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Know When it Makes Sense to Consolidate Student Loans – US News #pay #day #loans


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Know When it Makes Sense to Consolidate Student Loans

Consider the type of loan you have and your repayment history before seeking consolidation.

Gone are the days when it was generally a good idea for most federal student loan borrowers to consolidate their loans. The student loan world has changed significantly, eliminating two of the biggest benefits of consolidation.

First, most federal loans previously featured variable interest rates. These rates changed annually, so consolidation allowed borrowers to lock in historically low numbers. In July 2006, interest rates on new loans became fixed. Because consolidation interest rates take a weighted average of the underlying loan rates, borrowers no longer automatically get a lower rate by consolidating.

Second, in the past, it was common to have your federal loans held by multiple servicers. By consolidating, borrowers could pay one servicer instead of many. Now, most borrowers pay all their loans under one bill from the start, thanks mostly to efforts on behalf of the Department of Education.

With these benefits removed, borrowers may be wondering if consolidation is even worthwhile. For many, the answer is, not really. However, it can still be a useful tool for some. Here are some situations where it can make sense to consolidate student loans.

1. To o btain access to forgiveness or repayment benefits: Student loan regulations and laws are complicated, but sometimes that can work to the borrower’s benefit. This is true when it comes to consolidation, Parent PLUS loans and Public Service Loan Forgiveness.

While Parent PLUS loans are technically eligible for PSLF. it’s hard for borrowers to take advantage of this benefit. A borrower must make 120 payments under either a standard 10-year, income-based, income-contingent or Pay As You Earn payment plan to qualify for PSLF.

The catch is that Parent PLUS loans are not eligible for the three income-related payment plans. and a borrower paying under a standard repayment plan will have nothing left to forgive after 120 payments.

If you consolidate a Parent PLUS loan under the Direct Loan program, however, it becomes eligible for income-contingent repayment and therefore has the potential to be eligible for PSLF. If the borrower wouldn’t otherwise be eligible for PSLF, having access to this option could make payments much more manageable, especially if the borrower still owes money when he or she retires.

On a related note, as only Direct Loans are eligible for PSLF, borrowers with older Federal Family Education Loan Program loans can use consolidation to transfer those loans ​into the Direct Loan program to gain access to PSLF.

Consolidation can work the other way too, especially when it comes to Perkins loans. Many unique forgiveness opportunities available to Perkins loans are lost when they are consolidated, so make sure you do your research before taking this step.

2. To obtain a lower payment : While income-related payment plans provide much needed relief for many, those lower payment amounts may still be too high to manage. For those borrowers, especially those with lower loan balances, extending the term of the loan through consolidation may actually yield a lower payment than some other repayment options.

This calculator can help weigh all of those options at once. Just remember that the longer you take to pay the loan, the more you will pay in interest.

3. To manage private student loans: The benefits of student loan consolidation have increased when it comes to private student loans. While it is generally not advisable to consolidate federal loans ​with private loans since you’ll lose the federal benefits, consolidating your individual private loans may make sense.

There’s been a significant increase in lenders offering a private loan consolidation product. increasing the competitiveness of these products. Borrowers can often find a lower interest rate and more favorable terms, especially if they have a good payment history on their existing private loans to date.

At the very least, private loan consolidations can extend the term of your loans, lowering the payment. As we’ve discussed in the past. private loans have very few lower payment options. so consolidating to a longer term with a lower payment can sometimes be the only option available.

If you have good credit and payment history on the loans you want to consolidate, this can also be a way to release the co-signer​ from responsibility of those underlying loans. The co-signer will not automatically transfer to the new loan product, so if you do still require one to consolidate, you’ll need to find a new one, or ask your existing co-signer​ to re-up his or her commitment.

4.To get out of default: If you’ve defaulted on your federal student loans, consolidation is the fastest way to get the loan out of default. Consolidation is not as beneficial as loan rehabilitation, as consolidation doesn’t remove the default from your credit history. However, if you’re not eligible for rehabilitation or can’t take the time to complete that process, consolidation can get your loan back in good standing.

A good place to start to determine the pros and cons of consolidation will be your student loan holder, which will have a good understanding of how consolidation will benefit – or not benefit – your particular situation.


