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March 30th, 2009
11:45 AM ET

Student Loan Nightmare: Help Wanted

Program Note: Tune in tonight to hear Randi Kaye talk to Samantha Hillstrom on AC360° at 10 p.m. ET.

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/03/27/art.sam.jpg caption="CNN Production Assistant, Samantha Hillstrom, at her graduation in May 2007."]
Samantha Hillstrom
CNN Production Assistant

I’m about to talk about two little words that make most people cringe. The mere mention of these words usually incites the same reaction in everyone: a) fear b) denial c) a throbbing headache and d) the desire to run away screaming and crying and begging to go to a “happy place.” Yes, I am talking about STUDENT LOANS. If you don’t have one, you know someone who does and you sympathize with them. In the midst of the credit crisis, home foreclosures and bailout turmoil, the amount of debt that graduates are facing is overwhelming.

I am 23-years-old, two years out of college and I am sitting on $115,000 of student debt. And based on my lender's loan terms, I only have roughly 12 years to pay it off. How much does that make my monthly payment, you ask? A whopping $1,200 a month. And let’s just say my lifelong dream career in television doesn’t lend itself to that. The only option my bank is giving me is to go on “graduated repayment plan.” That means that for four years I will only be paying off the interest every month. How much is that? Well, $115,000 with interest rates between 4-8%... that’s about $600 a month and that doesn’t even touch the principal amount. People don’t pay off houses in 12 years and I am expected to pay off this student loan in an entry level position?

Some might say, “Sam, you shouldn’t have gone to a private school in New York City if you wouldn’t be able to pay it off.” Well, I made a lot of mistakes when signing up for my loans, but I was uneducated on the process and on the repayment and now I’m stuck. I share the same anxiety as the families struggling to pay their mortgages. How was I ever to expect the financial crisis that was going to happen and where can I get some help?

And why do I have such a short amount of time to pay off my loans? Because of the current financial crisis. Due to the economic downturn, my lender isn’t consolidating loans. If I were able to consolidate, my repayment time would extend to 30 years…just like a home mortgage. Now that wouldn't necessarily solve the problem, in that I would still owe more than $500 a month with the principal and interest, but it would buy me a bit more time and stretches out the money.

Here is my question: why aren’t student loans receiving the same attention, same care and forgiveness as every other loan in America? I have to say that I am lucky to have a job right now and was especially lucky to get a job right out of college. Can you imagine what kind of pressure and stress the 2009 graduates are feeling in this time of uncertainty? Veterans of the workforce can’t find work right now. What about the recent college grads with no work experience and tens of thousands of dollars of unforgivable debt underneath them?

There is a grain of hope that will come when the Income-Based Repayment Plan, part of the College Cost Reduction and Access Act of 2007, will take effect on July 1. The program will cap off borrower’s monthly payments at 10% of their gross income for 25 years with the rest of the debt being forgiven. However, that only applies to federal loans (which is only one of my four loans).

According to the Federal Education Department, in 2009, the amount of outstanding federal student loans is $544 billion, up $42 billion from last year. Where is our bailout? Where are our options? The default rate on student loans this year is already at 6.9%. That’s a 13% increase from last year.

Recently, Rev. Jesse Jackson started a campaign called “Reduce the Rate” urging the Obama administration to reduce the interest rates of student loans to 1%....the same amount of interest the banks are getting.

Jackson’s plan proposes the following…

  • Reduce the interest rate on all student loans to 1%.
  • If banks can borrow at 1% or less, then so should our students.
  • Extend the grace period before loan repayment begins from 6 months to 18 months for students who graduate.
  • In these tough economic times, it takes a college graduate an average of 6 months to 1 year to find a job. The rules should reflect this reality.
  • End the penalties assessed to schools for student loan defaults.
  • Schools should not be held accountable for students who don’t pay back their loans.
  • Increase Pell Grants to cover the average yearly cost of a public
  • 4 year institution instead of the amounts in the current stimulus package–$5,350 starting July 1 and $5,550 in 2010-2011

Source: Reducetherate.org

I chose to go to a private school and I chose to work in a field where the starting salaries are low. Does that mean that I chose to live a life of struggle, wondering how I am going to pay my rent, afford the basics of living and still stay in my chosen career field…all while putting up with high interest rates and an amount of debt that brings me to tears?


