So here are my top 10 tips to get rid of student loan debt so you can get on to other important things in life (like traveling, inventing, and jamming).
1. Make friends (or at least amends) with your debt.
Student loan debt is currently hitting the US in a huge way (as in over a trillion owed). Being part of such an enormous sum can be weirdly uniting and comforting. It’s terrible, but it also means that you aren’t alone. But while it’s nice to share a certain camaraderie over your debt, it’s easy to spend more energy on feeling defeated than on actually paying it off. That’s why it’s essential to focus on your personal numbers and come to terms with what that means for you. Engage with your student loan debt, make peace with the fact that it’s a part of your life. That means opening bill statements and doing research that allows you to truly understand your options and how to pay off your debt even more quickly.
2. Understand the terms of your repayment plan.
Next up? Understanding what the heck is going on with your student loan debt repayment. I was (rightly) intrigued by all the federal loan repayment plans when I was in college. It seemed like they were there just for me… the low earner and high debtor! Under an income-based repayment (IBR) plan, 25 years of consistent on-time minimum payments meant the remaining balance is just forgiven. Plus I would get to push off repayment for a good year via grace period, forbearance, and deferment? Psh, that doesn’t seem too bad…said the 22-year-old with no real concept of time or how interest works.
Twenty five years is indeed a long time–I’ve since realized. And I’m not that interested in being chained to debt for quite that long if I can help it. It’s a lot of time for compounding interest (and not the good kind) to accumulate. I’m definitely not interested in paying tens of thousands of dollars in interest.
It’s not that these programs don’t make sense–anyone who’s struggling financially could (and does) benefit from any one of them. But they’re also not the end-all-be-all of your debt repayment. I went straight-shot to a plan where I paid the least amount each month because I thought it was my most feasible option. And honestly, at the time it was. But I didn’t really understand what my repayment should look like over time and I stuck to paying minimums even as I started to make more money. I was just happy to be following a plan! Unfortunately, it was one that put me on the slow track to debt free. Do some homework (ahhh, never thought I’d say that again!!) and carefully consider what each repayment plan means. Take into account the length of repayment, how you might accelerate your plan as you continue to increase earnings, and even just consider what it means to pay student loan debt for so many years.
3. Create a personalized repayment plan.
Once you’ve figured out exactly what repayment plan works best for your present (and your future) circumstances then it’s time to put your sweet college skills to good use! Creating your very own repayment plan will help you to keep track of your payments and ensure that you’re going about repayment in the most efficient way possible. Decide on your timeline, how much you can sensibly pay into your repayment plan, and how you want to go about paying off your student loan debt most effectively. Visuals that highlight your repayment timeline are particularly useful to help you really picture the trajectory of your repayment. When I first started using ReadyForZero, I was a bit appalled each time I saw my principal balance creep up on the graph when I was accumulating interest. It was motivating!
4. Make your payments work FOR you.
Micromanage your debt! There are so many sneaky tactics that could be keeping you in debt for longer than necessary. To pay off your student loan debt you’ll need to keep your wits about you–especially as you sort out your initial payment plan. Ultimately, you want to make sure that you’re paying off your higher interest rates first while paying minimums on the rest, and also that your payments are actually applied to the principal balance! Be diligent with your payments or the entire process will go on for longer than anyone would probably like.
5. Bi-weekly payments.
Making bi-weekly payments is a fun “trick” to share and it also happens to be an awesome way to accelerate your repayment plan. If you’ve never heard of bi-weekly payments before they essentially add an extra payment each year. It works like this… instead of making one single payment each month, you take your monthly payment and divide it by two. Then you pay two half payments every two weeks, instead of one full payment at the end of the month. Since there are 52 weeks in the year, that means you’ll have an extra payment on your debt repayment. It’s fairly simple and the result is pretty awesome. Punch in your numbers to see how it works for you using this calculator!
I know, it’s a crazy cool trick! And it’s not even magic.
6. Track your daily interest…
… because you will be traumatized into action. I remember the moment that I truly understood just how much interest I was accruing on a daily basis. Let me tell you, it was a doozy of a panic. The only thing worse was seeing how that translated into monthly interest charged, and then from there, the yearly interest.
Keeping track of interest paid is one of the most effective motivators when it comes to paying off your student loans. It hurts to see how much interest you’re paying on a daily basis, even if your loan is attached to a slight interest rate. Even years into repayment it pains me to see my daily interest charges. On the same token, these numbers have motivated me to throw more force into my repayment plan.
7. Pay above the minimums.
Yet another must for millennials who want to dig out from under student loan rubble… pay above the minimums! If you pay the suggested payments you will be stuck in the student loan payment wheel for a long time. Much longer than if you paid even a small amount above the minimum payments. That’s because minimum payments are often largely a representation of the interest accumulated over the previous month. It’s essential that you boost your payments above the minimums, even if it’s just $20 a week.
