Student Loans ... Oh my gosh!

First: My personal disclaimer ...
I should have planned better ... I should have calculated my school expenses better. That said: I did not.

(I never had a student loan in my undergrad years, and had NO idea how much this would cost. I just kept signing the paperwork.)

I graduate with my Masters in Information Technology in two months. I just found out what the balance of my student loans were: $48,000 !!!!!!!

Being married with two kids I already have a substantial debt load. (And I owe the IRS money from a failed real-estate investment.) (On the plus side I have zero credit card debt)

If things were as they looked two years ago life would be good: I'd be happilly employed and getting raises and bonuses. However with the crash of the dotCom and tech sector my salary has gone down quite a bit and there is no sign of it improving anytime soon.

I *want* to repay my debts. But this student loan is going to kill me.

Any advice? Anyone that I should consult to help me figure out an attack plan?
(I'm quite literally getting sick over this.)

Thanks in advance ....

 

You might like to check out the Student Loan Counseling Service, Inc. website -- especially the pages on deferment and on forbearance.

Good luck.

 

I have a friend who is a loan officer for a smallish bank. He said that the only thing they will not tolerate is stonewalling or evasive behavior. When people say "Help me," or "How can we work this out," or at least, "Let's talk," good (or at least non-stomach-churning) things often happen. He said a common solution at his bank is a secured personal loan: home equity line of credit, or other personal property. Can be interest only (e.g., $48K, 7%, $280/month). Otherwise, their longest personal amortized loan is 7 years, changes daily based on prime, currently would be $787/month for $48,000.

 

Thanks for the replies.

These are stafford loans. From what I can make out I have two loans (one unsub, one subsidized) both at 5.39%. So I don't think I can do much better on the interest rates.

Both of my cars will be paid off in mid 2004. (One in mid 2003, the other about 9-10 months later). I'm hoping to work something out to make smaller payments until those nuts are out of the way.

Otherwise, I'm kind of screwed.

(Stomach-churning doesn't begin to describe it.)


Thank you once again. (I guess plans for a doctorate are on hold for a while!)

 

I agree with John, my father is a retired bank president who started off in the loan department. He always told me that as long as someone makes a good-faith effort at repayment, the lender will bend over backwards to come up with a solution that makes everyone happy. Just don't ignore it, because it surely won't go away. Best of luck.


Bruce

 

Just today, I received notification in the mail (via a full color brochure) that I have been pre-approved for a federal student loan consolidation promising to reduce my monthly payments by more than half. This, in and of itself, does not appear to be much of an accomplishment (as I don’t have any student loans whatsoever), but it leads me to believe that there are a few companies specializing in this sort of thing.

Not knowing anything about the particular company that sent me the information, I do not want to give them any free publicity by naming them here. However, EllisZ, if you are interested, email me, and I will give you their name and Website address (with the caveat, of course, that you must conduct your own due diligence.)

The government, however, does maintain its own Web sites addressing loan consolidation at http://www.loanconsolidation.ed.gov/ , and http://www.ed.gov/DirectLoan/consolid2.html .

Lastly, information concerning loan forgiveness can be accessed here, and a Google search using the keywords student loan consolidation will yield quite a few more sites to explore.

 

Ellis brings up a very critical issue in regard to furthering one's education via DL. He now owes $48,000 at the master's level, and if he chooses to pursue the doctorate there will be another $25-40,000 (conservatively). For those who have tuition reimbursement plans, or for whom tuition cost is not an issue, this is not a problem. For those (like myself), who must pay every penny of their educational costs, it can be a real challenge.

I paid off a student loan for my masters and another for the doctoral program, so I understand your concerns Ellis. I think this is why some non-US GAAP programs are so attractive to US students.

Best wishes in finding a manageable financial plan!

 

As mentioned by another poster up the list, I strongly suggest you look into having your loans consolidated into a direct loan from the federal government. ( http://www.directloans.ed.gov/ ) There are many advantages to this: one bill to pay, less hassle figuring how much you owe, and most importantly, they will not drive you nuts calling you at home the same way a private lender would if you have trouble paying your bill.

Addittionally there are many repayment options to explore. Your payment plan can be changed from the standard 10 year repayment for a stafford loan. There are options that include income-contingent payments (i.e., if you don't have a lot of income they will lower the size of your monthly payment at the beginning assuming your income will increase in the future), or you can change to the 20 year plan, which is how my loans are being payed off.

If you are having extreme financial difficulty, you can also pursue a forbearance, which essentially stops the requirement for payments for a set amount of time, although interest will continue to acrue.

BTW, I should mention that all options I've listed (and there are more) are available no matter who your stafford loan lender was. I like the way the direct loan system operates, that is the only reason I recommend it.

Good Luck,
Jeff

 

The first thing that you might want to try is requesting a forbearance or a deferment. Either of these may get you by until you have your cars payed off. You should be able to work something out with the lender. They may want you to at least pay the interest each month, or they may allow it to be capitalized (added to the principal).

If all else fails, or even as a preferred option, you can always enroll half-time at an inexpensive school, which should qualify you for an "automatic" deferment. This way you not only won't need to make payments, but you also won't pay interest in the meantime on the subsidized loan. If nothing else, find a local community college or a cheap DL school and sign up for a couple of easy courses that you might enjoy. The total cost for the courses should be a whole lot less than the monthly interest that you would have payed on the subsidized loan (assuming that the subsidized loan accounts for a substantial portion of your total student loan debt). Just make sure that the school is eligible for loan deferment and that you are enrolled half-time, however the school defines it (generally 6 s.h. for a full length semester, or 3 s.h. for a summer semester), and also make sure that the courses you plan to take will qualify you for a deferment.

