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Killer Loans

Student loan borrowers drown in debt as lenders make billions.

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Thursday, October 14, 2010
Illustration By Mark Roessler

A nationwide financial disaster almost as farreaching as the foreclosure crisis is occurring quietly all around us. It has already turned hundreds of thousands if not millions of college-educated people into indentured servants, trapped in debt. The effects on their lives are crippling, and the broader economy suffers as the income of a large segment of the population is squeezed for interest payments and fees on loans taken out to pay for college, or for graduate or professional school.

The scale of the problem is not easy to assess, but there are clues. Some $96 billion a year is loaned to people attending colleges, universities and trade or professional schools, and that doesn't count so called "shadow" borrowing, such as taking money from home equity lines of credit, retirement accounts and credit cards (in 2005, a national survey by Smith College found that 23 percent of students were using credit cards to help pay their tuition).

This year Americans' total outstanding student loan debt from federally funded and private loans was estimated at $833 billion, a sum that exceeds our credit card debt (though the two kinds of debt overlap, since, as the Smith study showed, credit cards are used to help pay tuition). The Chronicle of Higher Education reported in July that the 15-year default rate for federal loans is 20 percent; for loans to community college students, 31 percent; for loans to students at for-profit schools, 40 percent.

What has been reported about this problem so far is only the tip of the iceberg. There has been some press coverage of conflicts of interest between college financial aid administrators and large lenders. A recent wave of reports targets excessive default rates at for-profit universities. Still, the systemic scandal in the student loan industry, which reached from Congress to scores of institutions—not just the half-dozen mentioned in the newspapers—has only been reported in a few places, and the story seems not to have lodged in the public consciousness.

But Alan Collinge, author of The Student Loan Scam and founder of the group (and website) Student Loan Justice, is determined to get that story told as often as it takes to end the abuses in the system.

At the heart of the problem is the fact that, as Collinge explains, the conventional protections for borrowers don't apply to student loans. They can't be discharged in bankruptcy, even after many years. Wages, tax returns, including earned income tax credits, and even Social Security and disability benefits can be garnished to pay them.

Incredibly, professional licenses can be revoked as a penalty for defaulting, making it even less likely that the borrower will ever catch up.

And many classes of student loans are even exempt from truth-in-lending laws. Nonprofit state-operated lending operations were also exempted from the Fair Debt Collection and Practices Act. In many cases, state usury laws don't apply to student loans.

The result, Collinge says, is that borrowers have been set up to fail because defaulted loans are more lucrative for lenders than loans that are paid, especially loans that are paid on time. Collinge's website, www.studentloanjustice.org, carries stories from every state in the country of people whose loans have ballooned to three or four times what they originally borrowed—more than they will be able to pay off in their lives. In a few cases people have left the country, gone underground, even committed suicide.

"Trapped in limbo with a $120,000 tab on my head," one poster writes, "I have been told frankly by my lenders that with all my interest and the 30-year repayment program (because I can't do it any other way right now) I will be paying somewhere in the range of $500,000 and one million dollars. All in the name of a dream wherein I would become a journalist, at a meager $25,000 salary, chasing stories and serving the public.... I had the thought of killing myself many times, but the realization that my loan's responsibility would merely fall onto the shoulders of my co-signer (my mother) is what really keeps me going."

Meanwhile, the lenders have been taking no risk, because the loans are guaranteed by the other victims of the scam: the taxpayers.

*

Collinge learned about the student loan debacle by hard experience. He borrowed $38,000 to acquire three degrees in aerospace engineering, and owed $50,000 when he finished his schooling in 1998. Given the income he expected to enjoy, his debt load didn't seem insuperable. But things took a turn for the worse in 1999, after a month in which he was unable to come up with the whole amount of his loan payment. His lender, Sallie Mae, hit him with a fee. From then on, though he continued to make his payments regularly, the fee he had originally been told was a one-time charge was repeated. He appealed to the lender to no avail.

In 2001, with the loans eating up more than 20 percent of his income, Collinge resigned his $35,000-a-year job as an associate scientist at a university after receiving a "weak offer" of a lucrative job in the defense industry. The job didn't come through; the events of September 11 chilled his search; and though unemployment should have gotten him a forebearance, Sallie Mae threw his loans into default. His debt soon rose to $60,000; he was constantly hounded by collectors.

For years Collinge worked 90 hours a week and more to pay off a debt that was swelling from the original $38,000 to $103,000. His lenders refused to negotiate. "I became obsessed," he writes, "literally unable to put my student loans out of my mind for more than a couple of hours at a time. ... Consumed, I began doing research. I found that Sallie Mae and other lenders made far more money from defaulted loans than they did from those that remained in good standing. ... I found that well-connected student loan executives and shareholders had carefully orchestrated a lobbying campaign to strip away even the most basic consumer protections from student loans."

He also found that his case was not unique—that "millions of other citizens were trapped just as I was."

*

How did it all start? There's always a layer of paternalism in society's view of students, who in fact are targets of much underreported exploitation—by credit card companies, slumlords, textbook scammers, employers who pay students less than nonstudents in the same age group and count on their transience to make them unlikely to report workplace abuses. Take paternalism, add a little corruption and a lot of profit motive and you get, among other things, the student loan scam.

Paternalism was at the root of the idea, dating from the 1970s, that student loans were defaulted on more than other types of loans—a belief amped up by anecdotes about a few doctors and lawyers who finished their training and promptly staged phony bankruptcies to shed their student loans.

Yet a GAO report done in the late 1970s, when student loans could be discharged in bankruptcy after five years, showed that the default rate on student loans was only 1 percent (for purposes of comparison, the rate of delinquency on home mortgages at that time hovered around 4.6 percent, while the rate of foreclosure was .4). Nevertheless, the regulations about student loan dischargeability were tightened so in the 1990s and again in 2005 that now even many private student loans, as well as federally backed loans, can never be discharged in bankruptcy.

In other ways as well, students have been treated like children who don't deserve the same protections as "adult" borrowers. Particularly in the 1990s, after the largest student lender, Sallie Mae, had turned from a government entity with Treasury Department oversight to a private lender, protections were stripped away. Not only was discharge in bankruptcy eliminated; student loans were even exempted from state usury and truth-in-lending laws.

Borrowers whose loans were in default could have wages garnished, tax refunds seized, Social Security and disability payments garnished. Their credit ratings suffered. Public employment could be terminated, professional licenses revoked. Collinge's book includes the story of a man who borrowed $70,000 to become a chiropractor, then fell behind with his payments, lost his license and saw his loans balloon to $400,000.

"Revoking the professional licenses—it makes no sense," Collinge told the Advocate in a telephone interview. "Who designs that kind of a system? It's a trap unlike any I ever thought I would come up against in this country."

In 1998, the government approved collection charges of 25 percent on defaulted loans. That meant that 25 cents of every dollar borrowers attempted to pay back went to the collection companies, which were in some cases owned by the lenders themselves. The fees left people already struggling to pay back their principal and interest so far behind they couldn't catch up.

With respect to the ballooning effect of fees, the pitfalls for the student loan borrower are the same as the pitfalls of paying off credit card debt. An important difference is that in the worst-case scenario, bankruptcy, credit card debt can be discharged.

Another difference is that credit card users are not prohibited from consolidating their debt with another lender who offers better terms. But among the advantages student lenders fought for and won from Congress was the right to prohibit borrowers from consolidating most loans with firms other than the original lender. A loophole called the Two-Step, which allowed borrowers willing to go through a complicated process to seek lenders offering more favorable terms, was outlawed in 2005.

In 2006 the so-called "single holder" law was repealed due to outcry by smaller lenders, but borrowers of federal loans must still stick with whoever becomes their lender the first time they consolidate. The result of all this has been to keep many students trapped in relationships with their original lenders.

The lives of people whose loans go into default, even for the most pardonable of reasons, are severely damaged. "The student loans of Robert, an Air Force captain, defaulted in the mid-1990s while he was serving in the military," Collinge writes. "His original $35,000 in loans grew to $155,000 despite his efforts to negotiate with the lender, the Illinois Student Assistance Commission. ...Like most StudentLoanJustice.org members, Robert absolutely agrees that he should pay what he owes, but he simply cannot deal with a debt of this magnitude."

One of many Valley residents struggling to pay their loans for college and graduate school told the Advocate by email that she pays $1,100 a month on a schedule that is supposed to get her loans paid off in 10 years.

