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Dear Penny: Can I Kick My Husband Out if I’m Not on the Mortgage?

Dear Penny,

My husband and I have been married for almost seven years. Two and a half years ago we bought a house. My credit is horrible so it had to be financed by him alone, but I pay the mortgage every month. 

We live in New York. Can I make him leave if things don’t work out? We are having some major issues.

-Credit Challenged

Dear Challenged,

I can’t predict who would get what if you divorced. An advice columnist is no substitute for an attorney. So if you’re seriously considering divorce, you need to talk to an attorney who’s licensed in New York.

It’s not clear to me whether you’re on the deed of the home, or if both the deed and mortgage are in your husband’s name only. Obviously, if you’re listed as a co-owner, that bolsters your case. But even if your husband is the only one listed on the deed, you’d probably get something for this house. That doesn’t necessarily mean you’d get to stay, but at least you wouldn’t walk away with 0% equity.


Had your husband acquired the home before you married, a court would likely consider it separate property, which means he’d get to keep it in divorce. The same goes for if he bought it while you were married using money from a gift or an inheritance. Otherwise, a home purchased during a marriage is typically considered marital property, which gets divided between spouses in divorce court.

Most states, including New York, use equitable distribution in divorce. That means a judge would attempt to divide assets fairly between the two of you. The court will consider a number of factors in dividing the home’s equity. The fact that you’ve made the mortgage payments would likely carry some weight.

We don’t have a crystal ball to predict whether you’ll be able to work out your marital problems. So I think you should prepare for the worst. Rebuilding your credit is essential because if you do stay in the home, you may need to refinance the mortgage in your name. Even if you do stay together, obviously you won’t regret boosting your credit score.

Unfortunately, those mortgage payments you’ve been making aren’t helping your credit since the loan isn’t in your name. If you don’t have any open credit accounts, try opening a secured credit card by putting down a deposit, which will become your line of credit. Focus on making on-time payments and avoid charging more than 10% of the limit. If you do have open accounts, try to pay off as much of the balance as possible, focusing on the credit card with the highest interest rate first.

Now is also a good time to assess your budget. You don’t say why you’re the one who pays the mortgage, so I’m not sure if your husband earns income that goes toward other bills or if you’re the sole breadwinner. If your husband earns income, think about how much you could afford to spend on housing with your income alone.

A lot of people stick around in relationships that aren’t working because they can’t afford to leave. What I hope is that by working on your finances now, you won’t have to make decisions based on money. You can focus on your marriage and whether it’s worth saving.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].

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SmartAsset Talks to the Couple Behind MarkandLaurenG.com

AJ Smith, CEPF® AJ Smith is an award-winning journalist and personal finance expert with more than a decade of experience in television, radio, newspapers, magazines and online content. She has appeared on CNN, The Weather Channel, Wall Street Journal Radio and ABC News Radio. Her work has appeared on websites including MarketWatch, Huffington Post, Yahoo Finance and Credit.com. She is a contributor for Forbes. The SmartAsset VP of Content and Financial Education has degrees from Princeton University and Mississippi State University. AJ was named an honoree of the 2018 Women in Media awards in the Corporate Champions category. She is a member of the Society for Advancing Business Editing and Writing and a Certified Educator in Personal Finance® (CEPF®). AJ and her husband also write and illustrate educational children’s books.

Source: smartasset.com

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Good Debt vs. Bad Debt: What’s the Difference?

Good debt. There couldn’t possibly be such a thing, right? Well it turns out not all debt is bad, because without debt, nobody knows your creditworthiness, and that actually makes things very, very tricky when it comes time to consider you for a loan or anything else in the financial space.

It’s time to take a look at good debt vs bad debt so we can understand the differences between them, and try to utilize good debt to our advantage as much as possible.

Good Debt vs. Bad Debt

What Are Examples of Good Debt?

Good debt can be beneficial to your creditworthiness and help you in the long run. It can even be used as collateral (depending on what the good debt is), and equity can be drawn off of it. Good debt needs to be well thought-out, properly executed, and with a healthy level of risk assessment involved. This is what good debt looks like.

