Posts Tagged ‘debt crisis’

Student loan HORROR stories

Posted on: November 7th, 2012 by

Student LoansWith the cost of college continuing to rise and the economy still stagnating, the student debt burden has swollen to a record $1 trillion.

Mark Kantrowitz, publisher of Fastweb.com and FinAid.org, believes that one of the main culprits behind the student debt crisis is the private student loan sector.

“Students are following their dreams and don’t pay attention to their debt,” Kantrowitz says. “They sign whatever piece of paper is put in front of them, figuring they’ll pay it back when they graduate.”

Unlike federal loans, private loans usually come with variable interest rates that seem low at first glance but can skyrocket by 5 points over the loan’s lifetime. They also offer far fewer options for cash-strapped graduates struggling with payments, such as deferment, lengthy forbearance periods and income-based relief.

And since it’s next to impossible to discharge student loan debt in bankruptcy, millions of students are left drowning in private debt they have no hopes of ever paying off.

Last year, the Consumer Financial Protection Bureau (CFPB) put out a call for consumers to share their student loan stories on its message board and get the ball rolling on lending reform.

But for these nine commenters, it may already be too little, too late.

Besides being one of the millions of college graduates (from a for profit school nonetheless) that, at one point, was unemployed and had absolutely no way of paying my loans, here are a few other horror stories many of us can relate to:

Steve Macintyre: $100,000 in debt and out of a job

“I used to work in the entertainment industry but have been unemployed for a few years and I needed to desperately update my skillset if I could hope to find a job in the highly competitive field of games and animation.

Searching for various schools, I kept seeing advertisements for the Art Institute and talked with one of their recruiters and was told wonderful stories about how the school was accredited, how students went on to successful careers, etc.

I told them I wanted to get a degree in Game Art and Design but was told I could but needed to take the Graphic Design course first. I didn’t think much of it at first, but I agreed. I was dismayed at the quality of the classes…(Now) I’m stuck with over $100,000 dollars in debt, which qualifies as theft as I received nothing substantive in return.

I actually had to sign up for other courses outside the school in order to successfully complete assignments! Courses that offered REAL *VIDEO* Instruction at a fraction of the cost ($35 dollars per month as opposed to $2000+ dollars!) and by a company that trains people in the industry.

It’s now 8 months since loans have run out and I couldn’t complete my degree and I’m still looking for work.”

Michael Speck: Passing on a generation of debt

“I have three degrees, including an MA and a JD. When I graduated from law school in ’99 all of the offers – with the exception of those from the upper echelon firms that essentially own you – were for little money, leaving next to nothing for living expenses.

Now I am making a decent living and can pay my loans under the (Income-based repayment) program, but repayment is a distant dream.  As a result, I am unable to assist my son with his education expenses (thereby effectively making the debt trans-generational), or buy a home, start my own practice, etc.

As a macro-economic problem, those of us saddled with this debt are unable to fully participate in the economy.”

Dgoeck: Stuck with a clunker – indefinitely

“I’m not really sure what to do at this point. I am a victim of a for-profit school that definitely seemed in cohorts with Sallie Mae. My original loan was $80,000 but has grown to $135,000 and all I can pay is interest only, which is already $700 a month.

It’s ridiculous how sad this market has become. No one offers consolidation anymore or those that do will pin you at a ridiculous interest rate.

I am definitely in this for life… It looks like I will be stuck living in a low-rate apartment for the rest of my life and drive a 15-year-old car. I’m at least glad I found a really good job in the industry I was hoping for, but these loans are a real burden. Just thinking about them hurts my overall outcome each and every day.”

KDF11: Dogged by debt collectors

“I am a graduate (doctoral) student with a 2005 loan from Bank of America which was passed to American Education Services. AES passed my loan to their subsidiary National Collegiate Trust…

They cited that my (notice to them) was over 60 days late and the loan was in repayment and refused to negotiate. Then, when I called/wrote/emailed NCT to negotiate, they sent my loan to another subsidiary— their collection agency MRS.

These companies are working together and when students are full-time in school, they bombard them with calls and deadlines and capitalize by taking punitive measures such as outlined above, from which they no doubt profit.

…I believe that a lot of students have had loans placed at (a) collection agency while they are full-time in school. This should be amended to allow students wiggle room to complete their studies stress-free. If students graduate, find employment and refuse to pay, only then collections should be appropriate.”