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Philanthropists Make a Splash Paying off Student Loans, but Few Are Pushing for Debt Cancellation

Philanthropists Make a Splash Paying off Student Loans, but Few Are Pushing for Debt Cancellation


This week, LA’s Otis College of Art and Design got its largest-ever donation from a glitzy pair of donors. Apparently inspired by classes he took at the school as a teenager, Snapchat co-founder Evan Spiegel, once the world’s youngest billionaire, along with model and entrepreneur Miranda Kerr, gave the school a gift somewhere north of $10 million.

The couple’s gift made something of a splash — it’s earmarked to pay off the student debt incurred by every graduate in Otis’ class of 2022.

Once all but unheard-of, paying off lucky graduates’ student loans is gaining traction among some higher ed donors. The most well-known example is billionaire investor Robert F. Smith, who doled out around $40 million in 2019 to cover the debt of Morehouse College’s graduating seniors and extended additional funding to relieve the debt burden of other HBCU students.

Whenever this happens — and it’s still rare — it tends to draw great fanfare, perhaps justifiably. Still, there isn’t much on the structural level that distinguishes paying off graduates’ student debt from its far-more-common philanthropic cousins ​​— commitments for scholarships and financial aid. It’s just that it happens at the tail end of students’ college years rather than up front. In that sense, it’s probably less beneficial, given the anxiety and fear associated with racking up huge amounts of debt while trying to finish a degree.

Consider, also, how few students actually benefit. In Spiegel and Kerr’s case, Otis College’s graduating class of 2022 numbered just 285 students. In Smith’s case, Morehouse’s 2019 class numbered around 400 students. Don’t get me wrong; canceling the debt of any number of students has great meaning for the young people involved. But it’s less than a drop in the bucket next to the mind-boggling total student debt burden in the US, estimated to span nearly 45 million borrowers and add up to over $1.7 trillion.

Following campaign promises to cancel at least part of that staggering sum, the Biden administration has chosen simply to keep extending (and extending, and extending) the pause on federal student loan payments instituted at the onset of COVID. The most recent such extension pushed the end date to August, but midterm political optics all but guarantee the date will be pushed again. Meanwhile, the debate continues — should debt be canceled, and if so, how much, and for whom?

Positions on those questions vary. But for funders who do back student debt cancellation, it seems likely that $10 million (or $40 million) to tilt the scale on federal action would be a far more effective use of philanthropic dollars than one-off graduation gifts, potentially benefiting millions of borrowers instead of just a few hundred. So why don’t we see more advocacy funding for student debt cancellation in the otherwise crowded world of higher ed philanthropy?

Who is backing advocacy?

Well, for one thing, it would be inaccurate to say the funding world is completely bereft of resources for student loan advocacy. There is a modest constellation of nonprofit organizations pushing for federal student loan cancellation and advocating on behalf of student borrowers. Their funders include progressive-leaning foundations as well as several giving vehicles with living donors at the helm.

The Student Borrower Protection Center is one example. It got its start in 2018 when Seth Frotman, student loan ombudsman at the Consumer Financial Protection Bureau, stepped down in protest amid Trump-era efforts to undermine the agency. Frotman and a few colleagues went on to launch the advocacy group at the Resources Legacy Fund, a fiscal sponsor that otherwise tends to focus on environmental projects. The center secured initial support from the Sandler Foundation, as well as additional support from Arnold Ventures, to the tune of nearly $4 million.

The Sandler Foundation, a progressive heavyweight advocacy founded by the late Herb and Marion Sandler, also bankrolled another group active in this space, the Center for Responsible Lending. While the center’s advocacy work isn’t limited to student loans, its research and recommendations often support broad-based student loan cancellation as a path toward a more racially equitable and durable economy, themes often expressed by other cancellation advocates, as well. Besides Sandler, who got it off the ground, the Center for Responsible Lending counts progressive foundations like Ford, OSF and Oak as supporters.

The National Consumer Law Center is another think tank-y advocacy shop making a case for student loan cancellation and relief. Many of its major funders are associated with living donors, including Arnold Ventures, the JPB Foundation and the Heising-Simons Foundation.

A few other notable advocacy groups pushing for student loan cancellation include the Student Debt Crisis Center, a 501(c)(4) group founded in 2012, which says it is “in the application process” for 501(c)(3) status . Young Invincibles’ wide-ranging youth advocacy work draws funding from a variety of sources, including Gates, Robert Wood Johnson and the California Endowment (though not necessarily for the specific purpose of student loan advocacy; Young Invincibles does a lot of work on healthcare) .

Finally, the Debt Collective is a debtors’ union founded in the wake of Occupy Wall Street that’s also advocating for an end to student debt. It’s seeking to become a union in the traditional sense, funded by member due, but right now, it’s a fiscally sponsored project of the 501(c)(3) Sustainable Markets Foundation. Philanthropic funders include progressive grantmakers like Ford, OSF, Rockefeller Brothers Fund and Nathan Cummings.

