You’ll Never Guess the Latest Victims of the Student Loan Crisis

hand reaching out of hole using adding machine with rolls of paper
Renold Zergat—Getty Images

A fast-growing number of seniors are hitting retirement with a student debt burden. Even their Social Security is at risk.

Most debt you can get out of—painful as it might be. Credit card debt can be cleared in bankruptcy. A mortgage can end in foreclosure. But student debt is more sticky, and it turns out it can have big consequences in retirement.

Last year, Richard Minuti’s Social Security payments were cut by 10%.

The Philadelphia native was already earning only a bit over $10,000 a year, including some part-time work as a tutor. “I was desperate,” says Minuti. “Taking 10% of a person’s pay who’s trying to live with bills, that’s the cruelty of it.”

The Treasury Department was taking the money to pay for federal student loans he had taken out years before. Just before age 50, Minuti had gone back to college to get a second bachelor’s degree and a better job in social work and counseling. But the non-profit jobs he landed afterwards were lower paying, and he defaulted on the debt.

Student debt’s painful new twist

Minuti is one of the small but expanding group of seniors who are hitting retirement with a student debt burden. Over the past decade, people over the age of 60 had the fastest growing educational loan balances of any age group, according to the Federal Reserve Bank of New York. The total amount grew by more than nine times, from $6 billion in 2004 to $58 billion in 2014.


Only about 4% of households headed by people age 65 to 74 carry educational debt, according to a 2014 U.S. Government Accountability Office report. But as recently as 2004, student loans balances in retirement were close to unheard of, affecting less than 1% of this group.

Educational loans are very difficult to pay off when you are in or near retirement. Unlike a new college grad, there’s little prospect of years of rising salary income to help pay off the loan. That’s one reason older debtors have the highest default rate of any age group. (Also, most people who can’t pay off a loan will eventually age into being included among older debtors.) Over half of federal loans held by people over age 75 are in default, according to the GAO.

Student loan debts can’t be discharged in bankruptcy. And, as Minuti learned, federal tax refunds and up to 15% of wages and Social Security can be garnished.

This can be devastating, says Joanna Darcus, consumer rights attorney at Community Legal Services of Philadelphia.

“Most clients find me because the collection activity that they’re facing is preventing them from paying their utilities, from buying food for themselves, from paying their rent or their mortgage,” says Darcus, who works with low-income borrowers.

The number of seniors whose Social Security checks were garnished rose by roughly six times over the past decade, from about 6,000 to 36,000 people, says the GAO. Legislation from the mid-1990s ensured recipients could still get a minimum of $750 a month. At the time, this was enough to keep them from sliding below the poverty threshold. But to meet the current threshold, Congress would need to increase this to above $1,000 a month.

In other words, with enough debt, a Social Security recipient can be pulled into poverty.

“That’s pretty stressful for seniors when they understand that,” says Jan Miller, a student loan consultant who has seen a rise in his senior clients.

What’s behind the rise?

It’s not, despite what you might guess, only about parents who are taking on loans for their kids late in their careers.

Listen: How to decide if you should take out loans for your children’s education

In the GAO data, about 18% of federal educational debt held by seniors was from Parent PLUS loans for children or grandchildren. The remaining 82% was taken out by the borrower for his or her own education. (The GAO data differs from the New York Fed’s, showing lower total balances, so it may be missing some parental borrowing.)


Darcus says many of her clients turned to education as a solution to unemployment and long-stagnant wages. Enrollment for all full and part-time students over age 35 increased 20% from 2004 to its recessionary peak in 2010, according to the National Center for Education Statistics.

“Among many of my clients, education is viewed as a pathway out of poverty and toward financial stability, but their reality is much different from that,” Darcus says. “Sometimes it’s their debt that keeps them in poverty, or pushes them deeper into it.”

And in recent years, both tuition and older debts have been especially difficult to pay, as home values and household assets took a hit in the Great Recession. Meanwhile, of course, the cost of higher education has soared. Tuition for private nonprofit institutions is up 78% in real dollars since 2004, according to the College Board.

What may be changing

New regulations and legislation this year may bring some relief to educational loan borrowers. The Senate in March introduced legislation to make private loans, but not federally subsidized loans, dismissible through bankruptcy.

