After Bankruptcy And Divorce, Student Debt Still Persists

May 14, 2014

Many Rhode Islanders are paying off student loans that average more than $31,000, one of the highest student debt burdens in the nation. As we continue our series Paying for It: Rhode Islanders Struggle With Student Debt, we look at what happens when those loans are too much to handle.

Rhode Island Public Radio’s Education reporter Elisabeth Harrison met Allison Dean at her house on a quiet street in Warwick, sandwiched between the airport and Narragansett Bay.

Allison Dean learned the ins and outs of college loans through personal experience.
Credit Elisabeth Harrison / RIPR

In her small, yellow kitchen, Allison Dean riffles through a stack of bills on the counter next to the coffee machine.

“Here’s some of my mortgage stuff that keeps changing.  So I need to call them,” said Dean.

Dean is a thin and blond with spiky hair, who is raising three young boys, and she has struggled recently to make mortgage payments because of some unexpected medical expenses. Money is often tight.

Allison Dean in her kitchen in Warwick.
Credit Elisabeth Harrison

“I worry constantly about money," Dean said. "I worry about the mortgage, I worry about my kids, I worry about just all our finances."

Dean has a bachelor’s degree in social work and makes a living counseling families who are applying for college financial aid. She tells them to look everywhere for scholarships and negotiate with colleges to reduce the amount they have to borrow, and she speaks from personal experience. Dean and her ex-husband borrowed about $65,000 for college and graduate school.

“We were foolish, and we still owe that same amount, haven’t made any payments,” said Dean.  

Dean says they used part of the money to travel and some of the money went towards classes she took at Rhode Island College for a graduate degree in education, which she never finished. Although they both have undergraduate degrees, it’s been tough to find regular employment that really pays the bills.

“Which is another thing, when I’m talking to my students or the family of my students, I stress that it's not like when I went to college, and you could get a degree in social work or in English, or get a bachelors and get a good job," Dean explained. "Today you can’t do that.”

Photos of Dean's three children adorn the refrigerator door.
Credit Elisabeth Harrison

Further complicating the situation for Dean, she and her husband consolidated their loans and later got divorced.

“We were advised not to in case we ever get divorced, and we were like, oh we’ll never get divorced," said Dean. "And we did get divorced and you can’t split that.”

As Dean has learned, you can’t split up student loans once they’ve been consolidated, and if her husband is ever unable to pay, she will be on the hook for the money. Even bankruptcy didn’t make their student loans go away.

Persis Yu, an attorney at the Center for Consumer Law, says student loan borrowers have to meet a very high standard known as “undue hardship” to discharge their student loans through bankruptcy.

“It’s a huge problem for borrowers that it is such a high hurdle," Yu said. "Bankruptcy is an important protection, and there is unfortunately no fresh start for student loan borrowers.”

There’s no fresh start, according to Yu, because federal student loans can essentially follow you until you die. But there are programs that help borrowers in difficulty.

For Allison Dean and her ex-husband a new federal program called income based repayment has made a big difference. Their income is so low right now, they don’t have to make any payments on their student loans at all.

Dean has managed to hold onto her house despite bankruptcy, but she has been unable to make payments on her student loans.
Credit Elisabeth Harrison

This allows them to avoid defaulting, but it also means the interest on their loans keeps racking up, and Dean says it’s the not the situation she had hoped for, when she borrowed the money

“We owe it. It’s not something I wan to get around, it's just we happen to be in a situation we can’t pay it,” said Dean.

So Dean tells her clients not to make the same mistakes she and her husband made. She points out that the $65,000 they borrowed would only pay for about a year of undergraduate education these days, at least at many private colleges.

When it comes to sending her own three boys to college, Allison Dean says she will encourage them to start at a community college, so they can keep the cost to a minimum. She’s considering going even one step further by encouraging them to go to a vocational high school, where they can learn a trade. That way, she says, they will have something to fall back on to pay student loans even if jobs are hard to come by after college.