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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. Phlashlite

    Stacie, your response almost sounds like a class argument. Samantha shouldn't be chided for choosing a private school, the college or the career. Anyone should be free to apply to the school they feel most comfortable with. Of course the cost of that school is a primary concern, but then again all schools are not the same, so school choice cannot automatically be faulted. If anything, colleges these days should be taken to task for the cost of education. It's beyond ridiculous.

    Jesse Jackson has something right, for a change. Students should pay the same rate as banks – why not? Why shouldn't we support, as much as possible, the higher education of our youth? We're already behind much of the rest of the western world education-wise as it relates to our youth coming out of school. With the cost of college getting more and more out of reach of the middle class, should we then just leave the best or the specialized colleges for the rich? Even the poorest among us can and should aspire to great things. It doesn't mean to be imprudent, but neither should it mean "don't take a risk". The rules on loans should support risk-taking for these are where our greatest advances generally come from.

    April 1, 2009 at 1:05 pm |
  2. Sooner

    Comments on the sorry state of affairs that result in predatory student loans should be directed straight to U.S. Sen Ben Nelson (D-Neb). He is standing squarely in the way of direct-to-student loans from the federal government that would take the costly private middleman out of the equation. Why? He has a large private lender in his state he's out to protect - one whose interests are clearly more important to Senator Nelson than yours or mine.

    April 1, 2009 at 1:05 pm |
  3. Rex

    I agree that we should do a lot more to make student loans helpful rather than devastating. BUT I do not think all schools should be treated equally. You chose a very expensive private college, when you could have gone to a public one where taxpayers are already footing the bill for a big share of the cost.

    So you are asking me to subsidize your need to attend a more "prestigious" institution.

    Not in this lifetime, so far as I'm concerned.

    My seven kids all went to public universities, as did I. We all seem to be as smart, happy and well employed as those who paid twice as much or more.

    April 1, 2009 at 1:04 pm |
  4. David

    Samantha, you are obviously well educated. You clearly understand that the term "borrow" requires repayment. I fully understand what an education costs as I personally not only paid my college and law school tuition but worked after school in high school to pay my high school tuition. I was accepted to two very expensive private law schools but passed and went to a state school because I knew I couldn't afford the debt that would be created at the private schools. Your attitudes are exactly why banks won't lend money. I am absolutely amazed at the attitudes of so many in this Country regarding the OBLIGATION to repay debt. Suck it up and pay your bills. Only you are responsible for your debts.

    April 1, 2009 at 1:04 pm |
  5. Jessica

    It is very disturbing to read some of the comments that people have left here regarding Student Loan debt.

    First, to respond to those who have basically said...you made your choice now deal with it. That's ridiculous. Yes, people make choices, sometimes they work out sometimes they don't, but criticizing those who have gotten and education in an effort to better themselves is outrageous. I'd also say to those making those statements, they you shouldn't comment or criticize someone until you are also faced with starting out in life facing a mortgage payment a month with no good options on how to pay for it.

    I am currently in my final semester of law school and am facing $189k or more (I haven't looked yet this semester). Currently my estimated monthly student loan payment is $1800 per month. That is $21,600 per year in loan payments only.

    Yes I made the decision to go to graduate school with the knowledge that I will be taking out enormous loans, I waited 6 years after graduating college to do this and I also knew that I would end up making a reasonable salary when I graduated in the 50-60k range, not the $170k that makes headlines. I have worked the entire time in law school and tried to live modestly. I have loved the experience and am very happy for the choices I made.

    However, up until 6 months ago, I thought i'd have a job at graduation and would be able to begin paying off my loans. However, now I don't know what I'm going to do.

    There needs to be a way to improve the higher education system in this country, and that includes the student lending system. It is outrageous that a private school for undergrad is over $40k a year, with graduate schools being in the same range. Higher ed is again going to become something available only for the very wealthy. For the first time in my life I find myself agreeing with Jesse Jackson. Federal LOans are capped at 8.5% in interest rates, that's higher than most mortages. It is outrageous. A Bar loan for living expenses while studying for the bar exam, which is not covered by federal funding, yet you cannot practice law without studying for a bar exam has interest rates, of upwards of 14%. That is higher than most credit cards.

    A 1 or 2% interest rate on these loans is appropriate, student lending should not be an avenue for lenders to gouge the public. No matter how easy of a target students are.

    The Student loan and higher education industry needs to be overhauled and the current fiscal crisis has given this country a great opportunity to make major changes, because without them there is no way that we are going to be able to recover.

    ok...im off my soap box.

    April 1, 2009 at 1:04 pm |
  6. John

    Student loans will never be considered in bankruptcy, if that were the case everybody would get $100,000 in student loans, then declare bankruptcy immediately after graduation. There is no collateral with a student loan, the institution can't take it from you and sell it to help minimize their losses like they can if you get a secured loan to buy a material possession such as a home or auto.

