Zero Debt for College Grads: From Student Loans to Financial Freedom 2nd Edition

Published by Advantage World Press

An imprint of TheMoneyCoach.net, LLC

P.O. Box 1307

Mountainside, NJ 07092

Copyright © 2019 by Lynnette Khalfani-Cox. All rights reserved.

No part of this book may be reproduced or transmitted in any form or by any means, electronic, or mechanical, including photocopying, recording, scanning or by any information storage and retrieval system without either the prior written permission of the Publisher. Requests to the Publisher for permission should be addressed to: Advantage World Press, Permissions Department, P.O. Box 1307, Mountainside, NJ 07092, or E-mail: info@askthemoneycoach.com.

Book Packaging: Earl Cox & Associates Worldwide - http://earlcox.com

Cover Design: Marites D. Bautista

Editor: Aziza Khalfani

ISBN 10: 1-932450-10-6

ISBN 13: 978-1-932450-10-1

LCCN: 2018950578

Printed in the United States of America

2nd Edition: 2019

This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the author and publisher are not engaged in rendering legal, financial or other professional advice. Laws and practices vary from state to state and if legal or other expert assistance is required, the services of a competent professional should be sought. The author and publisher specifically disclaim any responsibility for liability, loss or risk that is incurred as a consequence, direct or indirect, of the use and application of any of the contents of this book.

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Other Books By Lynnette Khalfani-Cox,

The Money Coach®

Zero Debt: The Ultimate Guide to Financial Freedom 3rd Edition

Perfect Credit: 7 Steps to a Great Credit Rating 2nd Edition

Free Pre-College Programs: A Guide to No-Cost and Low-Cost Summer Programs for Teens

College Secrets: How to Save Money, Cut College Costs and Graduate Debt Free

College Secrets for Teens: Money-Saving Ideas for the Pre-College Years

The Money Coach’s Guide to Your First Million: 7 Smart Habits to Building the Wealth of Your Dreams

Your First Home: The Smart Way to Get It and Keep It

Investing Success: How to Conquer 30 Costly Mistakes & Multiply Your Wealth

The Millionaire Kids Club Volume #1: Garage Sale Riches

The Millionaire Kids Club Volume #2: Putting the ‘Do’ In Donate

The Millionaire Kids Club Volume #3: Home Sweet Home

The Millionaire Kids Club Volume #4: Penny Power

About the Author

Lynnette Khalfani-Cox, The Money Coach®, is a personal finance expert, television and radio personality, and the author of 12 books, including the New York Times bestseller Zero Debt: The Ultimate Guide to Financial Freedom. Lynnette is a former financial news journalist, who now teaches individuals nationwide how to better manage their finances. She has appeared on hundreds of TV programs, including Oprah, The Talk, Dr. Phil, Dr. Oz, The Steve Harvey Show, The Today Show and more.

As the CEO of TheMoneyCoach.net LLC, a financial education company, Lynnette oversees all content, marketing and operational efforts; serves as spokesperson for the company; and is responsible for the overall editorial direction of the company’s main consumer site, AskTheMoneyCoach.com.

Before launching TheMoneyCoach.net in 2003, Lynnette was a Wall Street Journal reporter for CNBC, where she covered business and personal finance news. Lynnette spent nearly 10 years at Dow Jones & Co. Inc. working as a reporter, bureau chief, deputy managing editor and personal finance editor.

Prior to her work at Dow Jones, Lynnette was a correspondent for The Philadelphia Inquirer, a writer and assistant producer for WTXF (FOX-TV) in Philadelphia, and a writer for the Associated Press in Los Angeles.

Lynnette earned her Bachelor of Arts degree in English from the University of California, Irvine. She also holds a Master of Arts degree in Broadcast Journalism from the University of Southern California.

Lynnette lives in New Jersey with her husband and business partner, Earl Cox, and their three children.

Dedication

I’m dedicating this book to my children Aziza,

Jakada and Alexis. You are the future.

I love you all very much.

