The Student Loan Death Trap: Private Student Loans Drive the Future into Poverty. – Rachel

My situation is so horrible and massively complex it’s difficult to explain in a way without running off on other subjects, but mainly my problem is I can’t seem to find out how to survive with a life worth living while having my student loans on my shoulders.

If it were just the federal loans..I wouldn’t care…I could do income based repayment plans and after 25 years your remaining debt is discharged.

The real pit is the private student loans. I got private student loans with both Sallie Mae, PNC Bank’s American Education Services, and Wells Fargo.

Sallie Mae 59,000$ (father cosigned on one loan for 19,000$, the rest all my own..amazingly)
PNC Bank about 15,000$ (all on my own…somehow…incredibly)
Wells Fargo about 15,000$ (grandparents cosigned)

Now I can put my federal loans into unemployment forbearance to try to make room for the other loans..but here’s the kicker…they can get everything no lower than 350$ a month for the rest of however long I can pay doing INTEREST ONLY! They won’t do interest only forever…just for a while…the real payment amount is around 500$ a month…JUST for Sallie Mae’s private loans…not counting my other ones…Wells Fargo can do 77$ interest only…and PNC bank won’t do ANYTHING for me whatsoever..even though their contract stated they could do 50$ a month…ON THE PRIVATE LOAN CONTRACT…they told me only for federal…WTF? And finally I can lower my dad’s cosigned loan with Sallie Mae for 78$ a month with variable interest….great…

I make…1400$ a month gross income working part time at a call center..and my boyfriend gets SSI for 674$ a month…

Here’s what sucks…I calculated total living expenses and bills…

Internet-paid for by my employer
Cell Phone-my dad pays
Cable-don’t have any cable service
148$ in food stamps..we spend near 200$ a month for both of us..and it’s really hard to keep it that way

all rent associated fees, about 710$ a month
car insurance 167$
electricity-100-150$ (possibly 200$…) a month depending if it’s summer or winter (it gets HOT in phoenix!)
gas/transportation- 150$ monthly just to go to to work..not counting drive ANYWHERE else..

Now…lets add that up…

Total income for both me and my boyfriend minus taxes: 1,974$

Total expenses estimated to be as close as possible minus change: 1,402$

572$ left over

Now that sounds like a lot…right? Well…consider this next:

PNC bank wants me to pay 157$ and they WONT budge at all to help me
Wells Fargo interest only: 77$
Sallie Mae Private: 350$ lowest for all 3 loans with them…interest only again..
Sallie Mae Federal: while working part time 0$ for a few years..

Now…let’s see…subract that from my excess income… -12$

Remember..this does NOT include basic hygenic items and other personal care products or household necessities like soap, shampoo cost for pets, even if I only spend 10$ a month on them…This ALSO does NOT cover emergency costs or medical costs related to my health or car maintenance…

Really? Really US GOVERNMENT? REALLY?!!!! Does our government WANT to send us all to the toilet?

I call attorneys for help, and they for the most part give me an answer with a resounding, “No, sorry can’t help you, you’re screwed.”

They said my best hope is to be dead, move out of the country with a different name, or to be so horribly disabled that death would be preferable…in order to discharge loans…

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If I do bankruptcy…I’m still screwed because I don’t think my life is “Horrible” enough for them to consider my loans or some of them to be discharged..if I fail to get rid of them or work out a reasonable payment plan..they could garnish my wages, either if I don’t do bankruptcy or once I’m out of bankruptcy..either way…they’ll devour my soul.

