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