If misery loves company, the more than one million New Yorkers collectively carrying $35 billion in student debt can rest assured they are not alone.
The New York City Department of Consumer and Worker Protection (DCWP) says about 14% of city residents with student debt are 90 days or more behind on loan payments, according to its commissioner, Lorelei. Salas.
“I care about that a lot,” Salas said. “I graduated from law school with $150,000 in student debt. So I know what it does to people’s finances and to their stress levels.
“It’s a long process,” added Salas, who still has nearly $50,000 in student debt. “There were times when I thought, ‘I’ll never stop paying until I die.'”
Borrowers have taken to social media and advocacy organizations like the non-profit Student Debt Crisis to share their stories of woe (and also their accomplishments if they managed to repay or repay their debts ).
“For the past three years I’ve had a pretty solid job at a top university,” one New Yorker wrote on studentdebtcrisis.org.
“I make a pretty decent salary and get a free MBA. I have a 401(k) and a Roth IRA and I put 25% of my salary in my savings account every month. I have about $45,000 student debt — $15,000 private loan and $30,000 federal loans I’m trying to contribute $600 a month to these loans.
“Last year I contributed $1,762.12 to a large chunk of federal loans totaling $25,000. Over the past year, that total debt has gone down by $415. I invested $300 there I’m seven days old and I already owe $20. I burst into tears when I realized this. For years, my student loan debt has been this shadow hanging over me.
Indeed, a Moody’s report released in January found that slow repayments have become a key driver of what has been the fastest growing type of household debt over the past decade.
Student loan debt soared to $1.6 trillion in the fourth quarter of 2019, according to the Federal Reserve. One in five adults – 45 million Americans – contributes to the total.
Over the past decade, the overall annual net repayment rate (or the amount of existing balances eliminated each year) for U.S. student loans has averaged just 3%,” and many recent graduates have not repaid their balance at all,” Moody’s said.
Meanwhile, the student debt clock on FinAid.org has topped $1.7 trillion, and the issue looms large as the presidential election approaches.
The student loan woes put education concerns ahead of job loss and market downturn fears to become the No. 1 financial disruptor in a recent Harris poll on behalf of TD Ameritrade.
The results came in a time of low inflation, record employment, a rising market (pre-coronavirus), noted Tom Butch, general manager of retail distribution at TD Ameritrade.
In five years, education concerns have risen slightly, with student debt jumping more than 25% in that time, he said, especially for millennials.
The NYC DCWP, formerly the Department of Consumer Affairs, released three reports on student debt, including one in 2017 with the Federal Reserve Bank of New York looking at student loan default and delinquency rates in different neighborhoods, a study that has been replicated in other cities.
The DCWP held debt clinics in targeted areas in 2018 based on the findings of the Fed’s joint report – delinquency and default rates are higher in lower median income neighborhoods.
He offers counseling for student borrowers at nyc.gov/studentloans and provides free counseling at Financial Empowerment Centers in all boroughs.
There are many resources available across the country, but borrowers should be sure to find one that offers student loan expertise, whether it’s a financial advisor, CPA, or attorney, said Bruce McClary, vice president of communications at the National Foundation for Credit Counseling, which runs studentloanhelp.org.
Try to avoid for-profit debt relief companies, he warned.
“Clients pay a lot of money up front and in many cases end up worse off than when they started,” he said.