Online Book Store – Hiocpely http://hiocpely.com/ Mon, 16 Aug 2021 08:56:31 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 https://hiocpely.com/wp-content/uploads/2021/08/hiocpely-icon.jpg Online Book Store – Hiocpely http://hiocpely.com/ 32 32 Commercial loans to replace government equity in NPPMCL https://hiocpely.com/commercial-loans-to-replace-government-equity-in-nppmcl/ https://hiocpely.com/commercial-loans-to-replace-government-equity-in-nppmcl/#respond Thu, 12 Aug 2021 01:00:00 +0000 https://hiocpely.com/commercial-loans-to-replace-government-equity-in-nppmcl/ ISLAMABAD: The Privatization Commission Council on Wednesday approved commercial loans from local banks to replace excess government equity and loans from the National Power Parks Management Company Limited (NPPMCL). The PC board which met with Federal Minister of Privatization Muhammadmian Soomro under the presidency discussed various issues relating to the NPPMCL, the Jinnah Convention Center […]]]>

ISLAMABAD: The Privatization Commission Council on Wednesday approved commercial loans from local banks to replace excess government equity and loans from the National Power Parks Management Company Limited (NPPMCL).

The PC board which met with Federal Minister of Privatization Muhammadmian Soomro under the presidency discussed various issues relating to the NPPMCL, the Jinnah Convention Center (JCC) and the corporatization of the State Life Insurance Corporation (SLIC) .

He was informed that the privatization of two power plants (Haveli Bahadur Shah and Balloki) of NPPMCL is at an advanced stage, but in order to align the capital structure with the tariff, 70 percent of the cost of the project would be based on financing . In accordance with the authorized benchmark, the long-term financing requirements, including the repayment / adjustment of the loan guaranteed by the federal government, currently amount to 103.765 billion rupees.

The question of long-term financing arrangements and its capital structure with the determined tariff of NEPRA and repayment of government loans, State Bank of Pakistan and local banks have been contacted for commercial loans.

A committee for this purpose has also been formed by the Pakistan Competition Commission (CCoP) to resolve the issue, according to a statement issued by the privatization commission.

The recapitalization of the debt and the refinancing of NPPMCL with local banks, formal approval would now be requested from the CCoP. Board terms would be followed, including Expressions of Interest (EoIs) to invite banks and DFIs programmed in the amount of Rs 103.765 billion for a period of up to 7 years (aligned with the NEPRA debt schedule) in accordance with the tariff determined by the regulator. maximum of KIBOR + 1.8 percent.

The standard security package including the charge on NPPMCL’s assets and cash flow would be without any recourse to the government of Pakistan. Banks and scheduled DFIs, which submit EoIs, will receive a request for proposal. At its recent meeting, NPPMCL’s transaction committee approved the local financing scheme prior to the transaction’s equity-accounting process.

The PC Board recommended NPPMCL’s debt recapitalization and refinancing plan in accordance with the recommendations of the transaction committee.

The PC Board approved the list of 12 potential bidders / investors who have expressed interest in the JCC transaction. Prequalified parties would be allowed to exercise due diligence of the JCC property to later participate in the tendering process.

The issue of the corporatization of SLIC was also discussed. The CCoP and the Federal Cabinet have approved the divestment of up to 20% of the government shares in the company.

In order to go further in the divestment of 20 percent of the shares of SLIC as part of the proposed privatization, the corporatization of SLIC is a prerequisite. The Ministry of Commerce would proceed with corporatization and related legislation.

The PC Board decided to take up the issue with the CCoP as the competent forum.


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Commercial loans to replace government equity in NPPMCL https://hiocpely.com/commercial-loans-to-replace-government-equity-in-nppmcl-2/ https://hiocpely.com/commercial-loans-to-replace-government-equity-in-nppmcl-2/#respond Thu, 12 Aug 2021 01:00:00 +0000 https://hiocpely.com/commercial-loans-to-replace-government-equity-in-nppmcl-2/ ISLAMABAD: The Privatization Commission Council on Wednesday approved commercial loans from local banks to replace excess government equity and loans from the National Power Parks Management Company Limited (NPPMCL). The PC board which met with Federal Minister of Privatization Muhammadmian Soomro under the presidency discussed various issues relating to the NPPMCL, the Jinnah Convention Center […]]]>

ISLAMABAD: The Privatization Commission Council on Wednesday approved commercial loans from local banks to replace excess government equity and loans from the National Power Parks Management Company Limited (NPPMCL).

The PC board which met with Federal Minister of Privatization Muhammadmian Soomro under the presidency discussed various issues relating to the NPPMCL, the Jinnah Convention Center (JCC) and the corporatization of the State Life Insurance Corporation (SLIC) .

He was informed that the privatization of two power plants (Haveli Bahadur Shah and Balloki) of NPPMCL is at an advanced stage, but in order to align the capital structure with the tariff, 70 percent of the cost of the project would be based on financing . In accordance with the authorized benchmark, the long-term financing requirements, including the repayment / adjustment of the loan guaranteed by the federal government, currently amount to 103.765 billion rupees.

The question of long-term financing arrangements and its capital structure with the determined tariff of NEPRA and repayment of government loans, State Bank of Pakistan and local banks have been contacted for commercial loans.

