The the federal interest rate really 6%?!? Geez, I got a federal consolidation loan in 2005 and am paying 2.8%. Thank goodness I did that...

I teach at a university now, and I haven't stumbled on this, and haven't had any students mention it either. But, our university doesn't accept funds from private lenders, so unless these are lenders who are cutting checks directly to the students, I doubt it will be an issue here.

@burnedout:
The Federal Interest rate is actually 6.8% right now.

Does anybody do Loan refinancing nowadays?

I have $25k in loans with an 8% rate. I would love to get that down even a little bit but the way things are going, nobody is offering them now.

This is why it's very important to read your paperwork and ASK QUESTIONS when you're taking out a loan. I blame poor parenting and poor financial education for creating a society of people who don't read what they're signing and who think it's more important to not hold up the line/process/person waiting for the form than to ensure proper understanding.

Since they are not federally guaranteed loans, I think you can (as a possible up side, if you can call it that) go bankrupt on the loan if you need to. Whereas you can't on federally guaranteed loans.

Haha, A+ Doctor Who picture.

Also, Sallie Mae can kiss my ass. I've had nothing but problems with them. I once paid one of my smaller loans for an entire year, no problem at all, using one of THEIR coupon books, and then I got a letter telling me I had been paying them the wrong amount (short by about $1.25) and was therefor having to pay crazy late fees. I called them up, asked what the HELL, and was told after my first payment they re-did my loan payment numbers and thought I could pay them more each month. They just didn't tell ME this. And it took them a year to figure it out. Thankfully they waved the fee, admitted fault and I was able to regain some perks I had gotten for paying on time for a year. But still, it was SUCH a crazy run around and about a full week of calling them to fix the issue.

I won't even tell you what a pain in the ass it was to get them to change my address when I moved.

@Shappie: the feds still consolidate their loans....but the private companies won't consolidate their loans any more

@dr1024: unless she had any credit whatsoever, she would have needed a cosigner on the first private loan. and if I declare bankruptcy my nana gets hunted down for the 10k loan she cosigned on

Help me! I signed a contract and I didn't bother with something as basic as reading or understanding it first! Oh, woe is me! I blame the government, the school, and anybody else that is not me taking responsibility!

Not a blame the OP post but 140K is really expensive for a 4 yr program...were there no scholarships?

Granted I graduated in 2006 from a school that charged 40K a year, but I was poor and smart so they paid half my tuition, I paid some, my grandparents paid some, and I only owed 1 year's worth of tuition when I graduated

@Esquire99: So there onus of responsibility is only on people, and not at all on any business or corporation?

@dr1024: No, sadly private student loans are just as non-bankruptable as federal student loans.

Which is pretty screwed up if you ask me.

Ok, that picture just gave me the woogies.

@Esquire99: financial aid departments are NOTORIOUS for not telling you information that you could know to save yourself money...it's why I borrowed from sallie mae my 1st year of grad school, i didn't know the school was a direct loan school and I could have gotten a loan with a lower interest rate. Yes I'll read what I sign, but it would be appreciated if you gave me the information on ALL my options.

AND there were some very illegal profit sharing agreements b/w schools and some lenders a while back.

My wife recently applied for student loans from Wells Fargo (grad school, long story why we had to go to them). We got approved and then the loans went to certification. We NEVER saw an interest rate or anything. I kept waiting for them to say "here are the terms that you're signing up for". There was NOTHING. We couldn't shop them around. I kept looking for some sort of documentation saying "hey, here is what you're going to be paying in APR afterwards".

We ended up not having to take dispersement on them because of this, and avoided that mess. She got loans elsewhere. Still it was really scary. I can't imagine an 18 year old having this stuff put in front of them. I was just happy to be there when I was 18. Now that I'm 27, I know what not to do.

@sponica:

so you're confused as to why someone has 140k of debt when you yourself went to a 4 year school at 40k (for a total of 160) while getting a partial scholarship and having your grandparents helping you out?

and scholarships are very hard to get if you're middle class or richer unless your a genius.

@Joseph Fisher: eh i can see why they are non-dischargeable...why should sallie mae or any other company have to foot your bill for college because it didn't work out?

but from what my mother tells me we have med students to blame, they'd graduate, declare bankruptcy with their high enough salaries to live a decent life and pay cash for everything, so it didn't matter their credit was in the dumps....

