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Suicide Over Student Loans. Tragic But Understandable.

It seems more people are contacting me these days who look at suicide as a way out of primarily private student loan debt. I’m sure you have the same visceral reaction as I do and feel everyone needs to be talked off the ledge. But in the hard light of day, considering suicide as a way to deal with student loans isn’t an uncommonly considered solution in the face of no other good solution. For the record, I’m not endorsing suicide as a way out, just acknowledging what others are feeling.

Let’s look at some of the recent reader feedback on this. Take the new lawyer with $100,000 in student loan debts who can’t find a job paying more than $40,000 a year. Her private student loans only have one real option, forbearance / deferment. Under that approach the payments are waived but the interest continues to make the balance due larger. The temporary respite from current loan payments only makes the repayment problem worse in the future. “I guess my question is whether I should try anything else before committing suicide,” the reader asks.

John said, “My student loans are almost $42,000 dollars. I frequently think about suicide; thinking about my son is the only thing that has so far kept me from committing suicide.”

Michael said, “Suicide as the option to get out. Do not want to work the rest of life thinking about this debt. If I cannot be free, I would prefer to be dead. I am going to die anyway.”

Student loan debt now exceeds the total owed in credit card debt. In 2005 under what creditors heavily lobbied as bankruptcy reform, the bankruptcy law was changed to not allow private student loans to be discharged in a consumer bankruptcy.

But until recently, private student loan lenders were dishing out loans like free cheese. There was significantly less regard to the ability to repay based on traditional lending criteria. Just look at the drop in acceptable credit scores approved after the bankruptcy reform bill went into force in 2005. “Hey, Bob they can’t get out of them anymore, lend away.”

Suicide Over Student Loans. Tragic But Understandable.

Or how about we look at the cross section of private student loans across all ranges of credit scores. If lending was based on risk alone, the years 2005-2008 should not be relatively flat. Since 2008, lending standards in the private student loan market have tightened. Lenders are not able to easily sell off the student loans they originate, so they have more “skin in the game” when it comes to the borrower’s ability to repay. More skin equals more reasonable lending criteria.

Suicide Over Student Loans. Tragic But Understandable.

And once attention was placed on the student borrower ability to repay in 2009, look what happened with loan volume that required a co-signer. It rockets up.

Suicide Over Student Loans. Tragic But Understandable.

And which types of programs are co-signes on the hook for? Take a look.

Suicide Over Student Loans. Tragic But Understandable.

It’s not the students that are now trapped in this dark pit of student loan debt. The co-signers are being dragged under as well.

Let’s turn back to the underlying problem with the dead end private student loans and why some consider suicide as a way out.

As the Consumer Financial Protection Bureau has noted, private student loan lenders set people up to fail with debt that can’t be discharged in bankruptcy. The private student loan lenders pushed students into lives of terminal debt slavery without much apparent regard for the borrowers.

Recent CFPB and Department of Education research found:

  • Most private loans have few options for payment modification or forbearance. Most private loans have variable rates, making estimates about future debt payments difficult. Prior to 2010, federal law did not require a disclosure showing the actual interest rate on a borrower’s loan until after the lender documented the loan, approved the credit, and readied the check for mailing.
  • Some lenders bypassed school financial aid offices and marketed loans directly to students. As a result, in many cases, the school could not review the borrower’s financial need, compare it to the loan amount, or even verify that the borrower was enrolled. Many lenders also lowered the minimum credit score required to receive a private student loan so that they could originate and then sell off more loans. Many students did not understand the differences and features between federal and private loans. They ended up using riskier private loans before exhausting their safer federal options.
  • Defaults on private student loans have increased since the financial crisis. Based on the CFPB’s sample, there are now over $8.1 billion in defaulted private loans, representing more than 850,000 distinct loans. Congress amended the bankruptcy code in 2005 to make it tougher to discharge private student loans. Borrowers reported their lenders were unable or unwilling to modify or adjust repayment terms.