How to protect your child’s credit – FOX 14 TV Joplin and Pittsburg News Weather Sports #credit #card #consolidation #loan


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More from Bills.com More

By Andrew Housser

Identity theft is terrible when it happens to anyone. The consequences range from hassle to financial disaster. But what if someone stole your identity, and you had no idea, perhaps for years while the thief opened credit cards or secured vehicle loans, filed taxes and pocketed the refunds, or even took government benefits?

It is possible, particularly with children the group most at risk for this type of unrecognized theft. A 2011 study found that more than 10 percent of victims of identity theft were children. This makes children 51 times more likely to be victimized than adults. The tips below can help you protect the children in your life.

1. Know the warning signs.

Possible identity theft has warning signs. The most obvious is if a child begins to receive credit card or loan offers in the mail, or collection calls. Sometimes, a child receives a notice from the Internal Revenue Service about unpaid taxes. Others may be denied government benefits such as Medicaid because the Social Security number has been used. Sometimes, the theft goes undetected until a child applies for a driveR s license or bank account. A fraud victim may be denied because his or her Social Security number has been used with another name.

2. Check the child s credit reports.

Adults and minors older than age 14 can request free credit reports once per year from AnnualCreditReport.com or by calling 877-322-8228. Check your child s credit reports using his or her Social Security number. If no reports exist, the child s credit has never been used. This is an indicator that all is likely well.

3. Understand when a child might have a credit report.

Some minors legitimately have a credit report. In many cases, this is because parents have added a teen as an authorized user on a credit card account. Other minors may be joint account holders or have a small bill, such as a cell phone, in their names. In these cases, having credit reports is valid. Still, parents or guardians and teens should review the reports together to make sure they do not contain inaccurate information or errors. If you do spot an error, report it to the credit bureau in writing and request a correction.

4. Keep Social Security numbers secret.

Do not share your child s Social Security number, even with family members. If you receive information that any relevant data such as tax return, school or health insurance information has been exposed in a security breach, take necessary precautions with your child s information as well as your own. If you are asked for a Social Security number for identification purposes, ask if you can use only the last four digits, or see if you can identify the child in some other way.

5. Be especially careful regarding foster children.

Foster children are especially at risk of identity theft. This is because their information passes through many hands. Sadly, these children face even greater challenges if their identities are stolen. Fortunately, in 2011 Congress passed legislation requiring child welfare agencies to help foster kids check and repair their credit when they turn 16.

6. Handle fraud or identity theft quickly.

If you believe your child is a victim of identity theft, respond quickly. Contact each of the credit bureaus to report the fraud. Tell at least one of the credit bureaus to place a fraud alert on the account (one company will contact the others). You also should file a fraud report with the Federal Trade Commission (FTC) online or by calling 877-438-4338.

7. If a child already is a victim, consider a credit or security freeze.

A credit freeze shuts access to an existing credit file, making it impossible for anyone to open a credit card or loan using a Social Security number. If a child is a fraud victim, parents may opt to do this. You need to arrange the freeze individually with each credit bureau. See more details from the Identity Theft Network .

In addition, it s possible in some states for parents to proactively do a credit freeze for any child. If the child has no credit file, in these states, the credit bureau would create a file in order to place a freeze on it. Currently, legislatures have made these credit freezes available to parents or guardians in about 20 states. Be aware, however, that there is a downside to this option. Should someone try to apply for a loan using a child s stolen (but unfrozen) information, the lender will be informed that there is no credit history, and the applicant is a minor. This could result in the fraud being reported, and perhaps the thief s capture. With a freeze on the account, the lender would never be informed of attempts to use the number.

Fortunately, most children will avoid identity theft. For those who are victimized, the best defense is catching the situation early. By reporting the fraud, you can help salvage the child s credit profile in time for grown-up responsibilities such as a job application, student loan or car loan.

Andrew Housser is a co-founder and CEO of Bills.com. a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.


Best College Loan Advice: 9 Tips for Borrowing for College – CBS News #montel #williams #loans


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Best College Loan Advice: 9 Tips for Borrowing for College

  • Lynn O’Shaughnessy
  • MoneyWatch

Last Updated Apr 13, 2010 4:15 PM EDT

College loans . Yes, that time has arrived when parents of returning and new college students start thinking about applying for college loans. It’s also crunch time for graduating college students, who must begin repaying their college loans .

