When Andrew Josuweit graduated from Bentley College in Massachusetts in 2009, he had 16 student loans totaling $104,000. To make matters even more complicated, the loans were serviced by 4 different companies.
In addition to Josuweit’s debt load, he became increasingly frustrated by the fact that he couldn’t get the advice he needed to take control of this important part of his financial life.
“I think the biggest challenge out there is that most borrowers know very little about their loans,â€ says Joseweit.
Frustrated by his own situation and realizing how big a problem the complexity of the industry was for the 40 million Americans who struggle with more than $1 trillion in student loan debt, he founded Student Loan Hero. A site that is helping more than 20,000 people manage and eliminate their student loan debt.
“A lot of people, particularly young adults, have never had consumer debt. They’re looking for someone to hold their hand. They don’t understand that if you stick your head in the sand and avoid paying your loan, you go into delinquency. You’ll accrue fees and there will be negative consequences for your credit score,â€ says Joseweit.
BlackEnterprise.com caught up with Josuweit who told us there are steps people can take to make the repayment process easier and more efficient.
BlackEnterprise.com: What prompted you to start Student Loan Hero?
Josuweit: I learned from my own experience how difficult it was to keep track of your loans and understand how they worked, who held them, etc. I wanted people to have one place where they could track all of their information and understand their options. The average person has 8 loans that are a mix of federal and private. When the information is scattered, it’s hard to understand things like their overall debt level and interest rates, but that’s where you have to begin.
People can get so overwhelmed by their debt levels, that they often don’t feel like they have options. What do you tell them?
There are over 70 repayment options for student loans, but they’re complicated for borrowers to figure out. When it comes to private loans, borrowers should explore refinancing and making sure they are getting the lowest possible rate. Lending institutions will also allow students to defer payments if they are in trouble: Federal loans can get deferred for 3 years. Private loans can generally get deferred for 6 to 12 months. You have to sit down and figure out your options. There is no reason for the high level of default on student loan debt.
Elaborate on what you mean by no reason for high default levels when you consider that fact that people are struggling with student loan debt and struggling to make ends meet.
You can get income-based repayment plans for federal loans if the loan represents a significant portion of your income. This can greatly reduce or eliminate your payment.Â Federal loans are also eligible for different loan forgiveness programs. Borrowers have to do a little research, and these programs need to do a better job of getting the word out.Â I’m always surprised by how few people take advantage of these options.
(Go to https://studentaid.ed.gov for more information on income based repayment and loan forgiveness).
I’ve heard you mention how important it is for people to keep their contact information up to date.
This is especially problematic for young people. They graduate, they get jobs, they may move around, and they lose track of things like when their payments are due. You must let your lender know when you’re moving, otherwise you may not even know when it’s time to make a payment.Â This can cause big problems and lead to default.