I’ve received letters from students asking this question, so I would like to make a definitive statement about this:
That is such a wicked bad idea at this point in time.
At least wait until you have all the facts, and complete the “assigned reading:”
The Student Loan Scam: The Most Oppressive Debt in U.S. History and How We Can Fight Back
by Alan Collinge of StudentLoanJustice.org. He documents why your credit card lender won’t negotiate with you for your current loan: It is more profitable to them if you DO default.
Also check out an update on: Dave Cohen’s website: Decline of the Empire “Student Debt Slaves Get Some Repayment Relief” l that promises some tiny relief for a select few.
The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act also held a special surprise for students: student loans NOT guaranteed by the federal government cannot be discharged in bankruptcy. This became law on October 17, 2005.
Amendments to the Higher Education Act eliminated all statutes of limitations for the collection of student loan debt, so if you have old unpaid student loans from the 70′s and 80′s? Surprise! It’s again a collectible debt!
Student loans are exempted from coverage under the Truth in Lending Act (TILA). They were also specifically exempted from state usury laws…lending money at an unreasonably high interest rate. Can you spell “l.o.a.n S.h.a.r.k?” Most student loan guarantors do not have to adhere to a 1988 Federal Trade Commission legislation requiring an adherence to Fair Debt Collection and Practices in pursuing defaulted borrowers.
And if you don’t like the lender you chose when you were in college, because they were on the Preferred Lender list, or you found another lender who will offer cheaper terms? Tough. Legislation was passed that requires borrowers to consolidate their loans with the original lender only (if there was only one original lender). Even the tiny loophole that once existed in federal law whereby a borrower could transfer his/her loans through the Direct Lending program, and into the FFELP program with a different lender, has been closed in 2005 by (you guessed it!) Sallie Mae and other large banks.
In addition to having no consumer protection, “collection rates” of up to 25% can be applied on top of the debt. If you were unable to afford what you owed already, you will certainly not be able to afford a 25% “surcharge,” in addition to principle, interest, fees and penalties.
In 1976, there was a provision in the student loan law that set a 5-year time period, after which the loans could be discharged, and also a provision that permitted bankruptcy if the debtor could prove undue hardship, but that was removed. Even the mob can’t do half of what the banks can now do to collect your defaulted student loans without a court order. They can grab your wages, garnish your social security and disability payments, seizure tax refunds, and even suspend of state-issued professional licenses and termination your public employment. Hoping to practice as a psychologist/nurse/teacher/hairdresser etc? You can’t if you don’t have a license. Were you hoping to have your loan forgiven by working as a teacher in a “needy” neighborhood? Defaulters don’t qualify for loan forgiveness programs.
One million private student loans are estimated to be in default, with an equal number of private loans perilously close to defaulting. There are over 5 million publicly insured defaulted loans on record with the U.S. Department of Education. These borrowers are embarrassed, humiliated and intimidated when their loans spiral out of control, or when they are trapped in predatory lending situations, so they are less likely to be proactive on their own behalf. However, that’s exactly what needs to happen.
Here’s one of over 2000 case histories you can read at StudentLoanJustice.org:
There is David, a chiropractor in Texas, who originally borrowed $70,000 for college. After a period of unemployment in the mid 90s, David’s loans defaulted, and to date have escalated to about $400,000. The state of Texas has suspended his license to practice medicine, and he has been unable to negotiate a reasonable settlement of the debt. In David’s words, “It doesn’t make sense. It’s almost like the government doesn’t want me to practice medicine-never mind that it’s the only way I can reasonably even have a shot at paying this mountain of money back!” David is currently driving trucks in Amarillo to make ends meet.
So do you recommend students simply stay out of debt and save the cash ahead of time for college?
One writer put it this way:
“I certainly advise avoiding loans at all costs. It is frankly safer to put college costs on a credit card…At least there are bankruptcy protections (if something horrible happens) and the ability to refinance the debt under more competitive terms if the lender is treating them badly.) There is also a statutes of limitations, truth in lending requirements, and coverage under state usury laws in the use of credit cards, all of which are null and void for federally guaranteed student loans thanks to Congress.”
Don’t default on student loans, and if you are seriously considering it, at least read Collinge’s book and join StudentLoanJustice.org if you do.
I was completely blown away by learning about the student loan situation, which is why I put up a reminder about the Jokes, Humor, Ridiculous page on prior to this entry. I needed a laugh, so I though all of you student borrowers might, too.
About Kathy McMahon
Sounds like you would be better off taking a cash advance on your credit cards to pay off the student loan and get out of the racket that is Sallie Mae. I’m so glad those days are over for my husband and I, these latest articles are the most terrifying I’ve seen lately.
Yes, and there is all this “confusion” and “misinformation” that lenders offer. We had experience with that, ourselves. “Oh sure, just put the loan with us, and we’ll let you finance it at x % over 12 months.” “Will that put me in default with my school?” “Oh, no, you’ll be on a payment plan…” School says “No, you can’t register, you are in default.” We paid it off using a credit card, but golly, what about the poor kids that actually believed the BS and didn’t HAVE any credit? We were savvy borrowers, and just had a hard time believing someone would OUTRIGHT LIE. They do. There is no law that prevents it.
I went to the website for studentloanjustice and posted my story. I felt empowered in doing so, actually.
I try to take a really long view of this–as in that this situation is the best 10,000 years of totalitarian agricultural-based thinking is getting us. Our best thinking got us into debt slavery and unhappy virtual enthrallment.
I’m not one of those people who thinks we’d be better off returning to hunter-gatherer tribes, though I do think that the model of the tribe as a going concern does have its uses in these trying times. Some people got through Katrina in Nawlins by “proverting” to that halcyon state. I think it’s an element of our future that we need to pay attention to, and we need to get past our ideological differences to see the value in others’ experiences, and “the work of ye other gods and goddesses” in this process.
