Advertiser Disclosure

College Students and Recent Grads

How to Combine Your Student Loan Debt With Your Spouse’s

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

While marriage is a union between two people, it can also become a union between two financial situations, as the couple shares expenses and typically opens joint bank accounts and credit cards together. Many newlyweds (and many of those soon-to-be-wedded) also wonder: Can they combine student loans with their spouse?

It might sound attractive to consolidate student loans with your loved one and combine all educational debt. In reality, combining student debt with your spouse might not be that easy or simple.

Here’s what you need to know about how marriage affects student debt and whether combining student loans is possible.

Dealing with student debt after marriage

Starting a marriage with student debt is common enough these days, given that about 44 million Americans have a student loan. But how you and your partner choose to handle any student loans is up to you — mostly.

There are a few legal changes to student debt that kick in as soon as you say “I do.” Here are some of the ways that getting married can affect student debt.

Student debt from before the wedding: Usually, any debt that predates your marriage will be individually owned, and repaying it remains the sole responsibility of the person who holds it.

Student loans borrowed while married: In most states, student loans taken out after the wedding day would still be the sole responsibility of the one borrowing them. However, in states with community property laws for married couples, student loans borrowed during a marriage might be considered shared property, for which the couple is collectively responsible.

Student loans enrolled in income-driven repayment: These repayment plans use your income to set affordable monthly payments for your federal student loans. If you get married, this could change what you pay — depending on how you choose to file your taxes.

File jointly, and your payments will be based on your joint incomes and how much you owe together on federal student loans. File separately, and payments will be based on your individual income and student loan balance.

Student loan interest deduction: Spouses who file taxes separately will be ineligible to claim the student loan interest deduction (as well as some other tax benefits), which allows you to reduce your taxable income by interest paid on student debt.

On top of these formal changes to your student loans, payments and tax situation, you and your spouse will also want to discuss whether you’ll share responsibility for repaying student debt, and if so, how.

Start the conversation well before your wedding day, and keep communication open throughout your marriage, to make sure you’re on the same page about student loans. Talking about these issues can help them from causing or contributing to marital conflicts.

Can you consolidate student loans with a spouse?

If you decide to tackle your college debt together, you might want to consolidate student loans with your spouse. Student loan consolidation is any process that combines multiple student loans into a single, new student loan.

The two main options for consolidating student loans are a direct consolidation loan, which combines federal student loans, or private student loan refinancing, which can consolidate private or federal student debt.

Here’s a look at each option, with an eye toward which one is best to combine student loans with a spouse.

Not a solution: Couples can’t use direct consolidation loans to combine student loans

Previously, the Federal Student Aid Office did offer a way for spouses to combine student loans: the federal joint or spousal consolidation loan. This program ended in 2006, since then there has been no federal option for married couples to jointly consolidate their federal student loans.

Still, while you can’t use a direct consolidation loan to formally combine student debt with a spouse, it could still be worth considering as an option to simplify your own student loans.

Potential solution: Some private lenders can consolidate spouse student loans

While a federal direct consolidation loan is out of the question, it is possible to combine student loans with a spouse by refinancing with a private lender. Such joint student loan refinancing loans are very rare, however.

One major lender that does offer this option is PenFed Credit Union, where couple can apply together to have their combined student loans refinanced. The application is processed using your and your spouse’s combined income, and rates are set by whichever credit score is higher. Refinance rates started at 2.91% APR for variable-rate loans or 3.75% APR for fixed-rate loans.

Most likely solution: Consider cosigning a spouse’s student loan refinance

A more accessible option might be to refinance one person’s student loans and add the spouse as a cosigner. This move won’t combine your student debt with your spouse’s, but it provides some other benefits.

The lender will consider both your income and your spouse’s income when processing your application. This can improve your chances of getting approved if you earn far less than your spouse or have no income — for example, if you’re a stay-at-home parent.

If you have poor credit but your spouse has a higher credit score, adding them as a cosigner can also help you qualify to refinance student loans. In fact, lenders like Citizens Bank will not only allow you to add a cosigner, but will set your student loan refinance rate based on whoever’s credit score is higher.

If you’re interested in this option, make sure to shop around to find good rates and terms for your student refinance loan. And be careful when refinancing federal debt, as you will lose access to certain government programs, such as income-driven repayment and Public Service Loan Forgiveness.

Is combining student loans with your spouse a good idea?

Married couples do have a few options to legally share responsibility for their student loans, but they should carefully evaluate whether it’s a good idea.

It might be smart to refinance student loans together, for example, if it could mean getting a much lower student loan rate — which could save hundreds or even thousands in interest charges over the life of the loan. Consolidating debt with a spouse might also seem like a smart way to simplify your student debt and manage it more easily.

However, there are some potential drawbacks to weigh. The first is whether it’s wise to mix responsibility for student loans, especially if they were taken out before you got married. If you consolidate student loans together or cosign to refinance your spouse’s student loans, both parties then become equally responsible for repaying this debt — no matter what. Even in the case of divorce, you’ll still be on the hook for any student loan you consolidated or cosigned with your former spouse.

In fact, you could be liable for repaying any student loans taken out after you get married. This could include any refinance student loan or direct consolidation loan that originates after your wedding date. Since these are new student loans that replace the old student loans, they could be considered community property — and you might be responsible for repaying a portion of them whether your name is on them or not.

Ultimately, though, combining student debt with a spouse doesn’t have to require more than an informal agreement between the two of you. Any couple can discuss their student debt repayment goals and how they can work together to achieve those. You don’t have to officially meld your student loans into one or have both your names on a loan in order to work as a team to manage and pay off this debt.

You and your spouse’s student loans are already part of your joint financial situation, both in the present and in the future. If you can handle your other financial issues together, the student debt shouldn’t be a problem, regardless of whose name or names are on which loans.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Elyssa Kirkham
Elyssa Kirkham |

Elyssa Kirkham is a writer at MagnifyMoney. You can email Elyssa here

TAGS:

Advertiser Disclosure

College Students and Recent Grads

Seeking Private Student Loan Forgiveness? Here’s How to Get Help

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

iStock

Student loans can feel like a financial burden that’s always weighing on you and will never go away. If you’ve felt that, you might find yourself daydreaming some way to snap your fingers and make your student debt disappear.

Getting student loan forgiveness isn’t quite that easy, however, and it can be even trickier for borrowers with private student loans. While student loan forgiveness can provide important relief to borrowers who qualify, private student loans are ineligible for some of the most common and popular options for student loan forgiveness.

The good news is that there are still some student loan assistance programs beyond the options reserved only for federal student loans. Find out if you can get funds to repay your private student loans or qualify for other forms of private student loan help.

How to get private student loan forgiveness and assistance

Even though many of the best-known forgiveness programs don’t include private student loans, you definitely do have some options.

For example, some state and local programs provide repayment assistance that can be used to repay private student loans. Some companies are also jumping in to help their employees pay off student debt.

Here are a few potential sources of private student loan help that are worth exploring.

Loan repayment assistance programs for private student loans

Many federal, state and local government agencies provide or participate in student loan repayment assistance programs (LRAPs) that offer funds to help pay off student debt. Some limit these funds to federal student loans, but others allow you to apply them to private student loans, too.

Check for LRAPs that are offered for residents of your state, members of your profession or alumni of the college you graduated from, and you could find an opportunity to get private student loan forgiveness. You can search for such options with this student LRAP tool from Student Loan Hero, which filters programs by location, occupation, award type and amount. (Note: Student Loan Hero, like MagnifyMoney, is a subsidiary LendingTree.)

As you seek out these programs, make sure you double-check that your private student loans are eligible to be repaid.

Here are some examples of a few such LRAPs that can offer help with private student loans:

  • The National Health Service Corps Loan Repayment Program offers repayment assistance to health professionals as nontaxable funds, which may be applied to either federal or private student loans. The program awards up to $50,000 for a two-year, full-time commitment ($25,000 for part-time) providing physical or mental health services in designated high-need areas.
  • The Teach Iowa Scholar Program provides $4,000 per year for up to five years (for a $20,000 total) to teachers working in Iowa’s designated shortage areas. These funds can either be applied to a federal student loan or paid out to the recipient, after which they could be used toward private student loan repayment.
  • The Alfond Leaders student debt reduction program helps science, technology, engineering and math (STEM) professionals in Maine. Qualifying STEM workers can apply to get up to half their student loans repaid, including private student loans, up to a total of $60,000.
  • The Teach NYC Loan Forgiveness Program offers to repay up to $24,000 over six years for teachers who work in one of New York’s assigned shortage areas. The program repays the lesser of $4,000 or one-sixth of the recipient’s total outstanding student loans, including private student loans, for each year of service.
  • The University of Colorado offers student loan assistance or forgiveness for graduates of these law schools who work in public service. Awards are calculated on an individual basis and can range from 15%-75% of your monthly student loan payments, for up to five years.

Employment benefits for student loans

These student LRAPs are not the only options to get help with your private student loans. Even if you don’t qualify for private student loan forgiveness, you might still be able to find extra funding to repay your college debt faster.

