Granny_Weatherwax Posted January 21, 2015 Share Posted January 21, 2015 This was published in a local paper.http://www.galesburg.com/article/20150118/NEWS/150119768/13710/OPINION  The young woman claims to have $150K in student loan debt for a BA. Her parents co-signed the private loans.  The story raises more questions than it answers but that is typical for journalism in our area. Quote Link to comment Share on other sites More sharing options...
Tsuga Posted January 21, 2015 Share Posted January 21, 2015 Holy cow. A BA in public relations! Ă°Å¸ËœÂ²  That's pretty much what, five years of living expenses and tuition in loans? Quote Link to comment Share on other sites More sharing options...
maize Posted January 21, 2015 Share Posted January 21, 2015 She says in the article that there is no bankruptcy for student loans, but I thought that only applied to federal, not private, loans. Can anyone clarify? Quote Link to comment Share on other sites More sharing options...
Joyoustxmama Posted January 21, 2015 Share Posted January 21, 2015 I found this information on bankruptcy and student loans http://www.studentloanborrowerassistance.org/bankruptcy/ Â but surely she and her family have already researched/ considered it? My goodness I hope they have or will. What a terrible lifetime punishment for the simple crime of youthful inexperience. Â I have to wonder why her parents agreed to cosign? Surely they realized she would have trouble paying such monster loans back with a public relations entry level job... (Baffled face). Â I feel bad for the entire family. Quote Link to comment Share on other sites More sharing options...
gingersmom Posted January 21, 2015 Share Posted January 21, 2015 Sad. Â I remember reading awhile ago about a NYU student leaving with $100,000 in student loans and no degree. Quote Link to comment Share on other sites More sharing options...
BlsdMama Posted January 21, 2015 Share Posted January 21, 2015 :( Quote Link to comment Share on other sites More sharing options...
BlsdMama Posted January 21, 2015 Share Posted January 21, 2015 She says in the article that there is no bankruptcy for student loans, but I thought that only applied to federal, not private, loans. Can anyone clarify? I'm guessing even if she could declare it, they'd then take the parent's assets. Â It says she is the first in her family to go to college. Mom and dad didn't want to discourage and probably didn't look at the total dollar amount, never fathoming what it could cost. Â Gotta be honest, my parents and DH's parents weren't savvy in this way. The two of us got into a (smaller) mountain of debt. If DH hadn't joined the service wed be in $64k deeper than we are and they paid for a good chunk of his MS and MBA degrees. Â But $150k in private loans. Wow. :( Quote Link to comment Share on other sites More sharing options...
Barbara H Posted January 21, 2015 Share Posted January 21, 2015 Thanks for sharing this article. This is an unusually extreme but very sad story. As the article mentions the average amount of student loan debt is under $30,000. Not an insignificant sum of money, but it is an amount that many students find manageable and a good investment. One thought I had while reading this article is that it is a good reminder why high school students benefit from having some kind of financial literacy training or class. This isn't just a college financing issue. Lack of understanding of financing gets a lot of people in trouble with stuff like car loans, rent to own furniture, etc.  It is sometimes possible to discharge private student loans in bankruptcy but it is complicated and difficult. Given the extreme nature of this situation, yes, it seems like consulting an attorney that specializes in this area would be a good idea. http://www.huffingtonpost.com/steve-rhode/some-private-student-loan_b_3652935.html   Quote Link to comment Share on other sites More sharing options...
happypamama Posted January 21, 2015 Share Posted January 21, 2015 Sad. Â I remember reading awhile ago about a NYU student leaving with $100,000 in student loans and no degree. Was that the girl making $8 an hour as a photographer's assistant, or something like that? It made me feel so sick. So, so sad. Quote Link to comment Share on other sites More sharing options...
Jilly Posted January 21, 2015 Share Posted January 21, 2015 It sounds like she is not making much. Couldn't she apply for an Income-Based Repayment Plan? It seems like that would be her best bet. Quote Link to comment Share on other sites More sharing options...
elegantlion Posted January 21, 2015 Share Posted January 21, 2015 12% interest! OMG, that should be illegal. My federal loans are 3-4%. I'm sorry, but ignorance of college costs does not equal ignorance of interest rates. Neither of my parents finished college, ex was not a graduate, I'm a sophomore in college at age 40+, and even if I weren't in college, I know enough to counsel my son about interest rates. I guess I was brought up to question everything.  Our college requires a group loan counseling session for all borrowers. It's basically an employee with a personality like a blunt bulldog reminding people to not borrow money without any clue how to pay it back.  It's sad and it sucks that her career has not turned out like she planned, but sometimes you have to take off the rose-colored glasses to read the fine print. Quote Link to comment Share on other sites More sharing options...
elegantlion Posted January 21, 2015 Share Posted January 21, 2015 And much like textbook publishers that create a racket with new editions each year just because they can, companies that charge those rates to students should be taken out back and flogged. That's part of what needs to change. We need to make an investment in people that want to attend college and give them so financial breaks to help them achieve their goals, not rob them of their future before they ever get a degree. Quote Link to comment Share on other sites More sharing options...
