Sunday, November 29, 2015

Liz Kelley, High School English Teacher in Ballwin, Mo., Has Accrued $410,000 in Student Loan Debt

That just seems impossible to me.

Do people even consider the possibility that they might have to pay this money back? I guess not.

At the New York Times, "Student Debt in America: Lend With a Smile, Collect With a Fist":
The American student loan crisis is often seen as a problem of profligacy and predation. Wasteful colleges raise tuition every year, we are told, even as middle-class wages stagnate and unscrupulous for-profit colleges bilk the unwary. The result is mounting unmanageable debt.

There is much truth in this diagnosis. But it does not explain the plight of Liz Kelley, a Missouri high school teacher and mother of four who made a series of unremarkable decisions about college and borrowing. She now owes the federal government $410,000, and counting.

This is a staggering and unusual sum. The average undergraduate who borrows leaves school with about $30,000 in debt. But Ms. Kelley’s circumstances are not unique. Of the 43.3 million borrowers with outstanding federal student loans, 1.8 percent, or 779,000 people, owe $150,000 or more. And 346,000 owe more than $200,000.

Ms. Kelley’s debt woes are also mostly a matter of interest, not principal, a growing problem for the nation’s student debtors. According to the Federal Reserve Bank of New York, the number of active borrowers enrolled in college has declined to roughly nine million today from about 12 million in 2010. Yet the total amount of outstanding debt continues to increase, because many borrowers are not paying back their older loans.

This is partly a function of continuing economic hardship. But it also reflects how the federal government has become the biggest, nicest and meanest student lender in the world.

Ms. Kelley, 48, first enrolled in college in 1990 at Maryville University, a private school near St. Louis. She was a nontraditional student, already married with children. She took out loans to help pay tuition, and by the time she graduated with a degree in English in 1994, the total was $26,278, which is the inflation-adjusted equivalent of about $42,000 in 2015. This is not an unusual sum. The typical private college graduate who borrows holds $32,600 in debt.

Then as now, the job market was not clamoring for English majors. Practicing law and teaching seemed like the best options, and Ms. Kelley chose the former. Entering law school also allowed her to delay repaying her undergraduate student loans. She again borrowed for tuition, $37,000 for the first three semesters, which is also a fairly typical amount. Law school graduates today often have six-figure loans...
You can see where this is going.

I think on the regular federal student loans you have deferred interest until 6 months after graduation, when you have to start making payments. That's what I did. But not this lady. She kept borrowing for more schooling while her old loans starting accruing.


More here.