One way to do this is by working in an occupation that comes with its own LRAPs. A sizeable number of LRAPs are tied to specific types of employment, so if you’re in a field where participating in those is possible, explore that option.

But even if an LRAP isn’t a possibility, you can still seek out employers that offer benefits or compensation that will help you tackle your student debt.

Here are some key benefits to look for that can help you repay private student loans:

  • Student loan repayment plans are becoming a more common and popular benefit in employers’ compensation packages. These student loan benefits usually match student loan payments made by the worker, capped at a certain dollar amount each year or month. The matched funds might be paid directly to the lender, or provided to the employee as additional compensation.
  • Higher base pay will also help you repay student debt faster. If you’re bringing home more money each month, you might have extra funds available to repay your private student loans. That’s why it’s vital for job seekers with student debt to apply to high-paying positions and negotiate for a higher salary if they receive an offer. If you’re already employed, you can speak with your supervisor about how you can earn a pay raise in the next year.
  • Sign-on bonuses can also be a great source of funds to make an extra, lump-sum payment toward private student loans. Depending on the industry you work in and the demand for workers with your skills, you might be able to get a signing bonus when starting a new job. This is a common perk for doctors and lawyers, for example. But with 23% of employers offering sign-on bonuses in 2018, according to The Society for Human Resource Management, it’s worth considering negotiating such a bonus when you receive a job offer.

If you keep your private student loans in mind when evaluating your current job or a new job, you can target job growth opportunities that will get you benefits to help repay student debt.

Other ways to get private student loan assistance

Getting private student loan help from an employer or LRAP might not be an option for everyone. And if you’re struggling with payments on your private student loans, you may need help now — not when you satisfy an LRAP’s requirements or find a new job.

If you’re looking for more immediate help, there are some steps you can take to tackle your debt when private student loan forgiveness or LRAPs aren’t an option. Here are some other strategies to consider as you work to more effectively manage your private student loans.

1. Work with your private lender

Private lenders don’t have to offer the same protections and benefits that come with federal student loans — you won’t be able to get deferment under federal guidelines or enroll in an income-driven repayment plan, for instance.

However, many lenders will work with borrowers struggling with private student loans. Reach out to your lender to discuss your situation and see what your options are. You might be able to adjust your payment due date, for example. Skipping a payment or pausing payments might also be an option for borrowers who run into financial hardship, such as a job loss.

2. Use federal student loan benefits

If you have both private and federal student loans, make sure you don’t overlook the options available to help with the federal side of your student debt.

Federal student loans come with many benefits and protections designed to help borrowers keep their debt repayment on track — and out of default. You can switch to several different repayment plans, including income-driven repayment designed to be affordable based on your income, local costs and family size. You can also apply to forbear or defer federal student loans.

Lastly, don’t overlook student loan forgiveness programs that are offered specifically to repay federal debt. One can access federal student loan forgiveness through programs such as Public Service Loan Forgiveness (PSLF), the Teacher Loan Forgiveness program, and forgiveness granted through income-driven repayment plans.

3. Consider refinancing student loans

Borrowers don’t have to be stuck paying off a private student loan with unfavorable terms or from a lender they hate. You can refinance student loans with another private lender, instead, taking out a new loan to replace the previous private student loan.

Refinancing private student loans puts you back in control of your debt. You might be able to refinance to a lower student loan rate, which can cut interest costs and monthly payments. You can also choose a new loan term that better fits your needs, such as a longer repayment period that could help lower monthly payments.

Just keep in mind that you’ll need good-to-excellent credit — or a cosigner with excellent credit — to get approved to refinance student loans and receive favorable rates. It’s also wise to shop around and compare different student loan refinance offers, so you know your final pick offers the best deal.

4. Target private student loans first

Prepaying your student loans can be a smart move to get out of debt faster and save on interest charges. If you pay extra toward your student debt, beyond just the minimum, you’re likely better off targeting your private student loans first.

This is because private student loans offer fewer options and protections for borrowers than federal student loans do, making the former riskier to keep around. Plus, paying down private debt first could also produce bigger savings, since this type of student loan often (but not always) has higher interest rates than what you’d pay on federal student loans.

Take a look at your own collection of student loans and assess the costs and risks of each one. Then, you can make a plan to pay off those student loans one at a time, starting with your highest priority accounts, until you’re debt-free.

Whether you’re able to pay extra toward your debt or are struggling just to keep up with payments, take some time to investigate the many possible solutions and strategies for private student loans.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Elyssa Kirkham
Elyssa Kirkham |

Elyssa Kirkham is a writer at MagnifyMoney. You can email Elyssa here

TAGS: , , ,

Advertiser Disclosure

College Students and Recent Grads

5 Reasons Student Loan Forgiveness May Not Be Worth It

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Waking up to find student loans wiped out is a common fantasy for many borrowers. For a lucky few eligible for student loan forgiveness programs, this dream can become a reality.

You might love the idea of getting free money to repay student debt — until you see the fine print, that is. The process to have your student loans written off isn’t likely to be quick, easy, or painless.

But is student loan forgiveness worth it?

For some people, student loan forgiveness and assistance programs can be a huge help in getting out of debt. Yet for other borrowers, pursuing forgiveness can be a bigger headache than they’re willing to deal with.

Here are five reasons student loan forgiveness might not be worth it.

1. You might wait 25 years for student loan forgiveness

Depending on the student loan forgiveness program you pursue, you might be waiting decades to have your student loans forgiven. The longest period for student loan forgiveness is 25 years, under certain income-driven repayment plans:

  • The Revised Pay As You Earn (REPAYE) Plan requires 25 years of repayment to qualify for student loan forgiveness for borrowers using the plan to repay any graduate school loans.
  • The Income-Based Repayment Plan grants student loan forgiveness after 25 years of repayment for borrowers who took out their first student loan before July 1, 2014.
  • The Income-Contingent Repayment Plan requires 25 years of repayment for forgiveness for all borrowers.

Other student loan forgiveness programs offer to write off student loans much sooner. The Teacher Student Loan Forgiveness program offers debt forgiveness after just five years of full-time teaching work. The Public Service Loan Forgiveness (PSLF) program requires just 120 qualifying monthly payments, which can be made in 10 years.

The sooner you can erase your student debt, the more likely it is that banking on student loan forgiveness will pay off. But if pursuing student loan forgiveness means waiting 20 or 25 years to qualify, consider all your other options before proceeding.

2. You could wind up paying more

Under forgiveness programs, the amount of student loans written off is not what you initially owe, but rather any student loan balance remaining after the payments you’ve made. If you get student loan forgiveness after 25 years, for example, this will only wipe out what’s left after you’ve made 300 student loan payments.

This forgiven portion of your student loans might be smaller than you’d hoped. Not only that, but repayment plans that make student loan forgiveness beneficial can actually set monthly payments that are less than your student loan interest charges. In this case, interest accrues and can be added to the principal, increasing your balance. As a result, the total principal and interest repaid over the life of the loan might also be higher.

Consider a borrower who has $40,000 in student debt and earns just $28,800 out of college, enrolled in the REPAYE income-driven repayment. According to the Consumer Financial Protection Bureau (CFPB), such a borrower would repay $48,370 on a standard 10-year repayment plan. Under REPAYE, however, the total principal and interest repaid would be nearly $20,000 more, at $68,156.

IDR forgiveness provides a nice guarantee that you won’t be repaying student loans for longer than 25 years. But projecting your costs with a student loan IBR calculator can help you figure out whether or not you’re likely to come out ahead.

3. Your career choices (and pay) might be limited

Some student loan forgiveness assistance provides relief and erases student debt, but only if you’re willing to make a specific employment commitment. Here are some examples of student loan forgiveness programs with requirements tied to your work:

  • Teacher Loan Forgiveness requires five years of full-time employment in an underserved community.
  • PSLF requires 120 payments made while you’re working in a qualifying “public service” job; this includes working for a government agency or a 501(3)(c) nonprofit organization.
  • National Health Service Corps (NHSC) and many state governments offer loan repayment assistance for lawyers, dentists, physicians, nurses, and other skilled workers that are in high demand. They usually require two or more years of employment in an underserved area to qualify for forgiveness.
  • Military student loan forgiveness can also be an option to get some student loans repaid. The Active Duty Health Professions Loan Repayment Program provides up to $120,000 in loan repayment assistance over three years of service.

All of these programs can provide student loan forgiveness, but only if you meet the employment commitments — yet the employment offered isn’t always the most advantageous. They often require relocation and can keep you from choosing or changing jobs as you wish, as well as limit career opportunities later on.

Additionally, jobs that qualify you for student loan forgiveness often pay far less than what you could earn elsewhere. Fulfilling the employment requirements could mean missing out on higher pay, and the amount of debt forgiven won’t always be enough to cover this discrepancy in earnings.

Seeking student loan forgiveness that’s tied to employment can make sense if these programs already align with your career goals. If not, you should take some time weighing the tradeoffs against the benefits.

4. You can get taxed for forgiven student loans

Student loan forgiveness isn’t always free, either. Many forms of student loan repayment assistance or forgiveness are considered a type of taxable income. This means that you’ll be responsible for paying tax on the balance of your forgiven student loans.

