|Posted on September 4, 2018 at 3:10 PM||comments (0)|
Forbearance is a way to stop making student loan payments temporarily. It is not a long-term affordability strategy, or a way to put off repayment indefinitely. And that means very few people should use it - probably far fewer than are doing so right now.
In the second quarter of this year, 2.8 million federal student loan borrowers had loans in forbearance, according to the U.S. Department of Education. Almost 70 percent of borrowers who started repaying loans in 2013 used forbearance at some point in the next three years, according to the U.S. Government Accountability Office; a fifth had loans in forbearance for 18 months or longer.
Many students didn't grasp what they signed up for when they scrambled to afford their education. Forbearance is the quick fix they turn to when the bill overwhelms them. But if forbearance isn't a good idea, follow these guidlelines:
- Use income-driven repayment to make your loan payments more affordable over the long term.
- Choose forbearance only for short, one-off financial crises, like when you have a big auto repair or medical bill to pay.
What forbearance is
Forbearance allows you to pause payments, generally for up to 12 months at a time for federal loans. There are different types, but discretionary forbearance is the one that can creep up on you. It's available to anyone with financial difficulties, and there's no limit to how long you can get it for. Interest will keep adding up, meaning at the end of the forbearance period, you'll owe more than you did before.
For instance, after putting $30,000 in loans on hold for 12 months at 6 percent interest, you'd owe about $31,800.
Think of forbearance as a last resort. It's too easy to renew it and let your balance grow, while also spending each month without factoring in a student loan payment.
"Because forbearance can be applied for virtually any reason, you want to keep that for a potential emergency down the road, when you may not qualify for anything else," says Betsy Mayotte, president of the Institute of Student Loan Advisors, a nonprofit that offers free student loan advice.
What forbearance isn't
Forbearance is not the same as deferment, another way to stop making student loan payments. Deferment is a better option, since you won't pay interest on subsidized student loans when they're in deferment. You'll qualify for deferment in certain circumstances - when you're unemployed, for instance - so ask your student loan servicer if that's an option before going with forbearance. Forbearance isn't as easy to avoid when you have private loans. Private lenders generally offer fewer ways to lower payments unless you've already fallen behind, Mayotte says. But it's worth asking for interest-only or interest-free payments as an alternative.
Smarter ways to get relief
Most people with student loans have federal loans, which means they're eligible for income-driven repayment. These plans lower payments to a percentage of income; you can pay $0 if you have no earnings.
To qualify, some plans require you to show you can't afford the standard 10-year schedule, but one plan - called Revised Pay As You Earn - is available to all federal borrowers. Sign up for free at www.studentloans.gov.
Depending on the plan and the type of loans you have, the government may pay part of the interest that accrues if your payments don't cover it. Your loans will also be forgiven if there's any balance after 20 or 25 years of payments.
Income-driven repayment will help get you through a crisis, but staying on it for decades will mean owing more in interest. Under current rules, you'll also be taxed on the balance forgiven. Use income-driven repayment strategically by staying on it once you've found steadier financial footing. You can pay extra each month without penalty to get rid of your loans faster, and a lower payment is there as a safety net if you need it.
This is your chance to take back contral of your loans and to keep them from dictating the life you can afford.
More information online
- NerdWallet: Deferment and forbearance: How to pause student loans; nerd.me/pause-student-loans
- Federal Student Aid: Income-driven repayment plan request; studentloans.gov/mydirectloan/ibrinstructions.action
|Posted on August 31, 2018 at 12:00 AM||comments (0)|
Judge's ruling means issue will be on November ballot
- by Joanne Young
Lancaster County District Court Judge Darla Ideus on Tuesday dismissed a challenge to the Medicaid expansion petitieon intitiative, allowing the initiative to be placed on the November ballot.
The lawsuit was brought by former state Sen. Mark Christensen and Sen. Lydia Brasch. They alleged the initiatve was an uncostitutional delegation of legistlative authority, contatined more than one subject, which the state Constitiution prohibits, and that it failed to identify Nebraska Appleseed as a sworn sponsor.
Last week, Secretary of State John Gale confirmed that enough sigatures were gathered by petition circulators to put the question of whether to expand Medicaid to about 90,000 un-insured adult Nebraskans on the Nov. 6 ballot.
At least 84,269 valid signatures were required to add the petition question to the 2018 general election ballot, and 104,477 were valid and certified, he said. That's a 74 percent acceptance rate.
"This is a great day for democracy and for Nebraskans," said Meg Mandy, campaign manager for Insure the Good Life. "We are pleased to hear from the court that Nebraska voters will have the opportunity to decide to lower property taxes and expand Medicaid to the 90,000 Nebraskans who work at jobs that don't come with health insurance."
