student loans http://www.wisebread.com/taxonomy/term/5885/all en-US How Your Bad Credit Can Impact Your Kids http://www.wisebread.com/how-your-bad-credit-can-impact-your-kids <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-your-bad-credit-can-impact-your-kids" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/working_at_home.jpg" alt="Working at home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>This is not about laying the guilt on you as a parent (there's already plenty of that to go around). However, you need to know that bad credit not only impacts your financial situation, but can also have long-term effects on your kids. Here's what you need to know.</p> <h2>It could keep them from getting a student loan</h2> <p>Co-signing a student loan should not be the default decision in helping your child afford college. Co-signing can cause serious financial problems for you down the line if your child cannot afford to make the loan payments. However, if you do decide you want to help your child apply for a student loan by co-signing, a poor credit score could prevent you from doing so. Your negative credit history will come up in the loan application and can cause it to be denied.</p> <p>Being unable to get a student loan means that your child may have to choose from limited educational options. Is that the end of the world? No, of course not. But certain career tracks depend on specific educational programs, and limited college options can make that difficult.</p> <p>Federal student loans, however, are still an option for your child even if you have poor credit. The Perkins loan and the Stafford loan, for example, have fixed interest rates and don't depend on credit history to determine eligibility.</p> <h2>It could make it more difficult for them to establish a credit history</h2> <p>College is often the time when young adults start establishing their own, independent credit history. That seems like no problem, until you realize that &quot;independent credit history&quot; isn't so independent at first.</p> <p>In fact, many credit card companies require a co-signer on a card if the primary applicant is under 21 years of age. That means that if you want to co-sign on a card to help your child start building credit, your own bad credit can cause your child's application to be denied. Keeping your kid out of credit card debt is great, but well-managed use of a credit card is often a great way to start establishing credit history. It's tough to get credit for a bigger purchase when there's no credit history to check.</p> <p>A <a href="http://www.wisebread.com/5-best-secured-cards-with-no-annual-fee?ref=internal" target="_blank">secured credit card</a> may be a good alternative, but keep a careful eye on hidden fees and increasing interest rates. The key to using a secured credit card successfully is to pay it off in full each month; otherwise, the high interest rates will cost you and your child much more than it's worth to build that credit history.</p> <h2>It could teach them poor financial habits</h2> <p>If your bad credit is a result of poor financial habits, you may have passed those &mdash; and a bad attitude toward money in general &mdash; on to your kids. (See also: <a href="http://www.wisebread.com/4-bad-money-habits-youre-teaching-your-kids?ref=seealso" target="_blank">4 Bad Money Habits You're Teaching Your Kids</a>)</p> <p>If they haven't learned from you how to budget, how to save, and how to plan for the future, they probably don't know how to do it. And if you're not showing them how to handle financial stress in a healthy way, or communicate with each other about financial issues, chances are they won't learn how.</p> <p>The great news is that you can all learn together, starting now. A poor financial past does not have to mean a poor financial future. You can change your habits and your attitudes, and there's help available to do so. Start with financial counseling to figure out how you (and your kids) can build better financial habits for today and for the future.</p> <h2>It could prevent them from accessing opportunities</h2> <p>There are often special extracurricular activities, such as field trips, tutoring, music lessons, and more, which come with a hefty price tag. Many parents can't afford these expenses outright, but can use a credit card or other loan option to pay for the expense and then pay that debt off within a few months.</p> <p>Poor credit can keep you from being able to access this payment option for these extra expenses, which means your child may have to pass on them. If your child is focused on a future that involves art, music, or sports, those missed opportunities may really matter.</p> <p>However, it's worth noting that, in general, there are inexpensive options to build a stellar academic resume. Look into free extracurricular activities such as volunteering in local communities, trading lessons for service or help, or applying for scholarships for workshops and camps. (See also: <a href="http://www.wisebread.com/save-on-school-expenses-without-ruining-your-kids-childhood?ref=seealso" target="_blank">Save on School Expenses Without Ruining Your Kid's Childhood</a>)</p> <h2>It can negatively impact their home life</h2> <p>Poor credit can have a major impact on your ability to access housing, transportation, and work. It isn't fair to be judged solely by your credit score; unfortunately, it happens.</p> <p>Poor credit might prevent you from getting a lease, which can make your living conditions unstable and bring a lot of stress into your life. You might encounter the same issues being unable to get a car loan, which means you have to rely on public transportation, rides from friends, or an old, unreliable car for getting around.</p> <p>Of course, living and transportation issues can make getting to work difficult. If your job is unstable, your income is unstable. This instability leads to more financial issues and stress, all of which can directly impact your child's life at home. It's a vicious cycle.</p> <h2>What can you do?</h2> <p>Despite the negative consequences of bad credit, there are steps you can take right now to start improving things. It's not just for you; it's also for your kids. Here's a short list to get you started.</p> <h3>Get financial counseling</h3> <p>There are resources available, such as confidential, low-fee credit counseling from nonprofit organizations. A good place to find help is through the <a href="https://www.nfcc.org/" target="_blank">National Foundation for Credit Counseling</a> and the <a href="http://fcaa.org/" target="_blank">Financial Counseling Association of America</a>. You can also ask at your local credit union and religious or nonprofit organizations. Many of these places offer free or low-cost access to financial advisers, credit counseling, and debt management. (See also: <a href="http://www.wisebread.com/8-organizations-that-really-can-help-you-with-your-debt?ref=seealso" target="_blank">8 Organizations That REALLY Can Help You With Your Debt</a>)</p> <h3>Start taking steps now to deal with your bad credit</h3> <p>Don't put this off another moment longer. <a href="http://www.wisebread.com/credit-counseling-when-you-need-it-and-when-you-dont" target="_blank">Credit counseling</a>, <a href="http://www.wisebread.com/5-tricks-to-consolidating-your-debt-and-saving-money" target="_blank">debt consolidation</a>, <a href="http://www.wisebread.com/7-unnecessary-household-expenses-you-can-cut-today" target="_blank">lowering expenses</a>, and even <a href="http://www.wisebread.com/11-steps-to-take-when-bankruptcy-is-your-only-option" target="_blank">declaring bankruptcy</a> may be good options.</p> <p>Dealing with poor credit is not easy. However, you're not alone. Many people have <a href="http://www.wisebread.com/your-bad-credit-isnt-the-end-of-the-world" target="_blank">dealt with bad credit</a> and come through it stronger than ever, and you can, too. No matter how tough your financial past has been, you can build positivity for your kids by communicating, being proactive, and looking for ways forward, together.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/annie-mueller">Annie Mueller</a> of <a href="http://www.wisebread.com/how-your-bad-credit-can-impact-your-kids">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-you-ruining-your-retirement-by-spoiling-your-kids">Are You Ruining Your Retirement by Spoiling Your Kids?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-start-a-family-before-reaching-these-5-money-goals">Don&#039;t Start a Family Before Reaching These 5 Money Goals</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-signs-you-are-teaching-your-kids-bad-financial-habits">4 Signs You Are Teaching Your Kids Bad Financial Habits</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/best-kids-eat-free-restaurants">Best Kids Eat Free Restaurants</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-your-kids-contribute-to-family-money-goals">Should Your Kids Contribute to Family Money Goals?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Family bad credit children co-signing credit history financial habits impact kids negative stress student loans Thu, 21 Sep 2017 08:00:06 +0000 Annie Mueller 2022638 at http://www.wisebread.com What to Do If You're Retiring With Debt http://www.wisebread.com/what-to-do-if-youre-retiring-with-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-to-do-if-youre-retiring-with-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/old_couple_having_problems_with_their_home_finances.jpg" alt="Old couple having problems with their home finances" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>For a growing number of older Americans, the golden years have been tarnished by debt. If you're retired or will be soon, and too much debt is weighing you down, here are three common sources of senior debt, along with some suggestions for breaking free.</p> <h2>1. Mortgage debt</h2> <p>One of the tenets of wise money management is to be mortgage-free by the time you retire, ridding yourself of what is likely your biggest expense as you enter what may be a lower- and fixed-income season of life. However, for a growing number of older people, that is not the case.</p> <p>According to the Federal Reserve, about 42 percent of households where the head of household is 65 to 74 years old had mortgage debt (a mortgage or home equity loan) in 2013 &mdash; up from 32 percent in 2004 and just 19 percent in 1992. Many such borrowers refinanced their mortgages in order to take advantage of low interest rates, but in doing so, reset the 15- or 30-year mortgage clock.</p> <p>What to do? If your overall housing costs, including taxes and insurance, take up more than 25 percent of your monthly gross income, consider downsizing. Reducing or eliminating your mortgage and lowering what you pay for property taxes, homeowners insurance, utilities, and maintenance could do wonders for your financial peace of mind. (See also: <a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0?ref=seealso" target="_blank">6 Ways You Can Cut Costs Right Before You Retire</a>)</p> <h2>2. Student loan debt</h2> <p>Much has been made of how indebted today's college graduates are. What's less well known is that the fastest-growing segment of the population with education debt is the 60-plus crowd. Most such borrowers took out loans for their kids or grandkids via Parent PLUS loans, or they co-signed on a student loan and now find themselves responsible for the payments.</p> <p>According to the Consumer Financial Protection Bureau, the number of people age 60 or older with student loans quadrupled between 2005 and 2015 to 2.8 million.</p> <p>What to do? Look into loan consolidation or rehabilitation (if you're behind on the payments). Both are preferable to default, in which case the government could reduce your Social Security benefits in order to collect.</p> <h2>3. Credit card debt</h2> <p>The overuse of plastic isn't just something that plagues the young. According to the National Council on Aging, in 2012, nearly one-third of households headed by someone age 60 or older carried a credit card balance. Are these older households simply living beyond their means? Some probably are, but an AARP survey found that over half the older households with credit card debt put their medical care on plastic.</p> <p>What to do? If your credit card debt is unmanageable, consider contacting a local affiliate of the <a href="https://www.nfcc.org/" target="_blank">National Foundation for Credit Counseling</a>. They may be able to negotiate lower interest rates. In addition, if you haven't done so already, don't put medical bills on your credit card. Instead, see if you can work out a payment plan directly with the medical provider, which may offer more favorable terms. (See also: <a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt?ref=seealso" target="_blank">The Fastest Method to Eliminate Credit Card Debt</a>)</p> <h2>Other ways to ditch your debt</h2> <p>No matter how old you are, an important key to getting out of debt is margin &mdash; creating a gap between your income and expenses so you've got the money to make extra payments on your debts. There are only two sides to the margin equation: income and expenses.</p> <h3>Increase income by picking up a part-time job</h3> <p>By definition, retirement means not working anymore, so the idea of going back to work may not fill your heart with joy. However, even a temporary part-time job can make a big difference in how quickly you get out of debt. (See also: <a href="http://www.wisebread.com/6-great-retirement-jobs?ref=seealso" target="_blank">6 Great Retirement Jobs</a>)</p> <p>Start thinking of where you could work. How about consulting with your former employer, hanging out a shingle as a sole proprietor, or simply picking up some hours at a local retailer?</p> <p>Keep in mind that if you started claiming Social Security benefits before your normal retirement age, earning too much from a part-time job may reduce those benefits. Learn more on the <a href="https://www.ssa.gov/oact/cola/rtea.html" target="_blank">Social Security Administration's website</a>.</p> <h3>Decrease expenses by taking your kids off the payroll</h3> <p>It's common for parents to help their adult children with everything from health insurance premiums to cellphone bills. According to a Merrill Lynch study, nearly 70 percent of people age 55 or older with adult children are doing so.</p> <p>Wouldn't it be easier for you to cut them off if you realized that doing so would not only benefit you, but it would benefit them as well? That's one of the key messages in the classic book, <em>The Millionaire Next Door</em>. Authors Thomas Stanley and William Danko found that adults who receive &quot;financial outpatient care&quot; from their parents tend to become dependent on such help and end up saving and investing less than those who do not receive money from their parents. (See also: <a href="http://www.wisebread.com/are-you-ruining-your-retirement-by-spoiling-your-kids?ref=seealso" target="_blank">Are You Ruining Your Retirement by Spoiling Your Kids?