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Sallie Mae to Father of Dead Marine: Pay Up!

Ian McVey wanted to serve his country, so he joined the Marines after college. He was supposed to go to Iraq, but died not long before his unit shipped out in a motorcycle accident.

Ian's father, John McVey, had to settle Ian's college loans. He wrote to the lenders, asking the debts to be forgiven and two agreed. The third, Sallie Mae (originally founded as Student Loan Marketing Association in 1972, as a government-sponsored enterprise), decided that it'd rather have the money:

John McVey then wrote a very personal letter to Sallie Mae:

"In the process of his education, Ian amassed considerable loans. But Ian was steadfast in his desire to serve our country rather than begin a life in business where his income would have been double or triple his Marine service payment. Giving to our country was Ian's calling, and we admired and supported his choice of service. He was a good and noble son and better friend.

"We are asking that you forgive Ian's loans as his federal loans are being forgiven on the basis of Ian's choice of service to our country as a patriot and so that our family may not have to bear these financial burdens while we deal with the inconsolable grief over the senseless, tragic and untimely loss of our son. While life has not been fair, we pray that you will be."

Sallie Mae responded with a computer-generated letter that, aside from a "Please accept our condolences for your loss" stuck in the middle, was a demand for $53,144.

There was no name on the letter. John McVey's attempts to get a human being to talk to him about this have been met with computer-generated voices.

Kevin Cullen of The Boston Globe has the story (since the article was published, Sallie Mae suddenly had a change of heart and had forgiven the debt): Link


To be honest I would be more surprised if they did wave any costs.

The loan company provided the family with a service and as such should be compensated.

Sure he joined the service, that's great. But had he not got into a motorcycle wreck he would be still paying his bills off.

I'm as patriotic as they come, and as such, I believe that the company has every right to demand payment.
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So somebody raises a loan, spends it and dies before he can repay. His heirs inherit debt.

Isn't this what life insurance is for?
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TronStuck - My understanding is Sallie Mae guaranteed the loan so they are stuck with it not the loan company.

I'm curious, have you ever spent any time in the military?
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Actually, it's more complex than that. When a person dies, his student loan is settled by his estates. If the estate doesn't have money to cover the loan, then the loan dies with him.

I think his father co-signed the loan (I'm guessing here), so he is liable for it.
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Sallie Mae does not budge on anything. I gave up on trying to come to a different solution on paying my loans. Because they decided to be uncooperative I am only paying them $350 a month instead of the $1400 they want a month.
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I am unhappy to see that his marine status was exploited, when the death was unrelated to the marines.

If it was co-signed, doesn't the co-signer owe the $53k? Isn't that the point of the co-signer?

Only one out of three lenders is seeking money, and that comes to $53k. How much did he borrow in total? What college is that expensive?
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Even if his death were related to the Marines I would still not see a reason for the loan to be forgiven.

Becoming a soldier (especially voluntarily) does not automatically transfer responsibility for one's financial situation to the government.
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Your heirs don't inherit your debt. The dad probably was a co-signer or was administrator of the estate. Don't feel bad for Sallie Mae, it probably recovered anyways. Lenders often have life insurance policies without your knowledge that will pay off your loans if you die.
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Yeah, I'm a little curious too. The guy's service is commendable and his death indeed terribly sucked.

But why is his father on the hook unless he co-signed the loans? And why would he do that if his son was only going to enlist anyhow -- clearly the son wouldn't be able to pay. You don't need $53K (plus the other loans... that was just Sallie Mae's chunk) in education just to enlist in the Marines. A high school education works fine. If you *do* want to go to college, ROTC would have picked up the tab.

Question for Josh: You said you are now welching on $1400 a month student loan payment, giving them only $350. Were the loan terms a surprise to you? Didn't you know how much you would have to pay and how often? Why take out such onerous loans if the education they provide won't return that sort of income? IS Sallie Mae suing you now or somehow attempting to garnish your wages? Sorry for being nosy, just curious. I went to engineering school -- lots of folks had loans upon exit, but they all got jobs sufficient for them to pay. Why take a $100K loan to get an art degree?
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The family should continue to pay the debt, loan companies get the short end of the stick by being labeled as "the big bad lender."
These lenders represent real people and provide a valuable service that is the backbone of our economy.

Working for a loan company I've watched over 60 of my fellow co-workers be laid off in the last year because of higher than expected defaults and payment uncertainty. That 53 grand represents someones salary. That money was put up by investors who are out of pocket. Forgiving debts like that makes the system crumble by creating a fear of lending which is contributing to the credit crisis we are currently facing. The more student loans that default the harder it becomes for students to get loans.
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According to the article, his "motorcycle was blindsided by a car driven by an 84-year-old woman."
Why can't his father sue that driver (or her insurance company) for the financial burden she caused? It's not Sallie Mae's fault.
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Josh: If you pay less a month, you'll gather more interest and end up paying them more... I'm just making sure you know this because you act like paying them les sis really sticking it to the man.
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I have Sallie Mae student loans totaling over $100k for an art degree so don't be knocking it!

