Changes in 2012 for Holders of Student Loan Debt

Posted by Rana & filed under Private & Federal Student Loan Consolidation.

One thing is quite clear about the changes affecting payment of student loan debt set to take affect in 2012: confusion. Exactly what is going to be different about how student debt is managed and how will it affect you?

Change in Loan Subsidization Status

One of the most frightening changes for most student loan debtors is the news that beginning July 1, 2012, student loans will not be subsidized. What does that mean, exactly? Basically that the cost of future student loans will increase, but past loans won’t be affected. If you already hold student loans, this does not change your scenario. If, however, your children are applying for school loans, their loan money will be even more expensive than yours has been over the long haul if the amount cannot be resolved quickly on a targeted repayment plan.

It is also important to remember that existing subsidized loans remain interest free while the student is in school, or working with some type of deferment. That would be any kind of arrangement that allows a break in the payment schedule. For instance, if you decided to go back to school to earn an advanced degree, interest would be deferred on your existing loans for that period of time.

After July 1, 2012, however, federal student loan money for any level of education will not be subsidized. For the 2012-2013 school year, the maximum amount that can be borrowed with a Federal Stafford Loan is $20,500. Additional funds can be borrowed for qualifying participants from Federal PLUS Loans, but neither they nor the Stafford loans will be subsidized.

More Important Than Ever to Calculate Payments

The plain truth is that student loans are expensive and they are getting more expensive over the total life of the loan. It is important, from the beginning, to get clear projections of required monthly payments, and how much the loan will cost you — including the interest — for the proposed repayment period. The recession in America has made it very apparent that there is no such thing as “easy” credit.

For instance, consider this sobering fact. If you take out loans of $23,000 per year for a six-year education, you walk away with $138,000. To repay that amount with interest in ten years, you would have to shell out $1,000 a month. In this economy, most people find that impossible, and so watch their debt build and build and build.

Steps to Ease Some of the Repayment Burden

Beginning in January 2012, about 6 million student debtors will be able to consolidate their loan debt and negotiate a single, lower interest rate. However, this provision applies only to federal loans. The Obama administration is also proceeding with its “Pay As You Earn” plan. Beginning in 2014, student debtors can reduce their monthly payments to a figure equal to 10 percent of their existing discretionary income. This will, in theory, tie repayment to a more realistic assessment of an individual’s ability to pay. As the president’s plan moves forward, it will also include forgiveness of the debt after 20 years.

Currently, the law provides for payments at 15 percent of the debt holder’s discretionary income with loan forgiveness after 25 years. Many critics feel the changes are not sufficient, and the recent “occupy” protests included strong cries for simply erasing student loan debt altogether. While it is extremely unlikely that will ever happen, the lowered payment levels and debt consolidation will help many debtors.

Unfortunately, these changes do not apply to individuals who went to school on private loans from banks and similar financial institutions. They routinely face even higher and often variable interest rates. These people are continuing to fight debt balances that have often reached into the six figures and will in no way be helped by the president’s plan.

Student Loan Debt Remains a Serious Issue

Even with these changes, student loan debt in the United States remains a serious issue, crippling the chances many recent graduates have to make life choices like marrying and starting a family. If they cannot feed themselves and their loan, they certainly cannot feed a spouse and children. This new and youthful debtor class is fighting a total debt amount of somewhere between $898 billion to $1 trillion, figures that even exceed credit card indebtedness in the U.S.

The recent changes, while in theory aimed at easing the student loan burden for the debtors, are also part of the federal government’s move to trim expenses in the face of its own spiraling debts. It’s little wonder that confusion has resulted, and, when looked at carefully, there is no avoiding the fact that the changes are minimal at best when weighed against the enormity of the student loan debt issue in this country.

At What Price were Black Thursday and Cyber Monday a “Success?”

Posted by Rana & filed under Credit Card Debt Consolidation Information.

As American consumers slowly begin to regain confidence in the state of their finances after struggling through almost three years of recession and high unemployment, they still face the threat of taking on even more credit card debt. This fact was in clear evidence on the busiest shopping day of the year, Black Friday, the day after Thanksgiving.
Read more on “At What Price were Black Thursday and Cyber Monday a “Success?”” »

Debt Consolidation But Begin With No Credit-Based Spending

Posted by Rana & filed under Credit Card Debt Consolidation Information.

