Give Graduates the Gift of Financial Advice
Consumer Protection

Give Graduates the Gift of Financial Advice

By June 24, 2015 October 9th, 2019 No Comments
It’s the season for high school graduation parties. Those recent graduates are making big decisions about how to pay for college. The Consumer Financial Protection Bureau has tools to help.

College student loan debt has been a much-debated element of consumer protection for years. Politicians like Senator Elizabeth Warren of Massachusetts are struggling to tackle the issue at the federal level, even while middle-class families wrestle with decisions between public and private financial aid options.

The Different Types of Financial Aid

According to the Federal Reserve, 23% of adult Americans have some education debt. But all loans are not created equal. Federal student aid includes options for consumers to “defer” payments or seek lower monthly payments in cases of economic hardship. They also have repayment plans based on your income.
But private student loans may not have the same options. According to Chris Dlugozima, community educator for GreenPath Debt Solutions:
“With private loans, it’s completely case by case but many lenders will offer forbearance options. . . . It’s always worth a phone call.”
Forbearance could allow a debtor to delay or reduce payments, but the interest will continue to add up. You may also be required to continue to make interest-only payments during the forbearance period.

The Problem with Student Loan Debt

One of the biggest problems facing students is the risk of incurring thousands of dollars in student loan debt without ever getting a degree. In 2012, only 59% of all first-time, full-time college students actually got their bachelor’s degree within 6 years. Those who don’t finish still face piles of debt. Freshmen could already have $5,500 in student loans by the end of their first year.
Once they drop out, the chance of falling behind on their student loans jumps from 6% (for college graduates) to 21%. That means among the 40% of first-time college students who don’t finish, one in five will have trouble paying back their loans.

The Consumer Financial Protection Bureau Has Help

For students trying to decide if enrolling in college is worth the risk, the federal Consumer Financial Protection Bureau has some important tools. Their Student Financial Guides and online financial aid offer comparisons that can help college-bound students make smart decisions about how to fund their education. The Consumer Financial Protection Bureau also has tools for finding options if students fall behind.
Collections proceedings from defaulting on federal financial aid and private student loans can ruin a young person’s life. Rather than waiting until they fall behind, make sure your high school graduate knows what tools are available to them right from the start. This little financial advice could be the best graduation present they will ever get.

Dani K. Liblang is a consumer protection attorney at The Liblang Law Firm, P.C., in Birmingham, Michigan. She helps to defend debtors against aggressive collections companies and negotiate fair settlements. If you have debt collectors hounding you for payments, contact The Liblang Law Firm, P.C., for a free consultation.

Dani Liblang

Author Dani Liblang

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