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Obama's 'solution' to student loan debt crisis skirts Congress, adds to deficit

Around 40 million Americans are saddled with more than $1.2 trillion in student loans, which last year surpassed credit cards as the largest form of consumer debt. The student loan debt burden is having a major impact on the macro economy by delaying first-time home purchases and marriages, as well as limiting the mobility of many recent grads, which hurts their long-term earnings potential and sense of optimism about the future.

In an effort to address the crisis in student loans, President Obama embraced a “pay-as-you-earn” scheme wherein payments on federal student loans are capped at 10% of income and loans are forgiven after 20 years. The plan was first launched in 2012 and then expanded this year to include borrowers who took out loans before October 2007 or stopped borrowing by October 2011, making an estimated 5 million Americans eligible for the program.

It sounds great on paper and certainly welcomed by those able to take advantage of the program. But there’s no free lunch.

The President’s 2016 budget proposal reveals the “pay-as-you-earn” program will add $21.8 billion to the federal deficit, a nearly 5% increase. At $21.8 billion, the annual cost of the program exceeds the combined budgets of NASA, the Interior Department and the EPA, Politico reports. “And because of a quirk in the budget process for credit programs, the department can add the $21.8 billion to the deficit automatically, without seeking appropriations or even approval from Congress,” the report says.

In other words, there’s nothing Republican deficit hawks can do about this increase in the deficit, further evidence that President Obama’s ‘go it alone’ approach has teeth.

Again, there’s no free lunch — Barclays Capital estimates the “pay-as-you-earn” plan will add $250 billion to the deficit over the next decade. But there is a better way, as Jennifer Rogers and I discuss in the accompanying video.

In yet another quirk of the student loan crisis, federal student loan borrowers are currently able to consolidate their loans, but not refinance them like a mortgage (or a credit card if you’re savvy), as Yahoo Finance’s Mandi Woodruff reports.

Related: Student loan refinancing is a great idea — except when it’s not

So here’s a ‘great’ idea that’s clearly too simple and logical for Washington to embrace: The U.S. government, which can currently borrow for 10 years for less than 2% and 30 years for less than 2.5% — should issue new debt and use to the proceeds to offer refinancing. A similar proposal by Sen. Elizabeth Warren (D-MA) failed to pass the Senate last spring, but that doesn’t mean it’s not an idea whose time has come. (Sen. Warren’s office did not return calls from Yahoo Finance seeking comment.)

Yes, issuing new debt will add to the deficit — which has come down sharply from 2009’s record $1.4 trillion — but it’ll be at very low rates relative to recent history and, more importantly, will be done in the light of day and require the approval of Congress, which is supposed to control the country’s purse strings.

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Unfortunately, it’s too much to hope that our elected officials would see that this approach makes both economic and political sense. But a guy can dream, can’t he?

Aaron Task is Editor-in-Chief of Yahoo Finance. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com.

Community groups help borrowers out of payday loan debt traps

IMG_0512IMG_0626Gabriel de la CruzFahad Qurashi

Community advocates (from left): Rafael Morales,Wendy Ho, Gabriel de la Cruz and  Fahad Qurashi. 

MOUNTAIN VIEW, California – Deadlier than a loan shark is the predatory payday lender. Both offer short term loans at extremely high interest rates, target the low income and keep them in a cycle of debt.

But only the payday lender operates with varying degrees of legality, depending on which state they do business.

Silicon Valley Community Foundation (SVCF) Economic Security Program Officer Rafael Morales said, “To give you a sense of this: there are more payday lenders in the US than there are McDonalds and there are more payday lenders than there are Starbucks. In California alone, the payday loan industry is about $3 billion a year.”

Morales also said, “Until several years ago, the major banks were essentially funding a lot of these payday lenders. But most of the banks have gotten out of the payday lending business because of federal regulations.” Morales added that it grew out of the check-cashing model, and the SVCF didn’t tackle the issue until 2009.

United Way Silicon Valley Advocacy Public Policy Manager Wendy Ho, a Filipino-Chinese stated, “I think payday loans really came about in the 1990s with the downturn of the economy when people really started looking for quick cash fixes. Desperate times called for desperate measures to make ends meet.”

Morales explained that some immigrants, not necessarily undocumented, bring their grave mistrust of banks when they come to the US and prefer to stash their cash under the mattress.

