Student Loans

My Experience with Sallie Mae

student-loan-debt

LaTisha: This is a reader’s experience with Sallie Mae. The purpose of these stories is to help prevent others from making the same mistakes. If you have an experience that you would like to share anonymously please contact me.

Figuring Out How to Pay Tuition

My experience with Sallie Mae has been a rather interesting one. I originally began business with the company back in 1999 when I started college at a private school. Imagine the overwhelming feeling that both my parents and I had when we realized the steep tuition that would have to be paid for me to get a better education. The head of the financial aid department made it sound so simple to just sign up for a student loan and everything would be handled. Well just coming out of high school with zero credit under my wings, my only option was for my parents to be the co-signer for me.

For those who are not familiar with the meaning of a co-signer it’s basically joint signers of a loan agreement who pledge to meet the obligations of the debt in case of default. My parents were only thinking about the present and not how it would affect them in the future. I did not think about how this could negatively affect me also. I took out a private loan, and several federal loans. The day that we decide to sign that loan was the beginning of financial imprisonment with Sallie Mae.

Deferment versus Forbearance

I only attended that particular private school for one year and this set me back $16,000. I figured that I wouldn’t worry about it too much because by the time I finish college I would make payments on the loan and I would be okay. Each year while I was in school I put the loan in forbearance. Anyone who knows anything about loans will know that when you’re in school you are allowed an in-school deferment. I was uneducated when it came to loans so I was gradually wasting my forbearance time away for when I really would need it.

At the beginning of my third year in school, I became extremely ill with major health issues and had to put college on hold. Well, there went my plan of finishing school with a good job so that I could pay my loan. I just kept the loans in forbearance and when I had the money I would pay some money on the interest charges (which were adding up). Eventually, I was not financially able to make payments on the loans and my forbearance ran its course.

I began to receive the phone calls from Sallie Mae and although I explained my situation, they were not in the least bit interested. All Sallie Mae wanted to know is how and when I would be able to make a payment. Once they realized that they had very little chance of receiving much money from me, they began the phone calls and threatening letters to my mom. She tried to help as much as she could but with her small paycheck and her own financial obligations it became a stress factor. At this point, all I wanted to do was put this behind me.

Lessons Learned

As of today, I have graduated college and with the economic downfall I am working part-time, seeking full-time employment. My mom is now disabled and not working at all. This unfortunately does not excuse the loans from so many years ago. I talk with Sallie Mae about once a month and I hear the same thing each time. “You have used up all of your forbearance so you cannot place your private loan in forbearance.” The loans are now around $20,000 because of the interest adding up. I make a small payment of $50 each month to keep the loan from going into default. If I could go back to the day I started college in 1999, I would never have signed that private loan with Sallie Mae.

What to avoid when beginning your college journey………

  • Co-signers: the debt will not only follow you but the person who co-signs for you.
  • Private Student Loans: These loans have more restrictions and usually have higher interest rates.
  • High Interest Loans: Avoid loans altogether if possible. There are many scholarships and grants available if you do your research.

LaTisha: Readers, what are your thoughts on this situation? Have you encountered a similar situation? Any suggestions on possible alternatives?

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  • http://www.yourfinancessimplified.com YFS

    Interesting story. I’m surprised Sallie Mae didn’t have a checklist to let you know the best option between in-school deferment and forbearance.

    • http://youngadultfinances.com LaTisha Styles

      I find that interesting as well. I’ve always seen a ‘checklist’ that will recommend the better option. But to be honest, I’ve heard so many horror stories about Sallie Mae that I am not surprised they did not go the extra mile.

  • http://www.moneycone.com MoneyCone

    Wow! That is a painful lesson LaTisha. Hopefully this post will be an eyeopener for those thinking of student loans or getting their parents to co-sign their loans.

    • http://youngadultfinances.com LaTisha Styles

      Exactly. Especially when you can never know how your finances will look after graduating. Ideally, every student thinks they will find the perfect job but with the way the economy has been the past few years, that’s just not true anymore.

  • http://dollardisciple.com Dollar D @ The Dollar Disciple

    It’s really terrible how expensive it is to get an education these days. It’s getting to the point now where students are graduating with debt that is often many times more than their salary. How does one get ahead when you’re starting your adult life with so much debt?

