Friday, October 25, 2013

Post Grad Survival 101

I am finding out about more people from my wife (who has many friends and acquaintances) and because they are women they talk more about things they see as important than men tend to do. We talk about different subjects based upon the 20 words or less philosophy of most men in the world.
But, the 20 words or less makes for much different conversations than women tend to have.

What I found out today is interesting to me. I found out that often people now are allowed to defer their student loan payments until they find a job. But, in the case of women at least, many women are just getting married and getting pregnant because of the dismal job market. In one way it doesn't make things any easier likely it makes life harder but at least they are not alone, they have their child or their child and their husband even though they might not have a job and be paying back their student loans. This likely will become more common as idealism meets horrific reality for college age kids graduating into the real world. You might want to save the world but unless you have a parent or friend who is going to pony up money for you to start a business or something you might have to defer payment on your student loans to until the world becomes a slightly better place. And all things considered it isn't expected to be anything like it was before 2006 or before until 2020 to 2025 so this might be what we see more and more of as students defer their loan payments because it is presently impossible to get a good enough job to be able to make student loan payments. Here is a quote from below:

• As of 2012, there are now more than $8 billion in defaulted private loans, or 850,000 distinct loans in default. (Source: CFPB)

So, this has been a severe problem and so deferment of payments is a potential option for those not finding gainful employment soon enough not to miss payments or default.

In the 1970s it was different than now, it was a time of "Back to the Land" and people buying land wherever they could and living there if possible in a tent or trailer while putting in a septic tank and building a home to live it. This way college graduates could avoid Mortgages by paying as they went so within 4 to 8 or 10 years everything was paid for for life in one's home and property (often 2 1/2 acres or more). However, land prices are higher now and entry level jobs in the country are harder to find most places and building materials are too expensive for most people to do this easily anymore. However, if you are resourceful there is always a way to do something like this if you buy the right property.

Because of solar energy now being much more developed than it was then, solar arrays are pretty cost effective. So, it would be possible now, for example, to pump your water through a trickle pump that ran all day when the sun was out into a water tank and have all your water from gravity feed from your well. When water is only moved it a trickle it takes very little power to move it but it can run 12 hours straight and replenish what you use.

So then, inexpensive land off the electrical grid is useful to you if you have water you can pump up out of the ground or even move from a body of water or river up into a water tank for storage. However, to drink water you need to either get a reverse osmosis system like you see in many houses after you get the water tested to make sure it would be safe to drink even after run through a reverse osmosis system. However, buying inexpensive land off the electrical grid in beautiful places is still quite affordable in many places in the U.S. However, building materials are very expensive unless you can tear down existing houses for free for the lumber that need to be torn down and have building inspectors okay the wood for rebuilding before you build something. But, like I said it is still possible to build structures fairly inexpensively in very beautiful places if you are smart and resourceful and do it all yourselves or with your friends you are choosing to survive with and to make a stand in your lives whatever comes.

You have to figure out a way to survive these times just like everyone has since this country began. If they can do it so can you. You just have to be brave and resourceful to make it. I did.

Note: My wife wants you to know about all the people who failed while I and my friends succeeded. Part of the reason my friends and I succeeded was we had relatives who had either built their own homes in the past or who were building contractors of one kind or another or both. So building your own home if you are not handy isn't very practical. By the way I lost part of my hearing using chain saw building my own home then when I lost my ear plugs during that time. I wear hearing aids now partly because of this. So protect your ears, your feet, your fingers and hands. (It's nice to have fingers on your hands). Otherwise, if you are not handy to begin with maybe this isn't the best idea for you.

Here is some information below regarding deferments of student loans and other related stuff.




A deferment or forbearance allows you to temporarily postpone making your federal student loan payments or to temporarily reduce the amount you pay.

Find out if you qualify for a deferment or forbearance.

Under certain circumstances, you can receive a deferment or forbearance that allows you to temporarily postpone or reduce your federal student loan payments. Postponing or reducing your payments may help you avoid default.
You’ll need to work with your loan servicer to apply for deferment or forbearance; and be sure to keep making payments on your loan until the deferment or forbearance is in place.
Deferment
Forbearance
Do I have options besides deferment or forbearance?

What is deferment?