“The majority of folks who get payday loans don’t have banking relationships because they feel uncomfortable using the bank so they’re outside the financial mainstream,” he said. “Sometimes they’re the ones who have imperfect credit so they don’t qualify for a checking account. Sometimes they’re the ones who have no other option or they have already exhausted their options at the bank.”

Some of these cash-strapped borrowers, already suspicious of hidden and other undisclosed fees, get even more suspicious of the solicitous attention from well-dressed bankers. What the payday lender offers is not dressed up and is more direct.

‘No cash, no credit no problem, it’s easy’

According to an October 2014 analysis by the Center for Responsible Lending (CRL), “for a 2-week loan of $255 (the max allowed in California) the borrower writes a $300 post-dated check ($255 loan plus $45 interest) to the lender. This provides the lender with direct access to the borrower’s checking account. Payday lenders do not assess whether the loan is affordable to the borrower in the light of their income and expense. Payday loans essentially require only proof of income (from work, Social Security or even unemployment insurance) and a checking account to qualify for a payday loan.”

But then “with direct access to the borrower’s checking account, a lender can cash the post-dated check on the borrower’s next payday, amounting to an annual interest rate of 459 percent (credit cards charge from 17 to 25 per cent).

“The payday lender is then first in line for this new income and the money it takes from the borrower’s account before they can make their car payments, buy groceries, pay the utilities and other expenses. This practice leaves most borrowers deeper in the hole than when they started.”

Morales said, “On the average, across America, payday loan borrowers have six loans per year and actually, some of the data that the California Department of Business Oversight last year showed 80 per cent of payday loan customers have more than one loan per year and a full third of all payday loan customers are taking out 10 or more,”

The CRL research also found that “37 percent of payday borrowers experience default in the first year of borrowing and 44 percent within the first two years.” So payday loan borrowers are more likely to incur overdraft charges, bounced check fees, lose their bank account, default on their credit card and file for bankruptcy.

The situation gets worse because many payday lenders target the low-income (making less than $50,000 a year) communities, those who don’t own houses and those who are not native English speakers. Youth Leadership Institute (YLI) Senior Director Fahad Qurashi said, “Payday lenders are eight times more likely to be found in communities of color.” The quick injection of fast cash is easily seen but nobody bothers to do the math.

Ho said that although payday lenders do not use strong-arm tactics like some loan sharks, “they can be very aggressive in terms of making lots of phone calls and sending letters to collect debts.”

When the harassed borrower tries to lie low, “the payday lenders may put a lien against the borrower’s account, continue to draw out funds and leave a negative balance.”

Damage to local economy

This takes out some hardworking, contributing members to the community. But there’s more damage done. Said Qurashi, “Payday loans cripple the local economy as the dollars from the high APR never goes back to the community. Many Daly City payday loan customers take out $255 with a $45 interest. For each $45 interest, $10.80 is drained from the Daly City economy. If the same resident takes out 10 consecutive loans to pay the previous loan, then he would have paid that $ 450 in interest which would be a $108 loss for Daly City.”

“According to a report from the Insight Center for Economic Development, 5-day payday lending establishments drain $272,845 from the community annually. This means reduced sales and receipts to Daly City businesses. Also, lower tax revenues for the City. Daly City lost $1.36 million due to payday loans during the previous five years at the time of the recession.”

To YLI Program Coordinator and Filipino-American Gabriel de la Cruz, the loss is personal. “There are five payday lenders within a 2-mile radius of each other in a predominantly Filipino neighborhood. Most of the Filipinos residing in Daly City are working class families who are vulnerable to the payday lending businesses that litter Mission Street.”

De la Cruz added, “As a Filipino, my experience with payday lending debt is culturally related to the value of hiya (shame). I turned to payday lenders to avoid the stigma of shame. I was embarrassed for myself for not having the means to survive. In fear of what others might think, I could not let my family and friends know that I was struggling financially. In secret, I took out a short-term loan. I feel that the stigma of shame and debt would force some Filipinos to turn to payday loans.”

De la Cruz explained that payday loans can be done in secret, “there’s no credit check and one can easily go to several payday lenders in one day and receive multiple loans. As a college student, I took the loan to help pay for school and rent. For struggling Filipino families in today’s housing market and gentrification in areas like SoMa in San Francisco paying rent could be a reason.”

Moreover, he said, “We live in a consumer society and buying power is a measure of success. We look up to the American Dream and keep up with the lifestyle, trying to get the newest smart device, car and fashion. Many Filipinos aspire for the Dream to show family members in the Philippines that we got it made, even as we work on three jobs and take out payday loans.”

