A distressed borrower named Amy called me today for help on her student loans. She was very distraught, because she and her husband are having a great deal of difficulty making ends meet. She is unemployed, and her husband is a nurse who travels around the country for work. Amy is also the mother of two children. She home schools them and the family currently lives in Texas.
She and her husband were thinking that it might be best for her to default on her student loans, so she wanted to talk to me about the plan of action. They have medical bills and credit card bills, as well as two growing children to feed.
When Amy and I first got off the phone, she was in tears. I did encourage her to look into IBR as a way to lower her payments. As it stands, Amy has subsidized and unsubsidized loans. Sallie Mae is the servicer of a portion of her debt. Since she has not defaulted on her loans, she is eligible for IBR.
Amy thanked me for the information, and I hung up.
A few minutes later, she called back and was more frustrated.
"They told me that my payments would go down to $105.31 for the first 12 months. However, after those twelve months are up, I was told that my payments would go up to $696 a month."
We were both puzzled. At this point, Amy pays around $500 a month, so how could IBR possibly be helpful if (a) the repayment program only lasted a year after which (b) her payments would shoot up to something even higher than what she is paying now?
"That makes no sense to me," I told her. Since my expertise is not on repayment plans, I told her that I would have to ask some of my sources about this information. Amy was distraught again, and for justified reasons.
I made it very clear, however, that she would be worse off by defaulting. I assured that I would have answers for her soon.
We hung up again.
After I sent out some questions about this situation, Amy called me a third time.
The news was much better this time.
Amy still hates Sallie Mae, but at least she cleared up the confusion about IBR. Here's what she found out:
In order to keep her monthly payments at $106.31, she will need to refile her paperwork with Sallie Mae every year.
The first person with whom she spoke did not provide her with that important detail!
Amy is much more relieved. She currently owes around $62,000. The good thing about IBR is this - it lowers your payments, and if you continue to pay for 25 years, the remainder of your debt is then cancelled.
So, folks, make sure you know all the information about IBR before deciding it's not a good option.
A non-profit organization dedicated to the eradication of all student loan debt through activism, education, and legislation; because student loan debt is dangerous to the US economy and to the health and well-being of individual Americans and their families. CRYN JOHANNSEN, Founder & Executive Director
44 comments:
Whew! I was worried! Thanks for the information, it was very helpful. I never want to default. Thanks again. Nice article by the way and nicely written. @ffandfn Kristen
Thank you, thank you, thank you. Because of you, Cryn, i might get at least "some" sleep tonight. <3
Amy - you did the leg work! So thanks for sharing with me. It's good for everyone to know about asking the right questions, and that's just what you did!
Just remember, JDpainterguy, everyone struggles in their own way. So don't assume it's all fun and games for her.
This is a good example of the coming crisis. The sub-prime mortgage debacle is going to look like a cake and ice cream party. Without the ability to discharge the debt (which in turn would employ attorneys, yay) the indentured are hosed.
The cycle this perpetuates is vicious. Consider this: Future legislators decide to allow for more hoops because too many people are getting onto the IBR program. Some potential future stipulations: Required monthly reports of all accounts for all individuals living in the home (so much for moving back in with mom and dad), forfeiture or liquidation of any assets (thank you grand-ma for the beautiful family heirloom, but I have to report it to Sallie Mae, and they're going to seize it and auction it off) and the like.
If we do not get reform now, the children and grandchildren (for those fortunate enough to be able to afford them) will find higher education unattainable.
(to head off comments of "not everyone is meant for college" I know. My kids are going into the fields of agriculture, tobacco growing, and ammunition presses.)
Oh and I almost forgot to mention: Get active. Get the message out. Approach your state reps, contact your members of Congress. You're not alone. Get involved!
Wow, hurtful. Please don't assume that someone's life is roses, when you don't even know them or their entire situation. You don't know me.
After 25 years, she will be taxed on the balance forgiven, no? I don't know how that is going to work because borrowers are still going to owe quite a bit of money.
Cryn,
Consolidating and using IBR with Federal Direct Consolation isn't much better. The websites information is lacking and the call center folks are snotty and less than helpful.