  • Education: We see this all the time. While there is a student loan debt crisis going on in the United States, it doesn’t mean you’ll be joining that crisis by taking out education loans. Truth be told, a lot of education loans come across as predatory, but if you’re smart about your choices and you know what you want to do, this can actually help you in the long run. Education loans are tricky and you have to make sure you pay them back properly, but they can help your creditworthiness during your early adult years, when building credit matters most.
  • Business Endeavors: Starting up a business is difficult, but when it’s off the ground and running and you know the business model works, small loans to purchase inventory, expand operations when you know it’s going to work (or, as well as you could possibly know), and when other well thought-out, well-executed business strategies come into play, will benefit you in the long run. These loans are seen as good debt because business loans are often paid back relatively quickly (nowhere near as long as a 15-year mortgage), so you’re building long-standing accounts and showing that you can pay them down completely. Just be sure you don’t pay them off early, otherwise you’re not using all the time that you could use to build up your business credit.
  • Personal Property: Personal property can appreciate in value, especially if you plan out your purchase properly. That’s why even though this is often the biggest financial decision that anyone will make in their life, it can still be seen as an investment. Properties are supposed to increase in value over time, so if that’s the case, your investment and continued maintenance of your home will increase its value over time, and be seen as an asset, not a liability. This is good debt.
  • Rental Property: This is listed separately because it’s an entirely different ordeal. This is something you’ll make money off of immediately, and it’s one of the most common ways that individuals begin a real estate empire: they begin renting out one property. This is good debt since there will be income gained from it, so you have more leverage when you negotiate the terms of your loan, and your credit continues to rise when you show that this property and business endeavor hybrid works out. This has a higher level of risk than personal property depending on the size, but rental property or income property debt is good debt.
  • Auto Loans: These can be volatile, because auto loans generally have more complex terms than other loans and can be tricky, but once again, knowing what you’re doing before you sign your name on a loan is completely key. If you’re able to look over the terms properly and understand what you’re getting yourself into, and you don’t take out anything too massive, auto loans can be good debt.

Is Good Debt Really Good?

Yes it is. Good debt is manageable debt that you could completely wash away with liquid assets at a moment’s notice, if you had to. We saw examples of good debt, but we didn’t really talk about why it’s good and how to make sure it isn’t volatile.

If you lost your job tomorrow and had to use your current assets to survive off of while you found a new job, and you quickly realize you’re living paycheck to paycheck and can’t afford anything for even one week with no inbound money coming in, you’re not in a position to take on good debt.

If you were to lose your job tomorrow and had enough money to survive off while you look for a new job, and it’s not contingent on that last paycheck coming in, then you’re most likely in a position to take on good debt. If you can use your assets to wipe away all your good debt and not shaft yourself, you’re in a good position.

Good debt is helpful to your situation and doesn’t hurt you. Good debt is manageable by your current assets without a second thought, so if you did lose your job or you were put in a position where your income was interrupted, you could use your capital to wipe away these debts and not go into bad debt just because of a little life disturbance.

Good debt doesn’t put a chokehold on your life. All it does is bring up your creditworthiness and help your overall financial situation in the long run. If it’s manageable and won’t sink you, it’s good debt.

How Much is a Good Debt?

A good debt doesn’t have a specific percentage, but suffice to say, that percentage should be relatively low. Your good debt can’t feasibly be wiped away in an instant, even though that’s an ideal situation, so if it is something like your education or your business, you don’t want it to run your life.

Any level of good debt should be an amount of money that won’t completely put you out. Remember that debt can be stressful and frustrating, so your good debt shouldn’t be something that adds to that.

It’s safe to assume that, if you’re talking about personal credit cards and debt for the sake of building your credit history, it should be less than about 10% of your total income. If you bring in $4,000 per month, your good debt shouldn’t be more than $400. It’s a good rule of thumb to live by, because as long as your living expenses aren’t more than 50% of your income, you’ll have free cash floating around to wipe out debt if need be, such as if your situation changes.

Why Exactly Any Debt is a Good Debt?

If you don’t have credit history, you’re losing out on the potential to increase your creditworthiness going forward. That may sound like it doesn’t matter if you pay for everything upfront or in cash, but not having credit can and will hurt you in the long run.

Credit comes up when you go to buy a car or a home, two of the biggest purchases that the average American makes in their lives. Even if you typically have a lot of liquid cash, simply paying for a home and missing out on equity and the ability to build your credit even further is a big mistake. You can use a big down payment to avoid PMI, but apart from that, you should be using credit to your advantage in an intelligent way.

