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Making Sense of
Student Debt
Phil DeGisi
Chief Marketing Officer, CommonBond
@phildegisi @commonbond
©CommonBond
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Inc. Confidential
Confidential
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A quick introduction
• Chief Marketing Officer @ CommonBond
• Joined CommonBond December 2014
• Background in ecommerce marketing (Amazon,
Walmart.com)
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Why I joined CommonBond
Because of this day:
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In June 2009, I received 2 things that would
change my life
$150,000
(with >8% interest rates!)
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The Student Debt Dilemma
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The Stats You Know
- $1.3+ trillion in total outstanding student loan debt
- 40+ million Americans hold student debt
- 70% of college graduates have student debt
Sources: NY Fed, Ticas.org
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The Stats You Know
Average student debt by degree
$35k
$57k
$56k
$112k
$176k
$247k
$250K
$200K
$150K
$100K
$50K
$0K
Undergraduate
Graduate
MBA
JD
Sources: Debt statistics - Undergraduates: Edvisors; Graduates: U.S. News & World Report; MBAs: U.S. News & World Report;
Doctors: Association of American Medical Colleges; Dentists: American Dental Education Association; Lawyers: U.S. News & World Report
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MD
DDS
The Stats You May Not Know
46%
are delaying
wedding plans
69%
are delaying
home
ownership
Source: CommonBond survey February 2016
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78%
are delaying
the vacation of
their dreams
Lack of Student Debt Literacy is a
key part of the issue…
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We need to educate students,
graduates, and parents on what
their options are
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There’s never been more options for student
debt repayment
Federal programs that can help those
struggling to make their monthly payments
Refinancing thru a private lender that can
help graduates save thousands in interest
payments
Employers contributing to their employees’
student loans can enable millennials to
save more for retirement
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Federal Government Programs
Income-Based
Repayment Plans
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Public Service Loan
Forgiveness
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Federal Programs:
Income Driven Repayment
Download this pdf at www.ticas.org
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Federal Programs:
Public Service Loan Forgiveness
• Must work for government organization, 501(c)(3) non-profit,
private not-for-profit org (ie law enforcement, emergency
management, public education, and more)
• 10 years of on-time payments. Should be on income-based
repayment plan if planning to take advantage of PSLF
• Forgiven amount is NOT taxed
• First year loans will be forgiven as part of this program is 2017
• Some discussion around capping the benefit (ie preventing high
earners like doctors from getting hundreds of thousands
forgiven)
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What is student loan refinancing?
Refinancing means taking out a new loan to
replace an existing loan
Lenders pay off your existing loans, and
create a new loan for you at a lower interest
rate
You can refinance federal, private, and
previously consolidated student loans
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Why are graduates refinancing?
By refinancing student loans with a private lender like
CommonBond, borrowers can:
- Lower their monthly payments
- Lower their interest rate
- Choose a payment plan that’s right for them
Yet, in spite of that, 1 in 4 millennials with student loans aren’t
aware refinancing is even an option1
1 Student Loan Hero 2016 Refinancing Survey
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CommonBond has delivered over $60,000,000 in
savings on student loans
$14,581
Average member savings
2.22%
APR
Our lowest interest rate
(5 year variable)
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How much lower our interest
rate is versus the Grad Plus
government rate5
2,000+
Students educated
through our social promise
Number of
refinancing products
17
70%
Why are
CommonBond's rates
lower than the
government's?
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We use technology and data
to get to know applicants...
Free Cash Flow
Credit History
Education
RATE
Earnings Potential
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Location
And many more...
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so we can give them a lower rate ...
Federal Government
Grad Plus Rate
Federal Government
Average
Grad Plus Rate
CommonBond Rate
7.21% APR
Lowest
CommonBond
Rate (Variable)
7.21% APR
4.65% APR
2.22% APR
Savings = $18,332
(Assumes loan balance of $125,000)
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Savings = $36,828
(Assumes loan balance of $125,000)
…in a matter of minutes
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Our members save big:
Sarah saved $27,100
Education
BA, Hofstra University
JD, Cornell Law School
“
If I was going to go through
the process of refinancing my
student loans, I wanted to do it with a
company that was really easy to work
with. And that was CommonBond. It
was nice to talk to real people who
actually know things. At other
companies, you have to talk to five
people to get an answer and wait on
hold forever"
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The newest opportunity:
Employer contribution to student loans
Millennials increasingly are looking to their
employers for student loan assistance
Source: ionTuition
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Employers are considering two ways to
contribute to their employees’ student loans
• Employers can contribute to their employees
student debt directly
• Employers are exploring matching their
employees’ student loan payments with a 401k
match
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It’s still very early days…
Source: Willits Towers Watson Survey – March 2016
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…and Congress will have a significant impact
on the adoption rate
Bills in Congress that, if passed, would make the tax
treatment of employer student loan repayment similar to
that of a 401(k):
- Employer Participation in Student Loan Assistance Act (House)
- Student Loan Repayment Assistance Act of 2015 (House)
- Employer Participation in Repayment Act of 2016 (Senate)
- Student Tax Affordability and Relief Act (Senate)
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To summarize
There has never been more ways for graduates to manage
their student debt
Awareness of options and understanding of the ramifications
is key to putting a dent in the student loan dilemma
Employers are starting to see the opportunity to contribute to
the solution and help millennials save for retirement as a
result
We as financial literacy enables can play a critical role in
helping more people make the best, most-informed choice
for them
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Thank you!
Keep in touch:
@phildegisi
[email protected]
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