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No One CARES or HEALS True American HEROES — Our Students. How to Save Yourself

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No One CARES or HEALS True American HEROES — Our Students. How to Save Yourself

As of Q1 2020, the U.S. government is owed $1.4 trillion in student loan payments. It could be argued this same government is not doing much to provide jobs to the people taking on this debt — the unemployment rate currently stands at an incredibly high 11.1%.

The Coronavirus Aid, Relief and Economic Security (CARES) Act gave student loan borrowers a temporary moratorium. Unfortunately, the Student Borrower Protection Center found that defaults actually increase after payment pauses like this. Why? If students have no way to get money, the length of the pause does not matter. A loan pause is only delaying the inevitable.

What’s more, the Consumer Financial Protection Bureau (CFPB) found that borrowers have issues returning to a repayment track after a payment pause because of bureaucracy within the loan service organizations.

Is There Any Relief Coming?

The CARES Act extends student loan payment “relief” until September 30, 2020. If there is no extension to this package, around 40 million Americans will have to resume payments on that date. The House of Representatives and the Senate have yet to come together on a relief agreement, and their separate proposals offer vastly different scenarios.

As part of a proposed COVID relief package spearheaded by Senator Lamar Alexander (R-TN), the country’s student loan repayment system will receive a substantial overhaul. People who have student loans but no taxable income would be relieved of the need to make loan payments at all. Those who do have income to report would pay one-tenth of discretionary income to loans. If your loan is from an undergrad program, you would receive forgiveness after 20 years of compliance. Graduate loans are forgiven after 25 years.

Experts led by Ben Miller from the Center for American Progress say that the changes do not help student borrowers in any real way. Institute for College Access and Success president James Kvaal came out against the plan as well, noting that current policy includes repayment plans based on income. If you make less than $19,000, your student loan payments are already waived. He also says that the logistics of the plan would cause more bureaucracy than it solves.

The Health, Economic Assistance Liability Protection and Schools (HEALS) Act has no provision for further loan forbearance, nor does it offer any other solution that provides relief. The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act from the Democrats does include a bit of help. If you are economically distressed, you can receive up to $10,000 of loan forgiveness. Any debt collection is also suspended along with an extension of the current forbearance.

Experts believe that even if students get everything Democrats have proposed, relief will not last beyond the end of 2020. There is simply too much money owed to the government, and to forgive or delay it further would upend the status quo too much.

Things should not be this way, but it seems as though students need to be professional investors before going to school. The number one lesson of investing is simply put, not so simply implemented:

You make your money on the buy, not the sell.

Finding the Best Deal

When it comes to loans, making your money on the buy means getting the best rate from the beginning of the process. You need to avoid the hidden fees that many traditional lenders hide in the fine print of their loans. You also need to know that there are refinancing options for you as your life takes on new challenges and changes.

Credible is the next wave student loan platform that makes it easy to find and compare the most advantageous loan packages. Instead of spending days and weeks on the phone prequalifying, qualifying and negotiating, lenders compete for your business side by side. Credible has already done negotiating with a large selection of partners, including those with private, federal and Parent PLUS products.

Credible makes the process of financing or refi simple and easy. You start with a two-minute form and instantly see what you qualify for. Once you choose a prequalified rate from your intuitive Credible dashboard, you will typically receive a response from lenders within 48 hours. You have no obligation to any lender just because you receive an offer, so you can hold out for the terms you want. There will be no hard credit pulls until you choose to move forward with the lender of your choice.

Most people have more options than they know when it comes to student loans. Whether you are looking for a new loan or restructuring your old one, Credible can help. Shorten your time to closing with more options than you could ever find on your own. Start the process by setting up a profile with the platform and submit to start receiving offers today.

 

 

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Posted-In: Opinion Personal Finance