Student Loan Debt and Bankruptcies

A 12 On Your Side Alert for anyone who thinks bankruptcy is the answer to mounting student debt. A typical student owes about $25,000 when they finish school. But that debt stays with you -- always.

Graduating college is the exciting part, repaying student loan debt, not so fun. Counselors at Clear Point Credit Counseling solutions say the ability to repay is not getting easier.

"Aside from the increased school cost that seems to go up each year, there is also the unemployment rate, about 7 to 8 percent of college graduates will continue to be unemployed," said Clear Point Credit Counselor, Patrick Owens.

The news doesn't get better. Student loan debt is keeping Bankruptcy Attorneys busy. A new report by the National Association of Consumer Bankruptcy Attorneys says there's a major increase in people with student loans looking for help; many of them are turning to bankruptcy.

"If they go through bankruptcy, they may find out those loans can't be discharged through the bankruptcy. And while their credit cards and medical bills and everything else can, student loans are going to be placed on hold and they will have to pick up with those payments right after they bankruptcy process," Owens said.

Owens says you may be able to get a deferment but no matter what happens in bankruptcy court, you eventually will have to pay up. Many times parents will step in to help. Credit counselors say this is not always the best thing to do. Remember, if your child doesn't pay, you are stuck with the debt.

"I have seen a lot of parents have to take out of their 401k savings or use reserves to pay down or pay off student loans just to help stop a default,"Owens added.

There are some options to avoid racking up student loan debt. Experts recommend looking into community colleges and two year institutions to decrease the amount you will have to borrow. Another tip, consider your career path.

"When you are choosing your major, make sure you know what the salary ranges will look like when you graduate. Considering how tough it is to be hired now, you don't want to be saddled with a lot of debt but end up with a job that has lower pay," Owens said.

And for all you college students that have extra money left over each semester after paying for classes, don't just blow it. Use the money to start paying off the loan. If you spend it, you'll have to pay it back in the end.

Source: http://www.nbc12.com/story/17210416/student-loan-debt-increasing-bankruptcies

Saving for College: What Parents, Students Need to Know About Custodial Accounts

Growing up is tough enough without the worries of your financial future, so Money101 is here for you. E-mail us your questions and let us take off some of the pressure.

Saving money for college in a weak economy can seem insurmountable, especially with rising tuition costs.

Students and their families have a plethora of savings options, including custodial accounts, which include a Uniform Gift to Minors Act account (UGMA) or a Uniform Transfer to Minors Act account (UTMA), invested in a bank or brokerage firm.

A UGMA custodial account is a simple way of transferring securities to a minor without the need for an attorney to prepare trust documents or for the court to appoint a trustee, according to FinAid.org. The terms of these accounts are determined by a state statute.

A UTMA custodial account is similar, but tends to be a little more flexible than a UGMA account. Along with CDs, stocks, bonds, and mutual funds that UGMA accounts usually invest in, minors can also own real estate, art, patents, and royalties with a UTMA.

Before the child reaches the age of majority or termination, which varies by state, the first $950 of unearned income is tax free, the second $950 of unearned income is taxed at the child’s tax rate, and any amount over $1,900 is taxed at the parent’s rate.

Once the child reaches the age of majority, the custodian managing the account transfers control of the funds to the child and any additional unearned income for the child is taxed at the parent’s rate under the “kiddie tax” rules.

“When these Gifts and Transfers to Minors Acts were initially set up, they were sort of ways for families to save money for their kid’s college, but what they were in actuality was a way to transfer wealth and tax attributes from high margin tax payers to lower margin tax payers,” says Margaret Munro, author of 529 and Other College Savings Plans for Dummies.

Munro points out that before the child comes into control of the account, parents are required to file a separate tax return for that child.

“You as the parent, up until the child is age 14, are to file a tax return on behalf of the child,” she says. “When the child is 14, they are old enough to sign his or her own return and then the requirement falls on the child to make sure that return is filed,” she says.

Advantages of a custodial account

Setting up a custodial account for a child may make sense for a high-income family looking to transfer wealth at a lower tax margin, according to Jeff Rose, certified financial planner and author of the blog Good Financial Cents.

“[For] someone who’s in the highest tax bracket to be able to gift away $13,000 or so for however many years, that can have a pretty substantial tax savings for that person,” he says.

Unlike a 529 college savings plan, where the money must be designated for educational purposes, the beneficiary of a custodial account can use the funds for whatever they choose to once they become of age .

