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Wednesday, Aug. 20, 2008 01:40 am

Case studies: How they dealt with debt


Thanks to StudentLoanJustice.org, a national grassroots advocacy organization and political action committee, students from all over have banded together to speak out about the sticky student loan situation. Two central Illinois members share their stories:

A local biology professor, who wishes to remain anonymous, began her career with a full-ride scholarship to Saint Louis University. She graduated in 1995 and enrolled in a Chicago medical school. After two years, she decided to switch directions. She took time off school and went on to receive a master's degree in biochemistry from the University of Missouri-St. Louis in 2005.

She took out loans for both medical school and graduate school, and after graduation faced a total debt of nearly $160,000. She attempted to move all of her loans from Sallie Mae to Great Lakes Higher Education Corp., but one of the specialized loans wouldn't transfer. Each month she sends $426 to Great Lakes and $200 to Sallie Mae.

She dealt with the biggest nightmare, she says, before she made the decision to go to UMSL.

"I was trying to find a job where I could afford these payments," the biology professor says. "I started to tutor, had a couple of research positions, and waited tables, but it just seemed like I never made enough to pay them and pay everything else I owed, like rent and other bills.

"It got to the point where I couldn't afford to live, so I filed for bankruptcy. I was very young and naïve, and I didn't see any other way out."

She didn't know that her student loans weren't dischargeable in bankruptcy and now on her credit report she has a bankruptcy that did little to alleviate her situation.

In hindsight, she says, she sees problems with the expense of education and with loan companies' reluctance to help students erase their debt.

"I was taking out massive amounts of loans when I was younger," she says, "and I thought it would be easy for me to pay them back. You don't realize how many things are just expensive."

Wilma Washington of Charleston classifies herself as a nontraditional student.

In 1980 she took out a $2,500 loan to fund a bachelor's degree in political science at Eastern Illinois University. She was a single mom raising two kids, and when she got pregnant with her third child two years later, she decided to leave EIU.

"I was struggling, trying to work, and I just gave up," Washington says. "You know the story of a single mom, uneducated, trying to raise three children. That was my life."

She filed for bankruptcy and moved to Louisiana. When she returned to Illinois in 1990 and reapplied for EIU, she received notice that her loan was never discharged and that its total had ballooned to $9,000. Since so much time had gone by, she says, her loans had defaulted and she wasn't granted a deferment. Instead her wages from housekeeping and customer service jobs were garnished and her income tax was taken.

The loan's interest continued to accumulate. After she was taken to court, attorney's fees were added to the mix.

"I continued to work like I have, do my income taxes, and let them take it," Washington says. "That was the only way I was getting it knocked down — it wasn't going to go anywhere, it was only continuing to grow.

"But in 2004, they were satisfied. After paying over $18,000 on an original $2,500 loan, they discharged it."

Now that she doesn't have kids at home anymore, Washington has decided to go back to school for a degree in geriatric nursing. She took out $6,000 in student loans and started at EIU on June 8. She'll take out more in the fall to cover living expenses, but says she's not worried this time.

"By the time I finish my degree and pay back my loans, I won't have this problem," Washington says. "Now it's more worth it, because I'm more focused than I was. Under no circumstances will I let it go into default."

— Amanda Robert

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