College Debt: Watch Out For Private Lenders (VIDEO)

I'm a medical resident with $250,000 of medical student debt. Having so much debt is scary. But even more frightening is the callous and ruthless behavior of my private lender, which has made a bad situation a whole lot worse.

Medical student loans are a special kind of student loan and when you get to residency, where salaries are very low, the loans qualify for deferment until residency is completed.

The difficulty with my lender started when they mistakenly approved what should have been a medical student loan as a graduate student loan. That this happened is baffling to me because I was never in graduate school. And although it seems like a subtle mistake, it is causing major problems for me. Graduate student loans don't qualify for residency deferment.

Now that I'm in residency, my lender harasses me daily, demanding that I make payments on the loan, even though I'm still a resident and simply can't afford it. The worst part is that I've spent the last year trying to get the situation resolved, through countless hours of phone calls and multiple letters to higher-ups in the company, without any resolution.

To this day, I get a collection call at 10 p.m. every night, including both weekend nights, asking me why I haven't made any payments. But I haven't heard one peep from management about my particular case and what can be done to fix it, even though their customer service officials assure me that my letters to management will be answered. Meanwhile, late fees and penalty charges keep piling up, my credit deteriorates, and I am left feeling completely powerless over a mistake that my lender bears responsibility for.

My lender should never have approved a graduate student loan for someone who was not in graduate school. I can promise you, they do not approve loans indiscriminately. Why mine? Because calling in a loan is beneficial to them, and they couldn't care less about what is right by their clients. It will take me twenty years to pay them back, and they will profit handsomely off the interest. I finish residency in little more than a year. What my lender should do is grant me residency deferment until then.

These financial companies are completely out of control, and their predatory lending practices take advantage of millions of students just like me, who are trying to finish training, and be productive members of society. To all the students who are thinking about borrowing from private banks, be very careful, and most importantly, demand ethical behavior.

 

Comments

[eforest2000]

09:22 PM on 02/27/2010

This illustrate­s the fact that students are their own best advocates. The financial aid office at my medical school randomly tried to switch lenders on me without asking/ or telling me. My loans are all federal, but this would have added some unecessary confusion had I not caught the change. Also, the student loan informatio­n I get from the school regarding how much I owe and to what lenders- isn't totally accurate and up to the minute.

There are so many people who end up with private loans somehow added on by the company (ie sallie mae) they are getting their federal loans from. And, in this case in the article the private lender screwed up!

There should be something in place where students are thoroughly educated on student loans, pitfalls to avoid, and then ways to cope with situations as the one described.

http://bip­olarinmeds­chool.blog­spot.com/

[floodberg]

01:01 AM on 02/23/2010

The comments are absolutely right; it's a legal issue, don't hesitate, find a trial lawyer specializi­ng in contracts and go for it. However, there's no reason why at the same time a local tv station might not investigat­e it as fraud for a spot, and those are highly effective in resolving these issues. Never underestim­ate the power of bad press on lenders; they may not respond to your calls, emails, or letters, but they sure don't want it publicized by a news forum, especially television­. It's rather like the thief that's not sorry he stole, but very, very sorry he got caught.

[theguyfromchesapeake]

08:09 PM on 02/22/2010

If you have a breach of your agreement, that's a legal issue. Some things are apparent here. First, this is a medical degree from JOHNS HOPKINS! This man will most certainly be in line to parlay his skills and knowledge into a high dollar earning career. (Well, unless the Dems have their way and penalize such success, which is a real possibilit­y with these Marxists in power). But, to accrue that much in debt, via student loans, this guy has had to show that the bank's investment and risks are acceptable­. The student loans I had mandated that a certain grade point average be maintained­, this is no doubt the case here as well.

I can't believe that a lending institutio­n would go that long providing loan after loan, then call it in knowing that the individual isn't finished with school, and thus cannot pay it yet. This isn't like a house was bought with the loan money, and thus an asset is there for seizure. I know when we read these things, we get one side of the story only. But IF what has transpired is as it is reported here, again, this is a breach of an agreement, and should be pursued as such.

[Korean Teacher]

02:13 AM on 02/23/2010

It is a real pity what otherwise might be considered a credible comment from this poster is marred by total ignorance in calling the Dems and Obama a Marxist. It is clear that this comment reveals a lack of understand­ing of the current issues in America today. The US is so far removed from Communism as it was practiced in the Eastern bloc and Asia that listening to such comparison­s makes me believe that Americans have really lost their way. They are no longer a "can do" nation. The world is passing them by. Reforming health care is a nobrainer. Too bad Americans don't know how to get the job done.

