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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. Betsy

    Excellent article! And unfortunately, I think the easy availability of student loans has caused a massive inflation in tuition costs. If we were required to pay cash for tuition, then I don't think you would see tuition costs of $20,000-30,000 per semester because it simply would not be affordable. When I visited the law schools that had accepted me and explained to one of them that the cost was prohibitive, a financial aid package was put together that included an array of products, none of which would make sense to anyone without an advance degree in finance. The cost of any good or service is limited to what the market will bear, and the availability of credit for everything from a new bed to a doctorate degree to medical and legal services has pushed the prices of those goods and services well beyond what they would have been in the absence of credit.

    April 1, 2009 at 1:14 pm |
  2. Concerned Parent of soon to be college student

    What did you think would happen when you took out those loans? Did you not expect that some day you would have to pay them back? What made you decide on the high priced private school? Did you not investigate salaries when you made your career choice? Did you not consider the return on investment of your education vs. the expected salary in your chosen field? My child will be starting school in the fall, attending a public school that is affordable. Taxpayers should not have to foot the bill for your lack of judgement in college choice. Even if the economy was in fine condition you would be faced with repaying your bill with a salary that cannot handle it.

    April 1, 2009 at 1:14 pm |
  3. sk8ergirle

    It is an outrage that we should be willing to spend so many dollars on bailing out car dealerships,banks, and other countries for crying out loud, but to try to help our students in our own country is out of the question? This counrty will continue to fail unless we get our priorities straight. Students should get low intrest rates so that they CAN pay them back. Stacie I think you should keep your negativity to yourself, nasty comment...College student and savings in the same sentance, what planet did you grow up on? Must have been a rich one...

    April 1, 2009 at 1:14 pm |
  4. Erica Jackson

    I completely agree with you! It doesn't matter what others say, especially the ones who insist that '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.'

    If you are going to college, why be a stickler about it? It's a decision everyone has to make, and if everyone decided to go to community college, they would be in school twice as long and spend twice as more just to get a Bachelors. I have nothing against community colleges, but if someone is ready to jump at the chance to go to a prestigious university, or even a cheap one, no one, or no loan, should hold them back.

    I went to the cheapest Missouri school received one scholarship and 3 grants, and held a steady job throughout my 4 years, and I still accrued over 15K in student loans. So, apparently unlike Stacie, I made all the wrong choices, but the truth is, I never had a choice 🙂

    April 1, 2009 at 1:14 pm |
  5. Jill

    I don't think that Samantha is saying she made great choices. Her point is that bailout money should be more evenly distributed. I, for one, would rather bail out graduates than Wall Street investors.

    As for knowing better... Which group should have been expected to make the best choices – young adults still in the process of being educated or middle aged plus financial analysists with years of experience and a finished education behind them?

    Yes, students need to make good choices, live independently and within their means. But they need to be TAUGHT to do that. Parents and other community stakeholders need to step up. Teach your children about money management. If you can't, give them access to someone who can.

    Focusing on the fact that Samantha went to private school is irrelevant. There are just as many people out there indebted for STATE education.

    April 1, 2009 at 1:13 pm |
  6. Jane T

    Sounds like most of us are stuck with the same problem. I've been paying my loans for years and years, with no end in sight. They neglect to tell you that they double the loan if you don't pay on it immediately. So my $30K went to $60K in a very short amount of time, with interest.

    I have worked at many different jobs and none in my field. No work there and probably won't be. Tough beans. But I'm working, and paying, and paying, and paying.

    I went to a state school, 4 pointed almost every quarter, and got the tiniest of assistance. My problem: single mom, two kids, and stereotype of welfare mom. But I made it at the top of my class. My kids both have done well since, too, and they are successful people. But that didn't help me when I needed it. Too much scholarship money was handed out for sports, because it is soooo important to school image. Forget about the engineers, artists, teachers, and accountants (keep adding to this list for everyone else) that came from the same school.

    The answer to the question: Free college for those smart and talented enough to qualify. For those who aren't, then they should find other employment opportunities and keep working until they get where they want to be professionally and educationally.

    And for those who are stuck with these horrendous student loans, bail us out, too.