Again Amy, I'm very Sorry about last night.
I was drinking, and read Cryn's post not very closely or carefully I guess, and was
lashing out everywhere last night. I drink too much and have a serious problem and my health is suffering from it-mental and now it seems, physical because my blood pressure is hypertensive, and the hands get a bit shaky sometimes.
I said baby loan because my debt is 300K, and the whole situation has made me half nuts, and no shrink, and no AA meeting has a solution for that.
Odd as it may seem, and if it helps anyone to understand the complexity of the Student Lending system and Sallie Mae, the way I finally got out of Sallie Mae's clutches was, oddly enough, through default, and a history of low income over a span of 8 or so years.
Sallie Mae, it seems, had no choice but to sell my loan to the Federal Gov't. because I was a dead beat in their view more or less.
My payments were up to around fourteen or fifteen hundred a month by 2009 when I finally defaulted, and all I could do was watch the loan grow and grow.
The debt destroyed my credit, and the Law degree repelled prospective employers in the non-legal world.
And so, in 2009, The Dept of Ed bought my loan up, and a Private Company collection agency reaped a forty thousand dollar profit from the default.
That 40K was paid for by the taxpayer, and went into the Private Collection agency's pocket, which may well be owned by Sallie Mae too (the second bite of the apple theory).
It is all so complicated. But maybe I should attempt a post on my blog to once more try and explain my loan history. All of the deferments, and how the loan continued to grow. What my income was over the years.
My loan continues to grow, and will grow well past 500K over the next 20 years.
When the loan is finally discharged someday, and I am 65 to 70 years old, I will owe a whopping tax bill to the IRS on an amount well over 500K.
And so it all freaks me out and I just want to blot it all out and disappear into the fog by drinking.
And again, I'm sorry. I must have had a slight black out or what they call a spotty brown out, because I did not remember even making my comment until I went back to Cryn's blog this morning.
And Cryn I am sorry as well to you too. I keep fucking up it seems. I just keep fucking up.
I can't expand my business operations because I can't get a small business loan because my credit is wrecked from the Student Debt.
Today I will go to an AA meeting. I have to. This is proof.
I have 180k in loans from college and law school. I think I'd be out on the street by now if it wasn't for IBR.
However, IBR is just a band-aid. You still have to carry a gargantuan amount of loan debt for a very long time. You won't go into default, but you'll find yourself extremely constrained for many years. Some people can avail themselves of the 10 year forgiveness for public interest, but that's going to be less the case considering that these are highly competitive jobs that are getting cut as the number of debtors balloons.
I think we ought to make student loans the big issue for 2012. Without some kind of bailout, the spending and investment power of an entire generation is going to be funneled into debt service. I for one will not be supporting any candidate that does not come forward with a comprehensive plan for student loans. I'd rather throw my vote away then lend it towards one more person who doesn't take this as a serious issue.
Understand: the CEOs have decided. The value of young people is lower than the value of people from my generation. You don’t deserve the same salary, even if you are better educated. You don’t deserve the same vacation time or health benefits. And you certainly don’t deserve to have the same kind of secure retirement. It’s just not in the business plan. When it blows, it is going to be catastrophic. Until then, sit back, do what you can and watch.
@Anonymous 9:32 - I have spoken to the architects of IBR and have told them that it isn't enough. The program is a good start, but it needs to be far more robust and expanded (to include private loans). In the U.S. we wish to slap band-aids on tumors - this is common practice. We also like to fix problems once they have gotten out of hand. That's why policy here frustrates the hell out of me. It is often too little and too late.
@Anonymous June 18 12:28 - I'm not sitting back. We're organizing. Even if that's an antiquated approach - and older intellectual and activists with whom I am speaking have mixed feelings about - we are going to fight back by protesting. The time has come.
if you protest here in TX while i am here...my kids and i will be there along side you !!
@9:32 - why should anyone but you pay back the money you borrowed and spent on yourself? For many of those who did not indulge themselves in a surfeit of student loans, IBR appears too generous to debtors. And consider how it would look for a politician to support debt relief for LAWYERS who borrowed a ton of money - a more politically unsympathetic group is very difficult to imagine. The typical voter believes most lawyers are wealthy and despises them as as a group. So there will be few, if any, politicians willing to lead the charge for "debt relief for lawyers" and an avalanche of voters who will oppose any such politicians.