Tsuga Posted January 21, 2015 Share Posted January 21, 2015 It sounds like she is not making much. Couldn't she apply for an Income-Based Repayment Plan? It seems like that would be her best bet.  Yep. She needs to go into the public service and get a government job so she can do income based repayment for 10 years. It is her only hope. Quote Link to comment Share on other sites More sharing options...
FaithManor Posted January 21, 2015 Share Posted January 21, 2015 My understanding is that most judges will not allow private student loans to be discharged in bankruptcy. But, what they do require if the student files for bankruptcy is that the lending institution lower the interest rates considerably and re-amortize the loan over a longer period to make the payments more manageable. This is because the worst cases, like the one above, are nearly always SALLIE MAE who has a history of unethical behavior of mind boggling proportions, bordering on illegal, harassment that absolutely crosses the line of legality, and crazy interest rates...many times jacking students rates to 14% or higher. They have been cited for failing to send out statements until AFTER the due date in order to tack on late fees they shouldn't be entitled to, and judges are really tired of it. So, generally, if the student gets tired of trying to consolidate their loans into one payment at a lower interest rate and Sallie Mae refuses to cooperate, the words "I'm engaging a bankruptcy attorney and you will not get another penny from me until this is settled in court" will get them to back down and be decent. This is what my son in law had to do because he wasn't even behind on payments, was still in the deferred grace period after graduation, and was already being woken up at 3 a.m. every morning from one of Sallie Mae's debt collection agencies with threats of what they would do to him if he wasn't on time with that first payment. Once he mentioned the above, they magically lowered his interest rates to the same as the federal Stafford loans which is roughly 4% down from anywhere from 10-14%, and amortized them over 15 years instead of 10 which made them much more manageable. As it is, he'll pay off his Staffords early and then apply that money to the Sallie Mae which will get them paid off sooner. Still, it's just a huge bill. Huge, and a real burden.  We have no problem with the boys taking out Stafford/Perkins loans. That means around $23,000.00 in debt. But, not the private ones. We can contribute $5000 - $7500.00 a year from our retirement savings per boy and then when A graduates, I'll be going back into the work force to pay all of that back before dh thinks about retiring. Therefore, the rule of thumb is that the school they settle on needs to have a merit aid package that makes the bill $13,000 or less so that when they take out the federal loans, the amount left is within what we can handle from retirement funds and household budgeting. So for instance, Alma...his current package is at $20,000.00 on a $42,000.00 bill. That's $22,000.00 left. So he needs to get the additional $4000.00 he competed for on the 10th, plus the Christian Leadership scholarship which is $1000.00 plus $5000.00 between Michigan competitive scholarship and his art portfolio (those scholarships run from $1000 up to $15,000) and/or a campus job for $1500.00 or he needs to get the 4-H scholarship in lieu of the art portfolio or some combo like that in order to afford it. Otherwise, he's off to U of MI with his half scholarship that already puts the total bill below the $12,000.00 for on campus, or far less than that if he commutes to the extension campus the first year while we sort out his medical situation.  I recommend that parents do this kind of math. Take the "total bill" and minus out anything that you could manage without scholarships and financial aid and loans such as books, travel, activity fees, and then take that number, subtract merit aid awards and see what is left. Subtract the Stafford and Perkins loans which are the really low interest, good repayment terms loans ($5500.00 is the total for the freshman year if memory serves), subtract out say $1000.00 or $1500.00 in campus job (avoid schools that give you a bottom line that includes more than that for campus job because it means your student is going to work potentially more hours than what a freshman can handles as he or she adjusts to college responsibilities), and see what is left. That is the number they expect in parent loans and private student loans or from your savings account or whatever. As a general rule, if you make more than $50,000 a year, you probably aren't going to see any kind of significant grant aid from the state or federal government. So if you are at or above that threshold, then you've got a pretty good idea how much money is left to come up with and will have some idea if your student can afford the school or not. As a general rule, most schools will try to have financial package letters ready around the middle of March because they are hot to trot to get housing deposits from that time forward. If the schools you are looking at allow stacking of awards - meaning that outside scholarships do not lower the amount of institutional aid - then look at what you can get locally. 4H, American Legion, local business groups, etc. Those $500 and $1000 scholarships will add up and usually the competition is low because so few students take the time to write the essays or jump the hoops. Again, that only works at colleges that allow outside scholarships to stack on top of institutional merit awards so you want to contact the financial aid department of each school and pose that question to them.  Also, make sure that the institutional aid is renewable and not just a one time freshman scholarship. Many of the outside scholarships will be one time. So you need to consider what future years will look like without renewable merit. In C's case, all of his merit from Alma is renewable based on minimum GPA, as is the 4H scholarship he is competing for so he'll be okay. Something like the American Legion is usually a one time gift. Now that said, upper classmen can many times apply for departmental scholarships in their majors later on which could make up for lost one-time merit awards.  Quote Link to comment Share on other sites More sharing options...
