Archive | November, 2017

Loan Repayment Tips In The News

30 Nov

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Whether you’re a recent graduate whose loans are just entering repayment or you have been making payments for several years, there is a very real chance that educational loan payments may be causing you a financial hardship. For recent graduates, there is a lot of info covered in federal exit counseling and it would be easy to have missed some of it.

Loan Servicer Navient has put together a list of their Top 10 Things to do Before You Make Your 1st Loan Payment. The key to successfully repaying your loans with any Loan Servicer is understanding your responsibilities as a borrower and the wide range of tools available to help you throughout repayment. Your Loan Servicer doesn’t want you to default and you definitely don’t want to default on your loans either!

While there isn’t much that can be done about the amount you owe since you’ve already borrowed it, you can still choose from several different options for repayment.  The Institute for College Access and Success created a Top 10 Tips for recent graduates, a handy reference for borrowers.

Unless you chose otherwise, you’re probably enrolled in the Standard Repayment Plan which spreads your payments evenly over 10 years. This is both the default plan as well as the most aggressive repayment option available. However, there are several other options a borrower can choose which can limit the repayment per month to 10% of  discretionary income and reduce payments to as little as zero dollars per month (depending on income). For more information, check out Acacia Squire’s piece in NPR about her experiences and what options may be available to you.

 

Choosing the Right Loan Repayment Plan For You

28 Nov

All information on repayment plans is from this article by David Evans, Ph.D.
Additional info added by Casey Doten, Purdue Financial Aid Administrator

There are two main types of repayment plans you can choose from: traditional and income-driven. For borrowers that will qualify for Public Service Loan Forgiveness (PSLF), income-driven plans may be the better option. Income-driven plans will require an annual verification of income. This fact sheet describes each of the repayment plans as well as pros and cons of each. For more information about each of the repayment plans visit the Federal Student Aidwebsite.

Traditional Plansstudent-loan-repayment-plans

Standard Repayment Plan

The Standard Repayment plan consist of equal monthly payments over a 10-year period of time. This repayment plan is good for those who can handle making their monthly payments and make enough money to afford them. This payment plan is best for those who have minimal other debts and start working right out of school.

The Pros: You’ll pay off your loan faster compared to other plans, and pay less interest as a result.

The Cons: Your monthly payments will be higher than those made through other plans.

Graduated Repayment Plan

The Graduated and Extended Repayment plans could be an option for you if your income is low when you graduate but will increase quickly. Under a graduated plan, payments start out low and increase during the repayment period, usually every two years. This is a good plan if you can’t afford your current payments but know you will make more money in the years to come.

The Pros: Your loan is still paid off within 10 years.

The Cons: You’ll pay more interest over the lifetime of your loan compared to the Standard Plan.

Extended Repayment Plan

An Extended Repayment Plan is an option if your loan amount is more than $30,000 and you want to stretch your repayment to 25 years.

The Pros: Smaller monthly payments (since they’re spread out over as many as 25 years) and more time to pay off your loan.

The Cons: You’ll be saddled with payments for a longer period of time as well as pay more interest.

Income-Driven Plans

If you qualify for an Income-Driven plan, these are often the most attractive options if you’re willing to recertify your payment each year (it’s not very difficult). However, some of these are contingent on when you took out loans! If you’re interested in student loan forgiveness*, you’ll need to be enrolled in any one of these plans.

Income Based Repayment Plan

If you’re not making enough money to cover all of your monthly expenses the Income Based Repayment (IBR) Plan would be a good option. There are two separate calculations for IBR which are dependent upon when you took out your student loans.

The Pros: The IBR plan takes into account your annual income as well as your family size. Your payment will be 10% of your discretionary income** if you were a new borrower on or after July 1, 2014. Otherwise it will be 15%. Any outstanding balance on your loan will be forgiven after 20 (for undergraduate loans) or 25 (for graduate loans) years.

The Cons: You will have to pay income taxes on any forgiven debt unless you qualify for PSLF (this is true for all loan forgiveness).

Income Contingent Repayment Plan

If you have a federal Direct Loan (other than a PLUS loan), you could opt for the Income Contingent Repayment (ICR) Plan. Your payments could be as low $5 or even $0.

