April 3rd, 2009
09:57 AM ET

Student aid needs a course correction

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/04/02/art.vert.hillstrom.jpg caption="Samantha Hillstrom graduated from college in May 2007." width=292 height=320]

Samantha Hillstrom
CNN Production Assistant

Last week, I wrote a blog about an issue facing many college graduates: debt from student loans. Since the post went up, the outpouring of response – more than 2,000 comments posted on this blog - has been staggering. It’s quite clear this is a discussion we need to be having in America today. Whether you support me or completely disagree with what I’m saying and the choices I’ve made, I think one thing we can agree on is that America’s student loan system is severely flawed.

Let me make something very clear. In no way am I looking for a bailout. I completely accept the amount of student debt I gave myself by attending a private college in New York City. It was my choice and one that I made understanding I would be leaving with debt to pay off.  I do not expect to be bailed out, but what I do expect is to have the same conditions on my loan agreements and repayment plan as homeowners in America.

Right now, you can purchase a house at a fixed rate of 5% with a 30-year repayment. Yet, I have student loans that have variable interest rates and only 12 years to pay them off. That’s not right. How is it that the failing auto industry gets a bailout and I can’t even consolidate my loans to get a lower monthly payment? How is it that the banks get a bailout and student loans holders can’t even get forgiveness when they go into a low paying job or when they serve their communities? We didn’t all strive to be doctors, lawyers or investment bankers earning high wages.

As a result of the government bailouts, I’ve noticed a general sentiment in our country where everyone lacks sympathy for those who made poor decisions and then expect a handout when it fails. I get that and I share the same distaste. However, I regret the notion that attending the college of my choice and choosing my dream career was a poor decision.

The conversation we need to be having is complex. It starts with addressing the cost of college and how kids have to pay for it. We need to start educating our high school students on how to finance an education and what exactly it means to take out a student loan. I have said before that I was uneducated about loan terms and I wasn’t exactly certain about all of the fine print. Now, in my repayment, I am still confused. It’s not as easy as you think.

The way student loans are processed and subsequently repaid is part of the predatory lending crisis, quite similar to what many homeowners experienced. Students did what they thought was the right thing by taking out student loans through a bank backed by the government, but now they’re leaving college with variable interest rates and unfair repayment options.

I didn't leave college with $115,000 of student debt, but out-of-control variable interest rates and the inability to consolidate has now left me with more than $20,000 worth of interest  - yes, interest - on the loans.

In 2006, the federal government cut aid to students including Stafford Loans, Pell Grants and work study options, leaving many people with no other option than to take out a student loan. My loan provider is actually a bank that received federal bailout money. As a consequence of that, I think it is within reason to ask that it renegotiate my loan terms.

Many people said I should have attended a state school and then I wouldn’t have been in this mess. Last time I checked state schools weren’t drastically cheaper and I didn’t come from a financial situation where I could have afforded any school without a loan. The tuition of my state school would have been at least $20,000 per year. How is that any different? This isn’t a private versus public school debate.

My mom was a single parent who did everything she could to make sure I had options to pursue my dreams. I worked my entire way through college. Between work study, part-time jobs both during the school year and summer, babysitting I did on the weekends and non-paying internships; I was hardly sipping lattes on Madison Avenue watching my debt accrue. Last month, I moved outside of Manhattan to save an extra $300 a month to put toward my loans. I have never been on Spring Break. I dye my own hair, paint my own nails and bring my lunch to work. I still babysit and use that money to buy groceries and pay my electric bills. I’m from Chicago and now only go home to see friends and family at the holidays. $250 for a flight home or partial payment of my student loan? I almost always choose the latter. This is my life. This is my choice and I’m not complaining. However, we are taught to follow our dreams and I didn’t push my way through high school to attend a community college because that was the only thing I could afford.

We need to stand up as a country and demand that student loan interest rates are lowered and college is more affordable. We should be free to go to any school we want and get a degree in our dream field. Let’s fix this problem and give students the freedom to attend the college of their choice and graduate with the ability to pay off their student loans in a responsible manner. We are talking about education, not cars, homes or lines of credit to go shopping. The fact that students are expected to pay sky-rocketing interest rates on loans for education is exactly where the problem lies. We are in a financial crisis right now and the student loan repayment process isn’t reflecting that.

