Defaulting On My Student Loans Dug Me Into A Hole I Can't Escape
I saw a tweet a few weeks ago that read something like, “Look, I’m never gonna pay off these student loans in my lifetime, so I might as well go on vacation.” I’ve never related to something more than that. Currently, I have about $45,000 in student loan debt, and because I defaulted on my student loans, it’s affecting my life in ways I didn’t expect. I realize my debt isn’t nearly as much as someone who has a professional degree, or had no help from parents, or had scholarships, but it’s still a number I’m not comfortable with. And I’m digging the hole deeper and deeper.
It’s been two years since I graduated from the University of Missouri in 2017, and I don’t have my diploma. My college won’t send it to me until I’ve got the last $1,200 of tuition I owe paid off. To cover my last semester of school, I had about $7,000 to pay out of pocket. I was able to take out a last-minute loan directly from my school because I had maxed out the amount of loans I could have from the U.S. Department of Education. After the loan, I had about $1,500 left to pay out of pocket. I managed to pay $300, but the rest is still outstanding.
When you default on your loans, the calls from collections companies begin — and never end.
Since I’ve been unable to pay off my loan from my university, I’ve defaulted on it, which means that according to the lender, I’ve failed to uphold my end of the loan agreement. Depending on the specific loan, that can mean all kinds of consequences. For me, it meant a hit to my credit. Right now, about $13,000 — the loans I got through my school — of that total $45,000 shows as delinquent on my credit report. I also defaulted on other loans borrowed from the U.S. government. Those, thankfully, don’t show up on my credit report, as I was able to defer them. My credit has made it difficult to get a loan for a new car, and if I had not re-signed the lease on my apartment, I would have had an even harder time trying to secure housing.
When you default on your loans, the calls from collections companies begin — and never end. If you block them, they’ll just start calling your family members. You receive letters explaining how many days you have to dispute the charges before the collectors decide to file a motion in court. I dread the days where I check my mail and find have received letters from lawyers located in my college town offering their services to represent me in court. That’s terrifying. And once collections companies have your defaulted bills, they basically go straight to your credit report, lowering your score dramatically. I hate the fact that these loans are now on my credit report and have quite literally sunk my score to below 500. My car broke down several months ago, and I have not had the money to buy a new one. I don’t qualify for any loans because my credit score is awful. It sucks.
Right now, I make less than $30,000 a year in my current position as a social media manager. I pay about $800 a month in rent, $200 a month for food, and $200 a month in loan payments. That’s a lot of expenses for what I call a “first-time adult.” On top of this, I’m also dealing with the expenses of a chronic illness.
I’ve had to prioritize what’s most important for me to pay for in order to survive.
After my second year of college, I was diagnosed with ulcerative colitis, a chronic inflammatory disease. When my symptoms are at their worst, I can’t get out of bed or I’m stuck at home. When I miss work, it affects my pay. My checks become short, and I worry about paying my rent for the month. I’m turning 26 in August, which means I’ll get kicked off my dad’s health insurance, and that terrifies me. I worry about having to pay for life-saving treatments out of pocket, which are about $1,400 per month before my insurance kicks in.
There are times where I haven’t been able to buy my daily medication because I don’t have the funds to do so. I’ve had to make sure my rent was paid, stash enough money to pay for rides to work, pay my utilities, and keep my phone on. Sometimes I pray that my doctor’s office will forget to bill me for copays, because $40 visits are not always in the budget. I didn’t realize how expensive it could be to exist with a disease and little money until I moved out on my own.
Defaulting on my loan has shown me how important paying bills can be, and how significant credit history is. Credit history shows lenders that you’re responsible and that you will pay bills as agreed. It determines whether you’ll be approved to buy a house or a car, receive loans from banks for a business, be able to rent an apartment, or even get a cell phone. But at the same time, I’ve had to prioritize what’s most important for me to pay for in order to survive: I cannot live without my medications and treatments for my disease. I have to pay my rent and utilities, and have food to survive each month. I think about how the more I struggle with basic needs and stay on top of fixed expenses, the longer it’s going to take for me to start paying back my student loans. The longer they remain in default, my credit score slips lower and lower.
I’m not alone. As it stands, the average college student who graduated in 2018 will take out close to $30,000 in student loans, according to Student Loan Hero. And in general, about 11.5% of student loans are either 90 days delinquent or in default.
I understand the struggle of defaulting on loans after graduation. It’s depressing. I remember feeling as though my worth was tied to whatever position I found. I was able to put my loans into forbearance due to my salary. The thought of interest racking up still bothers me, but I’m focused on what’s happening in my life right now. That’s finding a better job, securing health insurance, and purchasing a car.
I know that these loans have to be repaid — and I plan on making aggressive payments once I’m in the position to do so — but that requires a higher paying job, where I am able to pay all of my bills on time and be able to set aside money for student loan payments. In the future, I see myself owning a business, a home, and buying whatever car I want. I don’t want to be my parents’ age and living paycheck to paycheck. I don’t want to have to deny my future children vacations in the summer, or the ability to do certain activities that cost money because I may not have it. Through this struggle, I’ve learned the value of money, and how easy it is to slip into financial ruin — especially with student loans looming in the back of your mind.