Who knows more about repaying student loans in New Jersey than I do? Seriously, by the time I’m done repaying my student loan debt I’ll have the knowledge and know-how to write a book about how to do it right. So, from up here on my ego-confident perch as the man when it comes to student loans in New Jersey, I felt compelled to comment on a story that came through my inbox many months ago. This story has to do with a woman with a student loan debt of nearly $555,000.

Repeat: $555,000!

WOW!!! That’s incredible… and completely unacceptable.

When I saw the headline on Yahoo! News that read, “The $555,000 Student-Loan Burden,” I had to read more. And what I found was the story of Dr. Michelle Bisutti. If you want to read her story directly as reported by Yahoo! News and the Wall Street Journal, you can click here and take it in for yourself. Here are the parts of the story that struck me and stuck in my head:

When Michelle Bisutti…finished medical school in 2003, her student-loan debt amounted to roughly $250,000. Since then, it has ballooned to $555,000.

It is the result of her deferring loan payments while she completed her residency, default charges and relentlessly compounding interest rates. Among the charges: a single $53,870 fee for when her loan was turned over to a collection agency.

WHAT?! A $54 thousand fee for turning the loan over to a collection agency?! Okay, look. I understand that lenders need to be repaid. Heck, I work for a statewide loan fund and when my borrowers don’t repay their loans, my professional life sucks. So, I completely understand the need for people to repay in good faith. But a $54 thousand fee for turning a debt over to a collection agency? Get out of here! That’s ridiculous and should be reversed without question.

How dare someone charge that type of fee? For comparison’s sake, if an interest rate was that outlandish it would be called usurious and the lender could possibly be taken to court and penalized. A $54 thousand fee… good grief!

There is an estimated $730 billion in outstanding federal and private student-loan debt…and only 40% of that debt is actively being repaid. The rest is in default, or in deferment, which means that payments and interest are halted, or in “forbearance,” which means payments are halted while interest accrues.

Ummm… can anyone say “bubble ready to burst?” When you combine the high unemployment rate with the increasing student loan debt burden – well, it’s not a good thought. Only 40% of student loans are actively in repayment? Oh boy…

Dr. Bisutti says she loves her work, but regrets taking out so many student loans. She admits that she made mistakes in missing payments, deferring her loans and not being completely thorough with some of the paperwork, but was surprised at how quickly the debt spiraled.

As a guy whose student loan debt story was also spread out all over the national media, I’m glad that this paragraph was included in the story. One of the missing pieces of my story in USA Today was that I pretty much knew what I was getting into with respect to my student loan debt. It appears that Dr. Bisutti knows how she wound up in the position that she’s currently in and I can tell you from experience that this puts her a few steps ahead of other student loan borrowers that are falling behind on their payments.

While in school, her loans racked up interest with variable rates ranging from 3% to 11%.

Eleven percent?! Are you kidding me?! Now we are dealing with usurious interest rates if you ask me…

She maxed out on federal loans, borrowing $152,000 over four years, and sought private loans from Sallie Mae to help make up the difference. She also took out two loans from Wells Fargo & Co. for $20,000 each. Each had a $2,000 origination fee. The total amount she borrowed at the time: $250,000.

In case any of you are wondering how a person borrows $250,000 in student loans – there’s your answer. Quite frankly, I know folks that have over $200,000 in student loan debt. In fact, I’d be one of those people if I decided to stay in Graduate School until I received a Doctorate. And while I do anticipate eventually going back and obtaining a doctoral degree, I want to eliminate or dramatically reduce the remainder of my student loan debt ($80 thousand as of this writing) before I take that step.

In 2005, the bill for the Wells Fargo loans came due. Representatives from the bank called her father, Michael Bisutti, every day for two months demanding payment. Mr. Bisutti, who had co-signed on the loans, finally decided to cover the $550 monthly payments for a year.

Ugh. What a horrible resolution to this particular loan’s status. One thing that always stuck in my mind when I was an undergraduate (not a graduate student) was that my Mother co-signed for my student loans. I’m not quite sure what benefit, if any, I received from having her co-sign, though I know that she made a quarterly interest payment on the loans while I was in school. There was no way that I was going to let any of my student loan debt fall back on my Mom and Dad’s shoulders, so as soon as I had the opportunity to consolidate my $121 thousand in loans I did so.

Again, I didn’t receive a lower interest rate because I had a co-signer with an excellent credit score, so other than providing the student loan companies with an additional repayment source, I’m not sure what the benefit of a co-signer is for today’s undergraduates.

She recently entered a rehabilitation agreement on her defaulted federal loans, which now carry an additional $31,942 collection cost. She makes monthly payments on those loans — now $209,399 — for $990 a month, with only $100 of it going toward her original balance. The entire balance of her federal loans will be paid off in 351 months. Dr. Bisutti will be 70 years old.

Well, at least the good Doctor found herself a repayment plan. But with only $100 of each payment going towards the original balance, she’s going nowhere fast. However, if I can make any recommendation to Dr. Bisutti it would be to overpay when possible and as much as possible.

The debt load keeps her up at night. Her damaged credit has prevented her from buying a home or a new car. She says she and her boyfriend of three years have put off marriage and having children because of the debt.

I readily admit that there was a time when my student loans kept me up at night. Those days are pushing further and further away, but they’re still close enough where I remember the gut-wrenching feeling of not believing that there was an easy way out of the student loan debt situation. Of course, I’ve found my way and I’m beating the crap out of my student loan debt, but there are hundreds, thousand, and even tens of thousands of student loan borrowers out there who are in way over their heads. I sympathize with their situations and hope for the best for each of them (and their lenders, who should be repaid).

Back in June 2006 when I was plastered on the front page of USA Today the one thing I remember most from that whirlwind experience was that people tried to project their personal situations on my situation. I can’t tell you how many internet message boards I read that said I should have gone into the military because, “Back in 1946 that’s what I did and the government paid for my education!” Or how many times I read crap like, “Joe should have gotten a job while in college and not eaten so much!” (I had two jobs in college and there were MANY comments about my weight on the internet message boards because, well, people are really, really dumb).

That said, I dare not project my personal situation on the good Doctor chronicled in this story. Like I wrote above – I’ve also been kept awake at night because of my student loan debt. I know what that suffocation feels like and I’m sorry to hear that anyone else has to go through it. I know what it’s like to not be able to buy a home because you can’t begin to put away the proper down payment. I know what it’s like to not be able to purchase a brand new car for the same reasons. And I know all too well what it’s like to push off new or advancing relationships because the thoughts of your student loan debt consume you.

So, if this blog entry reaches Dr. Bisutti I hope that she is doing well and making progress in repaying her debt burden. Good luck, Dr. Bisutti!