Client Beat: Milly’s Story
How a student loan “ruined my life”
Milly is a comedian and writer living in Brooklyn with an exciting and promising career ahead of her. But, as is the case for many of the country’s 45 million student loan borrowers, she remains burdened and overwhelmed by school debt, in particular a private student loan. It was the stress caused by this private loan, which motivated her to sign up for TrustPlus financial coaching.
Milly’s family always emphasized their goal for her to get to and graduate from college but never discussed the financial implications of student loans or how the credit system works. As a result, when her college suggested she take out a private loan to pay for the balance not covered by her federal loans, she had no reason to question their recommendation. Her sister, also not fully understanding what she was signing up for, co-signed on a $20,000 private student loan for Milly.
In the 10 years since she borrowed the original $20,000, Milly has paid $33,000 but still owes an additional $17,000. Milly did her best never to miss her $350 monthly payments, but over the years she has had to occasionally make the difficult decision of prioritizing her rent, utility, and food expenses over her loans. These missed payments threw her repayment schedule completely off track and devastated both her and her sister’s credit scores. This unintended impact on her sister’s credit ended up derailing her plan to buy a home. She blamed this setback on Milly, and as a result, stopped speaking to her for several years. For Milly, this loan has cost her many thousands of dollars more than she borrowed and has compromised her financial security, mobility, her relationship with her sister, and her mental health — all because she chose to finance a portion of her higher education with a rigid private student loan product that she did not entirely understand.
Meanwhile, Milly has had infinitely more options for managing her federal student loans. She worked as an Americorp volunteer after graduating from college, knowing they give all volunteers $5,000 when they finish their service to help pay student loans. At the time, she did not know those funds would be restricted to federal loans. She has benefitted from the flexibility of options available to federal loan borrowers such as income-driven repayment plans and the CARES Act federal student loan moratorium. All the while, her student loan balance has continued to grow.
With the help of her Financial Coach, Ashley, Milly fully understands the terms of her private student loan, is prepared to avoid similarly predatory loans in the future, and feels empowered to take back control over her financial future and tackle this debt head-on. In recent months, she made several lump-sum payments towards her loan while her federal loan payments are suspended, and is finally seeing the balance come down slowly but surely. She even leveraged her following on Twitter to directly tweet at the lender, which successfully pressured them to lower her interest rate — though her payments still remain unaffordable on a monthly basis.
“Before I started coaching, [this loan] just seemed like a hopeless, insurmountable issue.” Her financial goals felt out of reach: “Even in my standup, I would joke ‘what’s a savings account?’” But today, and for the first time in her life, she has a savings account with enough to cover 1 month of expenses and has a credit score over 700. With Ashley’s help, she also created, and is sticking to, a holiday budget for the first time. “I was starting to make progress even before I started coaching so Ashley has not only kept me on track and kept me moving, but also the free coaching has really transformed my relationship with money.” Once her student loans are finally paid off — or better, forgiven through a national forgiveness program — Milly looks forward to having the extra $500/month available so she can finally afford an apartment without roommates, help her family out in small ways without expecting to get paid back, or even quit her day job and focus more energy on her comedy, writing and acting.