Many of those unisured Nebraskans earn less than $17,000 a year, she said.
The campaign has said Medicaid expansion will create and sustain 10,000 new jobs, reduce medical bankrutpcies, bring $1.1 billion of Nebraskans' tax dollars back from Washington, D.C., and produce savings by reducing uncompensated care for thos who lack helath coverage.
Ninety percent of Medicaid funding would come in the form of a federal match, with the state paying 10 percent of the costs, according to the evolving Medicaid expansion funding formula that would be in place by the time the new program would begin in Nebraska.
The petition committee, Insure the Good Life, is made up of local health care stakeholders, organizations, and other Nebrasans. Members of the ballot committee are: Amanda Gershon, Lincoln; former Lincoln Sen. Kathy Campbell; and Dr. Rowen Zetterman of Omaha.
Lincoln Journal Star - Wednesday August 29, 2018
|Posted on August 30, 2018 at 1:05 PM||comments (0)|
by Sarah Skidmore Sell
Despite a strong economy, about 40 percent of Americna families struggled to meet at least one of their basic needs last year, including paying for food, heath care, housing or utilities.
That's according to an Urban Institute survey of nearly 7,600 adults that found that the difficultiies were most prevalent among adults with lower incomes or health issues. But it also revealed that people from all walks of life were running into similar hardships.
The findings issued Tuesday by the nonprofit research organization highlight the financial strains experienced by many Americans in an otherwise strong economy.
The average unemployment rate for 2017 was 4.4 percent, a low that followed years of decline. But having a job doesn't ensure families will be able to meet their basic needs, said Michael Karpman, one of the study's authors. Among the households with at least one working adult, more than 30 percent reported hardship.
"Ecomonic growth and low unemployment alone do not ensure everyone can meet theri basic needs," the authors wrote.
Food insecurity was the most common challenge: More than 23 percent of households struggled to feed their family at some point during the year. That was followed by problems paying a family medical bill, reported by about 18 percent. A similar percentage didn't seek care for a medical need because of the cost.
Additionally, roughly 13 percent of families missed a utility bill payment at some point during the year. And 10 percent of families either didn't pay the full amount of their rent or morgage, or they paid it late.
While startling data to some, it comes as no surprise to those Americans who are struggling to get by.
Debra Poppelaars of Nashville, Tennesseee, underwent spinal fusion surgery last fall and was diagnosed with breast cancer shortly thereafter. Although she is insured, she owes roughly $19,000 for her portion of the medical bills.
Between disability, a job change and the mounting debt, she hasn't been able to make ends meet and is now facing bankruptcy.
"It's very hard at 64 years old, I look back and think I am in this position and I should be able to retire," she said.
Jerri Wood of Renton, Washington, says she makes choices each moth to pay one bill instead of another as she struggles to pay for her health care. Wood has lived for years with a brain tumor that requires regular monitoring and she was recently diagnosed with diabetes that she takes insulin to manage.
Rising costs for her care, even with insurance, have her juggling bills to get by - such as paying her cell phone or electricity bill one month and not the next. And she still feels like one of the lucky ones, as she is able to survive.
Lincoln Journal Star Wednesday, August 29, 2018
|Posted on August 28, 2018 at 2:50 PM||comments (0)|
|Posted on August 22, 2018 at 12:45 AM||comments (0)|
The Associated Press
San Francisco -
In a win for consumers, the California Supreme Court ruled that interest rates on some personal loans may be so high that they are illegal under state law.
The court in its unanimous decision on Monday did not define exactly what interest rate would qulaify as unconscionable and acknowledged that determining that figure could be daunting.
But Associate Justice Mariono-Florentino Cuellar said "courts have a responsibility to guard against consumer loan provisions with unduly oppresive terms."
At issue in the case before the state Supreme Court were consumer loans of $2,500 and higher. California does not cap interest rates that lenders can charge on those loans.
Cuellar said the lack of a cap did not mean that courts must allow any interest rate.
The decision came in a class action lawsuit filed in US court against lender CashCall on behalf of a group of borrowers who took out loans from the company of at least $2,500 at an interest rate of 90 percent or higher.
An email to an attorney for CashCall was not immediately returned. The lawsuit now returns to a U.S.appeals court for a decision.
The ruling could invite additional lawsuits by borrowers, according to the Los Angeles Times.
State-licensed lenders in California made more than 350,000 consumer loans with interest rates of 100 percent or higher last year, according to the newspaper.
Graciela Aponte-Diaz of the Center for Responsible Lending told the newspaper the court deciasion could also spur California lawmakers to pass some kind of rate cape.