For federal loans, more favorable income-driven repayment plans may be extended to up to 5 million borrowers this year. These plans, which have been growing in popularity since launching in 2009, adjust monthly payments according to reported discretionary income. The Department of Education is scheduled to issue new regulations by the end of 2015 that may allow all student borrowers to cap payments at 10% of their monthly income.

But it is unclear what percentage of that 5 million people are older borrowers who would benefit. Some borrowers have also complained that income-driven repayment plans require too much complex paperwork to enroll and stay enrolled. Borrowers who want to find out if they are already eligible for income-driven repayment plans can go here.

Parent PLUS loans would not be included in the new regulations. However, Parent PLUS loans can still be consolidated in order to take advantage of a similar, albeit less generous option, called the Income Contingent Repayment plan. This plan allows borrowers to cap their monthly payments at 20% of their discretionary income.

Still, some feel the best way to help seniors with student loan debt is to stop threatening to garnish Social Security benefits altogether. This spring, the Senate Aging Committee called for further investigations of the effects of student debt on seniors.

“Garnishing Social Security benefits defeats the entire point of the program—that’s why we don’t allow banks or credit card companies to do it,” said Sen. Claire McCaskill of Missouri in a statement.

Getting out from under

Richard Minuti was able to enroll in an income-based repayment plan last year with the help of a legal advocacy group. Because Minuti earned less than 150% of the federal poverty level, the government set his monthly obligation at $0, eliminating his monthly payment.

“I’m appreciative of that, thank God they have something like that,” Minuti says, “because obviously there are many people like myself who are similarly situated, 60-plus, and having these problems.”

But Deanne Loonin, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, says she doesn’t see the trend of rising educational debts ending any time soon. And some seniors will struggle with this debt well into retirement.

“I’ve got clients in nursing homes who are still having their Social Security garnished and they were in their 90s,” she says.

MONEY Student Loans

How a Student Loan Bill Can Go From $97K to $236K

Max Oppenheim—Getty Images

A tale of loan consolidation gone bad.

There’s been a lot of discussion lately about Americans deciding to not pay back their student loans. While the reasons for purposely defaulting on education debt vary, the consequences are invariably unpleasant: debt collection, wage garnishment, growing loan balances, even lawsuits.

For example: A Connecticut attorney’s student loan debt from law school has more than doubled since he stopped making payments in 2001, and a federal judge has ordered him to repay the higher amount, reports the Connecticut Law Tribune. According to the article and court papers, the lawyer owed $97,658.55 when he consolidated his loans in August 1999, which he intended to tackle through income-contingent repayment. However, he and the government disagreed on what the adjusted payment amount should be. More than a decade later, his balance has ballooned to $236,535, which a U.S. District Court judge recently ordered the lawyer to repay.

That’s just one story of how student loan debt can grow rapidly, but it’s not the only one. Education debt can quickly make a mess of any borrower’s finances. Student loans are rarely discharged in bankruptcy, meaning if you get into financial trouble and can’t make the payments, there’s not much you can do but try to catch up on the debt later. Forbearance and deferment can temporarily alleviate the pressure, but interest continues to accrue on the balance, potentially leaving you with more debt than you had in the first place. Once a borrower defaults on student loans, the lender may pursue the individual through debt collection or a lawsuit. Any income the borrower has may be subject to debt collection, and those who default on federal loans may lose out on future tax refunds and access to government programs like FHA loans.

On top of all that, if you fall behind on student loan payments, you’ll see your credit score suffer, potentially making it difficult for you to get a home or apartment, access affordable pricing on loan and credit products or set up services like utilities or a cellphone plan without having to pay a hefty deposit upfront. In some states, your credit history has an impact on how much you pay in car insurance premiums, too.

There are many reasons to make repaying your student loans a priority, and there are a few ways you can try to make your federal student loan payments more manageable. Before deciding not to pay, it’s important to research your repayment options and consider the long-term financial consequences of student loan default.

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MONEY Opinion

Defaulting on Student Loans Is Stupid, Not Brave

shirt saying "can't pay, won't pay"
Jeffrey Blackler—Alamy

Don't be a martyr.

Today’s college graduates need to get the message that defaulting on federal student loans is not just stupid, it is unnecessary.

That message easily could get lost in the controversy following a recent New York Times opinion piece, “Why I Defaulted on My Student Loans,” in which writer Lee Siegel not only defended his decision to ignore his education debt, but urged others to join him as a way of changing the economics of paying for college.