The picture choice made my geeky morning, I have to admit. As for student loans, I didn't take any out the first time but now I'm considering going back to school and the very idea is overwhelming. Stories like this don't do much for that, though I'd rather know what to look out for than not to know.

@Skaperen: I've got to agree with Skaperen's point which is that a corporation should have some responsibility to educate their customers.

Like many people, I got have a private student loan that I got in college. It's so easy to target the fresh faced college kids who have just emerged from High School. I had a niave point of view in those days and I am sure I was easy pickings for what turned out to be a predatory high interest student loan.

Its unrealistic to think that many, or any, college freshman would have the working knowledge of finance and the jaded cyncism necessary to approach these companies.

@Esquire99: BTW, knowledge of finance and the loan industry, while valuable, is not a good indicator for quality of parenting.

I agree about the education system though. I wish that High School civics was more comprehensive. Wish in one hand..., eh?

Sorry man, but I blame the OP here.

I have close to 40K in student loans from Sallie Mae, most of which are private.

If I recall, the paperwork I had clearly indicated what portion of the loans I took were federal and what portion were private.

If you're smart enough to go to college, you should be smart enough to skim your contracts for important information such as this.

@BigFoot_Pete: I'm all in favor of personal responsibility and all, but I know a few people who have dealt with Sallie Mae, and from what I gather, they go way out of their way to mislead students about what sort of loan they're getting.

They also engage in some dubious debt collection practices. I've heard multiple accounts of someone who fell behind on their loans, called Sallie Mae to set up a new payment plan, both parties agreed to said plan, and then S M went behind the debtor's back and approached their employer to get their paycheck garnished.

Like I said, I'm all for personal responsibility. Read what you sign, and ask questions if you don't understand it. None of that should excuse the misleading and shady practices of Sallie Mae. Just as a person should be held accountable for their loans, so too should Sallie Mae be held responsible for their significantly-less-than-honest business practices.

@sponica: I would say your mother is wrong on that one.

Same thing happened to me! My Financial aid department, we found out after the fact, was doing all sorts of shady dealings behind our backs with SallieMae and now us students are stuck with the bill. So here I am with a degree I cant find a job for in this economy and having to pay back loans I was mislead to believe was something else and working 2 jobs 7 days a week just to barely pay back my student loans and not leaving anything else to really survive on. Why cant they just bail out student loans? They bailout everything else.

@Esquire99: ok, i agree with that, but only up to the point that STUDENT LOANS ARE NOT DISCHARGEABLE! if the government is going to protect the industry, then the industry has a responsibility to adhere to a set of guidelines that shield the consumer from abuse. & part of that is a responsibility by the lender to ensure that borrowers know what they're signing on for.

@sponica: Yeah, my dad is on the hook if I default. It just feeds my burning hatred for these companies.

I remember when I called them after graduating and listened as a rep explained that this is designed as a 30 year loan. I'm making large payments so it's going faster than that, but seriously, a 30 year loan designed for a college freshman?

@ilves: i think it's more emblematic of a larger issue...i KNEW my college was going to be too expensive and was only going to go if I could make it cheap enough. Since it ended up costing me less than the public school with no grant aid, I went there. I wasn't going to go if it wasn't in my price range...but I'm just a cheap witch anyway

@JulesNoctambule: if you go back, see if the school has the Direct Loan program from the federal government, low fixed interest rates. AND no dealing with sallie mae (who somehow owns my stafford loans)
depending on your field, there could also be research money to be had...

@Eldritch:

That happened to my sister with Texas loans (Hinson-Hazelwood is run by the most incompetent people on earth.) They told her one amount to pay and then re-adjusted it without telling her. My parents (who co-signed) got a nasty letter from the state of Texas saying they were being sued because of the loan company's mistake. It all got worked out thought, thankfully.

@sponica:
I think the school has a "moral" obligation to tell you, but nothing more. It's pretty crappy that they don't, but there should be no legal requirement that they baby you. If you don't ask questions, that's your fault. If you don't ask, "Is this my only option?," that's on you. People need to learn look out for themselves and not expect others to hold their hands and guide them (save for their parents).

