Streamline Student Loans: Opposing View

As the president has said recently, there is still much more work to do,” said Matt Lehrich, a White House spokesman. “In the coming months he will lay out an aggressive strategy to build upon the historic work his administration has already done to keep college affordable and help Americans struggling with their student debt.” Correction: A previous version of this story mistated the day that Remondi spoke with investors. Also on HuffPost: Loading Slideshow Obama Holds Final Primary Night Event In St. Paul ST. PAUL, MN – JUNE 3: Democratic presidential candidate Sen. Barack Obama (D-IL) (R) and his wife Michelle Obama bump fists at an election night rally view publisher site at the Xcel Energy Center June 3, 2008 in St.
Source: http://www.huffingtonpost.com/2013/09/11/income-based-repayment_n_3903208.html

EDT September 8, 2013 Give relief to those who earn less. President Obama speaks at Henninger High School in Syracuse, N.Y., on Aug. 22. (Photo: Jacquelyn Martin, AP) Story Highlights If you have high debt compared with your income, IBR caps monthly payments on a sliding scale based on income and family size. Pay As You Earn started last year and is a lot like IBR, but with lower monthly payments. SHARE 29 CONNECT 22 TWEET COMMENTEMAILMORE As part of his college affordability plan, the president has wisely proposed both improving and raising awareness of income-based repayment options for federal student loans.
Source: http://www.usatoday.com/story/opinion/2013/09/08/student-loans-institute-for-college-access-and-success-editorials-debates/2783185/

The basic principle is that it ties student loan rates to the bond markets. This fall, undergraduate students will pay an overall interest rate of 3.86% on their loans. It is comprised of the yield on the 10-year Treasury note on June 1, plus an additional 2.05%. Graduate students will have to pay 5.41% on loans this fall, or 3.6% over the 10-year Treasury, also on June 1. Related: Bill helps college students now, but future students to see rate hikes If rates on Treasury notes rise, so would student loan rates under the new deal. However, if interest rates were to spike, the bill makes provisions to cap the rates.
Source: http://money.cnn.com/2013/07/24/news/economy/senate-student-loans/index.html

Student loan deal passes Senate

For purposes of the deduction, an individual can be your dependent even if you are the dependent of another taxpayer; even if the individual files a joint return with a spouse and even if the individual had gross income for the year that was equal to or more than the exemption amount for the year. As with other education tax breaks, you must reduce your qualified education expenses by the total amount paid for employer-provided educational assistance; tax-free distribution of earnings from a Coverdell education savings account or a qualified tuition program (QTP); U.S. savings bond interest previously excluded from income; tax free scholarships, fellowships and grants ; and veterans benefits . You can typically deduct all of the interest you paid on your student loan until the loan is paid off. There are limits and phaseouts, however, depending on your income.
Source: http://www.forbes.com/sites/kellyphillipserb/2013/09/10/back-to-school-deducting-interest-paid-on-student-loans-even-if-you-dont-pay-the-loans/

Evaluating a Variable Rate Student Loan

Lets say youve borrowed $50K to finance your student debt, and youre about to enter the repayment period. Now well take a look at three potential scenarios in which prevailing interest rates change in order to see how they would affect your variable rate loan your total payment over the life of your loan and your maximum monthly payment over the next ten years: Scenario #1: 1-month LIBOR rises to 5.82% (its 10-year high) Scenario #2: 1-month LIBOR rises to 11.64% (2X its 10-year high) Scenario #3: 1-month LIBOR rises to 2.91% (half of its 10-year high) In Scenario #1, where rates rise to their 10-year high level, the variable rate SoFi loan still beats all but the lowest fixed rate loan on the federal side. In Scenario #2, where rates rise to twice the 10-year high level, SoFi still has the edge in terms of total payments again beating out all but the lowest rate federal loan. How is that possible? Because rates are starting out very low today, and the variable rate SoFi loan is capped at 8.95%. Having a cap on a variable rate loan can remove some of the risk if youre concerned about interest rates going sky high.
Source: http://dealbreaker.com/2013/09/evaluating-a-variable-rate-student-loan/

Back To School: Deducting Interest Paid On Student Loans (Even If You Don’t Pay The Loans)

The CFPB maintains a very helpful navigator on their website ( http://www.consumerfinance.gov/paying-for-college/repay-student-debt ) that covers the basics. Here are the options, from simplest to most complicated. 1. Repayment. Obviously, this is easier said than done, but some borrowers in default do actually have the wherewithal to pay up all at once. If you have, say, an inheritance or real estate you can sell to fund repayment, in the long run this is the cheapest way to get out of default.
Source: http://www.chicagotribune.com/business/sns-201309101900–tms–savingsgctnzy-a20130910-20130910,0,2500170.story

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