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Student Loan Sob Story

By JLP | August 26, 2009

I’m only writing about this because the guy in this story left a comment on this post along with a link to his website, ForgiveStudentLoanDebt.com. No wonder why this guy wants his debt forgiven and why he founded his website:

My name is Robert Applebaum. I am a 35 year old attorney from Staten Island, NY and the founder of ForgiveStudentLoanDebt.com. This movement began as a proposal I wrote one morning on a Facebook Group called “Cancel Student Loan Debt to Stimulate the Economy.” This is my story:

I am a 1998 graduate of Fordham University School of Law – an education I financed through the Federal Stafford Loan program. By the time I graduated from law school, I had amassed approximately $65,000 in student loan debt.

Starting in 1999, I began working as an Assistant District Attorney in Brooklyn, N.Y. where my starting salary was $36,000 per year. With a strong desire to use my education to serve my community, I was forced to place my loans into forbearance because I simply could not afford to make student loan payments while paying rent at the same time.

Thanks to “capitalized interest” – a racket whereby interest continues to accumulate, which then gets tacked onto the principal, the amount I owed grew exponentially over time. After five years of service as an ADA, while watching my student loan debt grow at an alarming rate, I was forced to make the unfortunate decision to leave a job I loved simply because I felt that I needed to begin to pay down my student loan debt. But for that debt, I likely would have continued in public service indefinitely.

For the next five years, I made regular payments on my student loan debt, never once defaulting on my loans and I continue to make payments to this very day. Despite five years of regular payments, and because of the first five years during which my loans were in forbearance, my principal loan balance is more than $20,000 higher today than it was on the day I graduated. Unfortunately, I’m not alone.

Apparantly Mr. Applebaum has NO IDEA how interest works. You see, people and companies don’t loan money for free. The $65,000 Mr. Applebaum racked up had to come from somewhere. It was loaned to him with the stipulation that it would be paid back at some point in the future with interest. Mr. Applebaum didn’t understand this and then when he figured out he couldn’t pay back the loan, he was surprised to find out that the interest was being tacked on to his loan amount, and therefore increasing his debt.

DUH!

Come on Mr. Applebaum. You’re a lawyer. You can’t figure this stuff out?

You made a mistake and it shouldn’t be up to the American taxpayer to bail you out. Instead, why don’t you look for a better job or move to a place with a lower cost of living so that you can afford to pay back your loan and pay rent?

I don’t mean to pick on Mr. Applebaum. But, publicizing his plight and asking for the Federal Government to step in and magically wipe away his debt is just too much for me to handle.

Topics: Credit | 67 Comments »


67 Responses to “Student Loan Sob Story”

  1. Lindsay Downs Says:
    August 26th, 2009 at 1:38 pm

    I agree. I’m also wondering how forgiving this guy’s debt would “help the economy”.

    Other than the amount of debt, my husband and I have the same story, if you replace “studen loan” with “credit card”. Same thing: we borrowed money, didn’t make enough to pay rent AND the monthly bill (other than the minimum required), so our balance continues to accumulate interest and we are still making payments. However, we do not expect anyone to pay this for us, or even to “forgive” the debt. We have learned a lot from these mistakes and have changed our spending habits in order to pay off our debt. It’s our respnsility.

  2. JLP Says:
    August 26th, 2009 at 1:44 pm

    Lindsay,

    The government taking over this guy’s student loan would help his personal economy…lol.

  3. JohnB Says:
    August 26th, 2009 at 1:49 pm

    Too many people don’t seem to understand that borrowing money creates a SERIOUS PERSONAL OBLIGATION to repay the money (as well as all of the interest). They seem to believe that if it becomes inconvenient to make payments, they should be able to default without consequences. In reality, this no different than THEFT. What did their parents teach them?

  4. Pat Says:
    August 26th, 2009 at 2:18 pm

    This is no different than the government giving money to AIG, Goldman Sachs, Bank of America, et. al. But that doesn’t make it right, it boils my blood just thinking about it.

    Just goes to show you that politicians are more concerned with the big corporations that pay to get them re-elected than with you or me.

  5. Rick Francis Says:
    August 26th, 2009 at 2:28 pm

    I think that student loan forgiveness would be in order only if it was required to keep the position filled. I’ve heard of programs that forgive student loans to insure a supply of doctors and teachers for rural areas. That makes economic sense as it is a bonus to attract new applicants, not a bailout.

    If there are qualified applicants that will fill the Brooklyn ADA with the $36,000 salary then they should. Was it a problem filling the ADA position at that salary after he left?

    -Rick Francis

  6. Dave Says:
    August 26th, 2009 at 2:46 pm

    Pat,

    It is not the same at all as bailing out the companies you mention. For example, the bailout to AIG is not a gift, but a loan of up to $85 billion from the Federal Reserve Bank of New York. AIG’s borrowings will bear interest at a rate per annum equal to three-month Libor plus 8.50%. The revolving credit facility has a 24-month term and is secured by a pledge of all of the assets of AIG and its Material Subsidiaries.