“Prior to that, the custodian, who is typically the parent, can determine how to use that money for the benefit of the child,” says Joe Hurley, founder of SavingForCollege.com. “It’s actually probably an advantage rather than a drawback because if there are other needs that the parent wants to use that money towards, they can do that.”

Parents should be aware that even if the money is not used for school, it must be used in some way that benefits the child that does not fall under standard “parental obligations.” Things like a school trip to Europe, a new computer, or a few weeks at summer camp can be considered acceptable uses for the money, but parents should make sure to document any spending out of the account.

“You can always be asked by the IRS to provide proof that you actually spent it in this way on your child or on the custodial child,” says Munro. “That’s just good fiduciary practice, because the custodian has a fiduciary responsibility.”

Disadvantages of a custodial account

Although having the flexibility with the money in a custodial account can come in handy if your kid wants to use some of it on a big-ticket item, Munro cautions that once the child becomes of age, they may not choose to use it for college expenses.

“You’re handing a whole lot of money to somebody who has no idea how to handle it,” says Munro. “It doesn’t matter what your intent was, you could have labeled it the ‘UGMA college fund’, and [the kid] can do whatever he wants with it when he turns 18 and that’s a very big red flag for me.”

Unlike a 529 plan where if the child chooses not to go to school, you can transfer the money to another beneficiary for education purposes, UTMA and UGMA account beneficiaries cannot be changed; the custodian has given up all rights, titles, and interest of the property.

“It is a completed gift with the exception that if you die while the child is still a minor, the property is pulled back into your estate because you still as the custodian retain some control over it, but you cannot change who you are giving the gift to,” says Munro.

If financial aid is a concern for a family, having a custodial account in the child’s name can affect their eligibility.

“It counts as a student’s asset and therefore is assessed at a 20% rate in computing the Expected Family Contribution, which is a significantly higher rate than parent’s assets and a significantly higher rate than 529 plans, whether they’re owned by the student or the parent,” says Hurley.

While it is possible to liquidate a custodial account and transfer the funds to a 529 plan for the same beneficiary, Hurley explains that the minor will be taxed on any capital gain triggered as well as the impact that those capital gains could have on financial aid and income.

Should you decide to invest in an UGMA or UTMA account for your child, the experts recommend seeking the advice of a tax professional that is well-versed in the kiddie tax rules, which are adjusted annually and hard to track.

Source: http://www.foxbusiness.com/personal-finance/2011/10/06/saving-for-college-what-parents-students-need-to-know-about-custodial-accounts/

Saving for College: What's Changed In The Recession?

Retirement or “The College Fund."

Are you faced with that choice? For many parents, figuring out the right balance between those two financial goals has always been tricky, but it’s become particularly challenging in today’s economy. Most families have tightened their household budgets; for those where a breadwinner has lost a job or had their income cut, saving for college has become a difficult, if not impossible, goal that takes a back seat to more immediate priorities.

So how are families coping, and what are some of the strategies being employed to deal with this significant expense?

The recent recession pushed some families to look to grandparents to help with education funding, according to Carl Amos Johnson, a fee-only fiduciary adviser based in New Hampshire. “This is where the 529 Plans shine: As an asset of the grandparents.”

Other financial planners said they’ve been working with clients to help re-evaluate college goals. As part of this process, they look at the degree program that the child is hoping to pursue, the job prospects for that degree, and the income that can be expected from it. One alternative that some families consider is to have their child attend a community college or junior college for two years, and then transfer to a university of their choice for the final degree. This saves parents money on tuition, room and board if the child stays home during the first two years, according to Sean P. Kelleher, principal of Riverchase Financial Planning in Lewisville, Texas.

Not all students, or their parents, are willing to consider the community college option. “I am getting a lot of clients that are having an issue with overspending for college,” said Laura Scharr-Bykowsky, a principal at Ascend Financial Planning in South Carolina. Parents “are aggressively funding their kids’ education to the detriment of their retirement. They are focusing too much on the short-term goal.”

Instead, parents should set expectations up front with their children, and have a frank conversation with them about what they can, and cannot, afford, Scharr-Bykowsky said.

This is particularly true since many families have invested their college savings in portfolios that have suffered declines in recent years.

