Steps for Conquering Student Debt

By Matt DeBallaway-1356948_1280

I remember very clearly when God nudged me to pursue ministry as a career. I also
remember the palatable community atmosphere of a Christian college, and knowing that it was God’s next step for me. Though both of these experiences were nearly a decade ago or more, they are memories I have often revisited to recall God’s faithfulness. What has followed both of these events is in line with Paul’s blessing: “The one who calls you is faithful, and he will do it” (1 Thessalonians 5:24).

Though your experience may be rather different than mine, all who follow Jesus are faced with opportunities that require counting the cost and taking steps of faith. My 18-year-old self could not have fully understood the endeavor of paying for college, but did understand that college (and, later, seminary) was an investment in my future. Thankfully, I was blessed by the support of my parents, my church, and my schools (via scholarships), which significantly reduced the amount of student loans required to complete my degrees.

Having completed my time in college and seminary, repaying student loans has begun. Here’s what this next step of my journey looks like:

1) Before graduation, chosing a repayment plan that would work best for my wife and me. Depending on which plan you choose, you may be able to change plans later. Typical
board-2084777_1280options include several standard repayment models (the same payment amount every month during the course of your loan, smaller payments leading to larger payments, and vise versa) and income-based repayment plans. There are also options for deferring loans if your current financial situation is difficult and prevents you from repaying with a regular plan.

2) Making small (or significant) lifestyle adjustments to pay for student loans. This includes finding a source of additional or increased income and/or cutting back on leisure expenses in order to faithfully make monthly payments.

3) As often as possible, paying more than the minimum monthly requirement. In addition to cost savings, you can target the lowest valued loan with the highest interest rate, and over time decease the rate of accumulating interest as you pay off each loan (what many call the “snowball method”).

4) Celebrating milestones along the way. celebrate-1835387_1280Regardless of how much you owe or how many loans you have, its important to celebrate when you pay off a student loan or decrease the value of your loans a certain amount (e.g. every $5,000 or $10,000).

5) Having hope that loan payments are purposeful and won’t last forever. Even the loans with the shortest lifespans (10 years) can feel like they will never end. Even though repayment can take (a long) time, it’s important to remember the results of your loans: a quality education, the opportunity to be qualified for desired jobs, and/or being faithful to God’s call for your life.

If you find yourself in the midst of paying back student loans, take heart: God has been faithful in the past and will continue to be faithful in the future.

About the Author

m-deball-9-2016Matt DeBall is the COMPASS Communications Coordinator for the Ecumenical Stewardship Center. He also serves as Coordinator of Donor Communications for the Church of the Brethren. He has an MDiv from Northern Seminary of Lombard, Illinois and a BA in Communication Arts from Judson University of Elgin, Illinois. He loves running, reading, and napping. He and Chelsea live in Northern Illinois with their Welsh Corgi, Watson, and attend the First Baptist Church of Aurora.

This blog is a component of the Ecumenical Stewardship Center’s COMPASS initiative to engage young adults in conversations about faith and finances. Like what you’ve read? Visit the COMPASS web page, follow us on Twitter, and join the COMPASS community on Facebook.

Image credits: pixabay.com

Straightforward Advice About Student Loan Debt

By Darryl Dahlheimer

Less than ten years ago, Americans faced a soap-bubble-826018_1280 square
“housing bubble” that burst into people
losing their homes mortgage foreclosure and the Great Recession following the collapse in housing values. Here in 2017, the French adage applies again: “Plus ça change, plus ça la même chose.

This time, it’s a student loan debt bubble where total student loan debt now surpasses total credit card debt. And the Federal Reserve has reported that almost one in three of us who have this debt (31%) are 90 days or more late on our payments. This crashes our FICO credit score and leads to court actions like garnishments against our wages (even the number of retired adults over 65 who are finding their Social security checks garnished for old student loan debt has risen from 8000 a decade ago to 63,000 today).