"My starting salary after taxes totals $2, 800 a month, making my approximate loan payments total nearly 40 percent of my salary," she wrote. "I decided to apply for extended repayment, which allows me to decrease my monthly payments and pay for 25 years. I promptly called to check on the status of my application, which the employee at the loan company stated would be processed in 10 to 14 days. One day later, I received an e-mail stating that my application for 'graduated repayment' had been denied on the basis that I was still in school. Interestingly, I neither applied for graduated repayment, nor am I still in school. ... I will have to spend an inordinate amount of time on hold or arguing with the loan company, all in order to assure that I will be able to make my loan payments on time. "

Though she has no dependents, this young woman is so concerned about her co-signers that she has added to her living expenses by taking out a life insurance policy to protect them in case she dies.

*

The growth of the student loan business was not just a result of the rise in college costs but at least partly a cause of it, Collinge argues. He's not alone in that hypothesis; Secretary of Education William Bennett said in 1987 that the increased availability of loans had changed the way colleges did their budgeting. The result, says Collinge, has been a bubble that has created fortunes for student loan company executives at the expense of students. Between 1999 and 2004, for example, Sallie Mae CEO Albert Lord received $225 million in total compensation.

The largest lenders, like Sallie Mae and Nebraska-based NelNet, have been indefatigable in their efforts to make money from every sector of the student loan business. After years of working to take market share away from the Direct Loan program, they later courted and got contracts worth hundreds of billions of dollars to service loans made through that program. Ever more favorable laws allowed them to own collection companies, creating a profit stream through late fees and interest on defaulted loans.

Sallie Mae and other lenders deny that borrowers are set up to fail. "Nobody wins when a student loan customer defaults," Sallie Mae spokeswoman Patricia Nash Christel told the Advocate by email. "The only way any lender earns money on a loan is if it goes into repayment and stays in repayment. Simply put, we lose money if a borrower defaults. Even if we collect on a defaulted loan, we make only about one-third of what we would have made on that loan if it had stayed in repayment. ... In academic year 2009-2010, Sallie Mae's company-wide default prevention efforts helped 2 million customers resolve their past-due accounts and avoid default on $38 billion in federal and private student loans."

But it's not only borrowers who have suspected they were set up to fail. In 1998 a Florida firm, Cybernetics and Systems, paid the government $30 million in penalties for claiming falsely that it had contacted borrowers before throwing their loans into default and requesting payment from the government for the "defaulted" loans. In 2001 Sallie Mae paid a much smaller sum, $3.4 million, to settle a case involving a similar practice.

*

In the heyday of big lending, before an investigation by the office of the Attorney General of the State of New York led to a crackdown, financial aid administrators at one institution after another were gifted, bribed and otherwise blandished by the major loan companies to establish so-called "preferred lender" programs that channeled their students toward those companies. In 2007, financial aid officials David Charlow of Columbia University and Ellen Frishberg of Johns Hopkins both left their posts under clouds because the New York AG's investigation had exposed their ties to the lender Student Loan Xpress; Frishberg in particular became the lightning rod for publicity about the scandal.

But the focus on two big-name schools actually obscured the fact that financial aid administrators in colleges across the country were found to have improper relationships with lenders, accepting their payments, owning their stocks. Sometimes lenders' employees, rather than college financial aid staffers, actually served as loan counselors for students. Lenders' logos appeared on athletic gear; lenders set up relationships with alumni associations to help business flow their way.

The New York Attorney General's office came on the scene very late in 2006, when then-AG Eliot Spitzer, just before assuming the governorship of New York State, identified the student lending business as ripe for investigation. A player of lesser standing than Sallie Mae, Education Finance Partners, had admitted to the AG's office that it had given a college a piece of its business in return for being given "preferred lender" status and having student borrowers steered its way.

Early in 2007, when Andrew Cuomo replaced Spitzer as AG, he immediately moved to investigate how wide the practice was and soon publicly identified several lenders and their complicit colleges. In a bold move, Cuomo also included colleges from outside New York State in his accusations that lenders and institutions were engaging in conflict of interest at student borrowers' expense. Early on he came out swinging against Education Finance Partners and its "kickback" agreements with Baylor, Boston University, Clemson, Drexel, Duquesne, Fordham, Long Island, Pepperdine, St. John's University, Texas Christian University, Washington University (St. Louis), the University of Mississippi and 48 other schools not named in public releases.

Before the end of 2007, Cuomo had instituted disciplinary measures against Citibank, Sallie Mae, JP Morgan Chase, Bank of America, Wells Fargo, Wachovia and College Loan Corporation—the country's largest student lenders—as well as Education Finance Partners and other smaller players. His investigation brought to light one abuse after another: one private lender who advertised interest rates "as low as" 7.15 percent was actually charging 16 percent on 40 percent of the loans it offered students. Cuomo's office forced the termination of "preferred lender" agreements, gifts from lenders to college financial aid administrators, and arrangements allowing lender employees to serve as loan "counselors" in colleges all over the country.

*

This year, President Obama terminated the role of the large banks and private lending companies in the student loan business, a measure the Congressional Budget Office estimates will save the government $61 billion in subsidies over the next 10 years. The new rules also put a lower cap on monthly payments as a percentage of income, and on the number of years borrowers must go on paying.

But fundamentally, Collinge says, borrowers are still up against the same odds as before, because the new rules do nothing to restore the protections borrowers of other types of loans enjoy.

"I support [Obama's] program," he says, "but it does nothing for students. It saves the government a ton of money, and more than that, the government also is getting the interest, where the lenders were getting the interest. But in terms of the predatory nature of the business, the system is the same. The bad guys are still going to be doing the same things they did before. Sallie Mae and NelNet will still be the people that decide whether a student defaults or not. Their collection companies will still be collecting debt. ... The most damaging aspects of the system persist."

"I've got one primary wish," Collinge adds. "Number one, bankruptcy protections have got to be re-established. The reason bankruptcy protections are so important is to prevent a predatory lending scheme from evolving. That will cause the federal government once more to have a stake in the success of the student rather than in the failure of the student.

"They get 25 cents on the dollar—on average they get $123,000 back from the borrower on a student loan for $100,000. There's no statute of limitations. ... Sallie Mae often brags that they can predict very accurately who is going to default. They treat the people they predict will default much worse. They don't grant them forbearances. At the root of it is [lack of] bankruptcy protections, which enables the whole system to start cycling up in this predatory fashion."

In 2007, with the financial crash looming, even a Sallie Mae executive was quoted in Time saying that it might be necessary to return to the older law allowing student loans to be discharged in bankruptcy after seven years, Collinge points out.

Wish number two, Collinge says, is that the system would stop garnishing people's Social Security. "I've gotten submissions [for the Student Loan Justice website] from senior citizens who couldn't buy medications as a result of a percent of their income going for their loans," he says.

Wish number three is that the government would put a stop to the revocation of borrowers' professional licenses—an irrational penalty, it would seem, since it not only cripples the borrower but even goes against the interest of the lender.

What can borrowers struggling with a mountain of debt do in the meantime? They can tell their stories, says Collinge. They can follow the issue, join Student Loan Justice or kindred organizations at websites like forgivestudentloandebt.com, bankruptyourstudentloans.com, or projectonstudentdebt.org. They can support reform measures in Congress and in their states and transparency in financial aid practices at their local educational institutions.

They should let their Congresspeople know about their situations. Sometimes—though rarely—a Congressperson has actually managed to get a constituent a measure of relief. "More important," Collinge writes, "borrowers should contact their local officials because these representatives need to understand the depth, breadth, and seriousness of the student loan problem. ... Student loan borrowers, particularly those whose debt has exploded to unmanageable proportions, need to realize that suffering in silence serves only to perpetuate a predatory lending system that is in critical need of reform."

Comments (60)
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Thank you, Stephanie Kraft, for your thorough research & reporting of this crisis.

I am a medical student on sabbatical in part because of my financial concerns related to student loan debt. Part of my journey can be read on my blog Medical Student Success Strategies (http://www.lisablacker.com/distracters1/)

As a member of Student Loan Justice, I would like to encourage you and your readers to also read the article at the link below, which is in support of H.R. 4053: The Private Student Loan Bankruptcy Fairness Act of 2010,

Tell Congress: Protect Private Student Loan Borrowers


http://www.change.org/petitions/view/tell_congress_protect_private_student_loan_borrowers

Posted by Lisa M. Blacker on 10.13.10 at 12:46

We need loan recipients to unite to change this system. If we were to organize a date on which every student/parent with loans over 35,000 stopped paying and refused to pay until a sensible system and better protections were in place, this outrageous federally sponsored loan-shark system would collapse and lenders would be forced to change.

