With the July 1 interest rate hike looming, it’s unclear whether or not Congress will act to keep the finance charges on federally subsidized student loans from jumping to 6.8 percent.
Failing to keep the rate at 3.4 percent could be an election-year black eye for lawmakers, but as CNN points out, the $6 billion tab to carry the lower charges is another conundrum for Congress.
Either way, the plight of jobless grads owing big bucks is going to sizzle again over the next few weeks, so here are a few ideas for more coverage of student loans and college borrowing:
Coping. Here’s a great round-up from Terry Savage in the Chicago Sun-Times of a variety of repayment programs, from those that stretch out payments (and interest) over 25 years to the sort of career-related loan-forgiveness programs I wrote about in this previous blog post. You can enlist a Certified Financial Planner to run the numbers on the pros and cons of a variety of payoff strategies, and how they would affect cash flow, overall interest paid, opportunity to save for retirement and other goals, etc. so that borrowers could gain a better understanding of the trade-offs they’d be making.
Also, note that the White House has proposed expanding the extended repayment plan to other students, though it’s unclear how that will be done.
Private loans. While the interest-rate debate concerns federally subsidized loans, private student loans also are under scrutiny. The Consumer Financial Protection Bureau has released thousands of comments that illustrate the plight of many borrowers, from those distressed by flawed administration of loans to grads unable to find work that pays enough to tackle the debt.
The comments make good reading and can alert you to some trends to look out for — one writer said her parents took out a mortgage in order to pay down her loans; I wonder what a financial professional would say about that. And you might even take a page from the CFPB book and solicit similar tales from local readers; they could be published in a round-up or provide case studies for a student-loan package.
Just one contrarian caveat: Make sure you see the documentation, including contracts, the borrower’s recent pay stubs, payment records and so on. People tend to skew a story to present themselves in the best light, and I’d want to see the paperwork before I let them castigate a corporate under my byline.
Prospective students and college choice. How has the spotlight on college costs affected the class of 2016’s selection process? Is community college enrollment up? Are scholarship applications rising? What are your region’s schools and universities seeing in terms of enrollment trends and interest? As this Daily Hampshire Gazette story notes, students are weighing costs and benefits more strategically than ever.