The Consumer Financial Protection Bureau (CFPB) reports that student loans today cause serious setbacks financially for borrowers. They warn students of pitfalls that accompany lending practices that are becoming more commonplace in the student loan market.
What’s the Problem?
More and more, parents or other adults are cosigning student loans to help them in getting approved or in getting lower interest rates. However, this practice may result in the cosigners having difficulty in getting credit for their own purposes, or their interest rates on new loans may be higher than they would otherwise be.
In addition, it is generally quite difficult to remove cosigners from private student loans. Private lenders reject about 90% of consumers who file applications to have cosigners removed from student loans. The lenders do not provide any helpful information for borrowers about how cosigners can get their names removed from the loans.
A Troubling Trend
Using cosigners has increased recently, since the lenders of student loans are tightening their underwriting requirements to ensure they are repaid. According to the CFPB, about 94% of undergraduate student loan money lent in the 2014-2015 school year’s first three quarters was cosigned. This is the highest it has ever been.
The report from the CFPB does not name the specific lenders whose data was used in their report, but the lender responses they received covered millions of privately financed student loans. From their analysis, experts at the CFPB believe their statistics represent what is happening more and more in the industry.
In addition, there are mysterious criteria set that explain what lenders evaluate when they consider releasing cosigners. You should always look to get student loans without a cosigner. Adding a cosigner to your loan can cause many problems down the road. Don’t be part of this troubling trend.
Stronger Underwriting Standards are in Place
The student loan industry in the private sector has a goal of ensuring repayment to their lenders. Ensuring that all loans are supported by the ability to repay is often won by using cosigners. This is a cornerstone of protecting the consumer, according to Richard Hunt, who is the CEO of Consumer Bankers Association. He represents lenders of private student loans. He has found that private student loans lately are performing well, with almost 98% of these borrowers paying their loans back in a timely manner.
How Cosigning Can Affect Borrowers
This latest report is probably the last student loan report from CFPB to be issued under the leadership of Mr. Rohit Chopra. He sent in his letter of resignation recently. He has consistently been a critic of the practices of private student loans. He has called for greater protections for consumers and questions the way in which the student loan industry reports on the performance of loans. He feels that these reports appear more positive than is actually the case.
Chopra has discussed the ways in which loan cosigning impacts borrowers when they are seeking other types of credit. If you cosign a student loan and are looking for a mortgage lender, for example, they will take into account your debt obligations on the student loan as compared with your income. Student loan debt almost always shows up prominently on credit reports, which could limit a cosigner’s chance to get a home loan.
Cosigners’ Problems become Problems for Student Borrowers
Students who borrow for school and who pay on time may still see a hit on their credit score if their cosigner passes away or files for bankruptcy, according to Chopra. Lenders can report students in these situations as delinquent, when passing information to credit reporting firms. This can give students black marks on credit reports and can cause their credit scores to fall dramatically, which limits access to financing in the future.
Chopra’s report warns also about the use of fine print in contracts by some student loan lenders, which the CFPB has already addressed in the past. This includes what is termed “auto-default”, which occurs when students must pay a remaining loan balance in full if their cosigner dies or has defaulted. This can occur even if the student has made all payments in a timely manner.
The industry that issues private student loans counters that very few lenders actually use this practice. Most loans are not accelerated when cosigners die or default.
The report from the CFPB discusses issues that surround refinancing of student loans, which has become more popular since 2014. The bureau states that it received complaints from student borrowers who encounter difficulties in refinancing due to the servicers of their student loans. Some of these borrowers have difficulties in obtaining accurate statements of payoff amounts. These statements show the amount they owe and need refinanced.
Student loans are a very useful tool, when parents of graduate or undergraduate students are in need of paying career school or college. These loans can help you pay those educational expenses that other financial aid doesn`t cover. Federal loans are handy for those students who are eligible to benefit of these. Even more, some schools are offering federal loans through their direct loan program for graduate students, so they can easily cover their educational costs. If you are looking for such a loan, the following guide will help you know what the process of receiving your loan is.