“If people groaning under the weight of student loans simply said, ‘Enough,’ then all the pieties about debt that have become absorbed into all the pieties about higher education might be brought into alignment with reality,” Siegel wrote. “Instead of guaranteeing loans, the government would have to guarantee a college education.”


We now have some indication that debt strikes may work: The U.S. Department of Education expanded its forgiveness program after some former students of the Corinthian Colleges chain – which shut down all its remaining campuses in late April – publicly refused to pay their debt, saying they’d been defrauded.

Before the chain collapsed, it had been fined by the Education Department for falsifying job placement claims and was the target of numerous other investigations for predatory lending and deceptive recruitment.

But the Education Department’s willingness to reconsider likely was less a response to the debt strike than to the intervention of state attorneys general and consumer advocates who encouraged the feds to be more generous with Corinthian victims.

In any case, Siegel’s piece downplays the personal and lifelong financial devastation that default can inflict, while ignoring the fact that there are now plenty of options for dealing with most student loan debt.

If debt collectors are sometimes likened to junkyard dogs, the Department of Education would be the one who is not chained or fenced. There is no statute of limitations on federal student loans, which means its collectors can chase you to your grave.

Along the way, they can snatch your tax refunds and garnish your wages without having to go to court. They can even take a bite out of your Social Security checks, something other creditors cannot do.

Borrowers pursued by other collectors can escape into bankruptcy court. Student loan borrowers are unlikely to find relief this way, since few can meet the stringent “undue hardship” clause courts require to erase this debt.

These powerful tools are among the reasons why the federal government expects its collection efforts to recover enough money in principal, interest and penalty fees to offset any defaults in its student loan programs.

Even before collection actions start, though, the failure to pay will take a heavy toll on a borrower’s credit – and thus impair the person’s ability to get credit cards, apartments and jobs.

Bad credit can inflate the cost of insurance and the size of deposits required for utilities and wireless phone service.

All this pain is increasingly unnecessary, since improvements in federal payment plans mean the vast majority of today’s student borrowers can find ways to avoid default.

The latest iteration of the Education Department’s Pay As You Earn program, for example, caps payments at 10 percent of discretionary income – defined as the amount over 150 percent of the federal poverty level for the borrower’s household size and state of residence. For some low-income borrowers, that can translate into monthly payments of zero dollars.

Forgiveness of remaining balances is possible after 10 years for those with public service jobs and after 20 years otherwise.

There are certainly some who will still struggle. Among them, for example, are higher-income borrowers who have crushing levels of other debt, who may have trouble staying current even under Pay As You Earn.

People with older student loans are not eligible for the new arrangement and may have to pay up to 15 percent of their discretionary income with the other available income-based repayment plan.

Parents who took out federal PLUS loans also are not eligible for the more generous repayment options, although they may qualify for an income-contingent plan that caps payments at 20 percent of discretionary income.

Meanwhile, private student loans, which make up roughly 15 percent of the $1 trillion or so currently owed in education debt, offer far fewer repayment options and consumer protections than federal student loan debt. That is why Congress should seriously consider the Consumer Financial Protection Bureau’s suggestion that these loans – which involve no taxpayer funds or government guarantees – be easier to discharge in bankruptcy court.

Other reforms, such as expanding grant aid, simplifying financial aid forms and expanding Pay As You Earn to other borrowers, should be considered as well. What is not worth discussing is default as political protest. Today’s graduates have much better options than to make human sacrifices of themselves.

Read next: Someone Took Out a Student Loan in My Name

MONEY credit cards

3 Things You Should Never Buy With a Credit Card — and 1 You Always Should

wedding cake
Keller & Keller Photography—Getty Images/StockFood

Beware the "snowball effect".

From time to time we bring you posts from our partners that may not be new but contain advice that bears repeating. Look for these classics on the weekends.

Credit cards shouldn’t scare you; when used correctly, they’re actually the most rewarding form of currency available today.

Seriously, when’s the last time you were rewarded with airline miles for using cash?

And while it’s highly recommended that everyone should apply for a credit card as early as possible to begin the process of building credit, there are a few things you should simply not charge to your card. Generally, these are big-ticket items that might take you a long time to pay back. And when it takes you a while to pay back a credit card purchase, eventually you end up paying interest. A lot of it.

