Category

Student Loans

Washington

Latest Student Loan Scams Charge Borrowers Thousands for Free Information

Student loan scams are on the rise because of the confusion surrounding student loan regulations…

While the Obama administration has pushed for different loan structures to help borrowers manage their debt, scammers are taking advantage of the new programs.

Find out all about the latest scam right here...

Stocks

This Gun Stock Has Returned 5X the S&P 500 for a Reason You May Not Expect

Buying "what you know" used to be a fundamental underpinning of investment success. Now, it's a recipe for disaster.

As the performance of this gun stock shows, true investing success is all about "knowing" the real numbers.

In fact, understanding this company's fundamentals would have helped you beat the markets five times over...

Higher Education

Subprime Loans Are Just the Start of the Massive Student Debt Scam

If you thought there was only one component to the gargantuan student debt scam, think again. If you're about to become a college student, you're in luck.

Financial services giants Discover Financial Services Inc. (NYSE: DFS), Capital One Financial Corp. (NYSE: COF), and Bank of America Corp. (NYSE: BAC), to name a few players in the student credit game, are bending over backward for you.

They totally get you - so to speak...

Higher Education

How This Great American Dream Is Turning Scam

Here's a question for you: Has higher education become another great American scam?

I'm not talking about the rich getting scammed. They get what they pay for. They can afford to be scammed – they know what's up.

A lot of rich people send their kids to expensive private colleges hoping they'll get a good education that will lead them into their chosen careers.

But then there are kids who want a higher education because they believe a college education is their ticket to gainful employment and well-compensated careers.

Higher Education

Student Loan Debt and the Big Higher Education Scam

Has higher education become another great American scam?

I'm not talking about the rich getting scammed. They don't wind up saddled with student loan debt after they graduate.

I'm talking about the kids who want a higher education because they believe it's their ticket to employment and well-compensated careers. They pay for it themselves, or their parents cosign on loans or take out personal loans on behalf of their kids' college dreams.

For them, higher education is increasingly looking like a scam. Here's why...

Your Money

Peter Thiel's Solution to the Student Loan Bubble Makes a Lot of Sense


Peter Thiel, Co-Founder of PayPal

"Education is a bubble in a classic sense. To call something a bubble, it must be overpriced and there must be an intense belief in it. Housing was a classic bubble, as were tech stocks in the '90s, because they were both very overvalued, but there was an incredibly widespread belief that almost could not be questioned – you had to own a house in 2005, and you had to be in an equity-market index fund in 1999." ~ Peter Thiel on higher education for NRO.

Peter Thiel is a highly successful entrepreneur, venture capitalist, hedge fund manager, and perhaps most notably co-founder of Internet giant PayPal.

He is also a staunch libertarian, and anything but meek about sharing his philosophic point of view.

When it comes to higher education in America today, Thiel is less than impressed:

"It's basically extremely overpriced. People are not getting their money's worth, objectively, when you do the math. And at the same time it is something that is incredibly intensively believed; there's this sort of psycho-social component to people taking on these enormous debts when they go to college simply because that's what everybody's doing."

Like Thiel, we at Money Morning believe that America has been swallowed by a student loan bubble.

We've given you the numbers. We've discussed its uncanny similarity to subprime. We even tracked one student's epic journey to discharge his student loan debt.

And, like Thiel, we've thought up some reasonable alternatives to the blind pursuit of higher education.

For instance, we suggested starting a business. There is something about real-world experience that can't be replicated in higher education right now.

Just look at the commentary by some of the business elite.

To continue reading, please click here...

Debt

Student Loan Interest Rates Still Tangled Up In Congress

Student debt in the United States has already surpassed the country's auto loans and consumer credit card debt. A student loan bubble looms on America's horizon, and promises dark times should it ever burst.

And earlier this month, the student loan problem worsened.

Federally subsidized Stafford loan interest rates doubled from 3.4% to 6.8% after Congress missed the July 1st 2013 deadline, and instead recessed for the Independence Day holiday.

The failure sparked frustration amongst student advocates nationwide.