</a>)</p> <h2>There's plenty of time to retire debt</h2> <p>It may be discouraging to find yourself buried in bills at a time of life when you had hoped to slow down and enjoy the fruit of all your years of labor. However, increases in longevity mean you probably still have plenty of time to reap those rewards. What'll make all the difference is how quickly you implement the ideas mentioned above.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/what-to-do-if-youre-retiring-with-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-of-the-fastest-ways-to-go-broke-in-retirement">4 of the Fastest Ways to Go Broke in Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-retiring-with-debt-isnt-the-end-of-the-world">Why Retiring With Debt Isn&#039;t the End of the World</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-red-flags-that-your-retirement-plan-may-be-off-track">4 Red Flags That Your Retirement Plan May Be Off Track</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-happens-to-your-debt-after-you-die">What Happens to Your Debt After You Die?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/depressed-it-could-be-your-debt">Depressed? It Could Be Your Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Retirement adult children co-signed credit card debt expenses giving money increasing income kids mortgages student loans Tue, 19 Sep 2017 08:00:07 +0000 Matt Bell 2021474 at http://www.wisebread.com 4 Red Flags That Your Retirement Plan May Be Off Track http://www.wisebread.com/4-red-flags-that-your-retirement-plan-may-be-off-track <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-red-flags-that-your-retirement-plan-may-be-off-track" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/piggy_bank_and_house_model_for_finance_and_banking_concept.jpg" alt="Piggy bank and house model for finance and banking concept" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're 55 or 60 years old, the end of your working days may be in sight. After all, most people retire somewhere around age 65, so you may assume you will also. But how prepared are you?</p> <p>Take a look at the following potential <em>unpreparedness </em>indicators. After reviewing them, if you don't see any concerns, you may, indeed, be headed down the right path toward retirement. However, if you <em>do</em>, it'll be far better to address them now while you're still gainfully employed. (See also: <a href="http://www.wisebread.com/5-financial-moves-you-should-make-five-years-before-retirement?ref=seealso" target="_blank">5 Financial Moves You Should Make Five Years Before Retirement</a>)</p> <h2>1. You haven't run the numbers</h2> <p>Ignorance may be bliss when it comes to the latest neighborhood gossip, but not when it comes to preparing for retirement. Now is the time to estimate your post-career income and expenses.</p> <p>Start with your anticipated monthly expenses. Some of your outgo categories may disappear in retirement, such as contributions to your retirement plan, commuting, and other job expenses. Others may at least decline, such as how much you spend on clothing. (See also: <a href="http://www.wisebread.com/how-much-can-you-afford-to-spend-in-retirement?ref=seealso" target="_blank">How Much Can You Afford to Spend in Retirement?</a>)</p> <p>However, some expenses might actually go up, at least temporarily. Many retirees find that they spend more on travel and entertainment initially, but less as they get older.</p> <p>Next, add up the monthly income you expect to receive. How much is your Social Security benefit likely to be? Find out through the <a href="https://www.ssa.gov/oact/quickcalc/" target="_blank">Social Security Administration's estimator</a>. How much are you likely to have in your retirement account by the time you retire? The <a href="https://www.fidelity.com/calculators-tools/fidelity-retirement-score-tool" target="_blank">Fidelity Retirement Score</a> calculator will give you a ballpark idea.</p> <p>What's a conservative estimate for how much you could withdraw from your retirement nest egg each month? One popular rule of thumb is that you should be able to safely take 4 percent of the balance each year without having to worry about running out of money.</p> <p>What other sources of income will you have?</p> <p>Planning future income and expenses isn't a perfect science, but running some estimates may help you avoid unpleasant surprises. (See also: <a href="http://www.wisebread.com/9-unexpected-expenses-for-retirees-and-how-to-manage-them?ref=seealso" target="_blank">9 Unexpected Expenses for Retirees &mdash; And How to Manage Them</a>)</p> <h2>2. You haven't saved enough</h2> <p>One of the most unpleasant facts you may discover by taking the step above is that you <a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement?ref=internal" target="_blank">haven't saved enough</a>. According to the Employee Benefit Research Institute, almost half of workers ages 55 or older have less than $100,000 set aside for retirement. That won't go very far.</p> <p>Let's say you're in better financial shape and are on target to have a $250,000 nest egg by the time you retire. Using the 4 percent rule mentioned above, even that amount will allow you to withdraw just $833 per month. (See also: <a href="http://www.wisebread.com/4-retirement-rules-of-thumb-that-actually-work?ref=seealso" target="_blank">4 Retirement &quot;Rules of Thumb&quot; That Actually Work</a>)</p> <p>What to do? Plan to stay on the job longer. Doing so will increase your Social Security benefits (when I checked my benefits, I found that waiting until age 70 would boost my monthly benefit amount by 28 percent vs. taking benefits beginning at age 67). Plus, that will give you more time to build a larger retirement nest egg. (See also: <a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0?ref=seealso" target="_blank">6 Ways You Can Cut Costs Right Before You Retire</a>)</p> <h2>3. You still have a mortgage</h2> <p>For most people, a mortgage is their biggest monthly expense. Making sure your mortgage is retired by the time <em>you</em> retire is ideal. However, a growing number of older homeowners are bringing mortgages into their retirements. Many of them refinanced into a lower interest rate in recent years, but reset their 15- or 30-year mortgage clock in the process. If that's you, here are some options to consider:</p> <p>If you're planning to move after you retire, and especially if you'll be able to downsize into a home you could buy outright with the equity in your current home, no problem. (See also: <a href="http://www.wisebread.com/5-countries-where-you-can-retire-for-1000-a-month?ref=seealso" target="_blank">5 Countries Where You Can Retire for $1,000 a Month</a>)</p> <p>If you're planning to stay put, you might consider paying extra on your mortgage in order to wipe it out by the time you retire. But you'll have to weigh that against the potentially better benefits of using that money for added contributions to your retirement plan.</p> <p>Keep in mind that this isn't a strictly mathematical exercise. Many people argue that it would be more profitable to invest more through your workplace retirement plan than accelerate payments on a low-interest mortgage. However, you may decide that the emotional benefit of being out from under your mortgage is more valuable. (See also: <a href="http://www.wisebread.com/is-it-safe-to-re-finance-your-home-close-to-retirement?ref=seealso" target="_blank">Is it Safe to Re-Finance Your Home Close to Retirement?</a>)</p> <h2>4. You still have student loan debt</h2> <p>A surprising number of older people have education debt, usually because they co-signed on a loan for a child or grandchild who is unable to make the payments or because they took out a Parent PLUS loan. If that's you, consider consolidating your loans to a lower interest rate (you can even &quot;consolidate&quot; a single loan). Then put your loan payoff on a faster track by paying more than the required amount each month.</p> <p>This list isn't meant to discourage you; it's meant to help you prepare to retire <em>successfully</em>. Where else do you need to shore up your retirement plan?</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F4-red-flags-that-your-retirement-plan-may-be-off-track&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F4%2520Red%2520Flags%2520That%2520Your%2520Retirement%2520Plan%2520May%2520Be%2520Off%2520Track.png&amp;description=4%20Red%20Flags%20That%20Your%20Retirement%20Plan%20May%20Be%20Off%20Track"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/4%20Red%20Flags%20That%20Your%20Retirement%20Plan%20May%20Be%20Off%20Track.png" alt="4 Red Flags That Your Retirement Plan May Be Off Track" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/4-red-flags-that-your-retirement-plan-may-be-off-track">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-do-if-youre-retiring-with-debt">What to Do If You&#039;re Retiring With Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-retiring-with-debt-isnt-the-end-of-the-world">Why Retiring With Debt Isn&#039;t the End of the World</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-your-daily-latte-wont-sink-your-retirement-savings">Why Your Daily Latte Won&#039;t Sink Your Retirement Savings</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0">6 Ways You Can Cut Costs Right Before You Retire</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-its-time-to-retire">8 Signs It&#039;s Time to Retire</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement expenses mortgages owing money preparedness red flags saving money student loans unprepared Thu, 31 Aug 2017 08:00:07 +0000 Matt Bell 2012369 at http://www.wisebread.com 7 Money Moves Every New College Student Should Make http://www.wisebread.com/7-money-moves-every-new-college-student-should-make <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-money-moves-every-new-college-student-should-make" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/cute_college_student_walking_around_campus_on_sunny_day.jpg" alt="Cute college student walking around campus on sunny day" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>College is about more than just getting a degree. For many new college students, starting this phase of education is also a time to learn any number of important life skills, from proper laundry care to time management.</p> <p>However, many college students often overlook one important life skill: money management. As a college student, you might assume that money management isn't important, since you've got so little money to manage.</p> <p>Unfortunately, neglecting your money skills in college could have lasting negative repercussions throughout your adult life. Rather than assuming you'll sort out the money stuff &quot;later,&quot; get off on the right financial foot by following these money moves when you start your college career.</p> <h2>1. Open a student checking account</h2> <p>Your brand-new university ID makes you eligible for student checking accounts. This gives you a good home for your money while you're in school, and helps you develop good banking habits.</p> <p>Student checking accounts often have low or no minimum opening deposits, and they also generally do not require you to carry a minimum balance each month. In addition, some student accounts offer perks like a limited number of free out-of-network ATM transactions per month, free checks, and some overdraft forgiveness.</p> <h2>2. Start automating your bills</h2> <p>Once you have a checking account in place, you can take advantage of your bank's online bill paying services to set up automatic payments of your regular expenses. Automatic bill payment allows you to keep your focus on your studies, where it belongs.</p> <p>Of course, the caveat is that you need to periodically make sure your account has enough money to cover your automatically paid bills. One good way to do this is to set up a weekly reminder to check your finances. This will help you establish the habit of keeping an eye on your finances even as they are taken care of automatically.</p> <h2>3. Create a spending plan for your financial aid</h2> <p>Receiving a big chunk of money from your university's financial aid office can be pretty exciting &mdash; whether you're receiving loans you'll have to pay back, or grants that you won't. It's tempting to live it up when you receive your financial aid, but that's a good way to run out of money before the semester is over.</p> <p>Instead, take the time to create a spending plan for your financial aid disbursement before the money hits your bank account. Determine how much of your financial aid will need to go toward tuition, textbooks, lab fees, and living expenses. Having such a plan in place will help you keep your spending in check when you feel the urge to splurge some of your aid money.</p> <h2>5. Keep track of your student loans</h2> <p>Many college students &mdash; including yours truly! &mdash; make the mistake of paying no attention to their student loans until they have graduated. In general, the amount of money you are borrowing can seem unreal, so it's very easy to just ignore the problem until you reach your student loan exit interview just before graduation.</p> <p>However, knowing early how much you owe and how much it will cost you to pay it off is both good for your financial health and can help you remain motivated in your studies. It's much easier to get up for that 8 a.m. chemistry lab when you understand just how much you're paying for the privilege of going to it.</p> <p>If you have federal student loans, you can keep track of how much you have borrowed and what your repayment options will be through the <a href="https://www.nslds.ed.gov/nslds/nslds_SA/" target="_blank">National Student Loan Data System</a>. Just select &quot;Financial Aid Review,&quot; log in, and you can view all of your federal student loans in one place. If you have any private student loans, you will need to contact your lender for information regarding your loans.</p> <h2>6. Build up an emergency fund</h2> <p>When I was in college, a classmate's financial aid package was re-evaluated at the end of her first year. The school's financial aid office decided that she could count on an additional $1,500 from her family for her second year, even though she knew that it would be impossible to ask for that additional money. By working some serious overtime that summer and living off tuna fish and ramen, my classmate was able to scrape together the additional money. But this situation could have potentially meant the difference between her returning to school and her dropping out.</p> <p>An emergency fund can make this kind of unanticipated financial change much less stressful than it was for my classmate, especially when you are already living on a shoestring.</p> <p><a href="http://www.wisebread.com/a-step-by-step-guide-to-creating-your-emergency-fund" target="_blank">Building an emergency fund</a> might feel impossible when you're in college, but don't forget that small amounts can add up to something really helpful. Start with an automatic transfer of $5 &mdash;$10 per week into a savings account. Add in whatever excess money you come across &mdash; including the cash you get for selling back textbooks or some of the birthday money Nana sends every year.