Very old student loan lapse

[LuvOrlando]

so a good friend of mine, 57, went to college years ago and defaulted on her student loan when she and her husband lost all their money in a failed business venture. She's only married to this guy seven years and in that time she sold her house to live with him in his house and he talked her into putting all their money into a store. Now she's got one son in college and he is getting pretty reasonably taken care of due to their financial situation. However, the marriage is falling apart ( I think her husband is a ConMan the marriage fell apart as soon as the son's Social Security ran out when he turned 18 over the summer) and she is living in the house that her husband owned with his first wife Who passed away. So now she find herself in the unenviable position of trying to figure out the rest of her life. needless to say she's never going to be able to get a house or anything else unless she sorts out her credit. Has anyone else out there ever had a situation where you defaulted or know somebody that had to default on a student loan and how did it end up? I told her she's got to get on fixing it because it this point there's probably a ridiculous amount of fees that have been piled up against her since 2010. i'm thinking maybe a credit counseling agency but since the student loans or federal money maybe that won't work

 

[TwoMisfits]

so a good friend of mine, 57, went to college years ago and defaulted on her student loan when she and her husband lost all their money in a failed business venture. She's only married to this guy seven years and in that time she sold her house to live with him in his house and he talked her into putting all their money into a store. Now she's got one son in college and he is getting pretty reasonably taken care of due to their financial situation. However, the marriage is falling apart ( I think her husband is a ConMan the marriage fell apart as soon as the son's Social Security ran out when he turned 18 over the summer) and she is living in the house that her husband owned with his first wife Who passed away. So now she find herself in the unenviable position of trying to figure out the rest of her life. needless to say she's never going to be able to get a house or anything else unless she sorts out her credit. Has anyone else out there ever had a situation where you defaulted or know somebody that had to default on a student loan and how did it end up? I told her she's got to get on fixing it because it this point there's probably a ridiculous amount of fees that have been piled up against her since 2010. i'm thinking maybe a credit counseling agency but since the student loans or federal money maybe that won't work

Those are the hardest loans to get discharged, but they are possible...I'd have her do some research...here's a sample site to see what might be possible and what won't be...

http://www.studentloanborrowerassistance.org/bankruptcy/

 

[LuvOrlando]

Thanks for the link I'll share it with her.

It seems they are on public assistance for food and medical care - I believe she gets support from public assistance for food and medical care so I think they'll be able to qualify for anything that requires proof of need

 

[arminnie]

I had approximately $70,000 in student loans (in today's dollars). When I was in my 30s I lost my job and was dead broke and out work for over a year. I lost my home and everything.

But you know what I still eventually paid off my student loans. I have zero tolerance for people who just never ever pay anything back. If she had money to put into a "store" she had money to pay off her loans. Deadbeats are just deadbeats and don't deserve any special treatment.

 

[QueenIsabella]

I'm afraid I have to agree with ARMinnie--this is a person who has made many poor choices, from defaulting on the loans to choosing poorly in a husband. She's nearing retirement age, and is on public assistance. Part of me is sympathetic, but I can't wrap my mind around having nothing at that age--no assets, no retirement, soon she'll have no place to live.

Most student loans can't be discharged. They will attach her social security to get paid back. I really hope she raised her son to be wiser about his debts.

 

[tvguy]

Those are the hardest loans to get discharged, but they are possible...I'd have her do some research...here's a sample site to see what might be possible and what won't be...

http://www.studentloanborrowerassistance.org/bankruptcy/

Interesting. When my kids got student loans the line was, the only way to get out of paying them back was to die.
I'm about the same age as the person OP is talking about and my total tuition, room and board for 4 years at a Private University was under $10,000, so even with penalties, the total debit today probably is less than a typical car loan that folks pay off in 3, 4 , 5 or 6 years.

 

[DisneyMandC]

Interesting. When my kids got student loans the line was, the only way to get out of paying them back was to die.
I'm about the same age as the person OP is talking about and my total tuition, room and board for 4 years at a Private University was under $10,000, so even with penalties, the total debit today probably is less than a typical car loan that folks pay off in 3, 4 , 5 or 6 years.

That is true for federal-backed student loans. Death or serious permanent disability. Some courts are allowing privately-held student loans to be discharged through bankruptcy now.

 

[QueenIsabella]

Interesting. When my kids got student loans the line was, the only way to get out of paying them back was to die.
I'm about the same age as the person OP is talking about and my total tuition, room and board for 4 years at a Private University was under $10,000, so even with penalties, the total debit today probably is less than a typical car loan that folks pay off in 3, 4 , 5 or 6 years.

Except if she went to school back then, she would have been accruing interest for 30+ years. If her schooling is more recent, her costs would be much, much higher. Many of these cases that you read about, the interest owed is now greater than the amount of the original loan.

 

[tvguy]

That is true for federal-backed student loans. Death or serious permanent disability. Some courts are allowing privately-held student loans to be discharged through bankruptcy now.

