College graduates struggle with student loan spiral - Dallas News | myFOXdfw.com

College graduates struggle with student loan spiral

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Higher education is often considered the key to success, but many say the current student loan system gets a failing grade. FOX 4 found today's graduates are not deadbeats who refuse to pay their loans, but hardworking Americans with jobs, struggling with life-altering debts.

They complain the system is broken and it only benefits the banks and the government. They are caught in a student loan spiral.

Sam and Emily Stribling are the picture of success. Both went to prestigious universities and graduated almost debt free. Then they enrolled in architecture school, where the borrowing began.

"I just assumed student loans are how you get through school," Emily said.

The Striblings got married, and the future looked bright for them until the economy took a dive, just as they accepted their diplomas.

"Everybody had huge layoffs, nobody was hiring," Sam said.

The Striblings moved in with parents and took the only jobs they could get.

"At Hallmark, I was making $8.50 an hour," Emily said.

They put their student loans on hold to get their feet on the ground. Now, both have great jobs, but their debt skyrocketed.

"$167,000," Sam said.

The Striblings pay about $800 a month toward their debt, which adds up to almost $10,000 a year, and with a 6 percent interest rate, that $167,000 debt is not shrinking.

"The loans get bigger every year," Sam said.

And the Striblings' story is far from unusual.

"It is just a mess," Jay Slivocka said.

Slivocka graduated from University of North Texas. He had big dreams of working in the Big Apple, so he enrolled in film school and borrowed about $50,000.

Now, a decade later at 37, that number is closer to $80,000. At one point, his interest rate was a whopping 18 percent.

"They pretty much own me," Slivocka said. "Basically, that is the truth."

The cost of a college education has soared. It is up 65 percent in the past 10 years. Around Texas, state schools like University of Texas-Austin, Texas A&M, Texas Tech and University of North Texas are now up to about $21,000 a year for tuition, housing and fees.

Private schools, like Southern Methodist University, Texas Christian University, Rice University and Baylor University, are closer to $50,000 a year. That equals to more than $200,000 for a college degree.

On top of that, the average debt is way up. In 2005, it was $15,551. Now, in 2013, it is $27,253. 

But the problem is not the amount borrowed – it's the interest.

"I did not realize, like I said, about the $10,000 fee," Ursula Nelson said.

Nelson did not even know her $22,000 loan had ballooned to more than $30,000 until FOX 4 sat down with her. She put her loan in deferment while working on her master's degree in criminal justice.

"The interest is so high, it seems like I will be paying this until the day I die," Nelson said.

Nelson may be right. She pays about $145 a month, but her loans are now about $66,000.

With a 6 percent interest rate, even if she more than doubles her payment to $331, it will take her 98 years to pay it off, and she'll pay more than $300,000 in interest. If she could boost that payment to $700 a month, she could get it paid off in the next 10 years, and be finished by retirement.

Darren Marshall should be thinking about his retirement. He's 50 years old with teenagers. He borrowed $24,000 almost 20 years ago, but he lost a job and went into default. 

He could end up paying back more than four times what he borrowed. Now, the government takes his tax return.

"They just want to turn it over to these vicious collection agencies and they do what they want with it," Marshall said.

What many borrowers don't realize is that credit card debt, even gambling debt, can be discharged in bankruptcy, but not student loans.

The government will take your tax return, disability check, even your social security to get that money back.

"Over 120,000 individuals did not get their social security checks because of their student loan debt," said Cathy DeWitt Dunn, a financial planner. She advises students to look at community college, stay in state and take online courses to save money.

"No one has sat down with these kids to tell them this is the impact of what is going to happen to you," DeWitt Dunn said. "This money is so easy to come by."

The Striblings are taking advantage of one government option -- an income-based repayment program where they pay a percentage of their salary for the next 25 years.  In the end, they will pay taxes on the balance. For now, they are renting, and like so many, they never imagined their educations, which they are so proud of, could be so crippling.

"We would love to have kids," Emily said. "It does limit, change your options."

"I am not buying a house, buying a second car," Sam said.  "It is my intention to never retire. That is the simple answer."

Experts advise students and parents research and understand the terms of all loans before they borrow. There is a lot of great information on the web and resources below about the different kinds of loans, repayment plans, calculators and ways to get involved. 

The best advice FOX 4 received was to try to get payments you can live with and avoid a default at all costs. A lender can tack on up to 18 percent if you fail to pay.

Resources

 

http://studentloanjustice.org/

Student Loan Justice is a 25,000 member grass roots group seeking the swift return of standard bankruptcy protections and other consumer protections to all student loans.

 

http://askheatherjarvis.com/tools

Lawyer and student loan expert Heather Jarvis works to help students better understand repayment programs and loan forgiveness.

 

http://trends.collegeboard.org/student-aid

This report from the College Board documents grant aid from federal and state governments, colleges and universities, employers, and other private sources, as well as loans, tax benefits, and Federal Work-Study Assistance.

 

http://www.ed.gov/blog/2013/10/need-advice-about-your-student-loans-your-loan-servicer-can-help/

This website from the Department of Education has information about repayment plans, making payments affordable, consolidation, forgiveness, cancellation and discharge.

 

http://nces.ed.gov/fastfacts/display.asp?id=76

This is a look at college costs from 1980 thru 2011.

 

http://nces.ed.gov/ipeds/datacenter/Default.aspx

Government database with statistical information

 

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