Thursday, August 22, 2019

Student Loan Debt – When the Panic Hits

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The shattering phone call

One recent phone call shook me to the core and threatened the already shaky financial future of not only myself but my family. You see, the student loan crisis is a huge problem regardless of what you went to school for. Whether it is for undergrad or even graduate school these loans have life-long complications and come with crazy high-interest rates. These issues can make paying them off that much harder. 

The Federal government tried to help by creating Income-Driven Repayment plans. These are plans to help pay your student loans with payments based on your income. The issue came around when borrowers realized there will be a tax burden at the end of the forgiveness. This means that while you are not able to afford to pay down your principal monthly, your debt is growing and 20-25 years later you will have a huge tax bill that once again you most likely won’t be able to afford. It is a perpetual cycle of debt and constantly inflating interest designed to simply make money from the borrower for the whole of their employed life. It is indentured servitude in modern society and it is being normalized so cleverly that few seem able to recognize the problem, let alone stop it.

To take part in these Income-Driven Repayment plans you must submit your yearly tax returns or current paystubs to prove your financial hardship. What sounds like it should be an easy process, can end up being your worst nightmare.  What happens if you no longer qualify, or told you no longer qualify but yet, do not make enough money to properly pay the 10-year standard repayment or have to be forced to consolidate your loans capitalizing all the interest? How can this be possible?

I always thought that, how can they ever kick me out of the program when I owe almost a half million dollars? Imagine my shock when I received a call stating just that: I can no longer be in the program.  I was not graced with a pay increase. I couldn’t believe that my student loan provider thought I was able to afford to pay a 10-year standard repayment while having a mortgage and daycare.

Panic set in as I was trying to grasp the reality of the situation I was facing. What was I going to do? All the careful planning I have been doing to save up for the tax burden after the forgiveness was disappearing since I figured I was going to be kicked out of the program. While the representative was spilling out options, she basically said I would have to capitalize all my interest and go into forbearance. I panicked about daycare, about our mortgage and about my marriage. How can I tell my husband? How can I express the reality of what is going on?

I hung up with the representative and called back. With this phone call, while I was still told that I still did not qualify, I was given more options and different numbers I would owe. When questioned, this representative then explained that there is a way to have affordable payments but I would have to not only capitalize the interest but put my loans into forbearance or pay about $5,000 for one month.

I hung up the phone. Throughout these two phone calls I was not given full information, I was given two different monthly payments and they were attempting to persuade me to capitalize my interest– which in the end would have been my absolute worst mistake.

After thinking on the matter, I opted to contact a supervisor. During these phone conversations, I was talked down to, and he offered contradictory information multiple times and made me seem like I have no idea what I was talking about. The frustration grew, and I was given multiple different options. In the end, my income-based repayment was still being denied. My gut instinct told me something was not right here.

At this point, I was told that my payment would be less than a thousand a month if I consolidated my interest and put into the REPAYE program. A program that I would be forced to not only use my income but my spouses, which was not explained to me.

My Aha! moment

I was at a loss. What do you do? While I wanted to just jump to refill the paperwork out, I decided to scour the internet to make sure I was making the correct choice not only for right now but for my distant future. I went to the one place I knew I can get reliable information—a forum for veterinarians.  Having a support system with everything is extremely important and it is exactly what I got. After describing my debacle, I received a flood of feedback pointing me to one person: a veterinarian. This person saved me from making the worst decision. 

This veterinarian completely understands the student loan process and assists others free of charge. After collecting all the information needed, I went back to Navient and the supervisor to question the information that was given to me. This time I was ready with all the correct information.

The supervisor stated that there is no one that is an expert unless they work for a service loan provider, attempting to discredit the veterinarian’s advice that I was given. He stated that the information I received was completely wrong and was even told to stop talking. When I asked to speak with his boss, I was told that someone will call me back with the exact same information.

Having the confidence in which I was given and the knowledge I called back and asked the requirements of the program.

