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 FinAid.org 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.

However, now the weak economy is forcing some schools to limit the financial aid available after many doubled or tripled financial aid in order to attract greater numbers of students and also to reduce student debt. But now Dartmouth and Williams College will no longer be offering aid packages that formerly allowed students to attend without taking out loans. And other private schools are expected to follow suit which means students will have to take on more debt in order to earn a degree.

Tuition is expected to increase by 4 to 6 percent this year and there are fewer resources available to students. And financial aid and even scholarships will start to suffer at private institutions. Last year schools were concerned enrollments would drop so they dug into their future savings in order to increase student aid. But now colleges are really shorthanded in funding this year.

In recent years between 30 and 40 schools which were mostly private have replaced scholarships and grants with loans. At Dartmouth for example, students whose families earn above $75,000 are eligible to receive between $2,500 and $5,500 in loans. But students from families who earn less than that amount will still be able to receive free tuition and loan-free aid packages.

Schools are now trying to set their budgets for next year and many are expected to increase tuition costs along with loan options and cut down on the money that they’re giving out. But many also recognize that those actions won’t be enough and they have to make staff cuts and eliminate certain sports programs. Funding coming in and going out of schools is making it difficult for students to earn a degree and for schools to stay open.

However, the schools still make money and profit because they increase their enrollment, which brings tuition dollars that are subsidized by the government to the schools.  Some schools that have seen their enrollment significantly increase are the University of Phoenix, Westwood College, and ITT.  ITT has seen new enrollments rise by 33 percent and seen profits increase 50 percent from last year.

Many of the students at these schools finance their education through tuition grants from the government and take out loans for the rest of their costs.  However, with the economic difficulty, it has become more difficult for students to get bank loans, so schools have stepped up and are extending credit to students.

In some cases students are getting better terms, but many have taken loans that are worse. Students need to check around and make sure they are taking the best loan.  Go over it thoroughly and understand everything before you sign it.

For-profit schools have seen the proportion of students borrowing at least $40,000 nearly triple to 30 percent.  These schools are also showing that 43 percent of students took out private loans in 2007-08.  College can be expensive, and students need to prepare for that.

Despite the expense, students are returning to school because they have either been laid off from work or have decided to take advantage of increased government aid. Education is never something that invidividuals resent having.  They understand that despite the time, energy, and money it took to earn a degree, it was a wise investment in their future.