Filed under: Economy • Education • Samantha Hillstrom
soundoff (701 Responses)
  1. DK, Cleveland

    Sorry, but you made these choices, and should have thought it through more carefully. I was poor and had no assistance, no grants and unsupportive parents when I started college in 1983, and I was living on my own. I worked full time, took out what loans I could (a grand total of about $9,000), went to a state university, and even then had to frequently skip semesters when I did not have the cash on hand to pay for tuition.

    Did it take longer? Yes. Did I miss out on dorm life? Yes (I had to live in a cheap apartment instead). Was it the ideal situation I would have hoped for? No, but life is not about fairness. We do the best with what we have, and considering this humble start, I have done well for myself since that time.

    April 1, 2009 at 11:33 am |
  2. Alison

    i graduated from a very expensive private college in may 2008, and am very lucky to have a job and a relatively small ($15,000) amount of loans. my boyfriend dealt with a horrible situation where he signed a loan when he was 18 that didn't include a deferment for graduate school, so as a PHD student he was expected to pay $800 a month on a small stipend. fortunately for some magical reason he was eventually given a deferment, but not until after a lot of worry and struggle. i consider myself lucky that my monthly payment is only $150, but i just don't understand why we are expected as very young people just starting out to know how to manage and control thousands of dollars worth of loans with no help from the government or our lenders.

    April 1, 2009 at 11:32 am |
  3. Stan

    So it is not enough that I have to work two jobs to save for my own children's college fund, now you want me to pay for yours too??

    Pay your own bills and take responsiblity for your choices. No one told you to go to a school you couldn't afford and no one told you to choose a low-paying vocation when you knew fuill well the obligations you were going to face after graduation.

    April 1, 2009 at 11:32 am |
  4. matt

    Put the interest rate at 1%, make it tax deductible and extend the terms. No free handouts. You made the choices and have the responsibility now, just like everyone else. I too went to a private college, but I did it over 11 years, 100% with the money I made working full time, straight out of my pocket.

    Honest, responsible, accountable and hardworking.

    April 1, 2009 at 11:32 am |
  5. Kimberly

    It's appalling to see the amount of envy that so many have when others get into the best schools in the country. The situation you're describing, Samantha, with regard to bail outs for greedy corporations but not fur students is spot-on. It truly is a shame, and so many of the same people who are spewing forth venom and jealousy over your acceptance and attendance at a top school do not see how the same sort of mentality is what got us into this mess in the first place.

    April 1, 2009 at 11:30 am |
  6. Nick

    I have said this many times, the government should stop backing student loans that are impossible to pay. If this was done, the schools could not charge so much. The issue is that you made a really poor choice. I do not feel sorry for you, as it was your choice. I went to a state school and finished after 10 years. Many of those who graduated high school at the same time, I am earning significantly more them them (as I did not give up experience, I went directly into my field) and this year I will takeup student loans for attending a top tier business school, which when you do an ROI, will pay off. The missed issue with the education system is that those who take up 100K or more in debt fail to realize that their intended major will never allow them to pay it back. The goverment should refuse to back the loan or set specific amounts for specific majors. This would slow or reverse the tuition rate.

    April 1, 2009 at 11:30 am |
  7. Bryan

    Way to go Samantha!! I agree... after a Bachelor's degree and a Master's degree, I am over $100,000 in debt myself. Because the job market was so tough, I couldn't find work in my field (higher education), so not only do I owe the money, but I am working for less money in a field completely unrelated to my Master's degree. Instead of the government bailing out all of these corporate fat cats, how about giving those of us who will have to pay off the corporate debt a break!!

    April 1, 2009 at 11:29 am |
  8. Paul

    I paid off my student loan when I was 45 years old - 21 years after completing law school, and 24 years after completing college. I had to consolidate my loan into a 20 year loan.....but I paid it on time every month. It was indeed a hardship, and to this day it seems unfair that wealthy classmates had no loan to worry about. But that's the way it goes. And - this was when annual college tuition in the 1970's and 1980's was in the $5000 to $7000 range - I can't imagine what it's like today, with tuition 10x that amount.

