Smart Borrower Blog

Archive for the ‘Student Borrowing’ Category

Not All Student Debt Created Equal

Student loans have generally been considered a “good” or “safe” debt, as they are an investment and allow the borrower to significantly increase income potential. In fact, the College Board reported last fall  in 2008 the median income for those who earned a bachelor’s degree and had full-time work was $55,700. That is $21,900 more than the high school graduate median income. What’s more, the bachelor’s degree recipients were much less likely to be unemployed. So there’s no reason to worry about rising student debt, with a likely total of more than $1 trillion this year, right? Or that student... more »

Student Loan Debt May Exceed A Trillion By Years End

According to an article on NYTimes.com, student loan debt could very well pass the trillion dollar mark by year’s end. Just last year student loans surpassed credit card debt, and it did not stop there. With the economy continuing to be sluggish, coupled with colleges receiving less funding and raising their tuition, more and more students are being forced to borrow and borrow more than ever in the past. In 1993 only about half of those who graduated from college had student loan debt compared to today where 2/3 of all college grads are faced with paying back student loans.... more »

Student Loan Debt May Limit Career Options For Some Grads

According to an article on CBS Money Watch, many students graduating college today are faced with such high debt that they are not able to pick the career of their first choice because the job wouldn’t pay enough to pay back their student loans. Add credit card debt to the student loans and these young graduates are faced with pressures that generations before them never had to deal with. While smart borrowing is advocated to get an education, there are many students today that are borrowing to the max and using part of their loan money to fund a lifestyle... more »

Student Loan Default Rate Rises Even More

Earlier this month new data releases by the Department of Education revealed that the default for student loans has gone up. For those students who started repayment on their loans in 2008, defaults were up to 13.8% compared to 11.8% of years prior. The percentage shows those students who defaulted on their loan during the first three years of repayment. According to education department officials and other student lending experts, college graduates have had an extremely difficult time over the past few years in gaining sustainable employment. Additionally, since the majority of the defaults are from college graduates who attended... more »

Consumer Group Calls for More For-Profit College Regulation

For-profit colleges received another poor review for their student loan practices in a recent study from the National Consumer Law Center’s Student Loan Borrower Assistance Project. The report titled “Piling It On: The Growth of Proprietary School Loans and the Consequences for Students” dings for-profit schools for creating private student loans with high fees and “predatory” terms, while criticizing the government for its lack of regulation of the situation. The main problem seems to stem from the “90-10” law that requires for-profit schools to prove that at least 10 percent of their revenue comes from non-federal student loan sources. In... more »

Sallie Mae Acquires $27 Billion in Federal Student Loan Assets

Sallie Mae announced today that they completed a deal last week with the Student Loan Corporation, owned by Citibank, to acquire $27 billion in guaranteed federal student loans as well as other related assets. Negotiations for the deal began back in September between the two companies and were finalized on December 31, 2010. With the addition of these loans, Sallie Mae adds to its student loan customer base an additional 1.3 million loan holders. The company now oversees over $200 billion in federally-funded student loans and in addition, the company personally backs $36 billion of privately-funded student loans. They are... more »

For Profit College Student Loan Defaults Projected to Approach Fifty Percent

New data released by the Education Department this week shockingly shows projected student loan defaults from for profit colleges is approaching 50%. 46.3% of federal loans that were taken out by students attending for profit colleges and universities in 2008 are expected to go into default. This number is well above the national average of all colleges which is 15.8% for loans originating in 2008. Some are now paralleling this crisis to that of the mortgage market. Just as home loan lenders lured home buyers into risky mortgages they could not afford, higher educational institutions have been doing the same... more »

Wells Fargo Changes Student Loan Forgiveness Policy

Wells Fargo announced this week that effective this Friday, student loans will be forgiven at the time of the student-borrower’s death or if they are declared permanently disabled. Up until now if a student became permanently disabled or passed away, their student loan debt became the responsibility of the loan’s co-signer, which is most often a family member. When asked if this new policy was in light of legislation currently in the Senate that would require banks to explicitly detail the responsibilities of the co-signer if the borrower died or was permanently disabled, Wells Fargo was quick to say no.... more »

Undergraduates Borrowing More Than Ever Before

According to a new study that was released last month by the Pew Research Center, undergraduates are borrowing money at higher rates than ever before, leaving them with large student loan debt to deal with once they graduate. The study looked at student loans issued in 1996 and then again in 2008. Astonishingly, when an adjustment was made for inflation undergraduate students in 2008 on average borrowed 50% more money than those in 1996. Even more disturbing, the study showed that those borrowing for an associate’s degree borrowed twice as much in 2008 compared to students in 1996. The study... more »

For-Profit Colleges Blasted in Latest Report

Students at for-profit colleges may not be eligible for government grants and student loans in the future if the Obama Administration has its way. A new study from the Education Trust, a nonprofit research and advocate group, called “Subprime Opportunity: The Unfulfilled Promise of For-Profit Colleges and Universities,” claims that for-profit colleges are essentially like subprime mortgage lenders because they are “peddling access to the American dream but delivering little more than crippling debt.” Just like with subprime home loans, for-profit colleges seem to attract minorities and low-income students. The report found that 37 percent of all enrolled are minorities... more »