MONEY Student Loans

11 Myths About Student Loan Forgiveness

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Here's when you can -- and can't -- qualify for college debt relief.

If you have more student loan debt than you can handle, or if you’ve been paying and paying (and paying) and can’t make headway, chances are you’ve wondered about student loan forgiveness. As you look into your options, keep in mind that everything you read (or hear — even from your student loan servicer) may not be accurate. We asked experts who work with borrowers all the time to share the most common myths they hear about student loan forgiveness. Here are their top picks.

Myth: You have to pay someone to get loan forgiveness help.

“There are lots of online scams that charge borrowers for things that are available for free from the government. The truth is you don’t have to pay anyone,” says Pauline Abernathy, vice president The Institute for College Access and Success. Borrowers can use the free tools offered by the Department of Education — starting with the National Student Loan Data System. If more help is needed, they may want to seek advice from a reputable counseling agency or consumer protection attorney who is well-versed in student loan law.

Myth: Student loans can’t be wiped out in bankruptcy.

“The bankruptcy laws require you to show that being held responsible for the student loans will amount to what’s called an ‘undue hardship.’ Though this standard can be difficult to meet, it’s not impossible,” says Jay S. Fleischman, a lawyer who concentrates in the fields of student loan resolution and consumer bankruptcy. He goes on to explain that if you attempt to discharge your student loans in bankruptcy, you’ll have the advantage of dealing with an attorney, rather than a debt collector. “Those attorneys often have the ability to resolve payment disputes more readily than non-lawyer collectors,” he says. “Many people who seek a discharge of their student loans in bankruptcy end up settling on a reduced balance or affordable payment plan, which may accomplish your goal of bringing the payments in line with your financial abilities.”

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Myth: Only Corinthian students get relief from debts involving school fraud.

Students may be eligible for cancellation of federal loans from schools that committed fraud or broke state laws. It’s called a “defense to repayment,” and the Department of Education is working on a process to make it easier for borrowers who attended other schools to apply for this relief. More information is available from the Department of Education. “The Education Department is developing a comprehensive system to assist students defrauded by any school and to hold schools accountable for their actions that result in loan discharges,” said Abernathy. Borrowers who have been victims of fraud by their schools may also want to look into state tuition recovery funds. StudentLoanBorrowerAssistance.org maintains a list of state tuition recovery funds.

Myth: Forgiveness applies only to federal loans.

While it’s true that private loan forgiveness programs are few and far between, some borrowers are able to settle private student loans for less than the full balance says Steve Rhode, founder of GetOutofDebt.org and a Credit.com contributor. “Settlement offers I’ve seen have been in the 45% to 50% range with up to two years to pay,” he says on his site.

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Myth: Only consolidated loans can take advantage of public service loan forgiveness (PSLF).

Not true, says Joshua Cohen, aka The Student Loan Lawyer. “As long as all of your loans are Direct Loans, they qualify.”

Myth: Payments don’t count for PSLF until an employer certification form is completed.

Or until it is transferred to FedLoan (a student loan servicer), or until you’ve enrolled in the program etc. … “Where is this stuff coming from?!” Cohen asks. The employment certification form is encouraged, but not required. And the reality is that qualifying payments made on Direct Loans while working for a qualifying employer made after Oct. 1, 2007, currently count toward the 120 payments required under this program.

Myth: If you are a teacher, you automatically qualify for PSLF.

“There are specific requirements and if you work for a for-profit school you may be out of luck,” says Rhode. (Here’s more information on teacher loan forgiveness.) Similarly, those working in other professions that may be eligible but can run into some hurdles when trying to qualify. Nevertheless, is important for borrowers who are hoping to take advantage of PSLF to understand the requirements of the programs for which they may be eligible, so they don’t wind up missing out on an important benefit.

Myth: Student loan forgiveness is for everyone.

“In reality, it really only provides relief to those with very large debts and/or low incomes,” says Andrew Josuweit, founder of StudentLoanHero, where this issue is explored in detail.

It makes sense that borrowers who are able to afford their payments aren’t going to be able to take advantage of the most popular forgiveness options, many of which require a certain number of payments under an income-driven plan. A recent report from Equifax found that the income group most at risk of defaulting on their student loans were those earning less than $30,000. “This rings true across all age groups, with those earning less than $30,000 suffering from triple or even quadruple the delinquency rates of their higher-earning peers within the same age group,” say the authors of the report, Dann Adams and Naser Hamdi.

