I am passionate about solving the “Student Loan Problem” and had no idea where to begin.
I met Duschka Fowler-Dunning when I made a small loan to her through SLICE Finance, a student loan program prototyped by BGI students. SLICE did not disclose the identity of borrowers and lenders. Duschka described herself a horseback riding instructor in her loan bio. It was easy for us to connect at a BGI event since her occupation was unique at BGI.
Duschka and her mother, Joanna Fowler, own and operate Brackenhollow Stables, a family business in Redmond, Washington. Joanna was very ill several years back and Duschka moved back home to help care for her mother, the horses, the stables and to keep the business afloat. Joanna recovered fully and is back working as hard as ever. Dushcka stayed on, living in a separate apartment in the house.
Duschka wanted an MBA to help her do a better job managing the family business and to learn more about sustainability so she could do her part in combatting climate change. Duschka used student loans to finance her undergraduate education. She budgeted carefully and always paid her student loans. When Dushcka made her final student loan payment, it felt like a huge milestone in her life. And nothing happened, not even a thank you note or a computer generated congratulatory letter.
Ducshka and I talked about the family business. She used Excel spreadsheets to track revenue and expenses – overall and on a per horse basis. As I spoke with Duschka, I realized that I wanted to refinance her student loans. The Federal rate on her loans averaged 7.0% – unconsciously high in 2013’s interest rate environment where the “too big to fail” banks were borrowing at .1 % (10 basis points).
I was working to set up a “checkbook IRA” and this would be a great first investment. I chose 3% simple interest rate; Ducshka selected a $600.00 a month repayment, which we track on an Excel spreadsheet. If I needed the money before the loan was repaid or Duschka needed to miss a payment or had another emergency, we agreed to talk and jointly come up with a solution. We deleted the default clause that is standard in most loan documents, assessing late fees and increasing interest rates, because Duschka and I feel this clause and the lack of bankruptcy protection is a major cause of the “Student Loan Problem.” Duschka purchased a life insurance policy that will pay and interest and principal, with any remaining balance paid to Joanna Fowler.
Duschka is helping me generate investment income for retirement and I am helping her by making her student loan payment manageable so she can concentrate on expanding her business. For graduation, Duschka acquired Joey, a miniature horse than she plans to use in a new Executive Leadership Training Program.