As Default Rates on Borrowing for Higher Education Rise,Some Borrowers See No Way Out

[Mi Bankruptcy]

I was working full time when I went to college to get my degree. Heck, Wells Fargo owns me. They acquired my mortgage from another company and they hold 36K on my student loan debts. To charge the fees that this lady was assessed is a shame to say the least.

There is not enough information out there about the problems of student loans and how they can not be expunged with bankruptcy. People going to college are already stressed and may read the terms and think they can repay. This is no different than the Credit card companies jacking rates up on the person with a high credit card balance.

[flyinbroke]

I don't see her as so driven that she overlooked the cost; everyone who pursues beyond a bachelor's degree is well aware of the pricetag involved. We are also aware of the "advanced degree=greater income" that is pushed by employers as well as school.

It is common knowledge that once they are done with residency, doctors make enough bank to pay their bills. It is not at all farfetched for a doctor to see a light at the end of the tunnel and not have it be an oncoming freight train.

Now if you were talking about this chick (who, on top of scamming an extra 40K of party money from Sallie Mae and then decided getting knocked up would help financial troubles) we would have a personal ad:

Student loans were a fact of life for Marjorie Dillon and she was OK with that -- even though she didn't keep close track of how much she borrowed or completely understand the agreements. She and many of her former classmates at Robert Morris University in Moon relied on loans to pay tuition and expenses.

Ms. Dillon, 26, of Coraopolis, was the first in her family to attend a four-year university and loans were the only way to finance the business administration degree that would be her passport to a better life.

But six months after graduating with her bachelor's degree, Ms. Dillon is making $7.25 an hour plus tips serving beer at a bowling alley, working 25 to 30 hours a week. She's nearly $120,000 in debt, behind on her bills and, despite her best efforts, cannot find a better job. Her 80-year-old grandmother co-signed for the loans and could lose her house in North Fayette if the debts are not repaid.

"Honestly, I wouldn't have gone to school if I knew I would be in debt the rest of my life," Ms. Dillon said. "I won't be able to ever own anything. If you look at my credit report, it's (loaded) with Sallie Mae loans."

The financial crisis she is facing provides a snapshot of the worrisome outlook confronting many college graduates who find themselves juggling a mountain of student loans and other forms of debt in the early stages of their working lives.

Her case might be considered a worst-case scenario. The average cumulative debt for four-year college graduates has reached $22,656, according to Finaid.org, a leading Web site for financial aid information.

Some relief is on the way thanks to a new federal student loan repayment plan that will set monthly payments based on how much borrowers make and the size of their families instead of how much they owe. In some cases, graduates will make no monthly payments if their income falls below a certain level. And after 25 years of payments, any remaining balance is cancelled.

But the reduced income repayment program is only available for federal student loans under Stafford, Grad Plus and federal consolidated loan programs.

Ten of Ms. Dillon's loans totalling $108,639 were private signature student loans through the SLM Corporation -- commonly known as Sallie Mae -- which cannot be consolidated, forgiven, deferred or erased in bankruptcy. Two of her loans, totalling $9,000, are federal government loans.

Even if the variable interest rates stay frozen or never go up during the 25-year life of the loans -- which is unlikely -- her monthly payments on the $117,600 borrowed will climb to more than $1,100 and she will end up repaying at least $270,000.

For hardship reasons, Ms. Dillon has been allowed to pay only the interest for the first two years, which amounts to $670 a month.

Beyond illustrating the perils of student loan debt, Ms. Dillon's story also shows the consequences of a lack of financial planning, missing federal aid application deadlines and not meeting academic requirements for federal programs.

Officials at Robert Morris were willing to discuss Ms. Dillon's case only after she signed a consent form allowing the institution to release her education records to the Post-Gazette.

"In this case, the student frequently came into the financial aid office after school had begun and in some cases on the date bills were due and asked what her financing options were," said Mike Frantz, vice president of enrollment at Robert Morris.

University records show she failed to complete the Free Application For Federal Student Aid (FAFSA) on time for the first three years she attended Robert Morris, starting in fall 2005. That meant she didn't qualify for federal student aid and state grant money through the Pennsylvania Higher Education Assistance Agency.

After the spring 2006 semester, Mr. Frantz said Ms. Dillon lost her eligibility for government aid because her grade point average fell below a 2.0. To make matters worse, she failed to pass at least two thirds of the academic credits she signed up for, another requirement for eligibility.

Ms. Dillon also borrowed more than the amount needed to take classes.

Mr. Frantz said she borrowed $43,290 in excess of the cost of tuition and fees to attend Robert Morris. Full-time undergraduate tuition for the 2009-10 academic year costs $19,950. That does not include room and board for resident students. Ms. Dillon was not a resident student.

