Meet Alison, a recent graduate from Ohio working in New York City who we’ve interviewed about her experience with student loan debt:
Piecewise: Tell us a little about yourself.
Alison: I’m 25 years old and I graduated in May of 2018 with a Bachelor of Fine Arts Degree in Fashion Design from a large school in Ohio. I am currently living in New York City and working as an Assistant Designer at a famous denim company.
Piecewise: Do you use what you learned in school for your job?
Alison: My answer to that is mixed: it's necessary to know the basics I learned in class in order to do the job, but there are so many other things taught that are so specific you're not likely to use them in the industry at all. On the other side, there's a lot of stuff that you can really only learn on the job.
Piecewise: How easy or hard was it to find a job here?
Alison: I was pretty lucky with my first job, they hired me right away through the phone. But it didn’t end up being what it was supposed to be, I was more a showroom assistant than a design assistant, which was the work experience I wanted. And at that time, I remember thinking to myself: I went through all of these years of college and put myself in such huge debt just to be a showroom assistant! I had to bounce around to a few different positions and companies before I could be hired back at the company I currently work for to do the job I'd gotten a college degree for.
Piecewise: What was your story of you taking out debt to go to college?
Alison: Neither of my parents went to college, they are a bit older and back then in Ohio basically nobody from my community went to college. I think they view it as something for this generation. Since my mom and dad didn’t go to college, my mom was just listening to what other people were saying to her in the financial aid process, and basically doing what everyone was telling her to do along the way without any knowledge of negative consequences. Of course I didn’t know anything about debt or even personal finance either, so I was going along with whatever my mom was doing since I was 18. She would always do my loan paperwork and I would sit there and be there to sign without understanding a thing except that I'd get to continue going to school. I never really knew how much we were borrowing, I was just thinking that I’ll deal with it later, when I graduate. I didn’t know what the total balance was until graduation, when I had to do the exit counseling. I called my servicer and they told me the balance. I remember being shocked hearing this huge number and telling my mom that I didn’t know it would be that much. She was telling me that there was nothing she or I could do. I had to take out the maximum amount in order to go to school and on top of that, my major, which is design, was one of the most expensive options at my school because you have to buy your own materials since the school doesn’t supply anything. So during my senior year, on top of my student loans, I probably took out another $3,000 just to help with my final project which was me creating a collection. At that time I was working but I had rent and a car payment so my loans helped out with those things. I was a full-time student so I could only work 20 hours a week.
Piecewise: How did it work every year for you to take out loans?
Alison: Every year would be basically the same-- I had my dad as my cosigner for some of my loans so that I could get a lower interest rate. Then, I would also get financial aid for an amount of about $1,500 per semester. So the rest of my money was all private loans. Federal loans are nice because they work with you, I haven’t paid a dollar towards them yet because they have options like income based repayment or deferment. Little did I know that my experience with Sallie Mae was going to be another story.
Piecewise: Do you know what your split is of federal loans versus private loans is?
Alison: I am at about $10,000 for federal loans and I am at $120,000 for private loans. Me and my mom didn’t know there was such a huge difference in taking out federal versus private loans. My mom was just listening to people telling her to use Sallie Mae, but most people telling her that were people that could help their kids with the payments. Sallie Mae told me that if I can’t pay my loans, then my co-signer can do it. The thing is, my dad makes the same amount of money as me! And my dad agreed to be my co-signer so that I could get lower interest rates, but I never expected him to also pay back my loans, and wouldn’t want to put that burden on him.
Piecewise: So have you gotten in contact with Sallie Mae?
Alison: Yes I have, maybe too many times to be honest. I would call and talk to different people and what they would end up telling me is that they couldn’t do anything for me but in order to get help from someone higher up, like the collections department, I would have to purposely miss my payment so that I would get a call from the people who could eventually help me. They called me and gave me some options but none that I could work with. I really feel like they need a different system because they only have three options: you either pay in full, you pay interest only, or you can enter forbearance for up to one year out of the lifetime of your loan. I’ve already gone through a whole year since I graduated, so now my only two options are to pay the interest, which wouldn’t really do anything to reduce my total balance but would still amount to $900/month. And if I pay in full, it’ll be $1,900 a month! I just wonder how they can expect me to make a payment that’s almost double my rent and more than my whole paycheck. There’s no way.
Piecewise: Have you missed a payment yet?
Alison: No, but my forbearance is coming to an end in a few days. That’s really soon and I am not prepared for it. My mom and I are trying to see if there would be any refinancing option available for us so that we could borrow money at a lower interest rate to pay off my loans.
Piecewise: You want to avoid defaulting as best as you can. Default is reported to the credit bureaus if you miss payments for 9 months which is a long time so there are intermediary things you can do to avoid being in this situation. We'll get started by figuring out your refinancing options to lower your interest rates as much as possible so you owe less in the long run.
Like millions of students across the U.S, Alison is in a tough situation where she can't make her required payments. Piecewise is currently helping Alison through a refinancing process to help her lower her monthly payment and ensure that she doesn't default. Stay tuned for updates, and if you find yourself in a similar situation to Alison, don't hesitate to reach out to firstname.lastname@example.org. We're here to help!
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