6 Tips for Avoiding the Worst Student Loan Repayment Traps

from NYTs

Whether or not you believe the allegations, the jaw-dropping dossier of sins that the Consumer Financial Protection Bureau accuses the nation’s largest student loan servicer of committing is useful for two crucial reasons.

First, it’s a reminder of just how much can go wrong when we force inexperienced young adults, especially, to navigate a complex financial services offering. We shouldn’t be surprised, but we should be ashamed: Elected representatives cut support for higher education; sticker prices rose; teenagers and others applied for admission, signed up for debt and, in many cases, finished their degrees. Then came the bombardment of confusing loan and repayment options.

Nobody stitched this crazy quilt on purpose, but most clear-thinking humans who approach the system for the first time conclude that we are insane for allowing it to evolve this way.

Second, the bureau’s complaint offers a road map of sorts. For every major infraction that it accuses Navient, the servicer in question, of committing, there is at least one defensive move that borrowers can make to sniff out problems or keep them from happening in the first place. 

Let’s take them in order:

More here.

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23 Responses to 6 Tips for Avoiding the Worst Student Loan Repayment Traps

  1. Matt Talarico April 26, 2017 at 2:11 am #

    Student loans, especially in the United States, are always a hassle to deal with because of the high cost of tuition. Even the middle-upper class is struggling to pay with school tuition, as top schools are costing around $60,000 per year. Across the globe, higher education is much less expensive. I think a major reason it costs much less in countries such as Denmark is because they can afford to spend more money on education, rather than military or other international affairs.

    To sum up the whole article, it basically says how big banks can afford to dish out these really awful loans because they have a monopoly on the market. People will still come back to them because they do not have another choice. Many of the small banks vanished during the 20th century, which resulted in a saturation in banking power towards larger banks. These large banks can abuse their power over the people because people are not going to stop taking out loans. Going to college has proven to be beneficial because it is a good long term investment. The individual seeing the long term investment, combined with the bank looking for the short term profit, creates a dangerous environment because banks will continue to abuse their power, and the people will keep going along with it.

    While the article gives tips on how to maintain student debt, the only way to avoid debt is through scholarships, and to not even go to school. This is why many people are opting out of going to college to save them a lot of many, where they could use that money and start their own business instead or not dig themselves into debt. I hope that President Trump and future presidents can lower the cost of rising school tuition, because at some point I think that it is going to burst at the rate that it is going up.

  2. Anthony Laverde April 26, 2017 at 3:53 pm #

    Being a colleges student in debt in the united states of america, I am witnessing and noticing the flaws in this system first hand, both in a financial light, and a moral one. The united states government has made going to college a priority, and them as well as our parents and teachers, constantly tell us this it is crucial to our success in life. However, over the years, our government has began to cut the budget for education more and more. This means they are giving out less money to offset the price of college, as well as offering less federal grants in general. Pair this with the rising costs of colleges across the country, and it is easy to point out the problem. Some of the top school’s tuition can be as high as sixty thousand dollars a year. This does not include room and board fees, which can be up to an extra five thousand dollars. This has made it much harder for students to be able to afford college. Being from a lower middle class family, I can personally testify to the constant worrying I do about paying off my own personal debt. Seton Hall University costs about fifty thousand dollars a year. There is no way I could afford this if it were not for the generous scholarship they offered me. However, it was not a full ride, and I have still found myself in debt that will only continue to increase as my years go on in college. What makes things worse is that colleges raise their tuition prices for kids that want to come in from out of state; this discourages students from traveling. Luckily (but not really) Seton Hall is a private school, so the tuition is a fixed rate. Also, being a private school, they offer a lot of their own personalized scholarships. Sadly, but necessarily, these scholarships are contingent on maintaining a certain status at the university. Many students like to make the most out of their experience in college, and get involved in a lot of different programs. Other students work throughout college so that they can pay off debt as they go. All of this contributes to distractions from academics, and puts students in constant stress of not meeting their minimums. This is unfair to the students, and completely contradicts the statements adults say about going to college and obtaining amazing experiences.

    Students, like myself, are then forced to take on a co-signer for our debt. For me, this was my parents, who did so happily. But it unfair to them that they have to become legality responsible for paying money back just so that I may receive a higher education that is completely free, or at least subsidized better, in many countries across the world. Providing everyone with a free college education seems like it would be common practice in the year 2017, but it has become harder than ever to even get in, let alone pay for it. This must change immediately, and I believe it will better our education system if it does.

  3. Guy Barbano April 26, 2017 at 7:50 pm #

    Honestly this article was very helpful considering the fact that a great majority of students now a days have to take out student loans in order to go to college and with taking out student loans out myself and many other young Americans coming out a step behind. Since we have to pay back our $100,000 to $200,000 loans we had to take out in order to get a piece of paper saying we complete the requirements to be a legal accountant or whatever profession you choose. To me the American investment industry is very messed up and needs to be fixed. Granted the student loan rates are only so high because the money being loaned out can never be received back if someone defaults on it. The bank cannot say okay you did not pay back your loan give me your brain so I can get back what I lost. No that just does not happen like it would if the money was for a car or home. This article I feel though really helped me understand my loans a lot better than I did before. Granted before I really did not know much about them I just knew I needed them. The first step in the article is know your loan which is very important because you need to know who you have to pay back when the time comes because if you forget about it you will have a huge issue if you default on it. One thing I did not know was the next step which was Income-driven Payments which is basically a way that federal loans will make it easier for you to pay back your monthly loans based on family size and income. Another tip for college loans is stay involved with it if you do not stay update and active with it you will never know where you actually stand with it. As before with being able to qualify for smaller payments sizes per month. You have to stay on top of it because you have to requalify every year for that and if you do not you will see your payment size double or even triple. So always stay up to date on what you need to do in order to be ahead. The last tip I saw helpful in this article was the 6th and final one. Always keep checking your credit again and again. If you forget to make payments on a loan it will most certainly affect your credit score and even worse if you default on a loan it will destroy your score. Staying on top of college loans and payments is a huge deal this is why college students need to realize now saving money is very important and that finding a well-paying job also after college is even more important. This article really helped boost my knowledge of college loans and how to stay on top of them as soon as I get out of college and start my career.