How is it possible to become eligible for student loans for graduate students?
There are two main conditions that need to be fulfilled, if you want to become eligible for getting student loans in your last year of college: from one hand, you must be a graduate student at an eligible college of which program leads to certificate or degree or if it is not the student asking for the loan, you need to be the biological parent, stepparent or adoptive parent who is applying for the loan; from the other hand, you, as the student, need to fulfill the general requirements of the federal student aid, so you can become eligible for the loan.
How adverse credit history affects student loans for graduate students?
When a student or his/her biological, adoptive or stepparents are applying for the loan, performing credit check prior to any other action is necessary. If you have an adverse credit history, it is still possible to become eligible for getting federal student loans, but only through an endorser who doesn`t have an adverse credit history. If the parent is the person who is willing to borrow the student loan, it is not possible that the student himself represents the role of endorser. In case that the parents are unable to secure repaying federal student loans, the student can become eligible for other types of graduate student loans. Finding yourself in this situation is not excluded and if so, you need to contact the financial aid office of your own college for getting more information and support.
What else do you need to do for receiving your loan?
When you become eligible for receiving your federal student loan, you will need to sign the Master Promissory Note in which you agree to all terms related to your loan. Completing entrance counseling may also be required to perform for professional or graduate students, prior to receiving their loan. If you are graduating from a college, but want your loan for covering your educational expanses at the next school that you are willing to attend, the best thing is to contact the financial aid office of the desired school for most appropriate information.
How do you receive your loan?
The school account is actually the place where funds are transferred from where your tuition, room, fees and other school costs are covered. Once all of these vital costs are covered, if any funds remain, these will be given to you, so you can further pay for your other educational charges.
How do you pay back for loan?
Once the funds have been transferred to the school`s bank account, you will be contacted by the loan servicer who did this operation. Maintaining continuous communication with this person is essential, because you will find out updates of your loan on a regular basis and when you have to repay loans through this person.
When you are unable to regularly pay back loans…
If you already know that there will be times when you will not be able to repay student loans on-time, you need to immediately let your lender know about this fact. This person will definitely be able to help you understand and learn how to keep your loans in good standing. If you have a long history of on time student loan payments you will be able to refinance your student loans. Luckily, there are plenty of student loan refinance lenders on the market. And those high interest rates on graduate student loans can be lowered through refinancing. That being said, you will lose some of your federal graduate student loan benefits if you refinance with a private lender.
Flexibility – the key thing for graduate student loans!
Flexibility indeed represents one of the most important aspects of financing your graduate education. Some agencies let students choose the best loan plan depending on their professional and financial needs. Getting the best student loan for graduate students is something that depends on a lot of factors – and graduate students are the people who are really aware of this fact.
Student loans can be every student’s dream and also a nightmare. It is paradoxical that a loan could constitute so many problems. In the United States, the average debt that a student falls into after graduation would be about $68,000. It means one thing; the debt wouldn’t be paid off until they reach their 50’s. However, it isn’t all graduates that’ll be able to make this payment in their lifetime.
Let’s consider the case of Jessie. Jessie is a 22 year old Law graduate and comes from a lower middle-class background, and she held a lifelong ambition of being a solicitor. Now she’s a graduate and in her first year in school, she got a student loan and now upon graduation, it is not all joy and happiness. It’s because statistics has shown that some Law graduates would find it hard to secure training contracts once they`re done from the University even after doing their Legal Practice Course.
Jessie`s story, is just one of the many situations young graduates find themselves in even before they start earning their first paycheck. They’re already in debt and may end up residing in their parents` homes longer than they would’ve imagined. On top of this, it may get worse as it would be difficult to get a mortgage, making moving out an impossible decision even after graduation. It’s why student loan is a nightmare for so many students and for those that see it as a means of obtaining a good education.
