Student loan nightmare. Man finds out his student loan balance is 200k after he graduates

[Liberal_in_LA]

My life and career have been scarred by the naïve exchange I made at college: an education of questionable value for a dangerous amount of debt.


After completing my master’s in 2008, I got a job working as a contractor science policy analyst at the National Institutes of Health in Bethesda, Maryland. I was lucky to land a good, bioethics-related job in a very bad economy. Like most people with loans, I started getting repayment letters within six months of leaving school.

I already knew that I had about $70,000 in federal loans from Penn and some federal loans from Conn—but I had no idea I also owed $100,000 in Sallie Mae–serviced private loans.

I was shocked. It turned out that my parents and Conn had had me ink them during my semesterly flurry of document-signing without discussing them with me. Now I was making $50,000 a year in an expensive region with close to $200,000 in loans. I was completely unfamiliar with the—at the time very limited—repayment options. It was a nightmare.

The decisions were unwise, certainly. But while I was in school, my parents were too stressed and embarrassed to take stock of my loans. They wanted me to focus on doing well and felt, as do many middle-class families, that they were in a financial Catch-22: They made too much to get enough aid but not enough to cover the cost of college. Financial aid awards come once per year, giving them little time to plan, and again, they expected similar aid and tuition rates as my brother. They’d lost much of their savings dealing with career challenges and the house fire. They didn’t want to take me out of a school I was heavily invested in. Given the grant funding I received every year from Conn, even if they had pulled me out and sent me to our flagship state school—the University of Wisconsin—the full cost there still could have left me with a fair amount of debt.

------
With every bump in salary comes a bump in payments. My current payment is about $1,500 a month—that’s almost 40 percent of my take-home pay—and despite having paid more than $75,000 toward my loans, I still owe about $190,000. Remember, I started with $200,000 in debt. With more than eight years of some of my private loans at 8 and 9 percent interest, and my federal loans at more than 6 percent, Sallie Mae and the federal government have made it very hard to make progress.

http://www.slate.com/articles/business/moneybox/2016/01/student_loan_crisis_at_its_ugliest_i_graduated_and_found_out_i_owe_200_000.2.html

[Travis_0004]

1. I was unaware that student loan balances were a secret

If only there was a website where you could check your balance and see what you owe. . .

[Drahthaardogs]

2. This is a raw deal, but it is hard to have a ton of sympathy...

Why do kids pick colleges that cost $50,000 a year? That is silly. Go to a state school that costs 1/4 of that per year. Everyone wants to go to the big expensive colleges. If you are not rich or on scholarship, you probably cannot afford to do it. People need to be realistic with their kids.

[Brickbat]

8. It doesn't really work out that way anymore.

Private colleges that cost a ton give lots of aid; state schools cost less but it's much harder to get aid unless you're a student who gets the kind of grades and test scores that would steer you to a private college anyway. State schools cost much more than they used to as well, and the benefit for state residence is lower. In some cases, it can be a wash with a private college.

[Drahthaardogs]

10. I just got done putting a kid through college at a local University.

Tuition was never more than $200/cr hr. There is now way you blow through $200,000 at a state school unless you are foolish. The private schools here run $40,000/yr. A lot of kids get 1/2 tuition. No one gets a full ride.

[Arazi]

18. U of illinois in state costs $31k/year. So $120k+ to graduate

If you have no aid, you graduate with 6 figure debt

[skepticscott]

33. So you look at your finances

and realize that you can't reasonably afford U of I, and instead consider places like Illinois State or SIU, where you can get a perfectly fine college education, albeit without quite the name-dropping prestige. But you can't eat prestige, and with limited exceptions, it won't help you pay back your loans.

[Arazi]

34. ISU $28,239 instate - well that's hugely cheaper

That means an ISU grad has loans of @ $105,000 upon graduation. I'm sure they're going to feel tons better than a U of I grad



How about we don't saddle our best assets for future growth with this kind of staggering debt?

