Nice Work, Rolling Jubilee!

You may have seen this article on NPR:

http://www.npr.org/blogs/ed/2014/09/17/348036877/these-people-can-make-student-loans-disappear

A group called Rolling Jubilee has purchased (and forgiven) the private student loan debt of a for-profit college's victims. This is some rare bit of sunshine in the student loan world. For more on Rolling Jubilee, visit their official website.

This is good news for victims of Everest College. Corinthian Colleges is the parent company of Everest. The CFPB (Consumer Financial Protection Bureau) just filed suit against Corinthian for its predatory tactics.


Also see the official CFPB website at: http://www.consumerfinance.gov/

MASH (Mansion, Apartment, Shack, House)

Do you remember playing MASH? Dreaming of a mansion on a hill, an apartment in the city, a shack in the woods, or maybe a three-bedroom house just like the one you lived in as a kid? I think this game was mostly a girl thing. My friends and I spent a great deal of time predicting our potential futures. The things I used to conjure up: where I would live, the type of dwelling I would raise my family in, the job I would end up with, number of kids, type of car, and my future mate.

Here’s a link to the game for those who do not know if it:

http://www.wikihow.com/Play-M.A.S.H

I used to list Florida, Russia (what was I thinking?), the Bahamas, and Oregon as the places to be. What came true is that I currently live in Florida and I found my mate. Obviously, while this game was a fun distraction, it had no actual bearing on my future.

Student loans, on the other hand, have the potential to shape one’s future in very real ways. But I don't recall playing that version of the game. Do you? The amount of loans one has influences all of the categories in the MASH game of life. Want to drive a new car? Want to purchase a new house? It may not be possible if your loan balance is too high. But don't despair. It's not all doom and gloom.

In many instances, you have control over how much your monthly payment on federal loans will be. Here is a breakdown on two popular repayment plans that are calculated from your loan balance and length of repayment (making them operate like mortgages, kind of).

1.     Standard Loan Repayment: This payment plan is called “standard” because it is what most students with federal loans are placed on unless they stipulate otherwise. Monthly payments will be the same amount for 10 years, at which point their loans will be paid off. This repayment plan is probably the best option for someone who has the financial means and desire to pay their student loans off quickly. The total amount of interest someone is obligated to pay will be the least under this payment plan.

Here’s an example….let’s say that your student loan balance is $26,946 with an interest rate of 3.9%. Per studentloans.gov, this is the average debt held by an undergraduate graduating from a 4-year public university. Under Standard repayment, the monthly payment would be $272.00, and this amount would remain constant for all 120 payments (equaling 10 years). The total interest paid would be $5,638.00,while the overall amount of the loan (principal + interest) paid equals $32,585.00. For more official information on the Standard plan, see: https://studentaid.ed.gov/repay-loans/understand/plans/standard

If you can afford the $272.00 per month and want to pay your loan off quickly, this is the way to do it. You can also pay extra each month to fulfill your loan obligations sooner. Now, let’s say that you have a low-paying job after graduation, but have prospects (experience, tenure, economic recovery) to get a higher paying one later in your career. Enter Graduated repayment…

2.     Graduate Repayment: The payments under this plan are somewhat flexible.

They start off smaller in the beginning (when a former student is earning less) and become larger at the end of 10 years (when he or she is earning more). At least that's what the assumption is. Like Standard repayment, monthly payments under the Graduated plan are calculated based upon the overall balance and time. Using the same balance of $26,946.00 and an interest rate of 3.9%, the first monthly payments would be $152.00. Towards the end of the 10-year loan, the payments increase to $455.00. The total interest paid is $7032.00, making the total amount (principle + interest) paid $33,979.00.

Notice that the Graduated repayment plan will cost a bit more in interest than the Standard repayment plan, but it might make sense if someone needs a lower monthly payment at the beginning of their student loan journey (seriously… “journey” is such a ridiculous euphemism for this type of situation!).

For more information on the Graduated plan, see:

 https://studentaid.ed.gov/repay-loans/understand/plans/graduated

I recommend visiting the official government websites. If you have consolidation loans, you may be able to spread your loans out over 30 years instead of 10 with the graduated repayment plan.