    April 1, 2009 at 1:13 pm |
  7. Yes1fan

    Students are DROPPING OUT OF COLLEGE mid-stream because they can't get loans. THAT is the most IMMEDIATE CRISIS! People's entire future lives are being derailed by this footdragging!

    April 1, 2009 at 1:13 pm |
  8. Rob

    I will be graduating from law school with just under $100,000 in federal student loans. On top of that I have about $40,000 in loans from college. I am very lucky as my parents decided to take on the debt I have from college so that I could survive when I get out of law school. It's something that scares the hell out of me. Thankfully, as I will be entering public interest law, my loans will be forgiven after 10 years.

    April 1, 2009 at 1:13 pm |
  9. Brian

    Yes, she chose the loans. But consider that in many states *children* are not allowed to smoke, drink or drive before they're suckered into student loans. You take credits in high school in your junior or senior year, before you're 18 years old in most cases, based on whether or not you'll go to college. So the decision to take student loans really comes at 16, 17 or 18 because by graduation you're locked in based on your high school courses.

    Personal responsibility say conservatives? Well, start *banning* or making it *illegal* or *fraudlent* to scam *children* out of tens of thousands of dollars, especially for useless degrees, then we'll talk about personal responsibility. And reform the education system so children don't think college is the only way. Going to college is not new conservatives; you could go to college in the 70's or 80's ten times over for what it costs now and if you think there's nothing wrong with that and it's all about personal responsibility you're missing the big picture.

    April 1, 2009 at 1:12 pm |
  10. victoria daco

    i still have $206,000 parent /student loans that i have been paying monthly. for a monthly payment of $655.00 every 2nd of each month, only $102.00 is going to the principal and why is that? the new government has to look on this situation, cause Mohela and other lenders is just sucking up all your money instead of helping you out pay off the loans. The new government has to deal with this to help us out ...this loans are for my 4 daughters who had graduated a long time ago and i am still paying for it. They are also done paying their student loans, since student loans are not enough to cover the college expenses i have to get a "parent plus loans" and i didnt realize that i will be stuck paying this. thank you for listening but the new government has to bail us out on this debts.

    April 1, 2009 at 1:12 pm |
  11. ash

    i know exactly how you feel on the loans and people can say, oh well you should have started out in community college blah blah... well, community college didnt seem like an option since my 1st semester i only had to pay $2000 out of pocket due to scholarships and grants and come the enxt semester (cuz prices gretaly increased) i had to pay $5000. the increases kept coming and the grants got smaller to where i ultimately had to drop out and now am in $12,000 debt.

    my loans keep adding up since ive been out of school 6 months and my pay isnt increasing due to the recession. its hard to manage to pay an additional $200 on top of all my bills and cant ask for a bonus or increase.

    everyone else is getting a bailout, there has to be some type of modification to the loans sytem. i agree with the 18 month pay back policy. itll help to budget expenses better.

    April 1, 2009 at 1:12 pm |
  12. Matt

    I chose to go to in-state to a State school in the field of Engineering and luckily it has a great program. Tuition rings the register at $12,000 a year (in-state remind you) and my family decision was that all kids would pay their own way through school. Reason being that when you look around at all the kids slacking their way through school, bearing the weight of paying myself provided extra motivation compared to them.

    People talk about how affordable State schools are if you work or do this or that. Fact is that in a highly competitive Engineering program, there is little time to hold down any sort of a job, or at least to be able to put in enough hours for a place to hire you. Unlike some majors, the majority of our work is outside the classroom in labs and projects. Our work was not to memorize historical facts, but rather to apply concepts and design systems.

    I am grateful that I was able to find a job out of school during the boom of late 2007 and that my education went well beyond just a piece of paper. What it taught me were the skills to be successful in any field, to be a creative thinker and someone who can deliver results.

    April 1, 2009 at 1:12 pm |
  13. kelly

    The problem I have is that people with student loan debt, debt which represents efforts to better themselves and be self-sufficient taxpayers, have to watch a portion of their paychecks go to pay off the debts of banks and auto companies while they are left unable to pay their student loans.

    I would share the sentiment of those posters who say the choice to get an education is the choice to accept the bill that comes with it IF I could pay my student loan debt before the bailouts. In other words, make the entire payment, principal plus interest, tax deductible.