Yes, the Courts march to the beat of their own drum.

 

[tvguy]

Except if she went to school back then, she would have been accruing interest for 30+ years. If her schooling is more recent, her costs would be much, much higher. Many of these cases that you read about, the interest owed is now greater than the amount of the original loan.

$10,000 @ 8% which was about what the student loan interest rate was in 1975, probably would be a debt with penalties of about $35,000 today. Like I said, about what a typical person pays for a car these days.

 

[QueenIsabella]

I'm not sure why you assume she borrowed $10k. I started college in 1981, I borrowed a lot more than that, and my annual bill (tuition, room and board) was about $10k/year, not for all 4 years. When I started college, you could borrow $2500/year in Guaranteed Student Loans, $1500/year in some other type of loan, and I also had private loans. I know times have changed, loan names have changed, and graduate school loans are "sky's the limit", these days (I have no idea how they were back then--my master's was covered by my employer). I do know your interest rate is about right--that would have been during a time of very high interest rates all around. 11% actually sticks in my mind, thanks President Carter.

 

[adisneyaunt]

Ugh! what a debacle for ur friend OP. I think u are wise to tell her to try and get this long overdue debt resolved.
Ignoring debt is simply Not Ever the best Answer. Good luck to her. I hope her child/ren are wiser.

 

[tvguy]

I'm not sure why you assume she borrowed $10k. I started college in 1981, I borrowed a lot more than that, and my annual bill (tuition, room and board) was about $10k/year, not for all 4 years. When I started college, you could borrow $2500/year in Guaranteed Student Loans, $1500/year in some other type of loan, and I also had private loans. I know times have changed, loan names have changed, and graduate school loans are "sky's the limit", these days (I have no idea how they were back then--my master's was covered by my employer). I do know your interest rate is about right--that would have been during a time of very high interest rates all around. 11% actually sticks in my mind, thanks President Carter.

I went 1975 to 1979, Private College, and that is what is ran for all 4 years with room and board. Just a reference point since I mentioned it before. Most folks of that era probably spent a lot less over 4 years, Cost of living was much lower then, and at least around her, Community College was free in those days.

 

[QueenIsabella]

I went 1975 to 1979, Private College, and that is what is ran for all 4 years with room and board. Just a reference point since I mentioned it before. Most folks of that era probably spent a lot less over 4 years, Cost of living was much lower then, and at least around her, Community College was free in those days.

It also may be a difference in East Coast and West. Also, I went to a private engineering college, they may have been pricier. But I do remember, with scholarships, my private engineering school wound up costing me less than State U. would have. And I graduated with $17k in loans (in 1985).

 

[STLDisney_Freak]

OP...Please see the attached link. It will help your friend that is in default.

https://studentaid.ed.gov/sa/repay-loans/default

 

[arminnie]

In 1976 Stanford University (one of the most expensive private schools) cost approximately $8000 a year for tuition, books, room and board. My sister is 59 and started college that year. This woman is a couple of years younger. Did she ever make ANY attempt to pay off her student loans?

 

[QueenIsabella]

In 1976 Stanford University (one of the most expensive private schools) cost approximately $8000 a year for tuition, books, room and board. My sister is 59 and started college that year. This woman is a couple of years younger. Did she ever make ANY attempt to pay off her student loans?

See that, I can believe. I don't remember room and board costs, but I DO remember my tuition bills, since I paid them:

1981: $5800
1982: $6700
1983: $7200
1984: $8100

That's in line with what you're saying, just moving out a few years.

I also remember the regular loan was $2500/year, then a secondary loan was $1500/year. Private loans were also available at that time--I remember getting mailings. The names have changed through the years.

Of course, if this woman also took out graduate school loans, she could have borrowed much, much more. Also, some types of loans begin accruing interest from the loan origination date, rather than deferring until graduation. So, that's potentially 4 more years of interest.

 

[dclpluto]

You should be responsible enough to pay back all your loans in the monthly amount you agreed to. You should never be late on a payment. I understand things happen lost job, health etc. of for some reason you can't pay your bill on time. Let them know as soon as possible so maybe something can be worked out.

 

[tvguy]

In 1976 Stanford University (one of the most expensive private schools) cost approximately $8000 a year for tuition, books, room and board. My sister is 59 and started college that year. This woman is a couple of years younger. Did she ever make ANY attempt to pay off her student loans?

I went to the University of the Pacific in Stockton, private but less expensive than Stanford, and of course housing is much cheaper in Stockton than in Palo Alto. I was getting Social Security Survivors benefits of $400 a month, and in those days if you stayed in school you could get benefits until you turned 21, and that covered all my college expenses. And my mom invested those benefits for the 8 years I got them before I hit college so I had a nice nest egg for college.

 

[tvguy]

University of California tuition, room and board, 1975-1975 academic year, $712!
Scroll to page 45.
http://catalog.ucdavis.edu/upload/GenCatArchive/GenCat19751976.pdf