Real Life Student Loan Mistakes: Stories from Students Who Over Borrowed
The last thing we want to do is deter you from borrowing student loans. We know that in order for you to attend school student loans are unavoidable. It is however, very important that you understand what borrowing means to your financial situation and why over borrowing is simply unnecessary. Take a look at some of the stories students tell about their student loans and how over borrowing has had a negative impact on their lives.
Real Student Loan Horror Stories from the iGrad Community
Joseph Orsolini, CFP, College Aid Planners, Inc. “I am working with a young lady who recently graduated from an elite college with $172,000 of student loan debt. She is going to law school in January and will add another $100,000 on to that total...some people never learn! We got her loan payment down to $1,200 per month by having her go back to school at her local community college so she could continue deferral on some of her loans. It was cheaper to pay that tuition than her student loans…I would never have let [her] get in this deep.”
Chanelle Schneider, blogger, social media maven and founder of #genychat: “I got kicked out of school one year before I would have graduated because I maxed out my ability to get anymore loans. I've been living at home for three years after an attempt to move out didn't work. I've gone from retail to temp back to retail and am finally on a track to getting a ‘real’ job, but the stress of calls from debt collectors and family pressure to get money plus a big hiring push in the retail industry might...make me...go…back. (Scream!) …I wish I had known how bad of an idea it would be to take on loans when I started school. I would have just delayed going. $80,000 in debt later and I still don't have a degree? I would rather be without a degree and debt-free than in this boat I'm in now.”
Vince Mercandetti, co-founder and blogger @ Sox and Pinstripes: “Something horrific? I woke up to a phone call on my 22nd birthday (yes, I'm a late riser and it was a Sunday, don't judge me) from one of my loan companies telling me my loan had come out of forbearance for two months and I owed 900 dollars. Went from a fancy dinner to fast food in a span of 30 seconds.”
Tim Tyrell-Smith of Tim’s Strategy: “I took out two loans in college. I distinctly remember that in between those two payments, I tried to write a $3 check to a local pizza joint. And was denied. I had only a dollar in my account. Who knew!”
Melissa Breau, blogger and freelance writer: “My SO took out major loans to attend a major tech school for engineering—he took out so many loans, in fact, that they decided they couldn't give him any more money...with about 18 months of schooling left to pay for. He had to drop out and look for other job opportunities, but still has all that debt over his head. Moral: A better, more expensive school is only a good idea if you can pay for it. [The loans] are a major reason he recently joined the navy. He needed something that would pay him enough, soon enough, that he'd be able to make his loan payments. Originally he wanted to become a cop, but he couldn't afford to not be earning money while in the police academy. So he's smart enough that he got into the Navy's nuclear engineering program, and they're forgiving all his federal loans. But he still has a ton of private loans (Citibank's automatic message calls at every hour of the day to remind him about them, even though he's explained and has it noted on his record that he'll be able to make payments starting December, when he'll be in boot camp and he begins making money again).”
Jenn Pedde, community manager, marketing director, and tech/sports/travel fanatic: “I have private loans through Sallie Mae, and for my first loan I needed a co-signer since I was just 18 and I asked my mother, naturally. Years later they SWITCHED the social security numbers, and wreaked havoc on both of our credit! Still 100% unresolved.”
Wendie Howland, RN MN CRRN CCM CNLCP and Editor, AANLCP Journal of Nurse Life Care Planning: “Some years back I applied for a loan for grad school to Chase, deadline was August 1, and I had it sent in in April. Summer comes and I haven't heard back, so I call them in July, and they say they never got it. So I hurryhurryhurry and get it out to them again on July 18. And then I get a check for $4500 instead of the $5000 I asked for (and needed). Called them immediately. They said, ‘Oh, we show that we did not receive your app until August 6, and the new law passed says that as of AUGUST 1 we get to keep 10% right off the top of any loan we make.’ ‘Fine then,’ says I, ‘I only have to pay back $4500.’ ‘Oh, no,’ say they, ‘You owe us $5000 (and the interest that accrues over the entire 6-year repayment period).’ How VERY convenient that they ‘didn't receive’ my app until a week after that law went into effect. Scum. Moral of the story: Everything you send, send registered mail, return receipt requested. If you send it electronically, use a receipt notification service like ReadNotify to indicate when your email was opened. And never, ever bank with Chase.”
