One woman decided that an education was worth the student debt. Michelle Bisutti took out $250,000 in student debt before she finished medical school in 2003. But over the years it grew to a $555,000 debt.

The woman deferred her loan payments while she did her residency and so default charges compounded the interest rates. There was a single $53,870 fee added and eventually the debt amount was turned over to a collection agency.

Bisutti acknowledges she didn’t read the loans fine print. Apparently! What doesn’t make sense is why she let it go to a collection agency before she took it seriously. I took out a student loan and I was constantly getting papers that were telling me I would have to start making payments on such and such a date; so I knew in advance what the payments would be and I could figure out a way to pay them.

Did she hide all of those under her bed and hope they would go away? She needed to contact her financial counselor and find out a way to start making the monthly payments. Since she avoided the repayment she now owes over two times the amount.

Student loans are serious business. Since the government funds these student loans they are very hard to get rid of. Whereas other debts can pretty much be eliminated by declaring bankruptcy. The keys to the house are taken away and the car may be taken away along with other things but you have the chance to start over.

But student debt follows individuals around even if they declare bankruptcy. So getting rid of student loan debt is virtually impossible especially once the collection agency is involved.

Probably the best thing to do in the situation is contact financial aid advisors and see if payments may be trimmed down and extended over a longer period of time.  But other than that there isn’t much that can be done.

The website said that there’s over $730 billion in outstanding federal and private student-loan debt and only 40% of that is actively being paid on and the rest is in default. This means that only $292 billion is being repaid and that $438 billion is in deferment, forbearance, or in collections.

Students need to understand that student loans are serious. They can mess up the rest of their life if they aren’t paying attention. They need to understand everything and read all of the fine print before they sign their name.

Debts can quickly spiral out of control and in this economy it can be difficult to pay back. So only take out student loans as a last resort and make sure that everything is as clear as day before you put your signature on it and take the money.

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