Dictionary.com defines usury as – the lending or practice of lending money at an exorbitant interest. In practice, the street definition has been mangled a little to apply to any assholish lending practices, and my conversation this morning certainly qualifies on that regard, if not under the “exorbitant interest” qualifier. What follows is a cautionary tale of a man who mortgaged his adulthood for an education and is still paying for the privilege fifteen years later.
When I was in high school, I wanted to be a teacher. As soon as you’re done laughing at the concept I’ll continue. I wanted to be a high school English teacher in the Dead Poets Society vein, not realizing that most people who attempt to teach using those methods would end up quickly unemployed. As the child of working-class parents, I was informed at a very young age that if I wanted to attend college, it would be on my nickel. So I worked hard and got scholarships that would cover all my tuition to Winthrop, one of the schools I had short-listed. That list became one name long when they sent that scholarship offer.
The only problem was, tuition was but one portion of the expenses that had to be covered to get my happy ass educated. So I applied for Pell grants and this new thing called the South Carolina Teacher’s Loan. Now this loan was a great idea on the part of the state of SC, because if you became a teacher in SC at the end of your college education, the loan would be forgiven at the rate of 20% per year. So teach in SC for five years, and you don’t owe any money. Great, right?
Except I decided at the end of my junior year that I had no interest in becoming a teacher. So I finished up college like a lot of people, with a pile of student loans that I couldn’t afford to pay. So I didn’t pay them. And I didn’t pay them. And I continued to not pay them for a decade or so. A couple of years ago, I started paying on the student loans, and they stopped calling me with nasty threats, and all was good in the ‘hood. Until last week. I went online to check the total remaining balance, kind of a beginning of the year what’s up with my debt check-in, only to find that the amount listed as my monthly payment had increased by $120 per month.
I was a little befuddled, so I called the SC Student Loan Corporation and spoke to Tara, a very helpful young lady who had no idea what was going on. So she promised to look into things and call me back. Then she noticed that I was on what they call a graduated repayment plan, which might explain why the payment was increasing. I figured, “ok, not a huge deal, I can afford the extra $120/month, and if it’ll get this thing paid off quicker, all the better.” But Tara promised to talk to her supervisor and call me back.
Which she did, this morning. And she responded, as I expected, that her supervisor at the SC Student Loan Corp. said there was no way they could forgive any of the interest or renegotiate anything with me, and that my payment was scheduled for another increase on January 20th, 2010. I expressed some dismay at this, since the increase of $120/month was dated January 10th. So I said that Tara should probably have her supervisor call me, because a loan that increased by 25% in the monthly payment one month shouldn’t reasonably increase ANOTHER 25% ten days later. So I expressed to Tara that I couldn’t afford to make that payment, and someone should call me.
Now I’m not going to say that I’m without fault here. Had I paid the loans on time, I’d be done five years ago. Had I had the money to pay the loans, I’d have paid them. But this latest development is a little ridiculous, and now I just have to sit and wait for the fine folks at the SC Student Loan Corporation to get back to me and convince me that they’re not screwing me over, and that I shouldn’t just tell them to go into the kitchen and fix themselves a nice hit steaming cup of go fuck yourself. Which I won’t do, because I can’t.
Because here’s the cautionary tale about student loans – they never go away. They are guaranteed by the gubmint, and the gubmint gone get they money somehow. If I had paid for my room and board on credit cards I could have declared bankruptcy and pissed off with an education and never paid for it, or just settled with the creditor for less interest. But since it’s a student loan, I’m hosed. So now I wait for the nice supervisor to call me and try to figure out some equitable solution to this that doesn’t involve me taking a loan out against my 401k to pay off the student loan and then pay myself back into my 401k over the next four years. So pay attention to the terms of your student loan, because unlike other debts you’ll incur in life, they don’t have to work with you, or be reasonable, or do anything the way normal creditors do.
I wonder how many teachers in SC became that for the sole purpose of getting out of that loan even though they changed their mind about that career choice.
Jct: Ezekiel 18 says the wicked is he who takes usury or excessive interest. Ezekiel saw a difference between demanding usury on money or gold and demanding excessive interest on cows or grain. Can you see the difference? Usury creates a death-gamble mort-gage musical chairs game among participants.
I am surprised, sometimes, by the lack of good, comprehensive explanations by lending institutions, credit card companies, etc., about the real implications of deferred payments, payment plans, stepped payment plans, and things that are designed to give you a break up front and kick your ass on the backend. As a finance person, I think there is probably a real lack of understanding in general about how things like that work, and no one really comes up with good clear documentation about how it does.
And we wonder how we got ourselves, as a nation, into the mortgage crisis.
As much as you understand the part you played yourself, still sorry to hear its kicking your butt – but good to share the lesson learned with others.
i was a NC Teaching Fellow so I know this woe quite well. I finally consolidated mine into another loan before I realized that you could write off student loan interest – doh! I also made it to about my junior year when I realized I couldn’t teach at the high school level.
They really should do more to explain these kinds of things before you are allowed to take out the loan. I will say when I took out a smaller amt for graduate school, just after graduation you had to do an online course that explained everything. But, why wasn’t that done at the get go?