“Where habits have changed or may need to change is the savings rate,” according to Philip Lee of Modera Wealth in Boston. “I have had to sit in front of a client and tell them that because of the portfolio declines, the monthly amount they need to contribute to meet their goals has increased, and increased significantly, and that’s a tough message.”

Source: http://articles.boston.com/2011-10-18/business/30298477_1_financial-goals-degree-program-education-funding

Four Steps to College Saving

The College Board reported that the annual cost of in-state tuition and fees at public universities averaged $7,605 in 2010. That puts the cost of a four-year degree at more than $30,000, and that figure doesn't begin to factor in costs such as housing, books and food.

And if the public-school figures seem unsettling, you might find the figures on private schools downright terrifying: The costs at some of these institutions can also exceed $30,000--for one year alone.

But in light of these sums, it's also worth noting that the unemployment rate for those with only a high school diploma was 10.3% in 2010, while only 5.4% of bachelor's-degree holders were unemployed. So while saving for college may be a costly prospect, in the long term, it may still be worth it.

Here are four steps to starting a successful college savings fund:

Step 1: Start early
Compound interest is your friend, and the earlier you start making those savings account deposits, the better. Of course, savings accounts will only get you so far. There are many college-specific savings plans to consider, but more about that in a minute--the important part of this step is that regardless of your child's age, there is no time like the present to start saving for college.

Step 2: Choose the right savings vehicle
Beyond your basic savings account, there are a number of ways to save for college. While bonds are a traditional choice, a quick look at the current rates is likely to dissuade you. Similarly, today's CD interest rates and money market account rates are no match for specialized accounts created especially for college savings.

Section 529 Plans are among the more popular college-savings instruments. Every state offers a version of the 529, and they can be structured as either savings plans or prepaid tuition plans, in which parents purchase college credits at current prices for their children's future use. In addition, many private colleges offer a prepaid tuition plan known as the Independent 529 Plan.

Another common savings vehicle for college is the Coverdell Education Savings Account, also known as an Education IRA. The Coverdell account allows parents to earn interest without paying the usual taxes on it.

Since the available plans vary by state and each family has a unique tax situation, there is no one-size-fits-all approach to college savings. Making the right choice depends on selecting the right savings account--or combination of accounts--to ensure the greatest growth and minimize any tax implications. Consulting with a finance professional may be a wise move before you begin investing.

Step 3: Sign up for affinity programs
While depositing into a savings account is a very deliberate act, affinity programs offer a more incidental way of saving for college. They operate by depositing money into your child's college fund in exchange for tracking your habits as a consumer--information the companies later sell to marketers. Upromise is the largest such program. To participate, you link up your credit cards, utility accounts and grocery loyalty cards to your Upromise account and watch the money roll in with every eligible purchase. BabyMint is another popular affinity program.

Step 4: Spread the word
Did you ever think that Grandma and Grandpa might be willing to assist the saving effort too? Here's a way to avoid clutter and beef up the college fund in one fell swoop: Ask relatives to forgo bringing an armload of toys for the birthday party and make a donation to the college savings account instead. Many relatives are happy to oblige and will still bring a small, inexpensive gift to boot so your child will have something to open.

But why stop at just relatives? If you and your friends always exchange Christmas gifts, ask if they will make a small donation to your child's college fund instead. Your friends may actually be relieved that they don't need to scour the stores to find something that they haven't already given you in the last 20 years.

By following these steps, your college savings will begin to expand in no time. Then, when it is time for your child to head off to school, you can once again be their hero.

Source: http://www.foxbusiness.com/personal-finance/2011/10/20/4-steps-to-college-saving/

Saving Money On College Loans: President Changing Programs to Help Millions

College is known as an investment in the future. But that investment is becoming a burden for many students. The President will announce some changes today that could lower the amount students pay for student loans.

Over the past three decades, the price of college has quadrupled. That price increase, combined with less state funding at public universities, means students are paying more. The President hopes a couple of changes to existing programs will ease the pain for millions of Americans struggling with college debt.

Higher education comes with a high price tag. The President is trying to ease the burden on college students and graduates entering the real world.

"We have to make smart investments. And what smarter investment is there, than our children's education?" said Melody Barnes from the Domestic Policy Council.

The White House will announce today two changes that will lower the amount students pay for college loans. First, students or graduates who consolidate their combination Direct Federal Loans and other federal loan programs could see a half percent interest rate cut simply for combining it into one payment. Second, the President will adjust the "Pay as You Earn" program for low income students. The adjustment will decrease the percentage and length of payment, possibly giving more students the chance to go to school.

