Student Loans in the News: A Student Loan Expert Takes Her Own Advice
A brief round-up of recent articles and blog posts that discuss current student loan debates and data
About the author: Kevin Mahoney, CFP® is a Millennial financial expert and fee-only financial advisor in Washington, D.C. Kevin's work with his clients focuses on paying off student loans, buying a house, investing savings, and budgeting. Kevin is the founder & CEO of Illumint, a virtual financial planning firm specifically designed to help couples and young families with their financial decisions.
A student loan expert takes her own advice
Author Anna Helhoski writes:
"I never made an extra payment until the last big one. Doing so can help you pay off your debt even faster, but it wasn’t my priority.
There’s a hierarchy we recommend when it comes to managing your finances. Student loans, which are relatively low interest, rarely top that list. It’s better to pay off high-interest debt and build savings instead.
I signed up for an employer-sponsored retirement plan and gradually increased the percentage I contributed. I also saved about three months of expenses in an emergency fund.
I wasn’t willing to sacrifice everything. That included my bad habit of moving each year, including three long-distance moves. I also wasn’t willing to forgo a vacation to Italy, participating in four weddings or getting an auto loan.
My credit card took a hit with every event, so I prioritized paying that off instead of making extra student loan payments."
[Read the entire article over at WTOP]
Should You (and Can You) Refinance Student Loans During the Coronavirus Pandemic?
Student Loan Hero
Author Rebecca Safier writes:
"The increased interest in student loan refinancing, combined with the overall economic crisis from the COVID-19 outbreak, has led some refinancing lenders to tighten their refinancing criteria. In other words, it might be tougher to get the best rates unless you have excellent credit.
'Given the market uncertainty, it is likely that many lenders’ approval criteria prioritizes the applicants with the best credit — giving them a very strong refinancing offer, while providing slightly higher rates to people who don’t have quite as strong credit,' said Muszynski.
'While we wouldn’t anticipate approval rates to change dramatically, it is likely that those with lower income and slightly lower credit may get a rate that is higher than they would have pre-COVID,' he continued.
Widhalm, too, expects lenders to review their underwriting policies to mitigate risk.
'This would include the tightening of certain riskier borrower segments more likely to default on their loans,' he said. 'This would also likely include additional verifications on income and employment of applicants.'
So, depending on your industry and job, a refinancing lender might ask for more information than they did before the pandemic.
[Read the entire article over at Student Loan Hero]
2020-2021 Federal Student Loan Rates Drop To Record Lows
Author Robert Farrington writes:
"The interest rates for federal student loans for the following year are set based on the May 10-year Treasury notes auction. That auction took place today, and we now know the interest rates for student loans effective July 1, 2020 through June 30, 2021.
This is a big deal - with the recent turmoil in the economy, interest rates have fallen to record low levels. As a result, the interest rate that will be charged for student loans this fall is going to be the lowest in a decade.
It’s important to note that these rates are only for loans that originate after July 1, 2020. If you have existing loans, your rate is locked in based on when you took out your student loan."
[Read the entire article over at Forbes]