It would have been more realistic if the designers of the MASH game had included a “student loan balance” category. But for most of us, that might have been depressingly portentous. People had student loans -- back in the day --- when I was playing this game in the late 80s and early 90s, but the implications were less troubling. At that time, there were more scholarships available AND tuition was much less.

Now, what if your loan balance is higher, or your income will not allow you to make the monthly payments under the Standard and Graduated repayment plans? Thankfully, there are options based upon your income.

I will deal with those in an upcoming post.

Know Your Enemy

Financial Freedom can be yours for only 120, or was it, 300 payments of $0.00-$3,000.00 per month!

Why so vague? To get your attention. Reel you in. Make you sign on the dotted line before you realize that the financial loan package you are being talked into may NOT be in your best interest.

It's no coincidence that student loan payment terms sound like late-night infomercials. Take federal loans, for instance. There are many different monthly payment options available and no one size fits all. But you don't have to be floundering in the dark. If you happen to be a current or former student struggling to figure out where you stand and how much you owe -- or you know someone who is -- you can find out what your best course of action is and whether or not you need to set up a repayment plan that is more manageable.

Should you discover that you are unable to afford your current (or anticipated) monthly payment, what are you supposed to do? You can: minimize your expenses, look for a second job or contract work, stop binge-watching premium content, and sell plasma (I have done this).

In case you think you can avoid dealing with the problem or you can declare bankruptcy, I have news for you. That's not going to help. It's only going to further compound the problem. Student loan debt is practically impossible to wipe out, unless of course, you qualify for an undue hardship exemption. http://www.nolo.com/legal-encyclopedia/student-loan-debt-bankruptcy.html

The only other way to have your student loans discharged is if you become totally and permanently disabled. In layman’s terms, you might qualify for this if there is no chance of you working in any capacity ever again. See this link for more info. http://www.disabilitydischarge.com/home/

Most of us are thankfully not permanently disabled. Still, student debt can disable you enough so that you feel powerless. Awareness of the true nature and extent of your debt obligations will empower you, and once you figure out what your options are, then you can form a reasonable plan of attack. And here's hoping, once you come up with a viable solution, there's enough left over in your budget so you can afford some creature comforts like a night out on the town or a new app. I also believe that with the right payment plan, you can contribute to things like a 401k, IRA, etc.

The good news is, you do not have to watch late night TV or the home shopping network to figure out where you stand. For federal loans, the data you need is located here:

https://studentloans.gov/myDirectLoan/index.action 

This site provides you with an up-to-date balance on any outstanding federal loans, as stated in the national database. Another valuable feature that the website provides is a repayment calculator. If you know about the various repayment plans already, that’s awesome. You are ahead of the pack. But if you don't and/or if you're unsure what your monthly payments are likely to be, you can enter your particulars into the calculator and it will generate a number of scenarios.

After you have entered your data and crunched the numbers, you will notice how payments can vary based upon your AGI (Adjusted Gross Income), family size, and marital status. This website also produces charts that calculate projected forgiveness amounts, total amount paid, and interest paid.

Similarly, should your circumstances change, you may use these results to help you renegotiate better terms on your outstanding loan(s) and if applicable, change your payment plans.

In subsequent blog posts, I will discuss the pros and cons of each repayment plan. But whatever you do, don’t fall into delinquency and don't renege on your loan obligations. Some students end up in default because they can’t afford their monthly payments and are unaware of different types of recourse they have in mitigating their debt burden.

It has been rumored that many student loan servicers won’t tell you that you have options for repayment. In fact, there has been speculation on the Web that certain servicers and investors actually like it when a borrower gets behind, since it drastically inflates the amount of money owed. Whether that is true or not remains to be seen. In upcoming posts, I will be using this blog as a platform to do additional fact-finding and together, we will try to uncover the truth. In the meantime, you can read these articles and decide for yourself:

*    Wall Street Sees Big Money in Student-Loan Defaults

http://www.foxbusiness.com/economy-policy/2014/06/19/wall-street-sees-big-money-in-student-loan-defaults/

*   Sallie Mae Under Fire For Death-Induced Defaults

http://www.huffingtonpost.com/2014/04/25/sallie-mae-simm-death_n_5212024.html

* Sallie Mae Not Opposed To Bankruptcy Relief For Student Loans

http://www.forbes.com/sites/peterjreilly/2012/04/30/sallie-mae-not-opposed-to-bankruptcy-relief-for-student-loans/

The point is, be informed. Know your enemy.