Barbara H Posted January 21, 2015 Share Posted January 21, 2015 Income based repayment or public sector work forgiveness are great options for some students. It sounds like the problem for this student is that she's saddled with large private loans. That's one of the downsides of private loans is that they aren't covered by options like income based repayment or public sector work forgiveness. She's in a really tough situation. Quote Link to comment Share on other sites More sharing options...
Tsuga Posted January 23, 2015 Share Posted January 23, 2015 Oh dear. :( I did not realize that most of her loans were private... Quote Link to comment Share on other sites More sharing options...
TechWife Posted January 24, 2015 Share Posted January 24, 2015 I have a great deal of sympathy for this young lady. However, I do think part of the problem is that people are not taking the time to educate themselves on the loans they are taking out. It truly is all there in the paperwork. The amount of the loan, interest rate and the payment requirements are all there. I think it would be a great idea to have a seminar that teaches teens how to read contracts, especially when so much is at stake. Quote Link to comment Share on other sites More sharing options...
snowbeltmom Posted January 24, 2015 Share Posted January 24, 2015 In my opinion, this is more of a "stupid story " than a "sad story." Why did this girl choose a private college with a yearly tuition price tag of over $40K when she could have gone to a state school for way less than that? Maybe this girl didn't understand debt, but I find it hard to believe her parents were also as naive and didn't understand the documents they were signing. More than likely, they didn't want to have to say "no" to their daughter when she begged them to sign.  My son just last month turned down the opportunity to attend the university ranked number one in the country in his major, and one of the contributing factors was the yearly tuition of $47K. Many kids every year turn down offers of admission at schools because the price is beyond their families' abilities to pay. That is the reality.  I don't feel sorry for this girl. She had way less expensive options. She is not a victim - she chose to take on this massive amount of debt. Quote Link to comment Share on other sites More sharing options...
SarahW Posted January 24, 2015 Share Posted January 24, 2015 I understand how these things happen. You take your bill to fin aid office and say that you can't really pay that amount, can they help? Oh, yes, they can help, of course! They go to a stack of papers and hand you a form. Just fill this out, and 10k will come off your bill! Â That happened to me once (though not for 10k, I was wondering why the bill was $500 more than previous bills) and when I saw the form was for a PLUS loan I laughed and walked out. My parents were in the middle of a divorce, for one..... Â Â And Sallie Mae are criminals. They refused to put my DH's loans in IBR for months for one lousy excuse after another. They even tried telling him he wasn't eligible for IBR because he had consolidated with a PLUS loan. His parents aren't even American! He finally threatened legal action (knowing a lawyer who lets you put down his name in letters is really nice) and they put him into IBR within a week. Did they refund his payments for the months they screwed with us? Of course not. Quote Link to comment Share on other sites More sharing options...
Posted January 24, 2015 Share Posted January 24, 2015 As is often the case, I feel like the article completely misses the point. Â This earnest young lady, took out huge loans to get a college degree to improve her life, and after graduating, apparently, couldn't find a job better than her waitressing gig she had before she started college. Â The real problem isn't that she's got the huge debt (although it is a problem), the real problem is that her degree didn't help her to land a job on track to middle class. Â Then, while I wish her luck in California, she seems naive about the cost of living, and how, even if a fast food waitressing job pays $9/hour, it isn't going to go nearly as far towards rent as it would back home. Â I hope she can find the PR job she wants there. Quote Link to comment Share on other sites More sharing options...
amsunshine Posted January 24, 2015 Share Posted January 24, 2015 As is often the case, I feel like the article completely misses the point. Â This earnest young lady, took out huge loans to get a college degree to improve her life, and after graduating, apparently, couldn't find a job better than her waitressing gig she had before she started college. Â The real problem isn't that she's got the huge debt (although it is a problem), the real problem is that her degree didn't help her to land a job on track to middle class. Â Then, while I wish her luck in California, she seems naive about the cost of living, and how, even if a fast food waitressing job pays $9/hour, it isn't going to go nearly as far towards rent as it would back home. Â I hope she can find the PR job she wants there. Â Yes, she seems to be making one bad decision after another. Â California will likely not be the answer to her problems. Â I do think there is a big issue here about the vast difference between what colleges promise to offer young students, and what is actually delivered. Â Tuition is outrageous and there is something disturbing about how easy it is for young, naive people to get student loans, which are not dischargeable in bankruptcy, to pay for an inordinately expensive degree, when job prospects for someone with that degree are either not very good, or the available jobs will not pay enough income to make the student loan payments manageable. Â I'm not saying that these people were wise in making the decisions they made leading up to this young lady's student debt. Â However, it seems to me that something needs to change with the educational loan system. Â Quote Link to comment Share on other sites More sharing options...
