By Rianne Cole
A Rogers Park resident was among those testifying at a Senate hearing in support of a legislation that would allow students who borrowed from private lenders for their education to wipe out that debt in bankruptcy.
Danielle Jokela, 32, and her husband are in fear of losing their condo, because she owes more than $98,000 on 16 government and private student loans.
Here is the story from the Chicago Tribune:
Danielle Jokela, who graduated in 2007 with a bachelor’s degree in interior design from Harrington College of Design in Chicago, still hasn’t found a job in her field. She and her husband fear losing their condo, she said, because she owes more than $98,000 on 16 government and private student loans.
The 32-year-old Rogers Park resident was among those testifying at a Senate hearing in support of legislation that would allow students who borrowed from private lenders for their education to wipe out that debt in bankruptcy proceedings, just as credit card borrowers and many other unsecured debtors may now do.
In 2005, Congress changed bankruptcy laws and made private student loan debts nondischargeable in bankruptcy, with few exceptions.
“I ask that private student loans once again be dischargeable in bankruptcy, and that all schools be required to provide clear and full disclosure to students regarding the amount of their loans, interest rates and expected payments,” Jokela testified at the Senate subcommittee hearing convened by Sen. Dick Durbin, D-Ill.
Jokela said her parents were both high school dropouts, and that when she was a high school junior her mother said she couldn’t afford to support her. So Jokela took a fast-food job that paid her rent and little else.
In 2004, she moved from Minnesota to Chicago to attend Harrington, owned by Schaumburg-based Career Education Corp.
“I fully trusted the staff at Harrington to give me the guidance I needed and to work in my best interests,” Jokela testified. “They helped fill out the financial aid paperwork for my loans, made phone calls on my behalf and worked diligently to ensure I had the funds I needed to pay for school.”
But the details about those loans were another matter.
“There was no discussion about what my interest rates were or what my actual debt load looked like,” she said. “We never talked about what my monthly payments would be once I graduated.”
She said she knew nothing about compound interest and what that might mean for repaying her debts, she testified. That became all too clear as time passed.
Jokela graduated with $37,625 in federal loans and $40,925 in private loans from private student lender Sallie Mae, and those balances ballooned to more than $100,000 after interest and fees, she told the Senate subcommittee.
She has stretched the pay-back period to make the payments more manageable. She has also had various periods of forbearance, but when she resumed payments, she found fees had been assessed and interest compounded, adding to the balance owed.
She is making monthly payments of about $830 on what is now a total debt of $98,000. Her private student loans have interest rates ranging from 8 to 11 percent and are variable.
“If interest rates rise, so does my monthly payment,” she said.
In an interview later, she said more private student loans should have fixed interest rates.
“I’m out of options,” she said. She and her husband had been up to date on their condominium mortgage payments of more than $1,500 a month until early March, she told the Tribune. She expects that they’ll lose their home as they try to keep up with student loan payments and living expenses.
Jokela and her husband, Mike, owe $188,000 on their mortgage, she said in an interview. Other debts total about $15,000; of that, about $7,000 is a car loan, and the rest is credit card debt, of which $4,000 is related to veterinarian bills accrued when a pet cat became sick. It died in January.
The couple is living paycheck to paycheck. Her husband, a customer experience specialist for a benefits consulting firm, earns about $45,000 a year and has benefits. But he also owes about $27,000 in student loan debt.
Jokela makes $19 an hour as an independent contractor in a Highland Park design showroom, mostly doing administrative work for a general construction contractor.
She also runs its showroom, which promotes its own cabinetry as well as some countertop and flooring materials.