Student Loan 'Benson-Dicked'

Archived From: Finance
  • Text Only
Voting History
rated:
HI all.  I am a financial illiterati with a tremendous graduate school level student loan debt (now over 450K) from 1995 (to present).  I paid on time for years until medical bankruptcy, then defaulted.  I then tried again with the 2010  Obama program and paid a lower amount for more years before becoming ill again and defaulting once more, which is where I am now.  I noticed that doing this (while in repayment both times) helped my actual borrowing power not one tiny bit, due to my 'lopsided' debt to income ratio. (I do have a full time 'social worker' type of job, warm and fuzzy  but not lucrative). I was told this phenomenon is called being 'Benson-Dicked' and that I am basically financially f**ked for life no matter what I do as I am unlikely to earn over 55K per year or so in the future in this field.

My question:  I there any (financial) benefit to trying once more to do RePaye or Paye or any other program (besides the no garnish thing which is not my concern as I am self employed). Can I even do these programs if I did the Obama income based program once and defaulted on it? Will this ever get me enough credit to buy a house or even a used car? Any other suggestions?  None of the student loan advisor programs discuss what their program does to real world credit scores and borrowing power.  With my limited resources I have to decide to either try these programs- or- try to save enough money to eventually buy a home with cash.
I am willing to do the right thing but not willing to starve to do it.
Many thanks.
Frazzled Grad

Member Summary
Most Recent Posts
You're right about posters not using the upvote / downvote system.  There should be a sticky about using the voting syst... (more)

RailroadTrack (Apr. 03, 2017 @ 6:50p) |

You are welcome - I'm glad the thread has helped you!

After you determine the course you are going to take with this, com... (more)

oppidum (Apr. 06, 2017 @ 1:50p) |

I just wanted to point out that debt-forgiveness income is not taxable to the extent one is insolvent. So the government... (more)

Rajjeq (Apr. 06, 2017 @ 2:40p) |

Staff Summary
  • Also categorized in:
Thanks for visiting FatWallet.com. Join for free to remove this ad.

Unfortunately, those student loans are going to follow you forever. If you're going to stick with a lowish-wage field like social work, is it possible to find government employment in which your loans would be forgiven after some point? Unfortunately, there's no way to fix your DTI. You're going to have to either make more money or have less debt. There are rare circumstances in which student debt can be discharged in bankruptcy, but it's more or less a moonshot.

As for the house, you might be able to find a seller willing to finance it. It's rare but does happen.

Sorry to be so blunt. I do wish you luck.

You sound like a candidate for another bankruptcy. This time include the student loans.(Not sure why they weren't included last time)
And before anyone says the student loans can't be discharged, you can check PACER and see that it happens daily.

I don't know why, but I'm impressed that you racked up nearly half a million dollars in student loans and make $55k/yr.  That is quite a feat. 

TravelerMSY said:   Unfortunately, those student loans are going to follow you forever.
  ^This, so the only clear choice is to fake your death.

You can move outta the country and pay cash for everything, never set foot again on US soil.

drsallyboyddaughtrey said:   student loan debt (now over 450K) from 1995 (to present).  
I do have a full time 'social worker' type of job, warm and fuzzy  but not lucrative.
 


How on earth did you borrow $450k to get a social work degree.


I mean, first off how did you thnk that was a smart thing to do, but secondly, How on earth did you spend four hundred and fifty thousand dollars on a masters degree in social work?

I'm guessing the high balance is in large part a result of 20 years of compound interest.

Yes the interest is the majority of it.  The loan was for 113,000 total.  And, before anyone judges too harshly, that amount has moved upward not downward after years of paying about $800 a month (almost half my income at the time) every month on time before total physical collapse- in part from overwork. And, as a cautionary tale, if anyone is wondering how I got into this mess, I did my due diligence about this degree and this career.  I based my decision on the reported income averages and  loan default rate of my school for my degree. The default rate of my college for my degree was less than 1%.  What they DON"T tell you in the enrollment office is that those figures are only attributed to an individual school for a few years (3 if I recall correctly) after which the school's percentage is not 'dinged' if the student defaults.  Now, almost anyone with a brain can defer, claim forbearance, do the community college run around, etc for that short of a time, which is why a college can say 'oh yeah our grads make great money and pay their loans no problem!"  If I had it to do over again, I would look to those already in the field for income rates and loan payment rates (is there any way to track default rates by degree type?)
So that's my tale of woe.  Thanks for any and all comments!

atikovi said:   TravelerMSY said:   Unfortunately, those student loans are going to follow you forever.
  ^This, so the only clear choice is to fake your death.