Here are the types of student loan forgiveness that would likely come with a tax bill:

  • IDR forgiveness: After making the 20 to 25 years of payments required to qualify for forgiveness through an IDR, the remaining balance is forgiven. But the IRS still considers it income, and it will increase your tax liability.
  • Some student loan repayment assistance programs (LRAPs): If you participate in a student loan repayment assistance program, the help you get paying off your student debt could also be considered taxable income. Consider a physician’s assistant who joins the military and takes advantage of an applicable LRAP. This loan assistance is treated as bonus pay — and therefore taxable income — with the net after-tax amount then applied to student debt.

Other forms of student loan forgiveness are tax-exempt, however. Any student loans forgiven through PSLF are not taxable, for instance.

Additionally, IRS rules state that certain LRAPs can provide student loan forgiveness or assistance tax-free:

  • The National Health Service Corps Loan Repayment Program
  • Educational loan repayment programs funded by the Public Health Service Act
  • State LRAPs or forgiveness programs for health professionals working in underserved areas

It might not always be obvious which loan forgiveness programs will shield you from tax liabilities later on. Make sure you investigate and understand the possible tax implications of a student loan forgiveness or assistance program before enrolling — so you won’t unexpectedly owe thousands on forgiven debt later.

5. You won’t have any guarantees

Lastly, student loan forgiveness can be risky simply because life doesn’t always turn out the way we plan or prefer. Even if you’ve made all the right choices and followed a student loan forgiveness program to a T, there are no guarantees that you’ll receive forgiveness.

Errors can mess up your student loan forgiveness. Some loan forgiveness programs and LRAPs are complicated to the point of being ridiculously confusing. This can make it tricky to get it right when qualifying and applying for these types of loan assistance. With PSLF, for example, you could jeopardize your eligibility if you fail to consolidate certain student loans, and you could delay forgiveness if you miss payments or defer debt.

Student loan servicers have also caused problems for borrowers, according to a recent report from the Consumer Financial Protection Bureau. Borrowers complained that servicers didn’t clarify if the borrower qualified for PSLF, and that servicers did not process consolidations or changes to repayment plans in a timely fashion. Servicers even enrolled borrowers in payment plans that were ineligible for PSLF, despite the borrower expressing interest in the forgiveness program.

The future is foggy for many student loan forgiveness programs. PSLF, in particular, has had a rocky start. The first borrowers just barely received forgiveness through PSLF in early 2018, yet recent federal budget plans included proposals to end PSLF for borrowers taking out loans in upcoming years, for example.

The proposals were axed from the final budget, and PSLF seems safe (for now), but changes might still be made to this or other similar programs. Borrowers should be optimistically cautious about counting on student loan forgiveness and watch out for policy changes that could affect them.

Along with looking into your student loan forgiveness options, it can be worthwhile to compare them to other student loan strategies. Making extra payments on student debt can help you knock it out faster and pay less interest, for instance. Refinancing student loans can be another option to lower student loan rates and costs.

Only by exploring and comparing different student loan repayment paths can you find the best option for your current circumstances and future plans.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Elyssa Kirkham
Elyssa Kirkham |

Elyssa Kirkham is a writer at MagnifyMoney. You can email Elyssa here

TAGS: , ,

Advertiser Disclosure

Retirement

The Average Retirement Savings of Millennials Isn’t Enough

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

The Average Retirement Savings of Millennials Isn’t Enough

A new MagnifyMoney analysis of recent Federal Reserve data reveals that millennials aren’t saving enough for retirement. This might not be shocking on its own, but the data also reveals that the gap between what millennials have saved compared with what they should be saving is surprisingly wide.

To set our benchmark, MagnifyMoney used the guideline promoted by retirement industry experts, such as Fidelity, that workers should have roughly two times their annual income in retirement savings by age 35.

We then compared the earnings, savings and ages of millennials as reported in the Federal Reserve’s Survey of Consumer Finances to see whether they are hitting that mark.

Here’s what our dive into the data revealed about millennials’ retirement savings.

Key findings

  • The median 2016 retirement savings level for households headed by 30-somethings was about $23,000, while the median income level was $55,400. This means that typical millennials in their 30s have saved just 41% of their income.
  • Based on that level of income, median households should have saved $112,000, according to a common rule of thumb suggested by retirement plan administrators and financial planners. That’s almost five times more than the actual median savings of $23,000.
  • This shortfall isn’t specific to the current cohort of savers in their 30s (millennials). Prior surveys show a persistent shortfall in retirement savings among 30-somethings in previous generations, too.
  • While high earners are saving slightly more than median or average earners, they still fall short of retirement savings guidelines. Recent data show 30-something households with income at the 90th percentile — $146,000 — have saved roughly 1.1 times their income ($160,000) in retirement accounts when the rule of thumb suggests that figure should be $292,000.

Millennials are 80% behind on retirement savings


Unfortunately, millennials’ retirement saving efforts are far behind the recommended benchmark. The median income for workers in their 30s is $55,700 per year. This puts the retirement saving target at around $111,400 by age 35.

The actual savings are far behind that, however, with the median retirement savings at just $23,000. In fact, a typical millennial has saved only 40% of their annual income at age 35. This is just about one-fifth of the amount they should have saved. (Average retirement savings levels are similarly short).

Median earners in their 30s aren’t saving nearly enough. But perhaps more surprisingly, a better paycheck doesn’t seem to help much, as even high-earning households are coming up short.

High earners save more, but are still behind

High earners do a better job saving for their golden years than their median-earning peers. This makes sense, as higher-income households will have more funds at their disposal that they can use to save.

But even high-income millennials still fall short of the target of saving twice their incomes. Part of that is because earning more results in higher salaries, which also raises the target amount they should save.

In 2016, households earning at the 90th percentile — those earning about $146,000 or more per year — had saved $160,000 so far for retirement. That might seem impressive since it’s nearly seven times the $23,000 median retirement savings balance among their cohort.

But based on their level of income, the retirement savings standard suggests they should have close to $300,000 saved. Yet these high earners are around five years behind on their savings, having saved just 1.1 times their annual salary.

Of course, these numbers won’t reflect every saver’s individual progress. A household that falls in line with the median retirement savings of $23,000 with an annual income of $20,000 might actually be doing OK. Or they might earn $200,000, and be even further behind than most.

Other households might have their retirement savings right on target for their 30s or even be saving more aggressively with the aim of retiring early. Overall, however, it’s safe to say that millennials whose retirement savings are on or ahead of schedule are the exceptions to the undersaving trend.

Millennials’ retirement savings are on par with previous generations’

Millennials are way behind the ideal benchmarks for their retirement savings, and that’s worrying. But do these millennials have it worse than past generations?

We took a look at the historical Federal Reserve data going back to 1998 to find out how millennials’ retirement savings levels compared with previous generations’ savings habits.


As this chart shows, millennials are actually saving better than previous cohorts of 30-somethings. This could reflect the conservative money management attitudes found among many millennials. After coming of age in the Great Recession, this cohort saw the importance of personal fiscal responsibility.

The average retirement savings for millennials in 2016 is $64,000, which is 14% higher than the $56,000 30-somethings’ average retirement savings in 1998 (all figures are in 2016 dollars).

Interestingly enough, millennials are saving more without earning more than previous cohorts — U.S. wages haven’t grown much in that time.

On top of stagnant pay, millennials have also faced historically higher levels of student debt. The average student debt among recent graduates was $39,400, and a typical monthly student loan payment for a millennial is $351. With this student debt, millennials have had fewer discretionary funds they could use to make retirement savings contributions.

The fact that millennials’ savings habits are outpacing previous generations despite these financial obstacles is a promising trend, but it still might not be enough.

The guideline to have twice your salary saved by 35 is, admittedly, an aggressive goal — one that 30-somethings have been falling short of for the past 20 years. But it’s what millennials should be shooting for to ensure a comfortable and financially secure retirement.

How millennials can catch up on retirement savings

If you’re a millennial, you might be wondering how your retirement savings stack up — and if you’re behind, what you can do to make up for lost time.

The first thing to do is figure out where your retirement savings “should” be, according to this guideline. If you’re 30, this will simply be equal to your annual salary; for 35-year-olds, it will be twice that amount.

For every year in between or above, you can simply add on an additional 20% of your annual income. A 38-year-old, for example, should be shooting to have 2.6 times their annual income in retirement savings accounts.

Once you have your number, start planning for retirement and taking steps to catch up. Here are some ways you can start saving more.

