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Getting educated on student loans

By: Brendan Losinski | Online Only | Published January 29, 2019

A college degree can pave the way for a successful and financially secure future, but many people find themselves struggling to pay off the significant amount of student debt they accrued in order to get such a degree.

Student debt is often described as one of the key factors in preventing financial stability among adults. Chris Dlugozima, an education specialist with Greenpath Financial Wellness, a national nonprofit organization headquartered in Farmington that helps people manage their finances, said it is an issue that is continuing to grow.

“Student debt is certainly about $1.5 trillion. As other areas of the economy keep getting better, student debt keeps getting worse,” he said. “It is not only the amount people owe, but it’s also a matter of people not being able to keep up with payment requirements.”

Americans owed more than $1.3 trillion in student loans at the end of June 2017, according to the Pew Research Center. That is more than 2.5 times what they owed a decade earlier. Furthermore, the center states that 40 percent of all adults under the age of 30 have some amount of student debt, and a quarter of adults with student debt owe more than $43,000.

One of the key reasons for student debt becoming such a widespread issue is increases in tuition costs.

“First and foremost, the cost of tuition is the biggest problem,” explained Christine Roberts, head of student lending for Citizens Bank. “We don’t have a student loan problem so much as we have a cost of attendance problem. The Consumer Price Index has gone up about 250 percent, and the cost of tuition has gone up more than 1,200 percent. A lot of this came about about 15 years ago, when the federal government removed the cap for what parents could borrow for attendance. The cost up until that point rose slightly higher than the Consumer Price Index, but after that, it skyrocketed up.”

The first step to getting student debt under control is to get a better understanding of what is owed. There are online tools that can help with this.

“The first step for people is looking at the loans they have,” said Dlugozima. “They can look at the (Federal Student Aid from the U.S. Department of Education) student loans portal, and there is a repayment estimator tool, and you can look at different options. This gives people what monthly payments would be under different plans and budgets, and what kind of interest they would be looking at depending on their lifestyle.”

The student loans portal can be found at

Countering student debt can seem like a daunting task, and anyone who knows anything about money knows debt never simply vanishes. However, there are options people can explore to manage that debt to lower low much they owe or make the monthly cost less of a burden.

“Always look at what your refinance options are,” said Roberts. “The more likely you are to pay your bills, the lower your rates will stay. We allow parents to refinance debts while children are still in school if they think they can get a lower rate and consolidate debt into one debt, for instance. If people can pay down loans faster, it’s always a good thing.”

“The most important thing people can do is educate themselves on their options,” said Dlugozima. “See if consolidating loans would help. Explore loan forgiveness programs and so forth. People often get wrong information or conflicting information. Less than 1 percent of people who apply for student loan forgiveness get accepted, but 70 percent of them are rejected because they don’t meet the requirements. This means looking at whether you are working so many hours a week, what other types of loans you are eligible for and watching their credit score … making responsible adjustments in your life can mean having more options to reduce or manage your debt.”

Both Dlugozima and Roberts said the best approach to student debt is to try to avoid accruing it in the first place.

“With a young child, there are different vehicles for saving money or putting money aside over a 10- or 15-years period,” said Dlugozima. “For families who have a student looking at college in a year or two, always look at scholarships, state grants or work programs to cut down on those costs. Some scholarships can be dependent on service programs they take part with in high school. Also, the best option for some people may be to go the first two years of college to a community college and then transfer to a four-year university to finish their degree. … Also, don’t just look at the ‘sticker price’ or just the cost of tuition. Look at what you would have to pay for room and board, additional costs like books or later payments if you do borrow money.”

“Talk early and talk often to your children about the cost of education,” Roberts added. “It’s sort of a quasi-taboo topic that parents don’t want to talk to kids about finances. When it comes to financing of college, they need to be part of the conversation and know what is available to the family. Families should talk about what the child wants, what they can get out of every college and what they can afford.”

When taking out a loan for college, it is important to explore different options, particularly seeing whether a government loan or a private loan would be the best financial option both at that time and in the future.

“For those looking for loans, always look at private lenders, which often can offer better rates than the federal government. Know your options. If you have good credit, look for the best interest rates and terms,” said Roberts. “Banks like Citizens Bank have resources people can use to look at different options or different scenarios so people can better predict what their payments will be, what they will owe and what different options are for paying off that debt.”

“When you look at all this cost minimization costs, remember that not all loans are equal,” said Dlugozima. “A subsidized loan is the best option. Parents taking out loans for their students often come with higher interest rates. Private loans also will almost always have higher interest rates. Federal loans have different rates every year, but once the loan is taken out, those rates are fixed. Private loans will almost always require a cosigner for undergraduate students, which can also affect the parents’ credit as well, which families need to remember going in.”

Dlugozima said that often the most effective ways to counter the burden of student debt is to get educated, live responsibly and to get an outside opinion.

“Having someone advise you through the process, like Greenpath Financial, can be a huge help,” he remarked. “Sometimes it just comes down to how much money you can free up in your monthly budget.”