student debt Archives - Hanover Mortgages

Apache is functioning normally

May 31, 2023 by Brett Tams

Your debt-to-income ratio—the total of all your monthly expenses divided by your gross monthly income—is one of several factors that impact your mortgage rate, our experts say. Your debt-to-income ratio (DTI) determines the loans you can get and a higher DTI generally means you won’t get access to loans with lower mortgage rates.

“The better programs have thresholds with lower debt-to-income ratios. And better programs translate into better rates,” says Kevin Leibowitz, a mortgage broker at Grayton Mortgage.

Impact of DTI on buying choices

In New York City, co-op boards have their own DTI requirements for buyers, usually 22 to 24 percent. “Co-ops are usually stricter than banks when looking at DTI,” says Deanna Kory, a leading agent at Corcoran.

Of course lenders are also assessing your financial viability. “Every bank has guidelines with regard to the maximum debt-to-income they allow in order to approve a loan,” says Melissa Cohn, regional vice president at William Raveis Mortgage.

When you’re shopping for a mortgage, a loan officer or mortgage broker will offer you a rate based on your borrowing profile. This includes your credit score, your down payment, whether you’re buying a condo, second home, or investment property, and whether the mortgage is a cash-out refinance. “All these factors are layered on top of each other and it becomes a decision-tree matrix,” Leibowitz says.

Many lenders will allow for DTI ratios up to 50 percent but the terms available for the loans with a higher DTI are typically worse than those with lower DTI ratios. “Many adjustable and most jumbo lenders cap the maximum DTI at 43 percent in order to qualify,” Cohn says. If you are financing more than 80 percent and applying for private mortgage insurance (PMI), Cohn says the cost of the PMI increases with a higher DTI.

Put another way—if you have a small down payment, a low credit score, and a high DTI, Leibowitz says, “either the programs are going to disappear or the programs that are available come with worse terms.”

For example, let’s say a condo buyer has a low credit score and a high DTI and they are putting 50 percent down on a $500,000 apartment. That’s not necessarily a bad loan for a lender, Leibowitz says. A buyer is unlikely to default on $250,000 of equity or cash they’ve just put down.

However a higher DTI might rule out access to a loan with a better rate, Leibowitz says.

How to improve your DTI

One of the best ways to improve your DTI ratio is to limit or pay down any consumer-related debt. This might mean paying off your credit card debt, delaying a big purchase, holding off on a leasing arrangement for a new car, or setting up a loan repayment program for any student debt.

Source: brickunderground.com

Apache is functioning normally

May 30, 2023 by Brett Tams

Originally founded as Social Finance in 2011 to help borrowers manage student loan debt, SoFi started offering mortgages in 2014. Today, the company has funded more than $50 billion in loans, which include everything from wedding loans to auto loan refinancing. The company offers a wide range of services including investing, credit cards and checking accounts for more than 4 million members. Those interested in and eligible for a mortgage can prequalify online in less than two minutes. The lender typically issues conditional approvals in one to two business days, with closings on purchases currently averaging 30 days.

Breakdown of SoFi overall score

Affordability: As an online lender, SoFi’s mortgage rates are very competitive. Notably, you’ll pay a flat lender fee instead of a percentage-based fee. Depending on the price of your home, this might mean you save some money.
Availability: SoFi lends to borrowers in the majority of states in the U.S. It has limited mortgage options, however, and requires a higher down payment (unless you’re a first-time homebuyer).
Borrower experience: SoFi is a membership-driven company that does business primarily online, so you can expect convenience when working with this lender. You’ll need to become a member to take full advantage of some of its perks, however.

Affordability: 5/5

SoFi updates its 10-year, 15-year, 20-year and 30-year APRs daily on its website. All publicly advertised rates assume you’re making a 20 percent down payment, however. To get loan offers tailored to your situation, you’ll need to provide some contact information and other details via an online form.

SoFi charges a $1,495 administration fee, according to a company spokesperson, but SoFi members get $500 off this cost. (Membership is free.)

Note: You can lock in your rate with SoFi for 90 days at the time you’re preapproved. However, if you don’t enter into a purchase agreement by day 60 of the 90-day window, you’ll be subject to a $250 fee. This’ll be refunded at closing. On the plus side, if you do sign a purchase agreement by day 30 of the 90-day period, you’ll get a 0.125 percent further discount on your rate.

Availability: 5/5

While SoFi is licensed to lend mortgages in most states, it only offers conforming and non-conforming (jumbo) conventional loans; it doesn’t offer government-backed products like FHA loans. To qualify, you’ll need a credit score of at least 620 and a debt-to-income (DTI) ratio of no more than 50 percent. If you’re an eligible first-time homebuyer, you can get a conventional loan for as little as 3 percent down. If it’s not your first home, however, you’ll need to put down 5 percent, at minimum.

Borrower experience: 4.7/5

SoFi has been providing mortgages since 2014, originating more than $6 billion in loan volume on that front to date. While the company isn’t accredited by the Better Business Bureau, it does have an A+ rating from the organization, along with “Great” reviews from Trustpilot.

SoFi is a digitally-focused company, and its mobile app is in the top 100 finance apps in the Apple App Store. You can complete the entire application for a mortgage online; there’s also a Home Loan Help Center with calculators, insights into local housing markets and other information to help with the home-buying process. If you need help with your loan at any point, you can call 833-408-7634 Monday through Friday from 8 a.m. to 8 p.m. CT, or Saturday, 10 a.m. to 2 p.m. CT.

Refinancing with SoFi

You can refinance your current mortgage with SoFi. With a traditional refinance, you only need to have 5 percent equity in the home. For a cash-out refinance, you’ll need at least 20 percent equity.

The company also offers student loan cash-out refinances, which allow you to pay off your student debt and refinance your mortgage at the same time. You’ll need to do the math to determine if that move would actually save you money in the long run. Existing SoFi members can save $500 on refinancing costs.

Alternatives to SoFi

Methodology

Bankrate’s expert editorial team collects lender information through a variety of methods. We contact lenders directly, and we also turn to regulatory filings and to assessments by third parties. Our research takes into account three main factors – affordability, availability and borrower experience.

Bankrate’s reporters and editors have decades of experience covering the mortgage industry. They’re skilled at gathering information through interviews and by scouring regulatory filings. Bankrate evaluates more than 85 lenders for factors relating to affordability, availability and customer experience, assigning each a Bankrate Score out of five stars. Here’s how we assess each of the categories:

Affordability. Loan cost is a deciding factor for many borrowers. We look at two metrics: 1) a lender’s lowest advertised annual percentage rate (APR) based on Bankrate’s sample scenario, which assumes a 740 or higher credit score and a 20 percent down payment, among other factors and 2) established-customer discounts or incentive pricing, when applicable.
Availability. Another factor is how quickly your loan application will be approved, and how many loan programs the lender offers. So we evaluate approval and closing timelines and diversity of loan products.
Customer experience. Finally, we delve into what it’s like to deal with the lender as a consumer. We look at the lender’s application process and availability of customer service support. We also consider the results of J.D. Power’s 2022 Mortgage Origination Satisfaction Survey.