Many borrowers feel overwhelmed by the confusing landscape of many different loan types, each with its own rules, and so they get talked into unfavorable consolidations, or parking the loans in deferment, which has a ticking-clock time limit and keeps the loan debt growing by interest charges.

One bright ray of hope in this debt morass is the Student Loan Repayment Counseling (SLRC) project being piloted by LSS Financial Counseling. Certified student loan repayment counselors help people face their debt and make an action plan that is realistic. Not everyone needs expert SLRC, but whether doing it on your own or using SLRC, here are the steps to get back in control of your debt.

Screen Shot 2017-04-17 at 10.38.18 AMThe first step is loan discovery, where you make a complete list of all the loans owed, and which types – you’ll need to look on the www.nslds.ed.gov site for all your federal loans, and also look on your three credit bureau reports from www.annualcreditreport.com to find any private student loans or collectors.

Then you need to understand all your options for repayment. One of our favorites is to teach people about “public service loan forgiveness” where people working in (not all but many types) of government or nonprofit jobs can pay a reduced amount and have a large portion of their debt forgiven.

It’s also important to dodge the “help” scams that promise to assist you but actually charge large fees to do what you can do for free. Similar to what happened during the mortgage crisis, many student loan “servicers” have been caught giving out bad advice or harvesting fees from borrowers. Especially do your research before any loan consolidations, which can cause your federal loans to lose options.tip-jar-1796480_1280
LSS will present information about its
SLRC and about repayment options at a
free COMPASS Live Chat on
April 20th from 12:30-1:30pm ET
you can join this chat at stewardshipresources.org/compass-live-chats

LSS offers SLRC free to anyone in Minnesota (888-577-2227) and through its partnership with Everence, offers SLRC nationwide via phone counseling for all Everence members (877-809-0039).

About the Author
Darryl-DahlheimerDarryl Dahlhemier
is Program Director for
LSS Financial Counseling.

 

 

Photo credits: pixabay.com, www.nslds.ed.gov

Affording College: Before, During, and After


hand-1840039_1920By Beryl Jantzi

There is an old adage that says, “The best time to plant a tree is 20 years ago. The second best time is today.” The same could be said about preparing for the financial realities of paying for college.

Preparation is not a once and done exercise. Preparation is ongoing. One misconception is that preparing for the financial obligations of college is only about saving beforehand or paying off debt once you graduate. In reality, there are several points along the way to redouble your efforts to get as good an education as possible in the most cost-effective way as possible.

There are three stages in Affording College, and each includes proactive steps you can take throughout this journey.

1. Before: for perspective students

  • Know what financing is available. Educate yourself about:
    • Federal loans
    • Private loans
    • Subsidized and unsubsidized loans
  • Shop and Compare:
    • In state vs. out of state costs
    • community college vs. state university vs. private school costs
  • Budget now:lawn-mower-938555_1280
    • Get information on tuition and living expenses for various schools and on campus and off campus costs for various regions of the country
    • Parents: Start 529 plans as early as possible
    • Youth: Consider part-time jobs and summer work to save for college
    • Monitor your debt from year to year
  • Apply, Apply, Apply:
    • Research sources of grants and scholarships, and business scholarships available through parents employers and local civic organizations
  • Do your homework on career interests:
    • Know the first year earning potential of your career of choice to help determine how much you can/should borrow. (Rule of thumb: borrow no more than the entry income of your career of choice)

2. During: for current students

  • Don’t stop looking for scholarships:
    • Scholarships are not just for freshman
    • Return to organizations that may have turned you down for your first year and reapply
  • Don’t take all the loans you qualify for unless you absolutely need to. Borrow as little as necessaryapple-1851464_1280
  • Look for entry level internships for your career and major. Experience will matter
    when it comes to interviewing for work
  • Always know what you owe:
    • Monitor your total debt from year to year
    • Set a limit on what you can borrow based on your career of choice and your first year earning potential

#3 After: for those entering the working world

  • Know the repayment options for all your various loans
    • Prioritize increased payments for highest interest loans and aggressively take on one loan at a time while paying minimum amounts on the others
    • Discuss consolidation of private loans to lower interest payment. Do not consolidate Federal loans which typically have lower interest rates
    • If you are struggling to make payments, do not stop making payments without talking directly with your lender. Forbearance options exist
    • If you can accelerate payments it will reduce total interest paid over the length of the loan

If you find these guidelines helpful, consider viewing three short videos related to these three stages at www.everence.com/college. They are based on the lives of Carol, Erica, and Justin. Each of these students will speak in more detail to the realities of each stage of your college experience.