Plus, the window for relief was wide open when the Dems controlled both Houses of Congress and the Presidency for the two years before the 2010 elections. The Dems chose not to act on this when they had the votes to do anything they wanted, including a bailout, bankruptcy law change, etc. Now the Republicans control the House and it is very unlikely that they will lose control in 2012 [it's more likely that they'll also take over the Senate since the Dems have 23 seats to defend]...as long as the Republicans control the House or Senate, no student loan "bailout" is going to happen. The Dems got scorched in 2010 and any hint of a bailout for any constituency [especially debt-ridden attorneys] is too politically toxic to come anywhere near passage.
So I'm betting against any relief for student loan debtors. Both sides will make their best effort and we will see which one prevails. In the meantime, I hope employment prospects improve dramatically for all who need jobs as soon as possible.
Wow "anonymous"...don't even have enough dignity to stand behind your name? It's a good thing your not disabled, unemployed or otherwise unable to pay your loans. Once again, another person who has no idea of my entire situation, but still feel qualified to bring "judgement" down upon me! Spend the $ on myself??? You act as though i went to the damn mall and went shopping. The money went straight to the University for my tuition. My mother developed a deadly cancer and couldn't help me and my father was a deadbeat. I suppose i could have worked a minimum wage job somewhere and, wait, i would still be poor,but i suppose i screwed up, made a poor decision and got educated. Welcome to America, Land of the Impoverished and the "few elite" who think that they are GOD and can pass judgement on those "below" them.
I hope that some things change just in how much tuition cost. I am trying to finish college and the amount of debt is crazy. I wonder if it was worth getting into but now 30000 in and half way through I am terrified to fail because of the debt I already owe. I need a better paying job just to pay the loans back. I could not have managed to go to school now without it and needed it to survive as well as the full time job I continue to do. I pray everyday I am not seriously injured or become ill because there are no ways to pay this debt and I will lose everything.
7:36, I'm not advocating for just lawyers but for every person under crushing debt obligations. The overleveraged economy along with the loan system led to the explosion in tuition. Should an entire generation of the educated, who are supposed to be the movers and shakers of the future, be faced with financial ruin for pursuing a degree that was viewed as a necessity for success in America?
Saying that something might be unpopular or "impossible" given the current political reality is like saying that nobody should ever try anything unless victory is assured. With that kind of thinking, nothing will ever get better.
After 25 years, the amount forgiven, likely an astronomical amount, will be taxed.
Moreover, your balance will increase throughout the term, and if you get kicked out of the program for any reason in the interim, you are stuck with a msssively increased amount owing.
All these repayment programs Might be good, Might be bad. What we should all know, at this point, is that standard consumer protections, like bankruptcy, and others, are essential to maintain a healthy lending system.
It is because these protections were yanked away that the inflation, horrible loan administration, and predatory activities inducing defaults have occurred. This whole conversation strikes me as just more lender subsidized propaganda...
Real borrowers reading this should wake up to this line you're being fed.
Anon @756 wrote, "why should anyone but you pay back the money you borrowed and spent on yourself?"
The answer is because this country was founded on failure: the ability to try an idea and take it as far as it will go. If the idea goes nowhere or fails, a new start can be found, either in the west or by a fresh start in bankruptcy. That dream has ended and it is why this country has failed. It is also why these generations need only suit back, wait and watch for the collapse into a form of feudal serfdom.
Guess you only publish one side?
Censorship should really increase the traffic on this site.
Keep up the one-sided work.
@Anonymous 3:34 PM - what are you talking about? I only censor when people say racist or seriously hateful things. If something was missed that you posted, it's simply because there are a number of comments coming through on this end.
@ 9:57 said:
"After 25 years, the amount forgiven, likely an astronomical amount, will be taxed."
Thank You, Thank you and Thank you again. You are the only person that I have seen thus far, other than myself, that has pointed that out.