Some debt is good. Investment debt is good (education, property, etc.). In today’s market, you can’t afford to not have debt, as silly as that sounds. You need to build your credit history.

Speaking of which, there are a lot of factors that go into your credit score, and one of those is history. Having a credit card for one month and paying the bill is less impactful than having a credit card for twelve months and paying the bill on time. Institutions want to see that you can be trusted over an arc of time, not just in the short-term.

Good Debt vs. Bad Debt (Main Difference)

There’s one key difference between good debt and bad debt. We’ve been over good sources of debt, but now it’s time to discuss what makes them good, and what makes a source of debt completely bad.

Good debt can be managed, and used as leverage to increase your creditworthiness. Good debt is seen as an investment because it is low-risk and offers a much more beneficial payout, such as education, property, and business expenses. There’s something monumentally valuable to be gained, and a careful, tactical investment strategy is in place to ensure it works out.

Bad debt doesn’t help you in any way. Bad debt is a personal credit card that was used on frivolous purchases, or debt that you take out but have no idea how you’ll pay it back. Bad debt will hurt your creditworthiness and make it more difficult to be trusted by lenders in the future.

Source: crediful.com

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Secured Versus Unsecured Loans — And Ways You Can Wield These Powerful Tools

Sure, you could mow acres of lawn with a weedeater, dig a hole with a pitchfork or nail a screw with a hammer. You’d be turning an old adage on its head by working harder, instead of smarter, however. Like tools, loans are much more effective, and easier to maintain, when you wield the right loan product for the job at hand – whether that’s buying a new car, taking out a mortgage or consolidating high-interest credit card debt.

Knowing what an unsecured loan is and how it compares to a secured loan, can help you choose the right loan type, so you can do things like sand down high interest rates, hammer away at debt or take an ax to large expenses to chop them into manageable monthly payments.

So what is an unsecured loan exactly? What is a secured loan? And what’s the best way to take advantage of them?

Consider this your quick-start guide to the characteristics of secured and unsecured loans, as well as a primer on how you can use them to repair or renovate your finances.

What a Secured Loan Is — and the Best Ways to Use It

When you think of “secured loans,” think collateral. Collateral provides lenders security against non-payment, or “default.” Instead of having to navigate the legal system to recoup a loan that wasn’t paid in full, the lender can take possession of the collateral a borrower submitted to guarantee the loan.

Having to put up a car, real estate or other valuable assets as collateral for a loan is a sobering thought. But you can’t blame lenders for wanting to ensure an applicant is serious about repaying the loan.

Common types of collateral for secured loans: automobiles, real estate, investments, insurance policies and cash accounts.

Backing a loan with collateral not only affirms your commitment to repayment — it can also raise your chances of approval for that loan, especially if there’s plenty of room for your credit score to improve. With less risk to the lender, it’s often easier to land a secured loan than an unsecured loan, though the latter is still the most common type of personal loan.

Check out some of these common use cases for secured loans:

  • Financing a new car: You don’t need pristine credit to buy a car, since the car itself can serve as collateral.
  • Mortgaging a home: Just like financing a car, you can buy a home with a secured loan.
  • Building credit: If you have bad credit or none at all, you can use your own money as collateral to get a small line of credit from a bank. With responsible use, that credit line could grow.
  • Emergency money: If you need money and don’t have great credit, you can borrow money by using collateral such as a car title or jewelry.
  • Business loans: If you don’t qualify for an unsecured loan, or need more than offered, you could land a secured loan by backing it with high-value assets, such as real estate or business inventory.

Pros of Secured Loans:

  • Lower interest rates
  • The potential to borrow larger amounts
  • Easier to qualify for, since they involve less risk to the lender
  • Lower credit score requirements

Cons of Secured Loans:

  • Approval could take longer as assets are reviewed
  • Have to leverage assets, risking repossession or foreclosure in cases of loan default
  • Smaller loans or shorter terms may not be available

In the approval process for a secured loan, lenders also factor in your creditworthiness:  Your debt-to-income ratio, credit scores, the value of your assets, employment status and the health of your accounts. These factors typically weigh more in the application process for unsecured loans.

A woman hugs the steering wheel of a car she wants to buy.
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What an Unsecured Loan Is and How to Use It

It’s what it sounds like, yet not exactly so.

Unsecured loans don’t require the security of collateral. Instead, a potential lender will review your creditworthiness to determine if they’ll extend you an unsecured loan.

