Money College: One student's losing battle with private student loans

College grad will burdened with huge college debtI will try my hardest to not make this piece a "woe is me" story and more on the dangers of taking out private loans (or any student loans for that matter).

I would first like to clarify that I come from a financially unstable household. I was the first person in my family to go to college, I am an immigrant, and my parents did not put aside money for me to go to college. I went to a private university, and besides Stafford loans, I took out private loans from Sallie Mae. I could not get a co-signer, as no one in my family has good credit, and in hindsight, I should have probably gone to a cheaper college or a community college (and gotten a degree in something other than English).

The Sallie Mae Student Signature Loan looked like a good option at the time because I didn't need a co-signer and there was no cap on how much I could borrow. I didn't have anyone to talk to about financial matters and I didn't ask for help, either (not even a quick Google search), another bad decision. Private loans cannot be consolidated, something I did not know, and had I known, I would have changed my education plans entirely.

I moved off campus the first chance I got, and I worked full- or part-time, depending on my class schedule. In total, I borrowed approximately $43,000 from Sallie Mae, with an average interest rate of 9.5%. As of today, I have already accrued $22,525 in interest (on $43,000!), and the estimated total amount to be paid should I follow the monthly payment plans will be $123,350.

Does that number seem high to you? It does to me, but I am not exaggerating, and I am not just pulling that number out of a hat. I have to make monthly payments of $690 for 14 years and 11 months. That's more than I pay for rent, and in this economy, I do not have a full-time, or even a good, part-time job. I live with roommates, I rarely go out, and I agonize over every single financial decision (should I fork up $4.50 for the train today, or should I ride my bike in 20-degree weather?).

I've learned my lesson: Keeping my head in the sand does not make the problem go away.

I have been deferring my payments with Sallie Mae since the fall, but guess what? I can only defer my loans for three months at a time, and I need to pay $150 every time I defer them. Of course, the loans still collect interest while they're deferred. I have the option of making interest-only payments for a year, but is that really worth it? I can kiss my dreams of saving money for a car, a house, or even having children by the time I am 40 years old goodbye. And I didn't even go to graduate school!

A friend of mine who goes to a graduate law school in New York City and wishes to remain anonymous, says "I owe so much money, I don't even keep track of it any more. I do know that I could have bought a house by now." She is worried about her prospects when she graduates because the job market is terrible right now and "no one is hiring."

Jennifer Larson, a fellow English major from Loyola University Chicago also doesn't keep track of her loans (mostly unsubsidized federal loans) and is frustrated by the prospect of paying them back (her interest rate is 5%). "No one wants to pay me enough to live, eat, and pay off my loans. I will have these over my head for a while. It's a scary thought." She said Loyola passed off one of her loans to a collections company when she couldn't pay the $200 a month:

"This woman would call me every few days at the same time, which clearly didn't coincide with my schedule. I asked her to call at a different time or if we could communicate over e-mail, and it was like talking into the wind. Somehow they don't hear your side of the conversation. They just want your money and they won't stop at anything ... they won't even compromise. I asked if I could pay $50 a month, and she said no, I needed to pay $200 a month," said Larson. "Oh yeah, she also started calling my mom. My mom lives in another state and I've been independent for several years. So my mom started telling her to stop calling. The woman responded, in a sweet, Southern accent 'Oh, then do you want me to tell Jennifer that you were of no help?'"

After hearing this, I am considering ... prostitution? Or how about filing for bankruptcy to get rid of my private loans? Sometimes I question whether going to college was even worth it. I cross my fingers every night, hoping the Obama Administration will listen to New York attorney Robert Applebaum's idea about forgiving student loan debt to stimulate the economy. Something needs to be done soon, because the rich should not be the only ones with access to a good education.

President Obama's loan forgiveness/debt cap program mentioned in his State of The Union address does not cut it, as his program does not even consider private student loans. Federal loans are not the biggest problem; it's the private loans that need to be regulated, or even banned. Something needs to be done soon, because the wealthy should not be the only ones with access to a good education.

This year, Sallie Mae stopped offering their "Sallie Mae Student Signature Loan" and now only offers a "Smart Option Loan" that requires you to pay back interest immediately after the loan is disbursed, in an effort to target "stronger borrowers." Sallie Mae no longer has an option for students coming from "bad credit" families.