The Pros: Your monthly payment will be the lesser of 20% of your discretionary income or on a repayment plan with a fixed payment over 12 years. You can have your remaining loan balance forgiven after 25 years of regular payments.

The Cons: You’ll pay more over the lifetime of your loan than you would with a 10-year plan, your payment could be lower than the monthly accrued interest and your loan principal will grow. You will have to pay income taxes on any forgiven debt unless you qualify for PSLF.

Income Sensitive Repayment (ISR) Plan

The Income Sensitive Repayment (ISR) Plan is only available for those with Federal Family Education Loan (FFEL) Program. Payments are based on your annual income, family size, and total loan amount. You would pay the loan off in fifteen years.

The Pros: Each lender has their own calculation, but generally it is between 4% and 25% of your monthly gross income, although your payment must be greater than or equal to the interest that accrues.

The Cons: It’s only available for up to five years. After that time, you must switch to another repayment plan. You must reapply annually, and there’s no guarantee that you’ll have continued enrollment in the plan.

Pay as You Earn Repayment Plan

The Pay as You Earn Repayment (PAYE) Plan is another option for those not able to afford their current monthly payments.

The Pros: The PAYE plan takes into account your annual income as well as your family size. Your payment will be 10% of your discretionary income. Any outstanding balance on your loan will be forgiven after 20 years.

The Cons: PAYE is only eligible to those who were new borrowers on or after October 1, 2007 and must have received a disbursement of a Direct Loan on or after October 1, 2011. You will have to pay income taxes on any forgiven debt unless you qualify for PSLF.

Revised Pay as You Earn Repayment Plan

The Revised Pay as You Earn Repayment (REPAYE) Plan is very similar to PAYE. This plan was created to allow more borrowers the opportunity to have their payments lowered to 10% of discretionary income.

The Pros: Not dependent upon when you took out your student loan, the payment will be 10% of your discretionary income. Any outstanding balance on your loan will be forgiven after 20 (for undergraduate loans) or 25 (for graduate loans) years.

The Cons: If you are married, your spouse’s income will be considered whether taxes are filed jointly or separately. You will have to pay income taxes on any forgiven debt unless you qualify for PSLF.

Summary

Federal student loans offer various ways for repayment. If you are in a situation (like so many others who have taken out student loans) that is not ideal for standard repayment of your loan, consider these options. There is a lot to consider when you are trying to decide which repayment plan to choose. Using the Federal Student Loan Repayment Estimator can help you make your decision by showing you what your payments would be under each of the plans described above.

*A note about loan forgiveness: There are two different kinds of loan forgiveness, Public Service Loan Forgiveness (PSLF) and loan forgiveness from your income-driven repayment plan ending. While both plans require you to be enrolled in an income-driven plan to reap the benefits there are some key differences:
-PSLF requires being employed at a qualifying employer in public service (non-profits, government, etc.) for 10 years/ 120 qualifying payments before forgiveness takes place. Standard forgiveness is after 20 or 25 years depending on your repayment plan.

-Any loan amounts forgiven under PSLF are tax-free, but not under standard forgiveness! So if you still have a balance on your loans after 20 (or 25) years, you will owe taxes on it as if it is income. While it’s still better than paying the amount back, it’s important to know it will have ramifications.

**Discretionary income = Your income – 150% of the poverty level in your state for your family size

Happy Thanksgiving!

23 Nov

Casey Doten, Financial Aid Administrator

Happy Thanksgiving! In addition to celebrating a cultural tradition here in the states, Thanksgiving is a great time to reflect on everything you’re thankful for in life.

Whether you’re flying high on life or currently going through the doldrums, it’s good to give thanks for even the little things. Research from Harvard Health finds that giving thanks can actually make you happier.

So if the end of the semester and the holidays cause more stress than happiness, now is the perfect time to reflect on the things that bring you joy – no matter how big or small they are.

Throwing a Great Friendsgiving

21 Nov

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Thanksgiving may be one of the few times of the year that you and your friends are going to be somewhat near each other. This makes it an opportune time to get a ‘Friendsgiving’ together and enjoy each other’s company for possibly the only time during the year. If your friends don’t already have this tradition, you’ll probably have to host the first one to get the ball rolling. But don’t fear, done correctly Friendsgiving can be a fun and low-stress opportunity to get together with your best friends.