Basically the kid got his education and decided to join the Marines. He could have been an officer, which you need a degree for.

Sallie Mae is right in that it still asked for the money because they still had to pay the school. It's not fair to always stick it to the lender. Now I will argue that the interest rate on the loans that Sallie Mae gives is pretty crazy. I'm paying almost 9% and over the course of the 30 years on my loan it'll total around $340k if I only make the minimum payments. So if you look at it that way then you can see they are making a pretty good deal of $ and a 53k forgiveness isn't too bad.. But when a lot of people are getting forgiven, you can see the problem.

To add to the fact that Sallie Mae sucks at customer service... They outsource their customer support to India. Not that they are bad people over there, it's just hard to communicate when the english they learn is not the same english we speak and it's tough to communicate properly. I finally got to the claims department and spoke to an American woman and she told me that all of Sallie Mae is based in America, even after I explained that I spoke to 4 different people with Indian accent. Poor customer service, but if that's the worst of it then whatever.
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A lesson on how loans work: (For everyone crying poor Sallie Mae)

We have this system called Fraction Reserve Banking, essentially it means that for a bank to issue a loan, they only need to hold in reserve a percentage of that loan amount. Let us assume that a bank has to hold 10% reserve on loans, that means for a $100,000 they only need to have $10,000 in assets to issue that loan. The other $90,000 is created out of thin air. So when you then pay back the $100,000 + interest they then have that $100,000 to make new loans on and can now lend out $990,000, having only risked $10,000 to begin with. The process goes on and on.

At current the actual reserve percentage for banks is far lower than the that of the 10% I use in my example. So next time you hear about a bank being complete a-holes over some debt they want repaid, ask yourself how much stake do they really have in that loan, because chances are if the debtor made any payments the amount of money the lender actually risked has already been paid back.
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If you owe money, you owe money. Bad things happen to people all the time. I pay all my bills on time and have ZERO debt. What is my reward for going above and beyond and doing the right thing?

Sorry but lots of people have hard, dangerous jobs. Fishermen are more likely to die on the job and troops, and they dont get public housing either.

Cry me a river.
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Although it's a sad story and there is nothing much more horrible than loosing a kid, the debts should have been payed. Why others should pay for their choice?

especially $50K+ with no insurance...
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it sucks to have your kid die young.

But I'm wondering, why would someone who joined the military get a free pass? Even if he would have died in combat, thats a consequence of the person's decision (if you join the military, you have to know that you might die. especially if there's a war going on). But that aside, he didn't die in combat anyhow.

It like the parents are trying to profit as much as they can off the pity of others. It would such to be in their situation, losing a kid and inheriting his debt, but I see no reason for them to be helped out more than any other non-military parents in their situation.
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...

He was supposed to go to Iraq, but died not long before his unit shipped out in a motorcycle accident.

'His unit shipped out in a motorcycle accident'..??

That must have been messy.

Sorry. It was too ripe of a target.

...tom...
.
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Fractional reserve banking has nothing to do with Sallie Mae. When you deposit $100 at a bank they can lend out $90 - this is fractional reserve. Sallie Mai uses Asset-Backed Securities, Commercial Paper, and issues Bonds backed by student loans. When students don't repay loans, these bonds (for instance) can default, they can be downgraded by bond rating companies such as S&P, and Sallie Mai incurrs a higher cost of funds. Not to mention investors are less likely to invest in these bonds leaving students high and dry. Pay your debt.
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Dad's reasoning is just off. Why does choosing to be in the military make you forever and always a special wonderful person who deserves extra crap? I'm not making a point about the military per se right now, but you know, there are lots of career paths that are at least as honorable.

If someone chose to be a chiropractor or a soup kitchen worker because they actually wanted to ease the suffering of others, would we be expected to give them a free ride forever, or do this pseudo-canonization thing that goes on with military folks? Is it because you might die if you join the military? Seriously, I'm asking. Because liquor store clerks are at very high risk for violence as well, and we don't have parades for them.
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violet

"... Why does choosing to be in the military make you forever and always a special wonderful person who deserves extra crap?"

As a retired navy man I resent the Hell out of your comments! Neither I, nor you, know ANY military member that has that attitude. I won't waste my time asking you how much time you served your country. We both know the answer to that don't we freeloader.

"I’m not making a point about the military per se right now, but you know, there are lots of career paths that are at least as honorable."

Sure would have fooled me!

"If someone chose to be a chiropractor or a soup kitchen worker because they actually wanted to ease the suffering of others,"

Yet more crap, to use your word, from someone that obviously hates the military. For your information the U.S. military delivers millions upon millions of dollars of aid every year to ease the suffering of others all over the world. They do more good than you could ever imagine. And they don't do it for ingrates like you.

would we be expected to give them a free ride forever,

Another bald faced lie. Why do you hate the military so much? Could it be that they refused to accept such a classless jerk as you?

"or do this pseudo-canonization thing that goes on with military folks? Is it because you might die if you join the military? Seriously, I’m asking. Because liquor store clerks are at very high risk for violence as well, and we don’t have parades for them."