8. Tweak your spending habits (or create good habits that will help speed up your repayment).
One of my favorite tricks to connect with my spending is to preface every “extra” purchase with… “are you willing to buy this AND match the amount in your repayment?” So for instance, if I see something that I want, but don’t need I’ll challenge myself to match whatever I spend on that item and put it directly into my student loan debt payoff. Sometimes, that stops me from making the purchase. Other times, it incentivizes me to put more into my repayment plan. It’s a great way to add a bit of thought to my purchasing–especially since it’s so easy to swipe more than I intend to when I’m hungry at the grocery store.
9. Use accountability.
Talk about your student loan debt! Tell people about your student loan debt! Sharing is a great tool to help you stick to your repayment plan and stay accountable to your goals. I’m not saying you have to live-tweet, snapchat (I’m trying to sound hip by using these references), or paste your numbers on your resume, but sharing your student loan payments goals with someone you trust and who will kick your butt when you’re distracted is extremely valuable. And remember when I talked about the camaraderie over student loan debt in the beginning of this post? It can work for motivating each other’s repayment too!
10. Have common sense (AKA, hone in on your inner Kali).
I’m not stretching in the least when I say that Kali is one of most inspiring millennial financial bloggers I’ve come across. She’s done an amazing job at securing her finances by using a powerful, but simple tool: common sense. And even better–she’s spreading this common sense and sharing tips that are simple and easy to implement. By making good financial habits widely applicable, she’s shown that this is not something that people have to struggle with alone and that much of financial wisdom can be boiled down to making informed and sensible decisions.
She’s a smart cookie – I’d listen to her.
Bonus: Open up a retirement account
OK, I know I said 10. But here’s a “bonus” tip, if you will…
If you don’t already have a retirement account, get thee to a computer/bank/financial advisor/friend and go about opening one!! I was practically forced to open up a Roth IRA and it was one of the best decisions of my young life. Not only did I start to build up savings for my eventual retirement kingdom, the biggest benefit came around tax time when I realized that I qualified for the savers credit! $500 into my retirement savings and then $500 returned at tax time. Millennials are winning in one area… we’re young enough to benefit from compounding interest in our retirement accounts. Start today!
Student loan debt can carry a stigma, but finance is a part of life. It isn’t something that you have to turn into a dry, boring topic as evidenced by some of Kali’s creative posts. There are tons of resources available to help you out. If you want to optimize your life and happiness you’ll need to lock-down your repayment so that you can free up more of your attention and funding to pursue personal goals. Get your student loan repayment together and you’ll be all the closer to your dream job of traveling the world while spearheading your own startup! Or, in my case traveling to New Zealand to take the Lord of the Rings movie tour.
Retrieved from https://www.levo.com/posts/10-things-millennials-should-do-to-get-rid-of-student-loan-debt
If you’ve ever felt a nagging sense of shame every time you crave a frozen margarita, you shouldn’t. But statements like these may be the reason you feel that way:
“Frozen cocktails carry a good deal of baggage in the cultural imagination. … Your first vision at the mention of ‘frozen cocktail’ is that of a rotating slushie machine, dispensing candy-pink blends of cheap booze and artificially flavored mixers into plastic palm-tree-shaped novelty glasses.”
If you want a frozen margarita, don’t let the naysayers stop you. Make your own damn frozen margarita and enjoy every last icy crystal. There are just a few things to keep in mind.
Use good alcohol. Don’t use a crappy blender. And many would argue you should never use fresh fruit juice in a frozen marg. Rather, it’s suggested that you use a frozen fruit concentrate (preferably made of all-natural juice, with no sugar).
The eight recipes below don’t all adhere to that rule, but to each his own. Take your pick and find your best-frozen margarita.
Teachers have long supplemented their incomes by tutoring. And there’s perhaps never been a better, or easier, time to do it than right now. The reason: China-based online education companies are in an apparent race with each other to hire U.S. teachers who’d like to work from home this summer and, using their webcams, “teach cute kids” the English language — in the marketing parlance of one of those companies, Beijing-based VIPKid.
If you doubt that’s true, you haven’t been looking at the classifieds. Just today, five-year-old VIPKid — which reportedly raised $200 million in fresh funding last summer at a $1.5 billion valuation — listed openings for thousands of U.S. teachers, from Jacksonville Beach, Florida, to Saint Joseph, Missouri, to Carmel, Indiana.
Its jobs offensive comes just three days after seven-year-old, Beijing-based China Online Education Group, known as 51Talk, did precisely the same thing.
Both companies are growing quickly and, in the process, trying to outgun competitors. These include 14-year-old, Goldman Sachs-backed iTutorGroup, which operates out of Shanghai as VIPABC and boasts of it’s $1 billion valuations on its home page, and 15-year-old TAL Education Group, a holding company for a group of tutoring-related companies that went public in 2010 and now enjoys a roughly $17 billion market cap. (51Talk is also publicly traded, having IPO’d in 2016. Its market cap is currently $215 million.)
There’s seemingly plenty of demand for all. According to a recent report from the China-focused consultancy iResearch, online language lessons in China represented a $4.5 billion market opportunity in 2016 and is expected to grow to nearly $8 billion by next year.
