Should You Refinance Your Student Loans with a Credit Card?

Using a balance transfer credit card can be a great way to lower the interest rates on your debt to help you save money and pay your debt off faster. Most people only think about doing a balance transfer with high-interest credit card debt, but recently I’ve been considering a 0% interest balance transfer credit card to help me pay off my student loan.

After making my final credit card payment to be credit card debt free, I started thinking about how I could use a balance transfer offer extended by my creditor to help pay off other types of debt I still have. Since the highest interest debt I have remaining is my student loan, this is what I’m considering refinancing with a 0% interest balance transfer. My student loan only has a remaining balance of about $6,000, which means I could transfer the entire balance to the credit card and pay it off before the promotional rate expires, if I pay it off aggressively.

Of course, there are lots of reasons why you could choose to refinance or consolidate your student loans. I was curious whether or not a balance transfer could be a viable option as well.

Here are some of the pros and cons you should consider before deciding to refinance your student loans with a balance transfer credit card.

Benefits of Refinancing Student Loans with a Balance Transfer Credit Card

There are several benefits you could take advantage of by refinancing your student loans with a balance transfer credit card.

A Lower Interest Rate

One of the main reasons people choose to refinance student loans is to lock in a lower interest rate. For example, my student loans are at 6.8%. If I do a balance transfer to a 0% interest credit card, I could save hundreds of dollars on interest through the end of the 0% interest rate period on the balance transfer.

But keep in mind that not all balance transfers are created equal. You might get all kinds of different balance transfer offers from companies trying to entice you to sign up for a new credit card, or even transfer a balance to a card you already have. Some of these transfer offers will be better than others. You might encounter offers that have a 1% to 3% interest rate for a certain period of time, usually 12, 18, or 24 months. But the best balance transfer offers have a 0% interest rate, obviously saving you more on interest than the others.

Pay Off Student Loans Faster

Transferring student loan debt to a credit card can save money, but only as long as you get the balance transfer paid off before the promotional interest rate expires. This time limit is a big motivation for people to pay extra on their student loans to make sure the balance transfer is paid off before it expires. If you struggle with being motivated to make extra payments, the reality that your interest rate may spike up to 15% or more after a few months may be just the motivation you need to get serious about paying off debt. It’s worked well for me in the past when I’ve transferred high-interest credit card debt to a 0% balance transfer credit card, helping me to pay off $5,284.18 much faster than I would have otherwise.

Drawbacks of Refinancing Student Loans with a Balance Transfer Credit Card

Although using a balance transfer to help pay off your student loans sounds like a great way to save money and pay your debt off faster, there are some potential downsides you should be aware of.

Balance Transfer Fees

A lower interest rate makes balance transfer credit cards an attractive option for those looking to refinance debt, but you need to consider more than just the interest rate before deciding to refinance your student loans with a balance transfer credit card. Make sure you consider the balance transfer fee that many credit cards charge. This can eat away at the amount of money you save on interest. Luckily, some credit cards do have a cap on this fee at $50 or $75, which can be helpful if you plan to transfer a large balance that would otherwise result in a fee higher than that cap. But at that point, it could be difficult to get your student loan transfer paid off before the promotional interest rate on the balance transfer expires.

There are balance transfers without fees, but your options may be limited. If you find a no-fee, 0% interest transfer option you qualify for, it’s almost a no-brainer to use it to pay off other debt.

Potential Loss of Savings on Interest

As mentioned, it’s imperative that you pay off your entire balance transfer before the promotional interest rate expires in 12, 18, or 24 months. If you don’t, the high interest rate after the transfer expires will quickly negate any interest savings you earned by doing the transfer in the first place. In fact, you may end up paying more in interest than if you’d skipped the balance transfer in the first place.

You May Not Qualify

In order to use a balance transfer credit card to refinance your student loans, you first have to qualify for one. In order to qualify for many balance transfer credit cards you must have a credit score of at least 680.

Applying Could Ding Your Credit Score

If you don’t already have a credit card with a balance transfer offer available, you may need to apply for a new card. Anytime you apply for a new line of credit, it will ding your credit score slightly. This may or may not be an important factor depending on what your score is and if you plan to apply for any other credit cards or loans in the near future.

Loss of Federal Student Borrower Protections

A final and very important consideration to think about before you decide to refinance your student loans with a balance transfer credit card is the loss of student loan protections you may have. If you are refinancing federal student loans, you will lose the protections that are offered to you as a borrower, such as:

  • Income-driven repayment plans
  • The opportunity for student loan forgiveness
  • Deferment or forbearance
  • Discharge upon permanent disability or death

Some credit card companies may be willing to work with you in an emergency situation, but chances are high that even in those situations the flexibility offered to federal student loan borrowers is far greater. In some cases, you may be better off not refinancing your student loans in order to maintain your borrower protections.

With most low or 0% interest balance transfer credit cards, you can’t miss a payment or pay late. If you do, your promotional interest rate may be void and you will be subject to the regular interest rate, which could be 15% or more depending on the card and your credit score.

Despite these drawbacks, doing a balance transfer to help pay off your student loans can be a good idea if your goal is to get out of debt quickly while saving money on interest.

