Sidestep your student loan payments - Debt settlement shouldn’t be a slam dunk choice

Have you considered debt settlement for your student loans?

If you’re someone who has defaulted on his federal student loan debt, or gone without making payments for at least a year, you may feel that you don’t have any other option but to drown in debt. But did you know that you still have the choice of settling your debt with the collection agency to pay an amount which is less than what you owe? Well, if you’re a grad who is looking for ways to sidestep his student loan payments through a debt settlement option, you’re off to a tough road! Unlike credit card debt and personal unsecured loans, private and federal student loans can’t be discharged through bankruptcy, according to the US Department of Education. Since student loans are tougher to shake off than all the other kinds of debt, there could be remedy for those who are fiscally snowed under by student loans. Read on the concerns of this article to educate yourself on some facts on student loan debt settlement.

How about considering an income-based repayment plan for student loan debt settlement?

Is an alternative affordable repayment plan all that you want? If answered yes, how about considering the income based repayment plan? Through this plan, the monthly payment will be calculated on a percentage of your discretionary income. This is the amount, by which the adjusted gross income surpasses 150% of the poverty line. For most borrowers, this is the most affordable option as it is based on the income of the student and not on the total amount that you have borrowed. In case your income is less than 150% of the poverty line, the monthly payment will be based on the income based repayment plan.

Debt settlement for your defaulted student loan debt

If you wish to settle your defaulted federal student loan debt, you should be able to make a lump sum payment to pay off a major portion of the balance of the loan. A compromise offer will demand you to pay back the settlement amount entirely within a span of 90 days. There are some common circumstances where the defaulted borrower will make a lump sum payment like obtaining an inheritance, winning a lottery and getting a big bonus at work.

The key to obtaining a good debt settlement deal is knowing the available options for settling your debt with the collection agency. The US Department of Education appoints the private debt collection agencies to make different kinds of debt settlements without getting prior approval.

1. Waiving off or eliminating all the collection charges and the borrower pays the present principal amount and the accrued interest rate
2. Payment of minimum 90% of the present principal and interest rate
3. Payment of the present principal balance and half of the  accrued interest rate which is still unpaid.

In case you’re someone who has offered an amount which is less than the aforementioned compromises, the collection agency will require getting approval from the US Department of Education. This is a reason why non-standard compromises aren’t much common. 

Calculating the compromise and minding the taxes

When debt settlement is the only option, the students should prove that the collection fees and the interest amount have burgeoned so rapidly that it’s impossible to pay back. Once the lender agrees, you should make it within 60-90 days. Once the settlement figure is decided, you have to check the tax implications too. Any debt that is forgiven is subject under tax and therefore the borrower has to make sure he knows this liability of his.

Therefore,when you’re saddled with federal student loan debt, you can take resort to debt settlement in collaboration with the debt collection agencies. Get everything in writing and make sure you repay 100% of what is paid.

Community colleges are assisting students to graduate without debt

How Community Colleges & Others Can Help the Cost of Education

Cost of education is skyrocketing unbelievably. As a consequence, more and more people are struggling to deal with their student loan debt. As per the current reports, student loan debt in U.S. has already crossed the $1 trillion limit. In such a circumstance, the Obama government considers it important to find some effective solution to curb the higher cost of education as soon as possible. For that purpose, Obama has recently announced a plan to make college affordable for every student in America. There are basically three proposals in the plan - (a) linking federal student aid to the overall performance of the college that is based on the yet to be developed rankings; (b) evaluating the scorecards of colleges to help people select the right college according to the performance; (c) expanding the eligibility criteria for Pay As You Earn repayment program to assist students in managing debt. All these strategies are quite new and yet to be applied officially. Still, some states have already applied these ideas to increase the education affordability. For instance the community colleges in California follow some of these ideas to assist students to manage the cost of education.

 

Do Community Colleges Truly Help Lessen Costs?

The fees structure of California community colleges has been judged to be a bit ambiguous by many economists. The current rate for a single unit is $46. This is supposed to be a reasonably low rate. But, the combination other costs associated with education like the textbooks, lodging for students and the transportation cost, can increase the overall expense up to $17,000 in a year. The Institute for College Access and Success found this data in their recent research. This much of expense can be difficult for an average student to manage.

