Author Topic: The $555,000 Student-Loan Burden  (Read 1674 times)

SAMSON123

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The $555,000 Student-Loan Burden
« on: February 17, 2010, 11:35:12 AM »
The mere idea that someone could end up with this level of debt trying to get educated in america is preposterous. Over half a million dollars of debt trying to obtain a medical or any kind of degree???? Yet many tell this same tale of ridiculous interest rates, outrageous tuitions and unbelievable debt after college of which the person will NEVER be able to pay off. Even paying 50,000 per year on half a million will leave her no where as the interest alone will eat all of that payment up leaving the principle UNTOUCHED... MAybe she should do as the fiancial do: claim bankruptcy, get bailed out by the government, give herself a VERY LARGE BONUS and then walk away..

The $555,000 Student-Loan Burden
by Mary Pilon
Tuesday, February 16, 2010

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.

wsj-photo.jpg
Andrew Spear for The Wall Street Journal
Michelle Bisutti borrowed $250,000 to pay for medical school. The debt has since 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. Emmanuel Tellez's mother is a laid-off factory worker, and $120 from her $300 unemployment checks is garnished to pay the federal PLUS student loan she took out for her son.

By the time Mr. Tellez graduated in 2008, he had $50,000 of his own debt in loans issued by SLM Corp., known as Sallie Mae, the largest private student lender. In December, he was laid off from his $29,000-a-year job in Boston and defaulted. Mr. Tellez says that when he signed up, the loan wasn't explained to him well, though he concedes he missed the fine print.

Loan terms, including interest rates, are disclosed "multiple times and in multiple ways," says Martha Holler, a spokeswoman for Sallie Mae, who says the company can't comment on individual accounts. Repayment tools and account information are accessible on Sallie Mae's Web site as well, she says.

Many borrowers say they are experiencing difficulties working out repayment and modification terms on their loans. Ms. Holler says that Sallie Mae works with borrowers individually to revamp loans. Although the U.S. Department of Education has expanded programs like income-based repayment, which effectively caps repayments for some borrowers, others might not qualify.

Heather Ehmke of Oakland, Calif., renegotiated the terms of her subprime mortgage after her home was foreclosed. But even after filing for bankruptcy, she says she couldn't get Sallie Mae, one of her lenders, to adjust the terms on her student loan. After 14 years with patches of deferment and forbearance, the loan has increased from $28,000 to more than $90,000. Her monthly payments jumped from $230 to $816. Last month, her petition for undue hardship on the loans was dismissed.

Sallie Mae supports reforms that would allow student loans to be dischargeable in bankruptcy for those who have made a good-faith effort to repay them, says Ms. Holler.

Dr. Bisutti says she loves her work, but regrets taking out so many student loans. She admits that she made mistakes in missing payments, deferring her loans and not being completely thorough with some of the paperwork, but was surprised at how quickly the debt spiraled.

She says she knew when she started medical school in 1999 that she would have to borrow heavily. But she reasoned that her future income as a doctor would make paying off the loans easy. While in school, her loans racked up interest with variable rates ranging from 3% to 11%.

She maxed out on federal loans, borrowing $152,000 over four years, and sought private loans from Sallie Mae to help make up the difference. She also took out two loans from Wells Fargo & Co. for $20,000 each. Each had a $2,000 origination fee. The total amount she borrowed at the time: $250,000.

In 2005, the bill for the Wells Fargo loans came due. Representatives from the bank called her father, Michael Bisutti, every day for two months demanding payment. Mr. Bisutti, who had co-signed on the loans, finally decided to cover the $550 monthly payments for a year.

Wells Fargo says it will stop calling consumers if they request it, says senior vice president Glen Herrick, who adds that the bank no longer imposes origination fees on its private loans.

Sallie Mae, meanwhile, called Mr. Bisutti's neighbor. The neighbor told Mr. Bisutti about the call. "Now they know [my dad's] daughter the doctor defaulted on her loans," Dr. Bisutti says.

Ms. Holler, the Sallie Mae spokeswoman, says that the company may contact a neighbor to verify an individual's address. But in those cases, she says, the details of the debt obligation aren't discussed.

Dr. Bisutti declined to authorize Sallie Mae to comment specifically on her case. "The overwhelming majority of medical-school graduates successfully repay their student loans," Ms. Holler says.

