Student Loans


Originally published here.

Earlier this year, Hillary Clinton brushed off a proposal for free public college tuition from her primary opponent Bernie Sanders with a zinger: “My late father said, ‘if somebody promises you something for free, read the fine print.'”

Now, Clinton has adopted key planks of the Sanders plan, and she may be struggling with some of the fine print herself. On Monday, her campaign released a “college calculator” tool on her site that allows students to determine how much they would save under her plan. It’s the campaign’s first time pushing the plan since she announced her shift in July.

While Clinton’s plan isn’t the universal project Sanders outlined, she took a big step in his direction by proposing to cover public college tuition for families making up to $85,000, and by 2021, families making up to $125,000.

“[I]t is imperative that the next president put forward a bold plan to make debt-free college available to all,” read statement announcing the plan. “My New College Compact will do just that—by making sure that working families can send a child or loved one to college tuition-free and by giving student debt-holders immediate relief.”

Hillary and Bernie

So Clinton went from backing lighter “debt-free” college remedies to a more straightforward, Sanders-esque plan to pour money into public colleges and universities. Advocates hope this kind of policy will reinvigorate public education and turn colleges into the same widely public institutions as high schools. After all, free college is not a pie-in-the-sky, it used to work quite well in states like California.

But is Clinton’s plan financially possible? Politically possible? Is it too much of a half-measure?

“The funding question is very simple, and I’ll be very blunt,” said Sara Goldrick-Rab, professor of higher education policy and sociology at Temple University. “We can absolutely afford to do this, and more.”

Clinton has kept the funding details vague, with a reference to taxing the rich and closing loopholes for hedge funds, but Goldrick-Rab says it’s not an issue anyway. “There is a ton of waste in the current system that the public is under-educated about, including a lot of money going to private companies like ITT, which just went under,” she said. “And of course, education produces real returns on this kind of spending. It would pay off.”

Robert Kelchen, assistant professor of higher education at Seton Hall University, is skeptical.

“This plan probably won’t end up happening,” he said. “The full plan is something over $500 billion over 10 years, and that’s unlikely to pass Congress without filibuster-proof majority.” There’s also the danger that Republican governors won’t play ball and reject partnering with the federal government, something Clinton herself mocked Sanders for during the primaries.

Kelchem also argued that the plan might backfire.

“The tuition-free part, that’s something that could end up encouraging up more students to go to college–but it could also potentially squeeze lower-class out of public colleges,” he said.

But Goldrick-Rab says that’s based on a false assumption that capacity won’t expand with all that available money. “There have been studies when a bond referendum is passed to fund community colleges, and they grow their capacity. Their capacity has been constrained by underfunding.”

There are some recent examples of this: In 2005, University of California added UC Merced to its array of campuses because they needed to expand capacity. In Florida, a state that’s slicing public education most times it can, still founded the public Florida Polytechnic University in 2012.

“People think that all these proposals do is lower the price, and they don’t think about what’s going in the back-end to further fund and expand and get you more room,” Goldrick-Rab said.

Clinton’s move, then, is certainly a step in the right direction for proponents like her, especially compared to the Republican ticket. Republican candidate Donald Trump is a blank slate on the issue, but his running mate Mike Pence has been on a crusade against public education funding even as he made use of $280,000 in federal Parent PLUS student loans to send his children to college.

Still, Sara Goldrick-Rab is not convinced Clinton is all in. “This calculator thing is too confusing, it isn’t being pitched well. She needs a working class level outcry for it. What I can tell you is there is a community college in every district across this country, and if they could see something that could really help them, they would push for it.”

“You shouldn’t need a website. Imagine if we needed a website to calculate the price of high school right now,” she said.

Originally published here.

Originally published here.

More than 43 million undergraduates have student loan debt. This is an incredible audience for student loan forgiveness scams.

Graduates desperate to find help often fall for these scams. Standard loan payments on federal loans are often high and begin just 6 months after graduation. Many graduates don’t have the income to cover the payments.

If you are one of them, don’t let yourself become a statistic. Know your options and how to protect yourself.


Citizen’s Bank conducted a study on 1,562 college students. The study showed that:

  • 62% of graduates feel anxious about the amount of their student debt
  • 23% can’t make their payments on time
  • More than 50% claim that they cannot enjoy daily activities because of student debt

There is one statistic that shocked us even more, though. 81% of the participants claim their loans were not accurately described to them. In other words, they had no idea what they were getting into.

These students graduated college receiving an unpleasant surprise.

Worse yet, less than 10% of the participants have used the free resources available to them. These resources include opportunities for debt consolidation and affordable repayment plans on federal loans. Each of these options are free.


The study says it all. Many college students were not aware of their options or they weren’t listening when their agreements were made, 4 years before they got their diploma. They don’t realize that they can reduce or eliminate their debt. Graduates in certain fields could even have their debt forgiven.

However, if they don’t apply for help, they won’t get it.

You don’t need to have financial difficulty to qualify for these programs. Government programs like the Income Based Repayment and Pay as You Earn are based on your income. And they’re legit – they help you pay back your federal loans. You only pay what you can afford. These programs base your payment on your discretionary income. Discretionary income is your adjusted gross income that exceeds 150% of the national poverty level. The program then creates a payment based on 10%-15% of your discretionary income.

College grads often do one of the following with their student debt:

  • Pay their loans as required
  • Default on their payments
  • Fall for a loan forgiveness scam

If you can’t pay your loans as required, find the help available to you. Read our article “How to Get Student Loans Forgiven” to learn more.


With more than 200 companies offering debt relief for students, it seems like a legitimate service.

