Tuesday, July 27, 2010

Law Grads are Just the Tip of the Iceberg

Sometimes, we at BIDER become a little self-involved and forget about the victims of other graduate programs--or even college.  I received a message from a student loan victim (on my facebook, you should definitely add me) and I thought I would share it.  It's a long email, but much like a 5 car pileup on the highway, you can't help but look:

Today I am 46 years old. I was 22 when my father died suddenly in 1985. I had no idea what I was getting myself into when I took out student loans to finish my BA at a college in Michigan. Let me preface this by saying I have never been in default and I have always believed in paying back what I borrowed.

Telling my story is important because many people do not understand how the student loan business has turned into a predatory lending industry that rivals Wall Street. There are no consumer protections, and no limits. I have come out of hiding in the hopes that people will read this and start to understand why we need help.

I was majoring in theater and wanted to teach, but I was advised by the college to get a "real career", so I took out more loans and added a BA in Psychology.They told me not to worry, I could pay these back. I worked three part time jobs, and moved off campus. In 1985, there was no" loan counseling", there were only appointments for loan signing.

When I took out student loans I was going through chemo for cervical cancer with no health insurance, my father's sudden death in 1985 and my family went though being very wealthy to losing everything and being left a half a million dollars in debt.Could I have switched schools? Quit school? I don't remember what I was feeling or if I read every detail of the loan; I think I was just trying to get through my grief and my chemo a minute at a time.

I went on to get my Masters in Counseling Psychology, which was paid for by my employer,Thank God. I found to my dismay, that I just couldn't make enough money on a salary of $25,000 as a counselor to make the loan payments and take care of everyday life. My cancer in 1986 left me thousands in debt. In 1991, ended up filing a chapter 13 for my medical bills. Subsequently, a woman at Wachovia Bank noted this, and accidentally put my loans in default instead of deferment.

My life became nightmare for the next seven years.This was before the regular use of computers. I was on the phone for hours on hold, but I couldn't get anyone to talk to me. Creditors treated me like a leper. I was actually told by a well meaning person that" Your loans have been bought and sold so many times, they are probably in a shoe box in someones closet."

Finally in 1995, after getting nowhere, I contacted the US Dept.of Education. I literally sent them a shoebox full of notes about my conversations and letters I wrote trying to ask for help. They eventually tracked them down and subtracted the penalties, but not the interest, so my $25,000 turned into $45,000.

I tried to make the payments on a counselor's salary, even on an income contingent plan or any plan I could find, but it was too much money on $28,500 per year. I made payments whenever I could afford to but they never seemed to count because they were never enough to cover even the interest. My payments were more than my rent! I have deferred and been in forbearance so many times it's not even funny.

I had to declare bankruptcy again in 2000 due to lack of finances and everyday living, and ongoing medical issues with my cancerous nodules on my thyroid which prevented me from working in for 7 months in 1999. Again, deferment, hardship forbearance, more compiling interest.

I wanted to go into the NHSC (National Health Service Corps) which is a program for health professional to go into public service into rural, urban, low income areas and prisons to work for a period of time in exchange for loan forgiveness. I had a license in Michigan, but they changed their policy and you had to already have your national independent license.

I couldn't afford to stop working to get my PhD, so after 10 years of getting nowhere and the threat of default, I went back to school at age 41 in 2004 and got my MSW so I could be in the NHSC. This was not something I wanted to do, but I wanted to get my loans repayment and I already had devoted my life to public service, it seemed the logical thing to do. Another Masters would increase my loans, but I could pay it back through this program.

During this time, I was able to buy a house on an FHA loan, but was one of the victims of the refinancing scams of 2006, and although my house went into foreclosure, I was fortunate enough to sell it in a short sale through Freddie Mac.

Right after graduation I was able to secure a job in Arizona for the NHSC. I had to go out there as they make it extremely complicated to get accepted, and Michigan virtually had none of these jobs with a high enough need number to guarantee loan repayment. I had to reconsolidate my loans were now 140,000.

I sold everything and went out there, thinking that I would finally be free of this monkey on my back! It was not to be. The NHSC passed a policy that if you have any bad credit that involves federal loans, you can't serve your country and get your loans paid back.Even if you have good credit again and/or straightened the situation out!

