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Recent Articles by Mark Kantrowitz

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What is Equitable Relief for the Victims of a Ponzi Scheme?

Friday Feb 5, 2010

How should the funds recovered from a Ponzi scheme be allocated to the victims?

Credit CARD Act to Curtail College Credit Cards in February

Wednesday Jan 27, 2010

In February 2010, the Credit CARD Act of 2009 will make it more difficult for students to get a credit card without a cosigner.

The Horrors of Defaulting on Education Debt

Tuesday Nov 10, 2009

Defaulting on federal and private student loans can result in negative personal and financial consequences. For most borrowers there is no escape from education debt.

Will the Kindle Make Textbooks More Affordable?

Wednesday Sep 30, 2009

Ebook readers work well for pleasure reading, but need some improvements in usability before they will be able to replace textbooks on a widespread basis. The potential cost-savings are more limited than most people expect.

House Looks to End Federally-Guaranteed Student Loan Program

Monday Sep 21, 2009

The U.S. House of Representatives passed legislation replacing the federally-guaranteed student loan program with 100% direct lending from the federal government. Savings will go to increase the Pell Grant program.

Is College Worth the Cost?

Tuesday Aug 25, 2009

The financial value of a college education outweighs the cost even when one considers the cost of attendance, the interest on education debt and the opportunity cost of skipping several years of income from a job.

Interest Rates on Federal Education Loans Dropped

Monday Jun 1, 2009

The interest rates on variable-rate federal education loans (loans originated before July 1, 2006) will be dropping to new historic lows on July 1, 2009. Students should wait until July 1, 2009 to consolidate these loans to lock in the new low rates.

New Income-Based Repayment Plan Bases Student Loan Payments on Income, Not Debt

Wednesday May 20, 2009

Income-based repayment bases a borrower's monthly federal student loan payments on a percentage of discretionary income instead of debt. This new repayment plan becomes available starting July 1, 2009.

Establish a Rainy Day Fund for Job Loss and Other Emergencies

Thursday May 7, 2009

Most personal finance experts recommend saving 3-6 months salary in liquid form for use only in emergencies. Should you have a bigger emergency fund during a recession?

Best Money Books for Grads on Debt and Investing

Wednesday May 6, 2009

Finaid.org's Mark Kantrowitz weighs in on some timeless classics and recent publications for learning about stock markets, saving, investing and the dreaded D-word: debt.

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Recent Comments

Commented on: Will the Kindle Make Textbooks More Affordable?

FiLife Contributor

Mark Kantrowitz said

5 days ago

The Apple iPad has a large screen and color, making it suitable for many textbook publishers. But it will still suffer from inferior note-taking capabilities because the on-screen keyboard wobbles as you type on a flat surface. Still, the bluetooth capability may permit the use of external portable keyboards. It remains to be seen how well the software addresses the needs of students; Apple is well-known for excelling in the design of user interfaces. Even with textbook publishers rushing to convert their textbooks to the iPad format, it is unlikely to significantly reduce the cost of e-textbooks. As noted in this article, only a small part of the cost of publishing a textbook is in printing, warehousing and shipping the physical product. Most of the markup comes from the publishers, distributors and agents. Until textbook authors are able to publish their work more directly, cutting out the middleman, there is unlikely to be a significant drop in textbook prices whether in electronic or print format.

Commented on: New Income-Based Repayment Plan Bases Student Loan Payments on Income, Not Debt

FiLife Contributor

Mark Kantrowitz said

14 days ago

Income-based repayment and public service loan forgiveness are available only for federal student loans, such as the Stafford, Grad PLUS, and consolidation loans that repaid Stafford and Grad PLUS loans. It is not available for Parent PLUS or private student loans. You said that your parents cosigned your loans, which makes me suspect that your loans are private student loans. But to address your specific question, public service loan forgiveness and income-based repayment do not damage your credit history. The payments under income-based repayment, even if they are zero, count as a payment. They are not reported as delinquent. Likewise, the forgiveness of the remaining debt after 10 years for public service loan forgiveness or 25 years for other borrowers counts as a satisfaction of the debt (i.e., money is transferred from the US Department of Education to pay off the remaining balance) and not as a charge-off or write-off of the balance.

Commented on: New Income-Based Repayment Plan Bases Student Loan Payments on Income, Not Debt

FiLife Contributor

Mark Kantrowitz said

14 days ago

On January 25, 2009, President Obama announced a proposal to improve the income based repayment program by reducing the percentage of discretionary income from 15% to 10% and by accelerating the forgiveness from 25 years to 20 years. (People who work in public service fields can still get forgiveness after 10 years.) The proposal will be included in his FY2011 federal budget (i.e., with a start date of October 1, 2010, if Congress agrees with his proposal and passes the budget promptly). For additional details, see www.fastweb.com/financial-aid/articles/2057-president-obama-proposes-capping-student-loan-payments-at-10-of-discretionary-income

Commented on: New Income-Based Repayment Plan Bases Student Loan Payments on Income, Not Debt

Newcomer

Kala said

14 days ago

Hello Mark, I saw information about this repayment plan on the Today Show and am really interested. I have high debt, low income and plan on doing non-profit/public service work, so it seems like a perfect fit. What I'm wondering, however, is if it will damage my credit at all? Also, since all of my loans are cosigned by a parent, will it damage their credit in any way? Thanks!