And that is what really, really freaks me out, because the IRS has much more aggressive collection powers, as in a de-facto debtor's prison, or at least the ability to take everything you own.
The loan is forgiven or "abated" after 25 years, but a huge whopping tax bill is applied to the surrealistically inflated debt, and in old age.
That is why I have finally decided to flee the country if I am able to do so. If I do not get arrested and stopped at the border trying to leave, while millions can pour into the US borders without being stopped.
Nothing makes any sense anymore.
The mainstream media simply does not address the issue and all the soul and life destroying anguish.
And again Amy, I am really, really sorry for the other night.
Hmmm . . . pay 10% more interest over time . . . or face the disastrous consequences of default? Borrowers need to stick up for their own interests, and should not choose default simply to "make a point" or to "stick it to the man."
"Moreover, your balance will increase throughout the term." Nope. If you are in ICR the interest capitalization is limited to a 10% increase.
"After 25 years, the amount forgiven, likely an astronomical amount, will be taxed."
First, it won't be "astronomical." It will be the amount you owned when you switched to ICR, plus, at most, 10% more. Second, really? Is what happens in 25 years at the top of the list of worries? Really? Again, there is some ideology here. Be practical. In comparison to the immediate horrible consequences of delinquency and default upon financial and social life, is what happens in 25 years essential? Third, that tax law will be changed. No one is even close to 25 years yet. Even if the law is not changed, you've had 25 years in the mean time, with affordable student loan payments, to live a life in the mainstream, raise a family, drive a car, do a variety of things that would be difficult in the underground economy. You can always make those same arguments against the IRS in 25 years, if indeed the tax is still in place. A number of commenters have also pointed out that negotiating with the IRS to cut a deal on reduced debt payment is easier than negotiating downward a defaulted loan debt. BTW, GAO just came out with another report showing no connection between federal aid availability and tuition inflation. GAO of course is far from perfect but what is needed is more analysis not more platitudes about the existence of the student aid system being in some way connected with tuition increases. Need more science, not more politics.
"After 25 years, the amount forgiven, likely an astronomical amount, will be taxed."
Um....is this really what happens? The IRS views debt forgiveness as income and you're taxed for it?
If that's the case, I would like to review the language as it's written in the statutes pertaining to the IBR program. Anyone have any links?
(If the above is really how it is, holy shit, that's really jacked. I'm totally in wrong racket.)
"After 25 years, the amount forgiven, likely an astronomical amount, will be taxed." Please make note - this respondent said "likely," and provides no solid evidence that it will take place. In addition, I have reviewed IBR, have spoken to the architects behind it, and also a number of congressional offices on the Hill (in person) about it. If you make such claims, you need to provide SPECIFIC evidence that it's true. Otherwise, it's merely speculation. (That said, I'm not suggesting that one should not approach these things with a healthy dose of skepticism. In this case, the reader sounds like they're trying to spread fear on unfounded theories, and I find that deeply troubling, particularly when it comes to the subject of student loan debt).
It's a no-brainer that consumer protection rights should be restored to student borrowers. That was something I spoke to about with a Congressman when I was last in D.C., and something I've written about time and time again.
BUT . . . that is NOT the only solution. And those who think that it will be the one-fix trick to the student lending crisis are deluding themselves. Anyone who has followed the problem understands that no single solution will put an end to this huge crisis. Should debtors be able to include their loans when declaring bankruptcy? Absolutely! But is it the end-all solution? Nope. Not even a little bit.
I have written about IBR in several articles (and here), and have pointed out the merits of the program as well as the drawbacks.
If it means helping out borrowers like Amy, then I am in support of it. Those who have a magician's ball, and can't back up their assertions, are a dime a dozen in every city. If you want to be fed mysteries about anything - including what will happen to those who enroll in the IBR program - just check out your local Tarot card shop.
Provide us with some evidence, then I'll take the claim seriously.
Thank you for clarifying, Cryn!
In general, loan forgiveness/cancellation is always a taxable event, unless there is a specific statutory exemption.