TranquilMind Posted January 24, 2015 Share Posted January 24, 2015 This was published in a local paper.http://www.galesburg.com/article/20150118/NEWS/150119768/13710/OPINION  The young woman claims to have $150K in student loan debt for a BA. Her parents co-signed the private loans.  The story raises more questions than it answers but that is typical for journalism in our area. I just read about a girl with $200K in loan debt she obtained in order to get a Sociology degree. Argh!  Crazy times. Quote Link to comment Share on other sites More sharing options...
Posted January 24, 2015 Share Posted January 24, 2015 Yes, she seems to be making one bad decision after another. Â California will likely not be the answer to her problems. Â I hope California will be good to her. Â However, I just know that somewhere along the line, someone will tell her that she'd be much more hireable in her PR field, if only she had a master's degree... Quote Link to comment Share on other sites More sharing options...
TranquilMind Posted January 24, 2015 Share Posted January 24, 2015 In my opinion, this is more of a "stupid story " than a "sad story." Why did this girl choose a private college with a yearly tuition price tag of over $40K when she could have gone to a state school for way less than that? Maybe this girl didn't understand debt, but I find it hard to believe her parents were also as naive and didn't understand the documents they were signing. More than likely, they didn't want to have to say "no" to their daughter when she begged them to sign.  My son just last month turned down the opportunity to attend the university ranked number one in the country in his major, and one of the contributing factors was the yearly tuition of $47K. Many kids every year turn down offers of admission at schools because the price is beyond their families' abilities to pay. That is the reality.  I don't feel sorry for this girl. She had way less expensive options. She is not a victim - she chose to take on this massive amount of debt. I agree. This should be on Dave Ramsay's "Stupid Tax" page.  She knew she was in deep trouble by year two, the article says, but she continued all four years at this overpriced, private college.  She says she badgered her parents into co-signing. Both she and the parents were stupid there. It's just a shame. I hope the parents don't lose everything because of this dumb mistake. Quote Link to comment Share on other sites More sharing options...
snowbeltmom Posted January 24, 2015 Share Posted January 24, 2015 Yes, she seems to be making one bad decision after another.  California will likely not be the answer to her problems.  I do think there is a big issue here about the vast difference between what colleges promise to offer young students, and what is actually delivered.  Tuition is outrageous and there is something disturbing about how easy it is for young, naive people to get student loans, which are not dischargeable in bankruptcy, to pay for an inordinately expensive degree, when job prospects for someone with that degree are either not very good, or the available jobs will not pay enough income to make the student loan payments manageable.  I'm not saying that these people were wise in making the decisions they made leading up to this young lady's student debt.  However, it seems to me that something needs to change with the educational loan system.   I agree that tuition is outrageous. However, it is impossible for young, naive people to get student loans of the magnitude this girl obtained - her parents, adults who should know better, had to co-sign the loan documents.  I think one of the problems now is that these lenders have no "skin in the game" since the loans can't be discharged in bankruptcy. If these loans could be discharged, these lenders would never lend that much money to a student majoring in public relations since that would be too risky of a loan.  Quote Link to comment Share on other sites More sharing options...
amsunshine Posted January 24, 2015 Share Posted January 24, 2015 I agree that tuition is outrageous. However, it is impossible for young, naive people to get student loans of the magnitude this girl obtained - her parents, adults who should know better, had to co-sign the loan documents.  I think one of the problems now is that these lenders have no "skin in the game" since the loans can't be discharged in bankruptcy. If these loans could be discharged, these lenders would never lend that much money to a student majoring in public relations since that would be too risky of a loan.   Exactly.  These lenders would never loan this kind of money under these circumstances if not for the bankruptcy rules.  What these people did was dumb, I agree.  The adults should have known better -- yes.  But lenders are taking advantage of dumb people.  And schools continue to make money hand over fist.  It doesn't strike me as right. Quote Link to comment Share on other sites More sharing options...
snowbeltmom Posted January 24, 2015 Share Posted January 24, 2015 Exactly.  These lenders would never loan this kind of money under these circumstances if not for the bankruptcy rules.  What these people did was dumb, I agree.  The adults should have known better -- yes.  But lenders are taking advantage of dumb people.  And schools continue to make money hand over fist.  It doesn't strike me as right.  I agree. And as long as there are people out there that continue to take out these loans, the colleges have no incentive to keep their costs under control and tuition will continue to outpace inflation.  I was hoping the college bubble would burst, like the housing bubble, before my kids started college. Unfortunately, that didn't happen.  Quote Link to comment Share on other sites More sharing options...