    April 1, 2009 at 1:12 pm |
  14. Jason

    Sorry, Sam....but you are not going to get any sympathy here. Why didn't you start out at a Community College for two years, earn good grades, then transfer to a 4-year school? Maybe those good grades could have gotten you a scholarship. Oh wait, but that is not your fault for racking up so much debt. It actually is the governments fault and now tax payers should help you too.

    April 1, 2009 at 1:11 pm |
  15. librarian want a be

    I am also drowning in a sea of student loan debt and unemployed but I can understand both points of view as far as "would a should a" made better decisions. However, what really gets me is that I got a degree in a field that the government said there would be jobs. There is suppose to be a shortage of librarians because the majority of working librarians are close to retirement age. Well, guess what- they're not retiring and there aren't any jobs.

    April 1, 2009 at 1:11 pm |
  16. D.J.S.

    Samantha makes some good points. I recently earned my Ph.D. and am now a science professor at a major university, so I wholly agree that a college education is hugely important to the advancement of our society. I also agree that high school students don't necessarily understand what they are getting into when they sign their loan paperwork. How can they? I had no idea what it meant to pay $64,000 out of pocket when I was 18 (thanks, dad). Nor did I know that it would take me 10 (!!) years of schooling to get the job that I really wanted.

    Incoming college students today need to know three things before they start. (1) How much and how long they will pay for their chosen school. (2) How those number relate to what they are *likely* to earn. (3) That the effort and motivation of the student matter more than the school. I think $115,000 in loans for a private school is bad decision when there are so many more affordable alternatives. In my experience, motivated students will successful, with or without the fancy pedigree.

    Yes, paying for school needs to be easier, and the ideas listed at the bottom of the article are a good start. However, I think students also need more help in making decisions about college. High school guidance counselors, no matter how well-intentioned, are not sufficient. Incoming students need some sort of financial and career counseling before starting college - at no cost to them!!!

    April 1, 2009 at 1:11 pm |
  17. Damon

    Let's not forget to address the ridiculous cost of college itself. If any other industry was charging what education does for its product, they would be dragged into court on consumer fraud charges. There is now way any school can justify the cost of the education they provide with any type of value analysis.

    April 1, 2009 at 1:11 pm |
  18. Jenn

    I had a full tuition scholarship, worked at least one and for 3 out of 4 years TWO jobs while in college full-time. I graduated magna cum laude, went on to grad school and law school (worked during both).

    And guess what – I owe over $200,000. From living expenses in undergrad to the insane price for an advanced degree, I am being punished for trying to better myself.

    It's so depressing to hear people from other countries talk about the free or even subsidized educations that they get, when my brothers and sister (oldest of five), can barely afford community college.

    There is something wrong with the higher education system in this country, and I can only hope this administration does something about it before America falls even further behind the rest of the world in skills and education.

    April 1, 2009 at 1:11 pm |
  19. Brooke

    Samantha,

    THANK YOU for bringing attention to this issue. I am graduating on April 26 from a state institution and have done all I can to prepare myself for the working world. There are little to no jobs available for me. Everyone is telling me to attend graduate school, but taking out more loans frightens me. It is difficult to stay optimistic when people much more qualified than me cannot find work.

    April 1, 2009 at 1:11 pm |
  20. Charles

    I am in the EXACT same position, except for me, I have just given up, the bill collectors call 9 times a day (NOT an exaggeration) and I am struggling to hold down an industry job and just put food on the table for me and my wife and son, amazing that my loan payment is more per month than my rent, and all other bills combined, sorry Sallie Mae, you won't be seeing a dime from me for a looooong time.

    April 1, 2009 at 1:10 pm |
  21. Dad

    Yes indeed this is a huge problem. Currently I help out both of my kids for a total of 500 a month to help retire this debt as soon as possible. I provided as much help as I could when they were in school and now I am working to help them both reduce this debt. What I find tough to take though is a friend of mine went back to school as an adult. And now that his 60k worth of student loans are due he choose to go on unemployment rater that work due to the fact that his checks could not be garnished as when he was at work they were attached. Perhaps if everyone actually paid back their student loans the lenders could afford to be more flexible with those who actually need the help.