    You made a mistake, just like people who bought homes they can't afford, lived beyond their means, made bad investments, etc. Now you unfortunately have to suffer the consequences of that decision. I certainly hope that I'm not going to be considered responsible for your actions in the future!

    Education is the best investment you can make, but you still have to proceed with reason. $100,000 paid back in 12 years after earning a degree in journalism?! Personal finance desperately needs to be added as mandatory class in grade school!

    April 1, 2009 at 1:04 pm |
  7. JJMartin

    It's worth noting that our government hand out billions to mismanaged banks, insurance companies, auto companies, etc., for multimillion-dollar bonuses, expensive parties, private jets, etc., with few (or no) strings attached. But the people whom the government expects to pay for this insanity, i.e., the American taxpayers, and especially the next generation of our young future taxpayers, are treated like dirt. What is our future as a nation, that we tolerate this? And before you condemn these young people, remind yourself that we NEED them...JJ

    April 1, 2009 at 1:04 pm |
  8. Laura

    Ridiculous, but more ridiculous to read those comments about poor choice and responsibility. Responsibility for a poor student to pay back 150K with thousands in interest?! And the same time money goes to help to those who brought us to that mess and the whole word in us? We need reforms, serious reforms. Education is one of them. Education is the future of the country. Do you really want to see America in future not educated? I read we already have a lower % for college graduates. I took only 3-5K in student loan, and after 14 years still make payments. But I learned from my mistakes and sent my daughter to study abroad. When I read Jesse Jackson's plan, I thought its a common sence. And this is only a plan right now?

    April 1, 2009 at 1:04 pm |
  9. Brent Smith

    One question to everyone that is suggesting state schools. Do the state schools have the capacity to accept a larger number of students that cannot afford to attend a private university? State schools sound like a great choice compared to private schools given the tuition costs but what do we do when the number of applications increases but the freshman class size remains the same?

    April 1, 2009 at 1:04 pm |
  10. Jon Holmes

    Seriously,
    No one seems to realize that the governments job is to bail people out of the debt they get in! If Samantha can't afford to pay the mortgage for her private college, she should not have to. It's not her fault she signed this loan. It's not her fault she chose to go to a school that would leave her in debt like this. It's not her fault she chose a low paying career either.

    Also something to consider. I didnt go to college. If the government is giving Samantha money to pay off her loans, I should get a bit of that for not going to school. I have a right to be reembursed for not adding weight on the system. I could use that money to start up a business. Did I choose to recieve no education? Yes. Did I choose to not go to school? Yes. Did I choose to have a life of poverty and debt? NO!

    April 1, 2009 at 1:03 pm |
  11. N

    I think the key word to your student loans problem is that you "chose" the loans and private school. Why should I bail out those who chose to live beyond there means? The American dream never meant that. You can become anything, you can do anything, but some choices have consequences you have to live with. It's a part of life. I too, have a student loan, all though it is much smaller because I chose to work, saved ahead of time, and took out a much smaller amount to cover the necessities and not my desires. I can easily repay it, so why should I help repay yours too because you chose another path?

    April 1, 2009 at 1:03 pm |
  12. Rae

    I didn’t go to a fancy school and I worked most of my way through college as a bartender and research assistant and I still walked out 55k in debt.

    Its honestly good to know that there are some people on here that had support, either financially or had the reality bestowed upon them by their parents/community that loans need to be taken in moderation. Or perhaps you were just naturally money savvy or had more common sense then the rest of us greedy morons.

    I would venture to say that most people in our situation are not greedy people, but that we really had no idea what we were getting into until it was too late. I figured it out eventually and realized that I could not do what I went to school to do because I had to pay back the loans for the rest of my life and I cant go on to get a Masters with loans so I am doing it through my employer.

    Whether some of you like it or not its tempting for people that grow up with little financial and/or emotional support to want to do well in life by going to a good school and getting the job of their dreams and basically striving for more then what they had as a child (which is what we are told is possible here). I’m not sure that makes them a bad person. Perhaps we should stop telling our children that they can do whatever they want to do when they grow up. I think that it is also up to the providers to give out accurate information and qualify people so a little reality can be put in their face, which is that we can’t all get what we want, only wealthy people can.

    April 1, 2009 at 1:03 pm |
  13. Ann

    Thank you for drawing attention to this prominent and pressing issue. As a 23-year-old college graduate who has 65K in student loans, I can sympathize with Samantha's situation. I was fortunate enough to have full financial assistance during the beginning of my college career which significantly influenced my decision to attend a private university. However, family circumstances quickly changed and I suddenly found myself signing loans for tuition, rent, food, books, etc. I did begin to work to relieve some of the burden–not that it helped much. I am now forced to take a job I'm not happy with. My dreams of pursuing higher education?? Hmmm

    April 1, 2009 at 1:03 pm |
  14. Phil

    This sort of relief would be an excellent stimulus, it would place enormous resources in the in the pockets of working people.
    Our current system of educational funding can only discourage students from attending our best universities. Something must be done!

