The School Loans Nightmare and College Costs

College School loans are Reaching a Trillion Dollars in Debt, but There is Help Available

I am prompted to write about the school loans nightmare currently in full force in our country due to several recent personal experiences. First of all, the news coverage about the looming trillion dollars of debt from school loans is scary enough. But based on actual personal stories I have been told, it is much worse than it seems on the surface. I will began by telling you actual school loans nightmare stories and school loan successes, as well as  solutions to their problems.

There are at least four stories I would like to share with you from students or graduates I have recently spoken to who wanted advice about college school loans or were featured in the media. This will help you to understand the problem with school loans for college and university students so that you can help your family members, friends, neighbors,  and associates avoid a horrible and costly school loan mistake. Once the mistake is made there is very little that can be done to remedy it, but there are options when school loans become unbearable or you get into default status.

First of all here are some of the examples of recent interviews I have had or media stories I have heard about school loans:

1. My first story is about a young girl who ended up on the front of yahoo news who thought her school loans would be forgiven due to a terminal illness.

Well, they were forgiven with a caveat. She was told by the government,  her whooping $150,000 of college school loans  were forgiven. Then she got a tax bill from the IRS. They explained  to her, that because it was “like a gift” she now had to pay $75,000 in taxes on what they considered a gift. Most people on the boards were surprised to find that students were borrowing upwards of $150,000 to go to college. Especially since  most entry level jobs cannot support a payment on that level of loans.

2. The next was the young girl who was all over DateLine television and internet news who went to medical school and borrowed a whopping $250,000 in school loans.

She was sent a bill for over $500,000 when she finished her medical residency in family practice medicine. She was told that interest accumulated on the loans while she was in residency, and that interest was added to her principle. She admitted that she did not read the fine print. Her biggest problem was finding a way to pay for the loans on a monthly basis. The loan payments were far in excess of what she could afford. After a massive media campaign, she was able to get the government to renegotiate her loans — the payments ended up being something like; $900 a month until she reaches 70 years old.

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3. This is an actual story of someone who came to me. I will call her “Rita” for privacy purposes. She took out $70, 000 in school loans to go to an expensive private University for graduate school, but could not find a job for 3 years after she graduated.

Her dad paid her way through college. She thought if she went to this expensive private University for graduate school, she would get all sorts of great contacts and land the perfect job. It did not happen. But, thanks to the Obama administration when he came into office, they drafted legislation that enables students to pay 10% of their income in loan payments, on federal loans. She eventually landed a job, but had it not been for the new legislation, she would  not have  the money in her budget to make monthly payments. The job was a low paying  job. Alternatively, her friend did not pursue the 10% option, and her check is being garnished for her school loan payment, leaving her almost no money to live off.

4. My own relative shared her financial aid award letter with me. She was told her mom made too much money for a subsidized loan, and was offered an unsubsidized loan. The unsubsidized loan would require interest payments during college, paid by her, or accumulated and added to the principle later.

I told her to throw that letter away, we will help. I figured she would have owed about $40,000 in four years going to a public state college and living at home. That is ridiculous.

5. This is a recent story from someone who ask if I could help her with information. I will call her Max. She borrowed money to go to college and graduate school, ending up with an additional $40,000 in accumulated “interest” at graduation, that was added to her existing principle.

When Max finished graduate school she found a job quickly. When her school loans came due she got a call from Sallie Mae, and they asked her if she could pay $1000 per month on her loans, she told them “no way”, then they ask if she could pay $750. She said “absolutely not, I don’t have near that much money after my necessary bills are paid”. She could not understand why the payment was so high, and they told her she was charged an additional $40,000 in interest while her school loan payments were in deferral, while she was in school.  I gave her several websites that could potentially help her.

Here are websites that can help you or people you know to avoid school loan nightmares, before or after college.

Information About Financial aid – Read Everything at This Website Before You Take Loans for College
https://studentaid.ed.gov/

The Consumer Financial Protection Bureau – has many resources about school loan protections
consumerfinance.gov

This is a section on federal loans and private loans
consumerfinance.gov/paying-for-college/choose-a-student-loan/#o1

Compare College Cost
consumerfinance.gov/paying-for-college/compare-financial-aid-and-college-cost/

Help Paying for Student Loans — If You Are Current Or In Default — This Page Will Help You Become Current With Student
Loans So You Can Clear Your Credit, or Return To School.
consumerfinance.gov/students/

Apply for a new direct consolidation loan with the U.S. Department of Education
http://loanconsolidation.ed.gov/

Try to get help from your loan servicer first, if they will not help, you can go to the
federal ombudsman.
For Assistance: Contact the “Federal Student Aid Ombudsman Group at the U.S.
Department of Education — Only if your loan servicer will not help you.
https://studentaid.ed.gov/repay-loans/disputes/prepare

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Lois Center-Shabazz
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author of, Live Rich Save Money! 68 Powerful Ways to Save Money, Now and Forever
Available Now at Amazon

 


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