In the spirit of “know your enemy,” you can also read Sun Tzu’s The Art of War:

 http://www.gutenberg.org/ebooks/132

If you don't have time to read, you can watch an excellent depiction produced by the History Channel:

https://www.youtube.com/watch?v=erZ2YidTZp4

What's Your Number, Baby?

Relax. I am not referring to the clichéd pickup line. What’s your number = What’s your total student loan debt? If you happen to know it, picture it now. How does it make you feel? Scared? Stressed? Trapped?

When I visualize mine, I feel as if I’m back on my (one and only) very bad blind date where the fellow showed up wearing a hoop skirt, white cake makeup, and fangs. We were NOT attending a vampiric Civil War reenactment.

I didn’t want to be on that date, just as I don’t want to have student loan debt. The first one was an easy fix. The second one, I'm still working on.

How does one get out of these situations?

Understanding and empowerment.

In the case of the bad date, I was able to politely extricate myself after ordering a soda, making polite conversation, and then getting the heck out of there. Student loan debt is a bit more serious than a bad date since it is inadvisable to simply walk away. However, it is possible to overcome the psychological and emotional barriers it presents.

The first thing you should do, if you haven't done so already, is learn your number. To find out how much you owe in Federal loans, go to:

https://www.nslds.ed.gov/nslds

If you have private loans in addition to (or instead of) federal loans, you will most likely find them listed on your credit report. Go to: https://www.annualcreditreport.com/index.action and pull your three credit reports (Experian, Equifax, and Transunion). This site will allow you to access all three reports once a year, for free. Beware of other sites that charge monthly fees or demand immediate payment.

To find out your total number, add up your federal and private loans. Got it? Keep that number handy because we will be referring to it in future posts.

Finally, please note: we will be treating federal loans and private loans separately, since they are governed by different regulations and often require different plans of attack.

If you are unsure about the difference between federal and private loans, go here for a breakdown:

https://studentaid.ed.gov/types/loans/federal-vs-private

Future blog posts will discuss these issues in more detail.

Knowing your number is the first step. However, you are not defined by your number. You are NOT 24601 (Jean Valjean from Les Miserables). You are you, and your number is a part of your financial reality. Nothing more.

Anyone can move a mountain.....

Anyone can move a mountain…. I remember singing it in fifth grade. “Anyone can move a mountain, if one really tries.” I think that’s how it starts. But it's the underlying message that sticks in my mind. "You can do anything you want in life, so long as you try hard enough." This is the mantra we are taught from an early age and most of us spend the rest of our lives doing our very best to overcome each, and every, obstacle that stands in our way.

We are also told that opportunities are limitless and we should pursue something we love because it will bring us contentment and happiness, followed by recognition and success.

Just how does one move a mountain?

Can't do it physically -- at least not without some serious earth-moving equipment at our disposal -- so we accept that the song is a metaphor about overcoming resistance through persistence. What the song doesn’t tell us is that moving a mountain depends on more than brute force, it requires personal sacrifice. Often, we must compromise and accept setbacks in order to fulfill our ideals. And all too frequently, we don't even come close to realizing our hopes and dreams. I suppose wisdom comes from not moving the mountain, but learning how to circumvent it.

You may have heard... there are some conflicting conversations about higher education floating around the Web these days. One is that students should pursue their dreams, whatever the cost. The other message insists that students should develop practical or technical skills instead of following lofty learning ideals. This dichotomy is something that I sensed during my journey through higher education. Here is my story…

I thought I did everything right. I began my B.A. in 1997 and received a full tuition scholarship from my undergrad institution. This school also gave me 29 credits for my high school AP classes. I entered college one credit shy of being a sophomore. My only loans were for room and board for 5 semesters. To help minimize costs, I took 18-21 credits per semester.

