Busy week in student loan land:
- What’s the average student debt levels by state? The HuffPost provides a graphic for students to see how their state stacks up.
- This is a fee that you cannot avoid: origination fees on federal student loans (The Hill); note that Stafford Loans carry 1.073% fee and PLUS loans 4.292% fees.
Last month, Rep. Susan Davis (D-Calif.), introduced legislation that would eliminate origination fees on federal student loans. Her office estimates that these administrative fees cost borrowers around $1.5 billion per year.
- Yikes! From a financial aid director: What is the biggest misconception about student loans (NerdWallet)?
Students forget that loans are self-help and must be repaid. Although loans are an easy way to satisfy a student’s current bill, they need to understand that this is money that must be repaid after graduation.
- More dangerous thinking: Almost 1/4 of students believe that their student loans will be forgiven (Time):
A new study from Junior Achievement USA and PwC US conducted by Ypulse finds that 24% of millennials think their student loans will be forgiven.
“It’s a scary statistic,” Junior Achievement president Jack Kosakowski tells CNBC. The survey doesn’t explore why roughly a quarter of young people have such an optimistic — and for the majority, unrealistic — expectation.
- Student debt balances continue to climb; approaching $31,000 maximum allowed for federal loans (Consumerist); might be interesting report for students to analyze
The latest Institute for College Access & Success’ Project on Student Debt report [PDF] on student debt found that 69% of 2013 graduates of four-year public and nonprofit colleges owed an average of $28,400, up 2% compared to $27,850 in 2012.
- Overall federal student loans declined in 2013-14 (International Business Times); might be interesting for students to read this article and the preceding one and discuss why one shows increasing student debt burdens and this one suggests declines in student loans:
In the 2013-2014 year, parents and undergraduate students borrowed $106 billion in federal and nonfederal education loans, according to the College Board’s Trends in Student Aid report released Thursday. That’s $8.7 billion less than in 2012-2013 and 13 percent less than the borrowing peak of $122.1 billion in 2010-2011. Experts identified two major, linked reasons behind the decline: shrinking enrollment and a flourishing economy.
- Additional lenders providing private student loan modifications in response to recent criticism from CFPB (Washington Post); don’t get too excited as number of loans being modified is still small:
On Wednesday, Wells Fargo said it would lower interest rates for eligible borrowers starting this month and extend repayment periods starting in February. The bank, which has $11.9 billion worth of private student loans, anticipates the move will save borrowers thousands of dollars in interest payments over the course of the loan.