The national student debt according to federal data of the Federal Reserve is $1.48 trillion in total U.S. student loan debt, crisis effects more than 44.2 million Americans of which Latinx and African American are disproportionately financially impacted. Why? Because we tend to borrow against the highest interest rates. To Latinx students, having loans to repay is a debt sentence, but it doesn’t have to be seen that way – – it is an investment in one’s future.
The average monthly student loan payment (for borrower aged 20 to 30 years): $351 This is a huge monthly debt to undertake and we end up owning more than borrowed. Millennials who are job seeking have entered a changing job market as well. Of course, we can not ignore the systemic racial issues at play, changing federal policies or lack of, governing these systems. As a result, student loan delinquencies happen much more frequently to brown and black/people of color. To look forward to are the state lawmakers going after these structures.
Do you know the difference between your loans as a borrower? Get on it! Federal student loans can be more forgiving than private – so get clear on potential differences in loan terms. For example, knowing your loan repayment terms can come in handy if you are not ready to repay due to not being able to find post-graduation work. Are you prepared to call and negotiate terms with the lender or do the legwork to get an income-based plan? You are liable and can end up going into default in 90 days which could hurt your credit history if no action is made. Student loans can not be included should you file for bankruptcy either. You are in a ‘debt sentence’ till it is paid off. But there are ways to manage smarter and get those loans off your back!
Here Are Some Smart Ways To Manage And Pay For Loans
1. Check to see if you qualify for Public Service Loan Forgiveness
What is PSLF? This program has been around since 2017 – basically if you work in public service, government services or for certain 501(c) not-for-profits you can have your federal student loans erased after 10 years of on-time payments. Program basic requirements are strict, but it may be worth learning about and applying, here is the form.
2. For Latinx Students – Pay More Than The Minimum – Even By $5.
Do whatever you can to pay more than the minimum. Sell clothes on Poshmark, ThredUP or the local consignment store. Airbnb your room, if allowable. Rent your car. Get a scooter business. Got digital skills? Freelance online with sites like Fiverr or Upwork. Build an online course. Is it time for a raise at work? Ask for a raise. Be specific – here are some ways to get bolder with your money – which can include applying your annual tax return to pay off your student loan balance. Don’t buy into paying the minimum and putting your loan at a less priority position to your other personal financial obligations and goals. Not paying off your student loan balance can lead to interest rate, long term accumulation ‘creep’. You could end up paying not only 100% but 200% more than you anticipated. Get it off your plate. Pay it off. Pronto!
3. Refinance If You Can
If you have to pull together several loans from several providers by all means, consolidate them all! You may end up saving more money from the interest rate alone, paying it off sooner and managing just one student loan payment. As a Latinx student, you may have several loans, at a low 4% APR – and it is the lowest you can get – it may not be entirely worth it to consolidate especially at a higher rate. Just work on the highest balance at 4% or a variable rate loan using the ‘Snowball Effect’ – a system of paying your debt of ‘highest to lowest’ balances. Be in the know when it comes to interest rate changes especially on ‘variable’ rate loans.
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4. Solutions are coming.
New technology-led platforms and models are democratizing the process. Some employers offer student loan repayment as a perk and this could be the future if employers want to attract a just graduated college class. Don’t want to manage your student loans…at all – get on platforms that can help manage payments to help you tackle the student debt. In the event you lose your job, Latinx students can potentially jump on an Unemployment Protection Program. Educational private financing solution platforms are working to find great schools and fulfill private student loans to vocational type programs to ensure you are able to find a job after graduation (which benefits the lender ensuring they get their loan paid!)
Latinx Students having loans does not need to be a debt sentence if you are on top of your loan game. That ‘debt sentence’ is a temporary financial situation that with hard work and paying attention, will be lifted.