The U.S. Department of the Treasury confirms, in a September 19, 2008, letter to members of Congress, for example, that public service loan forgiveness enacted under the College Cost Reduction and Access Act meets the requirements of Internal Revenue Code Section 108(f) and is therefore not taxable income to the borrower.
Although income from the cancellation of indebtedness is generally taxable, Section 108(f) allows the forgiveness of certain student loans to be excluded from taxable income if the student loans are forgiven as a result of the borrower working for a certain period "in certain professions for any of a broad class of employers."
Although the Treasury's letter does not bind the IRS to this position, it is a good indication of its position on the issue.
http://www.ibrinfo.org/files/Treasury_response_levin.pdf
The tax code section, originally enacted as part of the Taxpayer Relief Act of 1997, includes a section making loan forgiveness in exchange for service a non-taxable event as long as the funding flows follow certain procedures. This exemption from taxability has been interpreted by the IRS to include loan repayment assistance programs funded by institutions such as universities and law schools but not similar programs funded by employers.
First: To Mr. "NOPE":
from ED.gov regarding ICR:
"If your payments are not large enough to cover the interest that has accumulated on your loans, the unpaid amount will be capitalized once each year. However, capitalization will not exceed 10 percent of the original amount you owed when you entered repayment. Interest will continue to accumulate but will no longer be capitalized (added to the loan principal)."
So this doesn't limit principal, according to this text, it limits capitalization, which accrues once per year. Do you disagree?
let's consider a simple case where a borrower enters ICR owing $100,000. Assuming negligible income for now, this would lead, roughly, to $10,000 being added to principal every year (after the first few years where the interest does not exceed this cap).
So by the end of the term, a total of roughly %240,000 will have been added to the principal, and interest accrued that was not capitalized, roughly $225,000 will also still be owing, and there is nothing to indicate that this amount will not be taxed when forgiven.
Based on a $100,000 debt, I would say an amount owing at the end of the term of more than half a million dollars ($565,000 by my estimates) is not small. For someone with little net worth, little income, it is astronomical. Even half this amount is astronomical, for people without inherited wealth, large incomes, or other resources to count on when needed.
And indeed, this is taxable income under today's law, and I see nothing to indicate that Congress will do anything but strengthen this against citizens, rather than the opposite, in the foreseeable. Moreover, while there is a weak IRS ruling, currently, that prevents debt forgiven under the public service forgiveness program, this is not law, and even if it were law, there is nothing preventing Congress from changing their mind against the borrowers. (Like, for example, how they ripped bankruptcy away without warning, and retroactively...and like they're going to take the in-school interest subsidy).
So everything that I said holds. Mr. "NOPE"...and I haven't even begun to explain why this entire IBR/ICR issue only distracts from the real issue we should be discussing...COST.
And to Cryn and the others wishing to decouple the removal of bankruptcy (and other consumer protections) from the cost of college, it cannot be done.
The absence of bankruptcy protections (along with draconian collection powers) is why defaulted loans clearly and demonstrably are the lifeblood of the guarantors, and also are a preferable outcome to the large lenders who own collection companies. Most importantly, it is the key reason that the Department of Education gets back $1.22 for every dollar paid out on defaulted FFELP loans.
So why does Congress continue to raise the loan limits year after year? Because ultimately, no one at the Department of Education has warned them that the true default rate was/is abysmally high. To the contrary, in fact, ED press releases from 1998-2007 talk only of decreasing default rates ranging from 4-7%,roughly, and of course this pleasant sounding data was echoed and amplified by the lenders, schools, guarantors, etc...
Meanwhile, students were defaulting at an overall rate of 1 in 4, certainly a high enough rate to warrant warnings to both the students and Congress.
Why did the Department of Education not put warnings out? That is a question for them. One thing is certain however, given the corporate culture of FSA, designed and built by executives from Sallie Mae,and other industry players...if defaults had registered negatively on the bottom line of the Office of Federal Student Aid, Congress would have known long ago that all was not well, and that debt levels were getting out of hand.
FSA, too would have had a keen eye on how to reduce defaults, and would have used their significant leverage to compel the universities to provide a quality education to the students at a low cost.
