Colette Simone borrowed $200,000 in private and federal loans to attain her doctorate degree at the Michigan School of Professional Psychology in the early 2000s.
After graduation, her student loan bill was around $1,600. She tried to make those payments, but with entry level salaries it was difficult. She repeatedly postponed the loan payments, causing the balance to grow even more, thanks to interest. At one point, her bill was as high as $5,000 a month. She eventually stopped paying her private loans. “They wouldn’t negotiate beyond a certain amount,” Simone said, “which I didn’t have.”
She has paid around $90,000 of the debt by now, but it has ballooned to more than $400,000. The 65-year-old woman fears the government will soon garnish a portion of her Social Security.
She says the whole ordeal has left her disillusioned with the country. “If you want to get ahead, you have to go into debt,” Simone said. “And then the whole debt structure is rigged to make sure you’re never going to get out of it.”
Many student loan borrowers today express resentment and distrust toward their lenders and the companies that administer federal loan programs.
A recent government report found that some schools hire companies that don’t present student loan borrowers with their best options. Meanwhile, one of the largest student loan servicers — Navient, is being sued by five states and the Consumer Financial Protection Bureau for allegedly misleading borrowers. The bureau accuses Navient of steering struggling borrowers toward multiple postponements of their loans instead of into income-driven repayment plans, which cap monthly payments at a percentage of the borrower’s income. (Navient disputes all allegations.)
Source : CNBC
