Smart Borrower Blog

Archive for the ‘Federal Student Loans’ Category

Consumer Borrowing Makes Biggest Jump since 2001

Consumers borrowed money at a higher rate in November than they have in a decade, according to the latest report from the Federal Reserve. Total consumer borrowing grew $20.4 billion in November to $2.48 trillion, posting the largest monthly gain since November 2001 when loans increased by $28 billion. The new total is almost back up to pre-recession levels and significantly above the September 2010 decrease of $2.39 billion. Credit card borrowing and other revolving credit accounts jumped up $5.6 billion, the largest increase since March 2008 and the third consecutive monthly gain. Auto loans also rose $14.8 billion, almost... more »

Student Loan Debt Reaches Record Levels

Total student loan debt in the U.S. has surpassed national credit card debt, according to new figures from the Federal Reserve Bank of New York. New student loan funds borrowed last year grew to $100 billion dollars, a record high, and now total outstanding student loan debt has reached $1 trillion for the first time in history. Full-time undergraduate students borrowed an average of $4,983 last year, according to the College Board. That figure is more than double the average from 10 years ago, after adjusting for inflation. In the wake of the current economy, default rates on student loans... more »

Student Default Rate Makes Sharp Rise

Student loan borrowers are defaulting at a much higher rate, according to a new study from the Department of Education. This is yet another testament to the bleakness of the job market, as well as falling graduation rates. The Department of Education reported that the rate of default stood at 8.8 percent in 2010, up from the 7 percent in the fiscal 2008 year. Student loan borrowers at for-profit colleges performed the worst in that group. For the roughly 1 million students whose first payments were due October 1, 2008, 15 percent were more than 270 days late on their... more »

Debt Deal Cuts Student Savings

If the current debt ceiling deal is passed by Congress on Monday as scheduled, graduate students around the country will soon be faced with pricier college loans. In an attempt to safeguard Pell grants for low-income undergraduate students, the proposed legislation would eliminate a popular interest-subsidy loan for graduate and professional students. At the present, the government pays the interest on these loans while students are in school and for six months thereafter. If the law is approved, as of July 1, 2012, graduate and professional students will be responsible for all of that interest. Neither the accrued interest or... more »

Is Sallie Mae Beating The Odds?

Sallie Mae has had to succumb to numerous changes over the last year. Once known as the student loan lender giant, the company has had to make deep cuts, move its headquarters and refocus their business. Last year when new student loan regulations forced them out of the Federal backed student loan industry, many thought the company might not make it. A year later they are surprising analysts with higher than expected loan originations and a drop in loan delinquencies. Sallie Mae during quarter 2 of this year posted a core earnings increase of 23%. While they still posted a... more »

New For-Profit College Rules – Are They Enough?

New rules proposed last week by the Obama Administration are designed to protect students and federal dollars from abuse at for-profit colleges. Data uncovered in the past several years has shown that students attending for-profit colleges have the highest post-graduation default rates of any higher education group. According to Senator Tom Harkin (D-Iowa), students at for-profit colleges receive roughly 25 percent of government student aid account for 46 percent of all defaults. And students of for-profit colleges only make up 10 percent of the nation’s total graduates. Senator Harkin has led five panels on this issue in the past year.... more »

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 »

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 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 »