Upstream and downstream

Although many of these advocacy groups have been pushing for forms of student debt cancellation for a while, they’re small fry next to the massive student loan industrial complex. They’re also off the radar for most higher ed funders and tend to rely on backing from a small cadre of supporters. As mentioned, some are still in various stages of fiscal sponsorship.

Altogether, their yearly outlay for student-debt-specific advocacy no doubt compares unfavorably with Spiegel and Kerr’s gift of $10 million-plus, let alone Smith’s $40 million-plus. And yet their potential pool of beneficiaries numbers 45 million, while college-and-class-specific gifts only tend to benefit a few hundred.

It’s a scenario we see a lot when it comes to economic justice and anti-poverty funding. On one hand, there’s ample funding for downstream aid, like scholarships, financial aid and paying off graduating seniors’ debt. But much less support tends to be forthcoming for upstream interventions in the realm of fiscal policy, like pushing the federal government to cancel debt. To make a real, lasting impact, both are necessary.

In the student loan arena, that disparity could have to do with specific funders’ reticence around the notion of broad-based cancellation, even among backers of the advocacy groups above. Arnold Ventures, for instance, has been reluctant to support cancellation for all borrowers, instead advocating a more targeted approach. Questions also remain about the legal feasibility of student debt cancellation by federal fiat — though most advocates argue Biden should forge ahead.

In the end, the biggest barrier to philanthropic support for student loan advocacy is probably philanthropy itself — or, more precisely, philanthropy’s long-standing discomfort with advocacy of all sorts. That discomfort isn’t likely to evaporate anytime soon. But in a field of need as vast as that of student debt in the US, even a modest influx of new advocacy funding could yield outsized gains.





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Mike Durant’s loans give him edge in Alabama Senate fundraising

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Mike Durant has the most money and has spent the most money in his Alabama Senate campaign largely funded with his own money.

According to the latest campaign finance disclosure reports leading up to the May 24 Republican primary, Durant, a Huntsville business executive and former Army POW, is dominating when it comes to funds to get his message to voters. He spent almost $4 million in a 4½-week span beginning April 1.

That outdistances Katie Britt, which recent polling has indicated is the frontrunner to win the GOP nomination. Britt, formerly the head of the Business Council of Alabama as well as chief of staff for Sen. Richard Shelby, spent $1.6 million over the same time period.

More on US Senate race

But the spending difference perhaps represents where the candidates are in the race. Based on polling, Britt seems likely to advance to the June 21 primary runoff – assuming no candidate gets more than 50 percent of the vote, which is not expected – and could be saving money for the month-long runoff campaign.

Durant, however, has fallen from frontrunner status into what polling suggests is a tight battle for second with US Rep. Mo Brooks of Huntsville.

In the heavy spending from the most recent reporting period of April 1 to May 4, Durant loaned his campaign another $2.65 million. Altogether, he has loaned his campaign $9.45 million while raising just $541,000 from donors.

Brooks spent just over $1 million in the most recent reporting period.

Neither Britt nor Brooks have loaned their campaigns any money.

Britt has been the top fundraiser when it comes to donors, raking in more than $6.76 million in her campaign. In the last reporting period, Britt raised $380,000.

Brooks has trailed in fundraising since Britt launched her campaign in June 2021 and Durant’s loans have dropped the congressman to third in the money race. Brooks has received $2.8 million in donations, including $123,000 in the most recent reporting period.

Aside from his campaign loan, Durant raised $83,000 in the most recent reporting period.

The latest reporting period came three weeks before voters go to the polls. Durant had the most cash on hand with more than $3 million. Britt had almost $2.8 million. Should Brooks advance to the runoff, he would appear to be at a financial disadvantage against either Britt or Durant with just $677,000 in cash on hand.



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Ted Cruz wins Supreme Court case, helping candidates recoup campaign loans

Ted Cruz wins Supreme Court case, helping candidates recoup campaign loans


Candidates can now use post-election donations to fully repay loans they made to their own campaigns, thanks to a successful lawsuit brought by Sen. Ted Cruz.

Previously, candidates could only bed reimbursed up to $250,000 if they waited more than 20 days after an election to pay themselves back with post-election contributions. The Supreme Court struck the cap down though in a 6-3 ruling, with the majority of justices agreeing that it could limit political speech by candidates.

Deborah Hellmana law professor at the University of Virginia and director the school’s Center for Law and Philosophy, spoke to Texas Standard about the intended purpose of the cap and this ruling’s potential effects on elections.

Hellman said the purpose of the repayment restriction had been to prevent corruption, with two reasons for why repaying with money collected after the election is potentially more corrupting.

“One is that when you donate money after the election, its only purpose is repayment of loans, and so what that money does is it goes through the campaign and directly to the candidate. So in a sense, it hovers in between being a gift directly to the candidate and being a contribution because it goes directly to the candidate,” Hellman said. The second reason is “if you give money before an election, you don’t know if that candidate’s going to win. But when you give money after to the winning candidate, you know that the candidate stands in a position to do something for you.”

