A Case Study on “Personal Loan”

Managing finances can be tough. One of the toughest transitions is going from college student to wage earner. Unfortunately, this is often accompanied by the first payments to student debt. The following case study looks at one man’s experience to offer an eye-opening account of the impact of over-borrowing.


Student loan debt is often one of the biggest factors in Personal Finance. Once you have loan debt, it’s hard to get out of it. The Project on Student Debt reports that undergrad borrowers took out $27,000 in loans for four years of college as of 2011, and that number is rising all the time.

Those attending expensive schools or law and medical school often rack up debt in six figures. This is unmanageable because they cannot prepare or pay it back. Less than 40 percent of all borrower understand what they are getting into according tothe American Institute of CPAs.

One thing that is important to understand is that, unlike credit card debt, student loans can never be forgiven through bankruptcy. Here is the case study of one man who found out the hard way and is still struggling.


Case Study

Alan Ens borrowed $25,000 in federal and $75,000 in private loans, which he needed to complete his education for a jazz guitar degree at Philadelphia’s University of the Arts. Once he graduated, one of the lenders required $600 per month with no deferment options. There was more to come.

Four years out of college, Ens worked part-time for an after-school music program. He joined Student Debt Crisis, a nonprofit that supports the reform of higher-education. Even those he has kept up payments of federal loans, some private ones were defaulted on, ballooning his debt to $110,000.

Enz’s mother had co-signed some of the loans and her wages are being garnished.


Enz now wishes that he had the correct information regarding his employment options and pay prior to deciding on a major. Knowing earning potential would make a great deal of difference. He also wishes he could have gotten more forebearancs and deferments, despite his low income.

Personal loans, such as student loans, contain protection for the borrower but private loans are not required to offer them. So, private lenders are not required to offer deferments, forbearances or grace periods.

Suggestions and Conclusion

The American Student Assistance program in Boston helps borrowers in trouble with private lender. The first step is to call the lenders and ask for a lower payment. All they can do is say no, and if they say no, you should try to consolidate small loans into one big one.

Even though the borrower cannot escape, people in Enz’s position can still repay the loan and ask that the co-signor be released from future obligations.

In conclusion, the best thing to do is to take a deep breath, organize your strategies and keep moving forward.

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