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Students Graduate with Debt
2018-10-24
The State of Student Loan Debt in America Today

Education is an investment in one’s future. It opens doors to greater possibilities. It empowers people to reach their full potential. But for many, college has become an anchor instead of a sail. Crushing student loan debt can hinder a graduate’s ability to focus on the future. Some must choose careers based on salary instead of passion, just so they can handle loan payments. The constant need to earn more money stunts employee loyalty and justifies job-hopping. Even after refinancing student loans, debt still delays graduates from buying homes and starting families.  

It’s not just an unfortunate few saddled with student debt. Consider the following statistics:

 
  • More than 44 million Americans currently carry student loan debt.
  • The total combined debt is nearly $1.5 trillion. That’s more than the total amount of credit card debt owed.
  • Student loan debt is equivalent to 7.6 percent of the U.S. GDP in 2017. To put it another way, retiring the full amount of student loan debt would take 7.6 percent of the value all the goods and services generated in the U.S. economy for a full year.
  • The average debtor owes $39,400 in student loans. That’s equal to 70 percent of the median household income in the United States, which is $56,516, according to the 2015 U.S. Census.
  • On average, student debt is far greater than the annual salary of a new college graduate. According to the latest Bureau of Labor Statistics, the average American ages 20 to 24 earns just over $28,000 annually. It’s slightly better — $38,400 — for Americans between the ages of 25 and 34. However, that's still less than the average overall student loan debt.
  • According to a 2017 PricewaterhouseCoopers survey, 40 percent of millennial employees have a student loan. Over 80 percent of them say student loans have a moderate or significant impact on their ability to meet financial goals.
  New doctors carry an extreme amount of medical school student loan debt. About 75 percent of new doctors in the U.S. graduated with debt in 2017. The average amount is now close to $190,000.   This explains why New York University will now grant all medical students free tuition. That is approximately $55,000 a year per student.   "We thought it was a moral imperative because it's very difficult for medical students to incur the debt burden of medical school, as well as the additional time burden of training," Dr. Robert Grossman, dean of NYU School of Medicine, told ABC News.   According to the report, student loan debt can “scare away” students from a career in medicine. It may also prevent graduates from pursuing a lower-paying specialty like pediatrics.   Clearly, there is no quick fix for student loan debt. However, several public and private programs can ease the burden. These initiatives continue to grow as more employers recognize the value of offering financial benefits, such as student loan repayment assistance.  

Common student loan assistance programs include:

 
  • The Public Service Loan Forgiveness Program is a federal program designed to forgive student loan debt for employees of certain public and nonprofit jobs.
  • The Federal Perkins Loan Cancellation and Discharge forgives a certain percentage of student loan debt after every year of service. There are a number of ways to qualify for this program.
  • Both the Pay-As-You-Earn (PAYE) and the Income-Based Repayment (IBR) programs set repayment cap amounts based on income and family size. They also forgive remaining debt after a set number of years of qualifying payments.
  • Student loan forgiveness programs designed specific careers such as teachers, nurses, and lawyers.
  Public programs may be a great fit for some. But for others, they may actually end up costing more over time. When considering a deferment or forbearance program, make sure you are not accruing additional interest. If so, this will then be capitalized and added to your original principal balance. Programs like IBR can be misleading. They can set graduates up to make payments only towards the interest rate accruing that month. This means they never actually apply to the principal balance of the loan. And it keeps the loan balance the same over time even though payments have been made towards the loan.   Before choosing a program, graduates should crunch the short-term and long-term numbers. It’s easy to get caught up in a program’s immediate impact. After all, you may only need a little breathing room in your budget. However, it's this lack of knowledge surrounding these programs that is fueling the student loan debt crisis.   In response, more private employers are adding student loan and tuition assistance programs to their benefits packages.   “Employer-sponsored third-party student loan repayment assistance programs are projected to grow quickly in the future,” according to a Consumer Financial Protection Bureau (CFPB) report on student loan repayment assistance programs.   According to a January 2017 WorldatWork survey:
  • 4 percent of employers surveyed offer student loan debt repayment assistance.
  • 11 percent offer employee scholarships and student aid.
  • 23 percent have scholarships available for employees’ children.
  • 14 percent offer college savings plans as part of their benefits package.
  • 87 percent offer tuition reimbursement to current employees for career development opportunities.
  A similar employee benefits survey by the Society of Human Resource Management showed that the number of employers offering student loan repayment programs increased from 3 percent in 2015 to 4 percent in 2017.   In general, the larger the company, the more likely it is to offer employees student aid benefits. Companies can use these programs as a recruiting tool to attract recent graduates.   Still, experts agree there's much more that needs to be done.   Summarized the CFPB: “Recognizing that significant student debt can have a domino effect on consumers’ financial lives and overall financial wellness, reports suggest an increased interest by both large and small employers in exploring benefits to help their employees pay down student debt or help manage their employees’ student debt stress.” Most of these initiatives are steps in the right direction. However, there is still a long road to recovery ahead for those affected by the student loan debt crisis.   This guest post was authored by Colin Nabity. Colin Nabity is the Chief Executive Officer of LeverageRx, a digital lending and insurance company for healthcare professionals. Through software technology, LeverageRx helps healthcare professionals find better rates on disability insurance, medical malpractice insurance, student loan refinancing and mortgage loans.  