Cruz’s argument against the cap – which Chief Justice John Roberts, writing for the majority, accepted – was that the limit disincentivized candidates from loaning money to their campaigns and was therefore a burden on speech, Hellman said.

Since 1976, the court has treated restrictions on money in politics as restrictions on speech. And this case goes one step beyond that, even more kind of removed from a direct restriction on speech by saying the fact that a candidate might feel more worried about loaning money to his campaign itself is a restriction on speech.”

Hellman said that the integrity of our politicians is something that everyone should care about.

“Now, realistically, we all know that candidates and politicians are influenced by their ability to raise funds, and we may not be able to do anything about that as a whole – in that, to the extent that we fund elections by donations, politicians are going to be responsive to their ability to raise funds,” Hellman said. “But we don’t want them to be responsive in a way that’s too tight, I guess, too clear. And when the money is going into the pocket of the elected official directly as a loan repayment, that just ups that worry.”





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Disney’s Soaring Prices Force Guests Into Bank Loans to Afford Vacation

Disney's Soaring Prices Force Guests Into Bank Loans to Afford Vacation


It looks like some Disney Guests want to visit Walt Disney World and Disneyland so badly, they are no longer just saving up for the vacation, but taking out loans to make the magic happen.

Credit: Disney

It is no secret that Disney is an expensive place to vacation. Now that hotel rooms are tougher to find, the 50th anniversary is being celebrated, and shows like World of Color, Fantasmic!, Disneyland Forever, and the Main Street Electrical Parade have returned, the desire to visit a Disney Park will only continue to increase , especially after so many Guests have had to put off trips.

disney world gate
Credit: Disney

We recently covered how prices for multi-day tickets have gone up at Walt Disney World. We used a 4-day trip as the basis for our comparisons. Park Hopper Plus 4-day tickets used to range from $546.65 — $708.57 and are now $559.53 — $708.57. It appears that on average, multi-day tickets increased by around $20 or so. On top of that, hotel room rates continue to increase, and although currently suspended, Annual Passes in Disney World have gone up in cost, as well as the new Magic Key Pass in Disneyland. We have also seen food pricing go up while portions go down, as well as the rise of liquor. To add, the addition of Disney Genie+ is now a new financial opportunity for Disney, whereas before, FastPasses were free.

disney world animal kingdom tree of life
Credit: Disney

Related: Disney Scraps “Planning Ahead”, Changes Disney Genie+ to Combat Demand

During the Walt Disney Company fourth-quarter earnings call, the issue of inflation and the potential for increased prices at Disney Parks inevitably came up during the question and answer segment.

aladdin (left) and jasmine (right) with kids at disney world
Credit: Disney

Related: CEO Defends Controversial Disney Genie, Response “Overwhelmingly Positive”

Walt Disney Company CFO Christine McCarthy addressed the situation, noting that Disney has no plans to outright raise prices within Josh D’Amaro’s Parks, Experiences and Products division. She did, however, indicate that Disney is looking at a number of ways to cut costs behind the scenes, including “reducing portions” at Disney Parks restaurants. Since then, we have already seen portion sizes shrink, while costs have risen for many different food and beverage items across the Park.

Knowing how quickly the cost of a Disney vacation has risen, it is not shocking to think that some Guests are no longer able to afford the vacations they used to take a few years ago. So, in order to keep the magic alive, Guests are doing whatever they can to access Diseny — including taking a loan out to pay for it.

It seems that this is becoming so common, that others are starting to talk about it on Twitter. Theme Park History (@TPHYoutube) stated:

For the love of Michael Eisner, please do NOT finance or take a loan out for your vacation to either Universal or Disney.

The theme park fan and YouTuber noted for both Universal and Disney, but, Universal is often a vacation that can be done at a lower cost as opposed to Disney. But, the best Orlando vacation occurs when Guests combine both Parks, which is the most expensive option. Jack from Park Hopping (@JackWelliot) responded:

It scares me that this needs to be said.

It seems that families looking to travel to the Most Magical Place on Earth, or The Happiest Place on Earth will have to start saving months earlier than usual with the way prices have continued to increase at the Parks.

Disney's BoardWalk at night
Credit: Disney

There are always ways to save on your vacation by choosing a cheaper hotel. At Disney World, Value Resorts are the lowest option in terms of pricing, but good neighbor hotels provide even better rates, at times which can save you hundreds. Avoiding pricey table service restaurants can also lower the cost of your trip exponentially.

What do you think about the current pricing for a Disney vacation?

Let the expert team at Academy Travel help you plan your next magical vacation to Disneyland Resort, including Disneyland Park, Disney California Adventure, and the Downtown Disney District. Or what about Walt Disney World Resort’s four theme parks — Magic Kingdom, EPCOT, Disney’s Animal Kingdom, and Disney’s Hollywood Studios — and the Disney Springs shopping and dining district!





