by Repayable | Dec 5, 2016 | #Millenniallife, Money Matters
Giving the perfect gift can be such a thrill… until you look at your bank account. When you’re aggressively repaying your student loan debt it can feel like every extra gift is pulling you farther away from financial freedom. That mindset can make you feel pretty grinchy!
Don’t worry, you can navigate Holiday gifting without completely derailing your student loan repayment strategy.
Read on for my solid strategies to avoid being a Scrooge without falling off the student loan repayment bandwagon.
Fair warning, this article is really designed for folks who are making extra monthly payments rather than just the minimum monthly payment. If you’re already making only the minimum monthly payment your budget is much tighter than the strategies in this article cater to.
Make every gift worth it.
If you’re going to buy gifts make them worth it. Don’t just buy someone something for the sake of doing it. Really try to find out what that person wants/needs and spend your money on that.
For example when buying gifts for your friends or family who have student loan debt of their own consider buying them something that alleviates another cost burden. You could consider gifting an annual membership fee to their professional organization or alumni organization. Boring, yea, but you’re helping them out and you can feel good about that.
It’s not all or nothing.
Extra student loan payments aren’t all or nothing. Just because you can’t make as large of an extra payment as usual doesn’t mean you can’t pay any extra. The “all or nothing” attitude will delay your repayment. It’s ok if you can only afford to throw an extra $50-100 at your loans this month. That’s still some progress.
Map out your gift-giving.
Come up with a gift giving plan that includes all the people you need to get gifts for, how much you want to spend, and then an extra mystery gift for in case you forgot someone! This way you can decide how much you’ll be spending and you can hold yourself accountable for making even a little bit of an extra payment.
Size does not matter.
Think small and meaningful gifts rather than extravagant and expensive. Your student loan debt repayment is important to you. This means during the holidays you need to take a little extra time to carefully plan your gifts so you can get the most bang for your buck on a gift that someone will remember.
Here are a few gift ideas that can be meaningful without costing you a mint. The Amazon links in this post are associate links which means I get paid a commission if you make a purchase.
For the ladies in your life:
- If she wears earrings find her a unique pair of earrings that really shows off her personality. Here are some of my personal favorites for the writer, reader, scientist, engineer, or 90’s girl.
- For the avid reader, find some classic second hand books in good condition or a new book that you know she would love to read. Tie the books together with some twine for an old-timey feel and toss in her favorite snack so she can munch and read.
- Consider a gift card to somewhere she likes to go. Is coffee a treat for her? Buy a little gift card to her favorite coffee shop. Does she love fashion? Get her a Stitch Fix gift card. The possibilities are endless when it comes to gift cards. Just be sure to make it a little more personal with a handwritten card.
For the guys in your life:
- If he’s a gamer the obvious move is to buy him a new release he’s been eyeing. The not-so-obvious move is to go retro and buy him the digital NES system. It’s $60 which is about what you would expect to pay for the freshest titles on Xbox or PlayStation. We’re children of the 80’s and 90’s the nostalgic value of this digitized 1985 system is off the charts! P.S. anyone could also buy me one of these… I want one so bad!
- Does he consider himself a mixologist? Consider getting him a mixology kit or a specialty cocktail kit. An alternative would be a new cocktail book to suit his style.
- Is he a fitness enthusiast? Consider getting him a gift card to his favorite running store. Or the piece of workout gear you know he needs. Is he a coffee lover? Give him a gift card to his favorite coffee shop. The possibilities are endless for gift cards. Just don’t forget to make it a little more personalized with a handwritten card or something cute.
For everyone:
- A movie you know they would like. I’m thinking Star Wars: The Force Awakens or Star Trek Beyond for the Sci Fi lovers in your life, Step Brothers or The Big Lebowski for the comedy lover, Zootopia for the cartoon lover, Space Jam or Jurassic Park for the 90’s kid, the movie options are endless.
- My upcoming book Repayable makes a great gift for anyone looking for student loan debt liberation. I expect it to launch near Christmas. The Kindle version will be available for pre-order ($6.99) on Amazon very soon. The print version should be available by the end of December ($12.99).
- A unique travel coffee mug for the tea or coffee drinker on the go like this one for photographers. Make it a good one that doesn’t leak no matter how you tip it.
