http://finance.yahoo.com/news/missouri-high-school-teacher-ended-200000267.html
How? Poor life skills…
Read much? Add much? know how to multiply???
Perhaps one should open those envelopes when they arrive at the house instead of just putting them in a pile?
Terrible life choices…
"It wasn’t until this September that Kelley realized the extent of her debt’ - This sentence alone shows the real reason for debt - the lack of certain substance under certain bone structure. So, I totally agree with the post #4, the lack of this substance usually leads to terrible life choices…
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After 25 years of not making any payments, her total was a jaw-dropping $410,000.
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She hadn’t made any loan payments in 25 years?
Sad, but some people are going to read that and think that they can get away with not paying, because obviously, no one has really gone after her.
@MiamiDAP She had no idea what she wanted to do with her life. Going from law school to teaching was an exceptionally bad move.
@Fredjan: Not really, she’ll hop onto PSLF, pay pennies on the loan, and have it forgiven, tax-free, in 10 years. Not so bad from her perspective.
Are these all federal loans???
A highly educated dunce.
Unfortunately she cannot have the non government loans forgiven after 10 years. Even at $200k of principal amount borrowed, some of that has to be private bank loans.
There was an article yesterday about parents who can’t retire (at ages 59 and 57) because they cosigned loans for their sons and now the sons can’t make payments. They ‘didn’t know’ the payments were going to be so high. Try READING things before you sign them.
I don’t have a lot of pity for these people. They got what they wanted when they wanted it. They should have made better choices. My sister was a lawyer for many years, decided she wanted to be a teacher, so applied for a sponsored program where she got a master’s degree and her loans were forgiven during the first 5 years she taught in a title 1 school. My kids could not work during the school year, take fabulous vacationss, and live in better apartments if I was willing to cosign loans. I’m not, so they have to live the life we can afford to pay for now.
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some of that has to be private bank loans.
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That’s what I’m wondering. Most or all may be federal loans. Grad Plus loans for her two grad school efforts (law and grad) would be fed loans and could be a lot.
Curious what the loans were for “child care”. That would be beyond COA, so how could those have been student loans?
Also curious…where’s her H in all of this? Was he also not paying any attention to how much his wife was borrowing???
If no one else signed on these loans, the loans will go away with her death or approved disability. However she can never borrow money again (that is a very good thing)! - no home ownership with her name on it. At least it won’t continue with another generation, as her kids will not be able to get loans beyond their federal guarantee amount. She will have to continue to work and try to pay the minimums. If her H co-signed, he is in the same boat as her with the debt.
This is the reverse of ‘time value of money’ - it is called accrued interest rate accruing over time. Deferred doesn’t mean the interest rate freezes, they just stop needing to make the minimum payments.
This is absolutely why student loan debt should never be blanket forgiven.
So she didn’t make any loan payments for 25 years and ignored the fact that the loans were gathering interest.
Sounds like she got the PhD in order to try to make a higher salary - but she could not out-earn her big,big,big financial hole which she was already in at that point.
There is a lot of information out there for families not to sign parent plus loans for their students when they truly cannot afford to do so - however there are parents out there that are not educated and have too grand of beliefs in their children being able to pay it all back. These 18/19 year olds, no matter how good they are with ACT/SAT, do not have the maturity to understand the financial hole and the risk that is being taken with high loan amounts. And do these young S/D have the personal work ethic to work the additional jobs during and after their degrees to pay it all off?
In case anyone is interested, here is a link to the original article in Sunday’s New York Times’ Business section - explains her divorce, child care cost coverage, etc., and explains the strange federal policies under which she was able to borrow:
Her loans are not in default, and she was able to take out Plus loans for her daughter. She does still qualify for federal backed mortgage loans like FHA (she’d still have to qualify based on income). I think she did stay on top of the paperwork, making she she was in a deferral status and don’t going into default. That’s a lot of work for 25 years.
She took out a $12k Parent Plus loan for her child, after her child already took out the max loans s/he could take out him/herself, because she was “hoping to minimize her childrens’ debt.” Glad to see she at least learned her lesson and set her children on a different path. NOT
So she took out another 12K that she will never be able to repay and she knows it! In her mind, at this point it is free money. In a weird twisted unethical way, it is probably not a bad way to finance her daughter’s education.
This is one reason that the interest rates are higher on these loans. Someone has to pay for the loans that never get repaid. It just boggles the mind that there are not better credit checks on these loans.
Because they aren’t qualifying for the loans under the same standards most loans are made under. The government set the standards for student loans and it doesn’t include ability (or even desire) to repay. The only thing they care about is whether the borrow on private or Plus loans is in default on any major loans within the past 90 days, bankruptcies within 5 years, and defaults on any federal loans.
I wonder why they picked her case to profile. She isn’t a sympathetic case particularly having gone 25 years without a single payment. But I think there are much more sympathetic cases out there. There’s an old saying that “bad facts make bad law” which basically means that you should not formulate laws or policies based on extreme cases. Congress passed several bankruptcy bills that made it almost impossible to discharge student loans in bankruptcy, despite a lack of compelling evidence of widespread abuse. There were anecdotal horror stories but not compelling evidence. http://www.slate.com/blogs/moneybox/2015/04/16/student_loans_in_bankruptcy_how_the_bush_administration_pointlessly_screwed.html.
If student loans were dischargeable in bankruptcy, lenders would be more careful in making them in the first place. The burden of a huge amount of unpaid student loan debt affects the whole economy, not just the individual borrowers. Students with huge student loan debts can’t buy houses or cars, for example. The whole system needs reforming, including the bankruptcy laws.