Bankrate’s editorial team confirms the accuracy of data at the time of publication. Our team is dedicated to maintaining the timeliness of information – the mortgage industry is changing constantly, so we regularly revisit these reviews to update them.

Bankrate’s methodology page spells out our rating process in greater detail.

Source: thesimpledollar.com

Apache is functioning normally

May 30, 2023 by Brett Tams

Save more, spend smarter, and make your money go further

As the credits rolled on Adam Baker’s I’m Fine, Thanks documentary, tears streamed down my face. I had watched his TED Talk earlier that day about getting rid of your crap, paying off your debt, and doing what you love. I yearned to have the “freedom” he talked about in both videos. That’s when I looked at my husband and said, “I don’t want to live like this anymore. I want to pay off your student loan debt!”

The first tool that came to mind was Mint.com. I had heard of the site from friends who mentioned using the app. I never realized where all of the money we earned was going. We were living in Austin, Texas and working through a tough economy making roughly $12/hour each. Luckily, we had two old cars that were paid off (including my first car from when I was 15), so we didn’t have the burden of car loans or credit card debt.

The student loans were weighing heavy on us. Fortunately, a family gift of $5,000 helped us lower the loan from $24,000 to $19,000, but it was still a huge burden. I immediately logged on to Mint.com that same night after we finished Adam Baker’s inspiring videos and pulled in three months of history from our bank accounts. As I began categorizing every transaction and budget, I began to see a pattern of bad habits.

Read: How to Pay Off Student Loan Debt

What was my husband buying at the convenience store every two days for $7.43? Did I really need to purchase those clothes from Goodwill last Tuesday night? Why were we eating out four times a week? OK, I’ll admit, my food budget is still being reworked two years later! As the transactions poured into our Mint.com account, they sparked a conversation between my husband and me. We committed to spend less on ‘wants’ and focus on the necessities and paying down the student debt.

We failed miserably the first months and still do in certain categories from time to time, but we adjusted the budget and aimed for more goals the next month. Our minimum payments for the student loans were $184 a month. There was no way we’d be able to make big progress by only paying the minimum, so we upped our payments little by little.

The first month, we paid $300 on the student loans. We didn’t feel too much of a pinch. At this point, I was watching our account with a microscope, and every single transaction was up for discussion. The next month, we paid $500. Still no pinch. I said, “Let’s be crazy and go for $1,000!” We met that goal and continued to pay upwards of $1,200 each month until the balance dwindled down to nothing. Even after moving cities and switching careers, we were able to pay off the student debt in full before my 27^th birthday.

That feeling was amazing, and now we’re onto the next goals: saving for a house and preparing for our first baby due next year.

About the Author

Kelsey is the self-proclaimed financial guru of her household living in Houston, Texas, spreading the word about the benefits of paying down debt. She’s also a minimalist enthusiast, and founder of The Little Red Journal.

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Source: mint.intuit.com

Apache is functioning normally

May 28, 2023 by Brett Tams

Hello! Today, I have a great article from JT. JT has a great story about how he was down to his last dollars living in a hostel, to hitting his retirement number just a little over a decade later. If you’re looking for another great retirement article, I also recommend How This 28 Year Old Retired With $2.25 Million. Below is his article on how to retire in your 30s. Enjoy!

Do you want to learn how to retire early? Here's JT's story about how he was down to his last dollars to retiring in his 30s. How to retire in your 30s!

Have you ever seen a grown man ugly cry? Our faces scrunch up like a squeezed sponge, wringing the water from our eyes. Our shoulders shake uncontrollably. We gurgle out a noise that’s a cross between a laughing hyena and a grunt. We’re not pretty.

It was 2000. I was ugly crying on the bed of the Spanish Harlem hostel where I was living, down to my last dollars. Months earlier, I graduated college, sold my car, and drove from Los Angeles to New York City with sunny West Coast optimism. Then after months of getting rejected from job after job after job, reality blew in like an East Coast blizzard.

They say, “New York City: If you can make it here, you can make it anywhere.” For those of us who have tried, it can feel more like, “Since I can’t make it here, I can’t make it anywhere.”

I wasn’t crying because I failed. I was ugly crying because I thought I was a failure.

And yet, a little over a decade later, I hit my retirement number. So what happened between the tears of sadness and the tears of joy? I’ll tell you exactly what I did to hit my retirement number in my 30s.

Related articles on how to retire in your 30s:

What is Your “Retirement Number?”

First, let me define what I mean by retirement number. It’s not just sitting under an umbrella on a faraway beach sipping fruity cocktails (although that would be nice!). It’s simply the point where if you were to quit working, you could still cover your basic needs. Basically? It’s when going to work is a choice.

You might find out, like I did, that you actually want to keep working. The best part of reaching your retirement number isn’t money, it’s agency. It’s the ability to spend your time the way you choose — unless you have little ones like I do waking you up at 6:00am every morning!

Sound pretty good? Here are my 6 steps to find out your retirement number and how to reach it. I’ll spend more time on the first 2 because they are the foundation for the remaining 4 steps. The math might seem a little intimidating at first, but if you write it down on paper, you’ll find that it’s not too bad. As you’ll see, you don’t have to be a math or money genius to retire early!

The 6 Steps to Retire in Your 30s:

Budget to a Balance Sheet:

When many of us think about our finances, we focus on what’s called the “income statement.” As a result, the budgets you see are most often just an income statement, like this:

Understanding your savings amount is a good starting point, but it’s where most people stop. Instead, use it as a starting point. The savings amount from your income statement is there to help make your “balance sheet,” which is just a fancy way of understanding what you have and what you owe. It will take some time go gather up your statements, but it’s not harder to make than your income statement.

Your balance sheet is basically:

Your savings amount flows into your “What You Have” bucket since that savings is now what’s called an “asset.” Think of it like when you eat cashews and have several left in your bowl. You’d go and put the remaining cashews back into the bulk container. Those cashews just went from leftovers to future snack.

Next, add your investment account balances to your “What You Have” bucket. Don’t include your car, house, jewelry, or any other physical things unless you actually plan to sell them within a year. You’re trying to figure out all your “What You Haves” that can be used to fund your living expenses, and last I checked, biting into your steering wheel wasn’t all that filling.

“What You Owe” is your credit cards, student loans, mortgage, and that loan you took out from your uncle. The technical term for these is “liabilities.” So, once you organize your information, you basically have your balance sheet. You’ll see in the next steps why having a good grasp of both your income statement and your balance sheet is so important.

Know Your Retirement Math:

A study by financial planner William Bengen found that if you withdraw 4% a year, your money would last you at least 30 years if you had a 50/50 portfolio of stocks and bonds. Others have found that most of the time (although on a 60/40 stock/bond portfolio), you would actually end up with more than when you started.

Bengen got to this 4% rate by back testing the withdrawal rate that would have worked even through the Great Depression, basically taking the worst case scenario in history.

The 4% withdrawal rate is a helpful guide for knowing how much to withdraw, but not very helpful to let you know how much you should have to withdraw from. To find that, you’ll need to convert it into a goal. We’ll start with the 4% withdrawal equation:

But that’s not a goal. It’s basically where you are today if you were to try to retire early. To convert it into a goal, you’ll need to do some mathematical jujitsu with the equation above (not to worry, I did it for you!). It’s the same equation, but I’ve mixed it in a blender to make it more helpful:

If you look carefully, I just reversed the “retirement withdrawal” equation. I changed the “retirement withdrawal” to “living expenses” and inverted the 4% to make it 25. By doing this, you can get to your “Retirement Number” goal.