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China loan growth misses estimates

China loan growth misses estimates


Lockdowns have created problems for banks in China as they have become more risk-averse. China’s central bank has promised to help but it lacks a solution. We believe that asset management companies play a role in boosting overall credit. But there is no perfect solution when the uncertainty of long lockdowns is high.

Very weak loan growth

New yuan loans grew only CNY645.4bn in April after a CNY3130bn increase in March. The market consensus was CNY2200bn. April is typically a month of lower loan growth than March, but this April’s loan growth is just too weak. This matches the very soft growth in aggregate finance, which grew only CNY910.2bn in April compared to CNY4650bn in March.

Banks can blame lockdowns

The main reason for such small credit growth is because of Covid lockdowns that have created difficulties for getting new loans. During lockdowns, there are many individuals and companies who suffer from loss of wages and loss of business, so therefore there should be an increase in demand for loans. If the supply of loans was steady, we should have seen a jump in new loans in April.

But that was not the case because banks in mainland China are more credit sensitive nowadays. During lockdowns, banks tend to be more risk-averse. They have been told to keep past due loans on their books. Under these circumstances, banks have become unwilling to create new loans, as that would mean taking on more risk by getting new loans and then waiting for them to become past due if lockdowns continue.

This is bad for the government as it would like to see banks giving a helping hand to the economy. But from a risk management perspective, banks are protecting their capital ratios, which isn’t a bad idea for the whole financial system in China.

PBoC is undecided: To cut or not to cut

The People’s Bank of China (PBoC) is struggling to decide on whether to lower interest rates by cutting the policy rate (Medium Lending Facility) and/or the required reserve ratio (RRR). There are mixed messages from the government and the central bank. It is difficult to decide because cutting interest rates is not a direct way to help an economy that has been damaged by lockdowns. Fiscal measures would be more effective, and there are quite a few of them for small and medium-sized enterprises and individuals.

There may be new tools from the PBoC, as it has promised, which will hopefully arrive soon.

We believe a way out is for banks to divest some loans to asset management companies, allowing banks more room to increase lending. But the asset management companies have to take the weak credit from banks. Then there is the issue of how much weak credit the asset management companies can hold without raising too much capital. There is no easy solution for easing monetary policy when the uncertainties of long lockdowns remain high.

Read the original review: China loan growth misses estimates

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Refinancing an FHA loan to a conventional loan

Refinancing an FHA loan to a conventional loan


Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.

If you can meet the more stringent qualifying criteria, you can refinance from an FHA loan to a conventional loan. (Shutterstock)

If you used an FHA mortgage to buy your home, you’re not limited to refinancing into another FHA loan. Depending on your financial circumstances, you might choose to refinance your FHA loan into a conventional loan. Whether this is the right choice for you depends on a variety of factors.

Credible makes it easy to compare current refinance rates on conventional loans from multiple lenders.

Can you refinance an FHA loan to a conventional loan?

Yes, it’s possible to refinance an FHA loan to a conventional loan. But this option may not be open to everyone.

One of the selling points of an FHA loan is its lenient qualifying criteria. You may qualify for an FHA mortgage with a credit score as low as 500 by making a 10% down payment, or a credit score of 580 with a down payment as low as 3.5%.

Conventional loans generally require a higher credit score: 620 is typically the lowest score mortgage lenders accept. To refinance into a conventional loan, you’ll need to meet the more stringent requirements for a conventional loan — including that higher credit score.

How to refinance from an FHA loan to a conventional loan

To refinance an FHA loan to a conventional loan, you’ll follow the same general steps as you’d take in any mortgage refinance. Here’s how to proceed.

Step 1: Decide if it’s the right time to refinance

Refinancing may be a good idea in a variety of circumstances. People often refinance their mortgages to take advantage of lower interest rates. Find out the interest rate on your current mortgage, and compare it to interest rates offered today. Even a small reduction in your rate can translate to thousands of dollars in savings over the life of your mortgage. A loan officer or an online refinance calculator can help you see how much you’ll save.

Other common reasons to refinance include:

  • Switch from an adjustable-rate mortgage to a fixed-rate loan.
  • Change the term of your loan to a longer or shorter period. Longer terms typically equal lower payments, while a shorter term helps you pay off your loan faster.
  • Access the equity in your home through a cash-out refinance.

However, in some cases, refinancing may not be a good idea. If you’re planning to move soon, you likely won’t be able to recoup the money you’ll spend on closing costs through lower payments. If your financial situation has worsened since you first took out your mortgage, you may not be able to get a new loan with good terms. You may also have a hard time refinancing if your home value has fallen.

Step 2: Check your credit score

Your credit score is a major factor in whether you qualify for a refinance loan and the interest rate you’re offered. People with higher scores typically have an easier time getting a loan and pay lower rates. You can request a free copy of your credit report from each of the three major credit bureaus — Equifax, Experian, and TransUnion — once per year using AnnualCreditReport.com.