Always skirting the law

Ho said California state regulations are “a bit more lax in terms of the traditional storefront payday lenders. Both state and federal government have regulations but it’s really the local (city) government that is responsible for payday loan regulations. They set the terms for re-payment and interest rates. At the Federal level it’s really more of consumer protection.”

Qurashi specified that YLI works with the Consumer Financial Protection Bureau.

Both YLI and United Way Silicon Valley can count some victories. Qurashi explained, “the ordinance developed and passed through the leadership of YLI states that payday lenders can no longer open a shop 2,000 feet from each other in the Mission Boulevard area (the most and only saturated area with payday lenders in Daly City), making it virtually impossible for new payday lenders to open. This momentum led to a similar ordinance campaign, making a second policy victory in South San Francisco.”

For United Way Silicon Valley, Ho said, “We work with the city government to develop ordinances which restrict payday loan activity within their city boundary. It basically establishes caps for the number of payday loan outlets in their cities. San Jose established distance requirements between payday outlets. Santa Clara City actually issued a moratorium on payday lenders in their unincorporated areas.”

But the battles won don’t win the war. Said Morales, “We’d love to see movement at the State level because it’s actually the State that can regulate interest rates. At the State level there has been very little appetite by legislators to really champion this issue. Partly because the payday loan lobby is very strong and very well financed.

“Our ultimate goal is to enact the 36 percent interest cap which other states have done. That effectively ended the payday loan traps because the most they could charge with the cap is small dollars on any loan, short-term or otherwise. Actually, some of our colleagues and advocates still think 36 per cent is predatory.”

But payday lenders, unlike most loan sharks, make up in brains what they lack in brawns. Morales revealed, “Payday lenders are constantly looking at ways to avoid state laws. A lot of them have gone to the internet rather than be just the traditional storefront. Now some states are starting to prosecute on-line payday lenders, too. But payday loans are still widespread.”

A more recent challenge we have now is payday lenders approaching destitute American Indian tribes saying to them: “We’ll give you half or one per cent of our income in return for you being the subsidiary of our payday loan store” so they can get native American sovereignty to avoid compliance with state laws. And at the Federal level, they would get no interest rate cap and even few caps on installment on loans. Our grantees are working on this,” Morales said.

For now, all agree that correct information and education are still the best ways to combat payday loans. Ho said United Way Silicon Valley set up a hotline and are offering sessions on financial skills and managing debts.

They teach desperate borrowers things like closing compromised bank accounts and requesting their utility companies for payment extensions or installment schedules. YLI gives out similar instructions to the youth.

Student loan refinancing is a great idea — except when it's not

When Christina Wallace, 31, took out loans to cover her tuition for Harvard Business School in 2008, she was stuck with nearly $100,000 in federal student loans at a fixed rate of 8%. By the time her loans came due in 2010, interest rates had plummeted, but she wasn’t able to take advantage of them and refinance.

As it stands, federal student loan borrowers can consolidate their loans but can’t refinance to lower interest rates available today as one would with a mortgage. A consolidation only averages the rates of your current loans to come up with your new rate.

Government officials are debating whether to allow students to refinance federal student debt. Meanwhile, online start-ups-turned-refinancing-juggernauts SoFi and CommonBond have stepped in to fill that void. And some traditional credit unions and banks, including Darien Rowayton Bank, Alliant Credit Union and Wells Fargo, have followed suit. 

Wallace decided to refinance her graduate school debt through CommonBond in 2013. She was able to lower her interest rate to 5.9% from 7.8%, saving her a few hundred dollars a month in interest payments.

“It all seemed too good to be true initially,” says Wallace, who works at the American Museum of Natural History in New York. “But I liked the idea of supporting a New York start-up, and when I ran my calculation on their site, I saw that I could save a lot by refinancing.”

This is all great, but (and this is a big “but”) student loan refinancing is not the panacea for our national student debt problem. Refinancing only works for borrowers in a very specific set of circumstances.

Here are some important factors to consider before you consider student loan refinancing:

1. Broke art majors need not apply.  


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We all know that newly minted college graduates aren’t exactly in the greatest financial shape, but if you’ve missed one student loan payment in the past, you could be out of luck if you want to refinance. 

“Our program is really not for people who don’t expect to [make payments on time],” says Aryea Aranoff, director of education finance strategy at Connecticut-based Darien Rowayton Bank.