How can you overcome this nightmare?
However, there are ways around this nightmare for students to enable them discharge this loan. Firstly, this is by debt forgiveness. Debt forgiveness is one of the ways through which debt-saddled students and graduates could desperately get out of this miserable situation. However, how many students would a system pardon? But in truth, some may be eligible for debt forgiveness that would seem like a partial act.
Secondly, another way around this is for graduates that have a job and able to pay, to set up a direct debit payment scheme. This would enable them to manage the debt efficiently and prevent them from making payments quickly and avoiding them overpaying what they owe.
Thirdly, another way around this nightmare for students is called undue hardship. It is obvious that students that take loans do this because of some financial difficulty their family is suffering. Therefore, if they can show that repaying the loan would cause undue hardship to not just them, but also the people depending on them, then it could be a way out. If they can prove this, then bankruptcy could be a way out. After all, the essence of the loan is to get a better life and not one of hardship where some of them have come.
Looking at the third option, students may still find that they’re still in debt even if they eventually file for bankruptcy. It is essential that they seek appropriate advice before choosing this option. This is because of the types of student loans available to students. The first being for students who began studying between September 1990 and August 1998 which is a ‘‘mortgage-style loan’’. What does this mean? It is a style that’s portrayed by the direct debit method for the repayment of the loan.
The second type was made available to students who commenced from September 1998 till date and knows as the ‘’income contingent loan’’. What does this mean? This means that repayment would be made based on the tax system with an interest rate of 1.5% as at September 2014. This would likely change in the next tax year. This also is usually determined by March’s inflation (RPI) rate. Since, at this time, it is a period of low inflation, then it is likely that it would drop to 0.9%.
For students, this could be fantastic news. They could choose to start making the payment early or when they start earning an annual income of at least $26,500. However, this amount changes on a yearly basis and payment stops once earning falls below this figure.
We’ve all been in debt at some point. However, it`s how we deal with that ensures we don’t remain there.
The other day a diary by SteveUFT made the recommended list on the Daily Kos, which was about the alleged evils of the Disney corporation because it removed a teachers name from a list of honorees of a now defunct educational award its company gave out. It was claimed his name was removed because the person was previously listed as a signatory on a protest letter against the company.
I don’t know Leo Casey who put forward this claimed plot by Disney against him over on the EdWize blog. From what I gather Mr. Casey is a special representative for the United Federation of Teachers in New York City and is well-respected and competent. I have no truck against him personally, and certainly not against union teachers or unions as a whole.
Yet there is a serious gaping hole in the story which makes his claims border on the bat-shit crazy.
Let’s look at the first honoree that signed the open letter protesting Disney which this unhinged teacher is claiming got him “erased” from the honoree listing on the Disney site… Lenni Abel, the 2000 honoree for Visual Arts.
He is still still listed at the Disney site.
Ok, that person is still listed, but what about the next one who signed the letter? Ok, let’s look at the next one, Ann Anderson, a 1990 honoree for English.. she is still listed on the Disney site.
• Mark Antoniff, 1998, English… still listed on the Disney site.
• Jayné Anthony, 2000, Early Childhood… still listed on the Disney site.
• Meg Elder, 2003, Visual & Performing Arts… still listed on the Disney site.
• Dara Feldman, 2005, General Elementary… still listed on the Disney site.
• Carmen Gumina, 1999, Science… still listed on the Disney site.
• John Hertzog, 2004, MS Mathematics… still listed on the Disney site (though misspelled the last name)
• Wanda Jennings, 2005, Early Childhood… still listed on the Disney site.
• Julie Joyner, 2003, HS Math and Science… still listed on the Disney site.
• Pauline Jacroux, 2003, Elementary… still listed on the Disney site.
• Sharon Locey, 1996, General Elementary… still listed on the Disney site.
• Warren Marcus, 1992, Social Studies… still listed on the Disney site.
• Carol Ann McGuire, 2005, Special Education… still listed on the Disney site.