    April 1, 2009 at 1:03 pm |
  15. Erin

    As someone who has student loan debt, I understand your situation. But as someone who dreamed about going to a private university in New York, but decided to go to a less reputable state school closer to home because of the cost, I can't entirely sympathize. Yes, it would be great if policies changed to help us out, but then again we're not entitled to go to fancy schools or pursue low-income careers without paying the price of those decisions (which a lot of us have had to learn the hard way)...

    April 1, 2009 at 1:03 pm |
  16. Paul

    Yes, I owe about 50,000 myself. And it keeps getting bigger due to interest rather than lower due to payments. I have come to grips that it will be the black cloud that hangs over my head the rest of my life. I will never be able to pay it off.

    The problem comes in the age in which these decisions are made. I thought that i'd get some great paying job and make a lot of money and pay it off soon after i graduated. I was a stupid kid. If i had really understood what I was getting myself into, I wouldn t have done it. It wasnt like i was lazy, i was working a fulltime job while going to school when i decided to do it.

    College kids making these types of decisions just doesnt seem logical.

    April 1, 2009 at 1:03 pm |
  17. Jennifer

    For the people who say she has to live with her choices – I find it ironic that we allow grown adults to go to bankruptcy court to clear their debts, don't criminalize foreclosure, and dump bailout money on huge corporations, but you demand that enormous financial decisions made by 18 year olds must stand. When I was 18, I made $6/hr working part-time after high school. What college choice should I have made based on that income? What would have been "living within my means"? Of course, this means the majority of teens are dependent on parents who may have themselves been in excessive credit card debt, or buying too much house, or even getting rich off subprime mortgages to make college choices. Now that the system has collapsed under the weight of all those poor adult decisions, why are student loan debtholders excluded from bailout resources?

    April 1, 2009 at 1:03 pm |
  18. RationalThinker

    Top US institutions should be educating the best and the brightest, not only the brighest who can afford to pay for it. With tution costs reaching undeseriable levels for MBA students, 80-100K for two years at most schools, we may find ourselves losing the best and brightest to other countries. A form of arbitrage if you will, where students will search for good schools in Europe or elsewhere that cost less. Just as we have reached a housing bubble due to the availability of credit, so is the case for all other asset classses, including student loans(tuition). Specifically for MBAs, 30-50% of graduates were obtaining jobs in finance, some of which on wall street, that could justify the loan amounts due to the outrageous salaries. If you have 100K in debt, but are obtaining a 50-60 K bonus a year as an I-Bank associate, you can afford to lever up. This could be one of the main reasons behind 5-10% increase in tuition every year. In the new world we live in, we will have to reexamine the costs of schools, or 20-30 years from now, we may find ourselves at a significant competitive disadvantage.

    April 1, 2009 at 1:02 pm |
  19. Molly

    You have raised a very germane discussion and one that I hope continues beyond this blog. One of the most important points was in your acknowledgment of not appreciating what these loans meant in financial terms when you signed up for them. Typical students in their early 20's can't be expected to understand how student loan debt translates into monthly payments later on. Unless you have had a job and a monthly budget, it is difficult to appreciate what a burden these monthly payments become. It is irresponsible lending and I believe criminal. I hope that Rev. Jackson's plan goes far.

    April 1, 2009 at 1:02 pm |
  20. Todd

    A agree but disagree with this. I agree it seems unfair everybody and their brothers are getting help, but at the same time, had you planned on this being a problem 4 years ago? You knew the costs ahead of time, and you knew what the average starting salary was in your field. How much has the average salary gone down in your position since you started college? Probably not enough that you knew how much you would owe on the student loans and how much you would make and how affordable this really was. My wife and I have monthly bills of around $1000 in student loans and $1400 in mortgage, property taxes, and insurance and we just make sure to budget correctly. No Starbucks for us, very little eating out, and did I mention we have 2 kids, both in daycare so we can both work? Is it tough? You bet it is, but with a little planning you can get through it just like everybody else did 20 years ago.

    On a side note, you can't give everybody $50,000 like one poster mentioned. Supply and demand...ever heard of it. Now more people can demand cars and suddenly the supply isn't big enough so costs will go up meaning what $50,000 is today may only be $35,000 tomorrow.

    April 1, 2009 at 1:02 pm |
  21. jessica

    A lot of people here like to say, "If you couldn't afford it, you shouldn't have done it." That is such an easy way to dismiss the problem. We're not talking about people who went out and bought new cars and homes. We're talking about KIDS who were told that if they went to school, they would have unlimited career options. They were told that if they succeeded, employers would be scrambling to grab them before someone else did, and that they'd be getting much higher salaries than their non-college educated peers. They were also misled to believe that student loans were beneficial and EASY to pay off.

