Educational Dream Becomes a Nightmare in the Face of Student Loan Debt

By on | Private & Federal Student Loan Consolidation.

Although once perceived as a ticket to a successful future and to financial security, a four-year university degree in America has become a ticket to years of debt slavery. Approximately 37 million American students are holding an estimated $867 million to $1 trillion in unresolved educational debt according to statistics compiled by the Federal Reserve Bank of New York.

Disturbingly, however, in 2012, for the first time, the majority of people who were unemployed were also college educated. The U.S. Congress reached an agreement to continue federal subsidies for these loans at 3.4 percent on June 26, 2012, preventing an interest hike to 6.8 percent. The majority of students who responded to a Yahoo News call for commentary, however, described their education as a burden and saw few avenues to resolve its effect on their lives.

Indebted Graduates Tell Loan Horror Stories

Tanya Carter, a 2008 graduate of the University of Toledo, drew on all the federal loans she could access and used private loan funding to finish her degree. She now says the decision ruined her life. She does not believe she will ever have the financial stability to marry and have a family, much less buy a home or even a car.

Fordham University graduate Lauren Dollard was more frank in her description of deferred life plans due to a $157,000 student loan debt. “My boyfriend won’t marry me because of my debt,” she told Yahoo. “He doesn’t want it attached to his name.” While Dollard added that his reasoning “could also be an excuse,” she said she’d trade her education “in a heartbeat” to live “as an independent adult.”

Private Loans Complicate Educational Debt Pain

Sentiments like these are common among hard-pressed graduates, especially those who have a mix of both federal and private loans. While federal loans have mechanisms to tie payment levels to existing income, and some venues for loan consolidation and forgiveness, there are almost no “outs” with private loans, and educational debt cannot be erased by bankruptcy.

A recent report by the Consumer Financial Protection Bureau cited borrower ignorance as a contributing factor to what many analysts call the impending student loan “bubble.” Salvatore Aiello, a 2009 University of South Carolina graduate told Yahoo that he does blame his own ignorance for his $68,000 debt.

“My high school did a terrible job explaining our options when it came to financial aid,” he said. “They made it seem that if I wasn’t rich or beyond poverty I would not be able to go to college.” Others, like Logan Canale, a 2009 graduate of Queens University in Charlotte, N.C. see no value in their education.

“My private college was way too expensive for what it was worth,” wrote Canale. “I just feel like I have been beaten by the system and taken advantage of. Who is making money off my education? Because it’s not me.”

Educational Debt Effects Parents’ Retirement

As an added complication to the educational debt crisis, many parents have felt compelled to cosign private loans for their children. In the recession, many of these same people saw their 401k and other retirement savings wiped out. They, too, are now increasingly enslaved to a burden of educational debt that will imperil the safety of their retirement.

Given the sluggish nature of the American economic recovering, the ongoing and contentious debate in the nation about escalating healthcare costs, and continued high unemployment, many young people are making the decision to skip college altogether. What this portends for the future talent and potential of the American workforce is frightening, but the truth is painfully clear. As it stands today, a college education in the U.S. is far more akin to a nightmare than the dream of a lifetime.

Understanding the Basics of Bankruptcy

By on | Tax & Bankruptcy Law Information.

The purpose of bankruptcy law is to provide a framework in which both individuals and businesses can resolve debt obligations they cannot otherwise meet. The term “bankruptcy” in the popular vernacular is used broadly, but in fact there are many types of bankruptcy proceedings. The truth is that other attempts at debt resolution, like loan… Read more »

Home Equity Loan

By on | Home & Mortgage Refinance Information.

In a home equity loan, the consumer takes out a second mortgage on their home by essentially borrowing against how much of the home they actually “own.” (Basically how much of their current mortgage amount has been paid.) That “equity” is measured against how much the property is currently worth on the real estate market… Read more »

Consumer Financial Protection Bureau Proposes Debt Collector, Credit Reporting Oversight

By on | General Debt & Loan Consolidation Information.

In response to a flood of complaints about debt collectors and credit bureaus, the Consumer Financial Protection Bureau has proposed a new rule that would make the biggest players in these genres — including Equifax, TransUnion, and Experian — subject to the same oversight policies that apply to banks. The agency, which was created under… Read more »

Consumers Were Lured to Use Credit During the 2011 Holiday Season

By on | Credit Card Debt Consolidation Information.

For months now, financial experts have emphasized the need for renewed consumer confidence to bolster the sagging American economy. According to data collected by the Federal Reserve, Americans did just that over the Black Friday weekend, to the tune of $52 billion. Unfortunately, that “money” was actually spent with the swipe of a credit card,… Read more »