Blog
Article
Have you ever been to the doctor and asked "on a scale of 1-10, how would you rate your pain?" I always found that to be an odd question and one that is difficult to answer. Maybe your response is like mine, "I don't know...it is somewhere between being very uncomfortable and I am about to pass out from the pain, maybe leaning closer to the pass out side of the scale. Is that a 7?"
Well, since I don't have a better solutions, I won't complain.
Maybe it is just human nature to want to quantify and measure, and since I am a numbers guy where just about anything can be solved with math, I understand.
I recently did some research on what kind of financial discomfort the 5.3 million student loan borrowers that are in default status are feeling (and there could be another 5 million going into default status soon). I learned that defaulting on your student oan reduce your credit score (FICO) by 42-175 points.
I then dug deeper to see if there is a way to monetize that reduction. According to a 2020 Forbes article, a reduction in FICO score of 80-120 points would increase the mortgage rate that you are applying for by 1.37%. That is assuming you can get a mortgage as this reduction could put you in a category that is not attractive to lenders.
If you apply that increased rate to a loan of $215,000, your payment will increase by $205 per month, or $73,568 over the life of the loan. If you loan is larger, say $430,000, then your monthly payment would increase by $410 per month, or over $147,000 over the life of the loan.
For those of you advisors and HR Directors that put Financial Well-being as a priority for you 2026 benefits planning, this is an issue that should be prioritized and Thrive can help address this problem.
Please reach out to us to discuss our creative solutions so that we can help reduce the level of discomfort that employees are feeling from student loan debt from a 10 to a 1.