Unfortunately, many families get into trouble when they start shopping for college loans . When the college admission process is over, many parents are so relieved that they fail to do their homework before choosing college loans. College graduates also don’t give much thought to how they will tackle their college debt.

To help out families, who must borrow to pay the college, I’ve assembled some of my past college blog posts on student loans. Some of the posts will help you pick the best college loans and others will help those who must soon begin repaying their student loans.

There is no one right answer, but you will find links in this post to calculators that can help parents determine what level of college debt they can handle.

Students should limit their borrowing to federal loans only, which are safer and offer more protections than private student loans.

Federal loans are your best bet, but unfortunately many families gravitate to private loans because they don’t understand the difference.

In the early 1990s, only one out of every three college students took out college loans, but now well over half do.

There are federal student loan repayment opportunities that can dramatically shrink the monthly tab of eligible borrowers.

Don’t attend a college that has a high student loan default rate. Here’s how to find those default rates.

If you are struggling as you attempt to repay your student loans, here are some options.

Be extra careful about repaying student loans on time. The penalties can be astronomical.


Understand the Consequences of Student Loan Default – US News #home #mortgage #rates


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Understand the Consequences of Student Loan Default

The possibility of wage garnishment is just part of the headache.

​Recently, the New York Federal Reserve released some alarming information on student loan defaults that indicated up to a quarter of all borrowers from the last nine years have defaulted on their loans. The report also showed that up to 37 percent have missed at least one payment.

These numbers are much higher than the three-year cohort default rate measured and published annually by the Department of Education and show a growing trend of borrowers who are in need of information on how to use the lower payment and other options available for federal student loans .

Most struggling borrowers know that their loan is in default or at risk for going into default. so some of the consequences such as tax refund and wage garnishment may not be a surprise. But there are other consequences of defaulting on your federal student loan you may not be aware of.

There Will Be Fees​

If you ask federal student loan borrowers why they defaulted on their loans, nearly all would answer that they were in financial difficulty or couldn’t afford their payments. For a defaulted loan, it only gets worse.

First, the entire balance of the loan is due and payable immediately. There are no more monthly bills and no more lower payment options, as the loan loses eligibility for these benefits by being in default.

Second, any interest that was outstanding at the time of default will be capitalized, or added to the principal. This will increase your overall loan balance and cause you to have interest charged on interest, which is certainly not ideal.

The collection costs may be the biggest blow. Collection costs vary for different types of loans. For Perkins loans, these can be as high as 40 percent.​ ​For federal Stafford, PLUS, and consolidation loans. collection costs are as high as 24 percent ​, but can be discounted to 18.5 percent if the borrower consolidates out of default or as low as 16 percent if the borrower rehabilitates the loan​.

These costs can add up quickly. Let’s say you defaulted on your $25,000 federal loan after a year. This example loan has a 5 percent interest rate, so right away your loan holder will add $1,250 to the balance in capitalized interest, plus any late fee amounts they may have charged you along the way. Now add the 24 percent collection cost of $6,300, and your $25,000 balance has grown to $32,800 in a year.

These collection costs are set in federal law and regulation, so in most cases, there’s not a lot of wiggle room to negotiate these fees. Some loan holders will reduce these fees if you agree to pay the defaulted loan in full.

Expect Garnishments and Lawsuits

Federal student loan holders and the Department of Education can garnish your tax refund without any type of court order or legal action, although they will notify you ahead of time and give you the opportunity to appeal or resolve the default. If you filed your taxes with a spouse, their portion of the refund will also be garnished and put toward your defaulted student loan.

If having the refund garnished is a hardship, the borrower can try appealing to the loan holder to have some or all of it returned. Success in this case varies. The non-borrower spouse can also file an injured spouse claim to have his or her portion of the refund returned.

In general, defaulted student loans will be certified for tax offset after months of attempts to resolve the loan with the borrower with little or no response. Once a loan is certified for offset, it’s rare to have it removed unless and until the loan is either taken out of default or paid in full. They can also garnish your Social Security and other benefits.

