Great video on the basics of Student Loans.
Great video on the basics of Student Loans.
Last week, the Washington Post reported that the Trump administration plans to include a potentially big blow to student loan borrowers in its education budget proposal: an end to the Public Service Loan Forgiveness (PSLF) program.
Unveiled in 2007, PSLF is currently slated to begin awarding federal student loan forgiveness to eligible public sector and nonprofit works later this year. At first, the report suggested those plans may be in jeopardy. however, more details have emerged that indicate current federal student loan borrowers will still be able to receive forgiveness through PSLF. The proposal would only impact new borrowers on or after July 1, 2018.
According to the latest Public Service Loan Forgiveness statistics, 552, 931 borrowers have been approved and are potentially slated to receive forgiveness through PSLF.
Here’s what we know now:
Not yet, at least. Currently, this is merely a proposal put forth by the Trump administration. While this certainly isn’t encouraging for the PSLF program, the president does not make the budget. That’s up to Congress.
In other words, before there are any changes to PSLF, Congress must take action.
Based on a May 23 conference call with reporters, this proposal would not impact current borrowers who are looking to receive forgiveness through PSLF. Borrowers currently on track to receive forgiveness through the program should be able to do so as originally outlined. The proposal would only impact borrowers who take out their first federal student loan on or after July 1, 2018, according to the Washington Post.
This means that anyone who’s already borrowed federal loans should remain eligible for PSLF as well as anyone who begins borrowing prior to July 1, 2018. It appears that whether or not borrowers begin making PSLF-eligible payments or submitting Employment Certification Forms by this deadline would not impact eligibility. Only the borrowing date would matter.
The report from the Post also indicates that the Trump administration plans to eliminate the current income- driven repayment options including Income-Based Repayment, Pay As You Earn, Revised Pay As You Earn, Income-Contingent Repayment, and others.
For undergraduate degree holders, the proposal would reportedly replace these programs with a single income-drive option that would cap payments at 12.5 percent of discretionary income while offering forgiveness after 15 years. If this plan is offered, this could be good news for student loan borrowers as it may result in greater amounts of forgiveness over a shorter repayment term.
The news isn’t so great for graduate degree holders, who would enjoy the same 12.5 percent payment cap, but would need to do so for 30 years before receiving forgiveness.
No matter which side of the political aisle you stand on, eliminating PSLF would be bad news for borrowers. With mounting student loan debt that’s been compared to the recent housing bubble, borrowers need better - not fewer - options for relief.
While any potential changes to the program are likely far off, make your voice heard by contacting your Congresspeople and letting them know that you want to keep PSLF intact.
For many families, sending children to summer camp is an exciting rite of passage. But it can also be an expensive addition to the family budget, especially if there’s more than one child to pay for. Fortunately, there are several ways to save on sending kids to summer camp, as well as lower cost alternatives that can be just as much fun.
It seems impossible to watch TV or go through the mail these days without seeing an ad for an all-inclusive meal kit delivery service. You know the ones with names like Hello Fresh, Blue Apron and Plated (with new ones being added all the time). You’ve probably wondered if these services are a good deal or just a wasteful extravagance. The truth is, whether a meal delivery service is a smart way to spend your food budget really depends on your own lifestyle, eating habits and savings goals. Here are some pros and cons of meal delivery services to help you decide if it’s the right choice for you:
You’ll Eat at Home More- One of the biggest selling points of meal delivery services is that they allow you to prepare restaurant-level meals in your own kitchen. If you routinely dine out (or get take-out) several times a week, using a meal delivery service will probably save your money in the long run.
You’ll Learn New Recipes and Techniques- If you’re new to cooking or tend to make the same meals again and again, a meal delivery service will expand your horizons and help you learn new skills. All meal planning kits contain detailed recipe cards. Once you discover some new favorites, you’ll be able to recreate them on your own by simply purchasing the ingredients.
You’ll Minimize Food Waste- If you routinely buy more groceries than you need and find yourself throwing away food because it’s gone bad before you can use it, a meal kit delivery service will help with that. Everything is perfectly portion controlled and if you prepare the meals as directed, you should end up with zero food waste - and zero wasted dollars, too.
The Expense- While the cost of meal delivery service varies, they average out to around $10 a meal, per person. And while that’s more than what you’d pay buying groceries on your own, it’s much less that you’d pay for dining out. Also, many of these services offer significant discounts on your first delivery. Provided you remember to cancel after your first box, you could try out several boxes at a discount before deciding whether to continue with a service long- term.
Excess Packaging- In addition to the box everything comes in, every ingredient inside is packaged individually, and there are chilled packs, too. To avoid a sky-rocketing carbon footprint from disposing all of the packaging, you must be committed to recycling everything.
You Might Not Like Every Meal- Although most services allow you to specify certain ingredients or flavors you’d rather not receive, there’s still a chance you’ll run into a meal that doesn’t match your personal tastes. You’ll get the most value - and enjoyment - from a meal kit delivery service if you have an adventurous palate and few dietary restrictions.
