Caroline, my first experience with financial independence happened just a few years out of college. My car's brakes were failing (not exactly something you can leave to chance), and the estimate to fix them was $1,000. Gulp. I had my hand on the phone to call my dad for help when I decided I could manage on my own--and subsequently took out my very first installment loan (with my car as collateral, of course).
Happy Independence Day--financial or otherwise--to all!

Several years ago, my daughter borrowed monies from Wells Fargo for the purpose of higher education.
When she graduated, she was not immediately able to secure a job providing the income needed to begin repayment. She applied for and received a forebearance. At the conclusion of the forebearance, she applied for another forebearance and was told she received it. Within two weeks, she was informed that your policy was changed and she would not receive the forebearance. She was placed in default. Since that time, she has been denied each and every overture she has made to either rehabilitate or settle the loan. It appears that Wells Fargo uses federal guidelines in some areas that are to your advantage, but refuse to provide relief (rehabilitation etc.) to the borrower as would be permissable with a federal student loan. If I am incorrect in this, please communicate immediately. This is a sad and sorry state of affairs for students trying to better themselves in the land of the free and the brave.

Hi Perplexed--Thanks for your comment about your daughter's situation. Caroline is working on a response to you but wanted to do a bit of research first. Watch for her reply soon.

Hi Perplexed – Thanks for your patience while I did some research on your question. I’m sorry to hear you’ve had a negative experience. Since I don’t know all the details of your specific situation, I can’t fully explain, but I can give you some information that may be of help.

It’s not clear from your post whether your daughter has a private loan or a federal loan, but know that the rules for deferments and forbearances are different for each. At Wells Fargo, we do look out for the best interest of the borrower when it comes to making their student loan payments. We certainly don’t want any of our borrowers to go into default. However, all banks must adhere to certain guidelines with regard to both federal and private loans.
Federal loans are regulated by the federal government. All lenders must comply with the regulations established by the Department of Education, which include requirements related to deferment eligibility and default. There are several deferment options available to federal loan borrowers based specific conditions such as unemployment, economic hardship, etc. A borrower is considered in default on a federal loan when it goes 270 days past due.

With private student loans, Wells Fargo—and all banks—must still adhere to certain rules set up by the FFIEC (Federal Financial Institutions Examinations Council), and they are different than those that apply to federal loans. The FFIEC rules establish guidelines for extending and deferring accounts and establishes uniform charge-off policies, and for student loans, the standard is at 120 days past due.
Based on these rules, our most commonly-used private student loan for undergraduate students allows borrowers a six-month forbearance for economic hardship during the first 12 months of repayment. Then the borrower must make payments for another 12 months before they become eligible for another forbearance, and so on, with up to five forbearances or extensions throughout the life of the loan. Please know that the forbearances are not granted automatically—the borrower has to establish both a willingness and ability to repay the loan. The FFIEC does prohibit us from using deferments or forbearances as a way to delay inevitable default if the borrower can’t make a payment. The loan will be charged off once it is 120 days past due—again, this is an FFIEC regulation that we must follow.

As far as settling a charged off loan, we do it under some circumstances, if we can agree to the settlement terms. However, once the loan gets to the point of being charged off, we need to recover the principal balance in an expedient manner. The best time to try to work out payment options with your lender is before the loan goes past due.

I hope this information helps. If your daughter has more questions about her specific situation, she can use the Feedback tool to send us an email with her contact information, and we’ll have someone get in touch with her.

Dear Caroline: You will be financially independent when your money works for you; not the other way around. Congratulations on your entrepreneurial spirit going back to your paper route: now quit giving your money away on consumables. Instead start living on less than you make, save and invest the difference. Then you will truly be financially independent.

Dear hayekcapitalist – good point, true financial independence is when your money works for you. In my post, I was just talking about that first step…full financial independence from my parents! I’m well past that step now – definitely living within my means and investing. But those consumables get pretty tempting – I gotta indulge every so often. You make a good reminder though, to keep shooting for real financial independence.