VIPKID seems to be winning the war for media attention, however.
Back in January, Forbes named the company the best employer when it comes to work-from-home jobs (up from fifth place in 2017). Its founder, Cindy Mi, has also received glowing coverage in Bloomberg, the Financial Times, and Fast Company, among numerous other English-language outlets. (We also featured Mi in a fireside chat at our signature Disrupt event in San Francisco last fall.)
According to one of its job listings today, teachers are paid on average between $14 and $18 an hour and the openings are available to candidates who are eligible to work in the U.S. or Canada, have a bachelor’s degree in any field, and have at least one school year of traditional teaching, mentoring, or tutoring experience.
The company — which is backed by Sequoia Capital, Learn Capital, and an investment firm co-founded by Alibaba’s Jack Ma, among others — says it already works with more than 30,000 teachers. We’ll have to see how much those numbers change after this summer.
There’s a poster on Reddit who says he was able to afford a down payment on a pickup truck with the money he saved from not drinking for a month. Another guy said he saved $1,000 a month by not drinking alcohol or coffee.
While we couldn’t verify those claims, we aren’t surprised by them. And we do know this: Many people even casual or non-binge drinkers would be shocked to figure out how much they’re actually spending on alcohol. And like the two Redditors, drinking could be coming between you and your ability to live within your budget or save money for goals.
If you have three drinks a day, five days a week, at an average of $10 a pop, you’re spending about $150 a week, $650 a month or $7,800 a year just on alcohol.
Two groups of people may be especially at risk of drinking up their budgets: millennials and baby boomers. For one thing, both demographics drink a lot. Although millennials represent only a quarter of all adults over 21, they buy 35 percent of all the beer and 42 percent of all the wine sold in the United States, according to a Nielsen report. There are slightly more millennials than baby boomers, but more boomers than millennials are heavy wine drinkers. Boomers account for a greater total volume of wine consumption, though the gap between these two groups is not great and is closing each year, according to the Wine Market Council.
Each group has unique financial concerns and considerations and could risk their budgets by spending too much on alcohol. Millennials may be worrying about paying off student loans or saving for a first house, among other critical money issues, while boomers might be trying to live on fixed retirement incomes.
So how much is drinking actually costing you? If you have three drinks a day, five days a week, at an average of $10 a pop, you’re spending $150 a week, $650 a month or $7,800 a year just on alcohol not including any additional costs, like server tips or taking a taxi instead of driving. Even if you drink only on weekends, at two drinks per day you are spending about $2,500 a year.
Prefer wine at home? According to online wine retailer Vivino, the cost of a bottle of white wine averages $14.41, while an average bottle of red wine costs $15.66. If you drink one each per week for a year, that’s more than $1,563.
If your budget is tight, see if you’re spending a disproportionate amount of your income on alcohol. Here are some suggestions:
Start by finding out just how much you are actually drinking and spending. Write down all the wine you have with dinner in a restaurant, drinks ordered with friends after work, the alcohol you consume at home alone and six-packs you bring to parties for at least a week and ideally longer. You can even print out tracking cards to help.
Chances are, you will be surprised at how much you are spending. Here’s a calculator to get you started with a quick estimate.
Don’t guzzle, nurse.
Many of us gulp our way through those first cocktails. Instead, pace yourself and sip slowly with the goal of drinking less alcohol over the course of a night. Note the time your first drink is poured and then don’t allow yourself to order the next one for at least an hour. Have “drink spacers”— make every other drink a non-alcoholic one, such as water, soda or juice. Remember, beer-chugging contests are for college kids.
Prepare yourself for the social pressure or temptation to drink.
Find other ways to socialize that involve less alcohol. When your friends suggest getting a drink after a stressful day at work, suggest taking a walk or a yoga class instead. You don’t need alcohol to have fun, hang out or de-stress.
If people you know don’t seem to accept that you’d prefer to not to drink on a given day, script your “no,” says the Rethinking Drinking program of the National Institute on Alcohol Abuse and Alcoholism. The site has tips that will help everyone recognize and handle the pressure to drink from friends and co-workers.
One example: Have a polite, convincing “No, thanks” ready. Escalate your responses as the drink-offerer persists. Here is a worksheet and some suggested language.
Consider hidden and indirect costs, too.
Of millennials who drink wine, more than half talk about it on Facebook, and 33 percent do so on YouTube, Twitter, and Instagram, according to the Wine Market Council. If prospective employers are watching, this may have financial costs in and of itself. A CareerBuilder survey found that 70 percent of recruiters review the social media postings of job candidates. Are you losing out on higher-paying opportunities? Would your current boss promote you but for a concern about your drinking?
Other hidden costs can include health care and taxi or rideshare fares, not to mention that the average bill for a shopping spree under the influence is more than $400.
Think we aren’t talking about you?
Then take the NIAAA’s test to find out if you are a low-risk or high-risk drinker. And for the sake of your budget if not your health you might want to start tracking things.
