So my husband’s student loans just came out of deferment, and we got the paperwork yesterday with a payment schedule. OMG. They want over $200 a month. We don’t HAVE $200 a month to spare.
We’re both working, although I’m part-time and he gets paid very little right now. I’ve been sending out resumes every day for four months and no nibbles. I’ve just started to rebuild our credit after years of unemployment killed it, and the last thing I want is to default. We don’t have credit cards, nor do we own anything of note. Does anyone have suggestions as to what to do about this?
You can request an income-based repayment schedule, if they are Federal student loans.
http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp
Are they Federally guaranteed loans? If so, call them and explain your situation, and they will probably work with you. I have no clue about private loans.
Yes, they’re federal. I will try that link. THanks!
Okay, there’s a calculator which says we can get payments down to $160, which is better, but still out of reach. What’s my next step?
Contact your lender and request new repayment terms. Scroll all the way down to the end of the page at the end of the link.
We applied for economic hardship deferment. I think we only paid the interest or defered the whole payment but accumulated interest, but I really don’t recall exactly. That was around 1995. I don’t know if it’s still an option, but you can ask.
As stated above, the best bet is to contact the Loan Collections Office (or equivalent) at your school or lender (if not a school) directly as they would rather work with you than have you default. There are options for economic hardship deferment, modified payment plans and, if you or your husband work in certain jobs, cancellation privileges.
Again, please, please contact the lender and they can and will explain your options. Don’t try to do it from some website as direct contact is best in this case.
Have you actually sat down and written down all of your monthly expenses? I don’t deal with student loan repayment, but taxes, and I can’t tell you how frequently I’ll have a client tell me that they can’t afford even one cent to the IRS because they are upside down each month. . . only to have them write down their financial situation and discover that the reality is that they have a free $500 a month.
Now, it’s certainly ok not to have the ability to pay that $160 a month, but you’re going to need to be able to account for why when you ask them to lower it. Where is that money going?
Not to derail, but can you give some examples of this?
(This might help the OP as well, so I guess it’s not that irrelevant.)
The point would be that some expenses people “can’t do without” are pretty frivolous. Cell phones, for example. Yeah, it’s horrible not to have one nowadays, but… is it more important than being garnisheed for student loans? How expensive is the car? How much do you spend on cable TV, frivolous groceries, etc. ? How much on rent?
Basically, if $160/month is a problem for you, the problem is not the $160/month - especially if it’s “the two of you”. You need a better job or a second one…
She needs a first job, never mind a second.
If they’re all federal loans (Staffords, Perkins, etc), do a consolidation and pick the IBR (income based repayment) plan. I have almost 12k in federal loans, but I’m only paying between 64 and 85 a month.
You generally CANNOT consolidate *private *loans to pay a lower amount, though. You do not have a choice to lower private loan payments except at the discretion of the lender. They are unlikely to offer a deferment or forbearance, because private lenders are assholes.
So your plan of action should be 1) Consolidate all the federal loans together. 2) Choose the IBR plan. 3) Do whatever you have to (scrimp, get another job, sell your children) in order to pay the private loans in full, every month. The fees on those will get out of hand very quickly if you don’t keep up in full, and you have NO recourse to get them forgiven–bankruptcy doesn’t work for student loans, whether federal or private.
Upon reading the whole thread, I see your loans are all federal. This is great news! Consolidate them if you haven’t already, this is really the best way to lower your monthly payments. I consolidated within the last 6 months, and it was the best financial decision I’ve ever made–it also hugely reduced my stress levels. But, if they say you can afford to pay more than you think you can afford, you’re still going to have to pay that amount.
There *are *more options in most peoples’ budgets than they think, though. You might have to cancel your cable or downrate your cell phone to the most basic plan or shop at Aldi or take public transportation (if that’s an option). This is not meant to sound condescending, either, you may have already done some or all of these things (and if so, fantastic!). But honestly, as long as you are living within your means, you WILL be able to afford the IBR repayment option.
The thing is, with student loans, the lenders expect your husband to have a fairly-lucrative job using the degree he bought with their money. They expect to be paid back. Hopefully he’s putting out the resumes as much as you are.
Default on student loans? Not really an option.
Or, as the joke I used to hear from engineers goes…
Q: “What does the arts graduate say to the engineering graduate?”
A: " DO you want fries with that, sir?"
There are lots of jobs, just they are very demanding, boring, low paid, and not very fulfilling; and very likely not in your field. However, that’s life.
Of course it’s an option. What’s not an option is the accumulating debt going away just because of default.
It’s also my understanding that a judgment levied against you, and student loans are the two debts that cannot be erased through bankruptcy.
~VOW
Note that consolidating federal loans may mean you give up some perks like loans going back into deferment if you become a student again.
With Federal student loans you can apply for a deferment under a set of special circumstances, deferments typically defer both payment and interest.
You can also apply for a forbearance under just about any circumstances. A forbearance just means they do not make you pay the loan, but interest still accumulates. I have a nephew who hasn’t paid a dime on his student loans and is 34 years old and bought a house just two years ago. His Federal student loans have been in deferment the whole time, and he actually has a very large amount of accumulated interest now.
Not a wise path to go down, but at least in his case the chickens have yet to come home to roost. (I’ve tried to advise him he tries to follow some strategy to at least start paying down the monthly interest to stop the bleeding, but as long as the government hasn’t forced him to he can’t be convinced to take any amount of money out of his monthly budget.)
Just something to keep out there as an option, you can generally get a 12 month forbearance over and over again.
This is very true. You cannot discharge this type of debt with either chapters of bankruptcy. Generally you can call and work down the payment to something reasonable. I have never had a problem getting my loans deferred and this is something that you should really look into.
Also, every time I have talked to The Department of Education they have been pretty understanding on this.
I don’t know if the number is still good, but you can try calling the Department of Education Borrowers Inquiry line 1-800-621-3115. That used to be the number of their direct loan servicing department. (My mind is a little foggy on that at the moment, its been a few years since I was in that line of work)