For more information contact me about additional resources to help you with your college journey at beryl.jantzi@everence.com.

About the Author

Beryl Jantzi and familyBeryl Jantzi serves as the stewardship education director for Everence, a faith-based financial services company of Mennonite Church USA, which serves all who are interested in integrating their faith with their finances.

The Student Debt Challenge

By Marcia ShetlerGraduates with Student LoansIn a month or two, commencement ceremonies will take place at colleges and graduate schools across North America. Can you imagine graduates walking across the stage and receiving another slip of paper besides their diploma? That document would be their student loan bill.

According to US News & World Report, in recent years seventy percent of US students graduated with student loans. So for every ten graduates you see filing past you, seven of them would receive that piece of paper. The Globe and Mail reports similar statistics for Canada, where four students out of ten might have no student debt. What might the numbers on those papers look like? In 2016, the average Canadian graduate had more than $25,000 in debt. In the US, it was more than $37,000.

Student debt creates many challenges:

  • weight-loss-850601_1280The University of Toronto reports that students who took out more student loans were more likely to have poor mental health in early adulthood;
  • Time Magazine says that student debt can delay major life events such as buying a home, getting married, or having children;
  • Time also says that graduates with debt may work more than they wish, including taking a second job;
  • and MarketWatch reports that those who took out loans to pay for higher education but did not complete their degree have the most difficulty repaying their loans.

But student debt doesn’t have to be part of your new normal. There are things you can do to avoid it. And if you’re challenged by student debt, there are ways to make it more manageable.

This month, the COMPASS Initiative will look at these two sides of the student debt challenge:

  • Get great insights every week on this blog and on our Twitter feed and Facebook page.
  • Grab your lunch or a cup of coffee and join us for a Live Chat with Darryl tip-jar-1796480_1280Dahlheimer, Program Director for LSS Financial Counseling—a partner of Everence—on Thursday, April 20, 12:30 p.m. Eastern time, 11:30 a.m. Central time, 10:30 a.m. Mountain time, and 9:30 a.m. Pacific time. Darryl will tell us about new student loan repayment options and share stories of experience and hope about this challenging issue.

Student debt can be a burden that affects our ability to live the life to which God has called us. It impacts how we steward what God has given us to manage and our freedom to be generous. Whether we are considering how to finance education or deal with the financial ramifications afterward, the key is seeking God’s guidance and choosing wisely. I hope the information shared this month will help you conquer your Student Debt Challenge!

About the Author

marcia shetlerMarcia Shetler is Executive Director/CEO of the Ecumenical Stewardship Center. She holds an MA in philanthropy and development from St. Mary’s University of Minnesota, a BS in business administration from Indiana Wesleyan University, and a Bible certificate from Eastern Mennonite University. She formerly served as administrative staff in two middle judicatories of the Church of the Brethren, and as director of communications and public relations for Bethany Theological Seminary in Richmond, Indiana, an administrative faculty position. Marcia’s vocational, spiritual, and family experiences have shaped her vision and passion for faithful stewardship ministry that recognizes and celebrates the diversity of Christ’s church and the common call to all disciples to the sacred practice of stewardship. She enjoys connecting, inspiring, and equipping Christian steward leaders to transform church communities.

This blog is a component of the Ecumenical Stewardship Center’s COMPASS Initiative to engage young adults in conversations about faith and finances. Like what you see and want to know/do more? Visit the COMPASS web page, follow us on Twitter, and join the COMPASS community on Facebook.

Photo credits: pixabay.com