Here are the best articles from around the web this week talking about student loans…
For the week ending Friday May 02, 2014
Student Loan News:
1. Student Loan Interest Rates to Rise With 10-Year Treasury Note:
College students in the U.S. who take out federal loans are likely to see interest rates jump — potentially by a percentage point or more — in the coming academic year.
Last year, the government began to peg rates on most student loans to the Treasury 10-year note. Stafford loans, the most widely borrowed, carried an undergraduate rate of 3.86 percent for the 2013-2014 school year. In the past three months, the 10-year yield has traded 0.80 to 1 percentage point higher than a year ago, which means education borrowing costs may rise.
Interest rates for the school year beginning July 1 will be determined following the Treasury’s 10-year note auction on May 7. While interest rates are fixed for the life of an education loan, borrowers take out a separate loan for each school year. Federal loans make up most of the $1.2 trillion in outstanding education debt, which has become a drag on the economy in recent years as many borrowers struggle to repay. Read more article: http://www.bloomberg.com/news/2014-05-02/student-loan-interest-rates-to-rise-with-10-year-treasury-note.html
2. Is Student Loan Debt Dangerous to the Economy?
Student loan debt in the U.S. has grown to more than $1 trillion, surpassing credit card debt. Meanwhile, enrollment is surging in popular federal loan programs designed to eventually forgive some student debt. Now, government officials are considering how to rein in costs — and investigate the impact Americans' student debt burden is having on our economy.
The student debt dilemma is a major concern of Sarah Bloom Raskin, the new deputy U.S. Treasury secretary. The former Federal Reserve governor sat down with CNBC at the University of Maryland-Baltimore County, where nearly half of the students received some kind of financial aid this school year.
In an exclusive CNBC interview, the first in her new role, Raskin explained why addressing student loan debt is at the top of her agenda. Read this: http://www.nbcnews.com/business/economy/student-loan-debt-dangerous-economy-n94916
3. Hidden risks on some student loans:
It doesn’t always pay for young borrowers to add parents, grandparents or other relatives as co-signers to get a lower interest rate on a student loan from a bank.
In some cases, when the co-signer dies or falls into bankruptcy, the action may trigger an automatic default. When that happens, lenders can demand that the full amount of the loan be paid immediately by the young and likely cash-strapped borrower — even if loan payments have been made like clockwork.
The result is a potentially huge red flag on a young borrower’s credit rating, making it difficult and more costly to obtain a loan down the road. It could even be a turnoff for a potential employer. Go there: http://www.kansascity.com/2014/05/02/4993286/hidden-risks-on-some-student-loans.html
Student Loan Blog Posts:
1. Are Your Student Loans Costing You More Than You Think?
You’re a responsible student loan borrower, taking out only what you need and paying your bills on time every month.
But with so many changes to student loans in recent years (and so many details in the fine print), it’s easy to overlook some of these unexpected costs.
Save yourself the surprise – and the money – by considering these issues.
Careful With Interest Rates:
Remember that your interest rate is one of the most important factors in your overall cost of borrowing, along with the amount borrowed and your repayment time. Full story: https://www.mint.com/blog/saving/are-your-student-loans-costing-you-more-than-you-think-0414/
2. Proposed Bill Would Eliminate Automatic Default For Private Student Loans:
Between finding a job, finding a place to live, paying bills, and generally being an adult for the first time in their lives, many recent college graduates face a slew of challenges. One thing they shouldn’t have to think about is automatically defaulting on a student loan when a co-signer dies or files for bankruptcy. Today, legislators proposed a bill to protect consumers from getting stuck in this trap.
New York Representative Tim Bishop proposed an amendment to the Truth in Lending Act that would establish requirements for the treatment of a private education loans upon the death or bankruptcy of a co-signer of a loan.
“The practice of automatically defaulting on student loans without notice to the student or an opportunity to correct the situation is deplorable,” Rep. Bishop says in a news release on his website. “We need to make it easier for students to access higher education, not pull the rug out from under them when their circumstances change through no fault of their own.” Everything's here: http://consumerist.com/2014/05/01/proposed-bill-would-eliminate-automatic-default-for-private-student-loans/
3. Get to know your student loan report:
The number one rule in borrowing is to understand exactly how much money you are borrowing. If doesn’t matter whether you are a college senior who is trying to plan your financial future, or a soon-to-be college freshman who is considering federal or private student loans to supplement the amount of college financial aid you have been granted. Not understanding their full financial commitment is a big problem for college students.
As a college student you need to keep track of how much money you have borrowed, understand the interest rates, know about payment terms, and get a handle on how much money you will need to repay so you can borrow more intelligently. One great resource is the National Student Loan Data System (NSLDS). This is the U.S. Department of Education’s central database for student aid. Here some tips: http://collegefinancialaidadvisors.com/get-to-know-your-student-loan-report