We all need to take time to relax and enjoy life with family and friends. But maintaining an active social life can be expensive. And when you’re doing your best to live on a budget and save money, spending money on leisure activities often takes a back seat to covering basic living expenses and paying down debt. Fortunately, the beautiful weather is a great reason to take your social life outside. Here are several ideas for low-cost, outdoor alternatives to expensive social activities:
Dining Al Fresco- When you’re on a budget, dining out at restaurants quickly becomes a want, rather than a need. But you can still enjoy great food and good times with friends by choosing to have a picnic or outdoor potluck. Whether your host it at your home or get together at a local park, you’ll enjoy a wonderful meal, fresh air and the chance to reconnect with your friends, all for a fraction of the cost of one meal at a restaurant.
Outdoor Movie Night- Skip the long lines, sticky floors and overpriced concessions at the local multiplex and have your own outdoor movie night under the stars. Pinterest is filled with easy ideas for putting together your own outdoor movie screen and turning your phone or other device into a simple movie projector. Pop your own popcorn, fill a cooler with drinks, line the lawn with blankets and pillows for a comfy viewing experience. Once you try it, you won’t want to watch movies any other way.
Coffee Walk- Meeting for coffee to catch up with a friend seems like a reasonably budget-friendly option, until you factor in the pricey specialty coffee drinks and tempting desserts. Instead of meeting at the coffee house, brew a pot of coffee (or tea), pour it in a few travel mugs and meet your friend for a nice long chat and a walk. Not only will you save money, you’ll get a little exercise, too.
Concert Under the Stars- When it comes to concert tickets, there’s no such thing as a ‘cheap seats’ anymore. When you factor in service fees, most concerts will set you back at least $200 for two people. And that’s just the tickets, never mind concessions and souvenirs. So, what’s a budget-conscious music lover to do? Find free, live music outdoors. Communities of all sizes host free outdoor concert series featuring great local arts - and sometimes even big-name talent. You might not see the biggest tour of the summer, but you can enjoy great live music with your friends and neighbors without spending a dime.
Yoga in the Park- If you typically meet friends for class at the local yoga studio, move your yoga practice outside instead. use your smart phone or tablet to find plenty of free yoga videos online. Taking your practice to the park or beach isn’t just a money-saving move- being outdoors in the fresh air will enhance the stress-relieving benefits of your yoga session.
While repaying my student debt, I felt the pain of paying higher interest rates of over 6%. Most student loan borrowers feel that pain, too. The average student debt of $37,172 at a typical interest rate of 5% costs $155 a month in interest alone.
Unfortunately, I was unaware of options to refinance student loans. One strategy in particular could have a smart fit: getting a zero-interest credit card and using it to perform a balance transfer to refinance my student loan. I could have used the 12-18 month introductory rate period to pay off my student loans, interest-free.
A credit card balance transfer for a student loan is possible and could be a smart move for you. However, it’s not as simple as transferring balances between credit cards. Follow this guide to perform a student loan balance transfer to a zero-interest credit card - and make sure you’re actually coming out ahead in the process.
Simply put, a balance transfer for a student loan uses funds provided by your credit card issuer to pay off your student debt.
However, the actual process can be a bit complicated. Here’s an overview of the steps involved in a student loan balance transfer.
Overall, credit cards carry higher rates than most consumers pay on student loans. So a student loan balance transfer to a credit card only make sense if you’re moving the debt to a credit card with a 0% introductory APR and paying off the balance before that intro period is up.
However, not every credit card issuer allows cardholders to perform balance transfers for student loans. According to WalletHub, the following credit card issuers allow studnt loan balance transfers:
The next step will be to use your 0% credit card to pay off your student loan. your credit limit might put a cap on how much you can borrow to use for a student loan balance transfer. To maximize savings, be strategic and target the student loan with the highest interest rate.
These funds are paid out to you and your student lender. Many credit card issuers can also complete this process online or by phone.
As you move forward in this process, make sure you’re not mixing up a cash advance with a balance transfer. The two offers can be worded similarly, but a cash advance often has higher fees and costs associated with it.
After you request the balance transfer, the transaction will process and post. Make sure you get a receipt of payment from the student loan balance transfer to prove your student loan servicer got the funds.
Alternatively, the balance transfer funds might be deposited directly into your bank account. Try to immediately use these funds as a payment toward your student debt. Don’t let the money sit in your account, where you’ll only be tempted to spend it.
Once the funds from your balance transfer have paid off your student debt, it’s time to repay your new credit card balance - and fast.
If you still have a balance after the 0% APR expires, you’ll likely face a higher rate than you had on your student loans. Credit card rates are typically around 15% APR or higher. Any savings you might have anticipated by having an interest-free card could quickly be undermined by new, higher interest charges.
Diligently pay extra on your credit card each month. And make sure you set it aside and don’t add new purchases to the balance, either.
Now you know how to go about getting a credit card balance transfer for a student loan. But is this a smart move for you? Here are some potential benefits, drawbacks, and other considerations you should weigh before deciding.
