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The high costs of student loan debt

MINNESOTA SPOKESMAN-RECORDER — For the Class of 2018, the average student borrower graduated with a debt of $29,800 in private and federal loans over the course of a bachelor’s degree. This is in addition to $35,600 in federal Parent PLUS loans approximately 14 percent of parents took out to support their children.

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By MSR News Online

There’s no way around it: Americans are drowning in student loan debt. The Federal Reserve reports that nearly 50 million Americans collectively owe $1.5 trillion in student loan debt. That’s $521 billion more than the total U.S. credit card debt.

For the Class of 2018, the average student borrower graduated with a debt of $29,800 in private and federal loans over the course of a bachelor’s degree. This is in addition to $35,600 in federal Parent PLUS loans approximately 14 percent of parents took out to support their children.

Nearly 70 percent of student borrowers now have a looming bill over our heads each month —  and it’s not cheap. The average monthly student bill is $393.

This is debt that’s impossible to discharge in bankruptcy, difficult to have forgiven and increasingly unlikely to be fully repaid on schedule. And, rising college costs mean that number isn’t likely to drop much in the next few decades.

Here’s a look at the costs of that debt and what’s being done to lessen the crisis.

The Direct Costs

While college costs are rising, family incomes have not. So those with student debt loans are making different money management choices. They are less likely to buy homes or start families, and more likely to live at home and take jobs just to make ends meet, instead of the more lucrative positions for which their degrees prepared them.

Short-term solutions include deferring loans by returning to school, or consolidating or borrowing from private lenders, which ends up making the problem worse. For students graduating into a tight job market whose credit ratings are impacted by the amounts they owe, loan debt can remain their chief financial concern for decades. Especially when 11.5 percent are delinquent on their payments.

What’s more, the expanding student loan bubble could rattle the entire American economy in similar ways to the 2008 housing crisis, if borrowers default on loans in large numbers.

The Hidden Costs

The direct costs of student loan debt are obvious, but hidden costs often prevent lower-income students from pursuing the highest-value degrees.

Because the most selective, prestigious institutions are also the most expensive, those institutions are disproportionately populated by students from affluent families able to afford the burden of early-career debt.

And the recent trend of “differential pricing,” in which tuition costs are dictated by a student’s field of study, has had an effect on enrollment in high-employment fields, potentially scaring off the students who could benefit the most from an in-demand degree.

Avoiding high loan debt

While there is no limit to the amount of “free money” students can apply for, scholarships and grants only cover 28 percent of college costs today. That means more than two-thirds of the bill is either borrowed or paid out of pocket (for, most it’s the former). If you’re still in school, explore all of your scholarship options — whether based on grades, special interests or even ethnic backgrounds. Every extra dollar counts.

Also, only take out as much as you need. While in school, it’s tempting to take the full loan amount offered to help cover other bills. But that extra $1500 or $2500 every semester adds up to extra debt once you’ve graduated or left school and will cost you more in the long run.

For those concerned that scholarships may affect financial aid, organizations like Scholarship America are mobilizing nationwide efforts to change that. The organization has lent support to efforts to create a network of postsecondary institutions, or Collegiate Partners, that agree to not punish scholarship recipients with reductions in financial aid. Scholarship American also has a Dreamkeepers Emergency Financial Assistance program that gives students facing unexpected expenses an alternative to loans.

“We work with partners to incorporate mentoring, tutoring and financial literacy education into scholarship awards in an effort to help students persist and graduate rather than drop out with debt or get stuck short of a degree,” said Scholarship American President and CEO Robert C. Ballard.

For those who have already accrued student loan debt, the best course of action is to tackle it head-on. Make a plan and work through it. Ignoring the bill won’t make it go away; in fact, it will just keep growing.

Information provided, in part by, StatePoint.

This article originally appeared in Minnesota Spokesman-Recorder

Advice

The Perfect Time to Lock in Your Mortgage Rate, Keep Rising Housing Costs Under Control Is Now

Despite a challenging homebuying environment with high demand and historically low inventory, purchasing a home is still attainable – and you don’t have to go through the process alone. Getting connected early with a home lending advisor will better prepare you for the homebuying process, help you understand how much home you can afford and get you prequalified so you can shop with confidence.

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There’s no one-size-fits-all approach to locking in a mortgage rate and there are many factors to consider.
There’s no one-size-fits-all approach to locking in a mortgage rate and there are many factors to consider.

By Christina Dello Buono

Surging mortgage rates combined with double-digit price gains are putting homeowners and potential buyers in a tough spot. First-time homebuyers, in particular, are being squeezed out of the market – due to the fact they don’t have equity or an additional boost from the sale of an existing property.

Despite those challenges, buying a home may not be as out of reach as you think.

We sat down with Denise Richardson, Community Home Lending Advisor at Chase, to discuss how to navigate the mortgage process, what resources are available, and how increasing mortgage rates can impact your family’s homebuying dreams.

Q: How do increasing mortgage rates impact prospective homebuyers?