@Skaperen:
The legal responsibility, yes. I think that companies should make sure their customers are informed, but I strongly resist any legal obligation that they do so. If they don't want to take the time to point out and explain all of a customers options without being prompted, they shouldn't have to. The onus is on the customer to ask any pertinent questions, and then the responsibility shifts to the company to properly answer the question. They shouldn't have an affirmative duty to make sure people know all that the company thinks they need to.

Its terrible that a company like sallie mae is allowed to stay in opperation, i had almost an 800 credit score 2 years ago...they allowed someone to take out a loan with no signature in my name, the money was sent directly to that person not my school without my knowledge! guess what im stuck with the bill after getting a car loan at the bank i found out about a "default loan" on my report! Sallie mae will not talk to me other than to say i "cosigned" a loan and they will continue to rock my credit and disqualify me from student loans....F*** sallie mae

@Conquestofbread -- you're entirely right. If you're borrowing $140,000 in loans READ THE FINE PRINT, hell just read the print in general. WHen something is a private loan, government subsidized (ie, ELM, etc), or federal, it is very clear. The article reading that the person "Assumed it was a Federal loan."

Why is anybody assuming anything when they're borrowing $140,000?

I do place some responsibility on the financial aid office of the school too. I worked in Enrollment at a private college ($40k/year) for three years prior to the job that I have now and while we're a smaller school that gives much more attention to the students, most offices can spare a few minutes to run over your options for financial aid. Ultimately, it benefits the school -- if a host of grads aren't paying their loans off, it'll be harder for the school to qualify for state, federal, and private programs.

But, the responsibility falls on the borrower for "assuming that these were federal loans." Who's she think she is getting a federal loan like that, the auto industry?

Oh dog, Brooks Institute. They're already in some trouble for over-promising employability after over-paying for their program. Run, run away.

@ilves: I have $150,000 in student loans, paid nothing out of pocket, and spent five years at a private liberal arts school and three years in grad school. $140,000 for four years is insane.

@Esquire99: That's unrealistic! Not everybody comes out of High School with an instant distrust of the world. These are basically kids! Legally adults, but still children for all of that. Financial wisdom comes with time. It stands to reason that there should be some institutions that a college kid should be able to trust. A student financial aid office at a university certainly seems like it * should * be one of those.

@Prole: mine are 10 year loans.... but I know back when they offered private loan consolidation, the repayment could stretch as much as 30 yrs. because i totally want to be paying my loans off when my theoretical kids are in college...

@conquestofbread: I'm not disagreeing as a whole (I have nearly $30K in private SM loans), but when kids head off to college, they're generally 18 (and have never legally entered into a contract before), have never seen (and will likely never see) that much money in their lives, and are just generally not well-versed in finances. It's really a lot to throw on a kid.

Still, there were three things I made sure to know when signing up for my loans: the interest rates, repayment terms (grace periods, etc.), and funding source (Private, Stafford, etc). I've never technically read my promissory note or contract, and probably won't ever get around to it (it's now 6 years after graduation).

If you're smart enough to go to college, you should be smart enough to skim your contracts

@sponica: Heh, yeah, I was signed in to 30 year repayment right off the rip. If I could do it over, I would have done it much differently.

@burnedout: Yeah, they were sending notices out to folks who had loans in 2005 to consolidate now because rates were going to go up by the next month. I was one of the lucky ones who consolidated before the deadline and locked in 2.8% as well :-D

@BigFoot_Pete: As bad as it is, I agree. I came from a low income home, so it was extremeley important for me to look over my paperwork and make sure that I knew what I was signing. I only had 2 small loans, one of which is already paid off. I did receive letters from banks, my school's financial department, and the government about other loans -- but reading the agreements and fine print, and finding out that they charged outrageous interest, I knew better. So yes, it's horrible that SM did this, but the OP is partly to blame to ignore the fine print and for failing to ask questions. It's your finances, your future, you are the one that needs to deal with it and ask before you sign. It's been a few years now, so I guess the OP has to deal with it, goodluck.

Shamefully, this happened to me in 2000.

I thought they were government loans with a low interest rate. It's my own fault because I didn't take the time to read the paperwork properly.