In an article for Fox Business News from November 2011, Steve Bucci addresses a reader’s question about methods to consolidate $30,000 in credit debt. The desired goal was to achieve a single payment at a lower interest rate, but the reader expressed reluctance to use either a home equity line of credit or a mortgage.
Read more on “Debt Consolidation But Begin With No Credit-Based Spending” »

You Need to Resolve Debt: What Are Your Options?

Posted by Rana & filed under General Debt & Loan Consolidation Information.

We’ve all seen the commercials. We know in a hazy way that something called our credit report compiles our personal credit history into a reference number, or credit score, used by financial entities as a benchmark of “risk.” We may even understand that there are good and bad credit scores. But most people don’t know that credit scores in America average around the mid- to high-700s. Fall below that and you are in danger of not being able to borrow money, buy a car, or get a mortgage. Which is generally the time — when you get an application back with “denied” stamped on it in red — that most people have to face the fact that their debt has reached a point that it must be resolved. But how? There are many viable avenues for debt resolution.
Read more on “You Need to Resolve Debt: What Are Your Options?” »

Consolidation Debt by Renegotiation

Posted by Rana & filed under General Debt & Loan Consolidation Information.

Since 2008, as they struggled under the growing weight of 10% unemployment, the deepening recession, and counter-productive political bickering, Americans quietly changed their attitude toward debt. As the 2011 holiday season approached, stores advertised the time-honored concept of the “lay away” and more customers paid in cash than ever before. Gone are the days of the careless credit card swipe. The new imperative is simple: make debt go away.
Read more on “Consolidation Debt by Renegotiation” »

Eliminate Debt with Credit Card Consolidation

Posted by Rana & filed under Credit Card Debt Consolidation Information.

As Americans have struggled to make ends meet during the ongoing economic recession that began in 2008, they have also faced an unemployment rate that has hovered near 10 percent. Going into the economic downturn, many consumers carried existing credit card debt, and in order to survive, they have run up more over the past three years. A high number have now maxed out their cards, and are fighting to just stay ahead of accruing interest. In a hole like that, living debt free seems like an unattainable dream.
Read more on “Eliminate Debt with Credit Card Consolidation” »

Obama Administration Addresses Student Loan Debt Via Executive Order

Posted by Rana & filed under Private & Federal Student Loan Consolidation.

The “Occupy” protests that have spread to cities across America are an expression of the level of discontent the citizenry is feeling about the unequal distribution of wealth in the nation. There is also, however, an even greater gap in opportunity, broadened by the issue of mounting student loan debt. Many of the protesters are young people in their twenties to mid-thirties who are struggling under the crushing weight of paying off their college education. An executive order issued by the Obama administration in late October is a step toward improving conditions for that well-educated but struggling class of debtors.

Student Loan Debt Surpasses Credit Card Debt

Estimates place the level of student indebtedness in the U.S. at anywhere from $898 billion to $1 trillion, exceeding even the credit card debt that has been the bane of the American economy for the last decade. The instant a college graduate leaves the university, they are part of a growing class of debtors who fight to win entry level positions in their field in the face of high unemployment. When they are employed, they not only have to establish themselves professionally and build their personal lives, but find a way to manage debt that destroys the bulk of their discretionary income.

Current Debt Management Terms Misunderstood

In part, this is due to a lack of information. Few students know that current law allows them to limit those loan payments to 15 percent of their discretionary income, nor do they realize that the remaining debt can be forgiven after 25 years of payment. Current eligibility for the 15 percent cap can be determined at However, the Occupy protesters and other critics say, rightly, that in the wake of the recession and with the ongoing economic instability, the cap is still too high and the forgiveness period too long.

Obama Uses Executive Order to Enable Loan Consolidation

The Obama administration agreed, and, in late October, used an executive order to bypass Congress and put measures in effect to help  more than 1.6 million college graduates in lowering their monthly student loan payments beginning in January 2012. At that time, as many as 6 million current students and graduates will be eligible to consolidate their student loans and make their payments at a single interest rate. The measure should reduce the interest these loan holders are currently paying by as much as 0.5 percent, which represents hundreds of dollars in interest.