Bankruptcy protection should not be the focus - making repayment affordable should be. Bankruptcy is no picnic and has long-term repercussions, and people will be opposed to a law that allows people to run up a debt with no intention of paying it, so all efforts should be made to lower the cost of education in the first place, and make re-payments affordable, perhaps capped at no more than 25% of income; enforce low interest rates, and have loans forgiven after 10 years of steady payments.

I would like to see the first 5 years while students are at their lowest earning potential be interest-free. Whatever balance is left after 5 years should have no more than 3-5% interest. Anything more is punitive.

Posted by Sue Purchon on 10.13.10 at 13:18

If all of the payment arrangements and lower tuition were in place as stated above, bankruptcy would never be used for anything but what it is for. To give people in dire circumstances the opportunity to become functional in society again. Bankruptcy isn't for anyone who runs up debt with no intentions of paying it. Otherwise, there would be no bankruptcy protection period. Restoration of basic consumer rights - bankruptcy - is a key element in making it possible for all of the rest of the things discussed to be possible.

Posted by HC on 10.13.10 at 15:18

Without bankruptcy rights, or any other borrower rights, the lenders have no reason to negotiate with borrowers. My loan has grown from $8500.00 to $30,000.00 over the past 22 years. I have paid back close to $9000.00 but due to divorce, under-employment, un-employment etc., I have been forced to place my loan into forbearance on several occasions. The lenders LOVE interest capitalization and offer no other options to borrowers who cannot afford to pay. If we had bankruptcy rights, lenders would be more likely to strike a deal(reduced interest, reduced principal, etc.) instead of forcing us deeper into debt and closer to bankruptcy.

To make matters worse, many of us should qualify for teacher loan forgiveness, but do not because we didn't graduate during the special "window" of time. In my opinion this is age discrimination against older teachers who are doing the same exact job (with more experience) as younger teachers but are denied loan forgiveness because they graduated prior to 1998.

There should also be a cap on the amount a lender can add on to the principle of a student loan. Without controls in place, the lender is free to take advantage of borrowers who fall behind by increasing their debt and payment amounts with no limits. This situation makes it impossible for a borrower to regain control of their debt.

Unless we have bankruptcy rights, we have nothing to hold over the lenders to force a more reasonable outcome.

Posted by Mona on 10.13.10 at 16:07

Resources for California borrowers and others.

http://groups.google.com/group/student-loan-justice-california

Posted by Cindy Warner on 10.13.10 at 18:50

Great article! We need more that just bankruptcy protection. I went through that process and if I am forced to go through it again it can devastate me professionally. We need programs of loan forgiveness that are stronger or to restructure loans by forgiving interest, penalties, late charges. Just let me repay the original debt with a reasonable rate of interest.

Posted by rfiory on 10.14.10 at 0:42

Good article, but that's an insensitive photo illustration accompanying it.

Posted by jeffehobbs on 10.14.10 at 10:43

Perhaps it's because our society encourages those unfit for higher learning to chase college degrees that they don't really need.

Posted by DanielDb on 10.14.10 at 13:22

Another commenter stated that bankruptcy should not be the primary focus, and I do not thnk it is. In addition, it does not mean that peoplle are planning to use this to get out of a loan. Bankruptcy is no picnic and can be as stressful as a divorce. BUT, if you are about to lose everything (including your mind), and cannot sustain even a basic living, or hurt unable to work, at least their is a way to keep from total collapes of ones life.

I owe an amout at 51 years old that would make most people just quit life. I am lucky to be able to pay at present, but it is so depressing when I tthink of it that one of my viable options is to leave the country. I love the US and served 14 years with the Special Forces, but I am in a position that can make me homeless very easily. One injury, or if business was to slow for a couple of months I would be so indebt as to have no other recourse but to move overseas and start a new life there. Away from everything I love, but at least free from the draconian collectors and the pitiful life that would be left to me since no other option was on the table.

Yes, bankruptcy is not the focus, but it should be there if all else fails. I would love it if I could refinance my loan like any other. Its criminal that we can't, especially if that is the only way one can afford it.

I borrowed 130,000 (70,000 for school, 60,000 to feed my kids... a mistake, the money not the kids), owe 252,000 due to deferring, and pay AROUND $1900 a month till I am 80. Put that in your pipe and smoke it.

Posted by John Raymond on 10.14.10 at 19:00

Great article.... gives hope for my 140,000 debt that is growing at around 8,000 a year from interest... can't afford payments. I hope one day that I can get a fresh start as I can't afford the payment on this loan. Hopefully, I will win the lottery one day and I can than be freed from my chains of student loan debt.

Posted by Ryan on 10.14.10 at 19:09

Private Student Loans . . . The New Mortgage Crisis

The private student loan companies should be applauded for their brilliant business plan. They were able to convince Congress to pass a bill in 2005 that made all private student loans nondischargeable in bankruptcy, essentially giving them the power to target some of the most naive borrowers (students), to let these students borrow as much unsecured, uncertified debt as they desire, with no requirements to guide and monitor how the young students allocate the fund distribution. The students can then never get rid of this debt.

"Private student loans...the new credit cards from hell. Just sign in blood on the dotted line." Is it any surprise that the national student loan debt now surpasses that of credit card debt?

I implore to you to please support the passage of these bills in Congress. In my opinion, the private student loans that were written between 2005 and 2009 are strikingly similar to the loans that were written during the mortgage crisis. The key difference being that students have no hope of ever walking of away from the cold confines of their proverbial jail cell, as private student loans are non-dischargeable.

I am a young working mother who experienced an unexpected twist of fate after college, and I am now living at the mercy of relentless private student loan companies, to whom I owe for my undergraduate student loans, in addition to my Federal student loans. To make matters worse, my Father (who cosigned on my private student loans) is now in danger of losing his home as he nears retirement. I feel that I was the victim of aggressive predatory lending, the old “bait and switch trick,” and the solicitation of loan products that were designed to fail. For example, while I was in school, I periodically received phone calls and emails from my private student loan companies, to inquire whether I needed any more money for college. I was able to borrow up to $40,000 per year from each company. These funds were dispersed without any school certification, and they went directly to me to be used for, broadly, "the cost of education." I was told that after graduation, I would be able to consolidate my loans over 30 years, thus lowering my monthly payments, and making them affordable. However, to my surprise, after graduation, I learned that consolidation loans were no longer available. In addition, I feel that these loans were designed to fail. I earn a decent salary and so does my Father. However, we still cannot afford to make our monthly payments on these loans, and they are currently in default. When I took on these loans, I was naive and inexperienced. I trusted the system and the representatives who sold me these loans. I had no idea that they would lead me and my Father to ruin.

I have been desperately following H.R. 5043 (Cohen and S. 3219 (Durbin): The Private Student Loan Bankruptcy Fairness Act of 2010, and the Fairness for Struggling Students Act of 2010, in hopes that there will be some relief in sight.

I implore you to please support this legislation that will restore fairness and bankruptcy protection for private student loan borrowers. These bills would treat private student loans like similar forms of unsecured consumer debt in bankruptcy, which I feel is what they are. These bills would restore private student loans to their pre-2005 legislation status. They would force lenders to practice discretion when lending to students. As it stands now, I feel that students are naively taking out these loans, which can be used for any expenditures under the umbrella of “educational expenses.” Students are then locked into this high interest debt for life, and unlike other unsecured debt, they have no protection and no way out. Opponents of these bills claim that it would make student loans harder to obtain and allow students to abuse the system. However, there is no evidence of such problems before the bankruptcy protections were removed in 2005. To the contrary, lenders were making huge profits.

Hearing on this H.R. 5043 and stat facts:
http://judiciary.house.gov/hearings/printers/111th/111-91_56069.PDF

Please support future legislation by easily contacting your Congressman here:
http://projectonstudentdebt.org/letter_view.php?idx=21

Posted by apples4apples on 10.18.10 at 23:32

I have so much regret over having borrowed money to go to a Tier 4 Law School. Over even having gone to Law School.

What started out as 79 thousand in Student loans is now 272 thousand and counting.

After defaulting with Sallie Mae, my loan is now with Direct Loans and/or the Federal Government.

I fear for my future. I fear for my mental and emotional health as I carry forward this already 14 year old debt for the next 20 years.

I have no credit. A low paying job, and a divorce because of the debt mainly.

After 20 years the loan will be "Abated" and I will owe tax on the abated amount, which could potentially be astronomical. I will be 65 years old.

Posted by jdpainterguy on 10.20.10 at 21:30

Thanks for the article-Maybe you could use the same color text as the background next time.Or just show pictures?

