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Students, families fight to pay back billions in crushing debt loan

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Forget student loans: Some colleges want your salary

Reaction of CRTV’s Allie Beth Stuckey.

Steve and Darnelle Mason made national headlines back in 2014, by means of their campaign for the reform of a student loan system that left them with six-figure debt after the death of their 27-year-old daughter, Lisa.

Four years later, the Freemasons say that despite their efforts, they are now even worse off, thanks to a private student loans that total more than $10 billion of financial stress for students and their families throughout the country.

These private loans make up only 11 percent of the estimated $106 billion in student loans in the country, according to StudentDebtRelief.com . But in contrast to the federal student loans, which have a tendency to cancel debt in the event of the borrower’s death, many of these private loans are much less forgiving of personal or financial difficulties.

That was the case with the Freemasons, who persistently pursued by lenders co-signed Lisa’s loans. They kept the payments as close as possible. But in the last year, Darnelle Mason was disabled and unable to work, and Steve Mason had to shut down his church.

“It has no sense that there is no way to get student loans discharged,” Steve Mason told Fox News. “When I go to Vegas and fees on credit cards on gambling and drinking, and could not pay, I could have the debt discharged. But if you’re attempting to get a college degree, and have a their own loans, they don’t care.”

When I go to Vegas and fees on credit cards on gambling and drinking, and could not pay, I could have the debt discharged. But if you’re attempting to get a college degree, and have a their own loans, they don’t care.

– Steve Mason, who is forced to pay private student loan debt from his deceased daughter

The Masons were able to negotiate with a number of lenders, which reduced interest rates and reduced loan amounts. Friends set up a GoFundMe page for them, which raised about $45,000.

But when they were a few days late paying a debt collection agency, they said, the more generous conditions were cancelled, and the Masons were accustomed to the old, higher interest rate and the amount of the loan. Their already strained financial resources were affected by a medical disability, and a decline in the income of the household.

The struggle and stress, Mason said, are overwhelming.

“We were a two-income family, now is not my wife, and I am making less than the salary that I made when I was a minister in the church,” he said, adding that is 63 years of age, he has to try to re-enter the corporate world he left 38 years ago. “We make the payments we can, but we may not use all of them.”

Mason would like to see the private loans to be regulated so that they operate more like federal ones in the case of the borrower’s death.

“Why is it that it is one of the few types of debts you can’t discharge, even in the event of a bankruptcy?” Mason asked.

Student loan debt is a ball and chain for many borrowers, who experience sticker shock when the bills start to come.

The average student debt for the Class of 2017 was $39,400, an increase of six percent compared to the previous year, according to the StudentLoanHero.com Americans owe more than $1.48 trillion in student loan debt, the site said, a whopping $620 billion more than the total AMERICAN credit card debt.

That translates into an average monthly student loan payment of $351. Slightly more than 11 percent of borrowers are 90 days behind in their payment or are in default, according to StudentLoanHero.com.

A report in 2015 by StudentLoanHero.com found college-related debt carried out by some 43 million Americans — asked more than one in three wait with the purchase of a house, one in seven postpone marriage, one in four living with their parents, and 47 percent to put off buying a car.

“People tell me all the time,” I didn’t realize how much in student loans that I have,’ and I was one of those people,” said Bobby Hoyt, who is 30, and paid $40,000 student loan in less than two years in the life of a modest, forgoing new clothes, shoes and cable TV, among other things. “I think it’s a systemic problem. High schools push children to study, children feel that they are not successful when they go, they get a diploma that doesn’t have a good job, at the end, or they bumble around for a few years in college, without really knowing what they want.”

“It is also a personal responsibility thing,” said Hoyt, who quit his high school music job run Millennial Money Man, a website that focuses on a large part on student debt and other personal finance issues for the younger generation. In a measure of the importance of the issue of student debt, Millennial Money Man, features a number of 2 million readers this year, Hoyt said.

“Many students are so focused on school, but not that it is a super economical,” Hoyt said, adding that in retrospect, “I would be money that I made from the jobs I had college in the direction of paying of my student loans.”

A spokesman for the Consumer Bankers Association, which represents retail credit institutions that offer private student loans, said its members work with the borrowers if they are experiencing problems. The spokesman, Nick Simpson, said the ultimate goal of the banks is to get their money back, and that they screen potential borrowers and make sure that they are likely to repay the debt.

Jennifer Rodriguez

(Facebook)

Simpson said that the federal government can afford to take more space, because they do not have to do with the acceptance, in contrast to the banks.

“For the federal loans, which leads to over-borrow, which leads to higher tuition costs,” Simpson said. “Universities get money on the front end. If students default on the federal loans, the government increases the taxes.”

Then again, Hoyt notes, college is remarkably expensive.

“If you’re looking for $100,000 for a four-year college costs, that is a lot for an average middle-class family,” Hoyt said. “Many of the millennials are really hustling hard to pay off their student loans. They pay out second and third jobs to pay their debt. They wash cards and mowing yards on the side.”

Fox News spoke with a number of former students with significant loan debt, each of whom detailed their strategies and struggles in managing their payments.

JENNIFER RODRIGUEZ

Jennifer Rodriguez grew up in a low-income neighborhood in Newark, New Jersey. She was the first in her family, who, coming from Ecuador to go to college.

Sarah Baran and her husband

(With thanks to Sarah Baran)

Rodriguez, 25, received her bachelor’s and master’s in public health from Rutgers University, completing her studies in January. She has $95,000 in loans. When the first bill came in July, she was stunned – it was for $1,000.