• Meryl Meisler, 1992, Visual Arts… still listed on the Disney site.
• Larry Peterson, 1989, Mathematics… still listed on the Disney site.
• John Raby, 1994, Social Studies… still listed on the Disney site.
• Jean Savoy, 2000, HS Humanities… still listed on the Disney site.
• David Seiter, 1996, Social Studies… still listed on the Disney site.
• Robin Share, 1992, Performing Arts… still listed on the Disney site.
• Stephen Sroka, 1994, Physical Education… still listed on the Disney site.
• Joseph Sweeney, 1992, Mathematics… still listed on the Disney site.
• Larry Torres, 1992, Foreign Languages… still listed on the Disney site.
• Ron Valenti, 1990, Physical Education… still listed on the Disney site.
So every person who signed the same letter as Mr. Casey is still listed on the Disney list of honorees on their website. Some evidence. But because Casey, who wasn’t in any way highlighted in the letter, who wasn’t the first person singing it, was randomly left off a listing on a page after it was reformatted we must conclude that it is retaliation for signing the letter?
A reformatted page which, by the way has typos in it, yet because it has other mistakes like leaving off someone’s name randomly we are suppose to buy into the notion that it is a conspiracy to remove this one name as “retribution” for signing the letter, yet Disney does nothing to the other 24 people who signed the letter?
As noted by others, what you have to believe if you believe Casey’s story is that someone in charge of that particular portion of the vast Disney web site, sometime after October 1, 2007, (some 19 months after Casey’s letter) decided in an act of petty vengeance to delete Casey’s name from a web page that lists the past recipients of a now-defunct award.
The evidence that Casey produces to support the above claim? His name is missing from the web page.
Seems hundreds of people around here need some more education themselves, the kind which will improve their capacity for critical thinking and not making wild paranoid leaps of “logic” which, with even a cursory exploration of the facts, will be debunked.
What is more troubling for me in this is the group think (or rather non-think) and the mob mentality evidenced by the vast number of posters there who give zero critical thought to the subject and simply leaps to the preconceived notion that Disney is out being a vengeful petty right-wing shill trying to “Disappear” left-leaning political activist.
While I have criticized Disney quite strongly in the past, and rightly I believe, over its airing of the propagandistic and fraudulent re-writing of history in Path to 9/11, I am not willing to uncritically and unfairly slag off the company, particularly one who is progressive when it comes to providing partner benefits to gay couples who work for the company, etc. and who often draw the ire of the GOP and the looney evangelical right.
I know a little bit about Disney and how they operate, and they are like most any other corporate entity, not “good”… not “bad”.. but simply a typical well-established corporate entity.
We need good teachers, and Mr. Casey may very well be one, but we also need to educate ourselves in critical thinking as well as improving our ability to stay within the reality-based community.
How to make sense of the Bush, Gonzales and the GOP.
From pushing the Patriot Act which allows the Government to detain you, hold you indefinitely, not allow you access to a judge, trial or even stand accused of a crime all in the name of “national security”… to instituting laws that allow open-ended fishing expeditions into what you and anyone else want to read in your public library, all in the name of rooting out “enemies” yet without any probable cause to investigate you or anyone else. That the Bush administration can put someone like Alberto Gonzales in the position as the chief law enforcement officer, someone who was the prime legal architect for the policy of torture adopted by the Bush Administration is astounding.
Gonzales’ advice led directly to the abandonment of long-standing federal laws, the Geneva Convention, and the United States Constitution itself. Our country, in following Gonzales’ legal opinions, has forsaken its commitment to human rights and the rule of law and shamed itself before the world with our conduct at Guantanamo Bay and Abu Ghraib. The United States, a nation founded on respect for law and human rights, should not have as its Attorney General the architect of the law’s undoing.
