantha took out a total of $70,000 in private student loans through Citibank. Because she was young with little credit history, they asked for a co-signer, and her grandfather gladly helped her out.
Source: consumerist.com
Video: Student Loans : Private Student Loans for Weak Credit
Despite Concern, Banks Give Student Loans the Old College Try
The California Association of Private Postsecondary Schools (CAPPS) is dedicated to spreading the word about the role of private post-secondary education and represents the many diverse kinds of schools in California. For more than 25 years, CAPPS has been actively engaged at all levels of government to ensure our members’ voices are heard and our issues are addressed. With more than 300 institutions, CAPPS member schools are helping students of all ages, backgrounds and skill-levels achieve their dreams and secure stable employment. All CAPPS member schools and colleges are nationally or regionally accredited or approved-only.
Source: cappsonline.org
Private Student Loans Forgiveness
One way of paying back your students loans is through the forgive plans. Basically, these plans allow you repay your private student loans by service instead of using money. You will be required to work somewhere at no pay. Private student loans forgiveness involves a lot of voluntary and pro bono jobs. However, to be realistic, it is not very easy to get. Most of the federal student loans qualify for these plans instead. If you can manage to prove your inability to pay the loan any other way, then that’s when you may be allowed using these plans. You also need to realize that these plans are not meant to help you make money but rather to pay off your debts. You can get private student loans forgiveness by signing up for the military. This means that you will be deployed to some war and work in the service for a period of time. Remember, you still have to meet the eligibility requirements for working in the military. You may learn a lot being in the service so this job does have its benefits. Some of the skills that you learn may help you in your future jobs. Even if you don’t think that the jobs have a lot of benefits for you, consider the fact that the service will help you repay your loans. If you studied law in college, Guaranteed, you will not get a job as some hot shot lawyer in a big firm but you will b able to use the skills you acquired in colleges. You may have to put a lot of long hours and pro bono jobs in order to pay back your student loans. One way to look at this is that you will be getting some good experience in your career growth. This experience will help you secure and perform in your future jobs. You may also consider working in a no-profit organization and help build your career as you pay off your debts. If you studied medicine, there are a lot of great opportunities for you. You can get private loans forgiveness by working in hospitals or clinic or any health facilities. The good thing about such places is that they will always have room for a pair of extra hands. People will always get sick and so there is always demand for medical professionals. As you gain first hand experience about being a medic, you will also be clearing parts of your student loans. You can do some good in the world by joining the Peace Corps. This will help you in your personal and career growth. You will get to mingle with people from all over the world. This will help you build some interpersonal and communication skills that you can use in your future careers. You will also get to work on being a team; player by working with your teams. You will get a good % of private student loans forgiveness during the time of your service.
Source: eduloan.info
Sallie Mae Will Offer Fixed
Although it is the largest student lender, Sallie Mae is a bit late to the fixed-rate party. Competitor Wells Fargo, for instance, introduced fixed-rate private loans last summer; Citizens Bank and SunTrust also offer fixed-rate versions. (U.S. Bank was offering them, too, although it announced this spring that it is getting out of the student lending business.)
Source: nytimes.com
Five Free Tools to Help You Repay Student Loans
If you have federal student loans and are worried you may not earn enough money to pay them back, there is a new student loan repayment option called the Income-Based Repayment Plan that caps the amount you’ll have to pay on your student loans based on your income-levels. While it isn’t the answer for everyone, it is worthwhile to see if you qualify for the Income-Based Repayment Plan. To help you determine whether or not you are eligible, the government has created an online wizard called the Income-Based Repayment Calculator that allows you to answer a few questions and helps you determine whether or not you qualify.
Source: higherone.com
What is a Private Student Loan?
Forbes warns that interest rates on a private student loan are often variable. On a Federal loan, they are fixed and will remain at that rate for the duration of the loan. Interest rates on private loans typically reset every quarter, and there is no limit to how high the interest can rise to. In addition, if there is a problem with repayment, the legal agency Nolo says that a Federal student loan provides you with several possible options including deferment, forbearance, or even loan cancellation. Some private student loans may only offer limited options and they will generally not be as good.
Source: primerates.com
Our student loan complaint system is open for business > Consumer Financial Protection Bureau
However, private student loans – which don’t always carry the same consumer protections as federal student loans – have been overseen by a patchwork of government agencies. In the Dodd-Frank Wall Street Reform and Consumer Protection Act, Congress established an Ombudsman for private student loans within the Consumer Financial Protection Bureau to assist borrowers with private student loan complaints. This means a single federal agency is now responsible for watching out for all students and families who choose to borrow private student loans.