The single easiest way to fall into credit card debt is to make a big-ticket purchase and spend the next several months paying it back in very small increments. That’s what they call the “Snowball Effect” — wherein you make minimum payments, half of which go to interest – and it’s a legitimate credit killer.

The trick to staying out of credit card debt is to make small, semi-regular purchases and pay the entire balance every month.

With that in mind, here are three things you should avoid paying for with your credit card … and as a bonus, one purchase we ALWAYS recommend using a credit card for.

Hospital Bills

NEVER put your hospital bills on a credit card. Medical bills are expensive as it is; the last thing you want to do is add high interest fees to those bills, too.

The fact of the matter is you can get on a payment plan with lower interest rates if you need to pay back your medical bills over time. Credit card interest rates range anywhere from 10% to 30%; you can get a much better rate through a payment plan initiated through the hospital. So take the time to sort this option out before sticking it all on your credit card.

Student Expenses

Student debt is brutal, but the fact of the matter is student loan interest rates are, by and large, a lot lower than the average credit card interest rate. So it’s highly recommended that you don’t charge off some or all of that student loan payment since, ultimately, you’ll end up paying a lot more in the long run.

Along those same lines, it’s not recommended to charge your tuition bills. It’s MUCH cheaper (OK, maybe “cheaper” is the wrong word here — how about “less expensive”?) to take out a student loan or apply for a scholarship than it is to simply swipe your way through school.

Think about it: the average yearly cost to attend a public university is $22,261, according to CNN Money. Add 15% in interest to that and that’s another $3,300 — IN INTEREST ALONE.

Sorry for yelling, but hopefully you get the idea here: Keep the big-ticket items — especially the ones with lower interest options — off of your charge card.

Your Dream Wedding

Unless you’ve got a feeling your wedding gift-pile will be something akin to Henry Hill’s in Goodfellas (i.e. a pile of envelopes stuffed with cash), then it’s probably a good idea to scale back that dream wedding you had in mind to something more manageable.

I’m not married and I’m certainly not a relationship counselor, but it can’t be a good idea to begin your first days of marriage swamped in debt because you decided to fly in your entire extended family for a destination wedding.

Getting hitched is a celebration of love, not luxury. Stay within your means when planning your wedding and you’ll be more likely to enjoy your party.

That said, if you need to go into debt to fund the open bar, then we’ll make an exception.

(Just kidding. Kinda of.)

So, while we recommend putting the plastic away for the above purchases, there’s still one HUGE category of items we always recommend using your credit card for:

Online Purchases!

Why? Well, the dirty secret your bank doesn’t want you to know is that most credit card issuers offer better identity theft protection than that of the biggest banks. Not only that, but in the event that your credit card account is hacked, the damage will usually be limited because your credit card accounts aren’t synced with your personal bank accounts, savings accounts, etc.

Besides, the only credit card networks worth applying to have purchase protection, so you’re covered in the event of fraudulent charges. Not so with your debit card…

By using your debit card online often, you’re increasing the chance of foul play.

So you see, credit card purchases are actually recommended in some cases — especially if your card offers you cash back, rewards or miles.

Just be sure to keep the most expensive purchases — the ones that no matter how you slice it are simply out of your reach — off your charge card. By doing so, you’ll save yourself the burden of interest fees and debt for years to come.

Read next: 6 Perks a Sparkling Credit Score Will Earn You

This was a guest post written by Jason Bushey. Jason works at

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MONEY Student Loans

It’s Nearly Impossible for Student Loan Co-Signers to Get off the Hook

Holloway—Getty Images

90% of those who applied for release from their co-signing agreement were rejected, according to a new report.

Co-signers for private student loans have had significant difficulty handing off the obligation to the primary borrower, despite what the lenders’ marketing materials say, according to a report issued Thursday by the Consumer Financial Protection Bureau.

Of those who applied for release from their co-signing agreement, 90% were rejected, the CFPB found. The report also says lenders make the requirements for release hard or impossible to find, and rarely explain their reasons for rejection.

Co-signers agree to pay a student loan if the primary borrower fails to pay. In addition to the liability of the loan itself, co-signers may find their credit scores take a hit if the loan is improperly handled because the loan appears on their credit reports. So there’s ample reason for co-signers to free themselves from the agreement. Once a student has graduated, is earning a paycheck and reliably making payments, the necessity of a co-signer is significantly decreased. Co-signer release is often advertised as a feature of private student loans.

