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Among young blacks, higher student loan debt tied to less sleep

Black young adults may be more likely to lose sleep over student loan debt than people of other racial and ethnic groups, a U.S. study suggests.

Researchers surveyed former college students in their mid-20s to early 30s about their debt load and sleep habits. They found black people were more likely than white people to take out student loans – and they were also more likely to still have loans outstanding by the time they reached age 25.

Among those with student debt, black people typically slept about 42 fewer minutes a night than white individuals if they borrowed around $25,000 in loans. Even when black people didn't have any debt, they still got about 16 fewer minutes of sleep than white people.

"In the U.S., blacks earn less and acquire less wealth for the same amount of education," said lead study author Katrina Walsemann, a researcher at the University of South Carolina in Columbia.

"Earning less money and having less wealth may increase the strain associated with student debt," Walsemann added by email. "This may be why we found that racial disparities in sleep were greater among individuals with more student debt."

To understand the link between student debt and sleep among different racial and ethnic groups, Walsemann and colleagues analyzed survey data from almost 9,000 people born between 1980 and 1984. They did initial interviews in 1997 and conducted annual follow-up interviews through 2010, the year sleep was measured.

Half of the survey respondents had college debt, with an average loan amount of $10,176. Most had completed college by 2010, when they were 25 to 31 years old. By age 25, fewer of the participants owed money – just 36 percent of them – but their average debt amount had climbed to $17,765.

In 2010, the study loan participants were sleeping an average of 6.8 hours each night, but white people slept about half an hour more than black individuals.

One limitation of the study is that it relied on participants to accurately recall and report how much sleep they got, the researchers acknowledge in the Journal of Epidemiology and Community Health. They also lacked data on student debt acquired after age 25 and may not have accounted for all of the social and economic factors that could influence the amount of debt or the amount of sleep.

It also doesn't show that more debt causes poor sleep, but it does offer more evidence of the ill health effects of poverty, noted Sara Goldrick-Rab, a researcher in educational policy and financial security at the University of Wisconsin in Madison who wasn't involved in the study.

"Poverty is associated with many health consequences – including lack of sleep – and African Americans in the U.S. are dealing with a greater depth of poverty than other racial groups," Goldrick-Rab said by email.

When it comes to sleep, the average hours of rest aren't the only factor that matters, noted Alexandros Vgontzas, a psychiatry and sleep researcher at Pennsylvania State University College of Medicine.

"The true issue is not more hours of sleep but better quality of sleep which in turn means better ways to prevent, handle and cope with excessive stress," Vgontzas, who wasn't involved in the study, said by email. Sleep disparities found in the study are "a reflection of higher levels of stress in minority students," he added.

Source : http://in.reuters.com/article/2015/08/27/us-health-sleep-debt-idINKCN0QW23J20150827

Need an education loan? Banks may shut door on you

Securing an education loan for the upcoming academic session is set to be a difficult task, with several banks not keen on lending to students owing to a large number of defaults. The default rate, credit experts said, is high – 5% to 10% – in the education loan segment as against home and car loans (1.5%).

As a result, the growth rate of education loans has been steadily declining. Data from the Reserve Bank of India (RBI) revealed that in 2014-15, the segment grew just 5.7% year-on-year compared to 9.2% in 2013-14, 10% in 2012-13 and 10.36% in 2011-12.

“There is no fall in demand for loans, but the restriction is at the supply points,” said Rajiv Raj of creditvidya.com, an online credit advisory portal. “The defaults are highest in loans of Rs 4 lakh and below, where there is no collateral required.”

Education loans became popular in India after 2001, when the Indian Banks Association (IBA) prepared the ‘model education loan scheme’ to improve accessibility and affordability of education. While during the initial years, the default rate was within limits, it jumped 10%-12% after the global financial crisis of 2008.

KRS Murthy, former director at the Indian Institute of Management-Bangalore (IIM-B), said the job market scenario is crucial as banks take that into consideration before deciding whether to pass loans or not. “It’s fair, as that is how the economy works,” said Murthy. “Apart from certain sectors such as manufacturing, IT and finance, a hiring slump is expected in other sectors this year, further increasing chances of bad loans. Bad loans are the primary reason for the fall in growth rate of education loans.”

A bad loan is where repayment is not made as originally agreed upon by the borrower and the lender.