  4. Filip Bizek April 27, 2017 at 10:46 pm #

    Student loan debt is now the second highest consumer debt category just behind mortgage debt and it is much higher than credit cards or auto loans. According to the governmental statistic, over 44 million students owe $1.3 trillion in student loan debt in United States. Moreover, average monthly student loan payment for borrower aged 20 to 30 years is $351. These statistics are just a factual proof of how serious the issue of college affordability has become. The article 6 Tips for Avoiding the Worst Student Loan Repayment Traps is a useful reading tool essentially warning and teaching students about maximizing repayment efficiency while staying away from common mistakes.
    First and foremost, the author makes a very crucial point, which is so often omitted in discussions linked to student loans. Generally speaking, people taking out student loans are teenagers freshly out of high-school. Now, some of those teenagers may benefit from having educated parents who will help with the repayment process and take care of the bureaucracy part. However, not everyone is so lucky, significant number of people does not have an external support and has to deal with the paperwork all by themselves. This in itself is simply despicable. The current educational system, forces the American youth to essentially enter a contract without the proper knowledge to do so. From my personal experience, I was blessed enough to have a mother who helps me with every step I am taking when it comes to student loan repayment. Nonetheless, one of my closest friends unfortunately does not have the same situation. In her case, parents sign and she borrows sixty thousand dollars each year. From what she hast told me in the past, her parents most definitely do not have enough resources to help with the repayment and she herself at times gets overwhelmed with all the information. Considering such a case, it is hard not to argue that our capitalistic system has failed us and diminished our chances to climb the ladder in life.
    Knowing your loans may sound obvious, but that does not represent the reality. As mentioned before, if not for my mom I would have been truly lost in all the details by now. Staying on top of how much you owe, to whom you pay, and calculating repayment options is the first step to get out of the mud as soon as possible.
    A very undervalued trick in the article is the Income-Driven Payments. Not many of us know it, but there is an existing program, which helps with managing payments in order to avoid disproportionate payments for student loans in comparison to the total income and other expenses. Imagine making $2000 a month while for the sake of argument $700 would have to be dedicated to the repayment of the student loan. Although this is an extreme example, it would be impossible to maintain a certain standard in life and commit to such a preposterous payment option.
    Another vital trick mentioned by the author is under the Dropping a CO-Signer section of the article. If possible, stay away from the prepaid option as far as you can get. With the information from reliable sources, Navient punishied borrowers who had prepaid their loans and then skipped couple of payments. Thus, many of us are not in the positon to fight the system, which means we have to outsmart it.

  5. George Tannous April 28, 2017 at 12:10 am #

    Student loans are a pain and a headache to deal with. After a 4 year college degree one could find themselves in over 100k dollars in student loans that will take years to pay off. College costs seem to be rising each year while the job market has been weak. This makes it incredibly easy for one to graduate school with a lot of loans to pay off without acquiring a career or a job. It is becoming incredibly harder each year for graduates to find jobs right out of college. Certain majors make one less marketable and this hurts as well. With the future job market rapidly changing and turning into A.I based jobs, it is going to come to a point where families will no longer want to shell out big money to send their kids to expensive universities. This will make universities lose millions in the long run and will essentially will force them to fire faculty and decrease college costs. Universities will no longer be what the future is comprised of since STEM schools are taking off. Technology is the future of the job market and it is no surprise that schools will reflect this change. A STEM community college is all that will be necessary to make the top dollars in a technology driven economy. To become a computer coder one only had to go to a STEM school for two years and this will cost only a few thousand. And in addition, technology and coding jobs are in abundance and the average salary is near 60k per year. It will soon make little sense to shell out 100k to get an education that will not provide a stable career and a good living.
    For now, student loans will be a problem that will persist for a couple of decades more. I do not see student loans being a common issue in 20 or 30 years since most will not attend expensive schools. Student loans simply make it impossible for one to have a sustainable life after college. It will take a decade before one could finally pay off student loans and start to save money to eventually buy a house and have their own life. With loans one will not be able to buy a house until they are nearing 40 years old. This is not the image the American dream was based off of. Capitalism in this aspect has failed horribly. Then after one buys a house and pays off taxes, one will not be able to save sufficiently for retirement. Retiring at age 65 is no longer a reasonable venture for my generation. It is becoming a world where we have to work until we either lose the capability to do so or die. It is scary to think what the world will be like in 10 years. Everything is very unpredictable right now and it does not help that wars and other events seem to be imminent. Another economic collapse seems to be in the works as well and all is very uncertain.

  6. Frankie Lisa April 28, 2017 at 12:31 am #

    College graduates owe billions of dollars in student loans and that number will only continue to increase each year. Student loan debts are also the only debts that one can not declare bankruptcy. This means that lenders will hunt you down until the day you die to get their money back. There is a lot of risk and danger present when a lender hands out a student loan. First, the banks are lending money to inexperienced young adults. Student loans are very complicated and it can be difficult for adult professionals to understand the terms and conditions of the loan, it is even more difficult for college students to grasp. It is no surprise that debt owed from student loans is rapidly increasing. The government elected to cut funding for higher education, in an economy where most jobs require a higher education. The article offers six tips to help ensure you do not get trapped in massive amounts of debt from student loans. The first tip is to know your loans. This requires us to ask ourselves two questions. First, how much money do you owe? And to whom do you owe money? For those who receive loans from the federal government, the answer for these questions is pretty simple. However, for those who took out loans through private lenders, the answer may be more complicated. The entity that collects the payments and takes requests for adjustments is often not the original lender. The second tip the article offers is to get an income driven payment plan. Income driven payment plans allow you to get a payment plan that allows you to submit information on your income and family size, then reduce monthly payments to amounts that are affordable. Many people do not know these exist, and lenders will not be eager to point this out to a borrower so it is important to see if you are eligible for one. The article also advises you to call and use the servicing machine when calling about income driven payment plans; the automated responses are accurate and will be misleading like a regular receptionist. Once you are enrolled in an income payment plan, you have to requalify each year. If you fail to requalify, then your rates will jump. You should not count on your lender to remind you of this deadline. Another tip the article offers is to avoid forbearance if possible. Forbearance allows you to eliminate payments for a period of time, but then your interest will continue to add up. Another tip they offer is to release a cosigner. Having a cosigner when taking out the loan is usually smart because they can qualify for a lower rate, but when you are older and start making more money, lenders will allow you to drop the cosigner.