[skepticscott]

46. Saying that college SHOULD be cheaper in the future is all well and good

And I agree. But that doesn't absolve anyone from making responsible decisions about affordability based on what it actually does cost in the here and now.

[Gormy Cuss]

25. It cost me less to attend a $$$ private college than it would have cost to go to the state U

under a scenario similar to what Brickbat outlined. That's the main reason that I went to a private college. I had to choose the option with the least debt.

[MissB]

20. Our state school is $26k/year.

That's up from $24,500 last year.

It will actually be cheaper for my son (senior in high school) to choose one of the two private universities that have offered him full tuition scholarships.

Even though the private universities cost $65k/year, our out of pocket costs will be less than $18k/year- again, beating the state university cost hands down. Our state system can't afford to offer high stat kids enough $ to make it worth their while. The private universities my son is looking at are tier 1 research universities.

We planned all along to send our kids to the instate universities. Private universities can have some amazing endowments that they use for merit or financial aid. People shouldn't dismiss them out of hand. We will have him wait until the end of April to make his decision but that's only so we can let the entire process shake itself out - he's still in the running for two full rides.

So yeah, rich or on scholarship but don't forget merit!

[Yupster]

3. What do you say about a story like this

Obviously, he made foolish decisions, but then that's what young people (all people?) do.

The fact that his parents had him sign loan papers without telling him what he was signing adds a weird dimension to it all.

In an odd way the student loan situation kind of reminds me of smoking. For years while I was growing up people would say that they didn't know that smoking was bad for them, but then at some certain point, it was hard to say you didn't know smoking was bad because by that point you should have known.

Young people going to college today. You need to know how much money you're borrowing and understand the terms. At some point in the future the defense of I didn't know what I was doing will not hold any water anymore.

Understand that there are cheaper schools you can go to. There are some degrees that will not help your pay prospects. This has been going on long enough now that young people should now know this stuff.

PS - I have a kid in college now. So far we have not had to borrow any money. Hopefully we can get through the whole 3.5 years without borrowing.

[tk2kewl]

7. how about we just make college affordable for crying out loud

how about we get back to where state and city universities cost less than what you could make over summer recess

you sound like the folks that blamed the mortgage collapse on borrowers

[LiberalElite]

11. .

At one time CUNY was tuition-free. I attended at night for over 10 years while working full-time and not making much $$. I still could pay cash when they started charging in the '70s. I don't know why free tuition ended.

[tk2kewl]

12. i know... i went to City College in the 80s.

Money was hardly something to worry about even then

[LiberalElite]

13. Now it's Pay to Play in the U.S.A.

(but we knew that)

[SammyWinstonJack]

22. No we can't! How much does the Gov. make off of student loans/yr?

Billions?

[skepticscott]

43. That'd be nice, but it isn't reality right now

The responsible course is to look at what it does cost to go to college, and make sensible decisions on affordability based on that, not on what you wish it cost, or think it should cost.

And quite frankly, one of the reasons that colleges have raised costs so much is because they can, in an environment where people will mortgage their lives to the hilt to get the most prestigious education they can finance (even if they can't truly afford it). If people limited themselves to the kind of education they could actually afford (which in many cases doesn't look much different from the more expensive kind), I guarantee that would drive college costs down.

[petronius]

16. He also makes it sound like the university was giving him unexplained forms to sign

If--and it's a big "if," I think--the school was not providing clear information about his responsibilities, and these obligations were buried in all the other forms students sign and hoops they jump through, then I'd call that a big problem. But I'd like to see/hear more details...

[Erich Bloodaxe BSN]

27. I've got close to twenty years of college under my belt,

I'm published in a scientific journal or two, I used to spend hours pouring over complex journal articles...

and I found all the FAFSA and other college expense-related documentation confusing. The whole process is a mess, and he highlighted some of the key problems, from the fact that they insanely expect parents to sacrifice their financial lives on behalf of a child who dares to want to gain new skills to the fact that there are all sorts of often narrow time windows that certain parts have to be done, to the way in which large amounts of debt are next to impossible to pay down. My housemate racked up lots of debt to get her undergrad degree, and when I first met her, her debt had actually kept GROWING, because even fully employed, she couldn't make enough to keep herself alive AND pay down the debt faster than the interest rates piled it up. Even now, 16 or so years later, she's still got far more student debt left than I've got mortgage debt left.