A committee for this purpose has also been formed by the Pakistan Competition Commission (CCoP) to resolve the issue, according to a statement issued by the privatization commission.

The recapitalization of the debt and the refinancing of NPPMCL with local banks, formal approval would now be requested from the CCoP. Board terms would be followed, including Expressions of Interest (EoIs) to invite banks and DFIs programmed in the amount of Rs 103.765 billion for a period of up to 7 years (aligned with the NEPRA debt schedule) in accordance with the tariff determined by the regulator. maximum of KIBOR + 1.8 percent.

The standard security package including the charge on NPPMCL’s assets and cash flow would be without any recourse to the government of Pakistan. Banks and scheduled DFIs, which submit EoIs, will receive a request for proposal. At its recent meeting, NPPMCL’s transaction committee approved the local financing scheme prior to the transaction’s equity-accounting process.

The PC Board recommended NPPMCL’s debt recapitalization and refinancing plan in accordance with the recommendations of the transaction committee.

The PC Board approved the list of 12 potential bidders / investors who have expressed interest in the JCC transaction. Prequalified parties would be allowed to exercise due diligence of the JCC property to later participate in the tendering process.

The issue of the corporatization of SLIC was also discussed. The CCoP and the Federal Cabinet have approved the divestment of up to 20% of the government shares in the company.

In order to go further in the divestment of 20 percent of the shares of SLIC as part of the proposed privatization, the corporatization of SLIC is a prerequisite. The Ministry of Commerce would proceed with corporatization and related legislation.

The PC Board decided to take up the issue with the CCoP as the competent forum.


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New foreign loan repayment policy unveiled https://hiocpely.com/new-foreign-loan-repayment-policy-unveiled/ https://hiocpely.com/new-foreign-loan-repayment-policy-unveiled/#respond Wed, 11 Aug 2021 23:29:07 +0000 https://hiocpely.com/new-foreign-loan-repayment-policy-unveiled/ ISLAMABAD: Loans to borrowers, including provincial governments, federal and provincial entities, departments, autonomous bodies and development finance institutions (DFIs) would be made under the same financing terms and conditions as those borrowed by the government federal to the foreign lender. This is indicated by the “Repayment policy for foreign loans 2020”, posted on Wednesday by […]]]>

ISLAMABAD: Loans to borrowers, including provincial governments, federal and provincial entities, departments, autonomous bodies and development finance institutions (DFIs) would be made under the same financing terms and conditions as those borrowed by the government federal to the foreign lender.

This is indicated by the “Repayment policy for foreign loans 2020”, posted on Wednesday by the Ministry of Economic Affairs on its website.

The ministry said the Cabinet’s Economic Coordination Committee (ECC) approved the revision of the 2016 restitution policy, which was later ratified by the federal cabinet.

As a result, the 2020 restitution policy will replace the 2016 restitution policy, published by the Economic Affairs Division. The 2020 on-lending policy would come into effect on December 22, 2020 and will apply to all foreign loans / credits borrowed by the federal government and ceded to federal and provincial ministries, autonomous agencies and DFIs.

According to the policy, borrowers are required to bear the cost of currency risk on an actual basis and to repay the actual amount of principal and interest paid by the Pakistani government to the foreign lender in foreign currency and converted into rupee equivalent issued by the State Bank of Pakistan.

A one-time fixed administrative charge (FAC) of 0.25 percent will apply on the loan amount disbursed to the borrower. The FAC will be paid by the borrower at the time of each disbursement received, within seven days to the State treasury.

FY2020-21: Foreign debt of $ 14.282 billion from multiple sources: EAD

All fees and commissions including Escrow Fee, Management Fee, Entrance Fee, Service Fee, etc., as applicable, payable by the Government of Pakistan to foreign lenders will also be paid by the borrower.

When the loan amount is allocated to more than one borrower, fees and charges are levied on a pro rata basis.

Warranty fees, escrow fees, management fees, entry fees, service fees, etc. must be deposited in the Treasury on the due dates along with interest / principal payments.

In the event of the borrower’s default in payment of amounts due that remain unpaid for 30 days after the due date, penalty interest @ 2% per annum will be charged for the period of default.

The EAD will issue a sanction letter or sign a subsidiary loan agreement with the borrower, as the case may be, which will specify the terms and conditions of the loan transferred as well as the amortization schedule for repayment.

The repayment period will be the actual repayment period available in the loan agreement signed by EAD with the foreign lender. The exchange rate differential, if any, resulting from the difference between the date of payment by the GoP to the lender and the date of payment by the borrower to the GoP should be reconciled at the close of each fiscal year and the borrower is required to pay such a differential. In case of secured loans, a guarantee fee of 0.5% per annum will be charged to borrowers on the outstanding loan balance.