Gold, hole in the ground, gambling losses..

DPG said:   You sound like a candidate for another bankruptcy. This time include the student loans.(Not sure why they weren't included last time)
And before anyone says the student loans can't be discharged, you can check PACER and see that it happens daily.

I am truly asking, for my education and others'...really? is there a certain chapter that can do it? Must it be private but fed-backed type loans, or...?  

DPG said:   You sound like a candidate for another bankruptcy. This time include the student loans.(Not sure why they weren't included last time)
And before anyone says the student loans can't be discharged, you can check PACER and see that it happens daily.

  My pacer credentials are long gone. Could you enlighten us?

OP, someone above recommended that you look into the govt. program that is supposed to offer forgiveness of loans after 10 years of public service (based on exactly meeting several conditions... and I think you might not be eligible for it anyway, due to your convoluted loan history)--

so I just wanted to say that tonight I saw on the main page of the New York Times mobile site an article about how the 10-years-of-government-and-non-profit-work loan forgiveness program is actually in trouble, and half a million people (I think it was... I just quickly skimmed the article) who have thought that they were in the program, because they had received a letter in the past confirming that they were accepted into it,
have been informed that their acceptance into the program may actually not be confirmed after all and may not be recognized by the government,
even if they've already faithfully been enrolled in the program for many years and are approaching their 10-year anniversary.

Apparently that program has not yet paid out for any participant, the article said. (I guess the 10-year anniversary is probably coming up for the first cohort.)

If this issue interests you or pertains to you, please read the article to make sure of what it said, because I only skimmed it tonight and I may have not have relayed all the relevant details here.

---
I have always had doubts about the reliability of that program, which I've expressed on Fatwallet in prior years. It just seemed like they gave themselves some ways to wriggle out of it, which could dump some good people into a bad situation.

some ideas for further research:

1) There are specialized websites that give free info on trying to get a handle on terrible student loan situations. I don't know any names off the top of my head but I remember a few years ago seeing one or two which seemed to be legitimately helpful forums.

---
2) The New York Times article that I mentioned above has, at the end of it, a list of "related articles" that had appeared previously in the New York Times about people who have crippling student loan debt, and a handful of those articles were written in the last few months and are on various aspects of the situation, so you might take a look at those New York Times articles and see if you can pick up some advice and tips.

---
3) There have been numerous threads on Fatwallet in the past about student loan debt, repayment, the (vanishingly small) chance of counting it in a bankruptcy, etc.

You should certainly do a search in this site using a few different relevant keywords and read through those threads.

Search box: https://www.fatwallet.com/forums/search

---
4) The US govt. has (maybe it's been closed by the new administration, I don't know) a website and agency regarding consumer protection and advocacy relating to student loans -- I forget the name of it -- it is named in some of the New York Times articles I mentioned above.

You could check there to see if there are any answers to your questions about your complex situation.  I think they take/took questions from the public, maybe even have/had a phone line to call.

OP, if you have used your real name as your Fatwallet name, you probably should change that quickly.

Fatwallet posts show up in search-engine searches, so you don't want to be discussing personal financial issues while sharing your identity with the public.

If you wish to change your username, Fatwallet staff can help you make your username something generic, and can delete any copies of your prior username that may have appeared in other people's posts.

----
I will now send an "alert" to the Fatwallet moderator on duty to let them know that you might have used your real name here,
but in cases where the person isn't giving so much away that it could compromise their safety or privacy,
I think they will need to wait for you to tell them that you want to change it, before they will do anything to your account... I'm not sure what the current policy is.

I still can't comprehend how that roughly $300k is interest? OP, mind telling us what the degree is in?

Oh, I also think that loan-forgiveness is probably your best option.

I'd be pissed at paying $800 a month and watching the balance go UP.  I probably would have given up years ago, kudos for you for at least trying to pay it off.

ZenNUTS said:   I still can't comprehend how that roughly $300k is interest? OP, mind telling us what the degree is in?

Oh, I also think that loan-forgiveness is probably your best option.

  
She graduated from Naropa University (Boulder, C0) with a BA degree in the psychology of health and healing, and then studied thru the Master’s level in transformative NLP counseling ‘magic’.  She practiced as an NLP therapist while getting her Doctorate from Bastyr University (Seattle, WA). 

 

cestmoi123 said:   
ZenNUTS said:   I still can't comprehend how that roughly $300k is interest? OP, mind telling us what the degree is in?

Oh, I also think that loan-forgiveness is probably your best option.

  
She graduated with a BA degree in the psychology of health and healing, and then studied thru the Master’s level in transformative NLP counseling ‘magic’.  She practiced as an NLP therapist while getting her Doctorate from Bastyr University (Seattle, WA). 