    I'm in college now and have been for too long. I feel that I have been misled, lied to, and taken advantage of by schools and student loans. No one ever tells you the reality. You figure it out later when they start sending you bills, and that's when you realize how far in over your head you are.

    You have to remember that we are talking about naive young adults. I, for one, did not receive any guidance when it came to my finances, and a lot of my peers didn't either. You can't expect someone that has no real life experience to make the same decisions as a 40 year old adult. It's not realistic. You can't dismiss this issue by saying "they should have known better." How could we have known better? No one was telling us the truth.

    April 1, 2009 at 1:02 pm |
  22. RaeAnn Roca

    I think a lot of these commenters are failing to understand how most of us were basically DUPED into making these loan decisions.

    Do you honestly think I consciously walked into college and thought "wouldn't it be fun to have $100,000 in student loan debt?"

    I know in my own circumstance, it was an issue of "sign this loan or you don't finish school." I was in no situation to be singing any sort of loan, and given the economy that we are now in, I'm in no position to make repayments in excess of $500 per month. This isn't a situation where I bought a car, or racked up a credit card. I went to college. I wanted an education. I wanted to better myself. And now, I find myself on the phone every single month for hours and hours trying to figure out a way to pay those loans. I have to make the decision every month whether to eat, or to pay my loans. It's un-American to tell us that we can be anything we want to be, and do anything we want with our lives if only we go to college, and then once we get out, to tell us that our interest rates are not fixed and are now as high as 10%!

    We need HELP! We're drowning in debt that we had no concept of when we got into it. And now, what are we supposed to do? It's not like we'll ever know what this mortgage situation is like, because we'll never be able to own a home! Someone has got to fix this!

    April 1, 2009 at 1:02 pm |
  23. Crystal

    I knew my life wouldn't be easy because I chose to follow my dreams of being a fine artist. I was also aware that being a fine artist is an incredibly competitive field, so as a result I knew I not only had to go to New York City but I had to go to a very good school. I'm looking at about 60,000 in debt when I get out. I don't think many parents don't understand what it's like today, my fathers tuition and repayment would be vastly different now. As a high school student the colleges information was misleading and I had no parents or adults to lend wisdom, it was go to a good college or die in a gutter. Education I feel is not only important for our economy but our civilization. I'm glad the crisis has brought to light for young people how very difficult and unrealistic the American dream is, but this shouldn't be. I don't agree with a bailout but I do agree with much of rev. Jackson's idea.

    April 1, 2009 at 1:01 pm |
  24. Mike

    I truly feel for anybody struggling with debt – many of us are in the same boat.

    But, the plan put forth to lower interest rates doesn't reflect the financial reality of the risk involved in student loans. Basically, the people who pay their loans back – in any form of debt – are helping to pay the costs of those people who default and the interest rate needs to reflect this in order to make the entire business of providing loans profitable. If you disconnect the financial instrument from reality, believe me somebody will be paying for it – and when we talk about the government, we're talking about fellow tax payers.

    So, try this argument out – walk up to your nearest hard-working tax payer, in the grocery store, at the mall, whererver, who is supporting a family on modest means and sacrifices his/her own wants in order to make ends meet, and ask them to help pay your student loan to go to a school that their own children can't dream of attending. Because, frankly, that's exactly what you're asking here.

    April 1, 2009 at 1:01 pm |
  25. Randy

    WOW!!! Rev. Jesse Jackson please go to Obama and explain to him we are the people and we are trying to improve ourselves and in so we are making this a better nation. I am working on my master’s degree and still paying off my undergrad degree. Can I get some help too! I did not over pay for my house and pay all my bills on time. Why are we giving billions to companies and people that don’t’ represent the American dreams and values. Yet we give nothing to the people trying to live the American dream and up hold American values.

    April 1, 2009 at 1:01 pm |
  26. Diann Muck

    Finally something out in the public eye. My son has a mound of payments well beyond his ability. Sallie Mae is relentless and uncooperative. They also harass me because I co-signed on his first loan. He's trying to pay but it's unrealistic. There's no way to consolidate them into something reasonable. I've seen so many horror stories on the web. Education is necessary for individuals and the nation so give people the chance to make it. If you can bail out the lowlife financial predators, why not decent people?

    April 1, 2009 at 1:01 pm |
  27. Mike M

    In response to all of those who have criticized students for attending schools "they cannot afford" I strongly disagree. America's future prosperity will rely largely upon the students who attend the very best, most challenging schools they are admitted to, regardless of tuition. If those students are forced to pursue careers in only traditionally high paying jobs (lawyers, doctors, etc.) simply to pay off student loans at excessive interest rates, our nation will face a severe shortage of bright talent in crucial sectors (teaching, research, law enforcement, etc.)

