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Apache is functioning normally

By the end of 2022, 27 million Americans had an outstanding personal loan balance with the average amount owed being $11,116. The interest rates of these loans are also the highest they’ve been since 2011 at 11.23 percent.

Sources: TransUnion and the St. Louis Federal Reserve

As of the second quarter in 2022, Americans owed over $192 billion in personal loans, according to TransUnion®.  This was a 31% increase from 2021 and is thought to be due to the financial hardships Americans experienced during the COVID pandemic that overwhelmed the nation in 2020.

If you’re one of the many Americans who took out a personal loan in early 2022, the good news is that interest rates were very low, according to the St. Louis Federal Reserve. Since then, rates have reached new highs, so many Americans are struggling to pay back these loans.

Understanding the current trends in personal loans can help you see where you stand financially. We’ve gathered 10 personal loan statistics that include the most common reasons people take out personal loans, delinquency rates and which states have the highest personal loan debt to help you make better financial decisions if you’re accumulating too much debt.

In This Piece

Must-know Personal Loan Statistic Findings

Millions of Americans are taking out personal loans, and the following are some of the most interesting facts on the topic.

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  • 27 million Americans have personal loan debt (TransUnion)
  • At the end of 2022, the average new loan amount was $8,018 (TransUnion)
  • The average amount owed in personal loan debt was $11,116 at the end of 2022 (TransUnion)
  • In November of 2022, personal loan interest rates were the highest they’ve been since May of 2011 (St. Louis Federal Reserve Bank)
  • New Jersey has the highest average new personal loan account balance at $13,494 (TransUnion)

Average Personal Loan Debt in America

According to TransUnion, Americans owed roughly $9,896 on average as of the first quarter in 2022, the highest it’s been in recent years. Americans took out loans at an average of $6,656 per loan, which was over $1,000 more than in the previous quarter of 2022.

The amount owed per borrower dropped significantly between Q2 and Q3 in 2022, but by the end of the fourth quarter, the average amount owed increased by over 100 percent with the new loan amount dropping to $8,018.

The increase in personal loan debt may have been due to the inflation the country experienced in 2022. TransUnion also reports that there were more loans approved to “super prime borrowers,” or those with credit scores over 720, stating, “On a percentage basis, personal loan originations for subprime and near-prime borrowers increased in the single digits [year over year] whereas super prime borrowers experienced a 33% rise in the third quarter.”

How Many Americans Have Personal Loans?

The amount of Americans taking out personal loans increased 12 percent from 23.9 million in the first quarter of 2022 to 27 million by the fourth quarter.

Prior to the beginning of the COVID-19 pandemic, the total amount of personal loan borrowers was 23.3 million at the end of 2019 and dropped to 21.2 million by the end of 2020. The number of borrowers then grew back to 22.8 million in the following fourth quarter of 2021 and continued to grow as the pandemic regressed.

Quarter

Q4 2022 Average new account balance

Q4 2019

23.3 million

Q4 2020

21.2 million

Q4 2021

22.8 million

Q4 2022

27 million

The Most Common Reasons to Take Out a Personal Loan

LendingTree conducted a survey of their users in 2022 and found that the most common reason consumers took out personal loans was to pay down other debts. Over 58 percent of borrowers used these loans to pay down debt, and the other main reasons included credit card refinancing, home improvements and other major purchases.

Rank

Reason

Percentage of respondents

1

Debt consolidation

41%

2

Other

17.3%

3

Credit card refinance

17.3%

4

Home improvements

6.2%

5

Major purchase

4.1%

6

Medical expenses

3.0%

7

Moving/relocation

2.9%

8

Everyday bills

2.9%

9

Car financing

1.7%

10

Car repair

1.1%

11

Business

0.9%

12

Vacation

0.5%

13

Homebuying

0.4%

14

Wedding expenses

0.4%

Average Personal Loan Interest Rates

During the second quarter of 2022, the Federal Reserve Bank of St. Louis reported that interest rates reached an all-time low of 8.73 percent. By the end of the year, these rates were the highest they’ve been since 2011 at over 11.2 percent.

Personal Loan Debt Compared to Other Debts

Based on TransUnion data, personal loans account for less than four percent of the total number of accounts when compared to other types of loans, such as credit cards, home and auto loans.

Account type

Number of accounts

Percentage of accounts

Credit card

518.4 million

76.3%

Auto loan

81.2 million

11.9%

Mortgage loan

52.6 million

7.83%

Personal loan

27 million

3.97%

It’s also important to note that not all credit card accounts carry a balance.

