Night of the Living Debt: Five Real Life Student Loan Horror Stories

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Brian O'Connell

By Brian O'Connell

March 4, 2021

With Halloween beckoning, the old adage that things can go “bump in the night” takes on added meaning. That especially goes for Americans getting aggressively bumped by the student loan debt crisis.

Case in point. With more than two-thirds of Bachelor’s degree recipients in the Class of 2019 graduating with an average of $29,900 in student loan debt and 45 million student loan borrowers owe $1.6 trillion in federal and private student loan debt, Americans are increasingly spooked silly by the amount of cash they have to fork over monthly to keep current on student loan debt.

To get a better grip of just how serious the student loan debt crisis is right now, asked several college borrowers to detail their student loan horror stories.

Their stories are real and compelling, and are enough to keep anyone up at night, Halloween or not. These stories are in the borrower’s own words, with only minor editing. Some names have been changed or initialed at the request of the individual.


Student Loan Debt Crisis Stories

Erin Murphy

The good news is that next week I will be officially be Dr. Erin Murphy and I’m presenting my doctoral project in Injury Induced Apoptosis this weekend. Finally, I will be done with school.

The bad news is my total student loan debt is listed at $280,000 and it’s definitely impacting my life.

My current credit score has improved since moving across the country, as my landlord offered me a very affordable house that was way below market value. Despite my improved credit, and my mother co-signing for the mortgage on my house, the finance company will not allow me on the mortgage even though I am currently paid up to date on my student loans.

My mortgage broker’s advice was to pay $200,000 towards the student loans to get the mortgage on the house (the house mortgage is less than $200,000). So, in other words, in order to buy the house, I have to pay cash out of pocket since I have student loans.

To deal with that situation, my mother will purchase the home and put it into a trust so I can inherit the home I am paying for right now. We both fear the bank’s ability to take the home from me as soon as I inherit the money, so I have to set up a trust.

It’s not going to be easy. Hospital jobs like mine don’t pay great salaries, so I have to supplement my income and drive two hours one way to work as a massage therapist.

Currently, my student loan situation is a mess. I pay $400-plus per month in payments and after two years of payment, I’ve only paid $1,000 towards principal towards one of my loans and the rest of the loans keep building interest.

Next year I will start making $800 per-month in additional payments. Even with $1,200 per-month payments, I won’t be able to cover the monthly interest and will never be able to pay the debt off.

Rick Tallini

I have a current student loan outstanding balance of $350,000 and there really is no hope for me in sight, outside of bankruptcy.

I graduated with a bachelor of science degree from Long Island University with a U.S. Veterans Administration Loan. (I served in the Vietnam War era.) By the time I got to law school, the ten- year limit on VA grants and scholarship money had expired, so I had to go with student loans. 

At the time, I was working full time and went to law school at night. By the time I finished law school, my outstanding student loan amount was $60,000. Unfortunately for me, the higher-paying legal jobs weren’t there, as the good jobs were taken by law school students who graduated in the top 5% to 10% of their class.

Things started out bleak right after graduation. I was laid off from the day job that got me through law school, and I didn’t earn a decent income for over a year. I applied for forbearance and deferments but I wasn’t making any headway. In fact, I was actually losing financial ground and my student loans eventually went into default. 

At the same time, I was going through a divorce and making hefty alimony payments. That caused a ripple effect, as not having a job, I fell behind on alimony and child support payments, and I lost my law license as a result of falling behind on child support payments.

I went into Chapter 13 bankruptcy to try to reset and start fresh and eventually I wound up in Chapter 7 bankruptcy with a discharge. But, my student loan debt not only survived, it came back and grew even larger in volume – it was up to $90,000 in 2005, 12 years after I graduated from college.

I was able to get into several income-based repayment (IBR) student loan repayment plans, but lost ground over the last decade or so, and my loan amount is now over $350,000.

26 years after graduating and 14 years since I first tried consolidating the loans, there is absolutely no way I can pay the loans back. I have no qualifying employment, I’m 62-years-old, and I’m just able to stay out of loan default to protect my Social Security benefit payments.

As a disabled veteran, I just hope my Social Security isn’t stolen from me. Like I said, there really is no hope for me in sight.

Debbie Baker

I returned to college in 1996 to fulfill my dream of becoming a public school teacher. 

At the time, Oklahoma offered financial assistance to teachers but the program ended when I was halfway through my studies.  My husband and I decided to continue with my studies since I was halfway through my four year-plus degree.

We decided to take out student loans to finish the degree required for my teaching certificate and planned on repaying the debt within 10 years of graduation.  Even with two small children at home, we lived modestly and knew we would be able to repay the debt.

Having previously worked in the mortgage loan industry, I had ample information regarding lending and each year I would ask my financial aid office what my monthly payment would be upon graduation. Each time I was told “about $50 per loan”. 

