The Negatives of Borrowing Student Loans
Are you struggling to pay back student loans? Have you defaulted because you cannot afford to pay such high monthly fees? Well, you are not alone. You are one of the millions of people living in America today that owe the bank and the student loan corporations your life. Oh, you think I am exaggerating? Let me show you how the student loan corporations, banks, and even schools work together to keep you in debt and free from enjoying a debtless existence...free to work in a career that you have always wanted to have. Unfortunately, if you take on student loans, especially private student loans, this freedom will not be in your near future. I know I seem very cynical and pessimistic, but I have seen firsthand the deceit and lies that the student loan corporations will spew to get you to buy into their schemes. Let me tell you a bit about it and the many reasons why you should NOT get yourself into student loan debt.
The Inner Ring - Private Schools & Private Loans
After I graduated high school, I had absolutely no idea what I wanted to do. I knew I wanted to go to college, but I wasn't sure what I wanted to study and where I wanted to go. I began my college career by going to a small community college in my Southern Maryland home area. I took some general education classes and a few business classes for one semester, and then I changed my mind completely. I had a random desire to become a fashion designer...I know, I know...naïve and idiotic, right? I agree with you now, but being an excited and naïve eighteen-year-old with a dream, I was willing to take any risk. I wanted the good life...and I wanted to get the hell out of Maryland. Well, you can guess that this was mistake #1.
I searched on the Internet for public schools in the state of Maryland that would possibly offered Fashion Design or Marketing as a degree; however, my searching did not give me the results I desired. One day, my mom saw a commercial on the television for a school called IADT - The International Academy of Design & Technology. She thought that the commercial looked very professional and noticed that they were advertising a new degree in Fashion Design. She wrote down the number and we decided to give the school a call and see what they had to offer. The counselor (actually salesman but I'll go into more detail on that shortly) was a very nice and seemingly intelligent gentleman, who questioned me more than I questioned him. He wanted to know if I graduated from high school and what my GPA had been. He wanted to know why I had an interest in fashion design and if I had any experience in the world of art. The counselor left me feeling as though I needed to be qualified and prove that I should be "accepted" into this school of art; however, I would come to find out that they do not deny ANYONE from being accepted. You could be a felon with a GED and get accepted. They just want your money or the money that will be paid to them by the bank you borrow from.
From that point, IADT "accepted" me, after I sent in a few sketches and filled out a thick application. They seemed very convincing as a highly accredited and legitimate school. My parents were a bit wary of their promises, but they wanted me to be happy and shoot for the stars so they aided me by co-signing on a private student loan and a federal student loan. The funny thing was that this school told me that I did not qualify for any grants...that my parents made too much money. This was bullSH*T because the one semester that I had attended a community college (before attending IADT) had been paid in full by the state of Maryland. I believe IADT lies about the grants...or else they are not qualified to give federal grants because they are a private school...an illegitimate school.
So after my stepfather and I had signed for these student loans to get me through my three years at IADT, I was more than excited to move to Florida and start my education that would be me in the career of my dreams. Once I arrived and began my education, this supposed "counselor" that promised that he would be "there for me" whenever I had any questions or concerns about the school or my education, the counselor disappeared. I left message after message...I stopped by his office...but each time I received no response or he was not there. It turns out these so-called "counselors" at this school are nothing but commission-paid SALESMEN. Nothing more...not counselors. Another funny thing I would come to find out about private schools, in particular IADT - they receive kickbacks for the private loans that they get their attending students to sign on. Scary and malicious, huh?
My contract for my student loans, with Sallie Mae, stated that my interest rates would be variable but that they were guaranteed not to pass 9.5%...this was a LIE.
Sallie Mae - A Tyrannical RingLeader
If you have never heard of Sallie Mae, they are the Ringleader of Student Loan Banking. They facilitate both private student loans and federal student loans for students all across the country. On the outside, they seem to be a very supportive and successful corporation, in the business of aiding students who need funds in order to further their education. Successful they are...but supportive? Not by far! They are corrupted and deceitful...and they will do what they can to keep their clients/customers in debt...you are nothing but a number...more $$$ to them. Here's why:
- they prey on naïve young folks that are looking to improve their lives and follow their dreams
- once they've roped you into a contract with a variable interest rate, they can jack up the interest rate as high as 23%...believe it! It happened to me, too!
- if you are deployed and serving your country, they will call and harass your family members about payment instead of aiding in deferment or some other plan of action
- they will not allow couples who co-signed on loans together to split up the loan, if divorce or break-up occurs
- they have put students loans into default, while some were still in school!
- they have "accidentally" withdrawn funds from people's bank accounts, so never sign up for an automatic payment plan with this corporation!
- all of their customer service is outsourced to India so you will almost NEVER get someone that actually cares or understands what you are going through, they are all trained to give you the go-around
- they will garnish your wages if you are unable to pay the monthly amount (sometimes this takes awhile but it happens more than you could imagine)
- according to schoolsmatter.info, their CEO Albert Lord has grossed over $280,000,000 in salary and commissions, over just a five year span! Are you kidding me?
- in many cases, they have not withdrawn from someone's bank account and put their loan account into delinquency...which also meant a "tacking on" of late fees (some around $200 for a single month's late fees)
- they will claim all of these things are documented or law but never prove it by providing paperwork or pointing it out in a contract
I'm Paying WHAT in Interest?