Personal Loan Delinquency Rates

Delinquent accounts are accounts 60 days or more past due and can hurt your credit score. The Q4 TransUnion report shows that the delinquency rate dropped year over year between 2019 and 2020, but was up 53 percent as of 2022, with an overall delinquency rate of 4.14 percent.

Quarter

Delinquency rate

Q4 2019

3.48%

Q4 2020

2.7%

Q4 2021

3%

Q4 2022

4.14%

TransUnion’s 2022 Credit Snapshot shows that in the last month of the report, those with the lowest credit scores have the highest delinquency rate of 23.9 percent, while super prime borrowers are only at 12 percent.

Credit score range

Percentage of delinquent borrowers

Subprime (300 to 600)

23.9%

Near prime (601 to 660)

23.7%

Prime (661 to 720)

23.3%

Prime plus (721 to 780)

17%

Super prime (781 to 850)

12%

Personal Loan Statistics by State

TransUnion’s 2022 Credit Snapshot reports that New Jersey has the highest average new account balance at over $13,000, and Oklahoma has the lowest at $3,170. Although Oklahoma has the lowest new account balance, they have the highest delinquency rate at 7.73 percent.

State

Q4 2022 Average new account balance

Q4 2022 Delinquency rate

AK

$10,296

2.9%

AL

$4,362

6.59%

AR

$7,089

5.18%

AZ

$9,343

3.78%

CA

$10,454

3.47%

CO

$12,322

2.03%

CT

$11,712

2.57%

D.C.

$9,016

6.55%

DE

$9,146

4.04%

FL

$8,379

3.94%

GA

$8,621

5.18%

HI

$12,224

2.28%

IA

$7,443

2.94%

ID

$9,072

4.38%

IL

$9,236

3.46%

IN

$7,439

2.97%

KS

$8,349

3.05%

KY

$6,875

3.36%

LA

$6,797

5.07%

MA

$12,518

2.24%

MD

$10,956

2.77%

ME

$6,651

1.67%

MI

$7,052

3.21%

MN

$10,692

3.73%

MO

$6,522

6.69%

MS

$5,179

4.96%

MT

$9,326

2.53%

NC

$10,035

3.03%

ND

$8,051

1.89%

NE

$7,755

3.65%

NH

$11,719

2.31%

NJ

$13,494

3.49%

NM

$5,418

6.31%

NV

$8,839

3.74%

NY

$11,843

2.77%

OH

$7,595

3.75%

OK

$3,170

7.73%

OR

$10,523

2.93%

PA

$10,418

3.06%

RI

$8,744

2.14%

SC

$5,924

4.89%

SD

$9,945

2.06%

TN

$5,355

5.38%

TX

$4,952

6.33%

UT

$7,966

4.23%

VA

$9,875

3.37%

VT

$6,180

0.82%

WA

$9,570

2.94%

WI

$6,489

3.95%

WV

$10,864

1.96%

WY

$7,698

2.66%

Personal Loan Statistics by Type of Lender

More and more Americans are turning to financial technology companies, also known as FinTech, for their personal loans. These are online banking services that are done via a company’s website or mobile app, and 32.9 percent of all personal loans are done through these types of companies.

Lender type

Distribution of total balances

FinTech

32.9%

Banks

20.5%

Credit unions

19.7%

Other finance companies

26.9%

Can Personal Loan Debt Affect Your Credit Score?

If you’re one of the 27 million Americans with a personal loan, you don’t have to let your debt harm your credit score. As you’ve learned from these personal loan statistics, many Americans have turned to personal loans to pay off other debts, but many people are delinquent with their payments, which can hurt their scores.

Credit.com provides a variety of credit tools and tips to help you work to repair and improve your credit. You can learn more about our services, like ExtraCredit, or click here to get your free credit report card.

Source: credit.com

Apache is functioning normally

Apache is functioning normally

Although the number of identity theft cases fell from 16.7 million in 2017 to 14.4 million in 2018, the number of people held financially liable in these cases and the amount of their losses increased, according to the Insurance Information Institute. These identity theft statistics show that identity theft is still a major concern and consumers need to be on high alert to avoid becoming the next victims. 

Today, criminals don’t need physical access to your financial documents to wreak havoc on your life. They can simply find your personal information online and use it to steal your identity. Fortunately, in the age of cybersecurity, you can fight back. 

How Our Daily Activities Are Digitized and Prone to Data Breaches 

Thanks to the Internet of Things, easily accessible Wi-Fi, and other technological advances, we’re almost always connected to others. You can chat with family across the country through video chat, watch a video online for a recipe you’re preparing, and add items to your grocery list all at the same time. While this technology can make our lives easier, in many ways, it can also make us more vulnerable to attack. 

