Showing 48 posts tagged loans
“Lending standards have gotten suffocatingly tight in the wake of the housing bust, and young people with too much student debt compared to their income, or who’ve fallen behind on their loan payments, may simply be unable to qualify for a mortgage. As the Fed noted, student borrowers now also have worse credit scores, on average, than their ed-debt-free peers.”
“Since the Consumer Financial Protection Bureau highlighted a year ago that student debt had surpassed the $1 trillion threshold, others have warned about the impact on the broader economy. Last year, the Treasury Department’s Office of Financial Research described how student debt might impact demand for mortgage credit. The Federal Reserve Board’s open market committee discussed whether student debt is impacting household spending. And just a few weeks ago, the Financial Stability Oversight Council discussion of student debt in its annual report added to the chorus.”
Report: Student Debtors Under 30 Are Shying Away From Buying Homes, Cars
If life were a 1950s sitcom, college graduates would zoom out of school, get a job, buy a house, buy a car and get married. But these days, student loans are just one of many reason debtors under 30 are staying far away from the housing and auto markets. That, and life isn’t a sitcom. A new report from the Federal Reserve Bank of New York shows that this age group could be a drag on the economy by the very fact that they aren’t participating in it.
» via Consumerist
“Higher education loans are meant to subsidize the cost of higher education, not profit from them, especially at a time when students are facing record debt,” said Ethan Senack, the higher education advocate at the United States Public Interest Research Group, which is issuing the brief with the United States Student Association and Young Invincibles, an organization for people 18 to 34. “The revenue from student loans should be used to keep education affordable, and should never be used to pay down the deficit or for other federal programs,” Mr. Senack said.”
Neither party has cash for student loan rate fix
Incoming college freshmen could end up paying $5,000 more for the same student loans their older siblings have if Congress doesn’t stop interest rates from doubling.
Sound familiar? The same warnings came last year. But now the presidential election is over and mandatory budget cuts are taking place, making a deal to avert a doubling of interest rates much more elusive before a July 1 deadline.
“What is definitely clear, this time around, there doesn’t seem to be as much outcry,” said Justin Draeger, president of the National Association of Student Financial Aid Administrators. “We’re advising our members to tell students that the interest rates are going to double on new student loans, to 6.8 percent.”
» via Yahoo! News
Rates on Some Student Loans Again Set to Double
On July 1, just like last year, rates on subsidized loans made to low- and moderate-income undergraduates under the federal Stafford program are scheduled to double. Again, like last year, the rate is set to rise to 6.8 percent from 3.4 percent for new loans made after June 30.
In case you’ve forgotten, here’s a recap. The College Cost Reduction and Access Act of 2007 reduced rates on subsidized Stafford loans over four academic years, to the current 3.4 percent from 6.8 percent. But the rates are scheduled to bounce back up, unless Congress acts to extend the current rate.
Last year, Congress extended the lower rates for one year. So, here we are again.
» via The New York Times (Subscription may be required for some content)
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Why delinquent student loans are the fuse on America’s next debt bomb
The above graph comes from this week’s New York Federal Reserve’s quarterly report on American credit, which offered mostly good news: Overall household debt remains below the 2008 peak, and delinquency rates broadly improved. But there’s one asset class where delinquency rates and borrowing are both increasing: student loans for higher education. These are also the only debt that continued rising through the recession, tripling between 2004 and 2012.
There are now more people in the US borrowing money to pay for college than to pay for cars or credit cards. What’s more worrisome? Some 17% of the borrowers are delinquent on their loans, up from 10% in 2004. And that’s not even the real delinquency rate, since it’s the percentage among all borrowers, including those who are still in school and thus aren’t yet repaying their debt. If you remove those from the total, the delinquency rate rises to 30%.
» via Quartz
Yale Suing Former Students Shows Crisis in Loans to Poor
Needy U.S. borrowers are defaulting on almost $1 billion in federal student loans earmarked for the poor, leaving schools such as Yale University and the University of Pennsylvania with little choice except to sue their graduates.
The record defaults on federal Perkins loans may jeopardize the prospects of current students since they are part of a revolving fund that colleges give to students who show extraordinary financial hardship.
Yale, Penn and George Washington University have all sued former students over nonpayment, court records show. While no one tracks the number of lawsuits, students defaulted on $964 million in Perkins loans in the year ended June 2011, 20 percent more than five years earlier, government data show. Unlike most student loans — distributed and collected by the federal government — Perkins loans are administered by colleges, which use repayment money to lend to other poor students.
» via Bloomberg
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Student Debt Isn’t Rising As Fast As You Think
The good news is that state schools educate about 60 percent of bachelor’s seekers. And so while the average loan balance for all new four-year college grads jumped by about half during the Clinton era, it edged up just 13 percent over the next eight years.
» via The Atlantic
Report Says Average Student-Loan Debt Is Up to $26,500
The average student-loan debt of borrowers in the college class of 2011 rose to about $26,500, a 5 percent increase from about $25,350 the previous year, according to a report by the Institute for College Access and Success’s Project on Student Debt.
The project said that about two-thirds of those who earned bachelor’s degrees last year had loans. About one-fifth of the debt was from private student loans, which have fewer consumer protections and repayment options than federal loans.
» via The New York Times (Subscription may be required for some content)