Joseph Orsolini, CFP, College Aid Planners, Inc.: “[A] graduate with $70,000 in student loan debt just started a teaching job. Her take-home pay is $2,000 per month. Her student loan payment when she started her job in August was $685. Nearly 1/3 of her pay check is going to pay back her student loans. I just got an email from her last week stating that her payment had jumped to $775 per month due to rising rates on the variable private loans. [She] came to me after taking on this debt.”
Kathleen Ely, web designer for the Office of the Montana Secretary of State: “I finally returned to get my degree in 1989 at Rocky Mountain College when I was pregnant with my second son and in a very abusive relationship. I got my degree in 1990 and went off to graduate school at the University of Wyoming for two years, the Idaho State University for a year.
I took out every loan I could to get away and survive with my two small children, as it was impossible to get child support, even though I always worked at least two jobs (I would have been better off to go on welfare and that agency would have collected the child support).
My student loans in 1993 totaled $53,000 at 12%. Even though I have 102 graduate credits I could not finish my advanced degree due to a medical condition I had at the time, and was unaware of until five years ago. I had a small business for ten years and could not afford to pay during that time; I was also a single mother raising two sons.
When I finally got a state job five years ago my wages were garnished to the tune of $213.26 every paycheck, which is 12% of my pre-tax gross. The total now—with interest—is over $146,000, so it looks to me like I will be working for the State of Montana until I am 89 if it stays at the current rate, but since the interest keeps compounding I will never get to retire—EVER.
I can't get a credit card, buy a car, or finish my degree either. So I don't have any of those things. Of course it also means I don't have a lot of debt either.
I'm glad I like my job though...
I have one son who is brilliantly financially capable, and I am making sure the younger one is taking a local financial literacy course.”
How to Get Help
- Student Loan Repayment Calculators
- Consolidate This!: An article on how to consolidate your student loans after you graduate
- Student Loan Repayment on a Budget: Article detailing how the budget-conscious among us can afford to make those monthly payments
- How to Apply for Student Loans with Bad Credit: Article on how, even with little credit, no credit, or bad credit, you can still finance your education (without writing your own horror story)
- iGrad’s Financial Literacy Modules: Extensive multimedia modules, worksheets, and content to help you get back on track with financial basics
- StraighterLine: Online credit-bearing courses that you can apply to your BA to reduce the cost of your total education (as low as $35.00/credit), but check here first to make sure the school accepts ACE Credit recommendations
- American Student Assistance: A federally funded nonprofit specializing in providing advice to borrowers struggling with loan repayment
What’s the Moral of the Story?
While I think everyone agrees loans are a necessary evil for a lot of American students preparing to earn their degrees, I think we’re also starting to collectively realize that we need to be more careful about the student loan debt we do assume. It’s no joke if you can’t pay it back. As these stories prove, the havoc it wreaks on your credit and your life can change the entire course of your career, prevent you from getting credit cards, and in many cases, stop you cold in your tracks—without a degree to show for it.
There are some alternatives. You could start your degree at an inexpensive community college, seek federal grants (instead of private loans) or supplement your learning with online courses (including credit-bearing courses, like those offered by StraighterLine.com) instead of dropping $150-180k on an elite four-year degree (plus grad school after that), for example.
But even those I talked to who didn’t have specific stories to share had much the same outlook on the student loan situation.
“I don't have a story but I do have a quote,” said Christina Strong, one of iGrad’s regular contributors. “‘The scariest part of loans is figuring out how you're going to pay them back.’”
Got a horror story? Share it with us in the comments (anonymously if you’d like).top
Lindsey Donner, is a writer who graduated magna cum laude from NYU Gallatin School of Individualized Study in 2006. Her diverse experience includes working as managing editor of an English newspaper in Mexico and copyediting a novel about Cleopatra in the Czech Republic. In 2009, Lindsey launched her own design and writing consultancy, Well Versed Creative. Be sure to read her blog about the business of writing.
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