    April 1, 2009 at 11:29 am |
  9. Dave Jones

    As a college instructor, it makes me ill to think of how nuch debt students are carrying. The nation is not investing in education. College and graduate school should be affordable, so graduates can go out and change the world.
    Best wishes Sam

    April 1, 2009 at 11:29 am |
  10. mike

    Great Article! I agree someone needs to help. High School students don't know what theyre doing when starting college and getting loans. I too attended a private college and regret it every month.
    If I didn't have this monthly payment, I would buy a house and, in turn help the economy somewhat.

    Someone step up and help those who decided to go to college for a better future!

    April 1, 2009 at 11:28 am |
  11. Bob

    Student Loan Crisis = Predatory Lending Practices by our Federal Government

    April 1, 2009 at 11:27 am |
  12. Emily

    Unfortunately, you DID choose your situation.

    That said, I sympathize with you. I graduated with about 32K in loans, but I was very lucky in that a) I got a job right out of school, and b) I am able to live at home to reduce my expenses.

    As it is I have only been paying down my loans for about 10 months, but I have paid off about 13K.

    I do agree that education should be more affordable.

    April 1, 2009 at 11:26 am |
  13. Stephanie, Valencia

    Maybe somebody could offer some advice on getting out of this situation. This will help others before they get in the same situation.
    Good Luck Sam!!

    March 30, 2009 at 6:47 pm |
  14. maria

    Please Obama help us with Jesse Jackson's plan really all of help would be our only salvation! I am disabled and my son is on Deans list but I have no money to help him! I pray we get some relief!

    March 30, 2009 at 4:34 pm |
  15. Kim

    I can't work because my child has a disability. If I had a disability, the loan would be paid off. But I was told to get a job anyway and leave my son's development to the "professionals." So, I have a student loan and no way of paying them off right now. All that interest just keeps being added on. I have no way out, and no way to stay in school so I can get my master's. (which probably wouldn't help that much in this economy anyway.) It was very nice of the loan people to make health and welfare decisions for my child. But I'll stay home with him for now. The money will have to wait.

    March 30, 2009 at 3:06 pm |
  16. Mariah

    This situation is a horrible one, especially during these rough times in our economy. I as well have over $100,000 in student loans owed, with a Masters' Degree and no job!!!! Either the government adds more jobs, that I am qualify for, or help us out as well with a bail-out.

    March 30, 2009 at 1:36 pm |
  17. Rikki, Fargo, ND

    I know exactly what you are going through! I'm in the same boat, though my debt is not as much, I'm still toying with the idea of getting a 2nd job cuz the first one's paycheck just doesn't stretch as far as it needs to!

    March 30, 2009 at 1:14 pm |
  18. Mari

    I do not know even where to begin. This article is just part of how our Nation is in the mess we are in.

    Our four college-graduated children attended State Universities, which are affordable to most Americans.

    One of them wanted to attend a private Catholic university, and we said no. We did not want to ..... live beyond our means....... nor be in debt for years on end!

    We can't always have what we want. Its time to learn a very hard lesson, and say no to ourselves or our children whenever we or they want something we can not afford.

    March 30, 2009 at 1:12 pm |
  19. Julie

    Thanks for sharing Sam! Very informative

    March 30, 2009 at 12:59 pm |
  20. Neo

    I apologize to you Miss Hillstrom that some of these commenters lack the couth to understand your situation from both sides. It is NOT your fault that you wanted to go to a school that best suited you for a job working at CNN. Few people realize that choosing the right school (Harvard, Columbia, Tisch for Media, USC etc.) can be pivotal in the JOB you ultimately get. I trust that your commentary brought light to this ongoing issue. I hope any college bound students who come here understand the value of an education FIRST and yes making sure it's affordable is key too. That's why our generation must do all we can to reduce those rates for you, not belittle your desires. Education is INVALUABLE. Please ignore those saying that it's the students fault for wanting the best (they are bitter) always shoot for the stars.

    March 30, 2009 at 12:49 pm |
  21. John Feier

    Become an economic terrorist and JUST STOP PAYING!!! Education is a right!

    It's not like these banks and lenders actually HAVE the money when they lend it to you. They just make it up out of thin air. If you don't believe me, go watch the video, "Money as Debt."