While an unsecured loan doesn’t require you to put up collateral like a secured loan, the bank still has recourse to recoup the loan, should you fail to repay it in full. In their toolkits, banks have legal options, such as lawsuits and wage garnishment, which they can use to protect themselves against defaulted loans.

Here are some common use cases for taking out an unsecured loan:

  • Debt consolidation: A single lower-interest loan to consolidate all of those high-interest credit cards and other debt.
  • Emergency money: A solid emergency fund isn’t always enough, but a significant line of credit can bail you out in an emergency.
  • Big-ticket items: Spread out big purchases to fit a large item into your monthly budget.
  • Buying a car: You can use a personal line of credit to purchase an automobile from a private seller.
  • Home improvement: Homeowners can use a personal loan with a fixed interest rate to make home improvements without using the home as collateral, which is required with other options, like a HELOC.
  • Weddings: Some couples opt for a personal loan to cover large expenses, like weddings.

Pros of Unsecured Loans:

  • No need to leverage any assets as collateral
  • Faster approval process, since there’s no need to evaluate assets
  • The potential to take smaller loans

Cons of Unsecured Loans:

  • Higher interest rates
  • Higher credit scores required

How a Secured or Unsecured Loan Can Impact Your Credit Scores

While there’s usually no impact for looking into a secured loan or an unsecured loan, your credit scores could take a mild to moderate hit once you actually apply. That hit to your credit scores may come from the hard inquiry to your credit file, as well as the rise in debt that comes from using the loan.

But if you’re seriously considering a personal loan, then you probably aren’t shortsighted and can appreciate the beauty of the long game.

In the long run, that hard inquiry will fall off your credit file. And if you keep up with your loan payments, your score could begin to trend upward in a matter of months.

Paying that loan every month will help improve your payment history. And if you’re using that loan to pay off credit card debt, you could score points by lowering your debt-to-credit ratio.

Proving you can responsibly pay off a loan is one of the more impactful things you can do to improve your credit scores. And it could help you secure even better loan terms the next time you go looking for a secured or unsecured loan.

Shopping for Secured and Unsecured Loans

So now that you’re up to speed on the key distinctions between a secured versus unsecured loan, there’s still a little more work you need to do to secure the funds you need.

You might find it tempting to jump onto the first pre-approved offer from lenders with names you’ve heard of, especially if the terms are solid, but you could be doing yourself a disservice if you don’t compare offers.

Shop for the best loan terms available for your credit profile by using a loan-comparison tool like Fiona. Fiona searches the top online lenders to match you with a personalized loan offer in less than 60 seconds.

If your credit score is at least 620, its platform can help you borrow up to $100,000, with fixed rates starting at 4.99% and terms from 24 to 84 months.

And if you’re worried you won’t qualify, it’s free to check online. It takes just two minutes. Once you choose your loan, you could see your money in just a few days. And by the way, your information is totally safe — the website uses higher encryption security than many banks.

Fiona will also show you additional offers from other lenders — because comparing your quotes can help you save even more money in the long run.

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Source: thepennyhoarder.com

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What is the Best Method for Paying Off Debt?

What is the Best Way to Pay Off Debt? Snowball Method vs Avalanche Method – SmartAsset Close thin Facebook Twitter Google plus Linked in Reddit Email

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When you are in debt on multiple credit cards or from multiple sources, like a mix of student loans, credit cards, personal loans, etc. it can be difficult to decide where to start with paying off your debt. Of course, the first thing you should do is calculate and record the balances, minimum payments and interest rates on all of your debts. But after you do this, your numbers might seem overwhelming. Luckily, there are several debt payoff methods to choose from and each has its own set of pros and cons.

Find out now: How much do I need to save for retirement?

The Avalanche Method

Paying off debt with the avalanche method is a great choice if your debts have lots varying interest rates. When you use the debt avalanche method, you basically ignore your debt balances and minimum payments and focus solely on their interest rates. You focus on paying off your highest interest debt first (while still meeting the minimum payments for all debt).

The avalanche method is usually touted as being the fastest and cheapest way to pay off debt because you’ll get rid of your highest interest rate debt first. This will indeed save you some money on interest, and also some time because you’re highest interest rate debt won’t continue racking up compound interest.

But if you are new to paying off debt with intensity, it might be intimidating to you to try and tackle a debt that may not have the lowest balance.

