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[Student Loans] So much debt, so little help.
MNC Dover
Full-time Voice ActorKirkland, WARegistered User regular
Full-time Voice ActorKirkland, WARegistered User regular
Hey all,
My student loan payments are coming due next month and I'm all but screwed in trying to repay them. I'll try and summarize my dilemma and look for some help/advice from you fine folks.
I got my degree in game design in 2012 at the age of 37 and needed five private loans from my bank to pay for school. The loan repayments total up to $1,064/month. I've been trying to work with my bank for months to either extend the life of the loans from 15 year to 20/25 years or consolidate them into a lower overall interest rate. Every option has led to my need for a cosigner, which unfortunately I can't get.
I recently got a job which pays $30k/year (with a potential for $40k in about 2 months) and should help me keep my head above water, but not enough to keep up on my loans. After doing a financial breakdown, I'll probably be able to afford about $400-500/month towards my student loans. Two of my five loans were cosigned, so I'm going to focus on paying them every month to protect my cosigner's credit and alternate months paying off the other three.
Having spoken with almost a dozen different people, I don't see any other way to avoid having my bank loans end up in default. It's so sickening because I've got great credit and never missed a bill payment in my life. I simply don't know what kind of options I have left, if any. The last person I spoke with told me to send a letter to the home office. Not an email or phone call, but a physical letter. Ugh...really?
So please let me in on any ideas I didn't know of. Certainly I'm not the only one that's been in a situation like this before, granted probably not with this high of debt. Help me PA forums, you're my only hope!
My student loan payments are coming due next month and I'm all but screwed in trying to repay them. I'll try and summarize my dilemma and look for some help/advice from you fine folks.
I got my degree in game design in 2012 at the age of 37 and needed five private loans from my bank to pay for school. The loan repayments total up to $1,064/month. I've been trying to work with my bank for months to either extend the life of the loans from 15 year to 20/25 years or consolidate them into a lower overall interest rate. Every option has led to my need for a cosigner, which unfortunately I can't get.
I recently got a job which pays $30k/year (with a potential for $40k in about 2 months) and should help me keep my head above water, but not enough to keep up on my loans. After doing a financial breakdown, I'll probably be able to afford about $400-500/month towards my student loans. Two of my five loans were cosigned, so I'm going to focus on paying them every month to protect my cosigner's credit and alternate months paying off the other three.
Having spoken with almost a dozen different people, I don't see any other way to avoid having my bank loans end up in default. It's so sickening because I've got great credit and never missed a bill payment in my life. I simply don't know what kind of options I have left, if any. The last person I spoke with told me to send a letter to the home office. Not an email or phone call, but a physical letter. Ugh...really?
So please let me in on any ideas I didn't know of. Certainly I'm not the only one that's been in a situation like this before, granted probably not with this high of debt. Help me PA forums, you're my only hope!
Need a voice actor? Hire me at bengrayVO.com
Legends of Runeterra: MNCdover #moc
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Legends of Runeterra: MNCdover #moc
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I have. I'm allowed one 6-month defer in the first year. But in order to qualify for it, I have to qualify (prove that I'll be able to make future payments) and make a "good faith" payment of 1 month of loans. I could afford that, but I'd be almost out of money. My loans continue to accrue interest as well so I'm only delaying the inevitable.
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Unfortunately I'm definitely no expert, and my loans aren't private. I'm pretty sure that some people around here have successfully negotiated to pay what they can per month without it hurting their credit, but I don't know what the process is for that sort of thing or what the term for it is, and it may vary depending on the terms of your loans.
Actually my conversations with the bank employees became pretty candid. I've told countless people that I won't be able to pay and need to find an option to work this out. This has been going since December when I first found out about the payments. Today the lady I spoke to gave me the number to the collections/default line so I could get a jump on that as well.
As for the job, I'm in a training phase right now for the next 6 weeks or so. After that, I'm supposed to get moved to a new store in a management position. Not 100% sure, but that was the plan when they hired me so I'm sticking with it. I feel confident that I'll get the pay bump which will certainly help. Of course, I don't think I mentioned that I'm currently staying with a friend who is generously not charging me rent. Got that guilt sitting over my head too. Ugh.
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There is no use begging for mercy. The people you talk to have no power to help you aside from granting a deferment and the institution gives zero fucks.
Get a job, get paid. Pay these fuckers off
Private loans are basically financial vampires, and they simply don't care if they don't leave enough blood in your body to keep you alive. There's not much you can do besides talk with them to get some kind of deal.
