Chris addressed the Student Debt Reduction Coalition, a new coalition launched in May to advocate for federal and state policies to help reduce student debt faster. Chris also discussed a federal student loan proposal that would allow student debt borrowers to access a portion of their unused 401K tax exclusion to use toward their student loan payments. GradFin and the Student Debt Reduction Coalition is pushing this provision as part of tax reform in order to help student loan borrowers repay their loans faster and start saving for retirement.
The housing industry might need to start engaging with policymakers to act on the student loan crisis because the New York Fed recently came out with a study that clearly shows student loan borrowers are less likely to purchase a house than people that do not have student loan debt.
This figure shows that for student loan borrowers with greater than $25,000 in student loan debt, they are less likely to own a home. The homeownership rates are about 2% to 3% higher for every age between 23 and 33 so this clearly shows high debt loads equals lower homeownership.
College graduates are more likely to own homes; however, those with student debt are less likely to own homes than those that are debt free. However, those that have a college graduate degree and student debt are much more likely (about 20%) to own a home than Americans that did not attend college at all.
So what can we learn from these facts by the New York Fed? The answer is simple: If we want homeownership rates to increase, we'll need to address the student loan crisis in the meantime.
This January, GradFin began administering the student loan repayment and financial wellness platform for Liberty Resources, a non-profit based in Philadelphia.
The Philadelphia Business Journal recently covered this new program in an article that can be found here. Below is the quote from Liberty Resources about the program.
The nonprofit was looking for a way to improve retention while easing its employees' financial burdens, so it worked with GradFin to implement an employer match. Workers choose what percent of their paycheck they want contributed to their student loan and Liberty matches that, dollar-for-dollar, up to 5 percent.
“We saw this as an excellent recruitment and retention tool for our business. We have a younger workforce and one of the number one things we heard that was a barrier to that focus on financial planning was they have their student loans to pay off,” Sloan said.
GradFin’s flexibility with a plan was important for them, she said, and while just about five percent of their staff of about 170 people have signed on, word of the program is spreading.
“Our staff is absolutely loving it,” Sloan said.
GradFin Pens Article to GOP Before They Meet in Philadelphia to Discuss Agenda for 115th Congress
This week the House and Senate Republicans will meet in Philadelphia for their congressional retreat to discuss the top issues on the Republican platform for the 115th Congress. Let’s hope that the Republicans, who control majorities in both legislative chambers, will discuss options to help student loan borrowers.
Pennsylvania is ground zero for student debt. A recent report from the Institute for College Access and Success estimates that colleges in Pennsylvania have the second highest student debt numbers in the entire nation. More specifically, the data indicates that more than 70% of students that leave Pennsylvania colleges have student loans. The data also indicates that the average borrower from a Pennsylvania-based undergraduate institution has more than $34,900 in student debt.
Read The Rest of The Article HERE
Have you ever wondered how the 401K industry grew from $0 to over $4.8 Trillion in assets? It certainly would not have happened if Congress didn't act almost 40 years ago to provide a tax preference for employer-sponsored retirement plans. What does this tell us about the student loan industry?
Next Wednesday, GradFin will present to the American Bar Association's Young Lawyers Division about the Future of Student Loan Payments. We believe that if Congress makes a couple changes to the tax code (mirroring what happened with the 401K back in 1978), the future for student loan borrowers could be a lot brighter. GradFin will present about several proposals that are under consideration by Congress to reduce taxes on student loan payments. These changes could bring massive changes to the industry and would help borrowers pay back their student loans much faster. Click on the link below to go to the event website.
Moby Debt Blog
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