I was killing time with the boob tube set to Headline News. Clark Howard, the financial guru was handing out information and advice that I, in the past, have found to be useful and enlightening. I can’t deal with Nancy Grace or Jane whatever her hyphenated name is but Clark is OK. He was reaching time for a commercial and played a portion of the upcoming segment that immediately caught my attention. His statement paraphrased was “Stay away from private education loans, whatever you do!” I watched the segment where he gave the caller advice to use only federal loan programs and rather than taking out private loans, skip a semester of school. He went on to state that dealing with private loan companies can be an absolute nightmare. I’m here to tell you just how right he is.

Several years ago, two of my kids (who took too long to get through school) did not qualify for additional federal loans and looked to a private company called American Education Services (AES) also called PHEAA. Not knowing better, I cosigned on the loan. The nightmare began when my kids took a semester off.

After taking a semester off while we moved from Colorado to Texas,  both received (at some point) notice that payments were starting immediately. One had payments about $150 a month and the other with payments around $480 a month. Even though they went back to school, the company would not defer the loan which they do on federal loans. One handled the payments OK, the other had no source of income. After falling three months behind, I was notified that I needed to send over $1500 immediately or I would be reported to the credit union. Not having enough to cover all of it, I sent the first $1000 to start to catch up. They received the money and immediately called and let me know that it was not sufficient. There was another payment coming due the end of the month. I stated I would sent both the new payment and the rest of that one together. They stated that they would report to the credit bureau and they did. I now had late payments on my credit for the month I was notified and the back three months. I sent the remainder of the payment and the new payment when the new payment was due. As soon as they received it, I got another call. I had not sent the $5 of accrued interest on the old part. I needed to send it immediately. I said I would send it with the next payment and, you guessed it, it hit my credit.