Copyright Business Recorder, 2021


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NAB chief “optimistic” on economic outlook; decrease in bad debts https://hiocpely.com/nab-chief-optimistic-on-economic-outlook-decrease-in-bad-debts/ https://hiocpely.com/nab-chief-optimistic-on-economic-outlook-decrease-in-bad-debts/#respond Wed, 11 Aug 2021 23:28:02 +0000 https://hiocpely.com/nab-chief-optimistic-on-economic-outlook-decrease-in-bad-debts/ National Australia Bank chief executive Ross McEwan says he is confident the economy will rebound once COVID restrictions are relaxed, while a growing loan portfolio boosted the bank’s third-quarter profits. In a quarterly trade update on Thursday, NAB reported that its unaudited cash income was $ 1.7 billion, up 10.3%, thanks to the growth of […]]]>

National Australia Bank chief executive Ross McEwan says he is confident the economy will rebound once COVID restrictions are relaxed, while a growing loan portfolio boosted the bank’s third-quarter profits.

In a quarterly trade update on Thursday, NAB reported that its unaudited cash income was $ 1.7 billion, up 10.3%, thanks to the growth of the loan portfolio in loans mortgage (2%), small business (2.7%) and New Zealand (2.7% cent) loans during the June quarter. It recorded unaudited statutory net income of $ 1.65 billion for the third quarter.

“The strong economic momentum leading up to this period, continued government support and relatively healthy starting positions from customers give us confidence that once restrictions are relaxed the economy will rebound again.” : Ross McEwan, Managing Director of NAB.Credit:Eamon Gallagher

The big bank’s quarterly profits were also helped by a $ 112 million reduction in the allowance for bad debts associated with COVID-19 and NAB further reduced the risk of its assets by selling $ 1.5 billion in loans. aeronautics.

At the height of the pandemic, around the same time last year, the NAB deferred more than $ 92 billion in home loans and $ 41 billion in business loans. The bank said current lockdowns in major cities had caused “less than $ 1 billion” in loan deferrals as of June 30.

Mr McEwan said the health crisis continued to create “uncertainty and challenges,” but continued loan relief would support customers while protecting the bank.

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“However, we remain optimistic about the long-term outlook for Australia and New Zealand. The strong economic momentum leading up to this period, continued government support and relatively healthy customer starting positions give us confidence that ‘Once the restrictions are relaxed, the economy will rebound again. “

NAB will now continue to grow in the retail banking industry through the acquisitions of neobank 86,400 and Citigroup’s Australian customer business, while streamlining core operations to complete the sale of MLC Wealth.

“We are clearly focused on where and how we will continue to grow,” said McEwan.


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RPT-UPDATE 2-China’s Bank Loans in July Fall to 9-Month Low, Modest Policy Easing Expected https://hiocpely.com/rpt-update-2-chinas-bank-loans-in-july-fall-to-9-month-low-modest-policy-easing-expected/ https://hiocpely.com/rpt-update-2-chinas-bank-loans-in-july-fall-to-9-month-low-modest-policy-easing-expected/#respond Wed, 11 Aug 2021 23:00:10 +0000 https://hiocpely.com/rpt-update-2-chinas-bank-loans-in-july-fall-to-9-month-low-modest-policy-easing-expected/ (Repetition of the story from Wednesday evening without modification of the text) * July new loans 1.08 trln yuan against f’cast 1.20 trln yuan * M2 July money supply + 8.3% y / y, vs f’cast of + 8.7% * July TSF 1.06 trln yuan, against f’cast 1.70 trln yuan * Modest policy easing expected […]]]>

(Repetition of the story from Wednesday evening without modification of the text)

* July new loans 1.08 trln yuan against f’cast 1.20 trln yuan

* M2 July money supply + 8.3% y / y, vs f’cast of + 8.7%

* July TSF 1.06 trln yuan, against f’cast 1.70 trln yuan

* Modest policy easing expected as China’s economy slows

By Kevin Yao and Judy Hua

BEIJING, Aug.11 (Reuters) – China’s new bank lending fell more than expected in July to its lowest level in nine months, while overall credit growth hit its lowest level in 17 months, adding market expectations that modest policy easing may be needed to support the country’s growth. economic recovery.

The world’s second-largest economy has largely rebounded from the massive disruption caused by the pandemic last year, but recent new outbreaks of the delta variants and severe flooding threaten to slow its recovery.

Chinese banks granted 1.08 trillion yuan ($ 166.5 billion) in new yuan loans in July, well down from June’s 2.12 trillion yuan and the lowest level since October 2020 , according to data released Wednesday by the People’s Bank of China (PBOC).

Analysts polled by Reuters had predicted that new yuan loans would fall to 1.20 trillion yuan. Despite the decline, the total was still over 992.7 billion yuan a year earlier.

Loans to households fell to 405.9 billion yuan in July from 868.5 billion yuan in June, possibly due to stricter requirements for real estate financing, while loans to businesses fell to 433.4 billion yuan versus 1.46 trillion yuan, according to Reuters calculations based on central bank data.

Yet Chinese banks distributed a record 12.7 trillion yuan in new loans in the first half of 2021, even as the PBOC sought to slow broader credit growth to limit debt risks amid growing default.

Financial markets are increasingly looking for signs that authorities will announce additional stimulus measures as post-COVID growth rates moderate. In July, the PBOC reduced the reserve requirement ratio (RRR) of banks, freeing up about 1 trillion yuan in long-term liquidity, and analysts expect the RRR to decline further this year.