The best way to optimize the fun-factor while keeping your actual work level low? Make it a pot-luck where everyone has to bring something. Whether it’s a side of green beans, a box of wine, or someone wants to volunteer to make the main course, everything is welcome! Be sure to coordinate who brings what though, so that four people don’t all bring those canned cranberries. This could be done with a Facebook event, or just keeping a spreadsheet of what people tell you. Typically there is far more than enough food to go around, so if one person shows up empty handed for some reason try not to lay into them too much.

If it’s your first rodeo (or even if it’s not), avoiding turkey is probably a good plan. Most people are getting their annual fill on the day of Thanksgiving and don’t desire any more. Plus, the amount of people who aren’t that crazy for turkey is pretty high considering we have a day that’s reserved for feasting on it.Friendsgiving1.jpg

Something you do not want to forget is dishes and glasses. If you don’t have enough plates for people to eat off of, you’re going to have issues. An easy workaround? Paper plates! You don’t have to buy extra plates just for this one event and, more importantly, there are less dishes for you to do. Just be sure that you have enough drinking glasses for people as they might use more than one if they switch up their drinks.

Speaking of drinks, make sure you have plenty of ice! What’s in your two ice trays isn’t going to cut it. Whether people are drinking water, lemonade, or even a mixed drink, having ice is important. So go to the gas station, spend $5.00 for a couple bags of ice and call this one good. Have someone coming who is a terrible cook? Let them be in charge of bringing the ice.

Another important, and possibly awkward part, is figuring out who your invite list will include. Depending on the size of Friendsgiving you are having, there might just be your core group of friends or it might get larger. Either way, be sure to include people’s significant others. If you don’t, you’re putting them in a spot where they have to ask you if they can come or your friend will just skip so they aren’t ditching their boy/girlfriend. If your invite list is getting larger, just make sure there aren’t any obvious interpersonal conflicts you’re creating or that there is anyone you are totally missing from the invite list. You can’t have everyone over, but there might be some people upset they didn’t get the chance to join.

Another important group to keep happy is other people’s parents. How might you fail to do this? Not letting your friends know of Friendsgiving ahead of time. If you spring this idea up last minute and a friend comes over when one of their parents had planned for super special bonding time, it doesn’t matter if there was a lack of communication. Parental wrath will ensue in some fashion. So avoid this, and other potential conflicts, by planning it out ahead of time.

The most important thing? Have fun! Friendsgiving is supposed to be a time to see your pals and catch up while reminiscing on that embarrassing thing that happened 3 years ago. The more stress you can avoid while putting this all together, the better. As host your job is to provide a location and some planning but don’t feel like everything is on your shoulders. Just remember that you don’t need to be replicating a massive family-style event to have a successful time with your best friends.

Making Black Friday Work For You

20 Nov

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Black Friday is one of the strangest times of the year. Steep discounts on electronics and other items have people lining up and camping out for these “doorbuster” deals for hours before opening. So, how do you take fullest advantage of the Black Friday savings without regretting the missed hours of sleep? Depending on what you’re looking for, you may be able to save money without all the hassle.

If after scouring the various Black Friday ads, you have found a doorbuster deal that you can’t miss out on you’ll want to be prepared. Find out what time the stores you’re interested in open and plan to be in line well before that depending on the location. At places like Target or Wal-Mart expect people to be setting up shop well ahead of time. Some stores are also open on Thanksgiving for those of you who are willing to forsake their second helping of turkey. In the event you’re going to be part of a (hopefully civilized) mob storming a store, knowing where your desired item is beforehand will probably be the difference in getting it or not.

Remember to keep your receipts from your Black Friday deals that you buy for yourself and to get gift receipts if you’re getting a gift for someone else. It’s an easy details that you can lose in the chaos, but extremely important in the event you need to return it.

The doorbuster deals and people lining up for hours may get all of the attention but there are much easier ways to get those great deals without wasting your Thanksgiving evening or sleep. Aside from a few deals, almost everything will be available online for the same prices. A nice kicker? Many places offer free shipping with their deals as well. You can do this all from the comfort of your own home without waiting in the cold for hours. Additionally, you can wait a few days to check out the Cyber Monday deals as well as comparing with other stores online to see who has the best offers! Overall, you are likely going to get just as great of a deal by shopping online and comparing prices as you are with joining the crazies.

