USA Today - 13.11.2019

2B z WEDNESDAY, NOVEMBER 13, 2019 z USA TODAY MONEY

An intense cold snap is threatening
to smash record lows across much of the
nationthrough Thursday.
With temperatures sliding and win-
ter fast approaching, many car owners
are asking: How often should I start my
car to warm it up?
Turns out, the answer doesn’t lie in
frequency.
Experts at AAA, a federation of motor
clubs, say it’s not a good idea to warm
your car up to keep it from freezing.
“Ninety-five percent of the cars on
the road today don’t use carburetors, so
you no longer need to warm them up on
cold days,” said Mike Calkins, manager
of technical services at AAA.
Instead of repeatedly starting up
your car to keep it warm, drivers who are
concerned about their engines freezing
could have a block heater installed for
less than $100, Calkins said. A block
heater, which plugs into standard elec-
trical outlets, will keep the engine from
getting cold so the car starts easier the
next morning.
If a driver were to start their engine in
extremely cold weather without a block
heater,they would need to get it up to
full operating temperature, which is
best accomplished through driving the
car around.
Even after some driving, however, it

takes only a couple of hours for the en-

gine to cool down from full operating

temperature, Calkins says. Moreover, he

says, repeatedly starting a car without

running it long enough to recharge the

battery can lower the battery’s capacity

over time.

Antifreeze protection also is a good

alternative to starting up cars often.

Antifreeze prevents the coolant mix-

ture from freezing. When water or any

liquid freezes, it expands, which Calkins

says can create pressure that can crack

engine blocks.

Calkins says cars typically use a 50-

50 mix of antifreeze and water, which

provides protection for minus-30 to

minus-35-degreeweather. But if tem-

peratures drop, car owners should

have a higher concentration of anti-

freeze, up to 70%.

If a driver isn’t sure what the anti-

freeze protection level is in their car,

Calkins recommends they find out

soon to protect against possible dam-

age.

Warming up the car in the

cold is a thing of the past

A woman wipes the snow off her car in Chicago on Tuesday.GRACE HAUK/USA TODAY

Dalvin Brown and Ben Tobin
USA TODAY

Decide what you won’t

compromise on

“With the market what it is, buyers

will undoubtedly have to settle,” says

Greg Buchanan, president-elect of the

Lexington-Bluegrass Association of

Realtors in Kentucky. “Buyers have to

figure out what their nonnegotiables

are.”

For instance, some house hunters

may insist on buying a property in a

specific school district, an issue that’s

top of mind for many families with

children.

Take Stephanie Loomis Pappas, 38,

a freelance writer in Beachwood, Ohio.

She and her husband recently moved

about one mile from their previous res-

idence in order to enroll their son in

kindergarten in the new home’s school

district.

Ironically, she adds, her new home

is on the same busy street as the previ-

ous one. But she says she and her hus-

band realized there are advantages to

the location, such as being able to walk

to stores and coffee shops. In her eyes,

she was also able to get a better deal on

a home on a busy street. She recalls

they were considering another house

on a quieter street that was listed for

the same price – $439,000 –but it

hadn’t been updated in 50 years.

The home they ended up purchas-

ing “was completely redone in Janu-

ary: a new HVAC system, a new kitch-

en, new walls,” she says. “It is very

clear we were able to get a much nicer

home.”

Be realistic about repair costs

Some house hunters have trouble

looking beyond aesthetic handicaps

like garish paint colors, but many of

those issues can be fixed at a reason-

able cost. Other maintenance issues,

such as a new roof or furnace, might

represent a bigger investment and

should be calculated in the offer, says

Danielle Parent, a Redfin real estate

agent.

“When I take a buyer through a

home, I say, ‘It needs windows, it

needs a roof and it needs a furnace,’

and then we put that into our offer,”

Parent says. “We factor that in and

hope for a better price to offset the de-

ferred maintenance cost.”

It’s also a good idea to walk through

the house with a contractor to get a

rough estimate for fixing problems,

says Realtor.com’s Dutton.

“Keep an eye out for homes with

cosmetic flaws versus serious funda-

mental flaws with the foundation or

the roof, which will cost a bundle,”

Dutton advises. “If it’s ugly wallpaper

or a poor paint job, those are easy

fixed.”

Think like a seller

At some point, you’ll be on the op-

posite end of the transaction. That’s

why it’s important to think like a seller,

Dutton says.

“Even if the busy road doesn’t both-

er you, keep in mind it could bother

other people,” she says.

An undesirable school district is the

top drag on a home’s potential selling

price, depressing values by about 22%,

according to an analysis of home sales

in the top 100 metropolitan areas by

Realtor.com. Homes next to strip clubs

have a roughly 15% lower value, while

houses in areas with a high concentra-

tion of renters are depressed by about

14%, they found.

House hunters can find out about

the quality of local schools through

such sites as GreatSchools.org or Red-

fin and Zillow, which both link to

GreatSchools.org data.

Says Buchanan: “Just like when you

are buying a car, do a lot of research

online” before buying.

Catch

Continued from Page 1B

Stephanie Loomis Pappas and her son,

Dylan, at the end of their driveway.

STEPHANIE LOOMIS PAPPAS

loan is transferred from the student
loan servicer – a private contractor re-
sponsible for collecting payments on
behalf of the federal government – to
the Debt Management Collections Sys-
tem. Borrowers then have 60 days to
come to a repayment arrangement with
the Education Department. If no agree-
ment is reached, the loan is transferred
to a student loan debt collector.”
Defaulting on a student loan is seri-
ous business because it triggers hefty
collection fees, garnishing of your
wages, the possibility of the federal gov-
ernment taking your tax refund to cover
past-due student loans, and even ineli-
gibility for some other programs, such
as help with home ownership.
But taking the wrong road to avoid
default also can end up harming some
students.
Texas borrowers tend to lean more
heavily on student loans to pay for col-
lege than students nationwide. Borrow-
ers in this group entered repayment
during and shortly after the Great Re-
cession when jobs were tough to find
and starting salaries were low. Even so,
the experience of this group has some
takeaways.

