By Amy Sorter
Special to the TJP
Imagine this scenario.
You have just graduated from college, and were fortunate enough to land a good job. A few months go by; you’re earning money at a pretty good clip. Then the bill for your first student loan payment arrives. You see the total amount owed, and your heart sinks. Here you are, at the beginning of your career, and you already owe thousands for an education you absolutely needed to get that job.
Or maybe you’re not the student at all. Perhaps you’re the parent of a son or daughter who has just graduated from college, and is turning to you for help in paying off that loan. You shake your head, remembering your own college days, during which the debt with which you graduated wasn’t anywhere near what your offspring will be required to pay back.
The ray of light in this scenario comes courtesy of the Dallas Hebrew Free Loan Association (DHFLA) and its Higher Education Consolidation Loan. If the student is Jewish, and lives in Dallas, he or she could be eligible for up to $25,000 of interest-free money to help pay off that loan.
Riddled with debt
The history of student loans stretches back to 1840, when money was provided to students at Harvard University. At the end of the 20th century, the Higher Education Amendments led to the Free Application for Federal Student Aid (FAFSA), which puts students and their families in touch with all kinds of low-interest subsidized and unsubsidized federal loans. By the early 21st century, student loan debt rates began to soar.
According to The Institute for College Access and Success (TICAS), a nonprofit, nonpartisan research organization, a college student graduating in 2016 owed anywhere from $20,000 to $36,360, depending on the school and geography. A newly minted 2016 undergraduate from a Texas college or university ended up owing $26,292, on average, a 43.4 percent jump from the $18,334 average of a decade ago.
“Student loan debt is outrageous,” said Harrison Goldman, DHFLA president. “The statements begin coming in six months after graduation, and that is definitely a dose of reality for the student.” The end result, he went on to say, can often be loan default, which makes the situation even worse for a student who is trying to build a credit record.
Founding the program
The DHFLA’s Higher Education Consolidation Loan program — different from the organization’s Education Loan program, which provides funding while the student is in college — was the brainchild of one of the DHFLA’s younger members. “She said we weren’t appealing to that portion of the Dallas market that was in dire need, the segment that comes out of school with all of the debt,” Goldman said. The result was the Higher Education Consolidation Loan program, which officially launched Jan. 1, 2016. These days, the program makes up approximately 33 percent of the organization’s loan portfolio, thanks to a bequest received a handful of years ago.
“Typically, the loan is issued when the student gets the final degree, but if his or her loans are being amortized now, through the lender, that student can apply now,” Goldman said. “But the student can only receive tuition reimbursement once.” Meanwhile, a huge benefit is that the loan is interest-free. If an applicant is approved, the DHFLA pays the money directly to the lender, and the student can have up to six years to pay back the DHFLA.
But, before you knock on the DHFLA door to request money to consolidate, there are a few restrictions with the program. First, you have to be Jewish, and you have to have lived in the Dallas area for at least six months. People in Fort Worth and Tarrant County are excluded, as they are covered by Tarrant County Hebrew Free Loan Association.
It is not mandated, however, that you must have attended a Dallas-area school.
“Someone could attend Brown University (in Providence, Rhode Island), for example, graduate, move back to Dallas, find a job here, live here for six months, then avail themselves of the loan,” Goldman said.
Additionally, if you are already paying off a DHFLA loan, you aren’t eligible to participate in the program. The program won’t pay off credit cards used for tuition, only bank loans. You’ll need at least two credit-worthy guarantors to co-sign for your loan, which can include your parents. If you’re married, the guarantor count is increased to three, as your spouse will be included. Finally, you aren’t eligible if you or your guarantors have poor credit, or are in bankruptcy.
Those who are eligible for the Higher Education Consolidation Loan program can receive interest-free relief to a student loan problem that might seem insurmountable. “Our target audience consists of those who are graduating, and who are living in Dallas,” Goldman said. “We’re trying to move the money around in the community.”
For more information on the Dallas Hebrew Free Loan Association’s Higher Education Consolidation Loan program — or any other program — go to dhfla.org or call 214-696-8008.