"I can assure you she was told about the ramifications of borrowing," Mr. Frantz said. "She satisfied the entrance loan counseling requirements which the federal government requires to make sure they understand the implications."

Ms. Dillon's college debt has ignited an emotional family drama that which includes her grandmother and her disabled father who raised three children as a single dad. He lives with his mother and receives $598 a month in government benefits.

Ms. Dillon managed to make the first payment on her loans due July 3 but that meant other important bills went unpaid. Her electricity was cut off by Duquesne Light Co. for $612 in past due bills in late July. Her refrigerator and kitchen cabinets are essentially bare.

"I can't remember the last time I went grocery shopping," Ms. Dillon said. "No one should be in this position. No one should be this stressed out every single day."

Although she does not qualify for food stamps, she does receive government help for her 9-month-old daughter through the Women, Infants and Children (WIC) nutrition program. Every month, she gets 10 cans of baby formula worth $13 each and 15 four-ounce bottles of juice. A younger sister has moved in with Ms. Dillon to help care for her daughter since she has no way of paying for child care.

Financial adviser Paul Brahim of BPU Investment Management, Downtown, recently evaluated Ms. Dillon's income and expenses at the request of the Post-Gazette and concluded that she must take dramatic steps to get her budget under control.

He suggested she move in with her grandmother if possible to save $600 a month on rent and eliminate the $120-a-month cable and Internet bill.

She could erase the $329-a-month car payment by selling the vehicle and using public transportation. She also should try to renegotiate the interest rate on her credit cards to reduce those $300-a-month payments. Her $150-a-month cell phone plan could also be reduced, he said.

Ms. Dillon said she has learned a lot about how credit and interest works while looking for solutions to her dilemma.

She counts pennies to make her payments and crunches numbers all the time. She figures if she could get a job making $30,000 a year, that would give her about $900 every two weeks that would all go into the bottomless hole that is her student debt.

"I wanted to be better off than my dad," she said. "He struggled with us and I knew I needed to get an education to get a nice job, nice house and drive a nice car. Now one whole paycheck goes to Sallie Mae for the next 25 years of my life.

"You dangle a steak in front of a dog and he will eat it. Every student takes out extra for living expenses. We don't work. But I'll do what I have to to make it. Yes, it will be hard. I've only made one payment and it's already hard."

Read more: http://www.post-gazette.com/pg/09210...#ixzz0fto79YaL

[OhioFiler]

I don't see her as so driven that she overlooked the cost; everyone who pursues beyond a bachelor's degree is well aware of the pricetag involved. We are also aware of the "advanced degree=greater income" that is pushed by employers as well as school.

It is common knowledge that once they are done with residency, doctors make enough bank to pay their bills.

Now if you were talking about this chick, who decided getting knocked up would help financial troubles on top of it all, we would have a personal ad:



Read more: http://www.post-gazette.com/pg/09210...#ixzz0fto79YaL

This chick used the student loan system as a Cash Advance Payday Loans institution. If this article is her attempt at scoring a suitor/pseudo-daddy she will fail. At least Dr Bisutti is making decent cash and is pretty hot!

[flyinbroke]

Dingdingding. She used the loans as free money, and probably tried to "OOPS" some poor guy into babydaddyland and he did not bite. Now this is one I don't feel remotely sorry for. Maybe she doesn't need a 150 dollar cell bill.

Then again she is a cautionary tale for bad choices...starting with majoring in business and taking out 50K in party money.

[OhioFiler]

Dingdingding. She used the loans as free money, and probably tried to "OOPS" some poor guy into marriage and he did not bite. Now this is one I don't feel remotely sorry for. Maybe she doesn't need a 150 dollar cell bill.

I noticed there is no mention of child support income in the story. I suppose the WIC we're providing will end up being some other tax-funded support mechanism as the child becomes older. I wonder if this chick learned anything while she was in school.

[flyinbroke]

Hell, this chick can't even shop effectively. Tuition at Robert Morris is 19,200 a year. If she drove an hour south to WV, WVU is 16402. If she looked just a hair further to the west, University of Pittsburgh is only 14904 a year! She had a bargain right in her backyard.

Then again, if she bothered to file an FAFSA on time, or went to class (let alone major in something useful) we would not be here.

Thinking she did not learn where the student health office is...they usually give out free condoms. And yes, we are likely paying for her kid. Hope she named it something arty and creative like Myst'Aayke.

[MSbklawyer]

This chick used the student loan system as a Cash Advance Payday Loans institution. If this article is her attempt at scoring a suitor/pseudo-daddy she will fail. At least Dr Bisutti is making decent cash and is pretty hot!

Dingdingding. She used the loans as free money, and probably tried to "OOPS" some poor guy into babydaddyland and he did not bite.

