Earlier this week I spent half an hour on the phone arguing with my student loan servicer about why my income-driven repayment application had yet to be processed. I had a payment coming due and I needed to know whether I could count on my new payment calculation being done by the due date or if I should start shifting some other bills around to free up the funds needed to make my old payment.
Arguing with my loan servicer has become a regular occurrence in my life recently. I won’t mention their name here, but they are one of the biggest servicing companies and their name starts with an N. They also don’t have great reviews from their customers.
As an undergraduate student, I relied heavily on student loans to live comfortably while going to school. I worked two part-time jobs while attending classes full time, but the loans provided a nice cushion for those unexpected expenses that came up from time to time. They also allowed me to go out with friends on weekends for dinner and drinks to keep up my social life.
At the time I took out the loans, it didn’t seem like they were large amounts. A $2,500 loan here, a $1,000 loan there, and a couple of private loans–one to pay off a credit card and another to buy a car. I wasn’t worried about making my payments because I was on in-school deferment and had plenty of time (six months) to find a job after graduating.
By the time I completed my exit loan counseling my senior year, I had racked up quite a pile of student loan debt. Frankly, I was shocked about how much I had borrowed. Even this didn’t stop me from taking out student loans to finance my graduate degree the next year. I figured with a master’s degree I’d be able to find a great-paying job and I’d be able to pay off those loans in no time. How naive I was!
Today I owe more in student loans than I owe on my home mortgage. If not for income-driven repayment options, I would not be able to make my monthly student loan payments, at least not without living on the street or working a second full-time job.
I share this story with every student I assist who is looking for the seemingly easy money a loan can provide. I know many institutions whose financial aid offices automatically offer student loans to those who qualify as part of their standard financial aid package and I think it’s a horrible practice. Our institution does not automatically offer student loans. Instead, students must come to us and request student loans so that we can properly counsel them on what it means to have debt.
If someone had sat down with me during my freshman year and truly explained what I would be going through today, I would have second-guessed whether I really needed that money. Students need to understand the struggle of trying to fit student loan payments in an already tight household budget. They need to know the stress of going back and forth with loan servicers arguing about payments. They need to know that sometimes a payment made online doesn’t go through and the loan servicer has your phone ringing off the hook trying to get their money.
Students need to understand that some of these loan servicers are, dare I say, greedy, crooked companies that will try occasionally to cheat you out of your money. They need to know that this debt follows you wherever you go until it is paid off, forgiven, or you die.
I always go over all the other options with students. Can they get a second job (or a first job in many cases)? Do they have any friends or family members they can borrow money from to pay off that tuition bill? Have they exhausted all their scholarship and grant options? Do they really understand the ramifications of being a loan borrower?
Ultimately, it is up to the student if they want to take out a loan for which they’re qualified. But if I don’t give them all of the information that helps them make that decision, I don’t feel ethically sound handing over that student loan application. I’ve been through the struggle and I know how detrimental student loans can be to people’s lives. Borrowers should be adequately prepared to deal with all of the issues that will eventually come up and it’s our job to lay that preparation work.
> BONUS <
Podcast With Dr. Brian Bourke on Reframing “Nontraditional” Students