3 terrifying student loan horror stories
Jeremy Cooper took classes at several schools before graduating with an associate degree in Web design from Bryant and Stratton College in 2004. Borrowing $45,000 in federal and private loans, Cooper says he hasn't been able to get a job in Web design because, "Everything that I had learned from my degree became obsolete even before I graduated because the technology moves so fast." Since graduation, Cooper has fallen behind on his private loan payments, and his private debt has nearly doubled to $88,000. Despite working full-time day and part-time night jobs and scaling back his expenses to the bare minimum, Cooper says he does not see a way out of default.
With federal loans, borrowers such as Cooper may be able to find relief in one of the government's income-driven repayment programs, which cap loan payments according to your monthly paycheck, says Mayotte. "There just aren't a lot of options out there" for private loans, she says, though some lenders do offer extended and temporary interest-only repayment plans.
It's possible to dismiss student loans through bankruptcy, but only if the borrower can prove he has made a good-faith effort to repay the loan and that continuing to pay prevents him from maintaining a minimal standard of living.