    March 30, 2009 at 12:41 pm |
  22. William of Iowa

    You might consider the Armed Forces. They have programs designed to payback student loans and provide future educational money. With your degree and experiance – officers candidate school is a possibility. So more food for thought – given CNN's budget issues crippling their efforts to report globally- a connection to the military might provide reporting access to Afganistan, Irag and various other newsworthy locations. Just don't give up, there is a way.

    March 30, 2009 at 12:28 pm |
  23. Tracy from NOLA

    The President keeps talking about the future and education. I believe that unless he begins dealing with the current education crisis, including your situation... we will continue to be in the current financial situation for a very long time. I believe student loans should be restructured to help the educated workers! Stop bailing out the corporations and start helping the individuals!!!

    March 30, 2009 at 12:18 pm |
  24. anon

    Thanks for a succinct article. At the very least, consolidation should be an option, and with it an extension to pay back.

    It's an untenable situation, yet education is one of the best investments this country can make. I'm in school outside of the US, and it seems like every other country I come into contact with is more willing to help out college and grade students than the US.

    March 30, 2009 at 11:55 am |
  25. Kimberly M., Hiram, OH

    I agree that something needs to be done. In this economy I feel like I have no choice but to go directly into Graduate School after graduation next year, but that means taking on even more loans than I have already accumulated after four years at a private institution.
    I think that Rev. Jackson's plan is far more realistic than the current program. High interests rates only punish people for making the effort and getting a degree. If we want more students to go to college then we need to make it more affordable and more accessible to all.

    March 30, 2009 at 11:37 am |
  26. Heather,ca

    I feel really bad for you. My husband has a Stafford and a Perkins loan. He went to a state school in Calif. He has had to reapply for two forbearances in the past four years due to the economy. He graduated in 98. I wish there were more scholarships available to more people. You shouldnt have to barrow against your future.It seems a college education has become a luxury in this country.

    March 30, 2009 at 11:27 am |
  27. Michaele L. LePage

    THANK you for calling attention to this problem. I'm finishing my Ph.D., have been looking for a job since 2006 when I finished the master's, STILL cannot find a job, and worry SICK about my loan repayments. I certainly hope something gets done about this growing problem.

    March 30, 2009 at 10:47 am |
  28. Mike Syracuse, NY

    "I chose to go to a private school and I chose to work in a field where the starting salaries are low. Does that mean that I chose to live a life of struggle, wondering how I am going to pay my rent, afford the basics of living and still stay in my chosen career field…all while putting up with high interest rates and an amount of debt that brings me to tears?"

    Basically, yes. There are many fine public institutions that have curriculums in the broadcast category. You made a chioce and now you're stuck with the consequences. Welcome to the real world.

    March 30, 2009 at 10:43 am |
  29. Brian Puccio

    That's exactly what it means. If you think society (by way of taxes and the government) were supposed to help you get an education, you're right, they did. They're called state schools. You didn't want that and instead made this choice. Money can only be spent once and while money borrowed for education is better spent than money borrowed for a vacation, it still needs to be paid back.

    I work and pay cash to go to school part time at night. Now I have a job that will reimburse most of my tuition expenses. It will be slower, not nearly as fun as going away to school, but I will graduate debt free with a degree that will earn me decent money.

    March 30, 2009 at 10:40 am |
  30. carmen tickal

    My son is in the exact same boat as the writer but he has no job.I don't know how he is going to pay rent much less pay off his student loans without a job.where is his bailout?

    March 30, 2009 at 10:07 am |
  31. Tara Galloway

    I actually owe a greater amount and also attended a private university. The stresses I feel are identical to yours! I pay over $500 monthly and can't consolidate my loans. In addition, the majority of my loans are private and the variable interest rates are unforgiving to say the least. Being in an entry level position makes it even more difficult to make the large monthly payments. I can't fathom how life would be if I had a kid right now. Thankfully, I have a job that allows me to make my payments, but I feel that my life is at a standstill. I dream to attend medical school and fear adding to the debt that already consumes the majority of the money that I make. It's all very frustrating and I wish there were people or some programs available to help us.

    March 30, 2009 at 9:55 am |
  32. mimi rader

    Well said! I graduated in '96 and in same boat. I was in the mind set that the loan would be chump change since I was graduating from USC. Now I'm stuck with a huge monkey on my back.

