Private Student Lenders Respond To Government Pressure, Expand Refinance Options

This money should not be diverted to entertainment or living expenses. If your child feels that he or she needs extra money beyond the amount of the loan, talk about controlling expenses and employment opportunities. It’s Never Too Early to Think About Repayment Together you will need to think ahead in order to come up with a plan now about how these loans are going to be repaid in the future. You or your child will be signing a promissory note, whereby you are agreeing to repay the loan even if your child does not complete his or her education, cannot get a job after graduation, or does not like the education received. Failure to repay a student loan can result in serious financial consequences. You can look at the amount of money you expect to borrow and use the online repayment estimator to calculate payment amounts for federal student loans.

Student debt may hurt housing recovery by hampering first-time buyers

A separate analysis by the Mortgage Bankers’ Association found that loan applications for home purchases have slipped nearly 20 percent in the past four months compared to a year ago. Heres a look at what the survey shows is going on with student loan debt among the under-30 crowd, broken out by credit scores. The highest growth is in browse student loan debt, with auto loans coming in second. Most of the growth is concentrated among those with low to medium credit scores. Younger adults’ credit scores are often challenged because they haven’t had a chance to build up a solid credit history.

Have you tried to get a deferment or forbearance on your student loan? You may be able to defer repayment of a student loan if you meet the criteria and conditions for your type of loan, and you are not more than 270 days behind in your loan payments (or six months behind for an unemployment deferment on a Federal Family Education Loan). Some common reasons for a deferment are being enrolled in school half-time, being unemployed, suffering economic hardship or serving in the military. Forbearance of a student loan is a little different. You may qualify for forbearance even if you have defaulted on the loan. Forbearance means you can make reduced payments for a time; for example, while you are ill or if your monthly payments total more than 20 percent of your monthly income.

So they passed the buck to the feds, who passed it on to students in the form of loans. In this case, it’s clear to see that the ample availability of student loans did influence the hike in tuition. A recent study compares the tuition of private universities in five states. They found that the schools where students have access to federal loans and grants are charging 78 percent higher tuition than the ones where students are not eligible for federal loans and aid. There is an unspoken agreement between colleges and Washington that as long as annual tuition increases are kept to 5 percent or below, the government will keep student loans flowing. It’s much harder for a taxpayer to figure out how much he is on the hook for this misguided policy.

[ ALSO : Democratic Senators Announce Ambitious Student Debt Agenda ] “By the time they graduate, their credit score is at its lowest point and their interest rates are at their highest point,” Kantrowitz says. The best time to look into refinancing private loans, Kantrowitz says, is a few years after graduating. Because recent graduates often start out with thin or nonexistent credit histories, young borrowers can often quickly improve their credit scores with consistent positive credit activity, he says. “That means never late with a payment. Too often I hear from borrowers who say, ‘But I was only late with one payment,'” Kantrowitz says.

They have accounted for nearly a third of home purchases over the past year, well below the historical norm, industry figures show. The trend has alarmed some housing experts, who suspect that student loan debt is partly to blame. That debt has tripled from a decade earlier, to more than $1 trillion, while wages for young college graduates have dropped. The fear is that many young adults can no longer save for a down payment or qualify for a mortgage, impeding the housing market and the overall economy, which relies heavily on the housing sector for growth, regulators and mortgage industry experts said. “This is a huge issue for us,” said David Stevens, chief executive of the Mortgage Bankers Association.


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