Posted by jimmy on 10.21.10 at 23:18

America preaches for us to go to college.. to make something of yourself…if you don’t go to college you can’t get a good paying job…however now because of a result of that mind manipulation that me and people my age have been fed since we popped out of the womb…me and thousands upon thousands of young poeple…are trapped in loan debt that doesn’t seem to want to go down…with absurdly high interest rates…we are putting money into something that won’t go down. My loan has gone up 10,000$ in interest alone… in a matter of two years and that is how much I have already put into the loan.

They make me pay 630$ a month when at the same time they are charging that amount for interest monthly. TELL ME HOW IS THIS EVEN FAIR? I feel like my money is just being thrown in the trash. The loans should be going DOWN not UP.

So can someone PLEASE tell me how this is legal and even moral? There’s people who can never buy a house, rent an apartment, have kids, get married, live their dreams, work in the trade they studied for because places like CHASE and SALLIE MAE have fucked the future right in the cunt and they can’t afford to pay so they default.

I went to Emerson College…I am the first of my family to go. My parents could only cosign for me as we didn’t have any money to just give me to go to school. I was so proud to get into the college of my dreams after having failed to get in the first time around.

I finally move to NYC a year ago…to make my dreams come true…finally I thought things were slowly beginning to turn around in my favor then a month ago everything went to shit for me. Now guess what? I lost my job…I have no money and I owe $1800 worth of bills a month and now I have to move back to Stoughton, Ma and find a full time job which at this rate I’m probably gonna end up having 3 jobs just to pay my bills.

I will have to set aside acting/directing the only thing I have ever wanted to do with my life. If you know me in real life you know that acting/directing my dreams are what keep Jocelyn together…keeps her moving and going…but now you take that away…and she is left half empty inside. ANd that’s why I have been depressed and suicidal…
If I had known what college loans were gonna end up doing to me…I would have never gone to college…these loans… unless a fucking miracle happens…someone wins the lottery and gives me money or w/e I am gonna be chained to this debt for the rest of my life.

Tell me how is this even living? You work..work..work…then you die and the kicker is the loans keep going! You die and the loan gets thrown to someone else…

Tell me America the Great how do you feel knowing you have fucked up your future generation?

Oh i forgot you are to busy worry about weapons of mass destruction and reality shows and bullshit.

Dear Mr. President…how do you sleep at night while the rest of us are crying?

Posted by Jocelyn Padilla on 10.22.10 at 1:40

I took out 200k in school loans and pocketed about half of it and skipped the country. Haha Sallie Mae suck my cock and thanks for the free money.

Posted by Jake in Ireland on 10.25.10 at 5:46

If you can't afford to pay them, stop making any payments to them at all and let the loans go into default, and let them garnish your wages. A 15% wage garnishment is a lot more affordable than the monthly payments they want you to pay.

Also, consider the income contingent repayment plan-- after 25 years, the balance of your unpaid loans gets forgiven. And if you were insolvent at the time your loans were forgiven, then you don't owe any taxes on the forgiven amount.

Posted by T.J. on 10.25.10 at 11:07

Who the hell wants to wait 25 years to have someone decide if they are insolvent or not? We are being robbed blind, and told it is our fault. What the hell? I took out 13k in private loans to pay for a summer semester or 4 classes and unfortunately rent because one of the companies I worked for shut down. Hell I was still working on campus a paltry 6 hours and I even begged my boss for more hours, but guess what, I got shit. So now that 13k is more like 25k and will only go up more andmore since they have no reason to take me out of default even if I make payments on time and have the ability to pay. Instead they will continue to jack up rates and guess what, Ill leave the country. Fuck this. I almost killed myself once because of this, and I won't do it again. I am fortunate enough to know another language and have friends in other countries that own companies and I will be damned if these stupid mother F***ers force me down so low as to take my own life. I didn't take these loans out to screw anyone over. I busted my ass off to find work and this economy fucked me over, and guess who caused this economy to burn?

Posted by Cory on 10.25.10 at 15:05

Humm here is a thought....MAKE school cheaper !

Posted by db44 on 10.26.10 at 15:36

Higher education is a farce and a scam.

Signed,

31 year old master's degree holder who worked 20 hours per week throughout college, owes $50,000 in student loans, and still cannot afford to make a payment.

Posted by Gris on 10.28.10 at 16:19

Stealing your tax refund, Stealing 15% of your work wages, stealing your social security/disability income, ruining your credit rating, and stripping you of your livilihood is ALL CRIMINAL and all for the sake of repaying a God Damn student loan. What a bunch of Horse Shit! Why not put debtors unable to repay in prison as well....you know...Debtor's Prison? All of this shit shows how irrational our system is.

All this Usury places debtors into a pit of despair. Feeling hopeless and helpless and for WHAT?

A God Damn student loan. Fuck the Student Loan people!

Should a person be forced into a life of crime, poverty, depression, bitterness, or suicide all for the sake of repaying some idiotic student loan?

Why is the hell have bankruptcy protections been taken away from student borrower's who have fallen on hard times?

The EXCUSE for the removal of Bankruptcy protections for student loan borrowers is BULL SHIT!

You simply CANNOT penalize EVERYONE because of the unscrupulous acts of a few individuals from years ago who took advantage of the system.

There will always be unscrupulous individuals out there! CREDITORS BEWARE! But YOU SIMPLY DO NOT PENALIZE EVERYONE BECAUSE OF THIS!

Student loan debt for debtors who are unable to repay should be FORGIVEN! This is especially true if it has been found their situation is long standing (over 7 years).

What is the point of holding a borrower responsible for an unsecured debt they are UNABLE to repay? What good does it do? It's ludicrous!

If you are a creditor and do not want to have to deal with borrowers who are unable to repay their obligation to you...then here is a simple solution.......

STOP LENDING MONEY TO PEOPLE!

In this life....SHIT HAPPENS! ALL people do not lead successful, prosperous, and perfect lives. FAILURE HAPPENS....ALL TOO OFTEN!

The Student Loan Predators MUST BE STOPPED!

How in the hell can we get CONGRESS and the PRESIDENT to ACT ACT ACT on this ISSUE QUICKLY! NOT AFTER YEARS AND YEARS OF DEBATE.....BUT........

RIGHT NOWWWWWWWWWWWWW!!!!!!!!!!!!!!!!!!!!!

Something has to be done!

If Congress can bail out AIG Insurance, Freddie Mac, Fannie Mae, General Motors and so many others..........WHY IN THE HELL CAN'T THEY BAIL OUT their citizens who are in real trouble and have desperate need of relief from these student loan VULTURES!

Something has GOT TO BE DONE AND NOW!

I hope SALLIE MAE ROTS IN HELL and all the people associated with them!

Posted by George on 10.30.10 at 18:26

I do have one question:

Suppose bankruptcy protections do somehow become restored?

Wouldn't that lead to a tidal wave of Sudent Loan debtors filing for bankruptcy? Many thousands? Or hundreds of thousands? Would millions be more accurate? (somehow I doubt there are millions)

And what result would that have on the economy? On the lenders and servicers, and all related interests? Or does anyone really know?

I'm not an economics or financial person, but is there an understandable way to predict the overall national consequences of restoring bankruptcy protections?

A second idea of mine is this:

Because the system has obviously failed, and has become horribly corrupt, How about just wiping out Student Loan debt entirely and not even calling it bankruptcy? Rather call it a solution to a 3 decades old problem that was a bad idea in the first place.

After that, reinvent the entire educational system.

But nothing short of a major Civil War or Social Revolution would ever bring that about I guess.

I say that because appealing to Congress with respect to this issue seems pretty useless and/or an exercise in futility.

Posted by jdpainterguy on 10.31.10 at 5:28

Apparently everyone is entitled to a college education.

The fact that they borrowed money for it should not mean that they actually have to pay the money back.

It is the bank's fault for loaning them money.

None of these graduates seem to have studied basic economics.

What is happening to this country?

Posted by Billmelater on 11.1.10 at 1:34

In 1996, I graduated with a BA in History Education. I'd borrowed $65k to get through school as a married student. After I found a teaching job, my ex found she liked sleeping with my students better than sleeping with me. I got fired from my teaching job, and blackballed. Reccomendations were pulled from my files. I couldn't find teaching jobs after that. I had to take what work I could find. I've been living below the poverty level ever since. Even though I'm remarried and have kids, I'm still making under $30k/year. I can't afford the payments. We don't have a home of our own, and now, since AES screwed up on paperwork (which they cheerfully admit when you talk with them) and I was reported as "late" on a payment, I now can't get a home loan. My repayment is now $99k. I'll be destitute until I die. Thanks for the American Dream.

