Young, studious and broke: How interest hikes will lengthen student ...

As we?ve discussed before, Americans? trillion-dollar student loan tab ? combined with a difficult jobs market for grads ? is a major concern at the macro level as well as on the household budget.

And with high-school students about to graduate and wondering how to finance next fall?s educational pursuits, as well as current college students taking stock of their finances, the topic is ripe for a follow-up.? And the Consumer Financial Protection Bureau is seeking public comments on its proposal to regulate non-bank student loans servicers; the 55-page (PDF) proposal is kind of a slog but interesting background on the industry.? The agency also is trying to address the lack of refinance options for those seeking to modify student loan payments; it?s asking for answers to?this list of questions by April 8, after which it plans to publish a report.? While we wait for the report, that questionnaire might come in handy when you?re interviewing borrowers and lenders in your area.

Image from Student Loans: A work of a lifetime - CBS News Video

INTEREST RATES.? After being held in abeyance for a year, the doubling of the interest rate on subsidized loans, from 3.4 percent to 6.8 percent, again could happen as of July 1 unless Congress acts.? See this new article from Inside Higher Ed about a Capitol Hill hearing last week; note that in addition to rates, bigger-picture issues are being proposed by advocacy groups, such as aid tied to college completion.?

You might want to check with congressional representatives about local support for extending the lower rates, and with students, parents and lenders about the effect on monthly payments of?a rate hike.? This story calls for a sidebar indicating the lifetime interest payments on a loan; over the weekend a CBS News profile of a borrower said that the woman, who so far is unable to find work in her field, will be paying down loans till age 58 and that?she?ll end up paying $127,000 on her original loan amount of $48,000, when interest charges are added.

This is the?sort of example you should seek out locally, as well as the reverse ? find people who, for example, postponed college and worked to save up for a few years after high school, or who otherwise?sought ways to finance without borrowing.? Run the numbers both ways; I recall several years ago taking the case of a local student to a certified financial planner ? the student had reluctantly passed up a prestigious school to which he?d been?accepted in favor of a full scholarship at a more modest state school.??He lived with?a relative, drove a $500 car, worked for spending money and?kept up his grades to maintain the scholarship.??Not having student loans, the planner estimated, would make a $600,000 difference to this young man?s savings potential over the course of a working lifetime,?assuming then-average investment returns.? ?Illustrating how these choices can reverberate decades in the future may help students and families struggling with borrowing choices.

ANOTHER ANGLE.? People who are willing to borrow but face obstacles.? Check out this AP?report about historically black colleges and universities (HBCUs) in particular have been hard-hit by new Department of Education policies that tighten standards for the federal PLUS loans that parents can take out to help their children.? You can talk with financial aid counselors about the local rejection rates for PLUS loans, and check to see if any area universities are helping students with either the appeals process or re-enrollment.? And here?s a link to the National Postsecondary Student Aid Study referred to in the article; it?s a trove of data and allows for the creation of custom tables.

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Source: http://businessjournalism.org/2013/03/20/young-studious-and-broke-student-loan-debt/

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