When you receive your report, look carefully for any errors like incorrect balances, or accounts listed as past due that are actually current. If you find a mistake, you can dispute the information with the credit bureau that issued the report and have it corrected. This may boost your score.

Step 3: Shop around for a mortgage loan

Different lenders may offer significantly different rates and terms on a refinance loan. Check with your current lender about refinance options, but also request rate quotes or prequalify for a refinance loan with several other lenders to see whether you’re likely to get a loan and with what terms. Be sure to look not just at the interest rate offered, but also factors like fees and closing costs, and whether your current lender charges a prepayment penalty.

Credible can help you easily find the latest mortgage refinance rates. With Credible, you can compare multiple rates from various lenders in just a few minutes — it’s free, secure, and won’t affect your credit score.

Step 4: Apply for your refinance loan

When you’ve found the best offer, you can move on to the formal application. The lender you choose will give you instructions on how to apply for the loan. Just like when you bought your home, you’ll generally need to show documentation of your income and assets. This can include providing tax returns, W-2 forms, pay stubs, and bank account statements.

Step 5: Close on your refinance loan

While you won’t be getting any keys, closing on a refinance loan is similar to when you bought your home. Your loan officer will provide instructions on when and where to meet to sign the closing documents.

If you’ve chosen to refinance with a different lender, make sure you continue to pay your old mortgage until you have confirmation that it has been paid off. Your new lender will provide instructions on how to begin paying your new mortgage.

Requirements for refinancing from an FHA loan to a conventional loan

To refinance from an FHA loan to a conventional loan, you’ll need to meet the requirements for a conventional mortgage. These generally include:

  • Credit score of at least 620
  • Home equity of at least 3% to 5%
  • Debt-to-income ratio of 45% or below
  • Proof of homeowners insurance
  • Ability to document enough income to make your payments

THINKING OF REFINANCING YOUR MORTGAGE? HERE’S THE CREDIT SCORE YOU’LL NEED

How soon can you refinance an FHA loan to a conventional loan?

You can refinance your FHA mortgage into a conventional loan as soon as you can meet the qualifying requirements for your new loan. There are no waiting periods, often referred to as “seasoning” requirements, for this type of transaction.

Other mortgage refinances may have waiting periods. In most cases, you’ll have to wait six months before you can qualify for a cash-out refinance. To complete an FHA Streamline Refinance, you must wait 210 days and make at least six on-time payments in that period.

Should you refinance your FHA loan to a conventional loan?

You may want to refinance your FHA mortgage to a conventional loan if your finances have improved since you first bought your home. Conventional loans could offer better terms than you currently pay. However, refinancing may not always be a good idea. Here are some pros and cons of refinancing your FHA loan to a conventional loan.

Pros of refinancing from an FHA loan to a conventional loan

Refinancing may be worthwhile for the following reasons:

May lower your interest rate

If your credit score has improved and you can qualify for a conventional loan, you may be able to refinance to a lower rate — saving you thousands of dollars in interest payments over the life of your loan. Lower interest rates also typically mean lower monthly payments.

Ability to drop mortgage insurance

Most FHA loans require you to pay an annual mortgage insurance premium for as long as you have the loan. Generally, you can only cancel your premium if you make more than a 10% down payment on an FHA loan — and then only after 11 years of payments.

With conventional loans, you’ll usually need to pay for private mortgage insurance (PMI) if you make less than a 20% down payment. But canceling PMI is a lot more straightforward. When you reach 20% equity in your home, through a combination of monthly payments and home price appreciation, you can ask your lender to cancel your private mortgage insurance or refinance into a new loan without PMI.

As you’re refinancing your FHA loan to a conventional loan, try to avoid mortgage insurance entirely so that you can save money on your monthly payments.

Loan limits are higher

If your home has increased significantly in value, you may have a hard time refinancing your FHA loan due to the federal program’s loan limits. In most parts of the country, the FHA loan limit in 2022 is $420,680 (or $970,800 in some higher-cost areas). If your home is worth more than your area’s FHA loan limit, you may not be able to refinance into another FHA loan.

However, the loan limit on most conventional loans is $647,200 (or, again, $970,800 in higher-cost areas). Your home may fall within that limit, making a conventional loan a feasible option.

Cons of refinancing from an FHA loan to a conventional loan

You’ll want to keep these things in mind before you refinance from an FHA loan to a conventional loan:

Closing costs

When you refinance a mortgage, you’ll need to pay closing costs just as you did when you first bought the house. These may include a loan origination fee, points, appraisal fees, attorney fees, and title fees. Put together, closing costs can amount to between 3% and 6% of the loan — or $9,000 to $18,000 on a $300,000 loan. You’ll want to make sure that the amount of money you’ll save by refinancing will recoup your closing costs.