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Help! We Don’t Have Enough Savings to Pay for College

If don't have enough in the bank to pay for junior's college education, you have options. Here's how to assess them.

Q. What’s the best way to pay for college? We won’t get much financial aid and I think it will cost about $30,000 a year. We only have $40,000 saved. We have equity in our home, 401K plans, Roths and our son can take student loans. Help!
— Mom

A. There is no one best way to pay for college, but we want to give you some options to consider.

Like a lot of people, you might be surprised by how much of the bill won’t be covered by aid.

The first option to look at is scholarships, said Lisa McKnight, a certified financial planner with Lassus Wherley in New Providence, New Jersey.

Free money is the best money, she said.

“Consider schools where you child stands out academically for your best bet at scholarship offers,” she said. “You should also consider the many scholarships found within your local community.”

McKnight said high schools typically have resources for students to help them find scholarships. One other resource is The College Board, which has an extensive database of scholarships.

Next, your student should investigate work/study programs or working during school, McKnight said.

“Student employment via a federal work/study program, or even part-time work outside of a work/ study, is a great way to have the student help finance their education,” McKnight said. “It’s important to balance working with academics, so you will need to determine if you’re student is someone who can make both work.”

You won’t necessarily have to make a whopper payment for tuition. While universities will bill for each semester, it seems that coming up with a full semester’s payment all at once would be tough.

But, most schools offer payment plans that allow you to stretch payments out over the course of 10 months or a year, McKnight said.

Next, you’ll probably need to consider loans.

“Even parents who could afford to pay for college out-of-pocket may choose to make student loans part of their college payment strategy in order to avoid asset liquidation or to give their child some responsibility for his or her own education,” McKnight said.

You’ll need to see what federal loans you and your child are eligible for. Be sure to look at Direct Subsidized and Unsubsidized Loans and Direct Parent Plus Loans. You can find private loans too, but these often require a co-signer.

In looking at home equity, there are pros and cons here.

“It may be cheaper and easier to secure then a federal loan, it has fewer restrictions, and is tax-deductible,” McKnight said. “However, there are some significant cons — primarily home equity loan debt is secured by your home, giving the lender a legal claim to your home in the event of default.”

This becomes a secured debt backed by your home, McKnight said, and you’re basically putting your home on the line and you are trading a hard asset (your home) for a soft asset (education).

You said you have Roth IRAs, and you can withdraw from your Roth IRA contributions at any time without penalty or tax for any reason, McKnight said. You can also withdraw earnings without the 10% penalty if they’ll be used to pay for qualified education expenses.

Your 401K should be your absolute last resort.

The drawbacks are many.

If you withdraw funds before you are 59 1/2 years old, you may owe a 10% premature distribution penalty and taxes on the withdrawal, she said.

Plus, frequent dips into your 401K will reduce balances and the benefits of compounding and tax deferral, and ultimately the overall funds for your retirement, McKnight said.

“If you have no other options then the tap the 401K, consider a loan — if your plan allows — and read the fine print regarding interest, borrowing limits, repayment terms, etc.” she said. “Borrowing from your 401K will incur double taxation.”

By that she means you’re repaying the loan with after-tax money and then you will be taxed again when you withdraw the funds in retirement.

“If you quit or lose your job the loan balance may need to be repaid in full within 60 days,” she said. “It is very important to ensure that you aren’t putting yourself at risk in your effort to assist your children with paying for school.”

McKnight said because borrowing or withdrawing from retirement plans have risks, you should speak to a financial professional for help so you make an informed decision based on your overall situation, and help ensure that you aren’t putting yourself at risk in your effort to assist your child with paying for school.

“It is important that you explore all of your resources when developing a college payment plan,” she said. “A little strategic thinking can go a long way toward maximizing financial resources and minimizing college payment stress, no matter what your income level.”

[Editor’s Note: The interest rates on certain loans, like private student loans or home equity lines of credit, will be affected by your credit. You can see where yours stand by viewing your free credit report summary on Credit.com.]

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Help! My Tax Refund Was Taken to Pay My Student Loan Debt

Help! My Tax Refund Was Taken to Pay My Old Student Loan Debt

Every year, many people file their taxes expecting a refund … only to discover the money’s been taken to pay off their student loan debt. The bad news: The government can take that money if your federal student loans are in default. The better news: You can contest the seizure. And, if it was taken in error, you should be able to get your refund back. If it wasn’t an error, well, it can be very, very difficult to get those dollars released. However, we have heard anecdotally from readers who contacted the Education Department, demonstrated hardship and had at least part of their refund returned. The process appears to take awhile — and, again, there’s no guarantee Uncle Sam will comply — but it is an option someone can pursue if money is particularly tight.

Now, let’s delve a little deeper into why refunds get withheld — and what you can do if yours was one of them. (Psst: We’ll also provide some tips of what to do about those delinquent student loans.)

Why Was My Tax Refund Taken?

If you are in default on your federal student loans (which by definition means you are behind by 270 days or more), the Education Department can take your tax refund using the Treasury Offset Program. This program authorizes federal payments such as tax refunds or Social Security income to be intercepted in whole or in part to pay debts owed to other federal agencies. There are some limited consumer protections, but debtors aren’t always aware of them.