I began my M.A. in 2003, and paid in cash for my first year. I did not need to take out loans for that degree since I was fully funded. The majority of my loan obligations mounted up during my Ph.D. For two years, I received generous funding in the form of a teaching fellowship. After that, my options were either to bite the bullet and take out loans or quit the program. Nothing in between. I was unwilling to slow down my progress or work on the Ph.D. by attending part time. I had already invested too much time, money, and effort (sunk costs), so I chose the former option. Plus, I was in a hurry to get on with my life.

Throughout the reminder of my studies, I worked as an adjunct. Anyone who is familiar with academe knows you barely get paid enough to live on, much less have money left over to pay for ancillary expenses, like education.So even though I was working, I still needed to borrow money so I could cover all of of my living expenses.

Ever present, however, was the mantra I had been following my entire life: never give up. “Anyone can move a mountain, if one really tries.” You can conquer anything with courage and grit. Just try a little harder.

And persevered I did. I got a first class education and I recently graduated with my PhD -- but along the way, I also gained a mountain of debt. Hmm. Energy can never be created nor destroyed, but can only change form. The size of the loan, and how it got that way, is the part that troubles me.

A drastic reduction of available subsidized loans (versus unsubsidized), 6% + interest rates, and the time needed to completely my studies, all contributed to increasing the principle amount of my debt. Thankfully, my loans are federal instead of private (I will discuss this distinction in later blog posts). I am one of the fortunate ones. I researched what types of loans to take out before borrowing any money. As well, I had the good sense to check out what various repayment plans and forgiveness programs were available before I signed on the dotted line.

Don't get me wrong. I am not writing this blog in order to whine. I intend to repay my loans on the income-based repayment option. My remaining balance will be forgiven after 120 qualifying payments under the https://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service Public Service Loan Forgiveness Program. I also plan to save taxpayers money (that I am forgiven) through additional public service initiatives and volunteering. I will discuss this repayment plan and forgiveness program, among others, in subsequent posts.

But here is my situation: I am responsible for repaying a large student loan obligation. For those of you carrying a similar debt load, rest assured, you are not alone. There are literally hundreds of us out there, graduates from first tier research schools, land grant institutions (and lest we forget, the fly-by-night diploma mills, for-profit colleges and universities), all grappling with the reality that is student loan debt.

Finally, in the spirit of full disclosure, I want you to know that I am not affiliated with any educational/financial institution or debt relief organization. Instead, it is my aim to present this blog as an unbiased, online commentary. I hope that it will be informative, eye-opening, and a source you can trust from someone who has been there, done that, and is looking to explore viable alternatives.

My Student Debt Confessional

Hello, my name is Nadia, and I have student loan debt.

Sound familiar?

Thinking support group, maybe?

Me too. I would like to think that this blog will serve a similar purpose. Only time will tell. But one thing is clear. Besides the obvious financial burden, there are many psychological, emotional, and hidden costs associated with student loan debt. It has become an invisible divide that separates the haves from the have nots. The higher the number, the smaller and less empowered a person feels. Are you a former student, suffering in silence, resigned to the status quo. Afraid to speak out? Afraid of losing your job? Afraid of ballooning interest rates? Not sure how you are ever going to pay it all off?

  Using this blog as an interactive platform, I will be exploring the behind-the-scenes of financing and the gigantic mess that we now equate with student loans in the United States. Upcoming topics will deal with:

- student loan repayment programs,

- credit issues,

- forgiveness plans,

- debt reduction, and

- an alternative means to pay for college.

In future posts, I will be introducing you to a recruitment and job placement board -- currently under development -- that will allow you to find forgiveness-qualifying jobs (public service loan forgiveness, teacher loan forgiveness, etc.) in your area. If you would like to be notified when this service becomes available, please send me an email at: nadia@jawpln.org.

Lastly, I would most like to hear personal stories, be they good, bad, or ugly. And if you happen to be located from outside the USA, I particularly want to hear from you. Maybe we can benefit from your learning curve. And if you are not directly impacted as a (former) student, perhaps you have worked for an educational, financial or governmental institution dealing with loans and financial aid. I invite you to share your experiences and insights so we can learn what it is like to work on the other side of the desk.

In my next post, I will tell you my story and why I was motivated to start this blog in the first place. Until then, I am looking forward to hearing from you.