Long loan applications

When refinancing, you’ll also go through the same application process and documentation that’s required when you buy a home. You’ll need to dig out all your tax forms, pay stubs, W-2s, and other documents to be approved. This can be tedious, stressful, and time-consuming.

High credit score requirements

Going from an FHA loan to a conventional loan means you’ll need to meet the stricter qualifying requirements of a conventional loan. This includes a credit score of 620 or higher, compared with a minimum of 500 for an FHA loan.

WHEN IS THE RIGHT TIME TO REFINANCE MY MORTGAGE?

FHA Streamline Refinances

If you’re strictly looking to lower your interest rate, you may consider an FHA Streamline Refinance. This refinance option keeps you in an FHA loan, but includes much less paperwork and cost than a traditional refinance. No new appraisal is required either, saving you time and money. You may also be able to refinance without going through credit approval.

To qualify for an FHA Streamline Refinance, you must:

  • Have an FHA loan.
  • Show a “net tangible benefit” to the refinance, typically meaning a lower interest rate that will save you money.
  • Have had your FHA loan for at least 210 days and made at least six payments.
  • Be current on your payments.

If you’re refinancing to take cash out of your home equity, you may choose another type of loan. These can include cash-out refinances, home equity loans, or home equity lines of credit (HELOCs).

Credible makes comparing multiple lenders easy. If you’re looking to refinance your mortgage, start by checking prequalified rates on Credible.



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Interest rates for federal student loans to increase in July


About 41 million people in the US have student loans.

About 41 million people in the US have student loans.

PA

Students headed to college need to prepare for an unexpected cost: taking out federal student loans is going to be more expensive this fall than it was last year.

The Treasury Department announced that starting July 1, interest rates for new federal student loans will increase by 1.26% percentage points, according to the National Association of Student Financial Aid Administrators.

Here’s what that means for new borrowers.

Each spring, Congress sets student loan interest rates for the following academic year based on notes from the 10-year Treasury auction that takes place in May, according to Bankrate, a financial guidance site.

Starting July 1, interest rates on federal student loans will rise significantly and will stay in effect through at least June 30, 2023, according to Forbes.

The 1.26% spike will bring rates on undergraduate student loans from 3.73% to 4.99% — which translates to a 34% increase, according to the current rates shared by the Department of Education.

For graduate students, interest rates on unsubsidized loans will rise from 5.28% to 6.54% – or about a 24% increase.

Rates on the PLUS loans — designed for parents of undergraduate students and graduate and professional students — will go from 6.28% to 7.54%, about a 20% increase.

“It will represent a pretty notable increase from one year to the next,” Greg McBride, chief financial analyst for Bankrate, told CBS news.

This is the biggest percentage jump on student loan interest rates since 2013, according to the Washington Post.

Bankrate explained that federal student loans are fixed — “meaning that the rate will not fluctuate for the life of the loan.” It also means the new rates only apply to loans taken out to pay for the 2022-2023 academic year and don’t impact existing federal loans. Private student loans will also not be impacted by this change since rates vary from lender to lender.

New student borrowers won’t feel the effect of the spike in interest rates immediately as the pause on student loan repayments fixed interest rates at 0% until August 31.

The spike also comes as millions of student borrowers await a decision from President Joe Biden on student debt cancellation.

In an April 25 news briefing, White House press secretary Jen Psaki said the president will make a decision before the end of the current pause on student loan payments.

This story was originally published May 18, 2022 12:20 PM.

Profile Image of Cassandre Coyer

Cassandre Coyer is a McClatchy National Real-Time Reporter covering the southeast while based in Washington DC She’s an alumna of Emerson College in Boston and joined McClatchy in 2022. Previously, she’s written for The Christian Science Monitor, RVA Mag, The Untitled Magazine, and more.

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Businesses impacted by drought can apply for loans | News, Sports, Jobs

 Businesses impacted by drought can apply for loans |  News, Sports, Jobs



The Maui News

Small nonfarm businesses in Maui and Kalawao counties that have been impacted by recent drought are eligible to apply for low-interest federal disaster loans, the US Small Business Administration announced Tuesday.

The loans aim to offset economic losses due to reduced revenues caused by drought that began on March 15, a news release said.

Businesses may qualify for Economic Injury Disaster Loans of up to $2 million to help meet financial obligations and operating expenses that could have been met had the disaster not occurred.

The loans carry an interest rate of 2.94 percent for business and 1.875 percent for private nonprofit organizations, with a maximum term of 30 years.

The deadline to apply is Jan. 6, 2023.

Applicants may apply online, receive additional disaster assistance information and download applications at disasterloanassistance.sba.gov.

They may also call SBA’s Customer Service Center at (800) 659-2955 or email [email protected] for more information.

For people who are deaf, hard of hearing, or have a speech disability, dial 711 to access telecommunications relay services.

Completed applications should be mailed to US Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.




