What to do when you have can't make the payments
Troublesome Student Loans
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How Can I Get My Student Loan Penalty Forgiven?
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Struggling With Student Loans
I am a middle-age single mom who has gotten herself into a mess with student loans. I took out loans to support my children and myself while I was in school. I was the first person ever on either side of my family to finish high school and go to college. I thought I was doing the right thing. Now I am stuck with a debt that I will never be able to pay off in the next 30 years. I am in default. I have gotten deferments before, but the interest just keeps making the amount of my loan go up. The amount of my loans is over three times more than I make in a year. I will never be able to buy a house for myself. Does anyone have any suggestion, besides prayer or moving to another planet?
Paying Off Student Loans: Consolidate with Department of Education
I recommend that she consolidate with the federal government. They have different payment options, including "income contingent" where her payments are based on the amount of income she earns. I have nearly finished my Ph.D. and have loans from each level of my education. Twice I have consolidated student loans (once with a private lender and once with the department of education). In my opinion, the Department of Education is the way to go. They fully disclose the details of your loan including how much interest you will pay over the life of the loan, not just the payments. They have a number of different repayment plans that you can compare on their charts, and calculators on their website so you know your interest rate, etc. Right now interest rates are as low as they have ever been in the history of the federal student loan program, so it's a good time to consolidate. Their website is https://studentaid.ed.gov/sa/repay-loans/consolidation.
With the Department of Education, she can apply for underemployment or hardship forbearance, which will defer her payments. It is important to communicate with any current or future lenders, so that they know you are not trying to get out of the payments, just having a rough time, and that you want to work things out. Laws have changed, so now it's much more difficult to include student loans in bankruptcy. So the way out is to take a deep breath, see what you owe, consolidate your present loans, figure out the best repayment plan for your situation, and turn this beast around.
Paying Off Student Loans: Consider a Career Change
My daughter did lateral entry into the school system. She signed a contract to teach three years while taking summer classes. The school system will pay her loan off in full.
Paying Off Student Loans: Check Out This Website
The first thing you need to do is calm down. Student loans can be a burden, but they can be managed. My husband had five student loans when we first got married. Now he only has one left and we are making dents in it slowly but surely. If you have not consolidated your student loan debt, you are allowed to consolidate once. There are several ways to pay your student loans such as a steady payment, graduated payment (you pay more each year), and a payment plan that is based on your income.
There are also many options for forgiveness through volunteering or your profession. Look at the website finaid.org. It has a lot of great information regarding student loans and forgiveness. But I highly recommending looking into consolidating your loans and then moving into a graduated payment plan that increases through the years. It is easier to pay this way.
Paying Off Student Loans: Protect Your Credit Rating
I thought I would just die with my loans, but I went to hstudentaid.ed.gov and consolidated all of my loans into one. They started me off with looking at my yearly salary and all of my monthly bills and asked me for a payment each month that they thought I could handle. Honestly, the amount was so small that I managed to pay just a little more each month than they asked. Then when I got my tax return each year, I sent that whole check toward the loan. I was considering going bankrupt, but we wanted to buy a house, so I paid the loan and made sure I also put money towards savings each month. The better your credit report, the better an interest rate you will receive when you go to buy that house. That savings alone will pay for your loan and more.
Find out if you can benefit from student loan debt help.
Paying Off Student Loans: Talk to the Lender Now!
Having worked in financial aid for many years, I can tell you your student loan company doesn't want to see you go into default anymore than you want to go into default. You need to talk to them now! Explain your circumstances and see if they will lower your interest rate and/or spread out your loan payments. You may also get your payments to match your income level, which means when you're first starting out and making little money, your payments will be lower and then increase as your income increases. You can no longer get rid of student loan debt through bankruptcy. They can take your tax refund to pay the debt. You will not be eligible for anymore financial aid, and if your children go to college, you will not be eligible for any parent loans to help them out.
Karen in NE Indiana
Paying Off Student Loans: It Gets Better with Time
First, breathe. While this is overwhelming now, it does get better over time and the amount will eventually go down.
My first recommendation would be to contact the entity servicing the loan to see if you can get a lower monthly payment. If you provide them with a copy of your pay stub and a list of fixed monthly bills (rent, utilities, food, etc.), they may be inclined to lower your monthly amount temporarily.
Consider consolidating your loan(s) if you haven't already. I fought this for years, but when I did, I got a much lower interest rate and my monthly payment was much less. Once you consolidate, you are offered additional time for forbearance and/or deferment. Also, they have "graduated" plans where your monthly payment is based upon your income. Look into it.
If you ever come across extra money, apply it to your loan. Every little bit helps, and if you have paid what you owe in interest that month, the extra money (providing you specify) will be applied to the principal (decreasing the amount they can charge you in interest).
Most importantly, contact the entity servicing your loan(s) and explain your situation. They would rather work with you and have you make a payment than to not make a payment at all and ultimately default on the loan completely.
Updated October 2016
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