- Vacuum cleaner, gym membership, or an etiquette book. Bahaha I’m just kidding about these! Unless someone specifically asks you for any of these gifts you’re going to offend them.
Enjoy shopping and repaying your student loans you rock star. Nothing is impossible in the quest for student loan liberation!
Comment below with your best and worst Holiday gift ideas!
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by Repayable | Nov 21, 2016 | #Millenniallife, Money Matters
This election season was rough, and after Senator Bernie Sanders was no longer a candidate it felt as though student loan debt got shoved to the back of everyone’s political agenda. What remained of plans for student loan debt were small morsels added on to existing campaigns designed to attract millennials. Then the unimaginable happened and the U.S. elected you know who… Yea I feel the same about saying that human being’s name as the characters of Harry Potter felt about saying Voldemort’s name. Now you know who I voted for.
Anyway, political leanings need to fade into the background because half of the country was quite happy with themselves after the election. So as we move forward Repayable will be focused on helping you navigate student loan debt, no matter the regime controlling it.
With that let’s dive right in to what D.T. has to say about student loan debt.
Increasing College Accountability in Controlling Costs of Education
Mr. Trump’s website states that he will
“Work with Congress on reforms to ensure universities are making a good faith effort to reduce the cost of college and student debt in exchange for the federal tax breaks and tax dollars.”
This implies that he would financially incentivize colleges to reduce costs.
Access to College Education
Mr. Trump’s websites says he will
Ensure that the opportunity to attend a two or four-year college, or to pursue a trade or a skill set through vocational and technical education, will be easier to access, pay for, and finish.
This statement doesn’t discuss how he plans to make college easier to access, pay for, and finish. However the statement above and the next statement address the affordability point.
One Income-Based Repayment Plan to Rule Them All
Mr. Trump’s plan for student loan debt is to create one income-based repayment program and eliminate the other repayment programs. His plan is to cap repayment at 12.5 % of income and forgive the unpaid amount after 15 years.
“And if borrowers work hard and make their full payments for 15 years, we’ll let them get on with their lives. They just go ahead and they get on with their lives.”
This plan would be a huge advantage for borrowers and come at a huge cost for the government. Unfortunately this plan alone fails (as all existing plans do) to deal with the actual problem, skyrocketing costs.
It also leaves a few questions unanswered:
Will the forgiven loan amount be taxed?
Probably. Currently, loan amounts forgiven under income-based plans are taxed as income.
What if your existing income-based repayment plan is only 10% of your income, will your payment go up?
If Trump goes with “one plan to rule them all” then yes, however if this program is just added on then you could still keep the payment plan you already have.
What happens to other forgiveness options like PSLF?
Trump is in favor of simplifying student loan repayment. That means that programs such as PSLF could be eliminated.
What does it take to start up this 12.5% 15 year repayment plan?
Trump doesn’t need Congress to do this. He can add his repayment plan directly through the Department of Education regulatory process, President Obama did this.
None of the above information is law or certain to come to pass. So it’s hard to say how exactly these ideas may shift and change over time and which of them will be implemented.
However, Mr. Trump does seem to think differently about student loan debt than many in the Republican Party. Unlike typical Republican views, that the government shouldn’t be involved in student loans, Trump at least says he believes in the government sharing responsibility for student loan debt.
For now be sure to stay out of default by making timely payments on your student loans. If you’re struggling to make your payments, enroll in an existing income-based repayment plan to cap your payments at 10-15% of your income.
What policy change would you like to see regarding student loan debt? Comment below or post on the Repayable Facebook Page to share your thoughts.
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by Repayable | Oct 17, 2016 | #Millenniallife, Money Matters
When you’re the one living with student loan debt, you feel the increasing financial burden of your education. But what can you do when it seems like the rest of the country just doesn’t get it. You might even hear things like, actually college is getting cheaper because there is more aid available. Then why is student loan debt going up?
Today’s post is all about the spooky stats of student loan debt. It’s not pretty but if we hope to create a movement that propagates sweeping change we’ve got to face the facts.
Check out the info-graphic below and read the article for a brief explanation (and citation) of each statistic.
Sheer Amount
Student loan debt is the second highest consumer debt in the U.S. Student loan debt is second only to mortgage debt coming in at a grand total of around $1.3 trillion dollars.