[KentuckyWoman]

29. There lies the rub.

The interest. The gentleman in the OP has the same issue. Interest. He's paid $75,000 toward the loans but only $10,000 of the principal. This is a ridiculous situation all the way around and it seems to me the young adults in this country are in a lose/lose situation.

I know I'm preaching to the choir. Sorry about that. It just irks the heck out of me. Especially when the predator class isn't even pretending to give a frogs hind end anymore.

[hedgehog]

48. AS a side note - the parents of today's college students have spent thelast 20 -30 years paying off

mortgages set at high rates, not to mention doing a dance with the credit card companies. Rates of 6%, 12% 25% make it just about possible to keep up with the interest, but forget paying the principal. I ended up paying 2 1/2 times what my modest home cost due to high interest rates. That's momey that should have gone to my kids' college costs.

[Yupster]

36. Boy you could get in real trouble for that

especially if it's coffee or something that will leave a stain.

Sorry. I just couldn't resist.

I can picture the scene of a studious guy with a pipe in a sitting room gleefully pouring coffee all over complex journal articles. It just struck me as funny.

Signed, Conan The Grammarian

[Erich Bloodaxe BSN]

37. I tried a pipe once.

The bubble mix ruined it, and just bubbled over the edge without floating off.

[roamer65]

4. I had complete control over my educational financing.

I was given my parents tax forms and I handled it completely from there.

Nowadays, I really recommend anyone considering a 4 year school should become completely familiar with the financial aid process and see a financial counselor before signing any documents. Sorry, kids, but you cannot trust this kind of stuff to your parents. It's your life, take control of it.

[Kalidurga]

5. Well free college isn't going to cover that one.

Hillary might have a plan for uber expensive private college students though. It's not a plan I would back. State Colleges are often quite good and have good reputations like the University of Minnesota. It's still pretty expensive, but not 50,000 a year.

[Hoyt]

6. I feel for the guy, but he was obviously living large off student loans.

[librechik]

28. If you think you can live large on student loan money, you are sadly deluded

it's a fucking pittance as you go along with the individual payouts. After four years though, it really adds up.

You are expected to pay nothing but school expenses with it, like books $$$$$ and fees and of course, tuition. Because tuition is so fucking expensive, it's hard to visualize as you go along. Seems like a dream. Then you wake up and owe two mortgages. For thirty years.

All along they con you into believing a) there is no other way and b) you'll make big money once you have your degree, so no problem paying it off. Except those when you start looking, the big money jobs are already taken and you think you're lucky to get a job that isn't cruel and psychopathic even though you can't afford to pay your loans or feed your kids.

Reagan started this bullshit. He really is Satan.

[yeoman6987]

30. He's been out of office over 25 years

Either everyone loved what he did or didn't bother changing anything. We've had more democratic presidents the republicans since then. And we've had democratic congress during that time too. At the very least they could pass a law saying student loans can't be more then 2 percent in interest.

[Hoyt]

42. $40000 - $50,000 a year tax free. Not bad unless you are going to an exclusive school.

If so, he didn't get his money worth.

[jeff47]

51. So...you're claiming he paid $0 in tuition?

Yeah...that's a perfectly defensible argument.

[Hoyt]

59. At University of Wisconsin his tuition, books and board would run $20K per year.

You can cut that considerably at less expensive schools.

That leaves him $20 - $30,000 a year, tax free. Sorry man, but that's a good bit of money for someone who is supposed to be studyingm and a heck of a lot more than poor folks make. Work a little, and life would be pretty good for a student.

[Arugula Latte]

40. "Living large off student loans" -- are you kidding?