“After stabilizing in June, overall credit growth resumed its downward path in July and is now at its lowest since February of last year,” Capital Economics said in a note to clients.

“We expect the slowdown and resulting headwinds to the economy to continue in the months to come, notwithstanding further cuts in the RRR and policy rates.”

DELTA DANGER

Many analysts are lowering growth forecasts for the second half of the year as China imposes restrictions to contain an outbreak of the Delta variant, which is dragging down activity, especially in services such as tourism, retail and travel. restaurants.

Further reduction in real estate speculation, rising commodity prices, tightening pollution controls and severe flooding in parts of the country are also weighing on growth.

Insiders and political analysts told Reuters last week that China would support the economy with faster spending on infrastructure projects while the central bank would support activity with modest easing measures. Most analysts believe that key rate cuts this year are still unlikely, although some have recently started to predict them.

The central bank said on Monday it would keep its monetary policy flexible and appropriate to maintain stability as the pandemic persists and the national economic recovery is uneven. The PBOC cited a rebound in COVID-19 cases around the world and the risk of expected policy changes in developed countries that could affect cross-border capital flows.

The Politburo, a supreme decision-making body of the ruling Communist Party, pledged in July to maintain an accommodating stance.

Broad money M2 increased 8.3% year-over-year, central bank data showed, below Reuters poll forecast of 8.7% and pace of 8.6 % observed in June.

Outstanding yuan loans increased 12.3% in July from a year earlier, in line with expectations and unchanged from June.

Growth in total social finance outstanding (TSF), a general measure of credit and liquidity in the economy, slowed to 10.7% in July – the lowest figure since February 2020 – compared to a year earlier and at 11% in June.

Merchants Securities analyst Luo Yunfeng expects TSF growth to bottom out in August as central bank is expected to pump more liquidity, which could help government bond issuance local and stimulate construction.

“One or two RRR cuts the rest of the year are possible, but the chances of reducing the prime lending rate (LPR) should be low,” Luo said.

TSF includes forms of off-balance sheet financing that exist outside the conventional bank lending system, such as initial public offerings, trust company loans, and bond sales.

In July, the TSF fell to 1.06 trillion yuan from 3.67 trillion yuan in June. Analysts polled by Reuters had expected a July TSF of 1.70 trillion yuan.

“One of the main reasons for the failure (of the forecasts) is still lackluster government funding,” Nomura analysts said. Net funding of government bonds fell to 182 billion yuan in July from 751 billion yuan in June, they noted.

(Reporting by Judy Hua and Kevin Yao; Editing by Kim Coghill)


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Senate Bill Offers Interest-Free Federal Student Loans: What You Need To Know https://hiocpely.com/senate-bill-offers-interest-free-federal-student-loans-what-you-need-to-know/ https://hiocpely.com/senate-bill-offers-interest-free-federal-student-loans-what-you-need-to-know/#respond Wed, 11 Aug 2021 21:15:51 +0000 https://hiocpely.com/senate-bill-offers-interest-free-federal-student-loans-what-you-need-to-know/ Federal student loans without interest are fast becoming an alternative to forgiveness of student loans. Read on to learn more about the Loans Act and what it would mean for your federal student loan repayment. (iStock) As lawmakers debate how best to handle the student loan debt crisis, Senator Marco Rubio, R-FL, has reintroduced a […]]]>

Federal student loans without interest are fast becoming an alternative to forgiveness of student loans. Read on to learn more about the Loans Act and what it would mean for your federal student loan repayment. (iStock)

As lawmakers debate how best to handle the student loan debt crisis, Senator Marco Rubio, R-FL, has reintroduced a bill that would change the way students pay federal direct student loans.

Under the Opportunities for Americans Now Act (LOAN), federal loan borrowers would pay one-time financing fees instead of interest. But depending on the type of loan, the fees can be up to 35% of the principal amount:

  • Federal direct loans: 20%
  • Graduate student loans: 35%
  • Parent PLUS Loans: 35%

Read on for a comparison of the costs of the interest-free student loans on offer versus current federal interest-based loans, as well as to learn more about your alternative college funding options, including private student loans.

If you decide to supplement your graduate costs with private student loans, you can compare the interest rates of several lenders on Credible without affecting your credit score.

BIDEN ADMINISTRATION PROBLEMS “FINAL EXTENSION” OF STUDENT LOAN PAYMENT BREAK: IS CANCELLATION NEXT?

One-off finance costs vs. interest: what’s the best deal?

The cost of one-time charges on federal student loans, as per the Loans Act, ends up being pretty much what current borrowers might pay in interest. The financing charges proposed by the bill may seem high at up to 35%, but interest charges can add up quickly, especially for federal student loan borrowers who do not stick to their repayment plans.

“My bill would reform our federal student loan system so that borrowers do not end up with debts they can never pay off,” Senator Rubio said in a declaration of August 4.

The advantage of an interest-free loan is that the amount paid by borrowers would be capped, while interest can become problematic for borrowers who are in default or withholding for long periods of time.

Suppose a borrower takes out $ 40,000 in federal direct loans at the current interest rate of 3.73%, according to the Ministry of Education. If they were to repay their student loans over a 10-year period, their student loan payments would average $ 400 per month and they would pay $ 7,984 in interest.

