I’m not really sure that there is a solution to my issue but you seem to know about student loans so thought I would run it by you.
Back in 2007 I wanted to go to school to get into the graphic and web design industry. At the time I was working full time so was exploring online options – this led me to The Art Institute Online. The recruiter talked a good talk about how affordable an associates in web design would be and how many career options it would give me. I enrolled asap.
I had to take out loans to cover the cost and as my schooling continued I would keep getting notified from my student advisor that I would need to take out more loans – it seemed every time I was told “yes, this amount will cover the cost for the rest of your schooling for the associates” – a couple months later she would say I needed more loans.
I was young and naive and figured this was par for the course. Then enough was enough – I was up to more than 50K in student loans (half of that amount in private loans) and they were telling me they needed more money. I was months away from obtaining my associates degree – I couldn’t take out anymore loans so they said I could downgrade to a “diploma”.
So two years of schooling, over 50K in student loans and I walked away with a “diploma” in web design.
The quality of the education was sub par, I’m not a qualified web designer and could not hold a job in the industry. I tried to further my education at a local community college but found out that the art institute credits I earned were not transferable.
Over the last five years I have used every deferment/forbearance option that I qualified for as we were struggling financially. I have exhausted those options and now have over $400 per month in student loan payments.
What’s even worse – my father is a co signer on all of these loans. I have pretty much accepted that it is what it is and that I have to chalk it up to “dumb tax” on my part, but now that I have two children it is a crushing weight.
If you have any ideas I may be missing, I would be thrilled to hear them.
I’m so sorry to hear about your most unfortunate outcome with your school. What makes matters worse is the loans have sucked you father in as a cosigner.
Your situation painfully highlights a series of problems with the modern higher education system in the United States, and elsewhere.
It can cost a lot of money to go to school and the maximum value of that education is achieved only once the final degree has been obtained. That degree serves as a notice to the world you’ve completed a set standard of study. Ironically, most students never complete their degrees.
But if the school sucks, the very expensive degree isn’t worth a whole lot. And being downgraded from an associates degree to a diploma seems to give you a $2,000 benefit for $50,000.
You seem to understand at this point that the degree was never going to be good value for money when the cost of the degree was so high for your field of study. I’m not saying that to rub it in but to help others who might be reading this, there is a cost vs. benefit analysis that needs to be evaluated to justify a certain level of debt for a particular field.
Sadly, as more time passes and you are unable to work, the chance is your skills will become further and further less relevant if they depend on technology.
The best advice I can give you at this point would be to see if your school has any graduate placement services that might be able to get you in the door someplace to get critical experience as a graphic artist.
Without being able to transform your education into income there will come a time very soon where you will not be able to afford your loans and default. When you default on payments the lenders will start to contact your father and try to collect from him.
You’ve indicated some of your loans were private so I’m assuming some were federal loans. Those loans may be eligible for an income driven repayment plan like the Income Based Repayment plan. You can find more information about those plans here.
I completely understand why you’ve used the deferment options but all that has done is pushed the problem into the future and made the balances grow and grow.
When it comes to the private loans you will need to get your father onboard with a strategy to deal with them. As crazy as it sounds, one strategy is to stop paying your unaffordable private student loans. This is more likely to lead you to negotiations with your lender where you can settle the balances or talk about more manageable repayment arrangements. One person that can help you with this is this guy who has had some good luck in dealing with student loan lenders.
Unfortunately this approach will impact your father’s credit since he co-signed. It will also ding your credit, you will wind up in collections, you could be sued, and you could have your wages garnished.
What really complicates this situation is your father graciously agreed to be 100% responsible for the student loans by cosigning. Lesson to be learned here, never cosign for anybody. You get all the risk and none of the benefit.
If the private loans were in your name alone, the situation reminds me of another Art Institute case where the student did file bankruptcy and had her loans substantially reduced. See the case study for Opp in this article.
I wish I had a clear and simple answer that could eliminate all of this with a wave of a wand. The issue is much more complex and larger than just your individual situation. There has been a failure in the way higher education is made available to many. For-profit schools and public universities with accelerating costs are pushing affordable degrees out of reach of more students.
For you, please keep in mind the situation is broken because lawmakers have left it broken and have not forced private loan lenders to make reasonable and affordable payment plans available.
You also need to keep foremost in your mind that this situation does not define your self-worth, value as a member of society, or the wonderful blessing that you are in life. Don’t let your debt tear you down. Your debt does not define you. It’s just debt.
Please post your responses and follow-up messages to me on this in the comments section below.