She was able to qualify for an income-based payment plan, bringing the monthly amount down to $350.

“It helps, but it is still a large amount, and it means it prolongs the process of paying the student loan,” said Rodriguez, who works for a non-profit.

And the devil in the details also be daunting – from the $350 per month, a paltry $5, goes to the client.

“Everything is going to interest, so the balance hardly changes,” said Rodriguez, who had the entire college in the retail industry, in a garment factory and campus jobs — to help finance other educational costs. “It’s very stressful, very intense, month-to-month.”

SARAH BARAN

By the time Sarah Baran received the degree in education she believed would be her on the path to her dream of teaching, she was $ 200,000 in debt.

The debt was not as high as it would have been had they not won scholarships for her first year, and got a college course that covered room and board for two years.

Student debt was going to be the Future of Sarah’s problem.’ The future of Sarah would figure it out.

– Sarah Baran

She knew that the debts are piling up as she advanced in her studies, but like many students, she was hopeful that her hard work and the investment in her future would parlay into a good job with a steady income.

“Student debt was going to be the Future of Sarah’s problem,'” Baran, who is 36 years old, recalled thinking at the time, “the Future Sarah would figure it out.”

“I thought: ‘There is a teacher shortage, I will make good money, I’ll be fine.'”

But the reality was different. Baran applied to “every job in the state of Michigan,” but got nothing.

She moved to Pennsylvania with her fiancé, in the hope to do better, but more disappointment. She was one of the finalists for a couple of jobs, but the supply always went to “the other person.”

Baran landed a teaching assistant position, which does not pay enough to cover the costs, and much less of a dent in the loan. They sent out hundreds of applications to schools across the country, eventually ending up in Michigan, where she found a job.

But the salary was not much, ” she said. Then medical problems – especially lyme disease – struck hard and grew even worse in time, forcing her to go on medical leave. She has not been able to return to teaching.

The federal loan payments are on hold, though they come from the “massive quantities of interest,” Baran said. The private loans must still be paid, so she tries to send $370 per month.

Dave Barr, founder of Common Cents Millennial

(With thanks to Dave Barr)

“I lie awake in bed, trying to figure out how will I ever get out of this debt,” she said. “It caused me a lot of stress.”

She is crocheting afghans, in the hope to sell, and playing a free trivia game app, Givling, which has 350,000 users and pays out the winners’ student loan debt. The startup was the idea of Maine resident Libby Pratt, who went through a bankruptcy, but came from the launch of a real estate agent career.

Pratt found it terrible that the bankruptcy would not discharge student loans, and thought of Givling as a way to help others to fight back.

Baran has a GoFundMe page to raise money to help cover medical costs not covered by insurance. Knowing what she knows now, she said, she would have approached her education otherwise.

“I would have applied to a community college. When I started with health problems, perhaps I have stepped back and thought that maybe college is not good for me right now, and tried to care for my health.”

“I would not have gone into education,” she added. “I love my students. But it doesn’t pay the bills.”

I went to school, studied hard, and did a great job. And yet, I really can’t start with my life for another ten years because my financial situation is completely run by my fault.

– Dave Barr, auditor and money blogger

DAVE BARR

Dave Barr, he called the student debt “one of the greatest battle of my life so far.”

Barr, who studied accounting at the University of Pennsylvania in 2016, with a $70,000 student loan debt, which now stands at $ 55,000. When the spouse is included, the household student loan debt rises to $145,000.

“People always ask why we didn’t buy a house, a new car, or plan to have children,” Barr told Fox News. “Start your career with each of us paying more than $1,000 per month in student debt.

Advancing in our career is important, so that we can continue to pay our debt as quickly as possible.”

“The pay of more than $1,200 a month on just my debt is severely limited in what I can do in life,” noted Barr, a chartered accountant who is a money blogger. “We can’t save for a house, we can’t save for a family, I could barely afford to buy a three year old car. I went to school, studied hard, and did a great job. And yet, I really can’t start with my life for the next 10 years, because my financial situation is completely run by my fault.”

Barr, who is 24, comes from a low income home, giving him limited financial aid options for college. He had credit when he was 18 years old, and his parents were not well enough credit scores to co-sign a loan. The result was that the government loans with an interest rate above 5 percent, and a private loan with a 11 percent rate.

He took 18 credits per semester, worked 30 hours a week to help soften the financial blow, and took courses at a local community college to earn credits in a more affordable way.

“I find it ridiculous that I could not get a loan for my education to 11 percent interest, but then I would have a car with an interest rate of 5 percent. I also think that the insane increase of tuition rates in recent years in comparison with other good or service,” Barr said. “The loan companies are not the only ones to blame, if the state funding and the tuition charged by the schools have not worked in the students’ best interest.”

“This debt will have major consequences for my generation is the ability to make large purchases, and markets for everything that is not considered essential,” said Barr, founder of a website called CommonCentsMillennial.com “And it is no secret that there is a large student loan bubble, as the amount of students defaulting on the loans only but has grown.”

“This is not a story about irresponsible students wasting their money,” Barr said. “We are the children, who did what was said. We have worked hard, got into a good college, picked a major that we can earn money on, studied harder, got our education, got a job with a salary that can not support the loans that we had even that degree to get that job.”

Elizabeth Llorente is a Senior Reporter for FoxNews.com and can be reached at Elizabeth.Llorente@Foxnews.com. Follow her on Twitter @Liz_Llorente.

 

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