Credit Counseling for Student Loan Debt

Man looking at laptop, frustrated
Photo by Tim Gouw via Unsplash

A panel studying the crisis of student loan debt led by Ivanka Trump announced recently that it would recommend borrowing limits to help prevent students from drowning in debt upon graduation.

Student loan debt has tripled since 2003 to about $1.5 trillion nationally. An average college graduate leaves school with $42,000 in debt, with payments of $350/month for ten years.

Rule #1: Don’t Give Up
For most people who graduate and begin working as a professional, that kind of debt load is constricting, but manageable. For many, particularly those in the helping fields that don’t pay well, the debt can be a burden. However, the worst thing you can do, says Kristin Bastian, a certified credit counselor at Origin SC, a financial literacy non-profit in North Charleston, is fail to pay.

Bastian knows all too well. She ignored her debt when she graduated College of Charleston because she couldn’t pay it and things got ugly. Late fees and compounding interest multiply the pain.

“Stay on top of it and keep in contact with the loan servicer because they are there to help,” she advises. Looking back, she knows that had she made one phone call to arrange for smaller payments she could have avoided ruining her credit.

Today, Bastian helps others manage debt. She encourages anyone struggling with student loans to explore the many options, including income-driven payment plans, designed to help graduates reduce their debt and without cannibalizing their budget. She recommends the National Foundation for Credit Counseling at NFCC.org.

Paying Off $100 Grand
Bastian worked with one man awash in $100,000 of debt. She examined his income and expenditures and helped him determine where he could cut costs. They created a budget and a payment plan, consolidated at a lower rate.

Little by little, the man began paying down what he owed, while simultaneously saving for an emergency. Without that, one blown gasket, one medical emergency, one week of missed work can derail the best plan. After four years, the man had done such a good job getting his debt to manageable levels that he was able to buy a house.

Bastian says being honest about spending can be an uncomfortable and eye-opening process. It forces the debtor to come to terms with how much they spend on frivolous things. However, her job is not to judge.

Baby Steps
She says the key to success is baby steps. Focus on getting one thing under control, like a gourmet coffee habit, or spending on nights out drinking. Then move on to the next thing. Pretty soon, you’ve developed some fiscal discipline and paid off a chunk of debt.

Bastian says the real shame is that this generally isn’t taught in school – not in high school or college. It’s not a surprise that so many Americans borrow for college without a clear idea of how – or even that – they are going to repay.

What would Bastian advise her children do to avoid a student debt issue? “Apply for as many scholarships as you can. Consider work study and get your pre-requisites done at a Tech School. Only take out as much as you actually need, not what they offer to you.”