[Hoyt]

41. Roughly $40 to $50,000 a year, tax free. Are you kidding?

[Logical]

9. Wow, this is 100% this persons fault. Lack of responsibility is not anyone's fault but their own. nt

[Jim Lane]

15. Somebody who's under 21 isn't allowed to go into a casino and put $10 in a slot machine.

Our concern about their lack of responsibility means that we won't let them play for 25 cents a spin. They can, however, sign documents that put them under terrible obligations like the situation described in the OP.

In general, I agree with you about personal responsibility, but I don't buy the implication that when the clock ticks past midnight and a person turns 18, that magically imparts full adult responsibility.

I don't have a specific reform to suggest. The current system just isn't good, though.

[oberliner]

14. This person is getting hammered in the comments

Can't say I have a blame them.

[Senator Tankerbell]

17. If he was a corporation he could just declare bankruptcy.

I know it's his fault and everything like that but what is he supposed to do now? It seems like he wants to take responsibility now that he's older but how can he do that? It's a sad situation. Both Bernie and Hillary are proposing that student loans should be refinanced at lower interest rates and I agree with that.

[Orrex]

19. The actual dollar amount is not the important part here

Sure, it gives people a sense of smug satisfaction as they cluck their tongues and scold this irresponsible fool for racking up huge debt, but the same issue is going on with people facing 1/4 as much debt but equally unable to repay it.

No, let's laugh at the fate that the silly fool wrought for himself. Hell, he was asking for it, after all, so we're all smart and he's all stupid, right? Golly, it's great to be us!

This article describes an outlier, and if you're inclined to dismiss the problem based on his experience, then the bottom line is that you want to dismiss the issue, and you're using him as a scapegoat.

[lonewolf674]

21. Thank you

Although I personally believe media outlets choose to publish these kind of anecdotes because they know most people won't dig deeper into the issue, just as the entire mainstream media tried dismissing the cause of the mortgage crisis on profligate borrowers, and some outlets still do. As you say, this is a problem issue. With $1.8 trillion in outstanding student loan debt, much of it sliced and diced into CDOs, like residential mortgages were, and then sold to institutional investors, I've seen estimates ranging between 9%-25% of borrowers are either in forbearance or default. And whichever estimate is chosen exceeds the similar rate for other types of debt such as credit cards, mortgages, auto loans, etc. Further, home builders and auto companies have admitted the sales of their respective products to the 40 and under demographic are in the toilet because of student loans. With high interest rates and the inability to discharge this debt through bankruptcy, those who are able to make their monthly payments are seeing a substantial part of their incomes eaten up by debt service. It's only a matter of time before this snowballs beyond those two industries and starts affecting other sectors of the US economy at large. That's if this particular bubble doesn't implode before then.

[SammyWinstonJack]

23. +1000000.

[Starry Messenger]

24. +1

[Gormy Cuss]

26. +1 n/t

[JustAnotherGen]

31. +1

[TBF]

32. "Unrealistic" "Living large" "Foolish" -

why don't those damned poor kids just work at Walmart? Or go in to the military where we need them to be so we can strut around like assholes and get cheaper oil. Those stupid unrealistic kids - don't they know the score?

^



Thanks for all the inspiration from the paid posters ...

[Glassunion]

35. My student loan nightmare...

I have $0 in college debt.

I'm 40 years old.

I'm still taking classes, but only if I can afford to pay the total due. I'll have a degree soon.

So, zero debt, but it takes close to 20 years to graduate. Or 6 figures of debt, that you spend the next 30 years (or more) paying off.

[jeff47]

52. Many universities will kick out students who do not graduate in 6-10 years. (nt)

[Glassunion]

54. Then they need a different school...

Because that is a shit policy if in effect.

I've attended 4 county and 2 state colleges between 3 different states...

Never been asked to leave any of them.

[Liberal_in_LA]

56. Your ok. Your long ago start date allows them to exclude you from completion calculations

That they have to publicize and report to the government. Completion within 6 years and within four years is whT they care about but you wont be in that dataset.