But even high earners may run into a situation where they lose their income, and for anyone who isn’t working, even small debts can become unaffordable. Additionally, there are programs for lawyers, doctors, nurses and other higher-earning professionals, too. No one should automatically assume they aren’t eligible. (And don’t always rely on servicers to provide correct information. Sometimes they don’t.)

Myth: Parents are out of luck.

While it’s true parents with Parent PLUS loans aren’t eligible for Income-Based Repayment (IBR), they may be eligible for Income-Contingent Repayment (ICR), and that’s a “qualifying payment plan for PSLF,” Cohen points out.

Myth: Miss a payment or change jobs, and you start over.

If you miss a payment under one of these programs, “you just delayed it by a month for the missed payment, but you don’t start over,” says Cohen. However, if you were making payments under IBR and then consolidated you “ended the old loan and created a new loan. You start from Day One,” he notes.

Myth: I don’t have to worry about taxes on forgiven loan. (Or the reverse: Canceled student loans mean a tax bill.)

The truth is, it depends. Certain types of student loans canceled under PSLF are not taxable, but student loan debt discharged due to Total and Permanent Disability may be, unless you qualify for an exclusion. And currently, balances forgiven after completing an income-driven repayment plan are not tax-exempt. We’ve heard from borrowers who were shocked to learn that they owed large tax bill after they became disabled and were able to get their remaining balances canceled. Others were relieved to discover they qualified for the insolvency exclusion and wouldn’t have a tax bill to worry about. (Here’s a primer on taxes after student loan cancellation.)

Student loans can trap borrowers in debt for decades, and can make it difficult to buy a home or a car. If a student falls behind on payments, those late payments can ruin their credit scores for years to come. Even if loans are paid on time, debt can affect your credit scores. The programs today aren’t perfect and they can’t help everyone, but they can provide immediate relief for some. So borrowers will want to make sure they fully explore all their options for student loan repayment and forgiveness programs in order to take advantage of the programs available to them. It’s also wise to review your credit reports and scores to find out how your loans affect them.

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Should Colleges Pay for Student Loan Defaults?

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There is growing bipartisan support for legislation that would force colleges to pay for excessive levels of student default.

A college education does not come with a warranty. All a degree does for you, at least in theory, is open more doors of opportunity — it does not guarantee that you will get a job in your field.

However, college costs have risen sharply — over 1,100% since 1978, which is more than four times the cost increases in the Consumer Price Index (CPI). As a result, too many graduates are dealing with onerous levels of student debt, making repayment difficult if they do find a job in their chosen profession and nearly impossible if they do not.

With a tight job market and lower wages, college costs are reaching a critical mass. At what point do shrinking job opportunities make a college education not worth the costs? In the worst case scenario, continued price increases will eventually drive costs so high that graduates in critical but lower-paying jobs, such as teaching, will be unable to pay off the debts necessary to acquire their degree — and if they can, it will be at the expense of home ownership and other necessary economic drivers.

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While it is unrealistic for colleges to guarantee a job to their graduates, it is reasonable to expect colleges to consider cost control measures to make their degrees more affordable. Unfortunately, there is little economic incentive for colleges to control costs while the demand for a college education stays high.

Federal and state funding has been trimmed in recent years, but the combined input from state funding and Pell Grants is still over $115 billion annually — providing a large pool of money to colleges to help sustain higher spending.

Various legislative proposals have been floated to give colleges a financial stake in the future success of their students. One interesting proposal with bipartisan support in Washington is to force colleges to pay for excessive levels of student default.

In a way, this rule already exists within the Department of Education. If over 30% of graduates from any school default on their loans within three years after starting the repayment period, that school can be thrown out of federal loan programs. Even with this low bar, a few schools have still managed to miss the goal but are generally given a second chance.

Newer proposals to rectify the situation may be similar to the bill introduced by Sen. Elizabeth Warren (D-MA) and Sen. Jack Reed (D-RI) in 2013. Their proposal was effectively to fine colleges with default rates above 15% and force them to pay back the government 5% of the total loan amount in default. The intent is to find a way to make schools share some of the borrowing risk with their students.