An often overlooked, yet easy, method to get great discounts is by giving into the store’s attempts to connect with you. Follow them on social media, download their apps, register an account on their website, etc. These are all great ways to get exclusive coupons that can add up quickly helping you save big without wading through the crowds.

The experience of joining the pack for the crazy openings may appeal to some, but to many others it is a hassle not even worth contemplating. If you’ve tried it and never want to see that craziness again, or just don’t even want to see it, don’t feel like you can’t get great deals too. Just like any time you are shopping for big-ticket items you just need to compare prices, amass coupons and other discounts and you can come out hundreds of dollars ahead. The work you put in to shop intelligently is well worth the minimal effort it takes.

Stay Eligible For Your 21st Century Scholarship By Taking Enough Credits!

16 Nov

How Does the PLUS Credit Check Process Work When There Is a Credit Freeze?

14 Nov

The following is from the November 3, 2017 COD Processing Update:

Credit Check Processing for Borrowers who have requested a “Credit Freeze”
As a result of recent data breach events and heightened security concerns, many consumers are understandably taking steps to protect their personally identifiable information (PII). One of those steps may be placing a “credit freeze” on their credit profile at one or more of the credit bureaus, which prevents further credit activity from occurring without additional consent.

Because a credit check is part of the process when a borrower or endorser completes a Direct PLUS Loan Request or an Endorser Addendum on the StudentLoans.gov website, borrowers or endorsers with an active credit freeze may not be able to fully complete either process and may receive an error message when the credit check is run. The borrower or endorser must remove the credit freeze first; this action cannot be done by the school or Federal Student Aid. Note: Federal Student Aid can process an inquiry at two of the three main credit bureaus (currently Equifax and TransUnion). If a borrower or endorser places a credit freeze at only one credit bureau, Federal Student Aid could still receive a credit determination based on information provided by the secondary credit bureau.

Federal Student Aid implemented additional messaging on the StudentLoans.gov website on October 29, 2017. The messaging informs borrowers and endorsers that those who have a credit freeze on their credit profile will need to remove it before completing a Direct PLUS Loan Request or the Endorser Addendum. Federal Student Aid encourages schools working with borrowers and endorsers who may receive an error during the credit check process to ask about a credit freeze as a possible cause for the error.

Schools using the “Quick Credit Check” on the COD Web Site could experience an error or “timeout” response as a result of a borrower’s credit freeze. In some cases, Federal Student Aid will not be able to return a credit check response with the origination record and will reject the record with COD Reject Edit 996 (Invalid Value). Again, when troubleshooting a credit issue with a borrower or endorser, schools may want to see if the credit freeze situation may apply.

If you have additional questions about credit check processing, contact the COD School Relations Center. ”

COD School Relations Center
1.800.848.0978 for Direct Loans
Email CODSupport@ed.gov

Making Your First Student Loan Payment

9 Nov

It’s been six months since you’ve left school and despite not wanting to think about it, the time has finally come to start paying on your loans. Your loan servicer (the company that will collect payment from you) should have contacted you to let you know who they are by now.

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If they have not, be sure to log into the National Student Loan Database System (NSLDS) to find out who will be handling your loans. Be sure to let your servicer know how to contact you! If you think you can dodge them, they’ll just keep attempting to reach you at the contact info they have until your loan goes into default. And you don’t want that. You can also check your total federal loan balances on NSLDS to confirm how much you owe in total across all federal student loans.

Now that you know who you have in loan debt, be sure to log in to their website that’s provided on NSLDS to set up an account and see what your loan payments are per month.

Everyone is automatically enrolled in the standard 10-year repayment plan by default, which is actually the most aggressive repayment plan. Other repayment plans that are based off your expendable income might work better for you, especially as you get on your feet professionally.

While making higher payments is always preferable to pay down your loans as fast as possible and with the least amount of interest accrued, that’s not always possible on every budget. Ideally, your student loan payments won’t exceed 20% of your take-home pay. If it does, an income-driven payment plan might be needed to help shift the burden off your shoulders for now.

