Paying off Student Debt

Thomas: Thanks for having me.

Interviewer: The debt is a huge issue. I’m sure you deal with people
every day that are trying to manage this. What is your new
program trying to do?

Thomas: As part of the Student Loan Alliance, Clearpoint is one of 8 of
the largest nonprofit credit counseling agencies that have
partnered together to promote partnership, borrower outreach,
counseling, and education for students. There is a new program
in place for students to help them navigate the tricky road of
repaying student loans, to figure out what payment method is
best for them, to choose that and to keep them current on that
student loan. We see that about, actually, over 1/4 student loans
are in default right now. That’s 5 million people nationally.

Interviewer: It is talked about as this next bubble that is waiting to
burst, in terms of people that simply can’t get a job. If they
get a job, the wage that they’re earning is much too low to
support themselves and pay off their student debt. This is a
very serious issue.

Thomas: We see people with 6-digit student loans. We see people who are
moving back at home. Boomerang children, who have moved back
home simply because they can’t afford housing, to stay mobile in
a vehicle, and repay student loans.

Interviewer: I think this is probably changing now, but when I was in
school, certainly when I was in graduate school, you get these
loan papers, you sign them. No one really cares, no one thinks
about it. You don’t know what $45,000, $50,000, $60,000 means,
and then you begin to pay it off. That was 15 years ago; it’s
gotten so much worse now. Are you still finding that, that
people come here and after 4 years, “Oh, my gosh. I owe
$125,000”? I think the education part really has to happen
before you enroll Day-1 so that you understand what this debt is
going to be when you’re finished.

Thomas: There is some required counseling, both entrance and exit, in
the student loan process. A study found that 40% of students
didn’t remember that student loan counseling, and the others
felt that it was insufficient and they needed more personal
advice. The system that’s in place really isn’t sufficient. What
we’re hoping is that people reach out for this optional, and
it’s also free, counseling service that’s being provided by the
Student Loan Alliance.

Interviewer: Are there some good options? Can you consolidate? Can you
refinance these loans? Are there some limitations depending on
where the money comes from? How do you navigate that debt?

Thomas: You’re exactly right. That’s exactly what we look at; look at
the type of debt you have, who the servicers are, and see what
the options are. Can it be put on income-based repayment? We
know that that’s very underutilized. Apparently, only about 1%
of borrowers are on an income-based repayment plan. Sometimes,
they don’t know what payment plans are available to them.
Sometimes they’re afraid to ask. If you’ve ever called a student
loan servicer, you know that it’s not always the most pleasant
experience. Sometimes, it’s very intimidating, abrupt phone
call.

We’re hoping to soften that experience and to educate people as
to what is available to them, and get them on the path to
successful repayment so that we don’t have these abysmal default
rates, so that people don’t hurt their credit, and that they can
afford their payment.

Interviewer: If they want to take advantage of your program, how do
they enroll?

Thomas: They can go the ClearpointCCS.org. We’ve got a couple of blogs
under the Know You Money blog, on the right side of the webpage
that will link you to the intake for the Student Loan Alliance.
Or you can also call the number 877-877-1995 and just ask for
student loan counseling, as well.

Interviewer: The name is the Student Loan Alliance?

Thomas: Student Loan Alliance. It can be found on our website,
ClearpointCCS.org.