FaithManor Posted January 24, 2015 Share Posted January 24, 2015 Exactly. Â These lenders would never loan this kind of money under these circumstances if not for the bankruptcy rules. Â What these people did was dumb, I agree. Â The adults should have known better -- yes. Â But lenders are taking advantage of dumb people. Â And schools continue to make money hand over fist. Â It doesn't strike me as right. And some schools take commissions for selling the loans which means that they are handing out "financial advice" to students from one hand, while the other one is attempting to scam them. They know these kids are new to adult life and likely have very little experience with legalese. So yes, they should be more responsible to read and think through the paperwork, but on the other hand, the schools and the employees that take these "bribes" should be held accountable for their unethical behavior. Quote Link to comment Share on other sites More sharing options...
Michelle_NC Posted January 25, 2015 Share Posted January 25, 2015 "So I need a break. I need a new place. What I have hanging over me will never leave, so at least maybe I can start new in a new place and try to deal with the things I'll never be able to completely escape." Â Her best bet at this point would be to move in with her parents and use the majority of her salary to pay off her loans. Â What in the world are they thinking??? Quote Link to comment Share on other sites More sharing options...
Sebastian (a lady) Posted January 25, 2015 Share Posted January 25, 2015 As is often the case, I feel like the article completely misses the point. Â This earnest young lady, took out huge loans to get a college degree to improve her life, and after graduating, apparently, couldn't find a job better than her waitressing gig she had before she started college. Â The real problem isn't that she's got the huge debt (although it is a problem), the real problem is that her degree didn't help her to land a job on track to middle class. Â Then, while I wish her luck in California, she seems naive about the cost of living, and how, even if a fast food waitressing job pays $9/hour, it isn't going to go nearly as far towards rent as it would back home. Â I hope she can find the PR job she wants there. Â Having just moved from San Diego, I really had to scratch my head over that move too. Â Maybe she has friends or family to stay with, but $9/hr isn't going to go far when milk is $5/gal and gas is some of the highest in the country, not to mention the high cost of housing and utilities. Â And there are plenty of other people who are also looking for those server jobs. Â California's unemployment is 7.2, one of the highest unemployment rates in the country. Quote Link to comment Share on other sites More sharing options...
Sebastian (a lady) Posted January 25, 2015 Share Posted January 25, 2015 Yes, she seems to be making one bad decision after another. Â California will likely not be the answer to her problems. Â I do think there is a big issue here about the vast difference between what colleges promise to offer young students, and what is actually delivered. Â Tuition is outrageous and there is something disturbing about how easy it is for young, naive people to get student loans, which are not dischargeable in bankruptcy, to pay for an inordinately expensive degree, when job prospects for someone with that degree are either not very good, or the available jobs will not pay enough income to make the student loan payments manageable. Â I'm not saying that these people were wise in making the decisions they made leading up to this young lady's student debt. Â However, it seems to me that something needs to change with the educational loan system. Â Â People will offer me all kinds of things. Â I was offered a Firestone Credit card yesterday. Â I'm offered a Target card every time I shop. Â I say no thank you. Â Just because they offer it, doesn't mean they have MY best interests in mind. Quote Link to comment Share on other sites More sharing options...
plansrme Posted January 25, 2015 Share Posted January 25, 2015 I agree that this is sad, and she is stupid, and her parents were gullible, etc., but I also do not see her position as hopeless.  If she lives at home and lets her parents continue to support her for three years, she can climb a long way out of that hole.  Waitresses can make $100/shift easily (I could make that in a good night 25 years ago).  Five shifts a week = $500 cash, minimum.  And with $150K in debt, you don't get to work five shifts a week.  You work six or seven, and you babysit, and you work whatever job you can the rest of the hours in your day, and you scrounge up $30,000 in cash throw at those loans every year.  She would get the EIC, so there's  a little money.  Maybe she qualifies for food stamps--there's $100 a month.  It's JUST HER, no kids, and I assume her parents haven't thrown her out of their house, so let them pay for their gullibility by continuing to feed and clothe her for a few more years.  In three years, she's easily cut her debt in half, and now it's not so crazy.  Would it be a fun three or four years?  Of course not.  She had four years of fun; now she has to pay for it.  Sure, 12% interest is ridiculous, but I doubt she's paying 12% on the entire balance; surely some of those loans were subsidized.  In any case, she needs to quit whining to reporters and quit moving to California and fix this mess. Quote Link to comment Share on other sites More sharing options...
Michelle_NC Posted January 25, 2015 Share Posted January 25, 2015 There are hundreds of thousands of college students who manage to get through college without owing $167K at the end. Â This isn't a cost-of-college problem or youthful ignorance problem as much as a magical-thinking consumer problem. Â Both the girl and her parents. Â Especially the parents. Â Â Quote Link to comment Share on other sites More sharing options...