You might be thinking 25 times your expenses is a big, scary number. It can seem unreachable. But, I’m excited to show you how it can work in your favor. To do that, turn the “25 times” into the ratio:

When you look at it as a ratio, you can see the power of reducing your expenses. For every $1 you shave off of annual expenses, you’ll need $25 less in your “What You Have” bucket to hit your retirement number. To illustrate how powerful this is, let’s look at an example: Say you spend $35,000 a year but shaved off $4,000 in expenses. Take a look at what happens:

If you put your money into the stock market, you might get the historical 7% annual returns. Your account might get bigger. But it also might get smaller. But if you cut expenses, you’re guaranteed to get a 2,500% return! ($4,000 savings x 2,500% = $100,000 effect on your retirement number)

Isn’t math fun?

You’ll notice I’ve only focused on “What You Have,” so why did I want you to know your entire balance sheet? It’s a little circular, but I think you’ll get it one you think about how the income statement and balance sheet talk to each other:

Reducing your expensive “What You Owe” (like credit cards) items on your balance sheet leads to…

Lower expenses on your income statement, which leads to…

Higher savings on your income statement, which leads to…

Increasing your “What You Have” on your balance sheet, which leads to…

Hitting your retirement number sooner!

So don’t ignore your “What You Owe” number. The sooner you get rid of your high interest rate ones like credit cards, the sooner you can hit your goal.

Alright, so how are we going to apply this to our actual lives?

(Do you wish you knew how to do this when you were younger? Would you like to teach it to your child? I’ll show you how teaching your children about money can be fun, fast, and easy starting here. Download the FREE Guide to Helping Your Child Start Their First Business and you’ll also get access to a FREE course on how to get your finances in shape for early retirement!)

Make As Much As You Can:

I know — you’re shocked!

Even though it’s basic, let’s take a moment and think through the implications of what this means. It means that if you’re serious about retiring early, you don’t work for passion. You work for money. If Goldman Sachs is offering you a job but you’d really rather be glassblowing, take the Goldman job, hang in for as long as you can, then retire early and spend the rest of your life glassblowing. Till the ground now so that you can enjoy the fruit of your harvest later.

As for me, I persisted and eventually found myself at a hedge fund that allowed me to stay in New York City. But most of us don’t have the opportunity to immediately get a six figure job. What then?

Side hustle.

Michelle has 65 Ways to Earn Extra Money. There should be at least one that tickles your fancy. Remember, you are trying to increase your income so you can increase your savings so you can increase your “What You Have.”

So that I could extend my runway until I could get a full-time job, I worked as a sales associate at Banana Republic. When I finally did land a full-time job, much to my friends’ puzzlement, I kept my sales associate job and turned it into a side hustle. (Imagine how mortified my boss at the financial firm where I worked felt when she ran into me at Banana Republic!). My balance sheet thanked me, as it helped me quickly pay off my “What You Owe” items, including student debt.

Change Your Spending Mindset:

Change your default question from “What can I afford?” to “What can I withstand?” Often times, when we get an upgrade in pay, we too often automatically think we need an upgrade in lifestyle. Why default to this assumption?

Let’s say you just got a promotion that is paying you $5,000 more a year. You’re tired of asking your roommate clean up her dishes. Your car is fine, but basic. You think about how hard you’ve been working and how you deserve your own place and a new car.

We’ve all felt this tug to spend more. But as we’ve seen in step 2, the ability to minimize your spending is the most powerful thing you can do to reach your retirement number.

Even though I was making six figures, I lived with roommates in non-prime areas of Manhattan until I got married. I never had a doorman. I hardly took cabs. I stayed in and cooked most nights. Within a few years, I paid off $15,000 of school debt and started building up my net worth.

Invest (Almost) Everything:

Saving is not the same as investing. Saving is the act of putting money away for a rainy day. Investing is putting money to work. In fact, if you simply save without investing, you actually lose money due to inflation.

After you’ve saved enough for 3 to 6 months of living expenses, invest the rest. The S&P 500 has historically returned 7% a year, after inflation. Meanwhile, the average annual salary raise has been around 3%. This difference is huge! It means that at a certain point, your investments will actually start making more than what you’re saving per year. Then, with enough time, it will actually start making more than your entire annual salary!

Basically, you’re trying to shift your finances from the picture on the left to the picture on the right.

Now, the last step can be tricky, but greases the path to your goal.

Move to a Lower Cost Area:

This is the trickiest part but also has the most potential to get you to your early retirement goal. An easier way to do this is finding an employer that also has a location where you want to be. For the East Coast, that’s either moving from Manhattan to a borough like Queens or transferring to another city like Philadelphia or Stamford. On the West Coast, it’s like moving from San Francisco to Portland. (Or, for the ultimate move, live in an RV and see the entire country like Michelle!)

A few years ago, I moved to Philadelphia while keeping my New York City salary. In so doing, I significantly reduced my housing expense by thousands of dollars…every month. With that one move, because I reduced my biggest expense, my wife was able to stay at home with our 3 children. In other words, it allowed my wife to retire (although her work as a SAHM is much more challenging than mine!). At the same time, I was still able to accelerate our retirement timeline by decades!

So, if reducing your expenses is the most powerful thing you can do to reach your retirement number, cutting your housing expense is the most powerful thing you can do to reach your expense reduction goal.

But Can You Really Hit Your Retirement Number Before 40?

Let’s put all six steps together.

You’ll see that it can be done without making six figures. Let’s say you make $50,000 out of college and have a side hustle that makes you an extra $12,000 a year (I based this on the 20-25 hours a week I worked at Banana Republic while keeping my full-time job). Also, you live with a roommate and pack lunches most days a week and only occasionally eat out for dinner.

Your salary and expenses each increase 3% a year, which is in line with historical inflation.
Your investments earn 7%, which is the historical S&P 500 return above inflation.
At ages 28 and 34 you get a promotion, getting a $5,000 bump in salary each time.
Your first promotion at 28 gave you more responsibilities, so you decided to quit your side hustle.

At age 34, you move to a lower cost part of town, reducing your living expenses by 15% over the prior year (yes, it’s possible – I saved more than this moving from Manhattan to Philadelphia).

As you can see, by the time you’re 39, you could withdraw almost $43,000 a year. So, if you were this person and quit your job at 39, you’d have enough to cover living expenses and taxes until social security kicks in.

As you can see, it’s possible even if you don’t have a big salary. So the real question is not “can you?” but “do you?” Do you have the desire to transfer the math into your actual lifestyle? Do you put in the effort to create the habits to sustain this level of investing for almost 2 decades even when life throws you curve balls (which will happen)? Do you set aside time and energy to start a side hustle even when your friends are going out and having fun without you? Do you say “no” to the tug to spend more and that desire to show the world how successful you are by the clothes you wear or car you drive?

If you do, then the only thing between you and achieving that goal is…you.