The key words in this post were “at this point in time.” I’m a little behind on my student loan payments–$260 or so, and I’m like “screw ‘em.” They call me, I don’t answer the phone. I don’t return their calls. I give them the same khntsideration they give me. I’ll get current, but that’s partly because I have a feeling they are not long for this world, and I just need to hang in there for the time being. Things are spiraling so out-of-control, and I for one don’t believe that these CEOs and their henchpeople have anything resembling a coherent plan other than “lock ‘em all up.” That’s the most illegitimate and evilly stupid plan there is.
Is it good that I’m getting angry/enraged about this? Something’s gotta give, after all. I need to help this tower of babel tip over!
Richard
One thing that hasn’t been discussed is not default, but what I like to call ‘perpetual deferrment’. Most of the kids I went to undergraduate school with still haven’t started paying back their loans -mostly because they are working for $6 an hour at Starbucks. So, the lender gladly ‘defers’ payment on these loans, meanwhile adding thousands of interest to the prinicple.
I’ve heard my generation referred to as the Starbucks Generation. It’s true, but not because we drink there. We can’t afford the coffee.
Thanks for that, Rebecca. It is in the school of “the bills they don’t ask me to pay can’t hurt me.” And you are right, what a surprise if they ever get a “real” job!
I am defaulting as of now. There is no way I can pay off the amount of student loan debt that I’m in and it affects my entire life. I can’t negotiate with Sallie Mae to stop the mounting late fees and interest that will be piled on for years to come, this is madness. I will be forever in debt and feel that I will never be able to live a productive life or save for a home or retirement. The worst part is my Mother is the co-signer. Does Sallie Mae have the power to take all of her retirement money or to take her house? I’ve heard all they can do is garnish wages, but cannot tap into savings and retirement plans. Is this true?
I am in default as well. I took out $30,000 to pay for my nursing degree. I got sick and was unable to finish my last term of the program.
I defaulted. It has been three years. I now owe $106,000 total.
I’m unable to get a professional license until the balance is paid. I will never become a nurse now. All 4 years of hard work, studying, getting good grades, for absolutely nothing.
College is a huge scam. I think about suicide every day I’m awake.
Ryan,
I take people talking about suicide very very seriously. I want you to realize one thing:
The worst time to commit suicide is when you are suicidal. That sounds like a joke, but follow me here:
You say you got a nursing degree and excelled in it. You got sick. You are now in default.
You have many decisions to make about those facts, and this is probably not the state you want to be in when you are making them. You need a therapist and a med consult. You are a medical person, so you know this. Get the help you need to straighten out your head, then straighten out your finances. After that, you probably need a legal consultation.
Recently, a student of mine in a psychology oriented program told me she was a physician. She isn’t practicing as a physician because her education isn’t recognized in this country.
Years ago, a doctoral level psychologist friend of mine found out that because he was missing ONE 3 CREDIT COURSE, he was unable to get licensed in the state he wanted to settle in. Could he go back to take that course? No, he must repeat the entire doctoral program as the course must be taken WHILE he was matriculated.
I don’t tell you these stories to take away your own suffering. I tell them because each of these people have faced intense disappointment in their education, and went on to find a solution around it.
I pray that you will have the stamina and courage to figure a way around it, as well.
Renee, I totally feel your pain. I too have had thoughts about ending my life. I’m unemployed right now and I’ve tried desperately to speak with the lenders regarding my financial situation, but there not hearing it. What makes matters even worse is that the interest is growing like a viscous cancer. I don’t think I’ll ever be able to pay this loan off with the interest being the way it is. Now I’m faced with the possibilities of not being able to get a job due to the default status of the loan. I feel I have nothing left. I’m so desperate at this point. I have nothing.
I had a student loan back in the 80′s. I was hit by a drunk driver and had three surgeries in a year, having to exit school. The semester had just started and they were supposed to return a portion of the loan to the financial institution. I found out years later, when a collection agency contacted me. The original loan was 423.00 and my employment was garnished and I have paid back over 4 times that amount. I am now on unemployment, and suffered an heart attack. They are now coming after me for 2300.00 more. Is there any cap on what is legally collectible?
I thought I was the only one who is considering suicide as a way out of student loan hell. Luckily for me, I have kidney disease and can possibly speed up renal failure. Then, my family could use my life insurance policy to pay the student loan Nazis off. I have come to the harsh reality that I will never get married, have children, plan for retirement, own a house and more. My life is finished. No difference if I’m shackled to a prison cell or to student loans.
I’m not even bothering with licensure because I’m sure that our governing bodies will see to it that everyone ends up defaulting.
I’m sick of people commenting when they write, “Well you shouldn’t have taken money out that you knew you couldn’t pay back”. Up until 6 months ago, I could have gotten a $50,000 a year job. I would have been fine. Well, that amount of pay doesn’t exist anymore. When students took out these loans, we could find or had jobs to pay them back. And, our economy is not getting any better.
Hardened criminals aren’t even put through this kind of psychological torment and abuse. Would the U.S. government at least give us a swift death by firing squad?
There is little to no coverage played by the media regarding student loan hell. So, the only thing that we could do is spread the word and hope that 18 year old kids don’t set themselves up for a life of hell on earth.
No, no no. Suicide is a bad idea. Really, it is.
What you are required to pay is a social contract, that has been broken repeatedly by major corporations and banks. The government, freely and without too much hardship (to them, its our money they are getting), hands pieces of papers, just like the ones you owe, to these corporations, and that is IT! FREE!
Your life is worth much more than those pieces of paper. If you marry, your wife or husband has her income and you can share her/his life with them. About 40% of this economy is “under ground” in the US, and nobody collects taxes or anything else from that cash source. This is merely a fact, not a recommendation. My recommendation is to accept the things you cannot change, change the things you can, and keep things in the right order:
PEOPLE. THINGS. MONEY.
You have been caught in a whirlwind of change, my friend. Just like everyone else in the path, the Tsunami came in, and you got wet. You aren’t the only one.