Tuition has become so expensive that going to college is a financial strain for nearly everyone who isn’t mega wealthy. And although New Yorks pioneering program to cover tuition costs at both two-year and four-year colleges will offer relief to the middle class, critics are disappointed that it won’t lighten the burden on many of the states most in-need students.
The Excelsior Scholarship program, which New York Gov. Andrew Cuomo (D) signed into law Wednesday, ensures New Yorkers free tuition at the states public colleges if their families earn less than$125,000 annually. It will be phased in over the next three years, beginning this fall for families that make up to $100,000.
It’s a last-dollar program, meaning it’ll only cover what federal Pell Grants or other public aid won’t. Many students receive federal or state grants; nationwide, 36 percent of undergraduate students received some amount in Pell Grants in the 2014-15 school year, according to the College Board. Of those students, 27 percent received the maximum grant of $5,730 for the year.
And therein lies the biggest issue, according to social policy experts.
Last-dollar free-college proposals such as the Excelsior Scholarship don’t address the college affordability inequities at play in our country, Mamie Voight, the Institute for Higher Education Policy vice president of policy research, wrote in an email to The Huffington Post.
For a low-income student who opts to attend a lower-priced school, such as a community college, a Pell Grant may already cover tuition costs, she said.Under the last-dollar model, no additional resources are given to that student. Instead, last-dollar proposals divert resources to higher-income students who may already be able to afford college, leaving low-income students struggling to pay other education-related expenses.
It’s not just community college students who won’t benefit, according to Matthew Chingos, a senior fellow at the Urban Institute think tank who wrote an op-ed in The Washington Post when Cuomo first introduced the plan in January. He used the State University of New York in Albany, a four-year college where tuition is$6,470 per year, as an example.
SUNY Albany students from families making less than $30,000 receive more than $11,000 in grant aid, mostly from Pell and a state-specific program, Chingos wrote.As a result, tuition is already free for them and they receive no additional benefits under Cuomo’s plan, despite the fact that they still have to come up with more than $10,000 to cover non-tuition costs such as rent and food.
SUNY schools have some of the lowest college pricetags in the country, but the university estimates that a student can expect to pay nearly $25,000 a year once rent, food, textbooks, transportation, personal expenses and other student fees are accounted for.
Conversely, the free tuition plans touted on the campaign trail by 2016 Democratic presidential nominee Hillary Clinton and outlined by Sen.Bernie Sanders (I-Vt.) in the College for All Act are both first-dollar plans. That means they would cover all of the qualifying student’s tuition and allow young people to apply other grants to non-tuition costs.
To Cuomo’s credit, he has always been clear that the Excelsior Scholarship is designed to help middle-class-families too wealthy to qualify for federal and state aid but not wealthy enough to afford the cost of college.College tuition for all types of schools, including public and private increased 12-fold between 1978 and 2012, while wages stagnated.
We should make college affordable, college should be accessible, college should be free for middle-class families in this nation, Cuomo said on Wednesdays signing. So every middle-class family can go to college.
Last-dollar free-college proposals such as the Excelsior Scholarship dont address the college affordability inequities at play in our country. Mamie Voight
The last-dollar structure isn’t the only element of the New York plan that may exclude lower-income students, many of whom need to hold down jobs during the school year. To qualify for a tuition-free education, students must attend school full-time and complete their degree within four years. More than 90 percent of current students at the states community colleges and 60 percent at four-year colleges don’t fit that bill, The New York Times noted.
That policy is aimed at helping students graduate, said Tom Sugar, president of the nonprofit Complete College America. The programs 30-credit requirement which has been criticized by some is a research-proven strategy to raise GPAs, increase retention rates and ultimately boost college completion in the state, he said in a statement to HuffPost. Sixty percent of students enrolled full-time in four-year colleges graduate within eight years, according to Sugars organization. Just over 24 percent of part-time students finish school in that same amount of time. Similarly, the nonprofit found that less than half as many part-time students graduate from two-year programs within four years as do full-time students.
Another criticism levied at the Excelsior Scholarship addresses all students. A late addition to the plan stipulates that students who accept the scholarship must live and work in New York after graduation for as many years as they received the funds. If they don’t, their once-covered tuition will be converted to student loans they must repay.
Students may not understand what they are getting into when they accept the money, Tom Hilliard, a senior researcher at the Center for an Urban Future, wrote. And, to be clear, they are not simply agreeing to live in New York …after graduation. They are also agreeing to work in New York. So a graduate who lives in Chatham and four years later gets a summer job in Pittsfield could suddenly face a student loan burden of up to $27,500.
Cuomo justified this requirement on Monday during a call with reporters, explaining that students who take advantage of this opportunity should remain an asset to the state.
Why should New Yorkers pay for your college education, and then you pick up and move to California? he asked.
But such a clause should come with come with workforce alignment strategies that ensure graduates have ample opportunities to pursue meaningful employment, Voight said. Policymakers must guard against restrictions that stifle mobility, as well as career and economic advancement, and hold low-income students back from being as successful and nimble in the workforce as they could be.