But in reality, there’s little chance for co-signers to free themselves, the CFPB says.

“Our analysis of responses to the co-signer policy information request reveals that a miniscule portion of borrowers with loans that include a co-signer release actually obtained one,” it said in the report.

The issue is critical for parents and other co-signers, particularly because nearly all private loans now require a co-signer. Back in 2008, 67% of private student loans were co-signed — by 2011, more than 90% of private student loans were co-signed.

The CFPB also warned parents about other provisions of private student loans. Some lenders have a list of criteria that permanently bars co-signers from release, such as any request for loan forbearance. Meanwhile, many agreements call for “auto-default” if the co-signer dies or declares bankruptcy, meaning the student is required to repay the loan in full immediately.

“Parents and grandparents put their financial futures on the line by co-signing private student loans to help family members achieve the dream of higher education,” said CFPB Director Richard Cordray. “Responsible borrowers and their co-signers should have clear information and standards for releasing the co-signer if the time is right. We’re concerned that the broken co-signer release process is leaving responsible consumers at risk of damaged credit or auto-default distress.”

The findings in the CFPB report:

  • Companies rejected 90% of consumers who applied for co-signer release: Many private student lenders advertise options to release a co-signer from a private student loan. However, an analysis of industry responses to the CFPB’s information request found that the lenders and servicers surveyed granted very few releases — of those borrowers who applied for co-signer release, 90% were rejected.
  • Consumers left in the dark on co-signer release criteria: The CFPB found that consumers have little information on the specific borrower criteria needed to obtain a co-signer release. Consumers reported being confused about their eligibility for obtaining a co-signer release, as well as not understanding why they had been denied.
  • Most private student loan contracts continue to contain auto-default clauses: Last year, the CFPB reported that private student loan servicers were putting borrowers in default when a co-signer died or filed for bankruptcy, even when their loans were otherwise in good standing. Following that report, some financial institutions stated that they would no longer hit borrowers with auto-defaults. The CFPB’s analysis of private student loan contracts, however, found that most private student loan contracts continue to include auto-default clauses.
  • Borrowers are at risk when loans are sold and packaged by Wall Street: Even if individual companies state that they will not trigger auto-defaults in certain cases, loans are often sold to other banks and securitized on Wall Street. This puts borrowers at risk for the loan being triggered for an auto-default with the new owner.
  • Company policies can permanently disqualify borrowers from co-signer release: Student loan borrowers reported that some companies’ policies penalize or disqualify borrowers who prepay their loans and are in good standing. Some companies also disqualify borrowers from releasing a co-signer if the consumer accepts the servicer’s offer of postponing payment through forbearance. These company policies can permanently ban a consumer from seeking co-signer release for the life of the loan and penalize consumers that may have graduated during tough economic times.
  • Potentially harmful clauses found in the fine print: In addition to auto-default clauses, the CFPB found other potentially harmful clauses hidden in fine print of some loans including “universal default” clauses. Financial institutions use these clauses to trigger a default if the borrower or co-signer is not in good standing on another loan with the institution, such as a mortgage or auto loan, that is unrelated to the consumer’s payment behavior on the student loan. These clauses can increase the risk of default for both the borrower and co-signer.

If you’ve co-signed on a private student loan, or any loan, it’s important to keep an eye on your credit report and credit scores for any problems so you can take steps to correct them as soon as possible.

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MONEY Student Loans

Someone Took Out a Student Loan in My Name

hands holding student ID that has been blurred
Money (photo illustration)—Matthew Aslett/Corbis (1)

Some students worry about whether they’ll get the financial aid they need to pay for the next semester of college. Others wonder why there is a record of them taking out student loans when they didn’t apply — and now they can’t get the loans they need. Consider these scary scenarios readers have told us about recently:

  • Trey: I just checked my credit score and [someone] has taking a student loan out in my name what can I do?
  • Felecia: My tax refund was taken away because they said I [attended] school and I have never been enrolled in school. I don’t even have a GED or high school diploma so how can I get them to refund me my tax refund back?
  • Theresa: I’m just tired of all the craziness. Someone [has] been able to hack my identity some kind of way and follow my mother’s address and another address that I had and they got student loans in my name, I called the company and they just gave me the runaround, so now I have to figure out what else is there for me to do…

Most victims of student financial aid fraud find out when they apply for a federal loan that they are denied because they already have a loan — only they don’t have it. Instead, someone using their name and birthdate has the loan money, and it’s then the victim’s battle to restore their own credit.

