Should your student loans and your spouse’s get hitched?

February 7, 2020

By Ryan Lane, NerdWallet

Multiple studies have shown that student debt can cause borrowers to delay getting married. For some borrowers, though, marriage could actually be a gateway to paying less.

You can save money by refinancing student loans, but not everyone qualifies. If your better half has a better financial profile, you can share the benefits of refinancing in two ways:

— REFINANCE TOGETHER. You combine your student loans with your partner’s into one spousal loan with a lower interest rate.

— CO-SIGN FOR YOU. Your spouse co-signs a loan refinancing your debt, getting you a lower rate on the back of his or her finances.

If you’re considering getting hitched to your partner’s loans, here’s how to decide if you should.

REFINANCING ‘FOR BETTER’

Refinancing makes the most sense to save money on higher-interest private and graduate school loans.

For example, by refinancing a $60,000 loan from 7% interest to 5%, you’d save roughly $7,200 over a 10-year term.

Typically, you’ll need robust finances and a good credit score to qualify and get the best rate.

Spouses may “increase (their) chances at getting a better rate together,” says Andrew Zoeller, digital program director for Purefy, which refinances loans for Pentagon Federal Credit Union, or PenFed.

For joint spousal loans and loans that spouses co-sign, PenFed evaluates the couple based on their combined income and counts shared debts, like mortgages, only once. This allows more individuals — such as stay-at-home parents with good credit — to meet PenFed’s lending criteria.

Other lenders may evaluate spouses separately. Ask a lender about its policy before applying.

In 2019, 67% of co-signed PenFed student loan refinances were spousal loans, according to Zoeller.

“It’s something our program is known for,” he says.

REFINANCING ‘FOR WORSE’

If you co-sign a refinancing loan or combine debts with your spouse, you’re equally responsible for repaying the balance — even after a divorce.

“There is no exit ramp,” says Joshua R.I. Cohen, a lawyer in West Dover, Vermont, who operates TheStudentLoanLawyer.com.

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https://abcnews.go.com/Lifestyle/wireStory/student-loans-spouses-hitched-68798108

Colorado would repay first 2 years of student loans for grads who stay in state under “Get On Your Feet”

January 30, 2020

By Elizabeth Hernandez, The Denver Post

A bill in the works for Colorado’s upcoming legislative session would mandate the state pay for the first two years of student loans for new graduates of the state’s public colleges who commit to stay in Colorado and enroll in an income-based repayment program.

Students who qualify would have their monthly payment — determined by an income-based repayment program — paid in full by the state for their first two years out of college, relieving them of the financial responsibility as they get introduced to the workforce.

Senate Majority Leader Steve Fenberg, a Boulder Democrat, Rep. Leslie Herod, a Democrat representing District 9, and Rep. Julie McCluskie, a Democrat representing District 61, plan to sponsor the “Get On Your Feet” bill, modeled after a program established a few years ago in New York.

“Students are graduating with so much debt that it’s, frankly, overwhelming,” Fenberg said. “People are going down a path or a career that isn’t what they even went to college for to start paying these off. They don’t have a chance to take a breath and figure out what they want to do. The concept is to give them two years of breathing room to actually be able to pursue the career they want to pursue.”

More than 761,000 Coloradans are repaying $27.7 billion in student loan debt, according to household debt statistics from the Federal Reserve Bank of New York.

In 2018, 56% of Colorado graduates with a certificate or associate degree left school with debt — the average debt amounting to $13,300. For a bachelor’s degree during the same time frame, 69% of graduates ended their academic career with debt, averaging $25,500, according to statistics from the Colorado Department of Higher Education.

Gov. Jared Polis’ budget earmarked $14 million to advance-fund the program for three years, “serving approximately 5,300 Coloradans who graduate from a state institution of higher education, live in Colorado and participate in a federal income-based repayment plan.”

Charley Olena, an advocacy consultant with the left-leaning organization New Era Colorado, is helping with the “Get On Your Feet” bill this session.

“One of the reasons why this is so exciting for Colorado and the reason why the governor’s office has been so enthusiastic is because students’ loans are depressing entrepreneurship,” Olena said. “The total percentage of people under 30 who own their businesses has fallen about 65% since the 1980s. Millennials were overwhelmingly citing student loan debt as the thing holding them back from starting their own business. As Colorado’s economy continues to grow, entrepreneurship is something we want to be able to foster.”

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Colorado would repay first 2 years of student loans for grads who stay in state under “Get On Your Feet” bill

This Man Got $221,000 Of Student Loans Discharged In Bankruptcy

January 16, 2020

By Zack Friedman, Forbes

Getty

Can you now discharge your student loans in bankruptcy?

Here’s what you need to know.

