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Student-loan borrowers can get help managing debt – July 23, 2013

By David Hendricks

Author: SuperUser Account/Wednesday, July 24, 2013/Categories: Financial Empowerment Center
Student-loan borrowers can get help managing debt
By David Hendricks
July 24, 2013
If the college student-loan debt crisis had not unfolded so slowly or invisibly, Hollywood could make it into a terrifying disaster movie.
It's not easy to see, but large numbers of people are walking among us with financial albatrosses hanging around their necks.
When Consumer Credit Counseling Service of Greater San Antonio recently staged a free “managing college debt” seminar, more than 40 people showed up.
“This is not like other debt,” warned Richard Keith, assistant director of the city's Department of Human Services, which operates two Financial Empowerment Centers.
College debt can't be dismissed as easily as other debts, even when declaring bankruptcy. Wages and income-tax refunds can be garnished when borrowers fall behind in payments. Even if borrowers die, co-signers still must pay the debt.
“Student-loan debt will be painful for a long time, so it helps to address it as soon as possible,” Keith said.
College debt can drag down more than students. Gloria Delgado, Consumer Credit Counseling Service's president and CEO in San Antonio, cited an example of a grandmother who co-signed on college loans. The granddaughter racked up more than $100,000 in debt and is behind on payments. The grandmother's Social Security benefits are being docked for repayment.
Nationally, student loans are approaching $1 trillion. The Texas default rate of 13.9 percent is among the nation's highest. The Federal Reserve reports that 15.8 percent of all Texans carry student loans.
Even older people still carry college debt. About 6.3 million people older than 50 owe a cumulative $134 billion.
Consumer Credit Counseling Service and the two city-operated Financial Empowerment Centers are places that student-loan borrowers can turn to for help in managing debt.
When is it time to seek help?
Crunch time often happens after the standard six-month deferment of payments after graduation ends.
“If they are at a point where the loans are coming due and they can't make the payments, we can help them redo their budget and manage their income,” Delgado said. “We can help with other debt, such as credit cards, to get on a plan that makes college debt more manageable. We can take a holistic approach, take what you owe, what your income is and make it all work.”
Counselors have a few options that borrowers may not be aware of, Keith said.
An income-based repayment plan that reduces the monthly burden is possible in some cases. Paperwork is involved, but counselors can help with the red tape, including contacting the lending organization, Keith said.
If the borrower works for a government agency or a nonprofit organization for 10 years, along with other criteria, it may be possible for some of the debt to be forgiven, if payments have been made on time. The U.S. Education Department's forgiveness program that started last year is retroactive to 2007. But that means debt reductions cannot start until 2017 at the earliest, Keith said.
The federal government has taken over nearly all the student-loan industry in recent years, offering lower interest rates than private lenders did. But plenty of people are struggling with college debt in general. If they are responsible, they should explore ways to manage their debt better.
If borrowers need help of professional counselors, they should seek it.


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