Get Out of Debt Guy

I'm Frugal But My Student Loans Are Too Expensive

Posted January 23

WRAL Reader Question

Dear Steve,

I am a very frugal man, but student loans just took me over.

Sure, if they had some of the same rules years ago they do now, I probably could have managed it better. But at the time they want a % of your pay if you worked over so many hours and when you are paying child support.

Now it is different but the damage is done. The interest is almost 5 times the original amount, it is insane and I just do not ever see paying it off. My degree was worthless almost the moment I got as the DOT COM collapse, then the next round just when I was almost seeing daylight the economy knocked me down again.

I have worked at poverty levels most of my life working up to 4 jobs and going to school at the same time. I just can't get ahead. This student loan is just hounding me with every blink of my eye and I'd have to make a 6 figure income for a few years just to get rid of it and still not sure I will be able to at that point.

I did look into bankruptcy once and the attorney was not very good I guess. But I did not know that. I thought he was getting rid of the school loans and everything. Stupidly I filed and he only got rid of a small amount which was other debts that were too much at the time.

The school loan was the main one I wanted free of and the other debt just did not help. But I did not go there to get rid of about $10K, which is what happened. Maybe it was more than that. It was simply that everyone wanted a the whole pie and I barely had a sliver and no one would listen. So, it finally hit a wall.

I worked for a university that twice when I worked for them they messed my pay up. First time it took them 4 months to get me my first paycheck. They refused to walk it though. I ended up losing my truck and then they sold it and I was still left with most of the payment, could not get to work, etc. I should have sued them.

Then they pulled it on me again when I did some more field work for them, took them 3 months next time. I am so used to a mess happening that it has worn me out. And I am someone that checks to make sure the "i" is dotted and the "t" crossed. I am tired!

I am looking at retraining again in my mid 50's and the reality is that no one will hire me when I get that training. But I have to try.

Based on my background I gave you and having about $150K in school loans, plus in my mid 50's and I can't get anyone to hire me because they say I am over educated and have did too many things, or my education is too old, plus whatever else they can think of, I don't know what to do?

I wish I'd stayed in the military a long time ago, had not got married, etc, etc. I can't change what happened, but unlike other debt you can get rid of or get refinancing, a student loan is hanged around your neck and you forced to carry it around like a sign that has "kick me" on it. I was better off before I ever got a so-called, better education. And I know I am not the only one.

Randall

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Dear Randall,

Thank you for writing to me for advice.

Student loans are a terrible debt when you consider about 75 percent of people with student loans never graduate and just have the massive debt weighing them down. And a failure to address the debt or putting it into some deferment, just makes the balances grow bigger and bigger.

I'm hoping your student loans are federal student loans and not private. Federal student loans have more repayment options, including an income based repayment plan. Private student loans have few options but are easier to eliminate in bankruptcy. And yes, many can be eliminated in bankruptcy with an extra step. Unfortunately most bankruptcy attorneys are not experienced in how to tackle the loans and that extra step is more expensive than just a straight bankruptcy.

Before you embark on more student loans and education you must first ask yourself if the cost of the additional education is going to substantially increase your earning power. It might just be that your cost versus benefit review does not support the additional cost of more education. The worst possible outcome is that you go back to school, add to the amount you owe, and emerge older yet, with more debt, but still run into the same age barrier you feel you have faced.

I'm not sure if you've tried to overcome the employment issue by taking on temp jobs but that can be an excellent way to introduce yourself to an employer and let you see what opportunities are out there while getting paid at the same time. I just get the feeling if a potential employer got to know you through a temp job it might help melt away some of those barriers you feel you have faced that have held you back.

Steve

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.