 

  if op has a doctorate, even a doctorate in hoodoo,  then the loan amount makes sense but the salary does not. Op should be able to make more than 55K a year with a doctorate, even a doctorate in hoodoo.

I think it's quite a stretch to describe 'holistic/naturopathic' services as a 'social worker' type of job.

DPG said:   You sound like a candidate for another bankruptcy. This time include the student loans.(Not sure why they weren't included last time)
And before anyone says the student loans can't be discharged, you can check PACER and see that it happens daily.



Yeah I'd try bankruptcy again

http://www.nolo.com/legal-encyclopedia/student-loan-debt-bankruptcy.html

You have to have made a good faith effort to repay the loans though and I'm not so sure that has been done here. I honestly don't know what would qualify for good faith in a court view.

Research the topic and find out what works.

jerosen said:   
DPG said:   You sound like a candidate for another bankruptcy. This time include the student loans.(Not sure why they weren't included last time)
And before anyone says the student loans can't be discharged, you can check PACER and see that it happens daily.

 I honestly don't know what would qualify for good faith in a court view.

 

  Maybe not defaulting.

JepJepJep said:   jerosen said:   
DPG said:   You sound like a candidate for another bankruptcy. This time include the student loans.(Not sure why they weren't included last time)
And before anyone says the student loans can't be discharged, you can check PACER and see that it happens daily.

 I honestly don't know what would qualify for good faith in a court view.

 

  Maybe not defaulting.



Right so she should maybe have to get back to making payments for a time and then exhibit an attempt to pay, fail and then go bankrupt.

But I don't know what might be needed so op should research it to find out.


Plan B = invent time machine, go back and tell earlier self that degree program is a scam.

Borrow it from the guy who wants to keep 2 million dollars away from his wife!
On a serious note, government forgiveness because of public service or living in Europe/Canada are better options!

If you can't get on an ibr plan, just pay zero, get your wages garnished for 15% (Max allowable under law) and stash as much of your income as possible in judgment proof retirement accounts.

As long as you are able bodied you will never get your loans into a bankruptcy.

Edit: just read you are self employed, that's even better. Lenders and the government have no recourse against you other than trashing your credit. I don't see the problem here. Not everyone gets a mortgage or finances a car. You stole half a million dollars, there's gonna be some negative consequences in your life.

cestmoi123 said:   
ZenNUTS said:   I still can't comprehend how that roughly $300k is interest? OP, mind telling us what the degree is in?

Oh, I also think that loan-forgiveness is probably your best option.

  
She graduated from Naropa University (Boulder, C0) with a BA degree in the psychology of health and healing, and then studied thru the Master’s level in transformative NLP counseling ‘magic’.  She practiced as an NLP therapist while getting her Doctorate from Bastyr University (Seattle, WA). 

 

  Uh, not sure if serious.

I actually know a "doctor" from Bastyr, actually, I know a few.  I also had the pleasure of talking science to them (not a good idea).  Bastyr, for example, still teaches homeopathy.  They actually make good money and have the same (?) authority here in WA as someone with a MD.

ZenNUTS said:   
cestmoi123 said:   
ZenNUTS said:   I still can't comprehend how that roughly $300k is interest? OP, mind telling us what the degree is in?

Oh, I also think that loan-forgiveness is probably your best option.

  
She graduated from Naropa University (Boulder, C0) with a BA degree in the psychology of health and healing, and then studied thru the Master’s level in transformative NLP counseling ‘magic’.  She practiced as an NLP therapist while getting her Doctorate from Bastyr University (Seattle, WA). 

 

  Uh, not sure if serious.

I actually know a "doctor" from Bastyr, actually, I know a few.  I also had the pleasure of talking science to them (not a good idea).  Bastyr, for example, still teaches homeopathy.  They actually make good money and have the same (?) authority here in WA as someone with a MD.

  Homeopathy has the same authority as an MD? That's nuts!

Well, they are call N.D. Naturopathic Doctor.

Homeopathy is one of the voodoo thing they learn. In the U.K. there is such thing as H.D.

http://www.britishhomeopathic.org/treatment/find-a-homeopath-sea...

Prince Charles is a fan. http://www.dailymail.co.uk/news/article-2370754/Charles-NHS-home...

There are many student-loan refinanciers out there, who offer much lower interest rates than some of the federal loans.
People receive those letters all the time, some even disguised to appear from the Dept. of Education; it seems everyone wants in on that huge debt pie!