Commented on: Establish a Rainy Day Fund for Job Loss and Other Emergencies

Bronze

crashdamage1957 said

about a month ago

This is a good article, like a primer for the "First Thing Everyone Should Do." Full of good common sense logic, and laid out like a nice plan. Perhaps easier said than done, but not so difficult that it can't be done.

Commented on: Is College Worth the Cost?

FiLife Contributor

Mark Kantrowitz said

about a month ago

Most people do not borrow more for their education than they can afford to repay. For example, the percentage of federal education loans outstanding that have defaulted is less than 7%, which is quite good for unsecured credit. Analysis of the 2007-08 National Postsecondary Student Aid Study (NPSAS), the most recent available, demonstrates a similar statistic when one tries to identify students who have overborrowed (e.g., more than $45,000 for a Bachelor's degree, $25,000 for an Associate's degree). While overborrowing is a concern -- I hear from students who have overborrowed every day -- such overborrowing would have to be much more widespread for it to be considered a bubble. Now there are some fields of study where post-graduation income does not support typical borrowing levels, such as sociology, arts & humanities, culinary arts. But there are also fields like computer science and nursing that represent a good investment. As a whole, higher education is still a good investment for most people, and there would have to be several decades of price increases at the current rates coupled with stagnant incomes for it to no longer be a good investment.

Commented on: Is College Worth the Cost?

Newcomer

ronr said

about a month ago

Not sure why the comparisons of higher education to the housing bubble are superficial Mark? Your propaganda on that account is not convincing. The fact is people are borrowing more than they can afford to pay back. Things that can't go on forever, usually don't.

Commented on: Guru Q&A: Help Me Fix My Student Loan Consolidation Fiasco

FiLife Contributor

Mark Kantrowitz said

3 months ago

Only loans borrowed by the same borrower can be consolidated. For example, a student's Stafford loans cannot be consolidated with his parent's Parent PLUS loan as the borrower is different. Also, federal and private loans cannot be consolidated together. On the other hand, if a parent has a Parent PLUS loan for her child and also has a Stafford loan for her own education, those loans can be consolidated together. The only lender consolidating federal loans these days is the US Department of Education. Visit http://loanconsolidation.ed.gov to consolidate federal loans. For private loans, see www.finaid.org/loans/privateconsolidation.phtml for a list of the lenders still offering private consolidation loans.

Commented on: Guru Q&A: Help Me Fix My Student Loan Consolidation Fiasco

Newcomer

celyna villarreal said

3 months ago

how can i combine my parent student loan with my other student loans into one?

Commented on: New Income-Based Repayment Plan Bases Student Loan Payments on Income, Not Debt

FiLife Contributor

Mark Kantrowitz said

3 months ago

@maxsay If you default or get a bankruptcy discharge, the lender can still seek repayment from your cosigner. It sounds like your lender is trying to be somewhat accommodating. I would suggest trying to pursue that further before anything adversarial. Analyze it from their perspective so that you understand the likely limits to their willingness to compromise. For example, if 15% wage garnishment is an option for them, then they might be willing to compromise at or above that figure but not below it. You argument is that if you default, the debt will be uncollectable because your cosigners are in just as dire a situation as you, and the likelihood of default is high because your situation is getting worse, not better. Try for a modification to the loan terms, as opposed to just a reduction in payments, since the latter might just mean that the debt hangs around forever, growing ever larger. For example, if the current half payment compromise does not exceed the interest that is accruing, the debt is just growing larger. From a lender perspective it is better to have a borrower paying something than nothing, and if they realize that your circumstances are really difficult, they might be willing to make some compromises. But they probably won't be willing to make a permanent change if your circumstances are not permanent in nature (e.g., not due to a permanent disability). I'm fairly certain that the servicer is required to tell you the name of the current holder of the loan. They may be putting up roadblocks because their job is to handle all customer service inquiries regarding the loans. Also, try to determine whether you're talking with a servicer or a collection agency. The latter gets a commission on payments they collect and so may be reluctant to lose that. Look through your paperwork to see if you can find the name of the lender. Or try calling some of the likely lenders to see if any of them have a record of you. Or ask your college's financial aid office, in case they have a record of who your loans was with. Your priority should be to use your income to pay for basic necessities first -- food, shelter, medical care, clothing. It is worthwhile to write to Congress. Congress is currently considering changes to the bankruptcy rules regarding student loans. It helps them when they hear from borrowers who are experiencing financial distress.

FiLife Contributor

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Mark Kantrowitz is a nationally recognized expert on student financial aid and paying for college. He is the founder and publisher of FinAid.org, the leading source for unbiased and clear financial aid information, advice and tools. He is also the publisher of FastWeb.com, the most popular and complete free scholarship matching site. He is the author of FastWeb College Gold: The Step by Step Guide to Paying for College. He is a member of the editorial board of the Council on Law in Higher Education and a member of the board of trustees of the Center for Excellence in Education. He has degrees in mathematics, philosophy and computer science from MIT and Carnegie Mellon University. Noteworthy honors include awards from NASFAA, the College Board, NAGPS, the American Institute for Public Service and the Congressional Medal of Honor Society. Mark is a cancer survivor, the author of four books and holds six patents, with additional patents pending.