  7. Christian Cox April 28, 2017 at 1:38 am #

    Student debt accounts for billions dollars as is and only continues to increase each year as new students enter college. A college degree is now the bare minimum that one needs to be taken seriously as a job applicant, so it is always insisted that everyone goes to college. Counselors in high schools tell tall tales of the affordability of student loans and how necessary it is to achieve your dreams. When they accept the tall tale from the wise counselor they agree and they apply for student loans. Then they start to accrue serious debt and in the current job market can find themselves with no means to pay their loans. You might think that declaring bankruptcy would be the ideal solution when one cannot afford to pay a loan. Unfortunately, Congress passed a law that made this impossible except for the most sever conditions. In other words, you can not get rid of it. It is no surprise that student debt is increasing, jobs are becoming more competitive, debt never goes away, and college is an experience that is hyped up through all different types of media. Luckily, the New York Times has offered six tips to help you deal with this awful situation. It is emphatically important that you know your loans. This means you must know how much money you owe and whom you owe it. For the most part it is the federal government, but in many cases students take out private loans, which they purposely make more complicated than it needs to be. In many cases the loan you took out with the private lender is not the one you are paying. Debt purchasing has become a very popular means to make money. When someone is unable to pay their loan a lender may sell their debt for cents on the dollar without your knowledge. Then the new owner of your debt comes to collect. This is the part where it becomes concerning. Debt buyers are some of the nastiest people on Earth that are willing to do anything to get paid. One debt buyer was recorded saying with glee, “One thing I do that’s pretty nasty. Is I’ll find out where they work and I will call the boss telling them they owe me money.” This is by far one of the most awful businesses that one can get into. Debt buyers perform no services other than buying debt low and hoping you will pay them what you originally owe. Even though the debt was sold because you could not afford it in the first place. Student debt follows you forever and if you are lucky enough to pay your payments on time you will hopefully avoid debt buyers. This is easier said than done because students are fooled into thinking they can afford a college education but the sad fact is that many cannot. Sometimes people are dealt a bad hand and there is simply nothing you can do about it. Long story short get a job and make sure you do not owe anything to anybody.

  8. Jacob Hoelting April 28, 2017 at 12:31 pm #

    Student loans is always a scary phrase to here. In today’s world of college it is impossible to go to any school without a loan due to the fact that tuition alone runs anywhere from $12,000 a year to $100,000 a year and unless you are a billionaire there is no way to pay that off without the aid of a loan. Every student knows the pains of applying for a loan and try to pay for that loan- it is always a difficult and long process. When students graduate from school, they usually come out on the other side being around $50,000 in the hole- roughly. There have been numerous studies saying that on average it takes a graduate somewhere around 20 years to pay back all the loans they took out. That is an absurd number! The number of people going to college has been on the rise due to the competitive job market, but ever recently it has been flat lining and on the decline because people see the amount it costs to go to college and the thought of having to pay back $50,000 in loans when they graduate seems to a lot of people like a dumb idea. Especially when you look at degrees such as art degrees that make little to no money because an art degree is hard to employee and it takes a whole lot longer to pay off. I have been fortunate enough to come to Seton Hall University tuition free, but despite that huge cut back I still had to take out a loan because room and board was still very expensive. Due to this reason of loans and graduating with debt, I am transferring to a college back in Texas where I will go school for free. How is this possible you ask? It is not because of my superior academic abilities, because if you know me that is never the case. This is because my father works at a private university that allows students of faculty members to go there for free. While this school was definitely not my first choice, the idea of graduating with very little debt is very appealing to me and gives me a leg up once I graduate, not having to worry about paying anyone back and all. Although I am going to school for free in my coming years, I still came to Seton Hall University for a year and still have loans because of that. There is this one loan I have to pay off that is only $3,000, but in hinds sight that is nothing compared to everything else a lot of other students have. Loans are that most annoying and aggravating part of college, not test or homework. This is because everyone knows we are doing the right thing getting an education, but when you look at the loans and how long it will take to pay them off it becomes more and more of a question as whether to continue or cut your losses.

  9. Joshua Luchon April 28, 2017 at 4:31 pm #

    Student loans are what nightmares are made of. At any given moment, I can check my bursar account, initialing a downward emotional spiral towards depression and despair. However, articles like this give me hope. I am in an interesting and often aggravating place as far as student loans are concerned. I am fortunate enough to come from a household with an above average combined income, which was awesome right up until it came time to apply to college. It became apparent to me that since I have financially successful parents, it’s virtually impossible to get scholarships. What about grants you ask? I have a better chance of being struck by lightening twice in the same week than I do receiving free money from anyone. The frustrating part is that my inability to get grants and discounts is a reflection of my parent’s income, not my own. If I had filled out my college applications based on my income, I probably could have saved myself a hundred thousand dollars. My family’s income is the reason that the loan companies are bending me over a barrel and I don’t think that’s fair. My parent’s had to finance their college educations, so they decided that I have to pay for mine. Sounds reasonable except that tuition is more than 10 times what it was when they were in school with only a slight increase in the average salary for college graduates. What that means is that I am responsible for approximately 8 times more debt that they were. That is a really scary thought for a multitude of reasons. Debt slows life down. Student loan debt, if left as is, will bog down the entire economy. My generation won’t be buying houses, cars, vacations, or having children. Today’s greed causes tomorrow’s financial crisis. Universities and the loan servicing companies alike know that the current generation of college students have been raised in a society that puts immense value on a college degree, so they know that they can charge what ever they want and people will pay it. It is a disgusting abuse of power and it will cripple the economy if left unchecked. The only good news is that college students have some options to lessen the blow of college debt. First, shopping around for loans and understand the contracts in their entirety is paramount. There is no cheap way to finance a college education, but starting with a reasonable fixed interest rate is a good start. This article brings up several interesting tips for managing debt payments. One that stood out to me was income driven repayment plans. That is music to my ears because I make a fraction of what my parents do, and they are currently the ones whose income dictates my payments. It is no secret that the majority of people aren’t on top of their game enough to pursue all of the options available to lower payments or re-negotiate the terms of a loan, and lenders know that just as well as I do. It is important to remember that college is big business masquerading behind the façade of education and a hope for a better future. I see right through it and I’m to use articles like this to save the most amount of money possible.