To make things more convenient for the students, the Board of Governors of the California Community College formed The Student Success Task Force or the SSTF in the academic year 2011-2012. The 20-member task force came up with 22 recommendations which are similar enough to the president’s plan. Most of the economists feel that the plan Obama has decided to implement may help to make education affordable for all. The community colleges have already taken the initiative to implement the recommendations by SSTF, so it’s easier to assume how the president’s plan may develop in future.

According to the Student Success Act of 2012, students must make satisfactory progress in academics to be eligible to waive the enrollment fees. The provision took effect on 1st January 2013. The standards for academic progress will work in accordance with the other standards compulsory to get financial aid from federal and state government. As a consequence, the community colleges have become more responsible to support students for better academic performance so that they can achieve all their goals without any financial obligation.

The Student Success Scorecard, introduced by the SSTF, provides students with all the needed information about the college rankings. The scorecard offered by the SSTF will provide all the necessary information about a college’s retention rate, transfer rate, overall success rate, graduation rate completion and so on. With the help of this information, students may check the ranking and select the right college with better success rate. This will ensure a better career for students and thus they will be able to live a debt free life.

There is still much more to do to keep student loan debt under control. By following the recommendations by SSTF, community colleges are trying to assists students to get affordable education without much trouble. As student loan debt is still excluded from bankruptcy, it becomes more essential for students to get affordable education to graduate without debt. However, the techniques that community colleges follow must be adapted by every college to make education actually affordable for all.

High Blood Pressure Linked to Student Loan Debt!

Did you know that high blood pressure and poor health in young adults is linked to debt?

Just think about all of that student loan debt that some young adults have acquired. The average amount of student loan debt in 2012 was about $29,000.

Did you know that this student loan debt could be making you SICK and causing you to have high blood pressure?

Researchers at Northwestern University conducted a study which discovered that young adults between the ages of 24 to 32 with high financial debt/ student loan debt were more likely to have higher blood pressure readings AND were more likely to feel stressed and depressed.

This study, which was published in the Social Science and Medicine Journal, found that young adults with higher debt had a 1.3% increase in their diastolic blood pressure reading. 1.3% may not seem like a huge increase, however, an increase of the diastolic blood pressure by only two points will increase the risk of a stroke by 15 percent.

By: Shanice Miller, founder of DebtFreeCollegeGrad.com

Is 4 Years of College Worth A Lifetime of Debt?

By: Shanice Miller, founder of DebtFreeCollegeGrad.com

Recently, there have been a lot of articles surfacing about skyrocketing college costs and the effects that student loan debt has on graduates. Usually, the student loan debt that graduates end up with is so abundant that it puts a serious burden on them. The burden is so great that it poses the question, "Is 4 Years of College Worth A Lifetime of Debt?"

Yahoo! Finance spotlighted "7 College Graduates Whose Lives Were Wrecked by Student Loan Debt." These 7 people's stories and experiences can help you be the judge--- Is 4 years of college worth a lifetime of debt?

"Stephanie Snyder, 44, graduated in 2005 with a B.A. in Public Administration. She worked three jobs at one time to pay down her $38,000 student loan balance."

"Carla Ruiz, 53, earned her MBA in 2006. Today, she's $120,000 in debt and lives in an attic apartment."

"Kyle Laffin, 25, asked his dad to co-sign a $100,000+ private student loan for a B.A. in accounting. Now, he has $1,200 monthly payments. His dad is working two jobs and dipping into his retirement savings to help him pay it down." 
  
"Since earning his MBA in 2004, Michael Pope, 38, has been bankrupt, homeless, and unable to find a job that pays well enough to tackle his $140,000 loan debt."

I've only summarized 4 of the 7 people in the Yahoo! finance article whose lives were wrecked by student loans. (To read the full article, go to: finance.yahoo.com/news/7-college-graduates-whose-lives-were-wrecked-by-student-loan-debt-151703790.html?page=all)

So back to the question, "Is 4 years of college worth a lifetime of debt?" After reading these stories, I think not. College is supposed to help you obtain a better life, but being submerged in debt will not help you accomplish that goal.