It’s horrible. It’s an outrage (that’s why I wrote the piece). But it is not ‘suicide’ serious. Believe me. It isn’t. Falling in love, and getting married is serious. Having a child is ‘heart attack” serious. But your student loans are one of those payment it doesn’t sound like YOU can pay, so you don’t. You aren’t alone. You are a tiny drop in an ocean of sadness. I’m sorry for your sadness and the losses you have already suffered. But stay alive.
We need you (and your outrage.)
I went to college in my 30s as a single parent. I did well but it was hard raising a child by myself and I was sick a lot. I graduated and received my RN license. I lived in a rural area so couldn’t find a job right away but was immediately hounded by the student loan departments. We lived in a drafty trailer with rain and snow coming in through the windows and holes in the floor but they wanted me to pay them first. I did find a job but as a new nurse didn’t make enough. I was sick a lot but they kept hounding me. I used up all my deferments and forebearances; it was easier than dealing with “them.” I suffered a stroke and lost my job but “they” still came after me. I found out I had Multiple Sclerosis but “they” still hounded me. I had an accident and was paralzyed but “they” still hounded me. “They” would call my neighbors and leave messages for them to give me.I lost my house and was homeless and told “them” I had no address but they still hounded me through my relatives. They hounded relatives I was not close to. They lied saying I had used them as a co-signer to try to track me down. I am the big fat loser. I am no longer welcome to family gatherings. I am no longer welcome. I owe money. I am a loser. I drift from one menial job, work for several months, don’t work for several months, and then try to get something else. I work minimum wage jobs because I feel like a loser. It is hard to look people in the eye. It is hard to pretend to be anything other than what I am; a big fat loser. I have no health insurance and I am sick a lot. I used to live in my car but I lost that. I now sponge off people for as long as they let me. I have nothing. I will never have nothing. I have tried, periodically, to call different places to see what I can do to try to get out of default. But, I am treated like the loser I am. I, too, think about suicide. I am hopeful I will get sick and not recover. No more student loan debt sucking the life out of me.
Anon,
That is one of the saddest stories I have read in a long time. I can’t tell you how badly I feel about the waste of human effort this student loan program has put you through.
But I want to reiterate that there is no such thing as debtor’s prisons (so far) in the USA. I agree, that student loans are a parasitic weed on our collective community gardens. But they should not kill the plant, girl. You are a survivor, I can tell that. You are tough and angry, so you keep that attitude, you hear? There is no point taking on an attitude “I’m a big fat loser.” That’s a waste of your time and energy. No, you successfully completed an RN program. Do you know how hard that is for most people? I couldn’t do it. I couldn’t. But you did. And, what you walked away with, that medical knowledge and know-how, that the can’t take away from you.
If you can’t shake that attitude yourself, I want you to get on the telephone and call around to the private “head shrinkers” in your area and offer them a chance to work with you, gratis. That’s right-at no charge. PRN. You’ll get a lot of no’s, but you tell your story, and you’ll eventually get a “yes,” and they’ll probably be glad they’ll have a chance to work with you.
I’d say it’s time for a new chapter in your life story. It’s due, don’t you think?
Serioiusly, I know that it is very hard, but if you can pay off your student loans using credit card checks, then you can declare bankrupcies. This plan may take a few years, but its worth it. Get a few credit cards and get the cash advance checks. Start using these to pay down the student loans. Keep paying minumums on credit cards so you are in good standing. Once your loan is payed off and the debt has been transfered to the Credit cards, then declare bankrupcy.
Another plan: if you are luck enough to have a house, try to get an equity loan to pay off the student loan. Once the loand is payed off, then you can declare bankrupcy or let the house go into foreclosure. You will lose the house, but hey, time for a new start anyway.
Okay, I am days from defaulting. I am a victim of Sallie Mae deferments and such. I started off with $19000. in 1990. I got a job which paid $9. bucks an hour, single parent, no child support from hubby etc. Every cent I made went to bills and food for myself and my daughter. I would write these letters pleading to either reduce the interest or work with me on payments, never got an answer other than a form letter to forebear or defer the loan. Present day that $19000. is now around $80000. I do have a home that I have lived in for 16 years and I just can’t see throwing it away on giving those evil people at Sallie Mae my money. I feel violated by them. So what does happen after a person defaults???
Ok, it seems that everybody in here is talking about how bad it is and that they can’t do nothing. We need answers, stop crying, if I ever decide to kill myself or take the person who gave me the loan in the first place, or just rob a bank, all this people that feel bad but do nothing to help don’t feel bad, give answers, solutions anything that can get someone out. Let’s talk about answers sad stories do no good.
So, I just graduated from a crappy law school that I thought would empower me to finally grow up and settle down somewhere. I’m 160k in debt and have no job. I imagine that that number will quickly reach the cool million mark if I allow it to go into default and were ever to attempt to pay it off. So I ask you, what is the solution? I’m currently waiting tables all days of the week and sending out resumes and going on interviews with my time off, but to no avail. I know of others who are treating “finding a job like a job” meaning they have all day everyday to search, and they too are still unemployed. Even if I find legal work, it’ll be the 30-40k range and will be at least 50-60 hrs. a week. Are there any mathemagicians out there that can help? I don’t think even moving back home could get me outta this mess. I know I’m not the only one in this mess either. What’s going to happen to all of us?
Seek higher education and employment in other countries. America is a “has been” country. I got caught in the same mess. I’m an engineer and graduated 5th in my class. College lending is a scam. If a debtor cannot default why the high rates? Isn’t default the risk? Well, I was never able to repay after default. I spent years on the phone. I live in another, better country and use exclusively U.S. flag toilet paper. And today I laugh at the broke America. THE UNITED STATES HAS NO FUTURE BECUASE IT HAS NO VISION.