Every digital activity leaves a footprint and a possible access point for criminals. Everywhere you go, there’s data stored about you. The International Data Corporation prepared the 2020 Thales Data Threat Report, which revealed that nearly half of U.S. companies have experienced some type of data breach at some point. Furthermore, researchers estimated that at least 26% of U.S. companies have experienced a data breach within the last year. 

If that’s not concerning enough, a University of Maryland study found that a hacking attempt occurs every 39 seconds. If you’re not careful, hackers can infiltrate your digital bubble and steal your sensitive information.  

  • I just watched a documentary on the dark web, and I will never feel safe using my credit card again!

  • Luckily I don’t have to worry about that. I have ExtraCredit, so I get $1,000,000 ID protection and dark web scans.

  • I need that peace of mind in my life. What else do you get with ExtraCredit?

  • It’s basically everything my credit needs. I get 28 FICO® scores, rent and utility reporting, cash rewards and even a discount to one of the leaders in credit repair.

  • It’s settled; I’m getting ExtraCredit tonight. Totally unrelated, but any suggestions for my new fear of sharks? I watched that documentary too.

  • …we live in Oklahoma.

Common Types of Identity Theft and Their Consequences 

According to the 2020 Data Breach Investigations Report (DBIR), some of the most common data breach attempts include:

  • Credential stuffing – Credential stuffing occurs when many username and password combinations are inserted to try to gain access to an account. According to the DBIR, an average of 922,331 attempts were made at organizations that experienced this type of attack.
  • Malware – Malware is a type of virus that infiltrates your network, often to steal information, such as your personal data and identification. Malware usually relies on exploiting a system’s vulnerabilities. 
  • Ransomware – Ransomware takes a hold of an account and blocks out the authentic user. To regain access, you are instructed to pay a large ransom. 
  • Phishing – Phishing attempts that try to get you to hand over your credentials by pretending to be your bank or other trusted sender are increasingly using social engineering to trick you, according to the DBIR. An example of this type of attack was committed by Chinese hackers who breached an email system of a Mumbai branch to learn the rhythm of the business, identify important members of the business, and learn its vocabulary and customs. The hackers ran off with nearly $19 million.

A newer method to try to steal identities is account takeover fraud in which the criminal gains access to your account and then changes information about it so that you’re not informed of luxury purchases or cash withdrawals.

Identity theft can cause tremendous damage to your credit. It often takes months or longer to learn about the theft and the accounts affected, so by the time you notice, the thief could have been racking up thousands of dollars of debt in your name and not paying on any of it. Additionally, you can face additional legal consequences, such as having your wages garnished or being sued. Once your information is stolen, it can be difficult to stop the damage because your information might be sold on the dark web.

How to Avoid Identity Theft 

It’s more important than ever to be vigilant about protecting your identity online since more people are working from home and logging into public Wi-Fi than ever before. Here are some tips to help you avoid identity theft:

  • Keep an eye on your credit and changes in your score
  • Avoid accessing any financial data from an unsecured network
  • Consider using credit monitoring tools
  • Use strong passwords and don’t repeat passwords across various sites

What to Do If You’re a Victim of Identity Theft

If it’s already too late and you suspect someone has already stolen your identity, it’s time to move on to damage control. You might want to freeze your credit so that no one can apply for new credit in your name. Order a free credit report and carefully review it for any unauthorized accounts or changes. 

Report the theft to law enforcement. You might need to make a police report and provide a copy to your creditors. The FTC’s website has additional resources for identity theft victims.

Source: credit.com

Apache is functioning normally

Apache is functioning normally

A hard credit inquiry is when a credit card issuer or another lender reviews a credit report as part of your credit application. Their request to review your credit will be shown as a hard inquiry on your credit report and will affect your credit score.

Let’s say you’re looking to apply for a new credit card. Whether you want to expand your available credit, create a credit mix, or simply apply for a credit card online with your desired rewards, you’ll often encounter a hard inquiry.

A hard credit inquiry—or a hard credit check—is a natural part of the credit card application process. It happens when the lender or bank associated with your credit card company checks your credit report to see if you are eligible for acceptance.

What Are Hard Inquiries?

Hard inquiries—or hard credit checks—occur whenever a lender or bank accesses your credit account. The credit bureaus log the activity, recording the date and the name of the company or entity that accesses it.

Hard inquiries refer to when a lender accesses your credit report to evaluate your merit as a borrower. In other words, hard inquiries happen when lenders look at the information in your report to decide whether to approve or deny your credit card application.

