Posts Tagged ‘student debt’

Student Loan Debt Now Tops $1 Trillion

Student loan debt has been in the news lately. According to the Consumer Finance Protection Burea’s student loan ombudsman Rohit Chopra, the student loan debt market is “too big to fail.” It was disclosed recently that student loans now top over $1 trillion.

According to Chopra, “Students borrowed $117 billion in federal student loans just last year. And students continue to borrow private student loans, which lack the income-based repayment and deferment options of federal student loans. If current trends continue, there will be consequences not just for young people, but for all of us.”

Another student loan issue in the news right now is the federal Stafford Loans. These subsidized student loans are set to expire this summer. If they are not renewed by congress, interest rates on those student loans will double to 6.8 percent.

Lots of schools are responding to this issue and the tough worldwide economy in different ways. Schools like Burlington College in Vermont and Mount Holyoke College in Massachusetts are freezing their tuitions. Burlington College has stated they will not raise tuition for four year and Mount Holyoke is enacting their first tuition freeze since the 1960s.

Some schools are thinking about out-of-the-box methods to entice students to attend. Ashland University in Ohio will begin to offer bachelor degrees next year that will only take 3 years to complete. Also in Ohio, Baldwin-Wallace College is starting a “Four-Year Graduation Guarantee” program. If a student who maintains a 2.0 GPA at Baldwin does not graduate in 4 years, the college will pick up the tab for the remaining tuition costs.

Schools are also finding ways to create programs that offer a combination of Bachelor and Masters degrees in only 4 years. Simmons College in Boston and Wilson College in Pennsylvania are a couple schools that are going in this direction.

Some schools are lowering credit hours required to graduate. Lipscomb University in Texas is lowering their graduation requirement from 132 credits to 126. This is the equivalent of 2 classes on average.

The student loan landscape is constantly evolving. Make sure to utilize Cappex to stay up to date on all things college.

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Obama to Announce New Student Debt Plan

Students, you can issue a minor sigh of relief (emphasis on ‘minor’). The White House is thinking about your student debt, and President Obama, bypassing Congress, is set to announce a plan today that allows for students to lower payments and consolidate their student loans.

It’s a fairly specific new plan for people who hold the two types of loans, but according to the Wall Street Journal, this means that 5.8 million Americans with both direct government student loans and government-backed private loans can now consolidate their debts into one government loan. Woo!!!! Wait. What does that mean?

Well, for the 5.8 million who this applies to, the new plan makes it so borrowers will wind up receiving a reduction of up to 0.5% in their interest rates since the private loan would be refinanced at the lower government rate.

Still, some question, as with any political move, is it just another step to secure young voters for the 2012 election? Maybe it is. But isn’t everything done for that reason? Or maybe it’s not. Either way, student loan debt is foreseen to be the next “bubble” to burst and a common concern among Occupy Wall Street protesters. At least someone is addressing this ginormous mutated pink elephant in the room.

With the nature of the current economy, many college-bound students are wondering if going into debt for a college education is even worth it with prices skyrocketing. Nobody, not even someone with a college degree can be assured a job. And with student loan debt second behind mortgages and actually ahead of credit card debt, students are fearful of taking on such debt without being certain they can repay it. It’s a huge, looming problem.

Along with the loan consolidation plans, Obama plans to accelerate a program to cap repayments. Currently, the rule on payment limits is that graduates can pay only up to 15% of their income with all debt forgiven after 25 years of payments. The rule Obama wants to put into place would lower the cap to 10% of a graduate’s income and loans would be forgiven after 20 years. Not too shabby…but, still, student debt is way too high for a nation with this much unemployment.

What can you do to lower your student debt before you’re already 15 feet in it? Scholarships. Apply for some.

Does student debt concern you? Does Obama’s plan sound good to you?  Leave a comment about it below.