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.

Posted in Education and tagged , , .

3 Comments

  1. Imagine going through four plus hard years of schooling that will hopefully eventually lead you to a good job and when you are done and have that diploma in hand you get told that you owe $50,000 plus in student loans. That no longer gets imagined, but instead is a very common thing to happen for a lot of college students in today’s world. College is expensive and for a lot of people the only way to pay for it is to take out a loan and hope that in the end it will be worth it. It is nice to read that an article is actually being written that will help college students pay off their loans and get rid of them sooner rather than later. I feel that a lot of people are against students paying off their loans because everyone is money hungry. It is very hard to go through school, do all the studying that goes along with school, and know that when you are out you have to pay back all the money that you owe to the bank or whoever you took a loan out from. There is a very small number of teenagers that actually have the money to pay for school without having to worry about taking out a loan or something of that nature. The problem is that even those kids that have that money do not even really need to go to college because they already have a lot of money to their name. In my case, I was working from the first day that I was capable of working, age 15, and saved as much money as I could for four years so that I could use it for school. Even with the scholarship that I got from my school and all the money that I saved from working, I could barely pay off even a semester’s worth. College not only has expensive tuition, but also has expensive meal plans, room and board, books, etc. Something needs to change with how college students get charged for college because it really is not fair how much money they have to pay back. Hopefully, everything will eventually get figured out and college loans will not be as bad as they are now and students will not have to lose an arm and a leg just to go to school.

  2. Did you know the student loan debt as of 2019 is $1.6 trillion in federal and private loans? An estimated 44.7 million people are struggling with student loan debt https://www.nitrocollege.com/research/average-student-loan-debt. That amount of money with that amount of people is historical. The cost of tuition, room and board isn’t the only thing that student loans take into consideration. Think about the interest and the principle. The overall cost of repaying a loan is calculated by adding together the interest charged and the amount borrowed. The interest is what kills people the most. The higher the interest rate and the longer the repayment period, the more you’ll pay overall. Imagine going through 4 years of schooling just to realize that you’re going to be in debt for let’s just say about 15-20 years. Student loans are an absolute hassle to deal with and even families with two working parents are struggling to pay them. Students take on loan debt with the intentions that having a college degree is a ticket towards success. Colleges are very lax on informing you on how much you’ll actually pay back and how much the total cost will be in student loans. Just like how the government doesn’t tell you about the repayment options which leaves the 44.7 million people trapped. You have loan servicers who won’t inform clients of cheaper repayment options just so they can essentially “steal” more money from you each time you make your student loan payment. From personal knowledge and experience, I would afford private loans. They aren’t required to offer repayment options. Unfortunately, I honestly don’t think that the student loan debt will ever be solved and I expect the amount to grow substantially within in the year.

  3. The most daunting aspect of the college experience for many is the almost inevitable student loan debt they will incur from their studies. Societal expectations have led many young adults to believe that a degree is necessary to obtain a high-paying job, so some can see student loan debt as the price to pay for a fruitful career. Growing enrollment and increasing admission costs has led to the student debt crisis reaching all-time highs. Outstanding student loan debt peaked at $1.41 trillion in 2019 and the average student loan debt per borrower peaked at $35,359 in 2018. Because this issue is prominent for so many people across the country, and this debt is weakening the economy, people need to become more informed about ways to properly pay off loans without making mistakes that can increase interest rates.
    This article manages to effectively explain why these tips are beneficial, how borrowers can apply them in actual cases, and what borrowers need to do to reap the benefits of this guide. One thing the article pointed out that I found interesting was that many loan issuers do have programs that can assist borrowers with managing, and potentially lowering, their debt, but these programs are not often advertised, or most people do not do the research to find these programs. On the other hand, I also found it disheartening that some issuers show no regard for their borrowers. One example of this was Navient persuading borrowers to pursue forbearance, which temporarily reduces payments, but also leads to more interest in the future. Another shocking discovery was that companies like Navient weigh envelopes borrowers submit to test if they only contain a check, and if they do, they process the check with no regard for potential instructions. Issuers should manage borrowers on an individual basis because every case is different, and this process attempts to standardize transactions for the sake of convenience. I liked that the article ended with a call to action because reforms can and need to be made for a prevalent issue that is affecting the lives of many and weakening the economy.

Leave a Reply

Your email address will not be published. Required fields are marked *