So there I was. I had two little kids, a 3-year-old and a 6-month-old, and a husband working 60-80 hours a week as a history teacher and theatre director for the incredible salary of 30k a year. The money I was bringing in teaching piano barely covered the cost of childcare. Still, with the additional principal added to my original 100k loan from forbearance fees (Part1) and late fines (Part 2) my loan payment ballooned from $650/month to $800/month. This was more than my mortgage.
Lucky me, I knew I still had 12 months of forbearance to use. All I had to do was pay the $250 fine again (actually twice, because you can only apply for 6 months of forbearance at a time) and pray that I would never in the remaining 28 years of my loan, need a break from payments. Yes, that’s right. You are given 24 months of forbearance to use over the life of a 30 year loan. You must take it in 6 month chunks. So, four times.
At 18, or 19, or 20 you are asked to look out over the next 30 years of your life and decide whether four timeouts will be enough. “Sure!” you say. After all, at 18 or 19 or 20 you can’t imagine ever needing even one timeout because You.Are.Invincible. Of course, your prefrontal cortex (the part responsible for risk/reward and longterm planning) is not mature at this age, but that is all the better for the banks. An older person would know that 30 years is a long stretch of road to cover, and that there are bound to be more than four potholes.
So, I paid my fine and entered forbearance again, hoping that the interest rate, and therefore my payment, would decrease while I waited. Except, something went wrong. They said the forbearance was granted, but then two months later, they sent me a bill. With another $200 late fee. Evidently, something had gotten hung up on their end and I was required to apply for forbearance again. So I did. I paid the $250 fine AGAIN, because I was desperate. Because I was coming unglued with these little kids shrieking all day and the idea of having collectors call at all hours was more than I could deal with. Besides, now I had six whole months off.
Three months later they sent another statement with another late fee. Evidently, they had retroactively approved my original request for forbearance, and now my time was up. Collectors called 2-7 times a day. Within the week they sent my sister-in-law (a co-signor on one of the smaller loans) a notice that I was delinquent.
What was I doing during this time? Why was I just sitting there?
For three days my calls would go like this: Wait for an hour for a representative to take my call. Explain the situation. Listen to the representative tell me that there was nothing I could do but apply for additional forbearance. Apply for it. Listen to the representative tell me that, actually, I had used up my four forbearance periods. Request to speak to a supervisor. Wait on hold. Wait on Hold. Hear a message stating, “Our offices have closed for the day. Please call back during business hours.”
This happened twice. The third time I skipped the nicey-nice with whichever poor schmuck answered the phone and demanded to speak to a supervisor immediately. There was a lot of arguing. I did not use my nice voice. I was transferred and put on hold. For a LOOOONNNGGG time. The supervisor said she couldn’t help me. And then I said:
I will sue you.
So she transferred me to someone else. The end of the line for nasty, demanding, angry people who are tired of being fucked with. This woman answered right away. I explained my problem. I explained the erroneous late fees, the snafu with the forbearance, the fact that I hadn’t used up my third chunk of six months, let alone the fourth, but because I’d APPLIED for it (since they said the first application didn’t go through) I was being told my options were over.
She said, “That sounds very confusing, but I can’t help you. Those are the terms of your loan.”
I said I was going to sue, that I was going to my congressman, that this couldn’t POSSIBLY be legal.
And she said:
“Good luck. We are protected by The Higher Education Act, and we can do pretty much anything we want.”
I shit you not.
And you know what? She’s right. At least mostly, according to my congressman and everything I’ve been able to find. Here’s the skinny:
- Though I’m not sure Sallie Mae is actually protected under the HEA, they do have A LOT of protections that normal lenders do not.
- First and foremost is that private student debt is almost impossible to discharge in bankruptcy. See Suze Orman discuss it here:
- If you cannot pay your loan and you default (one missed payment) your wages can be garnished.
- Private loans from Sallie Mae are not technically backed by the government, HOWEVER, they are funded by one of the Federal Home Loan Banks (think Fannie Mae) so they get to borrow money at almost 0% interest (designed to get lenders to loan to homebuyers) and turn around and charge STUDENTS 4%-26% interest on the money they lend. Crooked. Very Crooked. Especially since the loans are non-dischargable.
- Sallie Mae owns the collection agencies that will come after you if you don’t pay. In fact, they actually make MORE money if you go to collections.
- Though there is no way to get out of making student loan payments, this debt is NOT reportable and not considered when you apply for any kind of social services:e.g. SNAP program or WIC. So, you can be right at the federal poverty line, struggling to feed your family, forced to pay your loans (or if not PAY them have them deducted by garnishment), and still NOT BE ELIGIBLE for help. This is INSANE.
- Private loans through Sallie Mae are dischargeable upon death. But, I’ve heard from many people that they will try to come after your cosigner or family anyway. Obviously, I have no personal experience with this, as I am very much alive, and very much pissed off after paying these loans for ten years, but I totally believe it.
Essentially, private student lenders, Sallie Mae in particular, are to students as Title Loan Companies are to poor people in the ‘hood: People looking to make a buck (or a billion) on the backs of the desperate.
Put THAT analogy on the SAT.