Former Students Plan to Ignore Loan Repayments When Pause Ends
Former Students Plan to Ignore Loan Repayments When Pause Ends, Newsweek, Khaleda Rahman
“I will not give them one cent!” 45-year-old teacher Jacque Abron said about resuming her student loan repayments when the COVID-19 pandemic-era pause comes to an end. “The illegal lending scam is over and I’m fighting until we see bankruptcy rights restored.”
The mother of three is far from alone in her refusal to return to a life struggling to chip away at ballooning student loan debt when payments resume in October under the terms of a debt ceiling deal approved by Congress.
Several former students told Newsweek they won’t make payments on a debt they say is spurious or cannot pay because of the rising cost of living.
More than 40 million Americans will have to making payments starting in October under the terms of a debt ceiling deal approved by Congress, and student loan interest will start accruing on September 1.
“Even before the pandemic, nearly 60 percent of all borrowers had either stopped paying, or were making $0 payments,” he told Newsweek, citing data from the Department of Education.
Millions are also eagerly waiting to find out if the U.S. Supreme Court will allow President Joe Biden‘s student loan forgiveness plan to go ahead, though payments will resume regardless of what the court decides.
Here’s what those struggling with their student debt had to say about why they won’t or can’t pay.
Jacque Abron
A single mother to three children in Dallas, Texas, Abron said she cannot recall exactly how much she initially borrowed to fund her studies, but the accrued interest means the balance she now owes has topped $100,000.
Her credit has been ruined. She refuses to make loan payments at the expense of providing for her children, she told Newsweek.
“I’ve never made a payment and I never will. It has ruined my credit and I don’t care,” she said. “I’m an underpaid teacher and I won’t spend any of my money on predatory, unconstitutional loans. I will not take away from my family.”
Abron is hoping she will be able to soon work for herself, which will help her make ends meet if the government seeks to garnish her wages.
“If all 45 million borrowers respected themselves enough to fight, we would have this problem solved,” she added. “I won’t let the corrupt government inflict stress or worry about their failed lending scam. Enough is enough! We should stand together!”
John Connors
Connors, 53, of Rhode Island, said his initial debt was $60,000. But despite making steady payments for almost a decade, his debt has ballooned to $100,000.
During the payment pause, he told Newsweek he has been able to put money toward his four children’s needs and make repairs to his family’s home.
But when the pause ends, he said he won’t continue making payments. He continues . . .
“In the absence of bankruptcy protections, I feel student loans are illegitimate loans. It’s debt that never goes away and I refuse to be an indentured servant to this loan. I’ve done nothing wrong other than go to college for a higher education. I’m a valuable contributor to society and deserve the same consumer protections that go with any other consumer loan.
Although I’m concerned about the consequences of not making payments, I’m more concerned about making payments on an illegitimate loan. A loan that only goes up in the amount I owe even after payments.”
Christina Williams
Williams, a registered nurse from Athens, Georgia, borrowed $25,000 to pay for a master’s degree in gerontology at Brenau University so she would be able to work specifically with seniors in rural Georgia.
“Instead, what I got was over $113,000 and climbing in loans,” the 56-year-old told Newsweek.
Williams said she has deferred her loans multiple times because she could not afford to make repayments.
“The loans have been bought, sold, traded so many times, I honestly do not know who holds them now,” she said. “I was too trusting and gullible and now I am saddled with debt that will haunt me and keep me working until the day I die. I have no savings, no IRA, live paycheck to paycheck, and now with the inflation as it is, sometimes don’t make that. I have just a degree that wasn’t worth the price on any level.”
She is planning to apply for deferment again and if the request is denied, she will not pay.
“I can’t afford to,” she said.
Tanesha Borgman
Borgman, 43, left school with her bachelor’s degree and no student debt. But she needed to borrow $60,000 to go to graduate school to fulfil her dream of working as a speech pathologist.
She has made payments since graduating, she told Newsweek, bar a couple of years when she was in forbearance. The amount she now owes is more than double what she initially borrowed.
Borgman, who is married with a 6-year-old son, won’t be able to afford to make payments when the pause ends. She said . . .
