Every week or so I run a search for updated information on a student loan bail out in the United States. Why? Because my husband and I are making a household income of less than $29,000 a year, and our student loans are combined at over $76,000 (it is on a $0 Income Based Repayment plan, but the interest capitalizes and swells up the debt farther and farther). This is not what I want, nor is it the life I envisioned after spending over half my life being told that education was the way to find success and gain worthwhile employment in life.
In my searches for student loan debt crisis and bail out information, I see a lot of people strongly opposing the government stepping in and washing away the huge load of debt. In some ways, I agree with this sentiment, however, I think those against the bail outs are not considering the issues I face, such as:
1) I have a high level of stress as to how we will ever pay these loans back. YES, if you stay on the Income Based repayment plan for 25 years, anything not paid off goes away. To the contrary, though, my goal in life is NOT to remain in a poverty income level. Even so, we can only do what we can do at this point. My understanding, though, is that if we do not stay in the Income Based Repayment income level for 25 years straight, we owe all that money, plus the thousands of dollars of compounding interest. Is that unfair? Yes and no. Yes it is what I ultimately agreed to (it was either that or default), but inflating my loan and punishing me for being able to pay in the future is not right in my opinion.
2) I would love to make $100,000 a year and pay those loans back, as agreed, with the full interest asked – but where are the jobs I was promised? The student loan offices told me I would make $50k a year and so I should live off of the federal loans, focus on school, and then watch how easy it would all be to repay. I was lied to. I was bait and switched.
3) The university sets the tuition terms, and the government hands out this money for student loans without considering anything about the student! “Barely pass high school? Borrow this money, no problem! Want to major in basket weaving? Just sign on the dotted line, they’ll be $50k a year jobs waiting for you at the end of the four-year rainbow! You have maxed out credit cards and are about to file bankruptcy? We don’t even consider that!”
This loan should have been reserved for high performing academics who were entering majors in certain fields needed by the United States (doctors, engineers, etc etc etc). In a worst case scenario, the government should have said, something like “we can give loans to x amount of people entering Chemistry, x amount in biology, x amount in psychology, x amount in sociology…” and so forth. This was a supply and demand issue that has now caused PhD’s to work at McJobs and many others to have no way to repay these loans because the market was over-saturated.
4) To this day I have still never owned a Smart Phone, or any of the other “cool” things that those against student loan bail outs claim I used my money for. You know where my loans went? Tuition, Books (some at $200-500 EACH because of that lovely university printing press and edition scam), Rent, Daycare, and Food. Sure, not every college student has children to care for, and there will always be people abusing the system to buy things they shouldn’t, but then why make the cash available in the first place? Anyone who’s taken a simple psychology class, or watched enough Dr. Phil, knows that the brain isn’t fully developed until the mid-twenties, which means most college students taking out student loans can’t see far enough down the road to understand that any negative implications exist.
6) There is blame to be put onto the borrowers, however, I was not the one promoting college as “the only way to a high paying future” since I first entered a public school. I didn’t post up photographs of all the graduating Seniors in the 12th grade who were attending college as an “inspiration” to follow in their footsteps, no matter what the cost. And, while I realize in hindsight that my career/income goals were unrealistic, I did not realize in my teens and early twenties that I was making a deal with the Devil, as it were. “I’ll save your life now, and you just give me your first born child in ten years!” was the essential deal we made. We were targeted and exploited, and our “reward” was a worthless piece of paper.
7) Much like the housing market crash, people believed that if they got approved for the loan, then they must be able to repay it. Also similar is the inflated cost of homes and tuition in schools. I bought a house last year, when our income was higher. We make due alright, but I’ve noticed a huge drop in housing values in the year we’ve lived in our house. Now, houses listed in 2012 for $150k are valued at $50k. Likewise, the degree that earns $30k a year, tops, should not cost $35k to obtain. It has an up-side-down value when compared to the job market. So housing and student loan debt was not a malicious attempt to steal from or hurt anyone, it is ignorance to reality mixed with predatory lending and manufactured prices. Very smart people worked very hard to fleece many of us.
8) The government unfairly decides who can go to college for free. If you are deemed to be from a low income family who “can’t afford college,” you will likely get something like a Pell Grant to pay your tuition for you! But I, as someone in a low income adult family, am expected to come up with the money to pay back these loans because my parents weren’t broke when I entered the system. Lets either make college free for all, or give out free money on merit based achievements (ie academics or a talent like sports), NOT just because Suzy has two working parents and Johnny lives with his Grandma who draws Social Security. That just puts Suzy on wellfare later because she can’t get a job to get her out of her crippling debt!
Here are my personal suggestions for the government dealing with student loan debt:
1) Erasing the debt for everyone would be ideal. However, I can see negative implications across the board from this happening as well. Remember the huge bail outs given to the banks for the housing market? Not a single Joe Nobody had their debt erased, and none of them got to keep their house all the same.
2) Lower the interest rates! Have you seen the details on a student loan bill? Half of your money for five years (on a ten year repayment plan) goes to interest! If I’m borrowing $40k for a degree from a state university, how about I pay back a flat $45k instead of $80k-200K?
3) Make compounding interest disappear! Again, this doesn’t fix all the problems, but it would help millions of former students get their debt repaid easier.
4) Allow student loans to go into bankruptcy. That way, if you didn’t get what you bought into, you at least have some out. Personally, I would declare bankruptcy tomorrow to get the loans off of my back, because I can’t find a single full time job that pays more than minimum wage.
5) Lets scale way back on the 25 years of poverty rule. How about we set up something like a five or ten year “too broke to pay” plan?
6) Make colleges accountable! Like tropical fish, they will grow to the size of their environment, so the more English majors that apply, the more they will expand their department to accommodate. The more we raise the student loan withdraw ceiling, the more the universities will charge! I shouldn’t need any loan to attend a PUBLIC and state sponsored school, it should be a low cost per credit hour fee. But, because the school can get it, the will, and because they don’t have to answer for drop out rates or under-employment/unemployment, they won’t .
7) Freeze interest for those in any type of repayment modification. If you are deferred or on an income based plan, getting help doesn’t help you in the long run, it earns the loan a higher total. It’s a debt spiral that easily gets out of control, and could just as easily be put to a stop.
As an example, let me share a story of my friend and the sorority. My friend hit financial issues, didn’t have money for dues, and so was dismissed from meetings and events, while also being charged $50 for each event she missed. So, if she didn’t have $200 to pay off her dues on Monday, how was she expected to come up with $250 on Sunday after missing a meeting? It was ultimately an unfair way to weed out any “poor girls.” That’s the same principle with interest rates, and especially those compounding ones.
Why, if no one can pay their tab, don’t we do something about that? No one really wants to welch on their debts, but we get driven in that direction. So why doesn’t anyone stop it? Well, because companies love it when students default (which is why so many of the lifelines we’re given have unclear and difficult to follow directions) because then Uncle Sam pays your tab, and you STILL owe the money too – so they get to double dip!
This fix isn’t rocket science, but it does involve making LESS money for businesses, so nothing gets resolved. I don’t necessarily want my debt erased (I’ll take it if you’re offering, but I don’t expect it), but I don’t need my debt getting worse off because of my financial status – and all because I believe that education was the key to success!
Trying to Mom 