I feel like no one else is looking at the math on this story. If she has been paying $650 a month for 12 months, and has never missed a payment.... she’s paid over $93,000 on a $75K loan, and still owes $54K ?? Either something is fishy, or her interest rate is really high.
The rate is high, but so is the risk. She’s paying about 8.5%, on a 20 year amortization schedule. It’s good business for the lenders, but this is unsecured debt and servicing costs are probably a lot higher than most home loans. Is the default rate that bad? It’s my understanding that it’s very hard to get this kind of debt discharged in bankruptcy.
Most college students could benefit from having a financial advocate advise them before they sign on the dotted line. Legally they’re adults, but they know nothing of economics or finance and have no understanding of what they’re getting themselves into. There ought to be a truth-in-lending law requiring disclosure about employment opportunities and post-graduation starting salaries so the kids can have an idea what kind of hole they’re digging for themselves. Letting puppetry majors borrow $100K isn’t criminal, but maybe it ought to be. It certainly borders on the predatory.