While many people look back on their university days with fondness, the one thing they probably don’t miss is the student accommodation.
If it wasn’t grotty, it was too expensive, or often both.
Recalling their college days, friends Miguel Amaro, Ben Grech and Mariano Kostelec all say that their biggest problem was finding somewhere to live in the first place.
“Our experience was horrible,” says 28-year-old Englishman Ben.
“As an international student from Argentina, Mariano had to pay 12 months’ rent up-front to get his place in London.
“Meanwhile, Miguel [who is from Portugal] booked some random super-expensive residence in Nottingham because he didn’t know any better, and I was looking around the streets of Nottingham knocking on doors trying to find a place.”
While it was irksome at the time, a year after graduating from their respective universities – Miguel and Ben from Nottingham University, and Mariano from King’s College in London – the three men realized that there was a business opportunity.
They came up with a plan to create an online marketplace matching students with accommodation.
Ben says: “It was clear that people were doing more online and that marketplaces such as Airbnb were a great solution for travel, but finding accommodation was such a problem for students around the world.”
So in 2011, the three started work on their business and website Uniplaces.
The trio invested around 50,000 – a sum whipped up from their savings, student loans and help from parents.
To save on costs, the men stayed at Miguel’s parents’ holiday home in Ponte de Lima in northern Portugal, before participating in startup competitions to win free office space, first in Porto, the country’s second city, and then in the capital Lisbon.
Later that year they won first round funding of 200,000 euros ($215,000; 172,534) led by the founder of UK property website Zoopla.
From there it was down to business, getting a permanent office in Lisbon, and wooing landlords to join the site and checking properties.
The Uniplaces website was then officially launched in 2013, with an initial 50 properties in the Portuguese capital listed on the site.
Mariano, 28, says: “We picked Lisbon as our first city as it totally made sense to stay [and open headquarters here].
“It is a low cost, good location with access to great talent such as good engineers, and people with excellent language skills, which is great when dealing with so many international students.
“For the first hundred plus properties, we actually went round them ourselves with our cameras taking pictures, cleaning the places up and asking people to get out of the room.”
Students using Uniplaces pay one month’s rent upfront via the website, and the sum goes through to the landlord 24 hours after they move in. Thereafter they pay directly to the landlord.
Uniplaces takes a service fee of 20-25% of the student’s first month’s rent, and then a commission of 5-12% of the total value of the contract from the landlord.
More than half of all properties featured on the site are still verified by Uniplaces staff who visit the property to take pictures and videos, draw up a floor plan and inventory list.
Since its launch, three million nights have been booked through the platform, which currently lists over 40,000 properties.
Revenues grew fourfold in 2016 compared to the previous year, but with the money being reinvested into the business Uniplaces is yet to turn a profit.
The company, which now has 132 employees, has also continued to attract the attention of investors. Last year it received $24m (19m) in its fourth round of funding.
The capital has been used to fund expansion, build brand awareness, fine-tune the product, and appoint extra staff.
But it hasn’t been all plain-sailing for the three entrepreneurs. Initially, they were too ambitious and tried to expand too quickly.
Miguel, 27, says: “We wanted to be a global startup so we quickly launched in 70 cities. But then you start compromising.”
With properties spread across so many cities, they were no longer able to verify enough of the properties.
Miguel adds: “Investors want results, but then you realize you need to focus and deliver a good experience for the customer and make sure landlords’ properties are getting filled up.
“That helps grow a more successful company. It’s a balance of ambition. We want to get out to the world but we have to stage it. So in 2016 we went down to six cities and focused on them.”
Today the business has expanded back up to 15 cities – London, Manchester, Nottingham, Lisbon, Coimbra, Porto, Madrid, Barcelona, Valencia, Rome, Bologna, Milan, Paris, Berlin, and Munich.
Jack Wallington, community director at student community website, The Student Room, notes that in recent years student accommodation has changed dramatically.
“Dedicated companies have popped up offering purpose-built student flats across the UK and other accommodation services.
“Alongside the standard mix of landlords it can be hard for students to know who to turn to and trust. Uniplaces is fairly innovative because its interest lies more with the student, supporting first-time renters to find good deals.”
While Uniplaces retains global ambitions, Mariano says that for the time being it will focus on Europe.
The ambitious trio also has visions of creating a more wide-ranging university brand.
From next year students will receive a welcome pack including useful materials such as a Sim card, and a travel card when they arrive at their new digs.
There’ll also be the launch of an app where Uniplaces brand ambassadors will be on hand to answer any questions students might have about their new city.
Further in the pipeline are plans to enable students who might have booked to rent a room in the same property to build a relationship through social media before they move in.
Ben says that the aim of such initiatives is to make renting student accommodation through Uniplaces as “welcoming” as possible.
Read more: http://www.bbc.co.uk/news/business-38735566
After Mitzie Perez filled out a preliminary form online to inquire about a student loan from Wells Fargo last summer, a message flashed across the screen saying the bank had no options for her. This could be due to the school you selected, your field of study, and/or your citizenship status, the bank’s website said.
