In this country we have a love-hate relationship with college, college costs, and student loans. We value advanced education, dream of a college education for those who desire it; and then become appalled at the impact all that expense and related debt has on students, graduates, and their families.
For many people, student loans are the major funding source for a college education. There was a time when scholarships and personal funding (not by loans or second mortgages on a parent’s home) of college were the only way to make higher education happen. Massive use of a loan system wasn’t an option. Things have changed and that change has brought some major financial challenges, along with the rewards, for those who rely on student loans.
Clearly student loan debt and those monthly payments for a long period of time affect the financial lives of students who have loans. Finding a solution isn’t a quick and easy fix and it is one with huge political and fiscal implications at the legislative level. However, this week President Obama signed an Executive Order* to expand the reach of a program designed to cap monthly payments of most types of student loans to a more manageable level. Please click here to learn more.
If you are considering taking on student loan debt, it is important to understand all the details of what will be expected of you along with the benefits of higher education. Student loans can end up being a long-term commitment and it is your call as to whether or not it is worth it to you.
Until next time.
*Executive Orders (EOs) are legally binding orders given by the President, acting as the head of the Executive Branch, to Federal Administrative Agencies. Executive Orders are generally used to direct federal agencies and officials in their execution of congressionally established laws or policies. However, in many instances they have been used to guide agencies in directions contrary to congressional intent. Source: http://www.thisnation.com/question/040.html.com
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I was attracted to a post in the Huffington Post which acknowledges that many Americans are not having their basic banking needs met by the existing services. A few years back I probably wouldn’t have even noticed an article about the subject. Yes, I have seen payday loan advertisements, been at the local super market where people cash paychecks, or even seen check cashing businesses in the strip mall. However, they were just part of the background scenery. Everyone in my life knows her or his way around banks, mortgage companies, brokerages, and all that the financial world offers. Of course they offer it to us because it is profitable.
My perspective changed when I moved to a small town located on the coast of the Gulf of Mexico in Texas. The people with money are visitors, business owners, and those who own resort properties. The local workforce includes a high percentage of low-income people or those living at poverty level. No longer was I living in the suburbs where having a checking account with a debit card is a fact of life for high school students. I found myself standing in line at the post office with lots of people who were getting money orders to pay bills and send money to family members. Sometimes it actually looked more like a bank than a place to send and receive mail. That’s why this concept of basic and uncomplicated banking services at the post office seemed logical to me.
Over time I learned a lot about why the low-income people around me avoided traditional banking systems. One reason is that often they were undocumented and want to remain invisible. Even if the person does have legal status, often he or she was brought up in a family where the parents were undocumented. The children simply emulate what the parents did and the cycle of using cash, money orders, and expensive loans is perpetuated. People living in poverty or on very low incomes see banks as scary places which they don’t trust. Even those of us who are middle-income and above often have that same feeling. Things have just gotten very complicated.
According to the article, collectively those households which use alternative banking products spent about $89 billion in 2012 on interest and fees. That represents a huge cost for people with lower than average incomes.
Please click here to read the entire article. The concept of tying simple and affordable banking services to the local post office is being done elsewhere successfully. There is a very good chance that those people currently using alternative banking methods would be more trustful of a place they have visited throughout their lives, the post office, than they would be of banks which really don’t want them there anyway. There are benefits to the U.S. Postal System too!
Until next time.
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Nice post and great information from onyourown.org.
If you are just venturing out into the world of credit and credit cards please click here for some quick and easy tips which can make life a lot easier.
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