[taught_me_patience]

38. At some point, one has to take personal responsibility for decisions they make n/t

[Waiting For Everyman]

39. No matter his fault, it's still highway robbery.

There's no way this should be allowed in this country... especially since (our lobbyist bought) Congress specifically blocked student debt from being relieved in bankruptcy, which is absurd. This is modern-day indentured servitude. It's WRONG. Sorry, there's no excuse for this being legal.

Banks get money from the Fed (us) for nothing or next to it, and do THIS. No way. And it can't be put on the fault of the borrower, that's total nonsense. This is a criminal enterprise at work, feeding on college students of all ages. They need to be behind bars, not having the law enforce their extortion for decades.

[skepticscott]

44. Robbery? No one had a gun held to their head.

They accepted huge amounts of money on terms they freely agreed to. No one is prevented from researching the long term benefits of a college education and deciding whether they are worth what it will cost them for the loan. If they were careless enough not to do that research, if they just accepted someone's word on the internet that an expensive college education is the only way to succeed in life, that's on them, not on the lenders.

And if students could get out of their loan obligations by declaring bankruptcy, what would prevent everyone from borrowing as much as they wanted, and then declaring bankruptcy as soon after as they could get away with it? For every student loan recipient who defaults through bankruptcy, that's just that much more in interest that the lenders have to charge people who ARE paying off their obligations. The money has to come from somewhere.

[Waiting For Everyman]

45. "Buyer beware" doesn't cover it.

Or should we just have no consumer laws then? Why would we need any at all?

Sharks are free to prowl, and it's up to everybody to watch out. How convenient for them!

Ever hear the legal term "unconscionable"?

[skepticscott]

47. If actual deceptive practices are going on

then borrowers might have a complaint, just as all consumers do if they are being sold products that are unsafe or fraudulent in ways that cannot be detected by the average individual. But we both know that's not the case here or in most of these situations. People are normally given all the information they need to know exactly how they will have to pay the loan back. They simply choose not to take a hard look at the finances of it and exercise the kind of sound judgement that should be within their capacity if they're signing the papers.

And what exactly is "unconscionable" about expecting people to keep their word?

[Waiting For Everyman]

49. 200K for an education is unconscionable.

Paying 6 and 9 percent now when the rates are near zero (and ARE zero to the banks making these loans) is unconscionable.

Paying for 20 years in unconscionable.

I doubt that this borrower, and most of them, could've even QUALIFIED for a 200K loan. Remember qualifying? No way that was done. And I doubt very much that he knew he would be paying that much for that long. So legal disclosure is an issue. Mortgages are regulated tighter than this, and if the education loans are going to be this high, they must be regulated as much too, or it is predatory.

The law is defective in allowing this to go on, it's not about the borrower being careful enough or agreeing to it. If you don't understand that, nothing I can say will enlighten you.

The student debt issue needs a drastic overhaul, all of it. It's not about this one guy, it's the whole predatory system.

And btw, with the technology we have now, education should cost next to nothing! This is a massive bubble just like the mortgage bubble, and the same thing will happen if something isn't done soon.

[skepticscott]

50. The people borrowing 200K for their education disagree with you

They seem to think it's worth it. But again, no one, and I mean NO ONE is forced to pay/borrow that much for college. People choose to of their own free will, even though less expensive options are available. Whose fault is that? Are you saying all of these people are that stupid and that easily manipulated?

And if lenders were means testing college students and their families for their loans as rigorously as mortgage applicants, I suspect you'd be complaining about discrimination against lower- and middle-income families. But you can't have it both ways..you either think that lenders should only give students loans that they can prove they can afford, or you think lenders should give out loans even though the students probably can't afford them. Which is it?

[lumberjack_jeff]

61. Sure they did.

The college industry tells parents (and high schools) that the only path to a happy life leads through their finance "counseling" offices. It's *this close* to emotional blackmail.

