posted: Jul. 2, 2010 @ 4:28p
Really makes my generation look bad. I know it was a legal document but come on, this is very selfish.
Arguing over money is nothing new for most families, especially when recent college graduates with massive student loans start looking to their parents for economic assistance in today's tough job market. And things can get tense when parents try to decide how much of that debt they're willing to help out with.
Dana didn't take a lawsuit against her own father based on a mere promise, however—she had a legal document to back her up.
When Howard and Deborah Soderberg divorced in 2004, Howard—a property developer—agreed to pay for the education of their three children.
Apparently Dana foresaw that his word wouldn't be enough. In 2005, she convinced her father to sign a written contract that would require him to pay for her college tuition until she turned 25, as well as cover related expenses such as textbooks and car insurance. For her part, she agreed to apply for student loans that her father would cover if she received them.
But Howard stopped paying her tuition just before her senior year, forcing Dana to take out a $20,000 student loan (co-signed by her mother). After graduating as an art major, Dana filed a breach of contract lawsuit against her father with the aid of family attorney Renee C. Berman.
Representing himself in court, Howard contended that his daughter nullified their contract first when she—supposedly—didn't try hard enough to apply for student loans. He even filed a counterclaim alleging that she dropped a few classes and kept the money for herself. In Dana's defense, Berman pointed out that Dana was forced to drop some courses due to the continued tardiness of her father's tuition payments.
"They just don't have a relationship," Berman said about Dana and Howard. "It has to be weak to begin with if you enter into that agreement."
Berman also noted how unperturbed Dana's dad seemed throughout the trial. "Here his daughter's bringing him to court and there's no sadness, no remorse that his daughter was in this situation having to sue him."
After two-day trial, the judge ruled that Dana had indeed fulfilled her part of the contract and awarded her about $47,000 in damages, which covered the initial loan, interest and attorney fees.
If a daughter successfully suing her father for nearly $50,000 to recoup the cost of her college loans sounds unusual, Dana's attorney would be the first to agree. "Nothing that I've researched has shown any cases like this and hopefully there won't be any more, because it's a sad situation," Berman admitted.
As an art major-turned-teacher facing a grim economy (liberal arts majors' salaries' dropped 8.9 percent in the last year), Dana's legal victory should ease some of her monetary concerns. But most college grads can't turn to the legal system to relieve them of their student loan woes. Unlike other types of debt—such as mortgage or credit card—student loans aren't wiped away by declaring bankruptcy.
That means grads who can't afford to make ends meet can end up defaulting on their loans, which effectively ruins their credit. What's worse, defaulting means being turned over to a collection agency—and the fee that incurs can turn an already imposing amount of debt into downright terrifying numbers.
Dr. Michelle Bisutti, for instance, finished medical school in 2003 with $250,000 in student loans. Today, she owes $555,000—and $53,000 of that is just a fee for being turned over to a collection agency.
The New York Times recently shared the story of Cortney Munna, a college grad who was convinced her NYU degree was worth the approximately $97,000 in loans she took out to pay for it. Now almost a third of Munna's income goes to covering the federal and private loans she took out to nab that NYU degree.
While most college grads don't owe money in excess of $100,000 (10 percent of the 2007-08 class owes more than $40,000), at least two-thirds of those who complete a four-year program end up owing an average of $23,000 in student loans.
And that's bad news for people who are slowly finding out a college degree isn't necessarily as profitable as they have been led to believe.
Recent studies indicate that while having a college degree tends to ensure a higher salary than those with a high school diploma, the increase in pay scale isn't as large as society often assumes. According to a study conducted for Bloomberg Businessweek, most of the people who recoup the cost of their higher education and out-earn high school grads by over a million dollars (over the course of their lives) primarily come from elite private schools.
For the majority of Americans who can't afford an Ivy League education, there are plenty of state schools that offer competitive academics at much more reasonable prices. The University of North Carolina recently topped Kiplinger's "Best Value in Public Colleges" list, and UNC grads don't seem to be hit as hard by the student debt crisis. The average UNC grad ends up with $14,936 worth of debt—a full $8,000 less than the national average.
So, for those whose parents aren't legally bound to cover the cost of their education, there's still hope for earning back the money you invest in your education.