"Making sure they have opportunities that are available to them. Making sure they are prepared for college and career," Barnes said.

Graduates qualifying for the "Pay as You Earn" program will have to pay 10 percent of their discretionary income for up to 20 years. If there is still a balance after that time frame, the remaining due would be wiped away. Those requirements are dropping from the 15 percent for up to 25 years in place now. White House advisors saying, these tough economic times call for tough budget decisions.

"We have got to reign in wasteful spending. We have got to cut our budget and in some cases we have to stop spending on things we care about just because we can't afford them anymore," said Barnes.

According to the White House, both changes to these existing programs could help over 7 million people decrease their payments. But, the time to act is soon. To qualify for the debt consolidation, students need to register between January and June.

The decreases are not supposed to cost taxpayers anything. The money saved by people in the debt consolidation program will be offset by the administrative costs of processing one payment instead of several payments by borrowers.

Source: http://www.fox43.com/news/wpmt-amnews-obama-college-loans,0,485486.story

Saving for College: Sometimes, Life Gets in the Way

It’s happened to all of us. As parents, we have the best of intentions to sit down and methodically plot a financial path, but then the phone rings. Afterschool activities beckon. It’s dinnertime and the kids are hungry. The boss calls. Life somehow gets in the way.

“I’m sure people, as their kids are growing up, realize that they really need to think more about saving for college, but then life gets in the way and they’re busy running their kids to all of their different activities,” said Chuck Drawbaugh, president of College Funding Associates in Rumson, New Jersey.

Parents need to make the time to sit down and review their finances. It’s not just about saving for college. It’s about getting back to basics and having a conversation about the choices that need to be made in order to achieve all of life’s financial goals.

“Unfortunately, we live in an ideal world, and then the real world,” Drawbaugh said. “I feel that we allow our busy lives to be too easy of an excuse to not do good enough planning. That’s hard to overcome. I have my own kids and I know how busy life is. I’m trying to bring some reality to the conversation.”

For example, do you lease a car or own it? If you’re looking into a lease and the car dealer says, spend ‘just’ $25 more a month to get into a fancier model, would you rationalize it and make the move, or step back and put that extra cash into a savings fund? Drawbaugh is willing to bet that in our world of instant gratification, many families would rationalize the nicer car.

If you own your car, don’t be tempted to trade it in for a new model too soon, especially if you just finished making payments. Keep it well beyond the length of a loan, advises Jeanne Gibson Sullivan, CFP of Wakefield, Massachusetts.

The same principle applies for the big vacations. Sure, you want to enjoy special family time and don’t want to penny pinch for the chance to have some special memories. But “it’s a balancing act,” Sullivan says. “Really think what the priorities are,” as you make your decisions.

So how can we break the “busy” habit and make time for our finances? Change doesn’t happen overnight, so start with a few basic steps:

1. Establish a routine: Set aside an hour every week to sit down and take a look at your spending. If you examine your expenditures in smaller chunks, it’s easier to track and think about where you can start making changes.

2. Make use of automatic withdrawals: Allocate an amount each month that is automatically withdrawn from your regular household budget account and deposited into a separate savings account. Keeping the funds separate makes it easier to avoid spending all of your money – and you’ll feel good watching that second account grow!

3. Give yourself an allowance, and stick to it: We teach our kids to save their allowance if they want something special. We can follow the same rule.

4. Consider cash: Some people find that when they pay cash they are more conscious of, and conscientious about, spending. Try leaving the plastic home for a week and see if it works for you.

Source: http://www.boston.com/business/personal_finance/blog/2011/10/saving_for_college_sometimes_l.html

The Best Ways to Save for College

A jumpy stock market has made some parents wonder if they'll ever be able to save enough to send their kids to college. But by taking advantage of tax-favored accounts that let you save tax-free for college expenses, you can put yourself back into the driver's seat and get your kids the education they'll need to succeed in the dog-eat-dog job market of the future.

When you look at the choices you have for saving for college, 529 college savings plans give you a lot of advantages over the competition. But to make the most of the opportunity that 529s give you, you need to pick the best plan you can find. The right choice can put thousands more into your pocket over the years. Below, we'll take a look at the 529 plans that Morningstar chose as industry leaders, but first, here's some background on why these accounts are worth looking at.