    If you chose to attend community college because it was the right decision (and price) for you, bravo. I am recently married and have just begun a four year graduate program at an ivy league school and am amassing huge amounts of debt. The field I am pursuing will make paying this debt off extremely challenging, but it is important to me to have the very best education possible in order to make a difference in this world. I do not expect to be 'bailed out' but I also do not wish to be criticized for not choosing the cheapest school possible or working night-shift jobs that will limit my focus on school.

    I do believe that if our government is serious about investing in the future much more attention should be focused on severely limiting interest rates on student loans. We are the infrastructure of the future.

    "Bill – March 30th, 2009 9:06 am ET

    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."

    April 1, 2009 at 1:01 pm |
  28. Steve

    I just want to say one thing about the student loans. They should be paid back. I graduated in 1983. Finally got a job in 1984. I spent 10 years paying back the money that I borrowed to fund my education in a field that I liked where I thought that I could make a living. Those 10 years of payments were a burden that I accepted by taking the loans. I was not a burden on my parents. I paid for my education myself. I paid back my loans and I was very happy when I made that last payment and could then keep more of my money that I was earning. I went to a state university where I was a resident to minimize the cost. I worked on campus, in the summers, did not take trips to spring break or spend money that I did not have. There were two groups of students when I was in school. The first group Mom and Dad were paying for 4 years of parties and fun. The second group had the loans and worked to pay for the education to prepare for themselves for a job. I find it sad that people today want the government to bail them out of the problems that they caused. As a taxpayer I say that has happened enough. Stop raising my taxes to pay for people who do not repay their loans. I worried about paying back my loans until I got a job. I then made sure that I paid the loans back. People need to understand that there are consequences for actions. If you choose to go to an out of state private school, or expensive state private schools, then you need to accept the consequence of having large loans to pay back.

    April 1, 2009 at 1:01 pm |
  29. Hill

    Great article. I have been out of college a long time and will be paying back my student loans until I die. I was lucky that I was able to consolidate them and got a good interest rate. However, I did not do this until many years after graduation and in the meantime I could not pay them back so I kept deferring them and now I owe DOUBLE my original balance due to interest. I best advice to anyone with student loans-DO NOT DEFER THEM it may seem like a good idea in the short term but in the long run, it hurts bad.
    I agree something needs to be done. I have two kids who will both go to a state university but will need to take out loans or get scholarships (which are VERY hard to get) to help cover the cost.

    April 1, 2009 at 1:01 pm |
  30. linda

    I am disgusted by the self-rightous attitude shown by some of you. The students who are admitted to top private or public colleges & universities are the leaders of the future. The last thing they (or their parents) should have to worry about is how to pay back the loans that might be needed to finance this education. There is a portion of our society who feels that a good education is something to be ashamed of.
    For now, the best economic stimulation that could be provided would be to lower interest rates on student loans – both for students and their parents who are frequently helping those students pay back loans. Our country must find a way to invest in education for everyone.

    April 1, 2009 at 1:01 pm |
  31. Joe

    I feel your pain. I have a decent job now, 4 years out of college, and have about 50k left in student loans to pay off. It pisses me of to no end to write that $800 check every month. Something I should be saving for a house (i don't own one), a car (mine's falling apart), or just to protect me from losing my job (it's not looking good).
    I thought goign to a good school would be worth it, apparently not yet.

    April 1, 2009 at 1:01 pm |
  32. Stu

    Sam,
    How does a person be smart enough to go to a private college and not understand the loan requirements. I do feel sorry for you and others in your situation but the general public should not be responsible for everyone's errors. I am out of college for many years and probably would not have made it into the IVY league schools but did understand money (with my parents assistance) so chose junior college while working 40 hours per week for a year, then the Uof I for BS and MS degrees. I was fortunate to pick a field that the university paid most of my graduate costs but still took out a small college loan and repaid it. Maybe I should have taken out more loans and defaulted or had a large mortage that I couldn't affordso I would get assistance but I chose to the prudent approach. Don't make all of us pay for others lack of knowledge.

    April 1, 2009 at 1:01 pm |
  33. Alfred

    Hi Samantha,
    I understand your pain but there was a workaround during your term. I made the same mistake and had to go through financial aid at the time. I had a 4.0 GPA for 6 semesters and got denied scholarship so many times. I was so mad that I couldn't afford to pay my student loan. 6 years has passed and I'm barely half way through the loan.

    Here are a few suggestions for HS students or undergrad students attending a university.
    1) Take your gen eds (minor subjects) at a community college. An $8000 course could turn into a $50 course at a community college. But before you start doing this, ask your adviser if the course your taking at a Community College can be carried over. A lot of people has done this and saved them almost half they tuition.

    2) After you graduate, depending on your credit rating, you can start applying for 0% APR credit cards and transferring some to these cards but always watch out for a balance transfer charge. Look at the ones that say's max $75 fee for a balance transfer. After doing this, you can consolidate your balance to a different company by getting a simple interest. There are some for 3-5% but caps you on the current balance and not the initial loan amount.

