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Came across occupystudentdebt.com. Holy sh*t there are some scary stories on that site. I pulled this one out because this is one of those cases where I think the borrower is just a total moron. What do you guys think?

Well, here it goes. This story is extremely embarrassing but this is the start of my fight to try and do something about it.

In 2000, when I was 18 years old after graduating high school, I started going to a local university to earn a 4 year degree in Elementary Education. My mother worked for the University and I had free tuition for the first 4 years. I was excited for my future, with a lot of hopes and dreams. However, growing up my parents and family always struggled with money. I had no help and was on my own with all other expenses besides tuition. I worked a part time job all throughout college and it was hard for me to keep up with both working and school full time. In 2003, I was diagnosed with pretty bad anxiety…mostly over money issues. My family doctor put me on anxiety medication, “Effexor”. I experienced rather strange symptoms from this medication which seemed minor so I didn’t think anything of it at first. At the same time I came across advertisement for Sallie Mae. I thought it was a perfect solution for my money troubles. I applied and was approved for a $30,000 loan at an alarming 9.5% interest rate. And I must note I was approved for that loan EVEN though at the time I did have free tuition. But being only 20 years old I had no idea what I was getting myself into. I was so happy and excited though because I felt a huge stress relief. The money would help me get through school, buy that computer I needed, pay for my gas, my car payment, etc. It relieved a ton of stress. My intention was only to take out one loan. However being young and stupid, and not knowing a thing about money and finances, that money quickly ran out. I used the money for everything, including clothes, going out to eat, EVERYTHING you name it. And oh how easy it was to just contact Sallie Mae and get one loan right after the other. They kept approving me for loans until after the course of 3 years or so, my loan debt reached a large sum of $120,00!!! As I was taking out all of those loans and spending that money foolishly on all kinds of things…it felt so good. Sallie Mae was my savior. I was able to live the high life I never had growing up because they were there for me to support it.

In 2006 my life turned upside down. I had not graduated yet. I switched majors again due to poor choices I made. But I also started feeling the pressures of having to pay back such a huge loan I wasn’t exactly in a rush to graduate. The longer I stayed in school the better I thought because it would give me more time to start paying the loans back. So I decided to take my time to graduate. I even started going to school part time to purposely delay it. And then somewhere in there reality sank in. My nightmare began. Many things happened in my personal life which I won’t get into but I tried committing suicide and ended up in a mental hospital for 4 days. I was diagnosed with bipolar disorder. It was discovered that the medicine I was taking for anxiety caused me to have manic episodes over the course of all those years (it is embarrassing) That is WHY I racked up all that debt and made very poor choices. I wasn’t thinking clearly. My mind was foggy. But regardless of myself being manic or not at the time, it is so easy for any young kid at 18, 19, 20, 21 years old to get themselves in debt. Unless you have parents who really taught you the importance of money and saving, etc., you are naive to the devastating consequences getting yourself into debt can have on your future. It is easy for any young kid who is NOT manic to take out those loans and not understand the implications they will have on the rest of their lives. Personally, I didn’t even understand the meaning of “interest”. I didn’t understand when I signed for those loans that after 6-7 years my initial $120,00 would turn into $250,000. It more than doubled!

Eventually in May of 2011 I finally graduated with a bachelors in criminal justice. I am now a divorced single mother (my large debt load was a major factor in my divorce) clearing $2000 a month on a $34,500 a year income. I am working in retail management because that is all I could find in this economy. I am still searching for better jobs but it’s been a challenge. I have a 4 year old daughter. Right now I can barely afford to survive off of what I make. When my $2500 loan payment kicks in this November I don’t know what I am going to do. Even making interest only payment my monthly payment will still be $1600 a month. And there is NOTHING I can do to get rid of it. NOTHING. I prey every day that the laws will change so I can declare bankruptcy. I would do it in a heart beat. I am scared for my life and for my daughters life If it wasn’t for my daughter I’d rather be dead right now….I feel so hopeless.

I am SOOO angry. I blame Sallie Mae for everything . What they did to me was called predatory lending without a doubt. A 20 year old still in school should NEVER be approved for a $30,00 loan just because they are a student. It’s insane. An adult with good established credit has a harder time getting approved for a personal loan of that size. Half of the time I was getting these large loans I was only taking ONE or TWO classes. The tuition being $4000 at most. And at the time I actually thought they were helping me. Now that I am 29 years old I know better and I am disgusted that the government supports these monsters. I know there are so many people out there like me who have similar stories. It’s a shame that a grown adult can take out personal loans for $100,00 for house renovations, boats, vacations, you name it and still be able to declare bankruptcy. But people like me can’t? At 20 years old you couldn’t even drink alcohol but you could take out a $30,000 student loan. And are powerless to do anything about it. Its unbelievable. Makes me sick. And we are the innocent victims paying and suffering for it? Sallie Mae won’t do anything to even help out…not even lower interest rates. They don’t care that I won’t even be able to put food on the table for my daughter.

Right now I have a fantastic lawyer that will be fighting for me if nothing happens this year with the bills trying to be passed. I am crossing my fingers the government will wise up. If not, I am ready to put up a large fight.

Comments (104)

  • GetOnTop's picture

    Wow that put me on tilt just reading it. What happened to personal responsibility? Why decide you're going to bring a child into this world when you're 6 figures in debt?

    The parallels to the mortgage mess are striking - companies give out huge loans and people borrow all sorts of ridiculous sums on the assumption that we'll have 5% unemployment forever and that a college degree will guarantee them a job. Until it doesn't. Same with houses: the price of them will never go down so the loan is safe! Until prices fall.

  • In reply to GetOnTop
    manbearpig's picture

    GetOnTop:
    Wow that put me on tilt just reading it. What happened to personal responsibility? Why decide you're going to bring a child into this world when you're 6 figures in debt?

    The parallels to the mortgage mess are striking - companies give out huge loans and people borrow all sorts of ridiculous sums on the assumption that we'll have 5% unemployment forever and that a college degree will guarantee them a job. Until it doesn't. Same with houses: the price of them will never go down so the loan is safe! Until prices fall.