Why 529 is a number you should remember
529 plans look a lot like retirement accounts. As long as the money you contribute stays inside the plan, you enjoy tax-deferred growth on your investments. Moreover, just as Roth IRAs let you reap the gains on your money tax-free if you wait long enough before taking it out, 529 plans give you tax-free treatment of your investment income if you use the money to pay college-related expenses including tuition, books, and even room and board.

The complicated thing about 529 plans is that there are a huge number of them. Each of the 50 states has at least one 529 plan, and each offers different menus of investment choices -- as well as associated investing costs and other fees. Because you're not required to use the 529 plan that your own state offers, deciding which plans give you the best deal can take a lot of research.

Boiling down the choices
That's where Morningstar's annual look at 529 plans can save you some legwork. In this year's edition, Morningstar noted several favorable trends among college savings plans. Not only have expenses started to come down, but plans are also working to expand and improve their investment offerings, giving parents better choices for how to invest their college savings.

But Morningstar's broad look at the industry still reveals some plans that stand out from the crowd. In particular, 529 plans from Ohio, Nevada, Utah, Virginia, and Maryland topped the list. You can see the full details here.

Less important than the plan specifics, though, are the overall trends that those top plans share. For instance, four of the five plans offer low-cost, high-quality mutual fund choices from providers including Vanguard and T. Rowe Price (Nasdaq: TROW ) . Moreover, even Virginia's CollegeAmerica plan offers American Funds mutual funds through financial advisors at relatively low cost, though the fees aren't quite as low.

But plans don't always make it easy for parents to separate the good choices from the bad. Many 529 plans offer greater varieties of higher-cost options that aren't necessarily your best bet. For instance, the Ohio plan offers not only Vanguard funds but also fund options managed by OppenheimerFunds, General Electric (NYSE: GE ) , and Pimco. Moreover, even plans that offer similar investments often have vastly disparate fee schedules that make their net costs much different.

More broadly, plans have started giving savers ways to invest outside traditional mutual funds. A separate Virginia plan lets savers put money into FDIC-insured accounts at BB&T (NYSE: BBT ) or Union First Market Bank, while the Ohio plan offers CDs from Fifth Third (Nasdaq: FITB ) .

Watch out
Not all plans are so beneficial, though. Morningstar cites Maine's NextGen College Investing Plan as below average, in part because program manager Merrill Lynch, now a subsidiary of Bank of America (NYSE: BAC ) , was fined for not having good procedures to determine suitability for its savers. Plans from TD AMERITRADE (Nasdaq: AMTD ) and Schwab (NYSE: SCHW ) also got below-average ratings, with Morningstar citing high fees.

In general, though, 529 plans can give you a lot of help in saving for college. By paying attention to which plans get top ratings, you'll be better positioned to make the most of your 529 opportunity.

For many parents, though, 529 plans should only be one part of a larger investing picture. At the Fool, we've identified 11 rock-solid stocks that can help you secure your future.

Source: http://www.fool.com/how-to-invest/personal-finance/savings/2011/10/28/the-best-ways-to-save-for-college.aspx

College 529 Plans - Saving for College

529 plans got their identity from the Internal Revenue Code, Section 529. The two different types of 529 plans are savings and prepaid and both are designed to help families save money for college. Acting much like a 401K or an IRA, contributions are invested into mutual funds or similar annuities. Based on the performance of your investment, your account will go up and down in value.

The options available with a prepaid plan permit you to pay either all or most of the expenses of an in-state public college education. One buys tuition credits at today’s rate, to be utilized in the future. Tuition will fluctuate with inflation and that will affect the ultimate performance. Tuition credits can also be used at private and out-of-state colleges. There are plans in many states that allow you to reside in one place, invest in another state and send your child to college in still another state. Limitations and restrictions differ, but every state in the union has at a minimum of one 529 college plan. Before you invest in any 529 plan, research all the features, advantages and limitations it may offer.

A 529 college plan is a guarantee that the account, whatever it is worth, can be used at any college or university in the nation. 529 plans are not reliant on residing in the state where the plan was devised. The main focus of the growth of any 529 plan is dependent on the market performance of the investments. As the student becomes closer to college age, one of the options available with these plans allows investment funds to become more conservative.

The way the funds are administered comprises another major difference between the prepaid and savings 529 plans. Savings plans are managed exclusively by the states while prepaid plans can be administered either by the states or individual colleges. A mutual fund or financial services company often maintains the records and performs administrative tasks.

