The Real Recovery | February 18, 2010 | 10 comments

The $555,000 Student-Loan Burden

source: http://FinAid.org

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remanns
When Michelle Bisutti, a 41-year-old family practitioner in Columbus, Ohio, finished medical school in 2003, her student-loan debt amounted to roughly $250,000. Since then, it has ballooned to $555,000.

It is the result of her deferring loan payments while she completed her residency, default charges and relentlessly compounding interest rates. Among the charges: a single $53,870 fee for when her loan was turned over to a collection agency.

"Maybe half of it was my fault because I didn't look at the fine print," Dr. Bisutti says. "But this is just outrageous now."

To be sure, Dr. Bisutti's case is extreme, and lenders say student-loan terms are clear and that they try to work with borrowers who get in trouble.

But as tuitions rise, many people are borrowing heavily to pay their bills. Some no doubt view it as "good debt," because an education can lead to a higher salary. But in practice, student loans are one of the most toxic debts, requiring extreme consumer caution and, as Dr. Bisutti learned, responsibility.

Unlike other kinds of debt, student loans can be particularly hard to wriggle out of. Homeowners who can't make their mortgage payments can hand over the keys to their house to their lender. Credit-card and even gambling debts can be discharged in bankruptcy. But ditching a student loan is virtually impossible, especially once a collection agency gets involved. Although lenders may trim payments, getting fees or principals waived seldom happens.

Yet many former students are trying. There is an estimated $730 billion in outstanding federal and private student-loan debt, says Mark Kantrowitz of FinAid.org, a Web site that tracks financial-aid issues -- and only 40% of that debt is actively being repaid. The rest is in default, or in deferment, which means that payments and interest are halted, or in "forbearance," which means payments are halted while interest accrues.

Although Dr. Bisutti's debt load is unusual, her experience having problems repaying
isn't.
More-------
http://finance.yahoo.com/college-education/article/108846/the-555000-student-loa...

http://www.freefinancezone.co.uk/wp-content/uploads/2008/12/debt-consolidation.j...
isn't.
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10 comments // The $555,000 Student-Loan Burden

  • corndog67
    • 0
      corndog67  

    • I guess if you are going to borrow a load of money for school, you should pick a course of study that makes a load of money. You'd think that Doctors make a bit of coin, half a mill should only take a few years to pay off. She finished school in '03, what the fuck is the problem?

    • 2 years ago
  • jubal
    • 0
      jubal  

    • My student loan debt went from 41K to 62K because of compounded interest. I am on the income contingent repayment plan. Based on my income, I only have to pay $7 per month. But this year its going to go up to $20 because I made $10K in 2009.

    • 2 years ago
  • HowdyDo
    • 0
      HowdyDo  

    • There's a relatively new law that basically says that, if you work for 10 years for a nonprofit and pay on your government subsidized school loans during those 10 years, the government will forgive the remainder of your government subsidized loans - she should work for Doctors Across Borders or something. The problem comes when you default - it may be too late for her.

    • 2 years ago
  • remanns
  • Guyatthebusstation
    • 0
      Guyatthebusstation  

    • lol, what an idiot. In all of her schooling i think she would have learned about compounding interest. If she did and decided to defer payments, she is a world class idiot.

    • 2 years ago
  • good_stuff
    • 0
      good_stuff  

    • As a doctor, I would have thought that she would have learned the rules of the game by now. I hope I never go see her, as everybody knows that you have to pay at least the minimum payment on your bills. She obviously knows how to read, so why didn't she just read the documents she was signing? It sounds to me like she just got in over her head. She should've gone to a cheaper school, spent less on living expenses in school, or just become a nurse. When you're spending borrowed money, it doesn't seem nearly as valuable.

      If she didn't screw things up by not payer her bills on time, then she could have graduated and paid off her debt in a few years with a doctor's salary.

    • 2 years ago
  • hammywill
    • 0
      hammywill  
    • good_stuff:

      According to a Congressionaly approved study, it takes a GRADUATES Degree to understand the intricacies of a loan/credit card contract. So, no, just knowing how to read is not enough. Neither is just knowing what compounding interest is. Student Loans also have the highest Interest Rates and restrictions because they are all insured by the Federal Government. This is DEFINITELY a case of predatory lending in the case of EVERY single Student Loan.

    • 2 years ago
  • observer2121
    • 0
      observer2121  
    • hammywill:

      Everything you have just said is plain wrong. Understanding a contract for a loan or credit card simply requires you to pay attention. If a guy from the mafia lent you $500,000 I bet you'd take the time to understand the terms but form some reason people feel like getting a loan or credit card is a joke. This doctor is a complete financial idiot. Banks don't turn over loans to collection agencies that are in deferment so obviously she is not telling us something. I am glad their are institutions willing to lend people $250,000 for their education and I would expect those borrowers to do their best to pay it back.

    • 2 years ago
  • jubal
    • 0
      jubal  
    • observer2121:

      I don't think you are getting it. The interest that was compounded and the fees that the consolidation loan companies charged her are the problem. That is the point of this story. The debt grew from $250,000 when she graduated and was entering her grace period and she also got some deferments and forbearance, but her debt almost doubled because of interest and fees. That is usury.

    • 2 years ago
  • dv627univ
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