  10. Nick Shervanian April 28, 2017 at 6:40 pm #

    Student loans are something that is very impactful for us because it applies directly with our future financial situation and us currently as we can afford to pay for college. Student loans are tough to deal with because of the high cost of tuition no matter where you go. Even the middle-upper class is struggling to pay with school tuition, as top schools are costing around $60,000 per year. Across the globe, higher education is much less expensive. I think a major reason it costs much less in countries such as Denmark is because they can afford to spend more money on education, rather than military or other international affairs. However, over the years, our government has started to cut the budget for education more and more. This means they are giving out less money to offset the price of college, as well as offering less federal grants in general. Pair this with the rising costs of colleges across the country, and it is easy to point out the problem. Some of the top school’s tuition can be as high as sixty thousand dollars a year. This does not include room and board fees, which can be up to an extra five thousand dollars. This has made it much harder for students to be able to afford college. What makes things worse is that colleges raise their tuition prices for kids that want to come in from out of state; this discourages students from traveling. Seton Hall is a private school, so the tuition is a fixed rate. Also, being a private school, they offer a lot of their own personalized scholarships. Sadly, but necessarily, these scholarships are contingent on maintaining a certain status at the university. Many students like to make the most out of their experience in college, and get involved in a lot of different programs. Other students work throughout college so that they can pay off debt as they go. All of this contributes to distractions from academics, and puts students in constant stress of not meeting their minimums. This is unfair to the students, and completely contradicts the statements adults say about going to college and obtaining amazing experiences. The article also advises you to call and use the servicing machine when calling about income driven payment plans; the automated responses are accurate and will be misleading like a regular receptionist. Once you are enrolled in an income payment plan, you have to re qualify each year. If you fail to re qualify, then your rates will jump. You should not count on your lender to remind you of this deadline. Another tip the article offers is to avoid forbearance if possible. Forbearance allows you to eliminate payments for a period, but then your interest will continue to add up. Another tip they offer is to release a cosigner. Many college students are either forced to take out a loan or find a way to get a lot of financial aid. Students will do anything to be able to afford college so colleges should do more to help them.

  11. Peter DeSantis April 28, 2017 at 6:55 pm #

    I predict that the next bubble following the housing bubble, which popped in 2007-2008, will be caused by a mixture of automobile and student loan debt. A lot of money has been borrowed in order to purchase new cars; however, there is some concern that drivers will not be able to pay those loans back. The reason for this is that cars are very expensive and some people are purchasing cars which are simply out of their price range. A lot of consumers get suckered in by promotional deals such as “0 down due at signing” or “0.9% APR for 24 months” without realizing that not having a down payment will increase monthly payments and that after two years that rate will jump to 2.5%. This article by Ron Lieber, talks about student loans and how complicated they are to them any young adults that apply for them. He offers six ways for students to avoid getting involved in bad or confusing loans.

    I believe that his most important piece of advice was “KNOW YOUR LOANS.” It may seem pretty obvious, but this is a crucial part in applying for and accepting a student loan. The borrower needs to completely understand the loan, how much is owed, what the interest is and if it is fixed or adjustable, and who is receiving the payments. I understand that to most young students, the world of savings, loans, and credit is a far off extraterrestrial. Many do not even understand the basics of how loans work and quite frankly they do not care to learn more. Personally, I think this stems from the fact that the language and the terminology is not easy to understand. A lot of the words are unfamiliar and not self-explanatory. Then the words that are simple actually are not. For example, take a word such as credit. Without any research or proof, I think it would be hard for a college student, at least one who has no interests in finance, to accurately define that term and what it refers to in a financial context.

    Even though I am a finance and accounting major, I understand that there are numerous people who have little or no interest in money matters. I understand that to some it is very boring and uninteresting even though to me it is riveting. That being said, I think that everyone should do some research about personal finance because no matter what, everyone will have to be involved with money one way or the other, either in their occupation or with their own funds. It is important to fully understand finances and what the language means so that one does not accidently get into financial struggles.

    I think that the most important thing to keep in mind about student loans is that the main goal should be paying them back as quickly possible. Obviously getting the lowest fixed interest rate is ideal, but usually that is not easy. After that though, it is important to have a steady flow of income, which is sufficient enough to meet monthly payments. Also, borrowers should pay as much as they can each month. If the payment is $100 but you can afford $200, pay the $200. If you do this, you will pay less in total because it does not give the interest rate as much time to keep compounding. You will be paying your $100 then that next $100 will go straight to the principal. This is an excellent article because it helps young college students to better understand the loan process.

  12. Jevon Mitchell April 28, 2017 at 8:06 pm #

    Being a college student, I immediately took interest in what this article had to say. I have always thought it to be unfair that the way students are forced to take out student loans to pay for school then when they come out, they are up to hundreds of thousands of dollars in debt. This is money that they will have to pay back, and will ultimately spend the next decade doing so. Since they are fresh out of college, these individuals don’t necessarily have high enough paying jobs to pay off the loan in a timely manner. This also prolongs the life of the loan, further increasing the amount that this individual will end up paying on the loan that they took out years before. If the loans are federal then they may be eligible to be adjusted to your income. If you submit info about your family and income those monthly loan repayments could be adjusted to an affordable payment. This is why it is important to know your loans as the article states.
    As the article states, we should not be surprised at what is occurring as, we should be ashamed.
    The inexperienced young adults are proposed with plenty of nice appealing options to take out the loans that these companies know the students need. Not knowing the dangers of signing up for debt, these young adults took out the loans that sounded the best, without necessarily reading the fine print and terms of the loan, or even without knowing what the terms they agreed to means. For example, Navient was accused of not properly informing its borrowers of deadlines or that they must requalify each year. This is a case of the large company taking advantage of the inexperienced young adult. This is why it is important to know your loans as the article states. It is also important to shop around for the loan option that will best suit you, rather than just choosing which one sounds the best.
    Another act that these companies use to take advantage of these naïve individuals is the offering of forbearance. Because they know that most of their borrowers will not be able to afford to pay off their loans immediately after college, thus they offer what is known as forbearance, which to the borrower sounds like a financially responsible idea. Instead of paying the loan back now, the borrower would instead eliminate payments over a period of time, but the catch is, the interest still continues to accrue over this period. It is believed that Navient may have cost over $4 billion in interest payments after consecutively offering forbearance plans. This type of mindset is not foreign in society. In fact, this is the same system that traps people with bad credit.

