I hate the job I have now, but it pays decent money and I can afford to make the loan payments. But I will be spending the next 30 years in a job I hate just so I have enough money to repay them. My real passion is teaching, but I will never find a position that pays well enough to make the payments.
Am I doomed to work in a job I hate because I made some bad financial decisions as a teenager?
I know I have a responsibility to pay back the loans. But why does the government give out such huge loans to young people without any guarantee they will ever be able to pay them back? Isn’t that same thing as a sub-prime loan which is one of the causes for the recession we are in now?
No other lending institution would give out a $75,000 personal loan to a teenager without any guarantees whatsoever. So, why does the government do it?
I have a masters degree in addition to my bachelors…not to mention a few aborted attempts at other degrees. Also, unsubsidized student loans enables you to borrow even more than usual.
Of course, I have had many/all of these loans in deferment or forbearance for quite a while. Deferments aren’t a big deal on the subsidized loans because the interest doesn’t accumulate during those periods. However, they do for unsubsidized ones. And the interest collects on all types of loans during a forebearance.
I have had to do all of these because I never had a job in which I could afford the payments. During the times when the payments were $500, I was barely making minimum wage. And by the time I found a relatively decent job, the interest had accumulated/compounded so much, the payments are now around $1000. Vicious circle if you ask me.
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The government limits federal student loans to dependent students. Federal Stafford loans, (if you receive the max every year) would be this:
5,500 freshman
6,500 sophomore
7,500 junior
7,500 senior
_________
27,000 total
So if you graduate with only federal Stafford loans and graduate in 4 years, this would be your max amount borrowed. Your payments would be around 300 a month for 10 years. this is the case for all federal student loans. This is reasonable amount and what the government allows as max to borrow. Parent PLUS loans are not your responsibility to repay, and the other type of federal loans are very rare (called Perkins loans) and not many folks borrow these.
If you have 75,000 (YIKES!) in student loans, then you have either 1. a degree beyond a bachelors or 2. Evil private student loans or a combo of both.
In the case of Private student loans, they are TOTALLY UNREGULATED by the government so folks are allowed to borrow as much as a clueless cosigner will agree to pay. So (in my option) it is not a question of why does the government allow it, because they don’t. But why in the world would a cosigner agree to agree to pay that for someone they obviously care enough about to want them to go to school but don’t realize the long term crippling financial obligations it entails?