A Different Cry:

Several years ago, I had a different moment while sitting down. This time, I was looking at my balance sheet and realized that I had surpassed my retirement number. There was no blubbering this time, just a calm lightness. I felt liberated. From then on, every day I walked into work was because it was my choice.

The funny thing? I realized I wanted to keep working because I was still having fun. For now. My 67 year old boss just retired. Instead of the joy and excitement you would’ve expected, he had a lot of fear about how he was going to fill the rest of his days. Do you want this fate? You work so hard for so long that when you do have financial freedom, you’re either too old or too set in your routine to experience all the things you used to want to do.

For someone working toward a single purpose for so long, it’s actually challenging to not have a big goal anymore. And the time to figure out what else to do is while you’re still employed. This is why I started Just Making Cents so that I could still have purpose and projects of my own choosing, and to have greater impact on people’s lives.

And that’s when life gets really fun.

Author bio: JT is passionate about viewing money differently, having spent over 15 years on Wall Street. He writes about money from the perspective of faith and as a father of 3 spunky kids.

Are you interested in learning how to retire early? Why or why not?

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Source: makingsenseofcents.com

Apache is functioning normally

May 28, 2023 by Brett Tams

As of the end of 2022, nearly 45 million Americans collectively have over $1.7 trillion in student loan debt, and these numbers are growing. If you are one of the millions with some form of student debt, you may have considered student loan consolidation, which allows you to combine all of your student loans into one loan with one monthly payment.

Student Loan Consolidation Explained

Student loan consolidation is designed to combine some or all of your student loans and make repayment more manageable. There are both federal and private options when it comes to consolidating your student loans.

Private Student Loan Consolidation

A private student loan consolidation is when a lender pays off all or some of your student loan debt and creates a new loan, which you will then make payments on. If you consolidate or refinance through a private lender, the new loan will ideally have a lower interest rate and better terms than your previous student loans. With a private lender, you can consolidate both federal and private loans, and this is typically referred to as a student loan refinance.

Consolidating through a private lender, though, means you lose access to federal forgiveness programs, such as income-driven repayment plans. If you plan on using one of these programs now or at some point in the future, it’s best to hold off on consolidating through a private lender.

Federal Student Loan Consolidation

If you are hoping to consolidate federal loans only and want to keep access to federal forgiveness programs, you can consolidate with a Direct Consolidation Loan through the U.S. Department of Education.

Recommended: Types of Federal Student Loans

Consolidating through the federal student loan system doesn’t usually save you money; it simply combines multiple loans into one. Your new interest rate is a weighted average of all your loans’ interest rates, rounded up to the nearest eighth of a percentage point. No application fees are charged for Direct Consolidation Loans, and the loans remain federal loans.

This could be particularly useful for borrowers who are pursuing federal loan forgiveness or who are enrolled in one of the more flexible federal student loan repayment plans, such as an income-driven repayment plan.

As you ask yourself, Should I consolidate my federal student loans? And when should I consolidate my student loans? The answers depend on a number of factors.

Benefits of Consolidating Student Loans

There are a few reasons to consider student loan consolidation either with a Direct Consolidation Loan or refinancing through a private lender.

Simplified Repayment

Whether you choose a Direct Consolidation Loan or choose to refinance through a private lender, your loan repayment should be simplified. Managing multiple student loan payments may increase your chances of missing a payment. If you miss even one payment, you risk your credit score being lowered. Late payments also stay on your credit profile for up to seven years.

Thus, consolidating multiple loans into one can help eliminate the margin of error and may make repayment more manageable.

Fixed Interest Rate

When an applicant is interested in refinancing through a private lender, their interest rate and terms will be based on their credit score, payment history, type of loan they’re seeking, and other financial factors. While requirements may vary by lender, applicants who meet or exceed the lender’s criteria may qualify for better interest rates and terms, thus saving money over the life of the loan. Borrowers can also switch from a variable to a fixed interest rate when refinancing through a private lender.

With federal Direct Loan Consolidation, as mentioned earlier, a borrower’s interest rate is a weighted average of current loan rates rounded up to the nearest one-eighth of a percentage point, which means this doesn’t typically result in savings for the borrower. The borrower does, however, keep their access to federal loan forgiveness programs.

Federal and Private Loans May Qualify

Both federal and private student loans can be refinanced. For a borrower who exclusively has federal loans, a Direct Consolidation Loan may work best, especially for those who plan to take advantage of federal forgiveness or repayment programs. Those who have a combination of federal and private loans can partner with a private lender to refinance.

Flexible Loan Terms

Student loan consolidation allows you to change the duration of your loan. You may currently have a 10-year repayment plan, but when you consolidate or refinance, you might choose to shorten or lengthen the term of your loan. Typically, lengthening the term of your loan will reduce your monthly student loan payment (but add up to more total interest).

Considerations for Student Loan Consolidation

Even though there are benefits of student loan consolidation, there are also drawbacks. Here are a few considerations to be aware of before consolidating student loans.

You Can’t Lower Interest Rates on Federal Student Loans When Consolidating

If you choose the Direct Consolidation Loan, generally you won’t see any savings. Because your new interest rate is a weighted average of your current loans rounded up to the nearest one-eighth of a percentage point, you will probably pay around the same amount you would have paid if you didn’t consolidate. You are, however, condensing multiple monthly payments into one more manageable payment.

If you extend your term, you may see your monthly payment decrease, but your total interest payments will increase.

On the other hand, if borrowers choose to refinance with a private lender, they could end up reducing their interest, thus saving money over the term of the loan. They could also opt to lower monthly payments by extending their term. But as mentioned above, this increases the total amount of interest paid.

Possible Disqualification from Federal Repayment Programs

Refinancing federal student loans with a private lender disqualifies you from federal repayment programs, including the Public Service Loan Forgiveness Program (PSLF) and income-driven repayment plans.

Borrowers will also be disqualified from federal benefits such as forbearance and deferment options, which allow qualifying borrowers to pause payments in the event of financial hardship.

Some private lenders have hardship programs in place, but policies are determined by individual lenders.

Fees May Be Charged With Private Lenders

While there is no application fee for the federal Direct Consolidation Loan, private lenders may charge a fee to refinance loans. Fees associated with refinancing student loans are determined by the lender.

Refinancing vs Consolidating

Consolidating or refinancing student loans are terms that are thrown around interchangeably, but they are actually two different types of loans. A federal student loan consolidation is when you combine federal loans only through a Direct Consolidation Loan. This is done by the U.S. Department of Education only. A student loan refinance, on the other hand, allows you to combine both federal and private loans into one new loan and is done by a private lender. Below are some differences and similarities between refinancing vs. consolidating student loans.

Student Loan Refinancing vs Consolidating
Refinance	Consolidation
Combines multiple loans into one	Combines multiple loans into one
Can refinance federal and private loans	Can consolidate federal loans only
Private refinance lenders may charge a fee	No fees charged
Credit check required	No credit check
Interest rate could be lowered	Interest rate is a weighted average of prior loan rates, rounded up to nearest one-eighth of a percent
Term can be lengthened or shortened	Term can be lengthened or shortened
Can no longer qualify for federal forgiveness or repayment programs	Remain eligible for federal forgiveness and repayment programs
Saves money if interest rate is lowered	Typically not a money-saving option

Refinancing Student Loans With SoFi

Understanding student loan consolidation and refinance options can help in making an informed decision about repaying student loans.