Skyrocketing Cost
The cost of attendance (tuition + fees) at all colleges has increased nearly 3 fold since 1963. Average cost of tuition & fees for all institutions in 1963-1964 was $3,900 in 2014-2015 it was $11,487[1]. That’s a 2.95-fold increase!!! Essentially tuition and fees cost three times the amount today as they did in 1963.
[1] NCES Table 330.10 Average tuition and required fees, all institutions.
Public Tuition
Tuition and fees at public universities have increased more than 400% since 1963. In 1963-1964 tuition and fees at 4 year public institutions was $1,867 and in 2014-2015 it was $8,543.[1] This means the cost of tuition and fees more than quadrupled at 4-year public institutions!
[1] NCES Table 330.10 Tuition and fees, 4-year public institutions
Sticker Shock
The average class of 2016 college graduate has over $37,000 in student loan debt. The amount of student loan debt borrowers graduate with has risen at more than twice the rate of inflation in the last 10 years.
Still Growing
Student loan debt is increasing by $2,726 every second. You can watch the doomsday clock…. er student loan debt clock tick onward here.
These stats aren’t here to scare you, rather they’re here to prepare you. It’s only by knowing and understanding the truth that we can build a movement to change the way we fund higher education in America.
If you found the article or info-graphic helpful please share it with someone you know. Information is the start of transformation.
To get involved in the movement to make student loan debt truly repayable head over to repayable.org where you can sign up for details about the Repayable book (out Dec 1st). Repayable is your one stop source for everything student loan debt related.
For more student loan tidbits check out the Repayable Facebook Page #1bookvs1trillion.
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by Repayable | Oct 3, 2016 | Money Matters
Free college education skyrocketed Senator Bernie Sanders to popularity with millennials. It brings to mind this question; if you could reform college education how would you do it?
Unfortunately, I don’t meet the age requirements for presidential election just yet (Burckart for president 2024). But if I was running for president, you can bet college education reform would be at the top of my list of issues.
So what do I think needs to be reformed? You mean, besides everything related to how much college costs and how we fund it?
Here’s my simple reform plan sure to please both sides and not break the budget.
Please both sides, yea right.
All Colleges Would be Required to Provide Cost Data
Any college that receives federal or state money, or any tax incentives would be required to provide certain cost data.
This cost data would include historical and current charts of annual tuition, annual tuition increases, annual graduation rates, annual job placement rates, average total student loan debt of graduates, and average starting salary of graduates.
I would also require colleges to report this specific information for each and every major and degree they offered.
Why so much data reporting?
Without objective information about the actual costs to attend college it is nearly impossible for a high-school student to pick a degree and major that suits their interests and won’t bury them in un-repayable student loan debt.
These statistics would allow students to compare the different financial pictures of majors they’re considering. Should they major in family studies or counseling psychology? Both could enable them to work with the specific population they’re interested in. Does one cost more than the other? Does one pay more than the other? Do graduates from this program have higher job placement rates at one college vs another? Is tuition cheaper at one college vs another?
Right now there’s no single source to find out.
Without that source colleges can let costs swell and be lazy about tightening their belts. They can pass cost increases along to students because it’s very difficult to tell where the best value lies.
Transparency would promote competition, cost-savings, and potentially change job placement rates. Colleges would want to look as good as possible to potential candidates. Thus students would get more out of the tuition they paid.
One potential problem with this is that the very best colleges would become incredibly competitive. That means that students who are weaker candidates may end up paying more for a lower-quality education. I will argue that this already occurs in certain fields (pharmacy I’m looking at you) between public and private schools.
Tuition Increases Would Be Capped
Regulating tuition increases would likely need to be done in conjunction with preserving state funding for these institutions. It seems like cutting funding for higher education is like finding money in the couch to policy makers.
Oooh I found a few million dollars… and some lint!
A tuition cap would look something like a rent cap or rent stabilization. Similar to how rent controlled properties work in NYC. The idea is that you don’t squeeze folks less able to afford renting, or in this case tuition, out of the market.
So for example if there was a tuition cap, the government would say, if you start a 4-year degree program in 2016 at an annual tuition of $8000 you will continue to pay only $8000 annually until you graduate. I would want to apply an appropriate time limit and at least a half-time enrollment status requirement to encourage graduation in a timely manner.
A possible problem I could see with this is that essentially for each incoming class, colleges would charge more and more tuition because they would know they couldn’t increase it for those students for 4-6 years (or whatever the length of the cap).