Well, I did try and maximize my Federal loans but my school was a private one and stupidly expensive. I admit to digging my own hole here, just looking for any kind of help to find my way out.
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With federal loans, you can do IBR/ICR, but you are hosed with private loans.
You should (1) join the movement calling for reform in the bankruptcy code to make student loan debt discharge able, and (2) warn others about overpriced degrees and private loans. Other than that, not much you can do. They can't do much to you besides maybe make you appear in court and garnish your wages. Even if they take 10% of your paycheck for life, it isn't the end of the world.
It's important to remember that.
There are a number of people in your situation and some of them blog about it or post on other boards. I would google them and we how they have come to grips with circumstances.
Have you gone to your bank or credit union and talked about transferring the debt? I know that student aid loans have some of the lowest APRs of any kind of loan out there (They expect you to take decades paying them back usually), but then you have the predatory companies that will do everything in their power to get their money... Maybe if you got a private loan with your bank to cover the size of the student aid loan? It's a long shot.. a really long shot... but it might be a thought.
Also, have you looked into consolidation loans?
If there is any way you can make it work at 30k you should be able to make it work at 40. Bust ass and make sure you get that promotion.
but they're listening to every word I say
When I left school, four of my loans wound up with fedloan and the fifth wound up with a super shady student loan servicer known for predatory behavior. My credit card issuer was happy to let me do a balance transfer of the entire amount of that loan and even locked the interest on the balance transfer at 3% for the life of the balance, so I got it away from the shady company and got it on a lower interest rate (3% vs 6.8%).
If you're looking at default next month, but you have available credit card balance RIGHT NOW, you may be able to pay the balances from the two loans where you have a co-signer using your other credit. You'll get hit with a large up-front fee (probably 4%) and then you'll have an awful lot of credit card debt to go with your student loan debt but at least you won't be damaging your co-signer if you do wind up defaulting.
Do NOT pay off debt with credit.
e: with the obvious exception of interest-lowering refinance type situations.
I'll join the movement and look up some others to see how they dealt, or are dealing with, this situation.
My student loan is through my bank.
Well, I don't pay rent for now. I'm trying to stretch out every penny right now and I would like to move out of my friend's house ASAP. He's been so kind to let me stay with him, but it weighs heavily on me. Besides, I'd like to have my own life and space.
I have a Sears card and a Discover card, both of which I got over 20 years ago. My credit limit with both is decent but you know those rates are murder. There's no way either card could cover the balances on the two cosigned loans.
On the plus side, I did find out that I can call in my payments and direct where the funding goes to. That way I can focus on paying those two cosigned loans each month and keep my cosigner's credit safe. This took a lot of stress off my shoulders. I'll probably have to alternate the other three loans around on which I pay. Not ideal by a long shot but a start.
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A. Just stop paying them. They will eventually default, collectors will harass you, and they may potentially take you to court, but they typically won't garnish your wages or your bank account. After 7 years, if you haven't paid, the debt is dead and can't be collected on any more.
B. File Chapter 7 bankruptcy. There's a slim chance you might be able to discharge the debt, but it's highly unlikely, however as long as you're covered by Chapter 7, they can't come after you. Some people just file over and over again.
I would typically agree with this unless you can get a lower interest rate AND avoid a credit hit, which are both good things. If the interest rate is lower on the credit, I don't really think it hurts to do minimum payments this way until you can get a better situation.
It doesn't really sound like his credit cards have a lower interest rate though, so agreed.
I would just like to point something out about this.
No debt is ever "dead" unless it is forgiven or paid off. What you are referring to is after 7 years of the account being potentially negative and closed, it should fall off your credit report. However, the following things can and have happened:
1. The company can re-open the account and attempt collections (But not after its fallen off your credit report, but I'm not entirely positive about that).
2. The debt can be sold or given to account collection agencies which will open up a brand new delinquent account for the same fucking thing. (I currently have 2 closed/negative accounts on my credit report due to some very old student loans, despite them now being paid off, and one of them still reports it as negative because when they sold it it was negative, and it will continue to be negative until it drops off).
3. You will have 120 days past due which is a huge hit on your credit. I don't remember it exactly but unless you've got some good stuff on there (on-time brand new car loan, mortgage, $2500+ on a single credit card) I do believe the hit is around 20 points.
It has taken me 10 years to get an old repo off my credit report, despite the fact the last payment made was in 2001. However, despite all this doom and gloom, what you say could very well happen. In my personal experience, however, businesses never make it fucking simple.
