jazzy i recall a time in my therapy when we were rooting around with my "stuff" that the pain felt unbearable. BUT in order to heal within i knew i had to go thru the pain to get to the other side. you may want to bring this up with your T. tell him how you feel. what is going to happen as you sift thru the mire you will learn new coping skills to deal with your pain and ways to process these things better in the future too. it will help minimize depression in the future. so i encourage you to continue therapy. when you're with your T it is a safe place to let these things surface. you have been carrying around a huge sack of hurt that you can unload in therapy. all the junk from the past that has made you feel "less than".
and no you are not a loser by having to drop out of school. your depression/that sack i mentioned- is bogging you down. once you start to heal you will be able to return to school if you want to.
so try not to be discouraged right now. you are on a journey to a new and improved you!!!