I assumed that my total monthly payment would be $200, but upon graduation I discovered that the figure was for each loan (subsidized and unsubsidized). That meant my payment was close to $400. After receiving my teaching certificate, I immediately went to work in the Oklahoma public school system with a beginning salary of just over $25,000. 

That’s when the nightmare began, soon after my 1999 college graduation, when I graduated with approximately $35,000 in student loan debt.

Less than 90 days after graduation, I received a letter from Sallie Mae saying my loan was being placed in forbearance, as I still didn’t have a teaching job.

I was told by my loan administrators that I had “no options” for lower loan payments and that I could not make partial payments. By 2004, I contacted Sallie Mae again and told them, in no uncertain terms, that I needed to start paying my loan off. They agreed to a consolidation loan through the Federal Family Educated Loan Program (FFELP).

By that point my student loan debt had grown to $52,000 and I was really getting worried.

In 2007, I inquired about Public Service Loan Forgiveness relief.

[Editor’s Note: The PSLF Program, which was established under the College Cost Reduction and Access Act of 2007, permits Federal Direct Loan borrowers who make 120 qualifying monthly payments under a qualifying repayment plan, while working full-time for a qualifying employer, to have the remainder of their loan balance forgiven. PSLF is not available for loans in the FFEL Program.]

I was told I couldn’t qualify for any PSLF relief until 120 payments on my loan had been made. Instead, I was put on an Income-Based Repayment loan relief plan and I began filing paperwork as instructed on an annual basis.

While that represented progress, I continuously had problems with submitting income verification forms with Navient and Sallie Mae. Again and again, both institutions made errors that caused processing delays and caused my student loan debt to keep mounting in forbearance. It was frustrating to wait for them to fix the errors to no avail.

For example, I told Navient their IRS 4506-T forms were incorrectly put together, yet they continued to insist borrowers use those forms. 

This back-and-forth scenario caused delays in processing as they changed the corrected forms I sent them. They would do what they needed to do to cause more delays, as my debt total grew. At this time, I had begun caring for my critically ill adult son and started teaching at a low-income school.

Eventually, I applied for PSLF in 2017 only to discover that all 10 years of my payments were forfeited and none of them counted toward program eligibility. I had to start my payments for PSLF all over again and I had lost $36,000 in payments.

I was really feeling boxed in.

Had I stayed in a regular payment program the forgiveness would then have been considered taxable income so I had no choice but to go another route. After all, the tax bill on $100,000 of forgiveness would be astronomical and we didn’t have enough equity in our home to pay that kind of tax bill.

Things were getting worse. After caring for my son for seven of the 10 years that I was dealing with Navient and Sallie Mae, my son passed away in the summer of 2018. They stole precious time I could have spent with him. Meanwhile, my student loan account balance has grown to $81,000 – even as I had faithfully paid on time every month.

I have sought legal advice, filed several complaints with the U.S. Department of Education, wrote letters to President Trump, President George W. Bush, Jeb Bush, celebrities, my senators, congressmen, state attorney general’s office, and reached out to media outlets. (I’ve had my story featured on CNN, CBS and Fox News.) 

In July 2019, I sued Betsy DeVos and the U.S. Department of Education with the help of the American Federation of Teacher (AFT). 

Today, I continue to teach in a public school system and continue to make payments of $300 per month.  Almost 20 years after my college graduation and 16 years of on time payments I now owe over $81,000.  It is unbelievable to me that no one at the federal level wants to help people like me.  

With no bankruptcy protections, no truth-in-lending disclosures and no statute of limitations these federal loan servicers are able to run amuck and abuse college students.  The price of college tuition continues to rise because these universities have their hands in the free-flowing stream of government subsidies known as the federal student loan system.

Now, I am in my 19th year as a public school teacher. 

At 57 years-old, I hope to have the loans forgiven at some point in time before I reach retirement. That said, I have little hope that this will ever be resolved. I currently pay $300 a month on a loan that should have been paid off long ago and I don’t see any way out of the situation.

Jennifer Tucker

I grew up in a very violent home and was a victim of child abuse.

My mother, who was my primary abuser, would rip out chunks of my hair, leave bleeding fingernail-shaped cuts in my arms, knocked my head into walls, and dug her nails into my throat, among many other things. 

In 2002, I was a junior in high school. One of my teachers heard me sing and was very impressed. She pulled some strings with some connections she had at Berkley College of Music and brought a scholarship package to school and gave it to me. My abusive mother came home and saw me looking at the materials and she ripped it out of my hands and threw it in the trash, proceeding to yell at me, telling me how stupid I was to dream that big.

In 2004, my mother drove me to a for-profit college in Virginia and enrolled me in a degree program I had no interest in, and at a school I did not want to attend. Even worse, she set it up so that all of my classes would be taken online, so she could maintain her very tight control over me and keep me isolated.

As I was no longer a minor, this was now considered a domestic violence situation. For five more years, my life was held hostage while my mother continued to move us all over North America and never stopped being violent and abusive to me. 