Once you know what payment plan you’re planning on and how much it’ll cost you monthly, it’s encouraged to sign up for auto-pay, also known as Direct Debit. Why pay your bill automatically when you probably prefer to choose when it comes out? Well, you’ll save 0.25% on your loan interest rate for federal loans.

For the average 2016 graduate with $37,172 in loan debt on the 10-year standard repayment plan this would equal $532 in savings. If you are enrolled in an income-driven repayment plan then you can save $1,252 for the 25 year term.

That’s not a bad trade-off considering you have to make the payments anyway and can choose what day of the month your payments are withdrawn when setting up auto-pay.

Once you’ve done all this, you are good to go! You’ve figured out who you are making payments to, made sure they fit into your budget with the correct payment plan, and can even set up automatic payments in the future so you don’t have to remember every month!

13 Must-Haves for Off-Campus Living

7 Nov

You’ve finally done it! The lease is signed, and you step into your first off-campus place, surveying your home for the next year or more. The boxes are all unpacked, but even though your dorm room was brimming with “stuff”, your new digs look barren. Here are 13 things you might be missing from your original packing list!

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1. Kitchen Odds & Ends

You know those miscellaneous things that are always just there in the back of a drawer or cabinet? You don’t realize you need them, you just find yourself in a pinch one day because you don’t have them. Things like a colander, wire whisk, spatula, mixing bowls, measuring cups, can and bottle openers, pot holders, and food storage containers. Picking them up now will save a lot of hassle later!

2. Pantry Staples

Having a kitchen means experimenting with new recipes (and let’s admit it, setting off the smoke detector once or twice), but it also means facing an empty pantry. It’s best to start off with some staples: spices, oil, salt and pepper, chicken broth, sugar, flour, pasta, rice, eggs, bread. Don’t forget those non-food staples, like aluminum foil and sandwich bags. With those out of the way, you can start filling in your pantry with ingredients for specific dishes. Staples can be different for different people, so think through your favorite meals, and write down reoccurring ingredients. Personally? Cheese and bacon are my two biggest kitchen must-haves.

3. Small Appliances

It’s pretty hard to make your go-to breakfast of waffles if you don’t have a toaster. An iron and ironing board, coffee pot, electric mixer, and blender are some of the many things that you might use (and probably never have had to buy before).

4. Paper Products

Believe it or not, off-campus bathrooms aren’t automatically stocked with toilet paper and tissues. If you’ve got these packed to bring with you, make sure you put them on top where they’ll be easy to find. While you’re at it, throw in some paper towels too!

5. A Shower Curtain/ Rod/ Rings

A lot of apartments will have a shower curtain rod already, but you’ll probably be on your own for the rest. Be sure to check the curtain you buy to see if it needs a liner as well. There’s nothing worse than realizing you can’t shower on day one without drenching your new bathroom.

6. Trash Can & Trash Bags

Sometimes the most obvious stuff is the easiest to forget.  You’ll thank yourself when you have a place to toss all that packing material on moving day! Relying on cardboard boxes just won’t cut it.

7. Cleaning Supplies

Coming from home, or a dorm, you might not have needed your own vacuum, toilet cleaners, mop, or shower spray. When you move off-campus, you’ll suddenly miss having a broom and dustpan, or even a couple of sponges handy. Start off with some other basics too: like hand and dish soap, laundry, and dishwasher detergent.

8. Furniture

The single futon that was crammed into your dorm room won’t look like much in an otherwise empty apartment. Identify your needs, and start looking early! Think about work space – do you need a desk? Or entertaining – do your friends normally crash on the couch, or should you have a table for dinner and games? Do you have a TV or gaming consoles? If so, where will they go? Get the measurements for your apartment and furniture before you buy, so you know each piece will fit and work for you.

Pro tip: Don’t forget to measure the doorways, and bring tools to remove the doors, or take furniture apart if needed. Legs often come off of couches for easier fitting.

9. Lamps/ Lighting

Check out the lighting situation before you move in. A lot of apartments and homes for rent, especially those near campus, don’t have overhead lighting. Look for lighting that isn’t highly directional, so that the whole room will be well-lit. Lamps with transparent or light-colored shades are a great choice!