  • Take advantage of employer-provided retirement plans. If your employer offers a retirement savings plan, such as a 401(k), it can be an easy and simple way to contribute through your paycheck.
  • Contribute enough to get the full employer match. Many employers will include retirement savings matching in their benefits package. This usually means that they will deposit extra funds into your retirement account to match your own contributions, typically capped at a certain amount. Find the details about your employer plan and contribute at least enough to take advantage of this full match.
  • Open an individual IRA. You don’t need an employer to open a retirement savings account, however. Almost anyone can open an IRA or Roth IRA and start contributing to it on their own.
  • Get debt costs and payments under control. If you have student loans, credit card balances, or other debt, these monthly payments and interest costs will limit your ability to save for retirement. Look for ways you can decrease the costs of your debt, such as consolidating credit cards or refinancing student loans to lower interest rates. Prepaying debt can also be a smart way to avoid interest charges and get rid of debt, freeing funds up to use for retirement savings.
  • Shoot to save 15% or more. As you might have figured out, saving a year’s worth of earnings every five years requires some intense saving habits. Of course, these funds will be invested and generate growth and returns that will do some of the work for you, so you can save a little less than 20% of your gross income. Saving 15% of your annual earnings is the typical suggestion.
  • Increase your savings rate a little at a time. If saving 15% feels out of reach, start smaller. Increase your retirement contribution rate by just 0.5%-1%. Then give yourself a few months to adjust, then raise it again and repeat until you’ve reached your target retirement savings rate. This method can help you ease into higher savings and find the right amount to balance retirement contributions with today’s costs.
  • Save “extra” funds when you can. If you’re behind on retirement savings, you can use extra income to play catch up. Instead of using bonuses and raises as more take-home pay, for instance, you can contribute this increase in pay to retirement savings.

It’s not too late to start saving for retirement, and every dollar you contribute now will count more than what you’d save later. That’s because saving for retirement in your 30s gives these funds over three decades to grow and for that growth to compound — time and money you simply can’t make up for later.

Take a look at your retirement savings and find one thing you can do to save more. Your future self will thank you.

Methodology

MagnifyMoney examined data from the Survey of Consumer Finances, a triennial report issued by the Federal Reserve, to determine relative retirement savings levels for various age and income ranges from 1998 through 2016 (the date of the latest study). We only include households with savings in at least one retirement account. All figures are in 2016 dollars.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Elyssa Kirkham
Elyssa Kirkham |

Elyssa Kirkham is a writer at MagnifyMoney. You can email Elyssa here

TAGS:

Advertiser Disclosure

College Students and Recent Grads

Are Your Extra Student Loan Payments Being Applied Correctly?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

If you want to pay off student loans faster, making extra payments is one of the smartest ways to do so. Beside knocking off some of your debt early, you’ll also pay less interest on the smaller remaining loan balance, saving you money over the life of your loan.

Paying extra on student loans and making it count, however, can be a little more complicated than just sending in an additional check. These extra payments are often applied in less-than-optimal ways that keep you from getting out of debt sooner, and in some cases they can even increase the amount you repay.

This can leave you frustrated and wondering why your prepayments aren’t making the dent you’d expected in your student loan debt. Here’s what could be going wrong with your extra student loan payments, and what you can do to make it right.

Common ways extra student loan payments get messed up

Every borrower should be aware of common errors and issues that can arise when paying extra on student loans. Reviewing these problems will ensure you know what to watch for when you prepay student loans.

Here are some frequently encountered issues surrounding extra student loan payments.

Student loan payments are applied to interest first

Perhaps you’ve been sending an extra payment every month a couple of weeks after paying your monthly bill. But to your surprise, the student loan balance hasn’t decreased by the full amount you sent in.

The reason that your payments don’t seem to go as far comes down to student loan interest. Payments you make toward student loans are almost always first applied to outstanding interest and fees, and principal second.

So an extra payment will be used first to pay interest charges, which are assessed based on your daily balance. Only then is the leftover applied to the principal.

Extra payments are credited against future payments

Perhaps you notice something even weirder — you make an extra payment, and then your due date is simply pushed back. What gives?

Some student loan servicers or lenders will credit extra payments toward a future payment, according to the Consumer Financial Protection Bureau. Most student loan servicers, such as Nelnet, will apply the extra payment to a student loan principal, but then advance the due date for you next payment.

Having your due date moved back isn’t always ideal, however, especially if you’re making extra payments so you can get out of debt faster. A delayed payment could throw off automatic payments set up by your servicer, for instance.

You might have to manually send in your extra payment to keep things on track. And if you choose not to make your next payment as usual, the payment you’re making isn’t exactly “extra,” but simply made early.

Lenders reset monthly payments

Another common practice among some student loan servicers and lenders is to reset a student loan repayment schedule, also called “redisclosure,” according to the CFPB.

When a redisclosure happens on your loan, your loan is re-amortized under a new loan schedule which can cause your monthly payments to rise or fall. Most often, however, lenders will lower monthly payments that will repay the new balance under the old loan term.

This actually occurred with my husband’s private student loans, after we started making extra payments on these each month. It wasn’t much — the minimum was around $260 per month, and we simply rounded payments up to an even $300.

But then something unexpected happened: Every month, we’d get a notice that our minimum payment had been recalculated and ever-so-slightly lowered. If we made this new, lower minimum payment, we’d pay off the loans under the original 20-year term.

While having the option to pay less seemed nice at the time, we never did. Following the new, lower payments would have meant paying more in interest and spending more time in debt than we wanted.

Extra payments aren’t applied to the preferred loan

Most students borrow as they advance through school, originating one or two different loans per semester. This means that most borrowers’ student debt is spread across multiple loans.

If you have the same servicer for multiple student loans and make an extra payment, however, it won’t be obvious to the servicer how you want the payment applied. In most cases, the servicer will split the extra payment across your student loans.

This can cause issues, however, if you want to target one balance at a time — an action at the heart of popular payoff strategies, such as the debt snowball or debt avalanche.

The debt avalanche method, in which you pay the highest-interest loan off first, can be especially effective in slashing the total amount you pay in interest on your student debt. Consider this example from the CFPB in which a borrower who, a year into repayment, begins paying $100 extra each month on three student loans, each with a balance of $10,000 but with varying interest rates.

 Starting BalanceStandard monthly payment without extra $100Monthly payment if extra $100 split evenly among loansMonthly payments if extra $100 applied to highest-rate loan

Loan 1 (7% interest rate)

$10,000

$116.11

$149.44

$116.11

Loan 2 (9% interest rate)

$10,000

$126.68

$160.02

$126.68

Loan 3 (13% interest rate)

$10,000

$149.31

$182.64

$249.31

Total Monthly Payment

$392.10

$492.10

$492.10

Savings at Payoff

$4,514.98 saved over life of loan

$5,403.62 saved over life of loan

Source: Consumer Financial Protection Bureau

The difference is real: If the borrower tells their servicer to apply the extra $100 payments to their highest-interest loan, they will pay nearly $900 less in interest than if they were divided evenly across all three loans.

5 tips to make extra student loan payments without a hitch

Now that you’re aware of common issues that can come up when paying extra on student loans, you might be wondering how you can avoid them.

Here are five steps you can take to ensure your student loan payments are applied exactly when, where and how you’d prefer.

1. Find your lender’s policy on prepayments

One of the first things you should do is get familiar with your servicer or lender’s policy for applying extra student loan payments (often called prepayments). Usually, this policy will spell out the lender’s standard method of applying any extra payments made above and beyond the monthly minimum.

For example, you’ll know whether extra payments are divided up proportionally across all outstanding loans (as with FedLoan) or applied first to the highest-interest loan (as with NelNet). You’ll also get a heads up on whether the student loan servicer will advance your due date or redisclose your loan if you prepay on this debt.

2. Instruct your servicer how to apply extra student loan payments

Just because your servicer has a policy for handling extra student loan payments doesn’t mean you’re stuck following it. Simply tell your servicer how you’d prefer your extra payments to be applied, and most will comply.

All it takes is sending a letter to your lender with instructions on how you’d like it to handle all excess repayment. Here is a student loan payment instruction sample you can follow, provided by the CFPB. (And here is the full sample letter.)

I am writing to provide you instructions on how to apply payments when I send an amount greater than the minimum amount due. Please apply payments as follows:

  1. After applying the minimum amount due for each loan, any additional amount should be applied to the loan that is accruing the highest interest rate.
  2. If there are multiple loans with the same interest rate, please apply the additional amount to the loan with the lowest outstanding principal balance.
  3. If any additional amount above the minimum amount due ends up paying off an individual loan, please then apply any remaining part of my payment to the loan with the next highest interest rate.

It is possible that I may find an option to refinance my loans to a lower rate with another lender. If this lender or any third party makes payments to my account on my behalf, you should use the instructions outlined above.

Retain these instructions. Please apply these instructions to all future overpayments. Please confirm that these payments will be processed as specified, or please provide an explanation as to why you are unable to follow these instructions.

This letter is just a template, so feel free to make any adjustments you see fit. For example, if you have unsubsidized loans and subsidized loans with the same interest rate, you might instruct your lender to apply payments to the unsubsidized loan first. Or, you might want to instruct your servicer not advance the due date when you make extra payments.

You can also add instructions specific to any individual extra payment if you’d like it applied differently than the servicer’s policy or your previous instructions.

3. Select corresponding payment options

Fortunately, many student loan servicers and lenders are making it easier for borrowers to clarify how they want extra payment applied.

Nelnet, for example, will display a box that reads “Do not advance due date.” If you leave it unchecked, your due date will be moved back in line with how much extra you’ve paid. Select NelNet’s “Do not advance due date” option, however, and the payment will be applied without affecting future payments.

Similarly, FedLoan allows borrowers to pay off extra on a specific loan by “targeting” their payments. By doing so, you get to select exactly the loan you want to pay extra on and indicate that you don’t want this amount applied toward a future payment.