Filed under: Education • Samantha Hillstrom
soundoff (30 Responses)
  1. Chris Kostro

    Mike M., did you even read her two blogs? What are you even talking about? The girl is saying she wants her loans refinanced so that she can have 30 years to pay them off instead of 12, and maybe, if the world were really fair, she could have a fixed rate instead of an adjustable one. She's not saying that she wants the government to bail her out with tax dollars. She specifically states the opposite, in fact. Refinacing of loans would cost the taxpayer nothing. It would just mean that the banks would have to reign in their predatory lending to people going to college. The problem with the political discussion in this country is that we often times don't even listen to what the other side is trying to argue. Listen up Mike M., and maybe you won't disagree with what she's saying. Maybe you still will, but at least you could come up with some points to dispute what she's actually writing.

    April 5, 2009 at 1:08 am |
  2. Mike M.

    To those that say "what is wrong with getting the best possible education?"

    What is wrong with driving a brand new Ferrari, Living in a multimillion dollar house, having yachts, horses, add what you like to this list.

    The answer is "nothing is wrong with it". The question is who is paying for it?

    If you want the taxpayer to pay for you to have those things you should move to another country I for one dont want you living here.

    This is America you can have all you want. Just dont ask me to pay for it.

    April 3, 2009 at 3:56 pm |
  3. Mike M.

    The article is on point. If this does come to a larger discussion you must seperate those that want to lag back to. He should, they should, the government should.

    What that amounts to is "PAY IT FOR ME".

    Sure change the rules regarding length of loan term, interest rate, and ability to re-finance. Even I can get behind that idea.

    America is the land of opportunity which gives each of us the right to pursue education, a job, housing, or riches if you like. That does not mean "I" the taxpayer have to pay for your education.

    If you want a free education move to a European country that offers a free college eductation. They exist.

    OH. You want to live here and want it free? Sounds like you want me to pay for it. Why should I?

    The bible nor the constitution entitles you to the right of a free education in "this" country.

    And to those of the enlightened. Education is the way. While I agree in principle that education drives many things here is the rub. I pay for you to become a doctor and then YOU keep the money. NOT.

    Have you seen any blog with "I am a brain surgeon and feel guilty for making so much money. How do I give it back?" NO. Yes he probably saved lives. He got paid for it and he KEPT the money.

    Samatha if you want this topic to gain steam you must seperate those that stray from your argument. I agree with you not the others.

    April 3, 2009 at 3:50 pm |
  4. cira de castillio

    This article is right on point. There needs to be Fed Sponsored Consolidation of Student Loans where all loans can be bundled with a interest rate that reflects the reason for the loan...a better educated America. Paying 12% on student loans is just not right. Banks are making a unfair rate on this arrangement. What can be more deserving "bail out' than education loans?

    April 3, 2009 at 2:50 pm |
  5. Annie Kate

    Student loan repayment plans and interest rates are ridiculous and yes, you should be able to get your loans consolidated at a lower interest rate.

    My daughters have student loans they are paying on and they have experienced the same thing that you are – inability to consolidate and get a lower rate. One went to a private university bu the other went to a state university – there is not much difference in total cost as you say.

    People are quick to say that wrong choices were made but what is wrong about wanting to get the best education and preparation you can get for the field you have chosen to work in? You hope to get good scholarships, grants, etc. but usually you never get enough and the balance has to be made up with a loan – my daughters all got scholarships, grants, work-study, an extra job, plus their loans and still could barely scrape by. I hope by the time the youngest has graduated something will have been done to make it easier to pay the loans back. They don't want a bailout – just decent terms.

    April 3, 2009 at 1:44 pm |
  6. Erin

    Thanks for this amazing piece, Sam! I was lucky enough to make it through my undergraduate education without any student loans which allowed me to pursue a graduate degree where I did incur debt. By that point, I was older and more educated so it was at least a little easier to navigate this incredibly complex and overwhelming process.

    I think your critics need to remember that an 18 year old is NOT an adult. Understanding loan terms and variable interest rates has clearly been difficult for older and wiser home buyers. Is it any shock that a high school senior might need help understanding?

