Student Debt Crisis Your One Stop Hub For Student Debt Issues Wed, 01 Jul 2015 19:28:05 +0000 en-US hourly 1 University of Phoenix lays off 900 after student exodus Wed, 01 Jul 2015 18:26:28 +0000 The University of Phoenix is shrinking in every way possible. It has lost students, employees and campuses at a breathtaking pace, and it’s making much less money than it once did.

The for-profit institution has shed about half of its students over the past five years, and the university has fired 900 employees since September. That works out to over 3 workers laid off every day.

University of Phoenix’s parent company, Apollo Education Group, announced dismal quarterly earnings Monday after the markets closed. Its revenue and student enrollment both dropped about 14% from the same time a year ago.

Investors ditched class Tuesday morning, and Apollo’s stock tanked. Apollo’s stock has lost more than half its value — 61% — since the beginning of this year…

Continue Reading at KSPR 33…

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Barack Obama pushes for-profit colleges to the brink Wed, 01 Jul 2015 18:14:35 +0000 On Wednesday, the Obama administration will begin choking off the financial lifeline of for-profit colleges whose graduates can’t find well-paying jobs — and the move is likely to accelerate a wave of shutdowns for an industry taking assaults from all sides.

Reining in the multibillion-dollar industry has been the administration’s goal for most of President Barack Obama’s term in office, fueled by complaints that for-profit colleges lure students with misleading promises, then saddle them with debts they can’t pay back despite their newly granted degrees. Its latest tool is the Education Department’s long-debated “gainful employment” rule, which requires colleges to track their graduates’ performance in the workforce and eventually will cut off funding for career training programs that fall short.
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The rule — upheld by a court ruling last week and set to take effect Wednesday — will trigger the closure of 1,400 programs that together enroll 840,000 students, the department has estimated. Ninety-nine percent of those students attend for-profits.

The regulation is part of a broader series of crackdowns on the industry by agencies including the Consumer Financial Protection Bureau, the Federal Trade Commission and the Securities and Exchange Commission, along with investigations, lawsuits and fines from states and blistering criticism from Democrats like Sens. Elizabeth Warren and Dick Durbin. Some major college operators have begun closing or selling campuses under the onslaught.

Continue Reading at Politico…


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3 Facts to Know About the New Student Loan Interest Rates Wed, 01 Jul 2015 18:07:25 +0000 Here’s the good news: New federal student loans are cheaper this year. The 2015-2016 federal student loan interest rates take effect July 1 and are more than one-third of a percentage point cheaper than last year’s rates.

“This is something that’s going to continue to happen and it’s going to fluctuate with the market,” says Jan Miller, president of Miller Student Loan Consulting, about the change in federal interest rates.

[Take these steps to understand student loan interest rates.]

Interest rates are currently pegged to the yield on the 10-year Treasury note, with a set percentage added on. That “add-on” is smaller for undergraduate debt than for graduate and parent loans, meaning that college students typically get the cheapest deal on federal loans.

Below are the student loan interest rates for the 2015-2016 school year. This rate change does not apply to federal Perkins loans, which carry a 5 percent interest rate, and have an uncertain future.
Federal loan Eligible borrowers 2014-2015 interest rate 2015-2016 interest rate
Direct Subsidized Undergraduates 4.66% 4.29%
Direct Unsubsidized Undergraduates 4.66% 4.29%
Direct Unsubsidized Graduate or Professional Students 6.21% 5.84%
Direct Grad PLUS Graduate or Professional Students 7.21% 6.84%
Direct Parent PLUS Parents 7.21% 6.84%

Here’s what to know about the effect the new rates will have on borrowers’ bank accounts.

1. They will save borrowers money in the long run. How much a borrower saves with this year’s lower rates depends on the type of federal loan they borrow, the amount of debt and length of repayment…

Read the Rest of the Tips at US News…

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University of Phoenix sidesteps Obama order on recruiting veterans Wed, 01 Jul 2015 18:01:23 +0000 Hundreds of soldiers and their families spread lawn chairs and blankets across the grassy parade ground at Fort Campbell, which straddles the state line between Tennessee and Kentucky. They’re here to see Big Smo, the reality TV star who calls himself “The King of Hick Hop.”