“I have medical debt I’m still trying to pay off and I currently pay mine and my son’s health insurance out of pocket, I also recently started a new job where I won’t earn full pay until after my initial four-month new employee evaluation period. I’m worried I’ll have to go into forbearance again and am currently just hoping God makes a miracle happen.
I just want to be able to continue working to help people as a speech pathologist without having to pay for it for the rest of my life!”
What Happens if You Don’t Make Repayments?
The repercussions of not making payments can be severe.
Once the pause ends, those who can’t or don’t pay risk delinquency and eventually default. That can hurt your credit rating and exclude you from future aid and government benefits.
“Once the loan is in default, the government can collect the loan by seizing a portion of the borrower’s wages, seizing their tax refund [including their Earned Income Tax Credit and Child Tax Credit], or seizing a portion of the borrower’s Social Security benefits,” Kyra Taylor, a staff attorney at the National Consumer Law Center, told Newsweek. “There is no statute of limitations on federal student loans, so the government can collect defaulted loans indefinitely.”
Those struggling to pay are advised to check if they qualify for an income-driven repayment plan by visiting the Federal Student Aid website. Anyone who is temporarily employed should be able to qualify for a $0 payment plan.
For most student loan borrowers, it’s very difficult to have them discharged through bankruptcy.
“Successfully discharging a federal student loan in bankruptcy requires proving “undue hardship” which includes looking at past efforts to repay, as well as present and future potential ability to repay,” Peter Holland, a consumer rights lawyer who specializes in debt collection defense, told Newsweek.
Holland advises people to find a lawyer who “can take the time to really understand your situation and then discuss your options with you.”
Taylor added that there will be a great deal of confusion when loan payments resume as millions of accounts were transferred from one servicer to another during the payment pause.
“So many borrowers will be getting bills from servicers with names they don’t recognize,” she said. “Millions of folks may not make payments simply because they don’t realize that they are still on the hook for the debt.
“It’s incredibly important that the Department of Education provide folks with a “hold harmless” period that is long enough for them to do effective and robust communication to student loan borrowers to fight against this confusion when repayment restarts.”
In a statement to Newsweek, an Education Department spokesperson said the department will “be in direct touch with borrowers and ramping up our communications with servicers well before repayment resumes to ensure borrowers and their families are receiving accurate and timely information about the return to repayment.”
Student Loan Borrowers Aren’t Waiting for Biden’s Promised Relief
Bloomberg – July 22, 2022
As faith in the president’s forgiveness plans wanes, many are searching for other ways to reduce or eliminate their payments.
Anxious Americans with student loans are tired of waiting for action from President Joe Biden and taking matters into their own hands.
With about a month until payments are scheduled to resume, there’s still no word from the federal government about student debt forgiveness or another postponement. Borrowers already struggling with soaring inflation are searching for other ways to reduce their payments, ske … (The rest is hidden behind a paywall.)
It was a bad investment …
If you’re talking about student loans that didn’t exactly pay off, what was one to do twenty years (or more) ago when it seemed essential and jobs were plentiful, especially in the dot-com era I suppose.
I made a decision back then (more like 40 years ago) to pay for my kids college, when they were first born, and hi-tech investment opportunities were abundant.
That paid off handsomely. If there are opportunities again, they are somewhat different. Pharmaceuticals? AI? Who knows? Is the end near otherwise? Who knows?
(My kids would be very well off, for sure, if they had just held on the the shares purchased to pay for their educations.)
I was there, 25/30 years ago, an Old Logger after the Pacific Northwest timber industry died raising a couple boys alone working my way through college and university. I didn’t necessarily borrow a lot of money, and though I did make payments for close to ten years, a series of unfortunate circumstances left the interest accrued out of control and under an eight percent garnishment on my social security
I borrowed the money in good faith though I don’t think it was thus lent …
If it was a bad investment you could write it off!
These aren’t loans, they are like something you do at midnight at the crossroads.
I wonder what would happen if five or ten million people simply stopped paying their student loans. This is a movement that could catch on.
Kaleberg:
I believe that many are already not paying. Good question for Alan Collinge. Some of these posts I am putting up are from Magazines (Newsweek, etc.. Some are being written by Lisa Ansell an associate Director at USC. Alan has some great coverage. I am hearing tomorrow SCOTUS will answer.