“Asset quality is a big concern for banks as the job market is not robust or is not paying enough for borrowers to pay off loans,” said Anuradha Rao, who heads personal banking at State Bank of India (SBI), the country’s largest public sector lender.

Adding to the reluctance of banks to disburse education loans, the IBA has listed only 1,100 accredited institutions.

“For admission to a private dental college in Delhi, I applied for a loan of Rs 15 lakh from a private bank. My application was rejected as the college was not in the list of approved institutes. I had to finally approach a private financer, who charged a higher rate of interest,” said Anagha Bhowmik, 20, a second-year student of dental medicine.

While some like Bhowmik are willing to pay a higher interest rate to secure a loan, there are others who need to find ways to repay their loans.

Srikant Ramesh, 25, is juggling two jobs to pay off his education loan of Rs. 4 lakh. An MBA from a tier-two college in Mumbai, Ramesh works in a mid-day shift at a telecom company, where he earns Rs. 18,000 a month, which is not sufficient to pay the EMI and support his family. The Thane-resident is forced to drive a radio cab during spare time. “My loan is for seven years at an interest rate of 12% per annum. I end up spending 70% of my earnings on the monthly instalment,” he said.

Ramesh is not an isolated case. A large number of students are often in a fix when it comes to repaying their education loans. The repayment process usually starts after the ‘moratorium period’, which is either a year after the end of the course or six months after getting a job, whichever is earlier.

The percentage of students taking a loan and the amount varies based on institutes and streams. According to experts, getting loans is more difficult for students who are not applying to top institutions or those who want to pursue off-beat courses. At premier institutions, such as the Indian Institutes of Technology (IIT) and Indian Institutes of Management (IIM), 30% students from a batch usually apply for loans. Students pursuing engineering typically apply for loans in the range of Rs. 7 lakh to Rs. 10 lakh, while those studying management tend to borrow between Rs. 10 lakh and Rs. 40 lakh.

While some top institutes such as IIM-B have started their own financial aid departments, where help, apart from scholarship from the government, is provided to students, others have tied up with various public sector banks to offer loans. Central Bank of India, for instance, provides a loan of up to Rs. 20 lakh with no collateral for students of IIMs. SBI also has special education loans for students securing admission to IITs, IIMs, NITs, AIIMS and other reputed institutions.

Also, a recent proposal by the central government is likely to encourage banks to disburse more education loans without worrying about defaults. The government is looking to create a Rs. 1,000-crore credit guarantee fund for education loans that banks can draw upon in case of defaults. It aims to guarantee a cover of up to 75% of the loan amount.

Bankers, however, are not entirely convinced. “While Study Loan sector needs such financial assurances, which will also benefit meritorious students, the risk factor for banks has not been taken into consideration entirely,” said a Canara Bank official, who did not wish to be named.

Credit Score Scare

The Credit Information Bureau (India) Limited (CIBIL) had recently announced that non-repayment of education loans will affect one’s credit score. A credit score reflects the financial health of an individual and is an important parameter for obtaining loans in the future.

(Source : http://www.hindustantimes.com/higherstudies/need-an-education-loan-banks-may-shut-door-on-you/article1-1358284.aspx )

NOW COULD BE THE RIGHT TIME TO REFINANCE YOUR STUDENT LOANS

There has been a growing concern around student loan debt for quite some time. The New America Education Policy Program reported in 2012 that about 40 percent of all study loan debt was from graduate students.

Why is this important? One in four borrowers took out more than $100,000 in loans, according to the study, and interest rates for graduate programs can be 50 percent higher than what their less-leveraged undergraduate counterparts can expect.

Is there anything you can do about your federal or Direct PLUS student loan debt?

There are three main options:

1.    Take no action. Depending on your interest rate and financial situation, you may be best suited to take no action at all. Refinancing or consolidating will limit flexibility in the future for loan deferment, forbearance and forgiveness. Since there is no prepayment penalty, you have the flexibility to make additional payments to the principal of your loan as your income changes without getting locked into a higher monthly payment.

2.    Consolidate. Designed to help simplify payments on multiple loans, some borrowers decide to consolidate their loans into one. By consolidating your loans, a new interest rate will be applied, based on the weighted average of the loan balances and associated interest rates. This approach is typically not advisable as it usually costs more over the life of the loan and limits your ability to refinance only a portion of the loan in the future. Since automatic payments can be set up and managed easily online, there is little need for consolidation.

