Here are the best articles from around the web this week talking about student loans…
For the week ending Friday October 25, 2013
Student Loan News:
1. The take on student-loan payments:
Most of it has been about the federal-debt burden. I want to shift the discussion to individuals, particularly those with private student loans. The student-loan ombudsman for the Consumer Financial Protection Bureau has just released a report analyzing complaints the watchdog agency has received from private student-loan borrowers.
Not surprisingly, the chief gripe concerned payment issues. But it's not what you might think. Many borrowers said they encountered problems trying to pay off their debt early.
We know that student-loan debt has been rising at a troubling pace. Outstanding education debt hit the $1 trillion mark in 2011. By last May, it was approaching $1.2 trillion, making student loans the second-largest form of consumer debt after home mortgages, says Rohit Chopra, the ombudsman. Get more news: http://articles.philly.com/2013-10-23/news/43291247_1_private-student-loans-private-student-loan-borrowers-student-loan-debt
2. Student Loan Servicing Beset By Problems Faces Calls For Overhaul:
The consumer finance regulator has recommended broad reforms to the student loan industry and has raised concerns with federal oversight that has failed to curb bad practices similar to those that once plagued credit cards and mortgages.
The Consumer Financial Protection Bureau said in a report last week that profit-boosting practices banned in other consumer debt industries, yet still used by companies that collect payments on so-called private student loans — those not guaranteed by taxpayers — can hurt consumers through higher fees, excess interest and forced delinquencies. Know more info: http://www.huffingtonpost.com/2013/10/22/student-loan-servicing_n_4144760.html
3. Bill sponsored by Wisconsin Democrats would ease student loan debt:
Citing crippling student loan debt that prevents young adults from buying cars and homes, three state Democratic lawmakers on Wednesday pushed for creation of a new state authority to refinance student loans through bond sales and a state tax deduction for those paying off student loans.
The proposed bill is called the Higher Ed, Lower Debt Act. It would create a state Student Loan Refinancing Authority allowing student loan borrowers to refinance those loans at “much lower” interest rates, just as homeowners do with mortgages, the bill's authors, Rep. Cory Mason (D-Racine), Sen. Dave Hansen (D-Green Bay) and Sen. Chris Larson (D-Milwaukee), said at a news conference. Full news: http://www.jsonline.com/news/education/bill-sponsored-by-wisconsin-democrats-would-ease-student-loan-debt-b99125859z1-228938911.html
Student Loan Blog Posts:
1. Lenders Are Making it More Difficult to Pay Off Your Student Loans:
Recent reports have uncovered a disturbing trend: student loan lenders are making it harder for borrowers to pay off their debt early. Payments are being distributed inefficiently and costing borrowers hundreds (potentially thousands) in interest.
When a borrower makes any extra payment above the minimum, the surplus is being distributed evenly across loans instead of being applied to the loan with the highest interest rate. It’s the default repayment system for most student loan servicers but it also means that extra or early payments may not be doing any good for borrowers looking to pay off their debt early. Click here: http://blog.readyforzero.com/lenders-are-making-it-more-difficult-to-pay-off-your-student-loans/
2. Report suggests student loan pitfalls stem from early, partial payments:
Private student loan borrowers have experienced payment-processing challenges when trying to finance their educations at institutions such as Boston University, according to a Wednesday report by Consumer Financial Protection Bureau officials.
The report analyzed complaints CFPB officials have received from private student loan borrowers. According to the report, borrowers have faced increased costs and prolonged repayments that have harmed their credit profiles. Full article: http://dailyfreepress.com/2013/10/21/report-suggests-student-loan-pitfalls-stem-from-early-partial-payments/
3. Higher Ed chief sees soaring student loan debt:
The amount of student loan debt for graduates of public colleges and universities in Massachusetts has increased 27 percent over the past three years, Commissioner of Higher Education Richard Freeland told a legislative subcommittee Monday.
“Over the past 10 years, as the state has struggled with its own fiscal challenges, funding for our public colleges and universities has simply not kept up with growing enrollments and rising costs, which has resulted in a steady shift of the cost of education from the state to students,” Freeland said, according to his prepared remarks. More info: http://www.gloucestertimes.com/topstories/x1442589787/Higher-Ed-chief-sees-soaring-student-loan-debt