    Agree to some extent. The story I pulled out is an example where the borrower is unwilling to take any accountability for her mistakes. There are, however, some genuinely disturbing stories where I sympathize a lot with the borrowers. When you have some time, read through some of the other stories on the site.

    -MBP

  • mk0000's picture

    i still dont get why he took out the loan--he was getting free tuition. Just because you can be approved for something doesn't mean you should.

  • In reply to mk0000
    manbearpig's picture

    mk0000:
    i still dont get why he took out the loan--he was getting free tuition. Just because you can be approved for something doesn't mean you should.

    She claims it was her bipolar disorder that made her do it, and Sallie Mae enabled her. Seems like a cop-out to me.

    -MBP

  • theBEEGEES's picture

    Knowing this person exists just ruined my fucking day.

  • In reply to manbearpig
    GetOnTop's picture

    manbearpig:
    GetOnTop:
    Wow that put me on tilt just reading it. What happened to personal responsibility? Why decide you're going to bring a child into this world when you're 6 figures in debt?

    The parallels to the mortgage mess are striking - companies give out huge loans and people borrow all sorts of ridiculous sums on the assumption that we'll have 5% unemployment forever and that a college degree will guarantee them a job. Until it doesn't. Same with houses: the price of them will never go down so the loan is safe! Until prices fall.


    Agree to some extent. The story I pulled out is an example where the borrower is unwilling to take any accountability for her mistakes. There are, however, some genuinely disturbing stories where I sympathize a lot with the borrowers. When you have some time, read through some of the other stories on the site.

    Just browsed through the front page, there are definitely some situations that warrant relief from the govt./lenders. It's obviously not entirely individuals' fault; blame deserves to be spread to the lenders as well as the universities that have been unable to stop the inflation +2-3% a year rise in tuition rates. That said, it's a touchy issue. If you tighten the loan standards more then you could be denying someone "the American dream", whatever that is.

  • MrBroadway's picture

    I think she does take personal responsibility for it choices, she is just saying that she wasnt mature or responsible enough at that age to understand the impact that debt can have on her future. I think some responsibility has to rest with the lender. i mean seriously who lends $120,000 to a student with no income and no credit history.

  • rls's picture

    How far up should we move the age of adulthood? I understand her general argument, but at some point we've got to become responsible for ourselves. We, as a society, have decided that the age of majority is 18 in the United States. Fortunately, the solution is simply- no federally subsidized loans, period. I can agree with that. Colleges lower prices or suffer lower matriculation rates.

    Absorbed in the sacrament of education, many have failed to perform the proper calculus as to the value of education. There is a price at which education is simply not worth it; and, what we are seeing is more and more people hitting the threshold of the return on investment becoming negative. The question is how obvious is the math. A rational 20 year-old who bothered to do some back-of-the-envelope math could figure that $120,000 over four years far exceeds the return expected from a criminal justice degree, I would think.

    As for bankruptcy, I don't know. I'm extremely reluctant to support bankruptcy as a means to retire education loans. While I can feel for this lady, she is not really a victim. She got to eat out, satisfy material desires, and live the life on campus. Where exactly is the suffering? There are consequences for profligacy, but that hardly makes someone a victim. Now, I don't like this federally subsidized mess, but I am trying to think what happens next should this policy of bankruptcy be enlarged. In the past, mass bankruptcy on education debt was not observed, but one could argue the social constraints, stigmas, and taboos contributed to stemming it- which do not exist in similar strength today.

    She sounds quite eager to declare bankruptcy, when she technically isn't bankrupt. She lives under difficult circumstances, true, but it is not like she has no job, no assets, and no income. The potential for abuse is obvious. If the mass delinquency observed on mortgages in the past 5 years is any indication of the expected behavior of student loan debtors, I would be very concerned if I were Sallie Mae and student loans became dischargeable via bankruptcy.

    Bene qui latuit, bene vixit- Ovid

  • seedy underbelly's picture

    Using student loans to live the high-life and then complaining about paying them off later? Yeah, you definitely deserve my sympathy...

  • In reply to MrBroadway
    manbearpig's picture

    MrBroadway:
    I think she does take personal responsibility for it choices, she is just saying that she wasnt mature or responsible enough at that age to understand the impact that debt can have on her future. I think some responsibility has to rest with the lender. i mean seriously who lends $120,000 to a student with no income and no credit history.

    I agree. It was definitely predatory lending. Nobody put a gun to her head to take the money, but they were counting on her immaturity and as expected, she took it and blew it on crap. But come on. The principal growing from 120K to 250K? That's insane.

    -MBP

  • In reply to rls
    manbearpig's picture

    rls:
    How far up should we move the age of adulthood? I understand her general argument, but at some point we've got to become responsible for ourselves. We, as a society, have decided that the age of majority is 18 in the United States. Fortunately, the solution is simply- no federally subsidized loans, period. I can agree with that. Colleges lower prices or suffer lower matriculation rates.

    Absorbed in the sacrament of education, many have failed to perform the proper calculus as to the value of education. There is a price at which education is simply not worth it; and, what we are seeing is more and more people hitting the threshold of the return on investment becoming negative. The question is how obvious is the math. A rational 20 year-old who bothered to do some back-of-the-envelope math could figure that $120,000 over four years far exceeds the return expected from a criminal justice degree, I would think.

    As for bankruptcy, I don't know. I'm extremely reluctant to support bankruptcy as a means to retire education loans. While I can feel for this lady, she is not really a victim. She got to eat out, satisfy material desires, and live the life on campus. Where exactly is the suffering? There are consequences for profligacy, but that hardly makes someone a victim. Now, I don't like this federally subsidized mess, but I am trying to think what happens next should this policy of bankruptcy be enlarged. In the past, mass bankruptcy on education debt was not observed, but one could argue the social constraints, stigmas, and taboos contributed to stemming it- which do not exist in similar strength today.