Laura in CA Posted January 26, 2015 Share Posted January 26, 2015 Perhaps this isn't relevant to the dilemma of the young woman in the article, but for the average student borrower with $30k in loans -- there is apparently an expansion of the IBR (income-based repayment) terms. There was an article yesterday in NYT: "A Quiet Revolution in Helping Lift the Burden of Student Debt" Â (sorry, this post isn't worded well -- but i'm in a hurry :) ) Quote Link to comment Share on other sites More sharing options...
Tsuga Posted January 27, 2015 Share Posted January 27, 2015 There are hundreds of thousands of college students who manage to get through college without owing $167K at the end. Â This isn't a cost-of-college problem or youthful ignorance problem as much as a magical-thinking consumer problem. Â Both the girl and her parents. Â Especially the parents. Â They think, "Well other people are taking out loans and paying them off, so why won't she?" They don't realize that most people aren't taking out so many loans. Â Yes it is pathetically ill-informed but this is the whole problem with the student loan scam. Nobody talks about the sums they are taking out so some particularly ill-informed people really don't know. Â Obviously her family is not brilliant. They think California is a great place to save money. Â Still, I think lending at those rates and to such young people for what they perceive to be their main chance at a middle-class life amounts to nothing less than usury and highway robbery. The lenders knew it was wrong. The family was stupid but the lenders were horrible people. Quote Link to comment Share on other sites More sharing options...
SKL Posted January 27, 2015 Share Posted January 27, 2015 Well, I agree with her when she says "I was stupid." Her dad tried to explain things to her and she would not listen. What can be said to that?  I also agree that all young people should be taught basic finance. It might be a good idea to require prospective debtor students to model out how much their loans are going to cost them, how much they will need to earn in order to support themselves while servicing the loans, and how that compares to realistic earnings in their chosen field. I know I'm going to make my kids do this. :)  As for blaming the creditors, I don't necessarily agree. Not every expensive education is a bad investment. How is the bank supposed to know which people are going to land a career and which ones are going to chase $9/hr jobs all over the country? How is the bank supposed to know which co-signing parents are making a good investment and which are just unable to say "no" to a foolish request? Should access to education finance be non-existent to people who aren't born rich?  I have my own long story about student loan debt. Mine was mainly from graduate school, and although it was very hard in the initial years, I paid it off early. It was sort of character building in a way - I'm sure it's the main reason I now have no debt and some savings. I might have done some things differently in hindsight, but I would not say it's wrong to offer education finance to people who otherwise could not afford to get a valuable education. My equally intelligent friends who didn't go to college are not all that happy or secure.  I don't like hearing the comments about bankruptcy, as if the reason for this woman's problem is the bankruptcy law. Bankruptcy law doesn't exist to provide education subsidies at the expense of stiffed creditors. Quote Link to comment Share on other sites More sharing options...
SKL Posted January 27, 2015 Share Posted January 27, 2015  Still, I think lending at those rates and to such young people for what they perceive to be their main chance at a middle-class life amounts to nothing less than usury and highway robbery. The lenders knew it was wrong. The family was stupid but the lenders were horrible people.  12% is not an outrageous interest rate under the circumstances. About half of my student loans were at 12% for some years. The big problem here is that she spent way beyond a reasonable investment amount (principal) for what she got out of it. And I can't fathom how she expected to get that much out of any bachelor's degree.  Quote Link to comment Share on other sites More sharing options...
SKL Posted January 27, 2015 Share Posted January 27, 2015 I have a niece who wanted to borrow significant $$ from me for year 1 of an expensive 4-year bachelor's program. She didn't have a plan for years 2-4, so I assume she was going to borrow those from me as well. I said no. So now she is attending the same junky state undergrad I went to. Poor darling. Quote Link to comment Share on other sites More sharing options...
snowbeltmom Posted January 27, 2015 Share Posted January 27, 2015 Well, I agree with her when she says "I was stupid." Her dad tried to explain things to her and she would not listen. What can be said to that? Who cares whether she would listen? The dad could have prevented this whole mess by refusing to sign the documents. It sounds like his daughter was having a temper tantrum and he was unable to say "No" to her.  I don't like hearing the comments about bankruptcy, as if the reason for this woman's problem is the bankruptcy law. Bankruptcy law doesn't exist to provide education subsidies at the expense of stiffed creditors. I agree that the bankruptcy laws should not exist as an out to stiff creditors. However, if the bankruptcy law did not exclude student loans, these students would not have these loans in the first place since the lenders would never loan that much money.  Take what happened in the housing market - Lenders were offering interest only loans with no income verification and no money down, and there were many borrowers who made the unwise decision to sign on the dotted line. This drove up the price of housing for all consumers. Eventually, the bubble burst and these irresponsible lenders went out of business.  Today, mortgage lenders are much more conservative with the loan products they offer and the price of housing has dropped as a result.  We need a mechanism to reign in these irresponsible student lenders. Until that happens, "stupid" borrowers will continue to sign on the dotted line and we will all pay the price for their "stupidity" as tuition will continue to rise for all of us.       Quote Link to comment Share on other sites More sharing options...
