Earlier this week rumors started to swirl that President Obama was going to do something to help American’s overwhelmed with student loan debt.
As someone who is – to put it mildly- overwhelmed with student loan debt, I was cautiously optimistic.
When the deal was first reported it sounded like exactly what my husband and I needed; a lowered Income Based Repayment percentage (10% of annual income after taxes instead of 15%) and the ability to consolidate your federal and your private loans. As a family with a whopping amount of both federal and private loans, from different lenders, with different interest rates, and scattered places to write our monthly checks, this too sounded fantastic. One provider. One payment. It was too good to be true.
As it turns out, it was too good to be true.
The income based repayment was only for loans taken out in certain years, not the years our loans were taken out, and the “consolidation” of federal and private loans was grossly over stated, what they meant was federally backed FFEL loans taken out from a private lender. Not the same thing. Not even remotely.
After my 12 hours of pure joy I was crushed. We were back where we started, spending more than 20% of our income on student loan payments and hardly scratching the surface of the principal.
Yes, we chose to go to a private law school. We chose to borrow the “full amount” which is what the school and government determine is the amount of money that will cover both your tuition, books and living expenses for the year. Until the 2006-2007 school year, the full amount was much higher than what you could get with federal loans, so students needing the full amount had to turn to private lenders. (We realize, other choices could have been made, but they were not, we didn’t go to state schools, we didn’t borrow smaller amounts, and we can’t change where we are today.)
No big deal! our law school told us, That is what everyone does. Here, just pick a lender and we have all the paperwork you need over here.
We signed the forms. We borrowed the money. We will pay it back. It just might take us until our 60′s.
The private lenders are – for lack of a better phrase- real assholes about the payment plans. They offer little wiggle room, “income based repayment” is a joke and when you try to explain yes, you see, the economy is very bad right now, so my job doesn’t pay me very much so I’m sorry but I can’t afford $500 a month on your payment, I have two other student loan payments to make every month in addition to my regular bills and expenses their answer is “Well these were the terms you agreed to when you signed the forms X number of years ago.”
Yes, well, I also signed those forms during a time of economic prosperity, but I suppose that is neither here nor there.
I took a gamble, albeit one that I thought was fairly low-risk and smart (lets see…I’ll invest in my education, which enhances my earning potential and can increase the ability to give back to society financially and with my smarts!) and in this instance, the house won. The house won big. I’m reminded of this every month as I sign checks and lick envelopes. Did you know if you default on student loans you can lose your Medicare eligiblity? That student loans are not dischargeable in bankruptcy? (Not that we are considering either of those options, but they are certainly something to consider if you are thinking about taking out student loans today.)
We actually don’t talk much about the amount we owe on student loans. The number is so big it is frightening, the equivalent of a mortgage on a very fancy condo, sadly the condo in this case is defined by a large piece of paper with our names on it. We haven’t even framed our law degrees, they are sitting flat in a safe spot. What is the point? To show our friends, all in the same boat we are?
Check out my $150,000 piece of art! It even has my name on it! Look, we have TWO.
No thanks. We all have the same personalized piece of art. And until we are done paying it off, it isn’t very much fun to look at.
I’m sure by 2060 the cost of framing will be much lower anyway. See, I’m saving money!
When we thought the new plan might apply to us we daydreamed about what we would do with the extra money in our pockets. The list was short, we had grand plans of buying a modest American made car to replace the one we have, and a secondary plan of…putting the rest into savings and retirement funds. But alas, the plan was not meant to be for us, so we will continue on the way we are.
Month by month. Check by check. Slowly trying to wrangle the beast of the loans, a beast so large and shadowy and slippery you can never really get a firm hold on it, but still, we try. I don’t begrudge the people that the new plans helps…but I think we are lying to ourselves if we say they are the only ones struggling with student loans.
One day, I suppose, it will have all been worth it.