    She sounds quite eager to declare bankruptcy, when she technically isn't bankrupt. She lives under difficult circumstances, true, but it is not like she has no job, no assets, and no income. The potential for abuse is obvious. If the mass delinquency observed on mortgages in the past 5 years is any indication of the expected behavior of student loan debtors, I would be very concerned if I were Sallie Mae and student loans became dischargeable via bankruptcy.


    I think if student debt is allowed to be discharged, the total number of loans will go way down, which will drive tuition down, which is exactly what's needed. I'm all for it. Not that any of it affects me since there's nothing like this in Canada. The best universities charge 5K a year on tuition, and student loans are interest free during studies.

    -MBP

  • rls's picture

    manbearpig,

    Her principal did not grow from 120,000 to $250,000- it's the interest, penalties, and fees that tack as additional debt. And I'm not sure I accept the use of the term 'predatory lending'. If two parties are rational adults and agree to terms, that's that. Just because one party is faster, more cunning, or more ruthless doesn't excuse the counterparty for playing out of their league.

    Bene qui latuit, bene vixit- Ovid

  • In reply to manbearpig
    MrBroadway's picture

    .[/quote]
    I think if student debt is allowed to be discharged, the total number of loans will go way down, which will drive tuition down, which is exactly what's needed. I'm all for it. Not that any of it affects me since there's nothing like this in Canada. The best universities charge 5K a year on tuition, and student loans are interest free during studies.[/quote]

    exactly, we need some reform in the student loan system. i mean this is no different from the US debt crisis, congress raises the debt limit and the govt keeps spending. expecting an 18 year old to manage debt of 30k or more responsibly is not wise. that is not responsibly lending.

  • In reply to manbearpig
    rls's picture

    manbearpig:
    rls:
    How far up should we move the age of adulthood? I understand her general argument, but at some point we've got to become responsible for ourselves. We, as a society, have decided that the age of majority is 18 in the United States. Fortunately, the solution is simply- no federally subsidized loans, period. I can agree with that. Colleges lower prices or suffer lower matriculation rates.

    Absorbed in the sacrament of education, many have failed to perform the proper calculus as to the value of education. There is a price at which education is simply not worth it; and, what we are seeing is more and more people hitting the threshold of the return on investment becoming negative. The question is how obvious is the math. A rational 20 year-old who bothered to do some back-of-the-envelope math could figure that $120,000 over four years far exceeds the return expected from a criminal justice degree, I would think.

    As for bankruptcy, I don't know. I'm extremely reluctant to support bankruptcy as a means to retire education loans. While I can feel for this lady, she is not really a victim. She got to eat out, satisfy material desires, and live the life on campus. Where exactly is the suffering? There are consequences for profligacy, but that hardly makes someone a victim. Now, I don't like this federally subsidized mess, but I am trying to think what happens next should this policy of bankruptcy be enlarged. In the past, mass bankruptcy on education debt was not observed, but one could argue the social constraints, stigmas, and taboos contributed to stemming it- which do not exist in similar strength today.

    She sounds quite eager to declare bankruptcy, when she technically isn't bankrupt. She lives under difficult circumstances, true, but it is not like she has no job, no assets, and no income. The potential for abuse is obvious. If the mass delinquency observed on mortgages in the past 5 years is any indication of the expected behavior of student loan debtors, I would be very concerned if I were Sallie Mae and student loans became dischargeable via bankruptcy.


    I think if student debt is allowed to be discharged, the total number of loans will go way down, which will drive tuition down, which is exactly what's needed. I'm all for it. Not that any of it affects me since there's nothing like this in Canada. The best universities charge 5K a year on tuition, and student loans are interest free during studies.

    Mass bankruptcy, or the risk of it, erodes the trust between borrower and lender. A better solution is simply to get rid of government-subsidized student loans. Loans should be made on the merit of the individual and the activities that the individual plans to use the money for. So, yes, the current economic realities dictate that an art history major should have a harder time getting a loan than a chemical engineer or less favorable terms, whichever the case may be. And one of the effects, I believe, will be a precipitous drop in the price of collegiate education.

    Bene qui latuit, bene vixit- Ovid

  • In reply to rls
    manbearpig's picture

    rls:
    manbearpig,

    Her principal did not grow from 120,000 to $250,000- it's the interest, penalties, and fees that tack as additional debt. And I'm not sure I accept the use of the term 'predatory lending'. If two parties are rational adults and agree to terms, that's that. Just because one party is faster, more cunning, or more ruthless doesn't excuse the counterparty for playing out of their league.

    Principal, by definition, is the amount on which interest accrues. Since she now owes 250K, she is accruing interest on 250K.

    I think you're basically relying on the caveat emptor defense, but you have to admit that taking advantage of someone you know is completely ignorant about what's coming their way is unethical.

    -MBP

  • manbearpig's picture

    Here's another one. In this case, I just genuinely feel bad for the guy.

    ___________________________________________________________________________________

    I took every AP class available at my high school because I was told it would count towards college credit, and it did! I graduated a year early from college and I had a 50% scholarship and I was an RA so my housing needs were covered, but I still had to borrow about $60,000 which was for tuition only, I had a work study job to cover any personal expenses. Then I went to law school which cost about $150,000 leaving me at age 23 with a JD and $210,000 in debt earning $50,000 working for Legal Aid. Thank god my law school had a decent loan repayment assistance program for people working in public interest, but when I had to leave that job for another making only $10,000 more, the assistance disappeared. My friend owns a condo and my student loan payment is her mortgage payment, approximately $1500/month between AES, Citibank and Brazos. I have paid approximately $60,000 out of pocket in the last 3 years and still owe about $180,000. After the interest was added to my principal at the start of pre-payment, I haven’t even gotten the principal down to what I actually borrowed. The loans are on 10-30 year repayment plans so at age 27, I’m looking at another 27 years of loan payments. I live with my parents to save on expenses which is embarrassing, but there’s no way I can move out right now. I have never missed a payment, pay all my bills on time and have excellent credit, but I can’t move forward with my life, be an adult, get married, have children, own a home, or live the american dream because the banks essentially own me until I’m 54. A financial planner in college told me that one should budget 30% of their income for living expenses, but right now 50% of my income goes to loans. I don’t even think bankruptcy will help because I don’t think student loans can be forgiven in bankruptcy proceedings, but I worked really hard to build my credit so I don’t want to destroy it either. I am not asking for a handout, I’ve had a job since I was 14 years old…but if the government can spend billions of dollars bailing out banks, why not spend a few million bailing out the customers? The cost of a higher education is exorbitantly high in this country and if the government took measures to lower tuition or give aid on the front end, then maybe so many of us wouldn’t be suffering at the back end.