  13. Taylor Salomon April 28, 2017 at 8:13 pm #

    Student loans. Hearing that phrase makes me squirm. It costs me an arm and a leg to attend Seton Hall University. Luckily, I do not resort to student loans to pay for my college tuition. Most of my friends always talk about their dreadful student loan plan. This article provides six tips that students can use in order to avoid the worst student loan repayment traps. Let’s examine all six pieces of advice.
    First, know your loans. Make sure you know the exact amount your loan provides you. Most cannot answer the following two questions: how much do you owe, and to whom? That answer is different for federal and private loans. Always keep track of important information such as those two. Next is income- driven payments. Did you know that if you have a federal loan, you are eligible for a payment plan that allows you to submit information on your income and family size? It is true. It gets even better because this program can reduce monthly payments to amounts that are affordable. Sometimes you don’t even have to make a payment. Not everyone knows these programs exist. If you are wondering if you are legible, just check out the Education Department’s repayment estimator tool. Third informs individuals to stay enrolled. Every year you have to requalify for an income- driven plan with updated financial information. In addition, you must pay attention to deadlines or your payments jump. Another piece of advice is no forbearance. I had no idea what that word meant before this article. It allows you to reduce or eliminate payments for a period of time. If you run into trouble repaying your loan and you call your servicers to beg for help, it may offer you forbearance. Fourth is dropping a co- signer. If you ever had a creditworthy relative co- sign your loan, then you are familiar with releasing that person from legal obligation of repaying the loan once you are stable to pay the bill. Last but not least is checking your credit. In parentheses, the word again appears. The article states you can get a free copy of your credit report each year from three major credit bureaus. Every four months, you can grab a report to check up on your servicer. Make sure to look for any late payments or other signs that things are amiss. Overall, this article teaches individuals what to do and not to do.
    Student Matt Talarico concludes the only way to avoid debt is through scholarships. He says furthermore if individuals do not attend college, then they will not encounter immense loans. Education is highly valued in the United States so I do not agree with the second statement one hundred percent. He backs up that statement by saying “This is why many people are opting out of going to college to save them a lot of many, where they could use that money and start their own business instead or not dig themselves into debt. I hope that President Trump and future presidents can lower the cost of rising school tuition, because at some point I think that it is going to burst at the rate that it is going up.” This topic was brought up in the presidential election. Hopefully, the recent debate sparked ideas to end this scary debt in loans.

  14. Juan Landin April 29, 2017 at 9:25 am #

    To me, I do not even believe that we should be reading this article because college should not have to be paid for. These days, if you do not have any sort of college degree, then finding a steady and secure job is like trying to find a needle in a haystack. So if this is the case, then why are we forced to pay astronomical amounts in order to attend college? This is because of the money driven capitalistic society that now runs our country. All people really care about is money, even if they say otherwise. This is the cause for much of the poverty and ghetto areas that exist in this country. We all know that many people are unfortunately born into poverty-stricken families. These families are worried about how they are going to eat, not college. When they see the prices of the colleges, in their minds, they think that this is unattainable and therefore see no need to work towards attending college. This leads to many students dropping out and having to work to feed their family. Many of them drop out of high school and many employers will not hire someone without at least a high school diploma. This will then force them to do illegal things such as sell drugs and/or other illegal activities.

    I believe that this system is designed for the rich and not for everyone. If you think about it, who is going to have a better chance as succeeding in school: the rich kid whose parents can afford the best teachers or the poor kid who can barely afford food and may need to spend some of his time working in order to help his family survive. This has been the topic of debate for a while; kids should be allowed to access any resource they want in order to help them succeed academically. We are basically saying to those kids is that we will let you struggle and possibly fail while we allow these other kids to take the easier path. It is not right but is the truth. What do we need to survive? Food, water, shelter, clothing, right? Well, in order to obtain most if not all of those things, wouldn’t we need a job? This is why education is needed to survive and that is also why we should not be forced to pay for it and for anything that would help us succeed in it. By doing this, we are ensuring that the rich kids go to the best schools and land the best jobs while other may not attend the best school and may not get the best job. The rich get richer and poor get poorer.

    The kids today, the students, are this world’s future. Shouldn’t we give our future the best chance of success? In order to do this we must look past our money hungry ways and we need to prioritize what really matters. We need to give every single student the best chance possible to succeed, what he or she does with that chance is up to them. However, just giving them the same options as others more fortunate than them may give them hope and motivation that they may end up being as successful as their family one day. We need to all be united and not divided by something as minute as money.

  15. Emma Lupo September 15, 2017 at 6:11 pm #

    It’s 2017, and American students are overwhelmed by loan debt now more than ever. Students owe $1.45 trillion in debt spread across 44 million borrowers. First off, I am not one to advocate for “free college”. I believe that telling millennials that they could make college free is just a tool to get them to vote for that candidate. Free college simply cannot be done, and we need to be more educated on this topic, and see how damaging this could really be. Taxes are already high, and making college free would be a burden on taxpayers. As nice as it may sound as a student to not have to pay for college, four short years from when you start college, you will have a job, and have to pay taxes. Those taxes will be going to the government in order to pay for the education they gave to you. One way free college can be achieved is if you join the Military. In order to get a free education, you should have to prove that you are worthy of that. Underprivileged people join the military for the sole purpose of getting an education. If free education is what you want, you should be more than willing to do anything it takes to get it, without it being given to you on a silver platter. Why would you want to burden taxpayers to pay for your education when they do not even know who you are? The thought of free college should escape everyone’s mind, because the consequences of this implementation could cause more problems.
    Starting college in general is a daunting feat by itself. Adding the potential for thousands of dollars in student loans to pile up certainly does not soften the blow. Ron Leiber, the author of the article “6 Tips for Avoiding the Worst Student Loan Repayment Traps”, suggests first to know your loans. By knowing how much you owe, and who you owe it to, is the first step in tackling student loans. Next, there are family based payment plans for people with federal loans. They are able to reduce the monthly payments so that the amounts are more affordable. Also, signing up for an income-driven plan is not enough to facilitate student loans. It is vital that you requalify with updated financial information every year to avoid jumps in your payments, and additional interest. If a time comes when you are unable to make a payment, you can call a servicer for help. Forbearance allows you to reduce or even eliminate payments for a certain amount of time. Even though this helps, interest will keep adding up. Having a cosigner on your loan may qualify you for a lower interest rate. This co signer should be more creditworthy. As you get older and more credible, you can release that cosigner at anytime. The last important step would be to always check your credit. It is easy to get a copy of your credit report from credit bureaus.
    It is easy to lessen the burden of student loans if you tackle it the right way from the beginning. For example, scholarships and grants are given out for virtually everything. Even if your GPA or test scores are not perfect, students can still find scholarships that fit who they are. Perhaps one of the most simple, and most overlooked way to avoid student loans is to get a job. Look for a job with flexible hours, and that offers decent pay. Saving a percentage of that money with every paycheck will quickly add up and help later on when you are paying off loans. Student loans can’t always be avoided, but there certainly are ways to lessen the burden.

