Keys Homes
Sunday, April 21, 2013
Are you smarter than a 40 year old?

By REGINA CORCORAN Citizen Columnist

How many times have we heard it? If you want to own your home, you must reduce your debt. Pay off those credit cards.

Yet, there is a debt even greater than all the credit card debt and all the car loan debt in the U.S. Only mortgage debt exceeds it. That is student loan debt.

Student loan debt now exceeds $1 trillion dollars. If every $1 were one mile, that would be approximately 14,285 Earth-Mars round trips.

Most college graduates start their adult careers with between $25,000 and $54,000 indebtedness.

Anyone with an IQ of at least room temperature in a wine cellar can figure out who the best candidates for first-time home buyers are -- duh.

So, the question is, once they throw their cap in the air, how do they get rid of college debt?

There is, of course, the straightforward approach. Make the payments! Hopefully, there was more going through the students' heads than "la-la-la-la-la-la" when they applied for and received the student loans. "You don't have to make payments as long as you are in school" does not extend to "and you don't have to repay the loan after you graduate, either." And after 16 years of education, "nanner, nanner, nanner" is hardly an appropriate response.

Still, unexpected problems arise. Here are three solutions in reverse order of appeal.

Third Place award winner goes to: the Karen Bass (D-Calif) Student Loan Fairness Act of 2013 also known as HR1330.

This legislation includes a 10-10 feature. That means the individual must make 10 years of payments at 10percent of their discretionary income and then, their remaining debt is forgiven. If discretionary income means what's left over after I pay my bills, I never have any.

The bill permanently caps the interest rate at 3.4 percent. This was a "gotcha" for many students because their loans prohibited them from refinancing to get a lower rate.

Also, so-called private loans (meaning non-government loans, or perhaps commercial or bank loans) may be eligible for conversion to federal loans. Another "gotcha" because private loans were previously ineligible for any government assistance programs.

Yes, this has the scent of another government bail out. Yet, it's still better than the students throwing their hands in the air and ceasing to pay or filing bankruptcy.

Second Place goes to: ROZ. Not OZ and not ROFL. These are Rural Opportunity Zones. The State of Kansas is a ringleader for this one. It works like this. The graduates (must have obtained an associate's or better degree) agree to move to one of 50 counties authorized to offer the incentive. They must have lived outside of Kansas for the five preceding years. They must agree to live in Kansas for five years. The State of Kansas will repay up to $15,000 of their college loans.

I realize, of course, the Tribune, Kansas is not a well-known destination for Spring Breakers. Still, for some graduates whose student loan payments look like car payments but last for 15 years, ROZ incentives have their attraction.

First Place and Grand Champion Award winner goes to: Governor Scott. What's his agenda? Let's reduce the cost of a college education. A college education has gone up more than 800 percent since the 1980's.

Governor Scott's current budget includes a "Finish in Four" feature. Students' tuition must be the same when they graduate as when they started.

The budget also includes incentives for colleges and universities to receive $167 million for "performance funding" based on the number of students who have jobs upon graduation.

I recently completed an Equine Studies class at the College of Central Florida. The tuition for that one class was $350. The class textbook was a 130-page paperback published in 1997 that cost $125. With 33 students in the class, it generated $15,675 in revenues.

At the current rate of college cost escalation, students attending that class four years from now will have to spend $31,350.

That's why Governor Scott's plan to hold the costs on college education makes sense.

What do you think?

Regina E. Corcoran, SRA, is a Florida real estate broker, state-certified residential appraiser and residential contractor. She is president of AmeriRealty Corp. and vice president of AmeriMortgage Corp. She can be reached at ReginaECorcoran@cs.com. Corcoran writes her column exclusively for The Citizen. It appears every other Sunday.

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