Here are the best articles from around the web this week talking about student loans…
For the week ending Friday January 10, 2014
Student Loan News:
1. Student loan system needs an overhaul:
The student loan system is broken, and we need new ideas for fixing it.
Student debt now totals more than $1 trillion, and students are borrowing some $113 billion a year. With this year’s college graduates owing $32,500 on average, these debts threaten to be dead weights on their financial futures.
The nation is moving toward a mobile information and transaction paradigm, with purchases and payments online. Students bank electronically, shop electronically and study electronically. They should be able to repay their loans electronically, especially the large percentage of borrowers who are non-banked or under-banked. The full report: http://thehill.com/business-a-lobbying/194688-student-loan-system-needs-an-overhaul
2. Student Loans: A Financial Bubble in the Making?
If more and more students are leaving U.S. colleges and universities with five figures of student loan debt, and an increasing number of them end up delinquent in repaying those loans, are we looking at a financial bubble? And will that bubble burst?
“Very possibly,” says Bob Traitz, a college financial-planning professional with American Education Funding. “I believe that it might become necessary to limit student loans, to the degree that one is able to demonstrate their ability to repay what they've borrowed.”
It's a potentially controversial idea — one that raises the concept of new regulations — but Traitz says the underlying issue is affordability and whether private and federal student-loan institutions are allowing higher-ed tuition to balloon out of control, setting students up for a post-graduation fall. Right here: http://www.fool.com/investing/general/2014/01/07/student-loans-a-financial-bubble-in-the-making.aspx
3. Ministry Seeks Applicants for Medical Student Loan Repayment Program:
Ministry Medical Group is seeking applicants for its 2014 Medical Student Loan Repayment Program.
The MMG Medical Student Loan Repayment Program offers student financial aid up to $200,000 for student enrolled in medical education programs.
It requires students return to, and work as, a primary care provider in an assigned Wisconsin community in which MMG has a facility for five years following residency. This includes Amherst, Crandon, Eagle River, Iola, Laona, Merrill, Owen, Plover, Rhinelander, Rib Mountain, Stanley, Stevens Point, Thorp, Tomahawk, Waupaca, Weston or Woodruff. Check this out: http://www.wsaw.com/home/headlines/238953521.html
Student Loan Blog Posts:
1. Federal student loan sharks prey on cancer patients filing for bankruptcy:
A federal agency charged with fighting student loan bankruptcy cases overstepped its bounds in over a dozen cases in 2012, from trying to force a woman to repay her debts twice to claiming Stage II pancreatic cancer did not meet “undue hardship” requirements.
The Educational Credit Management Corporation (ECMC), a nonprofit agency founded in Minnesota in 1994, conducts ferocious legal battles on behalf of the federal government against the few Americans who file for bankruptcy to discharge student loans.
One woman, Stacy Jorgensen, borrowed $43,000 for her undergraduate, masters and PhD degrees, but was diagnosed with Stage IIB pancreatic cancer before she could repay her loans. The combined costs of her mounting medical bills and student loan payments drove her to file for bankruptcy and prove she suffered from “undue hardship.” But the ECMC would have none of it in court. Click this: http://dailycaller.com/2014/01/02/federal-student-loan-sharks-prey-on-cancer-patients-filing-for-bankruptcy/
2. Save Money This Semester With Student Loan Interest Deductions:
College graduates and students who are repaying their student loans may qualify to claim a tax deduction for the interest they pay each year. Many student loans are subsidized by the federal government to give students a tax incentive to return to college. While the payments for the loans themselves are not tax-deductible, the interest may be. This can be used on both subsidized and unsubsidized loan interest. College Student
What is the Student Loan Interest Deduction?
The student loan interest deduction allows students who are repaying student loans to deduct a portion of their interest paid each year. Unlike some other education-related tax breaks, the student loan interest deduction is rather straightforward. Taxpayers do not have to itemize their deductions or complete a separate form to claim this tax break. The student loan interest deduction is limited to the lesser of $2,500 per year or the total amount paid by the taxpayer. Great post to read: http://www.toptaxdefenders.com/blog/bid/191984/Save-Money-This-Semester-With-Student-Loan-Interest-Deductions
3. Should You Borrow Student Loan Money To Invest?
Back when I was soliciting questions from you before Thanksgiving, one of the questions I received from a reader concerned the wisdom of taking out student loans to invest. That’s a question that I have gotten two or three times before and never had the time to answer, so I’ll tackle it now.
The short answer is no. The longer answer is: I don’t know who you are borrowing the money from, but most likely, you are signing a contract that has restricted potential uses for the money that you borrow. Most likely, “investing the money” violates the contract. Look, nowadays, everything you do leaves behind a digital trail. If you take out $15,000 and in short order purchase 500 shares of General Electric, it wouldn’t take much of an investigation to figure out what where the loan money went. These details: http://theconservativeincomeinvestor.com/2014/01/03/should-you-borrow-student-loan-money-to-invest/