Are student loans haunting you?

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    by Joe V
    Specializes in Programming / Strategist for allnurses.

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LoyalWeim

273 Posts

Loans are given out so readily nowadays. The reality is that this raises the tuition prices year after year. It ends up costing students a much larger amount (I believe costs increase about 6% annually, if I recall), and these are loans that follow people to their graves. Current student loan debt nationally stands around 1.2 Trillion. I do not believe this to be sustainable particularly if one considers that the economy is still not providing enough jobs for new graduates. Ultimately, I believe this will truly be devastating once the default rates hit critical mass. Remember what happened to the credit markets in 2008? They froze- locked up. Suddenly banks required up to 20% down or more for a home loan and only to those with pristine credit. This in-turn caused a home values to collapse because there were far less available buyers. I do not see how this is going to end well when so many are being called on their loans with practically no ability to pay them back.

For you new students out there.... just remember that there are no bankruptcy protections for student loans (that I know of). They follow you to your grave (at least for now) so take loans out sparingly!

Just my 2 cents...

LW

Specializes in Critical Care.

Truthfully I think financial advisors are mainly for the wealthy who have money to pay them in the first place. Also the majority of financial advisors are really salespeople selling the insurance or financial products for the company they work for or the one offering them the best incentives for those who work as indept brokers!

We really need basic consumer protections and restoring bankruptcy protections would go a long way to helping the truly desperate. Student loans are the only debt out there that has no bankruptcy options, without this protection, there is absolutely no incentive for student lenders to work with debtors. In fact they have a disincentive and it profits them to send someone into default. Once in default your loan can double and triple in size due to the capitalized interest and 25% fee added on! Some private student loans charge 18%! That is just crazy! Also cosigners are left to pay off massive student loans if their loved one dies unexpectently.

Bankruptcy should be restored and there should be a cap both on interest rates and fees for default! Plenty of good citizens have defaulted due to the inability to get a good paying job or because they lost a decent job and the lenders won't work with them because it is simply more profitable to push them into default! Some states have even taken away workers license to practice and many find they can't get or keep a job if they have defaulted. How can you pay back a loan if you can't work?

You can find your loan doubling in size simply by leaving it in deferment/forbearance which the lenders love because the interest is capitalized and the loan grows exponentially! But once you have used up your 3 year allowance the loan will default if you can't pay it back. The only option the majority of those in trouble have is the income based repayment with a 20-25 year payment plan. This is ruining our economy as people can't afford to buy houses and cars, etc because so much of their money is going to student loans. Forget about saving for retirement as well when all your money goes to student loans.

I never defaulted, but put my loans in deferment at least once when I couldn't pay all my bills and it will take me almost 25 years to actually pay them off! It ****** me off every month when I have to pay the student loan! Also it ticks me off that my loans have been bought and sold to three different lenders without my consent, the latest by the evil Sallie Mae! I regret taking out the student loans and these were govt, but interest rates were 8-10% on one loan and 12-14% on the other. I had no other way to pay for college. I had no rich relatives and worked part time it was enough for living expenses, but not student loans. And I have never been on an income based payment plan!

Specializes in Critical Care.
I pursued this degree well before the economic crisis. I had no idea what was going to happen when I graduated in terms of the economic environment.

I'm not misinformed. The only difference is that you were able to find a well paying job during and after your undergrad studies. You were luckier than I was. I was a great student and a great worker. When did you graduate, by chance?

Sorry, but I don't subscribe to the fact that the only people who should go to college are those that have money. That would make college the exclusive domain of the rich and powerful. I don't buy into that. Neither should you.

The bottom line is you will have to pay back your student loans till you die! It doesn't matter to the lenders if you can't afford them. If you can't pay them back you will be pushed into default and they will simply garnish any wages you have, tax returns and it will keep you from working for the govt and may even keep you from getting a license to work in your field! Even your social security and/or disability. Even if you are considered disabled by social security that is not enough proof to the lenders that you can't afford to pay the loan back. You will have to prove to their satisfaction and if and when they believe then you will be hit with income taxes on whatever is forgiven! While if you marry it is still your loan, that won't stop Uncle Sam from confiscating your joint tax return either!

I'm not stopping you from going to school or taking out student loans. Truth is it's too late for you. I'm speaking to the rest out there to be careful and to avoid student loans and at least to open up everyone's eyes to the risks of taking out student loans!

The lenders would have you believe that all the people who have defaulted are greedy lazy people, this is not the case at all! It just works in their best interests to bamboozle the public to the truth of the student loan debt situation! God forbid people would open their eyes, have sympathy and fight for the restoration of bankruptcy options and interest rates caps, mediation, and limits on fees, because that would get in the way of all the profit to be had on all the debtors!

LoyalWeim

273 Posts

For the most part, I totally agree with you Brandi. But one of the big problems with student loans is that there is no collateral for the bank. They cannot repo your degree. This is the root of the problem. As you said, the banks have no interest in working out new loan terms. Why would they when the government is there to backstop them (the banks I mean)? Banks are probably afraid to reduce loan terms because either it will set up a precedent upon which the remaining 75% of student loan borrowers mysteriously and suddenly are unable to pay. See what I mean? I am not defending the banks whatsover but I can understand their predicament. They have nothing to repossess; therefore, they are trapped. If they did do this, they would be flooded with fresh defaults because the loans that students have are huge. Even if I had the ability to pay back on $100,000, do you think that I would while these other students are getting reduced settlements? See the unfairness? To me, this is a clear ponzi scheme because it cannot go on forever like this. Something has to break.

But overall, I do agree with your sentiment. The banks will relentlessly come after you for the money that you owe- that much is certain. Best to take out as little as humanly possible...

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