Borrowers interested in refinancing student loans might want to consider evaluating a few options, because requirements — as well as interest rates and loan terms — can vary from lender to lender.

Refinancing student loans with SoFi comes with no origination fees or prepayment penalties. SoFi offers competitive rates, flexible terms, and an easy online application that can be completed in just a few minutes.

Prequalify for a refinance loan today.

FAQ

Can your student loans still be forgiven if you consolidate them?

Possibly. If you consolidate your federal student loans with a Direct Loan Consolidation, you are still eligible for federal loan forgiveness programs. If, however, you choose to consolidate your loans through a private lender, you will no longer be eligible for federal programs.

When is consolidating student loans worth it?

Consolidating student loans is worth it if you’re looking to combine multiple student loan payments into one or you’re looking to lower your interest rate. You can use a Direct Consolidation Loan for your federal loans and keep access to federal benefits, or you can refinance through a private lender. Refinancing through a private lender could give you a lower interest rate and lower monthly payment, but you do lose access to federal forgiveness programs.

What are some advantages of consolidating student loans?

Advantages to consolidating student loans include combining multiple loans into one loan with one monthly payment, possibly accessing a lower interest rate, switching your rate from variable to fixed, and possibly extending your loan term to reduce your monthly payment.

SoFi Student Loan Refinance
If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.

CLICK HERE for more information.

Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

SoFi Loan Products
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Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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Source: sofi.com

Apache is functioning normally

May 27, 2023 by Brett Tams

On Wednesday, the U.S. House of Representatives voted to advance a proposal that could retroactively end the student loan payment pause, kill the president’s debt cancellation plan and potentially force hundreds of thousands of public servants to return forgiven debt to the government.

But borrowers shouldn’t panic yet, because the proposal, pushed forward by Republican lawmakers under the Congressional Review Act, is unlikely to succeed.

Next, the Senate will vote on the proposal. A majority of lawmakers in the Democrat-held chamber would need to vote in favor in order for it to move to the president’s desk. If that happens, President Joe Biden vows to veto it. Both the House and Senate would need a two-thirds majority to overturn that veto.

Bottom line: Student loan borrowers shouldn’t worry that the CRA will force them to repay their debt immediately. Instead, put your energy into preparing for forbearance to end. Federal student loan payments are scheduled to resume in early fall.

What would the Congressional Review Act do to student loans?

The Congressional Review Act is a tool that allows lawmakers to overturn final rules issued by federal agencies — the Department of Education, in this case.

The GOP proposes using the CRA to reverse about nine months of interest-free forbearance, immediately restart monthly bills, block Biden’s student debt cancellation plan of up to $20,000 of relief per borrower and prevent the Education Department from enacting similar actions in the future.

“Tens of millions of people will be immediately hit with bills for past-due interest charges courtesy of congressional Republicans,” said Mike Pierce, executive director of the Student Borrower Protection Center, in a press briefing on Tuesday.

The House voted 218-203 for the proposal; two Democrats, Rep. Jared Golden of Maine and Rep. Marie Gluesenkamp Perez of Washington state, joined the Republican majority.

The consequences would be dire for some. Each month federal loans spent under forbearance has counted toward loan forgiveness eligibility under income-driven repayment plans and the Public Service Loan Forgiveness, or PSLF, program. Because the CRA would invalidate nine months of forbearance, it would reinstate the debt of more than 260,000 borrowers who have earned loan forgiveness under PSLF since September 2022 — averaging about $72,000 per person, according to a recent analysis by the American Federation of Teachers and the SBPC. It would also erase nine months of progress toward forgiveness under the PSLF program for 2 million additional borrowers, the report found.

“This will be a draconian mess,” AFT President Randi Weingarten said in the Tuesday press briefing.

How did we get here?

Student loans entered the political crosshairs during the pandemic. Forbearance began in March 2020 under the Trump administration. Although this spelled relief for 43.5 million federal student loan borrowers, it has come at a controversial cost: roughly $5 billion in revenue per month, according to a November 2022 estimate by the Committee for a Responsible Federal Budget, a think tank that supports lowering the deficit.

The CRA isn’t the only recent legal threat to the payment pause. In March, private student loan lender SoFi sued to end it, saying the latest forbearance extension has cost the bank millions in profits due to borrowers not refinancing. Conservative think tank The Mackinac Center for Public Policy filed a lawsuit calling the pause an “enormous expense to taxpayers” and asked a judge to immediately reinstate payments.

Prepare for payments to resume by early fall

Though this CRA proposal is unlikely to succeed, borrowers are still set to return to student loan payments soon. Expect bills and interest to resume by early fall. We don’t yet know the fate of Biden’s cancellation plan in the Supreme Court, so prepare to pay on your full loan balance.

Here’s how to get ready:

Locate your student loan servicer. The company that manages your student loans may have changed since forbearance began. Find your servicer by logging into StudentAid.gov.
Contact your servicer. Log in to your servicer’s website or give them a call. Update your contact information. Ask how much you might owe when payments resume, how much your monthly bills could be, and what payment plans are available to you. If you had automatic payments before forbearance, set those up again. Servicers expect a customer service bottleneck when payments resume, says Scott Buchanan, executive director of the Student Loan Servicing Alliance, so get ahead of traffic now.
Consider an income-driven repayment plan. Your servicer can help you sign up for an IDR plan. These plans lower your monthly bills to a set portion of your disposable income. Your payment could be as low as $0 per month. You can do the paperwork now so you’re set in an IDR plan when forbearance ends, Buchanan says.
Put money aside. If you can, consider putting aside your estimated student loan payment each month in a high-yield savings account. This can help you cover the first few months of student loan payments when they restart.

Source: nerdwallet.com

Apache is functioning normally

May 26, 2023 by Brett Tams

In the past, you had to drive to your bank and work with a teller to manage your deposit accounts. These days, however, you have the option to complete virtually any banking need with any device that has internet access. You can pull out your smartphone and deposit a check. Or you may use your laptop to check your account balance.

That’s where banks called neobanks come in. It’s no surprise that neobanks are more popular than ever before. Let’s take a closer look at what they are and how they work so you can decide whether a neobank makes sense for your particular situation.

20 Best Neobanks

While traditional banks take up more market share than neobanks, you can still find a good amount of them if you do your research and shop around. The right neobank for you will depend on your unique lifestyle, needs, and preferences. To help you hone in on the ideal option, here’s our list of the top neobanks of 2023.

1. Chime

Founded in 2012, Chime is a financial technology company that offers banking services from The Bancorp Bank, N.A. and Stride Bank N.A. The Chime Checking Account is free of monthly maintenance fees and no minimum balance requirements.

Its perks include early direct deposit, automated savings features, access to over 60,000 or more fee-free ATMs, and free debit card replacement. In addition, you can take advantage of SpotMe and get up to $200 in fee-free overdrafts.