</p> <p>Though your fund will grow slowly, working steadily on it will ensure that a financial aid (or other emergency) does not jeopardize your education.</p> <h2>7. Learn from your financial fumbles</h2> <p>Every time you make a financial decision as a college student, you have the opportunity to learn from your choices. The trick to learning from financial mistakes rather than repeating them, is to look back on the choices you made with curiosity and compassion for yourself. You're a college student, after all, and learning is the entire job description.</p> <p>Take each moment of money regret as an opportunity to figure out where your financial weaknesses are. You'll finish college with a much better understand of yourself and your money temptations, as well as potential solutions for avoiding those temptations.</p> <h2>Learn about finances before you enter the real world</h2> <p>It may feel like adding financial responsibility on top of your educational requirements will be too much to handle, but college is actually a great time to work on your money management skills. Taking good care of your finances as you are engaging in higher learning sets you up for financial success after graduation.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F7-money-moves-every-new-college-student-should-make&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F7%2520Money%2520Moves%2520Every%2520New%2520College%2520Student%2520Should%2520Make.jpg&amp;description=7%20Money%20Moves%20Every%20New%20College%20Student%20Should%20Make"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/7%20Money%20Moves%20Every%20New%20College%20Student%20Should%20Make.jpg" alt="7 Money Moves Every New College Student Should Make" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/7-money-moves-every-new-college-student-should-make">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/css-is-one-source-of-college-financial-aid-you-cant-afford-to-overlook">CSS Is One Source of College Financial Aid You Can&#039;t Afford to Overlook</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-money-moves-to-make-the-moment-you-graduate">5 Money Moves to Make the Moment You Graduate</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-things-financial-aid-might-not-cover">6 Things Financial Aid Might Not Cover</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-every-parent-should-know-about-the-new-college-financial-aid-rules">What Every Parent Should Know About the New College Financial Aid Rules</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-make-the-most-of-your-student-loan-grace-period">4 Ways to Make the Most of Your Student Loan Grace Period</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training automatic payments bills checking accounts college emergency funds financial aid money moves savings student loans students Tue, 29 Aug 2017 09:00:05 +0000 Emily Guy Birken 2009181 at http://www.wisebread.com 5 Monthly Bills That Vary Based on Your Credit Behavior http://www.wisebread.com/5-monthly-bills-that-vary-based-on-your-credit-behavior <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-monthly-bills-that-vary-based-on-your-credit-behavior" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_screaming_papers_599701902.jpg" alt="Man&#039;s bills varying based on credit behavior" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Your credit score is one of the most important numbers in your financial life. Because it incorporates data about your past behavior with credit &mdash; how much credit and debt you have and how good you are at paying those bills off &mdash; it's deemed as a good predictor of how you'll behave with future bills.</p> <p>A <a href="http://www.wisebread.com/what-does-your-credit-score-mean-good-bad-or-excellent" target="_blank">low credit score</a> can hurt you in many ways: It makes it more difficult to qualify for mortgages, car loans, or credit cards. And when you do qualify for a loan or credit card, you'll be stuck with higher interest rates and the higher monthly payments that come with them. Poor credit behavior can also cost you money each month in the form of higher student loan and insurance payments. (See also: <a href="http://www.wisebread.com/15-surprising-ways-bad-credit-can-hurt-you?ref=seealso" target="_blank">15 Surprising Ways Bad Credit Can Hurt You</a>)</p> <p>Most lenders today still consider a credit score of 740 or higher to be a strong one. Anything at 640 or lower, though, is considered weak.</p> <p>Here's a look at five monthly bills that you'll pay more for if your credit score is low.</p> <h2>1. Mortgage payment</h2> <p>Your credit score has a big impact on your mortgage payment. If your score is high, odds are good that you'll qualify for a lower interest rate, which will, in turn, lower your monthly mortgage payment. If your score is low, the opposite will happen.</p> <p>Here's an example of the difference that a high or low interest rate can have on your monthly mortgage payment: If you take out a 30-year, fixed-rate mortgage loan of $200,000 at an interest rate of 3.80 percent, you'll have a monthly payment of about $931, not counting what you might pay for homeowners insurance and property taxes.</p> <p>If you take out that same loan with a higher interest rate of 4.80 percent &mdash; which you may have gotten due to a low credit score &mdash; your monthly payment, again not counting taxes and insurance, will be about $1,049. That's $118 more a month, or about $1,416 a year. (See also: <a href="http://www.wisebread.com/4-smart-ways-to-lower-your-monthly-mortgage-payment?ref=seealso" target="_blank">4 Smart Ways to Lower Your Monthly Mortgage Payment</a>)</p> <h2>2. Auto loans</h2> <p>You'll face the same situation when applying for an auto loan with a lower credit score. Auto lenders, like mortgage lenders, rely heavily on your credit score. If they see a low score, they'll protect themselves financially by charging you a higher interest rate. This higher rate will result in a higher monthly payment.</p> <p>The higher rates make sense if you look at your loan from your lender's point of view. A lower credit score means you have a history of making bad financial choices, whether that means paying bills late or missing them entirely. Lenders then levy a higher interest rate to make up for the danger of lending to riskier borrowers.</p> <h2>3. Credit cards</h2> <p>Interest rates on credit cards can be high &mdash; 20 percent or higher in some cases. But if your credit score is high, you'll increase your chances of qualifying for a lower rate on your cards. This is important: If you carry a balance on your cards each month, a lower interest rate will mean a lower required minimum monthly payment. It also means your debt will grow at a slower rate.</p> <p>How you use credit cards has a big impact on your credit score. If you always pay your cards on time, and if you don't run up too much debt on them, you will steadily boost your score. (See also: <a href="http://www.wisebread.com/how-to-pay-less-interest-on-your-credit-card-debt?ref=seealso" target="_blank">How to Pay Less Interest on Your Credit Card Debt</a>)</p> <h2>4. Student loans</h2> <p>There are two types of student loans: federal and private. Your credit score won't affect your interest rate on federal loans. But lenders originating private student loans will look at your credit score. If your score is low, they'll charge you higher interest rates and fees. This will result in a higher monthly student loan payment.</p> <h2>5. Homeowners insurance</h2> <p>Insurance companies don't rely on your credit score to set your homeowners insurance rates. They do, however, use a similar metric known as an insurance score. This score includes information about your past payment history, your debts, and your number of open credit accounts, just like your credit score. It can also include information about any safety features &mdash; such as fire alarms and security systems &mdash; protecting your home and whether you've made a high number of insurance claims in the past.</p> <p>If your insurance score is high, you'll qualify for a lower insurance bill. If that score is low, you can expect to pay more for your homeowners insurance.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-monthly-bills-that-vary-based-on-your-credit-behavior&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Monthly%2520Bills%2520That%2520Vary%2520Based%2520on%2520Your%2520Credit%2520Behavior.jpg&amp;description=5%20Monthly%20Bills%20That%20Vary%20Based%20on%20Your%20Credit%20Behavior"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Monthly%20Bills%20That%20Vary%20Based%20on%20Your%20Credit%20Behavior.jpg" alt="5 Monthly Bills That Vary Based on Your Credit Behavior" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-monthly-bills-that-vary-based-on-your-credit-behavior">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-you-need-to-know-the-difference-between-secured-and-unsecured-debts">Why You Need to Know the Difference Between Secured and Unsecured Debts</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-do-if-youve-signed-up-for-a-terrible-loan-or-credit-card">What to Do if You&#039;ve Signed Up for a Terrible Loan or Credit Card</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/pay-these-6-bills-first-when-money-is-tight">Pay These 6 Bills First When Money Is Tight</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-ways-student-loan-debt-can-affect-your-mortgage-application">3 Ways Student Loan Debt Can Affect Your Mortgage Application</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance auto loans bills credit score fico homeowners insurance interest rates mortgages payments student loans Tue, 01 Aug 2017 07:47:46 +0000 Dan Rafter 1990977 at http://www.wisebread.com It's Now Easier to Get a Home Loan Even If You Have Student Loan Debt — Should You? http://www.wisebread.com/its-now-easier-to-get-a-home-loan-even-if-you-have-student-loan-debt-should-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/its-now-easier-to-get-a-home-loan-even-if-you-have-student-loan-debt-should-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/house_and_keys.jpg" alt="House and keys" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Student loan debt has snowballed to the point where many young people are delaying the purchase of a home. On one hand, it's hard to save up for a down payment when you're already $37,172 in debt &mdash; the average for class of 2016 graduates. On the other hand, student loan debt can make it hard to qualify for a mortgage at all.</p> <p>Fannie Mae, the nation's largest purchaser and guarantor of mortgages, recently addressed the second problem by changing two key rules for borrowers. Because Fannie Mae buys mortgages from about 1,800 lenders that follow its rules, these changes at Fannie Mae affect potential home loan borrowers all over the country.</p> <h2>Debt that someone else is paying off no longer counts against you</h2> <p>For example, your parents or your employer might be making your student loan payments. In the past, a lender would still count those payments as part of your <a href="http://www.wisebread.com/3-ways-student-loan-debt-can-affect-your-mortgage-application" target="_blank">debt-to-income ratio</a>, a key figure used to determine whether you can afford to make mortgage payments. But now, Fannie Mae will recognize that if you're not the one paying the bill, that loan won't actually affect your ability to pay your mortgage.</p> <p>This new rule will also apply to other kinds of debt that someone else is paying for you, such as car loans or credit card balances. To qualify, you'll need to provide documentation showing that someone else has made payments on the debt for the past 12 months.</p> <h2>Flexible payment plans are recognized</h2> <p>One of the benefits of carrying a federal student loan is that you may qualify for an income-based repayment program, lowering your monthly obligation to a certain percent of your available income. This is great &mdash; until you apply for a mortgage and find out that Fannie Mae uses the standard payment amount, not the lower amount you're actually paying, to determine your debt-to-income ratio.</p> <p>From now on, lenders working with Fannie Mae can instead use the lower, flexible payment amount &mdash; meaning that more applicants with student debt will qualify to buy a home.</p> <p>With these two changes, many more young people will qualify to buy homes &mdash; a change that is probably good for the economy and the housing market. But is it a good idea for<em> you</em>? Some questions for graduates who will be affected by the Fannie Mae decisions &mdash; and for other student loan borrowers &mdash; to ask.</p> <h2>What would you do if you had to take over your own student debt payments?</h2> <p>For people who have their loans paid by employers or others, investing in a nice house may seem like a no brainer. Say you're a young doctor practicing at a hospital that covers student loan payments as part of its compensation package. Great! You are able to buy a four-bedroom home with a swimming pool.</p> <p>But then the hospital files for bankruptcy and you are let go. You can get another local position with a private practice, but it won't pay for your student loans. Will you be able to pay your new mortgage and student loans at the same time?</p> <h2>What if the government changes student debt repayment rules?</h2> <p>If your income is already so limited that you qualify for a modified loan repayment plan, it's worth pondering whether buying a home is the right move at this stage in your life. Congress could decide to end that program in order to save money. Think about if and how you could make a standard debt payment and a mortgage payment if the rules change.</p> <h2>Do you have enough saved for a down payment?</h2> <p>It used to be that buyers routinely plunked down 20 percent of a home's value upfront. Nowadays, most buyers make down payments of between 5 percent and 10 percent. If you've been making large student loan payments, you may not have this money saved up. (See also: <a href="http://www.wisebread.com/4-easy-ways-to-start-saving-for-a-down-payment-on-a-home" target="_blank">4 Easy Ways to Start Saving for a House Down Payment</a>)</p> <h2>Will you be able to afford maintenance?</h2> <p>When working out your hypothetical budget as a homeowner, don't stop after accounting for your student loan payments and the mortgage. You need to set aside money for things that break and systems that wear out, from the doorbell to the roof. You never know when something is going to need replacing, but a rule of thumb is to budget 1 percent of a home's value for maintenance each year. So if you plan to buy a $200,000 home, make sure you can afford to set aside $2,000 annually for repairs.</p> <h2>How will you handle a financial emergency?</h2> <p>A financial emergency can be bad enough if you're renting and are forced to break your lease and move somewhere cheaper. But once you're committed to owning a home, a loss of income could mean losing the home as well. And homeowners with hefty student loan debt are that much more vulnerable.