Student loan horror stories

While student loans have helped countless individuals earn a degree, it’s critical to do your research and ensure that you’re borrowing responsibly. Bad planning and careless decision making can lead to a variety of student loan problems and challenges. Luckily, careful financial planning and research can keep you from falling victim to a student loan horror story.

I am struggling with mounting student debt.

Due to high interest rates, shady terms, and other variables associated with bad student loans, some find that their student loan balances continue to rise even with regular monthly payments.

Molly Webster left school with a master’s degree and $78,060 in student loan debt, an amount that should’ve been manageable given her job prospects and level of education. When it came time for repayment, she was shocked to see that her loans were generating $700+ in interest each month.

Although she’s paid nearly $60,000 towards her student loans, she is now $100,000 in debt.

Do I need to call off my wedding because of my partner’s student loans?

What happens to student loans when you get married? In short, things can get complicated. If you’re on an income-based repayment plan, your annual income is combined with your spouse’s income, which can result in higher monthly loan payments.

The following was submitted to a financial advice column on Cheap Scholar, a now defunct website that helped students and parents navigate paying for college.

“At 27 years old, I save very well on my own. I pay my credit cards off in full every month, have an excellent credit score, hold a steady well-paying job, have purchased and own multiple pieces of real estate, have a healthy 401K, have an active brokerage account I trade in frequently, as well as other miscellaneous investments. Generally, I am always trying to learn how to invest and manage myself better financially. The slap in the face came a few weeks ago, when my fiancé started tallying up her student loans as she had just gotten a notice that one of them will be maturing soon.”

“I always knew she had student loans, and she always knew that with 7 years of ‘private school’ it would probably be a larger number. After going through her paperwork, my heart stopped. I realized how extraordinarily dreadful her and now ‘our’ situation truly was. Her student loans are in excess of $340,000. That’s almost $50k/yr on average, an unfathomable amount.”

Buying a house with student loan debt is proving impossible.

Although having high student loan debt and buying a house might seem like a pipe dream for many borrowers, taking advantage of student loan mortgage programs and other lending programs, along with careful financial planning, can make it a reality.

With $55,000 in student loan debt, Jodi Meyers and her husband were unsure whether it would be possible to purchase a home. One lender advised her that she would be able to secure a loan if she had $9,000 to put down. Due to this program and careful budgeting, they were able to buy a $249,000 home despite student debt.

I didn’t finish my degree and am struggling with student debt.

Out of all the student loan stories we’ve touched on, this is among the most frustrating. Each year, students drop out of school and end up struggling with student debt with no degree to show for it. Juan Ramiro is one such student.

After receiving a full-tuition scholarship from the University of Kansas, Juan took out student loans to pay for school housing and other expenses. Due to family matters, he was forced to leave school before completing his degree, leaving him with $29,000 in student loan debt.

I miscalculated the return on investment of my degree.

One way to avoid these student loan horror stories is to pursue a degree with a good return on investment (ROI). Ensuring that your earning potential makes sense for the amount of debt you take on can prevent stress later in life.

Aaron Fraser acquired $120,000 in student loan debt while pursuing an MBA. He believed the degree would give him an advantage, but soon realized that employers found him to be overqualified as he was competing with younger candidates.

My student loan repayment terms are completely unreasonable.

The Pew Charitable Trusts conducted a poll on the challenges of student loan repayment in which several student loan borrowers expressed frustration regarding difficult student loan repayment terms.

Several borrowers reported not being able to keep up with interest despite making high monthly payments. Getting stuck with unreasonable repayment terms is often a result of taking out bad student loans.

I thought I qualified for student loan forgiveness. It turns out I don’t.

Some borrowers see forgiveness as the answer to their student loan problems, but it can be tricky to figure out who qualifies for this scheme. For example, 1 borrower paid on his $167,000 student loan balance for 20 years only to find out that he didn’t qualify for forgiveness due to his selected payment plan.

President Biden has implemented $25 billion in student loan forgiveness for qualified borrowers. There may be even more forgiveness options on the way, so it’s important to review new requirements as they emerge to see if you qualify.

Bankruptcy and student loans: the only thing I own is my student loan debt.

Does bankruptcy clear student loans? Contrary to popular belief, student loans can be discharged when filing for bankruptcy. However, due to the difficulty of the process and the need to pay additional lawyer fees, many bankruptcy cases end with individuals hanging onto their student debt.

Linda Vick is a mother with a disabled son and $77,000 in student loan debt. Despite having to file for bankruptcy, she was unable to discharge her student loans. This has had significant implications on her family and has made it more difficult to get her son the care he needs.

How to avoid walking into your very own student loan horror story

While student loan debt can easily get out of control, careful financial planning and research can help you avoid being the star of your own student loan horror story.

1. Always read the small print so that you fully understand the loan terms. If anything raises red flags, get clarification before signing.
2. Own your finances. Come up with a plan and budget for making your monthly payments and staying on top of interest.
3. Research the value of your degree. Be sure that it makes sense financially to take out student loans.
4. Look into types of financial aid that don’t need to be paid back, such as scholarships, to minimize your student loan debt.