The Warren-Reed bill went nowhere, but forms of this proposal are getting a new bipartisan emphasis. It is likely to be folded into reauthorization of the Higher Education Act. The chairman of the Education Committee, Republican Senator Lamar Alexander of Tennessee, reportedly backs the concept.

As with most legislation, the real trick is how to accomplish the goal without invoking the Law of Unintended Consequences. The most likely consequence is that colleges will find subtle (and possibly overt) ways of weeding out students based on their ability to pay. It will be difficult to balance this goal without further harming diversity or creating a greater inequality gap.

Still, some effective risk-sharing effort for colleges is long overdue. When the final proposals come out, watch where the money is designated to go. Are any fines directed back toward helping students who have defaulted or are approaching default, or does the money just go back in to the general Treasury?

Unless such a fine or reimbursement scheme is tied in with a means of directly helping students, these proposals will be a step in the right direction, but will only solve one element of the problem. Let’s see what evolves up on Capitol Hill.

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MONEY Student Loans

Yay! Now Only 1 In 5 Student Loan Borrowers Are Behind

Improving economy, more flexible repayment plans reduce delinquencies.

The percentage of federal student loan debtors who are behind on their payments, while still shockingly high, is declining, the U.S. Department of Education reported today.

The proportion of borrowers who are more than 31 days late in their repayments fell by more than 2 percentage points, to about 21%, in the last year.

Financial aid experts said that while heartening, that still means that more than 1 out of 5 people whose federal student loan payments are due—because they either graduated or dropped out more than six months ago—are behind on their bills. (The government issues automatic payment deferrals to borrowers who are enrolled in school at least half-time, so current students are not considered delinquent.)

“Declining delinquencies are a good thing,” said Justin Draeger, president of the National Association of Student Financial Aid Administrators. “Whatever the reason for the drop, more borrowers are steering away from the terrible consequences of defaulting,” which are triggered when a borrower falls nine months behind in payments and can result in big fines and long-lasting credit problems, he said.

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Draeger and other experts pointed to four main reasons delinquencies have fallen:

  • The improving economy has created jobs that are allowing more debtors to earn money to pay back their loans.
  • Families have paid down many other debts and thus can better afford their student loan bills.
  • More colleges are reaching out to graduates to help them apply for the best repayment options, in part because of toughened government penalties against colleges whose alumni have high default rates.
  • More debtors are taking advantage of the government’s “income-driven” repayment plans. The Education Department said that almost 4 million debtors have now signed up for one of the flexible repayment options, an increase of 56% in the last year.

The federal government now offers a dizzying array of income-driven repayment options, but the standard plan adjusts debtors’ payments to 10% of their disposable income. Disposable income is defined as any amount above 150% of the federal poverty line, or $17,655 for a single person. So anyone earning less than that would have their payments waived entirely until they earned more than the cutoff.

The flexible payment plans, while attractive in theory, have been criticized by borrowers and some federal investigators. The Consumer Financial Protection Bureau announced this week that it was looking into borrowers’ complaints about slow processing of applications.

In addition, some naïve borrowers have been shocked to learn that when their payments are waived or are reduced below the cost of the interest, the total size of their loan keeps rising. It is standard practice for lenders of all types to add unpaid interest to a debt. A recent study by the Federal Reserve Board of New York found that about one-third of all student loan borrowers are making payments on time, but the payments are so small that the size of their debt is growing.

The government’s new income-driven repayment plans do offer some hope for such borrowers, however, since those who keep making their payments for at least 20 years (or just 10 years if they work in a public service job) will have any remaining balance forgiven.

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MONEY Student Loans

Man Who Threatened Student Loan Servicer Gets 3-Year Prison Sentence

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Michael M. Murray of Columbus, Ohio was sentenced to 37 months in prison on August 12th.

When you realize you can’t afford your student loan payments, there are a few things you should do. Mailing an envelope of white powder to your student loan servicer is not one of them.

Michael M. Murray of Columbus, Ohio, knows this because he was recently sentenced to three years in prison for doing just that. In 2008, Murray received a letter demanding he pay his delinquent loans, and in response, he ripped his name and address off the letter and put it in the return envelope with white powder and the name “Osama Bin Laden” on the return address line, according to a news release from the Department of Justice. Murray sent the letter — on which he reportedly scrawled a number of threats and obscenities — to a Department of Education federal student loan servicing center in Greenville, Texas.

