Shedding Stress by Shedding Student Loan Debt

Only months away from a wedding to her husband-to-be, Julie Killian should have been spending time talking to wedding planners and making sure every last detail of her special day was in order. Instead, she was spending time on the phone with debt collectors, trying to remedy a problem with her loan.

Ten years earlier, Julie was working her way through school. To relieve some financial pressure, she co-signed a loan with her then husband. Always diligent about making sure every duck was in a row, especially the kind with bills to be paid, she made good on each monthly installment — even after she and her husband got divorced and the loan stayed in his name.

Without a hitch, years of payments went by until Julie got a notice from her bank stating that the loan had been forgiven. The language in the notice led her to believe she could stop making payments. Julie assumed everything was fine until she got a phone call from her ex-husband saying that payments weren’t being made and his credit score was severely impacted.

“The whole situation was incredibly stressful,” Julie said. “I didn’t understand what happened and it was affecting both mine and my ex husband’s ability to restart our lives.”

Determined to fix her finances and walk down the aisle into a debt-free marriage, Julie called her bank to inquire about the status of her loan and how to get back on track. Unable to contact anyone who could clearly explain her options, Julie was at her wits end. She confided in her fiancé, who told her about financial counseling offered by Lutheran Social Service of Minnesota.

Immediately she jumped online to find that thousands of families in Minnesota and around the country were using LSS Financial Counseling to receive expert guidance to achieve freedom from debt and worry about finances. Julie picked up the phone and connected with an experienced financial counselor who listened to her story and helped create an action plan.

“I finally felt like I could breathe again,” Julie said of the first meeting with her LSS counselor, who helped her understand the situation and how to get out of it. “I knew that none of this was my fault.” It turned out that only one portion of Julie’s loan had been waived and she still needed to make payments on her personal and federal loans. Unfortunately, that hadn’t been communicated to Julie and suddenly she was months behind on her payments, and incredibly overwhelmed.

“This small issue turned huge because no one properly explained the process from the start,” Julie said. “I am so thankful for my financial counselor, who helped me ask the right questions and get back on track.”

Julie isn’t alone in the financial challenges she has faced. Research shows that the average loan debt per student in Minnesota is $30,894, ranking fifth highest in the nation.

“Student loan debt, which now exceeds credit card debt nationally, has become a flashpoint of financial frustration for adults struggling to pay for education,” said Elaina Johannessen, program director for LSS Financial Counseling. “Many borrowers, like Julie, who fall behind on payments can come up against monstrous obstacles to finding housing, employment, receiving loans and securing insurance. We are here to help people get caught up and regain control of their finances — and their lives.”

Julie did just that, working with her financial counselor to create a plan to pay off her loan in February, right before her wedding. “Thanks to the help and support I received from Lutheran Social Service, I am able to start my new life headed down a good path,” Julie said.

“I am so thankful for my financial counselor who helped me ask the right questions and get back on track.”