What Can You Do if Your Refund Was Seized?

We spoke with Jay Fleischman, a student loan and bankruptcy attorney, about what people can do. First, he said that by federal law, people who have student loans in default get a notice that they are at risk of having any potential tax refund seized for student loan repayment. That notice contains instructions for a review of your loan information and how to avoid the offset —so, in other words, if your student loans are in default and tax season is coming up, be sure to watch your mail.

If your refund is taken and you don’t believe it should have been, you can contest the offset by contacting the Education Department. If it was taken in error, the money will be refunded. However, be aware that an error does not generally include not getting a notice; it typically would require that you be able to prove your student loan was not in default.

As we mentioned earlier, if you were in default, you probably can’t get your refund back. The one case in which you are likely to be able to recover the money is if you filed jointly with a spouse, and it was his or her student loan that was in default.

“You may be able to make an injured spouse claim,” said Fleischman.

How Can I Keep a Tax Refund From Being Taken for Student Loan Debt?

Fleischman said it’s a good idea to adjust your withholdings whether you’re subject to a tax refund offset of not. A large tax refund means you overpaid your taxes during the year, he notes. If you are in default on your federal student loans you probably need that money. But at this point, there is nothing you can do to change the over-withholding from last year. Still, revisiting how much you’re having withheld for taxes is a smart move for anyone who got a large refund.

The bigger problem is how you are going to deal with the default on your student loans from now on. You’ll want to get out of default and stay that way. (Here’s an explainer on how to deal with student loan default.) In some cases, you may be able to get an income-based repayment plan in which your monthly payment can be set as low as $0. And “if your circumstances are dire and expected to remain so,” bankruptcy and the discharge of student loans might be options, Fleischman said. (Yes, that can be done.)

For most, what is done is done. The best thing you can do is to look ahead. And if you haven’t filed your tax return and expect a large refund, you may want to see what options you have to get out of default first. Being in default on a student loan can not only squeeze your budget, it can hurt your credit and cost you thousands of dollars in higher debt costs over a lifetime. You can get two of your credit scores for free on Credit.com to track your standing.

Got a question about your student loans? We want to help. Ask away in the comments section below and one of our experts will try to get back to you. In the meantime, visit our student loan learning center for more info.  

This article has been updated. It originally ran on March 9, 2015.

Image: iStock

 

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19 Mistakes College Grads Make When Finding Their First Apartments

You aren't being graded on your apartment hunt, but you still want to get it right.

Finding your first apartment after college is a big undertaking — it can be hard to know where to start when you’re staring at a stack of listings and the money from your new job is burning a hole in your pocket. And you’re new to all this, so you’re bound to make some mistakes along the way.

But we can help. Take a look at some of these common slip-ups so you can do your best to avoid them as you search for a new place to hang your cap (and gown … see what we did there?).

1. Starting Your Search Too Early

“Generally, the best time to start looking for an apartment is no more than three weeks before your move-in date,” said Margaret Fanney, a licensed real estate agent at Triplemint in New York City. But once it’s time to start your search, you want to make you aren’t …

2. … Underestimating How Much Everything Costs

Whether you lived in student housing and paid on a semester basis, or you are moving to a different state (or even different city) post-graduation, getting your first apartment can be a big financial adjustment. (Still deciding if you want to move somewhere new? Check out these 15 best cities for college graduates.)

You can use the time before graduation to research how much apartments are in the areas you’re considering and what costs you might pay for additional amenities.

3. Not Planning for Expenses Beyond Rent

Most people think about the monthly rent check (or charge, if your landlord lets you pay rent by credit card), but that’s not the only expense you’ll face living on your own. Think about other necessities like laundry detergent, toilet paper and groceries. And remember, there are ways to save on your daily expenses — like making this delicious 16-cent breakfast.

4. Leaving Student Loan Payments Out of Your Budget

“Monthly payments for student loans are often overlooked … because student loans come with a six-month grace period before you have to start making payments,” said Brandon Yahn, founder of Student Loans Guy.

5. Forgetting About Credit

Most landlords look at a version of your credit report as part of the application process. Things like credit cards or loans (ahem … student loans) are impacting your credit. (You can read more about what factors influence your credit scores here.) Depending on how far into the world of credit you’ve ventured, your credit file may be pretty thin. Not sure? Now’s the time to find out — take a look at a free summary of your credit report on Credit.com.

6. Not Gathering What You’ll Need

“Graduates usually rush to find an apartment without contemplating on the requirements for renting an apartment,” Kobi Lahav, managing director of Mdrn. Residential in New York City, said. “They don’t have any offer letters ready, pay stubs or bank statements.”

7. Not Talking With Your Guarantors About Their Essential Paperwork

Once you’ve gathered all your paperwork, it’s important to also remind any guarantors of what they’ll need, as “springing it all on [them] at the last minute is guaranteed to cause delays and frustrations,” Fanney said.

8. Not Brushing Up on Terminology

“[Recent graduates] don’t typically know the difference in rental versus condo versus co-op building,” Greg Moers, a licensed real estate agent at Triplemint, said. “They tend to just shop for what looks awesome and do not take into consideration the process involved with putting together a board package and the cost.”