    -MBP

  • In reply to rls
    MrBroadway's picture

    rls:
    manbearpig,

    Her principal did not grow from 120,000 to $250,000- it's the interest, penalties, and fees that tack as additional debt. And I'm not sure I accept the use of the term 'predatory lending'. If two parties are rational adults and agree to terms, that's that. Just because one party is faster, more cunning, or more ruthless doesn't excuse the counterparty for playing out of their league.

    sallie mae preys on naive hopeful students...students go through the education system thinking that there is a guaranteed job after college because thats what they've been taught from elementary all the way through high school. so it wouldnt be a stretch to think that the loan could be paid after graduation........ and unfortunately the new legislation to lower interest rate will not apply to her.

  • In reply to manbearpig
    rls's picture

    manbearpig:
    rls:
    manbearpig,

    Her principal did not grow from 120,000 to $250,000- it's the interest, penalties, and fees that tack as additional debt. And I'm not sure I accept the use of the term 'predatory lending'. If two parties are rational adults and agree to terms, that's that. Just because one party is faster, more cunning, or more ruthless doesn't excuse the counterparty for playing out of their league.

    Principal, by definition, is the amount on which interest accrues. Since she now owes 250K, she is accruing interest on 250K.

    I think you're basically relying on the caveat emptor defense, but you have to admit that taking advantage of someone you know is completely ignorant about what's coming their way is unethical.

    Technically, the $120,000 is still the principal. She will pay penalties, and penalties on her penalties, but that is not the money that was borrowed. If you want to call it the new principal, fine; but, I believe I am technically right. As for the "caveat emptor" response- I don't accept that an average rational 20 year-old is completely ignorant. And even if they are completely ignorant, they are capable of acknowledging their ignorance and acting accordingly. For example, someone who doesn't know any Chinese should not sign any contract written in Chinese. That is not a complex idea to understand or accept.

    Bene qui latuit, bene vixit- Ovid

  • In reply to manbearpig
    Bobb's picture

    manbearpig:
    Here's another one. In this case, I just genuinely feel bad for the guy.

    ___________________________________________________________________________________

    I took every AP class available at my high school because I was told it would count towards college credit, and it did! I graduated a year early from college and I had a 50% scholarship and I was an RA so my housing needs were covered, but I still had to borrow about $60,000 which was for tuition only, I had a work study job to cover any personal expenses. Then I went to law school which cost about $150,000 leaving me at age 23 with a JD and $210,000 in debt earning $50,000 working for Legal Aid. Thank god my law school had a decent loan repayment assistance program for people working in public interest, but when I had to leave that job for another making only $10,000 more, the assistance disappeared. My friend owns a condo and my student loan payment is her mortgage payment, approximately $1500/month between AES, Citibank and Brazos. I have paid approximately $60,000 out of pocket in the last 3 years and still owe about $180,000. After the interest was added to my principal at the start of pre-payment, I haven’t even gotten the principal down to what I actually borrowed. The loans are on 10-30 year repayment plans so at age 27, I’m looking at another 27 years of loan payments. I live with my parents to save on expenses which is embarrassing, but there’s no way I can move out right now. I have never missed a payment, pay all my bills on time and have excellent credit, but I can’t move forward with my life, be an adult, get married, have children, own a home, or live the american dream because the banks essentially own me until I’m 54. A financial planner in college told me that one should budget 30% of their income for living expenses, but right now 50% of my income goes to loans. I don’t even think bankruptcy will help because I don’t think student loans can be forgiven in bankruptcy proceedings, but I worked really hard to build my credit so I don’t want to destroy it either. I am not asking for a handout, I’ve had a job since I was 14 years old…but if the government can spend billions of dollars bailing out banks, why not spend a few million bailing out the customers? The cost of a higher education is exorbitantly high in this country and if the government took measures to lower tuition or give aid on the front end, then maybe so many of us wouldn’t be suffering at the back end.

    This is rough. Guy worked hard and just needed the money to actually attend his schools. He seems intelligent and wasn't using his loans to live the "high life"

  • Edmundo Braverman's picture

    It's hard to have sympathy for stupid people. But I appreciate your posting this, MBP. It reinforces my decision to put my boys on a ship for a year after high school so they qualify for their captain's license at the end of it. If they want to go to college after that, fine. But at least they'll have a real trade to fall back on.

  • brutalglide's picture

    Man after reading some of those stories, I'm going to call my parents right now and say thank you for helping pay for college. I can't imagine being in some of those situations. Sounds terrible.

    On the other hand, some of those people are just plain stupid and it's hard to feel bad for them as they put themselves into that situation...

  • In reply to rls
    manbearpig's picture

    rls:
    manbearpig:
    rls:
    manbearpig,

    Her principal did not grow from 120,000 to $250,000- it's the interest, penalties, and fees that tack as additional debt. And I'm not sure I accept the use of the term 'predatory lending'. If two parties are rational adults and agree to terms, that's that. Just because one party is faster, more cunning, or more ruthless doesn't excuse the counterparty for playing out of their league.

    Principal, by definition, is the amount on which interest accrues. Since she now owes 250K, she is accruing interest on 250K.

    I think you're basically relying on the caveat emptor defense, but you have to admit that taking advantage of someone you know is completely ignorant about what's coming their way is unethical.