I too am finding myself days away from default. In total, I am about $50,000 in debt to student loans from three sources: Sallie Mae, and 2 different federal sources. My federal loans are in good standing, on is half way paid off right now. However, in the three years since I graduated, I have only been able to make 12 payments on my Sallie Mae loans. I haven’t been able to make any for the last almost 6 months. I am an assistant manager making $8.05 an hour…of that $.65 is an attendance bonus. I have been late due to traffic accidents twice, thus dropping my wage the $7.40 an hour for the whole week. I barely have money to put food in my mouth. And as gas prices creep up, the less food I have to eat. I have lost 10 lbs in the last month because all I have to eat is cereal, PB&J and ramen. No fruits, no veggies, hardly any meat. I went to school for journalism (something I am very good at) only to graduate in an environment of closing newspapers…leaving me jobless. I bounce from job to job trying to find better wages. I work full time as it is and make less than $1,000 a month. I donate plasma to put gas in my car and food in my mouth. I’m looking for a second job so that MAYBE I can make some payments. I’m actually going to talk to an airforce recruiter, maybe I can be an officer with my degree. As my credit goes down, payments like my car insurance go up. Like everyone else, I feel like I’m never going to accomplish anything in life. I have found love but why would someone marry me when my credit will just drag them down. I would like to go back to school for a degree in biotechnology -genomics- The talk right now is that’s a career of the future and something I am very interested in…but I can’t pay the loans I have now, how could I justify getting more into debt just so I can pay back the debt I already have? I probably couldn’t even get any loans. I feel hopeless, worthless, and simply don’t see the point anymore. How can companies do this to us? I borrowed the money and I will pay it, but times are tough…why can’t anyone see that?
I got caught in all this, went to college as an adult with little knowledge of the loan industry, took private loans and now make less money than I ever have in my life. I do not even make enough for the loan payments if I gave them every last dollar. Needless to say I do not make enough to survive on my own. It is troubling that the thought of suicide can cross your mind in this case but the fact is that it does, I am not suicidal so don’t worry i will leave the country before that option. What I can say though is that some action needs to happen to save this current generation from this disaster as ruining the lives of these people will and does have a negative impact on society as a whole, increased crime and all. Desperate people will do desperate things, the words “let them eat cake.” keeps rinning in my ears.
I got caught in all this, went to college as an adult with little knowledge of the loan industry, took private loans and now make less money than I ever have in my life. I do not even make enough for the loan payments if I gave them every last dollar. Needless to say I do not make enough to survive on my own. If I start getting my pay garnished i will no longer be able to get to work as I now can hardly justify the transportation cost. It is troubling that the thought of suicide can cross your mind in this case but the fact is that it does, I am not suicidal so don’t worry i will leave the country before that option. What I can say though is that some action needs to happen to save this current generation from this disaster as ruining the lives of these people will and does have a negative impact on society as a whole, increased crime and all. Desperate people will do desperate things, the words “Let them eat cake.” keeps ringing in my ears. It seems we are in a class war where money is the new royalty.
I can’t believe how sad our country really is….. I have worked in the health care field for many years. I never could finish my degree in psych because I went to a small private college that was very expensive. I was given loan after loan and finally after 3 years I was told I was maxed out. I couldnt finish my degree and I was 50k in debt………for many years I just worked in group homes for the mentally handicapped and took out forbances and kept my student loans at bay. A few years ago I was given the chance to go and work on some humanitarian projects in Penn. I took out a economic hardship deferement that I was told would last for 3 years. Apparentlly only if I keep filling out the paper work each year…. because I went into default with out knowing. So I was told I had to pay 650$ amonth for 10 months or I would owe 100k after penaltys and such so I moved back into my folks at age 39 wooo hoooo! and started paying. After 5 months of payments I lost my job and they said I have to start all over!!!!!! So I decided to take all my credits and go back to school for my LPN so I could pay these ass holes off……..but NOPE I CANT EVEN GET MY LISCENCE!!!! IF IM IN DEFAULT…………….I figured if i got my lpn i could afford to get out of default then get my RN. Apparentlly I’m completely screwed…….No idea what to do now…….off my self or just leave the country and volunteer at a ashram or something……… I hate this country whats wrong with it…………way to much…….alll I do is help people, I dont care about money…. but apparently its all anyone cares about here. Whats a guy to do????????????
bECOME A TEACHER AND TEACH AT A POVERTY SCHOOL.
LOAN IS PAID OFF.
JOIN THE PEACE CORP.
LOAN IS PAID OFF.
GOOD LUCK.
YOUR FELLOW STUDENT WITH $15,000 OF SALLIE MAE LOANS
STARTING LOAN WAS $4,000.
20 YEARS LATER…ITS $15k.
IT WILL NEVER GO AWAY.
see if your lender has an income contingency plan. I know the federal lenders do. If you report no income (which would me file no “tax returns”) you can defer up to 30 years. Best of luck to all. I know it sucks!
MADD (Mothers Against Drunk Drivers) and people who put a stop to telemarketers calling had to start somewhere. If creditors are hassling you, hassle the regulators who can hassle them right back.
Get with the attorney general in your state; s/he could add student loan sharks to the To Do list. Ted Kennedy stated we have to decide who we are for: students or bankers.
Get your hassles in front of your US Senators, if they’re Democrats. Democrats have control of both houses in Congress. Hassle them into introducing corrective legislation. Make them dread seeing you coming. Write Letters to the Editor of every Democrat who is up for re-election in your state and in the state of the university you attended. Shine the light on student loan corruption.
Get yourself scheduled as a speaker for as many groups as possible. Parents of high school students need to hear you and need to see your letters to your Attorney General, and your Democrat leaders. Get yourself in front of high school student forums, in front of sororities, fraternities, YMCA, and embarrass the heck out of your legislators and the student loan morons. Names, contact names, and include stock market names.
Finally, get all of this in front of Republicans in your state or your university’s state who started the problem, but only AFTER you’ve got a mile-high stack of paper and track record to embarrass them and make them realize they are “late out of the starting gate.” Your hassles should translate into their hassles.
