My Student Loans are a Nightmare
Posted May 14, 2013
WRAL Reader Question
My student loans are a nightmare.
I have a total of close to 70K in students loans. The majority of which are with Sallie Mae. I have 1 loan with Citibank at $11,000 and one with Great Lakes at $6,000. The rest with Sallie Mae. My payments for the 2 loans I mentioned are $100 each, which is fine.
My one loan grouping with Salle Mae ( $23,000) is in a graduated repayment plan so I pay them $100/mo also. The other loan grouping with Sallie Mae ( $28,000) is in a forbearance now because I could not afford that payment of $300/mo ( that is what the payment is with a graduated repayment plan).
So this coming Sept, that $28,000 loan will go into repayment and I am major losing sleep over this and we cannot even plan for a family because of this nightmare.
We are already tight as it is and I have been looking for a job in my career field since I graduated in 2009. I feel like I am drowning. The other thing I can think of doing at this point is put ting all 3 loans that I have been handling well, into forbearance while I start making $300 +/mo payments on that $28,000 loan.
That is the only way I can not have them breathing down my neck. I am getting nowhere with this because I am actually not paying anything down, just basically paying the interest
Any suggestions on how to go about being able to handle these? I can afford a $300/mo payment for my student loans. Maybe $350 but that may be pushing it. I just feel lost and have reserached until my eyes are bleeding. I just don't know what the right choice is.
Thank you in advance!
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People ask me what they can do to escape the bondage of student loan debt all the time. It is a rapidly growing problem.
For the government student loans there are some programs that will help. Read The Ultimate Guide to Dealing With Student Loans You Can’t Afford.
The bad news is private student loans are a trap if you can't afford to pay them. The good news is there are some options.
You need to be very careful about leaping into deferment or forbearance options. While they take the pressure off right now, the loans continue to grow and then when you have to pay them the balances have exploded and become even more impossible to pay.
It is true in most cases you can't discharge your private student loans in bankruptcy. But one underutilized advantage of bankruptcy is it can allow you to pay what you can afford and limit the fees and penalties while you are in the five year chapter 13 payment.
At the end of five years your debt will not be discharged but what you gained was five years of a legally binding solution and no collection calls.
I realize this is not a perfect solution but I think the signals are growing the government will have to step back in again and either allow private student loan debt be discharged in bankruptcy, as it was up until 2005, or mandate programs to allow people to pay what they can afford based on income.
The Consumer Financial Protection Bureau (CFPB) is currently studying the private student loans disaster and will be releasing recommendations in the next year or so.
If you would like to explore this option you can find a local bankruptcy attorney here who can help.
I have seen Sallie Mae begin to offer most settlement offers and Frank Pipitone, a bankruptcy attorney, told me, he was able to settle one such debt for a client. "I was recently able to settle a student loan debt for 35 cents on the dollar. This was a client who was on the verge of filing Chapter 13 and the bank did not want to risk waiting 5 years for payment," said Pipitone.
Unless we can get this looming pressure contained it will continue to gnaw at you in so many ways. I can't imagine the quality of your life and your emotional wellbeing is helped by just kicking these loans down the road with the current strategy.
Let's get them contained, remove the pressure, and give you a positive outlook towards a better future and make room for good things to happen.
WRAL Get Out of Debt Guy
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