  16. TraceeF September 17, 2017 at 2:21 pm #

    I’m relieved to know that I am not the only higher education participant who sees that student loans are just traps. The article mentions that most college students take out loans and are completely blindsided by graduation when they realize that they’ve just sold their soul. Many parents don’t educate their children on how to deal with finances and definitely not how to take out loans, many parents didn’t attend college at all. First generation college students, like myself are usually on their own for the most part and are usually the perfect candidates for the loan trap that places majority of college graduates in crippling debt. Sure, there are resources to help guide students financially at these universities that are raking up all this cash, but universities are businesses too. They’re only going to help but so much.
    The tips the article gives about staying on top of your student loans are good. It’s all about staying organized, staying ahead of your due dates. Putting the deadlines on your calendar for months and weeks in advance so that you’re not surprised when the loan offices start calling for their cash. Luckily for us I suppose, most college students learn to stay ahead of the game pretty quickly if they want to keep their grades afloat.
    The article also mentioned that the system wasn’t supposed to work like this, but by the time they noticed it was too late. That statement rubs me the wrong way, how can someone not notice that the way loan companies set up contracts would but students in debt? Most college students are still kids when they’re signing these contracts. Now most of the new generations of graduates are going into business for themselves anyways, so college as a whole is becoming less relevant. I’m interested to know how long it will take for universities to become irrelevant or if they will at all.

  17. Nicholas Kerins September 28, 2017 at 7:32 pm #

    Nicholas Kerins
    Blog Post 2
    9/25/17
    The article “6 Tips for Avoiding the Worst Student Loan Repayment Traps” by Ron Lieber is a cheat sheet to repaying your student loans in an efficient way that will hopefully help you avoid rising interest rates and drowning in debt. Ron acknowledges how great of a burden it is to take on hundreds of thousands of dollars in debt at such a young age. He encourages every young adult to think about these six points to combat the financial hole we put ourselves into.
    One, know your loans. I am happy to say I can answer this when it comes to my personal loans. Where are they from and how much do I owe. It’s important to be organized when it comes to loans. Even though college will keep us extremely busy it’s important to be educated on the company or entity we took the loan from as well as how much we owe. Millennials get a bad rep when it comes to financial smarts, so being in the driver’s seat of your loans in essential.
    The second tip was knowing your payment options. Some lenders offer an income based payment plan where you fill out a form of how much you make and the loaner may offer an option to pay less over a longer period of time. This option could be great for those who have yet to find their career/hit their stride in a job after college and pay what they can without putting themselves into debt.
    Point three speaks on always giving your updated information to your loaner. So refilling out an income sheet every year and informing them on dependents and other factors that can help you avoid a spike in interest rate. The article mentions have many consumer bureaus have accused loaners of not providing amble notice of these deadlines to people. It’s a sad reality that most loaners will not be your best friend and send friendly text reminders that your payments are due soon or tips on how to reduce interest rates. Which makes it even more important that we pay attention to what our options are concerning such a large loan are.
    Not paying or the concept of forbearance which is essentially declining a loan till a later date was the fourth tip. Although this may seem attractive to help postpone payments, this is a bad idea as the interest continues to pile up. I hope that I will be making enough money with my job to pay the minimum on the student loans as many of the other people that commented on the article did. Loaners also are dishonest in this aspect because they coerce their clients into thinking this is the best option. When often income based payments are the best. The theme of loan companies trying to make money off recent graduates is evident throughout the article and though sad is a reality everyone who has a loan should be aware of.
    The penultimate tip required a little more strategy and dropping your cosigner.Often when getting large loan, you can have a cosigner or someone with established credit that can help pick up some payments if you don’t have the funds. The tip was to drop the cosigner if you have the money to which will lower interest rates. After you make this change you should always pay through the loan website or directly mail the check instead of a banks autopay system. This will help you to make sure your payments and the amounts you are paying will be correctly deducted from your total. I do not have a cosigner on my loan but can have friends who do. This would be a good tip for them as they approach the end of their payments.
    Check your credit and check it again was the last point. I always thought that checking your credit score lowered it and all the corny commercials advertising credit scores didn’t reinsure me that I was committing a financial Deathwish by checking it. But the article explained that you can get a credit report once a year from three credit bureaus.
    Even though the six points made by Ron are specific and will affect everyone differently an overall take away from this article is to be educated and informed on our loans and ask questions. A college education is the second largest purchase in our life only being surpassed by a house. So the amount of attention we should pay to our statements from our loaners as well as the payment options should be extremely high. I hope to take what I learned from this article and apply it to my life and get my loans paid up quickly.