How Do Hard Inquiries Impact Your Credit?

Hard inquiries aren’t the most impactful thing that affects your credit score, but they are one of the five major factors that make up your credit score. That’s because having many hard inquiries on your account looks like you’re chasing credit. Lenders don’t want to see that behavior from potential borrowers as it reduces their credibility.

Here are the five factors that impact your credit score:

  • Payment history accounts for around 35% of your credit score. This factor is whether you pay your bills on time and as agreed upon.
  • Credit utilization accounts for around 30%. This reports how much of your available revolving credit limit you’re actively using.
  • Credit age accounts for around 15% of your score. This is how long you’ve had credit and the age of your oldest accounts.
  • Credit mix makes up around 10% of your credit score. Creditors want to see that you can manage different types of accounts, such as revolving and installment accounts.
  • Hard inquiries affect around 10% of your score. This is the number of recent hard inquiries on your report.

Hard Inquiries vs. Soft Inquiries

Not all inquiries that show up on your credit report impact your score. Only those that evaluate your financial creditworthiness do—these are hard credit checks.

Soft inquiries, which are purely informational, have little to do with credit and don’t have the same impact. They’re also not usually visible to lenders or banks—only you.

Hard inquiries

Soft Inquiries

Affect your credit score

Don’t affect your credit score

Count against your credit score for 1 year

Appear only to you on your credit report

Occur during the approval process

Occur during pre-approval processes

Happen when you’re actively searching for credit

Happen during noncredit screenings and background checks

Require your authorization

Do not require authorization

Examples of Hard Inquiries

Hard inquiries happen when you apply for a line of credit that will impact your financial health. Hard credit checks will affect your credit score and stay on your credit report for a year or two, so having too many of them in a short period may hurt you in the long run.

Credit card companies, car dealerships, banks, lenders, and others may perform a hard credit check only after your written approval—you will always know when a hard credit check will happen.

Examples of things that will require hard inquiries include:

Examples of Soft Inquiries

Soft inquiries typically happen for nonfinancial inquiries and don’t affect your credit score. Typically, only you can see the soft credit checks on your report.  Soft credit checks also don’t need your permission to happen. Though employers will request permission for background checks, creditors can run a soft credit pull to prequalify you for marketing purposes. Note that you do have the opportunity to opt out of those soft checks, though.

Soft inquiries happen when:

  • Employers run background checks
  • Credit card companies do a pre-approval process
  • Utility companies screen you
  • You check your credit report

Disputing Hard Credit Inquiries

You should always review the hard inquiries on your credit report to ensure that you authorized them. If you see something on your credit report that you didn’t authorize or approve, you can dispute your hard inquiry by following these steps:

  1. Reach out to your current lenders and confirm that they didn’t create a hard credit inquiry for your credit.
  2. Research the creditor that authorized the hard inquiry. Sometimes, they will remove the inquiry from your report.
  3. Open a formal dispute with the credit bureaus. You will normally do this by filing a dispute on an online platform.

You will generally need to wait around 30 days (give or take) before receiving a reply about your hard inquiry dispute. When the credit bureaus reach a conclusion, they will remove the hard inquiry from your credit report.

Frequently Asked Questions

How Long Do Hard Inquiries Last?

According to Experian®, hard inquiries remain on your credit report for 25 months. However, they only tend to impact your credit score in the first 12 months.

How much a hard inquiry affects your credit depends on various factors, including what your credit score was to begin with. Experian notes that a hard inquiry can bring your score down 5-10 points on average. The drop might be even less if you have excellent credit and no other issues.

How Many Hard Credit Inquiries Is Too Many?

There’s no set number of inquiries that are too many. If you suddenly have a lot of inquiries, it can look bad to potential creditors. And if you’re losing up to 10 points for each one, you could drop from excellent or good credit to fair or poor credit with just five or more inquiries.

Spacing out the inquiries and ensuring that your credit report doesn’t take a hit can help minimize these issues. It also gives your score time to recover before another inquiry.

Are Hard Inquiries Bad?

Not necessarily. They’re simply an aspect of how credit reporting works—it’s actually good that this information gets recorded. Knowing who accessed your personal credit information and why can help keep you informed on your credit application history.

That said, hard inquiries aren’t neutral. They can impact your credit, so you want to keep them to a minimal number when possible.

What Triggers a Hard Inquiry?

Any time you apply for credit-related accounts with a lender, you will trigger a hard inquiry that will appear on your credit report. It’s important to remember that you will always authorize hard credit checks, so be mindful of how you space them out and what loans you need at what times.