But not all of them will actually help you. Scam artists have a way with words. They also know how to reach you. Email, phone, and social media posts are ripe with advertisements. They promise you the world. They know who’s in trouble. They see you drowning in debt.

They may promise that by working with them, your loans will soon be forgiven. Or, more likely, they promise consolidation with interest rates next to nothing.

They can’t provide any of this. But many graduates fall for it.

It’s not that today’s graduates aren’t intelligent. They come from all backgrounds and have good grades. They just didn’t grasp the full implication of their loans. They saw money available to them and they took it.

Don’t blame yourself. Instead, know how to protect yourself.


There are legitimate ways to reduce or eliminate your student debt. Not every program is a scam. You need to know how to spot them and what to do.

  • Don’t pay fees upfront.Any company that asks for money upfront to cover a fee is likely not a legitimate company. They may take your money and run.Even if they stick around, there are many companies that offer free help for federal student loans. The legitimate debt consolidation and federal forgiveness programs don’t charge anything up front.That’s not to say you won’t pay anything to make a change to your loan. If you consolidate private loans or choose to refinance, there may be fees. Lenders often provide the details in an agreement, which you should carefully understand before handing over any dough. This agreement should list the loan amount, APR, payment frequency, and any closing costs. This helps you see if the consolidation is worth it by comparing your current loans to the offered option.Be careful of companies that refer to themselves as debt settlement companies. They may encourage you to make your payments directly to them so that they can negotiate on your behalf and get you better terms. Sometimes this happens. Other times, they keep the money. This may leave you worse off – with defaulted loans and damaged credit.Already made such a deal and are now worried? You can keep track of your loans via the National Student Loan Data System. This is a database that tracks all federal student loans. You can monitor your balances. If the principal doesn’t drop, you know something is amiss.There are more ways to know which companies you can trust. We discuss this below.
  • Don’t fall for promises that sound too good to be true.When you are in over your head, it is common to feel desperate for help. Scammers know this. They prey on your vulnerability. They promise to get you out of debt now.What they don’t tell you is they are doing exactly what you could do for free.Companies that promise lower payments or debt elimination process the paperwork to consolidate your debt. Again, this is paperwork you could file yourself. This is the first necessary step for many student loan programs.See our article on “Student Loan Forgiveness” for more details. You don’t need to pay a company to do this for you.The truth is, there is no way for a company to eliminate your debt right away. You must make payments first. Many plans require you to make payments for 10 years.You may find your profession could be advantageous for getting better terms. If you’re a teacher, the Teacher Loan Forgiveness Plan offers forgiveness to elementary and middle school teachers who work in low income areas. You must teach in this area for 5 consecutive years. You may then be eligible for forgiveness between $5,000-$17,500.

    A great way to tell what you are eligible for is to use The Federal Student Aid Repayment Estimator. This tool will tell you what options are available to you.

  • Don’t assume official sounding names are official.The companies offering debt consolidation or forgiveness are clever. I’ll give them that. They use names that get your attention. Words like “federal,” “national,” or “department” make them sound like they are legit. They may not be.Not sure if a company is the real deal? Check them out with the Better Business Bureau. If they are a scam, they likely duped others who reported it to the BBB.
  • Don’t fall for tax scare tactics.Some debt relief companies use scare tactics to get your attention. What could be scarier than hearing you are behind on your taxes? With the threat of arrest and ruined credit, the natural reaction is to panic. Don’t do it.These companies may claim you owe taxes on your federal debt. It’s probably not true. However, forgiven student loans do incur a tax liability. This pertains to loans forgiven by the government. Many of these programs require you to make at least 10 years’ worth of payments to qualify. The program hasn’t been in place long enough for this to happen.If you receive a call and it worries you, contact the IRS. Don’t give the caller any personal information or money. Find out for yourself what is really going on.


You may feel a sense of trust when someone tells you they are a lawyer or debt consolidation professional. Oftentimes, they are trustworthy. But knowing how to pick the good from the bad can protect you.

Here are some signs to watch for:

  • A lawyer who calls you out of the blue and promises to get you out of debt
  • A debt relief company that refers you to “their” law firm
  • Someone who calls you and promises grants to eliminate your debt
  • Anyone who asks for money before providing information or help

Of course, there are many legit lawyers and debt relief companies out there. Knowing how to differentiate can protect your credit and bank account. Read on to learn how to tell who you can trust.


The big question is who you can trust. With so many scam artists out there, is anyone for real? They are, but you have to know how to proceed.

Our best advice is to only talk to those you approach yourself. Do your research before you do this. Again, use the BBB. Even better, go directly to your loan servicer. They know what options are available to you. Your loan servicer will not charge you to ask questions regarding your options.

Before you take any offers to refinance your loans, talk to your loan servicer. If you have federal loans, this could eliminate the option for loan forgiveness in the future. Only specific federal student loans are eligible. Loans from private banks are never eligible. Refinancing your federal debt will render you ineligible.


Fell for a scam? Don’t worry. Take the following steps:

  • Report the fraudulent activity to the credit bureaus. They can place a fraud alert on your credit report. This freezes your credit. No one can open credit in your name without your permission.
  • Contact the credit card company for the card you used to pay the fees, if any. They may be able to reverse the charges in some cases.
  • Report the company to the Better Business Bureau and the Consumer Financial Protection Bureau.


Continue to make your student loan payments on time until you get help. Seek the help yourself. Only talk to the Department of Education or your loan servicer. If you need help, only use the references provided by the DOE.

If you fall for a scam, act fast. Get the appropriate precautions in place and move forward from the incident as best you can.

Originally published here.