So after I dropped out of art school because of the high expenses and living costs, I received a bill in the mail no sooner than six months following my drop-out date that showed my monthly payment as being almost $800 a month! I had five loans - 4 private loans and 1 federal loan. The federal loan's interest rate was pretty low, at only about 3%; however, upon further investigation, my interest rates on the private student loans ranged from 9.5% - 22%! Sallie Mae was estimating that by the time I finished paying them off, I would have paid a grand total of $180,000.00. This is for the original $48,000 that was borrowed.
I was in a new relationship that was quickly budding into something more serious, and having to show this issue to him was not my idea of hooking him. It scared him! Who wouldn't that scare? I was so scared that I became very depressed...I felt like there was a weight upon my shoulders that would never go away...no matter what I did about it.
We looked into many different ways of trying to get out of or lessen my increasing debt - bankruptcy, consolidation, deferment, forbearance, etc. but nothing seemed to be a solid option. Sallie Mae's customer service was of NO help whatsoever - offering literally no solution but to put my loans into forbearance and helplessly watch the insane interest keep building on it month-by-month. I begged the Sallie Mae officials to let me consolidate them all into one loan and to acquire a fixed interest rate, but they would not assist me in this endeavor. No wonder, when they had the ability/chance to make an extra $130,000.00 off of me over the entire life of the loan! Evil and disgusting...
The other problem with trying to consolidate was that many banks will not consolidate your loans, unless you've graduated from college...which was obviously a problem for me. I did end up finding out that CitiBank would consolidate my private student loans, with the help of a co-signor...who happened to be my poor stepfather again. The thing is, if I was ever to default on these loans, my stepfather would have to bare the brunt of the high monthly fees...which I could never allow to happen. So I had to get my private loans away from Sallie Mae...and QUICK!
If you have private student loans with Sallie Mae, my advice is to consolidate as soon as you possibly can. If Sallie Mae will not help you consolidate, find a bank that will consolidate your loans and pay Sallie Mae off...you don't want them holding a loan or multiple loans over your head...trust me.
CitiBank consolidated my four private student loans with variable interest rates into one loan with a fixed interest rate...thank God. This still meant that I was going to have to pay a minimum of $445 a month towards my student loan; however, compare this monthly payment to the almost $800 payment that Sallie Mae was expecting!
If you think you can get out of your student loans through bankruptcy, think again friend! It is not possible. You have the lobbyists and government officials who support the big student loan corporations to thank for those laws! The only way I have seen to inevitably wipe out your student loan debt is if you were handicapped and you had no way to work for the rest of your life...but that wouldn't wipe out the debt if you had a co-signor on the loan...the payments would just transfer directly to that person. Gah, it's so frustrating to know that the government doesn't care about this country's students either. Many some of them do, but not the majority.
I don't understand how they ever expect you to pay them any of that money at all...I'm sure even a doctor would have at least a little bit of trouble paying a monthly student loan that is as high as many people's mortgage payments! Here's the thing though...I don't believe they care if you can pay it or not...the shareholders and executives of Sallie Mae and other student loan corporations want their money, no matter what kind of effect it has on students in this country. Scary and sad. This is demonstrated by CEO Albert Lord's actions for the company...or inactions.
The Ongoing Battle - CitiBank, Not Much Better than Sallie Mae!
Now that I've consolidated my four private loans through CitiBank's student loan repayment program, I am making as much effort as I possibly can to pay off my debt as soon as humanly possible. This means that I am paying a little under double of what my monthly payment should be, and I ensure that the extra money that I pay every month is being applied towards the principal of my loan. I print out a receipt every time I make a payment and each receipt shows that I have selected to pay extra towards the principal. This way, if CitiBank ever comes back and tries to pull a fast one on me, I have hard proof.
While CitiBank has helped me remove my student loans out of Sallie Mae's evil grasp, CitiBank is not much better than Sallie Mae in its ethics and honesty towards their customers. Last week, I received a letter in the mail stating that CitiBank had "received my request to postpone payments." Funny thing is...I never requested that! It's almost as if they realized how much extra I have been paying a month and thought, "let's give one last stitch effort to add more interest to her loan and therefore acquire more money out of her in the long run." Because they don't tell you that when your private student loans are in a deferred state, they are STILL accruing interest. The only loans that don't accrue interest while in deferment are federal student loans.
So I decided to take quick action and call CitiBank to take this request off of my loan and out of their system, as I want to keep paying on my loan and pay extra. It took me literally thirty minutes to get through the whole automated phone system...and what do you know? There was NO way to talk to a real person. So, I decided to outsmart their evil plan and call from a different phone number...which still didn't work. Somehow they had every phone number I had ever called them from on file, which meant that I was an existing customer that they don't want to talk to. So then I went a step further and called from another different phone...but I called the Customer Service number specifically for people who are applying for new loans. Guess what? Someone was almost instantly on the other side of the line, waiting to sign me up for a new loan. So that's the problem...they only care about your money...not you! But I guess that's sort of a problem all throughout society and humanity nowadays.
My ultimate advice - never get student loans...even if you have to work two jobs in order to pay for your education. If you have to get student loans, make sure that they are all federal and that they have a fixed interest rate.