Question about Student Loans - Are we caught in a scam?

If you refuse to pay, they will take it out of your Social Security.
Want to gamble? Don't pay - what are the odds there will be any Social Security for them to take from you?
I am a believer in The Jubilee that is commanded in the Bible. For me, not because it is in the Bible, but because it is obviously the best solution. I would not begrudge anyone for refusing to send banksters money, as long as they understand the risks in the situation.
I still pay most of my bills. The banks defaulted on my home loans (failed to fulfill their contractual obligation) so I quit paying them, but I lost the homes, too. Perhaps just having the "back up plan" of "They can have my Social Security" will make her feel a little better.

I have a loan of 170k and my wife's is 150k. 8 years later we're finally to the point where we expect to make 6 figures, but with Obamacare questions and Medicare and other insurance scams cutting our payments year after year, we have to continuously work harder to make the same amount.

What's even better is that if we ever get to the point where we're making $250k+ and become one of the "rich", then we'll get nailed again. Never mind the fact that we have a mortgage for a student loan or that we've lived in a 900 square foot apartment for 6 years or that we had to go another $100k in business debt to get our business going or that I personally made about $100,000 total my first 6 years out of school. Nope...when we hit the 250k mark, we become part of the evil rich.
If I knew at age 21 before I started grad school what I know now, I would have never even considered going into that kind of debt.

And as usual, it's the governments fault. As Peter Schiff likes to point out, 20-30 years ago before the gov't started backing student loans, you could pay for your college tuition by working a part-time job and working the summers. Once the Gov't got involved, tuition skyrocketed. My old boss who graduated from my same school in the early 80's paid about $2000 a year in tuition. When I graduated 20 years later in 2002, I was paying about $22,000 per year in tuition alone

Sorry about the rant. Now for your question. One thing I would definitely look at is redoing the loan. The one "good" thing about our loans is that they are locked in at about 2% interest. I'm not sure what the rates are now though. You would have to be very careful though because there are a lot of predators out there and they could easily trick you into a bad loan

Yes, student loans can be (are) a nightmare.

First find out if they are government loans and if they are if they are subsidized or UNsubsidized. Subsidized means that no interest accumulates from the day the loan becomes due.

If they are government backed loans - and most are - you can get deferments. Usually 6 months or a year. There are different kinds - economic hardship, unemployment etc. You can look all this up online.
There is also forebearance. I cannot remember exactly the difference but I do remember that the deferments are preferable.

Take the time to look at the paperwork and put it in order and see just who now is holding the loans. They are commonly bought and sold and bought and sold etc.

I have not heard of the '20% of your income' situation that you mention. Student loans are whatever they are irregardless of income. There are payment plans - if you start paying them - that are varied.

I would not pay them a dime right now. I would find out who is NOW holding the loans and if they are indeed government subsidized loans. If they are you can get the deferment with no interest due and this will give you some time to figure out what you want to do.

Don't let the loan holders bully you into thinking that they are right and you must do what they tell you to do.

There is also student loan forgiveness and student loan elimination.

And yes, you are being played. That's what these banks do. That's what banks are for - to make money.

You need to take the time and go through whatever paperwork you have.

As far as I know what I wrote is true.

Thanks for all the great info and advice. Its unusual for me to be at a total loss for how to fix problems that my family faces, but this subject I have no clue. It is hard to see my wife hurting over such a thing. So thanks again from the bottom of my heart to you all.

That college degree that they said would make a graduate $1 million more...

Bzzzz!

http://www.youtube.com/watch?v=V122ICNS8_0&feature=related

did they come from a private lending institution? This is the first question to ask. The Federally-guaranteed loans should be eligible for deferments or forbearances. Also, IBR and other graduated payment plans.

If her loans came from private institutions, they are not Federally-guaranteed and are unlikely to have deferment or forbearance privileges. (Deferements and forbearances allow you to put off payments without hurting your credit.)The way you can usually tell this kind of loan is if the interest rate is sky-high.
The Federally backed loan rates have been right around 6%. The private student loan rates are more like 11-22% or even higher.

Also, I would have her contact each of her "servicers" and demand they provide the original promissory notes. You would want them for your own records anyway. Another possibility is to have her contact any schools she attended and find out exactly how many actual loans she took out originally.

I know this must feel like the end of the world to her. The student loan programs are arcane and the lenders have been playing all sorts of nasty tricks of student loan borrowers for years. But, the more real inforamtion you both have about this, the better you will feel because you will know exactly what you are dealing with.

I worked in the student loan industry from 1995-1996 and from 2002-2005. I worked with the Federally-guaranteed programs. The private lenders were bad but some of the shenanigans the Dept of Ed pulls are bad too. It is not hard to tell that most of the student loan legislation was written by the banks.

