Get Out of Debt Guy

I'll Never Get Out of Student Loan Debt

Posted August 5, 2013


Hi Steve,

Basically ever since i graduated i was never able to find a job with my degree because either my experience wasn't enough, or because the school wasn't even known!

I graduated in 2008 and about a few months ago we found out that my school was on academic probation the whole time and i didn't know this, it had received bad reviews and bad press and have shrunk in size and locations. But overall I know my loans wont change do to that.

I'm still working in the same job i had before college and i get paid decent at 48k before taxes. my budget is tight as i have to care for my family, i have been making on time standard payments of $900/Month for 4-5 years and not a dollar was shaved off from my balance, NOT ONE DOLLAR!

From every payment they take half for interest, and then every other month they add accrued interest of 1200-2000 dollars, its insane. I will never be able to pay this off, when i call them they say "well your suppose to pay more then the standard payment", yea i get that if i want to clear my loans away fast but making standard payments should drop my loan, now my situation is a little tighter and have been forced to defer some loans and make little payments... what are my options here Steve?

I'm sorry for the long post, its just frustrating and depressing !

Thank You


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Hi Basil,

It sounds as if you have private student loan debt. If I'm wrong and you have federal student loan debt then read this.

There are a number of student loan issues going on here. It sounds as if you are on some deferred payment plan that is the most you can afford. And that payment is not enough to even begin to lower your balance, not to mention stopping it from growing.

Just because a creditor let's you make a certain minimum payment does not mean that is best for you. It's typically best for them because it grows what you owe and results in more money eventually owed to the lender.

It's like those credit card payment holidays. You know, where they tell you've you've been such a good customer that you can skip the next payment, yet they tack on all the interest that builds during that time.

The first place for help is to talk to your private student loan servicer. Only they can tell you what solutions they may offer to assist you. If they don't offer any good options then we need to consider other solutions.

Typically options like less than minimum payments, payment holidays, and deferment or forbearance where interest builds, are not good solutions. They only dig a deeper hole that is tougher to get out of.

The most important fact you mentioned is your school was in some sort of trouble at the time you attended. If they were not fully accredited at the time then your private student loans could be fully discharged in bankruptcy. Read this article for details on why and how this can happen.

Steve Rhode
WRAL Get Out of Debt Guy

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About this Blog:

Steve Rhode has had careers in opthalmology, real estate and as the head of a nonprofit debt counseling firm. On his blog, he offers hard-won, free advice about getting out of debt, consolidation and making the right choices as you manage your money.