9 Signs It's Time to Refinance Student Loan Debt

Man Asking for a Raise
2018-10-22
Asking for a Raise

At one point or another in one’s career, you arrive at the realization that, “I need more money.” When that realization hits you can spend less, save more money, or make more money. Maybe you’ve cut way back on spending, but it’s still not enough. You might have even considered refinancing your student loans or downsizing your home or apartment. Did someone say “tiny house”? Jokes aside, at some point, you’ll come to the conclusion: You need a raise. Tough nobody likes asking for a raise, if you want more money, you probably have to. Here are a few tips we’ve gathered on how to increase that take-home pay.  

But Why?!

  Did you get a new car? Did your landlord raise your rent, or did you lose a bunch of money investing in cryptocurrency? These are all reasons you might need money, but they aren’t good reasons to ask for a raise. Look at it in a different way. Say you go to a coffee shop every day and your $3.00 coffee is suddenly $3.50. You ask the guy behind the counter why the price went up. If his answer is, “we’re serving higher quality coffee” or “we have bigger cups, now.” you may not care much about the price increase, but if he says “we want to make more money,” then you might not be as happy. Your salary is no different. It’s a business decision that needs to be made. Your boss needs to understand why you need more money. Just like any other business vendor if you’re bringing more value to the company, that’s a great way to earn a raise. By the way, stop buying that coffee, you can make it way cheaper at home. Hello, French Press.  

Toot Your Own Horn

  It’s not enough to do a good job and hope it gets noticed. Make sure your hard work gets noticed! If you have positive news to share try and do it in person. Let your supervisors know any milestones you’ve achieved or when you’ve met or exceeded goals. Now, let’s be clear here we aren’t saying go bragging about yourself at every opportunity to the point it is obnoxious, but anytime you can let them know you’re helping, do it. This can be one of the hardest things for some people to do. Many workers tend to lean towards the humble side and just aren’t self-promoters. If it’s just too hard for you, try seeing if others will help to share your efforts with the boss and do the same for them. Regardless, the simple truth is when you get noticed more, you usually get paid more.  

This is EVERYTHING

  Timing can be everything when it comes to a raise. And that can be tricky. Knowing when and how your job evaluates pay increases is important to know. Sometimes, you’ll walk into a performance review and there will already be a decision made regarding your compensation. At some companies, there’s never a set time and you won’t ever get a raise if you don’t ask. What is usually best is after you’ve laid your plan as to why you deserve a raise, set up a time to talk with your boss one on one. This will let them know that one, you want a raise and two you’re serious about finding a way to make that happen.  

Work Past the “No”

  Let's face it getting a raise isn’t always easy. The answer could very well be “no.” Use that “no” to figure out what it’s going to take for them to say “yes” and allow that to set some new goals for yourself. That way when the opportunity comes around again you can show them what you have accomplished.  

Find Someone Who, Will

  Don’t ever threaten to leave as a means of getting a raise, but if they’re not willing to give you the compensation you feel is deserved, maybe it’s time to start looking. Your company may not be in a good financial state or just unwilling to pay more. Some companies lowball employees on salary simply because they’re betting you're not going to leave. If you don’t feel valued, see if you can get more compensation elsewhere. If you go this route of finding a new job, just make sure you’re making a logical decision and not an emotional one. The grass often looks greener in another pasture, but people often leave a job for more money only to find the hours are longer, the expectations are higher, or it’s not a pleasant environment. If you decide to leave, know what you’re getting into and compare compensation before you make a decision. Let's say you do get an offer and you’d consider staying at your current job, see if they will counter offer. If they are truly happy with you, they will often agree when faced with the cost of finding hiring and training a new employee.  