Student Loans: Bankruptcy

A Navy veteran will have $220,000 of his student loans discharged, even though he is not unemployable, not disabled or wasn’t defrauded. A U.S. bankruptcy judge in New York, Cecilia G. Morris, ruled that Kevin J. Rosenberg will not have to repay his student loan debt because it will impose an undue financial hardship.

According the Wall Street Journal, Rosenberg borrowed $116,500 of student loans between 1993 and 2004 to earn a bachelor’s degree from the University of Arizona and a law degree from Cardozo Law School at Yeshiva University. He filed for Chapter 7 bankruptcy in 2018 and asked the court last June to discharge his student loan debt, which had grown to $221,400, including interest. At the time of filing, Rosenberg’s annual salary was $37,600, and after living and debt expenses, his monthly net loss was $1,500.

Traditionally, unlike mortgages or credit card debt, student loans cannot be discharged in bankruptcy. There are exceptions, however, namely if certain conditions regarding financial hardship are met.

The Brunner Test: Financial Hardship

Those conditions are reflected in the Brunner test, which is the legal test in all circuit courts, except the 8th circuit and 1st circuit. The 8th circuit uses a totality of circumstances, which is similar to Brunner, while the 1st circuit has yet to declare a standard.

In plain English, the Brunner standard says:

  1. the borrower has extenuating circumstances creating a hardship;
  2. those circumstances are likely to continue for a term of the loan; and
  3. the borrower has made good faith attempts to repay the loan. (The borrower does not actually have to make payments, but merely attempt to make payments – such as try to find a workable payment plan.)

There are variances across federal districts, but that’s the basic framework. To discharge student loans through bankruptcy, an Adversary Proceeding (a lawsuit within bankruptcy court) must be filed, where a debtor claims that paying the student loan would create an undue hardship for the debtor.

So, Can You Now Discharge Student Loans In Bankruptcy?

This is only one legal ruling. That said, federal judges and Democrat and Republican members of Congress are open to changing the law to make it easier for borrowers to discharge their student loans in bankruptcy. While these tactics may be welcomed by some student loan borrowers, critics may question whether judges should actively try to circumvent the existing law (suggesting that Congress, and not judges, should make the law.

To Read More, Click Link Below

https://www.forbes.com/sites/zackfriedman/2020/01/10/student-loans-bankruptcy/

University of Phoenix to cancel $141 million in student debt

December 12, 2019

By Scott Olson, NBC News

The University of Phoenix and its parent company have agreed to pay $50 million in cash and cancel $141 million in student debt to settle allegations of deceptive advertisement brought by the Federal Trade Commission.

The deal, announced Tuesday, settles a dispute over an ad campaign the for-profit college launched in 2012 touting partnerships with companies including Microsoft, Twitter and Adobe. It suggested the school worked with those companies to create job opportunities for students, even though there was no such agreement, investigators found.

Image: University Of Phoenix

The Federal Trade Commission said the settlement is the largest the agency has ever obtained against a for-profit college.

“Students making important decisions about their education need the facts, not fantasy job opportunities that do not exist,” said Andrew Smith, director of the Federal Trade Commission’s Bureau of Consumer Protection.

The University of Phoenix said in a statement that much of the dispute focused on a single ad campaign that ran from 2012 to 2014. It said it agreed to the deal “to avoid any further distraction from serving students.”

“The campaign occurred under prior ownership and concluded before the FTC’s inquiry began. We continue to believe the University acted appropriately,” the company said.

Apollo Education Group owns the University of Phoenix. The Arizona-based for-profit college chain has 55 campuses across the nation and teaches thousands of students through its online programs. It’s the nation’s largest recipient of GI Bill tuition benefits for military veterans.

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https://www.nbcnews.com/news/us-news/u-phoenix-agrees-cancel-141-million-student-loan-debt-n1099681

‘I’m working until I’m 75’: Factory worker describes family’s student debt nightmare

December 2, 2019

By Aarthi Swaminathan

Student debt isn’t just a student problem. Across the U.S., many parents also struggle with the burden of student loans.

A recent survey by Freedom Debt Relief found that 37% of 1,506 American adults said their children’s college education cost has made them feel financially overwhelmed. And 20% said that the stress has contributed to mental or emotional health issues.

More than 40% said education costs impacted their retirement plan, with 31% indicating that they had “given up retiring when they initially desired.”

Yahoo Finance spoke with one parent in a particularly difficult student loan situation: a 60-year-old factory worker from Scranton, Pa., who had cosigned a loan for his son. (The man, whom we’ll call Frank, asked for anonymity to protect his son.)

Student debt is affecting parents of borrowers‘It’s not nice for a hard-working middle class family’

Frank’s student debt experience began when his son got into a college. As a “middle-class working family” that brings in about $75,000 a year, Frank and his son started borrowing.