A deferment is a period during which repayment of the principal and interest of your loan is temporarily delayed.
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What happens to my loan during deferment?

During a deferment, you do not need to make payments.  What’s more, depending on the type of loan you have, the federal government may pay the interest on your loan during a period of deferment.
The government may pay the interest on your
  • Federal Perkins Loan,
  • Direct Subsidized Loan, and/or
  • Subsidized Federal Stafford Loan.
The government does not pay the interest on your unsubsidized loans (or on any PLUS loans). You are responsible for paying the interest that accrues (accumulates) during the deferment period, but your payment is not due during the deferment period. If you don’t pay the interest on your loan during deferment, it may be capitalized (added to your principal balance), and the amount you pay in the future will be higher.
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Am I eligible for a loan deferment?

The following table provides situations that may make you eligible for a deferment of your federal student loan.
Situations When You May Apply for Deferment
Deferment Available? (and for how long, if applicable)
Direct Loans
FFEL loans
Perkins Loans
During a period of at least half-time enrollment in college or career school
Yes
Yes
Yes
During a period of study in an approved graduate fellowship program or in an approved rehabilitation training program for the disabled

Yes

Yes

Yes
During a period of unemployment or inability to find full-time employment
Yes (for up to 3 years)
Yes (for up to 3 years)
Yes (for up to 3 years)
During a period of economic hardship (includes Peace Corps service)
Yes (for up to 3 years)
Yes (for up to 3 years)
Yes (for up to 3 years)
During a period of service qualifying for Perkins Loan discharge/cancellation
No
No
Yes
During a period of active duty military service during a war, military operation, or national emergency
Yes
Yes
Yes
During the 13 months following the conclusion of qualifying active duty military service, or until you return to enrollment on at least a half-time basis, whichever is earlier, if
  • you are a member of the National Guard or other reserve component of the U.S. armed forces and
  • you were called or ordered to active duty while enrolled at least half-time at an eligible school or within six months of having been enrolled at least half-time



Yes



Yes



Yes
If you are a Direct Loan or FFEL Program borrower who has a loan that was first disbursed (paid to you or on your behalf) before July 1, 1993, you may be eligible for additional deferments for such situations as teaching in a teacher shortage area, public service, being a working mother, parental leave, or temporary disability. For more information, contact your loan servicer.
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How do I request a deferment?

Most deferments are not automatic, and you will likely need to submit a request to your loan servicer, the organization that handles your loan account. If you are enrolled in school at least half-time and you would like to request an in-school deferment, you’ll need to contact your school’s financial aid office as well as your loan servicer.
Your deferment request should be submitted to the organization to which you make your loan payments.
  • Direct Loans and FFEL Program loans: contact your loan servicer
  • Perkins Loans: contact the school you were attending when you received the loan
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What is forbearance?

If you can't make your scheduled loan payments, but don't qualify for a deferment, your loan servicer may be able to grant you a forbearance. With forbearance, you may be able to stop making payments or reduce your monthly payment for up to 12 months. Interest will continue to accrue on your subsidized and unsubsidized loans (including all PLUS loans).
There are two types of forbearances:
  • Discretionary
  • Mandatory 

Discretionary Forbearance

For discretionary forbearances, your lender decides whether to grant forbearance or not.
You can request a discretionary forbearance for the following reasons:
  • Financial hardship
  • Illness

Mandatory Forbearance

For mandatory forbearances, if you meet the eligibility criteria for the forbearance, your lender is required to grant the forbearance.
You can request a mandatory forbearance for the following reasons:
  • You are serving in a medical or dental internship or residency program, and you meet specific requirements.
  • The total amount you owe each month for all the student loans you received is 20 percent or more of your total monthly gross income (additional conditions apply).
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How do I request a forbearance?

Receiving loan forbearance is not automatic. You must apply by making a request to your loan servicer. In some cases, you must provide documentation to support your request.
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What happens to the interest on my loan during forbearance?

Interest will continue to be charged on all loan types, including subsidized loans.
You can pay the interest during forbearance or allow the interest to accrue (accumulate). If you don’t pay the interest on your loan during forbearance, it may be capitalized (added to your principal balance), and the amount you pay in the future will be higher.
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Girl in classroom taking notes at the end of a row of desks
You MUST continue making payments on your student loan until you have been notified that your request for deferment or forbearance has been granted. If you stop paying and your deferment or forbearance is not approved, you will become delinquent and you may default on your loan.