DRB’s refinancing requirements are pretty stiff: They want candidates who have FICO scores of at least 680 and a debt-to-income (DTI) ratio lower than 40%, which means your total debts shouldn’t be more than 40% of your income.

Nontraditional lenders like CommonBond and SoFi don’t necessarily focus so much on DTI and credit scores, but they still run your credit history. And they’re still pretty picky.

CommonBond specifically targets high-earning graduate-degree-holders like Wallace (e.g.: the kind of folks who will likely be able to make payments on time). To be eligible, borrowers must have earned a graduate level degree or higher in a specific field of study like medicine, accounting, law, engineering, or finance, among others. And that degree must have been earned from a list of schools CommonBond has preselected, which varies by industry. For example, they prefer that a borrower who has a Master’s in Finance also hails from one of 13 schools, including Johns Hopkins University or Princeton.

SoFi won’t deny fine arts majors based on their degree alone, says co-founder Dan Macklin. Although educational history is the chief factor they consider before approving a loan applicant, they also judge based on employment history, income, and credit history.  

“Our underwriting approach is nontraditional,” Macklin says. “If somebody hasn’t been paying their bills in the past then it counts against them, but it’s not the sole [criterion] we’re looking at.”

2. Lower rates aren’t all they’re cracked up to be.

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Refinancing offers can be a pretty sweet deal, especially if you’re like Wallace and got stuck with high pre-recession fixed-interest rate loans. But not all refinanced loans are the same, and it’s important to pay attention to the terms of your specific loan.

Most lenders that offer student loan refinancing give borrowers the option to take out loans in 5-, 10-, 15-, and 20-year terms. Rates typically start around 3.5% for fixed loans and 2% for variable loans.

A longer term loan will give you more time to pay and lower monthly payments, but that extra time will cost you in the form of higher interest rates. For example, DRB charges 3.5%-4.75% on 5-year fixed-rate loans and 6% on 20-year fixed-rate loans. A 20-year variable rate loan at DRB starts at 3.98% but can go as high as 9%, much higher than rates on federal student loans today.

“Be careful, especially with variable-rate loans,” says Nick Clements, CEO of Magnify Money, a consumer finance education website. “We may be at all-time low interest rates but what we know for sure is that over the next 30 years they will go up at some point.”

There are other ways to get lower monthly payments besides refinancing. Ask your lenders if they offer a loan modification program like Pay as You Earn offered to federal student loan borrowers, which allows you to lower your payments based on your current income.

Shop around, too. It won’t hurt your credit. FICO, the company that provides the credit scores most lenders use, has promised to count any student loan refinancing applications filled out during a 30-day period as only one hard credit inquiry on your credit report, which would mean only a small dent in your credit score, Clements says.

3. You are giving up your federal loan safety net.


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Federal student loans are by far the superior loan option for one simple reason: they have way better repayment options than private lenders. You can put your loans into forbearance, defer them, apply for income-based repayment to reduce your payments or apply for loan consolidation. Once you refinance that debt into a private loan, you no longer get those options.

“You’re giving up future flexibility for something that may be cheaper now. You never know what could happen,” says Persis Yu, an attorney with the National Consumer Law Center.

Most private lenders that offer refinancing aren’t as forgiving to borrowers who fall on hard times as the government is. DRB says it offers no safety net for borrowers who miss payments. Once your bill is 15 days late, they either charge the lesser of 5% of the amount due or $28.  

“What we’re saying is that if you’re staying with the federal loan program, you are paying [higher interest rates] to get access to those [repayment] programs,” says Aranoff. “We are willing to give a lower rate to people who don’t want to buy that access.”

SoFi and CommonBond are a bit kinder. Each offers some form of unemployment protection that lets you defer loans if you find yourself out of a job (in three-month increments for up to 12 months). They also have teams on hand to help you find jobs in your field. When Wallace was out of work last summer, CommonBond actually gave her a three-week consulting gig at its Brooklyn, N.Y., office. Luckily, she found full-time work right before her deferment period ended. A company spokesperson says they haven’t experienced a default or an industry-standard delinquency since they launched in 2012.

Just make sure you read the loan’s terms carefully so you know what you’re in for.

Student loan refinancing is relatively new, so there isn’t one comprehensive tool that lets you compare rates, like you can easily find for things like credit cards. We recommend starting with this list of refinancing options from Magnify Money.

We are taking your questions 24/7 at Ask Yahoo Finance. Have a question? E-mail us at yfmoneymailbag@yahoo.com.