In 2009, at the age of 25, I ran away from home. After an additional five years of hell and severe symptoms of post-traumatic stress syndrome, I received my degree in the mail. I never marched in a cap and gown. There was no celebratory dinner. No “congratulations” or “good job”. There was nothing. 

Then I found out I had student loans with a total amount of $75,000.

I had explained to Educational Credit Management Corporation (ECMC), which services loans for the U.S. Department of Education, that all of my loan documents that were signed during the time of my attendance at the for-profit college were under a state of duress and undue influence.

That was because I was in an abusive situation and I felt that saying “no” would lead to a physically dangerous situation. The student loans were another form of abuse. Consequently, I spent several weeks gathering documents of all kinds, including written statements from friends and neighbors that had witnessed the abuse I had received.

I provided court documents to them that had police records of statements that I was abused. Yet every effort I made to validate my case to ECMC and have my student loan discharged was completely disregarded, even after I told them I was looking for a lawyer. 

They proceeded to garnish my wages, taking $400 a month of my income.

I have struggled with employment for the last year or so, because I live in an area with a dead job market. ECMC calls me at least once a day, and last week I received an email from an account specialist threatening to garnish 15% of my wages.

I am currently trying to get my story heard, to cast a wider net in seeking counsel. I have been trying very hard to find a pro bono attorney to take my case. I have done a lot of research, trying to figure out what legal recourse I have.

Sally Anne Harper

From 1984 to 1986, I borrowed $26,000 from Bank One through the Federal Health Education Assistance Program (HEAL), a specialized loan program designed to help medical students. The money was to be “used solely for tuition and other reasonable education expenses.”

I consolidated my loans with Sallie Mae but they kept my HEAL loan separate and most of my money went to my Guaranteed Student Loan debt. [Editor’s Note: HEAL and GSL loans were predecessors of the Stafford and PLUS loans available today.] Consequently, I only paid about $4,000 on the HEAL before I declared bankruptcy in 1994. Once that happened, my loan servicer sent my loan into default.

I was not allowed to include my HEAL on my bankruptcy despite the fact that my original promissory note said I could do so after five years. Apparently, the laws had been changed to prevent it. [Editor’s Note: The five-year waiting period for bankruptcy discharge was increased to seven years in 1990 and completely eliminated in 1998.]

By 1999, I had worked hard to repay the loan. Despite my efforts at repayment, the loan balance had ballooned to $40,000 when it was sold back to the government by Bank One after the default. I faithfully paid the U.S. Department of Health and Human Services (DHHS) $500 per month on my student loan for the next five years, totaling $37,700.

All told, between Sallie Mae and DHHS and my Social Security garnishment, I have repaid $50,000 to date. 

I stopped being able to pay any student loan debt in 2008 because my husband developed severe mental health problems, and his medical condition caused us to file for a second Chapter 13 bankruptcy in 2010. 

By 2015, my husband had died and I was just emerging from bankruptcy in January 2018 when DHHS contacted me and claimed I owed $99,000 on my student loans. They have not offered me any documentation on how they arrived at this figure. My DHHS contact claimed the agency had the documents but were not required to show them to me.

Ultimately, DHHS credited my payments, thus reducing the balance to $55,000.

I choked on signing the resulting paperwork that confirmed I owed this much money on the loan. [Editor’s Note: Such paperwork requires the borrower to affirm the validity of the debt.] The agency promptly started garnishing my Social Security and now have me on a payment plan for additional $100 a month.

But since I refused to sign the papers, they are still charging me interest on this loan. I have spent two years trying to get a hearing from Social Security, but since the U.S. government is the creditor, nobody cares. 

My original promissory note (I still have my copies) said I could file bankruptcy after five years but Congress changed the rules in the 1990’s and apparently it applies retroactively to student loans already made.

My promissory notes all clearly state the terms allowing bankruptcy, including that nobody can change the terms without my permission but the U.S. government does not have to honor my original promissory notes.

I am now a 68-year-old widow, still raising my teenage daughter. I am a Vietnam veteran, my job is very physical and I am not sure how long I will be able to continue working. Even the DHHS admits I will be paying this bogus debt for the rest of my life until I die.

Every month I receive a statement from the Social Security Administration showing how they are stealing the money right out of my hard-earned Social Security check and it galls me! This loan has followed me through two bankruptcies and there is no relief available. I discovered that the federal government has farmed my loan out to a ruthless collection agency.

This whole experience has really made me hate my government.

Ways to Tackle Student Loan Debt

If you are struggling with student loan debt, there are ways you can lower your student loan payments, including enrolling in an income-driven repayment plan, requesting a deferment or refinancing student loans to lower your interest rate.

Keep in mind, however, that when you refinance federal student loans you give up potential benefits, such as income-driven repayment plans, federal forgiveness programs and generous deferment options.

Sign up for our free student loan newsletter for expert advice on how to borrow student loans responsibly and how to deal with the  student loan debt crisis.

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