Richardson: Mortgage rates have nearly doubled in the last six months – from 3% in 2021 to more than 6% in 2022 – making it increasingly difficult for many Americans to purchase a home, especially those on a limited income. That difference is significant by any measure, but it could result in hundreds of dollars added to your monthly payment and thousands of dollars over the life of your loan.

Despite a challenging homebuying environment with high demand and historically low inventory, purchasing a home is still attainable – and you don’t have to go through the process alone. Getting connected early with a home lending advisor will better prepare you for the homebuying process, help you understand how much home you can afford and get you prequalified so you can shop with confidence.

Q: Is it a good idea for homebuyers to lock in a mortgage rate as soon as possible?

Richardson: There’s no one-size-fits-all approach to locking in a mortgage rate and there are many factors to consider. This is where your home lending advisor can provide more individualized counsel specific to your situation and your market.

Given the volatility of interest rates right now, we recommend locking in rates as soon as possible so you can be certain what your payments will look like on your loan. Many lenders require you to have a purchase contract in-hand before locking in your rates, but that isn’t always the case. Chase offers a Homebuyer Advantage Program, which allows you to get conditionally approved while you shop for a home.

Q: What happens if mortgage rates drop after a homebuyer locks in their rate?

Richardson: There isn’t an exact science to timing the market, and while interest rates have risen in recent months, it’s always possible that interest rates could fall. Some lenders offer a mortgage rate lock float down, which allows you to lock in an interest rate with the option to reduce if market rates fall during the lock period. This option provides you with a little more security in a volatile market and allows you to take advantage of falling interest rates.

You may be able to move to a lower rate even without the float down option, but it may require additional fees. Additionally, your lender may have particular requirements, such as being at a certain stage of the loan process, for the customer to be eligible to lower their rate.

Q: Can a homebuyer potentially let the rate lock expire by pushing back their closing date? 

Richardson: It’s certainly possible, but it isn’t likely to be beneficial for the customer. Oftentimes, lenders will only allow you to move forward with the rate you originally lock in – or the rate on the day you relock, whichever is higher.

The other thing to keep in mind is that the ability to move quickly in this environment is critical. It’s important to do your research on lender-backed resources available to you, such as Chase’s Closing Guarantee. This guarantee commits to closing customers in as little as three weeks, or they receive $5,000. The program offers buyers peace of mind knowing that they can close on their new home without delay or receive compensation that can be put toward additional costs.

There are plenty of other resources available to help boost your homebuying knowledge – especially if you are a first-time homebuyer. The Beginner to Buyer podcast is a great resource for prospective homebuyers to get answers to all their homebuying questions. Every episode offers conversations with real buyers and expert guests about each step of the process, from mortgage rates and application to closing.

Christina Dello Buono is a vice president in the Dept. of Communications, JPMorgan Chase/Northern California. 

Content sponsored by JPMorgan Chase & Co.

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Activism

California-Hawaii NAACP Conference Sues Sec. of State Shirley Weber 

The Elections Code provides for a 20-day period to review the ballot materials and file any legal challenges. Because all legal challenges to ballot materials for the November 8, 2022, statewide general election must be completed by August 15, 2022, the lawsuit was filed on August 1.

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Rick Callender, California-Hawaii conference president of the NAACP, and Shirley Weber, California Secretary of State.
Rick Callender, California-Hawaii conference president of the NAACP, and Shirley Weber, California Secretary of State.

By Edward Henderson, California Black Media

The California – Hawaii State Conference National Association for the Advancement of Colored People (“NAACP”) NAACP and Conference President Rick Callender have taken legal action against California Secretary of State Shirley Weber asking that a statement included in the Argument Against Proposition 26 in the ballot pamphlet for the Nov. 8, 2022, statewide general election be removed.

Prop 26 would permit federally recognized Native American tribes to operate dice games, roulette and sports wagering on tribal lands. On-site wagering at privately operated horse-racing tracks in four specified counties for betters 21 years or older would become legal as well. The proposition also imposes a 10% tax on sports-wagering profits at horse-racing tracks and directs portion of revenues to enforcement and problem-gambling programs.

The lawsuit is challenging a statement from the “No on Prop 26” opposition using a quote from Minnie Hadley-Hempstead, former president of the NAACP’s Los Angeles branch. Hadley-Hempstead’s opposition statement read as follows:

“‘We oppose Prop 26 to protect young people from developing lifelong gambling addictions that often lead to ruined finances, relationships, even homelessness and crime.’ Minnie Hadley-Hempstead, retired teacher and President Emeritus of the Los Angeles NAACP Branch.”

The lawsuit claims the quote gives “the false and misleading impression” that the NAACP opposes Prop 26. The NAACP endorsed Prop 26 in February 2022. In addition, the Los Angeles branch of the NAACP has not endorsed the No on Prop 26 campaign. The NAACP bylaws prohibit local branches from taking positions contrary to the state branch. The lawsuit also raises concern about how the quote was obtained.

“The NAACP is proud to stand with Indian Tribes in strong support of Prop 26 to help further Indian self-reliance,” Callender said in a statement given to California Black Media (CBM). “We are outraged that the card room casinos and their No on 26 campaign would deceptively use the NAACP name in its arguments despite our strong support. We are suing to have these dishonest statements removed from the ballot arguments so it does not mislead voters.”