Minimize Your Hard Inquiries

So, how do you reduce the impact of hard inquiries on your credit score? Nowadays, it can be challenging to go through life without ever applying for credit. But you can follow the steps below to reduce how hard inquiries impact your score:

  • Don’t spread out loan shopping: Credit scoring models know that you’ll want to shop around for the best rates. Because of that, multiple applications for credit during short periods can appear as a single inquiry on your credit report.
  • Don’t apply without confidence: Understand your credit score and what type of credit you are likely to qualify for, and only apply when you need the credit. Otherwise, you’ll rack up hard inquiries for no reason.
  • Manage other aspects of your score responsibly: Make payments on time, keep your credit utilization low, and manage multiple types of accounts well. These all have more impact on your credit score than hard inquiries.
  • Keep tabs on your credit report: The last step in minimizing hard inquiries is tracking your report and score. Check your credit regularly to see where you stand and whether potential mistakes could bring down your score.

You can check your Vantage 3.0 score with Credit.com’s free Credit Report Card or get many versions of your FICO® Score with ExtraCredit®. Neither of these options constitutes a hard inquiry, so using them won’t hurt your credit.

Source: credit.com

Apache is functioning normally

Apache is functioning normally

While the good news about housing keeps flooding in, one piece of negative data jumped out at me today.

The latest Zillow Negative Equity Report released today revealed that nearly one out of every five (18.6%) Las Vegas homeowners with a mortgage owed double what their home was worth as of the end of the fourth quarter.

In other words, if their home’s present value is $100,000, their mortgage balance is somewhere around $200,000.

For most people, this would signal being past the point of no return. After all, most of us have enough trouble paying off a mortgage when we’re above water, so the thought of owing double is daunting, even with a kick-butt mortgage rate.

Of course, if you stick around long enough, home price appreciation should do some of the heavy lifting, but it’s still a big ask for struggling homeowners.

While I cherry-picked a bad piece of data, it should be noted that 26.7% of Vegas homeowners were in this position one year earlier, so it’s not nearly as bad as it was.

And only 8.9% of underwater homeowners are delinquent on their mortgage payments, down from 9.9% a year earlier.

So yes, things are getting better…at the same time, the 200%+ loan-to-value (LTV) ratio bracket was the most prominent in Sin City.

In other words, if you went door to door and asked Vegas homeowners with mortgages what their LTV was, most would say 200%+.

The second largest distribution for Vegas homeowners was the 80-100% LTV tier (15% of borrowers), followed by the 100-120% LTV tier and under 40% tier, both at 13.8%.

3.8% of American Mortgagors Owe More Than Double Home’s Worth

If we expand the data to the whole of the United States, 3.8% of Americans with mortgages owed more than double what their homes were worth at the end of 2012.

That’s pretty scary, though the majority of U.S. homeowners with mortgages (26.6%) have LTV ratios south of 40%.

And 72.5% have a LTV somewhere below 100%, meaning they’re not the proud owners of an underwater mortgage.

If you look at the graphic below, you’ll notice that the LTV distribution is improving in every category, thanks to continued home price appreciation.

The low-LTV brackets are rising, and the high-LTV brackets are declining. All good news…

Overall, Zillow noted that the negative equity rate dropped to 27.5% in the fourth quarter from 28.2% a quarter earlier, and is now well below the 31.1% rate seen at the end of 2011.

As a result, nearly two million homeowners were able to get below the 100% LTV mark in 2012, though 13.8 million remain underwater.

Still, roughly one-third of all homeowners own their homes free and clear because they don’t have a mortgage.

Where’s the Inventory?

Zillow also has a nice little chart detailing how many homeowners will be “freed from negative equity” in 2013.

Using this data, we can guess which metros will see an increase in housing inventory, as that many more borrowers will finally be able to list their homes and move on to greener pastures.

The company expects 72,696 homeowners in Los Angeles to get above water in 2013, making it the leading metro in terms of total numbers.

Nearby Riverside is expected to “free” 62,407 homeowners, which represents a 21.2% decrease in the negative equity rate there, the second largest percentage decrease behind Sacramento (-21.3%).

In hard-hit Vegas, only 8,435 homeowners are expected to get above water this year, which represents just a 4.3% decline in negative equity.

And in Chicago, negative equity is actually forecast to get worse, with 7,019 more homeowners going under in 2013.

But overall, 999,601 homeowners should be “freed” in 2013, thanks in part to Zillow’s 3.3% home appreciation estimate.

This all reminds me of a post I wrote back in 2010, which claimed some real estate markets wouldn’t see a return to peak home prices until 2039.