    3) Avoid spending on unecessary useless things. Focus on necessities (i.e. food). It's a sacrifice you have to take but after you pay off this loan, you can do whatever you want. I would recommend saving the money and placing it in a money market. =)

    Hope this helps!!!

    April 1, 2009 at 1:00 pm |
  34. Leslie

    What a pity that so many are so callous to the plight of young professionals struggling to make ends meet because of the burden of student loans. The fact is that college tuition and fees have risen exponentially in recent years without sound reason. I attended a state school on scholarship, paid in-state tuition, and still graduated in 2003 with over $20,000 in student loan debt. Luckily, I was able to lock in a ridiculously low interest rate, and have a long repayment period, so I should have no problem paying it back.
    To those of you who brag about attending community colleges and living at home, congratulations to you. However, my college experience was something that I will cherish forever, and would have been profoundly different had I spent it sleeping in my childhood bedroom.
    College is about much more than going to class. It's about living in a dorm or an apartment, building new relationships, paying your own bills, learning to be responsible for yourself, making decisions, both good and bad, and learning from them.
    I just don't see how the solution to our student loan problem is going to be forcing all our high school graduates to attend the school closest to home, spending another four years with good ol' mom and dad. Not that this isn't a viable option for many, but it's not a fix-all cure.
    As with purchasing a home, students need to be realistic about the cost of higher education, and they need to do so before they enter into a loan agreement, not the day they graduate. They should look carefully at their potential schools, career path, and the salaries those careers actually pay. All of these things should factor in when a student wanting to major in 17th century French poetry decides to attend a $50,000 a year school. Just be realistic, people.

    April 1, 2009 at 1:00 pm |
  35. Pete

    I attended a state college and though cheaper than an ivy league school there was no practical way to afford paying for it without student loans and 18 years old I was very willing to take loans that I barely understood because public school guidance counselors recommended applying for them. I commuted to school, I packed a bag lunch and I lived very modestly and at no time have I ever thought I was taking advantage of any system. The federal student loan system is broken and it should be fixed for people now and in the future. I find it ridiculous to have to pay loans for an education for 20 or more years, aren't I doing enough by having a good job in the government that I was able to get with a 4 year college degree? I would say that my education has already paid off as far as this country should be concerned.

    April 1, 2009 at 1:00 pm |
  36. Chris

    YES!!

    I can sympathize with your position and agree that the PRICES of school and the loans needed therefore to go to school are outrages. But, you have several major choices of degree categories when choosing a career. Sciences, Business, Arts, and Medical. Generally some of those fields pay much better than others. I'm sorry, but it's a poor decision to pay top dollar for a degree that will not make you top dollar. Thats a bad investment in yourself, just like all the bad investments on Wall Street. Yes, our college education system needs an overhall.

    Everyone wants to do the things that they love, and they want to make a lot of money, sometimes the two aren't the same. When they aren't, then you need to find a career that will balance between the two, or allow you to make enough money, that you can do the things you love on your own time, but personal responcibility needs a comeback!!

    April 1, 2009 at 1:00 pm |
  37. Jetson

    Stacie, I wish it were as easy as "assuming personal responsibility". I feel for Samantha because I am a similar situation, and do not doubt for a second that there are many, many more YOUNG graduates out there who were asked to sign on the dotted line by their Financial Aid officers at their schools just to get them enrolled in their schools. I thought I had it as bad as it gets, because I am approaching 50, finished my graduate degrees in the late 80's and still have nearly 100,000.00 in student loan debt and payments that only get to the interest, so my balance goes UP instead of down because of what I am able to pay each month. I will never be able to own a home, and my prospects of increasing my earning potential are next to nil. What were we supposed to do when we were in college, choose not to follow our educational goals, settle for a less expensive career or choose a more lucrative one in spite of our vocation? I am certain Samantha is a responsible person who wants to pay back her student loans. We are not crooks. We are victims of a flawed system.

    April 1, 2009 at 1:00 pm |
  38. Linda Walter

    I agree w/ Samantha on most points as far as the government helping. However, I believe you do have to live w/in your means also. We would have never allowed our daughter to attend a school where the loans would have totaled that much. Part of our current economic problem is that people have lived way above their means for a long time. We as parents have a loan and she has Stafford loans. The totals on both are $500 per month for 15 years. This was something we knew we could live with and were capable of paying off without much hardship. Good luck!!! I wouldn't be able to sleep at night knowing I had that much to pay off. Our mortgage balance isn't even that much!