Posted by redcoyote on 11.6.10 at 14:58

Student loans are just the next "bubble," following that of mortgages and dotcoms. I highly recommend that people watch the film "PLUNDER" to get an idea of the criminal corruption on Wall Street that promotes these so-called debt "bubbles": http://plunderthecrimeofourtime.com/

I graduated with a B.S. a couple years back, first generation in my family to do so, and now have over $50k in student loan debt, paying what little I can on a blue-collar service-worker's income. I've resolved to never have children, own a house, or own any other assets -- but that was the original plan anyway. If a life of crime doesn't appeal to you, consider under-the-table self-employment as an option to escape unfair wage garnishments.

Posted by Bob on 11.14.10 at 23:03

This is possibly the best article I've read on student loans. Kudos to you, Stephanie. Bob is correct about "Plunder". Another good one is "Default"

Posted by Eggy on 11.22.10 at 1:43

So let's do something about this and fucking revolt. I'm tired of this shit.

First we need to elect Ron Paul president in 2012. We can work from there.

If my mom wasn't a cosigner I'd be gone already.

Posted by Pissed Off on 11.25.10 at 20:12

There is a serious problem in the U.S., and it is amazing that the government has been so fast to turn their back to it, yet they bailed out the financial institutions who were the people who turned the economy against those students who were set to graduate and attempt to pay off thier student loan debt. Now, the job market is terrible for recent college graduates. Some are turning to suicide; I know I think about it every day. What a terrible country we live in. It is not that the students believe they should be off the hook, but rather the predatory lending and usary laws that should protect this class do not exist - this means that it is okay to rip-off only those people who want to better themselves through college. WTF. Had I know that, I probably would have been better of manufacturing and selling drugs, importing illegals, stealing cars, and enslaving women to become prostitutes. You don't hear about drug lords, runners, and pimps being in the trouble we are in. Maybe I can pay down my loans faster with the money I could make from manufacturing meth. This country is a disaster when teh only jobs availible are in illicit activities. It's hard to lobby for change in policies when your having to study for finals and attend classes. What a mess. Had my parents not cosigned, I would have probably killed myslef already. Leaving this country may be the best option. I refuse to have my hard work be deemed useless because I can't find a job, but yet I have to sit back and watch Al Lord purchase golf carts for his private golf course with our money. This is a bunch of B.S. We depended on the government not to screw the economy up so we would have jobs to turn to after graduation that did not involve dealing or selling drugs. It turns out, we should not rely on our government to protect anything the people depend on. I do not think that was the vision the Framers and founding fathers had in mind, but nonetheless, here we are. http://www.youtube.com/watch?v=HvHqcFebOtU

Posted by Al Lord on 11.26.10 at 22:38

this is what jews do in every country.

Posted by Tim on 12.1.10 at 5:52

You can join my facebook page "Sallie Mae is a SCAM" in support of students that have been taken advantage of by predatory lending.. Thanks for the support

Posted by toney bones on 12.4.10 at 22:09

i feel bad for people such as Collinge, and the millions of others who are in his position. i still cannot believe an employer would yank a license. how do you expect to be paid back if you don't let that person work to pay you back?

well, here is my story. i hope someone here will learn from me and educate those around him/her.

i refused to go to college after high school (in 1995) for PRECISELY this reason. i always thought any type of a loan based on interest was a scam. yes i did simplify it too much but as i grew older, i realized companies hire superstar lawyers who write the laws that always have loopholes benefitting their company they represent. i knew it was a lose-lose situation.

LUCKILY, i was able to still go to college for free. back then in 1997, i applied to kingsborough community college and went there for free with grants. i believe they were PELL and TAP grants, given to me by the government. i am not sure if this was federal or city or state aid. this was in brooklyn, NY. from there, i transferred after a year into brooklyn college and spent two years there. same thing. i used the grants. i finished my BA degree in 3 years because i was very aggressive and just wanted it done. the ending GPA was also 3.79 but that is not a surprise if all you do is read and study. i did some work as a student (time was limited to produce labor) as i tutored other students as well as helped them compose term papers. the only problem was - my major was philosophy. unless you are going into law, the major is a total waste if you are going to make a financial investment in a degree. i personally have always hated the field of law but i really wanted to argue using logic. anyhow, why do i hate law? i don't find it fun. just not my cup of tea. anyhow, after graduating brooklyn college, i applied for and received an academic scholarship (fully paid) for teaching at fordham university. again, i was able to go to college for free (i guess my hard work earned it?).

OK, so here were the prices my colleges charged during the times i went there. this is based on my memory as best as possible.
kingsborough community college: about $1400 per semester in 1997 for courses valid up to 18 college credits
brooklyn college: about $1600 per semester in 2000 for courses valid up to 18 college credits
fordham university: i am not sure because i never saw a bill but this is a private university so i know it charged a lot more than my previous colleges.

SO here i am at age 34. i have 6 years of college with two degrees and a license. i have no debt. i never had a credit card in my life till i left graduate school (in 2005). i always said to myself, "if i don't have money for it, i just don't buy it." yes i lived austerely but it worked. i hate the idea of being in debt and being tethered to a company, as this article says, like "an indentured servant." to this day, i only use my credit card as cash - if i don't have money, i won't use it and if and when i use it, i pay it off within a few days to a week at most.

anyhow, back to those grants. if i had not had those grants from the government, i probably would have wound up taking unskilled labor somewhere or a job where i would be an apprentice, but i know there is one thing i would NEVER do: take a loan. it's not a wonder that major religions of the world despise and prohibit usury. these guys, the american capitalists, take it to another level - all legally.

even if you study to be a professional in a field that pays incredibly well, you are still placing bets on your future. how do you know that one day you won't be hurt in life and won't be able to practice your work to pay off the loan? maybe, you will make it 10 years into your training but the payoff will be far removed from what you invested into it - a decade of the best years of your life, as well as that half million to million dollar constantly-compounding-interest loan. many scenarios are possible and people who idealize their future with a picket fence and a comfortable cozy life are kidding themselves. maybe your dad gets alzheimers and now you have to cover the cost for someone to take care of him, pay your loans, food, rent, and so on.

i say that if you cannot get a full or a hefty scholarship based on sports, hard work, or other criteria, go open your own business (there are grants), or become an apprentice in a field you like, or try different jobs where one day you think you can master it and be great at it.

stop being afraid of life. go out and try new things. a college degree does not guarantee success. many have made it without college. if you are worried about not being educated and sounding "dumb," read and discuss content with people and travel the world. remember - college is mostly just job training for a narrowly defined skill. the liberal arts courses offered in college can simply be studied on your own with a group of other people or at a community college - you are STILL learning the exact same material, just paying far less. just be aware that when you take loans in today's inflated market price for education, you are assuming major risk - and maybe your parents/family too who will be co-signers.

STAY AWAY FROM LOANS.

Posted by scir91onYouTube on 12.21.10 at 13:09

In 1989, at 21, I left my husband of nearly two years after enduring the anguish of unspeakable mental, physical, sexual and verbal abuse, as well as his repeated threats on my life. I was just over three months pregnant with my first child, a product of marital rape. When I discovered I was pregnant, my husband's response was to inform me that it was my fault that I was pregnant, demanding that I have an abortion. He punctuated his demand with the vow that, if I didn't, he would abstain from work to avoid paying me child support if I left him.

He had been unemployed for months by choice, and I was earning a paltry $6.08 per hour as a secretary. From this meager sum, I paid our rent of $430 per month, as well as our utilities, in addition to my Visa card, which my husband had run up without my consent, and bought groceries. Neither of us had health insurance, and I wasn't yet eligible for insurance through my job.

After repeated and continued beatings, fearing for my life and the life of my unborn child, I left my husband, rescued by my parents who came to take me home. I found a new job shortly after relocating to my home town, earning $7.97 per hour. While staying with my parents, I saved my money, investing in a condo with a small down payment just over six months later in early 1990. However, although I was earning more than I had ever earned, I struggled as a single parent. I was unable to get either a divorce or child support because I was unable to afford a private attorney, and my husband refused to be served with papers drafted by the state's legal services, documents necessary to institute an order of child support.

