10 Questions for … a Student Loan Consultant

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Heather Jarvis
Photo Credit: Chad McMeen

Is it ever worth it to take on a big amount of student debt today for the promise of higher earnings tomorrow?

Debt is not to be taken lightly—it has significant and lasting consequences. However, education is highly valuable and arguably more important than ever—people with post-secondary degrees continue to have lower rates of unemployment and higher earnings over time. Of course, for many Americans, higher education is impossible without taking on debt, so I encourage clients to carefully consider what they can afford, borrow only what’s necessary, and look at federal loans first.

Do you believe the student-lending industry is broken—and, if so, can it be fixed?

We have a debt-based system of access to higher education, and I’m concerned that students and families are assuming unmanageable student-loan burdens that make it hard to save for retirement, qualify for a mortgage or start a new business.

So I’d like to see an increased emphasis on improving affordable educational alternatives (such as innovations that leverage technology, like Massive Open Online Courses or MOOCs), a simplification of federal student-aid programs, and better accountability in the student-loan “servicing” provided by companies that handle billing and are usually prone to error. Although I’m encouraged to see increased interest in these policy issues among elected leaders, I haven’t started holding my breath yet. But over time, and with continued commitment, I believe that meaningful reform is possible.

RELATED: 4 Ways to Fix the Broken Student Loan System 

Are there any resources, strategies and tools that you’d recommend to borrowers who are deep in student-loan debt?

There is nearly always something that can be done to fix a federal student-loan problem, but the system is overly complicated—and the details matter.

Everyone should start by getting a clear inventory of their loans. For federal student loans, you can check out the National Student Loan Data System. And for private loans, you can consult AnnualCreditReport.com.

Other great resources to explore include StudentAid.ed.gov and StudentLoans.gov, which are both managed by the U.S. Department of Education and provide descriptions of the various federal-loan repayment plans, as well as offer calculator tools to help estimate future payments. And StudentLoanBorrowerAssistance.org, managed by the National Consumer Law Center, is especially useful for borrowers facing financial distress, student-loan default or collections issues.

RELATED: 10 Ways to Reduce Those Steep College Costs 

In your experience, are college-bound students today any more aware of the perils of taking out student loans?

Yes, I find that students and families tend to be more committed to evaluating their options for financing higher education. But it remains the case that student loans are excessively convoluted—even the most sophisticated students and graduates struggle to navigate the system. So increased awareness of the perils doesn’t necessarily mean an increased ability to avoid the perils.

  • Sabina

    Wonderful article

  • b-dd

    Please stop saying the student loan interest rate has doubled. That is a misleading statement. In fact, it has gone back to what it was before. I’m not saying this is a good rate, but for those of us who took out loans at the time, we are already stuck with paying this so I feel almost no sympathy for those who were lucky enough these last few years to have revived the cut in interest. That would save me thousands a year. Please put it in context when you say it has ‘doubled’.

    • kim

      You are absolutely right! The student loan rate was 6.8% and was halved and now people that took advantage of the lower interest rate are complaining! At the end of the day, whatever was borrowed needs to be paid back and preferably without whining. It would not be fair to give new batches of students lower interest rates when I am stuck paying 160k at 6.8% (medical school)! I intend to pay every penny of the amount I borrowed, and so should everyone else! I live below my means to pay my debt and so should everyone else! I see people complaining about student loan debt and how it should be forgiven with Louis Vuitton purses and new Audis. Enrages me!

  • Christine

    This article didn’t really give any actual advising or action items as to what we can do with our large amounts of debt. I would like to hear more of her advice rather than just general info.

  • Kay

    how will the new student loan deal going through senate currently impact those of us who aren’t students, but have graduated and are paying students loans (and will be for some time to come!)? or will there be no impact to those with existing loans, etc.?

  • ReneeMW

    I wish this article offered more advice for those who have Private Loans. This would have been helpful maybe 8-10 years ago when I was heading into college. There’s a wealth of information out there now. What about people who were completely misled by their financial aid office and banks? I only needed to take out private loans when financial aid said my parents made too much money, which was definitely not the case. So what happens when i graduate and my mom is later on disability and my father is on unemployment because the economy tanked? There’s no financial aid then, not when it comes to private loans. I now work for a non-profit and while i’ve been able to get IBR for my federal loans, we’re still stuck making loan payments close to $700. I still live at home like many of my friends who are in the same boat. Because my loan payments are like having a mortgage!

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