    Technically, the $120,000 is still the principal. She will pay penalties, and penalties on her penalties, but that is not the money that was borrowed. If you want to call it the new principal, fine; but, I believe I am technically right. As for the "caveat emptor" response- I don't accept that an average rational 20 year-old is completely ignorant. And even if they are completely ignorant, they are capable of acknowledging their ignorance and acting accordingly. For example, someone who doesn't know any Chinese should not sign any contract written in Chinese. That is not a complex idea to understand or accept.

    Not to split hairs, but the 120K is the original principal, and the 250K is the current principal owing. Anyway, enough of that.

    I don't think the chinese example is a perfect analogy here. In that case, you know exactly what you don't know, and so you should know to avoid signing that contract. In these cases, the borrowers don't even know what they don't know. They don't even know which questions to ask.

    -MBP

  • In reply to manbearpig
    rls's picture

    manbearpig:
    Here's another one. In this case, I just genuinely feel bad for the guy.

    ___________________________________________________________________________________

    I took every AP class available at my high school because I was told it would count towards college credit, and it did! I graduated a year early from college and I had a 50% scholarship and I was an RA so my housing needs were covered, but I still had to borrow about $60,000 which was for tuition only, I had a work study job to cover any personal expenses. Then I went to law school which cost about $150,000 leaving me at age 23 with a JD and $210,000 in debt earning $50,000 working for Legal Aid. Thank god my law school had a decent loan repayment assistance program for people working in public interest, but when I had to leave that job for another making only $10,000 more, the assistance disappeared. My friend owns a condo and my student loan payment is her mortgage payment, approximately $1500/month between AES, Citibank and Brazos. I have paid approximately $60,000 out of pocket in the last 3 years and still owe about $180,000. After the interest was added to my principal at the start of pre-payment, I haven’t even gotten the principal down to what I actually borrowed. The loans are on 10-30 year repayment plans so at age 27, I’m looking at another 27 years of loan payments. I live with my parents to save on expenses which is embarrassing, but there’s no way I can move out right now. I have never missed a payment, pay all my bills on time and have excellent credit, but I can’t move forward with my life, be an adult, get married, have children, own a home, or live the american dream because the banks essentially own me until I’m 54. A financial planner in college told me that one should budget 30% of their income for living expenses, but right now 50% of my income goes to loans. I don’t even think bankruptcy will help because I don’t think student loans can be forgiven in bankruptcy proceedings, but I worked really hard to build my credit so I don’t want to destroy it either. I am not asking for a handout, I’ve had a job since I was 14 years old…but if the government can spend billions of dollars bailing out banks, why not spend a few million bailing out the customers? The cost of a higher education is exorbitantly high in this country and if the government took measures to lower tuition or give aid on the front end, then maybe so many of us wouldn’t be suffering at the back end.

    Two years ago talked a relative of mine out of going to law school because of the cost/payout discrepancy. If I could see it before I was 20, then I think this guy should have seen it- especially since he had already been down that path. Did he ask at the end of 4 years of college, how am I going to pay down $60,000 in debt based on my current skills? Many people in these binds use the "the government did one wrong, why not another?". First, it was the deposit banks, then the investment banks, then GM/Chrysler- now it's the students. Here's an idea- no bailout. Not for banks, not for student- no one. If I cannot tell you how to live your life, then you can't have my money. More importantly, I don't want to tell you how to live you life and I don't want to give you my money.

    Bene qui latuit, bene vixit- Ovid

  • In reply to rls
    manbearpig's picture

    rls:
    manbearpig:
    Here's another one. In this case, I just genuinely feel bad for the guy.

    ___________________________________________________________________________________

    I took every AP class available at my high school because I was told it would count towards college credit, and it did! I graduated a year early from college and I had a 50% scholarship and I was an RA so my housing needs were covered, but I still had to borrow about $60,000 which was for tuition only, I had a work study job to cover any personal expenses. Then I went to law school which cost about $150,000 leaving me at age 23 with a JD and $210,000 in debt earning $50,000 working for Legal Aid. Thank god my law school had a decent loan repayment assistance program for people working in public interest, but when I had to leave that job for another making only $10,000 more, the assistance disappeared. My friend owns a condo and my student loan payment is her mortgage payment, approximately $1500/month between AES, Citibank and Brazos. I have paid approximately $60,000 out of pocket in the last 3 years and still owe about $180,000. After the interest was added to my principal at the start of pre-payment, I haven’t even gotten the principal down to what I actually borrowed. The loans are on 10-30 year repayment plans so at age 27, I’m looking at another 27 years of loan payments. I live with my parents to save on expenses which is embarrassing, but there’s no way I can move out right now. I have never missed a payment, pay all my bills on time and have excellent credit, but I can’t move forward with my life, be an adult, get married, have children, own a home, or live the american dream because the banks essentially own me until I’m 54. A financial planner in college told me that one should budget 30% of their income for living expenses, but right now 50% of my income goes to loans. I don’t even think bankruptcy will help because I don’t think student loans can be forgiven in bankruptcy proceedings, but I worked really hard to build my credit so I don’t want to destroy it either. I am not asking for a handout, I’ve had a job since I was 14 years old…but if the government can spend billions of dollars bailing out banks, why not spend a few million bailing out the customers? The cost of a higher education is exorbitantly high in this country and if the government took measures to lower tuition or give aid on the front end, then maybe so many of us wouldn’t be suffering at the back end.

    Two years ago talked a relative of mine out of going to law school because of the cost/payout discrepancy. If I could see it before I was 20, then I think this guy should have seen it- especially since he had already been down that path. Did he ask at the end of 4 years of college, how am I going to pay down $60,000 in debt based on my current skills? Many people in these binds use the "the government did one wrong, why not another?". First, it was the deposit banks, then the investment banks, then GM/Chrysler- now it's the students. Here's an idea- no bailout. Not for banks, not for student- no one. If I cannot tell you how to live your life, then you can't have my money. More importantly, I don't want to tell you how to live you life and I don't want to give you my money.