    March 30, 2009 at 9:51 am |
  33. Erin

    Great article! I graduated from a private college in Upstate New York in 2005 and was lucky enough to get a job in the communications field right away. However, I'm completely overwhelmed by student loan debt. Sometimes I feel like I'd have been better off going to community college instead of the expensive school that I chose. It's a catch 22. Get a degree from a great school, get a good job and live in debt or don't go to college and live in poverty.

    March 30, 2009 at 9:49 am |
  34. Janet McCourt

    Great column..You touched on a very serious problem in our country. I can only hope it gets some attention from the higher ups that can solve the problem. Thank You for bringing it into a brighter light for those who have no clue what it is like to be burdened with heavy school loans at rates that are higher than we can even afford.

    March 30, 2009 at 9:38 am |
  35. JoJoD

    "I chose to go to a private school and theoretically, I chose to work in a field where the starting salaries are low. Does that mean that I chose to live a life of struggle, wondering how I am going to pay my rent, afford the basics of living and still stay in my chosen career field…all while putting up with high interest rates and an amount of debt that brings me to tears?"

    Yes.

    I don't disagree with you that the student loan system is outrageous at the moment, but you made a choice, and from a money point of view, a poor choice.

    I made the opposite choice. I went to a public university's business school and repaying my student loans was a breeze. I really would have preferred to study art tho, so I made a poor choice too.

    I'm not sure which poor choice is the tougher road to travel.

    March 30, 2009 at 9:36 am |
  36. Betsy Murphy-Mahle

    The problem with each and every new plan generated to help out those with student loans is that they are designed for current and future borrowers, while those of us who are still struggling to pay off said loans are usually left out. How about something that covers everyone who still owes money, regardless of when you took the loan? (Some of us are still paying them off and jobless 🙁 )

    March 30, 2009 at 9:32 am |
  37. Isabel (Brazil)

    Money spent on education is always valid, even if the person is a bit broke after the investment. (within a minimum of sense)

    The person may lose the house, you can lose the car, but what learn never lose. Knowledge is a legacy that no one takes.

    And the more the better! After the university, (within the conditions of each one, of course), the person should go to a post-graduate, MBA and so on ...
    This is an investment ... I'm just me recapitalised for begin a master's degree. We can't stop – never!

    March 30, 2009 at 9:30 am |
  38. Neo

    I wonder if America ever looks at itself and feels bad for the way it puts people in these binds. A) College doesn't have to be so expensive. B) College education (like Health Care) can be FREE via taxes. just put the students who benefit from gov't assistance into a specific tax bracket , if people want to still pay for school then they can. C) Certain schools look better on resume's. Your choice in school is your business and has nothing to do with your loan. D) All STUDENT loans should be capped @ the 10%. That leaves about 28% (I believe) for a mortgage or rent and then the other stuff so that seems fair .... except when you add tax and interest which can sometimes come to 50%+. E) College doesn't have to be 4 years. They include the core curriculum to get more money. Someone should have looked into that a long time ago. That's why people who go to speciality schools (producers, computer programmers, animators etc.) make a lot of money and are in the workforce sooner and last the longest. They're ahead of the traditional college competition.

    Good luck with everything. I'm sure CNN already gave you a raise!

    March 30, 2009 at 9:30 am |
  39. mardi petrillose

    Thank you, thank you, thank you for this article! I can relate to your personal struggle in every way. I also chose a private college to pursue my bachelor degree. I graduated in 2005 with the hope of becoming a teacher or working for a non-profit. Unfortunately I was left with the over 70,000 in debt and monthly payments (interest only) of more than $600. Now four years later my outstanding balance has grown to $87,000...and i am working a nanny to maintain the income necessary just to make my monthly payments-which dont even make an impact! I can't give back to the community and apply my teaching skills when the salary doesnt cut it. I feel stuck and abused by the system. An eighteen year old student should be given financial counseling and advice before signing the dotting line. Our country is setting us up for failure if the student loan crisis continues in this way. The banks get a bailout but those of us trying to make a difference are forced to settle for less than our dreams because of our debt!

    March 30, 2009 at 9:26 am |
  40. carl hood

    I have a similar story. I graduated from seminary as a non-traditional student in 2001. I had a family to support while attending college and grad school. Upon graduation I was an entry level pastor earning aprox $20k in salary carrying $90k in student loan debt and still supporting a family. Where is the motivation for young people to seek higher education? Is the American dream really for everyone? Or only for the wealthy to pass on to their kids?