After completing her fellowship in 2007, Dr. Bisutti juggled other debts, including her credit-card balance, and was having trouble making her $1,000-a-month student-loan payments. That year, she defaulted on both her federal and private loans. That is when the "collection cost" fee of $53,870 was added on to her private loan.

Meanwhile, the variable interest rates continue to compound on her balance and fees. She recently applied for income-based repayment, but she still isn't sure if she will qualify. She makes $550-a-month payments to Wells Fargo for the two loans she hasn't defaulted on. By the time she is done, she will have paid the bank $128,000 -- over three times the $36,000 she received.

She recently entered a rehabilitation agreement on her defaulted federal loans, which now carry an additional $31,942 collection cost. She makes monthly payments on those loans -- now $209,399 -- for $990 a month, with only $100 of it going toward her original balance. The entire balance of her federal loans will be paid off in 351 months. Dr. Bisutti will be 70 years old.

The debt load keeps her up at night. Her damaged credit has prevented her from buying a home or a new car. She says she and her boyfriend of three years have put off marriage and having children because of the debt.

Dr. Bisutti told her 17-year-old niece the story of her debt as a cautionary tale "so the next generation of kids who want to get a higher education knows what they're getting into," she says. "I will likely have to deal with this debt for the rest of my life."
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saopl

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Re: The $555,000 Student-Loan Burden
« Reply #1 on: February 17, 2010, 11:42:42 AM »
do you just cruise the internet all day long looking for the most pointless articles to post? it's her dumb ass fault she didn't pay the loan off in the first place.

maybe next you can post an article about my check bouncing last week?

SAMSON123

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Re: The $555,000 Student-Loan Burden
« Reply #2 on: February 17, 2010, 12:01:19 PM »
do you just cruise the internet all day long looking for the most pointless articles to post? it's her dumb ass fault she didn't pay the loan off in the first place.

maybe next you can post an article about my check bouncing last week?

Maybe your simple ass should learn to READ...She could not pay her loan off (250,000 dollars at the time) because she has a residency to complete. Obvious you have NEVER been to college or had anything in the form of a financial commitment: owning a house, paying rent, buying a car etc. it does not take much to find ones self in SERIOUS DEBT. The terribleness of this is THIS ONLY HAPPENS IN AMERICA...imagine this cost to get an education.
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Soul Crusher

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Re: The $555,000 Student-Loan Burden
« Reply #3 on: February 17, 2010, 12:02:06 PM »
Schiff has given many videos avbout this disgrace.  

This is another example of the federal govt intervening in a matter only to make matters gravely worse.  


BayGBM

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Re: The $555,000 Student-Loan Burden
« Reply #4 on: February 17, 2010, 12:10:25 PM »
>MAybe she should do as the fiancial do: claim bankruptcy, get bailed out by the government,
>give herself a VERY LARGE BONUS and then walk away..


Student loans cannot be discharged via bankruptcy!  Even if you are old and on social security the Supreme Court has ruled that a portion of your SS income can be garnished to pay the student loan debt.  :-\

SAMSON123

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Re: The $555,000 Student-Loan Burden
« Reply #5 on: February 17, 2010, 12:24:29 PM »
>MAybe she should do as the fiancial do: claim bankruptcy, get bailed out by the government,
>give herself a VERY LARGE BONUS and then walk away..


Student loans cannot be discharged via bankruptcy!  Even if you are old and on social security the Supreme Court has ruled that a portion of your SS income can be garnished to pay the student loan debt.  :-\


I know...I was making a cruel joke of the matter. The article goes on to say how it is practically impossible for someone to get out of these loans...But how about that...a bank can defraud a person taking out a loan, given them ARM rates that triple expectantly, can create panic in the real estate market to get people to take out loans, can put up LIAR LOANS and at the end of the day get bailed out. However a person going through the arduous medical training to be a doctor and needing loans to get there, is screwed over royally with no life preserver or bailout to be found anywhere when the debt is waaaaaay over their head..
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Soul Crusher

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Re: The $555,000 Student-Loan Burden
« Reply #6 on: February 17, 2010, 12:36:26 PM »
This is why I tell people thinking of medical school that that are crazy to pursue that field right now. 

