By Darryl Dahlheimer
Less than ten years ago, Americans faced a
“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.
The 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.
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
is Program Director for
LSS Financial Counseling.
Photo credits: pixabay.com, www.nslds.ed.gov