Source: consumerfinance.gov
At public universities, the median compensation for presidents was $375,442 in 2009-2010, according to The Chronicle of Higher Education’s latest figures. The top 10 highest paid boasted compensation ranging from $1.8 million to $728,350, with Ohio State University president E. Gordon Gee at the top, followed by former University of Washington president Mark Emmert with $904,004 (he’s now president of the National Collegiate Athletic Association), Francisco Cigarroa of the University of Texas System with $813,892 and John Hitt of the University of Central Florida with $800,703. That’s way more than what many of today’s most high-profile public servants earn.
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One thing to be clear about from the onset is that when one spouse or ex-spouse files for bankruptcy, the other spouse’s financial obligations remain. What matters for the spouse or ex-spouse who did not file for bankruptcy is that they have a contract with the lender, and they are personally obligated under it. What this means is that, if a spouse or ex-spouse files for bankruptcy, they may be able to have their obligation to pay a loan discharged. But the discharge does not affect the other spouse’s obligation.
As far as the morals of allowing student loan debt to be discharged, I think that the person who borrowed to go to college is a lot more deserving of bankruptcy protection than someone who borrowed to go on expensive vacations and buy a lot of bling they had no real need for. With the exception of high school students who read conservative blogs (perhaps 0.1% of high school students), high school students are extremely clueless about the possible bad consequences of borrowing to attend college. Every message they are receiving from responsible adults validates their borrowing. Most likely their parents are fully supporting their education, and a lot of sober adults with PhDs at the college they attend have told them what a great decision they are making for their future. If they ever turned on the television to watch Obama, they might have seen him say something like “every American should go to college.”
For me as an Indianapolis bankruptcy attorney, the best news I heard was that Finish Line plans to add 327 jobs to the 700-person labor force it already has in Indiana. And, although Albion is far north of where the four Zuckerberg bankruptcy law offices are located, I was happy to read that a New Busche plant is opening there, with the company planning to add 120 jobs. Construction job growth in Indiana as a whole rose by more than 7,000, according to the Louisville Business Journal. When one of my Columbus bankruptcy lawyer colleagues called my attention to the fact that the Arden plant in Kendallville plans to close next month, causing 46 workers to be laid off, that, on the other hand was not welcome news at all. Since for the past 25 years I’ve been a debt consolidation lawyer offering Indiana bankruptcy help, the availability of good jobs is of great importance in the work I do. When there are well-paid jobs to be had, debtors are able to get back on their financial feet after filing personal bankruptcy in Indiana. Those who’ve filed individual bankruptcy under Chapter 13 bankruptcy law are able to keep up with their scheduled debt repayments. People still need help to stop foreclosure and sometimes student loan debt help, but at least fewer come to see us bankruptcy attorneys in Indiana looking for payday loan debt help. (Readers of these Bankruptcy in Indiana articles know what a low opinion I have of payday lending.) Recently, the Labor Department came out with a very hopeful statistic: the percentage of adults working in the U.S. has reached 58.6 percent, the highest level in two years. On the minus side, Indiana remains one of the worst states when it comes to the wage gap between men and women. The new bankruptcy laws of Indiana are designed to offer honest debtors the chance to make a fresh financial start. That’s what my legal career has been is all about. Remember President Clinton saying “It’s the economy, stupid!” Well, neither I nor my clients are stupid, but for us, it really is all about the economy and the jobs!
Are we in a student loan crisis? What should be done about it? The overall consensus is that on the whole education in these United States is no longer globally competitive. That implies our society should be spending more on education, including college education. But should that be in the present form of privately made loans backed by federal government guarantees? The Long Recession has meant that students graduating starting in 2008 and apparently continuing through at least this summer of 2012 have mostly not been able to get jobs of any kind, much less the higher-paying jobs that normally come with a college degree. Hence many regret about having taken out loans, and some have called for all student loans to be forgiven. The American system of financing education is itself complex. There is a public sector that is typically fully taxpayer subsidized through high school. At the college level, how much taxpayer subsidy there is in public universities varies not just state by state, but in tiers depending on college (or junior college) attended. Private education exists to give children and families a competitive advantage over the uneducated and publicly educated. Despite that, it too receives public subsidies, though they tend to be tax breaks rather than direct subsidies. Student loans are a major source of income for private colleges, but are generally not available for private K-12 education. All colleges, public and private, are supposed to offer a competitive advantage to their graduates. Most people do not have 4-year college degrees. In effect taxpayer money that goes to higher education helps the richest one-third or so of the population, which largely corresponds to adult citizens with college degrees. Aside from, but not unaffected by student loan programs, we have the escalating cost of college educations. If college educations benefit society, and not just the money-seekers who buy those educations, then this can be a problem in itself. Within the sector janitors, professors and administrators may argue how to cut up the pie, but arguably the pie is expensive out of proportion to the benefits it provides society. It has been argued that when more loans and grants are made available by the government, the result is simply higher tuition charges, leaving us on a treadmill. It should also be noted that degrees are also part of an important anti-competitive