To get you started, check out this guide that deciphers 16 confusing mortgage terms.

9. Choosing the Wrong Roommates

Fanney suggests comparing schedules and lifestyles to see if living with a particular person is really a good idea.

“You should already be thinking about things like each person’s tolerance for mess and budget, but now that you have your first full-time jobs, you’ll have to make sure the lifestyles can coexist peacefully.”

10. Not Getting Roommate Agreements in Writing

Even if you’re living with your best friend, it’s important to write out responsibilities and agreements you’ve made about the living situation. You’ll also want to outline how bills will be paid and who is responsible for what. Hopefully you’ll never need to reference this for any reason, but you’ll be glad to have it all in writing if things go bad.

11. Not Considering Apartments With Fees

We know, all those fees are the worst. But some of these upfront costs, while painful at the time you see the money coming out of your account, may mean paying less over time.

According to Chelsea Werner, a Bold New York real estate expert, many of the no-fee apartments just add fees to your monthly rent. And, if that’s the case, “although you will pay less upfront, over time it will even out, as you will be paying more per month.”

12. Forgetting to Meet Potential Neighbors

“In college, your neighbors were probably other college students, but that probably won’t be the case now,” Fanney said. “Don’t let that stop you from getting to know your neighbors and finding ones you can trust.”

13. Not Factoring in the Landlord

“It’s sometimes better to pay a premium to be with a better landlord than to pay less and be with a bad landlord that doesn’t fix anything and is hard to reach,” Lahav said.

14. Skimming Over the Lease

In a time when we all just click “next” anytime we install an update on one of our devices, it’s easy to flip to the end of the agreement and sign on the dotted line. But it’s essential you know what you’re agreeing to and negotiate things that you’re not quite on board with.

15. Not Knowing Your Tenant Rights

Tenants (and even applicants) have federal laws protecting them. And, in many cases, there are state laws that help protect you too, so you’ll want to do your research and find out what legal rights you have ahead of time.

16. Passing on Renters Insurance

Renters insurance may seem like one more expense, but just like car insurance, having it may ultimately save you money in the event of a problem. You can read about the little-known ways renters insurance could save you money here.

17. Only Looking at the Bottom Line

“Graduates are very price-sensitive, so they will usually go with the cheaper apartment as their rule of thumb,” Lahav said. “However … they don’t realize that sometimes a cheap deal is not the best deal for them.”

18. Holding Out for Perfection

Apartment hunting can be a lot like a relationship — you start out with a list of ideal qualities, but the odds of finding someone (or some place) that meets all these may not be realistic.

“Regardless of your budget, there is no perfect apartment,” Werner said. “Renting is all about tradeoffs.”

19. Forgetting About What Comes Next

“When looking for an apartment, people have a tendency to not think about a rental as more than a one-year commitment,” Werner said. But, unless you have reason to move, you probably won’t want to go through the hassle. So, that’s why Werner said it’s a good idea to “think about how that unit will fit your life in the next few years.”

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5 College Degrees That Are Worth the Money

There's no doubt that college is expensive. Here are the degrees that can really pay off.

There’s no doubt that college is expensive. In fact, the average cost per credit hour is $594, according to a new Student Loan Hero study on the cost of a college credit.

For a typical four-year program, students will spend $71,335 on average. If you have to take out loans to pay for your own educational pursuits, you could end up paying even more thanks to interest charges.

With so much money on the line, it’s important to be practical. So when deciding on your college major, it can be helpful to consider the degree’s return on investment (ROI) before making a decision.

How to Determine a Degree’s Potential ROI

When considering a degree’s ROI, think about what the earning potential is in your chosen field.

Some fields — such as teaching — can be immensely rewarding, but are notoriously low-paying. If you can get a degree for a relatively low cost, it may be worth it. Otherwise, you may be overwhelmed with debt as you start your career. Try researching salary potential on PayScale or a similar site.

Another factor to consider is field growth. While some career fields have high average salaries (law, for instance), new graduates have saturated the market and competition is fierce. Getting your foot in the door can be difficult and many workers are forced to take lower-paying jobs to make ends meet.

One great resource is an interactive report released by the Federal Reserve Bank of New York. It outlines unemployment data by industry, starting salaries, and the income you should expect by mid-career. It’s a tool that can help you see what fields are most in demand to help you ensure job security later on.

Five Majors With High Earning Potential

With those factors in mind, here are five degrees that are generally worth the money spent earning them.

1. Engineering

Engineering is one of the top-paying careers available today. The top-paying engineering specialties are petroleum, chemical and electrical engineering.

The industry is expected to grow about 3% by 2024, according to the Bureau of Labor Statistics. This signals continued demand for new workers. In most cases, you only need a bachelor’s degree, and not a master’s or professional credential, to begin your career.

And as an engineer, you can command the highest entry-level salary of all of your peers. Starting salaries average $64,891.

2. Computer Science

Computer science is another lucrative degree with the potential to work in several different areas. Organizations of every size and scope need skilled technology professionals, from small nonprofits to huge Fortune 500 companies.

