After I got a job making $30,000 gross a year, I set myself up on the IBR plan for my federal loans, calculated what the private student loan debt collectors could garnish, divided that amount by the number of private student loan servicers I had to pay, and sent regular payments to each student loan servicer, not missing a month for 5 years straight. It wasn't enough.
Private student loan debt collectors made my life a living hell. They called me, my family, my office, and my references continuously, sometimes multiple times a day. I received at least 5 letters a week, issuing threats and demanding more payment.
I tried to reason with the private student loan collectors. I wrote letters showing them my budget, telling them I had little money to live on " and they responded with a letter in which they actually admitted the system is rigged against me. In the words of Student Loan Servicing Center:
"We sympathize with your situation; however, we do not offer a program to reduce your balance ..."
"You may benefit from an extension if you are unable to pay due to financial hardship " keep in mind that customers who are experiencing long term financial problems will not benefit from this as it simply post pones the inevitable default."
Inevitable default?
My private student loans were put into default by the private student loan servicers because my five years' worth of consistent monthly payments was unacceptable. Legally, they could set the payment terms to whatever they wanted, so when they declared me in default, I began to see the light.
I immediately stopped paying on the defaulted private student loans. And I eventually stopped hearing from them. And I started to finally find relief from the mental trap of student loan debt.
Redefining Personal Responsibility
Are the 600,000 [iii] people forced into default on their student loans each year really personally irresponsible? Or, can it be that the student loan system really is rigged?
Banks, the government, brokers and collection agencies found a way to unjustly profit off the desire of the 99% to earn an education. They designed a system that would reward lenders and collectors for forcing debtors into default. Creditors reap a 25% collection cost profit on top of the original debt amount if a loan goes into default. Naturally, that 25% is added to the balance of the debt.
They call the part we play in their unscrupulous little game our Personal Responsibility. I think we need to redefine Personal Responsibility.
Consider this:
If I had irresponsibly gambled and lost $200,000, and had no means to pay, I have the option of going to bankruptcy court to get my gambling debt discharged.
If I had irresponsibly bought a bunch of designer purses and shoes and clothing and gallons of martinis on credit, then lost my job and found myself unable to make a payment on my credit card, I have the option of going to bankruptcy court and getting my credit card debt discharged.
If I'm a corporation or a banker who carelessly loaned money to people I knew would be unable to make the payments, I have the option of being bailed out by the government and the taxpayers, or filing for bankruptcy and getting a fresh start.
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