Faced with loans that may never have been appropriate or affordable, an unwillingness for lenders to make reasonable repayment adjustments, and the non-dischargeablility of these private student loans, it’s easy to see why some people feel trapped and without hope. You can certainly understand why some consider suicide as their only way out.

Maybe there is some hope for those considering suicide as a reasonable way out of private student loan debt. “Our findings reveal that students were yet another group of consumers that were hurt by the boom and bust of the financial crisis,” said CFPB Director Richard Cordray. “Too many student loan borrowers are struggling to pay off private student loans that they did not understand and cannot afford. Moving forward, we must do our best to leave the next generation in a better place than we are today, rather than buried under a mountain of debt.”

“Subprime-style lending went to college and now students are paying the price,” said U.S. Education Secretary Arne Duncan. Potentially, some help may be on the way.

If you are as concerned as I am about this situation I invite you to sign this Change.org petition for meaningful private student loan reform.

Suicide Over Student Loans. Tragic But Understandable.
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • C.

    As I type this I am very close to suicide.

    Unlike many, I did get my degrees – a bachelors, masters, and doctorate – in clinical psychology no less (I needed a doctorate to become a psychologist – and I felt it was good career choice – and I’ve always loved helping people). Grad school was very expensive, and I thought long and hard before taking out those student loans – but I was confident I would be able to pay them off over time as I grew my private practice. I was my education as an investment in my future – now it’s a death sentence.

    Due to a 3-year bout of severe depression during my residency, I didn’t get licensed – that was death to my career. I tried to get back on track but ran into obstacle after obstacle. I finally gave up and left my field – only to find that my degrees and work experience (in mental health) were essentially useless in the marketplace. Life rapidly began to go down hill and my loans began to default (I’d always been very responsible with money, but had to use credit cards to survive on several occasions).

    Fast forward 17 years. My student loans have ballooned to over $250,000 (and they just keep growing and growing). I make a meager income doing freelance work, but depression and anxiety make it very difficult for me to be productive, so my income isn’t reliable. I stopped dating years ago because of my debt – I was ashamed and also didn’t want it to impact someone else. So I am completely alone. My dreams of getting married, having children (too old now), having a nice home, and a good career – all normal things – are dead.

    I’m in my 50s and have no future. None. My credit is destroyed. I live in a very tiny apartment and worry constantly about losing my home. I have no hope of ever even making a dent in these loans, let alone paying them off.

    I already made a very serious (and almost successful) suicide attempt 5 years ago – because I’m just worn out. Not a day goes by that I don’t wish I had succeeded back then. Three days ago I received a summons – I’m being sued by one of my student loan creditors. I can’t afford an attorney, and I’m scared to death. I knew this would eventually happen. I’m also deep in tax debt as well, so have that black cloud over me as well.

    So, Matt (and anyone else who says suicide is such an unacceptable response to a completely UNSOLVABLE and life-crushing problem like this), people CAN’T get out of this situation. YES, I borrowed the money. I didn’t borrow it foolishly or thoughtlessly. Stupid me for not having a crystal ball to see that depression would derail my career. Stupid me for not marrying someone with money who could support me so the little I make could go towards student loan payments (at the tune of well over $1500 a month!!!). Stupid me for wanting to better my life and have a career helping others. Stupid, stupid me!!!!!!! But, if I had gone on shopping sprees or trips and ran up my credit cards for fun, or bought a house I couldn’t afford – I could just declare bankruptcy and at least get a fresh start. Trust me, I’d take 10 years of damaged credit over this nightmare any day.

    But those of us with student loans – who took them out responsibly (or so we thought – after all, when I was growing up education was EVERYTHING) – have no way out. And they just keep growing – no matter what.

    This has ruined my life. I have no future. None. Retirement? Can’t ever do that. I can’t afford health insurance – so god forbid I get really sick or seriously injured!!!