Computer science is growing rapidly. The field is estimated to grow about 12% over the next seven years, outpacing many other industries.

If you enjoy this type of work, job security is high. Entry-level salaries average $61,321.

3. Math & Sciences

If you enjoy math, a degree in math and sciences can open doors for you throughout your career. You can work as a market analyst, operations researcher or project manager in a range of fields.

As companies increasingly adopt technology and research to grow their business, math professionals will be highly sought after. Experts project that the field will grow by 28% over the next few years.

The average starting salary is $55,087.

4. Economics

Similarly, the field of economics is in high demand, and salaries are increasing to meet the need. Economics is expected to grow 6% by 2024.

However, before pursuing a career in economics, it’s important to note that most jobs require a master’s degree. The added cost of graduate school can drastically increase your education costs. So it’s essential to evaluate the total expense compared to the salary.

The starting median salary is $52,100.

5. Communications

This major often gets a bad reputation for fierce competition and low salaries. However, communications salaries have recently increased and demand for new workers has gone up, as well. Within this broad field, you can pursue a career in public relations, marketing, or broadcast media.

The Bureau of Labor Statistics expects the addition of 27,000 jobs in communications by 2024.

The average starting salary for someone in this major is $47,047.

Selecting a major is a huge decision with long-lasting implications for your future. Before making a choice, sit down and evaluate your financial, personal and professional goals. Then you can decide what makes the most sense for you.

Remember: Passion is important, but so is your future. Earning a degree that promises better salary and employment opportunities means you can pay off student loans faster and actually enjoy the fruits of your labor.

Editor’s note: Your student loan repayments can have an impact on your credit scores. To see how your repayment history is affecting your credit scores, you can check out a snapshot of your credit absolutely free using Credit.com’s Credit Report Summary.

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Best Ways to Spend Your Graduation Money

Sure you can just spend it, but here's how to ensure your future self will thank you.

Graduation is right around the corner and that diploma may not be the only piece of paper graduates are excited to receive. If you’re among them, it’s likely your family and friends are eager to celebrate your accomplishment, and you may be expecting some gifts in the form of checks or cash. As tempting as it may be to go out and spend this money right away, here are a few ways you may be able to put your graduation money to better use.

Begin Paying off Loans

While the stress of tests and papers will soon be off your mind, in comes the anxiety of having to repay those student loans. You’re not alone. Many students rely on loans to help them achieve their degree — the rising student loan debt is proof. Your graduation money may not be able to cover your entire loan, but it could be a good start. Since some loans accrue interest during the grace period, this money may be able to tide you over in the meantime.

You also may want to consider paying down credit card debt. If you racked up credit card debt during college and had only been making minimum payments, now is a good time to pay off any remaining balances so you can begin working on your student loan debt. (You can see how your student loan balances are already affecting your credit scores by using Credit.com’s free Credit Report Summary.)

Invest in Yourself

There are many ways you can invest in yourself after your college graduation. For example, you can pay to speak with a professional like a financial planner or debt attorney. These professionals can help you determine your financial goals and help you sort out your student loans so you can begin the repayment process. Another great investment in yourself is to join a networking group. This can be an opportunity to meet industry professionals and begin making a name for yourself. Speaking of making a name for yourself, consider investing in some professional attire!

Build an Emergency Fund

You may also want to consider “paying yourself first.” Now may be a good time to start saving your money and begin creating the perfect emergency fund. Storing your money away in a savings account can give you time to decide how you would like to best spend your graduation money. Just be careful not to dip into this when you’re looking for quick cash, as you may deplete your savings before you have a chance to put the money to good use!

When starting out in the workforce, things may be uncertain. You may look to change jobs or pursue a different career. An emergency fund can keep you afloat while you’re figuring this out. Consider putting away at least three to six months worth of living expenses.

Invest

Consider using your graduation money to make even more money. Investing in mutual funds, stocks, an individual retirement account or other investment tools while you’re young gives your money more time to compound, which can mean even more money for your future! These funds can be used later to help make larger purchases such as paying for a wedding or making a down payment on a home. Before looking to build your portfolio, consider speaking with a financial planner who can place your money in places that align with your financial goals.

Treat Yourself

You may want to set aside some of that money to treat yourself. After all, you’ve worked hard to earn that diploma and there’s no harm in celebrating this accomplishment with a gift to yourself. Consider using some of your graduation money on a purchase or experience that will remind you of all your hard work in college. This isn’t to say you should blow all this money on a frivolous or impulsive purchase, but life’s accomplishments should be celebrated. Your college graduation is no exception.

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15 Side Jobs Students Can Get Now to Pay for College Loans

Want to start earning now before your student loan payments come due? Here are some side jobs that could work for college students.

The total student loan debt balance in America reached $1.31 trillion at the end of 2016, according to the New York Federal Reserve.

Student loan debt grew by $31 billion in the fourth quarter alone and it was already the second-biggest form of debt in the country behind housing debt.

If you’re in school and expect to be adding to that giant total, it’s a good idea to start trying to earn some extra cash to put toward those eventual payments. Luckily, a college student’s schedule sometimes allows for time to work a part-time job and earn some money to put aside for when those payments start coming due. (This guide can help you understand your student loan repayment options.)

