VOL. 132 | NO. 148 | Thursday, July 27, 2017
U of M Grads Say Bye to Student Loan Debt
K. Denise Jennings
Student loan debt looms large for most college graduates, but one local professional has created a system to knock out $150,000 in student loans in five years, and he wants to put those tools in the hands of a generation that is struggling toward financial freedom.
Nationally, student loan debt is the second-highest consumer debt category, according to a Forbes article published earlier this year. Forbes quotes stats compiled by Make Lemonade that state 44 million borrowers have racked up $1.3 trillion in student loans in the U.S. alone. The average student in the class of 2016 had $37,172 in student debt and the student loan delinquency and default rate is over 11 percent.
Dan Mendelson and Megan Jones Mendelson were part of those statistics. The two met while earning their master’s degrees in biomedical engineering at the University of Rochester in upstate New York, and moved to Memphis when they were both recruited by Smith & Nephew through the University of Memphis’ Customer Driven MBA program. The program pays bright biomedical students to come and earn Executive Masters in Business Administration degrees and in turn, they agree to work for the company after graduating for at least two years.
The Mendelsons, who married last year, discovered early in their relationship that combined, they had $150,000 in student loans. While their professional and financial futures were bright, the couple didn’t want to be saddled with the burden of interest-accruing loans for decades to come, so Dan got to work using the financial literacy that his parents had taught him growing up.
Dan Mendelson, left, and Ross Hornish are principals of BYE Student Loan Debt, a business formed after Mendelson and his wife paid off $150,000 in student loans. (Submitted)
“I put together a systemic process to get rid of $150,000 in five years, and it will be eliminated this year,” he said. “We wanted to share that story because we think it’s applicable to millions in the same boat.”
From that personal story, he created “BYE Student Loan Debt,” an e-book and interactive website with personal financial tools that anyone can use to tackle personal debt.
“I started writing this book around this time last year when I saw the end of the tunnel of debt,” Mendelson said. “It’s amazing what we’ve done in five years.
“My parents were good at teaching me financial literacy when I was younger. But most of this is trial and error. I have an engineering background, so I am good with numbers and my MBA finance classes helped me get better at figuring out how to get rid of debt.”
The first thing you have to tackle, which is extremely time-consuming, he said, is a lot of digging into the sources and terms of the student loans.
“Many had been sold, sometimes multiple times, so we had eight to 10 different providers all with different terms.”
Once you have all of the information about who holds your debt and the terms of the debt, contact those people and negotiate lower interest rates, and when possible, consolidate multiple loans to make them more manageable, he said.
The next step is to create a detailed budget and identify your net income at the end of each month. Then you set goals and a plan for implementation. Mendelson suggests ranking loans in order of interest rates and tackle them one at a time from the highest to lowest interest rates.
“It’s not rocket science, but I think there are millions of people who could benefit from this story and following the plan, so I put together all of my old spreadsheets and tracking graphs and amortization tables and I realized I could write a fairly easy process for others now that I understood it,” said Mendelson, who also works as a technical sales director for Smith & Nephew. “I wrote (“BYE Student Loan Debt”) in six months in my free time.”
After writing the book, Mendelson reached out to Ross Hornish, a digital marketing guru and search engine optimization manager at ServiceMaster whom he and his wife Meghan had met at the University of Memphis. Hornish became co-founder and managing director of BYE Student Loan Debt and is editing and digitizing the book and building a website with content links for interactive digital use.
“At first I purely came on as an editor and website builder, but once I read it and realized how many things I could take advantage of that I wasn’t doing, it seemed valuable enough for me to want to be a stakeholder and not just an acolyte,” Hornish said. “With this product, we’re not trying to do it for you. We want to educate people on how to do it themselves and give them the tools.
“We plan to continue to build the BYE Student Loan Debt brand and eventually have different product lines come out of it,” Hornish added. “We know where we want to go, but we are in the infancy stage and we want feedback to know what our users want from the project.”
When Mendelson and Hornish started the company earlier this year, they were on the fringe of being able to publish the book, but needed a little more funding to get it on the goal line. So the two started a Kickstarter campaign to help with building the engine behind the website, calculation tools, artwork and branding. That $5,000 Kickstarter campaign reached its goal in mid-July.
In early fall, the company will gauge digital demand for the product and do a market analysis for ordering hard copies of the book.
Mendelson and Hornish have devised a three-pronged marketing strategy with separate messages for different audiences. They are targeting parents and grandparents who will be tasked with educating their children and grandchildren on financing their education; schools and education systems which guide students in financial aid decisions; and later they believe banks and lenders themselves could see the value of offering BYE Student Loan Debt as a resource for their customers.
In addition to the practical application of tackling student loan debt, BYE also addresses issues like choosing education on the front end and how to look for scholarships and get as much tuition assistance as possible. The book also educates people who use their system on how to put their money to work in the most efficient way after they’ve paid off student loans.
Mendelson sees the student loan debt epidemic as a bit of a failure of the education system, which generally does not address or teach financial literacy in schools.
“Mostly, parents are or are not teaching this at home,” he said.
Meghan Mendelson, now a global product manager at Smith & Nephew, agrees.
“I did have most of the debt, and it’s a pretty common situation,” she said. “I had some scholarships, but I had to take on student loans to get advanced degrees, and when you go to do it, it looks like free money. You have to take online quizzes, etc., but it doesn’t really map out what it’s going to look like with interest down the road.”
She said it’s something that you are not taught in high school or college.
“I’ve been to three different universities and not once are you taught any of this, even if you are a business major,” she said. “For Dan and I, it is important for us to enjoy our lives, and we want to do it young, to be able to retire and travel. If you’re burdened with student loans it’s always in the back of your mind, and if you’re worrying about it, you’re not really living life to the fullest.”
For more information, visit student.byeloandebt.com.