    So, yes, suicide is becoming the ONLY solution I can see. Because I don’t have any fight left in me. And there is nothing about my life that is worthwhile anymore.

    Maybe the laws will change someday – but it will be far too late for me and many others.

    If only I could turn back the clock and never made the decision to become a psychologist….

  • http://GetOutOfDebt.org Steve Rhode

    New study out shows student loans can be discharged in bankruptcy. See http://getoutofdebt.org/48336/how-to-really-discharge-your-student-loans-in-bankruptcy

  • Anonymous

    Hi I have a question about loan repayment. I just graduated and If I have student loans which are consigned, is there a way to remove the consigners name in case something happens to me the consigner wont be responsible?

    • http://GetOutOfDebt.org Steve Rhode

      You can pay them off in full or refinance them.

  • ann perkins

    I got to this article by literally just googleing “suicide over student loans”.

    I know that this is older, and this might not get seen, but I wanted to add my .02 to the pot.

    I am in the same exact position as a lot of you and I feel hopeless.

    I wanted to make something out of myself. I knew I parents could not help. I didn’t understand the ramifications of taking out 100% loan for two years, then going to grad school (only because I knew a BS wouldn’t be good enough).

    Here I am, years later, 80K in student debt, without a prayer in the world. I take home roughly about $1200k a month after taxes, from a job I don’t like and am not good at…. and after rent, food, bills, there is simply nothing left.

    I get $100 drafted out by Sallie Mae monthly because of one $20k loan I defaulted on, and thats not including the other 60Kish that I have to figure something out on.

    I wonder on the daily if my life is even worth living. This can not be all there is.

    I hate my life.

    • http://GetOutOfDebt.org Steve Rhode

      Ann,

      I do get the sense that things will change for student loans and better options will be available in the future. It probably doesn’t help, but don’t give up and look for something to be grateful for each day.

  • Doc in Debt

    I get so angry when I hear people saying that student loan debt is not worth killing yourself over! Obviously, those people just don’t get it. I pay a $1000 on my consolidated federal loans and 3 private consigned loans, but cannot pay what Sallie Mae wants for another private loan. They refuse to make any arrangements that would allow me to stay out of default.
    So, when the debt collecting agency garnishes 25% of my paycheck without a court order, I won’t be able to keep paying on the loans I am current on, and ALL of my loans will be in default…it is a rigged system.
    Yes, I think we are on the verge of a revolution and there may be hope in the future. But probably not soon enough for me to keep the fees on the soon to be defaulted consigned loans within what my life insurance wil pay when I die. I refuse to have my brother and sister destroyed by Sallie Mae for my choices.
    So, I will die by my own hand if there is no one else to help soon enough. Unless you are planning to help me, don’t try to tell me that my life is too precious to waste. Sallie Mae is a murderer. If I have the courage I will video my death with a final message to Sallie Mae and ask my family to personally deliver it to the CEO and then post to YouTube.
    If I have to die, I may as well get some benefit from it and bring the reality to life for the greedy schools, corporations, and government.

    • RainKing

      Doc,

      I am truly sorry to hear about your situation, and I do understand your frustration – I was in a similar situation some years ago.  With tens of thousands in Student Loan debt (which I didn’t really understand at the young age when I took it out), wage garnishments for child support, plus other unsecured credit card debt … I was at the end of my rope.  I really didn’t see any way out – bankruptcy was not an option, as it would do nothing to ease the Student Loan Debt and Child Support.

      I became seriously depressed, and considered suicide many times.  Even though I had a job, garnishments plus debt service made it impossible for me to cover even basic expenses of food and shelter.  I was even homeless (sleeping in my car) for a time – even though I had a reasonably well-paying job in Banking.

      My solution was to eventually just … leave.  I was able to obtain a permanent residency visa for an overseas country, so I fled the US and have never looked back.  I return frequently for holidays, but I have been gone so many years that none of my debts even appear on my credit reports any longer.  Best decision I ever made.