I was and still am absolutely devastated.Because I had a foreclosure on a FHA loan even though I sold it in a short sale, they wouldn't take me! So now I had another degree and no way to pay it back!!!

There were years that I didn't pay- Even loan counselors told me it was better if I went into forbearance than make payments that couldn't even cover the interest because then I would have compounded penalties.

I have new student loans and consolidated them. Now, my loans have ballooned to 160,000. I can't afford even to make the smallest payment because I wasn't making enough on a social workers salary. The whole thing is insane.

I put off and sacrificed most things people my age have; a family, vacations, stocks, savings, investments, retirement and most of all children; because I had to to pay my loans. My friends have watched me save and scrimp and never get anywhere.

There were times I had to decide whether or not to buy food or pay my loans.Pay the heat or pay the loans. Get my medication or pay my loans. Eat rice and live in dark. They have watched me stress out and become depressed over this. I can never get good credit rates because this 160,000 shows up on my credit. They have watched me be in a career I was never sure I wanted because I had to try to pay my loans.

I just got married and have Lyme disease that damaged my neurological system and I have not been able to work full time. My medications are really expensive.

There is no way I can even attempt to try to make the full payment it's like a mortgage payment. I have had to declare bankruptcy twice (due to the start of cancer on my thyroid.) and the only way they would be forgiven is if I was completely disabled or dead. I have to take a job that is close to home due to my health and we are in rural Maryland!

I have been made to feel like dead beat. I have felt very ashamed. I feel as though I can never get ahead. It would be nice once in my life to have some nice things, or not always worrying about defaulting and having my social work license taken away, and then I can't work. I still have nightmares about this.

This July 2009 they finally passed legislation for income based payments instead of income contingent. I want nothing more than to pay my loans off, I am grateful I was able to get an education, but I cannot afford almost $1000.00 per month, and the penalties that accrue if you don't pay the full amount to even cover the interest. Even if i get a great paying job, most of the money will be go to student loans. This is a very complicated situation.

I thank God that he saw me through all of this. I also thank God that I found Cryn and her movement, "The Indentured Educated Class". I am working part time now and on the Income based program where as of now I pay $50 per month. I wish I could do more.

In closing, it is my hope that when people read this, they understand I am not asking for a free ride-only a just one. I am requesting that with the new public service forgiveness legislation, that my 23 years of public service be taken into account and allow for my forgiveness to be retroactive.

I wish you all the luck in the world, BIDER reader.  I wish that the "Indentured Educated Class" would rise up against our government and institutional lenders and declare a Revolution.  But alas, we have been indoctrinated to care about shit that is not relevant to our lives. Gay men picket about abortion.  
The middle class pickets about tax hikes on those earning over $225K a year.  We all have strong feelings about the death penalty.  Unless it affects you directly, who the fuck cares?  Storm Capital Hill about your financial distress--that affects whether or not you can pay your rent,  marry and and own a home.  These are the issues that affect us all.  

Power to the people.


  1. I don't know. I'm usually sympathetic to people getting scammed (once), but even after she had financial problems this woman kept taking on more debt. She writes that her employer paid for her MA, but that she took out a mortgage and more student loans for a second master's while the first loan was still racking up interest charges.

    Sorry, that's just stupid.

  2. I thought you could discharge student loans via bankruptcy until more recently. I'm not sure when the cutoff date was, but in the 80s I think they were dischargeable?

    Sure I'm sympathetic to her illnesses and everything else, but she did get married and did hold some jobs. I'm not sure what's going on here. What's her husband doing exactly? Why did she never get raises? Where was her health coverage? At her income level, she would qualify for different types of health plans by state.

    Her debt level also wasn't that bad, she said it now ballooned to $160k? Most of us start out with around that.

  3. I've heard about positions, like that of a Social Worker, where you cannot find gainful employment until you get a Masters. And then, the graduate programs get you to bite because some of the graduates earn 90K+, but the majority (even with a masters) earn far less. A friend of mine with two graduate degrees (MSW, MHA) earned $40K after all of that schooling and she went to one of the top programs. Then you have to put in a certain amount of time before you can even be licensed. I think their ponzi scheme is just as severe as ours. And the employers keep pushing you to get more school. I dunno. Dr. Bissuti's reasonable loans ballooned as well. Penalties add up quick . Paying anything other than principle and interest, makes the loans balloon as well.

