These stories are becoming common. A woman borrowed $100,00 to get a college degree. She stopped paying interest. Now she owes $142,000.
Some guy married her. Now he owes $142,000. Combined, their after-tax income is $42,000.
They cannot write off interest payments from gross income. The law was changed.
Will they be able to buy a home? Not from a conventional lender?
Will they be able to afford children? No.
Will they ever get out of debt? Under hyperinflation, yes.
Her story is worth reading.
Like so many others of my generation I was raised to believe that college was a necessity in order to secure a good job and to have a bright future.
This myth is fading, but not fast enough. Parents are still sending their children into a swamp of debt.
So senior year came and I began looking at colleges and of course their expense. Both parents were living paycheck to paycheck and had no resources to help fund my education. But when all hope seemed lost I found what I thought was my salvation in student loans, which offered low interest rates, consolidation, and flexible payment option. Unsure of what to do I consulted my parents, school, and loan advisors who did not hesitate to tell me that while my college education would be expensive I would have a degree which would guarantee me a good job with a nice income and thus I would have no trouble paying my debt off. I was told it was an investment in my future. Like so may other naive students with no other options I signed on the dotted line.
These poor kids are being hustled by shameless colleges and shameless lenders. They are trapped for life at age 21.
It took her five years to graduate — typical these days.
Then she tried to get a job with her useless $100,000 degree.
I naively assumed that finding a job even in an economic recession was going to be no problem after all I finally had that degree. I was wrong. After six months of trying to look for a job in my degree field and working two full-time jobs that paid only eight dollars and hour just to get by the student loans came due. I had accumulated $100,000 in student loan debt from two companies, Sallie Mae and Mohela, with a combined monthly payment of around $900.
If she had gone into the work force at age 18, she would be earning at least $12 an hour. She would have no debt. She would have had five years of savings.
She could not pay the debt.
. . . I decided to attempt to pay Sallie Mae what I could. Then the non-stop harassing phone calls began. I would receive around half a dozen phone calls a day because my account was past due always speaking to someone I could barely understand in another country. I once again naively believed that because I was doing my best all would be right with the world however I quickly was threatened with delinquency and default. After several months of paying what I could and Sallie Mae’s relentless phone calls I did the only thing I knew to do to escape the horrors of default and I went back to school part-time at a community college, which was inexpensive and that I paid for out of pocket, to put all my loans in deferment.
She went back to a junior college!
Then she got married. They earn $42,000 a year, combined.
Then she checked what she owed — years later. It was $149,000.
Interest had accrued.
Here is her future, and his. It is bleak.
We are living practically paycheck to paycheck and are nowhere near close to being able to afford over $1000 payments every month. Together after taxes and health insurance we bring home around $42,000 a year. I am literally accruing more interest every month then I can afford to pay let alone anything going to the principle.
She is despoerate. She wants a bailout. She thinks she is a New York bank. She isn’t.
Desperate not to accrue even more debt I am left with questions…what do I do? And where are all those thing that were promised to me at the beginning? Why is there no relief for the college graduates who are in over their heads? It appears that default is inevitable. And because these debts can not be bankrupted, there is no statue of limitations to pursue these debts, and wages can be garnished there is no incentive for these lenders to work with their clients thus creating a predatory lending system that is creating indentured servants out of an entire generation. As of now our dreams of owning a home and having a family are gone which I have read in my research is the case for many people. Something has to be done. An entire generation is drowning in debt. A generation that will not be able to afford to buy houses, buy goods and services like the last generation, and will have smaller or no families because they can not afford to. Further our generation will not be able to send their kids to college and certainly with the horrifying lessons we have learned in dealing with these private lending companies we won’t want to. This will impact the economy for years to come.
Warn your kids. Now.