Investigators found Murray’s DNA on the envelope, as well has his fingerprints. He was indicted in 2011 on one charge of making threats and hoaxes, convicted in April and sentenced on Aug. 12 to 37 months in prison. The news release did not provide details on the status of Murray’s loans.

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There are smart ways to protect yourselves from bad student loan servicers or debt collectors — you do have rights! But committing a felony isn’t one of the tactics you should choose.

Should you find yourself behind on student loan payments, reach out to your student loan servicer (and despite your frustrations, try to do so in a civil manner). Ideally, you should contact the servicer before you actually miss payments, because the sooner you confront the problem, the more solutions will likely be available to you. You may be eligible for income-based repayment, or you might be able to temporarily pause your payments. If you have good credit, you may want to also explore refinancing options, to see if there’s a lower interest rate available to you.

In summary: You may think repaying your student loans is horrible and difficult, but there are a few ways you might be able to make it easier on yourself. As Murray could likely attest, threatening the Department of Education is not on that list.

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MONEY Student Loans

Everything You Need to Know About Getting a Co-Signer for Your Loan

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Most students don't understand that co-signers are fully responsible for their loan debt as well.

Most people who borrow money to go to college take out federal student loans. One of the main reasons for that is because they’re very easy to get: Many federal student loan programs do not require the applicant to show financial need, and most don’t require a credit check. Even if you have no credit, which many high school graduates do not, you can probably get a federal student loan.

But that’s not always enough. There are limits to how much you can borrow from the government for each school year, and it’s rarely enough to cover the full cost of attendance. Without scholarships or savings, students may need to turn to private student loans. Because these students often have no credit history, they frequently need a co-signer in order to get the loan.

Getting a co-signer for a loan is a big deal — you’re asking someone to risk their credit standing and financial stability so you can borrow money — but unfortunately, many students don’t seem to grasp the gravity of that request.

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Nearly half (47%) of undergraduate students surveyed by U.S. Bank said they thought co-signers would not be held accountable for paying off a student loan if the student can’t find a job. While many co-signers probably wish that were the case, that’s not how it works. No matter the circumstances, co-signers are rarely let off the hook for the loans they helped someone obtain.

While it’s crucial a potential co-signer understand the magnitude of their responsibility in this partnership, it’s just as important the primary borrower understand the liability, as well.

The U.S. Bank data comprises survey responses from 1,640 full- and part-time students ages 18 through 30, and the sample was weighted to be nationally representative. It’s possible the misconception about co-signer accountability in the event of borrower unemployment is skewed by responses from students who have no experience with co-signed student loans. Still, co-signing isn’t limited to education loans, so it’s a financial practice adults should understand.

Other statistics from the survey indicate much room for improvement in students’ knowledge of credit and personal finance basics. For example, more than half of students don’t check their credit scores, which is something all consumers should do regularly. Your credit standing can have a huge impact on various aspects of your life, including your ability to find somewhere to live, so it’s worth it to check your free annual credit reports from each of the three major credit bureaus and to take a little time each month to review your credit scores.

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MONEY Student Loans

The Student Loan Problem Nobody Is Talking About

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A hidden culprit for much of our $1.2 trillion student loan debt problem.

Student loan debt isn’t a problem. Having a lot of student loan debt is the problem. That sounds obvious, but it’s a point that’s lost in a lot of discussion involving large numbers like the $1.2 trillion bill being carried around by America’s former students.

Look behind the numbers, and you’ll see that the student loan debt problem – just like the credit card debt problem, or the mortgage debt problem – is multi-faceted. Some people are managing their debt just fine, some aren’t.

For example, despite many claims that student loans are blocking millennials from buying homes, a study by Goldman Sachs last year argued that millennials with average college debt (around $30,000, depending on how you count) are no less likely to get a mortgage than their loan-free peers. That makes sense. Paying down a $30,000 student loan isn’t much different from paying off a car loan. On the other hand, former students with more than $50,000 in debt are considerably less likely to own a home, and those with large debt that eats up a big chunk of their income are much worse off – those who spend more than 10% of their income are 22% less likely to own a home.

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So the problem isn’t debt, it’s unmanageable debt. And not all college debt is created equal. For example, The New York Times recently reported that only 12% of students who graduated from public colleges owed more than $40,000, while 20% of private college graduates did. On the other hand, fully 48% of for-profit college graduates owed more $40,000.

