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

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.