  18. Greg D'Ottavi September 29, 2017 at 1:27 pm #

    In today’s society, higher education has become essential for higher wage employment and has become more expensive than ever before. Attending a college or university after high school is the standard for many middle class citizens in the United States, and over recent years has become more like a business than an education source. According to College Data, the average price for attending a public college last year was almost $30,000 and almost $50,000 for private schools. These numbers are astronomical compared to previous years and often do not include other fees such as room and board or meals. Every year millions of college students are taking out thousands of dollars in loans to allow them to pay for it all and this article sheds interesting light on that.
    It is no surprise to me how banks and other loan institutions have developed financial traps for young students. The article suggests that one of the major problems with student loans is that the young students applying for them are simply uneducated about the financial decisions they are making. With that said, student loan institutions do not make it very easy to understand either. In my opinion this is one of the worst aspects about going to college and it seems like it is only going to get worse. Once college students graduate, they realize that they have nothing to do but pay off their debt from attempting to get ahead in the world. Going to college is a privilege and an opportunity, but it should not end up being a regret. College students should be graduating and becoming employees with their degrees, not worrying about living from paycheck to paycheck only to pay off loans for five years.
    The author goes on to explain further various tips to avoid student loan straps and I believe the most important of them is know your loans. Being educated about the financial decisions you are making is such an essential skill when going into college. If I could go back and understand more about the various financial loans I applied for, and now currently have, I would be so much better off. Choosing the correct loans to apply for and ensuring you have a plan for repayment will help to avoid a devastating trap. It will also help you in the end once it comes time to pay off the loans.
    In addition, another interesting point the author makes is “No Forbearance”. No forbearance is something your servicer or loan provider may offer you, meaning to reduce or eliminate payments for a certain period. The problem with forbearance is that while you may slow your payment or pause it for some time, interest still goes up. This is often a trap that many fall into because of the way it has been offered. Some servicers have offered it to borrowers when there are various better options available. This is an eye-opening fact into the business of student loans and paying for college. These loan servicers have developed a way to make as much money as possible off people with high interest repayment plans. It is worrying to me to think that I will most likely encounter these traps when I begin to repay my loans in a few years. I am glad that this article helped to shed some light on to that inevitable time.

  19. Nicholas Birchby October 6, 2017 at 5:30 pm #

    Over the years, Student loan debt has transformed into one of the largest economic disasters in American history. American college graduates owe more than a total of $1.25 Trillion in debt. Avoiding student loan debt is nearly impossible for most people, as college expenses have never been higher. However, there are some tricks that can help you stay on top of your loans and prevent yourself from falling into a deep hole. Student loans can be extremely confusing to understand, especially for a young person who has never had to deal with anything nearly as important as this. It is important that for a starting step, a college graduate knows exactly how much, and to who they owe their money. It sounds very simple, however many times the servicer of the loan is not the original lender. It is best that you are extremely organized and as informed as possible. A very interesting way to monitor your loan is by using an income-driven payment plan. This deal structures your payments for loans upon your income and family size, which lowers your payments to a more affordable price per month. I think this is very smart because it gives the student a fair way to assure he can pay the money back. If the student has a very low income at first, burying him with interest will do nothing but prolong his debt in life. This can effect the student for years to come because his credit score could become destroyed. By offering these income-driven payment plans, you provide students with a more affordable price over a longer period of time, which benefits both parties. The important thing to remember is that these income-driven payment plans expire every year. If the student does not reapply in time for the deadline, they will see a huge jump in their monthly payment. When this happens to students, it typically results in falling behind on payments, and their interest to begin rising. The only way to avoid this is by being on your toes. Calendars and reminders should be scheduled weeks ahead of deadline to assure you can avoid a silly mistake. Another important thing that students should avoid is called Forbearance. This means that the company will lower, or even take away your payments for a while, but the interest keeps adding. This is a trick they steer you towards that helps short term, and buries you long term. The increased interest will add up and will completely overwhelm you once the payments return. This is why it is so important for college students and graduates to be extremely alert and informed regarding all aspects of student loans. You never know where these companies are going to try and take advantage of you. Be warned, Forbearance is almost never a person in debts only option. The same companies who stole billions by forcing graduates into forbearance were also available to give out income-driven payments. These major loan companies do not operate to make you smarter, they do it because they make a lot of money in what they do. It is very important that you are cautious of who you let handle your money. Do not allow yourself to be taken advantage of, and your entire future jeopardized.

  20. Brian Ayoub October 6, 2017 at 7:44 pm #

    As a college student who is lucky enough to have parents that are able to provide for me and pay for my college tuition, I am not entirely educated about student loans, however I have been in contact with others who have taken out loans and the reception is mixed. I have talked to people who owe over 150 thousand dollars and will not be able to pay those loans until they are in their mid forty’s. I have also talked to people who owed a little amount of money and were able to pay off the loans relatively quickly. One thing is for certain, you are definitely going to want to be 100% aware of what you are dealing with and how to navigate your loans. A key tip is to stay up to date yourself, and not count on emails and notifications that you owe a payment. As the article states, it is easy to forget a payment or make a mistake. Another tip is to ask for forbearance from your servicer which gets rid or reduces your payment for a certain period of time. Of course the more you stall, the higher the interest. If I did take out a loan, I would definitely try to pay it off as quickly as possible, since I hate have debt to my name. Another tip is to extend the time period of the loan to pay less each time. Again, for me, this doesn’t seem like an attractive option, but for someone who owes a crazy amount of money to the loaner, I can see why this option would be helpful. When you become established and dependent on your own income, you can choose to drop your co-signer, usually a parent, who signed for you when you applied for a loan. This helped the loan payment because the interest rate was lower. Services allow this when you make on-time payments for a certain period of time. I would love having a co-signer because having a low interest rate would definitely be beneficial. Once I got a job out of college, I could just drop my co-signer since I can financially depend on my self and pay off the loan. I noticed that this article emphasizes the point that you can not depend on automated services like notifications and auto bill pay. Usually they are unreliable and can mess up a lot of your life. If you miss a payment, it can come back to haunt you in many ways. Your credit score will tank, and that can screw you when you want to purchase a home or car. Also your interest rate for the loan will go up and you will need to pay more the you intended to when you applied for the loan. My parents really stressed the fact that loans are not a good thing in life and to only spend money on things that you can comfortable buy. I want to build up my wealth and invest wisely and that would be stuttered if I had to pay a ton of money towards student loans. The most important thing is to be careful and aware when dealing with student loans because one mistake can really hurt your entire future plans.