    You're blog highlighted two important tasks for legislators:

    1. We need to educate students about loan terms and how to find the best rates. This means that banks and even the government need to be more transparent.

    2. Pushing yourself (and making sacrifices) is what creates innovative and productive members of society. Students should be encouraged to follow their dreams while also realizing they're making choices about their future financial and career goals. But in the end, they should get the best terms possible when financing an education because it's the most important investment they will make.

    April 3, 2009 at 12:59 pm |
  7. catherine

    This country is set up to allow the elite and the rich to stay in power. Those who come from middle class families who just want to contend in the job market and choose to go to great schools are burden with debt for the rest of their lives. I received a bachelors and a masters. I have no credit card debt and I get treaded by creditors for my financial aid loans like I am a criminal. I did nothing irresponsible I didn't live outside of my means all I wanted was to contend with other students who could afford the best education and now I am financially ruined. This says to the citizens of this country who weren't born with a silver spoon that if they decided to climb the social latter that there are huge consequences. Debt forever.

    April 3, 2009 at 12:31 pm |
  8. John Williams - Lacey, WA

    Starting last year there were changes to hardship requirements that made loan repayment delays available to a number of people. These changes were made . My interest rate is variable but has remained under 6% the entire time since i graduated. Like any other loan the bank or institution you get it from makes a big difference on the terms you end up facing later.

    Better education not a change to the system needs to happen first.

    April 3, 2009 at 12:29 pm |
  9. Jeff O.

    It seems we have voices that are in agreement. What is the next step to have this discussed on a national level where something can really be done?

    April 3, 2009 at 12:00 pm |
  10. Gincoolette

    I totally agree with you! I am actually shocked that people would blame individuals for enhancing themselves as individuals with post education. People need to understand that education means progress, human progress and only thorugh education human being can evolve and survive. I know it is a strong statement, but as mentioned by many other people without for example doctors we would not be able to cure innocent suffering people and so on. Every INDIVIDUAL deserves to attend college no matter what their financial situation is. The government should help those who decide to spend their life at the library without sleeping for days. Graduate school is no joke. Students in most public colleges are underpaid, health insurance is not provided but it is a required to be enrolled, scholarships are competitive and only offered to a very specific target audience (minorities, U.S. citizens, etc), graduate students in many departments teach more than one class each semester and yet they have to take loans out because they can't afford to pay their miserable $400 in rent in the most dangerous area of town because that's where rent is cheap. And yet, what is amazing is that those students do it, fight, live in misery because they believe in what they study, they want to help people....And yet many Graduate students just can't afford to be in school and drop out. Statistically about 50% of PhD students in the U.S.A drop out and never finish college. If you look closely at these statistics you will also see that women and people of colors have higher drop outs. These numbers mean something and tell us something about our school system.

    April 3, 2009 at 11:51 am |
  11. Michelle Doellman

    I think this is exactly the point. I also had parents who sacrificed a lot to put my younger sister and I through private school. My dad is 55 and works three jobs to pay off the loans he and my mom so generously took out to pay my college expenses not covered by scholarships, students loans and work study programs. I'm graduating from graduate school in a few weeks and know this is an issue I'll have to face in a slow moving economy. Thank you very much for bringing it to light. I'm currently interning at a new newspaper called The Printed Blog. If you would be interested in submitting any content, please check out our website at http://www.theprintedblog.com. Keep up the great work Samantha and never be ashamed you followed your heart! 🙂

    April 3, 2009 at 11:44 am |
  12. Cori

    I agree 100 percent, well said. Education in general has always been a major problem, and no resolution is in sight. I am facing these same issues. I just graduated about a year ago and will have to start repaying my loans in 3 more months. Now my boyfriend is in the same boat, he graduates this coming December. Once he's done with school, we'll have a combined debt of almost $60,000, and we attended a state college! We both want to pursue a masters degree, but our debt will now MORE than double. We both come from poor families, and make sacrifes that people just can't believe. No vacations, no spring breaks, no flying anywhere to visit family (I haven't seen my family in 3 1/2 years), no eating out, no movies, we work as much as possible to keep up with bills, etc., etc. - it's just insane; we don't have a life! Heck, our long-term dreams of pursuing a PhD. seems impossible. What are we to do? We can barely survive as it is.