In January 2002, Gonzales advised the President that the United States Constitution does not apply to his actions as Commander in Chief, and thus the President could declare the Geneva Conventions inoperative. Gonzales’ endorsement of the August 2002 Bybee/Yoo Memorandum approved a definition of torture so vague and evasive as to declare it nonexistent. Most shockingly, he has embraced the unacceptable view that the President has the power to ignore the Constitution, laws duly enacted by Congress and International treaties duly ratified by the United States. He has called the Geneva Conventions “quaint.”
Yet that’s how Bush and the GOP view the law of the land and the basic principles we as a nation have always strove to stand for. That is the utter insanity of their rhetoric to defend and craft a legal basis for such actions.
In short, they employ doublethink and doublespeak when they get rid of freedoms and civil liberties in the name of “freedom” and “liberty”. The irony is that this is the antithesis of traditional conservatism and is a radical intrusion of civil liberties and the authority of the government to intrude into your private life.
As Benjamin Franklin, one of our wisest and most revered founding fathers, once astutely opined:
“people willing to trade their freedom for temporary security deserve neither and will lose both.”
That quote is not only timely (and timeless) but is a truism. Perhaps we should help Bush and Gonzales by downloading and printing a wall poster of that phrase with the various wordings of it used by Thomas Jefferson, so that they can look at it everyday and undue the damage they have wrought, while pondering the wisdom of it before they subvert the very principles we stand for and are worth defending again. It might also help you when you are confronted with doublethink Right-Wingers (Fright-Wingers™). Or when you meet with people who consider themselves to be “conservatives” and hold liberty and freedom as vital principles by having them read it. If they still think Bush and Ashcroft are defending our Constitution, our nation, and our most cherished principles, you will have a handy safe non-harmful tool to roll up and smack them up side the head, much like one does to potty train dogs.
His declarations made Hurricane Katrina an “Incident of National Significance.” The National Response Plan (NRP) defines an Incident of National Significance as:
an actual or potential high-impact event that requires a coordinated and effective response by and appropriate combination of Federal, State, local, tribal, nongovernmental, and/or private-sector entities in order to save lives and minimize damage, and provide the basis for long-term community recovery and mitigation activities.
The critical point is here:
“ALL PRESIDENTIALLY DECLARED DISASTERS AND EMERGENCIES UNDER THE STAFFORD ACT ARE CONSIDERED INCIDENTS OF NATIONAL SIGNIFICANCE.” (NRP, 7)
Furthermore the NRP states:
When an incident or potential incident is of such severity, magnitude, and/or complexity that it is considered an Incident of National Significance, the Secretary of Homeland Security initiates actions to prepare for, respond to, and recover from the incident.” (NHP, 15)
And so from August 26th onward the President already had declared he was lead via the NRP mandate. Because in the plan, which is a security assurance given to every state in this Nation, it says the President will lead in Incidents of National Significance. It says the President will order the Secretary of Defense to deploy troops, without a request from the local officials. It says the President directs the Secretary of Homeland Security and leads him in responding “effectively” to disasters.
So if they really want to hang their collective hat on the notion that 2 days *after* Bush already declared the NRP into effect, where he was now responsible to lead the proactive response to do what needed to be done, that somehow he was begging the local and state authorities to declare an evacuation… well they are welcome to it, because we already know that for three full days prior to the storm hitting, Bush was in charge via the NRP, and he could have forced the evac two days prior if he wanted to since he was so “Johnny on the spot” and in control, and because of the NRP already being in effect, he already had every legal authority and was already the one responsible.
This is the real face of modern Republicanism and their starve the beast, shrink the government to a size you can drown-it-in-a-bathtub world-view.
A dog consumes the remains of a man near a breach in a levee in New Orleans, Louisiana.
Image: © Allen Fredrickson/Reuters/Corbis
Photographer: Allen Fredrickson
Date Photographed: September 6, 2005
Location Information: NEW ORLEANS, LA, United States
I don’t know what I can say… what can we do to make people realize what the cost of Republicanism really is?