But to find the really stunning student debt numbers – and the heart of the problem — you need to look at students who go on to graduate school.

Median combined college / graduate school debt for someone who earned a degree in 2012 was $57,600 and worse, one-quarter of all grad degree earners had borrowed more than $100,000, according to a paper published last year by the New America Education Policy Program. One in 10 borrowed more than $150,000.

It should come as no surprise that people carrying six-figure student debt balances aren’t taking out mortgages. They are already making what feels like a mortgage payment every month.

Roughly 40% of the $1 trillion-plus outstanding student debt is owned by graduate school students, the paper says

Jason Delisle, who wrote the New America paper, blames skyrocketing graduate school debt on changes to federal loan programs that essentially allow grad students unlimited borrowing. The more students can borrow, the more schools can charge. Recent research linking increased lending limits to tuition inflation suggest he’s right.

“Looking at the debt levels of law school students, for example, there was no significant change in the average amount of debt students graduated with between 2004 ($88,634) and 2008 ($90,052). But by 2012 (after loan limits were raised), the average spiked to $140,616, and the average monthly payment shot up from $760 in 2008 to $1,187 in 2012,” he writes.

In other words, when talking about the $1.2 trillion student loan problem, it might be more specific to talk about the graduate school student loan problem. And it might be possible to focus the discussion even more. A new study released in July from the Center for American Progress (CAP) found that 20 universities received one-fifth of the total amount of loans the government gave graduate students in the 2013-2014 academic year. Those schools educate only 12% of the students, however — and most of them are private, for-profit schools.

So we might think of the student loan problem as the graduate school and for-profit school problem.

Delisle says that’s not quite accurate, however.

“For-profits are a small share of the problem,” he said. His data shows that for-profit schools generate only 10% of the total debt for students who end up owing more than $100,000. For grad students borrowing between $25,000 and $50,000, that number swells to 16% — disproportionate, since graduate schools educate only 8% of students, but still a small slice of a big problem, he said.

“Graduate school debt is driving the big numbers,” he wrote in a post on Forbes.com recently. “Even if lawmakers expunge the system of unscrupulous for-profit colleges, those trends won’t change.”

The danger of graduate school debt comes into focus even more sharply when you consider the surge in graduate school applications that occurred during the Great Recession, when many suddenly unemployed mid-career professionals jumped into graduate schools for a lifeline. Their loans are just starting to come due now.

Of course, big graduate school balances aren’t the only serious problem in the student debt world. College students who drop out face perhaps the biggest obstacles of all – no degree and years of monthly repayments. College graduates with higher-than-average loan balances also face a steep climb. But when you hear horror stories about overwhelming student loan balances, odds are, you are hearing about a former graduate school student.

If you’re having trouble paying your student loans, it’s important to contact the loan servicer to see if you qualify for a relief program (here’s a list of repayment options), or if you can restructure your loans for a more manageable payment. Missing payments, not to mention defaulting, can have a big negative impact on your credit.

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What’s Your Biggest Money Worry?

Do you worry more about repaying your student loans or saving for retirement?

We asked people in Times Square what’s their biggest money worry. Some said they worried about paying back their student loans–unlike the grads of this university, who got their degree for free–while some worry more about saving for retirement. One man even told us his biggest worry about money is how it can “control your mind.”

Read next: This Worry Keeps 62% of Americans Up at Night

MONEY College

7 Things You Need To Know About Hillary Clinton’s College Plan

Under the new proposal, students could attend in-state colleges without borrowing for tuition and change how they repay other loans.

With anxiety over college costs and student debt running high, Democratic presidential candidate Hillary Clinton unveiled a wide-ranging plan to make higher education more affordable at a campaign event today.

The proposal, estimated to cost $350 billion over 10 years, would rely on a federal-state partnership to reduce the price of a degree at public colleges, make a variety of changes to student loans, and provide grants to colleges that are improving their graduation rates and other student outcomes.

Clinton’s plan—like those of her Democratic opponents—is already drawing criticism from some Republicans. And her strategy to pay for it by eliminating tax deductions for wealthier families is sure to be a hard sell to congressional Republicans. But should the ideas be put into action, here’s what they’d mean for you:

1. Attending an In-state College Would Be Cheaper

The core of Clinton’s plan would allow students to earn a four-year degree from state colleges and universities without taking out loans to pay for tuition. She’d do that by providing federal grants to states, as long as the states up their investment in higher education. As tuition at public colleges has climbed rapidly in the past several years, state spending per student has fallen by almost a quarter, according the the State Higher Education Executive Officers Association. Families are now responsible for roughly half the cost of college. This federal-state partnership would account for more than half the cost of Clinton’s plan, about $175 billion.

