The new approach to student debt

In the past year, I have been helping a lawyer acquaintance – I call her Debbie – who has been trying to escape from the student loan hell. Back in the late 1980s, Debbie borrowed money to go to a four-year university. Struggling with her performance, after being put on academic probation, she go to a community college. A year later, she was readmitted to her four-year school, borrow more money, and eventually to $ 17,000 federal student loans.

After graduation, Debbie held a series of low-paying job, never regular payments on the loan she made. The Ministry of Education finally turned over outstanding debt to a collection agency, and Debbie wages in disguise. With her personal finances in disarray, she declared bankruptcy. But she continued provision for the loan interest and fees. When she ignored further payment notice from the education sector, she rebates were seized. In August last year, she was in principal, interest and fees on loans to her, which is the default owed more than $ 24,000.

Debbie’s story has a satisfying ending. A generous help from family members, she made a payment on the September issue of the need to get her to put out the loan defaults. Recently, she received from the federal government announced that she wanted to come back in good standing letter. Collection agencies have shut down her back, her salary is no longer disguised, she would get her tax refund. She may renegotiate the remaining loan balance and lower pay for better conditions.

Debbie’s experience shows how easy it is to use without considering the consequences. Debbie did not realize she entered, did not take to repay the loan, she was asking for help to deal with their responsibilities, and ultimately through the system, has been criticized for being too aggressive collection tactics submerged. I can not help but think that if someone had suggested Debbie said that she would be better off on their studies and earn a degree by the economic live in the community college, she would not have found himself in such a fix.

This is why it’s so important to let students and parents know before they enter what they borrow. In her story the right way to borrow University, senior associate editor Sandra Block household borrowing shows how clever, to establish a manageable repayment plan. How much is too much? Reporter Kettering Pitsker to his family calculated on the basisThey have much of the debt burden.

In addition to lending. To $ 1.1 trillion dollars in student loans, policy-makers are scrambling to come up with ways to reduce the burden. But in my opinion, we need outside-the-box thinking, so that students begin less dependent on loans. With type 3 recommendation that outside, in order to solve the student loan clubs, senior editor Anne Kates Smith outlined a number of innovative suggestions, such as private investors pay in exchange for a share of future earnings of graduates share.

The same time, students and families are matters into their own hands. Annual survey by educational lender Sallie Mae found that since the 2013-14 school year, enrollment in public universities is beginning a two-year investigation at its highest level in seven years ago. Overall, 22% of a typical home loan cover, the lowest level of college costs savings and revenue were both the parents and students in five years and to pay 42% of costs, from 38% the previous year.

Last summer that a diligent student I met at a farmers market on the beach, a young woman was selling homemade pound cake. She signs announcing her pay for her college education, “one pound at a time.”