</p> <p>Before you sign that purchase contract, it's a good idea to have several months of mortgage payments in an emergency fund. If you <a href="http://www.wisebread.com/where-to-turn-for-help-when-you-dont-have-an-emergency-fund" target="_blank">don't have an emergency fund</a>, at least have a plan for how you would pay the mortgage if you lose your job. Could you turn to a relative for support? Could you advertise for roommates? Sell your car?</p> <p>Taken altogether, it's clear that there is no one-size-fits-all answer to whether you should buy a house before your student loans are paid off. Homeownership comes with a lot of benefits, such as the mortgage interest tax deduction, so it may not be something you want to put off for the years it could take to pay off the student loans.</p> <p>But rushing into homeownership before you have a stable income and emergency reserves would be a mistake for anyone &mdash; and that much more so for folks with heavy student debt.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fits-now-easier-to-get-a-home-loan-even-if-you-have-student-loan-debt-should-you&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FIt%2527s%2520Now%2520Easier%2520to%2520Get%2520a%2520Home%2520Loan%2520Even%2520If%2520You%2520Have%2520Student%2520Loan%2520Debt%2520%25E2%2580%2594%2520Should%2520You-.jpg&amp;description=It's%20Now%20Easier%20to%20Get%20a%20Home%20Loan%20Even%20If%20You%20Have%20Student%20Loan%20Debt%20%E2%80%94%20Should%20You%3F"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/It%27s%20Now%20Easier%20to%20Get%20a%20Home%20Loan%20Even%20If%20You%20Have%20Student%20Loan%20Debt%20%E2%80%94%20Should%20You-.jpg" alt="It's Now Easier to Get a Home Loan Even If You Have Student Loan Debt &mdash; Should You?" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/its-now-easier-to-get-a-home-loan-even-if-you-have-student-loan-debt-should-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-ways-student-loan-debt-can-affect-your-mortgage-application">3 Ways Student Loan Debt Can Affect Your Mortgage Application</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/make-these-5-money-moves-before-applying-for-a-mortgage">Make These 5 Money Moves Before Applying for a Mortgage</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-you-really-need-a-20-percent-down-payment-for-a-house">Do You Really Need a 20 Percent Down Payment for a House?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/everything-you-need-to-know-about-freddie-mac-and-fannie-mae">Everything You Need to Know About Freddie Mac and Fannie Mae</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Real Estate and Housing debt payments debt to income ratio down payments emergency funds fannie mae flexible payment plans home loans mortgages rule changes student loans Mon, 31 Jul 2017 08:30:04 +0000 Carrie Kirby 1981838 at http://www.wisebread.com 6 Questions to Ask Before Taking Out Student Loans http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-questions-to-ask-before-taking-out-student-loans" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_saving_education_coins.jpg" alt="Woman saving education coins" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Americans are more burdened by student loan debt than ever, with the average graduate in their 20s making $351 a month in student loan payments. Suggested changes to the federal student loan program could have even more college students questioning just how much student loan debt they want or can afford.</p> <p>As part of its overall budget plan, the Trump administration would like to eliminate current provisions in which the government pays the interest on student loans taken out by low-income students while the borrower is still in school and for six months after graduation.</p> <p>The Trump administration is also proposing to end the Public Service Loan Forgiveness program. This program allows borrowers who go on to work for the government or for nonprofits to have the remainder of their federal student loans forgiven after they make 10 years of payments.</p> <p>Even though these potential changes might never be signed into law, just the possibility of such changes makes it even more important for students to ask the right questions before they take out federal or private student loans.</p> <p>Here are six questions you should ask before signing up for any student loan.</p> <h2>1. Have you considered all education options?</h2> <p>Your first-choice school might be the most expensive university on your list. You might be able to reduce the amount of money you borrow each year by choosing a less costly option.</p> <p>Instead of attending a private college, you might investigate a public university. Instead of going to an out-of-state school, you might consider going to school in-state, which comes with lower tuition. You could also attend a community college for two years before transferring to a private or public university for the remainder of your college years. These choices could reduce the amount of student loan debt you'll have to take on.</p> <h2>2. Can you cut out room and board?</h2> <p>The College Board reported that the average yearly cost of room and board at a public four-year university stood at $10,440 during the 2016&ndash;2017 academic year. You can save that expense if you attend a college that allows you to live at home while taking classes.</p> <p>Yes, you will lose out on some of the traditional college experience. But taking on less student loan debt might be an acceptable trade-off.</p> <h2>3. Are you borrowing too much for your potential future income?</h2> <p>Certain careers pay more than others. You need to remember this when applying for student loans. You don't want to take on huge debts if you expect to make $40,000 a year when you graduate. But taking on larger amounts of debt might be a solid financial choice if you are working toward a higher-paying degree.</p> <h2>4. How big of a student loan payment are you willing to make once you're working?</h2> <p>Borrowing money might seem easy when you're still in school. After all, you're probably not making payments on these loans yet. But once you're out in the working world, that student loan debt won't seem so benign.</p> <p>You will have to make payments each month. And these payments will come in addition to rent, car payments and, eventually, mortgage payments. Student loan payments become a huge financial burden to many. Before borrowing today, you need to consider how comfortable you'll be making those payments in the future.</p> <h2>5. Are there other types of financial aid available?</h2> <p>Before applying for a student loan, make sure you explore all financial aid options with your high school counselor, or the university you plan to attend. Many universities offer merit scholarships to incoming students. You usually don't have to apply for these scholarships. Schools automatically provide them, usually based on your academic performance. Even if you've been offered one, you might be able to persuade your university to provide you with a larger merit scholarship, especially if you are worried that you won't be able to afford the yearly tuition without financial help.</p> <p>There are other types of scholarships, too, that you should investigate. The U.S. Department of Education says that there are several ways for college students to search for scholarships and grants. They should first speak with the financial aid office at the college they are attending. These professionals often have tips for hunting down scholarship and grant money.</p> <p>They can also use the free online <a href="http://www.careeronestop.org/toolkit/training/find-scholarships.aspx" target="_blank">scholarship finder</a> offered by the Department of Education. The department also offers an online list of <a href="https://www2.ed.gov/about/contacts/state/index.html" target="_blank">state grant agencies</a> that students can search to find scholarships and grants in their states.</p> <p>Call your school's financial aid office to discuss options such as work-study programs and possible additional financial help.</p> <h2>6. Can you get by without private loans?</h2> <p>Even if you get grants and scholarships, you may still need student loans. There are two types of student loans to consider: Federal loans offered through the federal government or private loans offered by private lenders. Federal loans are preferable because they usually come with lower interest rates and more flexible repayment programs. Federal loans also provide more options if, after graduating, you find yourself struggling to make payments, including deferment and eventual forgiveness programs.</p> <p>It's far better to rely as much as possible on federal subsidized or unsubsidized student loans. The challenge is that these federal loans have limits; you can only borrow so much each school year.</p> <p>Your school might also offer its own lower-interest loans that would be cheaper than private loans. But if these options still aren't enough, you'll have to determine whether taking out less attractive private student loans to attend college is worthwhile. It might be the only option.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-questions-to-ask-before-taking-out-student-loans&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Questions%2520to%2520Ask%2520Before%2520Taking%2520Out%2520Student%2520Loans.jpg&amp;description=6%20Questions%20to%20Ask%20Before%20Taking%20Out%20Student%20Loans"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Questions%20to%20Ask%20Before%20Taking%20Out%20Student%20Loans.jpg" alt="6 Questions to Ask Before Taking Out Student Loans" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-unique-ways-millennials-are-dealing-with-student-loan-debt">7 Unique Ways Millennials Are Dealing With Student Loan Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-make-the-most-of-your-student-loan-grace-period">4 Ways to Make the Most of Your Student Loan Grace Period</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-things-financial-aid-might-not-cover">6 Things Financial Aid Might Not Cover</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-borrow-student-loan-money-from-amazon-prime">Should You Borrow Student Loan Money From Amazon Prime?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-every-new-college-student-should-make">7 Money Moves Every New College Student Should Make</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training college debt repayment federal loans higher education private loans scholarships student debt student loans trump tuition Tue, 18 Jul 2017 08:00:08 +0000 Dan Rafter 1983760 at http://www.wisebread.com These 17 Companies Will Help You Repay Your Student Loan http://www.wisebread.com/these-17-companies-will-help-you-repay-your-student-loan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/these-17-companies-will-help-you-repay-your-student-loan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/saving_for_education.jpg" alt="Saving for education" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Student loans can dampen the ability of new grads to get on their feet financially, causing stress at home and at work. According to Student Loan Hero, the graduating class of 2016 had an average student loan balance of $37,172 &mdash; up six percent from the year before.</p> <p>While it's daunting to see that number rise, the good news is that, in an effort to recruit and retain the best hires, a growing number of employers have started programs to help employees pay back those hefty student loans. Here are a few of those companies helping workers get out of debt.</p> <h2>1. Chegg</h2> <p>In April 2015, tutoring and study services company Chegg announced its college loan reduction plan for full-time employees in partnership with Tuition.IO, a company that provides a web-based platform for tracking and managing student loan payments. This benefit has an annual cap of $1,000 (less taxes), but has no cap on the total amount an employee can receive.</p> <h2>2. ChowNow</h2> <p>ChowNow has found this perk so useful in hiring talent that the company decided to double it from when it first started offering it to employees. The Los Angeles-based online food ordering company has an employer-paid student loan assistance program that matches up to $1,000 a year of employee payments.</p> <h2>3. CommonBond</h2> <p>Since December 2016, this lending marketplace platform has been granting $100 per month to its employees to pay down student loans. While CommonBond limits the perk at $1,200 per year, the company continues helping its employees until they fully pay off their student loans. Employees also have the option to refinance their student loans with CommonBond. On average, student borrowers save over $14,000 when refinancing through CommonBond, according to the company.</p> <h2>4. Credit Suisse</h2> <p>The financial services company doesn't offer a lump sum benefit to its employees, but instead provides a 0.25 percent discount on interest rates to workers that refinance their student loans with online lender SoFi.</p> <h2>5. Connelly Partners</h2> <p>Boston-based ad agency Connelly Partners works with Gradifi to offer a student loan repayment plan that improves the longer the employee stays with the company. Like a 401(k) plan, the agency matches up to $100 per month of its employees' debt payments. Employees who stick around for at least six months receive a $1,000 student loan payment bonus. Those who work for the company for five years receive another $1,000 bonus for the sixth year.</p> <h2>6. Fidelity Investments</h2> <p>The financial services firm makes an annual $2,000 direct payment to employees' student loan servicers, up to a total of $10,000. If your career with Fidelity requires you to continue your education, then Fidelity will reimburse you 90 percent of qualifying costs (up to $10,000 per year) of a work-related degree or certification program. You must have worked for the company for at least six months to qualify.</p> <h2>7. Kronos</h2> <p>Based in Chelmsford, Massachusetts, the workforce management software provider has partnered with solutions provider Student Loan Genius to pay up to $500 per year to help employees pay down student debt.</p> <h2>8. LendEDU</h2> <p>Since February 2016, the online marketplace for student loan financing has paid $2,400 per year ($200 per month) to employees with student loan debt.</p> <h2>9. Martin Health System</h2> <p>Employees working in the nursing field at Martin Health System in Florida can receive up to $2,000 per year to help pay down their student loans. In addition to this benefit from Martin Health System, Florida nurses can also work in areas with staff shortages to qualify for the state's Nursing Student Loan Forgiveness Program or the federal Perkins Loan Cancellation for Nurses and Medical Technicians.</p> <h2>10. Moonlite Bunny Ranch</h2> <p>In 2015, Dennis Hof, the owner of the legal brothel Moonlite Bunny Ranch in Nevada, promised to match 100 percent of his employees' student loan payments for two months, up to the full amount that they made during that period.</p> <h2>11. Natixis Global Asset Management</h2> <p>All Natixis employees receive an annual $1,000 student loan repayment benefit, up to $10,000 over a 10-year period. The company used to require that workers reached five years of employment in order to receive a lump sum benefit of $5,000, but did away with the requirement in July 2016.