Table of Contents

About the Author

Dedication

INTRODUCTION

THE STUDENT LOAN DILEMMA

The Fallout From The Student Loan Crisis

Digging out of Student Loan Debt

Why College Grads and Parents Need This Book

CHAPTER 1

MASTERING STUDENT LOAN BASICS

Understanding the ABCs of Your College Loans

Determine What Type of Loans You Have

Understand the Difference Between Federal and Private Loans

Figure Out How Much You Owe

Identify the Key Players in the Student Loan Business

Assess The Status of Your Loans

CHAPTER 2

UNDERSTANDING TIME-BASED REPAYMENT OPTIONS

Standard Loan Repayment Plans

Extended Repayment Option

Graduated Repayment Program

CHAPTER 3

UNDERSTANDING INCOME-DRIVEN REPAYMENT OPTIONS

Income Contingent Repayment Plans

Income-Based Repayment Plans

Play Let’s Make A Deal

Negotiate Your Own Monthly Payment

Let Uncle Sam Help

CHAPTER 4

MAKING SENSE OF PRIVATE STUDENT LOAN OPTIONS

Pay Off Private Loans

Other Pros and Cons of Private Loans

CHAPTER 5

THE PROS AND CONS OF LOAN CONSOLIDATION

Should You Roll All Your Loans into One?

Consolidation Explained

Who Should Consolidate Student Loans — and Who Shouldn’t

Eligibility Rules and Other Requirements

Faqs About Student Loan Consolidation

Student Loan Consolidation & Forgiveness Scams

CHAPTER 6

SAVVY WAYS TO DELAY STUDENT LOAN PAYMENTS

Are You Eligible for a Loan Deferment?

Fight For That Forbearance

Economic Hardship Cases — and Help From an Ombudsman

CHAPTER 7

FIXING DELINQUENT OR DEFAULTED STUDENT LOANS:

How to Bring Overdue Accounts Current

Student Loans and Your Credit Report

Wage Garnishments

Who’s in Default and Why?

What To Do and What Not To Say

Loan Rehabilitation Programs

CHAPTER 8

ELIMINATE STUDENT LOANS WITH LOOPHOLES

Qualify for Loan Cancellation or Get Others to Pay

Loan Cancellation Programs — Big Hassles, Even Bigger Payoff

Public Service Loan Forgiveness (PSLF) Program

What To Do if Your Discharge Application is Denied

Loan Forgiveness Programs and Loan Repayment Initiatives

Repayment Assistance Programs Nobody Told You About

CHAPTER 9

NEW AND CREATIVE WAYS TO REPAY STUDENT LOANS

Modern Methods to Eliminate your Debt

Crowdfunding

Income Share Agreements

State Support

Online Programs

Contests

Closing Thoughts

CHAPTER 10

SPECIAL CIRCUMSTANCES

Help for Unique Student Loan Issues

Getting Off a Student Loan

Options For Dealing With Co-Signed Student Loans

Handling Defaulted Student Loans and Your Social Security Check

Student Loan Discharge and Other Solutions for Older Borrowers

Income Driven Repayment

Rehabilitating Defaulted Student Loans

Dealing With Student Loans From Other Countries

International Caribbean Students

Caribbean American Citizens and Green Card Holders Completing High School in the Caribbean

AFTERWORD:

A CALL TO ACTION

RESOURCES

Note From The Editor

INTRODUCTION

THE STUDENT LOAN DILEMMA

With roughly $1.5 trillion in student loans outstanding in the U.S., college debt has become a major source of financial stress for far too many Americans. The typical college grad now comes out of school owing nearly $38,000 in student loans, and having a payment due of more than $380 a month. Sadly, many borrowers have absolutely no idea exactly how they’ll repay those obligations.

Among those who have left college, including both college graduates and college dropouts, 43% aren’t paying their federal student loans. About 30% of borrowers are delinquent or have defaulted on their student loans; another 13% are in forbearance or deferment status to postpone paying college loans due to economic hardship.