Related Article: Debt Settlement

The Snowball Method

The debt snowball method focuses only on the size of your debt balances. You’ll rank your debts in order from smallest balance to highest balance, ignoring their interest rates and minimum payments. Then you’ll pay them off in that order.

This method is a good one to choose if you feel that having small successes more frequently will keep you motivated to continue paying off debt. These psychological wins can help you avoid debt payoff fatigue if you have many debts to eliminate.

As you pay off your smallest debts, you wont’t see your disposable income rise. Instead, you’ll roll the payment you were making each month from the first one you payoff into the payment for your next debt. For example, if you were putting $100 each month toward a debt, once it is paid off you will earmark that $100 each month to more quickly paying off your next debt. This is when your snowball will begin to roll faster and gain momentum.

A Hybrid

Some people may choose to do a hybrid debt payoff method by combining the avalanche and snowball methods. For instance, I chose to pay off my smallest balance first, which would follow the snowball method. I also rolled my minimum payment toward my next debt, but instead of tackling my next smallest balance, I decided to move to a debt with a higher balance and my highest interest rate. This may not make sense to everyone, but in a hybrid situation you can use emotional and logical thinking to help you make a decision that fits with the best of both worlds.

6 Ways to Pay Off Debt Faster

Bottom Line

In the end, there’s no right or wrong way to pay off debt. Everyone’s situation is different, so what works for one person may not work so well for someone else. What really matters is that you continue to make progress toward your goal of becoming debt free.

Which debt payoff method are you using? Why?

Photo credit: flickr, ©iStock.com/fotoVoyager, ©iStock.com/SeaHorseTwo

Kayla Sloan Kayla Sloan is a writer with an expertise in debt, budgeting and saving money. She is focused on paying off her consumer and student loans, while simplifying her life and closet. Kayla’s work has been featured across the web, including on The Huffington Post, Time, credit.com and AOL. You can follow her as she blogs about her journey out of debt at www.kaylasloan.com.

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Dear Penny: Will I Ever Get the $2K My Ex Owes Me After 14 Years?

Dear Penny,
For what it’s worth, it doesn’t sound like your boyfriend set out to cheat you or use you if he paid back the first ,000 amid considerable hardship. That doesn’t absolve him of responsibility, of course. It’s just that in tough times, you were probably easier to blow off compared to his other creditors.
He paid me up to ,000 and then stopped when he owed me the last ,000. He moved to Florida because he couldn’t afford to live in L.A. anymore, and he claimed he couldn’t afford to pay me the rest of the money. After that, he never tried to pay me back. 
If you can’t sue your ex, your only recourse would be to contact him and persuade him to pay you because it’s the right thing to do. Maybe he’s changed in the years since you broke up. But the odds of getting him to voluntarily pay up seem extraordinarily slim. I don’t think ,000 is worth the price of opening old wounds.
Around 2007, I lent my boyfriend at the time around ,000 to buy a car. He said he would pay me back 0 a month. Well, he couldn’t handle that because he kept losing his job. Then he started paying me 0 a month. 

Think about what this experience taught you. Are there any takeaways you can apply to current or future relationships? Are there any boundaries about lending money that, in hindsight, you wish you set?
I’d tell you to look into your state’s process for suing in small claims court if this were a more recent debt. But 14 years have passed since you made this loan. The laws vary by state and whether you had a written or oral contract. But it’s likely that the statute of limitations has long passed by now.
Ultimately, I think you have a better chance of moving forward from whatever lingering feelings you have about this relationship if you extinguish any hope of getting your ,000 back. With the money off the table, there’s no reason to contact your ex again. You’ve closed that chapter of your life. Chalk this up to an expensive lesson learned.
Is this really about the money? Or are you seeking closure for your feelings about this relationship? Keep in mind that plenty of people walk away from a relationship feeling used even when money isn’t involved.


The ,000 he still owes you is easy to focus on because it’s quantifiable. But if you feel like you were robbed of your time or energy or goodwill, those feelings aren’t going to disappear even in the unlikely event that you collect on this old debt.
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Source: thepennyhoarder.com
I feel like I was cheated and used. Is there anything I can do about this? 
Ready to stop worrying about money?
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].

-Feeling Used

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Move on. Let go of the hope that you’ll ever collect that final ,000.

