1 Student Loans Literally The Worst | The Billfold

Student Loans Literally The Worst

A few months after he buried his son, Francisco Reynoso began getting notices in the mail. Then the debt collectors came calling.

“They would say, ‘We don’t care what happened with your son, you have to pay us,’” recalled Reynoso, a gardener from Palmdale, Calif.

This is totally horrific. The kid was the first in the family to go to college and died on the way home from a job interview. “Reynoso and his lawyer don’t even know exactly how much he now owes, but it appears to be well into the six figures” (the reason this is possible is because the loans have been repackaged and resold a zillion times because that is how things work now).

The dad co-signed on the loans because otherwise the kid couldn’t get them; he makes $21,000 a year. Bankruptcy doesn’t get rid of school loans. The only good thing that’s happened: “One of Freddy’s student loans was cancelled after his death without a problem: his federal loan. That’s because the government cancels student loans if a student dies.”


9 Comments / Post A Comment

Spinach Party (#253)

uuuuuuuuuuuuuuuuuugggggggggghhhhh. That’s all I got.

moreteawesley (#545)

The fact that student loans don’t get discharged in bankruptcy has always seemed so backwards to me. And the fact that private student loans don’t get discharged if you DIE is insanity. That poor guy. Something really really needs to be done about the student loan issue.

@moreteawesley Well think about this. I am a typical middle-class 18 year old with zero net worth want to get a Ph.d but don’t want to pay for it. So I finance my 8 years of degrees (plus living expenses) with student loans – probably totaling $45k/year combined so $360k. And then when I graduate what do I want to do: have to pay back $360k or just declare bankruptcy, owe nothing and just have bad credit for 7 years.

This is the sort of “gaming the system” we’d see if one could discharge student loans in bankruptcy.

sockhopbop (#764)

@Jeff Crystoff@twitter A little off-topic to your main point, but: PhD programs provide funding for qualified students. Also, most serious proposals for allowing student loan bankruptcy would require people to make a minimum amount of payments (or make payments over a minimum number of years) before the loans could be discharged. That would avoid the gaming problem while ensuring that people aren’t doomed to drown in insurmountable amounts of debt forever.

Maybe he should just move out of Manhattan then.

Or does that argument not work for this post?

meghan@twitter (#1,334)

for this exact reason, i have a life insurance policy with my parents named as the beneficiaries. they gladly make the payments on the policy for me so that if i die before the loans are paid back, they’ll have enough to cover the remaining balance. until this country’s student loan situation changes, y’all might want to consider that too.

Totally sucks but it’s the (admittedly very small and unanticipated) risk one takes when co-signing loans. When you co-sign you need to prepare for the worst-case scenario before making that decision. I don’t think this is so much a problem with the private student loan “system” but rather an issue of the unaffordability of higher education – lets focus on that and not create a system whereby folks with a Ph.d and $350k of student loans can just write them off in bankruptcy with the only penalty being bad credit for 7 years ok?

paula edwards (#1,673)

I have bad credit and did get a loan using ULSC. Their web site is http://www.unitedLendingServices.com
Good luck to you

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