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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