Wow, here are some real horror stories on student loans and thanks (I'll assume) to bankruptcy law changes, the debt is very tough to get out of.
Seems there is one guy out there who has created a website StudentLoanJustice.org trying to get anyone to listen.
This article in the New York Times goes into some real horror stories.
Basically people cannot find jobs or get sick and so on and can't pay them off, but the late fees, interest rate increases, penalties read like your classic predatory credit card.
Donna Troestler, 47, who graduated from the University of Wisconsin, Oshkosh, in 1998 with a degree in biology and microbiology, was traveling to sell scientific instruments in 1999 when she suffered an injury that caused recurring problems. It took years for her to figure out what kind of work she could do, given her new health limitations; in the meantime, she deferred payments on about $23,000 in loans.
“I never thought in a million years that I was ever going to have a problem with working and making money,” Ms. Troestler said. In 2002, she defaulted on her loans, which then ballooned with fees and penalties to $63,000, she said. In 2003, she found a job at the University of Wisconsin, Madison, where she still works. But then she found that her wages had been garnished, taking about $500 a month from her $2,500 take-home pay, she said.
I see! We all need education and training....so we can go into massive debt and make less than before college?
I am convinced student loans have become a scam.
I pretty much payed as I went to college part time out of my own pocket, until I got to a point where I was close to graduating and wanted to get it over with and borrowed the money.
My wife also had thousands of dollars of college debt
We were paying several hundred dollars a month - it was just like paying a credit card you pay and pay and pay - and despite paying extra and doubling up payments the balances never seemed to budge much and after several years it had become a stone around our family finances neck. Fortunateltly we came into a small windfall with the sale of our home and decided to pay them off once and for all.
The root problem of course is that the cost of college tuiton and books has skyrockettted well beyond any rates of inflation, so its almost impossible to go to school without loans. So the loan companies have a captive market and behave like sharks.
Submitted by anotherlineinasong (not verified) on October 8, 2008 - 1:49pm
Students loans have become a scam, but it also depends on where you get your loans from.
I went to Purdue University and the loans I took at through the school itself had a very, very low interest rate and they were very helpful and understanding when I needed to make a payment late or somesuch. It didn't take very long for me to pay those off.
HOWEVER, I unfortunately took out most of my loans via Sallie Mae, who screwed me over worse than any credit card I've ever had... Their interest rate was ok at first, but then they starting changing the time of the month my payments were due (without telling me of course; I was just supposed to remember to check my account status online constantly.. >.<), which caused me to make a payment a few days late. Once that payment was late, they jacked up my interest, plus tacked on "late fees" and "re-billing fees" which came up to around $200 extra I had to pay. So then, I started checking my account info all the time to be sure it didn't happen again. So they changed tactics. For maybe 5 months or so, I was making $60 payments a month (The minimum was $55 and some change, so I rounded up). Then a month came up where the minimum payment amount was suddenly $61 and some change; Luckily I caught it in time and sent a second payment of $1 and some change. If I hadn't caught it, it would have been another interest increase and another $200 down the tubes.
And before all that mess during the time I was paying on my loans, they managed to screw me over, too. When I filled out the loan app, they told me that I wouldn't have to start paying on my loans until 12 months after I graduated/stopped going to school. Well, the person I talked to was incorrect or lying, because its actually 6 months, so I wasn't paying anything for those months because I didn't know I was supposed to be. They never sent me a single bill or anything in regards to my account during that time (though they did send me PLENTY of solicitations asking me to take out more loans). Then around the 6 month mark, my mother gets a call from them saying that they needed to get in contact with me about my loans. I call them back and they tell me I'm delinquent, which is a total shock to me. They tell me that I can agree to a forbearance and they said that would basically wipe the last 6 months away, taking away the interest accrued and taking it off my credit record. So of course, I agree; I'm just starting out in life, I don't need awful credit on top of everything else. Then a few months ago, I apply for a loan and am rejected because of poor credit. Come to find out, that forbearance did NOT take those delinquencies off my credit report and when I called Sallie Mae about it they "had no idea where I would get that impression from". Also, the guy who told me that conveniently 'doesn't work there anymore'.
Sorry, this went on longer than intended... The whole situation has just infuriated me to no end. I agree with you, Blueneck, that a huge part of the problem is that tuition and book costs have gone so high. Despite my loans (which are now paid off), I still haven't been able to afford to go back to school to finish my degree. And with the state of our current economy, I don't see that changing soon. :(