BayGBM

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Re: The $555,000 Student-Loan Burden
« Reply #7 on: February 17, 2010, 12:44:50 PM »
I know...I was making a cruel joke of the matter. The article goes on to say how it is practically impossible for someone to get out of these loans...But how about that...a bank can defraud a person taking out a loan, given them ARM rates that triple expectantly, can create panic in the real estate market to get people to take out loans, can put up LIAR LOANS and at the end of the day get bailed out. However a person going through the arduous medical training to be a doctor and needing loans to get there, is screwed over royally with no life preserver or bailout to be found anywhere when the debt is waaaaaay over their head..

Maybe she can pull a Methyl Mike and simply bail on her obligation and never pay the loan.  ::)

http://www.getbig.com/boards/index.php?topic=309532.msg4419886#msg4419886

Btw, I don’t feel sorry for this woman.  She borrowed the money.  Now, stop whining and pay it back!  >:(

Soul Crusher

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Re: The $555,000 Student-Loan Burden
« Reply #8 on: February 17, 2010, 12:48:28 PM »
Maybe she can pull a Methyl Mike and simply bail on her obligation and never pay the loan.  ::)

http://www.getbig.com/boards/index.php?topic=309532.msg4419886#msg4419886

Btw, I don’t feel sorry for this woman.  She borrowed the money.  Now, stop whining and pay it back  >:(

She cant.  The pay scale for docs is not high enough to pay back these obscene loans. 

Its a complete disgrace.  i blame the Fed Gov mostly for this BTW.  schiff has great videos on why school costs so much. 

Its an outrage.   

saopl

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Re: The $555,000 Student-Loan Burden
« Reply #9 on: February 17, 2010, 01:09:01 PM »
Maybe your simple ass should learn to READ...She could not pay her loan off (250,000 dollars at the time) because she has a residency to complete. Obvious you have NEVER been to college or had anything in the form of a financial commitment: owning a house, paying rent, buying a car etc. it does not take much to find ones self in SERIOUS DEBT. The terribleness of this is THIS ONLY HAPPENS IN AMERICA...imagine this cost to get an education.

obviously she should have thought it through before she didn't, why should anyone feel sorry for her?

should have been a stripper instead, you get to drink on the job and endless amounts of cocaine!

BayGBM

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Re: The $555,000 Student-Loan Burden
« Reply #10 on: February 17, 2010, 01:10:39 PM »
She cant.  The pay scale for docs is not high enough to pay back these obscene loans. 

Its a complete disgrace.  i blame the Fed Gov mostly for this BTW.  schiff has great videos on why school costs so much. 

Its an outrage.   

Wrong.  She can pay the debt.  It will simply mean living a very modest lifestyle for many years.  I agree that the penalties need to be revised or regulated, but the idea that this woman is now a victim is laughable.  She chose to borrow the money to benefit herself.  And now she wants to cry foul?  I don’t think so.  If her loan were forgiven today, I suspect she would be driving around in a luxury car tomorrow.

I had student loan debt from my days in school and never missed a payment.  The same is true for millions of other borrowers. Michelle and President Obama didn’t pay off their school loans until they were in their forties.

If this woman needs to make more money then she can specialize in an area of medicine with better compensation.  There are medical school profs at my school that make more than a million a year.

The bottom line is this: she borrowed the money.  Now she must pay it back.  Failing to pay a debt that you legitimately owe is the equivalent of stealing.  Bay no likey! >:(

Soul Crusher

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Re: The $555,000 Student-Loan Burden
« Reply #11 on: February 17, 2010, 01:17:53 PM »
Wrong.  She can pay the debt.  It will simply mean living a very modest lifestyle for many years.  I agree that the penalties need to be revised or regulated, but the idea that this woman is now a victim is laughable.  She chose to borrow the money to benefit herself.  And now she wants to cry foul?  I don’t think so.  If her loan were forgiven today, I suspect she would be driving around in a luxury car tomorrow.

I had student loan debt from my days in school and never missed a payment.  The same is true for millions of other borrowers. Michelle and President Obama didn’t pay off their school loans until they were in their forties.

If this woman needs to make more money then she can specialize in an area of medicine with better compensation.  There are medical school profs at my school that make more than a million a year.

The bottom line is this: she borrowed the money.  Now she must pay it back.  Failing to pay a debt that you legitimately owe is the equivalent of stealing.  Bay no likey! >:(


I dont disagree with you other than the fact that schools' tution is simply criminal and based solely on the avaialbility of easy credit. 

