The Public Service Loan Forgiveness (PSLF) program was passed by Congress and signed into law by President George W. Bush in 2007. This program allows borrowers with specific types of federal student loans and public service jobs to receive tax-free loan forgiveness after 10 years of consecutive payments. Many of the first borrowers who enrolled in PSLF after its creation are nearing the point where their loans could be forgiven. However, the Department of Education has signaled many people who have made these payments will not qualify for forgiveness. When PSLF was created, many borrowers who enrolled did not have the type of federal student loans that are eligible for forgiveness. Before 2010, many borrowers were still using FFEL Loans, which are not eligible for forgiveness under PSLF. For the past ten years, these borrowers made payments towards PSLF under the assumption that they were eligible. Unfortunately, they may be…
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CNNMoney recently published an article that claims it is a mistake to pay off federal student loans early. According to the article, it is more important to pay off other types of debts first. This may sound crazy to people struggling with student loans, but the argument makes sense. There are multiple reasons why the article argues it is a mistake to pay off student loans early. Student loans are a good type of debt: Student loans are good debts that can increase your income. CNNMoney cites a statistic from the Labor Department that shows workers with four-year college degrees make 98 percent more per hour than workers without four-year degrees. It is more important to pay off debts without these advantages. Student loans have lower interest rates: Federal student loans can have lower interest rates than other types of debts. For example, federal student loans for undergraduate degrees have…
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Two weeks ago, we published a blog that discussed the Consumer Finance Protection Bureau’s (CFPB) alarming findings on student loans. The CFPB’s report discussed several developing student loan trends, some of which were not covered on our prior blog. According to the report, Americans over 60 are the fastest growing student loan demographic. The CFPB report claims that more than 70 percent of student loan debtors over 60 borrowed to send their children or grandchildren to college. Many of these borrowers used PLUS Loans, a type of federal student loan that parents can use to fund the undergraduate college degrees of their children. What makes this demographic unique is that many Americans over 60 have already entered retirement. Some may be unable to make monthly payments because they live on a fixed income. This may explain why more than 40 percent of federal student loan borrowers in this demographic have…
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