    April 1, 2009 at 1:10 pm |
  22. Kyle

    "no sympathy for those who took loans they could not pay back" – really? The loans were taken to pay for College/Grad School ...etc. People did not take loans to purchase a $50,000 car or go on a shopping spree. I lived like a starving student for 8 years – actually I was a starving student. Even then I have a montly payment of $2,300 for the next 10 years. So don't tell me I took loans out to have fun. The schools costs upwards of $40K a year and no community college is going to give me a Masters Degree. Wake-up, the problem is the school and the BANK THAT LOAN THE MONEY AT THESE SILLY RATES AND TERMS ... 10 years on a $210,000 loan? You do that for a house you get 30 years! What is the difference?

    April 1, 2009 at 1:10 pm |
  23. bettylouspence

    "It’s appalling to see the amount of envy that so many have when others get into the best schools in the country."

    It not an either/or: Either you're opposed to student loan reform because you're jealous OR you're a supporter of student loan reform because you're not jealous.

    Suggesting that people live within their means is NOT jealousy.

    April 1, 2009 at 1:10 pm |
  24. Tim

    I think all student loan debt should be forgiven. Could you imagine the amount of spending power that would be thrown into the economy because of that? Honestly, I think that might even be enough to pull this country out of the recession. I’ve been out of college since 2002 when the country was in another recession and it took me over a year to get into an entry level job that didn’t pay well at all. Now, 7 years later, the only way I’ve been able to increase my income is through changing jobs every few years and I’m barely making a living wage as a result of that. I went to Community College and a State College and worked 30-40 hours a week and still have to send off $300 a month in Student Loan bills. I’m a strong believer that Education should be free to those who wish to receive it, but with the system that we have now college students/graduates are just being financially punished.

    April 1, 2009 at 1:09 pm |
  25. Kate

    I agree wholeheartedly, Sam! I have over $100K in student loan debt and I think that those people who say, "It´s your fault," "your decision," and the like do not grasp the fact that students like us were doing what we were told to do: Parents and teachers tell us to get good grades in order to go to a good college, yet no one bothers to explain the consequences of student loan debt to high schoolers as they apply for college. As an 18-year-old, I signed on the dotted line because parents and and other authority figures told me to (student loans are "good debt"). I had NO concept of the repercussions that this would have on my life. I was still a KID!!!

    As a society, we must change this problem that affects countless college grads! Why are we not investing in our students, instead of turning them into indentured servants?

    April 1, 2009 at 1:09 pm |
  26. Big Stein

    I like the people tut tutting and blathering on about state schools, as if those are free.

    The average state school tuition is well over 10,000 a year. You might not graduate with six figure debt, but after a four year degree and significant scholarship and grant assistance, I still graduated from Rutgers with $14,000 in student loan debt.

    What a crappy system. We expect 18 year olds to make responsible decisions about tens of thousands of dollars in non-dischargable borrowing. Insane.

    April 1, 2009 at 1:09 pm |
  27. Jeff

    This is to all the people saying you should have gone to public school. public school is just as expensive i live in indiana and indiana state college is 8k a semester so sit back and say "oh well you should have gone to public school" well fact, alot of public schools are not cheaper and thats IF you can get in because they tend to take out of state applicants because they pay triple the tuiton.

    April 1, 2009 at 1:08 pm |
  28. Davina

    Samantha, I completely sympathize with you and am in a similar situation. After attending a private college and then law school, I now owe a whopping $170,000. On the 30-year repayment plan it comes to $1,200 per month. Many people (even my parents) say I should not have made the decisions I made if I couldn't afford them. I agree...and in hindsight I now know better. But, quite frankly, students are told by their institutions: "Take out loans. Everyone does it and everyone manages." I feel that students are pressured to take out loans with little information or understanding of what it will feel like to saddle hundreds of thousands in debt. We are given what seems like an easy option at the time, and have years before we begin to regret that option. Bad decisions aside, the government needs to consider ways to help before student loan repayment becomes a "crisis" comparable to housing mortgages.

    April 1, 2009 at 1:08 pm |
  29. Afsheen

    To Stacie and the people "just can't sympathize":

    I worked my way through college AND had a full scholarship, then chose to go to law school–an "affordable" state law school. That's when I incurred significant debt by taking out federal student loans offered to me by the university's financial aid office.

