I made one of the biggest mistakes of my life when I was 23 years old. I’m still paying for it. In fact, I’ll be paying for it until I am 60.
I got a private student loan through SallieMae to finance my education.
I have $100,000 in student loan debt for my Bachelors of Music from Berklee. It’s like a dying pet that we drag around everywhere with us. We lovingly refer to it as The Hundred-Thousand-Dollar BM.
Now, going to an expensive college was my choice. Financing it with student loans was also my choice, although in this case, my choices were limited. A lot of things played into it: the desire to please my family and not seem like a total fuck-up folksinger topped the list.
Anyway, it didn’t seem so bad. The loan had a fixed rate of 4%. It said right there on the front page, which, being well-trained by my parents, I read carefully. There were 80 other pages, but I was 23 and embarrassed to take up too much of the Financial Aid Officer’s time, so I didn’t read those. Besides, the writing was really, really tiny. I’m a fast reader, but I would’ve been there a week going through all that.
Imagine my surprise when, six months after graduation, standing in the kitchen holding my five-month-old daughter, I open my first bill from SallieMae and see VARIABLE INTEREST RATE in big (no, not really) letters.
I figured, I’m a grownup now, a parent, I’ll call and straighten this out.
After waiting on hold for almost an hour (the going rate for my interactions with SallieMae) I talked to a representative who informed me that the fixed rate of 4% was a promotion. It was only good while I was enrolled. As soon as I graduated, the rate became variable. WHAT?! A promotion? Like from the cable company? But this was a student loan, people!
I kept my cool. I latched my baby onto the other breast and asked, “What is the cap on the interest rate?”
“The cap?” she asked, “There is no cap.”
This is when I first suspected that I might be in trouble. Ever the optimist (um…) I dismissed the thought. After all, this was a student loan, a loan given to STUDENTS, who are by definition, still learning about how the world works. These loans are designed to give kids a shot at the American Dream, a dream which has become increasingly impossible without a college education. A college education which has become increasingly impossible without student loans. No one would try to trick a kid. That would just be WRONG. That would be predatory.
She seemed pretty sure of herself, and since my arms were aching from trying to nurse a 15 pound baby while talking on the phone, I moved on to the next step: Forbearance.
In essence, what I said was, I’m not working right now, unless you consider being a one woman Dairy Queen a job. I need six months to get my shit together and then I’ll pay you. Since this was part of my contract, she agreed, charged me $250 for the privilege (added on to the principal, of course, along with capitalized interest on the 6 months), and we were done.
So I thought.
Next time: What happened when my forbearance ended…and what Suze Orman thinks about it.
Draken Korrine
Check out – and join – the /r/studentloandefaulters subreddit to learn more about the movement to starve the predators. Stop feeding the Beast the Swallows its Young. Walk away, repudiate, default-en-masse.
Jen
Thanks for the comment. I’ll definitely check it out.
Draken Korrine
Thanks for the great article. Trying to get it some attention on reddit and elsewhere. Good stuff you’ve contributed here.
Patti
I went to law school – graduating at age 40. I borrowed $53,000. Here I am 18 years later, having paid over $60,000 – I still have a over $85,000. I have been paying for 17 years via wage garnishment. The problem? I defaulted after the initial grace period – and they refused to give me a deferment. This was all Federal Student Loans. I went into public service, and have worked for the State DSHS for 17 years. I am nearing retirement age – and fear I will never be able to retire and if I do – will lose half of everything to the Federal Government to pay these loans. My payments are going to interest and fees to the Collection Agency hired by the feds to collect on these loans. They have gotten over $11,000 in fees.
Jen
I’m so sorry. It’s terribly frightening to be in that situation. It’s made worse by the fact that student loans are non-dischargable in bankruptcy. In the case of private loans, the collection agencies are actually OWNED by the bank that is servicing the loan. I know that the rules have changed recently for federal loans… I wonder if there isn’t any way you could get some relief, especially considering your payment history and public service…
Big Daddy
You can trust the government,,,,just ask an American Indian.