How does somebody who isn’t you apply for a loan that you would be entitled to? We asked Brett Montgomery, fraud operations manager for identity theft and data risk services provider IDT911, and this is how he explains it: “Applicants and enrollees are not required to have their identities confirmed, and because institutions do not always otherwise verify students’ identities. With a valid date of birth, name and Social Security number, anyone can get a loan — especially online — since the system is designed to encourage electronic access to student loan assistance.”

Worse, you may not know that someone has taken a loan out in your name until something bad happens, like the Internal Revenue Service seizing your tax refund to pay the defaulted student loan you knew nothing about, or finding a student loan on your credit report. And sadly, it was probably a lot easier for the identity thief to access the money than it is going to be for you to be able to get a student loan or the tax refund that was rightfully yours. “The amount of documentation needed to prove your innocence is more than what was used or verified to establish the fraudulent loan,” Montgomery said in an email.

But you can’t even begin to try to untangle the mess unless you know it exists. For that, he recommends checking your credit often — though he cautions that not all government loans report to the credit bureaus. “Typically people are made aware through collection notices through the mail or by phone. Another way is when they have to apply for the same type of government student loan and they are informed they already have a loan out.”

The other question is why someone would take a student loan out in someone else’s name. Presumably it’s not to get an education. After all, a degree in someone else’s name isn’t likely to be valuable long-term. But cash is. While the proceeds of these loans are supposed to only be used for qualified educational expenses, the reality is people use them for just about anything.

How Long Can It Take to Unravel?

If, like Felecia, your tax refund is taken, it can take at least eight months, and possibly much longer, to get your money back, Montgomery said. And if you are refused a student loan because you supposedly already have one? “The government tends to not loan money out when there may already be the same type of loan in the person’s name,” Montgomery said. “All you can do is supply the requested documentation and hope they remove the fraudulent loan from your name and credit.” So if the loan refusal happens shortly before you need the money, you are going to need a Plan B.

If you’re a parent helping a student apply for aid, explain what personally identifiable information (PII) is and how to protect it, Montgomery said. Educate your student to ask why someone is requesting their Social Security number and how it will be protected if they give it to them. (And don’t give your child’s number out yourself unless you are satisfied the person requesting it actually needs it and will protect it.) If you hire a professional to help you fill out the FAFSA and apply for aid, make sure the personal identification number (PIN) is known only to you. While there is not yet a way to be absolutely certain you won’t be a victim, you can reduce the opportunities for a thief to access the data that make it easier to take federal student loans out in your name.

If, despite your best efforts, you become a victim, your best bet is to report it as soon as you discover it. The U.S. Department of Education recommends contacting these offices, as well as the three major credit reporting agencies, depending on your situation:

  • U.S. Department of Education Office of Inspector General Hotline
  • Federal Trade Commission
  • Social Security Administration

Also understand that a fraudulent student loan may not be the end of the story. It clearly indicates that someone was able to access enough of your personal information to get a loan. That information could be re-used at some point to get a credit card, etc. It’s important to regularly monitor your credit and to investigate major changes in credit score that you can’t account for as well as credit inquiries or new accounts you don’t recognize. You may want to place a fraud alert or security freeze on your credit reports as well.

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Panic Won’t Pay Your Student Loan Bill After a Layoff

Man in bed with scared look
Williams + Hirakawa

But these 3 smart moves can help.

When Jesse Lambert lost his job last December, he was about a level seven for panic. After paying rent in Arlington, Virginia, the 33-year-old’s student loans for his undergraduate degree and masters in international commerce were the next biggest expense at around $450 per month.

Lambert’s first step was the one experts advise: He called his lender.

After that, his panic quickly subsided. With a game plan in place, the odds were actually in his favor for a short-lived unemployment.

“Having a college degree is a good hedge against unemployment,” said student loan expert Mark Kantrowitz, who publishes the education resource site Edvisors Network (

In fact, the unemployment rate for those in the 16-24 age group with a bachelor’s degree or higher was 15 percent lower than for those without a high school degree – 4.8 percent versus 20.2 percent in May 2015, according to government data. For the 25 and older category, the unemployment rate for those with higher education was only 2.7 percent in May 2015.

The following are steps experts advise taking if you are out of work for a few months while paying off student loans.