Federal Student Loan Interest Rates Would Be a Bargain
Student loan interest rates aren’t always reflective of current market interest rates.
This lack of response to market interest rates can be seen as an advantage. If there’s high inflation it means student loan interest rates will take longer to respond and hopefully don’t incur the same sharp increases as say a mortgage interest rate would.
The downside to this though is that when interest rates are low (like right now) you’re paying well above standard amounts, and that’s a difference of thousands of dollars.
The government could make student loan interest rates more reflective of the financial market.
I think the better option is simply to standardize the interest rates at 1-2%.
This could provide the government some incentive to minimize the risks of defaulting by controlling costs of college attendance so they wouldn’t lose money due to inflation.
The major problem with this is that in years of inflation the government could lose money. If there are a lot of students who default on their loan repayment then the government could lose money. Again I think this would just give the government a little bit of skin in the game.
What would you put in your presidential campaign?
These are just a few of the ideas I have for making the student loan debt burden repayable. For an entire chapter full of possibility check out my book Repayable out in December of 2016. Please share your best ideas for change in the comments below or in the Millennial Maxims Facebook group.
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by Repayable | Sep 19, 2016 | Mindset, Money Matters
You’ve heard a lot about saving for retirement. Terms like compounding interest, 401K, IRA get tossed at you on the daily.
But let’s get real, a lot of the advice is garbage once you start to look at it in light of massive amounts of student loan debt.
It’s all half-baked advice from people who never had student loan debt. Let me expose the most common piece of half-witted advice so you can find the piece of truth that applies to you.
The folks giving you this advice aren’t stupid, they’re usually quite financially literate. They typically want the best for you and think they’re giving you rock solid advice. The fact of the matter is what used to work isn’t going to work in the era of crushing student loan debt.
You’ve got to put everything you can into your 401K because you get compounding interest.
What’s the big deal about compounding interest? Well, it’s awesome. Let’s say you put $1000 in your 401K, you make 1% interest so now you have $1010. That means next year you even if you don’t contribute and you earn 1% you’ll make $10.10 instead of the $10.
Ok so you can see with that small amount of money compounding interest isn’t super sexy. But if you have enough money and enough interest you can stop contributing and the interest will continue to build off itself. This is why the saying “the rich get richer” is so true. When you have enough money invested you can withdraw some money and still see your money grow (FYI this is the actual goal of retirement so you never run out of money).
Therein lies the first hole of the argument for throwing everything you can at a 401K. When you’re throwing peanuts in, the compounding interest isn’t doing you a ton of favors. If you had nothing else to spend your money on that might make sense, but remember you have lots of student debt.
Compounding interest works on your student loan debt too. When your federal loans are sitting around earning a pretty 6.7% that compounds on itself too. If you can’t keep up with your interest payments your loan amount will continue to exponentially increase. This is how people get into trouble with credit card debt.
The more you can pay on your loans the lower the principle and the less interest you’ll pay. Essentially it’s the inverse of compounding interest. Perhaps I should call it decelerating debt.
So what’s a financially savvy debt-strapped millennial to do?
Contribute only enough to your 401K to get your employer match. Do not contribute above that amount until your debt is paid off.
You won’t hear this advice anywhere else. People are illogical and will advise you to seek out the compounding interest of the 401K without acknowledging the impact of the compounding interest of your student loan debt. Let me break it down.
Why should you contribute to a 401K at all?
- You want to retire some day.
- Employer match money is free money.
- Match money doesn’t depend on the stock market.
Why not contribute extra to your 401K?
- You are not guaranteed a positive performance out of your 401K. In 2015 I got a 0.75% return, a colleague got a negative return -0.47% aka he lost money.
- You are guaranteed to earn interest on your student loans at your prescribed rate (6.7%)
- Assuming your debt and 401K have the same rate of return your student loan amount is probably higher than the amount in your 401K. Now you have a dichotomy where the total dollar amount of interest for your debt is more than the total dollar amount of “interest” (aka rate of return) of your 401K.
- That looks like this: $100,000 in student loan debt at 6.7% vs $10,000 in 401K at 6.7% rate of return.
- Student loan debt -$6,700 401 K +$670 net amount on the year -$6,030 … ouch!