I was struggling financially, and my estranged husband was successful in his bid to refuse to pay child support. I had long since relinquished any hope that he would do the honorable thing and at least pay child support. I also realized that my financial fate in life could not be improved by maintaining my current job. Hoping to improve my future and that of my child with the prospect of the upward mobility I believed a college degree would offer, just over a year later, in 1991, I left my job to return to school full-time. Unfortunately, however, my other bills didn't go away, and the money I was able to make part-time was nowhere near enough to make ends meet. I was also disappointed to learn that, although I qualified for Pell grants, I did not qualify for enough grant money to also cover the expenses of books and other supplies.

Reluctantly, I was forced to incur the additional debt of student loans. For the next six years, I worked very hard, both at school and at the odd jobs in which I was employed in a desperate bid to keep my head above water. I worked full-time as a temp for $8.50 per hour every summer, and every Thanksgiving, Winter and Spring break, landing a job as a result of one temporary assignment. However, I had no social life and devoted myself completely to my studies, my work, and my daughter. Along the way, I was introduced to a wonderful man who asked me to marry him. However, I deferred marriage, even after finally being granted a divorce by default judgment in 1994, because I was fearful of saddling my intended with my student loan debt.

During the last year of my undergraduate studies, I worked one job full-time as a medical transcriptionist in a hospital, in addition to three part-time jobs doing medical transcription from home, while attending college full-time as well. For all of my hard work and dedication, I graduated magna cum laude in 1997 with a B.A. in Psychology and was rewarded with job prospects earning no more than I had earned as an executive secretary several years earlier, but now with the added debt of student loans, in addition to my other preexisting debts and living expenses.

Realizing that I had been misled in my belief that a college education was the path to financial Nirvana, I refused to be deterred. I concluded that my only option now was to - you guessed it! - earn yet another college degree so I could get a job earning enough to live comfortably AND pay the student loan debt incurred for my undergrad degree, which had proven useful for doing neither. The only problem was that, now, since I already had an undergraduate degree, I could only obtain student loans and, perhaps, scholarships.

Undaunted by the nagging sense - and under protest from my significant other - that this was fast becoming a losing battle, I threw myself into a double Master's Degree program at a prestigious private university in my hometown in August of 1998, less than a year after earning my prized undergrad degree. But this time was different. Work was out of the question - at least initially - except for the paltry sum I was able to earn in my internship, and I became intimately acquainted with the notion of what it means to be a, "starving student!"

Again, however, I refused to be deterred in my efforts, and in December, 1999, I earned my Master's Degree in Social Work, followed by my Master's Degree in Public Health in May, 2000. Now, I thought, I would finally be granted the financial Nirvana which had eluded me for so long! And yet again, I was proven wrong.

Interestingly, I incurred nearly the same amount of student loan debt for my 1-1/2 years of graduate school as I had incurred for the entire six years I attended undergrad - between the two, a sum of around 100,000!!

Although I was fortunate enough to begin a job shortly after graduation, the salary fell far short of what I had hoped. I had no delusions that I would be earning a six-figure income as an entry-level professional in the field of social services. Nonetheless, I was disappointed by - yet grateful for - my beginning salary of $29,500 for a 30-hour work week. My student loans had been - and remained - in hardship forbearance.

In less than two years, I was promoted to Project Coordinator with an annual salary of $38k. Shortly afterwards, however, I became embroiled in a dispute with my employer after a brief illness. Faced with a hostile work environment and an untenable working relationship with many of my coworkers, I opted to seek work elsewhere and located a job paying $31,700 per year, a pay cut of over $5,000 per year.

A few years ago, I decided to avail myself of the opportunity to take advantage of low-interest consolidation loans, paying somewhere in the neighborhood of between $160 and $170 per month. Although I haven't missed any payments, I also haven't made a dent in the original debt, and the total amount I owe continues to balloon like a bloated bureaucrat.

Here I am, 13 years after earning my B.A. and almost 11 years after earning my last Master's Degree, a seasoned, licensed professional in the fields of substance abuse and addiction, maternal and child health, and domestic violence and public health. I struggle to pay my bills and can ill afford to pay the full amount of my monthly student loan payments (well over $1,000). I don't own a vehicle and sold my condo at a tremendous loss in 2006. I have pretty much zero hope of ever owning another home. During the past two decades, I have gone on just two vacations, both within the last five years, and both of which were possible only because of the generosity of my parents (who are not independently wealthy, and neither of whom has ever set foot on a college campus), who allowed me and my own family to tag along.

I still live with my significant other, and although the threat (I believe) of saddling him with my student loan debt through association is long-gone, after being together for 20 years, we still haven't married. The glimmer of hope for a bright future together has been replaced by silent resignation to an uncertain financial future, the burden of interminable debt, and hopelessness and despair about what is to come. My daughter is grown and about to have a child of her own. She wants to attend school herself and likewise lacks the resources to do so. Her father never did fully pay the child support obligation he owed.

At 43, I think about and fear for my future, my retirement - and those of my significant other - often. I was recently diagnosed with fibromyalgia, which is making it progressively more and more difficult for me to continue to work in my current 40-hour work week. I have disability insurance, but it will only cover me for a maximum of six months, and only at roughly 60% of my usual salary. I currently owe just under $142,000 on my student loans, and it's now time to recertify my eligibility for reduced payments under excessive debt forbearance through Sallie Mae. I feel like I'm in a proverbial race against time. I only hope that they will honor the terms of the original promissory note, which stipulates that my student loan debt can be completely discharged in the event of my death or total disability, and that my doctors will certify me totally disabled before things get any worse! In retrospect, I am glad and grateful that I didn't marry my beloved before finishing my education. I hope it was the right decision!

Posted by In Debt Forever on 12.22.10 at 2:43

I would like to why is it that students are not able to file for bankruptcy? Why is it that people who irresponsibly use lines of credit, buy houses they can't afford, or even gamble their life away have the privilege of filing for bankruptcy?

See the discrepancy? I don't really understand. I know of two people who bought homes they can't afford, run up credit card bills, and basically live outside their means, but are working on not their first bankruptcy, but their second!

However, I, the graduate from college, who works 40 hours a week, and lives within my means can't make affordable loan payments because the big bad loan giant, Sallie Mae, wants an unreasonable payment that would basically leave me without a roof over my head and food. How can I be expected to pay back loans when I can't reasonably live that would afford me the privilege of paying back the loans?

I have to have food, comfort, a roof, a car and insurance to get to said job if I am to pay Sallie Mae back. I would love to pay them back reasonably without sending me into the poor house.

Posted by Lisa Breslin on 1.21.11 at 9:21

OK, after reading all of these posts I am really scared now. I have two kids an 11 year old and a 8 year old and I am 36 years old and I have just earned my BACHELOR's and I owe over $100,000 in loans. Sallie Mae's response to how to pay for my loans is that if I don't have the money to pay for the monthly payment of $589 a month then I can just keep applying for a forbarance? WTF. What about applying for extended so I can afford to pay what I owe. I don't want to default but if they aren't willing to work with me, then what else is there to do. I got a degree cause I thought I would get a better job offer but in this economy how can I? I am really stressed on how to pay for these loans?? AHHHH, makes you want to just jump off a cliff.

Posted by Jenny1974 on 2.23.11 at 13:22

Something should be done about this. I am 50k in the hole from defaulting 13 years ago. It's all fees they tacked on etc, not to mention when I graduated the 1 year program, they didnt even mail me the degree. I didnt show up for graduation so they said they would mail it and they never did and when I called I got nothing but the run around and the same when I went down there. I finally gave up. I couldn't find any kind of work in the paralegal field either because all jobs wanted 5 plus years experience if not more and had other requirements we weren't even taught. The classes were very basic. I worked blue collar jobs on and off since then and now I am unemployed. I recently filed my income tax from last year and they skyjacked it..again.. leaving me with not a penny to even put towards my rent. Not to mention the few times they garnished my wages leaving me with nearly nothing to live on. They assume everyone graduates and earns a fantastic amount of money. Thats not so. The worst part is that you cant escape it. It haunts you until your on your death bed. When they are thru confiscating your income tax refund..they will start on your social security check. Its crazy. They need to put a stop to these people and make it so its affordable at least or some way to come to terms with it when you no longer have the ability to pay such is the case with many people. There should be a statute of limitations on student loans. I dont get it. I will just stop working altogther and and live my life as a gypsy.

Posted by Shark Bait on 3.9.11 at 9:34

Iam a victim of private student loan. I have strated writing at length about this in my blog http://churaumanieb.blogspot.com. Please visit my link and make a contribution.

Best wishes.