There’s also a Chime’s Savings Account, which offers a competitive interest rate with no cap on the amount of interest you can earn. Other services include Secured Chime Credit Builder Visa® Credit Card that doesn’t require a credit check, making it a suitable option if you have limited credit. Chime should be on your radar if you prefer a one-stop-shop for all of your banking needs.

You can read our full Chime review to learn more.

2. GO2bank

For more than a decade, Green Dot Corporation has specialized in alternative banking products. In 2013, GoBank made its debut as the first digital bank offering digital financial services. Then, in 2021, the company launched GO2bank, its second online bank.

GO2bank stands out from other neobanks which require you to sign up online because you can pick up their debit cards in person at Walmart and other popular retailers. GO2bank’s bank account tends to be a popular product in addition to its secured credit card that can help you build credit.

For a comprehensive overview, read our full GO2bank review.

3. Current

Since its inception in 2015, Current, which is not a bank, but a fintech company based in New York City, has partnered with Choice Financial Group and Metropolitan Commercial Bank to offer banking services. Its flagship products are a personal checking and debit card you can access via a mobile app on any iOS or Android device.

Even though Current’s product line is limited, the neobank prides itself on no shortage of perks and benefits. You can get your deposit up to two days early and earn cash back for debit card spending from more than 14,000 merchants. Additionally, Current doesn’t charge minimum balance fees or bank transfer fees and offers fee-free ATM withdrawals from ATMs in the Allpoint network.

If you would like to learn more, take a look at our Current review.

4. Revolut

Founded in 2015, Revolut is one of the largest European neobanks, serving more than 16 million customers. It has expanded its footprint to the U.S. market and has plans to become one of the most reputable neobanks in the world.

Revolut is unique in that it offers a wide array of financial services, such as bank accounts, debit cards, peer-to-peer payments, cryptocurrency, and currency exchange. It supports both individual consumers and businesses with more than 30 currencies. For a neobank with a diverse lineup of offerings, Revolut has you covered.

To learn more, read our full Revolut review.

5. Quontic Bank

Quontic Bank is a full-service, FDIC-insured online bank that was founded in 2002. It offers a range of banking products and services, including checking and savings accounts, credit cards, mortgages, and business banking solutions.

They offer some of the best annual percentage yields (APYs) in the industry. Quontic accounts come equipped with no overdraft fees, no incoming wire transfer fees, no monthly service fees, and access to over 90,000 surcharge-free ATMs.

Quontic also has a savings accounts feature called “Roundup”, which makes saving money simple and easy. In addition, they have a responsive U.S. based customer service team available to assist with any questions or concerns.

Read our full Quontic review for more information.

6. Dave

When Dave began in 2017, its sole focus was paycheck advances. Over time, it evolved to offer a checking account with no minimum balance requirements. If you become a Dave customer, you can receive early access to your paycheck, without a credit check or interest charges.

Dave also offers handy built-in budgeting features and doesn’t charge overdraft fees or ATM fees, as long as you use an ATM from the MoneyPass network. Dave may make sense if you’d like the option for small cash advances to get you through a financial hiccup from time to time.

See also: Free Online Checking Accounts: No Opening Deposit Required

7. Albert

Albert began as a money management app in 2016, but is now a personalized banking service that has attracted over 6 million customers. This digital banking account offers cash back and a range of benefits.

These including no-interest cash advances of up to $250, integrated budgeting and savings tools, and annual savings bonuses of up to 0.10%. There are no minimum balance requirements or overdraft fees. However, there is a minimum monthly fee of $4. Keep in mind that you’ll need to have an external bank account to open an account with Albert.

8. Varo

Varo Bank began in 2015 as a fintech company that partnered with The Bancorp Bank. In 2020, it acquired its own national banking charter, making it different from other neobanks you might come across. Even though Varo operates as an actual bank, it focuses on online banking via its website and mobile app.

Its checking account is free of monthly fees and there’s no minimum balance requirement. Plus it comes with a debit card. In addition, Varo partners with more than 55,000 ATMs through the Allpoint ATM network.

We can’t forget its other perks, such as contactless payments, credit cards with reporting to the major credit bureaus, early direct deposits, and no foreign transaction fee or transfer fees. Varo might be worthwhile if you’re looking for a checking account with all the bells and whistles.

Read our Varo Bank review to learn more.

9. Aspiration

Aspiration was founded in 2013 under the motto “Do Well. Do Good.” It partners with financial institutions like Coastal Community Bank and Beneficial State Bank to offer cash accounts, savings accounts, and a few investment accounts.

Aspiration’s most popular product is the Aspiration Spend & Save Account, which is a hybrid of a checking account and savings account. There’s also the Zero credit card, which offers cash back and plants a tree every time you make a transaction. Aspiration can be a good fit if you’d like to get rewarded for your spending and like the idea of one account for your checking and savings goals.

Read our full review of Aspiration to learn more.

10. Bluevine

Bluevine made its debut in 2013 as a fintech company with a mission to improve banking for small and mid-sized business owners. Its flagship product is the Bluevine Business Checking. It’s completely free and comes with a competitive annual percentage yield and unlimited transactions. This is rarely seen in the world of business checking.

In addition to the business checking account, Bluevine offers financing products, such as lines of credit of up to $250,000. Bluevine should be on your radar if you’re a business owner in search of fast, convenient startup banking and financing.

11. SoFi

Social Finance or SoFi entered the market as a student loan refinance company. Recently, however, the fintech company received its own bank charter to offer digital banking services. You can use the SoFi Checking and Savings combo account to manage your spending and saving needs in one place.

Fortunately, SoFi doesn’t charge monthly maintenance fees, overdraft fees, and ATM fees. Additional perks and extras include no-fee overdraft coverage, sub accounts for various savings goals, and additional products like credit cards, cryptocurrency trading, and retirement accounts, like an individual retirement account.

Read our full review of SoFi to learn more.

12. Acorns

Acorns has a reputation as an easy-to-use micro investing app. Since 2012, many people have downloaded it on their iOS or Android devices to invest their spare change. Over time, Acorns has expanded to offer a checking account.

You can open Acorns Checking for free and enjoy perks such as no monthly or overdraft fees, early direct deposit, mobile check deposit, and access to a network of 55,000 ATMs.

The checking account seamlessly integrates into the Acorns micro investing feature. Plus when you use your Acorns debit card, you can earn cash back at participating retailers and use it to invest, along with your spare change. If you’d like to get started with investing, Acorns is worth considering.

13. One

One is a neobank owned by Walmart. It offers a budget-friendly overdraft program with customized budgeting and savings options for its customers. One’s banking account allows users to organize their money into subaccounts called Pockets.

Pockets offer saving rates of 1% on up to $5,000 for any customer and 1% on up to $25,000 for customers with direct deposit. Additionally, One provides fee-free overdraft coverage of up to $200 for customers with direct deposits of at least $500 per month.

14. Cheese

Cheese is a digital banking platform that was launched in March 2021 and caters specifically to the immigrant and Asian American communities. It offers up to 10% cash back at 10,000 businesses, including Asian-owned businesses and restaurants.

Cheese’s customer support is available in English and Chinese, with more languages to be added in the future. One of the benefits of opening an account with Cheese is that accounts earn interest and do not have monthly fees or ATM fees when using the national MoneyPass ATM network.