    So to be the same, the government would pay off the guy’s student loan and then charge him a higher rate of interest than he probably is paying now, and take all of his assets as collateral.

    Do you think he wants treatment equal to AIG?

    Dave

  7. LOL Says:
    August 26th, 2009 at 3:01 pm

    If you want the debt forgiven, then file for bankruptcy and let a judge decide if in fact you are not able to pay.

    We already have a system, lets use it.

  8. JLP Says:
    August 26th, 2009 at 3:09 pm

    I think I read somewhere or anothe commenter mentioned that student loans don’t fall under bankruptcy laws so the bakruptcy route wouldn’t do them any good.

  9. JC Says:
    August 26th, 2009 at 3:11 pm

    @LOL:
    the catch is student loan debt is not bankruptable in most cases.

  10. Beth Says:
    August 26th, 2009 at 3:34 pm

    Thanks, JLP, this made me laugh! I don’t think anyone’s financial struggles are funny, but I find it ironic that Americans can be so dead-set against paying for anything for anyone else (like healthcare), yet as soon as they’re in trouble they want tax money to bail them out!

  11. dogatemyfinances Says:
    August 26th, 2009 at 3:38 pm

    Couldn’t he have been a prosecutor in, I don’t know, anywhere but NYC? Would it really have been that bad to, say, go to ALBANY?

    I paid off my student loans by working for the man, like everyone else. It’s not that hard.

  12. BD Says:
    August 26th, 2009 at 3:49 pm

    Wow, a lot of angry people are commenting here. I actually think it’s a good idea to forgive the student loan debt of highly qualified people who go into public service. It’s cheaper in the long run than competing with private sector salaries or filling the District Attorney’s office with incompetents, and easier than convincing the independently wealthy to work for cheap.

    When selectively applied, i.e. not everyone with advanced degrees, and certainly not those who have taken the high-paying jobs their training prepared them for, I do think this is a good idea. Let those working for the public good keep (and spend) a little more of their money instead of it going to the banks – which enjoy some fat federal subsidies these days.

  13. Daisy Says:
    August 26th, 2009 at 3:50 pm

    Ugh. How sickening.

    How many people do you think would like to quit their current jobs to follow their dreams? Everybody. Is it realistic? No. Should we finance these people out of tax payers pockets? Absolutely not.

    Ugh. Seriously, thats my only reaction.

  14. People W/O Student Loans Says:
    August 26th, 2009 at 3:52 pm

    Student loans are not forgiven when filing for bankruptcy. It is one of the few types of debt that cannot be erased. LOL, please do some homework before posting on a topic like this.

    An assistant ADA job was fulfilling for this individual. These types of jobs are typically low paying but still need to be filled. Unfortunately, it did not come with any type of loan forgiveness.

    The cost of education is completely out of proportion with the amount of money people amass while going to college. The cost of a legal education is even greater.

    I went to a state school and received a degree in computer engineering. This left me approximately 25k in debt. Then, I decided to pursue a law degree. I was able to live at home during my 3 years at law school but amassed another 80k in debt. I finished my education 105k in debt and had 30 years to pay off my loans.

    Thankfully, I am a patent attorney and was able to land a job paying in the 6 figures. Unfortunately, a majority of law school graduates only make around 60-70k a year. Lawyers working in the public sector make even less.

    Trying to pay off your loans, save for a downpayment for a house, make rent, and also have a car is incredibly difficult for many graduates. When loans cost around $600-900 per month it is difficult for many people to get ahead.

    I am not saying that these loans should be forgiven by the government. I am saying that companies like Sallie Mae are loan sharks and shouldn’t be lending many people money. Also, debt should be forgiven for jobs worked in the public sector because people should be encouraged to work in these jobs.

  15. People W/O Student Loans Says:
    August 26th, 2009 at 3:59 pm

    Another thought, to those people telling this person to work somewhere other than NYC, who do you want to be ADAs in NYC? Someone needs to do this job or else there will be more criminals let out on the streets.

    Do you want the most qualified person to do the job or the person whose parents has paid for all of their education expenses? That is what this all comes down to. There needs to be lawyers working in the public sector. Law schools cost way too much for the loans of these workers to not be forgiven.

    Also, the person in this post was working in a job that he enjoyed. He was working in this job because he wanted to do that instead of slave away at a big law job paying 2x-3x times as much. In other years (years in which the legal profession was not hit with pay cuts and record layoffs), I am sure that this person could definitely have gotten a job at a law firm. That’s not the point. The point is that we need lawyers to work in the public sector.

  16. dogatemyfinances Says:
    August 26th, 2009 at 4:38 pm

    Most decent law schools pay back your loans. The few public interest lawyers I know have this, and they didn’t exactly go to Harvard.

    I’ve never even heard of this law school, so I’m guessing it’s not the best and brightest.

    So, yea, either go to a reasonable law school that pays back your loans (most), or work somewhere you can afford to live. Like everybody else.

  17. JLP Says:
    August 26th, 2009 at 4:42 pm

    Dog,

    Check this out: http://law.fordham.edu/admissions/458.htm

    The school isn’t cheap!