    I surely didn't enjoy borrowing and putting myself in debt. I also never expected a bailout. It was a willing choice–it seemed to be an investment. Most of us who took out student loans likely had similar rationale for doing so. But as the article points out, it's nearly impossible to foresee the struggle of paying a mortgage-like student loan payment on a starting salary of ANY profession. My husband and I monthly owe $2200.

    The government is working to invest in the country's future, invest in education and sources for growth. Only the government has the capacity to mitigate the struggle for people who are trying to better themselves with an education, and helping out those people will in turn benefit America. We need promote education and incentivize people to choose education, not fear away from the consequences of it.

    April 1, 2009 at 1:08 pm |
  30. CM

    Thank you for posting this story. I am about to graduate with my Master's degree in May and I am concerned (to say the least) about paying when my loans start again in September.

    While I can see the argument that you do take on the responsibility when you sign on the dotted line for the loan, you must consider that:

    1) Without some people going to private schools, or continuing their education past undergrad we would not have doctors, lawyers, or even professors to teach at the college level;

    2) When most of us signed our first loan we were only 18 years old and could not comprehend the amount of money we were borrowing. At the very least, there needs to be a program in place to teach high school students about the loan system and what it will take to pay back their loans once they are out of college;

    3) And lastly, I agree that schools should not be nearly as expensive as they are. There is no need for a school to cost upwards of $50,000 a year to attend. More affordable schools would allow students to have a greater choice in where they want to attend school, not where they have to attend because of the cost.

    Good luck Samantha!!

    April 1, 2009 at 1:07 pm |
  31. Kimberly A Hanneman

    I am curious and would like to hear from recent grads.

    Did your financial aid office offer a course about financial aid and student loan debt management?

    Did your college/university offer a personal finance courses targeted to 18-26 year olds?

    What loan advice would you give yourself if you could turn back the clock and talk to your 18-year-old self?

    Is there a tipping point where the amount of a student loans out weigh the value of a bachelor's degree, masters degree?

    How much debt should a person incur in each profession?

    In this economic cycle many will be underemployed for years to come that includes people with professional degrees - such as MBA and Law. Is it a good idea to pursue a graduate degree with significant undergraduate debt?

    Thank you for your comments.

    April 1, 2009 at 1:07 pm |
  32. DS

    I am currently saddled with $100K in student loan debt and dread the day it goes into repayment. I took out the loans to complete my undergrad degree and took out more for grad school. I originally saw it as an investment in my future, now I am not so sure. Investments tend to payout over time. I work in HR not the highest paying field, but I'm hoping my degree will payoff with a six-figured salary in the next few years so I can afford to pay these loans off. My biggest fear is that my daughter who is a Freshman in high school will have be strapped with student loand debt because I won't have the discretionary income to pay for her to attend college. It's a cyclical problem that I only see getting worse.

    April 1, 2009 at 1:07 pm |
  33. Jason

    Its unfortunate that we allow higher education to be something for the privileged and rich. Student loans should be no reason to not follow your dreams and graduate with the degree you have wanted since childhood. There was no way my parents could afford to send me to the school I wanted to attend (although the government thought they could, maybe they missed the fact that they had another child to send to school), but we choose my education and future over anything else. And as for myself, I will NEVER see that as being the wrong choice. I may be paying back my loans for a long time, and I may have to stretch every last dollar, but in a world where the government give billions and billions of dollars to failing companies all I can say is I have lost much of my faith in the government ever helping me. Like Sam, I will hope for the best and maybe just a little bit of help along the way, but I know I am not holding my breath.

    April 1, 2009 at 1:07 pm |
  34. Teresa

    Excellent, excellent article–I've been wondering when somebody would bring up this issue, and nobody could have done so more articulately than this young woman.

    Considering the new religion wherein we must "stimulate" the economy by giving massive bailouts banks, automakers, etc., you'd think it would be obvious that a generation of horrendously economically burdened young Americans–college students who got in debt due to their naivete re: financial matters and their culturally instilled belief in pursuing education as the first step in the American dream, NOT through credit card extravagance or impuslive shopping–would warrant re-examination. It's time our government turned its eyes towards a huge problem with long-term negative consequences for Americans and the economy: unchecked university tuition spikes, predatory lending targeted towards the youngest members of society, and absolutely criminal penalties and fees should they find that their education ISN'T paying off sufficiently to make those ridiculous monthly payments.