In other words, while there is plenty of good news, it’s going to take a while to undo this mess.

Read more: How to refinance with negative equity.

Source: thetruthaboutmortgage.com

Apache is functioning normally

Apache is functioning normally

According to a report prepared by the Congressional Research Service (CRS) earlier this month, there would be several immediate impacts following the program’s expiration.

“The authority to provide new flood insurance contracts will expire,” the CRS report said. “Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year.”

The borrowing authority of NFIP from the U.S. Treasury would also be reduced from $30.245 billion to $1 billion. Flood mitigation assistance grants would still be available, but “the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities,” the CRS explained.

There would also be a chilling effect on the mortgage industry, according to experts and lawmakers.

“By law or regulation, federal agencies, federally regulated lending institutions and government-sponsored enterprises must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase,” the CRS report said.

Without NFIP, mortgage activity would be seriously diminished, as Sen. John Kennedy (R-Louisiana) stated.

“If for some reason the flood insurance program expires, existing policies are still in effect until their expiration date, and claims will continue to be paid as long as FEMA has money,” Kennedy said on the Senate floor on September 13. “However, the federal requirement that you have to purchase flood insurance under certain circumstances to get a mortgage would be suspended, which means that many mortgage companies would not loan the money to homeowners.”

In previous instances when NFIP lapsed, mortgage activity was temporarily halted. However, according to the CRS report, Congress eventually moved to reauthorize the program retroactively.

“In past NFIP lapses, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in [a Special Flood Hazard Area (SFHA)] until the NFIP was reauthorized,” the report said. “During the lapse in June 2010, estimates suggest over 1,400 home sale closings were canceled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse.”

The National Association of Realtors (NAR) has prepared an FAQ document to advise members of the potential impacts an NFIP lapse would have on the housing industry. They specify that a currently debated continuing resolution (CR) that would fund the federal government after September 30 includes an NFIP extension. Still, political observers and some in Washington are preparing for government funding to lapse.

The White House on Friday instructed federal agencies to prepare for a shutdown, according to reporting from the Associated Press.

“With the October 1 start of a new fiscal year and no funding in place, the Biden administration’s Office of Management and Budget began to advise federal agencies to review and update their shutdown plans, according to an OMB official,” the AP report said. “The start of this process suggests that federal employees could be informed next week if they’re to be furloughed.”

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

On top of sorting out whether you’re eligible for federal student loans and the difference between subsidized and unsubsidized loans, you may be wondering how student loans may impact your taxes and whether student loans count as income. In a nutshell, the answer is no, student loans are debt, and do not count as income.

Fellowships and other forms of financial grants, however, may be counted as income, depending on how the funds are spent. And loans that are forgiven have counted as income.

Read on for more about the tax implications of student loans, grants, and student loan repayment. Of course, this is just a helpful guide as you begin to explore the basics of student loans and taxes; always seek out a tax professional to help you with your specific situation.

Are Student Loans Taxable?

There are multiple types of student loans — each with their own unique terms. As noted earlier, though, student loans are not taxed as income.

This is true of other types of loans generally as well, like credit card spending, mortgages, and personal loans (unless the loan is forgiven) — basically most credit that needs to be repaid. The IRS considers student loans a form of debt — not income — therefore, it is not taxed.

The only time that student loans (or other types of debt) can be taxed is if they are forgiven during repayment. If you are eligible for a federal student loan forgiveness program and have met the requirements (which vary, and may include stipulations like making eligible payments for 20 to 25 years via an income-driven repayment plan or completing eligible public service work/payment requirements, and others), the remaining balance on your student loans (the amount forgiven) may be taxed as income, depending on the repayment plan. This could amount to a hefty tax bill.

Are Scholarships Taxable?

The high-level answer to this question is: it depends. There are many different forms of scholarships, grants, and fellowships that are awarded to students to cover the costs of studying and research. Some are need-based and some are merit-based. The basic difference between scholarships and loans is that a scholarship is given while a loan is borrowed. You won’t typically have to pay back a scholarship, but you do have to pay back a loan.

Most scholarships are not taxed when you are enrolled in a formal educational institution and the scholarship is directly used to cover the costs of tuition, fees, books, and supplies used for study.

There are some situations in which scholarships can be taxed, however. For instance, a scholarship can be taxed as income if you use it to cover what are considered “incidental” expenses related to your education such as travel, room and board, and supplementary equipment and supplies.

Another type of scholarship that can be taxed is a scholarship that has a service-related requirement to it. This frequently applies to scholarships for graduate students. If you are required to teach, provide research assistance, or perform other services as a condition of your scholarship, it can be taxed as income and you will be required to report the scholarship as part of your gross income.