But if the same borrower took 15 years to fully repay their loans and had accrued interest while their loans were forborne, they could pay more than $ 12,000 in interest over the life of the loan. You can use Credible’s student loan calculator to see how much interest you would pay over time.

98% OF REJECTS FOR WAIVER OF PUBLIC SERVICE LOAN REFUSED

Under the Loans Act, the 20% one-time fee on a $ 40,000 federal undergraduate loan would equal $ 8,000. But the fees could potentially be discounted based on the borrower’s annual income:

  • Less than $ 45,000: up to 15 percentage points
  • From $ 45,000 to $ 95,000: up to 10 percentage points
  • Over $ 95,000: up to 5 percentage points

Borrowers would automatically be enrolled in an Income-Based Repayment Plan (IBR) and those who earn 150% of the federal poverty line (FPL) or less would not have to make loan repayments as long as their income remained at that level, according to the bill.

To reduce financing costs, borrowers would have the option of paying extra for their loan, in the same way that a borrower might consider paying off their loans earlier to reduce interest charges under the current loan system. financing of student loans.

For graduate student loans and parent PLUS loans, borrowers would pay a financing fee of up to 35%. This is quite a big difference from undergraduate loans, but consider that the current student loan interest rates for these types are also much higher at 5.28% and 6.28%, respectively.

In contrast, interest rates on private student loans can be much lower, especially compared to PLUS loans. You can browse the interest rates for private student loans from real lenders in the Credible table below to see how different rates can impact the cost of borrowing.

WHY YOU SHOULD CONTINUE TO PAY YOUR FEDERAL STUDENT LOANS DESPITE COVID-19 EMERGENCY RELIEF MEASURES

Federal or private student loans to finance your studies

The Loans Act is in the early stages of being introduced to the Senate, and it would still have a long way to go before it is passed and proclaimed into law. In fact, this is the second time the bill has been presented to Congress – it was the first time brought before the Senate in May 2019.

Borrowers who are looking for ways to pay for their education now would not have to worry about the loan law. Instead, they should consider the choices available to them for the 2021-22 school year: federal and private student loans.

Federal student loans come with protections and benefits that make them a good first choice when students are looking for ways to finance their college education. It is a good idea to start by filling out the Free Application for Federal Student Aid (FAFSA) to see what type of grants and loans you are eligible for.

BIDEN LAUNCHES AN INVESTIGATION TO REPAIR THE FAILURE OF THE PSLF PROGRAM

Private student loans can be a useful tool when looking for ways to pay for education expenses when federal loans do not cover the full cost of a college education. Private loans do not come with the same federal protections such as deferral, forbearance, and income-based reimbursement (IDR). However, private student loans can come with more competitive interest rates, which can make them an affordable borrowing option.

The interest rates for private student loans vary depending on the amount and duration of the loan, as well as your credit score. So, if you are considering borrowing for private student loans, be sure to seek the lowest possible interest rate for your situation.

Interest rates on private loans are holding near record lows, making it a good time to borrow private loans. You can compare the rates of several private lenders at once by filling out just one form on Credible.

ANOTHER STUDENT LOANS DEPARTMENT TERMINATES FEDERAL CONTRACTS – ARE YOU IMPACT?

Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at moneyexpert@credible.com and your question could be answered by Credible in our Money Expert column.


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Senate Bill Offers Interest-Free Federal Student Loans: What You Need To Know https://hiocpely.com/senate-bill-offers-interest-free-federal-student-loans-what-you-need-to-know-2/ https://hiocpely.com/senate-bill-offers-interest-free-federal-student-loans-what-you-need-to-know-2/#respond Wed, 11 Aug 2021 21:15:51 +0000 https://hiocpely.com/senate-bill-offers-interest-free-federal-student-loans-what-you-need-to-know-2/ Federal student loans without interest are fast becoming an alternative to forgiveness of student loans. Read on to learn more about the Loans Act and what it would mean for your federal student loan repayment. (iStock) As lawmakers debate how best to handle the student loan debt crisis, Senator Marco Rubio, R-FL, has reintroduced a […]]]>

Federal student loans without interest are fast becoming an alternative to forgiveness of student loans. Read on to learn more about the Loans Act and what it would mean for your federal student loan repayment. (iStock)

As lawmakers debate how best to handle the student loan debt crisis, Senator Marco Rubio, R-FL, has reintroduced a bill that would change the way students pay federal direct student loans.

Under the Opportunities for Americans Now Act (LOAN), federal loan borrowers would pay one-time financing fees instead of interest. But depending on the type of loan, the fees can be up to 35% of the principal amount:

  • Federal direct loans: 20%
  • Graduate student loans: 35%
  • Parent PLUS Loans: 35%

Read on for a comparison of the costs of the interest-free student loans on offer versus current federal interest-based loans, as well as to learn more about your alternative college funding options, including private student loans.

If you decide to supplement your graduate costs with private student loans, you can compare the interest rates of several lenders on Credible without affecting your credit score.

BIDEN ADMINISTRATION PROBLEMS “FINAL EXTENSION” OF STUDENT LOAN PAYMENT BREAK: IS CANCELLATION NEXT?