I graduated from college in 1997 with about $24,000 in student debt. As of right now, my loan has long since passed into default and has been referred to a collection agency. The debt itself has more than quadrupled to just over $100,000! Although I had low-wage jobs and plenty of financial setbacks in my first years out of college, I really can’t blame this situation on anyone but myself. The truth is I was simply irresponsible for many years. I never made payments, and never talked with my loan servicer to try and make alternate arrangements. During a period of unemployment in 2001-2002, I stopped even sending back the request-for-deferment forms they would send me. That was when my student debt got really out of control.
The good news is that I finally hit bottom (I don’t just mean financially) and have been working to turn my life around for the past several years. I have paid off almost all of my old debts, but have yet to face up to my student loan responsibility. My mountain of debt is so huge I’m literally frightened to begin. At this point, I live and work overseas. I almost feel like I’m living in exile. I’m afraid to come back and live in the United States permanently, for fear of having my wages attached, being harassed constantly, and all the other things already mentioned. I know I have to face it someday, but I don’t know how or where to begin.
I wrote the secretary of education a letter. It prolly won’t be seen, but at least I can say I tried something. I am pasting it below:
January 14, 2010
Dear Secretary Duncan,
I know that you are aware of the problem with private student loans, but
are you aware of the extent the lenders are actually going to force people
into default? When people are unemployed and lenders attempt to force
people out of their homes because they are wanting people to default, it
is going too far. They refuse to make any type of reasonable payment
arrangements with the previous students. I was browsing the net today
trying to determine if I should default on my loans or not because I was
unable to finish my degree program and I am unemployed and not able to
work all due to health issues for which there is no cure. I found this
website, where beleaguered people are penniless trying to pay back loans
that are triple any reasonable income per month.
http://www.peakoilblues.com/blog/?p=329 (regardless of blog name, this
post is about student loans.) Please look into this.
Big lenders don’t have any incentive to work with the people to pay back
their debt. Not every American is a “lazy good for nothing shouldn’t have
gone to college if ya weren’t gonna pay it back” type of person. We took
out the loans because we wanted an EDUCATION!!! This is not irresponsible
spending, this is EDUCATION!!! These loans were meant to help us improve
our lives as professionals, not ruin them leaving many suicidal and
homeless.
Many ex-students were defrauded into getting private loans. I attempted to
complete college twice as an older adult, both times forced to quit due to
health issues. On my second attempt, I was told I was not eligible for any
type of federal loans. Having never heard of private loans before, I
asked questions and I was told by the financial aid department at Brooks
Institute of Photography that I would have all the same repayment options
w/ private loans as I had with federal loans. That is not the case. I
have had none of the familiar repayment options.
Medical deferment or discharge is impossible to get. All I could do was
play the forbearance game until I ran out of them. I now have
insurmountable debt, I am unemployable due to the type of medical
condition I have, yet I don’t qualify for medical discharge. But my story
is nothing in comparison to some of the people posting on the fore
mentioned site. People who have graduated with medical degrees have been
stripped of their licenses to practice due to inability to repay their
loans. Why? Because lenders WANT people to default…it’s a win-win
situation for them. When you have people struggling so hard to pay
something back or else lose everything they went to college for only to
see them stripped of their jobs as a result of credit problems, that is a
sign that the education loan system is seriously flawed.
Please, look into this. And please, help us.
oh and it doesn’t help Americans when Sallie Mae outsources it’s telephone operators to India. Call Sallie Mae to talk about your loan…chances are you’ll be talking to India. What? Sallie Mae can’t even hire people trying to pay off their loans?
Of all the writings and painful tales I have come across while writing this blog, none are as painful to me as the comments you read here. These letters are the desperate cries of our future leaders, healers, scientists, and artists. They went into their learning with bright hopes and great aspiration. They’ve come here after searching the internet for the answer to one of their most important life questions: Should I default on my student loans?
They are grieved. They are embittered. Many feel emotionally crushed and overwhelmed. Others have left the country–the USA– where they planned to make a living and contribute as useful citizens, believing they can never return and assume a normal life. Some are questioning whether leaving or living an underground life, is their only option.
It is a horrendous shame and travesty. It is a willful destruction of our nation and of our future. The best I can offer them, as a psychologist, is the promise that there are no debtor’s prisons, and to hang and and have courage.
Restitution has to be made to these people. It isn’t enough to change things from here on out. We need to call an “amnesty” for so many of these folks, and start anew. Let’s hope there is political will. There was certainly political cooperation to craft this horrendous system.
I am confused on this website. I am not seeing answers, only questions. What am I doing wrong. All I want to know is if I were to default on a school loan (which I am not even near doing) could “they” take my home? The house is paid off and I am concerned that the “they” will take back all of their markers in the economic Armageddon and I will lose my paid off home. Things that keep me up at night. Thanks,
I guess, I was the smart one. I tried to get an engineering degree in the late 90′s. Being raised on welfare the thought of borrowing 10s of thousands of dollars was too much for me. I only qualified for an unsubsidized student loan as my mother re-married when I turned 18, talk about bad timing! So I delivered pizza for a few years and saved up for college after high school. After tuition increased 50% a YEAR for three years my budget was broken. I was working two full time jobs and trying to pass engineering classes(almost impossible to do). Trying to “pay as you go” was very hard, but borrowing is a fools choice. I’m too good at math to consider that ridiculous choice. You get better odds at the black jack table.
As it turns out most of the people I went to class with only worked a few short years as engineers, made less then I did delivering pizza and were soon training cheaper imported engineers from India who did not have massive loans to pay off. Now I see that engineering as a carrier is a poor choice for an American getting loans for a useless degree like electrical engineering is a quick path to destitution indentured servitude and suicide.
“pay as you go” nearly killed me. I’m 6’2″ and was down to 145 pounds when I finally left during my last year.
DO NOT THINK OF COMMITTING SUICIDE!!!!!!!!!!!!!!!!
I know most if not all of you are sick of school. However, the solution below is a wonderful loop-hole for many if not all lenders.
If you enroll in an accredited college half-time (6 units) all of your loans go into in-school deferment status. (college includes community college).
The interest on your subsidized loans will stop and you can pay what you can while in school and all payments will apply directly to principal. Interest will still accrue on your unsubsidized loans but they will still be deferred.