The third-year bachelor’s student in gender and sexuality studies at the University of California, Riverside, didn’t think her citizenship status would be a problem. Though she’s undocumented, in 2012 she received work authorization under the Deferred Action for Childhood Arrivals (DACA) program. That program shields undocumented immigrants who arrived as youths from deportation and allows them to work legally.
Curious, Perez hit the back button on her browser and changed her answer on one of the preliminary questions to say she was a permanent resident. After she resubmits her application, Wells Fargo allegedly offered her a loan option she could apply for. I didn’t expect it, Perez told The Huffington Post. I’ve been approved for credit cards. It was weird to me that a loan wouldn’t be approved, but creditors would provide me that support.
A class action lawsuit filed in U.S. District Court in Northern California says rejecting her application based on immigration status violates both federal and state law.
The lawsuit could have sweeping implications if successful. It asks the court to create a class of people affected by the Wells Fargo policy that would include not only people like Perez, with DACA but also any financially qualified person who applied for a loan and was denied for lack of U.S. citizenship since 2013.
The Mexican American Legal Defense and Education Fund brought the lawsuit on behalf of Perez and the California chapter of the League of United Latin American Citizens, whose membership includes DACA recipients affected by the bank’s loan policies.
We don’t think Wells Fargo was unique, but it was the case that came to us first, MALDEF President Thomas Saenz told HuffPost. Our hope is that if we can resolve the issue with Wells Fargo, perhaps the other banks seeing what were doing will change their policy.
Wells Fargo spokesman Jason Vasquez pointed out that the bank only accounts for roughly 1 percent of total student loans and that its policies are in line with the U.S. Department of Education, which also does not loan to DACA recipients. The bank offers two products for which DACA recipients qualify a credit card and secured personal loan.
While we respect the important role that the California League of United Latino Citizens and the Mexican American Legal Defense and Educational Fund play in support of the community, we are disappointed they filed a lawsuit rather than work with us on solutions to help people realize their goals of higher education, Vasquez wrote in an email to HuffPost. Wells Fargo understands the dream of pursuing higher education and we remain focused on our responsible lending practices to assist temporary and permanent residents and U.S. citizens in obtaining student financing.
When assessing whether to offer a loan, a financial institution is only supposed to establish the applicant’s true identity and the risk the applicant will default, the lawsuit says. The lawsuit contends that using an applicants immigration status as a factor when considering whether to extend a loan violates the U.S. Civil Rights Act of 1866, which allows anyone in the country to enter into contracts.
Its discriminatory, Saenz said. The bottom line is that banks are supposed to make loans based on the assessment of risk. … A persons immigration status is simply not relevant.
The lawsuit alleges the Wells Fargo policy also violates a California state law protecting against discrimination and another that prohibits unfair business practices.
Barring Perez from applying for a private loan added one more financial hurdle to her path toward a college degree. The DACA program provides some protection from deportation and allows her to work legally, but shes still not allowed to apply for federal student aid the largest pool of financial assistance that people use to pay for a college education.
Already indebted, she charged her tuition on credit cards and works a schedule that includes two full days from 9 a.m. to 9 p.m. in class and the rest of the week working as a community organizer. She also works on weekends not just to service her debt, but to help support her family. I’m trying to be a good student, Perez said. I’m trying to give back to my community and be involved.
The lawsuit seeks damages on her behalf and for the bank to end its policies of weighing immigration status as part of its loan applications. If the class was granted, it could affect much more people in similar situations.
We deserve a chance to get a student loan, Perez said. We want to be a part of this economy. We want to do well in school. But sometimes were not getting the support we need.
The move, which reflects the Feds satisfaction with job growth and its mounting concern about inflation, banks is the first rate hike since Trump took office.
The cenbank’s Federal Open Market Committee increased the target federal funds rate what banks charge one another for overnight lending by 0.25 percentage points, to a range of 0.75 percent to 1.0 percent.
Our decision to make another gradual reduction in the amount of policy accommodation reflects the economy’s continued progress toward the employment and price stability objectives assigned to us by law, Federal Reserve Board Chair Janet Yellen said at a Wednesday press conference following the announcement.
One member of the FOMC dissented from the decision to raise the rate. Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, voted to leave the target federal funds rate unchanged. There was no explanation for his dissent in the Feds press materials.
The Federal Reserve has a dual mandate from Congress: to maximize employment, and to keep prices stable.The Fed raises the federal funds rate to tame inflation by putting downward pressure on job market growth.
When this form of interbank lending becomes more expensive, creditors tend to respond by increasing interest rates on home loans, auto loans, student loans, credit cards and a variety of other types of debt. As a result, the Feds quarter-percentage-point increase will likely squeeze borrowers and consumers, while upping the earnings of lenders and savers who rely on interest-bearing investments.
