‘A carefully constructed trap’

Loyola University Chicago School of Law
  • Name
    Hillary Finne
  • Age
    46
  • Home
    Carol Stream, Illinois
  • Occupation
    school bus driver
  • Student loan balance
    $318,000

Hillary Finne says she ran up her student loans to attend the Loyola University Chicago School of Law – the ticket, she thought, to financial security.

In a bitter irony, she was denied a license to practice law in Illinois because she’s in too much debt.

Finne grew up in the northwest Chicago suburbs. She says she borrowed $85,000 in federal student loans, mostly for law school.

After graduation in 1997, cervical cancer and other illnesses sidelined her for more than four years, she says, and after that, she struggled to land a good job. For years, she paid little on the loans. The balance, propelled by interest and penalties, became “out of control,” she acknowledges.

And so, in 2003 the state denied her admission to the bar. In a letter, the bar’s Character and Fitness Committee told her to reapply when she could “demonstrate financial responsibility” by paying her debts.

Since then, Finne says she has worked as a law office manager, bill collector and dump truck driver. For a time, she says, she was homeless.

She says her debt has cost her two potential marriages – “two men who, even with the prenup, didn’t want to go there.” Buying a home and having children also are impossible, she says.

Finne calls student loans “a carefully constructed trap,” luring 17-year-olds into bad decisions that follow them for years.

Today, Finne says she is enrolled in an income-based repayment program for her federal loans.

“For three years, the government has concluded the maximum I can afford is zero dollars,” she says.

‘I applied for 470 jobs’

North Carolina State University
  • Name
    Ashley Dale
  • Age
    51
  • Home
    Raleigh, North Carolina
  • Occupation
    software tester
  • Student loan balance
    $78,000

In 1992, Ashley Dale says he took out $16,400 in federal loans for a graphic design program at North Carolina State University. Before enrolling, he met with an adviser in the financial aid office.

“I said, ‘Bottom line, what am I going to have to pay when I get out?’ ” he says. “She said, ‘$80 to $100 a month,’ and I thought, ‘I can pay that.’ ”

But by the time Dale left school, advances in computer graphic software had dampened demand for graphic artists. Dale says he deferred payments on his loans until he found a job. It paid $24,000 a year.

“When I got my first bill, it was $340,” he says. “My rent at the time was $275, and my car payment was like $109, so it was quite a shock.”

During the up-and-down career that followed, Dale says he was laid off twice and went through periods of unemployment. Some years, he found only part-time work. He loves his present job, which pays $50,000 per year. But he says he found it only after a three-year hunt in which he applied for 470 jobs.

Meanwhile, Dale says he never paid enough on his loans. As a result, he says, the debt has snowballed, accruing interest and penalties that dwarf his original balance and wrecking his credit besides.

“I did more deferrals, I went into default,” he says. “I would pay $100 per month for a year and get it out of default, and they’d say, ‘OK, you need to start paying $700 a month.’ ”

Instead, he says he pays $50 per month. The U.S. Department of Education website says that if he ramped up his payment to $535 per month, he could pay off the loan in 30 years. His total payment would be $192,644.

Dale says he’s had countless phone calls from loan collectors – as many as 10 per day during times when his loans were in default. Some collectors are abusive and others are nice, he says.

But he says the collectors can’t acknowledge the obvious: He’s unlikely ever to make enough money to catch up to his spiraling student loans.

‘They would definitely take away his pension’

University of North Texas
  • Name
    Vanessa McClurg
  • Age
    29
  • Home
    Salt Lake City
  • Occupation
    auto shop service manager
  • Student loan balance
    $73,000

Vanessa McClurg borrowed $67,000 to study medical technology at the University of North Texas in Denton. Her father, a retired Navy petty officer, co-signed the loans.

Illness disrupted her studies, McClurg says. As a sophomore, she came down with pneumonia. In her junior year, she was hospitalized with a staph infection and a fever that spiked at 107. She says she missed more than a year of classes. Her GPA fell to a dismal 1.34, and in 2010, she dropped out.

Eventually, she moved to Utah, where she got a job at an auto repair shop for $9 per hour. She didn’t pay anything on her loans for a couple of years. Then loan collectors “really came after me,” she says, threatening to sue. Worse, if she didn’t get her loans current, they warned they would go after her dad.

“They would definitely take away his pension,” McClurg says she was told. “They said they have every right, and they would immediately go after the federal benefits of the co-signor.”

The threat to her father’s retirement horrified McClurg. She felt helpless to do anything about it because she was broke.

“My 84-year-old grandfather gave me every dime he had in his savings so I could become current on my loans,” she says.

Her advice for prospective college students? Think twice about whether a college education is necessary. And if you go, “don’t get student loans, whatever you do, none at all.”

‘I kind of ruined my life’

University of Rochester
  • Name
    Jackie Krowen
  • Age
    32
  • Home
    Portland, Oregon
  • Occupation
    nurse
  • Student loan balance
    $152,000

It was too easy to get student loans, Jackie Krowen says.

