Tag Archives: student loan

Coping with the Student Loan Burden

Image from Bascom Hill on Flickr
Image from Bascom Hill on Flickr

Written by: Megan Lanier

I am crippled. Not in the sense that I have a physical impairment, but rather a financial burden that looms over me and my husband day every day. That aliment is student loans. We are just one of the 40 million Americans inflicted with this weakness that was supposed to be our saving grace.

To be honest, this was somewhat self-inflicted. While I was one of the lucky few who was able to escape college and graduate school debt-free, my husband was not so fortunate. He (and now we) carries around an absurd amount of debt which makes me sick to my stomach to even think of the number, let alone share it with others. Although we make substantial payments each month, the total only seems to rise.

Knowing that we must not be the only ones stuck in one of those zero progress clichés, I started thinking: what are other millennials doing about this issue? We are a young, inventive and curious generation that will not be stopped a little issue like paying back over $1.2 trillion in our lifetime…right?

While most repayment plans are put on a 10-year track to debt freedom, the average bachelor’s degree holder takes 21 years to repay his or her student loans. That is also taking into account that the average loan amount is about $30,000. Gulp. Sadly, that amount is far less than the figure my husband and I are dealing with.

So, enough with the facts and figures. What are millennials actually doing about this “crisis”? Here are some creative ways our generation has tackled this mounting societal problem.

  1. Be a Volunteer. While the Public Service Loan Forgiveness Program is widely known now, it is not a feasible option for everyone. A couple of innovative millennials have crafted a way for the service-minded to receive the benefit of loan repayment assistance. Two organizations with a similar concept in mind, reward volunteers for participating in volunteer projects that receive funding from sponsors. Zerobound and SponsorChange have different funding models, but the same idea to make the burden of loans a little easier for those who give back. In a sense, volunteer work is crowdfunded by companies, friends, family, etc. to pay down student loan debt.

 

  1. Debt Realization. The first step to tackling debt is knowing exactly how much you have to pay off – and the time it will take you to do so based on your monthly payments. The federal student loan calculator is a marvelous tool. One millennial had the help of her boyfriend to finally come to terms with her student loan debt issue. By implementing some creative solutions to cut back expenses and make additional income, she has paid off $90,000 in debt. She discovered some unique ideas for earning extra income which made those monthly payments a little easier.

 

  1. Earn Rewards. Almost every credit card nowadays offers rewards for cash back, airline miles or hotel points. Another company has taken a similar approach by offering the benefit of student loan repayment. SmarterBucks allows users to sign up for a free account and shop the online marketplace featuring popular brands and earn up to 10% back paid to the student loan carrier of your choice. Additionally, family and friends can sign up for a “Gifter” account and their rewards will be contributed to repayment as well.

Although the issue of student loan debt can be frightening, it is reassuring to know that others have tackled the problem and are now thriving, debt-free individuals. Hopefully, some of these ideas will help you (and me!) make further progress on repayment and break free from student loan debt.

CNN Money Coverage on Student Loan Crisis.

New America Study on Student Loan Debt in the U.S.

U.S. News article on the realities of paying off your loans.

Information on the Public Service Loan Forgiveness Program.

Zerobound – how you can use volunteer hours to pay off your loans.

SponsorChange – complete special projects and get a loan payment.

A calculator to help better plan on how to pay off your loans.

Forbes – How one person paid off $90,000 in student loan debt in a year.

Long term benefits to Student Loan Debt?

Each generation has had an issue that plagued their thoughts, dreams, and aspirations. For our grandparents, it was managing a Post WWII world. For our parents, it was dealing with drug abuse and the now invisible color lines. What could possibly plague our generation more than the broken system that we inherited? The financial crater left by pursuing the one thing that marketed guaranteed success: a college education. 
 
An estimated 7 out of 10 graduating seniors in 2012 walked into the “real world” with an average of $29,400 of student loan debt. According to this Huffington Post article, the burden can lead to a loss of license in some states and most importantly prevents many young people from qualifying for home loans, personal loans, small business loans, and car loans: the bread and butter of the American economy. If you don’t really understand how it all works check out this infographic that breaks it down.
 Student Loan Scheme.
 
