A “forbearance” allows student loan borrowers to temporarily postpone payments on their student loans. It’s a great – and important – option available to people who cannot afford their regular monthly payments, because it allows you to stay in good standing on your student loan and avoid default. But forbearance is not without its consequences, and when used improperly, it can cause major problems.Read More
Tax time is a stressful time, I know. And if you have student loans, there’s even more to think about. Here are are some tax-related tips to help guide you.
Deduct Your Student Loan Interest
Some of the student loan interest that you paid during 2016 may be tax deductible, which could lower your tax bill. Watch for a 1098-E statement issued by your student loan lenders, which will show the total amount of interest payments during 2016. Just keep in mind that the amount of this deduction is capped, and it is phased out entirely for higher income earners. Be sure to talk to your accountant to see if you’re eligible for this deduction.Read More
Amy and Josh were just getting started, but they were already struggling. Amy had just completed nursing school, while Josh had just graduated from the police academy. They had two young children, and were struggling to keep up with massive private Navient student loan payments that they could barely afford.
That’s when they got a call from a company called “Consumer Protection Counsel” (CPC). CPC promised that if Amy and Josh simply stopped paying their private student loans – and started paying CPC instead – CPC’s team of experts and attorneys would protect them from Navient, and their private student loans would either be canceled or deemed uncollectible. Their credit histories would be protected and even repaired. All they had to do was sign a contract and pay a monthly fee. The deal seemed too good to be true, but Amy and Josh felt trapped by their student debt, and they didn’t know what else to do. After a series of high-pressure phone calls from CPC, they signed on the dotted line and began sending monthly payments to CPC – and stopped paying Navient.Read More
A bill has been filed in the Massachusetts State Legislature that would create a “Student Loan Bill of Rights.” This legislation has the potential to provide student loan borrowers here in Massachusetts with powerful new protections from student loan servicers. The bill is sponsored by Senator Eric Lesser and Rep. Natalie Higgins.
Here are some of the bill’s highlights:
- Student loan servicers would be required to register with the state and pay a licensing fee.
- Student loan servicers that are subject to oversight would be prohibited from engaging in unfair, deceptive, or abusive practices common in the student loan industry, such as misapplying payments or supplying misinformation.
- Student loan borrowers would be provided with the right to file a lawsuit against student loan servicers who violate the bill of rights.
- The state would also establish an Ombudsman position to monitor student loan servicing and help student loan borrowers obtain out-of-court resolutions to their servicing issues.
This bill has the potential to give student loan borrowers important new tools to make student loan repayment fairer and more transparent. And with federal oversight of student loan servicing in question following the recent presidential election, state-level protections are going to become that much more important.
If you live in Massachusetts, call your State Senator and State Representative and ask them to support the Student Loan Bill of Rights (you’ll need to reference the Senate Docket Number, S.D. 1229). If you don’t know who your representatives are, click here to find out.
Yesterday, the federal Consumer Financial Protection Bureau (CFPB) announced that it filed a lawsuit against Navient, one of the country’s largest student loan servicers, for conduct that violates various consumer protection statutes. The CFPB accused Navient of failing student loan borrowers “at every stage of repayment.” This is a major development. Here’s what you need to know. Read More
Yesterday, Congress held a confirmation hearing for Betsy DeVos, who is the nominee to head the U.S. Dept. of Education under the incoming Trump administration. If confirmed, DeVos would oversee the entire federal student loan disbursement, servicing, and collections system, which currently totals over $1.3 trillion and involves over 40 million individual student loan borrowers.
How will DeVos handle the student loan system? Here’s what we learned from the hearing (spoiler alert – not much): Read More
Happy New Year! I hope everyone had a wonderful holiday season. For better of for worse, it’s the time of year for New Year’s resolutions. We’re all going to exercise more, eat better, and call our long-distance relatives more frequently, right? (Well, for at least a month or two).
But financial New Year’s resolutions can be just as valuable as the more “cliché” promises we are used to hearing in the beginning of January. And I encourage everyone to consider some student loan resolutions to help manage your student loan debt more effectively. Here’s my list of some student loan New Year’s resolutions that I hope you will consider.Read More
2016 has been a big year in student loan law. We saw the release of Revised Pay As You Earn (REPAYE), a new income-driven repayment plan for federal student loans, although its rollout and implementation were a bit of a mess. We saw a continued federal crackdown on predatory for-profit schools which resulted in the collapse of ITT Technical Institute. The Obama administration issued final rules on student loan forgiveness and debt relief for students who were defrauded by their colleges and universities. And finally, Donald Trump was elected to be the next President, leading to a great deal of uncertainty about the direction of student loan programs.
There’s never a dull moment when it comes to student loan issues, and as the year comes to a close, there’s still a lot going on. Here are some highlights. Read More
The following is a guest article by Jon M. Luskin, a fee-only CERTIFIED FINANCIAL PLANNERTM (CFP®) at Define Financial.
If you’re spending less money than you make, give yourself a pat on the back for being frugal! But, how are you going to handle that extra cash: pay off your student loan debt, or invest?
Why would anyone with a student loan balance invest in the stock market? Because you’re hoping that the investment return will be greater than the interest rate on your student loan.
Investment Return > Student Loan Interest Rate
Notice that the keyword is “hope.” Will your investment return actually be greater than your student loan interest rate? Maybe. It depends. On what? A few things. Read on to find out! Read More
There’s been a lot of uncertainty since the election regarding what the Trump administration and the Republican-controlled Congress may have in mind for student loan borrowers. During the past few weeks, I’ve been carefully watching public statements, investigating proposed appointments, and speaking with other advocates and experts. While everything at this point is still speculation, I think we’re beginning to see some clues as to where student loan reform may be going in the next few years, and who may be most at risk from potential negative consequences.Read More