Unlike normal consumer debt, you can’t shake student loan debt. If you’re like most Americans, you know that you’ll carry it to your grave; this is one of the reasons why I maintain that college is a waste of time in the best case and a scam in the worst.
Sometimes, however, not even the Grim Reaper (or your psychopomp of choice) can free you from your obligation to the Sallie Maes of the world.
Or, rather, free your family from your obligation:
When his 27-year old daughter Lisa died suddenly of liver failure five years ago, Steve Mason was as devastated as any father would be.
He and his wife Darnelle immediately took in Lisa’s three children — ages 4, 7 and 9 at the time — even though they knew it would be a huge struggle to support them. Steve earns less than $75,000 per year as a pastor, while Darnelleearns [sic] even less as a directorat the same church.
Then the student loan bills started coming.
Mason had co-signed on the $100,000 in private student loans that his daughter took out for nursing school, and the lenders wanted their money.
Unable to keep up with the monthly payments on top of all of the other mounting expenses, the $100,000 balance ballooned into $200,000 as a result of late penalties and interest rates of as high as 12%.
“It’s just impossible on a pastor’s salary raising three kids to pay $2,000 a month on loans,” said Mason, who has been searching for a second job.
What’s more, private lenders are under no obligation to offer any sort of assistance for individuals suffering from financial hardship, even when it’s a parent who has lost their child. Any loan forgiveness, according to CNN Money, is up to the discretion of the company. Navient Corp, who manages several of the loans in Mason’s case, has reduced the balance and lowered the interest rates and payments for Mason in the past, but provides relief to customers on a case-by-case basis.
American Education Services, the other company controlling Lisa’s student loans, is a loan servicer and is only in charge of collecting payments. To broker a deal to reduce payments, Mason had to contact the original lender, National Collegiate Trust, directly. When he did, he said the lender refused to help him. NCT wouldn’t provide CNN Money with a comment on the case.
Mason has considered declaring bankruptcy, but student loans are the only type of debt that generally can’t be discharged through bankruptcy.
“People with other debt from splurging — they can discharge that,” he said. “Student loans should really be the one type of debt they do discharge because it’s done to further an education and career. But somehow getting [my daughter] an education has encumbered me for the rest of my life.”
His case isn’t the only one, either; Angela Smith, a mother from Chesapeake, Va., found herself stuck with the $40,000 in co-signed student loan debt after their son, Donte, was shot to death in 2008. She has since filed a petition on Change.org several years ago asking private loan provider First Marblehead Corp. to forgive the debt.
“Shortly after Donte died, that’s when the collection calls started. It was like a punch in the gut — we didn’t know what hit us,” Smith wrote in the petition. “All of a sudden we not only had to deal with the police and attorneys investigating his murder, but we also had to deal with collectors constantly calling and reminding us of our son’s death in the worst way.”
The petition received more than 150,000 signatures from sympathizers but no action from the lenders. First Marblehead didn’t respond to a request for comment, and Smith says the loan was recently sold to another company.
At least four other petitions from families in this situation have been started on Change.org. There’s been one success story so far, where the brother of a deceased borrower petitioned a bank to stop going after his grieving father for payments, and the loan was forgiven.
Until a college degree guarantees a job, or there’s no threat of debt, you’re wasting your time at college and possibly destroying your financial future.
You can watch a video on the matter below:
source: CNN Money