Would you trade a lifetime in debt for a college degree? Leave your comment below.

Parents, Are You To BLAME For Student Loan Debt???

Student loan debt is getting out of control!

According to the Wall Street Journal, "Americans are borrowing more to pay for college." By the beginning of 2012, Americans owed $904 BILLION in student loan debt which is an 8% increase from just last year. So who is to blame for all of this student loan debt?

Are colleges to blame for this excessive student loan debt?

With rising tuition and fees which cause the students to borrow more just so they can stay in college and get a degree to hopefully get a "good" job when they graduate, it is a possibility.

Or is it the government's fault for all of this student loan debt?

The government should be increasing the amount of grants given to students to help balance out and help the students keep up with the increasing college costs, right?

Actually, the PARENTS are to blame for student loan debt!

When I was in college, I encountered too many students who chose the college they attended just because their friends were going there or the campus looked nice or "it was far away from home." The truth of the matter is soon-to-be college students don't really take into consideration the cost of the college. At that age, they are just so excited to go and are only thinking with their emotions. The mounting student loan debt that they sign up for each year isn't quite real yet. It just seems like another form that they have to fill out in order to take college classes. It doesn't get "real" until Sallie Mae sends them a paper in the mail stating that their first student loan payment will be due 6 months after graduation and by that time it is too late. They have acquired $30,000 or $60,000 or even $120,000 in student loan debt (not including interest) and don't know where they are going to get the money to pay it back with the entry-level positions that they have accepted.

Parents, you HAVE to be the ones to think logically in this situation. Sit down with your soon-to-be-college student and have them understand the cost of attending the college they want to go to. Compare it to the costs of some of the other colleges that they were accepted into as well. Have your child understand that the cost of attending the college is for each year, not the entire 4 years. So if you have to take out student loans in the amount of $15,000 this year, you need to multiply that by 4 (at the very least) so their total student loan debt will be $60,000 that they will have to pay back, not just $15,000. Even tell them how much the monthly payments will be that they will have to pay back so they understand and are aware. Parents, you MUST get your child to think about the future, not just the present. Right now, they are just signing a paper. But in the future, that signature is going to cost them more than they ever imagined.

By: Shanice Miller, Founder of DebtFreeCollegeGrad.com

Parents COURT ORDERED to Pay Back Child's Student Loan Debt!

I ran across this article about parents being court ordered to pay back their child's student loan debt from the Wall Street Journal not too long ago and was shocked and amazed by what it said.

The article states, Lenders who extended $132,000 in student loan debt to Kristina Pietras before she dropped out of the University of Toledo knew she couldn’t afford to pay back the student loan debt.

But they convinced a bankruptcy judge that her parents could pay back the student loan debt.

Yes, her parents were COURT ORDERED to pay back the daughter's $132,000 student loan debt. The parents even tried to file bankruptcy, but even filing for bankruptcy didn't make the student loan debt go away.

Wow! Parents, BEWARE! You could, in fact, be held responsible for your child's student loan debt if you co-sign on a loan.

The articles continues on to discuss other cases where parents, and even grandparents, were court ordered to pay back the student's student loan debt when the student defaulted on the loan.
Could you imagine having to pay back another person's student loan debt? You didn't even get to reap the rewards of the student loan debt, but you are still responsible for it.
So the moral of this story is parents, only sign your name as a co-signer for the student loan debt if you are prepared to pay them back yourself. You don't have to get student loan debt to pay for college. There are other options.

If you would like to hear about other options that are available to fund your child's college, email me at: info@debtfreecollegegrad.com

To view the article, go to: http://blogs.wsj.com/bankruptcy/2012/10/29/soured-student-loans-bankrupt-parents-grandparents/

Leave a comment letting me know how you would feel and what you would do if you were court ordered to pay back your child's student loan debt.

By: Shanice Miller, Founder of DebtFreeCollegeGrad.com