One-off finance costs vs. interest: what’s the best deal?

The cost of one-time charges on federal student loans, as per the Loans Act, ends up being pretty much what current borrowers might pay in interest. The financing charges proposed by the bill may seem high at up to 35%, but interest charges can add up quickly, especially for federal student loan borrowers who do not stick to their repayment plans.

“My bill would reform our federal student loan system so that borrowers do not end up with debts they can never pay off,” Senator Rubio said in a declaration of August 4.

The advantage of an interest-free loan is that the amount paid by borrowers would be capped, while interest can become problematic for borrowers who are in default or withholding for long periods of time.

Suppose a borrower takes out $ 40,000 in federal direct loans at the current interest rate of 3.73%, according to the Ministry of Education. If they were to repay their student loans over a 10-year period, their student loan payments would average $ 400 per month and they would pay $ 7,984 in interest.

But if the same borrower took 15 years to fully repay their loans and had accrued interest while their loans were forborne, they could pay more than $ 12,000 in interest over the life of the loan. You can use Credible’s student loan calculator to see how much interest you would pay over time.

98% OF REJECTS FOR WAIVER OF PUBLIC SERVICE LOAN REFUSED

Under the Loans Act, the 20% one-time fee on a $ 40,000 federal undergraduate loan would equal $ 8,000. But the fees could potentially be discounted based on the borrower’s annual income:

  • Less than $ 45,000: up to 15 percentage points
  • From $ 45,000 to $ 95,000: up to 10 percentage points
  • Over $ 95,000: up to 5 percentage points

Borrowers would automatically be enrolled in an Income-Based Repayment Plan (IBR) and those who earn 150% of the federal poverty line (FPL) or less would not have to make loan repayments as long as their income remained at that level, according to the bill.

To reduce financing costs, borrowers would have the option of paying extra for their loan, in the same way that a borrower might consider paying off their loans earlier to reduce interest charges under the current loan system. financing of student loans.

For graduate student loans and parent PLUS loans, borrowers would pay a financing fee of up to 35%. This is quite a big difference from undergraduate loans, but consider that the current student loan interest rates for these types are also much higher at 5.28% and 6.28%, respectively.

In contrast, interest rates on private student loans can be much lower, especially compared to PLUS loans. You can browse the interest rates for private student loans from real lenders in the Credible table below to see how different rates can impact the cost of borrowing.

WHY YOU SHOULD CONTINUE TO PAY YOUR FEDERAL STUDENT LOANS DESPITE COVID-19 EMERGENCY RELIEF MEASURES

Federal or private student loans to finance your studies

The Loans Act is in the early stages of being introduced to the Senate, and it would still have a long way to go before it is passed and proclaimed into law. In fact, this is the second time the bill has been presented to Congress – it was the first time brought before the Senate in May 2019.

Borrowers who are looking for ways to pay for their education now would not have to worry about the loan law. Instead, they should consider the choices available to them for the 2021-22 school year: federal and private student loans.

Federal student loans come with protections and benefits that make them a good first choice when students are looking for ways to finance their college education. It is a good idea to start by filling out the Free Application for Federal Student Aid (FAFSA) to see what type of grants and loans you are eligible for.

BIDEN LAUNCHES AN INVESTIGATION TO REPAIR THE FAILURE OF THE PSLF PROGRAM

Private student loans can be a useful tool when looking for ways to pay for education expenses when federal loans do not cover the full cost of a college education. Private loans do not come with the same federal protections such as deferral, forbearance, and income-based reimbursement (IDR). However, private student loans can come with more competitive interest rates, which can make them an affordable borrowing option.

The interest rates for private student loans vary depending on the amount and duration of the loan, as well as your credit score. So, if you are considering borrowing for private student loans, be sure to seek the lowest possible interest rate for your situation.

Interest rates on private loans are holding near record lows, making it a good time to borrow private loans. You can compare the rates of several private lenders at once by filling out just one form on Credible.

ANOTHER STUDENT LOANS DEPARTMENT TERMINATES FEDERAL CONTRACTS – ARE YOU IMPACT?

Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at moneyexpert@credible.com and your question could be answered by Credible in our Money Expert column.


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BNM standardizes the reference rate used in variable rate loans https://hiocpely.com/bnm-standardizes-the-reference-rate-used-in-variable-rate-loans/ https://hiocpely.com/bnm-standardizes-the-reference-rate-used-in-variable-rate-loans/#respond Wed, 11 Aug 2021 20:48:45 +0000 https://hiocpely.com/bnm-standardizes-the-reference-rate-used-in-variable-rate-loans/ The “standardized base rate” will replace the “base rate” as the benchmark rate for new variable rate retail loans effective August 1, 2022. BNM (Bank Negara Malaysia) has published a revised benchmark rate framework, under which the standard base rate will replace the base rate as the benchmark rate for new variable rate retail loans. […]]]>

The “standardized base rate” will replace the “base rate” as the benchmark rate for new variable rate retail loans effective August 1, 2022.

BNM (Bank Negara Malaysia) has published a revised benchmark rate framework, under which the standard base rate will replace the base rate as the benchmark rate for new variable rate retail loans.