Callender’s lawsuit further points out that the position ‘President Emeritus’ does not exist within the NAACP and the only branch that can clear use of the trademarked term NAACP in support or opposition of any legislation is the state branch of the organization.

A declaration in support of the lawsuit from Hadley-Hemp. stead describes how she believes she was misled or misunderstood when she was asked to give the statement by Betty Williams, former President of the Sacramento Chapter of the NAACP.

Hadley-Hempstead declared that she was under the impression that Williams still worked for the state branch and believed that her statement against Prop 26 was in solidarity with Callender and the position of the state branch.

In her declaration, Hadley-Hempstead says “If I had known that Ms. Williams wasn’t working on behalf of NAACP, I would have said no right away…… As a long-time NAACP member, I would not agree to lend my name to a public document that took a contrary position to the official NAACP position and would not knowingly violate the NAACP’s bylaws.”

“The card room casino operators responsible for the deceptive No on 26 campaign have a well-documented and deplorable track record of flouting the law,” Callender told CBM. “They’ve been fined millions for violating anti money-laundering laws, misleading regulators, and even illegal gambling. We are suing to prevent their misleading statements from appearing in the voter information guide sent to tens of millions of voters.”

The Elections Code provides for a 20-day period to review the ballot materials and file any legal challenges. Because all legal challenges to ballot materials for the November 8, 2022, statewide general election must be completed by August 15, 2022, the lawsuit was filed on August 1.

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Activism

OPINION: Are We About to See the Permanent Exclusion of Most Black People from Construction Jobs in Oakland?

How is that possible in this city that is believed by the world to be very progressive? Most of the work goes to members of the construction unions that have historically and currently excluded Black people through a complex set of membership requirements.

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The City Council established a task force to discuss the racial issues involved in construction and the possibility of a Project Labor Agreement. The task force included some community members, including the publisher of the Oakland Post, and was mandated to address racial discrimination first.
The City Council established a task force to discuss the racial issues involved in construction and the possibility of a Project Labor Agreement. The task force included some community members, including the publisher of the Oakland Post, and was mandated to address racial discrimination first.

By Kitty Epstein

For decades Black people in Oakland have obtained 9% or less of the work hours on publicly funded construction projects. So…for jobs that are paid for by all of our tax dollars, Black residents, who make up 23% of Oakland’s population, get only 9% of the relatively well-paid work doing construction.

How is that possible in this city that is believed by the world to be very progressive? Most of the work goes to members of the construction unions that have historically and currently excluded Black people through a complex set of membership requirements.

Nationally, only 7.2% of the carpenters’ union members are Black; 8.3% of the electricians’ union members and so on. The City of Oakland has done two very thorough reports of these racial equity issues. You can find this important information at the end of this story.

But the leadership of the construction trades now insist that that they should obtain an even larger portion of the construction hours and that this practice should be set in stone by something called a Project Labor Agreement. It is now being inaccurately called a “Community Workforce Agreement,” which is nonsense because it doesn’t help the community.

Why would progressive Oakland consider giving exclusive benefits to organizations that practice well-documented racial discrimination? At least one part of the reason is that the construction unions spend enormous amounts of money on Oakland elections. They were instrumental in former City Councilmember Desley Brooks’ defeat in District 6, for example, because they did not consider her sufficiently compliant with their demands.

The City Council established a task force to discuss the racial issues involved in construction and the possibility of a Project Labor Agreement. The task force included some community members, including the publisher of the Oakland Post, and was mandated to address racial discrimination first.

The community members proposed that the entire task force work collectively throughout the process of making proposals and negotiating solutions. The City rejected this proposal and began meeting with the building trades alone, saying that they would return with a proposed Project Labor Agreement, although there has been no demonstrated change in the racial exclusivity practiced by the construction trades.

This is outrageous on three levels:

  1. These are the tax dollars of Black residents, as well as others.
  2. The community’s interests in racial justice have not been resolved in any policy venue.
  3. The community belongs at the table throughout whatever process takes place.

The usual arguments for labor/employer negotiations do not apply. The construction unions are NOT city workers. If they were city employees, they would have both the rights (negotiations) and the responsibilities (non-discriminatory hiring) of the city. Since they are not held responsible to Include Black people in their organizations, they should not have the right to exclusive negotiations about anything

I am hopeful, of course, that the City will reject the continuation and expansion of racial discrimination policies practiced by the leadership of the trades unions and will insist on the drastic changes necessary for Black people to obtain 23% of the work hours they are due by virtue of their proportion of the population and tax dollars contributed.

These two documents below provide information that is both illuminating and horrifying.

Oakland Equity Indicators: https://www.oaklandca.gov/projects/oakland-equity-indicators

Disparity Study – https://www.postnewsgroup.com/disparity-study-examines-patterns-of-discrimination-seeks-remedies-for-city-practices-of-selecting-contractors-in-construction-goods-and-services/

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