The son fell seriously ill after attending the school for one-and-a-half years and dropped out. After his health improved, the son decided to resume his education at a different school. All the while, both father and son continued to borrow.

The expenses began mounting: The family had a refinanced mortgage and credit card debt, as well as home and car insurance to pay. On top of that, they had recurring medical bills. And there was the possibility of more kids going to college.

“[With] some of my bills, I was in no position to barely help myself,” Frank said.

To Read More, Click Link Below

https://finance.yahoo.com/news/student-debt-family-burden-175514385.html

U.S. Education Dept. Cancels Loans for 1,500 Defrauded Students

November 11, 2019

By Stacy Cowley, The New York Times

Education Secretary Betsy DeVos has been under pressure from lawmakers and the courts over her handling of student-loan relief programs.

About 1,500 students who attended two art institutes that were part of the sudden collapse of a career-school chain this year will have their federal loans canceled, Education Secretary Betsy DeVos said on Friday.

It was a rare victory for borrowers seeking debt relief from a department that, under Ms. DeVos, has frozen or curtailed relief programs for students who claim that schools defrauded them. Borrowers who attended the two schools, the Art Institute of Colorado and the Illinois Institute of Art, sued the department last month, seeking to have their loans eliminated.

“Students were failed and deserve to be made whole,” Ms. DeVos said. Students who attended the schools from late January 2018 through the end of last year, when they shut down, will have their loans for that period canceled, the department said.

Borrowers will still generally owe on federal loans they took out before Jan. 20, the department said in an email sent to borrowers on Friday. Some people, however, may qualify to have all of their loans eliminated through the department’s closed school discharge program.

The decision was the latest twist in the messy unraveling of the chain, Dream Center Education Holdings, which owned dozens of campuses under the Art Institutes, South University and Argosy University brands.

Dream Center was owned by a Christian nonprofit that acquired the troubled group of for-profit schools in late 2017. It closed some schools within a few months, and the entire chain abruptly shut down barely a year later after millions of dollars in federal financial aid funds that were owed to students went missing. The money has still not been recovered.

The accreditation for the Art Institute’s Colorado and Illinois campuses was removed by the Higher Learning Commission in January 2018, around the time Dream Center took them over. The loss of certification meant that students risked being unable to transfer their credits to other schools or have their credentials recognized by employers.

Officials at the Art Institutes never told students that the campuses had lost their accreditation, according to court filings and the Higher Learning Commission.

By law, the Education Department is not allowed to release federal student loan funds to for-profit schools that are not accredited. But the department sent more than $10 million to the two schools and, according to emails and other records, told Dream Center officials that it was working to allow schools to become retroactively accredited.

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My aunt cosigned my student loans, but 12 years later I’m determined never to do the same

November 5, 2019

By Kelly Burch, Business Insider

college graduate student

During my freshman year of college, there was a five-figure gap between what my financial aid covered and what tuition cost. In hindsight, I should have seen that bill and run to my nearest community college, since the four-year university I was planning to attend was clearly unaffordable.

Instead, I turned to private student loans to cover the cost. As a broke 18-year-old with no official work history, I couldn’t get approved for a private student loan on my own. My parents couldn’t either because of their credit histories. I was panicked, until an aunt offered to cosign an $18,000 loan.

I was incredibly grateful at the time, and still am today. That loan allowed me to get started in a journalism program that kickstarted my career. However, in the 12 years since that loan was dispensed, I’ve learned a lot about cosigning.

I recently refinanced the loan in my own name, and I’ll never ask for a cosigner again. And though I am incredibly grateful for the gift my aunt gave me, I’ll never be a cosigner myself. Here’s why.

Cosigning affects you, even if everything goes well

Many people think a cosigner is merely a backup payee. If the primary borrower doesn’t pay, the lender can go to the cosigner, who is also responsible for the loan. If you think about cosigning this way, there’s little risk, as long as you believe the primary borrower will hold up their end of the deal.

However, that’s not the full picture. When you cosign a loan, it shows up on your credit report. Lenders consider cosigned debt just the same as they would consider debt where you’re the primary borrower. It affects your all-important debt-to-income ratio, which can limit your ability to get additional credit in the future. That means that even if the person you cosigned for is doing everything right, their loan can still change your financial situation.

To Read More, Click Link Below

https://www.businessinsider.com/aunt-cosigned-student-loans-ill-never-cosign

Advice for getting student loans forgiven, from borrowers who did it

October 17, 2019

By Ana Helhoski, MarketWatch

Pursuing student loan forgiveness entails a decade of meticulously recorded payments, hours on hold with your servicer and infinite patience. Success, however, arrives without much fanfare.