Take advantage of on-line courses. Just tell the college that you have school loans and they will report your in school status to Sallie Mae (you may have to fill out form for other lenders.
I’m lucky because I live in California and community college is only $26 per unit but even if you have to pay $600 per semester that is cheaper than $600-1,500 a month to Sallie Mae.
I guess I will be the most educated poor person on the planet because while I defer my loans I can concentrate of paying the consumer debt that I accrued while getting that expensive education.
Good Luck
My heart goes out to each one of you who is suffering under the burdens of this corrupt system. Please, please, DO NOT TAKE YOUR LIFE! If you do, while the student loans may, ghoulishly, be “forgiven”, the robber-barons will have won.
Instead, UNITE & FIGHT!
If you have medical conditions that prevent your being able to work, can you still write letters, make phone calls? Pass out leaflets? Talk to congregations and to peace & justice coalitions? Start with your local municipalities and ask them for resolutions to be sent to larger governing bodies? Go to town hall meetings and shame your “visiting” elected officials? Get a friend to video you telling your story, and others like it, then post it on YouTube?
Make this anger “go viral”! Taking steps to change the system will uplift you, too. Don’t fall into their trap of making you feel helpless and hopeless.
Other countries manage to educate their citizenry without bankrupting them. We MUST organize to demand our government do the same!
Amnesty – yes, usury – no!
So sorry about all the troubles with default. I have a daughter who became addicted to drugs while in college and now is clean but is thousands of dollars in debt. I don’t have the resources or the inclination at this point to pay any for her. She is trying, so I came on here to see if I could find her any help. It looks like her 10,000.00 of debt is a drop in the bucket to some of you. Good luck.
Oh…and one more thing for all of you college educated folks. Prolly IS NOT A WORD!!! It is probably. I wish they would teach grammer and spelling in college….WOW!!!
It’s best to must move out of the States. I’ve moved out of the country and I’m seriously considering not comming back.
In the states i graduated college into a declining economy and and the recession and was jobless for 3 years and did odd-jobs to make minimum loan payments. I packed up my stuff, sold my car, and bought a 1-way ticket to Asia and found a a job in ONE month and it pays me very well. (not well in USD, but well in local currency)
Screw Sallie Mae. They can’t garnish my wages when I’m in another country. The corporations and the government are one-in-the-same in the US and it’s a tragedy.
Although suicide may be what you feel like doing, please try to refocus on anger instead, and direct it in letters to editors, community groups, elected officials – heck, even stand outside banks with placards. Learn more about monetary reform and the options that are being presented by local, national, and international groups to change the way that “money” is created in your country. For those of you in the US, your monetary system was hijacked by private banks when the very non “federal reserve” was set up to produce your currency – as debt only.
Lincoln introduced the famed “greenback” dollar, which was interest free, people’s money. He was assassinated in part due to this, as he attempted to shut down the private bankers. So many of your presidents have wonderful quotes about what would happen to the US if private banks were allowed to control the currency – and we are all now seeing the results of that exact thing happening. Even the people involved with the federal reserve have been quoted when talking about how they care not what government is elected in a country, as long as the private bankers continue to control the currency.
Please, you went to college, university, hopefully got more educated. Use language and communication to make change through government. Back the candidates who are willing to pursue this and other travesties.
Best of luck, don’t quit – fight back.
I Wish I’d have known about all of this in 2004 when I was duped by The Art Institute and Sallie Mae.
I was 17 and stupid. I just wanted out of my parent’s abusive house. If I’d only known then that I’d be 12k in debt in less than a year and “Expelled” because I demanded a real education I’d have suffered the beatings a few more years.
Six years later I want desperately to return to school, a real university this time, only to be told I have no options because of them.
I’m twenty-three years old and in over my head. I have no idea what to do. And all I find is “Write letters! Maybe they’ll get what’s coming to them.” Ha! This is America! Where the poor get poorer until they have nothing to their name while the richest get tax cuts and whatever they damn well please!
What are my options? I can’t get a credit card to pay it off, I don’t even have a job right now. I’m sleeping in a friend’s living room for God’s sake! I was lied to about everything, then told to leave when I called them on their BS!
If I had the money to get out of here I would. In a heartbeat! If only getting a Visa wasn’t so dependent on having a “Desirable Skill.”
To Sally, no 30:
YES YES, they will take your home. College loan scammers can and will take everything you have.
Not only is bankruptcy relief not available to you, but lenders are allowed to use collection tactics that were outlawed in the 60s for every other type of delinquent debt. Additionally, they are allowed to charge fees and interest and penalties that absolutely would not be allowed on other types of loans, and that are designed to ruin you and make you a debt slave for life.
I’d do anything to pay this debt off ahead of schedule, if I were you. I was terrified to borrow for college in my youth and spent a couple of decades regretting it, but now I’m glad I was afraid. I only hope we can change the laws to help people like my young relative, who borrowed $200K to go to law school and is struggling to pay the debt while living in a tiny, shared apartment.
Our country is now a place that punishes producers and honest, upright people, and lavishes the largest awards on parasites and predators, and our laws are made to protect them, not people like me and you. Government programs established to help people buy houses or obtain educations are really just scam-traps designed to strip the non-rich population of its remaining wealth and convey their remaining assets to the back pockets of predatory corporations. Keep this in mind in all your dealings with your loan provider and remember that the laws are on the creditor’s side, not yours.
Any loan is dangerous. Always recall the rule to cover your debts with cash or do not borrow. At this juncture in our economy I’d work wherever I could and avoid pieces of paper called degrees unless I was smart and pre-med or had a family with assets to cover my borrowing just in case. There is always the military and before you accuse me of sending folks to a dangerous living hell…I retired a a patrol police officer so I lived my own hell, believe me. But it made a man of me and made me deal with reality head on. That is the ONLY way to deal with the future as this nation is corrupt now to the bone. My advice for what it is worth.
