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

A Word to all Recent and soon to be Graduates

Congratulations, graduates! You have studied and grown, and are now ready to be sent out or start new chapters. For some of you, this may mean your first full-time adventure in the working world. For others of you, this may mean moving cross-country. For others, it may mean the transition from one school and degree to another and further study.

Whatever your chapter and transition looks like, congratulations! Your hard work and dedication deserves to be praised.

graduatesMuch has been shared on this blog (and will continue to be shared) to spread light on thinking about faith and finances. COMPASS has and will continue to be a place and resource to think about student debt, the different challenges of finances, and yet the hope and promise of abundance that we share in our collective faith.

Today, I don’t want to spend much time thinking about these challenges and bills—some that you are likely already facing and paying—and others—such as your educational debt—which may become due after deferment in about six months.

Rather, today I want to encourage you to give thanks: to celebrate and be joyful. Give thanks for your focused study. Give thanks for your family, friends, and loved ones who have supported you up to this point. They may have helped buy you dinner, get your study food, be the listening ears to talk through the challenges of life away from home at school, or shoulders to cry on when things didn’t quite go as you had hoped. These people—your network and community—have been a big part of your journey to this graduation. Thank them. Celebrate with them, and allow them to celebrate with you.

Congratulations, graduates! May your discernment and transitions into whatever lies ahead be blessed.

A Personal Word of Thanks

In the spirit of giving thanks, I too wish to give thanks today. I have recently received an exciting call to serve as the new Director for Stewardship of the Nebraska Synod of the Evangelical Lutheran Church in America. In my transition into this new chapter, I will no longer be serving as the Communications Associate for the Ecumenical Stewardship Center (ESC).

I am grateful for the opportunity to serve in this way these past 2 years. I am tremendously grateful to Marcia Shetler, the Executive Director/CEO of ESC for this opportunity. I am also excited to share that though I will no longer be serving in this capacity; I will continue as a committee member for COMPASS and ESC and will continue to offer thoughts and perspectives on this blog about once a month as a volunteer contributor. I look forward to continuing the faith and finances conversation with all of you well into the future.

timothy headshotAbout the Author: In addition to these roles and news, Timothy Siburg also currently serves as a congregational mission developer, among a few other roles. He blogs regularly on his own blog as well.

Image Credit: Graduates

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.

Four Simple Financial New Year’s Resolutions: Share, Save, Spend, and Plan

Four Simple Financial New Year’s Resolutions: Share, Save, Spend, and Plan

During January the COMPASS blog is sharing space for financial new year’s resolutions. The series continues as Marcia Shetler, CEO of the Ecumenical Stewardship Center shares some thoughts about sharing, saving, spending, and planning.

happy new yearWith a grateful nod to my friend Nathan Dungan, I’d like to suggest four simple financial new year’s resolutions. Nathan is founder and president of Share Save Spend, and his website is full of great resources related to finances.

  1. Share!

Data about young adult giving in Canada and the US provides mixed reviews. The Globe and Mail reported last summer that less young Canadians are giving financially. In the US, though, CNBC reported that 84% of Millennials made a charitable donation in 2014, and 70% spent at least an hour volunteering.  But because their giving is strongly influenced by their peers, social media momentum, and current issues, it can tend to be sporadic.

While some Christians use the tithe (10 percent of income) as a giving measurement, it can also be a goal to aim for over a period of time. Do you know what percentage of your income you gave as charitable gifts in 2015? If you’d like to give more, set a “step goal” for yourself: an increase of a percentage or two. Now translate that into actual dollars and decide how you would like to give it. You can even include a category for unexpected or new opportunities you might encounter this year.

  1. Save!

It can be hard to save when you are faced with student debt and new expenses related to living on your own, but getting into the savings habit will reap benefits in both the short run and long-term. Sometimes adding to your savings is as easy as increasing your knowledge. For example, does your employer offer matching contributions to your retirement fund, and are you taking advantage of that opportunity? According to CNW, more than one third of Canadian Millennials can’t answer that question.

Even if you have a tight budget, you can develop a saving mindset. Pick a short-term goal. Save your loose change. Save by spending less, like on apps, eating out (including work lunches), and entertainment that costs money. Open a savings account and schedule automatic transfers from your checking account, perhaps synching it with your payday. Money you never “see” can be easier to save.

  1. Spend!

For most people, money is an integral and unavoidable part of life. So if we are going to spend, it’s important to do so wisely. Just this month, right after the traditional Christmas gift-buying binge, The Washington Post reported that one of the newest spending trends is choosing experiences over tangibles. “People are saying, I’ve got enough stuff. I want to pamper myself a bit and do something that makes me feel good,’” the article quotes Steven Kirn, executive director of the University of Florida’s retail education and research center, as saying. This kind of attitude toward spending can spiral out of control quickly.

In the COMPASS blog, we’ve encouraged looking for ways to live a fulfilled life without overspending. Here are a few previous posts that you might want to read for more ideas:

  1. Plan!

time to plan“If you fail to plan, you plan to fail” is a familiar phrase. Whether you want to share more, save more, or spend more wisely in 2016, developing a plan to do so is essential. If you’re not sure how much money you have or where it goes, gaining that understanding is a necessary first step. For just one month, or even just one pay period, keep a detailed record of where all your money went. How much did you share? How much did you save? How much did you spend? How can you adjust so that you are sharing, saving, and spending to reflect the life that God is calling you to live?

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 Credits: Happy New Year and Time to Plan