Welcome to Student Loan News, a weekly summary of developments and events affecting college debt in the U.S. Join us each Friday for a look at goings-on that could impact your own student loan situation.
Interest rates cut for third time this year
The Federal Reserve cut its target benchmark rate range last week to 1.5%-1.75%, down from 1.75%-2% and marking the third rate cut so far this year. While rate cuts primarily determine what banks charge one another, they can also mean lower rates for consumers. Going forward, the Federal Reserve indicated that it might pause additional rate cuts for the foreseeable future.
How it affects YOU: If you’ve been debating whether to refinance your student loans, a Federal Reserve interest rate makes that option a little more attractive. According to Forbes, refinancing rates could be as low as 1.81% if you have solid credit. While rates are low, you could explore your refinancing options to see if it makes sense for your situation.
39% of borrowers would spend a week in jail to erase their student debt
Student loan borrowers would take drastic actions if it meant they could get rid of their education debt, according to a new OnePoll survey conducted on behalf of Splash Financial and reported by the New York Post.
Among 2,000 respondents, 51% said they’d shave their head to get rid of their loans, 40% said they’d relive high school all over again, and 39% said they’d spend a week in jail.
Nearly half (47%) said they felt “frustrated” and “worried” about their debt, with 41% feeling “overwhelmed” and 40% “annoyed.” Likewise, 43% said their student loans made buying a home or saving for retirement feel like impossible goals.
How it affects YOU: If you’re feeling heavy stress over your debt, take control of your finances by learning about your repayment options, including income-driven repayment, forgiveness and repayment assistance programs and student loan refinancing. And seek out emotional support and advice from friends, family and others — you’re probably not the only one in your circle dealing with debt.
Also in the news…
- More companies are offering a student loan matching benefit to help their employees pay off their education debt. While only 4% of employers offered student loan assistance in 2018, the Society for Human Resource Management reports that that number has doubled to 8% in 2019, according to The New York Times.
- U.S. colleges are pushing back against a federal request for greater transparency about funding they receive from foreign countries, Politico reports. While the Education Department asked for more detailed information about foreign funding, more than two dozen higher education organizations said that this type of disclosure requirement is “unlawful” and burdensome.
- Student loan debt isn’t just a problem among millennials. According to a study by Fidelity Investments released last week, baby boomers have an average student loan balance of $56,652 and pay an average of $565 in monthly payments. Those figures were slightly lower for Gen Xers — and surprisingly were lowest among millennials.
- International students studying at U.S. colleges typically aren’t eligible for federal student loans, so companies like MPower and Prodigy Finance have stepped in to provide student loans. But Inside Higher Ed warns international students to be careful about how much they borrow, as private student loans for international students tend to come with relatively high interest rates.
- Automated savings app Digit has added a new feature to help borrowers pay off their student loans. Its Student Loan Payments tool can set payoff goals, connect loan accounts to the app, and also look for opportunities to put extra payments toward your debt.
- The average student loan borrower is paying off their debt for 18.5 years, starting at the age of 26 and not reaching “balance-zero” until age 45, according to a new survey by insurance company New York Life and reported last week by CNBC.
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