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eric_jones76

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October 07 2014 at 12:52 PM Report abuse rate up rate down Reply
matt7456123

I think you need to take responsibility for your decision to borrow as much as you did. I'm young, I have a family, I work and I go to school full time. I borrowed very little, so I do not end up in this boat. Why should myself and millions of other responsible students who borrowed very little pay for others to borrow ridiculous sums of money which they do not NEED to borrow? Now you want a hand out, you want us to pay for your TV and fancy laptop and the fact you decided to borrow, rather than work? Sallie Mae is not the problem, people borrowing more than they can afford are the problem. Nobody held a gun to your head here. You say forgiving federal loans does not go far enough. Why doesn't it, that sounds more fair than your solution of telling people to borrow away because you never need to repay. You picked a terrible major (never mind the countless studies which show how little value that degree is). You took easy courses and lived it up. Fact is, you may never live a lifestyle as good as that one you lived off borrowed funds. With that degree, even without loans, you may never have lived a high class lifestyle. Now you want responsible folks to foot your bill, when we struggle today so we do not have to tomorrow? Boohoo :( If you think you will ever have your private loans forgiven then you are living a pipe dream. There is no way that will ever or should ever happen. That is a slap in the face to the tens of millions of students who ate ramon noodles in college, to leave with little debt, while you ate lobster. No way.

February 08 2014 at 9:48 PM Report abuse rate up rate down Reply
elgecko84

I understand your situation because mine is actually worse. I have a 13% interest rate on $42,000 and am married with one income and two kids. That said, I can't believe the suggestions you propose to solve the problem. To ban private loans would be a horrible mistake because it would put all the power in the hands of the Dep of Ed rather than giving consumers choices. We both made stupid decisions, but that doesn't mean we should make education harder for other people. Financial education, not regulation, is the key. But you're right, getting a degree in English probably wasn't the brightest idea. We have a generation of humanities majors and they wonder why they can't get a job.

December 01 2012 at 1:15 PM Report abuse rate up rate down Reply
justin

I have the exact same problem. I decided to get two degrees while I was at school, one in environmental science and on in biology, was in a fellowship program, and played football for four years and my college. I fell for it from my original coach. He promised me I'd get financial aid. I didn't get any and ended up having to take out loans (At least 35 thousand each year and ending at 40 thousand for my final year). I did well in school and couldn't even get financial aid after my first year. One of my loans has already accrued 5 thousand in interest in 9 months. Luckily I've been accepted into a Master's program so I have 2 more years to figure out what the hell I'm going to do, but I'm going to have to end up paying back at least 200 thousand all together. I'm starting to think that my degrees weren't worth it since i couldn't even get a job that wanted either of my degrees and no years of research experience (I had 3). Hell i couldn't even get a job at toys r us or target. I don't think I'll ever be able to move out of my parents house. I'm desperately seeking ways to get money.

June 07 2012 at 2:10 PM Report abuse rate up rate down Reply
chefgavinb

It sounds like the middle class (the new poor uneducated lower class) will stay in the same situation they are in for good. I mean, that's what the upper class wants isn't it? Isn't that why a new study shows 49.5% of Americans don't pay taxes. Take a guess at which ones... Good guess.

Obviously the lower class now out weighs the upper class by millions it is only time that will express the fate of this upper class. As history repeats itself, as always the greedy upper class (i.e. emperors, dictators, kings, slave masters [these people do not deserve the respect of starting their title with a capital letter]) and so forth will always topple at the hands of the oppressed.

We are all in the same place. If you haven't yet, write a nice claim with www.bbb.org. I have recently filed and this is a good way to ensure sallie mae will put everything in writing. Please make viable claims, sallie mae is a vile company and will directly lie to benefit themselves.
Everything needs to be in writing before you make any official payments!

Everyone attending school was made to fill out FASFA, in order to decide how much money you need.
At that time you are directed to sallie mae, other options are usually kept quiet. This is because the DOE allocated all loans to sallie mae.
A company that was given all of the loans from the millions Americans through DOE should be heavily regulated by the DOE.
(The baby boomers proved to be a multiplication of society on a grand scale. We are their children, clearly we are a large group)
We are Americas future, Why hasn't the government stepped in to help yet? previously stated in article Obummer did nothing

Fun fact:

sallie mae gets paid through the government after they place you into default

sallie mae owns and operates its own in-house collection agency.

sallie mae customer service reps gained bonuses for every loan they put into deferment/ forbearance

sallie mae has been involved in several lawsuits in which it has lost for many reasons.

You can request sallie mae to stop the harassing calls

If sallie mae cannot produce the documents that were made out for your loan, it can be dismissed

sallie mae isn't even a registered BBB member.

There are many people (trolls) that post comments to keep people from knowing the truth, they are paid


Someone who claims bankruptcy in credit card or car loans is forgiven, but not loans for education. why?


If anything is questionable, do your own research.
Tip: always look past the first pages or so of Google, don't be lazy

Oh and I am not looking to not pay the loan. Its just outrageous how much they intend to collect overall.
If they were trying to help America, why do they need to profit more than double.

I propose a solution.
Rather than paying interest only. We need Principle only payments. This way, every month your loan will go down and in essence your overall monthly interest will lower and lower.

We need to all work together and make change.