C. Bissun

Posted by C. Bissun on 3.9.11 at 14:08

drowning for 20 years...my high crime? getting a master's degree....living with my elderly parents for 15 years....no family, no kids, no life, i hide.....i got out of school in 1991 with high hopes....i applied to job and after job....all i could get were minimum wage jobs i would have had anyway.....i put $50,000 on student loans including my savings until i could do it no more...put them in forbearance, the interest builds, my debt is now $100,000, i'm 47 now and i'm dying.....why me? i am so tired of living.....why do you do this to us? we were trying to DO THE RIGHT THING!!!!!!!!!!!!!!!

Posted by dyingstudentloandebtor on 3.17.11 at 16:23

the next person that tells me this is the best country in the world will get slapped. My wife got her bachelors, masters, and phd in Germany and owes a whopping $0.00. Yep, other countries actually treat their citizens like humans and not slaves. I owe over $100k and am not paying them a penny. I graduate in 2 months and am moving to Germany where they can't touch my paycheck.

Posted by Jayboy on 3.22.11 at 7:45

I want to know where we can can fight this and make a change. We have to stand up and defend ourselves. I want to know where the next rally is because I will be there. They are payday loan sharks disguised as your friendly local government trying to give you a hand..to empty your pockets into theirs and to make sure your are shackled to them until every red cent is repaid including the murderous fees they tack on. They will make sure you have no income tax refund so what bills your trying to keep up with will fall back even more, causing yet more debt..and rest assured come social security time and you still owe them several thousand you probably wont be getting your social security check either. Just a fraction of it. I will go into a state paid aging facility before they take a social security check from an old lady on a loan that has been dead for over forty years. Seriously..these people cant be right.

Posted by Shark Bait on 3.31.11 at 0:40

I have you all beat. With penality and interest I owe $551,000. I am 58 a podiatrist who only makes $20,000/yr. In a week or 2 I will be homeless because The Dept of Ed garnished payments from Medicare at 100% my only income.

The student loan program is a preditory loan program. The colleges are raping our country, they raise their fees without any free market pressures. They accept students who have no chances of being financially sucessful.

It is the new loan crisis.

Posted by TL on 4.19.11 at 12:59

I believe the local colleges where I live have taken advantage of me and other non-traditinal students by lying to us about the job opportunities available upon graduation from their educational institutions. I can identify with many of you on this blog. I have spent the past year watching my SallieMae student loans (2 of them) climb upwards.....higher and higher they go....where will they stop...who knows. I have not been able to repay my loans since I graduated back in 10/1996 with my bachelor degree in HRM due to I never did find a job doing HRM. Then I decided to go back to school to get a masters in HRD/OD in 8/1998.....graduated 5/2000...didn't find a job with that degree either....then 911 happened and all HR jobs were impossible to find where I live without world experience. In 8/2004 I re-entered college again telling myself this was my last time....I completed a masters degree in marriage and family therapy....graduated in 9/2006...did work for a little time but honestly it is feast or famine with this degree...not a lot of job prospects where I live, licensure has strict rules about where you can operate a business, clinical supervision is required for new therapists and is very costly, CE requirements yearly are costly....there are a number of issues trying to get a good job and earn a good income as a LMFT, too many LMFTs/LCMFTs and not enough jobs for everyone. I am ready to start repaying my SallieMae loans again for like the 10th time starting 6/2011 and I noticed SallieMae has been calculating my repayment balance incorrectly...each payment book I have been sent for the past decade and accompanying letter from them identifying my number of payments has increased so much for example 359 pymts was listed on the recent letter dtaed 4/13/11....this is crazy.....it was broke down as 23 @ 255.56 and then 336 @ 335.27....I will be paying these 2 loans until I am a very old woman. Over the past 10 years I was unemployed, went through a divorce, was not able to find consistent work to pay towards my student loans so I had to defer and also take out forbearances a few times....what a costly college eduation. Does anyone know where the legislation for H.R. 5043 (Cohen and S. 3219 (Durbin): The Private Student Loan Bankruptcy Fairness Act of 2010, and the Fairness for Struggling Students Act of 2010 is at to date and what is going on with it? I am hoping that this legislation will offer some relief in sight.

Posted by LM on 4.26.11 at 4:18

Shark Bait said: "The student loan program is a preditory loan program. The colleges are raping our country, they raise their fees without any free market pressures. They accept students who have no chances of being financially sucessful."

"It is the new loan crisis."

This is true. It is the new loan crisis. Defaults are measured by DOE et al, using voodoo economic metrics. They "say" the rate is low 3-4%. In actuality, it is nearer 33% and likely rising quickly.

It is BECAUSE there is a DOE that this problem exists. Everytime the schools beg for higher limits on loans, the government grants the request. The colleges/universities immediately raise the tuition fees.

This has been and is clearly a HUGE Ponzai Scheme by the government and they are making big bucks from it. First the taxpayers (who actually have a job and probably did NOT borrow money to go to college) pay for the defaults. The borrowers who defaulted then must pay taxes on this GIFT from the government. And the colleges are making bundles from higher and higher tuitions while the rest of us are paying for these loans.

Usury and theft are good words also to describe this practive. However, indentured servitude, often for years or life, is what it truly amounts to for the borrowers.

They are sold the scam that they must have the college degree and more, then go into debt for it and finally, may never get the job they need to pay their debt and still have some sort of life after all the work they will do for the next thirty years or so while trying to pay for these criminal loans.

The government now has taken complete control of all student loans, thus, cutting out the middle man. Yet the Ponzai Scheme will continue as usual until the entire economic system collapses in America. This, of course, is the goal.

Please do not borrow money to go to college. Do a work-study program. Do online courses for much less money. Do NOT feed the government's and wasteful, colluding colleges' coffers by "progressing" their agenda.

And yes, government and colleges do mislead students about future job markets. It is all part and parcel of the Regressive-Socialist agenda that aims to dub down young folks beginning with kindergarten all the way through college. This will help eradicate the so-called middle class and every dumbed-down student will leave college with a worthless degree, no job or under-employed, and HUGE debt. It is FEUDAL and DRACONIAN. It is REGRESSIVE back to a time when there were only two classes, the Haves and the Have Nots. This is the harvest those who love socialism must reap.

My heart goes out to all those who were so naive as to be taken in by yet another Corporate/government scam. Please remember next time you hear the term "Progressive" and realize it really means "Regressive" and rightly should be called such. Good luck to all who are affected by this scam; and that includes about all of us.

Posted by CM on 5.28.11 at 8:45

This is government sanctioned loan sharking, pure and simple. I'm not that far from retirement and the thought of being forced to hand over part (or maybe all!) of my Social Security to those bloodsuckers makes me furious. Yes, colleges are complicit in this nightmare and I know that because after my university screwed up ALL the Pell Grant apps for an entire year for hundreds of students they then deliberately waited until nearly Thanksgiving - when we were desperate for books and supplies- to inform us that we had no choice but to accept a loan or be thrown out. Because of their screw-up I've had 25 years of escalating debt, but there's hope. We may end up having to march on Washington, like Civil Rights activists and women who wanted the right to vote. They won and so can we. Great article, Ms. Kraft, you hit all the right points.

Posted by NS on 7.2.11 at 17:32

I haave two children with loans with Sallie Mae. Sallie Mae calls 32 times a day for each child from 8 different phone numbers. They told me that they calll 8 times a day from each number, which bounces around the country. They have no reasoonable solutions for predadory private loans,, which is what we have. This is more than an inconvenience but our familly is being torn apart. We are all unemployed, and the loans increase $30,000 each every year. Students need fair protection, and discharge possibilities. The stories of tragic deaaths, broken marraiges, and giving up are totally true.

Posted by RP on 7.2.11 at 17:48

Medical School (Caribbean) let me finish (but not graduate) owing 18,000 to the school. I couldn't borrow any more to finish because I hit my limit with public and private borrowers. Started repaying the school only to find out they lost my last years records without even an explanation. Sallie Mae sent me a first monthly payment bill for over 4,000. I was 22, handed a twenty page loan app. writen by 20 lawyers and taken to the cleaners, (for no benefit whatsoever). Anyone who can read should realize the magnitude of this legally institutionalized educational scam. The lesson I have learned is that predators will prey upon people until they no longer can. All I ever wanted to do was be happy, contribute to others and repay what I borrowed at the rate I agred to repay it.

I'm "judgement proof". I live in the woods with my son. My "potential contribution" to society in general, is gone. Ironic that my time spent outside the country studying made me realize there are other, better places for me to live my life and to raise my child. Places with laws, but more importantly morals, that protect their citizens from this kind of legalized slavery where no one wins (except the CEO's of Sallie Mae like LORD) I have read online that there are many more like me but still this evil continues.