Check out more money tips from Mandi:

Obama Budget Sees Rising Student Loan Defaults

The president’s fiscal year 2016 budget out this week is projecting fantastic economic growth over the next decade, but one piece of the puzzle refuses to fit — student loan defaults.

The Department of Education’s budget documents project that 25.3 percent of undergraduate Stafford loans (measured by dollars, not numbers of loans) issued next year will default at some point during the borrower’s repayment term. That is up a full 2.5 percentage points from what the agency projected last year for the previous cohort of loans. And it is a large uptick given that those projections typically don’t move much from year to year.

Every other student loan category also shows an increase in projected default rates. For Parent PLUS loans it is 2 percentage points higher, now at 10.6 percent. On the graduate student side, while the Obama administration seems to be accounting for the fact that many more graduate students will take advantage and reap the benefits of the generous terms of Income-Based Repayment and Public Service Loan Forgiveness, default rates for graduate Stafford and PLUS loans are still projected to increase.

The Obama administration has not explained what is behind these new numbers. Meanwhile, trends that might help explain the projected increase are actually pointing in the other direction. The maximum Pell Grant for low-income students will reach its highest level ever in 2016. Enrollment in affordable repayment plans such as Income-Based Repayment are increasing rapidly as the administration continues to aggressively promote them. Interest rates on loans issued in 2016 will likely be lower than those issued the year before. Even the favorite whipping boy for student loan ills, the for-profit college industry, will take in the smallest share of federal student loans in years, according to the president’s budget.

Maybe analysts at the Department of Education see trends in the way older loans are performing that suggest defaults on new loans are likely to come in higher, despite a rosy economic outlook, generous federal grants, tax benefits, and loan repayment terms. It may be that we are entering a new era of high default rates on student loans regardless of the strength of the economy or the size of government benefits.

Alexander Holt of New America co-authored this article.

Student Debt, Rising Rents Take Bite Out of Real Estate Market

Hefty student loans are a major stumbling block for young Americans as they try to buy their first home, a National Association of Realtors’ annual survey shows.

In spite of an improved job market and low interest rates in 2014, the number of first-time homebuyers dipped to 33 percent, down 5 percent from the previous year and the lowest since the National Association of Realtors began tracking the rate in 1981.

“Rising rents and repaying student loan debt makes saving for a down payment more difficult, especially for young adults who’ve experienced limited job prospects and flat wage growth since entering the workforce,” says Lawrence Yun, chief economist for NAR.

“Adding more bumps in the road is that those finally in a position to buy have had to overcome low inventory levels in their price range, competition from investors, tight credit conditions and high mortgage insurance premiums.”

Stronger job growth could boost wages, yet almost half of the first-time buyers NAR surveyed said the mortgage application and approval process was harder than they expected, Yun adds.

Credit standards need to be eased and mortgage insurance premiums lowered to bolster first-time buyers as interest rates are expected to rise, Yun adds.

Federal Reserve officials and banking leaders also have sounded a warning that student debt cuts down on the purchase of homes and cars, at the same time reducing retirement savings and limiting small business startups, which hurts future banking revenue.

In mid-2013, the Federal Reserve issued a statement encouraging financial institutions to work with student loan borrowers going through financial problems to modify loans through extensions, deferrals or renewals until they can get through tough times.

PENN

Middle Tennessee State University economist David Penn notes that student loan debt is the fastest-growing debt in the nation, edging past mortgage and credit-card debt. It has ballooned to $1.2 trillion, up from $340 million just 11 years ago with nearly 40 million borrowers.

Forty-three percent of 25-year-olds hold some student debt, according to a 2012 Federal Reserve study.

At that time, 44 percent of borrowers got deferments or forbearances and weren’t paying their loans, while 17 percent were past due more than 90 days, up from 10 percent in 2004.

The Fed points out that high levels of student debt delinquency cut into the ability of young borrowers to obtain other types of credit and is associated with higher delinquency on other debt.

The study concluded that, “The higher burden of student loans and higher delinquencies may affect borrowers’ access to other types of credit and the performance of other debt.”

Even worse, as default rates on mortgages and credit cards are falling, default rates for student debt are rising, Penn says.

One non-starter is that the nation is still experiencing economic stress in the wake of the Great Recession, according to Penn, with those 25 to 35 years old finding it difficult to land a good-paying job.

Attitude is another problem, Penn says.

“We have some students walking away, needlessly,” he says.

