Don’t let student loans define you.Here’s how to achieve it

Financial Planners

  • “Your student loan identity is about your relationship with debt,” says a financial therapist.
  • Reviewing your loan details and planning your spending can help you deal with the reality of debt.
  • A report from the Consumer Financial Protection Agency found that one in five student loan borrowers exhibit one or all of five risk factors that indicate they may struggle to pay their bills.

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After more than three years of suspension of payments, federal student loan claims will once again become a part of American life this fall. But borrowers should try not to fall into the “student loan identity” trap.

More than a decade ago, online advice columnist and best-selling author Sheryl Strayed covered the “student loan identity” phenomenon in her column “Dear Sugar” for the online literary magazine The Rumble. also wrote that life must go on. The size of the student loan outstanding balance.

In fact, a recent study conducted by the Trellis Company found that student loan debt holders experienced a higher proportion of key distress indicators compared to survey respondents overall.

According to Trellis, a student loan insurer that guides borrowers through the repayment process, the survey found that 88% of student respondents who experienced financial hardship while in college said they took out student loans.

Kristi Archuleta, a financial therapist and professor of financial planning at the University of Georgia, said her identity in student loans is a relationship to the debt she has accumulated.

“Sometimes we have so many emotions about our financial situation. Student loan debt can be a form of debt that people feel ashamed of. because they may not have known they were renting,” Archuleta said.

Lazetta Rainey Braxton, certified financial planner and co-founder and co-CEO of 2050 Wealth Partners, a virtual company, said people were stuck in student loans because of childhood “money worries.” He added that he has been critical of his decisions. . She is also a member of her CNBC Council of Financial Advisors.

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FOGS stands for “fear, duty, guilt and shame,” Braxton explained. “The fear of running out of money, the obligation to keep up with responsibilities such as credit scores, the guilt of decisions made, the shame that accompanies accumulated debt,” she added.

Student-loan expert Ryan Law, CFP and Utah Valley University professor, said he’s witnessed student-loan anxiety and debt denial among current college students. “We always deal with student loans,” he said. “Generally, what I’ve felt is that most people don’t want to know a lot about student loans.”

Additionally, according to a report from the Consumer Financial Protection Bureau, one in five student loan borrowers, or about 20%, are one of five risk factors that suggest they may struggle to pay their bills. It shows everything. U.S. Supreme Court voided President Joe Biden’s federal student loan forgiveness plan in June, requiring borrowers to resume repayments suspended two years ago amid COVID-19 pandemic as of October There is

While that may mean additional financial and psychological stress, Braxton believes that a system that requires Americans to borrow so much to get a college education is unjust. He admitted, but said borrowers shouldn’t forget that student loan debt can be viewed as an investment in themselves. “broken.”

In his column, Strayed advised us to deal with the current reality as best we can. “You have no right to receive cards that you believe should be dealt,” she wrote. “You owe it to yourself to play with what you have.”

Braxton said financial planners can help clients feel comfortable talking about student loan debt, see that they can actually meet their goals, and help them let go of stress.

“Free yourself up so you can use your energy to live the life you want instead of being trapped in a certain area,” she said.

Here’s how to take the first step towards inner peace.

  1. Check Loan Details. It’s important to know who the loan servicer is and what the balance looks like, Law said. About 40 million student loan borrowers are expected to start repaying their loans this fall. Be sure to update your contact information and reach out to loan collectors and others.
  2. Change the way you think about spending plans. Spending plans act as a kind of “reverse budget”, giving you the opportunity to enjoy life in the present while saving and investing for the future. “Sometimes people think of it like a diet, but think of it as a tool for success,” says Archuleta. A spending plan is how you compare your spending to your income, and what small adjustments you can make to keep things moving, she added.
  3. Check what repayment options are available. Many payment options are available with student loan debt that are not available with other types of debt. “Normally, a loan servicer wouldn’t say, ‘Let’s build a repayment plan for your car loan,’ but you can do that with student loans,” says Archuleta. However, it is up to you to review and apply for these payment options to get the help you need.
  4. Seek professional help. There are tools available and financial counselors are uniquely qualified to help people, Law said. Contact someone who can help you budget according to your financial situation. “Know you are not alone,” said Braxton.

As Strayed writes, “It’s up to you to keep parking there or turn around and drive out.”

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