Priorities: Who gets paid first?
Let's face it, no one likes paying bills. And, some bills just aren't as high a priority as others. We in the financial aid industry would love to think that student loans are always the monthly payments that trump all others and are paid on time. But that is not always the case. As we saw in the 1980's, a tremendous number of federal student loans ended up in default. Fortunately, this trend has reversed, and we now see some of the lowest default rates in decades. Yet student loan payments are often considered less important than paying credit cards.
This thinking is short-term budgeting. When borrowers consider their credit cards, they understand that not paying means that they will not be able to make future purchases or worse, not be able to obtain future credit. Since there is a tangible and immediate consequence, consumers tend to prioritize these payments. Similarly, car payments are always a subject of worry, since they involve direct collateral (the car itself), and no one wants to face repossession. While some may not bat an eye at a $300.00 monthly car payment, it's sometimes very easy for the same person to feel weighed down by a $150.00 monthly student loan payment.
Unfortunately, what's forgotten is this equation, however, is that student loans are investments - investments in their futures - and that education is a tool that makes borrowers more valuable. In our fast-paced culture, has it become too easy to forget what an important investment those student loans have funded?
It's important for us, the people who work in the financial aid industry, to remind borrowers of the reason they borrowed money in the first place: to receive an education. Is there any purchase that can top that? Let's continue to encourage borrowers in their efforts to keep their loans in good standing, and remind them that they've made a very wise investment and that it was worth it.
Posted by Shelley Saunders on July 11, 2007 at 12:45 PM EST
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Blog Author
Susan Nathan
Vice President, Lender and School Services
Biography
Susan Nathan is Vice President of Lender and School Services at American Student Assistance (ASA)®. She has held this position since October of 2002. Ms. Nathan joined ASA in February 1987 as supervisor of the external program review unit. She has held roles of increasing responsibility in product development, operations, client management and customer service, and marketing. She has been a member of the design teams for a number of ASA’s signature products, including FASTFUND, ASA’s disbursement product, and ASA Direct, ASA’s web processing tool. She was the manager of the business plan for ASA’s major system conversion in 1998.
She is credited with the development of ASA’s nationally recognized client management team. Ms. Nathan oversees the ASA Advisory Council, and is the staff liaison to the Marketing Planning Committee of ASA’s Board of Directors.
Prior to joining ASA, Ms. Nathan was a Financial Aid Officer for Lesley College. She is a graduate of Brown University and a fellow of the Institute for Educational Leadership. She is a member of state, regional and national financial aid associations and is routinely sought by the financial aid community as a professional development trainer.
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