      I have no plans to return in the near future, but as the slate appears to have been wiped clean, I may return after I retire.  I will keep any assets outside the country though, just in case.

      Best of luck to you – and remember, you’re not alone.

  • Matt

    This is horrible. I read Dan’s comment on Facebook, and after reading the article (which you told him to do), I still agree with him 100%.

    I can’t believe you’ve written the words, Tragic But Understandable, next to anything with the word suicide in it. What’s worse is that you’re either doing this as linkbait, or truly feel that suicide is understandable in situations such as these. Both are truly sick.

    I hope you realize, too, that some person is going to read your headline and that’s going to be enough to push them over the edge. And if it doesn’t, an example of someone $40k in debt will do it. The average in credit card is debt is 1/3 of the way there, so it’d be safe to assume that lots of people are in the $30-$40k debt territory. Shouldn’t you be telling people that suicide is not a way out, that it’s not understandable, that people are responsible for their own actions? That they can find a way out of $40k or $100k in debt — that other people have done it?!?

    Adding the petition at the very end doesn’t make the article any better either. It’s certainly not a focal point of the article and very easy to overlook. If that’s supposed to justify everything else or add some balance, the least you can do is expand on the petition, what it will do, goals, etc.

    This is your current tagline:

    Free debt help and debt advice on how to get out of debt, getting
    out of debt consolidation scams, and inside information on the debt
    relief and debt help industry.Maybe you ought to change it to: By All Means Necessary

    • http://GetOutOfDebt.org Steve Rhode

      I’m confused. The article is not stating that suicide is the best way to deal with private student loan debt, only that it is understandable how some people might feel that way. In fact the title even says suicide is tragic, which it is.

      As I said, “For the record, I’m not endorsing suicide as a way out, just acknowledging what others are feeling.” I also said, “I’m sure you have the same visceral reaction as I do and feel everyone needs to be talked off the ledge.”

      If you have some solution to share to help people drowning in private student loan debt that feel suicide is an appropriate way out, please share it.

      I get the point that suicide is tragic but without being able to discharge private student loan debt in bankruptcy or require the lenders to modify the payment or terms in any way, what can you offer to help people not feel hopeless and suicidal?

  • http://twitter.com/SCraigSEO Stephen Craig

    I too have enormous student loan debts and I have graduated a little over a year 2 years ago. I currently have a job in my field of study but I make no where near the amount to make substantial payments on my loans. I would never consider suicide as an escape from the loans, that seems a little ridiculous to me. But in a nation that pushes and pushes us to further our education, you would think they would make it easier for us to do so without being burdened for rest of our lives. Mean while tuition just keeps rising every year…I do wonder every day how I am going to put my daughter through school. Great post!

    • http://GetOutOfDebt.org Steve Rhode

      Thank you Stephen for stopping by and commenting. I agree, the underlying issue here is a massive paradigm shift from looking at higher education as a blind pursuit and looking at it on an investment and return basis.

      For me the most shocking figure is the about 75% of people with student loans never graduated. They have the debt but not the degree.

      • http://www.DuncanLawOnline.com Damon Duncan

        Steve, 

        I agree 100%. As a bankruptcy lawyer I actually had someone contact my office late last week saying they wanted to know about wiping student loans out with bankruptcy. When I explained that wasn’t going to happen they wanted to know if their daughter would be responsible for the debt if he committed suicide. Long story short, I was able to talk them out of that idea, at least temporarily. This guy only went to school for one semester. Poor economy + high student loan payments = unbearable stress and people with nowhere to turn.

        Damon Duncan
        Duncan Law, PLLC

      • http://GetOutOfDebt.org Steve Rhode

        Ironically this post has evoked a visceral response among on my Facebook page from one reader who said “Suicide is NEVER understandable. Shame on you Steve.” But for those of us on the front lines of consumer debt your example is far too common to ignore.

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