You make me want to retch. There is not ONE military person, past or present, that isn't a much better person than you could ever be. Don't be jealous!

"We can't all be heroes because somebody has to sit on the curb and clap as they go by." Will Rogers

(That will get her knickers in a wad!)
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Sparks, I'm afraid she has a good point. I am also afraid that you failed at addressing them and instead turned to ad hominem.
If you don't want people to think that military personnel regard themselves as above the rest - then you aren't really helping.

The real heroes are those who know they probably won't get any recognition for their work, yet are contempt in knowing they've made someone else's day (or life) a little better. You could argue that people serving in the military fit into this category. Some undoubtedly do. Serving in the military doesn't make you a more worthy human being.
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@ SparkS: Thank you for your subtle exploration of my sincere questions about our culture and attitudes. This is the kind of measured, thoughtful, judicious personality I want at the command of heavy weaponry in times of intense pressure and in situations where he is surrounded by people that may not see things as he does.
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Orjan Morjan, ted, Violet:

I stand by every word I wrote.

OM, Perhaps you need to take off your rose colored glasses. Since when is spewing lies considered a "good point"? Sorry, I'll never help someone tell bald faced lies. Especially when directed at me. I never said military service made a person more worthy. I'd appreciate it if you wouldn't insinuate that I did. Violet is the one that denigrated all military members with the lies she spouted about them. I'm supposed to sit here and let her filth go by without calling her out. Sorry, it will never happen.

ted, I'm supposed to sit here and let some twit spit out lies about me and other military members. She's lucky I didn't tell her how I really felt.

violet, "measured, thoughtful, judicious personality", like your spewing total lies huh. Do as I say not as I do doesn't cut it. There's a huge difference between a mere disagreement and some low life spouting lie upon lie about something I and plenty of others hold dear. As I said "DON'T BE JEALOUS".
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I used to be in the military a while ago, and even I don't understand why his family should be forgiven their debts to Sallie Mae. A loan is a loan. Sure, a military member is putting their life on the line, but doesn't that apply to our police force, our fire fighters, and so on? Do they deserve the same considerations?

I don't like how some people like to shame organizations into forgiving something they are liable for.
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@SparkS: Hehe, oh I get it now! I feel so gullible.

Your post was actually a teaching metaphor about the inadequacy of mental healthcare for veterans who have suffered profound psychological injury as a result of their service, the amelioration of which sad state of affairs I strongly support. I think it's terrible that the people represented by your cleverly-constructed example are not getting the help they need.

Do you have an organization through which you further engender awareness of this matter, some literature I could look at? I'd love to get more involved. In any case, well-played, sir.
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Sparks, Allowing a twit to spit out lies is one of the freedom for which you have fought. Although I think you reacted way too strongly to violet's comment.

I would hate to be in the military or ex-military right now, with all the criticism. It is a tough job.

What's sad is that this guy's parents are exploiting his military status as an excuse to forgive a debt that they incurred. And the fella never even saw combat.

The question is apt - why should he be treated any differently from the rest of the population?
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SparksS,

Don't make crass generalizations, for instance, "Neither I, nor you, know ANY military member that has that attitude." Referring to an attitude of entitlement. Maybe violet does know military individuals with this attitude, because I do. I know others that don't. Some people use their status, be what it may, executive, lawyer, celebrity, to justify what they are entitled to.

You claim that violet hates the military, but she (assuming a "she") merely criticized the father's and others failed logic of entitlement because of one's service. Criticism should not be perceived as hate especially when one asks valid questions. Her phrasing may have been more harsh than appropriate. We may not have parades for clerks, but we do have gay pride parades. I'm sure any organization could get a parade together, its a military tradition to have parades. Off on a tangent I know.

I also resent your assumption that violet is a "freeloader." Well, isn't the father in this article freeloading off of his son's service? It is exploitation and it is wrong.

Yes, you are in fact right that the U.S. military delivers over four billion dollars in aid to foreign countries. Most of it goes to three countries: Israel, Egypt, and Columbia.

You also accuse violet of lying, but she does not. You may have found some of her assumptions misguided, but never did she lie. Your off base attacks to a person criticizing the military are simply ridiculous. I thought they taught manners in the Navy.
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I agree with the above posters that the father must have co-signed the loan, otherwise Sallie Mae would have no standing whatsoever as federal student loans are discharged at death. If he did not co-sign, to those of you who think "the family should pay the loan" - if they didn't take it out, no, they shouldn't have to pay the loan. Would you like to be on the hook for a loan your family member took out that you had no part of? If his father co-signed it's trickier, but I think that the son's death should be enough, it isn't like it defaulted. Still, legally, that isn't enough. It's a good reason to think about whether parents should be co-signing education loans and whether our education system needs an overhaul.

P.S. - to those of you wondering why he spent so much and didn't get a degree - read closer. He did. He also WAS an officer - second lieutenant is an officer - a junior officer, but still an officer. chances are he wasn't a Marine that long.
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