9 Surprising Facts About Student Debt

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Americans’ accumulated student debt has topped $1.4 trillion, an all-time high. While that debt came in the service of providing valuable education, it can be a formidable hurdle for individual workers to overcome as they transition from student life into their careers. Check out nine surprising facts about the past, present, and future of the academic loan industry.

1. SCHOOL WASN’T ALWAYS SO EXPENSIVE.

After World War II ended with an Allied victory, the U.S. government rewarded those who served with scholarships under the GI Bill. Millions of veterans got a free education, while millions more who didn’t serve could attend for extremely low tuition rates that could be covered by working a summer job. This kind of nearly unrestricted access continued for decades until the economy took a downturn in the 1970s. As oil embargoes and inflation led to a sharp increase in tuition, private lenders started to take the place of federal aid, and the debt boom began.

2. DEBT HAS SURGED 58 PERCENT IN THE PAST 10 YEARS.

It’s easy to blame inflation for the ballooning student debt balances of the past decade. Graduates in 2005 owed an average of $17,233, while those exiting school in 2012 owed an average of $27,253. But average debts in the auto and credit card industries have fallen in the same period. The difference? Economists believe students have become more likely to take on higher loan amounts in the belief they’ll be able to secure higher-paying jobs after graduation. Unfortunately, those jobs can fail to materialize, leading to growing amounts of debt.

3. …BUT MOST DEFAULTS ARE ON LOANS LESS THAN $10,000.

Economists say that it’s a misconception that enlarged debt amounts are responsible for many of the defaults. By some estimates, two-thirds of delinquent loans are for $10,000 or less. Surprisingly, totals of less than $5,000 make it eight times more likely a student will default than if they owed a greater amount. One possible explanation: These smaller debts belong to low-income employees who didn’t finish school. For workers in lower income brackets, these smaller debts can still be significant obstacles.

4. YOU CAN LOSE YOUR DRIVER’S LICENSE FOR NON-PAYMENT.

What could a student loan default have to do with your driver’s license? In some states, a lot. Residents of Montana and Iowa reported to have non-payment of loans can see their licenses revoked. Other states, like Tennessee, can also suspend professional licenses. In 2010, 42 nurses had to stop working when their loans became past due.

5. DELINQUENT? YOUR WAGES CAN BE GARNISHED.

It’s a vicious cycle for graduates trying to climb the career ladder. If an entry-level job isn’t paying enough to cover student debt, the lender—often backed by federal government protection—can garnish already thin wages in an attempt to recoup their money.

6. DEBT CAN AFFECT YOUR LOVE LIFE.

One prominent economist has tracked survey data that examined the correlation between student debt and lifestyle choices like marriage. For every $10,000 owed, the likelihood of getting married within seven years of graduation fell by 3 to 4 percent.

7. SOME EMPLOYERS WILL HELP EASE YOUR DEBT BURDEN.

Given the prevalence (and amount) of student debt today, some companies hoping to attract top talent are including loan repayment in their benefits packages. Before you sign up for the assistance, know that there will likely be a cap on how much you’re entitled to annually. Another factor to consider: The money your employer puts toward your student loan is counted as taxable income, which means the benefit could end up being a burden once tax time rolls around.

8. YOUR STUDENT LOAN INTEREST PAYMENTS MAY BE TAX DEDUCTIBLE.

If you make less than $80,000—or $160,000, if you’re filing jointly with a spouse—you can claim any interest payments you make on your student loans as a deduction. (According to the IRS’s website, you can claim this deduction even if you don’t itemize everything you’re claiming.) By claiming your interest payments, you may be able to decrease your amount of taxable income by up to $2500.

9. THE GOVERNMENT MAY OFFER SOME SUPPORT TOO.

In an attempt to help recent graduates avoid default, the federal government offers programs aimed at reducing monthly loan payments. One, known as the IBR (income-based repayment) program, will ensure payments comprise no more than 15 percent of an individual’s income. (It will also forgive any balances that exist after 25 years.) Surprisingly, only 14 percent of people with federal student loans take part in this and other programs. If you’re struggling with your payments every month, don’t despair: See if you qualify for an income-based repayment plan.