part of our national economy. Degrees are often a prerequisite to professional licensing. Thus those with certain types of degrees are able to, with their fellow professionals, engage in monopoly price-setting for their services. These segment monopolies, most notably in the health field, also drive costs to society in a way that are unbalanced and arguably unethical. Thus talking about student loans, we should see that not everything should be lumped together. A $50,000 in loans to a Film Studies major does not have the same economic effect as $50,000 in loans to a medical student or to an accounting student. A loan to a student at a private college may just enable the cost of education to rise. A loan to a student at a public university may only shift the economic burden from taxpayers to the student, even if it does not cause the university to inflate its tuition and fees. A government-backed loan raises somewhat different public policy questions than purely private loans would. We should probably look at the various state college systems for some insights into what works (defined as getting a good education to cost ratio). In general neither the state systems nor the private colleges have been immune to cost inflation. In the state systems wage inflation seems to be driven by unions, but caps on taxpayer support limit overall costs. In the non-system of private colleges costs seem to be driven by administrators and increased demand for student luxury. In both cases we have exceptions: private universities that keep their costs reasonable and pass that on in reasonable tuition, and public state systems where the public (taxpayers) and students get a better return for their money than in the average state. We should look at those exemplary colleges and use them as models. [I hear professors and administrators screaming: but that would mean a pay cut for me! And yes, that is what I am advocating: a life devoted to scholarship and teaching, an exemplary low-environmental impact, low luxury, no-frills occupation. Or at least in that direction, from where we are now.] My back-of-the-envelope impression is that there are relatively few particular families who benefit from wealth transfers through taxation and the distribution of public education (including tax breaks & other subsidies of private institutions). If a student’s parents can afford for the student to go to college, with or without loans, they probably pay substantial taxes. The middle and upper classes of the U.S. currently pay very little in taxes that subsidizes the children of the lower classes at the college level. If anything, those who do not attend college pay taxes that subsidize those who do. Fixing the current system is different from designing a blueprint from scratch. The current system works for the powerful. The most powerful can send their children through college (and usually graduate school) without loans. These children start work where anyone else might aspire to finish life: debt free, with high-salary jobs and a “it’s not what you know its who you know” safety net. But those who go through college on loans have little room to complain, given that, if they are not at the very top of the system, they at least have an opportunity to exploit the lower classes with their degree. They just have to work harder at it. Banks may be essentially predatory, but I don’t see why they should forgive student loans when the point of the loans was to try to get a leg up the economic ladder. There is even less ethical reason for the government, which is really the taxpayers, to rescue banks and debtors alike. Stop government guarantees for student loans and the short-term economics side of the problem will resolve itself in a few short years. Banks will stop making the loans. Some parents will pitch in more, but many students will drop out. Colleges will face budget contraction. They will deal with it in different ways, some keeping tuition high, but many will choose to lower tuition. That, in turn, will make college more accessible, at least for the middle class. Degrees, being rarer, will become more valuable. High tuition, with or without student loans, cuts off class mobility and causes talent to be misallocated. But lower tuition just changes the situation a shade of gray. There is no particular correlation between talent at birth and parental economic or academic status. Nurturing the academic and intellectual talents of children is good, but it is a limited good, grabbed by the same people who grab most goods in America, the entrenched elite of professionals and capitalists, large and small. It follows that even if the states provided free college educations for those who qualify, many slots would end up occupied by “legacy” students, who only make it because of major parental support during their pre-college years. Private colleges like Stanford would continue to turn out new generations of predators that specialize in eating other kid’s lunches. Reforms should be supported. Tax the rich and use some of the taxes to make college free for those who qualify. Recognize that private colleges are businesses and should be taxed; discouraged, not encouraged. The real goal should be a society in which the environment is respected, and all people are respected too, regardless of who their parents are, or what occupation they end up in. The only way we are going to realize that is “nationalization.” In this case, however, it is the states that should take over the private colleges, enabled by national legislation. Probably the single biggest educational mistake in American history was made in 1819 by the Supreme Court in Dartmouth College v. Woodward. The state of New Hampshire tried to turn Dartmouth from a private corporation into a state-run college. Thus we became a nation with two tiers of college, a private tier for the slave owners, professionals, landlords and (later) the industrial capitalists, and a public tier for the rest of us. Making that change, short of armed insurrection, would be difficult. The current Supreme Court would have to be replaced in its entirety, and by some President representing a different set of values than those held by the Democratic and Republican parties. The only viable long-term solution is to nationalize the nation itself. Think about that, graduates, especially those of you opting not to go to college.
Barrick says planning for college should begin when a student is a freshman or sophomore in high school. She says students and their parents should be realistic about how much they can afford, and borrow only to pay tuition and room and board.