15. Unifimoney

Unifimoney is a money management and investment app that helps you manage your banking, investing, and borrowing needs all in one place. It caters to account holders who earn at least $100,000 per year but have significant amounts of student debt. You can download Unifimoney to pay bills, deposit checks, and write checks.

It’s unique in that it also allows you to refinance student loan debt and can create a diverse investment portfolio with particular stocks, cryptocurrencies, precious metals, stocks, and exchange-traded funds (ETFs).

In addition, you can turn to Unifimoney for insurance products, like car insurance and health savings accounts (HSAs). If you’d like to get started with Unifimoney, open the Unifimoney high-yield checking account with as little as $100.

16. NorthOne

Headquartered in New York and founded in 2016, NorthOne offers digital business banking services. If you’re a startup, entrepreneur, or small business owner, NorthOne can be a good fit. It differs from other banks that serve businesses in that there are no transaction limits that require premium upgrades.

You can open a business bank account for a flat $10 monthly fee and won’t have to worry about additional fees for deposits, transfers, ACH payments, or app integrations. In addition, you’ll get to create as many “Envelopes” or sub accounts as you want so you can save for payroll, taxes, and other business needs.

17. Oxygen

San-Francisco based Oxygen focuses on two accounts: the free thinker account for individuals and the pioneer account for business users. Even though it doesn’t charge fees, like monthly fees, ACH fees, and overdraft fees, you will have to pay an annual fee that can go up to a few hundred dollars.

While most neobanks don’t allow for cash deposits, Oxygen does. As long as you have an Oxygen bank account, you can make deposits at GreenDot locations, which are usually located inside popular retailers, like Walmart, Walgreens, and CVS. If you don’t mind paying an annual fee and like the convenience of being able to deposit cash, Oxygen is worth exploring.

18. Bella

Bella is a fairly new player in the neobanking space. Its partner bank is nbkc bank, which allows it to provide banking services. With Bella’s checking account rewards program, you can receive a random percentage of cash back on randomly selected purchases.

The cash back amount may be anywhere from 5% to 200%. Like most neobanks, Bella doesn’t charge monthly fees, ATM fees, and overdraft fees. You can also opt for a no-fee savings account. Bella accounts are FDIC insured for up to $5,000,000.

19. Lili

Lilli services small business owners and believes that managing two accounts is a hassle. That’s why this neobank offers a single account you can use for both your business and personal transactions.

Come tax time, Lili will eliminate financial stress and let you automatically save a certain percentage of your income into a “tax bucket.” Plus, it produces quarterly and yearly reports instantly, reducing your tax prep costs. While the Lili Standard account is free, Lili Pro will run you a couple dollars per month.

If you upgrade to Lili Pro, you’ll get cashback rewards on all your debit purchases and 1% interest on your savings accounts. Lili could be a solid pick if you’re a freelancer or solopreneur hoping to simplify your finances.

20. Monzo

Monzo is a UK-based neobank that just opened up to the U.S. market in late 2022. All accounts are insured by the FDIC for up to $250,000. Plus fee-free withdrawals are available at more than 38,000 ATMs.

Furthermore, Monzo is similar to Aspiration as it strives to protect the planet. Additionally, this neobank offers budgeting tools that can help you meet various savings goals.

What is a neobank?

Often called challenger banks, neobanks have recently entered the financial services industry and challenged banking norms. Most neobanks are financial technology or fintech companies that offer the same banking services you may find at traditional banks, like Bank of America or PNC.

But they promote innovation and act like digital only banks or online banks as they don’t have any physical branches and operate via apps. Most of these apps are user-friendly and loaded with a variety of handy features, such as early deposit and savings tools to simplify the banking experience. They are specifically designed to give you greater control of how you manage and spend your money.

Also since neobanks don’t have any physical branches, their overhead costs and customer acquisition costs are low and enable them to offer more affordable banking products and services. Many neobanks let you choose from a number of free and paid premium subscription services.

Are neobanks safe?

Since neobanks are fairly new and different from many traditional banks, you might wonder whether they’re safe. Fortunately, most of them are very safe because they operate within a regulated market.

These financial institutions typically work with U.S. banks to offer FDIC-insured accounts, which protect your money from potential bank failures and the losses that come with them. To help determine if a neobank is safe, check out their ratings and reviews on reputable websites like the Better Business Bureau (BBB).

Neobanks vs. Traditional Banks

To further explain neobanks and their modern spin on traditional banking, let’s take a closer look at how they differ from traditional banks.

Neobanks

Neobanks operate without physical branches. To take advantage of their offerings, you’ll likely need to download an app and provide some personal information.

While you can expect fewer banking and credit products than you’d find at traditional banks, you’ll reap the benefits of lower fees and extras that improve the overall banking experience.

Some neobanks have decided to expand their lineup of products and services to create more of a one-stop-shop you’d get from a traditional bank. Since most neobanks don’t earn money from lending, like incumbent banks, their business model depends on interchange fees or transaction fees, which usually come from debit cards. They might also charge for premium accounts and extra features.

Traditional Banks

Traditional banks often have brick-and-mortar locations across the country or in a specific geographic region or area. But many of them also have digital banking divisions in which you can perform banking services online.

Most banks focus on strong customer relationships and earning interest through loans as well as account fees from banking, lending, and investing. They typically target customers who appreciate customer engagement and a traditional in-person banking experience.

See also: Best Alternatives to Traditional Banks

Pros & Cons of Neobanks

Just like all types of financial institutions, neobanks have benefits and drawbacks you should consider, including:

Pros

Lower fees: Compared to traditional banks, neobanks offer lower fees. That’s because they don’t have the high overhead costs associated with the upkeep of physical branches.
Higher rates: Neobanks often pride themselves on higher interest rates on their checking and savings accounts. This can make it easier and faster for you to save money.
Convenience: Perhaps the greatest benefit of neobanks is the convenience they bring. You can perform a variety of banking tasks, like depositing checks or making payments from your smartphone device, round-the-clock.
Easy access: You can manage your banking 24/7 without ever having to leave your home and visit a local branch. All you have to do is download an app from the app store.
Simple setup: It’s usually fast and easy to open an account with neobanks. Many of them will approve you, regardless of your credit score or credit history.
Focused services: While most neobanks don’t offer all the services you might find at traditional banks, the few services they do provide focus on service quality and are typically loaded with perks and benefits. For example, you can get a no fee checking account with cash back rewards.

Cons

No bank charters: Neobanks don’t have bank charters. Instead, they often partner with traditional banks to insure their products. Before you move forward with a neobank, ensure they partner with a Federal Deposit Insurance Corp or FDIC-insured bank and offer their own FDIC insurance.
Customer service restrictions: Since neobanks operate on app instead of through physical branches, customer service can be a downside. You may have to turn to chatbots or social media for basic banking questions and support. If you notice fraud in your account, it may be more difficult to resolve the issue.
Fewer services: Traditional banks usually pride themselves on a long list of services, including loans, wealth management, and brokerage services. Neobanks, however, tend to limit their offerings to checking accounts and savings accounts.
Unproven track record: Neobanks are still in the startup phase as many made their debut within the last few years. This means that they may fail and force you to look elsewhere for your banking needs.
Require knowledge of technology: While most neobank apps are intuitive and designed for the average person to use with ease, they may still be inconvenient for some people. If you don’t consider yourself tech literate, a neobank might not make sense.