    April 1, 2009 at 1:00 pm |
  39. Stephanie

    I'm glad this was written but you forgot an important part of going to a good, private school – that is what helped you get that job right out of college. For everyone that thinks we brought this upon ourselves, put yourself in an employer's shoes for 1 minute – they want the students that did well in great schools – usually private and very expensive. I had 7 scholarships in college and I went into finance where a lot fo money can be made and I still am having a hard time with my loans. My parents couldn't afford to pay for my school. if we wait – we are seen as slacking off, if we go we are irresponsibly getting into debt and if we go to community college or a school that doesn't specialize in our desired area, we suffer in our future becasue employers only want the people from those schools. It isn't a choice anymore for many career paths – we have to get into debt to get the kind of job we want. I know i would never have gotten my job if it hadn't been for my school, network and experience. I don't regret going to the university I did – it gave me the job I wanted and comparted to a lot of other 25 year old, I am doing great. i have a lot of debt and I was lucky enough to consolidate. but someone needs to put a cap on tuition and help out people. it's no way to start your life, that far in debt. And we shouldn't have to choose to always be at the bottom by not going to a top notch school or being in life long debt. Thats not fair.

    April 1, 2009 at 1:00 pm |
  40. Kay

    I am soooo glad someone touched on this issue. I am in the same boat with private loans. Let tell the people who say you made your bed now lie in it. My parents made too much money so I couldn't get financial aid to go to school. I had no choice but to get private loans. Now I have 90,000 dollars worth of student loans to pay back and GM is getting a bailout. Are you kidding me???? If you haven't notice most of these people with bad mortages are the ones who have student loan debt. I don't understand how it is okay to bail these people out and here I am a grad who is struggling to make ends meet because I wanted to go to a STATE funded school who still put me in debt. I also work while in school too and it did me no good. So I wish negative comments would cease because you don't know what someone is going through before want to point fingers. I have to get a second job to pay these loans because I can't afford to pay them with the one I have. Something needs to be done, because I am plain SICK AND TIRED of struggle when I feel like I wasted my time going to school and can't get a decent JOB!!!!!!!!

    April 1, 2009 at 1:00 pm |
  41. Carlos Malave

    At 8% interest I have been paying my loan (with several deferment periods) for almost 15 years now. I still owe $10,000 over the original amount of $50,000. In the recent virtual town hall that president Obama held the second favorite question under education was about student loan; but, the President didn't touched that question. A reduction on the interest rate will be very helpful.

    April 1, 2009 at 1:00 pm |
  42. MONY

    Although I feel sympathy for the writer and have a huge student loan myself, I have to admit that I am guilty of expecting to live a lifestyle during school that I had not yet earned.

    Lower interest rates would be great and consolidations are definitely needed, but only I am responsible to pay for the choices I've made.

    April 1, 2009 at 12:59 pm |
  43. anonymous

    I graduated from a public university in 2007 with about $20k in student loans. I knew I would probably end up with loans going in, but once I got into college, I realized that things were going to get worse than I ever anticipated. Why, you might ask? Because every year of the four years I was there, tuition was raised by a minimum of 10%. Keep in mind, this is a STATE FUNDED school. By the time I left in 2007, tuition (just to enroll, does not include living expenses, housing etc.) was at $4500 a semester. My sister started at the same school in 2000. At the time, tuition was only $2100 a semester. Cutting state funds to public universities was the direct cause of this....so it is a FEDERAL issue. I have made the statement to my friends, if someone bails me out of the $20k I owe on student loans, I will buy a house the very next day!!!! No exaggeration, I'm an engineer and I am lucky enough to have been employed by the same company since the week after I graduated. It seems like so many people are expecting only the rich to get an education.....continue thinking like that and we'll never get out of this hole!

    April 1, 2009 at 12:59 pm |
  44. Richard G.

    Well – I commend Samantha on her article simply because, I think student loans and education is the next time bomb and sharing that kind of information with the public is not so easy.

    Let's talk community college – I took CC classes coming out of high school in order to try and reduce the amount it would cost once I went to a public state college. However, the main problem with CC programs is that if you plan to enter into a public/private university or other sponsored program, sometimes those credits you took at the CC level do NOT transfer.

    The other issue is that the field I went in to is Engineering. At the CC level, there is RARELY any program in this type of field (at least for Civil Engineering) so I did not have a choice of trying to pursue this field on the CC level. Yes, there are CC with engineering programs but the one thing you HAVE to make sure of is whether or not the program/courses are accredited by ABET or another recognized authority. I HAD to go public..and even so...I HAD to get student loans as my parents did not make enough and trying to work and attend school at the same time is difficult on your studies. Additionally, with the ever changing interest rates (especially these days) even trying to drag it, work part time and take loans to cover the rest...........sometimes...there is no choice.

    Then often times, there are those that have to go out of state for their degree, whether public or private. When I left KS, the instate tuition had increased almost 15%-25% every year! In the end, I owed $72K for a masters but was able to consolidate back then at 2.25%. I'm lucky...

    For those even in repayment – at the end of the year you get up to $2500 for student loan interest in your taxes, but when you paid 4-6 times more in interest during that year it can become unbearable even when those who are responsible in paying their loans as they see no reduction in the principal because the rates are 8% and higher. Plus these days – you are LUCKY to find an institution even willing to give out consolidation loans.

