‘Borrowing from Peter to Paul is a phrase that has taken on a whole new meaning for me, now that I am actually living it,” said a friend of mine recently. She was talking about her strategy for dealing with her child’s student loans for college, and I could feel her pain, since I was having some acute symptoms myself.

Three years ago, when her daughter was starting college, my friend and her husband took out a Sallie Mae loan to cover the entire first year’s cost — $55,000 for a private New England college.

The student loan with the friendly name bills itself as “the simple and smart school loan option for undergraduate students.” If you do a Google search for student loans, Sallie Mae’s Smart Option Student Loan claims to offer “various financial and educational benefits, including competitive interest rates, a choice of repayment options, and rewards for paying your undergraduate student loans.” Further research shows that Sallie Mae is one of several approved federal loan servicers working on behalf of the U.S. Department of Education to service federal student loans.

Sounds great, right? The federal government, those in education, no less, is looking out for you, right? Wrong. “We borrowed the full amount at an interest rate of just over nine percent, actually just about 10 percent,” says my friend. “That’s highway robbery, especially when you think about the nothing returns on bank CDs and the relatively low mortgage rates. But they had us over a barrel, because we were already mortgaged to the hilt and had tapped out our home equity. We had no other options.”

Three years later, with their daughter about to embark upon her senior year of college, her loan had ballooned from $55,000 to almost $70,000, almost $15,000 over the relatively short three-year life of the loan. That’s just about $5,000 a year, but because of the compound interest, in recent months, that one loan was accruing almost $500 a month, while their daughter was still in school.

“Outrageous on top of outrageous, right?” says my friend. Sallie Mae was gouging this family with an exorbitant interest rate that would mortgage their future as well as their daughter’s. While she was hard at work in college investing in an education that would help her find a good job and make a decent salary, she was creating a financial prison that would start her future off on very uneven fiscal ground. And she was only 17 years old.

This family’s story is one of thousands of such tales of financial hardship caused by student loans, and it is the reason it has become one of the nation’s hot button issues. Today’s student loan debt in the United States stands at $1.2 trillion.

According to Kyle McCarthy, founder of www.studentdebtcrisis.org, more than 40 million Americans hold this debt, making the population with student loans greater than the entire population of Canada, Poland, North Korea, Australia, and more than 200 other countries. About seven million have defaulted on these student debts, meaning their credit is ruined, and so is their reputation, in an age when potential employers routinely run a credit check on job applicants. So now it turns into a vicious Catch-22, because how can you make money to pay back your student loans if you can’t get a job because you have student loans upon which you have defaulted?

And lest you still have any misguided notions that Big Brother is watching out for you, the tender young student trying to build a brighter future (or that student’s parents trying to help him accomplish that), the Federal Government, according to projections by the Congressional Budget Office, made about $50 billion dollars on student loans last year, making it even more profitable than ExxonMobil, the most profitable company in the United States. The student loan system in this country is broken. It is run by greedy, shortsighted, usurious money-mongers who are making huge profits off the backs of our young people. At the very least, the interest rates have to be dropped to a more reasonable level, in line with the rest of the economy, and factoring in a 20-something-year-old’s ability to pay it back in reasonable fashion.

There have been discussions about debt forgiveness, but I am old-fashioned enough to believe that you should honor your debts. That said, you should also remember to live — and borrow — within your means.

Harder said than done, when it is education that still is the most powerful tool that can open doors to the future. And it is still the foundation of the American Dream. Too bad that for too many, it has become the stuff of American nightmare.