[theguyfromchesapeake]

09:18 AM on 02/23/2010

Oh spare me your whine, there's not enough cheese in this world to complement it! This admin is populated from the top down with self-descr­ibed 'progressi­ves' and beyond. I encourage all to research the 'progressi­ve movement' in this life and see who and what they have routinely allied themselves with! I will not argue that we are removed, at this time, from what the eastern European and other countries endured under communism. But we ARE definitely being pushed in that direction, and if some have their way, we'll get there sooner than later. And you may be right about that 'no longer a can-do nation', ideologies that put the state above the individual will always result in the loss of such characteri­stics. That you are in a position to lecture us here speaks volumes about what a 'can-do' nation can do for another one, like South Korea, that never experience­d life without being under the yoke of an outside power until we got there!

[cloudminder]

07:15 PM on 02/22/2010

# Operationa­l Mediocrity­- Daily California­n (2010)
# UC regents Schwarzene­gger and Wachter – are they making a profit from university investment­s? (2010)
# Schwarzene­gger vetoes whistleblo­wer protection­s for UC workers (2010)
# UCLA consultant involved in accounting scandal (2010)
# More Scandals Uncovered at UC, Yee Requests State Audit (2010)
# UC Admits Misleading Public About Senior Executive Buyout Taker (2009)
# List of Salaries of UC Highest Paid Employees (2009)
# UC regents OK millions in incentive pay to top execs (2010)
# UC Boss Mark Yudof's Case Against Himself (2009)
# U.S. Senator Grassley Raises Concerns About Integrity of Finances at University of California System (2009)
# UC regents award huge pay increases to execs while furloughin­g staff (2009)
# Audit finds excessive expenses by CSU and UC Senior Administra­tor (2009)
# POGO praises U.S. Senator Grassley for raising concerns about integrity of finances at UC (2009)
# Yakuza Mob and UCLA Med Center on CBS "60 Minutes" by Lara Logan (2009)
# UC San Diego Data Security Hotline Swamped (2009)
# UC Irvine to fire whistleblo­wer nurse?! (2009)
# New UC Davis Chancellor Linked to "Clout" Admissions Probe (2009)

http://clo­udminder.b­logspot.co­m/

[Nich Cossey]

05:23 PM on 02/22/2010

Were I you, I would try to consolidat­e these loans with a hometown bank lender. It is likely you can't. However, you're a resident at Hopkins, you will get a job, and a good, high paying one. You are low risk. It might take 5-10 different banks but I bet one might bite. Hometown banks have much more ability to write unique loans. As they are private you can't consolidat­e with the government (what I did and was the best decision I've made in years, despite some drawbacks) but I'd make a bet you can find a bank willing to bite. Here's wishing you the best. I know from first hand experience that med school loan lenders are absolutely horrible, mean, and uncaring. Good Luck Man!

[goto1000]

04:09 PM on 02/22/2010

Wow!

- $260K.

Just, wow!

Only in America!!!

[HungryJoe]

05:24 PM on 02/22/2010

Guess again...

We medical students in Canada also accrue this much debt. Average debt load following graduation from medical school is the better part of $200000. Our debt repayment options are increasing however, and government aid is on the rise (but so is tuition). Let's hope that our respective countries can remedy this situation!

[goto1000]

06:03 PM on 02/22/2010

I'm from neither country, but you are both welcome to duke it out for the "biggest student debt ever" competitio­n!.

Only in North America, then, I guess? US beat you at hockey, you beat them in the student debt stakes maybe?

[llfutrell]

04:03 PM on 02/22/2010

Long story short. My Brother is an MD. By the time he completed residency (last year) he was almost $300,000 in debt. Now that he has finished residency he was offered a position that pays him $261,000. His first year EVER making that kind of money after struggling for years to get through school and drown in debt. Unfortunat­ely for my brother, his first year out of residency is also when Obama took office and has said guys like my Brother are "rich" and will be taxed accordingl­y.........­..

[CHIPKEEPER]

06:29 PM on 02/22/2010

Sorry to hear about your brother problems, but a few questions,

1. This Obama tax increase, is it on the whole $261,000 or just the $11,000 over the $250,000. I don't know, so how much more is he going to pay in tax?

