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

[flyinbroke]

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.

If I tended to make all wise decisions, I probaby wouldn't be here. Not everyone is wise 100 percent of the time though.

I agree there should not be this push for college. Some people can do it, some can't. Some won't, even if they can. Perfect examples are me and one of my best friends. Both of us did 20 years in the military (aviation). She chose no school (said she was just not that interested in it) and is a jet engine mechanic. I chose school and am an engineer. We both love what we do and she and I both make a good living. However, I get to pay off loans and when she retires, she spends a grand or two on an A&P license and can carry on. Neither of us regrets our choices, because we found our niche. But we are an example that shows that while college is great, one does not need a formal education if they choose to think outside the box. It is fallacy to say that a college degree is the only ticket to the good life.

As for Ms. Dillon, her town is small but it is not a poor place...only 8-9 percent are below the poverty line. If she was the first to get a degree, it would seem that her family did okay without. But regardless of the road one chooses, private loans are one of the worst ways to do it if you are planning on giving it a shot. However banks will give them out like candy, especially now since they are no longer dischargeable.

[backtoschool]

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.

It is refreshing to see your compassion MSbklawyer. I agree with you completely, that since we all know what it is like to be insolvent, we should all be able to empathize with this poor woman's plight.

In my opinion, one form of insolvency is not morally superior to any other.

[OhioFiler]

It is refreshing to see your compassion MSbklawyer. I agree with you completely, that since we all know what it is like to be insolvent, we should all be able to empathize with this poor woman's plight.

In my opinion, one form of insolvency is not morally superior to any other.

Just so I understand....you praise MSbklawyer for his compassion based on the collective empathy we all share for the insolvent(regardless of the cause of insolvency), yet MSbklawyer is most assuredly one of the few on here who are not insolvent.

This poor woman's plight is not shared by me nor do I hold insolvency A in higher moral standing than insolvency B.

What I do make note of is this woman chose to use a federally backed program, designed to help people acquire a college education, as a Cash Advance ATM machine. She cheated the system and is now being held up as an example of what is wrong with the student loan system by this far left wacky reporterette.

Her decision to milk the federally guaranteed loan program for her party fund is morally repugnant.

[HakunaMatata]

I didn't have to live in NYC on 9/11 or in New Orleans during Katrina to understand devastation occurred. First-hand experience doesn't exclusively dictate compassion and empathy.

This woman became insolvent in a effort to place herself in a position to make a living. Some (and I'm not mentioning any names ) proclaim to have become insolvent while making a living. Milking federal student loans or milking credit cards...same insolvent end result.

In this situation, I believe ignorance trumps cheating. The practice of extending large loans designed to cover educational expenses and "living expenses" to clueless college students is flawed. Many fresh from the nest college students lack the knowledge to properly define "living expenses" while concurrently fostering grand notions of post-college success. Sadly, newbie adults don't have keen instincts and they're being tossed out of the nest without fully developed wings (believing education will aid in this development) onto a predatory path (inability to clearly assess living expenses).

[OhioFiler]

I didn't have to live in NYC on 9/11 or in New Orleans during Katrina to understand devastation occurred. First-hand experience doesn't exclusively dictate compassion and empathy.

This woman became insolvent in a effort to place herself in a position to make a living. Some (and I'm not mentioning any names ) proclaim to have become insolvent while making a living. Milking federal student loans or milking credit cards...same insolvent end result.

In this situation, I believe ignorance trumps cheating. The practice of extending large loans designed to cover educational expenses and "living expenses" to clueless college students is flawed. Many fresh from the nest college students lack the knowledge to properly define "living expenses" while concurrently fostering grand notions of post-college success. Sadly, newbie adults don't have keen instincts and they're being tossed out of the nest without fully developed wings (believing education will aid in this development) onto a predatory path (inability to clearly assess living expenses).

Come on, you can name names!

Another situation created by the effects liberalism: young adults with no concept of adult life.

Liberalism and its advocates created a barrier between parents and children over the last 2 generations leading to a era of child-like young adults. Couple this with our schools transformed from institutions of learning into institutions of self esteem and we get this woman and hundreds of thousands just like her who are ill prepared for life outside the nest.

Of course there is a difference between those who default on student loans and those who default on personal loans. One requires taxpayers to bailout the offender and the other does not (notwithstanding the TARP nonsense of 2008 which should never be repeated).

[backtoschool]

Come on, you can name names!

Another situation created by the effects liberalism: young adults with no concept of adult life.

Liberalism and its advocates created a barrier between parents and children over the last 2 generations leading to a era of child-like young adults. Couple this with our schools transformed from institutions of learning into institutions of self esteem and we get this woman and hundreds of thousands just like her who are ill prepared for life outside the nest.