Although Wednesdays rate hike is just the third increase since the Fed lowered the influential rate to zero in December 2008, it is the second hike since December 2016, suggesting the Fed is finally accelerating its efforts to raise borrowing costs. Prior to December, the central bank had gone a year without raising the rate after global economic headwinds gave it caution.
Looking ahead, we expect that job conditions will strengthen somewhat further… and [we expect] overall inflation to stabilize around 2 percent over the next couple of years in line with our longer-run objective, Yellen said Wednesday.
The simple message is the economy is doing well, she added later, when asked what message she would like consumers to take away from the rate hike decision. We have confidence in the robustness of the economy and its resilience to shocks.
However, Dean Baker, co-director of the liberal Center for Economic and Policy Research, argued that it is still too soon to raise the benchmark rate and risk putting the brakes on job growth.
Its the wrong move, Baker said on Tuesday. Its based on some wrong views about the economy, particularly that were closer to full employment than I think we are. But a quarter-point doesnt have a huge impact on the economy.
Baker is one of many economists, most of them progressive, who believe the low headline unemployment rate masks underemployment and fails to convey the lower pay of the new jobs being created.
The national unemployment rate dropped to 4.7 percent in February as the economy created 235,000 jobs.
But the official unemployment rate fails to account for people working part-time involuntarily, or people who have given up looking for work altogether. A broader metric that counts those workers as unemployed shows a jobless rate of 9.2 percent.
In addition, many American workers are settling for lower-paying work. Sixty percent of the net new jobs created between December 2007 and December 2016 were in retail, hospitality and other service sectors that tend to pay less and provide fewer work hours than other sectors, according to an analysis by Dan Alpert, founder of Westwood Capital and a fellow at the Century Foundation.
Its based on some wrong views about the economy, particularly that were closer to full employment than I think we are. But a quarter-point doesnt have a huge impact on the economy. Dean Baker, co-director, Center for Economic and Policy Research
Meanwhile, a measure of price inflation that excludes volatile food and energy prices rose 1.7 percent in the 12-month period ending in January still below the Feds 2-percent inflation target. Baker and like-minded economists prefer the risk of exceeding that target to the risk of prematurely depressing the job market.
Stephanie Kelton, an economist at the University of Missouri-Kansas City and an economic adviser to the presidential campaign of Sen. Bernie Sanders (I-Vt.), agrees with Baker that the economy is still employing fewer people than it could.
But Kelton argues that there are limits to what the Fed should be expected to do to make up for the federal government’s failure to boost growth through public spending. She understands what she believes is the Feds desire to raise rates now so as not to deprive itself of the ability to stimulate the economy later.
Fed officials want some space, Kelton said. They want to be able to get away from zero with enough distance so when the next recession inevitably comes, theres some room to move down.
Economic observers now await the White Houses reaction to the Feds announcement. During the 2016 presidential campaign, Trump was critical of the Fed for failing to raise interest rates ahead of the November election, accusing Yellenof artificially buoying the economy to benefit the incumbent Democrats.
But as Trump prepares a major package of tax cuts and a large infrastructure plan which even some of his critics believe could boost the economy further he could soon be on a collision course with the Fed for doing exactly what he claimed it should have done under President Barack Obama: raise interest rates.
Any of Trumps policies that create more jobs would likely prompt the Fed to increase the funds rate more rapidly. The contractionary impact of those hikes could offset any expansionary effect of Trumps agenda.
Yellen insisted on Wednesday that Fed officials were not basing their decisions to raise rates around the expected impact of Trumps policies. She also acknowledged meeting Trump briefly, and speaking with Treasury Secretary Steve Mnuchin on more than one occasion.
Try as Yellen might to avoid it, however, she had to field questions about a potential showdown with Trump. The Feds policymakers predict that economic growth will reach 2.1 percent in 2018 before leveling off at 1.8 percent in 2020 and beyond.
When asked about the disparate estimates, Yellen denied that Fed officialsmore conservative growth projection reflected a possible point of conflict with the president so long as inflation remains within the Feds target range, that is.
I dont believe it is a point of conflict. We would certainly welcome stronger economic growth in the context of price stability, Yellen said.
As with many issues, Trumps stance on the Fed has not been entirely consistent, and its possible he could embrace his old ideas if circumstances warrant it. Before Trump began arguing that Yellen was using low rates to inflate an economic bubble for political reasons, he hadexpressed support for her policies, claiming the low rates were good for U.S. exports.
Should the Fed respond to Trump with higher rates, and should Trump challenge the Federal Reserve for prioritizing concerns about inflation over allowing job growth to proceed unencumbered, he might find unlikely allies in progressive economists who have long taken issue with the Feds priorities. But thats far from a sure thing.
At this point, I wont place bets on that. I guess well find out soon enough, Baker said.
This story has been updated with remarks from Yellen and additional details about the Feds decision.
The U.S. government’s $1.3 trillion student loan program has a dizzying array of repayment plans that can overwhelm borrowers. That’s one of the things loan servicers are supposed to help with.
