Dear Steve,
I searched and didn't find quite what I was looking for, so I was wondering if you'd do an article on it.
My husband accrued a lot of debt to for-profit "colleges" before I met him. They strung him along, taking his loan money, and he was never able to graduate because they never offered him the required classes at days/times available to him as an adult learner.
So he took gen-ed after gen-ed at three different institutions, and never managed to graduate with a degree.
Student loan forgiveness programs are for GRADUATES. The Obama administration has recently spoken about steps they want to take to protect students from predatory for-profit colleges who offer no hope of graduation, but nothing about helping previous victims.
My husband is doing the best he can, but his federal student loan $$ is maxed out and he is close to $60K in debt with no degree to show for it.
He was too young and naive to know that those for -profit colleges were stringing him along at the time. He works hard at an unskilled job and is diabetic; when we last calculated, the amount of time it will take him to pay off his debt is longer than his life expectancy, so he has chosen to default - it's like throwing money into a black hole.
Would love to see your thoughts on relief for victims of for-profit colleges and your predictions for whether those people might see bankruptcy relief in the next couple of years.
V
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Dear V,
Thank you so much for contacting me. I think I can get you headed in the right direction, quickly.
Let's knock this idea out of the way your husband was victimized by for-profit colleges. I completely agree some colleges sell classes and degree programs that are way overpriced for the field of study. I also agree that people who enroll in these programs never give any consideration to the cost of the degree, graduation rates, and what it will cost them down the line. Rather than being a victim, your husband was another cog in a dysfunctional educational system that continues to ratchet up the cost of education and trap people into massive debt.
Students need to research and think about the cost of attendance before committing to student loans. Parents need to do a cost-benefit analysis of what their kids are getting into before pushing them into lifelong debt. Schools need to stop selling butts in seats to fill classrooms while passing out imaginary aid like crack. Tuition needs to stop rising faster than inflation. As you can see there are many broken parts here.
You made one statement that concerned me when you said loan forgiveness is only available for graduates. That's actually not true. Federal student loan forgiveness is available for anyone with federal student loans. Graduation is absolutely not a requirement. In fact it is said that 75 percent of people with student loans never graduate or receive a degree.
Your husband does not sound as if he is permanently disabled so one of the total and permanent disability forgiveness programs does not sound like a good fit. But there are other loan forgiveness programs he does sound eligible for.
Let me assure you defaulting on a federal student loan is never a good strategy. Especially when some good income based repayment options exist. You should absolutely try those first and let's reserve other options to Plan B.
We don't even need to consider bankruptcy or wait for bankruptcy to deal with his loans. There are things we can do right now, today.
I would suggest you read this guide about all the plans and options that are available.
The most likely approach at this point would be the Income Based Repayment (IBR) program that would give him a payment as low as $0 per month and completely forgive his loans after 25 years.
The IBR program requires people to re-certify each year but it is the least expensive and easiest program to enroll in right now. He sounds eligible and it would provide relief.
The toughest part of his situation would be to look at his total financial situation and than use that context to fit the right program to provide the relief he needs.
Steve
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