Student loans, repayment, and high cost of living

I was looking at the loan repayment calculator at the website, to get some more information on the recent income-contingent repayment program. I was unhappy to find that, while it takes into account gross income, it does not take into account the cost of living in a debtor’s area. I happen to live in an area with a much higher cost of living (and higher minimum wage) than the national average.

I’m currently making slightly over $14 an hour for a call center job. Sounds pretty great, right? But it’s fucking expensive to live here. Groceries are expensive. Auto insurance is expensive. Renting and homes are hugely fucking expensive. For the same job that I’m holding here, I’d probably be making about $9 or $10 an hour in a more rural area. Since groceries, insurance, and rent would be significantly lower, but the same approximate percentage of income as where I’m working now. Only 2% of people in my city are living below the national poverty line, but significantly more people than that are probably living paycheck to paycheck, like I am.

But since I am living in a place with higher median wages and a correspondingly higher cost of living, I would be made to pay significantly more money toward student loans. When I sincerely cannot afford to do so, but the financial aid fuckers don’t fucking care–they treat every resident of the lower 48 as exactly equal, they don’t care what your expenses are. I’m currently on a deferment but it’s going to expire soon.

What the fuck do I do?

Move somewhere else.

I’m in a lease until April and I can’t save up enough for moving expenses or a deposit in the meantime. Additionally, moving possibly means less rent, but more transportation costs (and more time spent traveling). I am not at all sure it would be a net gain.

I’ve taken a look at surrounding suburbs and, while mine is pretty much the most expensive one to live in, the others are not significantly cheaper until you get about 50 miles away.

Are you currently living with family or a roommate or two? That would be my first step if you aren’t already.

Get a roommate
Get thrifty with your groceries
Get a second job until you can get a roommate
See if you can manage without your car
If you can’t, reduce insurance coverage to legally-mandated minimums.

That’s what you can do. Does it suck? Um… yes. Yes it does suck to be always stressed about money. There’s a support group for that, it’s called “everyone.”

Life is tough. Debt is tough. The period just after graduating is tough. That’s just how things are.

When my student loans came due, I moved from the idyllic beach town of Santa Cruz to nitty-gritty Oakland because rent was killing me. I went from hearing waves and sea otters to police cars and gunshots. Some places just cost too much money to live in.

Take a look around you. Pretty much everyone you see feels like they don’t have enough money. You find a way to make it work. It probably will be a tough few years, but if you work at it things will become more sustainable.

  1. I didn’t graduate from college.
  2. I have 2 roommates already. Actually I’m renting a room in someone’s home, and still paying way more than someone in the same situation elsewhere would be paying. My living situation cannot get any cheaper than currently.

Food is probably my only negotiable expenditure. Not enough to cover the loan bill on its own, but I’ll look into that.

Unfortunately I am stuck paying for full coverage and car pymt until my car is paid off in 3.5 years. Without the car payment, everything would be flowers and sunshine. But the 93 celica I was driving before finally died and I needed something reliable to get to/from work. And my credit was already in the crapper from dropping out of school and being unemployed for a while. I didn’t have enough cash on hand to buy something used outright, and I needed something NOW, so I bought a used car from Carmax. I’m upside down on it still, I think, so I couldn’t even sell it and buy another one.

I was able to move back in with my mom until I got on my feet again after I dropped out of school, but she’s moved 2 hours south of me now. I have no friends or family in the area anymore. I’d consider trying to go back to school full time just for the loan deferments, but I seriously doubt the government would lend me money at this point. I only owe like 10-15k total. But it still looks like a mountain that shall never be scaled.

I’m in a similar situation…I just graduated and am nearing the end of the 6 month grace period, I actually am planning on calling tomorrow to get everything sorted out. I live in NYC with 3 roommates, and even that’s incredibly expensive, aside from the fact that I’ve been having trouble getting a decent salaried job. I was really freaked out because I was trying to talk to someone from Citibank’s call center about it yesterday and he was saying that most people can’t even qualify for deferment anymore, but on the other hand he barely spoke English and was probably from out of the country based on the fact that he called on a Sunday. I don’t mean that to be rude, I’m just pointing that out to mean he probably didn’t know anything about how this stuff works. I don’t even want to go into deferment though, I just want to make small payments until I get a better job. I only owe $18K as well.

Catherine, check out income contingent repayment. Depending how little you make, you may qualify to make small payments until you get something better. But the student loan people will never tell you about this.

I’m pulling in 28-30k/year at this point without any dependents. Which is apparently way too much to qualify with slightly over 10k in debt. But I used a calculator to figure that out:

Clearly, your option-- as many have already said-- is to move. If your living expenses are so much that you can’t pay your bills. . . you need to move. Period.

If you aren’t willing to do that, fine. But then accept that you’re not going to be able to pay your bills.

Sell the car (save on payments, insurance, repairs, gas, parking, licensing, etc.), sell everything you can, (stereo, computers, xbox, ipod, tv’s). Pay down all the debts you can, and move to the YMCA, stay there for a few months, if need be, to get out from under your debts and back on your feet. In a short time you should be able to afford a cheap room and your student debt. At that point you can begin to rebuild from a position of being able to afford your daily expenses and meager rent. If and when you can afford to again take on car payments, insurance payments, gas and parking, you can do so. Until then you can use that money to get yourself above water again.

For people without cars, it’s a little odd to listen to someone cry poor, while making insurance, gas, repairs and parking payments. I know you owe more than it’s worth, but that’s no reason to keep pouring money you don’t have into something you can’t afford, while complaining you can’t make ends meet.

I know it’s never easy, but it’s better than being at Mom’s or on the street. These are the decisions poor people have to make all the time.