For borrowers who prefer to pay by paper check, you can still provide instructions with your payment. Simply write the instruction on the memo line, such as “Apply to highest-interest loan only” or “Do not advance due date.” Or you can write them on a separate paper to mail with the check, and simply indicate on the memo line to refer to the enclosed instructions.

4. Keep records of all instructions and payments made

Even if you’ve done your part to communicate with your lender, your responsibility doesn’t stop there. You’ll want to keep excellent records of any extra payments you make.

  • Save copies of any instructions you send to your lender about how to apply extra payments, along with any confirmation or response it sends you in return.
  • Keep proof of payment for all funds you send to your student loan servicer. Keep copies of any check you write. Take screenshots of any confirmation or other messages that display after making an extra payment online.
  • Check that payments are processed without a hitch. Review statements sent to you by your lender, and make sure that any payments and changes to your principal listed are in line with your own records.

5. Contact your student loan servicer

If you ever run across anything that doesn’t match up, reach out to your lender or servicer as soon as possible. They can review your account, see where the discrepancy is arising, and resolve any issues so you can reap the full benefits of your extra student loan payments.

While some borrowers have issuers with their student loan servicer, many others make extra payments with no trouble at all. By keeping an eye on your student debt and applying these tips, you can ensure your student loan payments go further toward getting you out of debt.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Elyssa Kirkham
Elyssa Kirkham |

Elyssa Kirkham is a writer at MagnifyMoney. You can email Elyssa here

TAGS: , , ,

Advertiser Disclosure

College Students and Recent Grads

3 Strategies to Get a Lower Student Loan Interest Rate

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Interest charges can be a huge cost for student loan borrowers. Of course, they’re especially painful for borrowers who have high interest rates or large student loan balances. But even an average borrower might want to know how to lower student loan interest so that their debt costs them less.

A lower student loan interest rate is key to your finances. A high interest rate can cost you thousands of additional dollars over the life of your loan, while a lower rate can mean not just smaller monthly payments, but also a quicker route out of debt.

How student loan interest works

When you borrow with student loans, as with most other credit, what you repay will be more than the amount lent to you — the principal — since interest accrues on whatever you haven’t yet repaid. How much student loan interest you pay is based on how much you still owe — your loan balance — as well as the actual interest rate itself.

How your student loan rate is set

For federal student loans, your rate will be set by Congress for the academic year in which you borrowed them. And not all federal student loan interest rates are created equal. For example, PLUS loans carry rates 2.55 percentage points higher than those for undergraduate student loans.

Private student loan lenders, meanwhile, set interest rates differently. Each has its own formula, but most will tie offered rates to your credit history, giving lower rates to borrowers who have higher credit scores.

How student loan interest rates affect your payment

Most student loan rates are annual, which means they reflect how much interest you’d be charged on the loan within a year. So on a $10,000 student loan with a 5% rate, you’d pay $500 in interest per year if you didn’t repay any of the loan during that time.

But your loan doesn’t accrue interest just once a year. Student loan interest is typically assessed and charged daily. So your annual interest rate is divided by 365 days, and you’re charged that amount of your outstanding balance each day.

As you make payments on student loans, the principal will go down a bit at a time, slowly lowering how much interest you’re being charged each month.

Ultimately, one of the smartest ways to pay less interest is to figure out how to get a lower interest rate on student loans. With a lower rate, you will save money and get out of debt faster.

How to get a lower student loan interest rate

The student loan rates you’re paying now were set when you were first offered the loan, and they are outlined in your loan agreement or promissory note.

But you’re not stuck with what’s in your agreement if you know how to get a lower interest rate on student loans. Here are a few ways you might be able to slash your loan rates.

1. Choose your student lender wisely

As mentioned above, the rate you pay will depend on the type of student loan you choose and from whom you borrow. If you’re taking out federal student loans, for example, it’s wise to borrow with subsidized loans first (no interest while you’re in school), and then unsubsidized loans (interest accrues while in school), before turning to PLUS loans with higher rates.

It’s more important to get picky when looking for the best private student loans. Each lender has its own formula for setting rates, and advertised rates don’t always reflect what a lender will offer you. It’s important to comparison shop to find the best private student loan rates you can.

You could save even more by seeking a student loan from a bank or lender with whom you already have a relationship. Citizens Bank offers a 0.25% percentage point loyalty discount for borrowers with an existing account, for instance.

2. Sign up for automatic payments

On top of loyalty discounts, some lenders will provide you with a rate discount for making on-time payments. One of the most common ways to reduce a student loan interest rate is to sign up for automatic payments.

When you enroll in autopay, you let your lender automatically debit a connected account to collect your student loan payment each month. In return, you get a rate discount — typically 0.25% off your rate.

3. Refinance student loans with a private lender

Another option to lower your student loan rate involves refinancing with a private lender. Refinancing student loans gives you the option to replace your old loans (and their high interest rates) with a new loan. This is your opportunity to choose a new lender with lower student loan interest rates, and even adjust your loan term or monthly payment.

The lowest student loan refinance rates start around 2.50%. To get these rates you’ll need an above-average income and a good-to-excellent credit score, or else you’ll need a cosigner who meets those requirements. Student loan refinance rates can also vary by the terms you choose, such as loan length and whether you take a variable or fixed rate.

Still, you don’t need perfect credit to benefit from student loan refinancing. If you have interest rates in the range of 6.00% to 7.00% or higher — maybe from a private student loan, or even a grad PLUS or parent PLUS loan — you could be a good candidate for refinancing.

In this case, you might want to start exploring your options to refinance student loans by comparing lender requirements and collecting some rate quotes. Try out our student loan refinancing calculator to see what your savings could look like with a lower interest rate.

Other ways to lower student loan interest costs

After considering the options above, you might be wondering how else you can lower your interest costs.

While figuring out how to get a lower interest rate on student loans can be a good place to start, it’s not the only way to pay less. Here are some other strategies you can use to lower student loan interest charges.

Make extra student loan payments

Besides lowering your interest rate, one of the surest ways to pay less student loan interest is to lower your balance. After all, the interest you’re charged is based on the amount of student debt you owe. If you pay off student loans faster, your balance will also decrease more quickly — resulting in big interest savings.

Lowering your student loan balances is as easy as sending in more than your student loan payment each month. You can round up a payment to the nearest hundred. Or you might set up automatic extra payments deducted each time your paycheck hits your bank account.

Setting up an extra $25 payment from every biweekly paycheck, for example, would be $650 per year. Doing so for a $15,000 loan with a 5.00% rate just entering a 10-year repayment would shave off three years from repayment and save more than $1,300 in interest.

It might not seem like much at first, but after a few months you’ll start seeing results. Student Loan Hero has a student loan prepayment calculator to help you preview your savings and decide how much extra you want to pay on your student debt each month. (Note: Student Loan Hero and MagnifyMoney are both owned by LendingTree)

If you go this route, however, make sure that your extra payment is applied to the principal, rather than as an early payment. Contact your lender to be certain.

Target high-interest loans first

Sending extra student loan payments is a great start, but you can add a level of strategy to make it even more effective. You can do this through the debt avalanche method. Here’s how it works:

  • List all your student loans, including balances, interest rates and monthly payment amounts.
  • Order your student loans from the highest to lowest interest rate.
  • Apply any extra payments to one loan at a time, starting with the highest-interest loan.
  • As you pay off one loan, roll over the amount you were paying on that debt — both the monthly and extra payments — and apply them to the student loan with the next highest rate.
  • Repeat this until all your student debt is gone.

Following the debt avalanche method helps you quickly lower the balances that are costing you the most. By paying off high-interest debt first, you’ll pay less in interest and get out of debt faster.

Take advantage of interest subsidies

One of the smartest ways to save on interest is to get someone else to pay for it. That’s exactly what happens if you’re lucky enough to get a federal student loan with an interest subsidy.

For the direct subsidized loan, for example, any interest that is assessed and charge while the student loan is in deferment is paid by the U.S. Department of Education. The most common situation where this applies is an in-school deferment for students who are still in college. But this interest subsidy will also apply anytime a borrower defers a subsidized student loan, even if they’ve already started repaying this debt.

So if you have subsidized student loans and can qualify for student loan deferment, it might be worth pausing payments on those. It will save you interest for the months they are deferred, and this can free up funds you could use to make extra payments on your more expensive or unsubsidized loans.

Avoid extending repayment

While deferring subsidized loans can be smart, you should avoid pausing or extending repayment for unsubsidized or private student loans.

Getting a deferment, forbearance or income-driven repayment plan is better than worse alternatives such as missing student loan payments or even defaulting. But you should know for all these options that while they will provide temporary relief, they might also increase your student loan costs over the life of the loan.