When the unhappy day comes, and my mother passes away, I will leave the shores of this country my father fought to protect in World War II, and look back with a story to tell my son of what went wrong in America.

Posted by Waiting to breath free again. on 7.27.11 at 10:43

Lets say that bakruptcy protection goes through for student loans. What would be the stance on co-sgners on these loans? Also, would the bankruptcy law allow you to discharge after a certain number of years or would the law pretty much be along the same lines as credit cards and so on?

Posted by mattiewhoa on 8.7.11 at 23:38

What? Comments are still allowed... OK:

I have written a well-sourced and well-documented article on the genesis -AND SOLUTION to this problem:

* http://GordonWatts.com/Higher-Ed-Tuition-Costs.html

* http://GordonWayneWatts.com/Higher-Ed-Tuition-Costs.html

* http://ThirstForJustice.net/Higher-Ed-Tuition-Costs.html

Posted by Gordon Wayne Watts on 8.19.11 at 6:58

Very strong article Gordon, its good to see student loans are making progress in the world of bankruptcy

Posted by mattiewhoa on 8.22.11 at 17:13

you're welcome Mattie -- and thank you for your review.

Gordon

PS: PRINT COMMENT --> "Yes, I would like my comment AND my op-ed linked above -- to be considered for print in The Valley Advocate."

Posted by Gordon Wayne Watts on 8.23.11 at 0:08

This is good web site about student loans. Let me say about private and public loans. Private loans even it is called student loan can be discharged by bankruptcy procedure. Public loans cannot be discharged. You can ask bankruptcy attorneys about it. Public loans can be exused according the Student loan exuse act.

Posted by Ernest on 9.9.11 at 1:59

How is any new high school grad suppose to be motivated about going to college when they know how bad the student loan crisis is? They think they are going to create a better, more financially secure life for themself, but what they dont know is they are ruining their life if they go to college by getting student loans. BEWARE ALL POTENTIAL COLLEGE STUDENT: DO NOT GET A PRIVATE LOAN FROM WELL FARGO OR CHASE, they will fuck you over! Especially Wells Fargo; they WILL NOT work with you for any reason you have. They just want their money no matter how they have to get it. Come on, they gotta be able to take their 2 times a year vacations with their families on their 50 foot yachts in the bahamas! Now we wouldnt want them to have to sacrifice the lifestyle they have been able to create....God forbid!

Posted by Deanna on 9.20.11 at 3:31

by the way...I have filed for chap. 7 bankruptcy and am now in default on my student loans because of it...the customer service guy at Wells Fargo basically told me I just made my situation worse and fucked myself by filing for bankruptcy. So...what does this guy KNOW that he's not telling me?

He did tell me that my account would be on hold till the rest of my debts are discharged, but what does that mean exactly!? He wouldnt tell me. Hmmm....imagine that. CROOKS!

Sounds to me like I will soon be in the same sad situation as the rest of you.

I want to cry because I went back to school at age 34 to hopefully better myself for myself and my children, one of which is autistic and costs me alot to make sure he gets the care and services he needs to survive in this pathetic government country we live in. Don't get me wrong, I love America...just not the idiots who run it.

Think about it...the people who run this country ARE living their American Dream. They all have the house they want, the car they want to drive, the big boat to take the family out on, and the financial security to be able to take a vacation with their family without worrying about what they are going to eat next week....AND THEY ARE DOING IT WITH OUR HARD EARNED MONEY!

OUR TAXES PAY THEIR SALARIES!, and they wont change the system because they are making more money from it!

Posted by Deanna on 9.20.11 at 3:48

I am 63 years old and I work as a teacher in a men's prison. I graduated from college in 1998 and worked for about three years as a substitute teacher. I acquired my position at the prison in 2002. My husband is much younger than myself and he works as a construction worker (rock mason). Although I make a fairly good salary as a teacher there, my mortgage, car payment, insurance, utilities and other loans, besides my student loan make it nearly impossible to save any money. Repairs go undone on the house and the vehicles, because we cannot afford to make them. While my health is fairly good at present, i have been in the hospital twice in the last two years with chronic anemia. If I am able to work until age 70, I still won't have made a dent in my student loan debt. It is in excess of $60,000 and the interest rate in 7.5%. There is no way I can make any head-way on this thing.

In the article, it was stated that if we all would band together, and refuse to pay, Congress would have to back down and change the laws concerning student loan debt. The problem is, people are afraid and won't take the chance. I too, want to do the right thing by repaying my debt, but let's get real here, where is the American Dream of getting an education and making a difference? I'm a teacher and most of the time, I love my job. I think that I am making a difference in the system. But what thanks do I get for all the hard work I have done to get to this point in my life? It seems I'm being trampled on by people who are getting rich on my misfortune and well as the misfortune of millions of other people who are in a boat very similar to mine. The system is messed up and needs to be fixed. United we stand and divided we fall. I don't know about others, but I'm tired of getting mistreated for trying to do the right thing!

Posted by Doris Kellen on 10.24.11 at 18:45

Get ready for the deluge: DEBTORS' REVOLT -- DEFAULT EN MASSE.

I am an economics and finance professional (retired), a former insider, and I tell you: the predatory lending system is a cancer on our economic future. Starve the cancer of its nutrients then.


Spread the meme. Collapse the predatory banking system. Just say no - don't play their rigged game any longer.


And yes, it will cause widespread systemic collapse, but this will be temporary, we will adjust and rebuild, and will have cleansed out the massive DISTORTIONS that currently plague the system.

DEBTORS' REVOLT -- DEFAULT EN MASSE. The momentum grows. The critical mass is near.
...And to the folks who will immediatel­y answer with "pay what you owe. end of story!", let me just preempt by answering that the analysis is more structural and macro in scope than that. It's not just a matter of whose "fault" it is - regardless of that, it's become a macroscale systemic distortion that, if allowed to continue, will prevent any sort of mobility in the long term. We, as a nation, need to simply suck it up, recognize that these contracts were made in what is essentiall­y a different economic era, and recognize that they are incompatib­le with the new situation.
It has to simply be zeroed, reset. Rebuild from there. DEFAULT EN MASSE.
Posted by Draken Korin on 10.27.11 at 17:13

I am a RN currently working in the state of Utah. I have reached the point where I question why I ever went to college. One of my school loans (out of 4) has a 20% interest rate. After many attempts to speak to the loan company who didn't return my calls, my loan went to a collections company (which I believe is owned by the original lender). As a new graduate RN, I am at the bottom of the totem pole. Meaning that the more experienced nurses and those with more seniority get full time hours. I have taken on a second job to supplement my income but am still working less than full time. I spoke to the collection agency and was told that my monthly payment as it stands is $1800.00 per month. This is about 60% of my income. I was told by their representative that their objective is to collect the total amount of the loan/debt within 1 year. They were "gracious" enough to accept $300.00/month for the next 3 months so that I may find ways to increase my income during that time. I have placed my other loans on forbearance so that I might sent larger montly payments. However, that still will not get me remotely close the the $1800.00 per month. My daughter has just graduated highschool and is excited about going to medical school in the near future. I don't know if I should encourage her or tell her it's not worth the money you will owe later on.

Posted by Helga Liques on 3.14.12 at 16:39

be careful here.nobody can help you here or even suggest how you can get financial help.any answer of a loan lender to your question or loan request,you MUST ignore,because they are SCAMS...real SCAMS...i was a victim of which i was ripped thousands of dollars....so email me rightaway on tips of detecting a loan scam and a safer way of getting a cheap legitimate loan help via ” kenshawwjeanne(at)gmail(dot)com “.Replace the content in brackets as usual.I made it so because of those CON IDIOTS..beware,I can't diclose anything here for fear of SCAMMERS,so do as instructed and you shall see the reality of it all

Posted by kenshaw jeanne on 5.4.12 at 6:30

be careful here.nobody can help you here or even suggest how you can get financial help.any answer of a loan lender to your question or loan request,you MUST ignore,because they are SCAMS...real SCAMS...i was a victim of which i was ripped thousands of dollars....so email me rightaway on tips of detecting a loan scam and a safer way of getting a cheap legitimate loan help via ” kenshawwjeanne(at)gmail(dot)com “.Replace the content in brackets as usual.I made it so because of those CON IDIOTS..beware,I can't diclose anything here for fear of SCAMMERS,so do as instructed and you shall see the reality of it all

Posted by kenshaw jeanne on 5.4.12 at 6:59

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Posted by Mark Henry on 8.6.14 at 20:30

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Posted by Pon Yee on 9.29.14 at 13:32
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