Student Loan Interest Rates Rise

MoneyTips

Are you planning to take out student loans soon? Be prepared to pay more for the privilege.

Every year, the federal government sets the annual percentage rates for student loans taken out in the following academic year. The rate is set based on the interest rates for ten-year Treasury notes, plus a fixed margin that varies based on the type of federal loan you’re receiving – undergraduate, graduate, or PLUS loans (for parents of students or graduates that have maxed out their graduate loan capability).

Unfortunately for student borrowers, interest rates on ten-year Treasury notes are rising just as the rates are being set for the 2018-2019 academic year. May’s rates are nearing the 3% mark, which hasn’t been seen since December of 2013.

Rates for undergraduate loans will climb to 5.05% from the current 4.45%. Graduate loans will increase to 6.60% from 6.00%. PLUS loans change to 7.6% from 7%. These changes represent increases of 13.5%, 10%, and…

Current State Of Student Loan Debt

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America has reached a new economic milestone – or maybe a millstone – of $1.52 trillion. Which of the following does this number represent?

1. The latest contract for a professional athlete
2. Your current credit card balance
3. America’s collective student loan debt

While the first choice sounds strangely plausible, and some days you may feel like the second choice is correct, $1.52 trillion represents America’s total outstanding student loan debt as of March 2018 – according to the new consumer credit report from the New York Federal Reserve.

For perspective on how fast student loan debt is rising, consider that in 2013, the total student loan debt was under $1.15 trillion. Over the past five years, total student loan debt has increased by almost 33%. Approximately 45 million Americans – roughly one-quarter of all American adults – owe money on student loans.

According to ValuePenguin, the average student loan deb…

5 Credit Tips For New College Grads

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Congratulations! You made it through college armed with a degree, and hopefully a job. Now it’s time to move on to the next stage of your education: life. The tests are all open book, the deadlines are varied, and some lessons are much harder and carry higher stakes than others do. Worst of all – there is very little grading on the curve.

Sure, you know your GPA, but do you know your credit score? You can see it for free right now using Credit Manager by MoneyTips.

One of your first post-graduate lessons should be on the proper use of credit. Poor early decisions regarding credit can have adverse effects for years. In the words of millennial money expert Stefanie O’Connell, “It’s really important for millennials to understand what a critical role cr…

Can Minor Debts Land You In Prison?

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The Equivalent of Debtors’ Prison

Is there such a thing as a modern-day debtors’ prison? Not literally, as
debtors’ prisons were outlawed by Congress in 1833. However, a recent ACLU
report on the criminalization of private debt points out that some private debt
collectors are creating the equivalent of debtors’ prison via the courts.

The ACLU found instances of debtors being arrested for debts as small as
$28. Once incarcerated, the debtor may be stuck in jail for days trying to
arrange bail, missing work and family obligations. Jobs may be lost, and the
warrants and arrests may show up on future background checks – making it
difficult to get a new job or go back to school.

While these tactics may be technically legal, the result is often a
punishment far greater than the crime.

It’s Not Just “Deadbeats”

The ACLU report breaks the stereotype of the deadbeat willfully tr…

Who Lives At Home?

MoneyTips

We know the stereotype of the unmotivated millennial, living at home with their parents without any long-term plan or concern about their situation. Is that a fair representation? Do millennials disproportionately live with their parents? If so, is this from necessity, lack of motivation, or part of a grander strategy?

It’s logical that younger generations are more likely to live with their parents in a non-caretaker capacity, even in the best of times. Millennials suffered the added indignity of coming of age during one of the worst recessions in history while dealing with prohibitive student loan debt.

Previous information from the Pew Research Center found that in 2016 – after years of economic recovery – 15% of millennials surveyed still lived with their parents. That’s well above previous generations at that same point in their lives (10% for generation X, 11% of late ba…

Interest Rate Acronyms

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APR and APY – are they new texting acronyms? IDK, you say – or rather, you text? (For the benefit of the textually-challenged, IDK means “I don’t know.”) If you think they are texting acronyms, or just “DK” what they are, it’s time to learn.

APR and APY are financial acronyms, short for Annual Percentage Rate and Annual Percentage Yield, respectively. Both are interest rates, but they have a significant difference. APR does not address how interest is compounded – the default is the interest that you earn if you are depositing money, or pay if you are borrowing it – in one year. APY takes into account how often the interest is compounded.

If interest is compounded once per year, there is no difference between APR and APY – interest is added all at one time. However, let’s assume an interest rate is compounded monthly. In that case, the interest payment is divided up into twelve equal increments.

If you are earning interest on a deposit, that adds a sma…