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Automatic Student Loan Forgiveness Coming for Nearly Half a Million

Automatic student debt assistance is on the way for nearly half a million borrowers due to recent rule changes at the U.S. Department of Education.

In a flurry of loan relief announcements, the Education Department outlined several groups of student loan borrowers who will receive automatic aid unless they choose to opt out.

The groups include some current and former service members, borrowers with qualifying permanent disabilities that prevent them from working and attendees of the defunct ITT Tech who inadvertently took out “misleading” loans that the for-profit college chain allegedly disguised as grant money.

In total, an estimated 485,000 borrowers qualify for automatic relief.

The Education Department has identified these borrowers through data-matching agreements with several other federal agencies, including the Social Security Administration, the Department of Veterans Affairs and the Department of Defense.

All of the borrowers that the Education Department has identified qualify for longstanding student loan relief programs through the agency. Many borrowers were either unaware of the programs or weren’t able to apply. Through the data-matching partnerships, the Education Department  is able to confirm borrowers’ eligibility without the need for them to do so.

Pro Tip

If you qualify for automatic student debt relief, the Department of Education will notify you this fall. You will have a chance to opt out if you prefer. 

This latest wave of aid brings the Education Department’s student loan forgiveness tally to $9.5 billion in 2021. Those not included in this round of forgiveness may still benefit from the pause on federal student loan payments, which has been extended until Jan. 31, 2021.

Here’s a closer look at who’s receiving the automatic aid.

323,000 Borrowers With Qualifying Disabilities

For federal student loan borrowers that have qualifying total and permanent disabilities, the Department of Education is providing $5.8 billion in automatic loan forgiveness, according to an announcement from the agency.

By accessing records from the Social Security Administration and the Department of Veterans Affairs, the Education Department identified an estimated 323,000 borrowers that are eligible for its total and permanent disability (TPD) loan discharge program.

Automatic discharge qualifications include:

  • Participation in a federal student loan program (i.e. William D. Ford Federal Direct Loan program, Federal Family Education Loan program, Federal Perkins Loan program and/or the TEACH Grant service program).
  • A total and permanent disability that prevents you from working, as determined by the Social Security Administration or the Department of Veteran Affairs.

The Department said it will complete its next quarterly data match process in September and notify those who are eligible “in the weeks after the match.” The agency plans to discharge the loans by the end of the year.

Going forward, the Department told The Penny Hoarder that federal student loan borrowers who are determined to be totally and permanently disabled by the VA or SSA will be identified for automatic discharge on a quarterly basis.

Many other disabled federal student loan borrowers are eligible for a TPD discharge but will have to apply manually — a process which staff attorney Alpha Taylor of the National Consumer Law Center called “overly burdensome.”

“For now, things will remain the same for borrowers who are not eligible for a TPD discharge based on the data matching program with SSA and VA,” Taylor told The Penny Hoarder. “They will still have to complete the overly burdensome TPD application process and submit a physician certification to have their loans discharged.”

155,000 Borrowers Defrauded by ITT Technical Institute

Before ITT Technical Institute closed its doors in 2016, the for-profit school deceived some students into taking on unnecessary debt.

“The institution engaged in widespread misrepresentations about the true state of its financial health and misled students into taking out unaffordable private loans that were allegedly portrayed as grant aid,” the Department of Education announced.

Approximately 155,000 former ITT students are now eligible for debt forgiveness after a new review of ITT Tech’s deceptive activity. The education department determined students who attended ITT but did not finish their degree starting as early as March 31, 2008 are now eligible for loan discharges.

To qualify for automatic discharge:

  • You attended ITT Tech on or after March 31, 2008; and
  • You took out qualifying student loans to pay for your schooling; and
  • You did not complete your degree or certificate program.

The education department will complete its data match process in this month and notify eligible borrowers in the following weeks.

ITT Tech is one of more than 50 defunct schools included in the Department of Education’s Closed School Discharge program. Other schools include The Chef’s Academy, Concordia University, Corinthian Colleges, Everest University and dozens more.

This discharge program typically provides automatic loan forgiveness to qualifying borrowers three years after a school’s closure. However, if you believe you are eligible and you don’t want to wait three years, you may apply to the program manually to receive a speedier discharge.

47,000 Current and Former Service Members

Due to a data-matching agreement — this time with the Department of Defense — the education department is retroactively waiving student loan interest for at least 47,000 current and former active-duty service members.

