Released from the burdens of overwhelming debt, Neighborhood Trust clients are experiencing life-changing possibilities.

U.S. households currently carry a cumulative $14.64 trillion in debt—of this $1.5 trillion is student loans.

The promise of higher earnings and upward mobility convinces many borrowers that student debt is “good debt.” Yet tuition is outpacing wages and the job market no longer guarantees high paying jobs for graduates. Plus, loan products lack safeguards to prevent students from owing significantly more than they borrowed, at higher monthly payments than they can afford. Student loan debt disproportionately impacts borrowers of color—a population already more vulnerable to other types of debt, discrimination, and predatory products.

In early July, the Supreme Court dealt a devastating blow to the hopes of millions of Americans seeking relief from the burden of student loan debt. Neighborhood Trust clients alone would have had $36.3 million in student loan debt eliminated had the ruling been in favor of debt relief.

Now, as the repayment start date looms, borrowers must navigate a new financial reality amidst a system that seems to be working against them.

At Neighborhood Trust, our Financial Coaches partner with workers to navigate difficult systems, reduce debt, and restore feelings of hope, and agency to plan for a financially secure future.

Neighborhood Trust has helped our clients reduce $8 million in student loan debt since 2021.

Renee, the first in her family to graduate college and earn a Master’s degree, had to put her ambitions and plans on pause due to her student debt obligations. She stopped her PhD midway through and shifted her focus to earning enough to cover her fast-accumulating student loan payments. Like so many borrowers, Renee found herself part of a predatory system that makes going into six-figure debt easy, but climbing out an endless maze filled with stress, confusion, and disappointment.

Renee began applying to the Public Service Loan Forgiveness program (PSLF) to lower her monthly repayment obligations, which were taking up most of her salary and leading to other debt. She was rejected at every attempt, given unclear reasoning and no path forward. Renee ultimately filed for bankruptcy and her financial anxiety continued to build.

Renee had lost hope of ever paying off her student loan debt. Her focus had shifted from future ambition to just getting by. With her Neighborhood Trust Financial Coach Adrianna as a guide, Renee rebuilt her confidence and increased her understanding of the PSLF process.

The result was well beyond the payment reductions she was hoping for. Her entire loan balance of nearly $275,000 was forgiven.

With freedom from student debt, Renee’s credit score immediately increased. Her savings jumped from $0 to $500 per month. Renee and Adrianna made a plan to build assets in the form of long-term savings. Adrianna introduced Renee to trusted products to help with bankruptcy payments and avoid future debt.

“Public Service Loan Forgiveness (PSLF) is a notoriously difficult process to navigate. It has been difficult for many people to get straightforward information about whether their employer, loan type, and repayment terms qualify. We partner with them to clarify what is possible, find opportunities to make the most of the student loan forgiveness programs available, and act as accountability partners along the way.”

Neighborhood Trust client Shanell, a lawyer working in the education system, was able to defer her student loan debt during school, but when payment resumed, her loan balance had ballooned significantly due to high interest rates and products designed to maximize profit. Additionally, her monthly payments fluctuated, increasing without notice and making saving and long-term planning incredibly difficult.

Shanell came to Neighborhood Trust for help making an overall financial plan, and found a true partner in her Financial Coach Ashley, who helped Shanell understand the value pursuing debt forgiveness through PSLF would have on her long-term financial health.

In exploring debt forgiveness, Shanell saw first-hand that the system doesn’t often work well on its own—borrowers have to push, advocate, write letters, file formal complaints, and be persistent. Fortunately, her law training was a huge asset, and with Ashley’s guidance, Shanell succeeded in getting over $120,000 in loans forgiven.

“Getting out of debt can feel like a very long journey for our clients, but we show them that it is possible. We help them understand that they can make significant, positive, and lasting change in their lives with persistence and patience.”

Our North Star is worker financial security as measured by freedom from a reliance on exploitative debt. We believe that a virtuous cycle of worker agency and good financial products in action together are what drive real, bottom-line impact for workers. And we are holding ourselves accountable to freedom from debt as impact at both the individual and systems level.

Neighborhood Trust financial coaching helped over 8,000 workers in 2022, 37% of whom were grappling with student debt.

The burden of student debt is a persistent challenge for many workers, especially for Black women. The statistics are alarming: 90% of Black students take out loans to pay for college, compared to 66% of white students, and the average Black borrower owes 95% of their student debt 20 years after enrollment.

Neighborhood Trust is pushing the marketplace and employers to give workers access to innovative tools, like employer-sponsored student debt repayment plans, 401ks with emergency sidecar savings accounts, and employer-sponsored payday alternative loans. We are shifting the focus to developing worker-focused financial solutions so that wages lead to financial security, measured by freedom from reliance on expensive debt to get by.

ABOUT NEIGHBORHOOD TRUST

Neighborhood Trust is a financial services innovator that creates financial security for low-wage workers through workplace and marketplace solutions.

We are trusted human guides connecting workers to financial benefits, and co-designing products and services that meet their complex and immediate needs. But we don’t stop there. We use the insights from our work to help credit unions, employers, nonprofits, and FinTechs better understand the unique financial challenges facing the workers they serve, and to push the marketplace to be more accountable to their needs.

Neighborhood Trust’s social enterprise influences the market through the workplace with our worker benefit TrustPlus, and with Pathways, through which we embed our financial coaching and impact tracking platform in credit unions across the country with our partner Inclusiv.