    All this must be re-examined...not to mention the drag on the US economy created simply by the fact that so many adults have ruined credit ratings who will never be able to buy a house, a car, or make investments. Thanks Samantha for a brilliant post!

    April 1, 2009 at 1:07 pm |
  35. Susan

    Has anyone recognized that what we are witnessing is symptomatic of a class-based society? Here's a wake-up call for all you folks who brag about your wisdom in choosing an "affordable" school: many of the top-tier corporations DO NOT interview your graduates. My best friend recommended that I attend a top-tier business school based on his experiences with corporate recruiters – he attended a state univ & was routinely shunned for interviews. WHERE YOU GO TO SCHOOL MATTERS. So here's the shameful little secret: variable interest rates on ridiculously high tuitions lead to crushing student loan debt that effectively restricts movement up the economic ladder.

    Are all of America's public policy people asleep at the wheel or what? The end result of this is going to be a society where only the children of the rich are engineers, doctors, lawyers, etc. and we will be FORCED to outsource a lot of work that requires high skills sets gained from education. Oh, wait a minute, we've already got that situation. Gee, what a coincidence.

    April 1, 2009 at 1:06 pm |
  36. Aaron Knoll

    Education shouldn't beyond anyone's means. If we're going to subsidize any single thing in this country it should be education. If we weren't drowning the next generation in debt, maybe we'd have some qualified educated leaders who could to develop a car that Americans want to buy or running a bank that understands the economics of lending and the macro-economy.

    but no, let's let them drown in debt. who needs the next generation when the current one's done such a stand up job?

    April 1, 2009 at 1:06 pm |
  37. Chad

    I graduated from college almost 3 years ago with close to 30k in student loan debt. I chose to go to a public university within commuting distance from my home ( 1 hour each way). Because of this reason, my student loans did not get nowhere near as high as many individuals out there.

    With that said though, you chose to spend the amount of money you did. We cannot keep placing blame on everyone else for our mistakes. At some point we must take responsibility for our actions. You made a tough choice that put you in a bad position, but you must understand it was your decision to do what you did.

    I do agree that financial aid programs are nowhere near the level they should be at and something should be done about that. But to help fund a bachelors degree that costs over $100k would be a waste of taxpayers money. Individuals need to make smarter decisions. And trust me, I know coming out of high school, it is difficult for a kid to know what to do, but at some point children have to grow up. They have to learn to make tough decisions on their own, and they also have to learn to live with their mistakes.

    Instead of complaining about the situation and asking for a hand out, why not try to reach teens across America and explain to them the mistakes you made, so that they do not repeat it? There are so many more things that can be done, rather than to complain about the situation.

    I wish you all the best in the Future and I do hope you get the situation resolved, but I feel my tax dollars should not be used to help anyone who has made a decision to live beyond their means. Sometimes people must learn to fall down before they can get back up.

    April 1, 2009 at 1:06 pm |
  38. Andy

    Student loans are like an albatross hanging round your neck. I graduated in 98 and I am in the last year of payments. It has been a long trying ordeal. I think the payments should reflect your salary like they do in Australia. As you earn more your payment is raised until you have repaid it. Education is an investment in our collective future. College grads and trades people make jobs. There clearly needs to be something done with burden placed on people choosing to attend higher education. That being said if you need to take loans out why are you going to a private college when you could be going to a state school. A BA or Bsc from a State school is just as good as a BA from a private school. Its just a brand.

    April 1, 2009 at 1:06 pm |
  39. Laura, Waterford, NY

    There are a few things to consider with student loans.

    1) A degree does not guarantee you a job.

    2) The student loan "nightmare" has been this way for a long time and as the years go by the old rules don't apply to things the way they are now. As the cost of college rises, the aid doesn't. I wonder if and when it will ever change.