Is this a scam? I believe it has become one. While we were still in the years of the financial bubble a person could conceivably take out big loans, get a fairly well-paying jobs and pay those loans off. The bubble has burst and that just doesn't work now with the exception of degrees in things like engineering or medicine.

I graduated from college in 2000. For a while I had ok jobs that paid me enough to pay on my loans. Two years ago I lost my last decent job. I am not able to pay on my loans now. I have used up all of my unemployment deferment privileges and have only 3 years left of forbearance. My loans are over $50,000.00 now. If I leave them in forbearance and pay nothing on them for the next three years, I will probably owe $60,000.00 or more.

With the economy the way it is, I don't foresee getting any kind of decent job again, if ever. I am training myself to get used to the idea of the loans defaulting. Acceptence of that possibility gives me more peace. This does mean that if I won the lottery tomorrow I wouldn't pay the loans off. I would do that in a heartbeat.

I am not a loser and I am not s slacker. I have just come to terms with the economic reality I have been facing for years now: Things may not get any better and they could get worse. But, I don't wallow in it. I get up each morning and keep on living my life. If I got a job tomorrow, I would make a student loan payment with my first check.

that you throw money into and never fill.

They are worse than any loan shark, at least a loan shark will acknowledge payment. And tell you how much will free you.

I never had any to worry about, but my wife had around $20,000. We paid and paid and they kept being resold and resold, the balance would never change. And each time a new bank bought them magically all the records from the previous bank disappeared and what we showed paid never mattered.

They were split up into 3 different ones. On one that was for $11,000 we paid over $6000, that just went into a hole never to be seen again, cause when the new bank bought it they bought an $11,000 debt, didn't matter what we had paid.

We would call, they would say send this send that, we will do this, nothing ever happened. We asked for a lump sum to pay all 3 off, they wouldn't give one. We finally stopped paying they never sent anything to the credit bureaus they never tried to contact us for over a year. Then they started calling and sending letters, we again tried to get a lump sum to pay it all off, they wouldn't do anything.

After about 1 and 1/2 years, my wife got on facebook and found the head of some department with the Kentucky loan people, and sent her a message on facebook. With in 3 weeks we had all 3 paid off, 2 paid and one forgiven. All it took was pissing away an extra 6 or 7 thousand and actually finding someone that gave a rats ass about their job.

You might want to visit: www.studentloanjustice.org

The entire thing is a scam. It was Boehner who took payoffs from Sallie Mae to enact the exemption from bankruptcy non sense signed by Bill "I feel your pain" Clinton. I know many who are enslaved to these loans. Right now I would advise people not to waste their time in school since we're in a depression and there aren't any jobs out there anyways. Likewise, I'm convinced it's too late for a peaceful resolution here. Way too many were lied to as to how wonderful they would have it if they got this over priced piece of paper. There's nothing sacred cow about this as compared to any other debt and no reason not to have the same consumer protections. The way I see it, the feds and banks are deliberately provoking an incident with the American people.

The student loan program has become another "sub-prime" loan government program... and you know what happen to that.

There has been a boom in private education in the last 10 years and it all has to do with this easy money. The University of Phoenix is just one example of the "success" of this. They proclaim to be delivering an education but what is really going on is another corporation preying on people supported by the federal government.

It has come to light in many of these programs that the promises of "good jobs" was just that... a promise. And the degrees... just another piece of paper.

What is interesting about the student loan program is the banks don't have to declare them delinquent for 2 years... as opposed to 90 days in a normal situation. And most of these loans as one of the previous commenters noted are not dischargable in a bankruptcy. So it has become the golden goose for a financial institutions bottom-line... unfortunately because so many college graduates and dropouts never get those promised jobs the real delinquency rates are incredibly high. Some say as high as 50%. But just like most things dealing with the Federal government this is hidden from the public.

Here's an excellent site http://www.studentloanjustice.org/

This was feature in a mini-documentary on student loans on CNBC.
http://www.cnbc.com/id/40680905/
You might note at the end of this article they suggest that the law might change on the "hardship" discharge... it probably already has... they just haven't read the bills yet.

Heres another documentary
http://www.youtube.com/watch?v=1463LHDLGvQ

And here's another one, Student loan scam
http://www.youtube.com/watch?v=B7OHrVKNIvw&feature=related

The law that made it so people cannot declare bankruptcy was created during Bush Jr's horrible reign.

There are a few ways to get around this. She can be a teacher, public servant or be in the medical field. Here is a site that lists ways to have loans forgiven.

http://www.finaid.org/loans/forgiveness.phtml

It sounds like you may want to have her take the below route with Income Base Repayment (IBR). This program was created during Obama. It helps lower payments based on income and all debt after 20 years on this program is forgiven. Each student loan carrier is forced to recognize this payment option. Here is the site for that.

http://www.ibrinfo.org/