“You didn’t have to meet with anybody,” she says. “You just clicked some buttons on the computer and you had a huge check.”

At 19, Krowen says she borrowed $37,000 to attend a public community college. It was far more than she needed, but she says her parents encouraged her to borrow because the interest rate was low.

She borrowed more for a theater program at Portland State University and for nursing school at the University of Rochester in New York. By graduation, the principal topped $128,000.

Krowen realizes now that she had no idea what she was doing when she took out loans, and lenders didn’t clue her in. It shouldn’t be that way, she says.

“I didn’t understand how much money a loan could accrue,” she says. “It didn’t make sense to me.”

Today, the monthly payment on her combination of federal and private loans is $1,200, almost all of it interest. After four years in which she paid more than $50,000, her balance has dropped only $4,000, she says. She’s afraid it will go on this way for the rest of her life.

“I can’t plan for an actual future,” she says. “I feel I kind of ruined my life going to college.”

‘It was like arguing with a brick wall’

University of New Orleans
  • Name
    Danielle Aluotto
  • Age
    30
  • Home
    River Ridge, Louisiana
  • Occupation
    pharmacy technician
  • Student loan balance
    $90,100

Danielle Aluotto borrowed $82,000 to attend the University of New Orleans.

By scrimping and saving, she says she has kept current with her loans. To ensure that she doesn’t miss a payment, she signed up for auto draft: Each month, $1,200 is automatically withdrawn from her bank account.

Nevertheless, she says that in 2013, Sallie Mae debt collectors began phoning her, declaring that one of her student loans was in arrears.

“The first thing on a Saturday morning, your one day off, or it’s throughout the day while you’re at work,” Aluotto says of the calls. “They just think a 45-minute conversation in the middle of the day is convenient.”

Collectors also began calling her fiance, she says.

Time and again, she says she explained that the loan was current. “It was like arguing with a brick wall,” Aluotto says.

After six months, she filed a complaint with the federal Consumer Financial Protection Bureau, accusing Sallie Mae of harassment. Soon, the calls stopped. But the pressure is unrelenting.

“I feel the weight of my student loans every day,” Aluotto says.

‘I’ll be 50 when it’s over’

Pace University
  • Name
    Lee Anne Aluotto
  • Age
    42
  • Home
    Houston
  • Occupation
    school addiction counselor
  • Student loan balance
    $109,000

From childhood, Lee Anne Aluotto says she hoped for a career in community service: working with at-risk kids, the developmentally disabled or anyone who really needed help.

“It’s not religion-based, it was just my calling,” she says. “I wouldn’t have been happy doing anything else.”

Most of her student loans – $65,000 by the time she finished school – paid for her master’s program in social work at Pace University in New York.

Over the years, she says she has worked as a food bank coordinator, drug counselor and school social worker, mostly for school districts in the Houston area. But in social work, “you work hard for low pay,” she says. To earn extra money, she also has worked as a telemarketer, mini-market cashier and clerk at a nuclear power plant.

Twice, she says she has been laid off because of cutbacks in social service programs. In 2013, she was out of work for a year. She then landed a job as a school social worker, but the district eliminated the position after a year.

“It was very sad and frustrating, but that’s how things ended up,” she says. Her new job as an addiction counselor pays $65,000 a year, the most she’s ever earned. “For me, that’s huge,” she says.

Given her modest wages, Aluotto says she never has been able to keep up on her student loans. In 2013, she enrolled in a federal loan forgiveness program. It was set up to give a financial break to people who do public service work.

“Each year, they look at my taxes and decide how much I should pay,” she says of the program. “If after 10 years I have paid what they request, they’ll forgive the rest.

“I will still end up paying the $65,000. I’ll be 50 when it’s over.”

‘I’ve been paying for over 30 years’

Southern Illinois University
  • Name
    Mary Franklin
  • Age
    62
  • Home
    Cincinnati, Ohio
  • Occupation
    retired college professor
  • Student loan balance
    $14,000

Mary Franklin was a music teacher in Chicago’s public schools when she decided to get a doctorate in special education at Southern Illinois University. She borrowed $25,000.

“I thought it was reasonable and I could pay it back,” she says. “But somehow I was never able to.”

Today, retired from a career as a professor at the University of Cincinnati, she still is making a monthly payment of $154 on her student loan.

“I was in my 20s and now I’m in my 60s,” she says. “So yes, I’ve been paying for over 30 years.”

Looking back, Franklin realizes that she was clueless about money. She never made more than a minimum payment on the loan, never tried to pay down the principal.

“I know now how ignorant I was, and my friends who had doctorates as well,” she says. It wasn’t until middle age, when she began watching personal finance guru Suze Orman’s television show, that she understood how loan interest compounds.