Out of the Box

  If you can’t adjust your salary to your lifestyle then you need to adjust your lifestyle to your salary. There’s probably plenty of ways to save without pinching every penny. Most you’ve probably heard of like cutting down on subscription services, eating out less, cutting the cord on cable, or buying used products. To save money you may have to think outside of the box. One thing you can do that typically most people don’t think of is—refinancing student loans. Refinancing could help to lower your interest rate, saving you in the long term, and probably lower your monthly payment which means more cash for you.   Regardless, how you choose to proceed in your journey of asking for a raise understand your strengths. In order to really understand the value that you bring, you need to know what you’re good at. Be sure to stay on top of the news and changes in your industry. If you’re constantly looking to improve your own personal skills this can help to attribute to the value you bring your company. Go ahead and sign up for that Saturday webinar or get that additional certification you want. Be your best and if your current company can’t seem to see that, then it’s time to move on. Good luck on your career journey!   [button text="Click to Learn More About Cutting Your Budget" link="/cutting-budget-start/"]    
Working Professional with Less Debt
2018-10-17
Entrepreneurs – The Cost of Starting Out

Starting a business can seem overwhelming, but it takes the right kind of person. For many entrepreneurs, money can be their biggest concern. You’ve got the dream, but you don’t have the dollars. People will often look for assistance using commercial loans to gain the money needed to get started, but what if you already owed thousands of dollars? Let’s take a look at the cost of starting a business with student loans. In this example, we’ll use a pizza place.  

Research and Planning

Before you begin investing your time and energy into a business, understand if and where there is a need for it. Where is there a lack of pizza places? Once you’ve determined a good area where there will be demand for the product look at your competitors. Look specifically at, prices, marketing, branding, and style. Now take a look at the median income for the neighborhood and surrounding towns that your pizza place would be located in. Is it a lower-income neighborhood or a higher-income neighborhood? Understand the area and price your product accordingly. Now that you have a better understanding of what you’ll need to start your pizza place create a business plan. If you’re in need of additional funding for your business this business plan will be of the utmost importance. There are different formats available for business plans, some more traditional while others are fairly brief. Be sure to check online for samples.  

The Cost of Business

Know what your expenses will be. Identify what those expenses are. The SBA has a list of expenses for starting businesses. These expenses include office space, equipment, supplies, utilities, licenses, permits, inventory, lawyer, salaries, marketing costs, and website costs. Once you have a list of your expenses, estimate out how much you’ll need to spend on each. Check out this handy worksheet that illustrates the starting costs for a pizza place. The SBA expense calculator provides an estimation of $18,975 as the starting costs for a business. The estimation includes one-time expenses like equipment, security deposits, and legal fees and monthly expenses like rent, insurance, and advertising. Every business is different, but typically there is some type of investment that must be made upfront. Now don’t forget that if you’re looking to start a business you can use some “startup costs’ as tax deductions. Tax deductions* per the SBA site include costs to get your business operation ready and costs of investigating the creation of a business. Once you have an idea of your expenses and what is tax deductible, you’re onto step two.  

FUN-ds

Here is the “fun” part where many young entrepreneurs get caught up - getting the funds. Not only do younger entrepreneurs not have the dollars but, they owe thousands in debt. That thousand dollar debt is likely due to student loans. According to a recent survey, nearly half of Americans considering starting a business said that student loans were a major barrier to entrepreneurship. Refinancing student loans can help. When refinancing you may get a lower rate or change the terms of the loan. It can help lower your monthly payments, sometimes significantly, giving you more cash in your pocket. Once your personal finances are in order (decreased student loan debt) figure out how much capital you can put towards your business. For this particular step, we’d recommend working with a financial advisor. By self-funding your business you will take on all the risk of the business, not to mention taking funds from all your accounts resulting in penalties. Instead of self-funding the capital fully, try crowdsourcing, small business loans which you’ll want to research heavily to assure you’re receiving the best rate or finding investors willing to provide capital. If you take money from an investor for your pizza place, it’s a venture capital investment. This type of investment is usually offered in return for a share in the company and some sort of power position within the company. Therefore, if you do take on venture capital investments understand that the business is no longer just yours.  

