Paying for College Catastrophe
by Scott Weingold
What if all their life, your child wanted to be a lawyer?
They studied long and hard hours year after year through high school, then college, and finally law school. Seeing this made you so proud. And when it came time for them to take the bar exam, you were sure they would pass. And guess what happened - they did pass it. It took a few tries but eventually they did it. You could not be more proud. Your child, all grown up and ready pursue their dream. All that was needed now was to be signed off on by a panel of peer lawyers and judges to start practicing law.
But guess what happens… the unthinkable. A group of judges reviews your child’s profile, which includes their financial history and determines that they are not financially responsible enough to practice law in that state. These judges believe that your child has racked up such a substantial amount of debt to finance their education that they are deemed unworthy of a law license.
So not only is your child’s dream crushed (they can’t practice law), but now they owe hundreds of thousands of dollars of education loans with no surefire way to pay them back in sight.
This story sounds pretty unbelievable – right?
It is a cliché but the truth is more often stranger then fiction. Such as the case of Robert Bowman of New York.
As reported in a New York Times article on Mr. Bowman’s case:
“It usually takes a pretty significant record of some underlying misconduct to keep you out permanently,” said Deborah L. Rhode, a law professor at Stanford who has studied bar admissions across the states. Excluding someone for having too much debt was odd, she said; the hard questions about loans usually involve applicants who have used bankruptcy to try to escape loans, she said, and Mr. Bowman has not.
Mr. Bowman concedes that he has never made a payment on his loans, partly because of medical and other deferrals and problems with his lender. But he says he intends to make good, adding that his only hope is to begin practicing law — which means overturning the judges’ decision.
While thousands of indebted students have complained about their treatment by lenders, Mr. Bowman has documented his personal debt crisis with remarkable, obsessive intensity.
He claims Sallie Mae overcharged him, imposing hefty and unjustified fees; did not allow him to defer payments when he was entitled to do so and improperly accounted for periods when he did defer.
According to his detailed records, a Sallie Mae representative even threatened him. “If you default, your license will be taken from you,” the representative said. “Do you understand that?”
When Mr. Bowman said that he did not yet have a law license, the representative responded that the company would prevent him from getting one.
Martha Holler, a Sallie Mae spokeswoman, said that such threats would violate the company’s rules.
What we take from this story is two-fold:
- It pays to help fund your child’s college education. Which means diligently saving for college in a secure account you know will be there when you and your child need it most.
- If borrowing is part of your child’s college financing plan, make sure it will be manageable when they start working full-time. It is a severe and often no-win situation if your child is chained to a mortgage size loan before they ever join the work force.
Paying for college and saving for college has become an often slippy-slope from which to walk. Please plan accordingly.
Related Articles:
How to Save for Your Child’s College
The College Savings “Survival Guide”