If one refinances with these 'private' institutions, doesn't it invalidate the whole thing where student loans cannot be discharged in bankruptcy?
Isn't that limitation specific to government loans, and that too for education?

Similarly, if one were to take out a personal loan, (like those non-collateralized ones from Discover or other lenders which encourage you to go buy a jet-ski for the summer)...at that point isn't it regular debt that would qualify for bankruptcy? Since you've gone this route before, it seems you have little to lose.

Withholding judgement here when it comes to tax strategy and filing for bankruptcy - seeing as that works for heads of state even!
Not to mention, the entire concept of good faith in this context could be redefined, what with close to double-digit interest rates they dole out happily - not dissimilar to the sub-prime loan-sharking.

The Repaye ibr program was supposed to ensure that one isn't underwater on the loan, or in negative amortization, but somehow the math doesn't work correctly - many still see their numbers going up monthly, with no apparently government contributions towards the interest, basically continuing to make interest-only payments in this Dante's Circle of Debt.

Plus, with political parties seemingly happy to keep changing things like healthcare, it seems likely that eventually someone will invalidate the various 'loan-forgiveness' plans.
If they can ask veterans for money back, I can see them having people work for ten years and then say sorry, that program changed, so you're s.o.l. and still on the hook.
They don't need even wiggle room anymore, it seems like everything can just be done and undone at will-y-nilly!

vgwallet said:   There are many student-loan refinanciers out there, who offer much lower interest rates than some of the federal loans.
,,,

  

I don't think anyone is going to want to refinance OP's loans.    The refinancer companies look for people with good credit.   I can't imagine they'd want to take someone in default on 500k loans with relatively low income.     Sure loans are generally not discharged in bankruptcy but they'd still need a way to actually get money out of the borrower.


 

I am really, really appreciating this discussion guys. Thanks so much! (Somewhat snarky comments about naturopaths nonwithstanding! And to some extent those comments could be deserved in some contexts I will admit. The 'science' of medicine would be another fascinating thread, but is not really relevant here. I am NOT here to defend homeopathy,ok!)
Question: I have started a 5013c Nonprofit that is approved by the IRS but of course underfunded at this time. Could I work in that venue and qualify for some kind of forgiveness/deferment that anyone knows is reasonably reliable?
Thanks!

ZenNUTS said:   
cestmoi123 said:   
ZenNUTS said:   I still can't comprehend how that roughly $300k is interest? OP, mind telling us what the degree is in?

Oh, I also think that loan-forgiveness is probably your best option.

  
She graduated from Naropa University (Boulder, C0) with a BA degree in the psychology of health and healing, and then studied thru the Master’s level in transformative NLP counseling ‘magic’.  She practiced as an NLP therapist while getting her Doctorate from Bastyr University (Seattle, WA). 

 

  Uh, not sure if serious.

I actually know a "doctor" from Bastyr, actually, I know a few.  I also had the pleasure of talking science to them (not a good idea).  Bastyr, for example, still teaches homeopathy.  They actually make good money and have the same (?) authority here in WA as someone with a MD.

  Yup, definitely serious. 

jerosen said:   
vgwallet said:   There are many student-loan refinanciers out there, who offer much lower interest rates than some of the federal loans.
,,,

  

I don't think anyone is going to want to refinance OP's loans.    The refinancer companies look for people with good credit.  


 

  
Exactly.  Folks like SoFi are trying to take advantage of the fact that public student loans aren't priced with regard to risk (the person pursuing a Harvard MBA gets the same rate as someone getting a degree from one of the scam for profit schools).  So, they try to pick off the people who are paying rates well about what their risk profile would dictate.

https://www.bloomberg.com/news/articles/2015-06-10/student-loan-...

MoneyDumDoc said:   I am really, really appreciating this discussion guys. Thanks so much! (Somewhat snarky comments about naturopaths nonwithstanding! And to some extent those comments could be deserved in some contexts I will admit. The 'science' of medicine would be another fascinating thread, but is not really relevant here. I am NOT here to defend homeopathy,ok!)
Question: I have started a 5013c Nonprofit that is approved by the IRS but of course underfunded at this time. Could I work in that venue and qualify for some kind of forgiveness/deferment that anyone knows is reasonably reliable?
Thanks!

  I think you probably need an expert opinion since 500k is at stake.

MoneyDumDoc said:   Question: I have started a 5013c Nonprofit that is approved by the IRS but of course underfunded at this time. Could I work in that venue and qualify for some kind of forgiveness/deferment that anyone knows is reasonably reliable?

 

  
Maybe.   I'm no expert on this stuff but...

You have to work full time (minimum 30 hours weekly average).

You have to be in one of the repayment programs.