Naming

Once you’ve gained the funds you’re well on your way! Next, you’ll set up the internal structure for your business, register the name for your pizza place, set up your Tax IDS, and get the appropriate licenses. Licenses are usually industry, location, and state-specific so be sure you’re working with a legal team to meet all appropriate criteria or it could end up costing you. All decisions will have an impact on how your company functions, so be sure that you’re taking every necessary precaution and good luck in your journey. Refinancing may not be the solution to all of your money problems, but it’s a step in the right direction. When you’re starting out, all it takes is to get going on the right path to continue moving forward. Don’t forget to open up a business bank account to help organize your business funds from your personal funds. Similarly to refinancing you’ll want to choose a bank with transparency, credibility, and great service.  

Facts About Student Loans That Will Save You Money

*Please note Education Loan Finance is not a registered tax professional.
Enjoying Nature with Student Loan Savings
2018-10-15
9 Signs It’s Time to Refinance Student Loan Debt

When is it time to swipe right on a refinance of student loan debt? It can be a tough question because everyone’s situation is so unique, and your goals or your motivation might be totally different from someone else. That’s why we’ve put together a simple explanation of signs that refinancing might be a good option for you. Here are nine signs it might be time to refinance student loan debt:  

You have a good credit score.

If you don’t have a good credit score, now is probably not the time to try to refinance. You will not get as favorable of interest rates and you might even be turned down outright. Check your credit score and go over your credit report asap. If there’s anything that needs to be fixed, do it. If your score could be better or if your credit history isn’t very long, look into ways to improve it. You can get your score up and clean up your report, but it takes work. That needs to be in order before you choose to refinance student loan debt.  

You’re up to date on your loan payments.

Have you been making your payments no problem? Great! If not, now is probably not the time to refinance. You might need a new payment plan instead of refinancing, but you will not look like as good of a borrower if you are behind on payments or have had trouble paying. Get up to date and make your payments on time for a while before trying to refinance. If you’re having trouble coming up with the money, be sure to reach out to your servicer to see what your options are.  

You are employed with a steady income.

If you are unemployed or your income is spotty, refinancing will likely be difficult or impossible. The best time to refinance is when you land a good main gig that has a consistent paycheck. You’ll have to report your income, so you may want to postpone your refinancing now if you aren’t already making a decent income. If you are self-employed, try giving yourself a few months of solid income before proceeding.  

You have a good debt-income ratio.

This one can be kind of a bummer because a lot of millennials are saddled with a fair amount of student loan debt (and maybe other kinds of debt) along with being underemployed. To get a hold on some of this debt, you might be looking to refinance. The problem is rates may not be as favorable or you may not qualify—if your debt to income ratio is too high. Look at options for gaining more income or reducing some debts you currently have, like cutting out credit cards and paying down those other debts.  

You are not planning on student loan forgiveness for public service work.

If you’re in public service and know you’ll qualify for loan forgiveness after the ten-year mark, refinancing can interrupt that and disqualify you for loan forgiveness. If you’re counting on loan forgiveness we’d recommend you don’t refinance your loan with a private vendor, but be sure to verify that you qualify for loan forgiveness.  

You know which loans to refinance and why.

If you’re not sure about which loans you want to refinance and why check out our guide to student loan refinancing. We help explain why you might not want to refinance federal loans, and which private loans are best to be refinanced.  

Loan benefits don’t apply to your situation.

If you are not going to qualify for loan forgiveness or if you don’t need benefits like income-based repayment plan options that you’re currently taking advantage of, it might be cool to refinance. Know what special plans you’re using with your current lender before you refinance because you don’t want to lose those in the process.  

You could save a boatload on interest or loan terms.

People usually think about refinancing when they are looking at a super long-term payment plan that they want to shorten or when they realize that their interest rate is high and they might be able to do better. If you aren’t sure how good your interest rate is, ask a friend or Google current rates. Start comparing. You’ll get an idea. And that will help you understand whether you can keep the same payment and shorten the length of time you pay, too, because this is also tied to interest rates.  

You know how to find a good lender.

Even if you don’t know how to find a good lender, you can figure it out! We encourage you to reach out and get in touch. With ELFI, applicants get their own Personal Loan Advisor who will stick with you throughout the application and setup if you decide to refinance, making the process simple and straightforward.  