Man, both of those options sound bad. I know my credit is going to get screwed, but I would like to be able to buy a house one day. How long does something like that stay on your report?
Yeah, my credit cards are probably the usual 18-22% thing. Not really an option.
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7 years after the account has been written off.
However, strong (or at least on-time) credit reports and not going above 15%/25% of your credit line (grand total of all your credit card amounts), not to mention buying a house that has monthly payments ~30% of your income can help it out.
A general rule is that dropping below 700 is when you need to pay attention, and dropping below 600 means you need to seriously get your shit in gear. There are home loans out there you can get with a 615 credit score, but your interest rate would be a big fat motherfucker. I say all this as someone who has taken their credit score from a 420 in 2008 to just above 650 as of 2 weeks ago, when I purchased my first ever brand new car with an interest rate that someone with a credit history like me seemed unreal (1 repo, 1 eviction, only 1300 of total credit between 3 cards, a bunch of inquiries, etc and I still managed to eek out an 11.2%, which is less than half of the rate I was offered just 2 years ago).
Im sorry about your girlfriend's situation and hate to be the bearer of bad news, but p much everything in this post is wrong.
a. they can come after you for student loans FOREVER. It's the only reason banks are willing to lend 18 year old chucklefucks unlimited piles of money.
b. If you do not pay your student loans, they will eventually get around to garnishing your wages. Lenders aren't in much of a rush to do that to kids in their early/mid 20s because the interest keeps ticking and the average 27 year old makes a damn sight more than the average 22 year old and is more likely to want to get their credit in order.
c. You can't file bankruptcy over and over again. After you file, you have to wait a number of years to refile.
All debts (except federal student loans) have a statute of limitations, which varies depending on your state. After a certain number of years (typically it's around 6), the debt will expire and they can no longer sue you to collect. They can continue to TRY and collect the debt from you, but under the fair debt collection practices laws, their options for recourse once the statue of limitations is up are limited. Now granted, I don't SUGGEST you just stop paying your outstanding obligations, but I have heard of many cases of people playing chicken with the collection agencies and winning, because either the collection agency doesn't have the time or the resources to take every single person to court, or some people just fall through the cracks and make it out scott free (sort of).
If your debt is so crippling that there's no way at all you can possibly pay it without falling into poverty, and you're willing to take the gamble, it's certainly a last resort option. Just stop paying it, submit a letter in writing to the lender or any collection agencies that you don't want them to call you on the phone (once you submit it to them in writing, they can no longer legally call you), and just cross your fingers for the next six years hoping you don't get served with a summons. Again, I do not suggest doing this, but it's still a last ditch option before bankruptcy or the poor house.
I am not sure if it works that way for bank loans. I would first try to find any way to work with them. DEFINITELY protect your cosigner's credit first, and get those loans paid down as fast as you can.
But yeah, I'll keep this thread bumped as new developments occur.
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I mean, a cosigner is basically saying that they're willing to risk their own credit for your sake.
Which means, frankly, it's in their own best interest to help you here, if they can.
Yeah I spoke with them both. One cosigner is the mom of my ex fiance and she doesn't think it's a good idea to cosign on any more loans and I agree. The other cosigner is my brother and his credit is such that he could only sign on a smaller loan for me.
So yeah, I've had no luck with cosigners since the end of 2011 which is part of the reason I'm in the situation I am now. At least I've got them covered with repayments.
I'm hoping that is the case. The people on the phone have limited power though, so maybe missing payments will get the right person on the phone with me.
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I'm not talking about more cosignings. The last thing you should be thinking about is borrowing more money. I'm talking about the fact that it is currently in their best interest to give you money to make payments, since it will affect their credit if you default on these loans.
Neither one can afford to do that though. I've been open and honest with them in my communications. They know what's up and trust me. I'll keep those payments on schedule before paying anything else and after two years of payments, I can supposedly remove them from the loans.
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ALL of your debt would be consolidated into one large pool and you'd pay out your lenders at a percentage based on your income. I'd advise doing this AFTER you have a place to rent as it could affect your rental status plus if they see you're not paying rent they'll take more out of your check. You'd want to shoot for a 25% payback, where you'd pay back 25% of your total debt and likely forfeit your tax returns. This repayment would take roughly 5-7 years depending on the amount. If you can pay more back, they'll look at your income and adjust that 25% accordingly.