    I'm glad to see you're not giving up this battle and standing up for struggling college students everywhere. Thank You!

    April 3, 2009 at 11:38 am |
  13. Jim Durbin

    Well I agree that it's not right, thats way I have started an essay contest where top prize is a full ride scholarship to the school of you choice. Plus I am looking for students to hire PT to help get the word out. Just go ck http://www.theessaycontest.com for more info. And good luck all on you reaching your goals.

    April 3, 2009 at 11:26 am |
  14. Ashley Leuck

    Its unfortunate that there is such an emphasis on education in the United States, yet, monetary support for higher education continues to drop each year. Students are faced with tuition rate increases each year due to economy setbacks, which forces them to borrow more money from student loan companies. It's unfortunate that students who cannot receive financial support from their parents are faced with $15,000-$100,000 in student loan debt before they are barely 22 years of age. Most of those students who do rely on student loans pay the minimum per month and cannot receive support after college from their parents.

    Where is the help for our future education? As the nation continues to sink into financial debt, the future leaders of America are faced with a tremendous amount of financial burden. How can we reach for our dreams when student loan burdens prevent us from even traveling outside our home state, or even from living on our own after college?

    We are the "boomerang" generation. Due to money, or lack there of, once we enter the "real world, " we cannot afford to survive due to the lack of disposable income we have which is a result of bills and loan payments. Most eventually return back to our parents house.

    How is this fair?

    April 3, 2009 at 11:25 am |
  15. Marissa Barrow - Baton Rouge, LA

    It's so true. My student loan is sitting there, and I know I should try to pay the interest while I'm in school. However, I've never received any information from my lender as to how I can do it.

    My biggest fear is I'll leave college and be haunted by this debt (even if it's considered "good" debt) for the rest of my life. How am I supposed to save money when I'll have to put every extra cent into my student loan payments? How am I supposed to ensure my future children can go to college if I can't set any money aside for them.

    And this is coming from someone who had to take loans out on top of a scholarship to a relatively cheap state school.

    April 3, 2009 at 11:21 am |
  16. Emily del Castillo

    Thank you for writing about the student loan situation. I took out student loans for my college education too. There was no other way for me pay for my tuition. I worked 2 jobs and went to school full-time. I didn't have parents that were able to assist me financially. It's been a struggle ever since I graduated from school. I don't regret my decision because the end result was well worth it. In hindsight I do wish that there was counseling available or provided prior to taking out the loans.

    It sickens me when I hear about all the greed that's been going on. It is like a cancer. There are those of us who play by the rules and meet our financial obligations yet we aren't getting a bail out. I just hope that we can find a balance in a financial system whose benefits have so far been 'one-sided'.

    April 3, 2009 at 11:19 am |
  17. Kristen

    Agreed!!!!! I have tons of student loans and can not see a future where I will be paying them off because I don't have a job because the economy blows! My loans have been on 'economic hardship' deferment ever since payments started because I went into the Peace Corps. I left early, but they are still deferred because I can't get a job. I feel that my only hope of employment is through an internship (unpaid obviously) or AmeriCorps (here is 10k a year thanks for playing)...

    April 3, 2009 at 11:15 am |
  18. Dayana

    Well said. It's easy for some people to point fingers and judge, but despite being accepted to NYU, Columbia, Princeton, Tufts, Boston U and the best state college in my state (U of Florida), I chose to go to the cheapest one (U of South florida). I come from the greatest family in the world who worked 90+ hours a week to put food on the table, but they couldn't send me to college. I had the scholarships and the grants and I was still left with a gap of $4,000+ per semester to be filled by me. I'm not one to complain about 4 grand, but those loans added up quickly and now I'm looking at $50,000 (including interest). It's not like I wasted my time in college .. I graduated with three bachelor's and am now fluent in two languages (not counting english)... I worked at least two jobs at all times and have accumulated a lot of relevant work experience ... and I STILL can't find a job! I claim full responsibility over the price of my education, but I can't help but be angered by what is happening. It seems like the only option the government has given me is to eat or make my bills ... of course there's also the option of dying in Iraq. I don't understand .. I thought I did everything right, I don't know where I messed up. I don't want to be defaulting on my loans but what other choice do I have? I'm really asking .. what are my options because I'm desperate!?!

