Tag: student loan debt

Have you ever felt like you watched a paycheck come in one door and go out another before you could say “savings account”? Well, the beginning of the new year is an excellent time for advice on saying “hello” to more money and saying “goodbye” to burdensome debt. So, we looked around for just that kind of advice. Here’s what we found:

In the Boston Globe, personal finance guru Suze Orman listed her Top Money Tips for 2010. Check out this advice on saving money, paying cash for purchases, understanding mortgages, preparing for being laid off, and finding career paths for prosperity.

Favorite quote from this article, re: finding a job:

“You should go into a field where you really want to spend the rest of your life. If you can just do what you want to do and you can be the best at what you want to do, better than anybody else out there, you will create a job for yourself. Just because there’s a job market out there this month or next year in an area, it doesn’t mean it will be there a few years from now—look at the car industry.”

And at Bankrate.com, Steve Bucci provided 10 Ways to Dump Your Debt in 2010. Considering that the Class of 2008 carries an average of $23,200 in student loan debt (and often far more than that), any practical and effective advice on how college students and graduates can start eliminating their student loan and credit card debt is a step toward a brighter future.

Welcome to the last year of the first decade of the new millennium!

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With the intention of providing consumers with more transparency from lenders, there are big changes to credit card rules and fees on the horizon. But many financial experts have also been emphasizing the equally important need for knowledgeable and responsible borrowing, and this includes responsible borrowing for college. Student loans are a form of credit; just as credit card issuers extend you a “loan” to pay for your purchases, student loan issuers (federal or private) extend you a loan to pay for your college tuition, fees, and expenses. To minimize the risk of relentless student loan debt after graduation, responsible borrowing for college is crucial. The 2009 increase in student loan debt is one reason why financial literacy is a topic you’ll be hearing a lot about in 2010.

Until then, we have time for one more laugh to help us say good riddance to a pretty bad financial year. For a (somewhat painfully) funny look at the credit card industry, take a look at “Card Reform in Action,” a video by political cartoonist Mark Fiore and hosted on the website of the Center for Responsible Lending:

To get a jump start on increasing your financial literacy, read the latest on what to look out for in your credit card agreement fine print: Dodging Reform: As Some Credit Card Abuses Are Outlawed, New Ones Proliferate. New laws may be helpful, but ultimately, responsible borrowing, whether for college, a house, or a wide-screen HDTV, will be up to us, the borrowers.

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Worried about adding all that holiday shopping to your debt? Well, you may get some financial power back in 2010, when new credit card and student loan rules start leveling the playing field between customers and lenders.

A week ago, Congress approved a proposal to create a new Consumer Financial Protection Agency. The new CFPA is designed to monitor financial transactions not covered by the Truth in Lending Act — including private student loans, which are currently unregulated. If the CFPA proposal eventually becomes law, the Agency will have the authority to establish and enforce rules for private student loans.

Also, a new credit card law goes fully into effect in two months (February 22, 2010). These new rules ban or restrict unfair fees, require more transparency about credit card costs, and help consumers make more informed decisions about which credit cards they acquire and how they use them.

The Credit Card Accountability, Responsibility, and Disclosure Act:

  • Requires “Plain Language in Plain Sight” explanations of both account and contract terms before consumers open an account and the activity on consumers’ accounts after the account is opened. (For example, customers must be told before they open a credit card account what fees they may be charged. Then, after the account is open, credit card statements must conspicuously display fees the consumer paid both in the current month and over the year-to-date, along with the reasons for those fees.)
  • Bans unfair interest rate increases
  • Bans retroactive interest rate increases for arbitrary reasons and restricts retroactive rate increases due to late payment
  • Offers first year protection: Contract terms must be clearly spelled out, and they can’t be changed at all during the whole first year
  • Bans late fee traps such as a too-short payment deadline, weekend deadlines, deadlines that change each month, and deadlines that fall in the middle of the day
  • Requires over-payments be applied to the balance with the highest interest rate first, and bans interest charges on debt paid on time ( “double-cycle” billing)
  • Requires transparency about over-the-limit fees by requiring the customer’s permission before processing any transaction that would push the account over the credit limit
  • Restricts unfair sub-prime and low-limit card fees
  • Limits fees on Gift Cards and Stored Value Cards and requires more transparency in the disclosure about fees
  • Requires consumers under the age of 21 to provide the signature of a parent, guardian, or other individual 21 years or older who will take responsibility for the debt, or proof that the applicant has an independent means of repaying the debt
  • Requires a periodic review of all interest rate increases since January 2009 and requires rate reductions when a review indicates that a reduction is warranted
  • Requires the inclusion of real information about the financial consequences of decisions, including periodic statements that clearly display how long it will take to pay off the existing balance (and the total interest cost) if the consumer pays only the minimum amount due VS. the payment amount and the total interest cost if the existing balance was paid off in 36 months.

The Credit CARD Act also mandates stricter safeguards for college students and young adults, who are particularly vulnerable to sales gimmicks and traps in the fine print.

  • Credit card issuers and universities will be required to be very clear about any agreements they have regarding the marketing or distribution of credit cards to college students and young adults.
  • Credit card issuers and regulators will be held accountable for failure to abide by the new rules, including increased penalties for repeat violators.

Financial literacy is going to be a hot topic in 2010. Visit EducationGrant.com often for updates on new student loan regulations, credit card rules, and changes to the federal financial aid process.

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An article I read about young Americans stuck on a hamster-wheel of debt was so compelling, I was surprised to see that it dated back to February 2006. It’s just as relevant today as it must have been four years ago—perhaps more so, given the recession that’s affected the country between then and now.

‘Generation Debt’ is going deep into the red, by Vanessa Richardson at msnbc.com, highlights the financial frustrations facing Generation Y, including heavy loads of student loan and credit card debt and an insecure economy with poor job prospects.

The article also offers candid feedback from graduates about how they’re coping with their overwhelming financial obligations and some practical advice from finance experts on how to get off your own hamster-wheel of debt. College and high school graduates alike will find these personal finance tips helpful. (Stay tuned to EducationGrant.com for information on upcoming changes to credit card laws.)

Thanks to Penelope Trunk for the reference to this article.


These days, going to college requires finding the balance between what it will cost you and what you’ll get out of it. As college students take on more financial burden than they can manage, both public and private financial aid experts stress minimizing student loan debt as critical to staying out of a downward financial spiral after graduation.

“Surviving Student Loans and College Debt,” a video from U.S. News & World Report, offers 3 tips for minimizing your student loan debt and provides examples of TV commercials advertising expensive private loans:

The Federal Trade Commission also has tips on avoiding risky loan offers and minimizing student loan debt. Click on the title to download the 4-page “FTC Guide To Avoiding Deceptive Student Loan Offers” PDF.

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