Of course there is a difference between those who default on student loans and those who default on personal loans. One requires taxpayers to bailout the offender and the other does not (notwithstanding the TARP nonsense of 2008 which should never be repeated).

One could say that bankruptcy is a bailout too.

I am not knocking the "school of hard knocks" that you went to Ohiofiler, but there are certain positions and careers that demand an intricate and expensive education. Loans are often the only way to fund such an education.

And while you may not "empathize" with those who have student loans because you bootstrapped your way through your degree, at least I can hope that you would sympathize with those that are insolvent like yourself.

[OhioFiler]

One could say that bankruptcy is a bailout too.

I am not knocking the "school of hard knocks" that you went to Ohiofiler, but there are certain positions and careers that demand an intricate and expensive education. Loans are often the only way to fund such an education.

And while you may not "empathize" with those who have student loans because you bootstrapped your way through your degree, at least I can hope that you would sympathize with those that are insolvent like yourself.

Bankruptcy doesn't cost fellow taxpayers a dime except in cases where Obama gets involved such as GM.

Loans are not the only way to finance an intricate education. Mom and Dad can pay for it, marrying a rich man before attending is another. I saw a young lady in New Zealand recently auctioned her virginity to pay for her intricate program. No college degree is a right. If you want one figure out how to pay for it or get a less intricate one.

I can sympathize with lots of people in distress. The degree I sympathize with someone who's problems are like this woman's are is slight.

[backtoschool]

Bankruptcy doesn't cost fellow taxpayers a dime except in cases where Obama gets involved such as GM.

Loans are not the only way to finance an intricate education. Mom and Dad can pay for it, marrying a rich man before attending is another. I saw a young lady in New Zealand recently auctioned her virginity to pay for her intricate program. No college degree is a right. If you want one figure out how to pay for it or get a less intricate one.

I can sympathize with lots of people in distress. The degree I sympathize with someone who's problems are like this woman's are is slight.

Bankruptcy costs the taxpayers money to cover courts, clerks, paperwork shuffling, utilities, etc....The filing fee only covers a fraction of the costs associated with a bankruptcy.

I would have thought that a morally superior conservative man such as yourself would approve of someone taking loans as opposed to a grant or a total-handout. At least the loans have to be paid back with interest.

For many of us sadly, auctioning off our virginity to pay for our college expenses is no longer an option at the point we are ready to go to college.

I still do not see why your gardening loan is superior to a student loan, please explain.

[HakunaMatata]

Come on, you can name names!

Now why would I want to do that OHIOFILER?

The problem isn't liberalism (unless defined as "free to spend"), it's consumerism with a heavy dose of ego. Recent generations are not producers. They are consumers. Large gaps in ideology exist between producing parents and consuming children.

Toss the cleverly marketed "need" for a college education into the consumer mix and the consumer is sold (into insolvency). Package it up with a plush dorm and state-of-the-art recreational facilities and technology, the "must have" list grows.

We were duped into believing houses were investments and many became liabilities. Educational costs have followed suit.

[MSbklawyer]

yet MSbklawyer is most assuredly one of the few on here who are not insolvent.

If I don't quit playing on internet forums and get back to work, that's going to change.

What I do make note of is this woman chose to use a federally backed program, designed to help people acquire a college education, as a Cash Advance ATM machine. She cheated the system and is now being held up as an example of what is wrong with the student loan system by this far left wacky reporterette.

Her decision to milk the federally guaranteed loan program for her party fund is morally repugnant.

I read the same story that you did, OF, and I came away with the conclusion that she used the extra money for ordinary living expenses while she attended school. I'm going to go back and re-read it, but I don't remember seeing anything that said she used the proceeds to party hardy and not for tuition and ordinary living expenses. To be sure, if she borrowed recklessly without any intent or any prospect of paying the money back, she should bear some responsibility for that.

But let's assume for the sake of argument that she, as a 19 year old kid, never so much as went to a day of class and spent all her student loan money on shopping and spa treatments and frozen daiquiris . . . or whatever it is 19 year old girls do and drink when they're flush with cash. Even assuming this, should she be saddled for the rest of her life with a debt that is never going to go away, that cannot be discharged -- ever, that she has no hope at all of ever repaying, that is going to ruin her credit, that will hamper her job prospects and her marriage prospects, that will foreclose her ability to buy a home, that will lower her childrens' standard of living and impact her financial ability to educate them, that will follow her into her old age and take 15% of her social security check until the very day she dies? That is what these loans are doing to people. I know I'm a softy, but that just seems a little harsh to me by anybody's standards. Yes, she was technically an adult when she took these loans, but so were the people who loaned the money. I just think with student loans we're shifting too much of the responsibility for bad loans to the 20-something, wet-behind-the-ears, gullible "adults" that are college students and away from the 50-something, financially sophisticated banker types who really know the score and who know that they can get fat by hopelessy burying these kids in debt that they cannot pay, because the government is going to make them good.

