Student Loans Outstanding

Anyone have large student loans in deferment or abeyance and facing large accumulating balances due to galloping interest rates quarterly? I refer to those who are ineligible for combining loans and reducing rates. My loan is in abeyance and accumulating $1000 quarterly interest. Lender will not respond to request to forgive some interest as allowed under law. I am thinking of appealing to my senator.

 

Interest rates are at an all-time low for federal student loans, and lenders are not likely to forgive interest during a time when their "take" of the loan is less than it has been in the past. As you pointed out, the interest forgiveness is allowed, but not required on the lender's part, and actually quite rare. It generally only happens when a settlement of payment is being arranged. You can appeal to your senator, but I wouldn't get my hopes up.

 

interest rates are only low for most.. some people consolidated before they were low and are stuck paying 8-9%

 

Right, but given that most are paying lower rates these days (and thus, the lenders' cash-flow is down overall), they are less likely to be forgiving of those from whom they are collecting more interest. It sucks, but it's business.

 

Anyone have large student loans in deferment or abeyance and facing large accumulating balances due to galloping interest rates quarterly?

interest rates are only low for most.. some people consolidated before they were low and are stuck paying 8-9%

I have about 50K in student loans that are being deferred all through state school paying in-state tuition rates. I entered another degree program in order to continue deferment. I'm picking Cal State programs that cost me only about $3500/yr with gas and books so I can will be awhile before I am required to pay.

If you decide to go back to school, enter a graduate degree program and receive more aid through student loans you will be able to re-consolidate at lower rate.

It's decision you could make: Assume more debt by taking on another program or pay higher rates by keeping the same situation that you have now.

Do a cost-benefit analysis and figure out which one of those two options saves you more money. Also, take into account tax credits for education; the lifelong learning credit, if the program is related to your job and you itemize you tax returns you can deduct tuition, materials and miles. For me it was a no-brainer. It will be different for you depending on your circumstances.

You should look at the public universities in your state or DL programs like the HUX program at CSUDH where the prices are reasonable for both instate and out of state residents.

Of course, if you're in default on the loans you already have, then the chances of you getting additional federal aid to do this is practically nil.

Also, I thought that if you consolidated loans you will have to start paying immediately, therefore no deferment. Is there a loophole I don't know about?

 

Just don't let the loans go into default status. Under the Perkins Act the Dept. of Ed. can garnish your wages with no due process whatsoever. I believe they are only required to leave you with minimum wage. All they need do is contact your employer and tell them they will be taking X dollars from your salary each month.

 

Abeyance

means I am allowed to not pay due to low income. It is good for 6 months at a time. I have been on it for 18 months. I have a MA from Cal State Dominguez Hills, but did not know I could consolidate loans at lower rate if I pulled down aid again. I will look into it. Thank you.

 

Re: Abeyance

You can re-consolidate if you draw additional loans, but be careful....

If you have a high balance at a high rate, taking out another small loan at current rates isn't going to bring down your overall rate that much. The new rate will be weighed by the balance of the existing loans. For example, when my husband and I considered consolidating our loans, he had over $40,000 previously consolidated at 6.5% and I had about $5,000 at the current variable rate of around 3%. Our overall rate dropped only to 6.25% So choosing to borrow MORE just to realize a small interest drop likely isn't going to do you any good in the long run.

 

Re: Abeyance

You can re-consolidate if you draw additional loans, but be careful....

If you have a high balance at a high rate, taking out another small loan at current rates isn't going to bring down your overall rate that much. The new rate will be weighed by the balance of the existing loans. For example, when my husband and I considered consolidating our loans, he had over $40,000 previously consolidated at 6.5% and I had about $5,000 at the current variable rate of around 3%. Our overall rate dropped only to 6.25% So choosing to borrow MORE just to realize a small interest drop likely isn't going to do you any good in the long run.