Further Student Loan Changes Proposed

In tandem with that action, the president is proposing, as an aspect of his jobs package, a program called “Pay As You Earn.” Beginning in 2014, it would allow Americans who have student loan debt to reduce their monthly payments to 10 percent of their existing discretionary income, with complete loan forgiveness after 20 years of payments. The plan, which is both a jobs bill and a stimulus program is called “We Can’t Wait,” addressing the growing feeling in the country that real economic change at the political level will not be possible until after the November 2012 presidential election.

Without question, however, the ongoing problem of student loan debt and the economic divide it is helping to forge in American society will be front and center in the coming campaign. The Occupy protests have served to highlight this problem, among others, in the American social and economic debate. The president’s executive action proves that not only is changed needed, but if our leaders want votes in November, they are going to have to back viable and immediate changes.

Celebrities Amass Staggering Debts and Pay the Price

Posted by cmsadmin & filed under General Debt & Loan Consolidation Information.

Since Michael Jackson’s death in 2009, the news has been full of details of the pop singer’s life, eccentricities, and the questionable circumstances of his demise. All of that has been rekindled with the conviction of Dr. Conrad Murray for culpability in the singer’s death as a case of involuntary manslaughter. One thing that has not been front and center, however, is that the King of Pop was also the King of Celebrity Debtors.

Six Million Dollars in Just Hours

Although Jackson never filed for bankruptcy, the sad fact is that at the end, he was worth more in death than in life. The tale may be an urban legend, but it is rumored that prior to shooting, “Living with Michael Jackson,” the singer went through $6 million in a matter of hours, and, at the time of his death, was in the hole to the tune of $500 million. Since he died? His music, films, and other entertainment assets have grossed more than $1 billion, erasing his indebtedness and securing his children’s futures.

The Celebrity Debt Club

Jackson is far from the only celebrity for whom success ended in crashing loads of debt:

Child star Gary Coleman went from owning a multi-million dollar estate to having less than $20,000 at his 1999 filing for bankruptcy protection.

In 1998 singer Toni Braxton filed for bankruptcy, disclosing more than $5 million in debt and a monthly spending habit of $47,000.

Mogul Donald Trump, famous for his brusque dismissals on the reality show The Apprentice, has filed for bankruptcy three times and at one point in his up-and-down business career faced $900 million in personal debt.

Singer MC Hammer was going through $500,000 a month — not surprising since the gates to his estate were gold-plated and he owned 17 cars, two helicopters, and a thoroughbred ranch. At the time he filed for bankruptcy in 1997, he admitted on Oprah he’d spent at least $20 million.

Thankfully, most people cannot even imagine debt at that level, but the average American household does have anywhere from $10,000 to $15,000 in credit card debt.

Swipe That Card, Baby!

And celebrities, just like the rest of us, have some trouble equating real money with the ease of a credit card swipe. When Kim Kardashian was hired to serve as a stylist for singer Brandy, one of the perks of the job was access to an American Express card. Kim and her sisters immediately hit the stores and spent $120,000 — and won themselves a lawsuit in the process.


And Lindsey Lohan? Heaven only knows now, but her credit card debt has been estimated at well north of half a million — although arguable debt may be the least of her problems.




Most people who need to consider debt consolidation are not talking about astronomical sums. But even these very wealthy people face multiple interest rates, late payments, and fines that all pile up on top of whatever they actually did spend. If the recession has taught Americans anything, it is that free credit is not free and now it’s time to get a handle on that debt and learn to live in a different way.

Occupy Movement Highlights Need for Student Loan Consolidation, Debt Forgiveness

Posted by Rana & filed under Private & Federal Student Loan Consolidation.

Most people have a hazy awareness that the Occupy Wall Street movement, which has now spread to cities and college campuses across the nation, is an expression of a growing dissatisfaction with and suspicion of the United States federal government. However, the vast majority of Americans don’t realize that the movement bears significant similarities to the Arab Spring pro-democracy demonstrations that swept the Middle East and North Africa earlier in the year. The greatest common factor is that the bulk of the protesters are disaffected and unemployed university students.

Crippling Student Loan Debt Driving Political Dissatisfaction

Student debt in the U.S. has now surpassed credit card debt and is estimated to total between $898 billion and $1 trillion. This means that upon graduation, most students are immediately $22,000-$28,000 in debt on average, with those who attended private institutions of higher learning facing even a greater financial burden. With unemployment hovering around 9.1 percent in spite of all government actions to stimulate the economy, this well-educated modern debtor class finds itself working in fast food chains or bagging groceries just to get by.