Do I have options besides deferment or forbearance?

Always contact your loan servicer immediately if you are having trouble making your student loan payment. If you don’t qualify for deferment or forbearance, you may be able to change your repayment plan. There may be a repayment plan that offers lower payments than you’re currently making.
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end quote from:

Deferment and Forbearance | Federal Student Aid

studentaid.ed.gov › Repay Your Loans‎
Under certain circumstances, you can receive a deferment or forbearance that allows you to temporarily postpone or reduce your federal student loan payments.
begin quote:

Student Loan Debt Statistics

Here are some important facts about the state of student loans in the United States today:

How many Americans borrow/have borrowed for college?

• Nearly 20 million Americans attend college each year. (Source: Chronicle of Higher Education)

• Of that 20 million, close to 12 million – or 60% - borrow annually to help cover costs. (Source: Chronicle of Higher Education)

• There are approximately 37 million student loan borrowers with outstanding student loans today. (Source: Federal Reserve Board of New York)

• As of the first Quarter of 2012, the under 30 age group has the most borrowers at 14 million, followed by 10.6 million for the 30-39 group, 5.7 million in the 40-49 category, 4.6 million in the 50-59 age group and the over 60 category with the least number of borrowers at 2.2 million for an overall total of 37.1 million. (Source: FRBNY)


How much do Americans borrow/have borrowed for college?

•There is roughly somewhere between $902 billion and $1 trillion in total outstanding student loan debt in the United States today. The Federal Reserve Bank of New York reports $902B while the Consumer Finance Protection Bureau reports $1T.
•Roughly $864 billion is outstanding federal student loan debt while the remaining $150 billion is in private student loans(Source: Consumer Finance Protection Bureau). Private student loans are not made or backed by the federal government.
•As of Quarter 1 in 2012, the average student loan balance for all age groups is $24,301.  About one-quarter of borrowers owe more than $28,000; 10% of borrowers owe more than $54,000; 3% owe more than $100,000; and less than 1%, or 167,000 people, owe more than $200,000. (Source: FRBNY)
•In 2010‑11, about 57% of public four‑year college students graduated with debt. They had borrowed an average of $23,800 (in 2011 dollars). About two‑thirds of those earning bachelor’s degrees from private nonprofit institutions had debt averaging $29,900.(Source: College Board)

•As of October 2012, the average amount of student loan debt for the Class of 2011 was $26,600, a 5 percent increase from approximately $25,350 in 2010. (Source: The Project on Student Debt)


Who borrows/has borrowed?

Among all 2007-08 bachelor's degree recipients:
• 66% graduated with some education debt, while 10% had borrowed $40,000 or more.
• 62% at public four-year institutions borrowed.
• 72% at private nonprofit four-year institutions borrowed.
• 96% at private for-profit institutions borrowed.
Associate’s degree and certificate recipients, 2007-08:
• 38% of associate’s degree recipients at public institutions borrowed.
• 98% of associate’s degree recipients at private for-profit institutions borrowed.
• 30% of certificate recipients at public institutions borrowed.
• 90% of certificate recipients at private for-profit institutions borrowed.
Among students who earned graduate degrees in 2007-08:
• 26% had no education debt at all.
• 14% had undergraduate debt but no graduate school debt.
• 7% had borrowed $80,000 or more for graduate school.
• 5% had borrowed between $60,000 and $79,999.
(Source: The College Board)
The majority of borrowers still paying back their loans are in their 30s or older. Of the 37 million Americans with outstanding student loan debt:
• Almost 40% of these borrowers are under the age of 30.
• Nearly 42% are between the ages of 30 and 50.
• 17% are older than 50.
• Borrowers age 30-39 carry $307 billion in student loans, followed by those under 30 at $292 billion, $154 billion in the 40-49 age group, 50-59 at $106 billion and the over 60 category carrying $43 billion, for a total outstanding debt of $902 billion.
(Source: FRBNY)


How many student loan borrowers struggle with repayment?


• Of the 37 million borrowers who have outstanding student loan balances, 14%, or about 5.4 million borrowers, have at least one past due student loan account.