We asked experts for suggestions on the ideal gigs for college students and rounded up some of the best, including some you might not have thought of:

1. Drone Pilot

Until recently, you needed a pilot’s license to fly a drone for commercial purposes in the U.S. But the Small Unmanned Aircraft Systems Rule, which took effect Aug. 29, 2016, requires prospective pilots only to pass a written exam.

The relaxed rules have fostered a growing business for real estate drone photography, said Charles Markman, co-founder and co-CEO of Galaxy Media, a south Florida company specializing in such photography. Markman said photographers had flexible schedules since their real estate agent clients don’t have to be present at the houses they photograph.

Shoots typically take 15 minutes of work and earn $150, Markman said. College students could also work in sales at drone photography businesses, offering drone services to real estate agents.

Drone photography businesses are in most major cities, and Markman recommended reaching out and seeing if they need help.

2. Customer Service

Many companies like Amazon, U-Haul, Hertz and others, contract remote workers to work the phones fielding customer service calls and making sales calls, said Angie Nelson, founder of TheWorkAtHomeWife.com. You’ll need to find someplace quiet to take calls, so this job might not be compatible with dorm life, but it could be a good opportunity for students who live on their own, she said. (Looking for remote work? These 15 states had the most work-at-home jobs.)

Apple hires At-Home Advisors who work remotely, said Brie Reynolds, senior career specialist for remote work websites FlexJobs and Remote.co. These advisors have flexible hours and provide technical support for customers with Apple products.

3. Web Developer

“There will always be a demand for web developers,” said Vicki Salemi, a career expert for job search website Monster. “Whether you work for a company or have your own clients, it’s a wise move to make.”

You’ll need to know how to code in a language like JavaScript, Cascading Style Sheets (CSS), HTML or jQuery, Salemi said. A degree isn’t necessary, but certifications may help land a gig, and if you’re studying computer science anyway, picking up some practical experience might be good.

4. Driver

Ride-sharing services like Uber and Lyft can allow students to make money between classes and during off hours by offering rides. This could be a way to make designated driving pay on party nights.

And yes, someone always needs to bring the pizza from the restaurant to the house, but delivery services like Amazon Flex, Saucey and Postmates also need drivers, said Kat Tretina, side hustle expert for Student Loan Hero, a website that helps people pay off school debt. (Make sure you know what you’re supposed to be getting tipped.)

“All you need is a smartphone and a form of transportation like a car or a bike,” Tretina said. “Best of all, you can make deliveries on your own schedule when you have free time. You don’t need to commit to a specific quota each week.”

5. Lifeguard

Lifeguarding is a good way to make a buck during those long summer breaks. Many states require certification to work as a lifeguard, but even in those that don’t you’ll need to know how to swim, of course, and will likely be required to obtain CPR and first aid certification. A fondness for the color red helps too.

Private gigs may be more lucrative than watching over the local municipal pool. AquaMobile, an on-demand swim instruction service, hires swim instructors and lifeguards to work for private clients. The company said in an email that instructors can earn more than $26 an hour.

6. TaskRabbit

TaskRabbit aims to bring order to the world of odd jobs. Some of the jobs posted on the online marketplace include basic home repairs, running errands, house cleaning, assembling furniture or moving heavy stuff. No experience or degree required.

7. Selling Insurance

Martin Smith, founder of Wealthcare Financial Group, a retirement planning and investment management firm in Maryland, started selling insurance while he was a full-time law student at the University of the District of Columbia and a part-time law clerk at a national law firm. He met with life insurance clients twice a week, including some weekends.

“Eventually, my part-time income exceeded the full-time salaries of some of the first-year law associates at the law firm where I worked,” Smith said.

Smith’s side hustle became his full-time career for the next 23 years. You’ll need a license to sell life insurance. Requirements vary by state, but passing an exam is often necessary.

8. Be a Friend

Jen Smith, a blogger at Saving with Spunk, had an unusual suggestion: RentAFriend.com. People use the site hire companions for social events, weddings or more.

“People aren’t just hanging out with friends here,” Smith said. “They use the site to practice language skills, to find companions for elderly family or for a motivational workout partner.”

The website emphasizes that it is not for dating. Rates start at $10 per hour.

9. Clean Up

“In my commercial real estate days, we used to pay college kids to clean up and maintain vacant buildings and warehouses so they didn’t have weeds in the parking lot or spiderwebs all over the office when we took prospective buyers or tenants, ” said Chris Post, now owner of Post Modern Marketing in California.

Post encouraged students to ask local agents if they would be willing to pay for similar help.

10. Dog Walker

The ideal gig for an animal lover. Sites like Rover and Wag make finding opportunities to get paid for spending time with man’s best friend easier, but asking around at the local dog park could work, too.

11. Tutor

If you’ve really mastered one or more subjects, you can get paid for helping other students.

“There is a huge demand for tutors to help students get through standardized tests and their regular coursework,” Tretina, of Student Loan Hero, said. “And with new technology, tutors today can do video sessions rather than traveling to clients’ homes.”

Tutoring work can be found online at websites like Care.com. And Tretina said tutors can make more than $15 an hour.