What To Know Before Refinancing Student Loans

Woman Dealing with Student Loans
2018-10-12
Women and Student Loan Debt

The cost of college has been on a slow increase since about 1976, and it’s no wonder the cost of student loan debt has too, seen a hike. According to AAUW the cost of college has increased 148% since then. Student loan debt has been estimated to total around $1.5 Trillion according to the Federal Reserve. Women prove to hold more than half of student loan debt. Let’s take a look at some factors that could be causing women to keep more student loan debt than men.

Women and Student Loan Debt

Women Less Likely to Refinance Student Loans

Refinancing student loans can help to achieve a lower interest rate and consolidate multiple loans. Refinancing also allows borrowers to change the repayment period, so they are paying less over the life of the loan. According to Student Loan Hero research, of the women who have heard about student loan refinancing, only 6% have proceeded to refinance their student loans. By not refinancing, women are subject to long payment periods that could end up costing them more over time.  

Lack of Opportunity

Women are shown to have less executive or leadership roles in companies when compared to men. Research by Pew Research Center shows that woman hold only 10% of top executive positions. That leaves 90% of the remaining leadership positions for men. With mostly men in high ranking positions, it seems reasonable to assume that men, in general, would be making larger salaries than women due to a higher percentage of men in executive positions.  

Student Loan Refinance Head Barbara Thomas' Advice to Those Caught in the Gender Gap

 

Missed Work Hours

A possible reason for women holding more student loan debt is that they may be getting paid less because of their time off. Women have traditionally held the majority of the parenting responsibility. If a child was sick or ill it was usually the female who would stay home with the child or that is what traditional gender roles would assume. Pew Research has shown that parenting can hurt your earnings. Time away from the office dealing with children could be not only a reason for less pay but a lack of ability to pay student loan debt down faster.  

Women Get Paid Less

The pay gap between men and women varies based on location, but women still make less than men. Can you believe it in 2018 women are still fighting for their right to be equal? According to information provided by the US Census Bureau, women earn 19.5% less than their male counterparts. In some states like Louisiana, the gender pay gap is a whopping 30%. In states like New York, it is only 11%.  

Lack of Financial Literacy

According to CNBC women are shown to be less financially literate than men. If women make poor choices with their money, it could end up costing them in the long run, causing women to have more substantial student loan debt than men. Women are two times more likely to see their student loan debt as “unmanageable” according to Student Loan Hero.   Refinancing student loans is a great option for those with student loan debt. If you qualify for refinancing you can change repayment dates and possibly get a lower interest rate. An added benefit for those with multiple loans is that if you choose to refinance all your loans you’ll only have to make one payment a month instead of multiple payments. Refinancing your student loans can help to eliminate student loan debt faster depending on the repayment terms you select. Let’s start lowering the number of men and women with student loan debt!  

Click to View Our Student Loan Refinancing Guide

Guy Investigating FDIC Backed Banks
2018-10-12
FDIC-Backed and Why You Should Care

You know the orange Chance cards you used to draw when you played Monopoly? Remember the one where the little guy was so broke he was wearing his pockets on the outside of his pants? Well, imagine that guy is your bank, and through bad luck or bad decisions, they negatively affect your life. You go to get a loan, and they aggressively try to get you to borrow more than you can afford. Or, when you show up to get your money, they just shrug, and you’re out of luck. Things are different today and the protections for account holders and borrowers for certain banks are better than ever, but how did we get here? What exactly does FDIC insured mean?

Banking used to be very risky.

Believe it or not, that’s pretty much how things were for a long time in the United States, and it happened quite a bit. Lending practices were not necessarily based on sound data and information. More than a third of the banks in the1920s closed their doors, and deposit holders had little recourse. That’s why many people of that generation had a deep distrust of banks and why you may have heard stories of people stashing money in their mattress or burying it in a jar in the backyard to keep it safe.

The creation of the FDIC.

You’ll notice that most people aren’t hiding money in their bed these days, and no one is wearing their pockets on the outside of their pants anymore. Sure maybe no one ever really wore their pants that way, but it could also be because Congress passed the banking act of 1933 and created the FDIC. FDIC stands for Federal Deposit Insurance Corporation, but we usually just say FDIC because the government loves acronyms. The FDIC is quite literally an insurance company and just like other insurance companies, they provide protection from an unforeseen event, in this case, a bank failure. They also function as a regulatory agency to make sure banks are following laws and guidelines.