Good luck to you, whatever you decide!

In some areas, it’s just not possible to go without a car. Nothing is within walking distance, and public transportation is just about non-existent. In my city, you can take the bus as long as you’re willing to be limited to a fairly small area in the middle of town, where the rent is pretty expensive, and where there are no grocery stores, only tiny bodegas. Oh, and you’re out of luck if you want to ride the bus during late evening or night hours…so you’re restricted to traveling during the day on weekdays, and very limited during the weekend. So you’re restricted to working the day shift, and you’d better hope that you don’t have to work too late.

It generally isn’t free to move, either, unless you can pack all your belongings in a couple of suitcases.

You can move to Chicago. You can easily get a livable flat for $600.00 and you don’t need a car. If you’re willing to get a roommate you can get a nice flat for $1,200 (each have your own bedroom)

You don’t say where you’re living but some cities are tough. The big four are Boston, NYC, San Francisco and DC.

If worse comes to worse, don’t pay it. All they can do is take it out of your wages. You can’t declare bankruptcy and it Social Security co-operates with people trying to collect student loans, so you’ll be found out in a second where you work.

Unfortunately people get suckered into student loans by less than reputable loan officers. This happens a lot at the for-profit schools you see on TV. Often times even if they do help you secure work and you graduate you’re making only a dollar more than minimum wage and it’ll take a decade to offset the cost of the loan.

And remember they can’t put you in jail for owing on your loan, all they can do is garnish your wages and even then they can only take up to a certain amount. In Illinois it is 15%.

If you already have roommates your next step needs to be calling around to get quotes for auto insurance. You might be able to find coverage for $50-$100 a month less than what you are paying now with a few simple phone calls. If you don’t get a better quote you may be able to talk to your insurance company about taking the defensive driving course for an additional discount on your insurance costs or finding other ways to bring down your payments.

Given the holidays I would say that when people ask what you want for christmas tell them you want socks, underwear, dry goods from the grocery store, etc. and try to get the things you need stocked up. It is all well and good for you to get a bunch of iTunes gift cards but you can’t eat those or use them to pay the bills so if people want to give you stuff encourage them to give you cash or other useful things.

If you would consider working a second job part time I would say you should check out your local adult novelty store and see if they are hiring. I worked part time at a store called Condoms To Go for about a year and it was the most fun I ever had at work and I made damn good money at a place where the hours tend to run late into the night so they are easy to juggle around your primary job. People there are always fun, I promise. :slight_smile:

I don’t recommend going back to school just for the deferments, but if you want to finish your degree, you should know that federal education loans don’t give a damn about your credit score. So long as you haven’t defaulted on prior education loans or declared bankruptcy, you should be okay.

Only, if she owes more than it’s worth, it nigh impossible to sell it. Let’s say she owes $4000, but the Blue Book/NADA value is maybe $3000 or $3500…even if she can sell it for that full value, she would still have to come up with another $500-$1000 to pay off the loan. With it being so easy to look up used car values online now, it’s very hard to get someone to pay more than the Blue Book value from a private sale.

And as Lynn said, some places are just not non-car friendly. For me to ditch my car, I would have to walk two miles to the nearest bus stop, ride that bus for…well, I don’t know how long, but I’m guessing at least 15 if not 20 minutes, change buses, and ride that bus for another 15-20 minutes, then walk another mile from that bus stop just to get to work. Oh, and most of those first two miles are on a road that doesn’t have a sidewalk and 50+MPH traffic. Yeah, I could move closer, but I pay about half in combined rent+utilities than I would if I was in the center of town where it would be easier to walk/take a bus. it is cheaper for me to pay for a car than live in a place where I wouldn’t need it.

Yes, because just packing and up moving cross-country is so easy. :confused:

Edit: Some actual advice: Try calling your loan providers. If you haven’t already, try to refinance your loans and get them consolidated, or at least look into it to see if it will be a lower monthly payment. Interest rates are fairly low right now. Plus, it never hurts to call and just talk with a real person about getting a lower payment, even if the automated website says you can’t. Student loans are a funny kind of debt, and unless you’re unlucky enough to have one of the few blood-thirsty, private loan companies (which is pretty unlikely, given that they all go through the Department of Education now,) there’s a good chance they will take steps needed to work with you. They’d rather you voluntarily pay less then stop paying entirely and make them go through the hassle of forcing you to pay.

People have considerable control over where they live. There are many places where you can live and work, relying on public transportation. Might not be the lifestyle you desire in the location you want, but if you can’t afford the alternative …

Meh. That’d probably take 20 minutes on a bike. Yeah, I know. It’s uphill, permanently covered with snow, only traversed by drunk Hummers, you have two broken knees, etc. The point is that if you want to make it work, you often can make it work. If you don’t want to have a car, there are ways to make that feasible. It may have drawbacks, but choosing a car over the drawbacks is still a choice.

I have a relative who up and decided to ditch his car. He lives in Los Angeles, the most famously car-addicted city on the planet. He bought a bike, moved near his work (to a smaller, less comfortable place, which is sometimes what you gotta do) and hasn’t looked back since. This guy has a good position at a major studio, he’s not some feckless loser. He made it work.

She hasn’t said where she lives yet, so we don’t really know if that’s cross- country. It might just be a matter of hopping in that car of hers and driving for a day.

Having just gone through a similar thing for my wife’s students loans, make sure you look at the income-BASED repayment plan, not the income-CONTINGENT repayment plan. The key difference is that the ICR bases your payments on a strict 10% of your income, while the IBR takes into account your family size and other student loan debt you may have. See this PDF for more info on the IBR.