</p> <h2>12. Nvidia</h2> <p>This computing giant offers comprehensive student loan repayment options. First, employees working at least 20 hours per week who graduated within the previous three years can apply for a reimbursement of $6,000 a year for qualifying student loan payments, up to $30,000. Second, employees who successfully refinance their student loans with SoFi receive a bonus ranging from $200 to $500 and pay no loan origination fees. Third, employees who need to go back to college can receive a reimbursement of up to $5,250 each year for qualified job-related educational expenses, including tuition and books, as long as they earn at least a B average.</p> <h2>13. Powertex</h2> <p>The clothing design company was among the first businesses in Wisconsin to partner with Gradifi to offer a student loan repayment assistance program. Powertex gives eligible employees $100 per month for student loan payments for up to six years.</p> <h2>14. PricewaterhouseCoopers (PWC)</h2> <p>Associates and senior associates at the consulting firm receive $100 per month ($1,200 a year) toward student loan payments for up to six years.</p> <h2>15. SoFi</h2> <p>Many employers partner with SoFi to offer a student loan repayment assistance program. The online lender also offers its own eligible employees $200 per month to help them fully pay back student loans.</p> <h2>16. Staples</h2> <p>The office supply retailer offers top-performing full-time employees $100 a month for three years, for a total of $3,600 in student loan assistance. To maintain their eligibility, employees must meet set criteria throughout the entire three years.</p> <h2>17. Aetna</h2> <p>As of January 2017, the health care company matches employees' student loan payments of up to $2,000 per year, with a lifetime maximum of $10,000. The program is available to employees who have graduated within the previous three years from an accredited institution.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fthese-17-companies-will-help-you-repay-your-student-loan&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FThese%252017%2520Companies%2520Will%2520Help%2520You%2520Repay%2520Your%2520Student%2520Loan_0.jpg&amp;description=These%2017%20Companies%20Will%20Help%20You%20Repay%20Your%20Student%20Loan"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/These%2017%20Companies%20Will%20Help%20You%20Repay%20Your%20Student%20Loan_0.jpg" alt="These 17 Companies Will Help You Repay Your Student Loan" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/these-17-companies-will-help-you-repay-your-student-loan">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-get-student-loan-debt-forgiveness">8 Ways to Get Student Loan Debt Forgiveness</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-things-you-didn-t-learn-in-college-but-you-should-have">10 Things You Didn’t Learn in College (but You Should Have)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-stop-student-loans-from-ruining-your-life">How to Stop Student Loans From Ruining Your Life</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-every-new-college-student-should-make">7 Money Moves Every New College Student Should Make</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/college/college-resources">40+ College Resources for Parents and Students</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Education & Training Job Hunting college companies contributions education employee benefits jobs loan repayment plans student loans Thu, 22 Jun 2017 09:00:10 +0000 Damian Davila 1968233 at http://www.wisebread.com 5 Biggest Ways Millennials Risk Their Retirements http://www.wisebread.com/5-biggest-ways-millennials-risk-their-retirements <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-biggest-ways-millennials-risk-their-retirements" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/sad_man_has_spent_all_his_money.jpg" alt="Sad man has spent all his money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're stressing out about whether or not you're saving enough for retirement, you're not alone. Millennials are among those struggling the most with this dilemma. According to a 2016 study, 64 percent of working millennials believe they'll never save a $1 million nest egg.</p> <p>Why are millennials so worried? Sadly, this age group is prone to making less-than-ideal money moves that could hurt them later in life. Let's review the five biggest ways in which millennials are risking their retirement. (See also: <a href="http://www.wisebread.com/4-things-millennials-should-do-today-to-prepare-for-retirement?ref=seealso" target="_blank">4 Things Millennials Should Do Today to Prepare for Retirement</a>)</p> <h2>1. Delaying the start of retirement savings</h2> <p>Nearly four in 10 millennials haven't started saving for retirement. The same 2016 survey found that 61 percent of females and 50 percent of males belonging to the millennial generation have their finances stretched &quot;too thin&quot; to save for retirement. Even worse, 54 percent of women and 43 percent of men of this generation are living paycheck to paycheck.</p> <p>However, delaying retirement contributions has a serious impact. If a worker were to deposit just $50 per month into a 401(k) with an 8 percent annual rate of return for 10 years, they would end up with around $9,200 at the end of the 10-year period. The IRS sets a cap on how much you can contribute to a retirement account per year, which for 2017, is $18,000 to a 401(k) and $5,500 to an IRA. If you keep delaying your contributions to your retirement accounts, you'll never be able to fully make up that gap.</p> <h2>2. Taking out high student loans</h2> <p>Student Loan Hero estimated the average student loan balance for a member of the Class of 2016 at $37,172, up 6 percent from the year before. With so many Americans still believing in the importance of postsecondary education, it's easy to see how the average student loan continues to climb. Studies have shown that higher education still leads to better earnings potential, after all.</p> <p>Still, loans are rising too fast. Back in 1993, only 45 percent of college graduates had a student loan and their average balance was $15,000 in inflation-adjusted dollars. By having to pay down a high student loan, millennials are foregoing sizable contributions to their retirement accounts.</p> <p>Assuming a $30,000 balance on a federal direct loan with a 4 percent interest rate, you would pay about $304 per month. That's $3,648 in missed retirement contributions every year. By the time that a millennial pays back that standard loan (10 years), they would have missed out on $54,259 in retirement savings, assuming an 8 percent annual return.</p> <h2>3. Putting their kids' college fund before their own retirement fund</h2> <p>Given the tough time that they're having paying back their own student loans, 19 percent of millennial parents say education for their children is their top financial priority, according to TD Ameritrade. Those millennial parents are socking away an average $310 every month for their children's college fund.</p> <p>Every month, these millennial parents are hit with the double whammy of paying down their own student loans and then putting money away for their children's education. No wonder millennial parents ranked saving for retirement third on their list of financial priorities. (See also: <a href="http://www.wisebread.com/why-saving-too-much-money-for-a-college-fund-is-a-bad-idea?ref=seealso" target="_blank">Why Saving Too Much Money for a College Fund Is a Bad Idea</a>)</p> <h2>4. Not setting a retirement savings goal</h2> <p>If you don't know where you're going, you'll never know when you get there. According to the Employment Benefit Research Institute, across all generations, workers age 25&ndash;34 are the smallest percentage of individuals who have tried to calculate how much money they'll need to live comfortably in retirement.</p> <p>By not setting a retirement savings goal, millennials may be misjudging how much to contribute from every paycheck toward their retirement accounts. This explains the low average contribution levels per paycheck from millennial men and women &mdash; 7.3 and 5.7 percent, respectively. In 2016, 75 percent of workers age 25&ndash;34 said their total savings and investments were under $25,000.</p> <h2>5. Accepting a first-job salary offer without negotiation</h2> <p>Faced with a countdown to start paying back student loans, many millennials are so eager to start generating income they skip salary negotiations. According to a survey from NerdWallet and Looksharp, of 8,000 recent grads that entered the job market between 2012 and 2015, only 38 percent negotiated their salary offer from a new employer. The same survey revealed that 74.4 percent of employers had room for a 5 to 10 percent salary bump, 8.6 percent of them had room for a 11 to 20 percent salary bump, and 1.3 percent of them were willing or able to go above 20 percent.</p> <p>Do millennials skip negotiations over fear of having their job offer retracted? Not really: Close to nine out of 10 employers in the survey had never done such a thing.</p> <p>Failing to negotiate a starting salary is one of the biggest ways in which millennials are shortchanging their retirement. Let's crunch some numbers to see why. In 2016, The Collegiate Employment Research Institute found that the average starting salary for holders of a bachelor's degree was $41,880. Negotiating a 5 to 10 percent raise on your first-job salary offer would have yielded a starting salary ranging from $43,974 to $46,068. That would have been an extra $2,094 to $4,188 per year, enough to cover six to 13 $304 monthly payments on a $30,000 federal direct loan with a 4 percent interest rate.</p> <p>Saving for retirement may seem like a big hairy monster, but it doesn't need to be that way. By understanding what's keeping you from starting or saving enough for your retirement, you'll have a better chance of meeting your retirement saving goals. (See also: <a href="http://www.wisebread.com/how-to-face-4-ugly-truths-about-retirement-planning?ref=seealso" target="_blank">How to Face 4 Ugly Truths About Retirement Planning</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-biggest-ways-millennials-risk-their-retirements&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Biggest%2520Ways%2520Millennials%2520Risk%2520Their%2520Retirements_0.jpg&amp;description=5%20Biggest%20Ways%20Millennials%20Risk%20Their%20Retirements"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Biggest%20Ways%20Millennials%20Risk%20Their%20Retirements_0.jpg" alt="5 Biggest Ways Millennials Risk Their Retirements" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/5-biggest-ways-millennials-risk-their-retirements">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-retirement-planning-changes-when-youre-single">7 Ways Retirement Planning Changes When You&#039;re Single</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-age-milestones-that-impact-your-retirement">6 Age Milestones That Impact Your Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement">10 Signs You Aren&#039;t Saving Enough for Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-when-you-should-borrow-from-your-retirement-account">This Is When You Should Borrow From Your Retirement Account</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-tax-day-is-april-15-and-other-weird-financial-deadlines">Why Tax Day Is April 15 and Other Weird Financial Deadlines</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) college funds IRA millennials not saving enough paycheck to paycheck salary negotiation savings goals student loans young adults Tue, 20 Jun 2017 08:00:11 +0000 Damian Davila 1961116 at http://www.wisebread.com 8 Valuable Rights You Might Lose When You Refinance Student Loans http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-valuable-rights-you-might-lose-when-you-refinance-student-loans" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/house_on_money_stack.jpg" alt="House on money stack" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Fannie Mae, the nation's largest buyer and guarantor of mortgage loans, made news recently when it announced it would sweeten the deal for folks who want to refinance their mortgage to pay off student loan debt. Fannie Mae works with 1,800 lenders nationwide, so their rule change affects many homeowners. At the same time, newer financial companies that target millennials have been pushing student loan refinances as a way to save money and simplify life.</p> <p>Fannie Mae's change will make it more affordable for graduates &mdash; or parents &mdash; to use home equity to pay off student loans by waiving the usual extra charge for taking out cash when you refinance a home. With mortgage interest rates still at historic lows, this could indeed be an opportunity for young adults with high-rate student loans to reduce their monthly payments. But proceed with caution.</p> <p>If you have a private student loan, you probably have nothing to lose by converting it into a mortgage, personal loan, or other consolidation loan. But if you have a federal loan, you should be more cautious about making changes. You may not realize you'd be losing these protections and options when you give up your federal student loan.</p> <h2>1. Deferment</h2> <p>If you lose your job or are unable to find a job after graduation, you may qualify for a <a href="http://www.wisebread.com/4-things-you-need-to-know-about-deferring-student-loans" target="_blank">deferment</a>, which halts your loan payments until you're in a better position to pay. With certain federal loans, the government will even pay the interest during deferment.</p> <h2>2. Forbearance</h2> <p>Similar to deferment, <a href="http://www.wisebread.com/what-is-student-loan-forbearance-anyway" target="_blank">forbearance</a> stops your payment obligation during a period of hardship. But unlike deferment, interest continues to accumulate.</p> <h2>3. Income-driven repayment plans</h2> <p>The government has rolled out a whole range of <a href="http://www.wisebread.com/which-student-loan-repayment-plan-saves-you-the-most" target="_blank">flexible payment options</a> in recent years to help federal loan borrowers handle payments. These plans cap your monthly payment at a certain percentage of income (10 percent for the program known as Pay As You Earn and 15 percent for the Income-Contingent Repayment Plan). Another benefit of income-driven repayment plans that you would lose if you refinance: an end date. With PAYE, any balance you still owe after 20 years is forgiven; with ICE, loans are forgiven after 25 years. (See also: <a href="http://www.wisebread.com/the-definitive-guide-to-pay-as-you-earn-a-great-student-loan-repayment-plan?ref=seealso" target="_blank">The Definitive Guide to Pay As You Earn</a>)</p> <h2>4. A second chance if you default</h2> <p>The Federal Loan Rehabilitation Program is a one-time opportunity to get a default removed from your credit report by making a series of on-time payments. This can save you from wrecking your credit and being unable to buy a home later.