I graduated from a major Texas university about three years ago. Since then, I had been paying my student loan payments online at a price that I thought was very affordable. It had been difficult to find a job in my field, but I had been working for about a year and had some savings, so I decided to go and buy a new car. I went to the lot, looked around, and found one that I just fell in love with. When I went into the loan office, though, I was shocked to hear that my credit rating was in the red and there was no way they’d be able to offer me a loan.
Since I only had one credit card and my student loans as outstanding debt, I called each company to see if anything was wrong. After a lengthy talk with my student loan lender, we uncovered something shocking: my student loans had been split into two parts, and the payments I had been making were only for one of them. The other had gone unpaid because the letter they sent about it never got to me. With fees and interest, I now owed over $30,000. I was stunned; it felt like my life was crumbling in on me. All my savings would now have to go toward my loan, and I would have to go into “loan rehabilitation” in order to clean up my credit, which meant paying nearly $400 a month to keep the balance current.
What was even more shocking to me was that the loan rehab officer told me that I was not the only student in this situation. Each year, almost thirty percent of student loans go into default because the payments are split without the student being informed. They continue to make payments, thinking they are paying on their full balance, when in reality their loans are going into default. Before any students’ loan payments begin after graduation, they need to monitor their accounts carefully every few months to make sure their lender has not split up their loans.