The state limits interest on loans of up to $2500 at 20 percent to 30 percent, but bills introduced over the last couple of years to cap higher-value loans have faild, the Times said.
Lincoln Journal Star
Wednesday August 15, 2018
|Posted on August 22, 2018 at 12:35 AM||comments (0)|
More farm loan applications are being rejected in rural parts of 10 Plains and Western states in reaction to weak farm commodity prices and income.
The latest Rural Mainstreet survey says nearly one-third of bank CEOs reported rejecting a higher percentage of farm loans, while nearly 55 percent indicated their banks had raised collateral requirements in the face of weak farm prices and income.
The regions economic index rose to 54.8 in August from 53.8 in July. That score still suggests growth becaue it is above 50, while any score below 50 indicates a shrinking economy.
Creighton University economist Ernie Goss says the recent trade disputes have weakened "already anemic grain prices."
Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming were surveyed.
Lincoln Journal Star
Friday, August 17, 2018
|Posted on August 3, 2018 at 4:40 PM||comments (0)|
by Martin Crutsinger
WASHINGTON - The Federal Reserve on Wednesday left its benchmark interest rate unchanged while signaling further gradual rate hikes in the months ahead as long as the economy stays healthy.
The Fed's widely expected decision kept the central bank's key short-term rate at 1.75 percent to 2 percent - the level hit in June when the Fed boosted the rate for a second time this year.
The Fed projected in June four rate hikes this year, up from three in 2017. Private economists expect the next hike to occur at the September meeting with a fourth rate hike in December.
The Fed's statement was upbeat on the economy, pointing to a strengthening labor makret, economic activity growing at "a strong rate, and inflation that's reached the central bank's target of 2 percent annual gains.
Analysts saw all the comments about economic strength as a clear signal that the Fed remains on track to raise rates two more times this year.
All signs still point to a September rate hike," said Greg McBride, chief financial analyst at Bankrate.com. He said that consumers should continue to pay down their home equity, credit card and other loans with variable rates that will rise further as the Fed keeps hiking rates.
"Refinance adjustable rate debt into fixed rates to insulate yourself from further rate hikes," McBride recommended.
There was no mention in the statement of what many economists see as one of the biggest risks at the moment; rising tariffs on billions of dollars of U.S. exports and imports that have been imposed as a result of President Donald Trump's new get-tough approach on trade.
The Fed statement also made no reference to criticism Trump has lodged recently agains the Fed's continued rate hikes.
The Fed's decision was approved on a unanimous 8-0 vote. The action was not surprising, given that this meeting followed a June session where the Fed took a number of steps including raising rates by another quarter-point and changing its projection for hikes this year from three to four.
Lincoln Journal Star
Thursday, August 2, 2018
|Posted on August 3, 2018 at 3:55 PM||comments (0)|
Companies having trouble filling jobs
by Matt Olberding
Companies in the Lincoln area are having more trouble filling jobs than they were just a few years ago, despite the fact that a perceived "skills gap" has improved.
Those are two of the key findings of the "Lincoln Area Skills Gap Report" prepared by the Bureau of Business Research at the Univeristy of Nebraska-Lincoln.
The report, written by Bureau Director Eric Thompson and released last month, found that more than 70 percent of employers in the Lincoln metro area reported having trouble hiring in the past year, up from 62.5 percent three years ago.
That was despite a large decline in the percentage of companies that said they couldn't find candidates with the right skills.
Nearly 42 percent of companies said their hiring troubles were due mainly to applicants lacking the right skills, which was down from 55 percent three years ago.
The three other main hiring factors measured in the report all increased, however,.
Nearly 30 percent of companies said applicant wage demands were too high, up from 26 percent in the previous report.
Pat Haverty, vice president of the Lincoln Partnership for Economic Development, said he constantly hears from companies that competition for employees is fierce, and "that's driving up wages in the community."
The number of companies citing poor work history among applicants rose from just more than 41 percent to nearly 45 percent, while those that reported applicants failed a background check rose slightly, from 22.5 percent to 23.3 percent.
Thompson said in an email that he found it "notable that employer concerns with workforce quality such as work history and background checks are often as prominent as concerns about skill level."
Most occupations, especially "white collar" ones, do not have a shortage of workers, according to the report. For example, just counting new college graduates, there are nearly twice as many candidates as there are jobs for business and financial services and nearly five times as many graduates as there are jobs in architecture and engineering.
In fact, the report found that annually, there are about 9,320 job applicants in the Lincoln area and 7,260 open jobs.
However, in blue-collar fields such as manufacturing, transportation and construction, there are fewer workers than there are jobs even when counting all available candidates, including people moving into the area from somewhere else.
