Here are the best articles from around the web this week talking about student loans…
For the week ending Friday August 9, 2013
Student Loan News:
1. Consumer protection chief puts focus on student loans:
Staggering student loan debt has the same kind of ripple effect on the economy as the subprime mortgage crisis did, the head of the Consumer Financial Protection Board says.
“It is a big priority for us,” CFPB director Richard Cordray said in a meeting with USA TODAY's Editorial Board. Distraught borrowers “come to our complaint line now and they come by the thousands.” Details here: http://www.usatoday.com/story/money/personalfinance/2013/08/04/cfpb-student-loan-debt-cordray/2609467/
2. Gara hopes for a new spotlight on student loans:
Thanks to a bipartisan deal newly brokered by Congress, the federal government's student loan rate is now 3.86 percent.
Alaska's is 7.3 percent, nearly twice that.
Something's wrong with that picture, says Rep. Les Gara, an Anchorage Democrat.
“It's pretty embarrassing when the federal government treats students twice as well as we do here in Alaska on student loans,” he said.
3. Income-based student loan repayment: Good for the student and bad for everyone else:
More than 12 percent of student loan borrowers are defaulting, even while there are other options — such as income-based repayment available to them. Yet while IBR helps struggling recent grads out of a jam, it is quickly becoming a big burden for American taxpayers.
On Monday, POLITICO published an article explaining that more than half of the $1 trillion student loan debt isn't being repaid, as 1 in 8 borrowers are going into default, as revealed by a report from the Consumer Financial Protection Bureau. The solution? According to the CFPB’s student loan ombudsman, Rohit Chopra, it’s income-based repayment. Main site: http://redalertpolitics.com/2013/08/07/income-based-student-loan-repayment-good-for-the-student-and-bad-for-everyone-else/
Student Loan Blog Posts:
1. Fewer Than Half Of Federal Student Loans Currently Being Repaid:
It’s scary enough to think that the federal government has around $1 trillion in student loan money out there waiting to be repaid. More frightening is the fact that not even half that amount is currently being paid back.
According to information on the government’s Direct Loan and Federal Family Educational Loan programs (NOTE: FFELP ceased writing new loans in 2010, but the data is included here because it still represents $429 billion in outstanding student loans), about $494 billion of the $999 billion owed to these programs is currently in the “Repayment” phase. Around 23.7 million borrowers, nearly 47% of borrowers, are actively paying off their loans. Full story: http://consumerist.com/2013/08/05/fewer-than-half-of-federal-student-loans-currently-being-repaid/
2. How to Avoid Student Loans:
In my article “What’s the Problem With Student Loans?” I wrote about how college debt is dragging down our economy and whey the average student loan borrower is enslaved by their decision to finance their education with loans.
I talked about many of the consequences that were unforeseen when they took out those loans and rear their ugly head years later, seriously hampering their future life. Original article: http://www.crosswalk.com/family/finances/debt/how-to-avoid-student-loans.html
3. The US Student Loan Problem:
The US Congress is nearing a compromise on the issue of student loan interest rates. Apparently loan rates will be changed from fixed to floating with an overall cap (see story). While rates are important, there is a much bigger issue at hand. Now with the help of some great data from Barclays Research let’s take a quick look at where we stand with the overall student loan problem and how we could potentially move forward. Here are six facts to consider:
1. There is about 1.2 trillion dollars worth of student loans outstanding with all but 15% of that owned or guaranteed by the government. The chart below shows the student loan amount held directly by the federal government. That balance is rising at about $110 bn per year. Read more: http://www.creditwritedowns.com/2013/08/the-us-student-loan-problem.html