So do i really need to go further, here? the people reading this aren't idiots, and they can understand why a lending system must be financially motivated to want the borrowers to succeed rather than fail. There are a multitude of other horrible consequences that go to the core of what it means to have 'good government", but for now, let us merely focus on this issue of price.
Cryn tepidly states that bankruptcy protections should be restored ("absolutely!"), and then proceed to do everything possible to discredit the value of it, both to the citizens it directly affects, and more importantly to the system generally (it is not the be-all end all...not even by a little bit, etc.).
Is Cryn on the payroll of an organization that is against bankruptcy protections or something. Not understanding. She bad mouths the notion of returning bankruptcy protections, badmouths those fighting for it, but doesn't support her claims...not even a little bit!
Name two problems with the Higher Ed system that returning bankruptcy protections WILL NOT FIX, Cryn. If you believe what you claim, then you should easily be able to point out two things, if not a dozen. Just name two.
The revolt must occur. We are beyond 'political action', as that system is captured and rendered an oligarchy.
WAR and REVOLT - and the triggering of systemic collapse - is the action available to us. I say we use it.
@Anon 11:35 AM - we're working on organizing mass protests and other things to change the crisis. More and more people are thinking the same thing. We're living in an oligarchy - you are right.
Are you familiar with this group? -http://www.october2011.org/
My Own Personal Stalin: http://alleducationmatters.blogspot.com/2011/06/my-own-personal-stalin-to-delusional.html
@Anonymous 5:00AM
I don't think Cryn should deign to respond to your trolling, but I will.
"Is Cryn on the payroll of an organization that is against bankruptcy protections or something. Not understanding." I'm not understanding, either. Is that a question or a statement?
"She bad mouths the notion of returning bankruptcy protections, badmouths those fighting for it, but doesn't support her claims...not even a little bit!" Really? I read her stuff pretty regularly, and I have yet to see her badmouth the return of bankruptcy protections, and I've never seen her badmouth ANYONE who is fighting to help student loan debtors. Now it's your turn to back up your statements, Senor Trollskin.
"Name two problems with the Higher Ed system that returning bankruptcy protections WILL NOT FIX, Cryn." Things I've learned from reading Cryn's blog, or from reading the articles she links here:
1. Tuition rate increases started outpacing cost of living increases in the 1990s, a good 10 years before private loan bankruptcy protections (BP) were taken away (2005), and almost 20 after federal loan BP were lost (1978). So there's no causal connection between exorbitant tuition rates and the loss of BP. So fine, return BP (and yeah, nimrod, it's self-evident this should happen for a number of reasons, and the fact that you're harping on this issue shows how desperately you're grasping at straws), but that won't solve the corporatizing of higher education, where playgrounds and posh accommodations (the costs of which are foisted upon the "consumer") are driving students further into debt. And guess what, dingleberry? The total federal debt burdern a person can accrue is upwards of $130k, which wouldn't be dischargeable if 2005 were undone. That still leaves people in a deep hole, and doesn't encourage universities to keep their costs down. Even restoring BP to people with federal loan debt (something that NO ONE is seriously considering) won't keep university admins in line unless there are additional pressures from ED to lower tuition rates.
2. Reversing 2005 would definitely be a boon to anyone with defaulted private student loan debt, and would take a bite out of that market that everyone (well, except for the industry and the politicians that profit from it) would love to see. But federal debt would still be on the books, and with orgs like Sallie Mae managing hundreds of millions of $ of that debt, i.e., still making money off the gov, there's no incentive to work with borrowers to keep debt manageable or even get it paid off.
(cont)
(cont)
3. Believe it or not, Mr. Narcissism, not everyone sees declaring bankruptcy as the magic bullet that you apparently do. Some people simply won't do it, for a variety of reasons. I, for example, would love to see BP restored simply to put the fear of God and the law back into the lending industry, but I wouldn't take advantage of it for personal and business reasons, and I'm sure there are thousands out there that feel the same way. But I personally think, and it seems Cryn does as well, that those people also deserve help. They deserve reforms not related to the restoration of BP that will allow them to pay back their debt under reasonable conditions. And perhaps you think that simply restoring BP across the board would cause favorable conditions to naturally accrue, giving such folks leverage against their lenders, even if they never intended to actually file. Well, that's worked really well in the mortgage industry, hasn't it? You can't assume that the threat of bankruptcy is enough to make lenders flexible and responsive to borrowers' conditions. That's an awefully naive laissez-faire position (if it is, indeed, your position).