This $49 Video Game Design Course Will Teach You Everything From Coding to Digital Art Skills

EvgeniyShkolenko/iStock via Getty Images
EvgeniyShkolenko/iStock via Getty Images

If you spend the bulk of your free time playing video games and want to elevate your hobby into a career, you can take advantage of the School of Game Design’s lifetime membership, which is currently on sale for just $49. You can jump into your education as a beginner, or at any other skill level, to learn what you need to know about game development, design, coding, and artistry skills.

Gaming is a competitive industry, and understanding just programming or just artistry isn’t enough to land a job. The School of Game Design’s lifetime membership is set up to educate you in both fields so your resume and work can stand out.

The lifetime membership that’s currently discounted is intended to allow you to learn at your own pace so you don’t burn out, which would be pretty difficult to do because the lessons have you building advanced games in just your first few hours of learning. The remote classes will train you with step-by-step, hands-on projects that more than 50,000 other students around the world can vouch for.

Once you’ve nailed the basics, the lifetime membership provides unlimited access to thousands of dollars' worth of royalty-free game art and textures to use in your 2D or 3D designs. Support from instructors and professionals with over 16 years of game industry experience will guide you from start to finish, where you’ll be equipped to land a job doing something you truly love.

Earn money doing what you love with an education from the School of Game Design’s lifetime membership, currently discounted at $49.

 

School of Game Design: Lifetime Membership - $49

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The Best Way to Defer Your Credit Card Payments During the Coronavirus Shutdown, Explained

Credit card companies can offer financial assistance, but there can be drawbacks.
Credit card companies can offer financial assistance, but there can be drawbacks.
alexialex/iStock via Getty Images

A number of financial relief options are available to Americans who have been affected by the unprecedented health situation created by the spread of the coronavirus. Mortgage companies are offering forbearances; insurance companies have lowered premiums for cars that aren’t being driven. Credit card companies have also acknowledged that cardholders may have trouble keeping up with their bills. While many companies are eager to help with debt and interest, there are some things you should know before picking up the phone.

The good news: If you’re unable to make your minimum monthly payment in a given month, major card issuers like Chase, Capital One, and others are willing to grant a forbearance. That means you can skip the minimum due without being hit with a negative strike on your credit report for a missed payment.

A forbearance is no free ride. Interest will still accrue as normal, and the card issuer may consider the missed payment deferred, not waived. If you pay $50 monthly, for example, and are able to skip a May payment, make sure the card won't expect a $100 minimum in June to cover both months. Ask the company to define forbearance so you know what’s expected. Some may be willing to lower your minimum payment instead, which could be a better option for you.

While the skipped payment won’t impact your FICO credit score directly, be aware that it could still have consequences. Because many minimum payments mainly cover interest, your balance won’t remain the same—it will continue to grow. And because that interest is still adding up, your total amount owed is still going up relative to your available credit, which can affect your score.

If you have a sizable amount due, the National Foundation for Credit Counseling (NFCC) recommends looking into alternatives to forbearance, like using savings to pay down some high-interest cards, taking advantage of zero-interest balance transfer offers, or even taking out a personal loan with a lower interest rate.

If you have multiple credit card balances and the prospect of trying to get through to a human to discuss payment options seems daunting, the NFCC is offering their assistance. The agency can put you in touch with a credit counselor who can act on your behalf, obtaining forbearances or other relief from the card companies. Be advised, though, that card issuers may want to get your permission to deal with the counselors directly. The program is free and you can reach the NFCC via their website.

Be mindful that emergency relief is different from a debt management plan, which consolidates debt and can have a negative impact on your credit card accounts.

In many cases, the best thing to do is to pick up the phone and deal with the card issuer directly. Explain your situation and ask about what options they have. Some might waive payments. Others might offer to lower your interest rate. No two card issuers are alike, and it’s in your best interest to take the time to see what’s available.

[h/t lifehacker]