The report also shows worker deficits in fields such as food service and personal care.
"It was notable that Lincoln appears to have enough new college graduates to meet entry-level job openings but a deficit of workers in many blue-collar and service occupations," Thompson said in an email. "In particular, there is a deficit in many skilled blue-collar accupations such as carpenters, mancinists and welders."
It's not just companies having trouble finding workers.The report found that workers say they are having difficulties finding a job.
Nearly 67 percent of local job seekers cited a lack of adequate opportunities, up from less that 62 percent, three years ago. Nearly 67 percent also cited inadequate pay, which was up from 64.4 percent.
The job hurdle that saw the biggest jump was a lack of training, with 37 percent of job seekers citing it as an issue, up from 30.5 percent three years ago.
When it comes to training, a large number of employers said they are training existing employees to fill highly skilled roles that will become vacant because of retirements, with 47 percent of companies reporting they are doing this versus only 14.5 percent reporting they are hiring new employees with the needed skills.
"It was noteworthy that the vast majority of employers address skills lost due to impending retirements through retraining existing workers rather than hiring new workers," Thompson said.
Lincoln Journal Star
Thursday, August 2, 2018
|Posted on August 3, 2018 at 3:35 PM||comments (0)|
However, the options could cover less, not provide some benefits.
WASHINGTON - Consumers will have more options to buy cheaper, short-term health insurance under a new Trump administration rule, but there's no guarantee the plans will cover pre-existing conditions or provide benefits like coverage of prescription drugs.
Administration officials said Wednesday the short-term plans will last up to 12 months and can be renewed for up to 36 months. With premiums about one-third the cost of comprehensive coverage, the options is geared to people who want an individual health insurance policy but make too much money to qualify for subsidies under the Affordable Care Act.
"We see that it's just unaffordable for so many people who are not getting subsidies and we're trying to make additional options available," said Health and Human Services Secretary Alex Azar. "These may be a good choice for individuals, but they may also not be the right choice for everybody."
Buyers take note: Plans will carry a disclaimer that they don't meet the ACA's requirements and safeguards. And there's no federal guarantee short-term coverage can be renewed.
Democrats immediately branded Trump's approach as "junk insurance," and a major insurer group warned that consumers could potentially be harmed. Other insurers were more neutral, and companies marketing the plans hailed the development.
It's unclear how much mass-market appeal such limited plans will ultimately have.
Unable to repeal much of "Obamacare," the Trump administration has tried to undercut how it's supposed to work and to create options for people who don't qualify for financial assistance with premiums.
Officials are hoping short-term plans will fit the bill. Next year, there will be no tax penalty for someone who opts for short-term coverage versus a comprehensive plan, so more people might consider the option. More short-term plans will be available this fall.
Lincoln Journal Star
Thursday, August 2, 2018
|Posted on August 2, 2018 at 11:55 AM||comments (0)|
Creighton economist thinks it could happen by 2020
by Matt Olberding
A Creighton University economist is bringing up the dreaded "R" word.
Ernie Goss, who is well known for his monthly surveys that measure economic conditions in the Midwest and Plains, said Tuesday that signs are starting to point to a possible economic downturn as early as late 2019 or eary 2020.
"As the last recession showed us, it's very hard to predict the timing, but the U.S. economy is definitely headed toward higher rise," Goss said in a news release.
He pointed to a number of troubling signs, including rising interest rates, trade tensions, rising inflation and the rising federal deficit as potential signs of a recession on the horizon.
Trade tensions have been particularly concerning for Nebraskans, as China has raised tariffs on pork and soybeans in response to the U.S. imposing tariffs on $34 billion in Chinese goods earlier this month.
"Those are two agriculture commodities where we've seen some significant declines in prices tied to trade tensions or tariffs," said Goss, who called the trade war a "clear and present danger to the overall U.S. economy."
Another potential economic warning sign is continually rising home prices, Goss said, although he noted that the price increases are becasue of constrained supply rather than out-of-control demand, which helped contribute to the housing bust that was a big contributor to the recession of 2007-2009.
The Federal Reserve in June reported that home prices in Nebraska have risen 26 percent since 2008, which is more than the increase in all but four states and the District of Columbia during the same time period.
In Lincoln, the median price of an existing home in the fist quarter was 36 percent higher than just five years ago, according to the Realtors Association of Lincoln.
Goss said he expects "some of the air to come out of the bubble" in the housing market by late next year or early in 2020.
Goss is joining a growing chorus of economists warning about a coming economic downturn.
A May survey of economists done by the Wall Street Journal found that 81 percent expect a recession by 2021.
Lincoln Journal Star
Wednesday, August 1, 2018