Qualifying for Income-Based Repayment is simple. Your monthly student loan payments under the IBR plan can’t equal or exceed what your payments would be under the 10-year Standard Repayment. There are also 4 different eligible loans: Direct subsidized and unsubsidized loans, direct graduate PLUS loans, FFEL consolidation loans, and direct consolidation loans.

After hearing the requirements, I then asked the representative to look up my information and tell me what my payment may be.  She then gave me a number that was calculated on her personal calculator. When I proceeded to question why I now qualify she used the Navient calculator that then stated I was not.

So, what was the difference? Why do I have all the qualifications but yet can’t qualify? The reason I was given was simple: my employer has been making payments and putting my account in a pay ahead status. This representative fixed the problem. A five-day problem, five phone calls later and a representative finally fixed the issue.

A week later I received a phone call from Navient. It was the supervisor’s boss. I was apologized to for not only all the wrong information but for the disrespectful manner in which they spoke to me. This person stated I would have made a ginormous mistake by listening to them. This was an apology I never thought I would receive.

So why tell the world about this serious issue?

Every day people are dealing with student loans, every day people get the horrible news that their plan isn’t getting renewed, they have to go into forbearance or pay an insane amount of money. While veterinarians are one career at the forefront of this problem–the issue isn’t restricted to them.

The student loan crisis is a dark problem. Veterinarians, for example, now incur approximately a half million dollars or more in student loan debt. In the past, veterinarians acquired less than $100,000 in student debt, an amount they were able to pay off after a few years of practice. Today’s veterinarians will never earn enough to pay off the student debt…which is a serious problem in a society founded on the freedom to create a life based on hard work and education. Debtors are now able to legally own working humans, for as long as they please. This is not ok. Boundaries and limits must be set on education to keep greed at bay and Americans capable of enjoying their most basic freedoms and rights.

It all boils down to this issue: How can we make school more affordable?

The cost of education to become a veterinarian has become so outrageous it almost seems that for-profit colleges are taking advantage of people who have the knowledge and the drive to head into this career.

When I started veterinary school, the government was just coming out with these income-driven repayment plans. A promise that college can now seem affordable thanks to these plans. You can easily pay your student loans for 20-25 years and then have the remaining balance be forgiven. How great is that? Like with so many things in life, what seems too good to be true often is. But this method is used to sell education to very young adults, some as young as 18 years old. These kids have no experience in the adult world, only dreams of what they want to become, and they will listen to adults advising them, especially student loan companies.

While students and graduates are trying to figure out ways to pay these loans down, to survive financially day to day we are fighting a losing battle. Our government made it more difficult for us to get the proper information, the interest rates are outrageous and there is no real way to dig yourself out of the hole.

Some advice that helped me

Protecting yourself and your children is the best thing you can do. Be aware that your student loan provider is most likely not giving you the correct information and you must do your own due diligence. Whether it is finding someone you or others trust to guide you or spending the time to really understand what your options are.

Make sure that while you are taking advantage of the employer contributions, that they are not putting your loans in a pay ahead status. Also making sure that if you make extra payments, do not put your loans in a pay ahead status. By doing this, you will be kicked out of the Income-Based Repayment plans.

Also, caution about consolidating or even just capitalizing the interest to switch plans. The reason is that you cannot count on the forgiveness they are still undecided what, if anything, is going to be taxed. Will it be the principal, the interest or the whole amount? Many people are trying to refinance to get away from high interest rates. When doing this you lose the protection of the federal government? You lose that the loans are discharged upon death and forgiveness. You may get a lower interest rate, so if paying them off rapidly if your plan it may be something to consider.

Whatever you do or however you handle your situation, talk about it, research and know you are not the only one. 

Information on the Repayment Plans

Studentloan.gov where you can research the plans and decide which options are best for you.

Are you a Veterinarian looking for information on Student Debt? 

VIN has a foundation that can help you understand your options and make sure you make the right decision!

Here you can find a lot of information that is FREE to help provide information about student debt, life as a veterinarian, tips for new graduates and much more.

Help fund the foundation continue to provide FREE help to Veterinarians and make your donation today!

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