That’s because student loan interest still accrues on private or unsubsidized federal loans, even if you pause payments through deferment or forbearance, or lower payments through an income-driven repayment plan. In fact, because you’re paying less toward these loans, your balance will go down more slowly (if at all). And a higher balance means higher student loan interest, too, unless you can get the remaining amount forgiven. So it’s worth sticking to making monthly payments under the standard repayment plan if at all possible.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Elyssa Kirkham
Elyssa Kirkham |

Elyssa Kirkham is a writer at MagnifyMoney. You can email Elyssa here

TAGS: , ,

Advertiser Disclosure

College Students and Recent Grads

Credit Union Student Loan Refinance: These Are Your Options

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Refinancing student loans can help you crush your college debt in many ways, from lowering monthly payments to qualfying for a better interest rate. But before you can enjoy the benefits of refinancing student debt, you’ll first need to find the lender that can offer you the best deal to make it happen.

Maybe you’ve already started checking out student loan refinance providers, but are credit unions on your list? Along with traditional banks and online lenders, many credit unions are offering student loan consolidation and refinancing, sometimes with very competitive terms.

Unlike other banks and lenders, credit unions are structured in a way that can provide unique value to members. So if you want to be sure you’re getting the best deal on refinancing student loans, it’s wise to consider credit unions among the lenders you compare. Here’s what you need to know.

Should you refinance student loans with a credit union?

Credit unions are cooperatives — not-for-profit financial institutions — which means that any money they bring in gets re-invested in order to offer the best products and lowest costs to their members.

This is often reflected in their student loan refinance options, which often have low rates and are open to borrowers with a wide range of credit and financial qualifications.

Here’s an overview of some of the pros and cons to choosing a credit union to refinance student loans. All rates and terms quoted below are accurate as of October 9, 2018.

Pros of refinancing with a credit union

Choosing to borrow from a credit union can come with some major upsides. Here are some of the benefits you might come across by including credit unions in your search for a student loan refinancing lender.

Because credit unions aren’t structured like traditional banks, they often have the flexibility to offer financing to a wider range of borrowers. This can be helpful for applicants with less-than-perfect credit, who might be more likely to get approved or be offered a better student loan refinance rate if they apply with a credit union.

Some credit unions also provide unique options on their student loan consolidation products that would be hard to find elsewhere. PenFed Credit Union, for example, allows borrowers to combine their student loans with those of their spouse through its spouse loan refinancing option.

As mentioned, credit unions’ not-for-profit designation means that they’re not as focused on making a profit off of every single product. This allows them to offer student loan refinancing with lower rates and fees.

LendKey, for example, is a network that connects student loan borrowers with credit unions and community banks that offer student loan consolidation. It advertises student loan refinance rates through its network lenders as low as 2.51% APR on variable-rate loans, or 3.49% APR for fixed-rate loans. These community lenders also charge no origination fees to refinance student loans.

Credit unions generally offer a member-centered experience, often going above and beyond to provide you with the help you need when you need it. Some of the most convenient credit unions provide unique features such as 24-hour phone assistance, extended hours in branches, and mobile apps to stay on top of your student loans and other accounts.

Cons of credit union student loan consolidation

Refinancing student loans with a credit union won’t be right for every borrower, however. Here are some potential downsides to watch out for when comparing credit unions to other student lenders.

Credit union products, like student loan refinancing, are typically only extended to credit union members. While some credit unions are open to anyone, each of these financial institutions will have some requirements for who can and can’t join.

You won’t be eligible to join every credit union, so make sure that membership is open to you at whichever credit unions you’re considering as a potential refinancing lender.

While credit unions have competitive student loan consolidation rates, that doesn’t mean they will always beat other lenders.

It’s possible that another student loan lender, maybe a large bank or online financial institution, can beat the credit union’s student loan refinance rate. That makes it all the more important to hunt around and compare refinancing rate quotes so you know how credit unions stack up.

For some borrowers, student loan refinancing won’t make sense no matter who their lender is. Refinancing comes with some drawbacks that every borrower should weigh before moving forward with this step.

Consolidating student loans with a private lender will mean giving up federal student loan benefits, for example. This could include losing access to income-driven repayment plans and federal student loan forgiveness, as well as options like deferment or forbearance that pause payments and can be tough to get from private lenders.

On top of this, many federal student loan rates are already fairly low, so they could be hard for a student loan refinance lender to beat. And since getting a lower interest rate is one of the most common reasons to refinance student loans, you’ll need to do the math before taking this step. You can use our student loan refinance calculator to get a sense of what you might (or might not) save.

Finding a credit union to refinance student loans

If you’re starting your search for the best student loan refinance lender for your needs, you might not know what your options are when it comes to credit unions. After all, you not only have to find credit unions you’re eligible to join, but also to judge whether their products are the best deal for your specific situation.

Here are a few good options to consider as you start your search:

LendKey

As mentioned above, LendKey isn’t a credit union itself, but rather a network of over 300 credit unions and community banks. It can quickly match you with credit unions willing to refinance your student loans. LendKey does this through its rate quote tool, which uses a soft credit check to get the financial information needed to find you potential lenders — without affecting your credit score.

You will need to complete a brief form providing some general information, including your name and contact information, income, citizenship status, the amount of student loans you wish to refinance, the degree you completed and the college you attended.

Once that’s provided, you can submit the form, and LendKey’s rate tool will automatically match you to credit unions. It will often bring up several student loan refinance offers at once, allowing you to compare multiple options at once.

LendKey

LEARN MORE Secured

on LendKey’s secure website

Credit Union Student Choice Refinancing

Another tool for quickly connecting with credit union student loan refinancing is Credit Union Student Choice. Founded by several credit unions as a solution for student loan borrowers, Student Choice works with credit unions throughout the U.S. to provide the Student Choice Refinance Loan.

The Student Choice credit union locator tool uses your zip code, the college you attended, or your state of residence to return credit unions that match your criteria. From there, you can view the specific student loan refinance rates and terms available.

Once you’ve selected a credit union you’re interested in, you can apply right on the site through Student Choice. You don’t always need to be a member of the credit union just to apply, but it can make the process a little easier, and you’ll typically need to join the credit union before signing the final loan agreement and getting your refinanced student loan disbursed.

Alliant Credit Union

The first two options power student loan refinance offerings at hundreds of credit unions. But they aren’t your only option.

Alliant Credit Union, for example, has a flexible membership eligibility policy, which includes one option almost anyone can satisfy: supporting its partner charity, Foster Care to Success. With a $5 donation to this organization, you can become eligible to join Alliant Credit Union.

If you do, you will get access to Alliant’s student loan refinance option. Here are some additional details:

  • Refinance up to $100,000 in private and federal student loans
  • Choose from repayment terms of 5, 10, 15 or 20 years
  • Select a variable rate (starting at 4.25% APR) or a fixed rate (as low as 3.75% APR)
Alliant Credit Union

LEARN MORE Secured

on Alliant Credit Union’s secure website

PenFed Credit Union

As mentioned, PenFed Credit Union offers some unique student loan refinancing options in partnership with lender Purefy. It offers student loan refinancing with variable rates starting at 2.91% APR, or fixed rates as low as 3.75% APR.

PenFed Credit Union’s student loan refinancing is most notable for its flexibility, including such options as refinancing parent student loans or, as mentioned, consolidating student debt with a spouse.

As with other credit unions, you’ll need to join PenFed in order to refinance your student loans there. U.S. federal employees, military members, and their family are all eligible to join PenFed Credit Union. Beyond that, nearly anyone can join the National Military Family Association or Voices for America’s Troops to become eligible for PenFed Credit Union Membership.

PenFed Credit Union

LEARN MORE Secured

on PenFed Credit Union’s secure website

Find your own credit union

The credit unions and networks we highlighted here are a great place to start your search for a student loan refinance lender. But you can also search on your own for a credit union to refinance student loans.

You might already be a member of a credit union — if so, check to see if it offers refinancing. You can also search in your community, or use this credit union locator tool from DepositAccounts, another LendingTree-owned company, to find other institutions that you are eligible to join.

Including credit unions among the lenders you consider for student loan refinancing is a smart move. Even so, you should be critical and choosy when evaluating student loan refinance offers, including those from credit unions. With some investigating, you can find enough options to be sure that the final student loan refinancing offer you select will be the best.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Elyssa Kirkham
Elyssa Kirkham |

Elyssa Kirkham is a writer at MagnifyMoney. You can email Elyssa here

TAGS: , , , ,

Advertiser Disclosure

News

Student Loans vs. Mortgages: Which Weigh Heaviest?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

iStock

Student loan debt has mushroomed dramatically over the last two decades. The total amount of outstanding student debt just passed $1.5 trillion earlier this year, putting it second only to mortgages as the type of loan on which Americans owe the most.

The amount of average student debt per person has also exploded, with a substantial number of borrowers owing mortgage-like sums above $100,000, according to a recent student debt study from MagnifyMoney parent company LendingTree.

But, as the study also noted, this student loan burden isn’t spread evenly across the country.

“Student loan debt varies pretty widely between metros,” said LendingTree senior research analyst Kali McFadden. “With student loan balances shooting up, we wanted to know how these types of debt stacked up against mortgages for people who carry both.”

To find out, we compared student debt to mortgage debt, using borrower data from the 50 biggest metros. Specifically, we wanted to identify cities where borrowers’ student loans are more likely to rival — or even surpass — their mortgages.