12. Babysitting

“Babysitting is one of the easiest side hustles to pick up both in college and as a graduate,” said Erin Lowry, author of Broke Millennial, a personal finance book aimed at young adults. “Not only can you find opportunities through sites like SitterCity and Care.com, but ask professors and university staff if they know of anyone looking for a babysitter.”

13. Personal Care Aide

These jobs have increased 18% since 2015, according to Monster. You’ll need to be comfortable with cleaning bedpans and preparing food for elderly people. You may also need to know CPR. Jobs in the health care field are increasingly in demand as Baby Boomers age, Salemi said.

14. Rent Stuff Out

If this whole “working” thing sounds like a lot of trouble, students can also monetize their stuff. Old books or furniture? Sell ’em.

A spare bedroom can go for rent on a site like Airbnb (cleaning regularly will go a long way), and you can even put your car up for rent on Turo, said Tretina, of Student Loan Hero. Turo claims people who rent out their cars earn hundreds of extra dollars each month.

15. Don’t Forget Scholarships

This isn’t really a side job, but Lowry said college students seeking cash should take the time to apply for scholarships. They can be just as impactful on reducing your student debt.

“Every little bit can be used to cover the next semester’s costs and reduce the the amount of student loans,” Lowry said.

Any money helps, and more importantly, ignoring your student loan payments is a bad option with severe consequences. If you’re wondering how your student loans are affecting your credit, you can get a free snapshot of your credit report every 14 days on Credit.com.

Image: yellowsarah

The post 15 Side Jobs Students Can Get Now to Pay for College Loans appeared first on Credit.com.

Why I Refinanced My Student Loans — Twice

 

Refinancing your student loans can be a great way to accelerate debt repayment or free up some of your monthly budget. I recently refinanced my student loans for a second time, which was a strategic move to improve my overall financial health.

Here’s why I think this can be a smart idea, if you do it at the right time in the right way.

What Is Student Loan Refinancing?

If you’re new here and wondering what refinancing even is, allow me to explain. When you refinance your student loans, you essentially apply for a new loan so that a new lender will buy out your current student loans and give you a new loan with better terms.

“Better” terms depends on what your goal is. For many people, getting a better loan means getting a lower interest rate. If you want to save hundreds of thousands of dollars of interest over the life of your loan, refinancing is a great way to do that. You can structure your loan to pay it off faster at a lower interest rate. This might mean higher monthly payments than you’re used to but a much lower cost of your loan overall.

If you’re having trouble paying your student loans and your monthly payment is too high right now, you can also refinance your student loans to lower your monthly payment. So if you’re on a 10-year plan now, you could refinance to a 15- or 20-year plan to spread out your payments until you get on better financial footing.

Why I Refinanced Twice

About a year ago, I refinanced my federal student loans with SoFi because I wanted to get a better interest rate and pay off my loans faster. My student loans totaled $33,000 with an interest rate of 6.8% with 15 years left on the loan. My monthly payment was around $295 a month. I dropped over a half a percentage point in the interest rate to 6.25% and chose to pay off my loans in 7 years, which increased my monthly payment to about $485. Had I stayed with this loan, I would have saved almost $12,000 in interest fees over time.

I paid my monthly payments dutifully every month, but when my husband and I recently sat down to plan an aggressive debt payoff using the snowball method, we realized that I had been a bit too aggressive with my initial refinance.

Essentially, we wanted to throw as much money as possible at our high-interest debt. Our student loans were at manageable interest rates compared to our credit cards, and we wanted to restructure things a bit to free up more cash.

After receiving a refinance advertisement from College Ave in the mail, I decided to see if I could refinance my student loans and my husband’s graduate school loans with them. It had been only a year or so since my first refinance, but I was still interested. For the record, I tried twice previously to refinance my husband’s loans with SoFi, but they didn’t like his current salary as a medical resident, and they said I was not a qualified co-signer.

Well, luckily College Ave thought I was, so I was able to refinance both my student loans and my husband’s graduate school loans with College Ave. Our interest rates remained the same but I was able to customize a payoff plan that works well with our current debt snowball.

Basically, I chose a plan that allowed us to make graduated payments, so my payments for the next two years are significantly lower than they used to be. That gives me two years to knock out some of our credit card debt without worrying about having large student loan payments.

The Benefits of Student Loan Refinancing

In addition to getting longer or shorter payoff periods and better interest rates, there are other reasons why you might choose to refinance your student loans. For example, if you co-signed your student loans with your parents, sometimes student loan refinance companies will let you get a new loan entirely in your name, getting your parents off the hook.

Many people also refinance their student loans to be more organized. If you have several different student loans and bills with a mixture of interest rates, consolidating your student loans allows you to finally have one monthly bill with one interest rate in one place. This helps reduce the possibility of being late on your payments.

Things to Watch Out for Before You Refinance

While I’m obviously an advocate of refinancing, it’s important to know the downsides as well. The main downside is that if you refinance to a private company from having federal student loans, you lose a lot of the flexibility and perks of the federal student loan system.

