Student Debt Crisis Jeopardizes Household Finances Across the Country

College graduates
Pin to Pinterest Share on LinkedIn

When we founded Freedom Financial Network in 2002, credit card delinquencies were at (then) historic levels and my co-founder, Brad Stroh, and I were struck by the idea that consumers had seemingly unending opportunities to get into debt but precious few options to help them get out of it.

In the last 17 years, however, a new, pervasive problem has trapped millions of American families in debt, and, currently, there is no way out for many people. According to data released by the Federal Reserve Bank of St. Louis, outstanding student debt jumped by an astonishing 107 percent in the last decade alone. Moreover, the increase in student debt has been remarkably consistent over the past several years. According to Q4 2019 data released by the New York Fed, total student debt jumped by $10 billion last quarter.

Unfortunately, there aren’t many options available to help those Americans facing financial hardship address their student loan debt. The overwhelming majority – approximately 92 percent – of student loans originate with the federal government. Unlike almost every other kind of unsecured debt, these loans generally aren’t dischargeable in bankruptcy. And, while loan forgiveness is an option afforded by the government to those Americans most at-risk of financial disaster, a borrower is required to make on-time, income-based repayments on their student loan debt for 20 years in order to qualify.

That is why we asked our clients to submit essays, telling us their stories and how their student debt has had an outsized impact on their overall financial health. Some of the stories we received were gut-wrenching, and they spurred us to action. So, over the next year, we are committing to help pay off student debt for our clients that need the most help. Today, we announced the first two award winners of this initiative.

Emely Alcantara struggled managing her student loans while in school and has been trying to recover ever since. Now, with the help of Freedom Debt Relief, she has reined in her debts and started to save money. With this award, Emely hopes to go on to graduate school.

Emely Alcantara with her family

With two children already in college, Lynn Martalock decided to attend a small university near her home in Wisconsin to finish her college degree. She deferred payments on her student loans while her late husband was diagnosed with non-Hodgkin’s lymphoma which was discovered during a routine surgery. With this award, Lynn can continue paying off her debts, while she completes her program with Freedom Debt Relief.

Lynn Martalock and her family during graduation

We are proud to contribute towards the student debts of our recipients. Sadly, millions of Americans still have a mountain of student debt with no way to repay it. This is a true macroeconomic crisis and needs to be treated as such. Our company’s investment in this forgiveness initiative is just the first step in what will be a concerted commitment to bring more attention to this issue and to encourage industry and policymakers to identify and implement better options for the most financially vulnerable Americans to address their overwhelming student loan burdens. We will be announcing more winners throughout 2020 and will be providing scholarships to current college student students starting next school year.

Andrew Housser co-founded Freedom Financial Network in 2002 and in 2005. Andrew sits on the board of directors of several startup companies as well as two independent school boards.