2. But it Wouldn’t Be Free

Unlike suggestions by progressive activists to create a completely free college education, Clinton’s plan would require families to make a “realistic” contribution toward tuition costs. Along with money from personal savings and borrowing, the estimated family contribution would include student earnings from 10 hours of work a week. Also, states wouldn’t be able to use money from Pell Grants in designing their loan-free tuition programs, so the federal grants for low- and middle-income students could still be used to help pay for living costs, such as room and board.

3. Applying for Aid Would Be Simpler

Calls for simplifying the 108-question Free Application for Federal Student Aid (FAFSA) have come from lawmakers on both sides of the aisle and from college access advocates who say the complexity of applying for aid keeps many low-income students from attending college. Clinton, too, backs simplifying the form, though she doesn’t offer any details aside from letting families know earlier if they qualify for Pell Grants.

4. So Would Repaying Loans

Clinton’s plan also calls for streamlining the repayment of loans and creating a Borrower Bill of Rights. Today’s four, income-based repayment programs would be consolidated into a single plan with simple rules. All borrowers could enroll in a program that caps their loan payments at 10% of income and forgives any outstanding debt after 20 years of payments.

5. Current Borrowers Could Refinance at Favorable Rates

Graduates who earn a bachelor’s degree now leave college with just under $30,000 in debt, on average. By allowing most current borrowers to refinance their loans at today’s interest rates (4.29% for undergraduate student loans), Clinton says 25 million students would save an average of $2,000 over the life of their loans.

6. Future Borrowers Would See Lower Ones

For future borrowers, interest rates would be reduced “significantly,” cutting the profits the federal government makes on student loans, a money source that’s been criticized by some politicians, most notably Sen. Elizabeth Warren (D-Mass.).

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7. Colleges Would Be Held to Higher Standards

Clinton wants colleges to be more transparent about student outcomes such as graduation rates, likely earnings, and debt load so families can make better-informed decisions when choosing a school. That argument is similar to one President Obama made in pushing for his ratings plan, which has since been scaled back after repeated criticism from some in higher education.

Clinton’s New College Compact Plan would give additional grants to colleges that further reduce costs, serve a significant minority or low-income population, or invest in student support services that lead to higher graduation rates. (Currently, four in 10 students don’t graduate within six years.)

On the other hand, Clinton would penalize colleges whose graduates aren’t able to repay their loans. Her campaign doesn’t offer specifics on requiring colleges to have “skin in the game,” but Clinton does say she’ll support bipartisan efforts to do so, such as a recently introduced bill that would require colleges to pay back to the government a share of the loans that their graduates aren’t repaying.

The Democratic frontrunner, Clinton unveiled her plan in New Hampshire, where undergraduates have some highest average student loan debt in the nation, and where she faces considerable competition from Vermont Sen. Bernie Sanders, an independent who’s running for the Democratic nomination. Sanders was one of the first candidates to announce a debt-free college plan. His plan calls for spending roughly $70 billion a year (two-thirds of that would come from the federal government) to make public colleges tuition-free.

The other major Democratic candidate, former Maryland Gov. Martin O’Malley, also has introduced a plan that would give students access to a debt-free degree from in-state colleges or universities, though his proposal doesn’t have a price tag attached. O’Malley also wants to allow students to refinance their loans and to automatically enroll all borrowers in income-based repayment plans.

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MONEY Debt

Parent Education Loans Can Ruin Your Retirement

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Here's what you need to know before taking out a parent PLUS loan.

Parent education loans can help your child attend the college of her dreams—and sink any dreams you had of ever retiring.

The grim reality is that the federal PLUS loan program allows parents to borrow far more than they can comfortably, or even ever, repay.

PLUS loans let parents (and graduate students) borrow up to the full cost of an education. There is only a basic credit check and no underwriting to determine whether the borrower has the income or ability to repay the loans.