    I went back to finish my degree at 26 after spending a couple of years at a state college and then working full-time. I left because that college was not up to date in my field. It took 3 more years at a private college to complete my degree. One year was done part-time, the other 2 full-time. I lived with my parents, drove a $900 car and worked part-time. I graduated in 2000 with $40,000 in debt in student loans and $15,000 in credit card debt. It took me 6 months to find a job at a starting salary of $23,000. I managed to live on that and pay what I could on both loans. I was laid off in 2001 and along with the horror of 9/11 found it very hard to find another job. 6 months later I did. I also had to put my loans in forbearance for a couple of months. I lived with my parents for the next year and paid off the credit card debt.

    I got married in 2004 and still had $34,000 in student loans. My husband and I took out a home equity loan to lower the interest and pay them off in 10 years or less. Now they are at $17,000 and I put whatever extra I can each month towards the principle. I drive a small car, it is paid off, do home improvement projects myself and live within my means. No my house isn't perfect or do I drive a car I can't afford. I was determined to get a degree in the field I wanted but accepted the idea that it would take some time to pay off loans. I am glad I went to that private college, they prepared me for the "fun" of finding a job, networking and the whole interview process in a competitive field.

    I am determined to pay off these loans and never to have credit card debt again! My husband has a 2 year degree and 2 four year degrees and no loans to pay off. He is a certified nurse, not exactly what he wanted to do but there are always jobs in that field.

    Life will throw you a curve ball sometimes, but it makes you stronger. I feel if you are determined enough, you will get through, it can only get better. I wish you all the best of luck with these darn loans!

    April 1, 2009 at 1:06 pm |
  40. Tony G

    All student loans are a form of fraud, and they should be banished entirely. Banks are extending thousands of dollars in loans to students who have absolutely no ability to repay them. We, as a society, are morally corrupt by loading down young people with mountains of debt that never should have been loaned to them in the first place. "Being in school" does mean you can repay these loans, nor does it mean you actually qualify for loans of this size. Kids who are 17, 18, 19 years old, teenagers essentially, shouldn't have to worry about how to finance an education and borrow money on this kind of scale. The government should subsidize higher education 100%, and stop the massive fraud that is being perpetrated in the name of "student loans."

    April 1, 2009 at 1:06 pm |
  41. Steve, Columbia, SC

    Regardless whether an individual makes poor student loan decisions in the beginning, that should not and does not excuse them from taking personal responsibility for their lack of wisdom. If this young lady is assisted by the government or the bank in reducing the burden of her lack of wisdom and good judgement, then she will never learn a valuable lesson in personal finance and borrowing.

    April 1, 2009 at 1:06 pm |
  42. Marcus

    I am excited that finally people are talking about it. I met two filmmakers in DC making a documentary about the problem, hopefully it will change things. It's called Default the student loan documentary. I think the url is defaultmovie.com

    April 1, 2009 at 1:06 pm |
  43. Michelle

    I too believe that I should have just skipped college. I am 42 yrs old and have been out of college for 19 years. In the late 90's my husband and I went through some serious hardships. The loan was in forebearance and now is worth about 3x what the actual amount was when I graduated. We are paying monthly. I don't want mine forgiven because I made bad decisions..I do wish someone could at least take off the 30k in interest that has been added over the years. The student loan people are not forgiving in any way and the system does need to be tweaked. To those of you graduating soon..don't do the graduated payments. If I had just gotten a 2nd job or even a 3rd and paid the payments with the principal and the interest instead of the interest only, I would be in a lot better shape.

    April 1, 2009 at 1:05 pm |
  44. Sam

    I agree with the fact that college is becoming a burden on students who do not have a means to pay, there is no way around the fact it is expensive to go to school, and that is why it is not manditory. Anyone who acts suprised by the amount they owe and how much that will cost them to pay back was very nieve when they signed up for their loans.

    Why should it be someone elses responsibility to teach YOU about the loans YOU are going to take out to pay for YOUR education? It is true that people are only willing to help those who help themselves. Kids need to do research about their field of study, where they want to go to school, and if necessary after that figure out where they are going to get the money to pay their student loans off.

    Sammantha I would have a bit more sympathy for you if you wrote this article unemployed because you could not find a job due to the economy, but you didn't. Thus this reads like a sob story from someone who did a poor job planning their future. The reality is you chose to get the education you got, and now you need to pay for it, all of this information you knew before you even opened a book in college.

