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Avoid Loan Delinquency and Default
Tweet Share on Facebook March 30, 2011 Comment (8)Caveat emptor! Your student loan documents probably do not explicitly state "let the buyer beware"—but maybe they should. A sobering report released this month by the Institute for Higher Education Policy, "Delinquency: The Untold Story of Student Loan Borrowing," suggests that a majority of students struggle to repay their loans.
As the cost of a higher education has exponentially increased over the last couple of decades, common sense and anecdotal evidence has suggested this is the case. Unfortunately, policymakers have relied solely on default rates as a measurement tool. Default rates alone paint an incomplete picture, because they exclude borrowers who have difficulty repaying their loans but avoid default.
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Income-Based vs. Income-Contingent Loan Repayment
Tweet Share on Facebook March 23, 2011 Comment (1)Last week, we looked in detail at one key element of the breakthrough College Cost Reduction and Access Act (CCRAA)—Income-Based Repayment (IBR). But since 1994, well before passage of the CCRAA, the federal government has had a program of Income-Contingent Repayment (ICR). So what are the similarities and differences between IBR and ICR, and which will best fit your needs?
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Repay Student Loans Based on Your Income
Tweet Share on Facebook March 16, 2011 Comment (6)The College Cost Reduction and Access Act (CCRAA) has been a breakthrough for everyone looking to afford a higher education. There are two distinct components related to loan repayment: The first, discussed below, is Income-Based Repayment (IBR) that allows graduates to pay back their federal loans on a sliding scale based on their income. The second, discussed in last week's blog, is Public Service Loan Forgiveness (PSLF), which provides forgiveness on federal educational loans for people who work in the public service sector for 10 years.
It is very important that readers understand that these two provisions in CCRAA are not dependent on one another. Someone can participate in IBR without also participating in PSLF. In fact, IBR provides help to a much larger group of people than PSLF, because IBR does not have a "qualifying employment" element.
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Help Available for Public Servants Drowning in Debt
Tweet Share on Facebook March 9, 2011 Comment (8)A number of articles have appeared in the press in recent weeks about students graduating with advanced degrees, mortgage sized-debts, and few job prospects to pay it back. These stories come as no surprise to those of us who advocate for educational debt relief programs. The amount of student debt that many young professionals have incurred is indeed staggering—even if the graduate has a job.
Law school students have been the focus of many of these articles. According to the American Bar Association, the average annual private law school tuition has more than tripled since 1985, growing from $7,500 per year to $34,000, with many top-tier schools now exceeding $45,000. It is not uncommon for law school graduates to accumulate $150,000 in educational debt. This amount of debt takes years and years to overcome.