(For more about which types of scholarships are considered income and what scholarship-related activities are taxable, check out IRS Publication 970 .)
💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

Do Student Loans Come with Any Tax Benefits?

Student loans aren’t usually taxable as income, and in fact, may come with a tax benefit that is meant to make repayment a little easier on borrowers investing in their education.

The Student Loan Interest Deduction allows you to deduct the amount of interest you paid on both federal and private student loans, up to a maximum of $2,500 per year. In order to be eligible to deduct the full amount, your modified adjusted gross income (AGI) must be $70,000 or less (or $145,000 for married couples filing jointly). The amount you’re allowed to deduct is gradually reduced if your modified AGI is more $70,000 but less than $85,000 (or more than $145,000 but less than $175,000 for married couples filing jointly. Income above these thresholds renders you ineligible for the deduction.

As a tax deduction, the amount deducted helps to lower your overall taxable income, potentially resulting in a lower tax bill or higher tax refund. This deduction can also help defray some of your repayment costs.

Are Employer Student Loan Payments Taxable?

An increasingly popular benefit offered in some workplaces is help with education costs and student loan repayment. Employers such as Aetna, Fidelity Investments, Google, and more offer student loan assistance programs to employees.

Currently, employers are allowed to contribute up to $5,250 toward employees’ qualified education costs tax-free. Payments or reimbursements above that amount are considered taxable income for the employee. It’s important to note that this special tax treatment is temporary, however, and expires December 31, 2025. After this date, the full amount of any employer contributions toward education expenses or student loan repayment will be taxed as income.

How Can I Make My Student Loan Repayment Easier?

The cost of a student loan comes in the form of the interest you pay each month on the balance owed. Consider this example: Say you have a $30,000 loan with a 7% interest rate. On the 10-year Standard Repayment Plan, you would pay roughly $11,800 in interest in addition to repaying the $30,000 principal.

So what can make repayment easier, other than the student loan interest deduction? One option is to refinance your student loans with a private lender.

If you already have private and/or federal student loans, you may be able to refinance your student loans at a lower interest rate than you currently are paying. If you are eligible to refinance your student loans, you could shorten your term length, qualify to lower the interest rate on your loans, or possibly lower your monthly payment (by extending your term). But there can be some drawbacks to think about.

For instance, federal student loans come with several benefits and protections such as forbearance, deferment, income-driven repayment plans, and certain forgiveness programs that private loans do not offer. If you think you might need some of these benefits, or if you are eligible for student loan forgiveness, it might not be the right time to refinance.

However, if you have a steady income and good cash flow — along with other aspects of your financial picture that are appealing to a lender — and you are ready to focus on paying down your loans, refinancing might be the right solution for you.

SoFi is a leader in the student loan space, offering refinancing options to help you save on the loans you already have.

The Takeaway

Generally, student loans are not considered income, so they are not taxed. The exception is when some or all of your student loan balance is forgiven. In some cases, the IRS may count the canceled debt as taxable income.

Educational grants and scholarships, on the other hand, may or may not count as income. Typically, they are taxed when they are spent on expenses outside of tuition and fees, such as room and board and travel.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Student Loan Refinancing
If you are a federal student loan borrower you should take time now to prepare for your payments to restart, including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. (You may pay more interest over the life of the loan if you refinance with an extended term.) Please note that once you refinance federal student loans, you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans, such as the SAVE Plan, or extended repayment plans.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Source: sofi.com

Apache is functioning normally

“According to the research report, the global wall art market was valued at USD 54.09 billion in 2022 and is expected to reach USD 88.66 billion by 2032, to grow at a CAGR of 5.1% during the forecast period.”

A recently published report titled Wall Art Market: By Size, Latest Trends, Share, Huge Growth, Segments, Analysis and Forecast, 2032 by Polaris Market Research aims to deliver a widespread synopsis of the Wall Art Market that comprises all the aspects and the necessary details with the help of an in-depth and specific analysis. The report offers a comprehensive analysis of market figures in terms of revenues, segmentation analysis, regional data, and country-wise data. One of the key purposes of this report is to present statistical data, historical information, insightful conclusions, and predictions. The research segments the market on the basis of product type, application, technology, and region.

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How Does The Report Assess And Describe The Competitive Scenario Within The Market, And What Implications Does It Have For Industry Players?