The vast majority of parents do not borrow nearly as much as Democratic president hopeful Martin O’Malley and his wife, who said they have borrowed $339,200 to educate the first two of their four children, or Republican presidential candidate Scott Walker, who has borrowed between $100,000 and $120,000 for his two sons who are still in college, according to recently filed financial disclosure forms.

But even much smaller amounts can prove difficult to repay for some parents. An analysis by financial aid expert Mark Kantrowitz in 2012 found that monthly PLUS loan payments ate up an average 38% of monthly income for borrowers in the lowest 10% of incomes. One in five parent borrowers had a child that received a Pell Grant, which are reserved for the poorest students with household incomes of $50,000 or less.

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An article published by investigative site ProPublica last year highlighted a woman living on Social Security disability payments who had $45,000 in parent PLUS loans for her child. (The average Social Security disability recipient gets about $14,000 a year, while the maximum possible benefit is just under $32,000.)

Parent PLUS default rates are still far below those for undergraduate student loans – 5% of parent borrowers in 2010 defaulted within three years compared to 15% of student borrowers. But the parent rate has nearly tripled over the past four years, suggesting a rising tide of floundering borrowers.

Repayment Plans

The Obama administration in recent years expanded income-based repayment programs for struggling student borrowers, typically reducing payments to 10% or less of their incomes. The lowest-income student borrowers do not have to pay anything, and forgiveness of remaining balances is possible after 10 years for those in public service jobs and 20 years otherwise.

There is no similar help for parents. The income-contingent repayment plans available are not as generous, and there is no forgiveness. As with student loans, parent PLUS loans are extremely difficult to erase in bankruptcy and the government has extraordinary powers to collect, seizing tax refunds, getting wage garnishments without going to court and taking a portion of defaulted borrowers’ Social Security checks, which are off-limits to other creditors.

In general, PLUS loans that total less than the parents’ annual incomes can be paid off within 10 years, Kantrowitz said. If the parents were within five years of retirement, they should limit total education debt to 50% of their income, he said.

That does not mean taking on that much debt is smart. College graduates presumably will benefit from higher incomes as the result of their education. Their parents will not. Parents also have fewer working years ahead of them, which means any financial setback such as a layoff can make a heavy debt load overwhelming and kill any shot at a comfortable retirement.

“I would never recommend parents borrow six-figure debt for their children, even if they can afford to repay the debt,” Kantrowitz said, adding, “Parents don’t always make the smartest financial decisions.”

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MONEY Student Loans

College Grads in These States Are Most Likely to Pay Off Their Student Loan Debt

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Student loan debt in the US has reached $1.2 trillion.

Go west, young grad—and, preferably, to Utah.

That’s the takeaway from a new report from WalletHub, which evaluated local economic strength and earnings potential to rank the 50 states (and D.C.) by their student debt burdens.

Utah took the number-one spot, as the state where college graduates have the best chances of paying off their loans with ease. Wyoming came in second, followed by North Dakota, Washington and Nebraska.

WalletHub based the rankings on seven key factors, including a state’s unemployment rate for Millennials; debt as a percentage of income adjusted by cost of living; and the percentage of student-loan borrowers over the age of 50.

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At the bottom of the heap, the states that ranked poorly for student debt were Georgia, Maine, Connecticut, Rhode Island and Mississippi, which took 51st place overall. Wallethub calculated that Mississippi had three times the number of student-loan borrowers in past-due or default status as Vermont, the state with the lowest percentage of such borrowers.

New York was listed at number 45, thanks in part to its high unemployment among Millennials and high costs of living, while D.C. was at 41.

With the nation’s student debt at a staggering $1.2 trillion—and ticking up $3,000 per second—the burden of debt plays an increasing role in life decisions for many Millennials. And it’s become a popular topic for researchers.

A separate survey from Bankrate.com found 45% of Americans with student loans have delayed a milestone event like buying a home or getting married because of their debt—and the number jumps to 56% within the 18-to-29 demo.

These recent graduates were also most likely to say that they didn’t receive enough information on the risks of carrying student loan debt before taking it on. The only category in which they’re on track with other age groups is socking away for their future retirements.

While those 18 to 29 were found most likely to put off major life events, it’s the next group—those from 30 to 49—that included the highest percentage of college grads still chipping away at their student loans.

Feeling the burden of your own debt? Start your journey to financial freedom with a crash course in paying off student loans.

Check out MONEY’s 2015-16 Best Colleges rankings

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