Y'all are terrible. Haven't your own financial difficulties given you any sense of empathy for other people in this situation? Everybody's own mistakes seem reasonable to them. Other peoples' mistakes look stupid. This poor girl probably had visions of herself with some sort of professional job earning decent money. And the purveyors of this poison sold her on that.

Babies happen. Better she had it than abort the child. When I was her age the very idea of using any kind of protection was laughable. As the saying goes, "But for the Grace of God, there go I."

So I, at least, will not be casting the first stone.

Anyway, these are the kinds of people I see so often. Only worse. In my practice they're usually black, speak thick ebonics, 150 pounds overweight, have 3 or 4 kids instead of just one and they don't even have the degree because they dropped out after 5 years of trying. So they're sitting in my office with a minimum-wage job and $80 - $100k in student loans and wondering what I can do about the garnishment that just got placed on the pitiful little check they do get. The only thing I can do is put them into a Chapter 13 with a nominal payment. And they'll be in Chapter 13 for the rest of their lives.

There has got to be a better way.

[OhioFiler]

Y'all are terrible. Haven't your own financial difficulties given you any sense of empathy for other people in this situation? Everybody's own mistakes seem reasonable to them. Other peoples' mistakes look stupid. This poor girl probably had visions of herself with some sort of professional job earning decent money. And the purveyors of this poison sold her on that.

Babies happen. Better she had it than abort the child. When I was her age the very idea of using any kind of protection was laughable. As the saying goes, "But for the Grace of God, there go I."

So I, at least, will not be casting the first stone.

Anyway, these are the kinds of people I see so often. Only worse. In my practice they're usually black, speak thick ebonics, 150 pounds overweight, have 3 or 4 kids instead of just one and they don't even have the degree because they dropped out after 5 years of trying. So they're sitting in my office with a minimum-wage job and $80 - $100k in student loans and wondering what I can do about the garnishment that just got placed on the pitiful little check they do get. The only thing I can do is put them into a Chapter 13 with a nominal payment. And they'll be in Chapter 13 for the rest of their lives.

There has got to be a better way.

No empathy at all. I graduated college debt-free. All my debt was consumer debt incurred while I was making a living.

I might choose to sympathize with this woman but I read she specifically cheated the system taking out loans far exceeding her educational needs and refused to take the advice of professionals. So there is neither empathy not sympathy for her plight.

What irks me about this story is the reporter clearly has an agenda writing this story. She intends to demonize the student loan programs and institutions while simultaneously creating sympathy for this deadbeat. The story is not fair or balanced and doesn't belong in a newspaper.

[MSbklawyer]

All my debt was consumer debt incurred while I was making a living.

Why is that kind of debt -- consumer debt-- somehow more empathetic or understandable or reasonable than educational debt?

I might choose to sympathize with this woman but I read she specifically cheated the system taking out loans far exceeding her educational needs and refused to take the advice of professionals. So there is neither empathy not sympathy for her plight.

But that's a form of consumer debt, isn't it? Using borrowed money for everyday living expenses. And I don't think that's cheating, really. The student loan notes that I've seen all say that the money is intended for educational expenses and reasonable living expenses associated with getting an education.

What irks me about this story is the reporter clearly has an agenda writing this story. She intends to demonize the student loan programs and institutions while simultaneously creating sympathy for this deadbeat. The story is not fair or balanced and doesn't belong in a newspaper.

Whatever your opinion about how much sympathy the girl deserves I can respect, but student loans NEED to be demonized. They need to be outlawed. They really do. Too many 18, 19 year old kids are making life-long debt slaves out of themselves with a stroke of a pen without any idea of what they're signing up for.

[Mi Bankruptcy]

When the bankruptcy system is this preferential then it does need to be demonized. It's the perfect example of lobbying and special interests. We also need to realize it is the government that was pushing for citizen to obtain higher eduction. They have now helped people become indentured servants to the debts of trying to obtain a better life in a honest way.

BTW.. I continue to pay my student debts.. However, I should have had a true fresh start when filing for bankruptcy.

[flyinbroke]

MSbklawyer, the difference between me and her is that I did not do an article to dredge up sympathy for my plight. I take on full responsibility for where I am at and in hindsight could kick myself for signing up for some of the things I did. (However, unprotected sex was never one of my bad decisions...I was pretty adamant about protection...but I digress.) Bad or not, I agree that the writer wants to make all S/Ls bad. I don't think they are; in some cases it is a necessary evil to finish school.

I am another that had empathy for her situation until I found out about the nearly 50K she took out for party money. She pretty much says that herself. I had no life in college; I worked through UG, until I could not keep up with the costs. I enlisted in the military to make more college money. I went full time while serving on active duty and got two degrees for half of what it cost her.