1. Call your lender

The default rate for student loans, which total over $1 trillion, was 12.9 percent for public colleges in 2014. In addition to ruining your credit, one reason you do not want to hide from lenders is that they may be able to help.

Federal loans come with set options for deferments, with all payments suspended for a time. There is also the option of forbearance, allowing you to delay payments, although interest will still accrue and be tacked back onto the loan.

Deferments are a better choice because they do not add on to the total loan balance, Kantrowitz notes.

Private lenders will also offer these options, and some will go further to come up with alternative payment plans. Wells Fargo, for instance, has a team trained to craft specific solutions for borrowers after listening extensively to their circumstances, said John Rasmussen, Wells Fargo’s head of Education Financial Services.

2. Rally your network

When Lambert ramped up his job search last winter, he even got help networking from his lender, SoFi, a start-up that has handled $2.5 billion in loans since launching in 2013. (By contrast, Wells Fargo, has a $12 billion current-loan portfolio.)

When Lampert refinanced his loans, he remembered seeing something about career services. After calling SoFi about deferment options, he ended up getting personalized job search coaching.

Lampert a few months later landed a job as a senior analyst for a company that does government consulting. Bob Park, SoFi’s head of career strategy and professional development, helped him negotiate his salary offer.

So far, about 100 borrowers have gone through SoFi’s job search boot camp. Another 45 are currently in the program.

“We haven’t lost anyone yet,” said Park, who has seen everyone go on to land a job. When Park started in 2013, the average time to a new job was over 100 days; now it is 90 days.

3. Lean on your emergency funds

Because your job search is likely to be short, the best way to get through it is to have an emergency fund, advises Jenny Smith, financial services representative for The Principal Financial Group.

Borrowers in financial trouble should avoid expensive options like consolidation, because it will likely result in an overall higher interest rate, Smith says. Nor should they take on credit card debt in order to pay off student loans. “Band-aiding can be bigger problem later,” she said.

If your lender does not offer career services, look to your state government or local chamber of commerce for programs aimed at young professionals.

MONEY Student Loans

Some Corinthian Students Aren’t Satisfied With the New Federal Debt Relief Process

Students Scrambling as Remaining Corinthian Colleges Shut Down
Al Seib—LA Times via Getty Images Ruby Maldanado, 20, a Medical Assistant student checks a note handed out to students that have been turned away at the gate to Everest College on April 27, 2015 in Alhambra, California. Corinthian Colleges Inc., a Santa Ana company that was once one of the nation's largest for-profit college chains, announced that it would be shutting down its remaining two dozen schools effective - a move that leaves 16,000 students scrambling for alternatives.

Up to 350,000 current and former Corinthian Colleges students will get debt relief.

Corinthian Colleges have been in the news a lot in the last several months. It’s been a roller coaster of campus closures, lawsuits, controversy over debt and outraged students, but perhaps the biggest news came on June 8, in an announcement from Department of Education Secretary Arne Duncan: debt relief for up to 350,000 students.

Activists and former students who have been calling for Corinthian students’ debts to be discharged say the DOE’s solution isn’t enough.

A little background on the situation: At its peak, Corinthian Colleges had more than 100 campuses of Everest, Heald and WyoTech career colleges in the U.S. in Canada. Twelve U.S. campuses shuttered in July 2014, and the Consumer Financial Protection Bureau sued Corinthian in September 2014 for allegedly pushing students into borrowing private, high-cost “Genesis” loans. In February, the Consumer Financial Protection Bureau announced $480 million in debt relief for current and former students who borrowed Genesis loans, but that left out many students who felt they had been wronged by the colleges and the government, which provided federal loans for Corinthian students. On Feb. 23, a group of 15 Corinthian students (who weren’t among the group whose debt was discharged) declared a debt strike, saying they would not repay their loans. Things heated up with Corinthian closed the rest of its campuses on April 27.

The Corinthian 15 (organized by an Occupy Wall Street offshoot called the Debt Collective) grew to the Corinthian 100 — they met with government officials and relentlessly called for debt discharge, something that rarely happens in the student loan world. Student loans are seldom discharged in bankruptcy, so if you can’t pay, you can spend years suffering the consequences of default, including a trashed credit standing, wage garnishment and forfeiture of any tax refunds.