Save on student loan interest- The most obvious benefit of a student loan balance transfer to a 0% APR credit card is the savings on interest. How much you could save will depend on the balance you want to transfer and how high your student loan rate is.
Maybe you have a $10,000 student loan at 6% APR that’s just entering repayment. Transferring the balance to a 0% credit card and paying it off in a year would save you $3,322 in interest, over a 10-year Standard Repayment Plan.
But what would you save if you paid off the loan in a year without the balance transfer? You’d still pay some interest - but not much. Paying the $937 a month it would take to pay off the $10,000 balance in a year, you’d pay $302 in interest (saving $3,021).
When deciding whether you should do a student loan balance transfer to a credit card with 0% APR or prepay your student loan, the savings are there. But they might not be as steep as you’re expecting.
Keep yourself motivated to pay off debt- Another potential benefit of using a student loan balance transfer is that doing so can keep you motivated to quickly pay off a large chunk of student debt. The period that you have a 0% APR on the credit card is the only time you can repay the debt without incurring more interest fees.
With the expiration of your 0% rate looming, you have a deadline to work toward. This can keep you accountable and disciplined as you work toward repaying debt. Getting out of debt often comes down to changing behaviors, so this benefit can be powerful.
Balance transfer fee- You’ll also need to account for a balance transfer fee. Most credit cards will charge this fee, which is usually around 3% of the balance transfer amount.
Take the $10,000 student loan balance mentioned above. If your credit card changed a 3% balance transfer fee, you’d pay $300. That wipes out a big chunk of your savings.
Look for credit cards that don’t charge a balance transfer fee. For instance, the Barclaycard Ring has no balance transfer or annual fees. And it carries a 0% APR for the first 15 months for balance transfers made in the first 45 days.
If that’s not an option, you can always call your credit card issuer and ask them to waive or lessen the balance transfer fee.
Transferring a high balance can be risky- Transferring a high balance means you’re stuck spending huge payments each month if you want to beat the clock on your 0% introductory rate. This can quickly eat into your cash flow and might be more painful than you expect.
Additionally, you’ll need to qualify for a high enough credit limit to even use the strategy.
And even if you have, say, a $15,000 credit limit on your new card, you probably shouldn’t use it all up with a balance transfer. Borrowing too much against this limit could increase your credit utilization ratio too much, which might adversely affect your credit score.
If you want to pay off student loans with this strategy, make sure the balance transfer amount is 30% or less than you total credit limit. For instance, that would be about $5,000 of the $15,000 limit.
With a student loan balance transfer, the 0% interest rate is a big draw. But it can also come with hassles like shopping for exactly the right credit card or coordinating with your student loan servicer. And you’ll have to force yourself to make big payments each month to stay ahead of the expiration date on the 0% APR.
There might be a better way to save on student loan interest: Refinancing your student loan with a private lender instead of a credit card.
The best student loan refinancing lenders offer rates as low as 2.30%. And you’re unlikely to face costs like a 3% balance transfer fee or a 15% interest rate hike after an introductory rate expires. You can also choose a longer repayment period to keep the monthly payments affordable.
So, what’s the “too long; didn’t read” answer? Simply put, it is possible to transfer a balance from a student loan to a 0% credit card to save on interest.
However, there are some downsides to watch for. You’ll need to make sure both your credit card company and student loan servicer allows this transaction. You should also spend some time calculating the potential savings of having interest-free debt for the introductory period. And compare whether costs like balance transfer fees might offset savings.
Overall, if you take the time to find the right low-cost credit card and pay your balance in full before your 0% APR expires, you could come out ahead.
When I graduated from college and landed my first job, I felt overwhelmed by my student loans. My balance was higher than my nonprofit salary and I had no idea how I was ever going to get out of debt.
I started reading personal finance blogs that talked about making extra payments on student loans to pay them off faster - and I rolled my eyes. I was on a tight budget; I sometimes couldn’t find the cash to put gas in my car, let alone extra money for my loans.
When you’re in student loan repayment mode, it’s likely you’re hungry for solutions - anything to make paying off debt easier. One lesser-known option is using a personal loan to pay off the remaining debt.
Personal loans are typically unsecured loans. This means they aren’t backed by any collateral, such as a home or car.
On May 24, 2017, the head of the Federal Office of Student Aid (FSA), James Runcice, handed in his resignation. Runcice blamed his sudden departure on overreach from Betsy DeVos and the Department of Education.
“I am incredibly concerned about significant constraints being placed on our ability to allocate and prioritize resources, make decisions and deliver on the organization’s mission,” Runcie wrote in an email to this staff obtained by the Washington Post. “[I am] encumbered from exercising my authorities to properly lead this great organization.”
If your goal is getting ahead financially, the formula for success is simple: Maximize tax-advantaged retirement accounts early, boost your savings with a Roth or traditional individual retirement account, choose investments you feel comfortable with and avoid debt like the plague. If you do those four things, you’re bound to enjoy less stress and more wealth over time.
But is it always that easy? Absolutely not. As you move through the various stages of life, you’ll encounter myriad pitfalls and temptations that can knock you off track - some of which can seem like a smart idea at the time.