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5 Business Loans Women Entrepreneurs Should Consider in 2022

5 Business Loans Women Entrepreneurs Should Consider in 2022


Image source: Getty Images

Women are an important, yet often underrepresented, segment of small business owners. The good news is that there are plenty of funding opportunities for women out there to discover.

Women small business owners are a powerful — and growing — group.

You don’t have to look very hard to find a woman-owned business. They range from your favorite local cafe to the e-commerce clothing shop you adore and everything in between.

The National Association of Women Business Owners (NAWBO) estimates there are more than 11 million women-owned businesses across the country, and these businesses generated $1.7 trillion in sales as of 2017.

Statistics about women business owners in the US

Women-owned businesses are an increasingly important part of the economy. Image source: Author

Many of these owners look to funding opportunities to help support and expand their businesses. It shouldn’t come as a big surprise. Small business loans are among the most common ways for business owners to get the help they need.

While there aren’t small business loans that exclusively cater to women, many lenders actively work to help underrepresented business owners, women included.

If you’re a woman-owned small business, here’s where you can start looking for loans.

What you’ll need to apply

As you start exploring lending options, you want to have your financial house in order. That means gathering your essential financial documents, such as profit and loss statements and income projections, as well as your credit score. You can get a free copy of your credit report from each of the three credit reporting bureaus every year.

Those are just the basics. Each lender is different, so be sure to explore what you’ll need before starting the application process.

Some lenders also require more, especially if you have poor credit. In that case, you might also need a business plan prepared for the lender. Your business plan describes your business goals, finances, and income projections. It also details the funding you need and what you plan to do with it.

Also, be prepared to have collateral — assets that can help secure your loan, such as real estate or equipment — at the ready. Some of the more traditional lenders might require collateral to get a loan, especially if you’re a new business or have a lower credit score.

Applying for a business loan isn’t always easy. But having this information and the related documentation prepared ahead of time can streamline the process and help you identify the best lenders for your particular situation. Here are a few lending options to consider:

1. Business loans from financial institutions

One of the first places many small business owners look for a loan is through a local lender. Your current bank or credit union is an excellent place to start. If you already have a business banking account with them, you might have the option of also securing a business loan.

Something to remember about loans from traditional lenders is they tend to be more difficult to get if you have poor credit, low revenue (typically less than $100,000), or haven’t been in business for at least a year or two.

If you already have a relationship with a local bank or credit union, that might give you a leg up, but not always. These loans can also take longer to process, and you might have to meet in person with the lender, adding a few weeks to the timeline.

Most financial institutions will have a few loan options, including standard term loans, lines of credit, and mortgages for real estate purchases. The exact terms and availability will vary from bank to bank.

2. The Small Business Administration

The Small Business Administration (SBA) is often synonymous with small business loans. While the SBA doesn’t give out funding directly, the federal government agency helps thousands of small business owners across the country to get financing through local lenders.

Your current bank likely offers SBA loans for women and other business owners. There are thousands of SBA lending-approved banks in the US, and these loans are often geared toward small business owners who might struggle to get traditional loans.

The SBA oversees a variety of loans, but these are the most common for small business owners:

  • SBA 7(a) Loan: These loans are partially guaranteed by the SBA and offer financing options for working capital, equipment, and buying real estate.
  • SBA 504 Loan: This loan provides fixed-rate financing for up to $5 million for use on fixed assets, such as buying land or facilities and improving equipment.
  • SBA Microloans: The SBA also offers small-dollar loans up to $50,000, called microloans, for working capital, inventory, supplies, furniture, and equipment.

You’ll need to meet specific requirements to apply for any loans through the SBA, including being a for-profit business operating in the US, have equity invested in your business, and have tried other funding options.

The main applicant requirements for SBA loans.

There are several requirements for small business owners to apply for SBA loans. Image source: Author

Even if you aren’t applying for funding through the SBA, it pays to check out the opportunities and support the agency offers women business owners, including mentorship, advice, and women-owned business grants.

3. Online lenders

Another option for women-owned small businesses looking for funding is online lenders. For many small business owners, this could be an option when they can’t get financing from traditional banks or even the SBA.

Unlike those other options, online lenders have relatively simple and easy applications, as well as quick turnarounds for funding. It’s not unusual to get approved and have the funds within a week. That’s much faster than more traditional loans, which can take weeks or even months.

Online lenders, such as Kabbage, OnDeck, and BlueVine, are all possibilities for small business owners. Many online lenders also offer loans if you have a lower credit score and struggle to get financing elsewhere. The terms and rates will vary by lender and loan, but you can often find fixed-rate term loans and lines of credit through online lenders that might meet your needs.

4. Peer-to-peer lenders

Peer-to-peer (P2P) lending has become increasingly popular over the years and has drifted into small business lending. P2P lending essentially removes the middleman from the loan process. Those willing to end get matched with business owners. The system often works as a crowdfunding process, with multiple lenders teaming up to help one business.