Wage garnishment is another tool often used to collect defaulted student loans. Affected borrowers are sent notification at least a month prior to the beginning of the garnishment and given the borrower an opportunity to appeal. Loan holders, with some exceptions, may garnish up to 15 percent of a borrower’s wages.

If these tactics prove unsuccessful, the U.S. Department of Justice may decide to sue the defaulted loan borrower for payment. This action can add significantly more fees and put your assets at risk, but is rarely taken due to the other tools the government has to collect these loans.

Other Consequences

One of the more well-known penalties of student loan default is being unable to take out additional financial aid. This can be sort of a no-win situation if you were in financial difficulty in the first place because you did not complete your credential or you need an advanced degree or certificate. Defaulting can also tank your credit score.

Some state boards are even allowed to revoke or suspend a license to practice certain professions in their state for borrowers with defaulted federal student loans. This can include medical professionals, teachers, state officers and attorneys.

Solutions and Fixes

If you’re having financial difficulties, call your loan holder. If the loan isn’t in default yet, there are many lower payment, deferment and other options available that can help prevent that from happening – but you need to reach out.

Most of the defaulted borrowers that the Student Loan Ranger encounters could have prevented the default from happening if they’d just allowed their loan holder, or other industry advocate, to work with them.

If you have already defaulted, you can resolve the default through rehabilitation, consolidation or by paying the loan in full.


Drowning in student loan debt? Here – s help – NBC News #types #of #loans


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Drowning in student loan debt? Here s help

Gan Golan, of Los Angeles, dressed as the Master of Degrees, holds a ball and chain representing his college loan debt. Jacquelyn Martin / AP

As college students start the fall semester, millions of graduates (and drop-outs) struggle to pay off a mountain of student loan debt – more than $1 trillion dollars, according to the Student Loan Debt Clock. That’s more than all the credit card debt Americans owe.

College seniors who graduated with student loans in 2010 owed an average of $25,250, according to the latest data from The Project on Student Debt. That’s up five percent from 2009.

And these days, a college degree doesn’t guarantee employment, let alone a good-paying job.

“You don’t realize the seriousness of paying back that loan until you finish school,” said Langdon Bueschel of Seattle, who needed financial aid to attend the University of Washington.

When he graduated in 2008, Bueschel had a degree in English and $12,000 in student loan debt. He has a job designing online advertising, but most of his money goes to living expenses. Because he missed so many payments, his balance now stands at $18,000 and counting.

“I could have been more responsible and paid more quickly,” he admitted, “but sometimes things come up.”

The most recent report from the U.S. Department of Education found that more than 320,000 borrowers had defaulted on their student loans as of September 2010. That is, they were 360 days or more late in making their payments.

Can’t handle your student loan payments?

You may have options and there’s an easy way to find them. The Student Debt Repayment Assistant on the Consumer Financial Protection Bureau (CFPB) website can help students – and their families – figure out the best repayment options and what to do if they’re behind in their payments.

“You just answer a few questions and we’ll be able to point you to the best repayment program or action you should take in order to best manage your debt,” said CFPB student loan ombudsman Rohit Chopra.

First, you need to know what type of loans you have – government, private or both – because the remedies are different. Not sure? The Student Debt Repayment Assistant has a link to the National Student Loan database where you can find out.

“We can lead you in the right direction for the income-based repayment program on federal loans and we can tell you how you might negotiate with your private student lender,” Chopra explained. “Let’s say you’ve fallen behind like so many people have, we can even tell you about ways to negotiate with debt collectors and maybe even get your credit report fixed so you can get back on track.”

Of course, nothing’s guaranteed. But your chances of modifying the repayment terms are fairly good with a student loan from the federal government. Private lenders are generally not as willing to help. Still, it’s worth a try.

“Options vary by lender, but many private student loan programs offer borrowers a partial forbearance during which the borrower makes interest-only payments for a short period of time until the borrower can get back up on his or her feet,” said Mark Kantrowitz, publisher of FinAid.org and Fastweb.com. “This keeps the loan balance from growing bigger and digging the borrower into a deeper hole.”

Kantrowitz points out that some private lenders may make reductions in the loan balance or interest rate when the hardship is of a more permanent nature and they know they are unlikely to recover the full amount owed.