10. Shelving/ Storage.

A lot of off-campus housing has limited storage. Make sure you pay attention to details when you’re touring housing options. Are there cabinets in the bathroom? Is there a pantry? Do the closets have shelving? Is the shelving solid? Some apartments have tons of shelves, but they’re all made of wire that smaller items can fall through. You may need baskets, multi-level hangers, a towel rack, or even a bathroom caddy if you’re looking at limited storage. You can also check out Buzzfeed and Pinterest for tons of clever storage hacks.

11. Internet Router

Most internet providers give customers the option to rent a router from them on a monthly basis, or use their own. Often, providers will allow you to purchase a router from them as well to avoid the extra monthly fees.

12. Curtains

Curtains aren’t just decorative. They also keep in a lot of warmth during the colder months. Check out what any bedroom windows face as well. If there are street lights or a busy road outside, you might want to pick up some blackout curtains so your sleep won’t be interrupted by lights and traffic.

13. Hardware, Thumbtacks & Command Hooks

Leasing offices have differing policies when it comes to hanging things, but chances are you won’t want your walls to be completely bare. Whether it is curtains, mounting a TV, or just some favorite posters, keep some hardware options on hand!

Preparing for Your First Indiana Winter Pt. 2

3 Nov

Casey Doten, Financial Aid Counselor & Native Minnesotan

While autumn may be far and away my favorite season, it also marks the approach of easily my least favorite time of the year: winter. If you’re from one of the many places in the world that Hoosiers dream about for 5 months of the year, your first Indiana winter can be a rough ride if you’re not prepared. However, with a little bit of preparation and proper clothing you won’t just survive, but thrive!preparing-for-indiana-winter-portrait

First things first, how you dress is going to determine how you feel for much of the day. So be sure that you have all the proper gear you need for any weather. Some days it will be in the 40’s, some days you might be hovering around 0 (Fahrenheit of course)! The key here is checking the weather in the morning, and there are several phone apps you can use for this. Don’t just look outside and see it’s sunny and assume you’re fine; some of the coldest days come when the sun is out since there are no clouds to help insulate.

A weather change you might not have ever thought of is the change in moisture in the air. Winter is extremely dry. Chapped lips, dry skin and nosebleeds can all be caused from the cold, dry air. Stock up on lotion and lip balm, because at some point you will need some. Just like the lack of sunlight (less than 9 ½ hours per day at times), you can’t change much about the humidity except how you deal with it.

Something you might have already put thought into is driving. After a month you might come to the reasonable conclusion that cars were not invented for winter driving. However, making sure that you have tires with reasonable tread will go a long way toward your ability to drive safely in the snow. Tires make even more of a difference than four wheel drive in snow and ice. A few things you might not have realized are important for driving safety in the winter are your wiper fluid and windshield wipers. Getting dirty snow tossed up on your windshield from the road can make visibility terrible without good wipers and fluid.

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In regards to warming your car up, it is actually a common myth  that you should do it for the benefit of your car. Unless you’re driving an older vehicle that would have a carburetor (which is quite rare nowadays), you don’t need to worry about it. The only reason why I let my car warm up is to give the heat time to get warm. The longer you let your car idle, the more gas you waste, not to mention opportunities for it to be stolen since the keys are in the ignition. Also remember to have a window scraper! If your windshield is iced over and you don’t have one, it’s not going to be fun to get it off.

Even though the weather can be a hassle, don’t use it as an excuse to skip class. You pay for your courses whether you are there or not, so not going wastes some of that money. Snow days are rare and few between, however instructors cancelling courses isn’t that uncommon. So if you expect that might happen, keep your eyes on your email as that’s the most likely way they’ll let you know (unless they are a monster who just puts a note on the door so you don’t find out until you arrive). You can burrito yourself in a blanket and watch Netflix later.

For a little bonus, here are some other blogs that help cover information about surviving in the winter if you’re new to it:

http://nyulocal.com/entertainment/2011/11/01/how-a-southerner-should-prepare-for-winter-in-new-york/

http://mitadmissions.org/blogs/entry/how-to-survive-your-first-winter-a-college-students-guide

http://lifeinleggings.com/winter/qa-tips-on-surviving-your-first-winter-season/

http://lifeinleggings.com/moving/what-ive-learned-living-up-north/

https://www.michigandaily.com/opinion/01jesse-klein-michigan-winters-suck20

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