Still Chained for Over 25 Years by College Debt -- A Personal Testimony from a Site Member
January 19, 2009
I started college in the early eighties but only took out loans later on. By the time I was finished I owed about $8,000. I've heard that such a debt is small potatoes today. [No, that is what it is today. The dollar is worth half of what it was then. -- G.N.] The loan interest was about eight percent, which is high for today, but who can say how interest rates will be in the future?
I took a mediocre job fresh out of school which did not pay well. I paid about a quarter of my income to service the loan, which was about $260.00 a month. I kept it going until I was laid off the first time, and took a deferment.
A deferment is not a vacation from paying the loan, instead it's a lesson on the miracle of compound interest. Within a year I was seeing around eleven thousand dollars of debt.
I kept up with payments as I was able. I have to confess that I did not plan my finances well and did not ask for help from family members. My jobs were crummy and paid poorly.
By the mid 1990s I was on a forebearance, where I would pay just the interest. By this time the debt was about twelve thousand dollars. I was only paying the interest on it, which came to about $180.00 a month.
Some time in 1998 my forebearance expired, it turned out retroactively, because of some shenanigans in DC. I had taken an awful job one that pushed my automobile to the limit. Eventually the transmission failed.
I had to choose between transportation to get to work or paying the student loan. I opted to pay for transmission work, the bank opted to put me into default.
In the novel "1984" persons who defied the State were arrested and vanished from society. They were called "unpersons".
I still recall the first phone call, when the lady said, "You owe us $18,000 dollars". I laughed like a fool. She did not think it was funny at all.
In America there is a form of Unperson. It's called a person who defaults on a student loan. You suddenly are cut off from credit cards, bank loans, home mortgage loans, and car loans. Everything is cash on the barrel head.
Decent job? Not if they check your credit rating.
This situation continued for a couple of years. I received on average four phone calls per week from various collection agencies. Threats were made of garnishment and such. In spite of this I paid the interest, and was not given any credit for it by the bill collectors. However I staunched the flow of red ink ever skywards.
Eventually I was helped to obtain a very good-paying job. I started on a "rehab" program. If I paid the agreed upon rate for one year I would lose the "default status". Miss one payment and I'd have to start all over again. Ever go back into the default and there I'd sit until the loan was paid. I paid the payment through months of not working and then on a temp job I paid the amount honestly.
Last year I celebrated a milestone - I finally approached the dollar amount of the original loan. I pay on average about twice the amount of loan each month. I'll probably be done with it in a year or two, God willing, but I am tossing more money at it now because of the economy.
I cannot remember a time in my life when the student loan was not part of my life. It's always been there. I am wondering what it will be like when it's finally gone. Relief, yes, but also a sense of unreality. I'm not being sorry for myself, but it's been there for so long.
My advice? If you want a debt that follows you around forever, that cannot be renegotiated, for a service which may offer you a shot at a decent job, and the chance to party for four years or more, by all means, take a student loan.
If you want to accept an alternative, such as Gary's plan, and work your way along, you won't have the issues that I worked with....
By the way, I did not list all of the opportunities that I lost...
1. I was offered a chance to teach English in China. Been nice to have gone there, learned Mandarin and grown contacts in China too.
2. I had another chance to go to the Czech Republic and teach English.
3. I don't know how many jobs I was turned down for because I had that 'Default' in flashing letters on my credit report.
4. I had to buy crappy cars and live in crappy housing. Even buying a used car on time is not a bad option compared to saving painfully for up to a year for another car, all the while feeding the albatross around my neck.
The Good Book says that "pride goeth before a fall". No "comedy college" for me, no sir. I was going to delux school. For what my Dad paid for one year I could have done two years of community college and earned my way.
If I had to do it all over again I'd have gladly signed up for Community College, CLEPed out, and studied a lot on my own.
Today with the Internet and good study resources it's pretty easy to pick up the basics online. Easier than in 1980.