I googled here by chance, and finally I don’t feel alone. I know there are people saying that suicide is too extreme for the feelings defaulting raises. But I know exactly how it feels because I am in the same situation feeling the same feelings.
I graduated from veterinary school and when dad came to graduation, he had letters from my loan company. He hadn’t opened them, just saved them. Turns out,despite a June graduation, the loan company wanted payment since May. I phoned them, explained that I wasn’t even out of university yet. They didn’t care, they were rude and pushed for payment right then. I had a bit of money from my family for graduation, so off it went to the loan people.
Job hunting took some time, there are few jobs happy to take on new graduates (and the pay is rubbish)and the ones that do are very competitive. It took me a few months to get a job. The loan companies didn’t take this into consideration. While I had 2 degrees, I had taken out a number of loans. Before I knew it 10 different loans were clamouring for repayment. I wasn’t sure what to do. I tried to divide the money I had evenly between the loans but I was never getting on top of them.
Even once I had work I continued to struggle. I was afraid to call the loan company after their disregard and lack of understanding the last time. They made me feel so little, so worthless, and humiliated. I didn’t want to be a slacker. I wanted to pay off what I owed them.
So, I struggled on. And the hole was getting bigger and bigger. Then I couldn’t work for three months. I had to give up my flat, move into a friends house and had nothing. Deferred most of my loans, continued to scrape together what I could for the one my aunt had cosigned (I couldn’t bare to ask her to sign the deferrment form).
Realized this week that despite one of the loan companies telling me how to defer and giving me forms for their deferement, they have sent me to collections instead. Its a different person every time I contact them but the last one claimed it was because I owed money. Well surely when they were advising me this would have been considered? Apparently not, so now I have debt collectors hounding me and my family.
I want to pay of my loans.
But I haven’t anything to give.
What am I going to do now?
I feel trapped, ashamed and lost.
And this leaves you wondering if killing yourself really is the only answer.
Suicide should not be an option you are considering, Anya. If it is, talk to someone. Please.
This is debt you have, not a death in the family. They don’t have debter’s prisons in the US, and if you don’t have the money to pay, you don’t have the money. Check out that book I’ve suggested in the body of this post, for more ideas.
Hang in, girl. You are CLEARLY NOT alone.
(Weirdly, this comment never got posted when it was written, and instead was spammed.)
My student loans will default on September 30, 2011. I have been working sporadically over the last two years, but not much. I have been mentally preparing myself for what a default will mean:
that I will probably never get married (can’t EVEN imagine asking a man to my 200,000 debt on. There isn’t that much love in the world)
that all of my tax returns will now be turned over to Sallie Mae.
that if I ever have a job again, they can take up to 33%.
That my mom may as well not leave me the house when she pass on – Sallie Mae will put an immediately lien on it.
I was fine with that. It wasn’t until I called this morning (as they still call me) and I asked about garnishment if I’m self employed (like do direct sales or some such thing). And I’d been working on business prospects. I was told “if you open up and start a business, they will put a lien on your business checking account).
That was it for me. I can’t even explain my anger, awe and disbelief at the whole situation and how much my life will change in 18 days. The main thing I am angry about is not being employed and not being able to find a job. I honestly don’t understand how credit agencies do not realize they cut their noses off despite their face: when they report every 30 days I didn’t pay my bill, that makes employers (and especially in my area – I’m pretty much in DC as I live in VA)not want to hire you. As of right now I know there are some states where employers cannot use credit as a reason not to hire but VA isn’t one them.
I’ve been sitting here literally thinking about ending my life. I honestly see away out of this and I seriously don’t know what’s the point.
I just needed to say that. Thank you for giving me the platform to do so.
Earlier this year I graduated into about $100k of student loan debt. I went to school in the city, but my home is in a rural area, so when I came back there weren’t any jobs for me. I’ve tried applying everywhere, even to jobs out of town but I get no response. Not even for minimum wage fast food or supermarket positions.
The grace period for my loans ends in a couple weeks and I have no way of paying them back or deferring them. I tried talking to Sallie Mae but their “solutions” are just different methods of payment (for example, I COULD put my loans into forbearance, IF i had the money to pay the per loan fee to have that done). My mom co-signed one of my loans, which makes me feel terrible. I don’t want to think about how she might get harassed by collectors because of me.
I wanted to be an animator, but now all I think about is how stupid it was to think it would be a good idea to go to art school. I’ve given up trying to do anything related to what I studied. I have terrible nightmares, sometimes I wake up crying because of them. I try to picture where I’ll be in just a year and I see nothing. I think about how much better off I would be if I had just started working at McDonald’s right after high school. I think about committing suicide every day, but I don’t want to tell my mom because I don’t want to worry her more than she already is (she might not have a job at the end of the year either). I’ve never been as depressed as I am now, I feel like I have no future.
I spent some time reading through all your stories and feel so bad about them. For those you didn’t finished the entire post, here is what I found by some posters for the possible solutions to your student loans.
BECOME A TEACHER AND TEACH AT A POVERTY SCHOOL.
LOAN IS PAID OFF.
JOIN THE PEACE CORP.
LOAN IS PAID OFF.
GOOD LUCK.
YOUR FELLOW STUDENT WITH $15,000 OF SALLIE MAE LOANS
STARTING LOAN WAS $4,000.
20 YEARS LATER…ITS $15k.
IT WILL NEVER GO AWAY.
see if your lender has an income contingency plan. I know the federal lenders do. If you report no income (which would me file no “tax returns”) you can defer up to 30 years. Best of luck to all. I know it sucks!
Steven,
First thing you need to do to feel better is to tell your Mom. Tell her how terrible you feel about the loans and having no job. Tell her your worries about her being harassed on the telephone. Your Mom is older than you are, and has had more experience than you have, in managing these stressful things. Be totally honest with her, and let her know how depressed you are, and that even you think of killing yourself every day. You clearly care about her, and she needs the chance to reassure her son that debt and having a job or money isn’t everything. She needs the chance to save herself from the most horrible fate any mother could face: having a talented child die needlessly at their own hands. It would haunt her the rest of her life. She needs a chance to prevent that from happening. You owe her that. You owe her that much.