    Just like all these credit card companies (where student loans are also tied in to them) jacking interest rates significantly higher, even for those of us who have paid on time and never missed a payment to try and make up for all the money they are losing on those that are failing to pay because THEY made poor decisions offering credit to those who couldn't afford it. Considering they are getting all this bailout money – why am I paying more?

    Point – there isn't one...for those lucky ones...congratulations...for the rest of you in the same boat as Samantha....time to find a bigger bucket!

    April 1, 2009 at 12:59 pm |
  45. Trish, Washington

    My husband and I both come from working class families, I was the first person in my family to go to college. And, even though we both went to state schools and scrounged up as much grant and scholarship money that we could, we still owe around 100,000 dollars. We looked at those loans as a necessary evil – the only way out of the paycheck to paycheck existence of our parents. Today, we do not live outside our means – our mortgage is not in trouble, our children our clothed and fed, our bills are paid – and that's it. I look at the 800 dollar check I write each month and see my kids' college dreams slipping away. What frustrates me the most is not that I owe this money. What frustrates me the most is that 2 people with masters degrees, working in their chosen fields have to live paycheck to paycheck.

    April 1, 2009 at 12:59 pm |
  46. Dan

    Let's put this in the prespective it diserves. The current total federal student loan debt is about $550 bilion. AIG and TARP bail out money equals what about $2 trillion. Obama is making the wrong decisions in office. Why not forgive ALL of the federal student loan debt in this country? This would increase consumer spending dramatically. The increase in spending would stimulate growth and finally get this economy back on track. What would you do if you had an extra $500 a month for the next 15 years. You would spend it on cars (no bailout necessary), appliances, tvs, HOMES, big ticket, economy driving items. Or we can continue down this path of providing golden parachutes for executives at huge corporations who drove us into this nightmare to begin with. I pay $900 in student loans a month. That is more than some peoples mortgages. Think about that.

    April 1, 2009 at 12:59 pm |
  47. Lou

    I can empathize with Sam but completely disagree with her. While the higher education funding system needs to be overhauled, Sam made decisions along with her family – she choose to go to a school she really could not afford and asking or even suggesting that the taxpayers bail "her" or other students out is wrong. The word "accountability" seems to have fallen off the cliff these days – people need to take accountability for their actions including the debt they choose to rack up.

    Sam could have gone to a public school (like me) and worked to pay off the tuition as I went along. Instead she chose an expensive private school in one of the most expensive cities in the world. There is a price that she was made aware of BEFORE she started and hence needs to accept and figure out.

    To that end the banks and auto industry should not have been bailed out either. When government tinkers too much with the free markets like they have been (since Bush) it only spells trouble. Congress should have stuck with improving and implementing new regulations, taking banks into receivership and sending individuals who knowingly defrauded investors etc. to jail.

    We need to wake up and start taking accountability for their actions and the decisions we make if we are ever to move forward as a nation.

    April 1, 2009 at 12:59 pm |
  48. Scott

    So... to all of you who don't have student loans.... good for you. But don't you dare look as us loan holders as choosing this debt. As an 18-22 year old, you can't possible understand the extent of the loan burden until that comes to bare. Public schools are bursting with applications and even highly qualified students can't get into public institutions.

    I owe over $200,000 in student loans. By the time they are paid off, it'll be over $400,000 in payments, my daughter will have graduated college and I'll be 67 years old!!!! It's almost not worth the education. One month of Iraq costs would pay for us ALL to go to school. And can you believe I pay taxes on my student loan payments. Add that to the inability to save any money and I figure my $150,000 tuition will cost me over a million dollars in my lifetime. AAAHHHHH! Tell me you understand that as an 18 year old!!!!

    April 1, 2009 at 12:58 pm |
  49. Matt from Georgia

    Perhaps the government should take into consideration that assisting those with student loans will only help spur economic growth. The money being spent to repay student loans would be spent on consumer goods. Instead of helping the auto manufacturers out by showering them with "free" money baffles me. Give it back to those individuals that put hard work into education to one day be able to afford the luxuries in life.

    April 1, 2009 at 12:58 pm |
  50. Chris

    I graduated in 2005 at 22 years old from a very good private school with $60,000 in student loan debt, I planned on becoming a High School Teacher until I realized I could never pay back my loans and live anywhere but with my mother on a starting teacher's salary. So I gave up that dream to take a job pushing papers I don't really care that much about. I'm making way more then I would be teaching, and I am able to pay my loans but I can't make a difference like I wanted to in the lives of young people unless I am willing to live in my mom's basement for the next couple years. I am not willing to do that. The "man" will get his money back. If I had known at 18 that going to the best school I got into was going to mean having a job I hate so I can pay back my debt instead of being able to teach, I would have just gone to Comunnity College.

    April 1, 2009 at 12:58 pm |
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