    You've got a good head on your shoulders, and it seems like you always have. A lot of that can be attributed to good parenting and a solid education in responsibility. Either you learned from the good example your parents/other family members set, or you learned from their mistakes. Either way, you had a privilege that a lot of people didn't have. I don't think they can really be held to the same standard to which you hold yourself.

    -MBP

  • West Coast rainmaker's picture

    What exactly is wrong with the first person? She didn't understand interest? I can't really believe that. I understood the idea of compound interest around 2nd grade.

    And how exactly do you end up taking out 120k for a criminal justice degree? You should go to a state school for that, maybe even start at a community college.

    Then getting married/divorced and having a kid...it all just speaks to poor judgement. I cannot work up too much sympathy for this person. She made really, really bad decisions (while an adult) and has to pay for it.

    --------

    The second guy is a more sympathetic case. But he knew what he was getting into. Law school is known to be a poor investment. I wish him luck getting a public sector so he can qualify for loan forgiveness.

  • In reply to manbearpig
    rls's picture

    manbearpig:
    rls:
    manbearpig:
    rls:
    manbearpig,

    Her principal did not grow from 120,000 to $250,000- it's the interest, penalties, and fees that tack as additional debt. And I'm not sure I accept the use of the term 'predatory lending'. If two parties are rational adults and agree to terms, that's that. Just because one party is faster, more cunning, or more ruthless doesn't excuse the counterparty for playing out of their league.

    Principal, by definition, is the amount on which interest accrues. Since she now owes 250K, she is accruing interest on 250K.

    I think you're basically relying on the caveat emptor defense, but you have to admit that taking advantage of someone you know is completely ignorant about what's coming their way is unethical.

    Technically, the $120,000 is still the principal. She will pay penalties, and penalties on her penalties, but that is not the money that was borrowed. If you want to call it the new principal, fine; but, I believe I am technically right. As for the "caveat emptor" response- I don't accept that an average rational 20 year-old is completely ignorant. And even if they are completely ignorant, they are capable of acknowledging their ignorance and acting accordingly. For example, someone who doesn't know any Chinese should not sign any contract written in Chinese. That is not a complex idea to understand or accept.

    Not to split hairs, but the 120K is the original principal, and the 250K is the current principal owing. Anyway, enough of that.

    I don't think the chinese example is a perfect analogy here. In that case, you know exactly what you don't know, and so you should know to avoid signing that contract. In these cases, the borrowers don't even know what they don't know. They don't even know which questions to ask.

    I would say you are cutting too much slack, but I think you are out-and-out advocating for poor decision-making practices. Knowing that you don't know much is more than enough reason not to sign. It's not like its either sign or a bullet to the brain.

    Bene qui latuit, bene vixit- Ovid

  • PetEng's picture

    It wasn't really 'known' until ~2005 or so that law school was shit.

    Sounded like he could be fine if he stayed public interest. Fuck him, zero sympathy.

  • manbearpig's picture

    Wow, I don't even know what to say about this guy. This one is a must read...

    p.s. the bold part is just painfully ironic.

    ______________________________________________________________________________________________

    I went into college knowing it was going to be very expensive. I knew that if I wanted to make it happen, I would have to go BIG. I decided to gut-rehab two historic homes. The plan was to fix them up, live in one with my roommates and rent out the other, and then sell them after I graduated. I worked 60+ hours a week on the houses while going to school for 6 years. It was the hardest thing I ever did, but I was successful.

    Unfortunately, when I graduated, America was officially in a recession and the housing bubble had popped. My beautifully renovated houses were worth less than we put into them. My parents, who financed the homes, were forced to foreclose on the houses and file for bankruptcy.

    I currently have about $100,000 in federal loans and $200,000 in Sallie Mae loans. Even if I could find a full-time job in my field, I will not be able to afford the minimum monthly payments.

    In one year from now I will no longer be eligible for forbearance. I have realized that even if I am able to scrape by and pay the payments, I will have to live a life of poverty. I will never be able to buy a car or a home or even have children. I just simply will not be able to afford it. This is not based on exaggeration or lack of research… remember I went to college! I did the math. I will never live a normal life.

    I could have skipped college and become a gas station attendant instead and over the course of my life been in a better financial situation then I am now.

    -MBP

  • SECfinance's picture

    I feel the tiniest bit of sympathy for the girl in the OP because she ended up being bipolar and because she has a child that has to live with the consequences of her stupidity. That being said, the fact that she blames manic episodes for all of her spending is ridiculous. Talk about not taking responsibility for herself.

    First of all, she said she got anxiety about the fact that she was working part-time and going to school full-time? Seriously? Thousands upon thousands of people do that every year and they turn out just fine.

    Why the fuck was she taking out a $30K loan when tuition was $4K? It took her 11 YEARS to finish college with a degree in CRIMINAL JUSTICE. These are just stupid, stupid decisions.

    She says she has a lawyer fighting for her - where's she getting the money to pay that lawyer?

    I'm sorry, but I really don't think it takes much common sense to understand the implications of taking out loans that are that big. Anyone intelligent enough to be going to college should understand it.

    As for our law school friend, a little more sympathy for him because he seemed like he was trying to do the right thing. That being said, his first mistake was going to a college that he couldn't reasonably afford. He had an RA gig, work-study, 50% tuition, graduated in 3 years, and still racked up $60K in debt? That's ridiculous.

    He's 27, which means that law school wasn't as vilified when he enrolled. So a little sympathy there, but again he should have chosen a cheaper law school. Why would he leave his loan repayment gig for another job without assistance? He was probably "saving" more than $10K/year by being on loan forgiveness.

    His loan payment is $1,500/month, but he makes at least $60K/year. He's living with his parents. He should have a ton of money to throw at his loans. It's ridiculous to say that he can't move forward with his life until he's 54. Our President and his wife certainly moved on with theirs, and I'd say they turned out OK.

    At least this guy seems like he's trying. Retail girl just wants handouts.

