Massive student loan debt weighs heavily on young couple
Danielle Jokela, who graduated in 2007 with a bachelor's degree in interior design from Harrington College of Design in Chicago, still hasn't found a job in her field. She and her husband fear losing their condo, she said, because she owes more than $98,000 on 16 government and private student loans.
The 32-year-old Rogers Park resident was among those testifying at a Senate hearing in support of legislation that would allow students who borrowed from private lenders for their education to wipe out that debt in bankruptcy proceedings, just as credit card borrowers and many other unsecured debtors may now do.
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Basically the situation is that, this lady is in an unfortunate scenario where she took on a huge loan in order to attend school, and the school arranged government and private institution student loans for her. The private educational loans have variable interest rate, and upon the time of borrowing, the school did not discuss interest rates, total loan amounts, and expected payment with her. Now she is in a bad spot that the payment is high, along with her mortgage, car loan and credit card loan, and being underemployed, it is too hard to keep making payments.
It sounds easy to simply change the rule out of sympathy, but it would be a seriously reckless decision in a logical standpoint. Here's why:
1 - It encourages the irresponsible borrowing behavior - students will borrow without looking at the amount, calculating the true cost of borrowing and expected payments
2 - It's unethical for people who bear the burden. Who's paying for this? Debt holders, Shareholders, Insiders and many others when these students stop paying. It's a losing battle for the private lenders.
3 - It's unfair - why should someone else pay hefty prices for others' lack of common sense?
4 - It promotes 'walking away from debt/liability', If you owe $100K and you have to pay $170K with interest, why not just declare bankruptcy and come back 7 years later clean?
5 - It lacks common sense - if someone is intelligent enough to pursue higher education, he/she should read the terms and conditions on the loan contract before signing it.
I too am a Harrington College of Design graduate with about $192,000 in student loan debt. I didn't have a family that was able to explain or understand the amount of debt I was taking on and I placed all of my trust in the loan officers at Harrington. With the stories of student's making $50-80k right after graduation, surely I could easily pay off my debts (whatever those may be...I was never told each time I signed my life away on the dotted line). I was also told to never perform a job for less than $50 an hour...how jaded I was. Why the loan officers didn't explain to me what my payments were and what the average salary was of a recent graduate, I have no idea. Isn't that their job? I once was in the financial aid department when a student was being "guided" by telling them 'you can borrow amount A, and just get by; or you can borrow amount B and buy a lot of shoes'. I will never forget that. This HAS to stop, how do you expect most people who are in their late teens or early 20's to make decisions such as this without being truly educated? It's irresponsible. I pay my loans but I cannot consolidate and the interest rate fluctuates...Sallie Mae is an impossible company to work with. I am trapped for life.
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