Public defender Shelly Tomtschik was in court when she got the email notifying her that the quest was over:

“Congratulations! After final review of your Public Service Loan Forgiveness (PSLF) application and payment history, we have determined that you have successfully made the required 120 monthly payments in order to have the loans listed below forgiven.”

“It wasn’t hitting me,” says Tomtschik, 40, of Baldwin, Wisconsin. “I thought it would be more official or something.”

Tomtschik is among the first federal student loan borrowers to get their loans canceled tax-free through the federal Public Service Loan Forgiveness program. The program, launched in 2007, forgives any outstanding balance after 120 qualifying payments for borrowers who take traditionally lower-paying public service jobs.

But the process is tricky. Just 864 of the 88,006 applications filed had been approved as of March 2019, based on the most recently available data from the Education Department. The average amount forgiven: $59,244.
What it takes to get public student loan forgiveness

To qualify for PSLF, borrowers must make 120 monthly, on-time payments while working full time in public service for a qualifying employer. You also must:

Ensure you have only federal direct loans. Some borrowers will need to consolidate into a direct loan. Private loans aren’t eligible.

Enroll in an income-driven repayment plan. Your payments will be a portion of your discretionary income.

Make sure your loans are serviced by FedLoan Servicing, the only company that processes PSLF applications. You can do this by submitting an employer certification form.

Submit employer certification forms to prove you worked for a qualifying government or nonprofit employer while making all 120 payments.

Apply while you’re still working for an eligible employer.

Tomtschik and another successful applicant, Bonnie Svitavsky, a librarian in Washington state, might add another requirement: Document everything.

Svitavsky, a 38-year-old supervising librarian at Pierce County Library, made payments for two years before she found they wouldn’t count toward PSLF. That’s because her loans weren’t enrolled in an eligible repayment plan.

“It was disappointing, to say the least,” she says.

To avoid any future surprises, Svitavsky set alarms to submit certification forms and logged the details of calls to FedLoan.

To Read More, Click Link Below
https://www.marketwatch.com/story/advice-for-getting-student-loans-forgiven-from-borrowers-who-did-it-2019-10-07

In The News: FTC to pay more than $5.4 million to people scammed by student loan debt relief fraudsters

October 3, 2019

By Jeanette Settembre, Fox Business

The fraudsters, who made off with at least $20 million, were required to pay up under a 2018 settlement with the FTC, the organization announced in a press release Monday.

The FTC alleged that Los Angeles-based companies using names like Alliance Document Preparation LLC, and Post Grad Aid, bilked millions of people trying to reduce or eliminate their student loan debt. They used social media platforms like Facebook to market their fake relief programs and misrepresented that they were affiliated with the U.S. Department of Education or the loan servicers. The defendants falsely claimed that consumers who paid an upfront fee of up to $1,000 were qualified or approved for permanently reduced monthly payments or loan forgiveness.

The FTC is sending 39,734 checks to people who lost their money, totaling $136.48 each on average. The checks will expire after 60 days, the FTC said, noting: “The FTC never requires consumers to pay money or provide account information to cash a refund check.”

Borrowers have reported receiving emails, letters and phone calls offering them financial relief from their federal student loans. In most cases, these companies don’t offer any relief at all and just take people’s money. One of the most common ways fake companies try to swindle those saddled with debt is by claiming they’ll get rid of student loans without the person having to pay it back, for a small fee. The only legitimate reasons for not paying student loans may include permanent disability, identity theft or in some cases, school closure.

America’s $1.6 trillion student loan crisis has some presidential candidates proposing to cancel student debt and make public college free. And state legislatures are cracking down on student-loan companies.

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https://www.foxbusiness.com/money/ftc-to-pay-more-than-5-4-million-to-people-scammed-by-student-loan-debt-relief-fraudsters

In The News: Millennials have an average of $28,000 in debt—and the biggest source isn’t student loans

September 20, 2019

By Megan Leonhardt, CNBC

It may seem like student loans and millennials are inextricably linked. But a new survey shows that education bills are not the leading source of debt among this generation.

Millennials (defined here as ages 23 to 38) have racked up an average of $27,900 in personal debt, excluding mortgages, according to Northwestern Mutual’s 2019 Planning & Progress Study. The findings are based on a survey conducted by The Harris Poll of over 2,000 U.S. adults.

The biggest source of debt? Credit card bills. And that’s a “troubling” trend, Chantel Bonneau, a financial advisor with Northwestern Mutual, tells CNBC Make It.

“One issue that a lot of millennials have is that they have not wanted to sacrifice their lifestyle, even though they have student loans or lower incomes,” Bonneau says. “That has left us in this spot where they’ve accumulated a significant amount of credit card debt.”

To Read More, Click Link Below:

https://www.cnbc.com/2019/09/18/student-loans-are-not-the-no-1-source-of-millennial-debt.html

 

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