That's what I hear from my student loan crisis clients: that counselors at the school are telling these kids to "not worry about the debt . . . your increased earnings from your education will more than offset your debt payments".

this woman chose to use a federally backed program, designed to help people acquire a college education, as a Cash Advance ATM machine.

But the same argument can be made for people who are in financial trouble for other reasons. For instance, a lot of people here, got here because of credit cards. I could argue: These credit card users' decisions to use a short term credit device to augment their lifestyles beyond what their capacity to earn would support is wrong. They cheated the system and milked a privately held bank -- whose stock helps make up pension funds that go to support elderly people, widows and orphans -- out of its money. They should have saved for a rainy day and not used these cards unless they were absolutely confident that they could repay. Their decision to 'rob' these banks without a gun is morally repugnant. But we let these people have a second chance by getting a discharge. Why?

There just has to be some balance somewhere between holding people responsible for their actions and ruining their lives on account of their youthful mistakes. What this girl is getting is, for all intents and purposes, a life sentence to a debtor's prison, sans the bars.

[flyinbroke]

I think it was the part about her flunking 2/3s of her classes, thus disqualifying her from federal aid programs and loans plus this quote "Every student takes out extra for living expenses. We don't work..." that kind of gives away what the money was spent on. I figured out quickly that "not going to class+partying+shopping=crappy GPA + no money - more money since you now have to retake class." No, kids don't always make the slickest decisions and the school of hard knocks will either work fast or fail miserably. In this case, definitely the latter.

Actually, MSbklawyer, I feel the most empathy for her elderly grandmother; she apparently cosigned this trainwreck thinking she was helping out and could very well lose everything.

[tigergem]

Yeah, she probably pinned some pretty high hopes on the granddaughter's success.

[flyinbroke]

Unfortunately, success is not going to be with a business degree these days. Unemployed BBAs are a dime a dozen. College these days is only a worthwhile cost if you pursue nursing, engineering, or something seriously undermanned.

[MSbklawyer]

Unfortunately, success is not going to be with a business degree these days. Unemployed BBAs are a dime a dozen. College these days is only a worthwhile cost if you pursue nursing, engineering, or something seriously undermanned.

Yeah, and even those are going by the wayside. Nurses get upitty and start demanding a living wage, and they'll ship in a boatload of Filipino nurses to take their place. Much of what we call engineering can be done via internet from India, and what can't be done on the net can be done by H2B2 (or whatever series of letters and numbers it is) Indians who are here in person.

It's gotten so a person just can't make an honest living anymore with a Ph.D. in art appreciation.

[tigergem]

This discussion prompted me to inquire about my son's use of student loans. I try to stay out of his business.

He just took his LSAT in December, and didn't just fall off the turnip truck, but I phrased my inquiry in such a way that I hope will prompt him to make sure to take a second look at his situation and not take it for granted.

Meh - a mother can worry, right? What else are we good for?

So far with multiple majors that I can't even pronounce, he said he thinks his total student loan debt is less than $10k, but it was kind of funny... The "thinks" part kind of scared me, but he texted me a dollar amount down to the penny lol. I guess that's not too bad. And he was born with a natural aversion to credit cards. (Interesting, that.) Actually I remember a time when he refused to apply for student loans, period, because he didn't want to incur debt at all.

Anyway.... I read this bit on the ombudsman.ed.gov site and it kinda got to me wondering what all the whining is about...especially with regard to the two news cases cited in this thread. Apparently there is a remedy of sorts in place that was not mentioned. Are people simply unaware of it? Or is it not being implemented? Or not implemented effectively? Or are too many people simply not qualified to use it?

I did read further that it does not halt the interest accumulation, nor does it solve the 25 year liability, but apparently it can make the payments somewhat affordable.

Income-based repayment program

On July 1, 2009 a major new student loan repayment option became available for the first time. Income-Based Repayment (IBR) caps monthly federal loan payments at an affordable level based on your income and family size. If you owe more on your federal student loans than you earn in a year, you can probably benefit from IBR. The lower your income, the lower your monthly payment will be: in some cases, as low as $0. IBR is available for almost all federal loans - past, present, or future - made by any lender, whether for college or graduate school. Please contact your loan holder regarding your eligibility for IBR. For more information regarding IBR, please visit http://studentaid.ed.gov/PORTALSWebA...sh/IBRPlan.jsp.

So...Do you think that maybe some people are simply not exploring all of their options, or is this information not being disseminated in the manner it should be?