SKL Posted January 27, 2015 Share Posted January 27, 2015 I agree that the bankruptcy laws should not exist as an out to stiff creditors. However, if the bankruptcy law did not exclude student loans, these students would not have these loans in the first place since the lenders would never loan that much money.  There is a reason for this law encouraging banks to make educational loans despite lack of collateral, at interest rates that reflect a likelihood of being repaid. Providing access to quality education is never going to be fool-proof, but it's an important goal.  I agree that the financing structure in this case was a mess, but that is on whom? Is it the responsibility of the banker to do a long-term cost-benefit analysis on each student's future? Or is it reasonable for them to consider the fact that most students don't over-borrow like this woman did?  And I think this lady is pretty ungrateful, considering people put all these funds at her disposal and she wasted them and now wants to play the victim. Victim of what? Too much trust, forbearance, kindness? Quote Link to comment Share on other sites More sharing options...
snowbeltmom Posted January 27, 2015 Share Posted January 27, 2015 There is a reason for this law encouraging banks to make educational loans despite lack of collateral, at interest rates that reflect a likelihood of being repaid. Providing access to quality education is never going to be fool-proof, but it's an important goal.  I agree that the financing structure in this case was a mess, but that is on whom? Is it the responsibility of the banker to do a long-term cost-benefit analysis on each student's future? Or is it reasonable for them to consider the fact that most students don't over-borrow like this woman did?  And I think this lady is pretty ungrateful, considering people put all these funds at her disposal and she wasted them and now wants to play the victim. Victim of what? Too much trust, forbearance, kindness? I agree that students should have access to a quality education. However, this girl did not need this loan in order to have access to a quality education - she could have gone to a state school for a fraction of the cost. She chose to go to a private school.  I do think the lenders should be responsible for doing a long-term cost benefit analysis on the loans they offer. This type of analysis occurs when lending money in any other situation, why should this not occur in the student loan business? Oh, that's right - lenders in the student loan business have "no skin in the game", unlike all the other lending markets.  It should not take much "analysis" to realize that borrowing massive amounts of money in order to attend a school that charges $40K per year for a degree in public relations in not a sound financial decision.   Quote Link to comment Share on other sites More sharing options...
maize Posted January 27, 2015 Share Posted January 27, 2015 I agree that students should have access to a quality education. However, this girl did not need this loan in order to have access to a quality education - she could have gone to a state school for a fraction of the cost. She chose to go to a private school.  I do think the lenders should be responsible for doing a long-term cost benefit analysis on the loans they offer. This type of analysis occurs when lending money in any other situation, why should this not occur in the student loan business? Oh, that's right - lenders in the student loan business have "no skin in the game", unlike all the other lending markets.  It should not take much "analysis" to realize that borrowing massive amounts of money in order to attend a school that charges $40K per year for a degree in public relations in not a sound financial decision.  I would say the bank knew the risk, which is why they would only issue the loan with the parents cosigning. Quote Link to comment Share on other sites More sharing options...
Elisabet1 Posted January 27, 2015 Share Posted January 27, 2015 There were people who were trying to tell me that I should tell my daughter to go wherever she wanted and just take out the loans for it. I refused. It was like I was the horrible cad ruining her for saying she had to go with options within our financial ability. Â I think people should be educated in this stuff, but I do not think they should just get off scott free. A lot of people will do community college, settle for schools that were not first choice, and whatever else, to stay within their means. Those who chose not to should not be allowed to just write anything off. Someone pays for that in the end. Quote Link to comment Share on other sites More sharing options...
katilac Posted January 27, 2015 Share Posted January 27, 2015  And I think this lady is pretty ungrateful, considering people put all these funds at her disposal and she wasted them and now wants to play the victim. Victim of what? Too much trust, forbearance, kindness?  Are you saying that the lenders treated her with trust, forbearance, kindness? Because I promise you they did not lend the money out of the goodness of their heart! And they didn't trust her; they had her get a cosigner. And, unless I missed it, they've shown no forbearance on the loan.  I agree that this young lady and her parents bear some responsibility for their stupid decisions, but let's not make the lenders out to be kind and generous. They are not. Quote Link to comment Share on other sites More sharing options...
SKL Posted January 27, 2015 Share Posted January 27, 2015 Punishing the lenders in this case would be effectively punishing any future young people who will be unable to pursue their realistic dreams without borrowing.  Why not see this as it is - one foolish woman who didn't know when to cut her losses and change direction.  I would like to know how she spent all that money. How much was the cost of her tuition/books vs. personal spending? If tuition was that high for a PR degree, maybe some of the questions should be on the college. Is their tuition reasonable for the value of their PR undergrad? How were her grades? What was she expecting to do when she graduated, and why didn't it happen? Was she being honest with her parents about her progress and prospects? Why would her parents go on cosigning loan after loan if they were seeing the honest picture of things?  And speaking of the parents. Even if a bank is unreasonable to trust an 18yo to know what she's doing financially, it is more reasonable to expect the mature co-signers to have that much sense. Is it also the bank's fault if the parents co-signed against their better judgment? Quote Link to comment Share on other sites More sharing options...
