Students, Beware: A Cautionary Tale of Student Debt

Enter At Your Own Risk by Daniel Jeffries

Getting an education is required for success in today’s world. Many people grudgingly attend college merely because studies prove that people with bachelor’s degrees earn around a million dollars more in their lifetimes than people who just have a high school diploma. This diploma race has escalated even further; now, a bachelor’s degree is the equivalent of a high school diploma in the business world, and master’s degrees are the new standard. We’ll probably see more and more people racing to get those in the coming years. “What’s your point?” you ask? Education is important. No, it’s vital to a person’s livelihood. It’s what can break the vicious cycle of generational poverty. It enlightens us as a society, allowing us to understand cross-cultural differences and come to common understandings. It can make the difference between war and peace, of life and death, of prosperity and poverty, of acceptance and bigotry, of love and hatred.

It can also be one of the most expensive ventures a person will ever undertake. I should know; in my five years of undergraduate studies, I racked up about $108,000 in student loan debt. Yes, that’s 108 with three zeros. Now that I’m out of college, I’m in the middle of a battle for my livelihood. I’m not alone, either. In 2010, student loan debt in the U.S. surpassed the amount of credit card debt. The total? Around $830 billion. In 2011, the number was estimated at $1 trillion. To make a long story short (click here for the long story), I owe a lot of money to student loan companies. I’m in good standing with six of them, which accounts for half my student debt. One loan had an extra long grace period and came due suddenly last January. It also happened to be the largest of all my student loans: $50,000. The loan had been sold from Campus Door to Wells Fargo, and my first knowledge of this was when I received the first collection call. Unbeknownst to me, the grace period had ended and this new company was demanding its money.

My monthly payments for all my other student loans totaled a little more than $700 a month. Pretty steep already, especially when you make $1800 a month, and the majority of them are private loans. I was making the payments and just scraping by. Eating off the dollar menu for weeks on end. Scraping together quarters, dimes and nickels to by a dollar cheeseburger from McDonald’s. Riding my bike 30 miles for a haircut from my friend’s grandmother because I couldn’t afford gasoline or a haircut. It was tough, and honestly, quite depressing. But I was doing it. Then, this bombshell from Wells Fargo.

My monthly payment for this new loan that had come due was $395, bringing my monthly student loan payments to over $1100. Already facing the daunting task of paying the others, this was simply something I couldn’t do. I didn’t make enough money to pay my existing student loan bills, rent and utilities, let alone groceries, gasoline or anything else. This extra $395 for Wells Fargo couldn’t even be part of that equation. When all was said and done, for at least two weeks of each month, I literally had nothing in the bank. Nothing. I actually began each month with a $300-400 deficit, making it only that much harder with each passing month.

When I spoke with representatives from Wells Fargo on the phone, none showed any interest in working out a payment plan to cover the back payments I owed. They wanted their money right then, no questions asked. In fact, one Wells Fargo representative even had the audacity to suggest that I stop paying all my other creditors and just pay Wells Fargo. That’s not a solution. It would be incredibly dumb on anyone’s part to do such a thing. I tried to arrange a meeting with a credit counseling service and couldn’t even do that because of the nature of student loan debt: there are no protections for students and lenders of student loans refuse to work with any credit counseling agency. It was quite clear at that point that I needed to find a better-paying job.

So I did a very tough thing: with a heavy heart, I left a job that I absolutely loved for one that paid more. But I didn’t just leave a job, I left my city. I flipped my entire life upside down and moved across the state to take a job in a place I didn’t know, and the only reason I did it was due to Wells Fargo demanding payment. Before I quit my beloved job in Tulsa, though, I had already begun making even more painful cuts at home in order to pay Wells Fargo. I began making monthly payments, in full, to Wells Fargo, even before I was able to get this new job. And I continued making regular, monthly payments, on time and in full. That wasn’t enough, though. They wanted me to make double payments to catch up. Double. I’m struggling to make regular payments, and they want double. Because it’s so easy to do that. I couldn’t, not even on my new salary. $1100 a month is more than a lot of people’s mortgages. $1500 a month is astronomical and practically impossible.

After Thanksgiving, I received notice that Wells Fargo declared the loan in default. They wanted all $50,000-something right then. A few days before the end of the year, I received another letter from them, this time, wanting to settle for only $25,000 (roughly). If I could pay them $25,000 within 30 days, they’d call it good and move on. Well, if I had $25,000 lying around, I wouldn’t have been behind on the loan, now would I? After much research and consulting with an attorney, I’ve verified one thing: there are no protections for student borrowers. None. Zilch. Nada. The student loan companies have all the power and the student borrowers have none. There’s nothing a bankruptcy can do, not even a Chapter 13 bankruptcy, which would simply result in a court-prescribed repayment plan based on one’s income. You can’t touch a student loan company, period.

Let me be clear: I don’t want to pay less than I borrowed. I don’t expect the loans to simply disappear. I’m not an Occupy protester that wants my student loan debt wiped away. I want to pay for what I borrowed And I need to pay it. But I need to be able to live, to eat, to pay rent, buy gasoline or get my hair cut. And I need Wells Fargo, one of the largest banks in the world, to show a little decency and work with me. I can’t make a quadruple payment, and I can’t give them $25,000 within thirty days. What I can do is make regular payments. And they’ve refused to make any sort of arrangements that would allow me to catch up.

If I’m ever financially secure enough, I’d love to establish a center for the protection of student borrowers. I want laws to be rewritten. I want student loan companies to actually work with their borrowers instead of bullying them. Every other type of debt–every one of them–except for student debt, have built-in protections of some sort for borrowers. Why is it that in a country falling so far behind the rest of the world educationally, the government wouldn’t provide basic protections for student borrowers? We need a highly educated workforce. We need a highly educated society. We push our young people into college and throw them to the sharks without so much as a life jacket. What kind of message is that to send to our youth, to our future leaders?

Students, beware: there is no protection for you.

If there’s a way out of this mess, I haven’t found it. If you or anyone you know has experienced something similar to this, or if you know anyone college-bound, or an expert in student loan law, please, I’m begging you, forward this post to them. There’s got to be a solution. There must be. I’m hoping Elizabeth Warren, champion of consumer protections, will read this and automatically know what to do. I know I’m not alone. There are thousands of student borrowers in my same situation. We just need some help. Even lawyers are baffled. I could fight to change the laws, according to one attorney, but he wouldn’t recommend that fight. According to a colleague he consulted, people in my situation are “shit out of luck” and caught in a terribly terrifying version of Catch-22. What a great place to be.