Remember: it is virtually impossible to discharge any type of student loans in bankruptcy. This obligation stays with you forever.

More information:


Missouri payday lenders shift to installment loans: News #easy #payday #loans


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Walker Moskop

Payday lending volume in Missouri has declined significantly in recent years, according to a state survey released this month.

On first appearance, the survey would appear to be good news to consumer groups that are fighting to limit the availability of high-interest, short-term loans. They argue the loans lure cash-strapped borrowers into cycles of debt.

But the survey numbers paint an incomplete picture.

While payday loan volume and the number of payday loan storefronts have dropped, the number of consumer installment lenders has surged.

Installment loans in Missouri are typically larger than payday loans and are repaid in installments spread across a period of at least 120 days, rather than being due in full after two weeks, such as with payday loans. Both types of loans can have high interest rates when charges are annualized.

“We have seen a massive increase in the number of products that aren’t classified as payday loans,” said Molly Fleming, who leads a payday loan reform campaign for the PICO National Network. She was heavily involved in a 2012 statewide initiative in Missouri to cap interest rates on loans at 36 percent. The measure, which faced well-financed industry opposition, failed to get on the ballot.

The biannual survey from the state division of finance showed the number of payday loans issued in 2014 had dropped 20 percent since 2012, from 2.34 million loans to 1.87 million loans. That’s well below the 2006 total of 2.87 million. And the number of lenders declined from a 2006 peak of 1,275 to 838, as of Thursday.

But the state doesn’t track consumer installment loans, a product that many lenders are moving to in the face of growing public criticism and regulatory scrutiny.

At the end of 2008, 569 companies were registered as installment lenders. Now, there are 980. Many storefronts across the state offer both products.

Missouri places no caps on interest rates for installment loans, and the state doesn’t track the volume of lending or the typical interest charged on the loans.

Some installment lenders do check borrower credit and income. Interest rates can vary from less than 36 percent, Fleming said, to well into the triple digits.

One of the state’s largest installment lenders, Advance America (also the nation’s largest payday loan company), offers online installment loans with annual interest rates just shy of 300 percent. According to its site. someone who takes out a $1,000 loan in Missouri and repays it in 13 twice-monthly installments would pay $838 in financing charges.

Many state legislatures in recent years have passed measures to rein in payday lending. While Missouri places few restrictions on payday loans, lenders have been wary of eventual action from the federal Consumer Financial Protection Bureau, which is expected to soon release draft regulations aimed at limiting payday loans and potentially other types of short-term loans.

As a result, many companies nationwide have shifted their focus to products that fall under less regulatory scrutiny, said Nick Bourke, a researcher at the Pew Charitable Trusts.

Though installment loans don’t come with the balloon payments that so many payday borrowers struggle with, large origination fees and high interest rates are still possible, Bourke said. “In a state like Missouri, the proper protections are not in place.”

Another of the state’s largest payday and installment lenders is Overland Park, Kan.-based QC Holdings. which has about 100 locations in Missouri.

In a filing with the Securities and Exchange Commission, the company noted that “higher fees and interest from our longer-term, higher-dollar installment products” was helping offset flagging payday loan revenue, which was in part due to the company’s efforts to transition some payday loan customers to installment loans.

According to the filing, the share of the company’s revenue and profit derived from Missouri dropped slightly through the first nine months of 2014 compared with the year before. The company’s general counsel, Matt Wiltanger, attributed the decline to the migration of customers online, to lenders that he said are often unlicensed and unregulated.

Wiltanger declined to discuss the company’s installment revenue, which had grown by 30 percent through the first nine months of 2014.

Payday lenders have long argued that the demand for their products reflects a lack of access to other forms of credit, and that cracking down on them won’t change the fact that millions of Americans are struggling to make ends meet. Lenders have asserted if federal rule changes make loans unprofitable, it will eliminate the only means of borrowing for some consumers.

The Consumer Financial Protection Bureau doesn’t have the ability to place interest rate caps on loans, but it can take other steps. Fleming hopes the bureau will require lenders to take into account a borrower’s ability to repay and remove their ability to access a borrower’s bank accounts, among other measures.