3.    Refinance. The decision to refinance student loans can save some borrowers thousands in interest expense over the life of the loan. Similar to most credit applications, your eligibility and rate will be determined by numerous factors, such as your income, credit score and total outstanding debt. Strong candidates can see a dramatic reduction in their interest rate – even a few points. It isn't right for everyone though, and there are some very important caveats to consider.

With only a few exceptions, it is generally advisable for all student debt holders to at least explore a refinancing scenario. Depending on how long you've been out of school, your annual income and credit history is likely to have improved. One of the main factors for the interest rate you may qualify for is current market interest rates, which are currently very low.

Why doesn't everyone refinance?

There are a few good reasons why refinancing isn't for all borrowers. Many of the big student loan refinancing lenders only consider candidates with excellent credit and income profiles, sometimes even limiting which academic institutions are accepted. Refinancing also tends to cost more in the short term, which not all borrowers can afford. Refinancing typically requires the borrower to enter into a shorter repayment period, often five to 15 years. Even with a reduction of one or two points on your interest rate, shaving five to 10 years off the life of the loan may result in monthly payments outside your current budget.

Refinancing federal student loans to a private lender also has lesser-known implications. Federal loans have benefits such as loan deferment and forbearance, which can help a borrower when they're having financial struggles. Depending on which you qualify for, you may be granted a period in which you can defer all loan payments, or at least only pay interest. When refinancing to a private lender, you lose these options, along with student loan forgiveness. Finally, if someone dies with outstanding federal loans, the balance is forgiven. With private lenders, this is not necessarily the case, especially if there is a co-signer on the loan.

If you're financially secure and think refinancing could benefit you, shop around a bit to find the best rate. That ultra-low variable rate may look appealing, but for the vast majority of borrowers, the risk isn't worth the reward, especially for those carrying high balances. If you have multiple loans outstanding, it probably makes sense to start with the highest balance or interest rate. Trying to tackle all your loans at once may not be feasible, but depending on the amount of debt, you can still save thousands by choosing one.

Most refinancing lenders do not charge any fees to refinance, and some even offer bonuses. Before signing on, be sure you're comfortable with the terms and check if there are prepayment penalties, as you may want to put a bonus towards your loans or refinance again in the future. As a final consideration, ensure the new monthly payment is within your budget and doesn't derail any other financial goals. If you're saving up for a down payment on a home, you may not want to divert an extra couple hundred dollars each month to your loans should your payments increase.

While interest rates remain low, consider your financial situation and whether it could be a good opportunity to refinance student loan debt. While the stock market cannot guarantee returns, by locking in a lower fixed rate on your loans you can actually calculate a guaranteed rate of savings over the original loan. As part of a diversified savings and investment approach, capitalizing on historically low rates by refinancing existing debt could be a good option for investors of any risk tolerance. 

Source from: http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2015/09/02/now-could-be-the-right-time-to-refinance-your-student-loans

Single window platform for education loans, scholarships

Are you a student looking to take an educational loans and wondering which bank has the best option? Would you also like information about the several national scholarships available? You can log in to Vidyalakshmi.co.in, the web-based portal jointly launched by the Department of Financial Services, (Ministry of Finance), Department of Higher Education (Ministry of Human Resource Development) and Indian Banks' Association (IBA). The portal has been developed and is being maintained by NSDL e-Governance Infrastructure Limited.

Students can view the various loan schemes available and apply for loans. Once a student applies, banks will upload the loan processing status on the website. So, students can also track the status of their applications. There is also a provision for sending emails about grievances or loan-related queries to banks.

There are also links provided to the National Scholarship Portal for information and application for government scholarships. Currently, 13 banks have registered on the portal and there are 22 loan schemes available for students to choose from.

While approving an education loan, banks look at the institute the student is applying to, the course, the student’s grades, job prospects after completing the course and so on. Since the list of approved institutions vary from bank-to-bank, students may have to apply to several banks separately before finally getting a loan.

“The ease and convenience of applying to multiple banks simultaneously is the biggest advantage for students. One application is tracked by all banks at the same time,” says S K V Srinivasan, executive director at IDBI Bank, one of the banks that has registered on the portal.