    As for #3... I don't even know where to start. Just a dumbass who didn't think about the implications of his actions. How does he have $300K in loans when his parents financed the homes? He probably could have put himself in less debt by not working on those houses and graduating in 4 years. Just someone that bit off more than they could chew and now wants handouts.

  • Cardinal's picture

    Zero sympathy for the girl in the OP. She had FREE TUITION, then took out loans to party, eat out, buy clothes, and have a kid. All for a criminal justice degree. I mean seriously she managed to blow 120K while in school. Sorry honey your SOL.

    I feel sorry for the kids who paid back their loans and worked hard in school. While this girl will in the end get some kind of relief when congress comes up with a way to "fix" the student loan mess.

  • manbearpig's picture

    Wow, this one takes the cake....

    __________________________________________________________________________________________________

    Dear People:

    As I approach my 60th birthday, I find myself in a financial position that I never would have dreamed possible in the United States of America. Here are the troubling statistics that have resulted from working for over 40 years of my life. I am a teacher and am married to a wife who is part owner of a small CPA firm in southeastern Tulare County, California.

    Fifteen years ago, we were able to afford for my wife to finish her Bachelor of Arts in Business Administration. She completed her CPA certification twelve years ago. At that time, we were optimistic that her salary would eclipse mine and that we would be able to afford to send our two children to a four-year university. Her salary has never caught up to mine and remains about $20,000.00 less. In spite of our children ranking 6th (my son) and 4th (my daughter) in their high school classes, we were not eligible for financial aid because of our income. That was then, this is now.

    Our total net worth is -$10,000.00

    Our home is worth $180,000.00 dollars and we owe $178,400.00.

    We have three outstanding student loans:

    Loan 1: $66,967.94

    Loan 2: $88,479.18

    Loan 3: $15, 178.21

    Fortunately (or not), out children have taken out loans for their post baccalaureate degrees.

    My son (a struggling attorney) owes $198,395.27 for law school

    My daughter (a teacher) owes $35, 938.09 for her credential work.

    If you total all of our education debt, my family owes $404,958.69 for student loans. This is our American Dream (night mare). Most of our loans are through Sallie Mae

    Sincerely,

    Michael C. Wait

    -MBP

  • Nobama88's picture

    Whats up with the occupystudentdebt website? It looks like a 5th grader in the 90's created the website.

    You would think with all the free time and worthless graphic design degrees these guys used $200K in loans for, they would be able to create a better website...

  • In reply to Nobama88
    manbearpig's picture

    Nobama88:
    Whats up with the occupystudentdebt website? It looks like a 5th grader in the 90's created the website.

    You would think with all the free time and worthless graphic design degrees these guys used $200K in loans for, they would be able to create a better website...


    LOL SB!

    -MBP

  • Sandhurst's picture

    I mean.. it's worth considering that student loans are being driven by the same forces as mortgages were up to '07. Student Loan ABS are generally federally insured at rates below their actuarial risk premium - basically an off-balance sheet government subsidy. They are also ubiquitous, and pretty easy to get.

    The most significant difference I can think of between MBS and SLABS is the nature of the underlying "secured asset," i.e. a house, vs a person's future earnings for as long as it takes to repay the loan. As someone who has worked with one or two shaky subprime asset class securitizations, SLABS truly scare me. Once these loans are sold into the deal, principal adjustments/other restructuring accommodations become dramatically more difficult. God forbid the senior note-holders realize a loss.

    The sooner these things become somehow discharged in bankruptcy, the better. In every other case (e.g. MBS) I would say "too bad - you signed the papers." But I've met people all over the place who are still saddled with this shit. I actually met a bulge bank IBD MD who's still paying off his MBA debt. WTF?

    "There are three ways to make a living in this business: be first, be smarter, or cheat."

  • manbearpig's picture

    lol, listen to this genius!

    ___________________________________________________________________________________________

    Here goes again… I am running on empty. Maybe Obama could bail us out… Honestly, everyone else gets bailed out. Especially the rich. I’m just thinking… hmm, why not tax all Americans. What are there? 306,000,000 people in this country? Maybe $2/year or even .25 a month… very minimal. Do the math. No one would really miss it. We’d be out of debt then and we could contribute to our economy and live like “normal” Americans . More jobs would open from us spending in our economy…plus maybe we could stop using other countries to produce our goods, too. What is so wrong with that? I don’t think its too much to ask and I don’t think it is impossible. Why is this idea so rejected? My son will never go to college if things remain the same… not without a full scholarship anyway.

    p.s. I don’t have a picture of my debt… but I owe $160,000 mainly b/c of interest. I took out $75,000 from 2001-2007.

    -MBP

  • Bobb's picture

    Why go to a school you cannot afford? Go to community college for 2 years, transfer to state school, stay out of debt.

  • In reply to manbearpig
    Nobama88's picture

    manbearpig:
    lol, listen to this genius!

    ___________________________________________________________________________________________

    Here goes again… I am running on empty. Maybe Obama could bail us out… Honestly, everyone else gets bailed out. Especially the rich. I’m just thinking… hmm, why not tax all Americans. What are there? 306,000,000 people in this country? Maybe $2/year or even .25 a month… very minimal. Do the math. No one would really miss it. We’d be out of debt then and we could contribute to our economy and live like “normal” Americans . More jobs would open from us spending in our economy…plus maybe we could stop using other countries to produce our goods, too. What is so wrong with that? I don’t think its too much to ask and I don’t think it is impossible. Why is this idea so rejected? My son will never go to college if things remain the same… not without a full scholarship anyway.

    p.s. I don’t have a picture of my debt… but I owe $160,000 mainly b/c of interest. I took out $75,000 from 2001-2007.

    Goes to school for 6 years (through the best 6 economic years in a long time), supposedly takes out $75K in loans but seems to double the loan amount due to interest?

    These people are fucking brilliant. The writing is so eloquent. College educated at its finest. So glad we get to call these people 'college educated Americans'. So much hope.