SKL Posted January 27, 2015 Share Posted January 27, 2015 Well, if I borrowed my neighbors' lawnmower, not knowing how to use it expertly, and ran over my flowers, can you see me going on the news and complaining because after all that, my neighbor wants his lawnmower back? And then other people mudslinging at the neighbor for being rotten enough to lend me his lawnmower? Quote Link to comment Share on other sites More sharing options...
snowbeltmom Posted January 27, 2015 Share Posted January 27, 2015 Punishing the lenders in this case would be effectively punishing any future young people who will be unable to pursue their realistic dreams without borrowing.  Why not see this as it is - one foolish woman who didn't know when to cut her losses and change direction.  I would like to know how she spent all that money. How much was the cost of her tuition/books vs. personal spending? If tuition was that high for a PR degree, maybe some of the questions should be on the college. Is their tuition reasonable for the value of their PR undergrad? How were her grades? What was she expecting to do when she graduated, and why didn't it happen? Was she being honest with her parents about her progress and prospects? Why would her parents go on cosigning loan after loan if they were seeing the honest picture of things?  And speaking of the parents. Even if a bank is unreasonable to trust an 18yo to know what she's doing financially, it is more reasonable to expect the mature co-signers to have that much sense. Is it also the bank's fault if the parents co-signed against their better judgment?  As long as people are stupid enough to acquire massive amounts of debt, colleges have zero incentive to set their tuition rates at a reasonable price.  This is similar to the housing market, as long as people were willing to borrow massive amounts of money, sellers were able to sell their houses for more than they were actually worth.  The responsibility for this girl's financial mess falls solely on the parents inability to say "no." However, if these lenders had to also suffer the financial consequences, the parents would not have ever had the option to co-sign for the loan in the first place.  Quote Link to comment Share on other sites More sharing options...
Sebastian (a lady) Posted January 27, 2015 Share Posted January 27, 2015 I agree that students should have access to a quality education. However, this girl did not need this loan in order to have access to a quality education - she could have gone to a state school for a fraction of the cost. She chose to go to a private school.  I do think the lenders should be responsible for doing a long-term cost benefit analysis on the loans they offer. This type of analysis occurs when lending money in any other situation, why should this not occur in the student loan business? Oh, that's right - lenders in the student loan business have "no skin in the game", unlike all the other lending markets.  It should not take much "analysis" to realize that borrowing massive amounts of money in order to attend a school that charges $40K per year for a degree in public relations in not a sound financial decision.  I'm half-way through rereading The Big Short by Michael Lewis.  It is a sobering reminder that many in the financial industries have their own goals.  Those goals might in some circumstances overlap with the goals of consumers, but in many cases, they don't really.  Students need to realize that there will be all kinds of people who will sidled up to them, offering them what looks like a great deal.  But they may be no more working in the student's interest than the three card monte dealer in Times Square or the guy peddling knock off Rolex watches or the car dealer offering a clunker car at exorbitant loan rates.  I would say that many of the loan offers as well as a good number of the college degree programs themselves are not necessarily in the student's best interests.   I think that one side effect of the push to get every student who wants to go to college into college is that the means of placing them there may actually work to the long term detriment of the student.  The OP article seems to be a case in point.  Quote Link to comment Share on other sites More sharing options...
snowbeltmom Posted January 27, 2015 Share Posted January 27, 2015 Well, if I borrowed my neighbors' lawnmower, not knowing how to use it expertly, and ran over my flowers, can you see me going on the news and complaining because after all that, my neighbor wants his lawnmower back? And then other people mudslinging at the neighbor for being rotten enough to lend me his lawnmower?  Well, if the neighbor knew his lawn mower was likely to malfunction and cut off his neighbor's foot when she was using it, I would consider that a rotten neighbor, even if he did "help" her out by lending his lawn mower.  While the parents are responsible for this financial disaster, the company that gave them the loan is a rotten neighbor because there is no way that they thought paying over $40K per year for a degree in public relations was a wise investment.   Quote Link to comment Share on other sites More sharing options...
8filltheheart Posted January 27, 2015 Share Posted January 27, 2015 I have become hardened to the plights of people who make decisions like those in the article. Â Spend any time on CC and you read 90% of the posts looking down at perfectly acceptable schools and stating that they have worked hard and "deserve" dream school experiences. Â They are too good for anything but the best. Â Fine and dandy. Â Embrace the dream which comes with nightmare debt. Â You deserve the debt, too. Â There are plenty of wiser kids who recognize the nightmare and choose the practical path. Â Â Call me cynical. Â Quote Link to comment Share on other sites More sharing options...
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