Those first payments
can foreshadow trouble

About a quarter of borrowers default-
ed within five years of starting to repay
their student loans, based on the Texas
data. Most had tried to deal with their
overload of debt by suspending pay-
ments through deferment and forbear-
ance. Many, of course, are told that
stopping or reducing their payments
could help avoid default. It didn’t help in
the long run in many cases.
Sarah Sattelmeyer, manager of Pew’s
project on student borrower success,
said borrowers who repeatedly used de-
ferment and forbearance to deal with
debt that they couldn’t afford ended up
with student loan balances that grew
over time.
For some, a better option could be
dealing with longer-term challenges by
trying to lower monthly payments
through an income-driven repayment
plan.
The Pew study showed that many of
those who suspended their payments
had showed signs of potential distress
almost immediately.
“When you’re earliest in your career,
it’s often when your income is the low-
est over the course of your career,” said
Will Sealy, co-founder and CEO of Sum-
mer, a New York-based startup that of-
fers software to help borrowers keep
track of their student loans.
The Summer online platform guides
borrowers through their repayment op-
tions, helping them enroll into the best
savings plans digitally.
College grads can sign up for free at
http://www.meetsummer.org.
Sealy, who previously worked with

the Consumer Financial Protection Bu-

reau on student debt issues, said the

federal government provides income-

driven repayment plans, which are in-

tended to help people.

But it can be difficult for people to

navigate the best option for their situa-

tion.

Yet it’s important that they spend

time investigating the overall costs and

options of such plans, he said, in order

to avoid future missed payments and

default.

“You can fall very quickly in a very

unforgiving direction,” Sealy said.

Your student loan debt

can easily go higher

After five years of repayment, about

21% of borrowers ended up owing more

than their original balances, according

to the Texas data. Debt grew as borrow-

ers paused payments repeatedly for

several years.

“Among borrowers who owed more

after five years in repayment, a third had

balances of 125% or more of their initial

principal,” according to Pew’s research.

So if you started out owing $30,

in student loans, you could soon owe

$37,500 after five years in repayment.

Not all borrowers

face the same risk

Borrowers who owe less than

$10,000 but didn’t complete a degree

default at higher rates. Borrowers of col-

or, particularly African Americans and

first-generation students, face default

at higher rates than their peers.

To be sure, there are good reasons for

seeking a deferment. Most borrowers

who use deferments do so while en-

rolled in school, unemployed or facing

financial hardship.

The U.S. Department of Education

has made a new deferment program

available to those undergoing cancer

treatment, for example.

Borrowers who qualify for a defer-

ment or forbearance typically can post-

pone payments for up to a year at a time.

One of the big red flags for trouble,

though, is trying to address longer-term

issues with what should be a short-term

option.

Many times, borrowers aren’t getting

much guidance about their repayment

options before struggling to make pay-

ments. Some aren’t aware of longer-

term repayment options, such as in-

come-driven repayment plans, which

could help them stay on a better track.

And some may be getting bad infor-

mation.

“According to federal law, schools

may lose their ability to participate in

federal student aid programs if a sig-

nificant percentage of their borrowers

default on their student loans within

the first three years of repayment,” ac-

cording to a 2018 report on default

rates by the U.S. Government Ac-

countability Office.

“To manage these three-year de-

fault rates, some schools hired con-

sultants that encouraged borrowers

with past-due payments to put their

loans in forbearance, an option that al-

lows borrowers to temporarily post-

pone payments,” the GAO report stat-

ed.

“While forbearance can help bor-

rowers avoid default in the short-term,

it increases their costs over time.”

Some grads need

to make decisions now

College graduates receive a six-

month grace period before they have to

start paying down their federal stu-

dent loans. Most private loans offer a

six-month or nine-month grace peri-

od. Getting a diploma in May means

many will begin to repay those loans in

November.

The U.S. Department of Education

outlines a variety of repayment op-

tions – and has a repayment estimator

• at StudentAid.gov/repay. You have to
  enroll in these plans to take advantage
  of them, and you have to pick the right
  one to fit your circumstances.
  Sealy maintains that the Summer
  calculations at http://www.meetsummer.org
  offer a more accurate look at estimat-
  ing the total costs of any repayment
  program based on wage growth expec-
  tations.
  Income-driven plans offer lower
  monthly payments that reduce the
  likelihood of missing payments, he
  said.
  At the same time, he said, an in-
  come-driven plan can free up much-
  needed money to help someone cover
  medical costs, invest in retirement
  savings and start saving to maybe one
  day have children and buy a home.
  Based on the latest data, the stu-
  dent loan default rate nationwide was
  10.1% for fiscal year 2016. The Depart-
  ment of Education calculates a cohort
  default rate – the percentage of bor-
  rowers who enter repayment in a given
  fiscal year who then default within a
  three-year period – for each school to
  hold them accountable for high default
  rates.
  The U.S. Department of Education
  released borrower default rates by
  state in August. The borrower default
  rate in Michigan was 11.5%. States with
  higher rates included Nevada (18.1%),
  West Virginia (14.6%), Mississippi
  (14.9%) and Indiana (14.2%).
  States with lower rates included
  Massachusetts (5.8%), Vermont
  (6.1%), Rhode Island (6.2%) and North
  Dakota (6.2%).
  Contact Susan Tompor at
  [email protected].

Student loans

Continued from Page 1B

Abetter option could be

dealing with longer-term

challenges by trying to

lower monthly payments

through an income-driven

repayment plan.