Federal tax laws dictate the fulfillment of a few basic qualifications for a 529 plan in order for tax benefits to be applicable. 529 plans offer unsurpassed income tax breaks even though your federal tax return will not allow a deduction for them. Investments eventually become federally tax-free as distributions grow and distributions to pay for college become tax-deferred.

A 529 plan can offer a very easy way to save cash for college. Universal eligibility together with no income or age limitations are important facets of 529 college plans.

SOURCE

Using Retirement Funds to Pay for College

According to a new Sallie Mae/Gallup survey, the percentage of college parents who are using their retirement funds to pay for college expenses has doubled.

U.S. News and World Report has more:

Some 6 percent of parents withdrew money from a 401(k) or IRA to help cover college costs in 2010, up from 3 percent in 2009, according to a Sallie Mae and Gallup survey of 801 college students age 18 to 24 and 823 parents of college students. The average amount withdrawn from retirement accounts jumped from $5,318 in 2009 to $8,554 this year.

The survey reports that families who made more than $100,000 per year used more from their retirement funds to foot college costs, and the money was more commonly used for private schools than public ones.

According to the National Center for Education Statistics, the average cost of a four-year, non-profit private college amounts to $35,000. The average cost of a four-year public college is $14,000.

SOURCE

Graduate College Debt Free

So, how do you graduate college debt free?

By taking a hard squint at your family's budget and picking a school with a tuition that won't burst the purse strings. Intuitive, rewarding in the long run, and impossible to fathom in an age when parents buy Mozart records in hopes of raising the new Harvard baby...

So what should you do if you'd like to erase student loans from your credit history?

1. Parents should refrain from cashing out their home equity lines and 401K accounts. Unless, of course, you'd like the 'rents to rely on social security and skimp on those winter getaways to Palm Beach.
2. Downsize, downsize, downsize. Quit smoking, drive your car for an extra year, and easy on those latte purchases. Also, GET A JOB AND QUIT MOOCHING.
3. FAFSA Form Woes: Understand that college financial aid accountants don't take into account how much your parents have saved for retirement, or how much of the housing mortgage they've paid down.
4. Choose the state school if you can't pay. Consider this your personal austerity program for a debt-free education.

SOURCE

Saving for College

1. Saving for your own retirement is more important than saving for college.
Your children will have more sources of money for college than you will have for your golden years, so don't sacrifice your retirement savings.

2. The sooner you start saving, the better.
Even modest savings can pack a punch if you give them enough time to grow. Investing just $100 a month for 18 years will yield $48,000, assuming an 8% average annual return.

3. Stocks are best for your college savings portfolio.
With tuition costs rising faster than inflation, a portfolio tilted toward stocks is the best way to build enough savings in the long term. As your child approaches college age, you can shelter your returns by switching more money into bonds and cash.

4. You don't have to save the entire cost of four years of college.
Federal, state, and private grants and loans can bridge the gap between your savings and tuition bills, even if you think you make too much to qualify.

5. With mutual funds, investing for college is simple.
Investing in mutual funds puts a professional in charge of your savings so that you don't have to watch the markets daily.

6. 529 savings plans are a good way to save for college and they offer great tax breaks.
Qualified withdrawals are now free of federal tax and most plans let you save between $100,000 and $270,000 per beneficiary. Plus, there are no income limitations or age restrictions, which means you can start a 529 no matter how much you make or how old your beneficiary is.

7. Tax breaks are almost as good as grants.
You may be able to take two federal tax credits - the Hope Credit and Lifetime Learning Credit - in the years you pay tuition. Or, if your income is too high to qualify for those credits, you may qualify for a higher education expense deduction that will be in effect through 2009 and is extended periodically.

8. The approval process for college loans is more lenient than for other loans.
Late payments on your credit record aren't automatic grounds for refusal of a college loan.

9. Lenders can be flexible when it's time to repay.
There are still ways to cut costs after you graduate and begin repaying your student loans. For instance, there is often a one-quarter percentage point interest rate decrease if you set up automatic debit, in which monthly payments are automatically taken from your account.

10. Taxpayers with student loans get a tax break.
You may deduct the interest you pay up to $2,500 a year if your modified adjusted gross income is less than $65,000 if you're single or less than $130,000 if you're married filing jointly. The deduction can be taken for the life of the loan.