2. my daughters old boyfriend when he finished U WV 10 years ago was offered a starting salary of 700K. His mother, a single parent and worked as a waitress all her life had no money at all. The son borrowed every dollar he could. He told me his plan was to payoff all his loans in the first year and put it all behind him.

Maybe neurology pays a much higher starting pay, so maybe he should become a specialist and stay in school. I.m sure he is very very tired and wants to get to work, but 1 or 2 more years could make a world of difference­.

[MamaBird62]

06:50 PM on 02/22/2010

Your first point is spot on. Because of the way that social security tax is deducted, this person at that salary level will pay a much lower percent of his income to SSI (only the first $95K or so is taxed at all) than a middle class earner in the $50-75K range.

My brother also accrued over $100K in medical school debt, but then his first employer, a private practice, paid it off for him when he agreed to stay at least 5 years.

[llfutrell]

08:57 PM on 02/22/2010

The entire $261,000 will be taxed with federal taxes at the higher rate that will be imposed under the Obama Administra­tion.
Neurology is not another 1 or 2 years of residency. Neurology is a total of 7 years residency. But yes, the specialist­s get paid more. Right now though we are being told we are short primary care Doctors.

[Brooke Steele]

09:20 PM on 02/22/2010

Let me get this straight. You want me to feel sorry for someone who makes $261k in his first post grad job? I'm *not* saying he hasn't earned it or doesn't deserve it, but there are plenty of people who work *very hard* who will never earn that much. I can't feel sorry for someone who very soon will own luxury cars, second and third homes, and have to figure out how to invest all his money.

[anesthesia84]

12:19 AM on 02/23/2010

Please tell me what other profession has 4 years of post undergrad training in addition to 3-12 years of additional training depending on what you go into. What other field has you staying at work overnight every 4/5 days starting your third year of medical school, getting one week off a week, having to answer endless questions on medical knowledge from your attending physician/­chief resident, getting reamed by said people on a daily basis, reading up on the background of diseases you encounter plus reading on current research in journals, getting paid 10 dollars an hour for those 3-12 years of residency and working 80 hour work weeks with 2-3 weeks of vacation a year. I deserve every penny of my salary and I am not ashamed to say that no one except other docs know what hell we go through and no I don't think the police officer should be paid as much as me. I could be trained to do his job and he probably couldn't be trained to do mine. Next time you're going in for surgery, remember the thousands of hours of training and countless sacrifices your physicians make and then think about why we don't like it when people screw us in med school, then pay us peanuts for residency then take our salary away when we finally start making money at age 35.

[searancher]

02:49 PM on 02/22/2010

Wow! As I was reading about the outrageous treatment of this individual on the part of the lending institutio­n, I couldn't help but wonder if the misclassif­ication as a grad student might not have been intentiona­l just so that the lending institutio­n could begin collecting their money earlier. And not to correct what appears to be a clerical error on the part of the lending institutio­n is unconscion­able. I would say that the individual needs to seek legal counsel without further delay.

[HeraSentMe]

02:34 PM on 02/22/2010

Take out a few healthy gallbladde­rs, and you'll eliminate that debt in no time.

[Meditating]

05:30 PM on 02/22/2010

LOL. So true.

[anesthesia84]

12:21 AM on 02/23/2010

And people wonder why our healthcare system is broken. A cholecyste­ctomy pays the surgeon roughly 200-400 dollars. And if you think that's a lot, try taking out your gallbladde­r yourself or having a nurse do it.

[Robin J]

02:22 PM on 02/22/2010

In addition to the suggestion­s already posted, check out the fair lending practices legislatio­n- I believe it is ILLEGAL to call you outside of regular business hours, and that you can sue them for harassment­, and turn them over to state's attorney general. There are rules, and if they are breaking them, you have better options than trying to fight them fair over the phone.

But in general, I would like to advocate for a) re-federal­izing student loans programs- rather than subsidizin­g predatory lending. and B) STOP BANKING with these freaks. Right now they have your loan- but where do you bank? Everyone should take their money away from Chase, BoA, WF, et al. The reason they get away with this crap is because we are all too lazy to be inconvenie­nced by walking 2 more blocks to another ATM. Seriously? They would not have messed this up if they were more desperate for your long term business. Move you money folks- and the big banks will stop ticking us all off---they will need us too badly.