Original loan amount: $10,279
Interest Rate: 14.99%

Since then, I'm in a debt consolidation program that actually took private student loans and lowered the interest rate (a bit) and I'll be finally rid of this by 2012.

Current balance: $9168.25
Interest Rate: 10.75%

@exploded: Yeah, an 18 year old is not really equipped to deal with these issues. I am convinced that many student loan companies count on this and deliberately take advantage of their ignorance if possible.

My student loan story:

I graduated HS in 2001. I managed a stellar GPA and got full scholarships to a few state schools. I was stubborn and decided I'd rather go to the more competitive and science minded private school, who offered me partial merit aid. I graduated with my BS in 2005 with ~$99,000 in student loans. With all the interest added in, when I started making payments 6 months after graduation, I was over $120,000 in debt. My payments were over 1000 a month. I couldn't afford to pay my students loans and live on my own at the same time. I was lucky enough to be able to live with my boyfriend, I don't know what I would have done if I didn't have that option.

I soon realized that as a scientist, I can't climb very far without an advanced degree. I went back to school for my MS in 2005 and paid the ~35,000 for the degree out of pocket with a payment plan. I put my student loans on hold, paying whatever I could scrape up toward the loans to try and keep the interest at bay. I finished my MS in December of last year and started paying my loans in full again in January 2009. Over the course of 4 years, the interest rates on my loans dropped from 7.5 to 3.0% and my required payment dropped from 1100 to 800 a month.

When I initially started paying my loans I was extremely depressed. I felt cheated and misled. When I took the first loan out, I was 18, barely an adult, and all I knew was that I didn't have the money to go to school, my parents didn't have the money to pay for me to go to school, and all I had to do was call up Sallie Mae, give them my SS# and I could go to school. No one ever made any mention or showed me anything telling me that when I graduated I had to come up with $1100 a month. As a new graduate, that was over half my take home pay each month. Once I paid my loans, car insurance, gas to get to work and for food, I had next to no money left. Forget about saving anything. It was a hard pill to swallow.

Should I have known how difficult it would have been? Maybe. Is this my own fault? Sure, I can own up to that that. But I was really blind sided by how much I was going to have to pay each month. My school really had me convinced that a degree from them in my chosen field was going to get me a high starting salary and paying my loans would be no problem.

In total, (I just looked at my account and added it all up) I have paid 18,513.68 toward my loans since 2005. But with the capitalized interest and my inability to make payments while I was in school, I still have a balance of 110,075.97, on an original loan of 99,000.

I feel for the OP, I really do.

I ended up getting most of my college paid for using CitiAssist loans from Citibank... right now, I'm paying less then 3% interest on it which is more then half the interest rate I'm paying on my federal loans.

Sure, they aren't locked in at that rate and they will probably go up, but I plan on paying off my college loans in 5 years rather then 10 like they are suggesting and if this happens within the next 5 years, I'll just consolidate all of my student loans into a new loan with a locked in interest rate between 4%-6% and pay them off just as quickly and pay a little bit more in the end.

It's not hard. The person who wrote in just failed by not knowing what she was doing before taking a huge sum of money.

@rugman11: well you have more than me...my 4 years of private undergrad and 3 years of public grad school have cost me 113K in principle and capitalized interest.
not sure what your loans are or when you borrowed, but now the direct loans offer income sensitive repayment, which means I can consolidate my staffords and direct loans and pay interest only, pay some of my perkins, and dump all my money into the 40K of private loans.

@Esquire99: This exact thing happened to me. I thought Sallie Mae only did federal loans and I was trying to take responsibility of my educations, so I didn't have my parents review the docs. I actually did read them all, but I was 18 at the time and I didnt really understand what I was reading. It was only after I graduated that I realized it was a private loan. I accept my responsibility and luckily I only took out $15K, so I'm not in bad shape, but the paperwork is really not clear.

@Esquire99: great. & if a lender let's someone borrow money that they can't afford to repay, they get to eat the loss, right?

do you honestly think it's just to allow companies to strap 18-year old kids with $100k+ in debt that they can never get out from under? to me, that not only seems unjust, but also incredibly unwise.

@BigFoot_Pete: Why don't you get off your freakin high horse. I read my contract and yes, it's my fault for not fully understanding what I was getting into, but apparently you're too dense to realize that they are deliberately misleading.