Last year, the Missouri Legislature passed a bill that would have prohibited payday loan renewals and would have lowered the fees that could be charged. Consumer advocates said the bill was riddled with loopholes and called it fake reform. Lenders didn’t bother to lobby against it, and Gov. Jay Nixon vetoed it.

According to state data, the typical payday loan is for $310 and carries an annual interest rate of 452 percent once fees are annualized. That translates to a little more than $17 for every $100 borrowed, assuming the loan isn’t rolled over, which leads to more fees. The typical loan is rolled over between one and two times.

A House bill has been filed this session that proposes capping annual interest rates for payday, installment and title loans at 36 percent. Fleming praised the measure, but acknowledged it’s unlikely to go anywhere.

Another bill passed in the House on Thursday could raise the maximum fee that can be charged on loans with terms of more than 30 days, which would include installment loans, from $75 to $100.

This map shows the locations of all licensed payday and consumer installment lenders in Missouri as of the end of January. It doesn’t account for online lenders. Zoom out to see other parts of the state. Read more about payday lenders shifting to installment loans here.

Loan types

Maximum loan is $500; average loan amount is $310


Mom-And-Pop Loan Sharks Being Driven Out By Big Credit-Card Companies – The Onion – America s Finest News Source #same #day #loans


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Mom-And-Pop Loan Sharks Being Driven Out By Big Credit-Card Companies

PHILADELPHIA Frankie “The Gorilla” Pistone leans wistfully on his bat. Then, without warning, he picks it up, swinging it furiously toward his deadbeat client’s leg. Just before the Louisville Slugger makes contact with the man’s kneecap, he pulls back, as only a real pro can, leaving the $250-in-the-hole man gasping in fear and relief. “Just get it to me by tomorrow, because next time, I ain’t gonna let up,” Pistone says.

Loan shark Frankie Pistone, whose way of life is endangered by the likes of American Express.

As the thankful man scurries off, Pistone pulls the cigarette out of his mouth and drops it to the ground. “I’m going to miss this,” he says.

Frank Pistone is part of the dying breed known as the American Loan Shark. Not so long ago, the loan shark flourished, offering short-term, high-interest loans to desperate people with nowhere else to turn. Today, however, Pistone and countless others like him are being squeezed out by the major credit-card companies, which can offer money to the down-and-out at lower rates of interest and without the threat of bodily harm.

“It’s a damn shame,” said Joseph Stasi, 61, a South Philadelphia loan shark whose business is down 90 percent from its mid-’70s heyday. “These days, there’s just no place for the small businessman. My kind, we just can’t compete with the Visas and MasterCards of the world.”

“The old customers don’t come ’round here no more,” said Felix Costa, 59, speaking from the Elizabeth, NJ, pool hall that has served as his place of business since 1972. “Time was, a guy who needed a quick $400 for a new refrigerator or some car repairs would come straight to me. Now, he just puts it on his Discover card.”

Though their client lists are dwindling, the loan sharks still have their champions.

“Call me old-fashioned, but I prefer the loan sharks to the credit-card companies,” said Gene Hobson of Detroit. “When I borrow money from Three Knuckles Benny, I know there’s going to be a personal touch, whether it’s a dead animal on my doorstep or one of my kids coming home with a missing toe. The credit cards just don’t give you that sort of individualized attention. And, if you’re late with them, it’s a form letter and maybe maybe an irate call from the accounts-receivable department.”

“With our overhead, we need to charge a 50 percent weekly interest rate just to break even,” said a Chicago loan shark who identified himself only as “Johnny Toothpick.” “We’ve got rent, pay-offs, and switchblade maintenance, not to mention travel expenses. How can we compete with rates as low as 18 to 26 percent a year?”

Continued Toothpick: “These [credit-card companies] are monsters. They care nothing about the damage they’re doing to the American landscape by driving us out. Loan sharking was about more than giving people money and roughing them up when they didn’t come through. It was about ruffling a kid’s hair on the street, helping out a local fella who needed a break, and occasionally letting somebody off easy with just a couple of punches to the gut instead of a glass-filled sock to the face. It’s a unique part of our shared national experience that, once extinct, will never come back.”

With nearly 200,000 new credit-card solicitations going out every week, the loan sharks have little hope of regaining the ground they’ve lost.