The Retirement Advice You Need to Listen To
Contribute enough money to your 401K to get your employer’s match. Pay the rest to student loans.
- If you can’t afford to contribute enough to get the entire match contribute 1% of your total income to get yourself in the habit of contributing while still getting some of their match.
If you don’t have an employer sponsored 401K option open up an IRA. Again aim to contribute 1 % of your income to this to build the habit. You’re not leaving anyone’s money on the table so you will be better served by aggressively repaying your debt.
If the amount of money in your retirement account is equal to the amount of money you have in student loan debt consider your options carefully. It is my opinion that you will be better served by eliminating debt. However mathematically this is tough to objectively quantify. Here are some things to keep in mind.
If you eliminate debt early:
- You can focus on contributing to retirment and contribute maximal amounts of income
- You have the opportunity to find additional sources of investment which diversify your financial portfolio and develop yet another income stream
If you contribute aggressively to your retirement:
- Early investment maximizes the potential for your interest to compound which means contributions made early on have more impact than those made later
Retirement seems like a worry for your future self to deal with but it’s something you need to develop a strategy for today. There are many individual factors that play into retirement including the amount of student loan debt you have and the interest rate on that debt.
There are many ways to look at issues of finance and unfortunately these have not yet been tailored to the needs of our millennial generation. I hope this post shed a light on the impact student loan debt interest has on the ideal strategy for retirement.
The advice I gave in this article is pretty unconventional. I would love to hear your thoughts, what you agree or disagree with in the comments below or in the Millennial Maxims Facebook Group.
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by Repayable | Sep 5, 2016 | Money Matters
I love Pokémon Go… I’m not ashamed of it, I seriously love it.
Pokémon games, TV shows, movies, and cards were a huge part of my childhood. I played Pokémon Yellow on my Gameboy Color and Pokémon Snap on my N64. I collected and traded so many Pokémon cards, the foil cards were legit. I can remember seeing the Pokémon movie and being enraptured by Mewtwo.
My nostalgia runs deep making Pokémon Go a serious addiction for me.
So one night as cars were dodging me and I was wandering through strangers’ backyards playing Pokémon Go (just kidding I don’t walk out into traffic and I’m not a trespasser) I indulged in a thought exercise (also kidding I can’t think about anything other than catching ’em all while playing).
So anyway sometime after playing I started to wonder what it would be like if student loan repayment was structured like Pokémon Go… Here’s what that lead to… enjoy 🙂
Student Loan Payments That Level Up
Your student loan payments would start out as wimpy little things. Payments that don’t break your Pokéballs er I mean wallet.
In the same way that catching Weedles and Caterpies sharpens your aim and helps you gain 
experience, starting small gives you a feel for making payments while letting you build some momentum. That way the transition from student to adult isn’t so startling and it builds a little financial confidence.
Helpful Tools To Accelerate Your Progress
Much like better pokéballs aid you by providing a higher catch rate, think of a master ball-like tool that would help you secure variable interest rates at low percentages or even capture elusive grant or forgiveness opportunities.
What if you could make your student loans easier to repay with a razz berry? You could use the razz berry and for the next payment a larger percent would be applied to principle.
Perhaps you could incubate some good fortune much like an egg. Just like you have to walk all over to hatch an egg maybe you have to make many repeated payments to hatch a lower interest rate, or like incubating eggs maybe you end up with the same thing you already have, it’s a surprise!
Medals for Milestones
Much like in Pokémon Go these medals wouldn’t actually do anything for you. They would just be a pat on the back and something you can feel good about. Or they might annoy you because you have a lucky egg out and they’re wasting your time…
Lucky Eggs
Because dang it I want my payment to count for double for a 30 minute time period. I will save up as much money as possible and then apply it all to my loans at once. Watch my XP soar and my loan amount fall! Oh man, that lucky egg would be filled with so much happiness!
Unfortunately student loan repayment will never be as exhilarating as Pokémon Go. It will never be so addicting that you buy an external battery pack and run your phone down to 2% because you just can’t control yourself.
But repaying your student loans can be rewarding. You can make progress and level up in your financial life as your debt ticks down. For the best tips and tricks to repay ’em all be sure to check out my upcoming book Repayable, launching in Fall of 2016.
Let me know what Pokémon Go characteristic you wish existed for student loan repayment in the Millennial Maxims Facebook Group or in the comments below!
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