However, Congress is able to retroactively "fix" the damage done by the soaring rate increase – that is, if Democrats and Republicans can come to an agreement on the matter.

So far, no dice: an emerging bipartisan Senate deal hit a stumbling block last week.

Even though the House was able to pass its own plan in May, the Senate is still at an impasse.

Democratic senators are avoiding the prospect of trying to "balance the budget on the backs of students."

On the other hand, Republican senators want a plan that doesn't risk adding huge sums to the deficit.

Here's what we've got so far:

The tentative deal ties Stafford loan interest rates with rates on the 10-year U.S. Treasury note.

Additionally, there would be a capped interest rate of 8.25% for undergraduates and 9.25% for all other loans.

Republicans would get a link between the financial markets and borrowing terms through this proposal.

Democrats would get a guarantee that interest rates would not reach 10%, their proverbial line in the sand.

To continue reading, please click here...

Trend Watch

How to Get Out of Student Loan Debt in Bankruptcy

Anyone wondering how to get out of student loan debt – or wondering if a slew of student debtors could try to do so – needs to read this.

Yesterday, I wrote about the case of Michael Hedlund, the failed law student who was able to discharge $58,000 of his student loans in a 10-year bankruptcy action.

Before Hedlund's case, it was widely accepted that there were only two ways to get out of student debt: pay it off, or die.

But the Ninth Circuit took a long, hard look at Hedlund's circumstances.  It found that he'd acted in good faith to repay his loans, and that paying the full amount would be an undue hardship for Hedlund and his family. 

The court viewed Hedlund as an "ideal debtor," and so it excused a large portion of his debt.

If you are a student debtor, you too could have a decent shot at discharging your student debt in bankruptcy, but only if you are an ideal student debtor.

But what makes an ideal debtor?

To continue reading, please click here…

Read More…

Trend Watch

Law Student Exposes the Secret to Wiping Out Student Loan Debt in Bankruptcy

Accepted wisdom says that there are only two (rather sobering) ways to relieve the burden of student debt:  either pay it off, or depart from this earthly world. 

Until now.

On May 22 the Ninth Circuit Court of Appeals wiped out $58,000 in student loan debt for a former law student in bankruptcy proceedings, sending shockwaves through the formerly impervious facade of student loan debt performance.

Ten years in the making, the ruling could burst the trillion dollar student loan bubble.

To continue reading, please click here...

Washington

How Student Loans Became a $120 Billion Government Bonanza

Business has been good for the federal government when it comes to student loans.

Over the past five years, student loans have generated profits of $120 billion for the Department of Education.

And the latest projections from the Congressional Budget Office (CBO) put the take from student loans for the 2013 fiscal year at $48.6 billion – helped along by a change in 2010 that eliminated the middleman and made the Education Department the direct lender for all government-backed loans.

It means the government will reap more in profits from student loans this year than any of the nation's largest corporations. Last year, for example, the most profitable company was ExxonMobil (NYSE: XOM), which reported income of $44.9 billion.

The money is rolling in partly because the Education Department has stepped up efforts to collect on delinquent loans, but mostly because the U.S. government can borrow money far more cheaply than the students to whom it is giving the loans.

The government's student loans now carry an interest rate of 3.4%, which has proved plenty lucrative.

But unless Congress acts soon, the interest rate on government student loans will double to 6.8% as of July 1. (The temporary 3.4% rate was supposed to expire last July, but last year Congress extended it for one year.)

Meanwhile, 10-year Treasuries go for about 2%, and 30-year Treasuries for about 3%.

That widening gap in rates could drive government profits even higher, but at the risk of appearing to exploit a struggling and vulnerable segment of the population.

"As the pomp of graduation fades, many college graduates become keenly aware of their financial circumstance: in debt," Ernie Almonte, chairman of the National CPA Financial Literacy Commission of the American Institute of CPAs, said in a statement. "They start out with an anchor that slows their progression toward future goals. It's a difficult reality confronting a growing number of people."

To continue reading, please click here…