</p> <h2>5. A central source for tracking loans</h2> <p>If all your student loans are federal, you'll be able to check up on all of them online through the National Student Loan Data System. If you refinance some but not all of your loans, you may end up having to keep track of them using multiple resources.</p> <h2>6. An unsecured loan</h2> <p>If you default on your student loan, you can lose your good credit, but not much else. If you default on your mortgage, you can lose your house. Let that reality sink in before you jump to refinance a home loan to pay off student loan debt.</p> <h2>7. A fixed interest rate</h2> <p>Of course, you could use a fixed-interest mortgage or a fixed-rate personal loan to pay off your federal student loan. But make sure that's what you're getting. If you use a variable rate loan to consolidate your debt, you could get hit with a big payment increase when rates inevitably go up. Federal loans, on the other hand, are guaranteed to be fixed rate.</p> <h2>8. Prepayment penalties</h2> <p>Federal loans don't charge a fee if you pay more than you owe on any given month, but some private lenders do &mdash; check on that before you commit to a refinance.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/its-now-easier-to-get-a-home-loan-even-if-you-have-student-loan-debt-should-you">It&#039;s Now Easier to Get a Home Loan Even If You Have Student Loan Debt — Should You?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-things-you-need-to-know-about-deferring-student-loans">4 Things You Need to Know About Deferring Student Loans</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-ways-student-loan-debt-can-affect-your-mortgage-application">3 Ways Student Loan Debt Can Affect Your Mortgage Application</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-make-the-most-of-your-student-loan-grace-period">4 Ways to Make the Most of Your Student Loan Grace Period</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-is-student-loan-forbearance-anyway">What Is Student Loan Forbearance, Anyway?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training Real Estate and Housing debt default deferment fannie mae federal loans forbearance interest rates mortgages refinancing repayment plans student loans Thu, 15 Jun 2017 08:30:16 +0000 Carrie Kirby 1963763 at http://www.wisebread.com The New Grad's Guide to Debt Management http://www.wisebread.com/the-new-grads-guide-to-debt-management <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-new-grads-guide-to-debt-management" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/graduating_student_worrying_about_career_path_and_financial_future.jpg" alt="Graduating Student Worrying About Career Path and Financial Future" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>According to Student Loan Hero, the average 2016 graduate left college with $37,172 in student loan debt. The class of 2017 will graduate owing roughly the same amount, if not more.</p> <p>For many young adults, a student loan is the only option for obtaining a degree. The problem, however, is that it takes years to pay off these balances. Some graduates also have difficulty juggling student debt with their other expenses.</p> <p>Luckily, student loan debt doesn't have to cripple a new grad's finances. Here are a few strategies to help graduates manage their debt and stay on track.</p> <h2>1. Get organized and prepared for that first bill</h2> <p>Student loan repayment typically begins six to nine months after graduating college. You'll likely receive information regarding your first payment in advance. If you haven't received this information yet, it doesn't hurt to contact your student loan lender to ask about your due date and minimum payment. Having this information early helps you prepare your budget ahead of time.</p> <p>To stay organized and avoid late payments, set up automatic reminders a few days before your student loan payments are due. If you have multiple lenders, look into consolidating all your loans into a single loan. This way, you don't have to juggle multiple payments and due dates. If consolidation isn't an option, contact your lenders to see if you're allowed to change your due dates. It might be easier to manage student debt when due dates are within a few days of each other. (See also: <a href="http://www.wisebread.com/what-s-the-difference-between-student-loan-refinancing-and-consolidation?ref=seealso" target="_blank">What's the Difference Between Student Loan Refinancing and Consolidation?</a>)</p> <h2>2. Sign up for autopay to stay on schedule</h2> <p>Signing up for autopay is one way to avoid missing a due date on your student loans, which can trigger a late fee or a negative mark on your credit report. With autopay, your student loan lender automatically drafts monthly payments from your checking or savings account on a specific day of the month. As a bonus, your lender may reduce your interest rate when you agree to automated payments. This results in paying less interest over the life of the loan.</p> <p>Of course, the key to making this a successful solution is ensuring that there's always enough money in your checking account to cover the deductions &mdash; something you'll really need to stay on top of.</p> <h2>3. Request forbearance if you need more time</h2> <p>If you're scheduled to begin repaying your student loan, but you don't have enough income, don't ignore the bills. Student loan lenders &mdash; especially federal lenders &mdash; are flexible and offer assistance to students requiring financial help.</p> <p>One provision is forbearance, which allows you to temporarily suspend student loan payments for a certain number of months. For example, request a one-month forbearance if you have a temporary hardship, or request a one-year forbearance if you experience longer financial troubles. Keep in mind that interest continues to accrue with forbearance, which can put you deeper in the hole. Only use this option as a last resort.</p> <p>Deferment, on the other hand, is an income-based hardship provision. This option works the same as forbearance in that it suspends monthly payments without penalty. With a deferment, however, the federal government pays the interest that accrues during this period. (See also: <a href="http://www.wisebread.com/4-things-you-need-to-know-about-deferring-student-loans?ref=seealso" target="_blank">4 Things You Need to Know About Deferring Student Loans</a>)</p> <h2>4. Deduct student loan interest</h2> <p>Student loan interest is a deductible expense, so remember to include this item when filing your income taxes. This is critical in cutting your tax liability, especially when you're already on a tight budget. Since it's an &quot;above-the-line deduction,&quot; you don't have to itemize your tax return to take advantage of this write-off. You're allowed to write off up to $2,500 of student loan interest paid annually. This will reduce how much you owe in federal and state taxes. (See also: <a href="http://www.wisebread.com/4-ways-student-loans-impact-your-taxes?Ref=seealso" target="_blank">4 Ways Student Loans Impact Your Taxes</a>)</p> <h2>5. Hold off on other types of financing</h2> <p>After finishing college, you're likely ready to get your &quot;adult&quot; life started. This might include buying a new car and furnishing an apartment. But since you're fresh out of school with student loan debt, try to hold off on other types of financing &mdash; at least for now.</p> <p>The more debt you acquire, the harder it might be to juggle student loan and other credit payments. If you can avoid a car loan and unnecessary credit card debt, the money you would have spent on these expenses can go toward paying down student loan debt.</p> <h2>6. Live at home</h2> <p>The financial decisions you make as a young adult can affect your life later on. Although your friends might move into their own apartments, buy new cars, and spend most of their money on fun stuff, consider the benefits of living at home after graduation. By doing so, there's an opportunity to put a major dent in your debt. I did it for two years immediately following college, and I wasn't even a little bit embarrassed about it; I've paid off two student loans as a result.</p> <p>Whether you have credit card debt or student loan debt, minimizing your expenses now and prioritizing debt elimination sets the foundation for a strong financial future. Not only should you pay off debt, you should use this time to build a solid emergency fund. It'll be easier to save money and get ahead financially when you commit to living as cheaply as possible. (See also: <a href="http://www.wisebread.com/8-surprising-ways-to-pay-off-your-student-loans?ref=seealso" target="_blank">8 Surprising Ways to Pay Off Your Student Loans</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fthe-new-grads-guide-to-debt-management&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FThe%2520New%2520Grad%2527s%2520Guide%2520to%2520Debt%2520Management_0.jpg&amp;description=The%20New%20Grad's%20Guide%20to%20Debt%20Management"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/The%20New%20Grad%27s%20Guide%20to%20Debt%20Management_0.jpg" alt="The New Grad's Guide to Debt Management" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/the-new-grads-guide-to-debt-management">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-student-loans-impact-your-taxes">4 Ways Student Loans Impact Your Taxes</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-things-you-need-to-know-about-deferring-student-loans">4 Things You Need to Know About Deferring Student Loans</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-times-student-loan-refinancing-can-save-you-big">4 Times Student Loan Refinancing Can Save You Big</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-is-student-loan-forbearance-anyway">What Is Student Loan Forbearance, Anyway?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-most-common-tax-mistakes-made-by-college-grads">5 Most Common Tax Mistakes Made by College Grads</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Education & Training college grads deductions forbearance interest new graduates student loans taxes Wed, 14 Jun 2017 08:31:16 +0000 Mikey Rox 1963760 at http://www.wisebread.com Don't Let Outdated Money Advice Endanger Your Money http://www.wisebread.com/dont-let-outdated-money-advice-endanger-your-money <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/dont-let-outdated-money-advice-endanger-your-money" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-503170570.jpg" alt="Woman ignoring outdated money advice" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We've all received unsolicited financial advice, often from well-meaning relatives and friends. In many cases, this advice is useful. But a lot of &quot;classic&quot; personal finance advice simply hasn't aged well, and is now viewed as flawed. It's just not applicable anymore in today's world.</p> <p>Before you blindly accept any money advice you receive, be sure to do some additional research to find out if the advice is outdated. Here are nine examples of financial tips that may no longer apply.</p> <h2>&quot;Find a good employer and stay forever&quot;</h2> <p>Many of us know an older relative that began working at a company as a teenager and then retired from that same firm four decades later. Often, they walked away with a sizable pension and even health benefits for life. (See also: <a href="http://www.wisebread.com/if-youre-lucky-enough-to-receive-a-pension-here-are-6-things-you-need-to-do?ref=seealso" target="_blank">If You're Lucky Enough to Receive a Pension, Here Are 6 Things You Need to Do</a>)</p> <p>This doesn't happen much anymore. Job security is not what it once was. A decline in labor unions means that guaranteed annual pay increases are a thing of the past. And a pension? Forget it.</p> <p>There's a lot of evidence now that switching jobs periodically will result in higher pay increases. And with the introduction of 401(k) plans, retirement savings are portable when your employer changes.</p> <h2>&quot;Pay off all of your debt as soon as you can&quot;</h2> <p>This is not so much &quot;bad&quot; advice, it's just less than ideal. Yes, it's a fine goal to remain as close to debt-free as possible, but in the current environment, carrying <em>some </em>kinds of low-interest debt may be more beneficial for you in the long run.</p> <p>Let's say you have a 30-year fixed-rate mortgage and were fortunate enough to lock in a low 3.5 percent interest rate. Let's also say stock market returns are averaging 7 percent per year. Over time, you're going to be better off using any extra money you have to invest in stocks rather than pay off your loan early. Generally speaking, if your investment returns outpace current interest rates, there's not much incentive to pay off debt early.</p> <h2>&quot;Technology is a fad&quot;</h2> <p>There was a time when some of the most savvy investors dismissed many tech stocks because they didn't understand them. The bubble collapse of advertising-dependent dot-com companies in the late 1990s didn't help the image of this sector. But there's no denying the fact that investing in technology companies with solid business models has been a clear path to wealth in recent years.</p> <p>All you need to do is look at the incredible returns for companies like Amazon, Apple, Netflix, Facebook, and others. A full 15 percent of companies in the S&amp;P 500 are technology companies, and they comprise most of the companies traded on the NASDAQ.</p> <p>Tech stocks are still notoriously volatile, but if you ignore the sector completely, you're ignoring some big potential returns.</p> <h2>&quot;Max out your 401(k)&quot;</h2> <p>While there's still little question that you should take advantage of your employer's 401(k) plan, people aren't quite as eager anymore to recommend that you contribute the maximum amount allowed. That's because over time, we've learned that the investment options and fees in many plans are rather lousy.</p> <p>Now, the best advice is to contribute to your 401(k) up to the amount that is matched by your employer. After that, begin contributing as much as you can into a Roth IRA, which offers tax-free growth and a wide array of investment choices.</p> <h2>&quot;Education debt is good debt&quot;</h2> <p>Attending college isn't a bad thing, but don't be cavalier about the impact that student loan debt will have on your financial wellbeing. College costs are increasing, along with stories of students and new grads being weighed down by tens or even hundreds of thousands of dollars of debt. (See also: <a href="http://www.wisebread.com/15-ways-to-pay-back-student-loans-faster?ref=seealso" target="_blank">15 Ways to Pay Back Student Loans Faster</a>)</p> <p>Carrying this debt can create a ripple effect that impacts your ability to save, purchase a home, or invest. And student loan debt can't be discharged in bankruptcy. Nowadays, any thought of borrowing for school should not be taken lightly.