  4. Higher education is Big Bu$ine$$ in this country. We are inundated from infancy with the idea/dogma that higher education = more income. The pigs get paid up front, and so they simply do not give a damn what happens to their students upon graduation. Great system, huh?!

  5. IBR only counts years once you got on the ICR or IBR payment plans. No way her 23 years counts, just the last few. IBR is a near-term emergency response, nothing more:

    RE: IBR

    1. Doesn't apply to private loans.
    2. Is dependant upon income to debt ratio. Maybe you'll qualify for a few years, but then you might earn your way out of it. Remember, the debt ratio is underestimated because it only counts public loans.
    3. Timeframe is 10 years for public jobs and 25 for private. That's a lot of time where you could achieve ineligibility. With IBR you are essentially betting on never getting a raise or higher paying job over the course of an entire career. Even marrying a wage-earning spouse could kick you out.
    4. Once out of it, no more income-dependant payments and no more eventual debt forgiveness.
    5. The private loan payoff is currently taxable. So you would somehow have to save up for that too (if it ever happens).
    6. IBR is a program, not a contract. Program terms can be changed at any time. You have no contractual rights to keep the terms extant when you began the program (unlike contractual loan consolidations).
    7. IBR payments are likely to be low enough that your total loan amounts keep growing because they will not be enough to cover just the interest, let alone principal.
    8. That means three possibilities: (1) you earn/marry your way out of IBR and owe more than you did when you started it, with no more payoff; (2) You achieve the payoff, but if private will have a HUGE balloon payoff with HUGE taxes; or (3) you actually never earn more than 30k in a public job for a at 10 years starting now or recently, don't marry someone who also works and the program is never tweaked in a way to screw you and doesn't disappear altogether, which it could.

  6. This is such a heart-breaking story. I wish her the best in her health and her marriage.

    Unfortunately, this sentence really stood out to me: "I was advised by the college to get a 'real career', so I took out more loans and added a BA in Psychology."

    I thought it was common knowledge that a BA in Psychology rarely leads to a "real career", much less one that pays enough to justify taking out loans. Am I missing something or did psychology majors have brighter career outlooks in the 80s? That said, I'm no one to judge because my own undergrad major was also a bad choice.

  7. I don't think the BA in psychology would have given her a career in that field, but it still wouldn't have been a bad choice because, back in the 1980's, you could still find a good job based solely upon the fact that you had a college degree.

    Now, there are so many graduates (with multiple degrees) and so many people looking for work that employers can feed their wish list into a computer and come up with a person with the right education and experience.

  8. I really disagree with BIDER's advice not to care about issues that don't affect you personally, and this story illustrates that problem, especially the quote: "I am requesting that with the new public service forgiveness legislation, that my 23 years of public service be taken into account." Translation: "I should get a break because I'm specially sympathetic, but no one else should." Be divided and be ruled; if the rest of us haven't put in 23 years of (dubious) "public service," this doesn't affect us and BIDER says we shouldn't care. Propose a solution that addresses the larger problem (e.g. limit student loan repayments to a 20% of income over 10 years), if you want to accomplish something. Also, I can't help thinking the author made many bad decisions along the way, and illustrates why double-blind studies have shown that talking to a credentialed psychologist is no more effective than talking to someone without formal training (e.g. clergy or older mentors, who provided free counsel before "counseling" became a big business). Lastly (in case there is anyone I haven't upset yet) the author keeps thanking an unidentified male God; if the deity in question is thought to be omnipotent, then this must all be his will, and the author should not expect mortal government to help.

  9. Thank god President Obama gave us all the opportunity to buy health insurance. That's horrible that she couldn't pay for her cancer treatments.

  10. She did pay for them without insurance, and paying through an insurer would probably have cost more; insurers are for-profit companies, not gift givers. ObamaCare will increase costs and reduce employment opportunities by imposing a headcount tax on jobs. Many other countries have better and cheaper healthcare, so between prayers of thanks to god/Obama (you seem not to differentiate) you might ask why does Obamagod want Americans to pay more and die sooner?



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