The federal government owns about 80 to 90 percent of the loans and is willing to work with those holding the debt, but some former students think the problem will simply go away, Penn says, adding many who don’t finish college don’t think they have to pay the debt.

Penn agrees that a hefty student debt might make it harder to save for a down payment on a house, but he points out, “Having a default on your credit report, that’s going to make it tough to get a mortgage.”

Relief measures

President Obama touched on helping Americans burdened by student loans during his State of the Union address, apparently referring to a plan to expand the Pay As You Earn program.

In 2011, Obama widened the net for student loan recipients to cap monthly payments at 10 percent of their income – with annual income above 150 percent of the poverty level – and to make them eligible for debit forgiveness after 20 years.

Reauthorization of the Higher Education Act in 2007 had capped payments at 15 percent of income and enabled forgiveness after 25 years of payments.

The Brookings Institution reported in 2014, however, that the new income-based repayment plan could cost Americans $14 billion annually in the long term. And Obama even proposed limiting the debt forgiveness, though Congress didn’t pass the measure.

U.S. Sen. Elizabeth Warren, a Massachusetts Democrat, continues to push a student loan refinancing bill that would be funded with a tax on millionaires. It was blocked in the Senate last summer after falling two votes short of the 60 needed to withstand a filibuster.

“Exploding student loan debt is crushing young people and dragging down our economy,” Warren says in a statement as she launched her legislation in 2014.

“Allowing students to refinance their loans would put money back in the pockets of people who invested in their education. These students didn’t go to the mall and run up charges on a credit card. They worked hard and learned new skills that will benefit this country and help us build a stronger middle class and a strong America.”

Many of those with outstanding student loans have interest rates of 7 percent or higher, compared to those with new loans taken out at 3.86 under a new act passed by Congress.

Warren’s legislation would have let those with outstanding loans refinance at those lower rates.

For-profit schools, which get 25 percent of federal student loan dollars but are involved in half of student loan defaults, should take responsibility for federal loans if graduates can’t find a job, Warren contends.

U.S. Sen. Bob Corker, R-Tennessee, was one of only three Republicans who voted to send the measure to the floor for debate. But he remains cool to the idea.

“While I think the underlying policy being proposed by Sen. Warren is problematic and I would not support passage of the current version of the bill, I think Congress should debate ways to address the rising cost of education and the way it is being financed,” Corker says.

Tennessee’s load

The average debt for Tennessee graduates is $24,500, 16th lowest in the nation, with a default rate of 13 percent, slightly lower than the national default rate of 13.7 percent, according to figures from the Tennessee Board of Regents, which oversees colleges such as MTSU and the University of Memphis.

The lottery scholarship program provides $304 million to students for tuition and fees. Need-based grants total $61.4 million and state grant aid is $1,484 per undergraduate.

MTSU’s Penn says part of the problem lies with for-profit schools, which have lower graduation rates and higher student debt rates compared to public universities.

With those figures in mind, Penn says public universities remain a good investment for students, but more emphasis needs to be placed on students selecting a major that will lead to a good job.

“You can’t walk away from those loans, and you can’t get rid of them by bankruptcy,” Penn says. The federal government will find out, and it will garnish pay or take the money out of Social Security benefits, he says.

Those who defer their loans run the risk of paying more as interest builds.

Board of Regents outlook

The burden of payment for Tennessee college tuition and fees has shifted from the state to the student over the last decade. Whereas students were paying about 30 percent of the cost at one point, now they’re paying roughly 65 percent with state funding stagnating over the last decade and average tuition and fees rising to $8,335 this year from $4,214 in 2004-05.

“We continue to worry about the cost of higher education and the shift of funding responsibility away from the state and onto student tuition,” according to the Tennessee Board of Regents. “We hope the increased outcomes our institutions have worked hard to meet will be funded this year, which will help us maintain low tuition levels.”

The state Legislature adopted the Complete College Act four years ago but remains about $20 million to $25 million short on funding it.

TBR is working “aggressively” to match student skills with employers and to build “work-ready” training certificates into associate’s degree programs. That will enable students to show an employer the skills they’ve obtained if they need to get a job before graduation.

The state boasts an 85 percent job placement rate for graduates of its Tennessee Colleges of Applied Technology and a similar success rate for community college graduates.

But tracking university graduates is harder because they move more often and could go to graduate school as well, according to the TBR.

“That said, our universities have Career Placement offices and programs geared toward helping both students and alumni find the jobs and careers they want and need,” TBR states.