</p> <h2>&quot;Diversify your portfolio with a mix of stocks and bonds&quot;</h2> <p>Financial advisers have always emphasized diversification, but over time there's evidence that younger investors don't need to devote as much of their portfolio to fixed-income investments. Investing in bonds is useful for people who are nearing retirement age. But if you've got a long way to go before you stop working, you'll be best off with mostly stocks, which will offer much better returns and greater potential to meet your retirement goals.</p> <p>There is more risk and volatility associated with buying stocks, but a long time horizon will give you plenty of time to recoup any losses and then some (especially since people are living longer than ever). If you're not sure what stocks to invest in, pick a simple, low-cost index fund that mirrors the performance of the overall stock market.</p> <h2>&quot;Try to become a millionaire&quot;</h2> <p>There is an enormous amount of mystique surrounding the $1 million mark, and there's no question that saving that amount is something to be proud of. But a million dollars won't carry you as far as it once did. (See also: <a href="http://www.wisebread.com/5-reasons-being-a-millionaire-is-overrated?ref=seealso" target="_blank">5 Reasons Being a Millionaire Is Overrated</a>)</p> <p>If you plan to retire at age 60, keep in mind that you need your nest egg to last for 30 years or more. Will $1 million allow you to maintain your lifestyle and pay for things like long-term care? It's certainly possible to retire with $1 million, but you may still have to live conservatively to make the money last.</p> <h2>&quot;Always buy instead of rent&quot;</h2> <p>Homeownership is a powerful thing. It allows you to build equity and get some possible tax breaks while also offering you a place to live. But we've learned in recent years that it's not for everyone.</p> <p>Home prices are sky high in many areas of the country, and having a mortgage payment that's too expensive can make it hard to save for the future or even live comfortably. Remember that just because you qualify for a loan of a certain size doesn't mean that's a sensible loan size for you.</p> <p>The best advice now is to purchase a home if you believe you can make a large down payment and then comfortably make monthly payments while still saving for other future needs. If you're not quite there yet, don't fret. Renting is OK as long as you're still saving, investing, and building your net worth in other ways.</p> <h2>&quot;Buy Coca-Cola stock&quot;</h2> <p>For decades, you'd often hear investors gloat about the consistent, predictably great returns from Coke. Heck, the great <a href="http://www.wisebread.com/the-5-best-pieces-of-financial-wisdom-from-warren-buffett" target="_blank">Warren Buffett</a> owns a ton of shares and drinks several Cokes a day.</p> <p>It's still a good company, but anyone who bought Coca-Cola shares in recent years will have seen below-average market returns. Shares have risen just 18 percent in the last five years compared to nearly 70 percent for the S&amp;P 500. Quite simply, the company has had to work very hard to maintain profits in an age when people are increasingly concerned about the health impact of sugary drinks and snacks.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/dont-let-outdated-money-advice-endanger-your-money">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-you-putting-off-these-9-adult-money-moves">Are You Putting Off These 9 Adult Money Moves?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/millennial-millionaires-how-the-brokest-generation-can-also-become-the-richest">Millennial Millionaires: How the Brokest Generation Can Also Become the Richest</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-online-forums-thatll-help-you-reach-your-financial-goals">9 Online Forums That&#039;ll Help You Reach Your Financial Goals</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-ways-to-increase-your-net-worth-this-year">10 Ways to Increase Your Net Worth This Year</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-financial-basics-every-new-grad-should-know">The Financial Basics Every New Grad Should Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance 401(k) bad advice debt education investing pensions retirement saving money stocks student loans Fri, 19 May 2017 09:00:09 +0000 Tim Lemke 1948480 at http://www.wisebread.com 3 Ways Student Loan Debt Can Affect Your Mortgage Application http://www.wisebread.com/3-ways-student-loan-debt-can-affect-your-mortgage-application <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-ways-student-loan-debt-can-affect-your-mortgage-application" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-164113230_0.jpg" alt="Learning how student loan debt affects your mortgage loan application" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>You're ready to buy a home, but you're also paying back federal or private student loans. Will this make it more difficult to qualify for a mortgage?</p> <p>Yes. But that doesn't mean qualifying for a mortgage while paying off student loans is impossible. Here's what you need to understand before starting the home buying process.</p> <h2>Debt-to-income ratio</h2> <p>When determining whether to approve you for a mortgage, lenders look at something called your debt-to-income ratio. This ratio shows how much of your gross monthly income &mdash; your income before taxes are taken out &mdash; your monthly debts eat up. If your debt-to-income ratio is too high, lenders won't approve you for a mortgage because they worry that you won't have enough money each month to handle this significant payment.</p> <p>It's important to remember that mortgage lenders aren't as concerned about your total student loan debt as they are about the size of your monthly student loan payments. Lenders typically want all of your monthly debts, including your new mortgage payment, to equal no more than 43 percent of your gross monthly income. So, if your total debts &mdash; again, including that new mortgage payment &mdash; are at or under that percentage, your odds of qualifying for a mortgage loan are higher.</p> <p>Your student loan payments are considered part of your monthly debt by lenders. For example, if you are paying $300 a month on your student loans, your lender will count that amount when calculating your debt-to-income ratio. If that $300 payment pushes your debt-to-income ratio past 43 percent, you might not be able to qualify for a mortgage.</p> <h2>A deferment won't help</h2> <p>Your student loan might be in deferment while you are applying for a mortgage, meaning you won't have to start making payments on it for six to 12 months. You might think this will help your debt-to-income ratio. After all, when you're applying for your mortgage, you aren't making those student loan payments.</p> <p>But this isn't the case. Lenders will still count your student loan debt against you. That's because lenders know that long before you pay off your mortgage, you'll have to eventually start making those monthly student loan payments. Lenders don't want your mortgage payment to be affordable for 12 months but then suddenly turn into a burden once your student loan payments kick in. When your monthly debts suddenly rise, you might no longer be able to afford those mortgage payments that you were once able to handle.</p> <p>Loans insured by the Federal Housing Administration, better known as FHA loans, were once an exception to this rule. In the past, student loan debt that was deferred for more than 12 months before a mortgage's closing was not counted in applicants' debt-to-income ratios. That changed last year, when the FHA amended its rules. Now, if the lender doesn't know what the monthly student loan payment amount will be when the deferment ends, it must count 2 percent of applicants' total student loan debt as part of their monthly debt.</p> <p>So if you have $30,000 worth of student loan debt, under the new FHA rules, $600 will be added to your monthly debt levels, a figure that could push you over that 43 percent threshold.</p> <p>Borrowers might actually help themselves by getting their student loans out of deferment. That's because their actual monthly payments could be far lower than 2 percent of their total student loan debt. If loans aren't in deferment, lenders will use the actual amount borrowers are paying each month on their student loans. (See also: <a href="http://www.wisebread.com/4-things-you-need-to-know-about-deferring-student-loans?ref=seealso" target="_blank">4 Things You Need to Know About Deferring Student Loans</a>)</p> <h2>Missed student loan payments can hurt, too</h2> <p>Student loan debt doesn't just make reducing your debt-to-income ratio harder. It can also hurt your credit score, if you're not careful about making your payments on time.</p> <p>In addition to debt-to-income ratios, lenders also rely on borrowers' FICO credit scores when determining who qualifies for a mortgage. Most lenders consider FICO scores of 740 or higher to be exceptionally strong. If your score is under 640, you'll struggle to qualify for a mortgage without paying high interest rates. If your score is under 620, you'll have a hard time qualifying for a mortgage at all.</p> <p>Paying your bills late is one of the biggest reasons for a low credit score. Your student loan payment is officially considered late when it is 30 days or more past due. A single late payment can sink your credit score by 100 points or more. On the other hand, making your student loan payments on time every month will help your score, making you a more attractive borrower.</p> <h2>What you can do about student loan debt</h2> <p>What can you do if your student loan debt is hurting your debt-to-income ratio? You can always improve your ratio by earning more income each month, perhaps by taking on a second job. The more income you make without increasing your monthly debt, the lower your debt-to-income ratio will be. (See also: <a href="http://www.wisebread.com/15-ways-to-pay-back-student-loans-faster?ref=seealso" target="_blank">15 Ways to Pay Back Student Loans Faster</a>)</p> <p>You might also try to consolidate your student loan payments into one loan with a lower monthly payment. That will reduce your overall monthly debt obligation, again improving your debt-to-income ratio.</p> <p>Reducing other monthly debts &mdash; anything from trading in a car with a high monthly payment to paying off your credit cards &mdash; can help, too.</p> <p>Then there's your choice of home. Buying a lower-priced home will result in a lower monthly mortgage payment. That will also reduce your future monthly debt and lower your debt-to-income ratio.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/3-ways-student-loan-debt-can-affect-your-mortgage-application">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/its-now-easier-to-get-a-home-loan-even-if-you-have-student-loan-debt-should-you">It&#039;s Now Easier to Get a Home Loan Even If You Have Student Loan Debt — Should You?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-make-ends-meet-when-youre-house-poor">How to Make Ends Meet When You&#039;re House Poor</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/make-these-5-money-moves-before-applying-for-a-mortgage">Make These 5 Money Moves Before Applying for a Mortgage</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-monthly-bills-that-vary-based-on-your-credit-behavior">5 Monthly Bills That Vary Based on Your Credit Behavior</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Real Estate and Housing credit score debt to income ratio deferment home loans missed payments mortgages student loans Mon, 01 May 2017 08:30:13 +0000 Dan Rafter 1935490 at http://www.wisebread.com 4 Things You Need to Know About Deferring Student Loans http://www.wisebread.com/4-things-you-need-to-know-about-deferring-student-loans <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-things-you-need-to-know-about-deferring-student-loans" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-528499384.jpg" alt="Man learning about deferring student loans" title="" class="imagecache imagecache-250w" width="250" height="142" /></a> </div> </div> </div> <p>Finding a way to pause your student loan payment can be a lifesaver when your financial life goes sideways. And trust me, this can happen to anyone at any time.</p> <p>For me, the financial roller coaster ride started in June 2010. I was expecting our first child when my husband accepted a job in another state. I'd had to quit my teaching job when we moved, and I knew I was not going to be bringing in a paycheck for at least a year.</p> <p>On top of this reduction in income, we bought a house in our new city, but it took nearly a year to sell our old house. We were stuck paying two mortgages for 11 months.</p> <p>Between the two of us, my husband and I also had about $35,000 in outstanding federal student loan debt. To help get a better handle on our monthly budget, we decided to explore the option of deferment until our financial situation became more stable.</p> <h2>What is deferment?</h2> <p>Deferment allows you to pause the monthly payments on your federal student loans for a set period of time. For subsidized loans (these include Federal Perkins loans, Direct Subsidized loans, and Subsidized Federal Stafford loans), interest will not accrue on your loans while they are deferred. Unsubsidized loans, on the other hand, do accrue interest during the deferment period. If you have an unsubsidized loan that you plan to defer, you are allowed to pay the interest to keep it from being capitalized and added to your principal, but it is not a requirement for your deferment.</p> <p>Deferment can make a huge difference in your bottom line, but it is not necessarily a cure-all to your financial problems. Here is what you need to know about deferring your student loans.</p> <h2>1. You might not be eligible for deferment</h2> <p>When we applied for a deferment of our student loan payments, our first big surprise was the discovery that we were not eligible. Borrowers are eligible for, and have the right to take, deferment in the following circumstances:</p> <ul> <li>During at least half-time enrollment in postsecondary school;<br /> &nbsp;</li> <li>During full-time enrollment in an approved graduate program;<br /> &nbsp;</li> <li>During enrollment in an approved rehabilitation training program if you are disabled;<br /> &nbsp;</li> <li>During a period of unemployment (limited to three years);<br /> &nbsp;</li> <li>During active duty with the military, or within 13 months of when your active duty occurred;<br /> &nbsp;</li> <li>During periods of economic hardship, as defined by federal regulations (also limited to three years).</li> </ul> <p>My husband and I had assumed that going from two family members to three, from two paychecks to one, and from one mortgage to two, was sufficient enough to meet the economic hardship requirements. But federal regulations only allow for <a href="http://www.studentloanborrowerassistance.org/wp-content/uploads/2013/05/self-help-EconomicHardshipDeferment.pdf" target="_blank">economic hardship deferment</a> if you are either on public assistance, or the salary from your full-time employment is no more than 150 percent of the federal poverty guideline for your family size and state. His salary was too high to qualify.