    Why anyone would pay that kind of tuition only to go into public service is beyond me.

  18. Robert Applebaum Says:
    August 26th, 2009 at 4:54 pm

    Here I go, walking into the lion’s den again. Oh well. First off, I think it’s important for everyone to know that I have NEVER defaulted on my student loans, don’t intend on doing so and have no problem paying back what I borrowed. In fact, if I was given the opportunity to get legislation like this passed with the only condition being that I couldn’t take part, I’d do it – because it’s not about me.

    To those who would suggest that bankruptcy is the proper avenue for discharging student loan debt, I suggest you do your homework – you can’t.

    All of that is beside the point though. Freeing up millions of hardworking, middle class Americans of their student loan debt repayment obligations could usher in a whole new era of freedom, prosperity, entrepreneurship and innovation. The gap between rich and poor has never been bigger in all of U.S. history than it is today. The middle class has been squeezed to the point where it’s in danger of completely disappearing. Educational costs have increased at a rate higher than that of health care – more than twice the rate of inflation.

    I would hope that we can disagree without being disagreeable. I did not personally attack anyone here and I can only ask that you refrain from the personal attacks on me.

    I put forth the proposal in question in the midst of the debate over the economic stimulus package, in the wake of TARP and all of the abuses that took place as a result. We’ve thrown TRILLIONS of taxpayer dollars at the banks and other institutions responsible for the economic crisis and it’s had no stimulative effect. Consumer spending accounts for 70% of the U.S. economy and until the middle class feels secure enough to start spending money, we’re doomed to continue spinning our wheels.

  19. kitty Says:
    August 26th, 2009 at 5:11 pm

    “This is no different than the government giving money to AIG, Goldman Sachs, Bank of America, et. al.”

    In case you didn’t know when Goldman Sachs repaid the LOAN earlier this year, it had to pay the goverment an equivalent of annualized rate of over 20%. This is because in addition to the interest on the loan, it had to repurchase the stock warrants it gave the government.

    Would you like the students to get the same treatment?

    It had been nice if people who are using TARP as justification for everything actually had some idea about the facts. Like that TARP is actually a loan that government gets quite a lot of interest on, that some banks were forced to participate. Or that Bank of America’s trouble stem in large part from it’s buying of Merrill Lynch – the purchase it was forced to complete.

  20. Joe Light Says:
    August 26th, 2009 at 5:11 pm

    I have no opinion on the larger issues here, but a couple clarifying points.

    1. Fordham is a well-regarded law school and is pretty highly ranked in US News, if you believe those sorts of rankings.

    2. Like many law schools, Fordham does indeed forgive student loans for people who go into public service if they meet certain conditions. There are also federal and state programs that do this. See here: http://law.fordham.edu/public-interest-resource-center/6924.htm . But, I think for most schools, these sorts of things were a recent development. So I don’t think it would help people who graduated 10 years ago.

  21. TMS Says:
    August 26th, 2009 at 5:18 pm

    Giving folks an education they don’t have to pay for will just drive up the cost of education even more for everyone else.

    That’s why health care and college costs always increase way out of line with inflation – too many people getting a total or partial free ride lets the providers jack up what they charge year after year.

  22. JLP Says:
    August 26th, 2009 at 5:29 pm

    Very interesting discussion we have going on here.

    Robert, I appreciate you stopping by to face this discussion. However, I don’t think there’s much you can say that will make me change my mind on this issue.

    I was against the bailouts from the start. Some were merely loans, which were easier to accept. Outright handouts are of a totally different nature.

    Let’s face it, your plan would benefit YOU!

    I’m sorry for your predicament…I really am. However, we all do things that put ourselves in a bind (some more than others) and I don’t think you should be asking your fellow taxpayers to fork over the funds to extinguish your debt.

    Why don’t you get a high-paying job, pay off your debts, and then go back into public service if that’s what you love?

  23. ~D Says:
    August 26th, 2009 at 6:41 pm

    I don’t think a lot of people realize the benefit of the bailout? of the banks.

    1st) We, the taxpayers, will (and currently are in the form of dividends) making money off of the money the goverment gave the banks.

    2nd) Without the Goverment intervention, we most likely would have had another Great Depression, perhaps one that was even deeper than the one in the 30s.

    3rd) Why do you think every bank want to pay back those TARP fund so quickly, if it’s such a great thing for them?… It’s a very bad deal, especially for the shareholders that were depending on those dividends for retirement.

    Systemic risk affects us all, that’s why the goverment intervened. The terms and restrictions weren’t favorable for the banks, that’s for sure.

    Student loans that are incredibly high, are usually the result of students borrowing to pay for something they couldn’t afford. I didn’t go to a expensive college because I couldn’t afford it, just the cheaper public schooling for me.

  24. Adam Says:
    August 26th, 2009 at 6:44 pm

    I actually agree to a point. I’m not going to go to an extreme and say that any student debt should be forgiven, but similar to my beliefs on health care, I believe a healthy and educated population is important to our country as a whole. So it is definitely worthy of debate. These are issues where I believe our hardcore love of capitalism, or a