“The federal government has become the biggest, nicest and meanest student lender in the world,” writes Kevin Carey in the New York Times. It’s very easy to borrow for college. It’s easy to defer repayment. But it all comes due eventually.
A Missouri high school teacher owes the federal government $410,000 for student loans. Liz Kelley, 48, hasn’t made a single payment, so the interest keeps mounting.
She borrowed $26,278 for a bachelor’s degree in English from Maryville University, a private school near St. Louis. After graduating in 1994, Kelley enrolled in law school. That delayed repayment on her loans and let her borrow $37,000 for the first three semesters.
After a serious illness, she quit law school and decided to go into teaching. A married mother of four, Kelley borrowed to pay for child care and tuition so she could study education at Maryville. After finding a teaching job, she borrowed again to earn more graduate credits to raise her pay.
She stayed in graduate school for five years, which let her put off repaying her loans. Graduate school and child care added $60,700 to the principal and the interest kept mounting. Her debt totaled $194,603 by 2005.
In the recession, the Kelleys lost their home to foreclosure and divorced. The loans came due — but the teacher was able to defer payments for three years due to hardship. She owed $260,000.
By this time, Ms. Kelley’s children were reaching college age. One received a financial aid package that included $12,000 in Parent PLUS loans, a federal program that allows parents to borrow money for their children’s college education after the children have reached the maximum on loans of their own. She agreed, hoping to minimize her children’s debt. She briefly enrolled in an education Ph.D. program at Texas A&M before withdrawing, but not fast enough to avoid an additional $7,458 in loans.
. . . After her loan deferment ended, she enrolled in another, similar federal program called forbearance, also because of an economic hardship. The hardship this time was the loans themselves.
In a little more than a year, the final forbearance will expire. The loan servicer could garnish her wages — she teaches at a parochial school — and eventually her Social Security.
“She had taken out her first student loan 25 years earlier and had yet to make a single payment,” writes Carey. With accumulated interest, she owes $410,000. Monthly loan payments would be $2,750 for 30 years.
If she found a public school job, she could use income-based repayment, which would link her payments to her income and erase the remaining debt after 10 years. “But that would still mean a decade of what she describes as ‘futile’ payments that won’t even cover her monthly interest expenses, leaving nothing to put away for retirement.” Carey writes.
I guess she objects to paying anything, ever.