“We were going by word of mouth, and we did pretty good around the neighborhood,” Pistone said. “But these credit cards? With direct mail and the Internet, they reach a customer base we can only dream about. In this business climate, how can a small, independent goon possibly compete?”


4 Must-Know Facts About Obama – s New Student Loan Plan – US News #loan #repayments #calculator


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4 Must-Know Facts About Obama’s New Student Loan Plan

Nearly 5 million borrowers could be affected by expanded Pay As You Earn eligibility.

President Barack Obama announced some big news this week that stands to help many student loan borrowers ​​​​​​​​​​​​​.

Most people met the president’s proposed changes with excitement, even though it seemed like many didn’t exactly understand what the changes were or, even more importantly, how the changes may apply to them. So, let’s answer some big questions about the president’s executive action.

1. Will these updates help me? If you have federal student loans, maybe. With his executive action, the president expanded the existing Pay As You Earn program available to federal student loan borrowers.

Currently, this plan caps monthly payments at 10 percent of a borrower’s disposable income and forgives the balance after 20 years of payments. Those aspects of this plan won’t change.

What will change is the number of borrowers who can take advantage of this option. Currently, only newer borrowers are eligible for this plan. However, starting in 2015, borrowers who took out loans before October 2007 or stopped borrowing by October 2011 will now be eligible. Government officials estimate this number to be 5 million people.

2. How much could I save? Now, most federal loan borrowers are eligible for income-based repayment – a different repayment plan that has the same premise as Pay As You Earn.

Unlike Pay As You Earn, IBR caps payments at 15 percent of one’s disposable income and forgives the balance after 25 years of payments. Those differences could mean a lot, both in monthly payment amount and in the total amount paid over time.

For instance, consider a borrower who owes $55,000 at a 3.41 percent interest rate, has an income of about $35,000 per year, and is not married and has no other dependents. Here’s what that person’s payments would look like under three different payment plans:


5 Warning Signs of a Bad Credit Card – US News #student #loans #rates


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5 Warning Signs of a Bad Credit Card

Don’t be duped by a horrible offer.

It doesn’t take much effort to find dozens or even hundreds of credit card offers. All you have to do is visit the websites of the largest credit card issuers, such as JP Morgan Chase, Citibank and Bank of America. Add to that the Visas and MasterCards available from major retailers, hotel chains and airlines, and it’s easy to find yourself awash in offers.

Naturally, some offers are better than others. It’s often tricky to determine what the best offer is, but there are a few warning signs of an offer that’s not as good as others. Here are five clear signs of a credit card you should skip right past.

No bonus rewards. Reward programs are common features of credit cards. They offer you some form of reward or rebate for purchases made on the cards.

Reward credit cards come in a variety of shapes and sizes. Some provide discounts at specific retailers. For example, the Target Visa gives you 5 percent off on all purchases at Target. Various gas station chains offer as much as 25 cents per gallon in rebates when you use their particular Visa or MasterCard to buy gas. Other cards offer points that can be used in various ways. Some hotel chains, for instance, offer cards that generate points with each purchase and can be exchanged for a free night of lodging at one of the hotels in that chain.

If you’re smart, a good rewards program can easily help you save on everyday purchases. There are multitudes of cards out there that offer at least some kind of rewards program, so there’s no reason to accept a card that offers you nothing in return for using it.

High APR. If you carry a balance on your card from month to month, you’re going to face interest charges. The higher the APR on your card, the more interest you’re going to pay each month on a particular balance.

Let’s say you have a 19.9 percent APR on a card with a $1,000 balance, and your monthly minimum payment is 4 percent of your balance. In that case, to pay off the card, you’ll pay $40 a month, but it will take 73 months. You’ll also end up paying a total of $1,556, which translates to an extra $556 in interest.

If you simply reduce the interest rate to 9.9 percent APR (and leave the other factors the same – a $1,000 balance and a 4 percent monthly payment), things change quickly. You’ll still pay $40 a month, but you’ll end up paying off the card in 58 months. Your total payment will be $1,209.11 – only $209.11 paid in interest.

Therefore, if you carry a balance, a high APR is something to avoid because a lower APR will directly save you money. (Of course, it’s better to simply not carry a balance.)