This benefit should not be confused with loan discharge, aka forgiveness. It affects only the interest on the loan(s).

Qualifying service members for this benefit were or are deployed to “areas that qualify them for imminent danger or hostile fire pay,” according to the Department, and must have taken out a federal student loan on or after Oct. 1, 2008.

Only a small percentage of qualifying service members have accessed the benefit. In 2019 before the data-matching agreement, the Department said it waived interest for only 4,800 service members.

“Now the Department is able to identify federal student loan borrowers who serve on active duty by matching records to DOD’s personnel records,” the Education Department stated in a news release. “As a result, the Department can automatically provide the student loan interest benefit.”

The Department of Education extended its freeze on interest rates and payments for federally held student loans through Jan. 31, 2022. This is the third extension since the beginning of the pandemic. 

What Happens When the Education Department Doesn’t Collect on Student Loan Debt?

Each time the Department of Education forgives a loan, it removes a financial burden for someone who pursued higher education. Simultaneously, the department loses out on money it was owed.

When we’re talking about 43 million borrowers who owe more than $1.7 trillion, the cost of forgiveness can add up quickly. Even the tailored relief provided by the department so far in 2021 accounts for $9.5 billion.

How does the department operate without those funds? Could loan forgiveness affect the budgets of other aid programs? What about everyone else with student loan debt?

The Department of Education did not respond when The Penny Hoarder posed those questions. However, a recent Brookings report by Adam Looney sheds some light. Looney is a nonresident senior fellow at Brookings, a former deputy assistant secretary at the U.S. Treasury Department and a tax policy expert.

“Even modest student loan forgiveness proposals are staggeringly expensive and use federal spending that could advance other goals,” Looney opens his report.

He argues that blanket student loan forgiveness tends to benefit whiter, better-educated and higher-income people who may not need the aid as badly as others. And while good natured, the cost of widespread forgiveness rivals the spending of unemployment insurance, food assistance programs and other government programs intended for Americans who need the aid the most.

Looney clearly favors more tailored loan forgiveness programs. And though President Joe Biden has voiced support for broad student loan forgiveness, his administration seems to be taking Looney’s advice.

Adam Hardy is a reporter and editor based in St. Petersburg, Florida. He covers personal finance, the gig economy, government benefits programs and other ways to make and manage money, and is a former staff writer for The Penny Hoarder. Connect with him on Twitter @hardyjournalism.

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How to Protect Your Finances Using Phone Apps

A crisis is no time to wonder if your car payment is due.

But whether it’s a medical emergency, a job loss, a natural disaster or… let’s face it, some crisis we haven’t even imagined yet, it’s easy enough to lose track of the other priorities in our life — and that can add to our financial woes.

Staying in control of your finances is essential, particularly during a crisis. An overdraft fee here, a late payment there and suddenly your initial problem is compounded by a financial hit that can haunt you for years.

If knowledge is power, then setting yourself up to have all your financial information on hand could be the difference between a one-time disaster and a lasting financial catastrophe.

One way to start protecting your money: Use the digital apps for your banks and lenders.

How to Use Phone Apps to Protect Your Finances

Downloading apps from your various financial institutions can help you during a crisis, but only if you have access to everything you need. Here’s how to make it happen in 15 minutes.

1. Create a Comprehensive List

Start by compiling a list of monthly, quarterly and annual bills — and the companies to which you send payments. Don’t trust your analog brain to remember all of them.

Instead, take a few minutes to review your budget or your bank and credit card statements from the previous year to jog your memory on regular but non-monthly expenses, like your vehicle registration renewal or credit card membership fees.

Also list your banks and all of your credit cards — even the ones you don’t regularly use. In a crisis, you may need access to a credit line you don’t typically tap, and you’ll want to have that account information handy.

2. Download the Official Apps

Whether it’s your student loan servicer or your mortgage lender, using the company’s official app offers the benefit of providing you more immediate access to your information and to assistance during a crisis.

Most lenders have added easy-access buttons that let you apply for relief plans if you’re struggling to pay your bills. That small convenience saves you the step of searching the company’s website for a customer service number.

Pro Tip

Create logins and new passwords when you download the apps, keeping the info in a secure place. And don’t reuse passwords to mitigate the damage if a thief gains access to one of your accounts.

By downloading the app, you’ll also have easy access to your account information. That can be helpful if a crisis puts you in the hospital unexpectedly or forces you to evacuate suddenly and you need to contact a lender.