Not all private lenders have as many repayment options as federal loans have, and most of them do not offer the perks that come with income-based repayment. For example, my husband’s medical school loans are under the income-based repayment plan called REPAYE, where the government is subsidizing his interest payments (several hundred dollars a month). This is not a perk I was willing to give up, but I was happy to refinance his private graduate school student loans to another private lender with better terms.

It’s Easier Than You Think

I know that switching student loan providers might sound like a complicated process, but with all the online financing companies available now, it’s easier than ever. The process to apply to refinance my student loans took less than 20 minutes both times.

Just make sure to have some identification documents on hand, like your driver’s license and Social Security card, to keep the process running smoothly. After my application was approved, it took about two weeks for my student loans to be completely moved over. Plus, since my new servicer paid off my own loans, that counted as a “payment,” which freed up even more cash this month.

Ultimately, student loan refinancing can be a strategic tool you can use when it comes to bettering your finances and getting out of debt faster. As long as you understand the process, ask to make sure you’re aware of any possible fees, and double-check that the process runs smoothly, you could be well on your way to financial freedom just by adjusting your interest rates and your payments on your student loans.

The post Why I Refinanced My Student Loans — Twice appeared first on MagnifyMoney.

Parents’ 10 Dream Schools for Their Kids (& the 10 Colleges Students Actually Love)

Spoiler: Parents and kids actually agree on their top choice.

Image: fstop123 

The post Parents’ 10 Dream Schools for Their Kids (& the 10 Colleges Students Actually Love) appeared first on Credit.com.

Watch Out for This 16% Student Loan Fee

The Trump administration has made it possible for debt collectors to once again charge hefty fees to some student loan borrowers who miss several payments in a row — even if those borrowers make an effort to get back on track right away.

These fees, which can be as high as 16%, are typically levied against the borrower’s entire outstanding loan balance and accrued interest charges. The so-called “collection charges” are meant to help recoup losses incurred by pursuing unpaid debts.

In a recent letter, the U.S. Department of Education rescinded an Obama-era rule that forbade guaranty agencies — debt collectors charged with recouping unpaid federal student loan debt — from charging defaulted borrowers collection fees if the borrowers began a repayment plan within 60 days of defaulting on their loans. In the new letter, the agency said the previous guidance should have included time for public comment and review before it was issued.

The reversal comes days after the Consumer Federation of America released an analysis of Department of Education data that shows the rate of student loans in default has grown 14% from 2015 to 2016.This certainly isn’t the first Obama-era rule or legislation the new administration has sought to undo, with an Obamacare replacement plan on its way to a vote in the House and plans to unravel regulations meant to crack down on for-profit colleges and universities.

A Department of Education spokesperson declined to comment.

Bad news for 4.2 million borrowers

The changes will impact borrowers who took out federal student loans under the old Federal Family Education Loan (FFEL) Program. The FFEL Program was phased out in 2010 and replaced with the current Direct Loan Program, but millions of borrowers are still paying back FFEL loans issued prior to that change. Those who have loans under the Direct Loan Program will not be impacted by the changes.

As it stands, some 4.2 million FFEL borrowers are currently in default on loans that total $65.6 billion, according to Department of Education data. Loans are considered to be in default after 270 days of nonpayment.

The changes will raise the stakes for borrowers struggling to make payments on their federal student loans, and make it even more important for those borrowers to avoid missed payments.

Fortunately, federal student loan borrowers are eligible for several flexible repayment methods, as well as forbearance and deferment.

An Ongoing Debate

The debate over a servicer’s right to charge borrowers a default fee has gone on for several years.

In 2012, student loan borrower Bryana Bible sued United Student Aid Funds after she was charged more than $4,500 in fees after defaulting on her loans. She started a repayment agreement to resolve the debt within 18 days, but was still charged fees.

The Department of Education sided with Bible and said companies had to give borrowers 60 days after a loan default to start paying up before they are charged fees. The Obama administration backed the Department of Education and issued the letter when the court asked for guidance on the issue.

There is one clear winner with this rule change: debt collectors.

“Rescinding the [previous guidance on collection fees] benefits guarantee agencies at the expense of defaulted borrowers,” says financial aid expert Mark Kantrowitz. He adds the change may increase the cost of collecting defaulted federal student loans, since borrowers will have less incentive to quickly rehabilitate their defaulted student loans.

What Happens If I Default on My Federal Student Loans?

Federal student loans are considered to be in default after a borrower misses payments for 270 days or more.

About 1.1 million federal student loans were in default status in 2016, according to Department of Education data.

The consequences of going to default are severe.

  • The entire balance of your loan + interest is immediately due
  • You lose eligibility for deferment, forbearance, and flexible repayment plans
  • Debt collectors will start calling
  • Your credit will suffer
  • And … your wages and/or tax refunds could be garnished

Are you missing federal student loan payments?

You’ve got options.

  • Contact your loan servicer ASAP
  • Find out if you’re eligible for a flexible repayment plan
  • Or ask about forbearance

Already in default?

  • Ask your loan service about loan rehabilitation
  • If you make 9 on-time payments over the course of 10 months, your default status will be lifted

You’ve only got one shot to rehabilitate your federal student loans after going into default. Don’t miss it.

 

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