This WILL NOT remove your student loans, those would still be on your account after the bankruptcy has cleared. However, in addition to them not being able to harass you fro 5-7 years there's also a 1-2 year "safety net" where they also cannot harass you once the bankruptcy has ended. Once this has wrapped, after what will be anywhere between 6-9 years, you should manage to save up as much cash as possible. I'm talking put every extra nickel in the mattress whenever you can. At that point, you have a much better shot at contacting your loan office and saying "look, I don't have 40K to repay you, but I've paid you 10-15K over the last 5-7 years and I'm willing to cut you a check for an additional 10-15K to consider this debt settled and often they'll take that deal and you'll be done.
Again, this is NOT legal advice, just a financial suggestion based on Chapter 11 laws (general laws, they can vary from state to state in some of the more minor details) You need to talk with a financial adviser because that's a TOUGH situation you're in, you owe a lot of money, and you have a few paths in front of you.
Typically, banks will not renegotiate a loan until after you've missed a payment. I'm not saying to just ignore it and renegotiate after you miss a payment, but if you do end up not being able to pay, contact them again.
But regardless of how the loan situation gets resolved, you need to start making a budget. You are probably tapped out from being unemployed since graduation, but going forward, 40K a year should be enough to live on and pay $1K a month in loans (I don't know what the cost of living is like in Seattle, but I made it in NYC on 30, which should be comparable). If it's not, then you are living beyond your means and need to make some tough choices about where to cut back your spending. You probably already do most of your transactions on credit/debit cards, so go back a year and put your expenditures into categories. Find places where you think you can trim. Repeat until your expenditures are lower than your (after-tax) income.
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Even after loan repayments, you'll have $934 per month to spend (or $1576 with raise). Zillow seems to show quite a few tiny studio apartments or rooms for rent for about $500 a month, including utilities. I know that living on $400 a month sucks, but are you sure that's not possible?
I'd suggest joining the "pay for the things that I made other people pay for before I could afford it" movement. I can't believe people are suggesting bankruptcy, just get your finances in order and pay off what you decided to borrow. It shouldn't be too hard to convince the banks to lower your monthly payments, but when you get a raise and can afford more you should start paying those things off hard.
$40K is a different story, but again, the OP is unsure if this is possible.
My situation is tough and I only have myself to blame. I've never been late on repayments my entire life so the thought of missing a payment makes me sick to my stomach. It's not that I don't want to pay the loans back but I don't feel like I can and still live my life. It should be noted that I have federal loans to factor in as well, but at least I can take advantage of IBR for them. The only other debt I have is $3k on my Discover card which was the cost of moving my stuff across the country. That's a manageable $70/month which I can easily pay off quickly once I get my budget settled.
The jump to $40k isn't guaranteed to happen after the remaining 6 weeks of training is over. I have to wait for a position to open. Although, going to an assistant spot seems quite likely and it provides a guaranteed 5 hours of overtime each week, which amounts to about ~$5k per year. Not exactly ideal, but certainly helpful. I have to keep plugging away at the gaming industry and see if I can get a door to open enough to jam my foot in there.
I really don't want to have to file chapter 11 or anything like that. If my bank would simply work with me to get my payments lower to a reasonable level (extend the years or whatever) then this wouldn't be an issue. I borrowed that money so I should pay it back.
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Which state do you live in?
Your rights as regards wage garnishing, according to Federal law in the U.S., are at a minimum explained here.
Some states do not even allow for your wage to be garnished except in special cases (like child support). If you're in Pennsylvania, North Carolina, South Carolina or Texas, good news for you: nobody is touching your wages.
They can take, at a maximum, about 15~ percent of your earnings. They cannot take so much of your money that you become destitute (at least in theory). They cannot deny you a primary residence. In some states (check your local rights / laws) they cannot deny you medical expenses. By no means does that mean wage garnishment is some wonderful and magical experience - it's very bad and will leave bloodstains all over the place where your credit history used to be - but it is not the end of the world. If you can't reasinably pay back the loan, well, you can't repay it. They will defer the debt to a collection's agency, the collection's agency will harass you (again, you have rights here as well. Check you local laws! You can sue, and other people have sued and won, if a collection's agency violates your rights) and, at the end of the day, they will be able to garnish 15~ percent of what you earn.
If your credit rating is important to you (and it probably should be), try to find a way to meet the payment schedule (you're the one who agreed to the loan conditions in the first place, afterall). If you can't, do go fucking crazy or anything. Brace for a few months of shitty phone calls, prepare for an extra 'I made a bad financial decision when I was younger' tax, and move on.