Saving those few minutes of stress by keeping the information handy could mean the difference between connecting with financial hardship assistance and letting bills go unpaid. Doing the latter could wreck your finances for long after the disaster passes.

3. Use App Features to Protect Your Money

If you haven’t set up automatic payments for monthly expenses like your mortgage and cell phone bill, do it before the next catastrophe hits. During an emergency, you don’t want the electricity turned off just because you forgot what day it is.

Additionally, you can set up spending alerts and limits for your bank accounts and credit cards, helping you avoid those nasty overdraft fees.

Pro Tip

If you’re trying to maintain social distancing guidelines, use the check deposit feature available on most bank and credit union apps to avoid visiting a physical location.

Review the apps for other features that you may not have considered, like the ability to check your credit score. If you check your score on a regular basis and it suddenly drops unexpectedly, you can track down the problem quickly.

Most major credit card apps also allow you to lock the account and replace your card if it’s lost or stolen amid the chaos of your current situation.

You may not be able to prevent a crisis, but you can control how you prepare for one so you and your money can survive intact.

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.

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Dear Penny: Can We Get Out of Our Estranged Daughter’s Truck Loan?

Dear Penny,

My husband and I did a really stupid thing: We co-signed for our 20-year-old daughter’s truck. 

We did this in July 2021. We shook hands in a “gentleman’s deal” on the condition that she live at home until 2022 to figure out her actual income versus outgoing money. 

She has a job that can pay for her to live on her own with no problems financially. We were concerned because of her lack of life experience. She went straight from homeschooling into this job. She moved out without our consent or approval. 

We are on bad terms at this point. We want my husband’s name off the loan OR the truck back. We’ll assume payments plus pay her back her deposit. It’s hard knowing you’re potentially responsible for something if things go awry. We are on such disgruntled terms that we don’t even know where she lives or her cell number. 

-Serves Me Right

Dear Serves Me Right,

I don’t think co-signing was your foolish move here. Co-signing tends to end poorly when the person you sign for has terrible credit or insufficient income. Your daughter obviously has a good job if she can already afford to pay all her expenses. But at 20, she probably lacked the credit history to get an auto loan on her own without paying an exorbitant interest rate.

Your mistake is that you made the co-signing contingent on her living at home until 2022. Of course, your daughter shouldn’t have agreed to something she didn’t intend to do. But she’s an adult. She doesn’t need your consent or approval to move out.

Your requirement doesn’t actually seem to be about money. She doesn’t need to live at home until 2022 to “figure out her actual income versus outgoing money” if she can already afford to have her own place and pay all the bills.

What I suspect is that this is about control. You don’t want to accept that your daughter is an independent adult. You may be right that she lacks life experience. But the only way she’ll get it is by flying the coop. Do you really think your daughter will gain worldliness by living with her parents for another year?


But let’s put family dynamics aside for a minute. Your options for getting out of a loan you’ve co-signed are limited.

You could request a co-signer release from the lender. But both your daughter and the lender would have to sign off. You could also ask your daughter to apply to refinance in her name. But you’d probably have to wait at least a year or two until your daughter has built a solid payment history and credit score for a lender to even consider either option.

You could take back the truck and take over payments, as you suggest. But that’s only an option if your daughter is willing to sign over the title to you.

Notice a common theme here? All of your options require your daughter’s cooperation. You have no chance of getting that if you’re not on speaking terms. The important thing here is that your message can’t be about the car loan or her decision to move out. Simply say that you love her and miss her. Ask her if she’d be open to talking.

If you can re-establish a relationship, I don’t think you should ask her to sign over the truck or petition to get your husband’s name off of it, provided she’s making the payments on time. If she can handle adult responsibilities, treat her like the adult that she is. You don’t have to agree with all her choices in life.

If she isn’t paying, obviously, that’s a different story. The relationship will be harder to repair — and in that case, there’s no way your husband’s name is coming off that loan. As the co-signer, he can ask the lender to send him monthly statements to make sure the loan is paid as agreed. If it isn’t, unfortunately, the only way to avoid damaging his credit will be to make the payments on his own.

I hope that having a relationship with your child is motivation enough for the two of you to extend an olive branch. I don’t think this is really about a truck loan. But if I’m wrong and it really is about the loan, the olive branch is still your only solution.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].

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