And it might not pass muster... if you're the only employee / director of the 501(3)c
https://studentaid.ed.gov/sa/sites/default/files/public-service-...
"I’m the only official who can certify my employment. Can I certify my own qualifying employment? Yes, you may certify your own employment if you are the only employee of the organization who can do so. However, we will request additional documentation concerning your employment, such as earnings statements, IRS W-2 forms, your application for tax-exempt status, or any other documentation required to be filed with the IRS on a periodic basis regarding the activities of the organization."

So they're going to need more information and I don't know what will be required there or what might disqualify you.

But you're in default so you can't do repayment plans until you get out of default.

You can get out of default by making 9 payments : https://studentaid.ed.gov/sa/repay-loans/default/get-out

For those suggesting that OP transfer the loan to a type that is dischargeable in bankruptcy, yeah, good luck with that. Such loans are in the 10K to 20K range, and maybe you can get multiple such loans, but you're not going to get anywhere near 450K before you max your credit.

jd2010 said:   If you can't get on an ibr plan, just pay zero, get your wages garnished for 15% (Max allowable under law) and stash as much of your income as possible in judgment proof retirement accounts.

As long as you are able bodied you will never get your loans into a bankruptcy.

Edit: just read you are self employed, that's even better. Lenders and the government have no recourse against you other than trashing your credit. I don't see the problem here. Not everyone gets a mortgage or finances a car. You stole half a million dollars, there's gonna be some negative consequences in your life.

  
I would argue she "stole" $111K -- if the interest and fees have hit 4 times the principle then the other side is the one stealing.  :p

DPG said:   You sound like a candidate for another bankruptcy. This time include the student loans.(Not sure why they weren't included last time)
And before anyone says the student loans can't be discharged, you can check PACER and see that it happens daily.

  
Just because people get their student loans discharged every day does not mean it is easy to do. The legal standard is so high that it usually only happens when someone is completely and totally disabled (mentally or physically, and the mental part is really hard to prove). OP spent $100k on degrees in medical quackery which ballooned to $500k. While it is an unfortunate series of decisions, unless they are completely disabled the chance of their loans being discharged is near zero. Sure, you could pay an attorney tens of thousands of dollars to do an adversarial bankruptcy and try it, but why throw good money after bad? There are attorneys who specialize in these kinds of cases, and I would be shocked if any of them would even take it.

Lets look at the facts from the judge's perspective. OP currently owns a naturopathic "clinic" that is open for 24 hours a week. They are fit enough to do 24 hours of work, but not 40 because of disability? Even 24 hoursa week  is enough to rule out a student loan discharge due to disability (because they can work). And on top of it all they are trying to get a nonprofit status for this clinic. Honestly Public Service Loan Forgiveness is not designed to support this kind of insanity, and I think OP will find the chance of their claim being denied in 10 years (with PSLF) is very high. If the government is fighting lawyers working for legitimate nonprofits because they were not the right type of 501c3 organization, I doubt the government is going to allow a "clinic" like this to count as public service.

OP's best hope is to rehabilitate the loans so that they can get on a income-based plan like REPAYE. Then their payments will be no more than 15% of their adjusted income. The balance will go up, but after 20 years it will be forgiven. That will then cause a tax bomb for OP, but the tax bomb will be less than whatever the loan is at in 20 years.

Ok I heard all that, thanks. Sounds like REPAYE is the best option ? and I am want to and willing to pay these loans if it does not cause me to end up in the poorhouse with no resources as a senior. . . I am concerned though that the program I did years ago, into which I did pay as asked, ended up 'not working' as in I owed even more over time, not less, and it did not help my credit at all. What is the assurance, if anyone knows, that REPAYE will have to keep 'their end of the bargain' wrt discharging the balance in 20 years??? BTW I did not actually go bankrupt, just got to the point where I probably 'should' have, pulled out of it and rebuilt by working hard.
The nonprofit, btw is not a clinic. It is a therapy program for disabled veterans and foster children.
Thanks again. I appreciate the help, I don't want to 'steal' from anyone, and I know I have made some mistakes, guys. I am not arguing your points on any of these counts! (Also, I never brought up disability, I am not claiming disability in this forum, just fatigue!)

Skipping 27 Messages...
magika said:   The forgiveness plan itself is a federal benefit. You can play "what if" games about it getting removed, but there is no evidence it ever would be because (A) it is such a long time period and (B) the forgiven amount is fully taxable. 

 

  I just wanted to point out that debt-forgiveness income is not taxable to the extent one is insolvent. So the government may not get nearly as much tax out of this as you may imagine.



Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2017