Adding to the problem: it’s not just 20-something Millennials, or recent college graduates, who are struggling with student loans. The college debt crisis in America has expanded beyond being a challenge solely for young adults. Federal Reserve data show that some 45 million people in the United States owe student loans, including 7 million people between the ages of 40 and 49, and another 7 million people who are 50 and above.

Older Americans grappling with college debt sometimes took out student loans later in life, after returning to school to complete a bachelor’s degree or to earn an advanced degree. Most often, however, those 50 and older racked up college debt by helping their kids or grandkids pay for college. Since college costs have been steadily climbing for the past two decades, it’s not surprising that many families need loans to finance a much-desired degree.

Tuition and fees alone at some institutions are enough to drive students – or their parents and grandparents – into debt. On average, tuition and fees at private colleges totalled $34,699 in the 2017-2018 academic year, according to data from U.S. News & World Report. Among the 10 most expensive national universities in the U.S., which are all private schools, tuition and fees averaged $54,232 for the 2017-2018 school year.

Public schools, although less expensive than private institutions, are still quite pricey. Earning a bachelor’s degree from a public school as an in-state student will set you back $10,000 in annual tuition, or $40,000 over four years, according to the College Board. Tuition for out-of-state students at public schools runs an average of $25,000 yearly, or $100,000 over a four-year period.

These costs don’t even include the many thousands of dollars schools charge yearly for on-campus housing, meal plans, or books and supplies.

Add it all up, and it’s easy to see why lingering student loans plague not only Millennials, but also those in Generation X, Baby Boomers and even members of the Silent Generation.

No matter your age, if you or someone you know has educational loans, you’re probably all too familiar with the dire consequences of the burgeoning student loan crisis.

The Fallout From The Student Loan Crisis

Massive college debt impacts virtually every aspect of an individual’s life plans, from his or her career choices to a person’s life plans, not to mention getting married or having a baby. Many financially strapped former students — armed with degrees they thought were supposed to land them high-paying jobs — are forced to go back home to live with Mom and Dad, swelling the ranks of the so-called Boomerang Generation who can’t afford to live on their own.

This trend is apparent in many ways. For starters, 24 years is the average age that children now leave their parents’ home, according to Demos, a New York-based public policy and advocacy group.

Yet, every day, at campuses all across this nation, growing numbers of students are literally mortgaging their financial futures. To keep up with the surge in higher education costs, students are accepting loans that in many cases will require nearly a lifetime to repay. If you’ve been a recipient of federal student loans — or of hefty private loans — you’re certainly not alone.

Getting that money may have been fairly easy, but repaying that debt is an entirely different story.

There is overwhelming evidence that repayment of student debt is a major challenge for college graduates of all ages, incomes, majors, and ethnic backgrounds. Huge student loan debt also disproportionately burdens members of minority and low-income communities.

It wasn’t supposed to be this way — and it doesn’t have to be.

Digging out of Student Loan Debt

I realize that the situation may seem bleak — if not downright impossible — for many of you, particularly those of you earning modest salaries and staring at a huge stack of student loan bills. Despite this, trust me when I say that it is possible to dig yourself out from your debts. I know because I’ve done it successfully.

Many of you have read my previous New York Times bestseller called Zero Debt: The Ultimate Guide to Financial Freedom. I wrote that book after I rid myself of $100,000 in credit card debt. Like some of you, I got my first credit card when I was a freshman in college. That marked the beginning of years of financial mismanagement on my part because — despite of all the things I learned as an undergrad at the University of California, Irvine — nobody taught me anything about how to budget, manage debt wisely, or be financially responsible with credit cards in my youth. For a lot of you, I’m guessing your college experience was pretty much the same.

After I earned my Bachelor’s degree in English from UC Irvine, I went on to obtain a Master’s degree in Journalism from the University of Southern California. By the time I was done with all my schooling, I’d racked up nearly $40,000 in student loans.

Now, I’m the first to admit that I’ve made my fair share of financial mistakes over the years. Happily, I did manage those student loans