4. How would restoring BP minimize the disgusting prevalence (and nauseating profitability) of the for-profit education sector? Those schools can still sell their snake-oil degrees, put their $100s of millions of profits (from student loans) in the bank, and then sit back and watch as their students go bankrupt. Okay, the student can at least discharge the debt, but now they've got ruined credit and few job prospects. So now Johnny Buy-a-lambskin gets a rare job interview. And does really well! But his prospective employer calls him the next day: "Sorry, we ran a credit check, and unfortunately we can't hire you." The same goes for folks wanting to go into public- or private-sector jobs that require background checks or security clearance (this last point is part-and-parcel of #3 above). Well, you might say, lenders would be more hesitant to lend to students at such schools because of the default/bankruptcy rate. But again, lending started to spike, and private lending ballooned, well before 2005, so we can't make assumptions about the behavior of banks/lenders should BP be restored. It doesn't guarantee, EVEN A LITTLE BIT, that students won't still be screwed by the for-profit educational industry.
I think that's a pretty good start, and I've already spent enough time responding to a troll. If, on the off chance, you're not some industry hack trying to sow discord, maybe instead of dragging Cryn down you should respect other points of view, particularly ones that are fighting the same fight you presumably are.
But seriously, "is Cryn on the payroll...." Laughable, just laughable.
It's absolutely frustrating. No one is looking out for the consumer. Who would want to when everyone is making money off the system? Then there are people like Amy who want to pay and stay out of default but can't because communication between the consumer and the customer service reps is abysmal. I wonder how many people have lost hope or given up because they weren't given the proper information. I wonder how much money the lenders have gained over the dispersal if incorrect information. Moreover, who is watching this communication and correcting/enforcing that things are done right? I'd gander to say no one because it's not in the best interest of the business.
AprilD - it's very frustrating. That's why I am an advocate, because our voices are not being heard. I think it's safe to say that lenders have benefited tremendously from the system in place. That's why it's a student lending crisis.
IBR is helpful for getting on your feet financially. It keeps the required minimum payment low, so that you can make payments in at least that amount every month and not default on your loan. However, if you can make an additional payment in some months, you can prevent some of the other things people have mentioned above.
I have been reading some, not all of the comments regarding IBR here. I am helping my son to deal with Sallie Mae loans right now. He has been unemployed since May 2010. But what really caught my attention in your article was the Sallie Mae misinformation. SM is expert at that if nothing else. They just lied to my son today and told him no need to re-defer those Stafford loans even though you are still unemployed. "You will only owe $44 (wrong) on them on 3/3 anyway". Calling them is a crap shoot basically. You have to keep calling back till you get better answers. For over a year they told him he could not defer Stafford loans at all until he depleted his savings. They tell him whatever they can get him to believe, which is why I am now involved. I keep saying this will be the next big bubble in the economy. This is going to all blow up. People have been misled and lied to and the schools make no mistake were just as guilty as Sallie Mae. They are lining their pockets with the futures of our children, and no one cares. It going to explode, just like the mortgages.
Sue - thanks so much for sharing. It's actually worse than the housing bubble. While that loss for homeowners, who had to walk away from their homes, was terrible, they at least had that choice. With student loans, especially federal loans, one cannot simply walk away.
Please feel free to send me an email - ccrynjohannsen AT gmail DOT com.
I would like to highlight your story in an article.
-Cryn
I have a sm loan and am to start payment in April, they want 562.00 a month I am currently un employed but do to go back to work in August as a school teacher. I need to lower my payments but my spouse will not release his income information or sign anything for sallie mae. He says he didnt have studebt loans and will not pay student loans . How can i get them to reduce my loan without his tax or income information. My Dad will give me 200.00 a month to pay them bur cant afford anymore than that. I dont want to default on my loan.
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