  21. R. Joseph October 6, 2017 at 10:16 pm #

    Growing up in the world today, we are always preached to by our parents about how important it is to get a good education. Education is indeed a good thing, and staying educated helps you to keep up with the constant changes that occur around us in the world such as technology, economic, and environmental changes. It’s important to know about what is going on around us and why this is happening. Getting a good quality education however, especially at the college level, is very expensive. If you can’t afford to get a good education out of your own pocket, of course, there are always people willing to help. There are people willing to assist out of the kindness of their heart (grants), and then there are those who will help you, but on different terms (loans).
    Student loans are always a good help when it comes to paying for college, but the less loans you have, the better. Students would not have to worry about loans if education wasn’t as expensive as it is. Of course, there are certain paths you can take to minimize your loans payable. One of those ways is attending a community college for your first year or two of college which is much cheaper than a regular college or university. We can’t forget about the benefits of being a local student and paying in-state tuition which is much cheaper than out-of-state tuition. Then there is a state like New York, where certain colleges are free as an in-state student, but there is always a catch.
    For students who are out-of-state or international, student loans can be a killer. It is always important that no matter who you accept loans from that you understand the terms and conditions of those loans such as: when would you have to start paying them off and the possible payment routes you can take to pays off those loans. Usually when taking a loan, there is always a briefing as to “what you are getting yourself into.” It is up to you as a person to make sure you understand the loan situation so that you do not put yourself in a bind when it’s time to pay these loans off. A loan servicer will be delighted to put you unto a plan with the highest interest rates, as that would be a benefit to them. However, if you find yourself in that position, it is rare that it is the servicer’s fault.
    There are many traps that you can fall in when it comes to paying off student loans. I like this article because if gives students tips so that we can avoid falling into some of those traps. As a college student, when we accept student loans, we should look to start creating a plan of action as to how we will pay off those loans step by step. The loan servicer can provide us with various payment plan options, but we need to establish a personal plan of action that involves getting a degree and finding a good quality job that can assist you in paying off your loans. We have to recognize and realize that there is no time to be fooling around and engaging in the typical “college life.” We must maintain focus and push ourselves so that we can get out of college as soon as possible. The sooner we get out of college, the fewer loans we will have to pay off. Make the right choices in terms of a payment plan, stay focused, and before you know it your loans will be paid off.

  22. Andre Bakhos October 19, 2017 at 4:30 pm #

    For many people in America, college is the next step after graduating high school; the bridge that must be crossed to finally reach adulthood and become fully independent financially. When a former student does become financially independent, they unfortunately are responsible for paying off all the loans they took out in order to afford their education. Sure, the student loan system is not perfect, and there can always be improvements, such as educating students on how to pay them off efficiently, but it is necessary in our society. There is a large movement across the country, spearheaded by university students, to make college free for all, so everyone can be afforded the same opportunities after high school. Free college sounds great on paper, but in reality, it is simply not feasible for a few reasons.
    When people advocate for something “free” from the government, they do not seem to understand that it is not truly “free,” but incorporated into our taxes that way pay out of our paychecks. Taxes will shoot right up, and diminish the weekly, monthly, and annual income of millions of Americans. The response to this argument, from those advocating for free college education, is that the millionaires and other members of the 1% need to “pay their fair share,” and the money for free college should come out of their wallets. This is also not feasible for a few reasons, one of which is that not even all of their money pooled together will be able to afford to pay for every student’s college education for more than a few years at most. The next problem with having the 1% pay for college education is that if their taxes keep rising and rising, they will eventually become fed up and move out of the country, leaving no way to pay for the college that was promised to students as “free.”
    If college becomes free, many more people would have a degree, bringing down its’ overall value. This is what happened with the high school diploma, or GED when public schools became the burden of the taxpayer. Not that making high school free was a bad thing, it just made it difficult to do anything post graduation, as everyone had a GED and it did not set you apart from the crowd in any form. College degrees would be practically handed to everyone, and having one would not set you apart from anyone else in society, except those without a degree.
    Unlike food, water, and shelter, education is not a necessity, and not a human right. There are many cheaper ways for people to learn compared to college, such as books, the internet, and other resources such as actual work experience. For most of the students going to college, their families have had to make large sacrifices of time, money, and personal pleasures such as home or technological improvements. College was not handed to them, but worked and fought for by the entire family, which makes it much more rewarding for the student when they finally obtain their diploma. For families that have made enough money to afford college without loans, they worked hard for, or their previous ancestors have worked hard in order to provide for their future generations, and should not be chastised for that.
    Instead of complaining about and whining about how the system is not fair for everyone, students should work to help pay for their education, study hard to obtain scholarships, and work hard while in college in order to not waste their family’s money or time. It needs to be pressed into their minds that nothing in life is truly free of some cost, and once they have embraced this mindset, they will appreciate whatever is gifted to them, and use it to their fullest potential. As a college student myself, I’ve seen my parents and whole family make large sacrifices to afford me the opportunity to be where I am today, and I will work hard to make them proud, and to give their sacrifices meaning.

  23. Piyush Patel October 20, 2017 at 9:02 pm #

    I feel that all high schools of student end up going to a higher education program after graduation should have a required personal finance course in their curriculum and required for graduation. They should be required to complete it during either their sophomore or junior year so senior year when they start to plan on going to college, they properly understand the best way the can finance their education. Now thinking about to it, I should’ve when to county college for the first two years and then transferred to a four year university because then I would have saved at least $40,000. Now all I can really do is make sure that when I graduate I am in good shape to pay my loans off and know the terms of my loans so I do not incur additional fees and interest.
    Elected representatives should start to support higher education much more. There are nearly 2 dozen countries that provide nearly free tuition at public colleges. As a developed country that wants to improve in the future we should invest in the education of our youth. Instead of pushing the youth to go to college and taking out on average $30k in loans a year and come out becoming a teacher or another public job making $40k a year so they’ll be in debt for most of their 20s and 30s, if not longer, we should be teaching them how to go about financing their education and if its right for them. This article talks about how it is important to know your loans and who you owe, how much, and the terms so you do not get hit with penalties. In addition, it talks about income-driven payments so you can known if you are eligible for certain payment plans that reduce your monthly payment for federal loans. Also many kids take time off of college and don’t realize once they leave college and are not enrolled they need to start making payments. Also many student don’t know that they can ask their loan servicer for help by asking for forbearance that allows you to lower you payments or not pay for a certain amount of time while you are having difficulty. This article really shows that students need to be more informed on their college financing options and that also the government should invest in their youth and not put them into debt making it harder for them to succeed.

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