I Owe $130,000 in Student Loans

Jennifer Sammartino has a great education and a mountain of student loan debt By Gemma DiCasimirro and Alexis Leonard | Thursday, Feb 9, 2012 | Updated 5:43 PM EST

When Jennifer Sammartino needed help paying for college, she, like many students, took out federal and private loans. Now she’s faced with over $130,000 in student loan debt.

After Sammartino graduated from La Salle University with a Bachelor's degree in Psychology. she had no luck getting a job. She then made the decision to go back to school, hoping that a Master’s degree would bring in more job opportunities.

Unable to get approved by herself, Sammartino’s parents co-signed for the majority of her loans. Now they could be in serious financial trouble too.

Sammartino, now with her Master’s degree is still unable to find a job in her field. She works as a case manager for special needs children, but her salary isn't enough to pay back all the money she owes for her education.

The debt seems overwhelming to Sammartino. “I would like to be able to pay my student loans, and we know that we have to pay them back,” she says, “But we don’t know where to start.”

I’d rather see fewer loans than see young people in debt bondage to the FedGov for liberal underwater basketweaving degrees, but that’s just me.

Nope, it's not just you. But, I'd approach it a different way.

My preference would be to get the government out of guaranteeing student loans altogether. I see that you made the same suggestion later. But, the reality is that a college student would find it very difficult to get a student loan if they were subject to the same underwriting standards as a personal loan -- which is what a student loan would be. Someone else would have to co-sign the loan or pledge collateral.

A middle ground would be for the banks to apply some kind of underwriting standard to the student's future income in their chosen profession. No one should be borrowing $130,000 for an future salary that can't possibly make the payments on the loan. And, no bank should be loaning money under those circumstances.

Before the mortgage bubble (and presumably afterward), banks wouldn't underwrite a mortgage for payments that exceeded 28% of the borrower's gross income, or for total debt service (car loans, etc.) above 33% of gross income. We need that kind of standard for student loans, which accounts for average starting income and the actual job market for graduates with the degree in question..

Put limits on the term of the loan (15, 10, or even 5 years after graduation) so that the student doesn't find themselves making payments for so long they can never buy a house, start a family, etc.

You are working really hard to miss the point.

You have a point? I'd wish you'd state it.

I want gov’t out of the student loan business. There is a higher education bubble still working right now that has similarities to the residential real estate bubble brought on by gov’t loans, loan guarantees, Freddie, Fannie, etc. I want that bubble to end.

Actually I don't disagree with that. I just think that going to school and then declaring bankruptcy at the end of it would be an invitation to a major disaster for lenders. The place to dump you school debt burden is BEFORE you sign up. In other words if you can't afford a college, go to a cheaper one - pick up the first two years in community colllege, etc. This idiot is a typical example of a complete waste of education dollars. She got a BA in a field with no job prospects and then doubled down on stupid by getting a masters in the same field. If your idea of dumping the debt with bankruptcy were available, then she could just dump the consequences of her poor decisions on the lender and waltz away to try another stupid idea.

you appear to be supporting gov’t student loan guarantees.

Talk about not getting the point. I'm going in opposite direction. I'd like student loans to be tied back to the student and NOT guaranteed by anyone else. No bankruptcy to say, "Oops I just wasted 4 years and $100,000. I'll take the easy way out and stick someone else with the debt. I'm 22 and a 7 year hit on my credit score for a bankruptcy won't mean that much anyway"

I want loans treated largely the same for all purposes. I see no reason for a student loan to be treated any different than other consumer debt with respect to bankruptcy.

I want loans treated largely the same for all purposes.

Even with the tightening of the bankruptcy rules it's still too easy to shed unsecured debt. And you want to make it easier.

I see no reason for a student loan to be treated any different than other consumer debt with respect to bankruptcy.

For one thing it is quantitatively different that most other unsecured consumer debt. What's the max limit on a credit card that a person with no credit history could get? $5000? $7500? The risk to the lender is an order of magnitude higher.

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