Reatna Taylor had big dreams of becoming a primary care physician when she entered Johnson C. Smith University. She obtained a bachelor’s degree in biology in 2015. A partial scholarship covered most of her tuition, but she still had to take out $ 54,000 in student loans to cover all other expenses related to her college education.
Both of Taylor’s parents are from Panama. Because she was the first in her family to attend four-year college, they didn’t understand how expensive it was going to cost.
Reatna Taylor felt the weight of her student debt. But she took advantage of the hiatus on payments, allocating funds to be used for her family’s needs during the pandemic.
“I don’t think they understood how much college was either,” Taylor said, “because my mom had like a college fund set up for me and my brother, but it was like $ 2,400. , maybe when I graduated. ”
Taylor continued his education at UNC-Chapel Hill, earning a master’s degree in public health. It cost him an additional $ 52,000 per year. By the time she graduated, she had accumulated $ 185,000 in student loans.
Part of the reason was that she had paid out-of-state tuition fees and missed payments on previous loans. Because she had not consolidated them, her interest varied from lender to lender. This debt is part of the reason she put her dream of becoming a doctor on hold.
Taylor now works as a nutritionist for Mecklenburg County. She’s also a new mom currently on maternity leave, so she took advantage of the break on federal student loan payments to have more money to care for her family.
“It was like a huge relief not to really have to think about, say, another $ 1,500 to go somewhere that could pay for other things we need,” she said.
The Ministry of Education has put a pause on federal student loan payments and interest at the start of the coronavirus pandemic. Borrowers do not need to register and will not be penalized for missing payments. The recess was due to end on Jan.31, but soon after taking office, President Biden pushed the deadline is September 30.
There is $ 1.5 trillion at the national level with regard to student loans. North Carolina borrowers alone owe $ 44 billion, according to to Rochelle Sparko, director of North Carolina policy at the Center for Responsible Lending.
Sparko says North Carolina mirrors what’s happening in the United States, with black and Latino students borrowing at higher rates. Ninety percent of black students and 72% of Latino students nationwide take out student loans, compared to 66% of white students. Sparko says it’s because they tend to lack generational wealth to help pay for their education.
“Due to the lack of intergenerational wealth, black borrowers start their careers at a disadvantage, tending to take on more debt,” Sparko said. “They have to earn less in the workforce than their white counterparts and, therefore, their ability to repay their student loan debt may also be affected by institutionalized racism.”
In fact, the Student Borrower Protection Center, a consumer advocacy group, analyzed zip codes in major US cities and find that the median income of white households is at least 10 times higher than the median income of black and Latino households, making white students more likely to receive help from their families to pay for their education.
Once it’s time to repay their loans, black and Latino borrowers have a harder time keeping up with payments, especially if they live in communities of color. Black and Latino borrowers who live primarily in black and / or Latin communities are five times more likely to default on their loans. Sparko says it may prevent them from getting a house, a car and even more business loans.
“In the case, for example, of PPP loans, which were intended for small businesses during the pandemic, if you had a student loan for which you missed payments, you might not have been eligible for a loan. to keep your business afloat, ”she mentioned.
This downward spiral is what Joshira Maduro worked hard to avoid. For eight years, she lived with her parents, on a tight budget, paying off her $ 132,000 in student loan debt.
Joshira Maduro graduated from Lehigh University with $ 132,000 in student loans. Today she paid almost $ 120,000.
Maduro graduated from Lehigh University in Pennsylvania with a degree in finance and marketing. She is the first in her family to attend a four-year college in the United States. Her mother is from Curaçao in the Caribbean and her father is from the Netherlands. He went to school abroad, where higher education was not as expensive. So when Maduro finished high school, she and her parents had no idea how to pay for college.
“His colleagues had kids going to law school with $ 200,000 in debt,” Maduro said of his father. “And so to him, he felt like, ‘OK, well, if you need to take out a $ 100,000 (loan), it just seems natural. You take six figures out of the debt, like it’s not at all unknown. ”
Tuition at Lehigh was almost as much as Harvard – nearly $ 55,000 a year in 2020 – but she fell in love with campus after visiting high school. A lack of financial literacy is one reason why student loan debt is so high among black and Latino borrowers, experts say. Maduro says his family didn’t know federal loans were an option, so his father told him to take out a loan from a bank. With private loans, she couldn’t take advantage of the pandemic payment freeze.
However, after eight years, she has paid off almost $ 120,000 of her student loans, increasing her payments from $ 1,300 per month to $ 500.
“Now I have a payment that doesn’t seem so emotionally draining to me every month,” Maduro said. “It still hurts to have as much money in education debt as it did eight years ago, but it certainly doesn’t seem as emotionally intense.”
Although Maduro had a major in finance, his loan customer service agents were some of his best teachers.
“I knew some of them by first name because eventually I called around the same time and got them and they were like, like, ‘Oh, that’s a great question, actually. Here is what you can do, ”she said.
She took everything she learned and made a career out of it. Maduro now works at Lending Tree, helping others manage their credit card debt and personal finances. She says she wants to tell her clients that once they can get their debt down to a certain point, they need to start investing in their future again.
Because making those personal investments will help them in the long run.
Additional resources for those who need help
GreenPath provides tips for managing your debt during the COVID-19 pandemic.
the Consumer Financial Protection Bureau offers you information on how to take out credit and advice on repaying them.
Calculate your payment options with the Federal student aid simulator.
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