In 2002, Franklin’s life seemed to fall apart. She began missing meetings at work. Unprompted, she would burst into tears. Some days, she says she couldn’t get out of bed. She didn’t return phone calls or open the mail.

Eventually, she says she was diagnosed with bipolar depression and went on disability retirement. It took her five years to get well.

During her ordeal, collectors for Sallie Mae began calling, saying her loan was delinquent.

“I tried to explain to them that I was ill, and I was still coming out of it,” she says. “They said the federal government (doesn’t) care about that, and they would take it out of my disability.

“That’s when I became really afraid.”

She says she has resumed making her payments.

‘A great opportunity … destroyed me’

John F. Kennedy University
  • Name
    William Berkholz
  • Age
    65
  • Home
    Fairfax, California
  • Occupation
    psychologist and liquor store clerk
  • Student loan balance
    $186,000

After a Vietnam-era hitch in the Marines, William Berkholz knocked around for 15 years. He says he tended bar, studied creative writing on the GI Bill and worked as a bellman at San Francisco’s Mark Hopkins Hotel.

In 1988, at 37, he enrolled at John F. Kennedy University in Pleasant Hill, California, to get his master’s degree in psychology.

“I thought grad school was a great opportunity, and yet it destroyed me,” he says.

Berkholz says he took out $44,000 in federal loans to help pay for his three-year program. He felt pride at graduation and looked forward to a meaningful career. But those feelings faded as he confronted a weak job market.

His first job as a psychologist – supervising mentally ill residents of a board-and-care facility – paid $5 per hour, he says. Three years later, he says he landed a better job at a drug addiction program and finally was able to begin paying back his loans.

In the 20 years that followed, Berkholz says he never earned more than $65,000 per year, and in lean years, he couldn’t keep up with his loan payments. In all, he says he paid about $31,000 on the loans.

Last year, when his balance was about $162,000 and he was beset with health problems, Berkholz defaulted on his loans.

Then Berkholz said his loan servicer offered him a way out: If he began making monthly payments of $161, the loans would come out of default.

Berkholz jumped at the deal: By then, he had begun to worry that the government was about to seize his Social Security. He says he has made his payments ever since. Meanwhile, his loan balance has grown to $186,000.

“I believe in America and consider myself patriotic, but this is the most idiotic thing,” he says. “I’m not 25 or 30, where they can say, ‘You need to get a job and pay these things off.’ ”

Murdered, but still on the hook

New York University
  • Name
    Reetpaul Rana
  • Age
    35
  • Home
    San Francisco
  • Occupation
    freelance writer
  • Student loan balance
    $4,000

Death is supposed to be the only sure way to avoid paying student loan debt. But in 2009, Sallie Mae went to court in San Francisco to collect on a murder victim’s college loan.

Reetpaul Rana grew up in the San Francisco suburbs. He graduated from Reed College in Oregon in 1996 and from New York University’s graduate journalism program a couple of years later, says his sister, Paulita. Later, he lived in San Francisco and wrote for local weeklies.

In 2008, Rana went to Humboldt County in Northern California to buy marijuana for resale, court records show. He was found shot to death. Years later, two reputed pot dealers pleaded guilty in connection with his robbery and slaying.

In 2009, while the murder still was unsolved, SLM Education Finance Corp., a Sallie Mae affiliate, filed a $4,000 claim against Rana’s estate, seeking payment on the student loan. Rana’s sister says she believes her brother borrowed the money for graduate school. His estate settled Sallie Mae’s claim for $3,200, records show.

Over the years, the U.S. Department of Education says it has forgiven billions in student loans because the borrowers had died. Many private lenders have done likewise.

Sallie Mae also forgives student loans when borrowers die, according to Nikki Lavoie, spokeswoman for Navient Corp., Sallie Mae’s successor firm. But the forgiveness policy applies only to loans originated in 2009 or later. When a borrower with older unpaid loans dies, “a claim may be filed against the estate,” she wrote in an email.

Lance Williams is a senior reporter for Reveal, focusing on money and politics. He has twice won journalism’s George Polk Award – for medical reporting while at The Center for Investigative Reporting, and for coverage of the BALCO sports steroid scandal while at the San Francisco Chronicle. With partner Mark Fainaru-Wada, Williams wrote the national bestseller “Game of Shadows: Barry Bonds, BALCO, and the Steroids Scandal that Rocked Professional Sports.” In 2006, the reporting duo was held in contempt of court and threatened with 18 months in federal prison for refusing to testify about their confidential sources on the BALCO investigation. The subpoenas were later withdrawn. Williams’ reporting also has been honored with the White House Correspondents’ Association’s Edgar A. Poe Award; the Gerald Loeb Award for financial reporting; and the Scripps Howard Foundation’s Award for Distinguished Service to the First Amendment. He graduated from Brown University and UC Berkeley. He also worked at the San Francisco Examiner, the Oakland Tribune and the Daily Review in Hayward, California. Williams is based in Reveal's Emeryville, California, office.