One of the most devastating elements of student loans is hearing stories of former students who had no idea they were signing onto private loans with long term consequences aren't spelled out.
Mom-of-three Patricia Feldman was recently shocked to learn that her sons student loans increased so rapidly.
Purdue’s Back a Boiler program, launched in 2016, offers ISAs to students seeking alternatives to traditional federal and private student loans. Feldman's son took out a $10,373 ISA for the 2018-19 academic year, and a $29,491 ISA for the 2019-2020 year, according to documentation seen by Yahoo Finance.
That $39,864 loan ballooned to $99,660.50 as of January 2022.
"This is more than double the original lend," Feldman stated in a January 18 letter that was addressed to Purdue President Mitch Daniels, and seen by Yahoo Finance. "In what world is this equitable for my son?"
Since the ISA stated that the borrower would not have to pay if they did not find a job, or earned income that did not exceed $40,000, Feldman added: "Should I encourage him to stay home, run out the clock on the agreement (104 months) and owe nothing? He wouldn’t do that because he is a fine young man, with a great education and a good job. All due to Purdue."
One of the biggest issues that's led to the student debt crisis is the fact that loans are often difficult to understand.
In this case, the borrowers had no idea you...couldn't pay the loans off as a lump sum.
Because of the structure of the loan, it can't be paid off all-at-once, even if you have the money to do so.
Feldman said after her son made two $900 monthly payments on his nearly $100,000 in debt, she tried to pay the entire sum off on behalf of her son — but the terms of the ISA didn’t allow for a lump sum payment. So now her son has $900 monthly payments while juggling his first job out of college.
“It's been just this horrendous deal that I've gotten him into,” Feldman said.
It's unclear as to whether or not the Biden Administration still considers student loan forgiveness to be on the table...but even if it is, loans of this nature are not eligible for forgiveness.
Stay tuned as Fundfly continues to build a platform for crowdsourcing student loan debt to help those who unwillingly signed up for a life of hardship to pay back predatory student loans.