</p> <p>Instead of deferment, we had to apply for a discretionary forbearance, which is the option available to borrowers who aren't eligible for a deferment.</p> <h3>What's the difference between deferment and forbearance?</h3> <p>The biggest difference between the two processes is that interest will accrue on your loans if they go into forbearance, even if your loans are subsidized. This means that unless you pay the interest during the forbearance period, the accrued interest will be capitalized (added to your principal).</p> <p>In addition, deferments are granted in six-month increments, and you may keep applying for the next six-month increment of deferment as long as you qualify for it. Forbearance, on the other hand, is granted in 12-month increments, and you may only apply for it three times over the life of your loan.</p> <p>In some situations, forbearance is mandatory, which means your loan servicer must offer forbearance to you. You can receive mandatory forbearance in any of the following situations:</p> <ul> <li>During a medical or dental internship or residency program;<br /> &nbsp;</li> <li>During economic hardship wherein your total monthly student loan payment is 20 percent or more of your total monthly gross income;<br /> &nbsp;</li> <li>During service in a national service program, such as AmeriCorps;<br /> &nbsp;</li> <li>You are a teacher who is eligible for teacher loan forgiveness;<br /> &nbsp;</li> <li>You meet the eligibility requirements for the U.S. Department of Defense Student Loan Repayment Program;<br /> &nbsp;</li> <li>You are a National Guard member who has been activated by a governor, but who is not eligible for a military deferment.</li> </ul> <p>For student loan borrowers who do not meet any of the eligibility requirements for a mandatory forbearance, the only other option is applying for a discretionary forbearance. As the name implies, these are granted to borrowers at their lender's discretion, and generally borrowers apply for them because of financial hardship or illness.</p> <p>In 2010, my husband and I were granted a discretionary financial hardship forbearance. My unemployment was nominally my choice &mdash; although I was actually unemployed because of my baby's insistence on a Virgo birthday that coincided with the beginning of the school year. If I had been unable to find full-time work, that would have potentially made us eligible for a deferment, rather than a discretionary forbearance.</p> <h2>2. Accrued interest can pack a mean punch</h2> <p>Unless you are lucky enough to be eligible to defer a subsidized loan, you are likely going to deal with accrued interest. The problem with accrued interest is that it's like the inverse of compound interest: The interest that you accrue on your student loan is capitalized, which generates even more interest.</p> <p>For instance, between the two of us, my husband and I paid about 4.5 percent interest on our outstanding $35,000 student loan debt. By putting our loans into forbearance and not paying the accrued interest, we added over $1,600 to the $35,000 principal over 12 months.</p> <p>Not only does capitalized interest increase the total amount you owe, but it can also potentially increase either your monthly payment or your repayment term.</p> <h2>3. Be prepared for paperwork</h2> <p>Neither deferment nor forbearance is an automatic process, even when they are &quot;mandatory.&quot; You will always have to apply for either deferment or forbearance.</p> <p>If you are applying for deferment, you will need to submit a request to your loan servicer. For deferments while you are enrolled in school at least half-time, you will need to contact your school's financial aid office as well as your loan servicer. This process is relatively simple, but you will need to go through it every six months to maintain your deferment.</p> <p>For forbearance requests, the paperwork can be a little more onerous. Like deferment, you will need to submit your request to your loan servicer. In some cases, you will need to submit documentation to support your request, especially if you are requesting a discretionary forbearance. For instance, my husband and I were required to prove we were paying two mortgages at once to be granted our forbearance.</p> <h2>4. You must continue paying until your request is granted</h2> <p>After you have made your request for deferment or forbearance, you are required to continue making your monthly payments until your lender informs you that the request has been granted. Generally, this process takes about 10 business days, but it can take as many as 30.</p> <p>Not making payments during this time can be serious. If you skip a month after submitting your request, and your request is denied, then your lender will consider you delinquent and you risk defaulting.</p> <p>Both the paperwork and the necessity of continuing payments means that deferment and forbearance are options you have to plan ahead for. If you have a sudden financial downturn with no emergency fund, then you might be scrambling to request a deferment or forbearance, which may not be immediately granted.</p> <h2>Postponing your student loan payments doesn't erase them</h2> <p>Anyone can fall into an untenable financial situation. Your student loan servicer wants to work with you to help you stay afloat, but deferment and forbearance are not instantaneous processes nor are they a given. Putting your student loan payments on hold can help you get back on your feet financially, but you need to be prepared to handle the costs and be ready to get back to paying off your loans as soon as you can.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/4-things-you-need-to-know-about-deferring-student-loans">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-is-student-loan-forbearance-anyway">What Is Student Loan Forbearance, Anyway?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-pay-off-your-student-debt-faster">5 Ways to Pay Off Your Student Debt Faster</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-every-new-college-student-should-make">7 Money Moves Every New College Student Should Make</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-10-most-common-financial-aid-mistakes-and-how-to-avoid-them">The 10 Most Common Financial Aid Mistakes — And How To Avoid Them</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training capitalized deferment financial aid forbearance interest monthly payments student loans subsidized loans Mon, 24 Apr 2017 08:30:13 +0000 Emily Guy Birken 1932491 at http://www.wisebread.com What to Do When You Can't Afford Your Child's College Education http://www.wisebread.com/what-to-do-when-you-cant-afford-your-childs-college-education <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-to-do-when-you-cant-afford-your-childs-college-education" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-168249072.jpg" alt="Learning what to do when you can&#039;t afford college education" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>First comes the joy: Your child receives the thick packet from a dream university, the sure sign of an acceptance.</p> <p>But then comes the reality: that sky-high price tag.</p> <p>The college your child has just been accepted to might be asking for $30,000, $40,000, $50,000 or more in tuition each year. And if your child doesn't receive much, or anything, in merit-based scholarships from that school, you and your child will be responsible for covering those costs &mdash; often in the form of student loans that can haunt your child's finances for decades after graduation. (See also: <a href="http://www.wisebread.com/5-sobering-facts-about-student-loan-debt?ref=seealso" target="_blank">5 Sobering Facts About Student Loan Debt</a>)</p> <p>What if you haven't saved nearly enough to help cover these costs? What if you haven't managed to save anything at all? What can parents do when they can't afford their child's college education?</p> <p>The choice usually comes down to taking on tens of thousands of dollars in student loan debt or attending a less expensive alternative school. And if you can't afford the tuition at any school, there are still options in the form of scholarships, grants, and community college. (See also: <a href="http://www.wisebread.com/college/college-resources?ref=internal" target="_blank">40+ College Resources for Parents and Students</a>)</p> <h2>Rising costs</h2> <p>Tuition rates continue to rise every year. Especially at private universities, this means that tuition that is already intimidating becomes a bit more of a financial burden with each passing year.</p> <p>In its 2016 report, the College Board said that the average annual sticker price &mdash; including tuition, fees, and room and board &mdash; stood at $20,090 for in-state students at public colleges, and $35,370 for out-of-state students. The average for private colleges was $45,370 in 2016.</p> <p>There is a glimmer of good news here: Many students don't pay this full price. That's because many students receive scholarships (many offered automatically by the schools that accept them) and grants. According to the College Board's 2016 report, the net price of college &mdash; the price showing what students <em>actually </em>pay after they receive financial assistance &mdash; was $14,210 a year for tuition, fees, and room and board for in-state students at public colleges, and $26,080 for students at private colleges.</p> <p>The fact still remains that after financial assistance, paying for college is no easy task, even at more affordable public universities.</p> <h2>Student loan burden</h2> <p>Student loan debt is a financial burden for many college graduates. According to Student Loan Hero, the average college graduate from the class of 2016 has $37,172 in student loan debt, a record high. But for many students, there is no other way to pay for college.</p> <p>If you can't afford to help pay for your child's college education, student loans are an alternative. The loans, though, are far from a perfect solution. First, students can only borrow from $5,500 to $12,500 in federal subsidized and unsubsidized loans. <a href="http://www.wisebread.com/college/federal-student-loans?ref=internal" target="_blank">Federal student loans</a> are the best option because they come with the lowest interest rates and most favorable repayment terms.</p> <p>Students who must borrow more each year will have to take out private loans. Their parents can also take out private student loans for their children. Those often come with higher interest rates and less favorable terms.</p> <p>Relying completely on student loans could also set you or your children up for a tough financial future after they graduate, especially if they struggle to land a decent paying job. (See also: <a href="http://www.wisebread.com/8-surprising-ways-to-pay-off-your-student-loans?ref=seealso" target="_blank">8 Surprising Ways to Pay Off Your Student Loans</a>)</p> <h2>A more affordable school</h2> <p>Your child might dream of attending that elite private school, but an in-state public university might be a more affordable choice that can provide your child with an equally strong education.</p> <p>Explain to your children that an out-of-state private school might be a dream destination, but might also negatively affect their financial health for decades after graduation.</p> <p>Students might also attend an in-state public school for two years, taking the general education classes that they are required to complete. They can then apply again to their dream university for the final two years of their undergraduate career. This can make their entire college career more affordable.</p> <p>There's also community college. Community colleges are a far more affordable alternative to both private and public four-year colleges. Attending a community college for at least two years could leave graduates with far less student loan debt after graduation.</p> <h2>Sources of additional help</h2> <p>Many colleges automatically provide merit scholarships to incoming students, which students never have to repay. Colleges will automatically provide this financial assistance to the students they accept; students don't have to do anything to apply.</p> <p>Merit scholarships can make private universities far more affordable. Private schools generally pass out more of this aid to attract students who otherwise wouldn't be able to afford tuition at these schools.</p> <p>If your child is accepted at a school but doesn't receive any or enough merit aid directly from the university, you can always contact the institution's office of admissions or financial aid. Often, schools will allow you to fill out a hardship form as a way to request additional financial support. Colleges aren't required, of course, to provide more aid, but some might. A phone call could make a difference.</p> <p>Also search for scholarships. Your child might qualify for hundreds of scholarships, some offering significant financial help. Winning these scholarships isn't always easy, with many attracting thousands of applicants. But even earning one or two scholarships can help cut down the expense of a college education. (See also: <a href="http://www.wisebread.com/college-without-loans-where-to-find-scholarships?ref=seealso" target="_blank">Where to Find Scholarships</a>)</p> <p>Your children can also work on a part-time basis to help afford tuition. Colleges usually offer their own work-study programs that can help defray expenses. Students who volunteer to serve as residential advisers at campus dorms might receive free or discounted room and board.</p> <p>You might even be able to significantly reduce your child's yearly college costs by convincing your child to attend a school close enough to home so that your student can continue living with you. Room and board generally costs about $10,000 a year; if your child lives at home, he or she can eliminate this cost.</p> <p>College education remains an expensive proposition. But you and your child do have options, if you look for them.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/what-to-do-when-you-cant-afford-your-childs-college-education">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-great-sources-of-financial-aid-for-switching-careers">7 Great Sources of Financial Aid for Switching Careers</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-every-new-college-student-should-make">7 Money Moves Every New College Student Should Make</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-10-most-common-financial-aid-mistakes-and-how-to-avoid-them">The 10 Most Common Financial Aid Mistakes — And How To Avoid Them</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-things-you-need-to-know-about-deferring-student-loans">4 Things You Need to Know About Deferring Student Loans</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-moves-students-should-make-during-a-gap-year">8 Money Moves Students Should Make During a Gap Year</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Education & Training college costs community colleges financial aid grants private schools public schools scholarships student loans Wed, 12 Apr 2017 09:00:10 +0000 Dan Rafter 1922478 at http://www.wisebread.com