What happens when an FDIC insured bank fails?

When a bank becomes insolvent, the FDIC essentially takes over the bank. Almost no matter what, the bank will still have some deposits and assets. The FDIC will try to sell the bank’s deposits and loans to another member bank. In this case, you the customer will find their deposits at a new bank. If for some reason the FDIC cannot successfully sell the bank, they will issue a check to the depositor directly.

It’s not the 1920s anymore, why should I care?

Sure, the Roaring 20s and all its banking peril are long in the past, but you might be old enough to remember the Savings and Loan scandal of the 1980s or the financial collapse of 2008. These were both significant events that wreaked havoc on the banking industry. Banks can still have problems and sometimes big problems. In fact, from 2008 to 2012, 465 banks completely failed. While most everyone felt the effects of the financial collapse in some way, bank depositors were spared significant loss thanks to the FDIC. This is why you absolutely want to make sure your bank is a member of the FDIC.

What else does the FDIC do?

Member banks are subject to strict overview of the FDIC. They monitor debts and assets and help to ensure banks have enough cash on hand for safe and responsible operation. They aren’t just guaranteeing your money, they are actively working to make sure the bank is healthy. Additionally, they work to make sure banks are compliant with the latest consumer and banking regulations.

Are there protections for borrowers as well?

Yes. The FDIC isn’t only focused on depositors, they protect borrowers as well. So if you are in the market for a home loan or you are looking to refinance those student loans, it’s important to pay attention to which lenders are FDIC members. Member lenders are under scrutiny to make sure the debt to income ratios for borrowers aren’t outside what borrowers can afford to realistically pay. You want to work with a member bank to ensure an upfront and transparent process.

Are all financial institutions FDIC insured?

No, not all financial institutions are FDIC members. The FDIC examines and supervises approximately 4,000 banking institutions in the United States.  

Tips for Finding the Perfect Lender

  Sources: https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation https://en.wikipedia.org/wiki/List_of_bank_failures_in_the_United_States_(2008-present) https://www.youtube.com/watch?v=dBOFiDpmESI
Millennials Renting Instead of Buying
2018-10-10
Top 5 Barriers to Homeownership for Millennials

Most millennials rent their living spaces and don’t purchase them. Ever wonder why that has become such a common stereotype of the millennial generation? Well according to some research done by Urban Institute it isn’t just a stereotype. It dives deep into this issue to explain the main barriers to homeownership for millennials and how to address them. Here are five of those barriers:

Location-

Millennials are moving to the biggest cities in the country in larger numbers than any generation before. In these cities (like New York, Chicago, and San Francisco), housing prices are extremely high and the actual housing supply for purchasing is low. You can save money in a major city by using mass transit instead of driving or taking cabs.

Starting a family-

In the past, getting married and having children were the life steps that often led to home ownership. Now, we’re getting married and starting families later in life (or not at all), causing a delay in the need to buy a home. If you are wanting to buy a house, don’t let your marital or family status stand in your way. You can save for a down payment now to speed up the process.

Student debt-

The total amount of student loan debt in the United States is at a historical high, and more students are taking out loans than ever before. Many people who are trying to pay off their student loans feel as if they cannot save for a down payment and do not want to add a mortgage on top of their existing debt. Also, a high debt-to-income ratio can make it more difficult to obtain a mortgage. Refinancing your student loan can help you reduce your rate, allowing you to pay off your principal faster and lower that ratio.

Renting-

Typically before taking the step to owning a home, you will rent a place for a few years. Rental rates have continuously risen for years, which is not allowing people to save as much money for their future down payment. This delays reaching that next step by at least a couple of years. You do not have to let this stop you from saving for a down payment if you are hoping to buy a home soon.

Poor credit-

Low credit scores are plaguing many millennials. The average credit score for this generation is 640, which is lower than both gen x and baby boomers as well as the median credit score for obtaining a mortgage loan. Whether those low scores are from lack of credit, high credit card debt, missing payments, or any other reason, there are plenty of ways to bring that score up.  