Key takeaways:

  • Across all 50 metro areas surveyed, 5.7% of borrowers have a larger balance on their student loans than on their mortgage. The average student loan balance across these cities was $18,435.
  • In just 6 of the 50 metros we reviewed, more than 10% of borrowers carry a larger debt load on their student loans than on their mortgage. The Rust Belt and the South regions dominate the top of this list.
  • A whopping 12.6% of borrowers in Pittsburgh owe more for their educations than they do for their homes. Rounding up the top three are Buffalo, N.Y. (12.2% owe more on student loans) and Cleveland (11.7%).
  • The West Coast occupies the other end of the spectrum. In both Seattle and Sacramento, California, just 1.4% of borrowers owe more in student loans than on their mortgages. Los Angeles and San Diego are tied for third place, at 1.6%.

The 11 cities where student loan debt exceeds mortgage debt

The cities with the highest student loan debt compared to mortgage debt (looking only at borrowers that hold both types of loans) aren’t necessarily just the ones with the cheapest real estate, and therefore the lowest mortgages.

“Clearly, property values pay a part in the ratio of student loan to mortgage debt … [however] we do see that higher student loan balances are a factor where more people owe more for their educations than they do for their houses,” said McFadden.

Of course, the blend of these two influences — heavy school debt and low home prices — is different for each city. However, when student debt balances are high compared to mortgage debt, it does suggest a tough environment for student loan borrowers.

Here’s a look at these top-ranking metro areas.

1. Pittsburgh

People who owe more on student debt than mortgage debt: 12.6%

Pittsburgh tops our list, and for good reason — 1 in 8 borrowers owes more on their student loans than on their mortgage. Specifically, the median ratio of student debt to mortgage debt is 22.3%.

Here, the culprit could be the low median home price of $125,000, as reported by Kiplinger — tied for the lowest of the 50 metro areas we compared. This likely results in lower mortgage balances for Pittsburgh relative to the median student loan balance of $18,927.

2. Buffalo, N.Y.

People who owe more on student debt than mortgage debt: 12.2%

Buffalo joins Pittsburgh at the bottom of the median home-price rankings of the metro areas covered in this study, at $125,000. These borrowers are likely to owe less on their home and also have below-average student debt, at a median balance at $17,256.

It’s no surprise, then, to see that a typical Buffalo borrower’s student loan balance is equal to 21.9% of their mortgage debt.

3. Cleveland

People who owe more on student debt than mortgage debt: 11.7%

Cleveland borrowers have a median student loan balance of $18,743, compared to an average home price of $135,000, according to Kiplinger. With above-average student loan balances and lower home prices, a typical Cleveland borrower’s student loan balance is nearly a quarter (23.2%) of their mortgage debt.

4. Memphis, Tenn.

People who owe more on student debt than mortgage debt: 11.0%

Borrowers in Memphis have the highest student loan balances relative to mortgage debt in any city we studied. In fact, the median $18,866 student loan balance is equal to 24.2% the median mortgage debt. Memphis is also among the cities with lower median home prices, at $137,000.

5. Birmingham, Ala. (tie)

People who owe more on student debt than mortgage debt: 10.2%

One of the main factors putting Birmingham at the top of this list is the high average student loan balance. A typical borrower in this metro owes $20,679, the fifth-highest median student loan balance among any of the cities we surveyed.

This amount is equal to 21.8% of the median mortgage debt balance in Birmingham, where the median home price is $131,000.

5. Detroit (tie)

People who owe more on student debt than mortgage debt: 10.2%

Detroit and Birmingham have the same percentage of borrowers who owe more on student loans than they do on their mortgages. However, borrowers in Detroit have a lower ratio of student debt to mortgage debt, at 19.9%.

This reflects both the lower student loan balances in this city, with the median at $18,552, as well as higher home prices (the median is $145,000, per Kiplinger).

7. Atlanta (tie)

People who owe more on student debt than mortgage debt: 9.5%

Atlanta tied with Oklahoma City for the No. 7 spot, due largely to borrowers with some of the highest student loan balances.

The city’s median student loan balance of $22,232 is second only to Washington, D.C. This high level of student debt is due largely to loftier levels of educational attainment among Atlanta residents.

These large student debt loads are high even when compared to Atlanta’s median home price of $190,000. For a typical borrower here, their student debt is about one-fifth (19.6%) of the balance on their mortgage.

7. Oklahoma City (tie)

People who owe more on student debt than mortgage debt: 9.5%

Oklahoma City residents have below-average student debt, with the median balance at $17,278. Overall, this median student debt is equal to 18.4% of the local median mortgage debt.

9. St. Louis

People who owe more on student debt than mortgage debt: 8.9%

The local median student loan balance in St. Louis is a relatively large $19,229, while the local median home price is $155,000, according to Kiplinger. Overall, a typical St. Louis borrower’s student debt is equal to 18.5% of their mortgage debt.

10. New Orleans (tie)

People who owe more on student debt than mortgage debt: 8.3%

The median student debt among New Orleans borrowers is $18,592, about on par with the average across all cities. This debt is equal to 19.0% of the median balance on borrowers’ mortgages.

10. San Antonio (tie)

People who owe more on student debt than mortgage debt: 8.3%

Borrowers in San Antonio have some of the smallest student loan balances overall among these cities in these rankings, with the median at $17,089. However, that balance is still 17.1% of the median mortgage debt for local borrowers who have both.

Cities where student debt is lowest, compared to mortgage debt

A look at the cities where student loan balances are smallest, compared to mortgage debt, also reveals some insights.

Not surprisingly, the list includes cities with some of the highest home prices in the nation. San Francisco, for example, has a median home price of $750,000. Los Angeles homes come in at $605,000, while San Diego’s median home prices is $530,000, and Seattle’s is $417,000, reports Kiplinger.

These significantly higher home prices mean that many local borrowers are taking out mortgages with much higher balances that overshadow their student debt.

But while higher home prices result in more mortgage debt, the high cost of living doesn’t necessarily affect how much local residents borrow in student loans.

In fact, borrowers in these 10 cities also tended to have lower median student loan balances overall. Providence, R.I., for example, had the lowest median student loan balance of the group, at $15,025, and Seattle and San Diego had median student loan balances of $16,003 and $15,984, respectively.

Dealing with high student loan balances

Mortgage debt is still larger than student debt for most Americans, both at the national and individual level. However, the results of this study show that in some places, a relatively large proportion of people face student debt that outweighs even their mortgage, which can be a significant financial burden.

No matter how your own mortgage debt compares to your student loans, you can benefit from taking steps to more effectively manage your school debt. It could be wise to pay off student loans faster, if you can afford to do so. You can also explore options such as student loan refinancing or pursuing student loan forgiveness.

On the other hand, it’s encouraging to see that many borrowers are buying homes while repaying student debt — even when they have enough student loans to eclipse their housing debt. While rising student loans are slowing the financial progress of many, it’s not stopping them in their tracks.

Methodology

We looked a sample of over 90,000 anonymized users who logged into My LendingTree (LendingTree is our parent company) in July 2018 and who had both active student loan balances of any size and mortgage balances greater or equal to $10,000 to calculate the ratio of student to mortgage balances. Median student loan balances were calculated using a sample of users who logged into My LendingTree during Q1 2018, and were originally reported here. These results were then aggregated with the 100 largest metropolitan statistical areas by population. My LendingTree has more than 9 million users. Credit report information is provided by TransUnion.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Elyssa Kirkham
Elyssa Kirkham |

Elyssa Kirkham is a writer at MagnifyMoney. You can email Elyssa here

TAGS:

By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

Advertiser Disclosure

News

Best Places for Women Entrepreneurs

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

start-up business loans
Source: iStock

While women have been making strides in the world of business leadership in the past decade, American companies are still far from progressive and equal in this regard. Of incorporated businesses across the top 50 metropolitan areas in the U.S., just 30% are led by women, according to a new study by MagnifyMoney.

But where are women entrepreneurs seeing the most success? We surveyed the 50 largest U.S. cities to find the best places for women who want to be their own boss, launch a business — or both.

To create our rankings, we looked at data about women entrepreneurs across four different categories. The first two related to raw income and were double weighted in our analysis, while the last two related to the number of women entrepreneurs and business owners in the metro area.

What we considered in our analysis:

Business income for self-employed women. We ranked cities on both median and mean business income of self-employed women. By including both metrics, the rankings “capture both the more common experience of self-employed women as well as monetary success overall,” said Kali McFadden, senior research analyst at MagnifyMoney.

Ideally, both numbers would be in the higher end. A wide range between the two, however, could indicate a broader range of potential earnings for self-employed women in that area.

Business earnings for self-employed women compared with wage earners. We also ranked metro areas on the difference in earnings between self-employed women and those working for wages (both median and mean).

In general, self-employed women do earn less median and average incomes than people with earned income. “But a smaller gap between each group’s income implies better a potential upside for those going into business for themselves,” McFadden said.

The rate of self-employed and “incorporated” women. The rankings considered the percentage of employed women who work for themselves. “A higher rate of self-employment suggests that the city’s opportunities and ease of entry into business are better for women,” said McFadden.

Additionally, we looked at how many of those self-employed women have an incorporated business. “A higher number means that more women are seeing enough success and permanence to think about the legal and tax implications” of the businesses they own, McFadden pointed out.