 

Re: Re: Student Loans ... Oh my gosh!

This issue starts making those South African doctoral programs looking pretty good, right Russell?
Jack
(who's talking seriously with some folks in Stellenbosch)

 

The Army offers student loan repayment of up to $65,000 for qualifying specialties. Just doing my part to sell others on the benefits of serving in the Army

See the following URL for details:

http://www.goarmy.com/army101/benefits.htm

Whatever you decide I hope it works out for you.

(But even if you don't get loan repayment, you will automatically qualify for a deferral during your first three years on active duty. Just a thought.)

Tracy<><

 

soapbox on funding higher ed

One of the things that anyone interested in the higher education system has to recognize is that the federal and state financial support for higher education has not kept up with inflation and retooling needs of the workforce.
Someone graduating with a BS/BA who goes into teaching looks at around $30,000 in schooling debts and will start a $25,000 a year job. Something is wrong with this picture.
The federal cutbacks and failure to keep pace with inflation have been in funding for college research, direct student aid, and continuing higher education.
The only area that draws political support is in worker retraining.
I think the distance learning movement will continue to grow because, it gives a person a chance to get a BS/BA without accumulating large amounts of debt.
I think Enron could be just the start of the slippery slope. They are not the only company with science fiction bookkeeping. And there must be colleges whose bookkeeping is not very good. The lack of federal support to train its own population could hit some programs hard in the next 18 months.
So much for the soapbox.

 

use of credit

I don't have any great ideas, for having, what I consider large amounts of debt. There are several experts who say somethings that make sense.
Bruce Williamson in his radio show always advises not to borrow for food and rent. He says you don't want to pay off a big mac for the next five years and have $30 of interest on a $3 item.
Clark Howard says when your debt is high, get out from under it, by getting a part-time job to pay it off. The quicker you pay it off, the less interest you pay on the debt. One extra days work a week could save thousands of dollars in interest.
Both say to figure out your income, and live within it.
I think it is Suze Ormand who talks about cutting out those "little" daily expenses that add up fast. Like that $3 feel good coffee, make your own for 50 cents and use the $2.50 a day savings (about $900 a year) to pay off debt or to invest.
My son wanted to buy a car, but really couldn't afford it on his expenses. But when he figured out that he was spending $6 a day buying lunch on work days that he could make for under $2 a day. He tried making his own lunch for three months, and had an extra $200 in cash.
I wish it was an easy problem to solve.
All the best!

 

Re: soapbox on funding higher ed

I hear what you are saying, but the picture you paint is, in my opinion, unnecessarily bleak. While it is true that the average starting salary for beginning teachers is about $25,000 ($27,989, to be exact, according to the Bureau of Labor Statistics)*, average student loan debt for graduates of public institutions is far less than $30,000**. And teachers salaries don't stay that low for long. Once again, according to the BLS, "median annual earnings of kindergarten, elementary, middle, and secondary school teachers ranged from $37,610 to $42,080 in 2000."***

So, while student loan indebtedness is climbing, it is not as high as you suggest. And teachers don't generally have to take jobs that pay less in the first year than the total of their student loan debt. Additionaly, teachers who stay in the profession can expect higher pay down the line.

Tracy<><



*"Teachers—Preschool, Kindergarten, Elementary, Middle, and Secondary," Occupational Outlook Handbook, 2002-2003 Edition, accessed on the World Wide Web at http://www.bls.gov/oco/ocos069.htm . Look under the section titled "Earnings."

**"Student Debt Rises But Loans Remain Affordable, Data Shows," ,Higher Education and National Affairs, accessed on the World Wide Web at http://www.acenet.edu/hena/issues/2001/12-10-01/student_debt.cfm . According to this article, median student loan debt at for those who attended public institutions is $15,375.

***"Teachers—Preschool, Kindergarten, Elementary, Middle, and Secondary," Occupational Outlook Handbook, 2002-2003 Edition, accessed on the World Wide Web at http://www.bls.gov/oco/ocos069.htm . Once again, look under "Earnings."

 

Re: use of credit

Tracy, you tread down a path so rarely traveled on this board. You provide actual citation for your information. A fact based resonse not founded on conjecture and opinion. A lesson for all.

My hat is off to you!

Paul C.

 

Re: Re: use of credit

Oh, really? How can you make such a bold statement? Exactly how rare is it?

Come on! What are your sources?


Tracy<><

 

To everyone ...

Thank you for your advice. I have a six month grace period starting in about 1.5 months. (So that gives me 7.5 months total to work out a game plan.)

I'll see about extending the payments for 20 .. (hopefully I can work that out.) I'd rather have the lower payments and pay it off early.

This gives me a larger incentive to find some sort of adjunct position to fill my evenings. (Make some money to pay back the loan!)

(BTW: Does anyone know where a good spot to look for adjunct openings would be? -- besides cold-calling the schools?)

Thanks again,
Ellis

 

http://www.higheredjobs.com often lists many adjunct positions (as opposed to the Chronicle which seems to focus more on full-time positions).



Tom Nixon

 

For a consolidation try www.cfsloans.com or their customer service line at 1-800-762-6441. I just consolidated my loans and my wife's loans with them. They have been great both with customer service skills and what they offer. Best of luck!!

 

Try these for job hunting for adjunct positions:

http://www.academic360.com/general/US.html

Leslie