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

Faithful Fun with Finances in February

How is that for some alliteration? COMPASS’ focus and mission is on creating conversations related to faith and finances for Millennials and young adults. This month on the COMPASS blog, we will dig deeply into some fresh financial topics such as credit scores, credit cards, taxes, income tax filing, and student debt. In March, we’ll continue a focus on finances with a closer look at debt management.

February is a month with more than just Valentines. We are going to have fun thinking about #faithandfinances.

February is a month with more than just Valentines. We are going to have fun thinking about #faithandfinances.

I am looking forward to sharing posts with you on the blog from persons who have far more expertise on these topics than I do. To start the conversation though, I have a few thoughts about some of our February topics.

Credit Scores

I am no expert when it comes to credit scores, but I have checked my wife’s and mine a few times because of having a credit card and paying student loans. I have learned that paying bills regularly and on time has a positive impact on your credit score. The credit score is one factor that is used when deciding if you will be approved for loans or other credit.

Income Taxes

In the United States, income taxes must be filed by Friday April 15th this year. Because of this, I am guessing that most of you have not yet started preparing your tax forms. I have to admit, I haven’t either. It’s on my agenda for this month, and I will let you know on the blog how that goes. Here are some things you can start doing now before filling out your paper or e-form:

  1. Find your 2015 receipts that you might use for deductions.
  2. Make sure that you have received all W-2s and other such forms (like 1099-Misc.) which you receive.
  3. Do a little research to determine the best way for you to do your tax preparation (e.g., do you need an accountant, tax preparation software, do you do it by hand??). The approach will vary based on your level of patience, time, interest, and expertise.

Student Loan Debt

At the start of each month my wife Allison and I make sure to set up payments for our student loans. Because we try to pay enough to reduce the principal in addition to the interest, it’s always nice to see that the total amount has gone down, thanks to the previous payment! If possible, adjust your payment schedule and/or amount to pay more than just the interest on student loans.

These are just a few observations from my experience. It’s also helpful to remember that in spite of all of the stress that financial matters can create, God is present with you. One of my favorite passages to remember which helps me put things in perspective and gives me patience is Isaiah 43:1-7.

“Do not fear, for I have redeemed you; I have called you by name, you are mine. When you pass through the waters, I will be with you; and through the rivers, they shall not overwhelm you; when you walk through fire you shall not be burned, and the flame shall not consume you… you are precious in my sight, and honored, and I love you… Do not fear, for I am with you.” ~  from Isaiah 43:1-5, NRSV.

What are some financial questions and topics that you have been wondering about?

About the Author: Timothy blogs regularly and serves as the Communications Associate for the Ecumenical Stewardship Center with a focus on COMPASS. He also serves at Messiah Lutheran as the congregation’s mission developer.

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 and join the COMPASS community on Facebook.

Image Credit: Hearts