Michelle Bisutti, a 41 year old family practitioner in Columbus, Ohio finished medical school in 2003. When she left school her debt was about $250,000 dollars, a daunting number in itself. In the last seven years it’s more than doubled to an unimaginable half a million dollars.
How did she get there? It wasn’t hard. Deferred loan payments while she completed her residency, a few default charges and relentlessly compounding interest rates. Even the smallest mistake costs Michelle more than what many people call a years salary – a few missed payments led to the loan being turned over to a collections agency, and a $53,870 dollar fee being added to the title.
Bisutti agrees that “maybe half of it was [her] fault because [she] didn’t look at the fine print.” but insists that “this is just outrageous now.”
With rising tuitions, student loan burdens are growing exponentially everywhere, often to levels that seem impossible for borrowers to pay down, even with the higher salaries that their educations allow them to command. Student loans are one of the most toxic debts around – unlike other kinds of debt, these loans can’t be discharged in bankruptcy. Lenders insist that they work with people who get in trouble, but getting fees or principals waived is nearly impossible.
Which doesn’t stop people from trying. With something like $730 billion in outstanding federal and private student-loan debt in America, and only about 40% of that debt is actively being repaid. The rest is in default, deferment or forebearance. These delays allow massive amounts of fees and interest to accrue, and loan agencies almost always flatly refuse to to modify terms in order to stop these loans from getting out of control. New legislation is being floated to allow student loans to be dischargeble in bankruptcy for those who have made a good-faith effort to repay them, and some lenders like Sallie Mae are supporting the effort. But, even if that legislation passes, it’s clear that even education isn’t a worthwhile enough investment to get into extraordinary debt over.