-broke

February 24 2012 at 2:03 PM Report abuse rate up rate down Reply
chefgavinb

It sounds like the middle class (the new poor uneducated lower class) will stay in the same situation they are in for good. I mean, that's what the upper class wants isn't it? Isn't that why a new study shows 49.5% of Americans don't pay taxes. Take a guess at which ones... Good guess.

Obviously the lower class now out weighs the upper class by millions it is only time that will express the fate of this upper class. As history repeats itself, as always the greedy upper class (i.e. emperors, dictators, kings, slave masters [these people do not deserve the respect of starting their title with a capital letter]) and so forth will always topple at the hands of the oppressed.

We are all in the same place. If you haven't yet, write a nice claim with www.bbb.org. I have recently filed and this is a good way to ensure sallie mae will put everything in writing. Please make viable claims, sallie mae is a vile company and will directly lie to benefit themselves.
Everything needs to be in writing before you make any official payments!

Everyone attending school was made to fill out FASFA, in order to decide how much money you need.
At that time you are directed to sallie mae, other options are usually kept quiet. This is because the DOE allocated all loans to sallie mae.
A company that was given all of the loans from the millions Americans through DOE should be heavily regulated by the DOE.
(The baby boomers proved to be a multiplication of society on a grand scale. We are their children, clearly we are a large group)
We are Americas future, Why hasn't the government stepped in to help yet? previously stated in article Obummer did nothing

Fun fact:

sallie mae gets paid through the government after they place you into default

sallie mae owns and operates its own in-house collection agency.

sallie mae customer service reps gained bonuses for every loan they put into deferment/ forbearance

sallie mae has been involved in several lawsuits in which it has lost for many reasons.

You can request sallie mae to stop the harassing calls

If sallie mae cannot produce the documents that were made out for your loan, it can be dismissed

sallie mae isn't even a registered BBB member.

There are many people (trolls) that post comments to keep people from knowing the truth, they are paid


Someone who claims bankruptcy in credit card or car loans is forgiven, but not loans for education. why?


If anything is questionable, do your own research.
Tip: always look past the first pages or so of Google, don't be lazy

Oh and I am not looking to not pay the loan. Its just outrageous how much they intend to collect overall.
If they were trying to help America, why do they need to profit more than double.

I propose a solution.
Rather than paying interest only. We need Principle only payments. This way, every month your loan will go down and in essence your overall monthly interest will lower and lower.

We need to all work together and make change.

-broke

February 24 2012 at 2:02 PM Report abuse rate up rate down Reply
BA

exact same story. worked my ass off in school. graduated at the top of my class. landed a really good job. and now i am paying $1100 a month in loans and live at my parent because i can't afford living expenses. i had big dreams for my life and all the motivation in the world up until now. when your financial future is in the hands of big banks how can you believe that you can achieve the life you always imaged? there really is no help with private loans. the whole situation is devastating. young people who come from financially unstable families should not have to worry about the repercussions of getting a good education. and the worst part is - NO BODY EVEN TOLD ME ANYTHING BEFORE I MADE THESE DECISIONS.... I was 17 when i took out my first loan.

February 20 2012 at 10:19 PM Report abuse rate up rate down Reply
mlynne81

So let me get this straight, you tell me how crappy your education is and then in the same paragraph you say only weathly shouldnt be entitled to a good education? Sounds like education isn't good period. obviously you got your education but its no better than anyone else who went to college.

November 10 2011 at 12:24 AM Report abuse rate up rate down Reply
Stephany Schultz

Same boat here as well. Everyone pushed and pushed me to go to college, "It doesn't matter what degree you have. Once you graduate, you can get any job you want." I heard that around every corner when applying for schools. And of course, I foolishly chose one that only rich kids should go to. AND NO ONE STOPPED ME.
Can you blame me? I wanted a good education; so that I could get a good job; so that I could grow up and have kids that I could afford to send to expensive schools; so they could follow their dreams. My parents weren't able to, and I wanted to be better than them, just like they wanted to be better than my grandparents (which they did by going to a university).
After putting my loans on forbearance for 22 months, Sallie Mae is now saying that I can only have another 2 months of forbearance. I can't afford 1,200 a month payments. That's more than twice what I pay in rent. I can't consolidate, I can't even think straight.
Loans blow. Hard.

November 07 2011 at 3:27 PM Report abuse rate up rate down Reply
mmaaaaattt

i am in the same exact boat. something needs to be done. as far as i am concerned, i just found a job making decent money and even still i am struggling. why is it that i feel i played my cards right, had the motivation to better my life and worked hard to get where i wanted and I still feel like i made a wrong choice? i come from a financially unstable family and got into a great school. i was such an idealist to think there was no price tag on my education. now i am ruined for the rest of my life. the life i wanted isn't going to happen until i am 75. sallie mae are a bunch of pirates.

October 14 2011 at 9:54 PM Report abuse rate up rate down Reply