By Jamie Tijerina
NELearn, a series of workshops to provide people in Northeast Los Angeles with information they can use in their daily lives, held its third meeting on Dec. 15 at the Arroyo Seco Public Library.
Ten people, most of them young Latinos, attended to learn more about the featured topic – Coping with Student Debt. The need for the information was quickly apparent. At the start of the workshop, each attendee was invited to anonymously write the amount of their student debt on a card. Five participants turned in cards, revealing total student debt of $204,500 — an average of nearly $41,000 per person.
Paying off that much debt devours a big chunk of one’s income and makes it very difficult to save for other goals, like buying a house. And yet, struggles with student loan debt are not often cited in the conversation about economic health in NELA.
In the first part of the workshop, Magaly Zapien, a mortgage loan originator at Loan Girl, Inc., detailed possible steps to tackle student debt. Her first suggestion was to request the full terms and interest rate of each student loan in order to fully understand the debt and ensure that loan companies had not made errors. She gave a detailed explanation of compound interest. She also explained a potential pitfall in Income-Based Repayment plans that tie a borrower’s loan payment to his or her income: If the monthly payment is not enough to cover the interest on the loan, the unpaid interest gets added onto the loan balance. As a result, the balance grows even though steady payments are being made. Additionally, Income-Based Repayment plans designed to forgive debt for students who go into public service accept only a tiny fraction of the people who apply.
Ms. Zapien said that homeownership is possible for people with student debt, but that it requires understanding the basics of interest rates and equity, as well as getting control of personal spending.
The group also discussed the predatory nature of student loans, underscored by the dire projection that 40% of student loan borrowers are expected to default by 2023. A default rate that high indicates something seriously wrong with the lending and economic system. In 2018, student loan debt in the US hit $1.5 trillion: College is important, but students are often urged to take on loads of debt without being given transparent, factual data about the graduation, employment and salary prospects of the colleges or graduate programs they are enrolled in. As a result, many become trapped in debt they cannot repay or discharge through bankruptcy.
The second half of the workshop looked at ways to cut personal expenses to pay down student debt. Sarah Moore, the librarian at Arroyo Seco, explained how Angelenos can save some $100 a month by using their library cards to access services like music streaming, audiobooks, educational apps and other benefits. Victoria Wagner, of the Securities and Exchange Commission in L.A., provided information on how to avoid financial and investment fraud.
Jamie Tijerina, chair of the Culture and Equity Committee on the Historic Highland Park Neighborhood Council, created the NELearn series. Jamie also provided the photo above of the NELearn workshop presenters.