  • rls's picture

    SECFinance,

    As a side note, there really isn't such a thing as a 'cheaper law school'. Law school costs are surprisingly uni-modal- it's astounding really. From Tier 1 through Tier 4, one can easily expect to pay $40,000 a year in costs, depending on location. For example, a Tier 3/4 school, Albany Law School, has a cost $39,000 for tuition only. According to their website, the average graduate had $120,722 of debt.This is part of the reason I talked my relative out of it. Unless you graduate at the top of a T-14 (preferably top five) law school, you have an uphill battle for employment and paying your loans.

    Bene qui latuit, bene vixit- Ovid

  • rls's picture

    I should print t-shirts that read: "I'm short your student loan" in honor of Mr. Zuckerman. Just looked at some student loan ABS on Bloomberg- oh my. If I can find the appropriate CDS contracts, I'll make out like Paulson.

    Bene qui latuit, bene vixit- Ovid

  • Cola Coca's picture

    Going forward, student loans should have stricter standards and smaller caps and also be dischargeable.

    The loans are just too easy to get, and a loan which is not dischargeable is simply broken.

  • bfin's picture

    Wow. That is all.

    The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

    WSO is not your personal search function.

  • In reply to rls
    Sandhurst's picture

    rls:
    I should print t-shirts that read: "I'm short your student loan" in honor of Mr. Zuckerman. Just looked at some student loan ABS on Bloomberg- oh my. If I can find the appropriate CDS contracts, I'll make out like Paulson.

    I don't think you'll find any on the vast majority of SLABS (i.e. gov't insured ones). Not sure of the state of the CDS market on Private Label SLABS - probably depends on deal size.

    Cola Coca:
    Going forward, student loans should have stricter standards and smaller caps and also be dischargeable.

    The loans are just too easy to get, and a loan which is not dischargeable is simply broken.

    I agree that a move towards some extent of discharg-ability is necessary (and probably likely).

    But that said, there is a strong rationale for its present state. Mortgages are secured with the asset they finance, same with auto loans. In a sense, student loans are the same - they are secured with the future cash flows they finance, namely (in theory) increased earnings resulting from the financed higher education degree. Mortgages are personally dischargable because in bankruptcy, the lender receives the underlying asset - Sallie Mae can't just foreclose on you and sell your organs or whatever. So, to avoid the moral hazard of a former student declaring bankruptcy (and essentially receiving a free education), the loans are structured as they are.

    Not to say that I agree that this is definitively "right" or otherwise appropriate. But there is a logic to it, and a food reform should take the lenders' position into consideration too. Maybe student loans should have a structured payment schedule, or even come straight out of the borrower's paychecks. E.g. until principal + interest are repaid, debtor's paychecks will be garnished at a maximum of 20% of each paycheck payment for a maximum of 10 years. Not necessarily the right way, but there needs to be some framework that allows student loans to tackle the moral hazard problem, but not be too inhumane.

    "There are three ways to make a living in this business: be first, be smarter, or cheat."

  • In reply to rls
    MrBroadway's picture

    rls:
    I should print t-shirts that read: "I'm short your student loan" in honor of Mr. Zuckerman. Just looked at some student loan ABS on Bloomberg- oh my. If I can find the appropriate CDS contracts, I'll make out like Paulson.

    Do universities really have the gall to invest in SLABS? If they did, that means not only would they be making money off of tuitions and fees on students, they would also be making money on Wall Street through investing in their securitized debts--i.e. they'd be getting paid 2x's for every student. In other words, this would give universities strong incentives to increase their tuitions in order to build up their endowments, all at the expense of putting our children in more and more debt. Our system couldn't be this corrupt and sickening could it?

  • In reply to MrBroadway
    Edmundo Braverman's picture

    MrBroadway:
    rls:
    I should print t-shirts that read: "I'm short your student loan" in honor of Mr. Zuckerman. Just looked at some student loan ABS on Bloomberg- oh my. If I can find the appropriate CDS contracts, I'll make out like Paulson.

    Do universities really have the gall to invest in SLABS? If they did, that means not only would they be making money off of tuitions and fees on students, they would also be making money on Wall Street through investing in their securitized debts--i.e. they'd be getting paid 2x's for every student. In other words, this would give universities strong incentives to increase their tuitions in order to build up their endowments, all at the expense of putting our children in more and more debt. Our system couldn't be this corrupt and sickening could it?

    Don't hate the player, hate the game.

  • Cookies With Milken's picture

    "My friend owns a condo and my student loan payment is her mortgage payment, approximately $1500/month between AES, Citibank and Brazos."

    Thats what you get for borrowing from a company called Brazos. "OMG, I feel like Brazos is taking me to the bang bus with these student loan payments!"

    lololololol brazos.

    Ok I'm done.

  • mk0000's picture

    I honestly wanna know what colleges these guys are taking out loans for.

  • Short Bus All-Star's picture

    This is basically a sequel to the housing bubble, only this time it will end much worse.

    Artificially low lending rates that don't reflect underlying risk :: check
    Widely accepted truth that having more people in college (like owning houses) is better :: check
    Well-connected groups on both sides of the aisle who can lobby to keep the party going :: check

    Now add into the stew: recalcitrant higher ed establishment, free online education rumbling on the horizon, and austerity looming.

    Many of these universities are hilariously over-built and are often the largest employer in their respective cities. I give it about three more years to reach a Wagnerian climax before the bitch implodes.

    The years 2008 to 2015 will be remembered as a giant macroeconomic bowel movement. I can hear the economy straining as a I type.

  • In reply to Short Bus All-Star
    dwight schrute's picture

    Short Bus All-Star:

    The years 2008 to 2015 will be remembered as a giant macroeconomic bowel movement. I can hear the economy straining as a I type.

    f*cking gold

    Making money is art and working is art and good business is the best art - Andy Warhol

  • Nobama88's picture

    How do we make money off this...

    We all know it is going to implode.

  • In reply to Nobama88
    Sandhurst's picture

    Nobama88:
    How do we make money off this...

    We all know it is going to implode.

    SWHC & ATK

    "There are three ways to make a living in this business: be first, be smarter, or cheat."

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