The second thing you need to get clear about, if you are as depressed as you say, that depression isn’t sadness. It is a mental disorder where you aren’t thinking clearly about your situation. You can’t trust your thought process, particularly if your thoughts are telling you that you should die in response to your student loan debts. A DEBT you owe to a mo fo bank? That’s worth dying for? I don’t think so. That’s “stinkin’ thinkin’.” Don’t trust it. If you’re jobless, you can qualify for mental health services, and you should seek them out. Or call a suicide hotline and just talk anonymously to the person who answers the telephone. http://suicidehotlines.com/national.html
Do it Today.
That said, there are a number of things, as has been pointed out (teaching in low-income school for example, or taking a course to defer your obligation…) that you can do. Read the book I’ve suggested, for starters. You are part of a vast wave of students who have been caught up in a historical period of epic proportions. And, to make it worse, you are an artist, and they tend to be more critical of themselves (and their art) than others.
So, produce your art.
Until you find yourself working, (and I would apply nationally as you’ve done, and continually as an “inbetweener” or “clean-up artist”), produce what you’ve been trained to produce. Focus on what you love, and just do it. Produce a tremendous body of work. Volunteer, just give it away. Teach kids for free at the public library. Teach old people who are retired. Always mention, at some point in your “giving yourself away” that you are looking for work. Make this your job, “giving yourself away,” at least half-time, until you find a job.
Perhaps your first animation can be the story of an out of work animator and his plight. Maybe it could accompany your job applications. Do it, and send it around to a few people I know.
Just keep producing your art, as a “therapy” to your hopelessness. Hopelessness is just a feeling, and it will pass with positive action.
Hang in there and thanks for your email, and keep this in mind, all of you out there in the same situation:
It is debt, which is a number on a computer screen at a bank somewhere. It isn’t you and it says nothing about your worth or the value of your life. It was a scam of massive proportions, and you just got caught up in it. Say “Oh well, sh*t happens.” Love is real. Your family is real. Your life is real. Debt, your credit score, or your future opportunity to take out bank loans or the ability to get into future debt, is worth squat, compared to the real things of value in your life.
Peak Shrink
Caroline,
The point is to forget about using student loans to measure whether you should get married, have a family, or start a business. Student loans should not figure into any of that. Perhaps your marriage can’t be “legal,” but only religious or ceremonial. The children will be “real” in every sense. A business may need to be “owned” by someone else, but there are many examples of people who have led quite successful lives and never did it on the “books.” The more anyone focuses on how to get a “straight” job or any such thing, while having $200,000 in student loan debt, the more depressed they’ll feel.
The “point” of living isn’t to make money to pay off student loans. Up to 33% is what most divorced fathers pay in child support. These aren’t “life ending” challenges. They suck, I do agree. But they aren’t worth talking about killing yourself over.
You’ll have to think creatively. You are part of a vast army of young people who are “unemployable” to many employers. Okay. That’s a fact. But there are many way to consider how to get around such idiocy.
Also, never take the word of any character who calls you trying to collect a loan. They are there for only one purpose: to get you to agree to pay them RIGHT NOW. Nobody will take them to court for lying, and they do regularly.
Peak Shrink
I went on a tour at a 1800 hour beauty school and was told how wonderful it was and that i wouldnt have to work all the money i would need would be taken care of. They had me write down all my bills and living costs i would need each month told me to then try n get fired from my job to collect unemployment so i would have more money. I never filed out any paper work for my loans and when we signed checks we were not allowed to flip the checks over to see the amount. Finally I found out about the NSLDS and the student aid advisor had just told me my loan about…the amount was off by $20000 and we had no licensed instructors for a year that we were in school. I am now in a lawsuit with them and they have admitted to stealing money from me and a ton of other students however they are broke and we are stuck paying it all back. The authorities are involved however…so not only do student loans scam you certain schools are doing the same to put money in their pockets.
If you want to go to school anymore the best option is to gain high credit and put it all credit card. If you can not pay on cc debt you can file, or if you rack up a huge gambling debt it can be discharged.
Opposition of HR 2028 say that you should pay, even though those previously mentioned can file. Even Donald Trump says bankruptcy is a business normal, he can build a multi billion dollar complex file and walk away Scott free yet those of us that tried to improve our selves with an education has 0 defense against a company that is predatory and fearless lender ( due to the law ) lending to a diploma mill. My interest after this bill was passed went from 6% to 24% overnight. I did not have to pay till I was out of school yet the lender (sallie mae wanted more income)and jacked it up without any reason other reason than greed.
If these lenders had risk maybe they would not lend to some one going to a diploma mill that promises 40k a year income + transferable school credit that is not. Or at the least would have fear of some one filing bankruptcy and treat us borrower better and offer real solutions to via income based repayment options.
I have a problem that I need some serious help with. I have defaulted on my student loans. I am trying to go back and finish school class by class, I only have a few classes left in order to graduate. I have someone who will pay my tuition so I can graduate, get a job, and consolidate the loans so I can start paying them off. I reapplied to my school and was accepted. I have been trying to register for classes, and I am blocked from registration for my defaulted loan. I called the financial aid department and asked them why I can’t pay out of pocket to attend college, and they said to contact my lender. I did, and my lender said they cannot keep me from going back to school, but they can prevent me from getting transcripts and other academic records. I called the school back, and they still said no, if you’re in default you cannot go to school. I have looked up the law regarding this, and nowhere does it say that you can be prevented from going back to school unless you are trying to get more financial aid to pay for it – which I’m not. I keep on getting the run around, and I do not know what to do to get these people to realize they are wrong about this and that they cannot keep me from registering. My lender even said that it makes no sense keeping me from finishing school, because they want me to be able to get a job so I can repay what I borrowed. What can I do to clear this up? Please help me! School starts next month and the classes I need are almost full. If I don’t get registered soon, I won’t be able to get into any of the classes I need!