At that level of employment, most are completely incapable of making their loan payments. The White House has begun to outline a plan that would help the more than 1.6 million Americans who find themselves crippled by student loan debt. Among other aspects of the proposal, students would be able to consolidate their diverse loans into a single debt at a better interest rate.

The Protesters Want Student Loan Forgiveness

The protesters, however, say that easing the burden doesn’t address what caused the need for the loans in the first place: skyrocketing educational costs that are pricing more and more young Americans out of a college education. College costs have tripled over the last three decades, and from 2010 to 2011 alone shot up 8 percent. What many of the members of the Occupy movement really want is a more radical option, complete debt forgiveness that includes an immediate cessation of all payments.

While the chances that this solution will be implemented are next to nil, the fact that student loan consolidation and debt forgiveness are front and center in the national debate is telling. It illustrates that the level of anger and frustration has filtered down to an age group that, historically, has not been this politically involve since the anti-war protests of the 1960s.

The argument, however, is not without merit, in that it would return a significant amount of purchasing power to indebted students that would then re-enter the broader economy through greater purchasing power. Facebook pages and sites like that support this ideas are rapidly growing in popularity.

The Student Loan Debt Cycle is Vicious

The ForgiveStudentLoanDebt site was founded by a 37-year-old lawyer who graduated with $65,000 in debt. Unable to live and make his loan payments, he made an agreement called “forbearance” that staved off a default, but allowed interest on his loan debt to continue to build. Today, some 13 years later, and after resuming payments in 2004, that same man faces a debt of $88,000.

The Occupy movement has brought many issues to the forefront of public debate in the U.S., with student loan debt and the need for loan consolidation being central to that discussion. Certainly long-term debt in this country cannot be addressed when the youngest professionals in the nation literally have no chance to succeed financially, making a higher-education not an asset, but a life-long financial albatross.

Long-Term Student Debt Worsens During Recession

Posted by Rana & filed under Private & Federal Student Loan Consolidation.

Although student loan debt was already a problem in the United States, the recession coupled with skyrocketing tuition costs over the past three decades has greatly intensified the financial stress new graduates now face — to the point that total student loan debt exceeds credit card debt in the U.S., standing at an estimated $898 billion to $1 trillion.

Unreasonably High Education Costs Fuel Debt

About 1.6 million Americans, many of them recent graduates, are currently struggling — and more times than not, failing — to get by on a day-to-day basis and make their loan payments at the same time. Over the past thirty years, the cost of a college education tripled, and has already jumped 8 percent since last year.

A student who attended a state institution of higher learning usually leaves school with $22,000 to $28,000 in loan debt. Those who went to private schools  can owe in the six-figure range. During the recession, in an effort to re-tool themselves for new careers, many people went back to school and took out student loans to be able to afford to do so.

Returning Students Did Not Count on Long Recession

Although economists are still arguing about exactly when the recession began, the economy was showing definite signs of stalling in 2008. Now, three years later, unemployment is still hovering at 9.1 percent. The very people who went back to school because they were unemployed are beginning to graduate and the job market is as bad, or worse. But now, their existing financial problems are compounded by the burden of student loans.

The weight of these debts can be crushing. One of the leaders of the current Occupy Wall Street protests, who also maintains a ForgiveStudentLoanDebt website, graduated law school with $65,000 in debt. Because he had to negotiate forbearance, a period during which he made no payments, did not default, but did accrue interest, he currently owes approximately $88,000 — even after resuming a regular payment schedule seven years ago.

Call for Student Loan Consolidation or Forgiveness

This problem of instant indebtedness in the 20-something generation is a major part of the discontent and disaffection with government driving the Occupy protests. In response, the Obama administration has outlined a plan that would include allowing for the consolidation of multiple loans and the negotiation of a lower interest rate.

Many protestors, however, want to see complete loan forgiveness in the interest of returning significant purchasing power back to more than 1.5 million Americans. While this would, arguably, amount to a kind of stimulus package to address the ongoing economic instability, it’s not likely to happen. It is sure, however, that the problem of long-term student debt will be central to the political discussion going into the 2012 presidential election season.

It is significant, however, to consider that this problem of extended student loan debt has made a college education more a burden than an asset. Already more high school graduates are choosing not to go to college because they do not want to be saddled with the student loads. If left unaddressed, this problem will undoubtedly change the face of higher education in America for generations to come.