Graduating Into Debt From Student Loans
(CBS)
There are many times I wish I were back in college. This is not one of those times. I worry I could have ended up like the recent college grad I profile in Wednesday night's piece on the "CBS Evening News with Katie Couric." Alex Guzzetta has $90,000 in student loan debt, $70,000 owed to private lenders. He says he never realized when he took out the private loans that he'd be facing a 10 percent interest rate and a minimum payment of more than $500 a month for 30 years. Forget about buying a better car or an engagement ring for his girlfriend. As he told me, he's just getting by.
I remember the days of trying to cobble together funds to pay for college. I managed to cover tuition with financial aid, federal loans and work study programs. There weren't many private loans available then -- or at least, I didn't know about any. Had there been as many offers as there are today (you can see them just by googling student loans on the internet), I worry I would have been motivated by the possibility of getting thousands of dollars quickly. Would I have read the fine print and realized those loans would severely impact my lifestyle and my job decisions once I graduated?
Private loans are now the fastest growing part of the student aid industry. There are many kids like Alex who need to take out the loans but don't realize what their obligations are going to be. There are also many students, one in five according to a recent study, who don't exhaust their federal - and cheaper - options first. Right now, federal loans include a fixed 6.8 percent interest rate - a rate that will drop by 50 percent in four years - while private loans have a variable and higher interest rate.
Last year, financial aid administrators at Barnard College became so concerned about the number and volume of private loans that they started a new program, calling every private loan applicant. The result? 98 students were taking out private loans before the calls, afterward just 39 were -- a 60 percent decrease.
Clearly, students need more information -- from financial aid administrators and from the lenders. Senate Banking Committee Chairman Senator Christopher Dodd (D-CT) has proposed a bill requiring private lenders to provide more details to students about what they'll actually have to pay. But the onus has to be on the students as well. As a representative of the private lenders put it, "The borrower is the person who is on the hook." Students need to make sure they shop around for loans, compare loan terms, exhaust less expensive options and know their obligations when they sign on the dotted line.
The stakes are high. Just think of Alex, an accountant, who knows his numbers. Not a day goes by, he told me, when he doesn't think about how one third of every hour he works is going towards interest payments on his student loans. That's not at all how he expected his post-college life to begin.
This is why every time you tuirn on MTV, you see a commercial for student loans.
This is the key point that the major networks always fail to mention, with the exception of 60 Minutes.
Come to StudentLoanJustice.Org to see the wicked truth about student loans, and see the people whose lives have been destroyed as a result.
I''m glad to CBS doesn''t hold back...if you search for this story in the CBSNews.com search engine...you get 3 private student loan lenders on-line ads! If I were one of them I would be re-thinking my advertising campaign!
or cry anymore. Too tired of telling the same story to my elected representatives, who respond as if I was asking for tickets to outer space;or send me thick responses from Federal agencies restating the history of my loan''s journeys. Like Otis Redding,"I cain''t get no, satisfaction...". I can''t file bankruptcy, been kicked out of Medicare and Medicaid and barred from Federal employment. This all started after I went back to complete Residency training after practicing, and paying on these loans for 10 years. During my Residency the Dept of Ed denied me a forbearance, defaulted my loans and essentially took a law abiding, productive member of society who had spent a decade treating Medicaid patients in California for $11 a return visit, and turned him into a non-working, seemingly unemployable depressed outcast. People who commit grievous crimes and ransack their own neighborhoods and who generally thumb their nose at an humane, orderly society are treated with much more respect. And our leaders have the audacity to ponder and bemoan the out-of-control crime and mistrust which pervades our society. Duh, a person who voluntarily spent 10 straight years in school, while single-parenting 3 children should not be sitting on the sidelines watching while their skills, interest and perseverance goes for naught.