"We Cannot Accept These Loan Agreements": Mom Is Very Disappointed At Sallie Mae

In the United States, there is a bit of a skewed perception of the responsibilities that can be placed on an eighteen-year-old. They can’t drink yet and you would be hard-pressed to find a bank willing to give them a mortgage. But six figures worth of college debt? Step right up!

A mom decided to share the absurd, horrible, and downright predatory interest rate student loan provider Sallie Mae offered her daughter. For a $ 28,000 loan, she would end up paying an additional $ 99,000. Fortunately, the mom caught this clause and made sure her daughter did not sign anything. People in the comments shared their takes on student loan debt. We got in touch with Stacy, who made the original video to find out more.

 

Bored Panda got in touch with Stacy, the mom in the video and she was kind enough to answer some of our questions. Firstly, we wanted to know what steps they took afterward. "We didn’t accept the loan from Sallte Mae and thankfully I ended up getting approved for a parent plus loan but not everyone is as lucky as we are, so many parents & students don’t have choices and have to accept loans like from Salle Mae or just not get an education."

"I think some people are so quick to defend the banks because they went to college 20 or 30 years ago and they don’t understand or want to understand that it’s not the same playing field, back years ago it was realistic that you could work and pay back these loans within a few years but now college prices have soared, it has increased by 169% over the past 4-decades and it’s crippling our youth in debt, you also have some people defending the banks because they are privileged and come from wealth and they never had to take out loans. I would like to add that so many comments from people have been to just not attend college which I find sad, it’s in our country’s best interest that our youth be educated, it gives our country a competitive edge in various industries including technology, and healthcare," she shared with Bored Panda.

Sallie Mae is just one of many financial service providers that focus on student loans. Setting aside the ethical question of specifically targeting young adults with monstrous loans just so they can go to college, Sallie Mae and the industry, in general, have been beset with scandals in the past. One prime example, involving the star of the show, Sallie Mae, was in 2007 when the company tried to use the Freedom of Information Act in an attempt to force colleges to hand over student data.

That same year, Sallie Mae was targeted by a class-action lawsuit that alleged it gave African-American and Hispanic students higher interest rates based on their ethnicity. This concern was actually shared by then-New York Attorney General Andrew Cuomo, who indicated that the company was engaged in “redlining,” the practice of limiting financial tools based on where a person was from. Ultimately, the case was settled out of court, with Sallie Mae agreeing to cover the plaintiff’s legal costs and making a donation to a charity.

If the OP felt the loan was predatory, she is in good company, as Sallie Mae has also overcharged the US government. The actual investigation found that multiple companies that operate similarly to Sallie Mae all deliberately overcharged the U.S. Department of Education. Which, to be fair, at least shows a large company picking on something its own size, not just naive eighteen-year-olds.

Besides trying to get young adults to sign off on crippling debt, student loans have a number of other hidden catches that make them predatory. For example, unlike traditional debt, declaring bankruptcy does not remove the responsibility to pay. So no matter how bad your situation is, you cannot escape repayment. Before 2009, even death and disabilities weren’t enough to get the payment requirements dropped. This was changed after Sallie Mae attempted to collect the debt from the family of a marine who was killed in action.

And instead of making sure students don’t end up six figures deep in debt, universities instead accept kickbacks to direct students to “preferred” lenders. While this practice was limited in the late 2010s, thousands of people are still stuck with this debt. These days, like in OP’s video, it’s more common for a “real” adult to cosign the loan, however, this comes with its own risks. Lenders, fearful of not turning $28,000 into six figures, will sometimes demand the entire sum up front if the borrower dies or goes bankrupt.

Fortunately, for all involved (except Sallie Mae, but we don’t count them), the mom realized just how absurd the interest would be and backed out of signing. While banks do need to turn a profit to operate, the social cost of burying people in debt can not be worth it to society. This is why even in countries that do not offer some degree of free education, loan repayment is “locked” behind the borrower's income. Until you start making enough money to survive, the bank or lender can’t touch your money. Regardless of the structure of the loan, young adults do need to be safeguarded from lenders who know they don’t have experience with borrowing money.