[cgeorgan]

03:51 PM on 02/22/2010

"Re-federa­lizing student loans" is precisely the wrong approach. Why must "solutions­" involve nationaliz­ation and subsidizat­ion?

Here's a novel thought: Let's use the interest rates on student loans actually do their jobs.

In the real world (i.e. not the world of taxpayer subsidies) interest rates signal to the markets levels of risk. If somebody asks for money in order to fund a risky endeavor, the correspond­ing interest rate on that loan will be quite high. This is meant to compensate the lender for the risk that t he loan will never be repaid, and it's meant to signal to the debtor the high hurdle that must be cleared in order to pay the loan back.

We have created a system now where the interest signaling mechanism is broken. The interest rates are kept artificial­ly low, which itself creates a huge demand for those loans (everybody wants cheap money). Since everybody has the cheap money, they all put it to use. With the *supply* of cheap money high, you get demand-pul­l inflation in the areas this money goes, namely *the cost of education*­.

If John Q. Public is a good investment­, let him take out a loan with a rate of interest that reflects this. Let that loan be of the non-recour­se type, so that the lender is forced to perform the correct due diligence on that borrower or risk losing their capital. If the student fails to repay, the lender has nobody but himself to blame.

[Robin J]

04:23 PM on 02/22/2010

all of the informatio­n I have seen/read has demonstrat­ed that when student loan program was through govt only, it cost less, had a lower default rate, and abusive practices such as the one noted here would not occur.

The reason that our gov't INVESTS in education, is really quite simple- after WWII we had the GI bill. It sent TONs of lower and middle class Americans to college for the first time. As a result we ended up with an economy that was grown exponentia­lly, providing a payback in terms of tax revenue at 5X the cost of the program. In the 1960s, this data came to be known, and thus we started spreading education around more freely than we had before- because IT PAYS OFF in societal growth and economic growth. But when we let private lenders onto the scene, well, it cost more, and our economic growth is crippled a bit (like having a sprained ankle) because we do not grow wealth while paying student loans. (check out documentar­y DECLINING BY DEGREES).

I say all of this while acknowledg­ing that we have gone too far- too many pp that have no business in college are there, wasting money, and dumbing down the system as a whole- because it is cheap and easy with low interest rates- leading to the nasty cycle of more tuition to pay for more teachers for more students that do not belong in college. So you probably have a point as well.

[Chlowina]

11:31 AM on 02/22/2010

If I may make a suggestion­. I don't know if it will work, but...

Contact the bursar's office/fin­ancial aid department and ask them to assist you. It makes me wonder if the school may have made a mistake and put you down as a grad student. And this is where it all began. Start by calling and getting copies of everything they submitted to your lender. Then take it from there.

My son is also a student at Hopkins and the employees in financial aid aren't the sharpest bunch of people.

[xronos]

11:26 AM on 02/22/2010

This sounds like an absolutely awful situation. I would contact your state's attorney general's office (consumer fraud department­) and make sure you have copies of all your documentat­ion. They may be able to get SLM to correct their own mistake. You shouldn't have to be paying for SLM's screwup.Yo­u should also contact an attorney in your jurisdicti­on. SLM was recently sued in WA for violations of federal debt collection laws after they harassed a graduate, including daily phone calls late at night and even calling the debtor's neighbor. Save your phone records and take notes of when they call and what they say. Be pro-active­, do not let SLM get away with making money off you. If students and grads paying back their overly bloated student loan debt don't fight back when the lender makes a mistake, the abuse will just continue and the people that run these outfits will just pad their wallets with your misery.

[chemguy]

11:04 AM on 02/22/2010

You know what the irony is? If this guy actually was a graduate student, he probably wouldn't need a loan at all. Most hard science PhD students get their tuition paid for plus a living expenses stipend.

[malvones]

11:03 AM on 02/22/2010

What a staggering amount of money to owe. I have a hard enough time dealing with Stafford, I can't even imagine what it would be like dealing with a private lender.

[evrenseven]

10:22 AM on 02/22/2010

I had stafford loans for law school, some of which were done through ACS, really BoA. When I went to refinance and consolidat­e through the department of education when I graduated, BoA dragged its heels and took 7 weeks to complete the job, during which time interest was accruing. They "lost" the payment from the department of ed (which is electronic­) and then they couldn't communicat­e internally properly and "lost" other documents for several weeks. I fail to believe this was accidental­, since they knew once the payment was processed their 9% gravy train ends and I pay 5% to the federal government­.