    April 1, 2009 at 1:05 pm |
  45. Lyn

    I feel so sorry for people who are going to school now, or who have graduated fairly recently. I took loans to go to a public law school in California. I graduated in 1993 and am still paying off my loans. I consolidated early on at 8% and still owe about 27K. It wasn't always easy to make my payments, but I consider myself fortunate. My loans were mostly for living expenses (I was a single parent and could not work and go to school at the same time). The UC fees were very low back then, like $900 per semester. Plus, I had a grant to cover those fees anyway. Now the UC fees are astronomical! There is no way I would even consider going to law school today if I were in the same situation now as I was then. And that makes me sad for the single parent out there who could be making a better life for herself and her child, but who knows she will never be able to afford to do so.

    April 1, 2009 at 1:05 pm |
  46. Alex

    If we are trying to create a more educated population, we need to make it more affordable. Many innovations and discoveries come from expensive, elite, private schools. These are not for profit organizations which must charge tuition in order to create an environment which attracts talented people. To more directly fund these institutions, why not allow a tax deduction for student loan debt PRINCIPLE AND INTEREST. Currently, I can deduct my student loan debt interest similarly to mortgage interest, but not the principle. Why do we want to tax those individuals who take the initiative, burden and associated risk of seeking higher education?

    April 1, 2009 at 1:05 pm |
  47. James B Norman

    The issue is not loans, the issue is why does school cost so much? Its because the Government backs the loans. If no one would back them, no one would give them, then prices of education would come down because less people would go to school. All we do is find ways to give kids a blank check up front to go to a school that is loaded with cash in the first place. Then they are hit with the costs after they leave the school.

    40 years ago you could get a degree in engineering from the University of FLa for about 2000 bucks. Now its like 100K and the quality of the education is not better than it was 40 years ago? Why is that?

    The Government has created a bubble by backing loans just like they did Freddie and Fannie, Its a fake market and it flues the bubbles.

    April 1, 2009 at 1:05 pm |
  48. SwilliamP

    I agree with Samantha. I am 57 but my wife still has student loans so the subject is close to home. I would like to choke the person who commented, "you chose the college, you chose the loans, you should have gone to a community college (with the unspoken add-on, '..and been content to be a kindergarten teacher, office receptionist, retail salesclerk or whatever...')"

    The point is that the people getting the most attention and early help, are bankers. The auto workers are getting less, and student loan recipients like Sam, are getting Bush-style moral pronouncements, but no help. Do we really want to send the message, as news abounds of other countries far excelling our youth in academics (and future prospects), that college is a luxury and is no longer something we as a country need to ensure its future? I hope the writers who think Sam's education was irresponsible, don't actually believe that. We are tanking as a nation, when you look down the road 20 years. We need more people like Sam. If the amount of the student loan was only spent on consumption, OK, different animal. But an education is not consumption. It is investment. If we say it no longer has value and we do not put in place policies to support it, we WILL fail. In 20 years we'll all be buying products with English and either Hindi or Chinese printed on them, vs. English and Spanish as is the case now.

    April 1, 2009 at 1:05 pm |
  49. Chien

    Have you ever heard of personal responsibility? You took out the loans. No one made you do it. You read the terms (hopefully, if not, that was stupid) and you agreed to them. You have made choices which have made the loans more difficult to pay off. Again no one made you do that either. Why is it the bank's fault when all the bad choices are yours? Why should the government have to bail you out for your mistakes? The moral decay I see today with the mortgage, credit card and banking mess really makes me wonder about what has happened to our values. Are we not men and women of our word anymore? Take some responsibility for God sake. What do you think will happen if everyone defaults because its difficult to pay? There won't be any loans for future students, thats what. At least you can defer and forbear the loans. I know, I have loans and I've been paying them for years. It is the price of an education. If its not worth it, you shouldn't have bought the education with someone elses money, which you have to pay back.

    April 1, 2009 at 1:05 pm |
  50. Serena Carmel, Greensboro, NC

    It is a scam the banks are pulling. Amidst all this lending, the real money maker is the Federal Reserve which loans its free money to the banks at interest. They compound it and stick it to the students.
    We are literally indebted to the Fed the minute we are born.

    April 1, 2009 at 1:05 pm |
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