    • http://youngadultfinances.com LaTisha Styles

      Good point. I also think that schools are perpetuating the belief that you have to get a degree to make a decent salary but there are plenty of jobs that you can get without a degree. And sometimes it seems like getting the experience first and then getting the degree is the way to go.

  • http://www.makingsenseofcents.com Michelle

    School is so expensive. I can’t wait until my debt is gone.

    • http://youngadultfinances.com LaTisha Styles

      Same here. I’m not in a rush to pay it off because the rate is so low but it will be nice once it’s gone.

  • http://thecollegeinvestor.com Robert @ The College Investor

    Wow, thanks for sharing your story! I can’t even believe they would let you do forbearance while you were in school. You should have read my eBook first!

    • http://youngadultfinances.com LaTisha Styles

      I’m sure she wishes she could have done that.

  • Monica

    This hits close to home, because our son starts college in the fall and we are dreading the expenses! We have impressed upon him how hard it is to have debt, especially student loan debt, and how to avoid it. It was eye opening to read this article and I will have my son read it as well. Thanks for the information, it was really helpful!

    • http://youngadultfinances.com LaTisha Styles

      Glad it could help!

  • http://freedom48.net/ Julie @ Freedom 48

    Such a painful lesson – for both you and your mom. The price of education is ridiculous these days. Plus…when you graduate from school, you’re expected to pay back these student loans at the same time you’re expected to get married, buy a car, buy a house etc. Ouch.

    • http://moneytalkscoaching.com/blog-2 Ashley @ Money Talks

      I hate student loans. I don’t know what’s going to happen but I think the next 20 years are going to be pretty interesting in the world of student loans. Something has to give here… they are getting out of control.

    • http://youngadultfinances.com LaTisha Styles

      It does seem like the bills pile up all at once. Hopefully she will be able to start paying them off soon and remove the burden from her mom.

      • http://thisthatandthemba.com Christopher

        Hearing the word Sallie Mae makes me cringe. Well they will certainly be buddy buddy with me for the next 10 yrs or so. I wouldnt trade the degrees for anything but I wished I was wiser and did work study or something so that I wouldnt have so much student loan debt!

  • Tony | Money and Matrimony

    So sorry to hear you had to go through this. Hopefully others will read this in time to avoid the potential of having a similar experience if they are unable to pay it back as quickly as they intended. I wish you the best in paying it off!

  • Larry

    Sallie Mae is a predatory lender. All of their private student loans are now double what they originally were. It should be criminal to lend a student loan at an interest rate so much higher than the prime lending rate. This organization is corrupt to the core, and the government is allowing it all to happen. The CEO of Sallie Mae (Al Lord) knows exactly what he has done. The lives of many students have been ruined by this company. We need consumer protections for private student loans to be returned to the people.

    • http://youngadultfinances.com LaTisha Styles

      Amen!

  • https://petitions.whitehouse.gov/petition/sallie-mae-and-private-student-loan-industry/5dDQ7RqT Stephanie Freundel

    Please sign the Whitehouse.gov Petition to get the Administration to look at the deceptive and predatory lending practices in the private student loan industry.
    https://petitions.whitehouse.gov/petition/sallie-mae-and-private-student-loan-industry/5dDQ7RqT

    • http://youngadultfinances.com LaTisha Styles

      Thanks for stopping by! To everyone else reading this, the petition closes the third week in August so make sure you check it out now!

  • Rh

    Although it may seem financially irresponsible, at this point you would be better off allowing them to default. Once they get sold off they will offer you a settlement. I am assuming this is already negatively impacting your credit score so although default is not optimal it’s a way out. I ended up in default after paying what I was told was an acceptable amount only to find out they were putting that payment toward one loan only and the other three were showing no activity. After them being in default for years I was able to negotiate and pay a settlement at a 55% reduction. Of course every situation is unique and this is something that worked for me. I’m not nearly as savvy in finances as the ones who blog and follow closely.

  • thefrugalweds

    I actually helped to cosign a loan for my sister who just started college. At the time, it felt like we had no other choice. It sucks that its the option we felt we HAD to go with. For the next year, I’m helping her get more scholarship money so that she doesn’t have to get into this cycle. I know she’s going to have a tough time paying it off, so I’m helping her save her paycheck from her part time job so that she can get a little bit of cushion after she graduates. Student loans suck :-( Thanks for sharing, and you are definitely not alone.

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