• Of the $870B-$1T in outstanding student loan debt, approximately $85 billion is past due.
(Source: FRBNY)

• The official FY 2010 two-year national student loan cohort default rate rose to 9.1 percent, up from 8.8 percent in FY 2009, while the three-year rate declined slightly from 13.8 percent to 13.4 percent.  (Source: U.S. Department of Education)
• Only about 37 percent of federal student loan borrowers between 2004 and 2009 managed to make timely payments without postponing payments or becoming delinquent.

• For every student loan borrower who defaults, at least two more borrowers become delinquent without default.

• Two out of five student loan borrowers – or 41%- are delinquent at some point in the first five years after entering repayment.

(Source: Institute for Higher Education Policy)

• As of 2012, there are now more than $8 billion in defaulted private loans, or 850,000 distinct loans in default. (Source: CFPB)

Who struggles most?


• As of early 2012, borrowers in their 30s have a delinquency rate (more than 90 days past due) of about 6%, while borrowers in their 40s have a delinquency rate double that, at about 12 percent. Borrowers in their 50s have a delinquency rate of 9.4% and those over 60 have a delinquency rate of 9.5%.(Source: Federal Reserve Bank of New York Consumer Credit Panel)

Students who drop out of college before earning a degree often struggle most with student loans:
• From 2004 to 2009, 33% of undergraduate federal student loan borrowers who left without a credential became delinquent without defaulting and 26 percent defaulted, vs. 21% with a credential who became delinquent without defaulting and 16% who defaulted.(Source: IHEP).
And the number of drop-outs is on the rise:
• Nearly 30 percent of college students who took out loans dropped out of school, up from fewer than a quarter of students a decade ago. (Source: Education Sector)
• More than half of students who take out loans to enroll in two-year for-profit colleges never finish. At traditional nonprofit and public schools, the percentage of students with loans who started college in 2003 and dropped out within six years is about 20 percent. (Source: Education Trust)
Type of institution attended can also make a difference:
• From 2004-09, a third or less of federal student loan borrowers at four-year, public or private nonprofit institutions became delinquent or defaulted on their loans, while nearly half or more (45 percent and 53 percent, respectively) of their borrowers were making timely payments on their loans.
• One-quarter to one-third of borrowers at for-profit and public two-year institutions were making timely payments on their loans, and more than half of all borrowers in these sectors were delinquent or had already defaulted.
(Source: IHEP)

Why do they struggle?


• 48% of 25-34 year-olds say they’re unemployed or under-employed.
• 52% describe their financial situation as just fair.
• 70% say it has become harder to make ends meet over the past four years.
• 42% of those under 35 have more than $5000 in personal debt that does not include a mortgage.
• Student loans account for the most common form of increasing debt among ages 18-24 (54% have seen increased school loan debt) while those in the older group attribute increased debt equally to school loans (37%) and credit cards (37%).
(Source: Demos and Young Invincibles)

How well do students and alumni understand their options to minimize borrowing and manage the debt once they have it?

• As of 2012, only 700,000 borrowers had enrolled in Income-Based Repayment (Source: Project on Student Debt), but the Obama Administration estimates that IBR could reduce monthly payments for more than 1.6 million student borrowers. (Source: White House Fact Sheet)
• About 65 percent of high-debt student loan borrowers misunderstood or were surprised by aspects of their student loans or the student loan process. (Source: Young Invincibles)
• Approximately one-third of recent grads, if they could do it all again, would have pursued more scholarships or financial aid options, pursued a major that would have led to a higher paying job, or gotten a job while in college and started saving earlier. (Source: Accounting Principals)

How is student debt impacting borrowers - and the U.S. economy?


A college degree does increase an individual’s potential for earnings:
• In 2010, people ages 25 to 34 with bachelor's degrees earned 114 percent more than did those without high-school diplomas.
• College graduates earned 50 percent more than did young adults who completed only high school, and 22 percent more than did those with associate degrees.
• The median income for young adults with a bachelor's degree was $45,000, and with an associate degree, $37,000
(Source: National Center for Education Statistics)
But student debt can also negatively impact an individual’s ability to take on other consumer debt – and therefore place a drag on the national economy:
• In 2011, first-time home buyers, with a median age of 31, fell to the smallest percentage of total home purchasers since 2006. (Source: National Association of Realtors)
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