When the Department of Education announced the debt-discharge process for Corinthian students, it seemed the Corinthian 100 finally gotten what they wanted.

They hadn’t. A statement on the Debt Collective’s website rails against the Department of Education, Duncan, and the response to Corinthian students’ requests:

“If Education Secretary Arne Duncan was truly ‘committed to making sure students receive every penny of relief they are entitled to under law’ he would sign the ‘Order for Discharge of Federal Student Loan Debts’ the Debt Collective sent him last week, immediately and automatically discharging Corinthian students’ debts. Students are entitled to receive full relief under law. The legal and most painless possible process for students is no process — they deserve an automatic discharge of their debts. … In place of this obvious option, the Department of Education’s “solution” is a bureaucratically tortured process designed to provide relief only to those who hear about it and can figure out how to navigate unnecessary red tape.”

Students whose schools closed on April 27 or those who feel they were defrauded by Corinthian must apply for relief. If all those students applied and received debt relief, it could cost $3.5 billion. While their application is processed, debtors can request their loans go into forbearance. For those who have already defaulted, the application would suspend debt collection activity on their loans.

The move has received a lot of attention, positive and negative, and the Debt Collective is doing its part to highlight what it sees as negatives. Debt Collective organizers did not respond to multiple requests for comment from

Meanwhile, students can start applying for loan relief. Details on the process can be found on the Department of Education’s website.

Read next: Students With Highest Loan Debt Are The Least Likely to Earn a Degree

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The federal government is forgiving the debt of students who attended now-defunct Corinthian Colleges. Corinthian Colleges enrolled more than 70,000 students at more than 100 locations at one point, and it is just one example of declining for-profit colleges. Corinthian was fined $30 million for exaggerating job placement rates, which some called a form of fraud. The government could be swallowing more than $3.5 billion in debt in this deal. The University of Phoenix’s enrollment has dropped by more than 50% since 2010.

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More Parents Say They Won’t Pay Their Kids’ Tuition Bill

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The reason: they can't afford it.

As the cost of attending college continues to dramatically increase, parents of college-bound students are rethinking their role in helping their children earn degrees. Sixteen percent of parents with children ages 16 to 18 who plan to attend college said they will not be helping their kids pay for school, up from 12% in 2013, according to the latest edition of an annual survey from Discover Student Loans. That 16% figure is the same as it was in 2014.

Parents who do plan to pay for college may not be paying as much as parents used to: 24% said they couldn’t afford to pay anything (compared to 21% in 2014 and 2013), but the most common answer (31%) is that the parent plans to cover up to 25% of education expenses. Only 9% said they can pay for all of it (down from 11% in 2014 and 2013), 8% said they could pay for three-quarters of it (down from 11% last year and 12% the year before), and 18% think they can cover half the cost (19% in 2014 and 18% in 2013 said the same).

The trend continues: This year, a greater share of parents said their children will borrow student loans to pay for school (54%, up 2 percentage points from last year and 4 points from 2013), though 20% aren’t sure if their kids will need to take out loans, which is a lot of uncertainty for students so close to the traditional enrollment age.

Based on the responses to the survey, money is a huge concern for these parents: 58% said they are very worried about that student loan debt will affect their children’s ability to buy a home, a car or another large purchase, up slightly from 55% in 2014. It seems they want their kids to get a grip on their future finances, as well: 47% said earning potential after graduation is more important to their children’s education than their major (up 7 percentage points from 2014), and 44% said they would be more likely to fund education expenses if their children majored in fields with a higher likelihood of getting a job — just 33% of parents said that last year.

So, college students of the near future, take note: You might want to talk to your parents about how to approach paying for college, because it looks like you’re going to be responsible for some of it, if not bearing the vast majority or all of the expense. Using student loans to finance your education isn’t an inherently bad choice, but if you’re not careful about anticipating your expenses and future earnings, you could end up in a very difficult financial situation upon graduation. Student loans must be repaid — they’re rarely discharged in bankruptcy — and falling behind or defaulting on the debt will seriously damage your credit standing, which you need to buy or rent a home, get a car or even access utilities, without having to pay a hefty deposit. If you’re not sure where you stand credit-wise, there are many ways to get your credit scores for free.

This is the fourth edition of the Discover Student Loans survey, which includes responses from a nationally representative sample of 1,000 adults with college-bound 16- to 18-year-olds. The margin of error is plus or minus 3 percentage points.

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