    March 30, 2009 at 9:18 am |
  41. Victor in NYC

    I'm 42 and owe $75,000 from the last time this happened in 2001. Went back to school to get a better job and now my payments eat almost a third of my salary. I'll be 75 by the time I finish paying them and that will be by usin my social security checks!

    March 30, 2009 at 9:11 am |
  42. Bill

    I’m sorry but I can’t sympathize with people who took student loans they could not afford to pay back. Nor home loans they couldn’t afford. I worked while going to school. And I went to a school I was able to afford. I never used student loans. I’ve also never bought a house because I never made enough money to save for a down payment that would have qualified me for a regular loan. We should not bail out homeowners or student loans. Those who took advantage of the system should suffer the consequences. I shouldn’t have to bail them out.

    March 30, 2009 at 9:06 am |
  43. Suzanne

    This speaketh to me as well. I'm 11 years out of nursing school, and still paying on loans. I went to community college to try and save money, then finished at a State University-the debt continues.
    Wish student loans qualified for as much attention as the mortgage crisis.
    Wish there were some way to link debt-free college grads to a stronger American dollar.
    I'd almost have been better off to have never gone to college, but to have just stayed in my high school job at the mall, and climbed up to management that way. I would be making just as much money-without being vomited on.

    March 30, 2009 at 9:05 am |
  44. Lisa A. Lupo

    Way to go Samantha!

    I couldn't have written it any better than that! I too am a struggling recent Grad with no career opportunity in sight and over 20K in loan debt that had to recently be put in forebearance.

    I envy you for writing this wonderful article and sharing your fears and crushed aspirations with your fellow peers that are in the same sinking boat! Kudos to you! Keep up the great work!

    Best Regards,
    Lisa A. Lupo

    March 30, 2009 at 9:04 am |
  45. ehixson

    I agree 100%! My husband and I do not pay near as much as you Samantha, but our combined monthly student loan payment is as much as car or house payment! I too am outraged that this subject has not been talked about more than it has. Decreasing the interest or reducing the amount owed all together would help just as much as the $8000 new home buyer stimulus credit. Why should the people who tried to better for themselves (going to college, buying a home they could afford, etc.) be penalized?

    I hope something comes up about this in the near future...

    March 30, 2009 at 9:01 am |
  46. Tom

    What's worse is that our Government won't allow us to get rid of student loans in Bankruptcy court. Yet, we can give billions and billions of dollars to companies that aren't selling any products, like cars.

    If the government wanted to really stimulate the economy, they should give 50 thousand dollars to each taxpayer as a 2009 stimulus check.

    That would help pay off part of my student loan, as well as, help out the auto industry (people would buy cars) and more.

    Help the people first. Then the business will prosper.

    March 30, 2009 at 9:00 am |
  47. Michael "C" Lorton, VA

    An excellent point--–I'm still paying for school loans for one of my children-–and I believe that I will make it to Arlington National Cemetery before the coupon book ends---we help the next generation by bailing out corporations of greed--and in return--give the bill to the recent college graduates--no good deed goes unpunished--does it?

    March 30, 2009 at 8:58 am |
  48. Jennifer

    I've been out of school since '95 and sadly still have over $30,000 in school loan debt. Currently, it's in forbearance because I can't afford the monthly payment. Sallie Mae's advice, "Go get a second job." Easier said than done these days. The government seems to be really good at eating other people's debts these days...let them eat mine.

    March 30, 2009 at 8:56 am |
  49. wind4me

    we as a NATION need to support our next leaders of the future, ie college students

    March 30, 2009 at 8:53 am |
  50. Stacie

    Sorry, Samantha, but that is EXACTLY what it means. You CHOSE the loans, the college, the career, so indirectly you chose the consequences. Others chose community college, or worked first and saved enough, or obtained different loans. You have survived the first hurdle, getting a job. Consider yourself lucky on that.

    A lot of this crisis is caused by people refusing to live within their means...too high mortgage, too many "things", high-end autos. private colleges..no savings... the list goes on and on. And then they have a medical crisis or lose their job and have no fall-back plan. When does the US stop rescuing everyone?? What has happened to personal responsibility?

    March 30, 2009 at 8:27 am |
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