The more credit available via the fed gov, the higher the tuitions. 


SAMSON123

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Re: The $555,000 Student-Loan Burden
« Reply #12 on: February 17, 2010, 04:03:45 PM »
Wrong.  She can pay the debt.  It will simply mean living a very modest lifestyle for many years.  I agree that the penalties need to be revised or regulated, but the idea that this woman is now a victim is laughable.  She chose to borrow the money to benefit herself.  And now she wants to cry foul?  I don’t think so.  If her loan were forgiven today, I suspect she would be driving around in a luxury car tomorrow.

I had student loan debt from my days in school and never missed a payment.  The same is true for millions of other borrowers. Michelle and President Obama didn’t pay off their school loans until they were in their forties.

If this woman needs to make more money then she can specialize in an area of medicine with better compensation.  There are medical school profs at my school that make more than a million a year.

The bottom line is this: she borrowed the money.  Now she must pay it back.  Failing to pay a debt that you legitimately owe is the equivalent of stealing.  Bay no likey! >:(


Until you have a 550,000 dollar loan you can not speak on the matter. I have already commented on this saying that even if she paid 50,000 per year at an interest of 10 percent she would NEVER even put a dent in the principle and would pay 50,000 per year FOREVER, without ever reducing the principle by even one dollar. A doctor does not make nearly as much as you think...and those that do are swamped with malpractice insurance, costly licensing, fees and cost related to operating a private business or accepting lower pay working for an HMO or hospital. Considering the malpractice insurance, health insurance, car and home insurance, travel cost, personal expense etc etc etc there is no reduction in personal life that can be done enough to pay back that amount of money. Easily something on the order of 65,000 per year would have to be paid out for at least 20 year in order to pay off this loan...and that is if the loan interest rate does not increase and she remains fully employed over these next twenty years without interruption.
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drkaje

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Re: The $555,000 Student-Loan Burden
« Reply #13 on: February 17, 2010, 06:05:55 PM »
Here's the thing...... she has an option to repay the loans and chose to not exercise it. Many doctors eat poop for 7 years in poorer communities and get their loans paid back. That's what I'll have to do.

BayGBM

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Re: The $555,000 Student-Loan Burden
« Reply #14 on: February 17, 2010, 06:28:51 PM »
Until you have a 550,000 dollar loan you can not speak on the matter. I have already commented on this saying that even if she paid 50,000 per year at an interest of 10 percent she would NEVER even put a dent in the principle and would pay 50,000 per year FOREVER, without ever reducing the principle by even one dollar. A doctor does not make nearly as much as you think...and those that do are swamped with malpractice insurance, costly licensing, fees and cost related to operating a private business or accepting lower pay working for an HMO or hospital. Considering the malpractice insurance, health insurance, car and home insurance, travel cost, personal expense etc etc etc there is no reduction in personal life that can be done enough to pay back that amount of money. Easily something on the order of 65,000 per year would have to be paid out for at least 20 year in order to pay off this loan...and that is if the loan interest rate does not increase and she remains fully employed over these next twenty years without interruption.

I am willing to wager that no one in this thread has a $550K student loan and we are all speaking on the matter.  So much for that caveat.

The money she would otherwise use to purchase a home must now be devoted to paying her student loan.  $ 550,000 is not an atypical mortgage in major urban areas.  In fact, in NY or San Francisco that is considered a down payment.  If her fiancée/husband can afford to provide them with housing, she can devote what would normally be her rent/mortgage to paying her debt.  Without her fiancée, she may never be able to live in her own home.  That is an unfortunate position to be in, but it is a simple matter of choice and consequence.  If you run up big debt your life is going to be compromised by it.  Btw, there are lots of people who cannot afford to purchase their own home.  She is now among them.

As someone who pays his debts, I have little sympathy for people who run up debts and then think they can escape without paying.  Notice that this woman was not the victim of some catastrophic illness or other misfortune beyond her control.

The good doctor could have taken advantage of loan forgiveness programs that involve working in (undesirable) underserved areas (of which there are many).  I suspect she was not interested in that...  Not enough glamour in it perhaps?

Sorry, I have no sympathy for this woman.

Gregzs

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Re: The $555,000 Student-Loan Burden
« Reply #15 on: March 13, 2023, 12:29:23 AM »
How Student Loan Repayment Is About to Dramatically Change