Parity of business ownership between women and men. We looked at the percentage of total self-employed workers and incorporated business owners who are women.

Cities with higher percentages of self-employed women and women business owners could indicate a more even playing field, “where women are seeing the opportunities and conditions to break out on their own,” McFadden said.

Key findings:

  • San Francisco is the best metro for women entrepreneurs by a wide margin. Austin, Texas came in the second spot, and San Jose (Silicon Valley) was third. Cleveland, Pittsburgh, and Philadelphia came in last for women entrepreneurs.
  • Women entrepreneurs are set up for success on the West Coast. Five out of the top 10 metros are in California, with another in Washington. Tennessee is also hospitable to women entrepreneurs, with two metros in the Volunteer State landing on our list at the 4th and 5th spots.
  • There is a long way to go before we reach entrepreneurial parity — meaning an equal number of women and men starting and heading up young businesses. The average percentage of self-employed people on our list of metros who are women is a scant 37%, and the number is even lower among people with incorporated businesses: 30%.
  • Most self-employed women are not getting by on their business income. The highest median income we uncovered for women-led businesses is just over $10,000 and the lowest is zero. And across the 50 metros we reviewed, median business incomes amount to just 10% of the local median wages for women. “This is not surprising,” McFadden noted, “as self-employment could mean anything from having an Etsy store or offering a few hours of labor on TaskRabbit, to owning a bed-and-breakfast or gas station, to being a high-dollar commercial realtor or blockbuster novelist.”

The top 10 places for women entrepreneurs

In the best cities for women entrepreneurs, women who work for themselves are more likely to earn a decent living by doing so.

These cities also tend to have higher rates of women who are self-employed, a sign that the conditions could be favorable to workers ready to go at it alone.

Here’s a deeper look at the best U.S. cities for women entrepreneurs.

1. San Francisco

At No.1, San Francisco ranked at the top largely due to having the highest business incomes earned by women working there. The median business income is $10,378 among women in this city, and women’s average business income is $31,880.

In addition to their higher business incomes, women entrepreneurs are also more common in the San Francisco. Just over 10% of San Francisco’s women earners work for themselves. Looking at business owners, 41.7% of the city’s self-employed workers are women, and 32.1% of incorporated businesses are owned by women.

2. Austin, Texas

Women’s business earnings in Austin were on the higher end in terms of dollars, with the median at $8,262 and the average at $25,345.

But they’re among the highest when comparing women’s business income with the women’s earnings through wages. The average self-employed woman or business owner in Austin, for instance, makes nearly half (48.1%) what the average income for women in the city.

3. San Jose

A neighbor to San Francisco, San Jose is a similarly ideal place for women entrepreneurs. The city has one of the highest average business incomes for women, at $30,344 per year.

San Jose also has higher rates of women who are self-employed (41.1%) as well as incorporated businesses owned by women (32.2%).

4. Memphis, Tenn.

Memphis stands out for the higher median business incomes; most women entrepreneurs make around $9,068 in business income, second only to San Francisco. Plus, Memphis women have the highest business incomes when compared with local women’s earned income, earning about 25% of a typical woman’s wage in this city.

However, the average business income for women in Memphis is just twice as high as the median, “suggesting that the range of income isn’t that great,” McFadden said.

5. Nashville, Tenn.

Next is another Tennessee metro, Nashville, which is a standout when it comes to average business incomes for women. At $23,373, self-employed women in this city make just under half a typical women worker’s earned income. This is a sign that striking out on their own is a viable way for women to earn a decent living in Nashville.

That’s great news, given that Nashville has fewer women working for themselves and incorporating. Seven percent of women workers are self-employed, but just one in five of self-employed women have an incorporated business.

6. Los Angeles

Then there’s Los Angeles, which has the highest portion of self-employed women workers of any city on this list — 10.9%. Women entrepreneurs in LA can also expect a business income on the higher end, with the median at $7,758 and an average of $20,945.

7. San Diego

The next major California city to make the list is San Diego, which offers women a similarly attractive business landscape. Among women earning a business income in San Diego, the median is $8,060 and the average is $20,949 (both slightly higher than what LA’s women entrepreneurs bring in).

San Diego also has high rates of self-employment among women. One in 10 women workers in the city is self-employed, and 39.3% of self-employed workers are women.

8. Sacramento, Calif.

Sacramento lands at No. 8 by faring above average in most ranking factors, showing it’s a solid place for women entrepreneurs to take the leap into starting a business.

Take women’s business incomes as proof; the median at $7,053 and the average at $23,596 show Sacramento’s women entrepreneurs are able to outearn similar cohorts in other major U.S. cities.

9. Seattle

In Seattle, the average income for self-employed women is five times higher than the median — $22,713 to $4,534, respectively. “[This] suggests that while most self-employed women aren’t making much money, those who are are doing well are doing very well,” McFadden said.

Another factor backs up this insight: Among the top 10, Seattle has the highest rate (30.6%) of self-employed women who are incorporated. Plus, the city has high rates of parity in women business ownership: 42.1% of self-employed workers are women, as are nearly one-third of incorporated businesses owners.

10. Cincinnati

Rounding out the list of the best cities for women entrepreneurs is Cincinnati. Self-employed women earn decent business incomes in this Ohio city, with the median at $7,556 and an average of $21,432.

These earnings are high enough to compensate for lackluster rates of women working for themselves. Just 5.4% of Cincinnati’s women workers are self-employed, and these women account for 35.4% of all self-employed workers in the city.

In the 10 cities that ranked last on our list, self-employed women are earning far less than their counterparts in other cities. Take a look at the worst city, Cleveland, where women’s median business income is $0 — meaning at least half of self-employed women there don’t make anything at all.

The worst cities also have fewer women who have incorporated a business or taken the plunge into self-employment. This might make it harder for entrepreneurial women in these metro areas to find women mentors and women-centered entrepreneurial networks that can provide support vital to a new and developing business.

Placement at the bottom of this list could also signal that these cities are inhospitable to self-employed workers or new business owners in general — for both men and women alike.

That’s not to say it’s impossible for women entrepreneurs to start and build successful businesses in these cities.

Women living in these worst cities shouldn’t assume that their business endeavor will be doomed before it even begins. But they would be wise to practice extra caution in their plans to transition to self-employment or business ownership.

How women business owners can beat the odds

Living in one of the best cities won’t guarantee automatic success any more than a woman starting a business in one of the worst cities will fail. Wherever they live, women entrepreneurs must overcome obstacles and chart their own path to self-employment.

For women ready to take their first steps toward entrepreneurship, these steps can help them get further faster.

  • Start small but dream big. Even if you’re not ready to quit your job and hustle full time, don’t put your entrepreneurial goals on the back burner. Build out a timeline to get you closer to self-employment or starting a business, filled with small and actionable steps you can start taking now. A side hustle can be the perfect way to get a feel for being your own boss without giving up your main source of income.
  • Explore the business landscape of your specific city. Research local regulations and bylaws that could be pertinent to your business idea. For example, you can start checking out everything from business licensing laws to local small business tax breaks to help build out your business plan. You can also research local small businesses to see which are doing well and why, to get insights into how to set your own venture up for success.
  • Seek out local resources for women entrepreneurs. Many cities recognize the important role small businesses, startups and self-employed workers play in fueling local economies. And some have responded with support systems designed to foster growing businesses — and women entrepreneurs who lead them. One example is San Francisco-based Girls in Tech, a nonprofit founded by Adriana Gascoigne,which seeks to empower and educate women (including entrepreneurs) in the tech industry. Even the bottom-ranked city, Cleveland, has local organizations focused on supporting women entrepreneurs, such as women -focused business development courses from Aviatra Accelerators and an annual Female Entrepreneur Summit.
  • Network with other self-employed women. Don’t underestimate the power of meeting, working with and learning from like-minded, entrepreneurial women. The local organizations mentioned above can be the perfect way to connect with other women entrepreneurs in your area and find a new friend, mentor or even a future business partner. You can also look for co-working spaces, entrepreneurship-centered meetups or social events for local businesswomen to grow your network.

Methodology:

Each of the 50 largest metropolitan statistical areas (“MSAs”) was scaled against each other, so that the most positive result for each factor was 100 and the most negative was 0, on the following eight factors from the U.S. Census Bureau’s American Community Survey for 2016, either available through FactFinder or calculated from microdata housed in IPUMS USA. The results for each factor were then weighted according to the notation below, and the sum was divided by eight (rounded to one decimal point), for a highest possible score of 100 and a lowest possible score of 0.

  • Median business income for self-employed women (double weight)
  • Average business income for self-employed women (double weight)
  • Ratio of median business income to median earned income for the metro (double weight)
  • Ratio of average business income to average earned income for the metro (double weight)
  • Percentage of working women who are self-employed (single weight)
  • Percentage of self-employed women who are incorporated (single weight)
  • Percentage of self-employed people who are women (single weight)
  • Percentage of incorporated people who are women (single weight)

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Elyssa Kirkham
Elyssa Kirkham |

Elyssa Kirkham is a writer at MagnifyMoney. You can email Elyssa here

TAGS: , ,