    April 3, 2009 at 11:09 am |
  19. anon

    Great follow-up. Though I agree with you on the nuts and bolts of repayment terms, there is still another issue that has not been addressed. That is, the US does not value education as a social investment. This isn't a house (important as it is to the person/family and to the economy), it is education–there's a reason it's free through high school: It's necessary for the future of the country on nearly every level. The state college system is good, but increasingly unaffordable even to in-state students. For those of us who choose a program outside the US, especially when US programs are insufficient or non-existent, forget it, there is no real, available aid. Nevermind we finance it ourselves, but come back to teach in public schools. Why don't we have forgiveness programs that substantially reduce serious student debt? Why doesn't the US understand that learning is a social investment with the future at stake?

    April 3, 2009 at 11:08 am |
  20. Doug Uptegraft

    I think the conversation needs to go even deeper than just how a college education is financed. I hold both a bachelors and a masters degree from a state college, acquired at the cost of a huge amount (more than $140K) of post-college debt. The degrees are completely worthless, though the debt remains. It is not the state of the economy which made them depreciate in value; it is the state of the education I did not receive. I have chatted with other alumni from other schools to hear stories similar to mine. College did not provide "real" educations for the price. Classes often kept the most current information until the end of a term, for example, which means its delivery was rushed or neglected. Labs or practicum experiences never happened (or were given in lieu of classroom instruction). If I had know what little preparation college would have given me for the rest of my life, I certainly would not have attended.

    April 3, 2009 at 11:06 am |
  21. Duane Nelson

    In my opinion, student loans could be extended, to say, 30 years in order to allow young folks a chance to get their feet on the ground. Smaller monthly student loan payments could be set up for a few years, gradually increasing over the life of the loan. Also, the lowest possible fixed rate interest should be established at the beginning of the loan. Just an idea. Oh, by the way, I am 56 years old with quite a hefty amount of student loans.

    Good Luck, Samantha

    April 3, 2009 at 11:06 am |
  22. Tara Galloway

    Your words are well put! Clearly, something needs to be done. I just hope people who can make a change are reading this article as well...

    April 3, 2009 at 11:05 am |
  23. Kathy Favro

    You 100% right. I have a son at Brown University. My husband & I have about $40,000 worth of loans and my sons has bout $20,000. It is not easy. My husband is 60 years old and has work since he is 12 years old. He is tired and so am I. We have worked as a family to make this happen, but a little help in any way would be welcomed.

    April 3, 2009 at 11:05 am |
  24. KJ

    Thank you for getting this subject out there! Kudos.

    April 3, 2009 at 11:03 am |
  25. Kristen-University Park, PA

    Samantha I completely agree. Students don't expect a bail out, but fair treatment in regards to paying loans back shouldn’t be too unreasonable. I’m glad you continue to blog about this because it definitely deserves the attention.

    April 3, 2009 at 11:03 am |
  26. Whitney

    I'm also frustrated at the process I have had with my own student loans to receive some sort of relief and/or delay of demanded payments b/c my husband has lost his job. We lost 55% of our income when he was laid off. I'm furious right now that mortgages are receiving help but there's nothing being leveraged to help the vulnerable people out there...

    We are newlyweds, trying to get by in a very high-cost-of-living area in pursuit of making it through these times...

    The fact that the interest rates aren't even based on anything but what a law passes and that they were EVER allowed to go to 6.5% and variable is insane. People have 8% interest rates out there on STUDENT LOANS while others have 0.5% and 1.5% from prior administrations.

    April 3, 2009 at 11:00 am |
  27. Michael "C" Lorton, Virginia

    Well written--and truly well spoken. It is a delema that faces many who have graduated from college-–the student loan progam is flawed--and needs to be restructured--and I hope that somewhere, someone in a position of power and influence hears your words--but remember--and especially in this time of economic crisis--how does one restructure "greed,"-–because there is no cure for "the cancer of greed."

    April 3, 2009 at 10:26 am |