“Getting out living every day of my life,” the rotund country rapper bellows as he bounds around the stage, wearing a necklace made of beer can tabs. “Southern swag in my blood, so to hell with a wife.” The soldiers from the 101st Airborne Division rise to their feet and cheer.

This is not just any concert. It’s a recruitment event for the University of Phoenix, the proprietary college that is far and away the largest recipient of taxpayer money under the post-9/11 GI Bill. That iconic program launched during World War II now pays college tuition for Iraq and Afghanistan veterans.

The stage is wrapped in a blue banner advertising the for-profit University of Phoenix. The school’s name and logo dominate a giant video board to the left of the stage, with a tagline claiming “30+ years of proud service to our military community.”

A representative of the Army’s Family and Morale, Welfare and Recreation Programs introduces the University of Phoenix’s military liaison, Craig Morton, as a friend of the armed forces. Morton, the representative says, gave away five Galaxy computer tablets to soldiers before the concert.

The University of Phoenix paid the military $25,000 to sponsor last October’s concert, according to records obtained…

Continue Reading at Reveal News…

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You’ll Never Guess the Latest Victims of the Student Loan Crisis Tue, 30 Jun 2015 19:19:54 +0000 A fast-growing number of seniors are hitting retirement with a student debt burden. Even their Social Security is at risk.

Most debt you can get out of—painful as it might be. Credit card debt can be cleared in bankruptcy. A mortgage can end in foreclosure. But student debt is more sticky, and it turns out it can have big consequences in retirement.

Last year, Richard Minuti’s Social Security payments were cut by 10%.

The Philadelphia native was already earning only a bit over $10,000 a year, including some part-time work as a tutor. “I was desperate,” says Minuti. “Taking 10% of a person’s pay who’s trying to live with bills, that’s the cruelty of it.”

The Treasury Department was taking the money to pay for federal student loans he had taken out years before. Just before age 50, Minuti had gone back to college to get a second bachelor’s degree and a better job in social work and counseling. But the non-profit jobs he landed afterwards were lower paying, and he defaulted on the debt.

Student debt’s painful new twist

Minuti is one of the small but expanding group of seniors who are hitting retirement with a student debt burden. Over the past decade, people

Continue Reading at TIME…

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You Are Making the CEO of The University of Phoenix Rich Mon, 29 Jun 2015 19:07:22 +0000

You and I, my friends, are just handing cash over to the University of Phoenixes of the world, because they can’t even manage to get 10 percent of their funding from anyone but us. We might as well be saying, Hey, I trust you will use this to make yourself rich and put people from vulnerable populations in massive debt, all in the name of an education that promised to give them a shot at a better life but is 100 percent doing the opposite.

To be fair, even heavily endowed nonprofit universities and colleges in the United States get a portion of their funding from Uncle Sam, but not nearly as much. For example, Ohio State (where I taught for two years) receives 18 percent of its budget from federal aid and state subsidies—the same amount it gets from tuition and fees. (Fun fact: Most of OSU’s money comes from its medical center. So that’s where that $150 emergency room copay went.) Over in the moneyed private school world, my alma mater Vassar College receives 3.4 percent of its revenue from government aid programs, 49 percent from tuition, 33 percent from investing its endowment, and 9 percent from private gifts, mostly from alumni far more successful than I, many of whom also fund private scholarships. The for-profits don’t have endowments or substantial private scholarships, mostly because their alumni are occupied with paying loans back on Taco Bell wages…

Continue Reading at Slate…

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Private student loans are the “Wild West” of lending. Here’s why. Mon, 29 Jun 2015 18:52:33 +0000 Kimberly Garrison has been struggling with her student loans for a full decade. Unable to land a job with her computer networking associate’s degree, the Homestead woman missed payments, which led to her wages being garnished — about $700 per month. When Garrison received an inheritance after the death of her grandmother, she put the full $10,000 toward her loan debt, she says, in hopes of getting it under control.