I took out federal loans, and never saw a dime of that cash. It went straight to the university. I got enough to cover tuition, and used GI Bill benefits for the rest.

[MSbklawyer]

We also need to realize it is the government that was pushing for citizen to obtain higher eduction.

And not just citizens, EVERY citizen, regardless of their lack of academic potential or lack of of inclination to go to college has to have a four year degree and study English literature &c. for their lives to have meaning. Can't have any non-degreed electricians walking around out here without a good knowledge of the writings of Shakespeare and a basic understanding of Freudian pshycologial theories. It's gotten so a person can't get a job pushing a broom unless they have this prohibitively expensive degree.

[OhioFiler]

Why is that kind of debt -- consumer debt-- somehow more empathetic or understandable or reasonable than educational debt?



But that's a form of consumer debt, isn't it? Using borrowed money for everyday living expenses. And I don't think that's cheating, really. The student loan notes that I've seen all say that the money is intended for educational expenses and reasonable living expenses associated with getting an education.



Whatever your opinion about how much sympathy the girl deserves I can respect, but student loans NEED to be demonized. They need to be outlawed. They really do. Too many 18, 19 year old kids are making life-long debt slaves out of themselves with a stroke of a pen without any idea of what they're signing up for.

I never used student loans so I can't empathize with her dilemma. It is nothing more or less than that. Had she borrowed money from Chase to finance a home improvement project then I could empathize.

No, student loans are not consumer debt. The loans are guaranteed by the government. My loan with Chase was not. NO ONE should rely of loans for reasonable living expenses. I worked full time through school and graduated on a 5 1/2 year plan because of it. I have no problem with anyone borrowing funds to finance an education.

What do you suggest the nation do in lieu of student loans to finance post-high school educations? I have a great idea but I want to read yours first.

[tigergem]

I'm gonna step in it. I just know it. But here goes my 2 cents adjusted for inflation.

In some areas of the country, there is a general underlying and highly pervasive cultural acceptance of being on welfare and living from one six pack to the next that is the "norm", and this is not a racial thing by any means. I dare say that no amount of education can overcome it, unless the person is willing (or able) to remove themselves from the culture, and also learn a different way to "be". I've seen it and it is depressing, but actually, if you can fathom this, only to people who have experienced something different. To those who are in it, living day in and day out with the reality of this culture, it simply is a fact of life. No matter what mess they get into, it is fully expected that there is a bureaucracy or a charity that can fix that. Their culture absolutely will keep them down, impoverished and following like sheep. And experiences like this, where people try and fail to better themselves, serve as an example to the rest of them as a good enough reason to not try to better their own situations. She is 26 years old with a nine month old baby, a degree and a lifetime supply of debt. Her 26 year old neighbor with 6 kids on welfare who didn't finish high school is financially better off.

And I would almost guarantee you that her stupid choices are being discussed in a completely different light around dinner tables in her own neighborhood than how they are being discussed here. It probably sounds something like this: See what she gets for thinking she can go off and get some high falutin' college degree, thinkin' she is better than everybody else? And the one with 6 kids on welfare? Her little kids are overhearing the whole thing.

See how that works?

[MSbklawyer]

MSbklawyer, the difference between me and her is that I did not do an article to dredge up sympathy for my plight. I take on full responsibility for where I am at and in hindsight could kick myself for signing up for some of the things I did. (However, unprotected sex was never one of my bad decisions...I was pretty adamant about protection...but I digress.) Bad or not, I agree that the writer wants to make all S/Ls bad. I don't think they are; in some cases it is a necessary evil to finish school.

I am another that had empathy for her situation until I found out about the nearly 50K she took out for party money. She pretty much says that herself. I had no life in college; I worked through UG, until I could not keep up with the costs. I enlisted in the military to make more college money. I went full time while serving on active duty and got two degrees for half of what it cost her.

I took out federal loans, and never saw a dime of that cash. It went straight to the university. I got enough to cover tuition, and used GI Bill benefits for the rest.

And all of that strongly points to the fact that you have good sense and you tend to make wise decisions. But a lot of people don't. She's a perfect example. And society is telling her and people like her that they SIMPLY MUST get this degree at any and all costs if they ever want to be anything more than a field hand.

And banks are letting these people take on loads of debt that they wouldn't dream of lending to these people if there were no government guarantee for the loan.

It's not funny anymore. This stuff is seriously ruining peoples lives. It's trashing their credit, it's lowering their and their childrens' standard of living.

You know, life is full of disappointments. And being unable to afford college is one of them. If you can't afford to go, you don't go.

Maybe government should provide a free ride to a few of the brightest kids who want to get an advanced education but otherwise can't afford it. But this idea of taking on debt so massive that it outweighs the benefit of the education is becoming the rule and not the exception.