The current benchmark rate framework was introduced in 2015, establishing the prime rate as the benchmark rate for variable rate retail loans in Malaysia.

Under the current framework, financial institutions use different methods to set their respective base rates, which has made it more difficult for consumers to compare the retail loan products offered and to understand the reasons for the changes in their loan repayments. , BNM said.

“In addition, the different [Base Rate] methodologies between financial institutions have resulted in a more unequal transmission of monetary policy.

As part of the revised benchmark rate, the standardized base rate will be used as the common benchmark rate for all financial institutions for new variable rate retail loans. The standardized base rate will be linked only to the overnight policy rate (OPR), which is determined by the BNM’s monetary policy committee.

“The OPR as a standardized base rate improves comparability and is more transparent for consumers,” said the BNM, adding that the change would also facilitate more efficient transmission of monetary policy.

Other elements of loan pricing, such as the borrower’s credit risk, liquidity risk premium, operating costs, profit margin and other costs, will continue to be reflected in the deviation above the standardized base rate.

The standardized base rate will take effect as the benchmark rate for the pricing of new variable rate retail loans and the refinancing of existing loans as of August 1, 2022.

The one-year transition period should allow sufficient time for financial institutions to undertake the necessary preparations and system improvements to ensure smooth implementation of the revised framework.

The switch to the standardized base rate will have no impact on the effective lending rates of existing retail loans, which will continue to refer to the base rate and the base lending rate (BLR).

After the effective date, the base rate and BLR will move in tandem with the standardized base rate, so financial institutions should continue to post the base rate and BLR, in addition to the base rate. standardized, across all branches and websites.

More information on the revised benchmark rate framework is available available here.





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MICROCAPITAL BRIEF: Microfinance institutions in Cambodia restructured $ 1.7 billion in loans in early 2021, restructuring requests peaked in Q2 https://hiocpely.com/microcapital-brief-microfinance-institutions-in-cambodia-restructured-1-7-billion-in-loans-in-early-2021-restructuring-requests-peaked-in-q2/ https://hiocpely.com/microcapital-brief-microfinance-institutions-in-cambodia-restructured-1-7-billion-in-loans-in-early-2021-restructuring-requests-peaked-in-q2/#respond Wed, 11 Aug 2021 20:33:27 +0000 https://hiocpely.com/microcapital-brief-microfinance-institutions-in-cambodia-restructured-1-7-billion-in-loans-in-early-2021-restructuring-requests-peaked-in-q2/ Kaing Tonnggy, communications director of the Cambodian Microfinance Association (CMA), which has 114 members, reportedly said CMA members restructured around $ 1.7 billion in loans in the first six months of 2021 Beginning of 2021, approximately 1,000 loan restructuring requests were filed every week. However, with the start of the third wave of COVID-19 infections […]]]>

Kaing Tonnggy, communications director of the Cambodian Microfinance Association (CMA), which has 114 members, reportedly said CMA members restructured around $ 1.7 billion in loans in the first six months of 2021 Beginning of 2021, approximately 1,000 loan restructuring requests were filed every week. However, with the start of the third wave of COVID-19 infections in Cambodia, that number rose to 20,000 requests per week in April and May before falling back to around 2,000 per week in July.

The National Bank of Cambodia (NBC), the country’s central bank, has reportedly said that financial institutions of all types have restructured loans worth KHR 22,200 billion ($ 5.5 billion) for around 370,000. borrowers in the country from January 2021 to June 2021. This follows the restructuring of $ 4.2 billion in loans in 2020, in accordance with a directive issued by NBC during the early stages of the COVID-19 pandemic. The restructuring included extensions of credit periods, lower monthly payments and “in extreme cases” full suspensions of repayments for up to 6 months. During this process, NBC has prioritized the transportation, clothing, construction and tourism sectors as they have been more affected by the pandemic than average.

CMA is an NGO that was established in 2004. The organization helps its members access equity and loans, implement the latest technology, and resolve conflicts with other MFIs.

Created in 1954, the BNC has the following responsibilities: formulating monetary and exchange rate policies, regulating financial institutions and issuing the national currency – the riel.

By Divya Deshmukh, Research Associate

Additional sources and resources

Phnom Penh Post article on loan restructuring, July 2021
https://www.phnompenhpost.com/business/nbc-financial-institutions-h1-restructure-55-billion-loans

Phnom Penh Post article on loan restructuring, March 2020
https://www.phnompenhpost.com/business/nbcs-directive-restructure-credit-targeting-four-sectors

CMA Home Page
https://cma-network.org/

NBC Home Page
https://www.nbc.org.kh/

Did you know that MicroCapital publishes the MicroCapital Monitor journal every month? To learn more, visit https://www.microcapital.org/products-page/.

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Fixed rate HELOCs: a cross between HELOCs and home equity loans https://hiocpely.com/fixed-rate-helocs-a-cross-between-helocs-and-home-equity-loans/ https://hiocpely.com/fixed-rate-helocs-a-cross-between-helocs-and-home-equity-loans/#respond Wed, 11 Aug 2021 18:54:41 +0000 https://hiocpely.com/fixed-rate-helocs-a-cross-between-helocs-and-home-equity-loans/ Our goal is to give you the tools and the confidence you need to improve your finances. While we do receive compensation from our partner lenders, whom we will always identify, all opinions are ours. Credible Operations, Inc. NMLS # 1681276, is referred to herein as “Credible”. Many people borrow against their home equity to […]]]>

Our goal is to give you the tools and the confidence you need to improve your finances. While we do receive compensation from our partner lenders, whom we will always identify, all opinions are ours. Credible Operations, Inc. NMLS # 1681276, is referred to herein as “Credible”.