Still, the $35,168 she borrowed from 2003 to 2005 to attend the Miami campus of ITT Tech has grown to $62,030.

“It ruined my life,” said Garrison, 38, who works as a FedEx driver and has taken on roommates to keep her living expenses down.

Garrison’s for-profit college education didn’t lead to a career, and she got in over her head by taking out a mix of federal loans and higher-interest private loans. Garrison’s private loans had interest as high as 9.6 percent.

Private loans make up a significant yet often overlooked piece of the nation’s $1.2 trillion student loan debt.

Some $150 billion of U.S. student debt comes in the form of private loans, which can be issued by banks or the schools themselves. These loans — which have been called the “Wild West” of student borrowing — represent a potentially dangerous trap for consumers.

Continue Reading at Miami Herald…

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The Dangers of Being a Co-Signer on a Student Loan Mon, 29 Jun 2015 16:50:47 +0000 You may be a father, uncle, grandfather, or just someone close to a college-aged kid, and with that position, you may feel responsible for providing guidance. That means offering advice when it come to relationships, maybe showing the youngster the basics of automotive care, or even helping pick out a career path or ideal college. Perhaps the most important, yet often unmentioned element in a young person’s life is their finances, and given the unprecedented levels of student loan debt causing a sag in the economy, a lesson in smart financial decisions could be the most important of them all.

To get into college, a huge number of young people have to take out loans. And in order to do so, they often need a co-signer. Often times, that comes down to close family members. While typically parents are more than willing to sign on the dotted line, there is reason to give it some thought.

A new report from the Consumer Financial Protection Bureau, a government institution, found that it’s incredibly difficult to get out of the status as a co-signer — so difficult, in fact, that 90% of those who apply to be released from their status as a co-signer are ultimately rejected. That means that as a co-signer, you’re opening your finances and credit up to serious risk.

Read the Entire Article at Cheat Sheet…

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Student loan interest rates to drop after Wednesday Mon, 29 Jun 2015 16:23:20 +0000 Thomas, 18, of Canton, is among thousands of Michigan students who will enter college this fall and have to use a student loan to help pay for it.

“I don’t want to have a huge debt waiting when I get out,” the soon-to-be U-M freshman said. “But I know I’m going to have to take some loans out to be able to make all the payments.”

He and everyone else taking out a loan after Wednesday are getting a break: Interest rates on federal student loans taken out after Wednesday will be lower than loans taken out the previous year.

That’s because in 2013, Congress changed how student loan interest rates are set, moving from setting a number each year to basing it on the 10-year U.S. Treasury note rate in the spring of each year, plus a set increment for each fee. The rate is then locked in for the life of the loan.

The rates are:

4.29% for Stafford loans for undergraduates, both subsidized and unsubsidized. That’s down from 4.66% for loans issued in 2014-15.

5.84% for Stafford loans for…

Read the Entire Article at Detroit Free Press…

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This Worry Keeps 62% of Americans Up at Night Thu, 25 Jun 2015 17:14:21 +0000 Most Americans are losing sleep over a financial concern, according to a new report.

A survey conducted found 62% of respondents said they were being kept awake by at least one financial problem. That number is lower than during the tail end of the recession in 2009, when 69% of Americans said they were losing sleep over their finances, but still worse than the beginning of the financial crisis in 2007 when the proportion of those kept awake stood at 56%.

Among those who are losing sleep, the most common fear is not saving enough for retirement. About 40% of Americans report they sometimes stay awake worrying about their retirement savings, and as many as half of respondents between age 50 and 64 say this concern keeps them up at night.

The second largest worry is educational expenses, which keeps 31% of the population—and 50% of 18-­ to 29-year­-olds—from slumber, followed by 29% of Americans who stay restless over medical bills…

Continue Reading at TIME…

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