One of the most popular P2P sites for small business owners is FundingCircle. If you choose to go this route, as with many online lenders, you can get approval and be matched with lenders very quickly, possibly in one business day. The application process also doesn’t have qualifications as strict as traditional banks.

Keep in mind that P2P lending is not available in every state, so you’ll want to check those regulations before applying. Additionally, many P2P sites have shorter terms for loans, ranging from six months to five years. You’ll want to decide if you can realistically meet those terms before applying.

5. Small business investment companies

A small business investment company (SBIC) is another option to find business loans for women. SBICs are privately-owned companies that use their own money for financing. However, through a regulated and licensed SBA program, they can work with qualifying small business owners via debt and equity financing.

There are a few primary ways a small business owner can work with an SBIC for funding:

  • Loans (debt financing): SBICs can provide loans typically ranging between $250,000 and $10 million. While the SBIC uses its own money for the loan, the SBA guarantees a portion and provides a dollar match.
  • Equity financing: This works very similarly to venture capitalist (VC) or angel investing. The SBIC will invest in your business for a share of ownership.

One thing to keep in mind is that interest rates might be higher with an SBIC than what you would expect from a traditional bank or online lender. You’ll also have to meet similar requirements as set by the SBA for small businesses.

For some small business owners, SBICs are alternatives to VC and angel investors. Still, they have specific terms and conditions for their investments that differ from traditional loans. Make sure you review these closely if you decide to go this route.

Women-owned businesses have loan options

Women small business owners are a growing force across the country. As you continue to expand your business, you might need to explore outside funding options. You might find that one of these loan options could be the perfect fit.



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Over 60,000 Round 2 PPP Loans Already Approved

How to Get Your PPP Loan Forgiven and Apply for a Second One


The second round of Paycheck Protection Program (PPP) loans is in full swing. So far, it’s helped more than 60,000 struggling small businesses.

The coronavirus relief bill signed in late December includes a second round of Paycheck Protection Program (PPP) loans. So far, it’s already proving to be a lifeline.

The coronavirus pandemic has battered small businesses, hurting communities and killing jobs. Thankfully, there’s been some relief in the form of the Paycheck Protection Program, which first became available in the spring of 2020. Through the PPP, small businesses have been eligible for forgivable loans to cover payroll costs and other essential expenses. And now, there’s a second round of PPP loans for the asking.

More than 60,000 loans and counting

The Small Business Administration (SBA) recently announced that it has approved over 60,000 PPP loans in the first week since the second round of funding opened. From Jan. 11-17, some 3,000 lenders provided more than $5 billion in loans.

Those loans may be a lifeline for struggling businesses that are still being impacted by the pandemic. Restaurants, for example, are being forced to operate within strict capacity limits, which is killing their revenue. Additional PPP funding could save countless jobs in the first half of 2021, not to mention prevent thousands of small business closures.

Not a free-for-all

Qualifying for a PPP loan back in the spring was easier than qualifying now. Back then, the only requirement was for businesses of 500 or fewer employees to certify their need for the money due to economic uncertainty. And really, during the first few months of the pandemic, what business couldn’t legitimately claim that? But businesses requesting a second round of PPP funding must meet tighter requirements to receive a follow-up loan.

How to qualify for a second PPP loan

Businesses seeking a second PPP loan must first exhaust the funds from their first loan. From there, applications are open to businesses with fewer than 300 employees, not 500 as in the initial round. Furthermore, general economic uncertainty won’t cut it for this follow-up round. Rather, businesses must prove they’ve experienced a revenue loss of 25% or more in any quarter of 2020 to qualify for a second loan.

From there, second round PPP loans are capped at either $2 million or 2.5 times a business’s payroll costs — whichever is lower. There’s an exception for restaurants and hotels, which can apply for loans up to 3.5 times their monthly payroll costs. Either way, the $2 million borrowing cap still exists.

To qualify for PPP loan forgiveness, at least 60% of those funds must be used to cover payroll expenses. The remaining 40% can be used for other operating costs, such as rent and utilities.

Businesses can also apply for the first time

Any small business that did not receive an initial PPP loan before Aug. 8, 2020, can apply for a loan during this second round of funding. First-time borrowers qualify if they have 500 or fewer workers; they can receive a loan for up to 2.5 times their monthly payroll costs, up to a total of $10 million.

How to apply for a second PPP loan

Businesses seeking a second PPP loan should start with the banks they used to secure their initial loans. Meanwhile, businesses that are applying now for the first time should begin by contacting banks they already have a relationship with. Community banks may also be a good resource for securing PPP funding. In fact, a number of local institutions have already helped make PPP funds accessible to underserved communities.

Help is available

Given the extent to which the pandemic is raging, COVID-19 variants are emerging, and vaccine rollouts are creeping along, there’s a good chance the US economy won’t recover for quite some time, and small businesses could bear the brunt of that. Those that qualify for a second PPP loan shouldn’t hesitate to seek one out, as that money could spell the difference between staying afloat and permanently closing.



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