While our society is all too willing to emphasize the importance of a college education to young people, the implications of the bill associated with it is sometimes swept under the rug. Many students are making commitments to enormous loans before they truly understand the consequences.
As a result, many of our brightest talents in the workforce are saddled with debt that prevents them from taking the risks that lead to greater success and innovation that benefit our entire economy. This is to say nothing of the impact on their quality of life.
The personal cost
Take the case of Emily, who graduated in 2010 with $25,000 in debt, which, relatively speaking, is fairly low.
“I’m eight years out now, and still paying for college,” she says. “That, in general, is a frustrating thing. I was making over the minimum payment, and still barely touching the principal. My rate was 10.75 percent, so it was almost like putting college on a credit card, which is just crazy.”
As a result, Emily had to have a very focused career, seeing a lot of her hard money go down the drain paying off a huge interest rate. It also affected her ability to buy a house and make mortgage payments — a struggle shared with about 80 percent of her millennial peers, according to a recent Statista survey.
Couple this with the fact that 66 percent of parents can’t afford to set aside money for their children’s education, and the problem gets worse.
“It really came into play when I had a kid,” Emily says. “Knowing that I might have to pay for her school while I was still paying for my school. That was very eye-opening.”
It’s easy to see how the debt problem affecting millennials will be passed on to the next generation. Parents like Emily shouldn’t still be making payments on college when they could be saving for their child’s future.
Investing in our students
Luckily, there are organizations out there that are committed to helping free students from debt so they can start putting their education to use.
“Credit unions are not-for-profit financial institutions, owned by our members, with a 100-percent volunteer board of directors,” explains Sandi Papenfuhs, senior vice president of consumer lending at First Tech Credit Union. “Our mission is to provide affordable financial products to our members at all stages of their life and for all financial needs.”
By joining First Tech, Emily was able to refinance her loan with 3.5 percent interest, saving her thousands in payments and allowing her to finally make a dent in her principal.
“You’re not just a number,” Emily explains. “You’re actually a member of the credit union. They care about your story and helping you reach your goals and dreams. I knew that [my loan officer] cared about me paying my loan off by the time my daughter was in kindergarten.”
Unlike private corporations that will pass students’ debt around — sometimes without informing them — credit unions will hold your loan for life, with a commitment to helping you pay it off.
“It was a really simple process,” says Emily. “If I had done this right at the beginning, I would be done with my student loans right now. There’s hope to get your life back and take control of your debt.”
Now, Emily can look forward to the prospect of being able to grow her event planning business while saving to ensure her daughter gets equipped with a great — and hopefully debt-free — education.
Dash Lunde, [email protected]