I receive a number of questions related to the financial aspect of the college experience. I respond to many of the emails directly but every now and again I like to share some of the questions on CheapScholar.org so that we can all learn from each other and maybe provide a little bit of a support group for our fellow readers.
The following story was brought to me by a young man named Adam. As you read through his situation, you may think that his scenario is unique, a little scary, and maybe even quite hard to stomach. However, I assure you that Adam is not alone and there are certainly others that are experiencing similar situations – just not maybe quite as severe as Adam.
Read Adam’s story and feel free to leave any advice, comments, or questions below. Tomorrow, I am going to introduce a new resource for Adam that I think may help his situation.
This situation is going to sound very “cartoonish”, but I assure you it is no joke and a fact that I’ve just recently been slapped in the face with… I myself was brought up to highly value the dollar by my family so I still don’t quite understand people who abuse both money or “bad” debt (credit cards, auto loans, student loans & etc). By 27 years old I have saved very well on my own, pay my credit cards off in full every month, have an excellent credit score, hold a steady well paying job/career, have purchased and own multiple pieces of real estate, have a healthy 401K, have an active brokerage account I trade in frequently and other misc investments. Generally I am ALWAYS trying to learn how to invest and manage myself better financially; I have a spreadsheet for everything. I feel I need to give this brief background so that one can understand better, within a few sentences or so, the personal value that I place on managing one’s money.
The slap in the face came a few weeks ago when I made my girlfriend of 2+ years now, whom I love dearly and have planned to marry, start getting her college/student loans tallied up because she had just gotten a notice that one of them will be maturing soon and payment(s) due. I always knew she had student loans, and she always knew with 7 yrs of “private school” it’d probably be a larger but manageable number. Long story short, but it wasn’t long after going through her loans that my heart stopped and I went white as a ghost… but reality quickly snapped me out of the nightmare that we just recreated on paper, and I realized how extraordinarily dreadful her and now our situation truly was. Her student loans are in excess of $340,000… That’s almost $50k/yr on average, an unfathomable amount…
The worst part about all this is that no she has not been training to become a Doctor or Lawyer. She got her undergrad, master’s and is now just finishing up an Advanced Education Specialist Degree, all in Psychology, and all of which will put her into a public school system paying her next to nothing. She is truly a sweetheart, is always wanting to learn/challenge herself educationally and has never (since I’ve known her) been careless spending with credit cards or the like. Her only real desire career-wise is to help everyday and work with mentally disabled K-12 students, she truly is a saint. In saying that, now her loans are plentiful, come from every conceivable lender, are comprised of every loan type and amount & most of which are unfortunately private rather than federal. I have plenty of moral and personal issues with this whole situation, but none of which I am willing to render an opinion on personally until I can help her figure out and start to climb out of this egregiously deep financial hole she has somehow gotten herself into. The story stems even deeper back to incredibly naive and irresponsible parents that created this loan nightmare for her; they “withdrew” or took out every loan disbursement amount and paid her tuition/expenses for her through the 7 years… My girlfriend, now only 25 years old, truly believed that a portion of her college had been being paid for by them and other family means, and that they certainly would have told her years ago if it was ever becoming a problem as terrible as this.
What boggles my mind, and I guess where my question(s) come in are how can the federal and private student loan entities possibly lend to one individual an amount of money this massive??? How has she racked up student loans of nearly $50k/yr??? To me these loan entities are borderline criminal, and seem completely vulturous in nature. Honestly this whole situation seems very similar to the Real Estate lending entities that have recently destroyed soo many lives/families/homes thru lending anyone and everyone home mortgages well outside of their financial wherewithal’s. I can only research soo much and have no idea which way to go from here. I don’t even know which way is up in all of this.
Any insight, direction or “miracle” would be wholly appreciated at this point… Please help!!! SOS!