Navient, the nation’s largest student loan servicer, handles accounts for more than 1 in 4 Americans who owe money for their higher education. The company sends borrowers their monthly bills, collects payments, and counsels them on their options. Government lawsuits filed on Jan. 18 accuse Navient of taking shortcuts that minimized its costs. They say that hurt some borrowers who could have paid off debt more quickly, while simultaneously putting distressed borrowers in more debt by steering some into plans that put off payments leading to ballooning balances instead of income-based repayment programs. Regulators estimate that households debt burden may have been inflated by billions of dollars.
Navient has called the allegations unfounded and agenda-driven, noting in a statement that the U.S. Consumer Financial Protection Bureaus case was filed just before the end of the Obama administration. Along with the CFPB, the attorneys general of Illinois and Washington state also sued. Authorities say they reviewed thousands of pages of company documents, analyzed thousands of consumer complaints, and listened to recordings of hundreds of phone calls between the company and consumers during a years-long investigation.
Student loan servicing is a low-margin, high-volume business: It doesn’t cost much to service an account for a borrower who pays automatically through her bank account. For those who are late on their payments, however, a servicer can rack up expenses that are many, many multiples of the average servicing cost, Steven McGarry, chief financial officer at student lender Sallie Mae, told investors on Jan. 19. Navient was split off from Sallie Mae in 2014.
Borrowers with federal loans are eligible for help, but a servicer may have to go the extra mile to get them in the most appropriate program and keep their paperwork up to date. Dilu Nicholas’s troubles with Navient began after he enrolled in a plan that allows a struggling borrower to make payments pegged to earnings rather than loan balances. Borrowers must annually recertify their income information to stay on the plan.
Nicholas, of Louisville, attended one year of college in the early 1990s before dropping out to care for his ailing grandfather. After working steadily for more than a decade, he began school again, graduating from a state college, but found he couldn’t afford his monthly student loan payments. The income-based plan was a godsend.
Nicholas, now 42, missed an annual deadline, resulting in the addition of $7,000 to his federal loan balance, now almost $80,000. Navient did send e-mail reminders about deadlines. Nicholas remembers one that told him to retrieve a message on the company’s site, but its importance wasn’t clear.
The lawsuits allege this was common for Navient. Over more than four years, e-mail reminders directed borrowers to log on to their account without telling them why. For almost three years, reminders in the regular mail didn’t provide borrowers the date of their deadlines. The company changed its e-mail practices around March 2015. Since then its income-based plan recertification rate has more than doubled, the consumer bureau says.
Another problem at Navient, authorities claim, was that people ended up in plans that didn’t make the most financial sense for them. A borrower who sees a drop in pay could, like Nicholas, ask to switch to an income-driven plan. A person in those plans can earn credit toward eventual loan forgiveness, and if their income is low enough the monthly payment could be zero. A borrower can also simply ask to postpone payments. That’s an easy idea to understand. But the borrower may accrue more interest and eventual forgiveness is not part of the deal.
The CFPB says borrowers were steered into such short-term forbearance too often. It estimates that from January 2010 to March 2015, as much as $4 billion in extra interest charges was added to principal balances of loans repeatedly put in forbearance. The reason, authorities claim, was simple: Postponing payment is easier and cheaper for the servicer. Navient chose to shortcut its obligations, said CFPB Director Richard Cordray in a conference call with reporters.
In 2013, before Sallie Mae split off its servicing business as Navient, its chief executive officer said in an earnings call that its very expensive work, for example, to enroll a borrower into something like an income-based repayment program which we are doing. But we don’t actually get paid for outperformance in that side of the equation. The CEO, Jack Remondi, now leads Navient.
The state of Illinois lawsuit claims that Navient for years promised higher pay to its customer service representatives to rush borrowers off the phone. One former, unnamed employee is quoted saying that bonuses were paid for calls that lasted less than six minutes. A review of call recordings by investigators showed that plans that postponed payments were frequently mentioned in the first six minutes of the typical call. Half the time, Navient employees didn’t bother to mention income-based repayment plans.
Navient argues that this description is wrong. Many of the loans it services is owned by the government, which in 2010 became the only issuer for loans with federal backing. Of the four major servicers used by the Department of Education, Navient, at 40 percent, has the second-highest share of loan balances enrolled in income-based plans, according to the most recent government figures. The company also receives much less pay from the government for borrowers who postpone payments, debunking claims that servicers have an incentive to place borrowers in forbearance rather than income-based plans, according to a Navient statement.
That pay structure has been in effect only since September 2014. The earlier contract, which covered the previous five years, mandated that the government pay almost the identical amount to servicers for borrowers current on payments and for those postponing their payments. Navient has a similar arrangement for loans owned by private investors.
The lawsuits represent potentially billions of dollars in fines and restitution. But the CFPBs future in a Donald Trump administration is a wild card. Many investors have already bet that Washington may become a friendlier place for Navient. The day after the election, the company’s stock shot up 17 percent, and even with the lawsuit it’s kept most of that gain.
This article originally published at Bloomberg here