Instead of borrowing $30k in the first four years out of high school, even after accounting for a major recession, I earned about $100,000. (I graduated HS in 1980)

I bought a nice house in a quiet town in 1985 and raised three kids. This was possible because I wasn't held hostage by debt and an educational investment that is only worth something in an urban center.

[skepticscott]

62. Yes, I figured someone would trot that tired nonsense out

But people get bombarded with "emotional blackmail" messages every day, telling them that they can only be happy and cool and successful if they buy/own/wear/visit/attend/etc. "X". And yet, somehow, responsible adults manage to resist putting themselves hundreds of thousands of dollars in debt to fulfill those fantasies that are constantly dangled in front of them. And in this case, it's not even that persuasive a message, since we're surrounded every day by perfectly happy and successful people who never went to college.

I'll repeat...NO ONE is prevented from making a sober, rational cost/benefit analysis of the college education they have in mind for themselves.

[lumberjack_jeff]

64. My schoolteachers worked to sell only one of those exploitive messages.

"Woodshop? What are you thinking? You do want to go to college, don't you??"

[skepticscott]

66. Ah, of course

And you did everything your schoolteachers told you?

Right.

[lumberjack_jeff]

67. You appear to be arguing with someone other than me.

I think we'd agree that an important feature of an educator is trustworthiness. Right?

[skepticscott]

70. I think we'd agree

that "trusting" an educator to convey factual information in class is not at all the same as "trusting" that the advice they give you on the course of your life should necessarily be followed, and that trying to conflate the two smacks of intellectual dishonesty.

Right?

[highmindedhavi]

53. Cal State Los Angeles $8204/year

http://www.calstatela.edu/financialaid/2015-2016-cost-attendance

Tuition and Mandatory Fees* $ 6,344
Books and Supplies $ 1,860

[Liberal_in_LA]

57. He went to private

[Blue_Tires]

55. At least he got a job after getting his master's

Shit, I didn't even have that (!)

[Liberal_in_LA]

58. ..,

😔

[lumberjack_jeff]

60. Cognitive dissonance: Colleges are exploitive industries with a monopoly on critical thinking skill.

Those are mutually exclusive arguments.

[skepticscott]

63. Seriously?

Not only do colleges not have a "monopoly" on critical thinking skill, for the most part they downright suck at instilling it.

[lumberjack_jeff]

65. For everyone who holds this opinion at DU, there are several who do not.

You and I are a distinct minority in our views on the value of college.

Where we differ is in our degree of sympathy for those who fall victim.

Cognitive dissonance: holding two mutually exclusive views simultaneously.

[skepticscott]

69. The "value" of college?

To paraphrase Tom Lehrer, "College is like a sewer..what you get out of it depends on what you put into it".

There's value, and there's value, but the high cost of college notwithstanding, it has been well demonstrated that, on balance, the monetary benefit from a college education vs. no college education still outstrips what you pay for it. Not for everyone, obviously, but everyone makes their own choices and takes their own risks. "Victim" is not how I choose to characterize people who make unwise choices.

[lumberjack_jeff]

71. College is the price parents pay for a secure inside job for their kids.

If 35 year old college name-dropping is considered the important feature of my resume by the organization to whom I'm applying, it is an organization with whom I really don't want to work.

I'm not going to argue against the idea that earning more money is possible if you're willing to commute every day in fucking Seattle; I'm arguing that if the point is a happy life, you're better off without the extortion inherent in college debt or a degree that's only useful by relocating to an urban center in which decent housing costs 8 figures.

Besides, if my labor is worth X to an organization after skimming .75X in profits, I'd rather be self employed and undercut them by only charging customers 1.5X.

Some people believe that security is found with a degree. The opposite is true, security is found by being the boss. I could never have a boss as good as me, and the resume scanner never kicks mine out.

[Sunlei]

68. 200k @ 8% with a 1,500.00 a month payment is like a mortgage. do not pay minimum payment.

pay towards the principle at least 15k a year. The OP says they make 50k a year.