Consider These Factors before Buying Your First House

Pharmacists at Work
2018-10-10
How to be a Financially Successful Pharmacist after Graduation

Pharmacy school teaches you most everything you need to know about being a pharmacist, but most don’t teach you about personal finance. If you’re like a lot of pharmacy grads, you’ve probably dug yourself into a bit of a hole. That’s okay. Now what you need is a plan to get back out. For some people, that’s figuring out how to get out of debt as fast as possible. For others, it’s a slow but steady plan to get there. Just as in pharmacology, what’s right for some people isn’t for others. Your plan will depend on your circumstances, but the important thing is not to let it overwhelm you. You’ve finished your educational journey, now it’s time to move on to the next chapter.  

After graduation – set a realistic goal.

  Getting to where you want to be financially is attainable, but you have to define what that is. Is it to be out of debt in 3 years? Refinance student loans? Save for a house? Make sure you have enough money for an emergency? Or some combination of all of those? All great and worthy goals, but if you don’t define a goal, you won’t know the things you need to do to attain it.  

Assessing your situation.

  Even if you know your goal, you can’t get there unless you know where you’re starting. You need to assess your debts and any assets you may have. The average pharmacy grad has nearly $160,000 in student loan debt. Quite often they also have credit card debt. If this is you, it’s okay. You may even have a car loan. You just need to know, that all debt is not equal and the best way to prioritize is to look at your interest rates to determine which ones you should try and pay down first. Consider using a debt pay down method like the debt snowball method.  

Credit Cards

  If you’re carrying credit card debt, that’s probably your highest priority. Typically credit card interest rates are between 15 and 20%, but they can go even higher. If you’re holding any significant balance with that kind of rate, making minimum payments will essentially have you paying the balance until the end of time. Even though your student loan balance is higher, it doesn’t make sense to pay beyond the minimum payment until your credit card debt is in control.   If you have multiple credit cards, figure out which one has the highest interest rate and start paying more there first. You may even be able to transfer to another lower interest card you have. Establish how much you’re going to pay over the minimum, say $500 or $1,000 and stick to it. It’s probably not wise to open a new card now, but as you pay down your cards you may notice special offers from the cards you have. You might see things like 0%APR for 12 months on balance transfers. Read the fine print, and if it’s good, do it. It can really speed up the process and save you a lot of money. If you have good credit, consider getting a Personal Loan to pay off your credit card balances. A Personal Loan will usually come with a lower interest rate than you had been paying with the credit cards.  

Refinance your student loans from pharmacy school.

  One of your best bets to improve your financial situation both in the short- and long-term is to refinance your student loans. Many student loans carry an interest rate around 5.8% While much lower than the average credit card, it’s a number you may be able to reduce several percentage points which can save you thousands of dollars over the life of the loan. Another thing refinancing can do is adjust your loan term. We’ll look at two general approaches that should help you decide what might work best for you.   Option 1: As fast as possible.   If you’re starting from a pretty good place financially and you’re not carrying a lot of other debt you may want to just knock out your student loans as quickly as you can. This approach would likely mean refinancing to a shorter term, say 5 years. The lower interest rate could save you money as will the shorter term, but it also means you’ll pay it off a lot sooner. This also means you might have a hefty payment every month. Though hefty, this monthly payment will knock out the balance accrued by interest faster, so you pay down more on the principal balance of the loan. This may mean a lot of scrimping and saving. Brown bag lunches and making do with what you have for now, but if you’re in a position to make it work without putting too much of a burden on yourself then this can set you up to be in a very good place financially and much faster than if you didn’t refinance.   Option 2: Slow and steady   A lot of us don’t have the luxury to do a shorter-term loan, but that doesn’t mean you still can’t take advantage of refinancing your student loan debt. It will still save you lots of money in the long run. And refinancing to say a 10-year loan can give your budget a little more breathing room. You may even be able to lower your monthly payments to give yourself a little more cash to pay off your credit cards or to save for an emergency.  

Don’t skimp on retirement savings!

  When you’re starting your pharmacy career it may be tempting to forego things like your 401K to have more money in your paycheck. This is a bad idea for many reasons. You want to establish your retirement savings right away. What you contribute in your 20s and 30s becomes much more valuable to you in your 40s and 50s. It’s just a habit you want to start early and not wish you had later.  

Enjoy the ride.

  Don’t stress over finances. Worrying will get you nowhere, but a plan can take you anywhere you want to go. Concentrate on getting your career going and stick to your financial plan and you’ll soon see the results you want.  