In order to apply, one has to first register on the website and log in. Then search for a suitable loan and apply by filling the Common Education Loan Application Form (CELAF). This is a single form for multiple banks and schemes. It is prescribed by IBA and accepted by all banks. A student can apply to a maximum of three banks.

Students can view the status of their application on the dashboard. If the loan is rejected, the student will have to contact the individual bank for more details. In case the bank puts the application on hold because it requires additional information, that will be indicated in the dashboard, which students will come to know when they log in to the portal. The loan, once approved, will be disbursed directly by the bank outside the portal.

While choosing an educational loan, check if the bank offers additional services such as insurance, and whether repayment conditions are flexible.

“Some banks allow students additional time for repayment based on their earning capacity after completing the course. Some banks also offer insurance along with the loan, which will help parents in repaying the loan, if something untoward happens to the student,” says Srinivasan. Education loans up to Rs 10 lakh fall in the priority lending segment for banks. For loans up to Rs 4 lakh, banks are not allowed to take any collateral. For loans of higher amounts, banks can ask for collateral, guarantor or both.

According to V N Kulkarni, counsellor with counselling centre Abhay, the portal will help reduce the turnaround time for processing of loan applications. In addition, banks will not insist on collateral or guarantor for loans below Rs 4 lakh, since this is a public platform.

“Some banks insist on collateral or guarantor for smaller loans, although it is not required. Often, it is only because of the attitude of the concerned official at that particular branch. And since students are not aware of this, many of them don’t bother approaching another bank. We get several cases like this,” says Kulkarni.

Currently, information about the tie-ups that banks have with educational institutions is not available on the portal. But it could be included going ahead, Srinivasan adds.

(Source : http://www.business-standard.com/article/pf/single-window-platform-for-education-loans-scholarships-115082600814_1.html)

Planning to take an education loan? Here are a few tips

Higher education has become pretty expensive these days. More and more people are finding it difficult to fund the cost and hence are resorting to education loans. If you have got admission in your dream college and are looking for education loan, it is important that you properly assess the various options available and take into account such factors as interest rates, eligible loan amount, repayment options and prepayment options available.

But what should be the ideal loan tenure? Should you choose a longer tenure as you are not sure what kind of job you will land into or what will be your paycheck? Or is opting for a shorter tenure more beneficial?

Ideally, the shorter the tenure of loan better it is. Let us see why.

Total interest outgo will be higher

Any loan is a liability so it’s better to get rid of it as soon as possible. Longer the duration, higher will be the total interest amount. Some people are not sure of paying high EMI in the early years of their career so to be on the safer side they opt for a long duration loan but this will have an adverse effect on your pocket. Let’s calculate to give you a better idea.

So, a loan of Rs 15 lakh at 13% for 10 years will have an EMI of Rs 22,397 but the same loan for tenure of 15 years will bring down your EMI to Rs 17,574. However, your total interest outgo will shoot up. For the 10-year loan, you will pay a total interest amount of Rs 11.88 lakh whereas in the other case, the total interest outgo will be Rs 19.16 lakh.

Notice the difference, it is huge!

However, it’s a tough call to make, as you may opt for a shorter duration loan but there is a possibility that you might not be able to pay your loan EMI if you don’t get a high paying job in the initial years. So, even if you opt for higher tenure loan, try to prepay the loan with any surplus money you have.

Say bye to tax benefits

You can avail a deduction on the entire amount of interest paid on education loan under Section 80E of the Income Tax Act. However, there are two conditions to it:

1. Loan should be taken from any of the scheduled banks in India or any Gazetted financial institutions.

2. Deduction can be availed only for the initial assessment years plus the next seven assessment years or until the interest is paid in full, whichever is earlier. Basically, you can avail the deduction for a maximum of eight years only.

So, if you increase the tenure of the loan to reduce the EMI burden, you will have to forgo the tax benefit.

Investment planning will lose focus

A loan of longer duration will adversely affect your ability to save and invest as you will continue to be under the EMI burden. After you get a job, you will not only need to pay toward your EMI but will also have to invest for future goals. As a result, your investment planning will take a hit as finances will be stretched thin.

In essence, get rid of your education loan as soon as possible so that you can invest more in your present and future.

(Source :http://www.financialexpress.com/article/blogs/planning-to-take-an-education-loan-here-are-a-few-tips/134872/)