Low credit limit. Each credit card offer comes with a credit limit that indicates the maximum amount of credit you can use on that card. While it’s rarely a good idea to use a card up to the credit limit, there are times when that flexibility can help.

For example, if you’re going to make a major purchase like a laptop, it’s nice to have the consumer protection that a Visa or MasterCard offers, but if your credit limit is too low, you can’t simply buy it with a swipe of the card.

A higher limit can also help improve your credit score, since scores factor in credit card utilization rates (the ratio of your balances to credit limits).

The bottom line: If your card offer limits your credit to $250 or $500, look elsewhere.

High fees and penalties. Credit card companies make a lot of money from fees. Fees for balance transfers, cash advances, cash withdrawals from ATMs, payment by phone, online payments – if there’s a way to charge you, they will.

That’s why it pays to look at the fine print. If you find that a card will charge you fees for all of these things – particularly for things you are likely to do, like transferring balances – skip it and move on to the next offer.

Variable interest rates. This is a particularly pernicious trick that some credit card companies like to use. They’ll advertise a very low initial rate, but it turns out that it’s a variable rate they can change at will. Trust me, they will change it, and it will cost you.

You should look for fixed-interest rate cards, even if they’re a bit higher than variable rate cards. Still, be careful – there are situations when companies can change the rate on a fixed rate card. Be aware of those situations by reading the documentation that comes with your card.

If you avoid these five warning signs of a bad credit card, you’ll wind up with a card that’s right for you .


Private college loans: 7 things you need to know – CBS News #interest #free #loans


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Private college loans: 7 things you need to know

  • Lynn O’Shaughnessy
  • MoneyWatch

Mar 27, 2012 4:53 PM EDT

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(MoneyWatch) If you have to borrow for college, the best college loans are the ones available through the federal government, which provide the same student loan rates and terms for everyone.

If you are interested in pursuing private college loans. you need to proceed carefully. Here are seven things you need to know when shopping for private loans.

1. Turn to credit unions.

Credit unions, which are newer players in the private student loan world, almost always provide better interest rates. Ironically most people stick with the well-known lenders even though their rates are typically higher. You can look for college loans at credit unions through cuStudentLoans .

2. Check for schools that have their own credit unions.

If your school is affiliated with a credit union, check its rates. Here are institutions that have a credit union:

Harvard University

University of Chicago

Amherst College

Hampshire College

Mount Holyoke College

University of Wyoming

MIT

University of Kentucky

Princeton University

California State University system

Eastern Iowa Community Colleges

Canada College

3. Apply for multiple loans.

At AllTuition. a private college loan comparison site, parents research many loans, but rarely apply for more than one. Unfortunately, borrowers won’t know what rate they qualify for unless they apply. It’s well worth the effort.

“A family taking out a $12,000 private loan is paying $5,000 more in interest because the parents aren’t taking 30 minutes to shop and they only complete one application,” says Sue Kim, Alltuition’s CEO.

4. Don’t assume you’ll get the lowest rate.

The teaser rate on private loans can look much more attractive than federal college loans. For instance, the interest rate for the federal PLUS Loan for Parents is 7.9 percent vs. some advertised rates of 3.5 percent or 4 percent. Mark Kantrowitz. the publisher of FinAid. however, estimates that fewer than 5 percent of borrowers capture the best rate.The difference between the lowest rate and the highest rate at an individual lender can be huge.

5. Use loan search engines.

Here are three online tools to find private student loans:

6. Ask the right questions.

Before committing to a private loan, ask these questions:

1. What is the interest rate?

2. Is the rate fixed or variable?

3. Is there an interest-rate cap?

4. What is the total cost of the loan?

5. Does the loan have borrower rewards?

6. What are the student loan deferment options both during and after school and are there any hardship waivers?

7. Are there any additional fees?

8. How difficult is it to consolidate loans and cut interest rates after graduation?

9. Does the loan offer penalty-free pre-payments?

10. How long is the grace period?

11. What are the borrowing limits?

7. Borrow responsibly.

Don’t borrow too much. Sure, college is a great investment, but you don’t want to hamstring yourself by graduating with too much debt. It’s much easier to borrow too much through private loans because they have higher borrowing limits.

Use the student loan calculator at Mapping Your Future to estimate how much your repayments will be.