If I do have to go bankruptcy…the loans my cosigners have for me would go back to them and the interest only plan may or may not be available and certainly not for the same price I got, because it’s on THEIR income…so once again..the amount owed would SOAR above my means and then they would have to pay it and I SWORE I wouldn’t let that happen…Dad’s got so much credit card debt he cant get out..and bankruptcy would disqualify him for his retirement plan…all his life would go down the crapper..and my grandparents are just too old and have their own financial problems too…

In other words…I better hope I get sick really fast and can’t work and still live a crappy life…or I can PRAY someone will understand the situation and give me the time I need to pay off my freaking car and lower my insurance on it…then i MAY be able to afford the interest only payments…god help me when that option is exaughsted…WAGE GARNISHMENT OF NO LESS THAN 15% HERE I COME!!! 200$ BUCKAROOS ON TOP OF YOUR COSIGNER’S LOANS…WOOOOT!

Anyone else see how messed up this is….?

I’m so sorry Steve, that this one had to come to you. I suppose I’m asking if there is anything else I haven’t tried in my months of online legal and loan research, and attorney phone calls that I have missed…I hoped maybe I could get some discharged based on what loans were certified and those that maybe weren’t and using my school’s COA (cost of attendance)…but the laws on that are so confusing…I just want to cry and slit wrists already…..

Any answer, even if it’s a sad one, would be appreciated…

Thank you,


Dear Rachel,

Here is the bottom line when it comes to private student loans, it sucks and their are no good options.

You said one thing, “bankruptcy would disqualify him for his retirement plan” which made me go huh? Why would he be disqualified for his retirement plan? But that’s another issue.

The problem here is that the cosigners are 100% responsible for the debt. Have you discussed your situation openly with them? It might just be your cosigners will have to clear their decks of their debt with something like bankruptcy and prepare to make the payments on the debts they cosigned. And your cosigners were adults and agreed to be liable for the debt when they signed on as cosigners.

I completely agree that private student loans were and are a trap but it is what it is unless we can get Congress to change the law. A few students loans are cleared with a Chapter 11 bankruptcy but it is an expensive and problematic process that has little guarantee of success.

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Keep in mind this is not a government punishment. Private student loans are a loan just like any other. But it just so happens that the issuers of private student loans successfully lobbied the legislature and got a law passed by Congress that prohibits private student loan debt from being discharged in bankruptcy. As you’ve acknowledged, if you had government backed student loans you’d have some great options.

In 2011 new legislation was proposed, Fairness for Struggling Students Act of 2011, to “restore the bankruptcy law, as it pertains to private student loans, to the language that was in place before 2005, so that privately issued student loans will once again be dischargeable in bankruptcy.” – Source

Private student loans are one of the riskiest, most expensive ways to pay for college. Like credit cards, they typically have variable interest rates that are higher for those who can least afford them. However, private student loans are treated much more harshly in bankruptcy than credit cards and other comparable types of debt.

Private student loan borrowers also lack access to the important deferment, income-based repayment, or loan forgiveness options that come with federal student loans. This leaves most private loan borrowers at the mercy of the lender if they face financial distress due to unemployment, disability, illness or military deployment, or when a school shuts down before they can finish their certificate or degree.

With recent reports that student loan debt has outpaced credit card debt, the Fairness for Struggling Students Act of 2011 is needed now more than ever. It is inappropriate and unfair to distressed borrowers to treat private student loans more harshly than comparable types of debt. Your bill would indeed restore fairness for struggling Americans who pursued the American dream by going to college, only to find themselves in financial distress. – Source

Because of your question I just started a petition to get this bill in Congress moving again. Please sign the petition to Pass the Fairness for Struggling Student Act of 2011. Please pass on the link to your question to other and help draw attention to the bottomless pit private student loan borrowers face so we can get this much needed bill moving again.

Please post your responses and follow-up messages to me on this in the comments section below.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
Damon Day - Pro Debt Coach

8 thoughts on “The Student Loan Death Trap: Private Student Loans Drive the Future into Poverty. – Rachel”

  1. There is debt owed and then there is debt recoverable. I’m in the same situation 50k private $50k federal. First off you need to find a career that pays a lot sometimes that means doing boring things like technical certifications project management is always a good option… IT stuff, business management… you got a useless degree now earn a useful certification. I’m guilty of the same.


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