Bottom Line

There’s no denying that neobanks have revolutionized the banking industry and financial industry. If your primary goal is convenience and you prefer mobile or online banking, a neobank can be a great alternative to a traditional bank or legacy bank. Just make sure you explore all your options and read the fine print before you choose one.

Source: crediful.com

Apache is functioning normally

May 25, 2023 by Brett Tams

The Department of Education has proposed new regulations to protect students enrolled in for-profit institutions and certificate programs from being saddled with debt they can’t afford to repay. The public has until June 20 to comment on the proposal.

“We cannot turn a blind eye to the college programs that are leaving students with mountains of unaffordable debts,” said Undersecretary of Education James Kvaal in a press release from May 17.

According to Kvaal, for-profit and career colleges are at the center of the problem, and the latest proposals offer the strongest protection yet for students and others involved against what he called “low value, debt-fueled colleges.”

These provisions would put metrics in place for institutions that fall under “gainful employment” regulations — targeted primarily at nondegree programs or any for-profit educational program — to decrease the number of students left with excessive debt compared to earnings. Low-performing institutions could lose access to federal financial aid.

“These programs disproportionately target many of the lowest-income students, in many cases leaving them financially worse off than if they never attended,” Becky Pringle, president of the National Education Association, a nonprofit organization of public education advocates, said in an email response.

The proposal also aims to increase the transparency of out-of-pocket costs and student outcomes for all educational institutions (public, private and for-profit) by collecting and publicizing more detailed college-level data. This is especially noteworthy, Pringle said, as it’s the first time students and their families will have access to this program-level data, empowering their decision making.

Cost of attendance, nonfederal aid and average debt and earnings are just a few data points that could be collected. Students would have to acknowledge this information before receiving federal financial aid from colleges not meeting the standards.

According to the Department of Education, proposed changes could affect nearly 1,800 underperforming programs, impacting over 700,000 students. Here are the proposal details.

Programs must achieve metrics to access federal financial aid

For-profit institutions and public or private nondegree programs are required to adequately prepare students for gainful employment to access federal financial aid, according to the Higher Education Act.

To hold programs accountable, the Department of Education will require institutions to meet performance standards in two areas:

Debt to earnings. The share of a graduate’s annual income needed to make their student debt payments cannot exceed 8%. For graduates on income-based repayment plans, their debt-to-earnings ratio must be less than 20% of their discretionary income — defined as income above the 150% federal poverty guideline.

Earnings compared to high school graduates. An institution must have at least half of its graduates earning more than the typical high school graduate with no postsecondary education. Graduate income is compared to the labor force of the college’s state.

Failing one metric would force the institution to alert students that the program may lose access to federal aid. If a program fails to achieve both metrics twice within three years, the program will completely lose access to federal aid.

Public access to more detailed college-level data

The department is also pushing for greater consistency in reporting the cost and return of postsecondary education. By collecting more detailed data on the cost of attendance, potential earnings and typical debt, the federal government wants to help students and families avoid impossible debt burdens.

New data collected could include the following:

Cost of tuition, fees, books and supplies.
Licensing requirements and exam passage rates (if applicable).
Nonfederal aid amounts per student.
Amount borrowed — for federal and private loans — per student.
Earnings per student.

Information will be made public on a department-run website, requiring students to acknowledge they’ve reviewed the data points before they can receive loans for a program that does not meet federal standards.

These metrics will also feed a “watch list” of institutions that leave students with high debt and poor earnings.

Additional provisions

Proposed regulations also include changes to other government-defined regulatory areas that will better equip the agency to hold institutions accountable — both proactively and once standards have not been met. They are:

Financial responsibility. Institutions would report behavior that could indicate a higher risk of closing suddenly — such as failing to make debt payments for more than 90 days. Certain financial triggers could lead to the Department of Education requiring a letter of credit from the institution to guarantee payment.

Administrative capability. There would be greater requirements for college administration programs, like career services and financial aid offices. Proposals would also include preventing administrators with previous misconduct around federal financial aid programs from being hired.

Certification procedures. The Department of Education would like to be able to more easily adjust its agreements with institutions receiving federal financial aid.

The regulations would also make adjustments to Ability to Benefit — a provision of the Higher Education Act allowing students without a high school diploma to have access to federal financial aid.

This proposed rule is currently open for public comment. Submit comments at Regulations.gov before June 20.

The Education Department expects to finalize the rule by the end of 2023. Rules finalized by Nov. 1, 2023, will go into effect on July 1, 2024.

Source: nerdwallet.com

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Private Student Loan Consolidation

Federal Student Loan Consolidation

Benefits of Consolidating Student Loans

Simplified Repayment

Fixed Interest Rate

Federal and Private Loans May Qualify

Flexible Loan Terms

Considerations for Student Loan Consolidation

You Can’t Lower Interest Rates on Federal Student Loans When Consolidating

Possible Disqualification from Federal Repayment Programs

Fees May Be Charged With Private Lenders

Refinancing vs Consolidating

Refinancing Student Loans With SoFi

FAQ

Can your student loans still be forgiven if you consolidate them?

When is consolidating student loans worth it?

What are some advantages of consolidating student loans?

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What would the Congressional Review Act do to student loans?

How did we get here?

Prepare for payments to resume by early fall

Apache is functioning normally

Programs must achieve metrics to access federal financial aid

Public access to more detailed college-level data

Additional provisions

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How to improve your DTI

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Affordability: 5/5

Availability: 5/5

Borrower experience: 4.7/5

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Student Loan Consolidation Explained

Private Student Loan Consolidation

Federal Student Loan Consolidation

Benefits of Consolidating Student Loans

Simplified Repayment

Fixed Interest Rate

Federal and Private Loans May Qualify

Flexible Loan Terms

Considerations for Student Loan Consolidation

You Can’t Lower Interest Rates on Federal Student Loans When Consolidating

Possible Disqualification from Federal Repayment Programs

Fees May Be Charged With Private Lenders

Refinancing vs Consolidating

Refinancing Student Loans With SoFi

FAQ

Can your student loans still be forgiven if you consolidate them?

When is consolidating student loans worth it?

What are some advantages of consolidating student loans?

What would the Congressional Review Act do to student loans?

How did we get here?

Prepare for payments to resume by early fall

20 Best Neobanks

1. Chime

2. GO2bank

3. Current

4. Revolut

5. Quontic Bank

6. Dave

7. Albert

8. Varo

9. Aspiration

10. Bluevine

11. SoFi

12. Acorns

13. One

14. Cheese

15. Unifimoney

16. NorthOne

17. Oxygen

18. Bella

19. Lili

20. Monzo

What is a neobank?

Are neobanks safe?

Neobanks vs. Traditional Banks

Neobanks

Traditional Banks

Pros & Cons of Neobanks

Pros

Cons

Bottom Line

Programs must achieve metrics to access federal financial aid

Public access to more detailed college-level data

Additional provisions