Whether or not you or your child are dealing with this type of debt, it has market wide effects. Think about it, with significant portions of 30 million salaries going to feed a collective financial crater, who is going to be purchasing the high priced credit based goods that serve as the metric for a healthy American economy? How can you breed healthy work habits when personal finance is always going to be a significant anxiety? 
 
There are hundreds of suggestions on how to cope with the pressure of dealing with student loan debt, and it deserves serious attention and planning. But once in this crater, why not wear the burden as a badge of courage? Presumably, students don’t take out loans unless they need them in order to get to where they want to go in their careers. As it is in life, taking that kind of risk has forced many in this group to make sacrifices and choices in order to survive. It will be lessons we’ve learned from those choices that will mold the next Great Generation.
 
Lessons in dedication, perseverance, resourcefulness, and long term thinking will only serve us in in the long run. Our generation has already claimed the superlative “most entrepreneurial” and “most diverse” in U.S. history, once we have claimed positions of power these lessons will only make stronger leaders and truly change the direction of the world.
 
Have student loans impacted your life planning and decision making? If so, how?

A Tech Solution to the Student Debt Crisis?

The Online Platform that Can Revolutionize the Student Economy

Among all of the social challenges facing the U.S. millennial, student debt and career development is by far one of the greatest obstacles for this generation. When I was making decisions regarding where I was going to attend university, I trusted that the economy was going to be there for me to gain a respectable income. Graduation day 2009 presented a completely different reality, one that I know many U.S. millennials are currently living. This crisis has been likened to the housing bubble, and many experts fear that it could have serious impacts on the U.S. economy as millennials are rising to prominence in this economy.

Although the outlook is quite bleak on this issue, I had the opportunity to interview a 24 year old Pittsburgher who is challenging the nature of work for current university students – Mark Heckmann of Student InTuition. His startup provides a revolutionary approach to start chipping away at the student debt crisis.

How It Works

Student InTuition is an online platform that matches students with businesses that have short term projects that current university students can do – and pays them for it. Such a model allows current students to gain real work experience and businesses to hire students without the burden of searching for good talent. Current students simply log-on, create a profile, and Student InTuition does the rest.

How It Started

As Mark tells it, about a year ago he was sitting at a board meeting for his alma mater, Denison University, where the Board of Trustees was exploring the increasingly concerning situation facing university students: increased student debt and lack of actual work experience.

At the time Mark was studying at Carnegie Mellon’s Heinz College obtaining a Master in Public Policy and Management and found himself trying to find a solution to this very serious problem. He then joined a student-run incubator at Carnegie Mellon, IdeaLab, where Mark was able to have access to a solid feedback community comprised of other start-up leaders. Then, he took a Social Innovation course where he was able to develop the framework for the company and apply for a spot at Pittsburgh’s newly established Thrill Mill’s Hustle Den. While at the Hustle Den, Mark was able to get more professional, legal, programming, and office space support that helped create the legitimate social enterprise: Student InTuition.

Mark’s Lessons

Having a million dollar idea is one thing, but getting the timing just right can make all the difference. As Mark said:

A big part of launching a company is timing – are the market conditions right for such a thing to exist? Oftentimes you can have a great business concept, but the timing is incorrect, so you wait for the conditions to become favorable. In our case, investment in Ed Tech companies has been very strong, and the debt issue has been a prominent part of public discourse.

Not only were the external factors in his favor, but he had the rare opportunity to develop his business while in school with the tools his institution had to offer. Using the tools available, can be the support system any entrepreneur needs to get an idea off the ground.

When asked about what are the other advantages of being a young entrepreneur, Mark said:

…millennials understand the importance of being connected. The adages about networking continue to apply, and the companies that truly make change are ones who ask questions, seek feedback and promote their cause shamelessly. Our generation is better equipped to do those things than others.

Connectedness and timing, though crucial, are nothing for an entrepreneur without this element:

…it’s critical to recognize that you can have a voice on an issue, even a big one. There are many people with far more training, work experience and expertise than me out there, but they do not share the same interest, passion and empathy on this issue with me. And that becomes a distinguishable, credible mark for an entrepreneur – which their unique skill set and interest in a sector could create value in ways that have never been thought of before. But you must have the confidence to have a voice on an issue – absent that; you cannot be serious about your business.

If you want to learn more about Student Intituion, check out their website: http://studentintuition.com/ or follow them on Twitter @studentin2ition and post below if you know of any other great efforts on tackling the student loan crisis.