The report investigates the competitive positioning of Wall Art Market key players in terms of their capacities, gross margin, price, product, pricing, financial situation, share, product portfolio, demand, sales, and geographical presence. Some of the tactics used by players in the sector include mergers and acquisitions, alliances and collaborations, and product launches. Leading companies are investing in efficient R&D to create new products and succeed in the market. Our vendor landscape analysis provides a thorough analysis that will enable you to keep one step ahead of your rivals.

Who are the Top Companies/Manufacturers/Players in the Worldwide Industry?

  • VGL Group
  • Art.com
  • Uprise Art
  • Saatchi Art
  • Society6
  • Minted
  • Artsy
  • 1stdibs.com
  • Artnet Worldwide
  • Artspace.

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What Key Insights Does This Report Provide?

Crucial contents analyzed and discussed in the report include Wall Art Market size, current & future development trends, market dynamics, import volumes, key players, industry structure, business development, and consumption tendencies. The study provides market dynamics, such as key drivers, restraints/challenges, Wall Art Market trends, and their effects on the market throughout the forecast period. The research demonstrates the contribution of various types/application segments to the market. The study takes a close look at changes, consumer expectations, technical advancements, competitive dynamics, and capital running in the industry.

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What Valuable Market Insights Can Businesses Extract From This Report, And How Can They Be Used To Make Informed Decisions And Gain A Competitive Edge?

Many factors affect the market differently in each location, and these factors are highlighted in the reports analysis by geography.

The research offers in-depth company profiles for the major participants, including company overviews, business insights, product benchmarking, and SWOT analyses.

The report divides the market into categories based on location, type, and application.

The research lists the opportunities and risks that suppliers in the business must deal with.

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What Are the Major Trends Identified in The Market by This Report, And How Can Businesses Leverage These Trends for Strategic Advantage?

The study provides an industry assessment for the present and the future, taking into account recent changes, drivers, challenges, growth potential, and restrictions in both developing and emerging regions. The research then goes into great detail on the value chain and its analysis of distributors. It aims to increase readers understanding of the markets scope and applications globally.

What Valuable Regional Insights Does The Report Offer, And How Can They Benefit Businesses Or Stakeholders In Their Decision-Making Processes?

In the regional and national breakdowns section, the market in each region is studied, along with its size and Wall Art Market share. Moreover, the research analyzes every area and nation based on market size by application, market size by product, major players, and market forecast.

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How Does the Report Effectively Differentiate and Delineate the Regional Scope of the Market Segments?

North America (United States, Canada, and Mexico)

Europe (Germany, France, United Kingdom, Russia, Italy, and the Rest of Europe)

Asia-Pacific (China, Japan, Korea, India, Southeast Asia, and Australia)

South America (Brazil, Argentina, Colombia, and the rest of South America)

The Middle East and Africa (Saudi Arabia, United Arab Emirates, Egypt, South Africa, and the Rest of the Middle East and Africa)

What Are the Key Takeaways and Actionable Insights That Businesses Can Gain from This Report?

Furthermore, the report includes information on import/export consumption, supply and demand, price, revenue, and gross margins. The reports conclusion also contains in-depth SWOT and Porters Five Forces analyses of the Wall Art Market segmentation anticipated to generate the highest levels of profit. The research then covers the industrys cost structures, economic environment, and industrial policy. Additionally, it researches the major buyers, producers, and distributors of raw materials, etc. The forecast information provided in this study helps you better understand the anticipated Wall Art Market growth and development status.

What Are the Vital Reasons That Make Purchasing This Report a Strategic Decision for Businesses and Organizations?

  • The report helps buyers understand all current and future probabilities in the Wall Art Market along developed as well as developing economies.
  • The report assists readers in redesigning and delivering business strategies based on key priorities.
  • The report underlines the segment likely to witness substantial growth and revenue maximization.
  • It provides details and specifications to analyze top leaders in the market.
  • The report also includes relevant data on future-ready expansion plans pertaining to the market.

Browse market data Tables and Figures and in-depth TOC on Wall Art Market Forecast Report (2023-2032) @ https://www.polarismarketresearch.com/industry-analysis/wall-art-market

About Us:

Polaris Market Research is a worldwide market research and consulting organization. We give unmatched nature of offering to our customers present all around the globe across industry verticals. Polaris Market Research has expertise in giving deep-dive market insight along with market intelligence to our customers spread crosswise over various undertakings. We at Polaris are obliged to serve our different client base present over the enterprises of medicinal services, healthcare, innovation, next-gen technologies, semiconductors, chemicals, automotive, and aerospace & defense, among different ventures, present globally.

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Email: [email protected]
Ph: +1-929 297-9727

COMTEX_440635727/2599/2023-09-21T05:30:53

Source: benzinga.com