Many people borrow against their home equity to make home improvements, pay for medical bills, or cover school fees. They often do this by taking out a second mortgage – a home equity loan or home equity line of credit (HELOC). These loans allow you to borrow large sums at low rates, provided you are ready to give your home as collateral.

Traditionally, choosing between these loans has meant choosing between a fixed interest rate with a home equity loan or a variable interest rate with a HELOC. But with a fixed rate HELOC, you get the best of both worlds.

Here’s what you need to know about fixed rate HELOCs:

What is a fixed rate HELOC?

A fixed rate HELOC is just that: a home equity line of credit with an interest rate that doesn’t change.

Normally, HELOCs carry an adjustable interest rate. However, adjustable interest rates have drawbacks that many borrowers find unattractive, one of the main ones being fluctuating monthly payments.

People can be reluctant to take out a loan when they don’t know how much it will cost them in the long run or what they will owe from month to month. And lenders can struggle to collect what borrowers owe when a rate hike makes loan payments unaffordable.

Point: Fixed rate HELOCs are not offered by all lenders. Ask your lender if they offer this option before purchasing an adjustable rate HELOC.

Fixed rate HELOCs are a cross between HELOCs and home equity loans

HELOCs and home equity loans are both considered second mortgages, but there are some distinct differences between the two:

  • Home equity loan: A home equity loan allows you to borrow a lump sum against the equity in your home and pay it back over a number of years at a fixed interest rate. For example, you could borrow $ 30,000 at 5% for 30 years, like a first mortgage. Your monthly payment will never change.
  • HELOC: A HELOC works like a credit card. You can borrow as much or as little of your line of credit as you want during the first five to 10 years of the loan (also called a “drawdown period”). It is followed by a repayment period of 10 to 20 years.

The initial interest rate on a HELOC is usually lower than the rate on a home equity loan, but the rate can adjust as often as once a month as broad market rates change.

This is where fixed rate HELOCs come in handy. A fixed rate HELOC is like a cross between a home equity loan and a regular HELOC. It gives you the ability to draw on a line of credit at your convenience as well as the ability to lock in your rate on the amounts you borrow, reducing the uncertainty of what you will pay per month.

You won’t find a fixed rate HELOC at Credible, but for another way to leverage your home equity, consider refinancing with cash. Credible can help you check the refinancing rates of all of our partner lenders. Checking rates with us is safe and easy, and it won’t affect your credit score.

Get the money you need and the rate you deserve

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Advantages and Disadvantages of a Fixed Rate HELOC

If you are considering a fixed rate HELOC, you should understand the pros and cons before you apply.

Benefits

The inconvenients

  • Don’t miss the rate cuts: If you lock in your rate and then the rates drop, you won’t automatically benefit from the lower rate like you would with a variable interest rate.
  • More decisions to make: A fixed rate HELOC is basically still a HELOC. By default, you will benefit from a variable interest rate. You have to choose how much of your credit to lock your rate on and when to block it.
  • Limits of rate foreclosure: Your lender may limit you to locking in your rate on only a portion of the money you borrow. They may require you to borrow a minimum amount to lock in your rate, and you may pay additional fees.

Alternatives to a fixed rate HELOC

A fixed rate HELOC is just one of many options for borrowing against the equity in your home. Consider these three alternatives to fixed rate HELOCs to decide what is best for your situation.

HELOC variable rate

If you don’t intend to actually use your HELOC but want to know that the cash is available to borrow in an emergency, then it makes sense to stick with a traditional variable rate HELOC.

That way, you won’t be paying interest on money you might never use, like you would with a home equity loan. And you may be able to take advantage of a lower interest rate later.

Point: Be aware that lenders can freeze or reduce your line of credit if your credit rating drops, your home’s value drops, or economic conditions deteriorate.

Home equity loan

A home equity loan is very similar to a fixed rate mortgage. If you know you need $ 100,000 to build an addition to your home, replace the roof, and paint the exterior – and paying off the money over 20 years will be affordable – then a home equity loan may be a good idea. choice.

However, if the rates go down, you will have to refinance your home equity loan to get a lower rate.

To verify: Second mortgage vs home equity loan: understanding the difference

Refinancing of collection

Maybe your first mortgage rate is 5% and you could get a 3.5% rate by refinancing, but you also want a lump sum to pay off your high interest debt.

Refinancing with cash might be your most profitable option in this case. However, the closing costs can be considerably higher compared to a second mortgage.

Keep reading: Home equity loan vs personal loan: which one is right for you?

About the Author

Amy Fontinelle

Amy Fontinelle is a mortgage and credit card authority and contributor to Credible. His work has been published in Forbes Advisor, The Motley Fool, Investopedia, International Business Times, MassMutual, etc.

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