Why You Should Not Put Student Loans In Deferment or Forbearance

   
Woman Realizing She Can Save on Loans
2018-10-09
Our Simplest Guide To Student Loan Refinancing – Part II

We covered some of the nuts and bolts of refinancing your student loans in Part I of this guide, but there’s still more to learn before you can confidently approach refinancing your loans. So strap yourself in for Part II of Education Loan Finance’s Simplest Guide to Student Loan Refinancing!

Refinancing Different Types of Student Loans

How and why you refinance your student loans depends a lot on what type of loans you have. Here’s why:

Private Loans

When considering refinancing private loans, it usually comes down to the math of how much you’ll save. Because there are so many private servicer options, you can take time to compare the customer service, terms, and interest rates. Since you’re refinancing a private loan, you probably aren’t losing any benefits moving from one servicer to another. Make sure you understand how much you’re saving because that will be a major factor in choosing the company, along with their service.

Federal Loans

Some people believe that federal loans can’t be refinanced, but they totally can. They’re actually the most common loans to refinance because so many people can get better rates now than they did with the federal loans initially. You can easily find private companies that will refinance your federal loans. The reason why people don’t choose to refinance their federal loans is because you can lose benefits that are only available on federal loans if you refinance them. Federal loans might have more payment options or qualify for programs like loan forgiveness where private loans won’t have those same benefits. But if you’re not counting on loan forgiveness and you are set with private payment options, refinancing your federal loans might be a great financial choice for you. Keep in mind that you don’t have to refinance all loans of either type. You might have one or two private federal loans that are a higher rate and you want to refinance those, but you keep others as-is because the rates and servicers still fit your needs. How you do it is up to you.

Other Loans

You can also refinance other kinds of student loans like PLUS loans. PLUS loans can be refinanced by the parent who holds them or can be transferred to the student/child from whom the money was borrowed. If the child recipient of these loans has a good credit score and good credit history along with sufficient income and an appropriate debt-income ratio, this might be a good solution. Just keep in mind that these new payments have to fit into the budget and you want to make sure you’re ready.  

What to Consider When Refinancing Student Loans

Interest Rates

If you’re not going to save money (either monthly or by reducing the length of time you’re paying back your loans) then it usually doesn’t make sense to refinance. That’s why most people look first to interest rates to understand whether they should refinance or not. If you qualify for significantly lower interest rates than what you currently pay, then take a look at how much you’ll save and see if it makes sense to move forward. Online student loan refinance calculators can give you an idea of what difference those small percentages can make depending on how much time you have left to pay your loan.

Loan Terms

Another factor for student loan refinancing can be the terms of your loans or the amount of time that you’ll continue to pay these loans before they are paid off. For example, say you have ten years left to pay off your student loans, but you can refinance. When you refinance, you make the same payment amount but finish payments in seven years instead of ten—heck yes! That’s three fewer years that you’ll be making that payment. On the other hand, maybe you want longer terms to pay off your loan so that you can get a lower monthly payment. Some people refinance into the same length of time for their loan but take the savings from refinancing and use that to save for something else. This is why it might make sense to refinance even if your payment isn’t going down.

Servicer Considerations

You might find that more than one loan servicer can give you a good drop in interest rates or better loan terms—so how, then, do you decide between them? There are lots of things that matter to you that may not be apparent at first. How you pay, like whether you can pay online or make automatic payments, can be a big one. Customer service is crucial when you are dealing with something that can be difficult to navigate on your own or as a first-timer, too. Plus, not all servicers are equally reputable. Check out information about companies you’re considering and make sure you’re not signing up for a shady new student loan.

When is it time to refinance your student loans?

Understanding when is the right time to refinance is a whole other can of worms. There are several markers or goals you might want to reach before looking into refinancing. Check out our article on signs that it’s time to refinance.

Should I refinance?

It’s a personal decision to decide if now is the time to refinance. The best thing you can do is to understand your current situation and equip yourself with information on refinancing and personal finance. Look for help connecting your specific situation to good advice. Consult trusted sources and look at the big picture. How would refinancing help you hit your goals? Are you doing something right now that would make refinancing tough and maybe it could wait a month or two, or does it make sense to get started today? You can always reach out to us and speak to an expert at ELFI. We help people with their unique refinancing situations every day. You’ll get connected with someone who can help you through the entire process so that you never get left in the dark. What could be simpler than calling your own personal advisor today?  

10 Facts About Student Loans That Will Save Your Money