Warning to those with student loans

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True, and I find it distressing how little outrage there is over this.

Why does the Department of Education have its own "swat team" to start with? If this was a criminal matter, the FBI should have done the deed, not the Department of Education with its own henchmen.

I wholeheartedly disagree.

You cannot associate debt with education.

By law, unsecured debt is unsecured debt. There were/are many organizations (doctors and lawyers) where a bankruptcy filing CAN jeopardize your license to practice. It isn't automatic (bankruptcies do happen), but disposing of outstanding student loans via bankruptcy can jeopardize an existing professional license or prevent you from obtaining a future license.

The rule of bankruptcy is to keep a person from being crushed by debt they can no longer manage. Before the current standard (I researched this BEFORE taking out a penny in student loan debt), the rule was that if you were in repayment for at least 7 years in good faith before filing bankruptcy, your student loans were subject to bankruptcy like any other debt. I felt that was fair. Require a student to wait 7 years while trying to get a decent job before they could ask for bankruptcy (and just filing doesn't mean you get it). While in school, they pretty much eliminated the option except for "undue hardship" cases (a vague legal concept still not clearly defined in the bankruptcy courts or in the law).

There is no way I would have borrowed for my education if I knew it would be so hard to get bankruptcy protection if I couldn't get a job afterward. For all the assurances that I didn't need to worry, I went to college after being blackballed out of the profession I wanted to work in, and I was admittedly paranoid that there was nothing keeping it from happening to me again. The first time, I had over $6,000 I had to find a way to pay off (which I did over several years). Now I'm over $100,000 in the hole and stuck in a dead-end situation with this economy...10 YEARS after finishing school, and as I approach 45, it's becoming apparent that nobody wants to take me seriously for a lucrative-paying opportunity.

My RAGE over this is in the FACT that educators knew what was coming. Student loan companies knew what was coming. They saw the trend in downsizing and outsourcing of jobs in America, but kids were being funneled into higher education on the promise of employment and prosperity when the jobs were quickly going away. Sooner or later, there was going to be a flood of bankruptcy filings when these hundreds of thousands did their 7 years of payments and realized that with the job market they would never avoid defaulting on their loans on what they were bringing in, so these monsters BRIBED Congress to change the bankruptcy law to give them a status no other creditor enjoys in the economy. Rather than be honest with prospective students to pare back the number going to school (certainly into expensive education programs), they sold an entire generation into economic slavery...and they are still LYING to them about education = prosperity. Only recently (this year, 2011) do you see prospective students waking up and realizing that the graduates now CAN'T FIND WORK and CAN'T PAY THEIR STUDENT LOANS.

And, for what it's worth, if you can't pay back your student loans, the odds are you already are not employed in a capacity that you need your education for in the first place.

I'm married to a bankruptcy paralegal who has ABJA certification. The short answer is it IS possible to discharge student loan debt as unsecured. But it is EXTREMELY difficult and rare. One must prove that student loan payments are an extreme hardship, and it's unlikely many people are going to be able to do this. My student loans are just over $250 and really are a hardship, though I'm working on getting extra income just for loan payment since every penny I "officially" make goes to supporting my family. By myself I make less than $12,000 yearly.

Me either....my parents are paying for college.

well yeah that was the concerning part, I mean why does the Department of Education have its own swat team? isen't that a little much? I mean as a rule people aren't paying back loans because they cannot afford to due to not finding work or whatever else........so intimidation is not going to solve anything, it will just end up tramatizing and possibly resulting in physical harm of people who as a rule are not maliciously stealing anything.

Did you take out private loans? That is the only reason I can think that you could have gone from owing $6,000 to $100,000. My father is in a similar situation to you. He was forced to take out private loans after he was rejected for federal loan assisstance.

The federal loans only charge what you take out plus a maximum annual interest rate of 8.45%. If your payments are late, they will charge more interest. People can sign for forebearance to avoid compounding interest. In 2011, the interest rate for this year's loans was lowered to 4.5%. Also, they have the Public Service Loan Forgiveness (PSLF) so after you pay 120 payments, your debt can be forgiven. This avoids the endless spiral of compounding interest. You can be a slave, at maximum, for 10 years.



It will catch up with them eventually. Just like the housing crisis. If people do not have the money, they do not have the money. Your private debt becomes meaningless if the collector is gone.

I recommend being paid only in cash if you can and NOT having any money deposited to your bank account. I wouldn't even have a bank account if I were you. I also recommend you save your money with friend's or families bank accounts (if you cannot safely secure cash at home).

In your case, I can sympathize with you. Perhaps my judgement earlier was too harsh as I am in a major that gaurantees me job prospects. Anyone who declares bankruptcy in my major just wants a free ride.

If the degree is worthless, they might as well take it away, huh?

When I finished school, I had $65K in student loan debt. Unable to pay, I consolidated, but at the time, interest rates were high (and you can't refinance to lower APRs later). That's how over the last 10 years my debt grew to over $100K. It also was a matter that they can "capitalize" your interest until it's 10% of what you originally borrowed/consolidated, so I think I'm at a point where my monthly interest cannot grow larger because they can't fold my accumulated interest into the principle anymore.



That's what sucks. The ICR plan (income contingent repayment) keeps monthly payments at a limit I can afford, but I couldn't afford to pay the monthly interest as it builds. Forget about paying down the principle. The IBR plan has a "tax free debt forgiveness" program for those working full-time for a government entity or qualified non-profit. I've been trying to get a job in these sectors because that's my only real chance of getting this monkey off my back. The ICR plan does have loan forgiveness for whatever is not paid off after 25 years, but that amount is counted as taxable income. If the Congress does not change the tax code to make the loan forgiveness tax free (if you couldn't pay back the debt, how are you going to afford the tax), I'll have to file bankruptcy to deal with the tax liability BEFORE it's incurred. Fortunately, bankruptcy courts have ruled that the tax burden for ICR loan forgiveness does qualify as an undue hardship as most situations involve a person in their older years on a fixed income.
It will catch up with them eventually. Just like the housing crisis. If people do not have the money, they do not have the money. Your private debt becomes meaningless if the collector is gone.



Trust me...after being shafted after doing my "due diligence" before borrowing, I'm keeping up on the legal loopholes and exploiting them whenever possible. Some might think less of me for it, but why should it be okay for them to screw me over by changing the rules but I can't use their own rules against them?



They might as well. My undergraduate degree doesn't open doors except that I can claim to have a 4-year degree. My choice to not practice law was personal, but I was assured (lied to) that finishing the program was worth it because I could do anything with the degree. If anything, my graduate program keeps me from being considered for jobs. I'm actually considering taking a lower-paying job if it guarantees health benefits (which I don't have right now). All my education has not done one bit of good for me, and in ways it could help, the employers want people even more qualified or actually working in a capacity I don't want to work. An example is that I wanted to work as a Magistrate...which is a judicial officer, but you don't need a law degree to do it. Well, the lawyers in the state legislature changed the law so that now you need to be admitted to the bar to be a "chief magistrate" and I don't doubt in time any magistrate will have to have that credential. One interviewer suggested I go and pass the bar so I could be considered. REALLY? I should invest THOUSANDS of $$$ to pass an exam that serves only one purpose...to practice law in a court of law...just so that IF another opening in my area happens to come by I MIGHT be considered for the position?

Now, if I got hired someplace where being a member of the bar would advance me up the ladder, I could justify the expense, but just to get my foot in the door?

You believe that the government is out of control because you don't have any student loans?