Can anything be done to improve situation?

[swampy]

My DH is going to be graduating in about a year and he has astronomically high SLs so I want to work on a plan ahead of time regarding repayment. Currently these are the numbers (interest would change by then)

 

1st#Principal 2nd#Interest

Total STAFFORD UNSUBSIDIZED $42K $9.4K

Total STAFFORD SUBSIDIZED $54K $0

Total DIRECT STAFFORD SUBSIDIZED $11K $0

Total FEDERAL PERKINS $7K $0

Total All Loans $114K $9.4K

 

He has not consolidated yet. What, if anything, can be done while still in deferment? We can't afford large payments now, but I'm sure every little bit would help. Would it be better to just leave it alone and just consolidate during the grace period? I also have SLs, mine are about 5K and I pay about $100/month. I have not consolidated either, but only have loans from about 2-3 semesters, all from the same lender. I am going to try to do the income contingent consolidation for mine as we have very little income and are planning to file BK in a couple months. I guess I'm working on finding out what our options are to make the repayment as painless as possible.

 

Thanks in advance!

Edited November 11, 2006 by swampy

[grammers]

With that much in student loans, repayment won't be painless, no matter what you do. Trust me - I'm in the same boat (Hi, neighbor!).

 

I consolidatedmy loans with DH's loans, into one giant, outrageous, unmanageable loan. I don't even look at the total anymore - I know it, I'm not trying to pretend it doesn't exist, but it scares me to look at.

 

(Anyway, they don't allow spouses to consolidate together anymore.)

 

We're on the Income Contingent Plan with Direct Loan Consolidation - it's the federal Dept. of Ed - and that's the only way it's even close to liveable. They want a huge payment from us each month, but it's a huge loan after all. On the standard repayment plan, the payment would be over three times as much - no way we could do that.

 

So, we'll be making our payments for 25 years, then the principle that we've not repaid at that time will be forgiven. And counted as income for that year, and taxed.

 

Another bonus to this plan is that capitalized interest is capped at 10% of the loan balance - so there's a limit to how high the principle can get from accruing interest.

 

Right now, our payments don't even cover the interest payment each month. Not kidding. It's really that high a loan balance. As our incomes rise (as we sure hope they do) our payment will rise and we will begin to pay off principle, too.

 

Let me suggest that you get info packets from several lenders (including Direct) about their consolidation programs. Also bear in mind that a consolidation loan is a NEW loan, so it's intereste rate will be 6.8%. If you have lower rates on his loans now, consider the benefits of keeping his current loans for the lower interest rate. It might be worth it. It might not.

[ignoranceIsn'tBliss]

Let me suggest that you get info packets from several lenders (including Direct) about their consolidation programs. Also bear in mind that a consolidation loan is a NEW loan, so it's intereste rate will be 6.8%. If you have lower rates on his loans now, consider the benefits of keeping his current loans for the lower interest rate. It might be worth it. It might not.

 

Consolidation loans are not issued at 6.8%. They use a weighted average interest method rounded up 1/8th of a percent.

[Daddy]

This is a joke. Student loans and student loan rates are absolutely ridiculous. I owe about $58,000 in federal loans, at about 4.5%, my wife has about $23,000 in federal loans at about 3.5%, and the most disgusting loan of all, she has about $34,000 in private loans with Sallie Mae, with rates ranging from 8.75% to 10%. We are paying about $265 a month in interest only on the Sallie Mae account. It's sad. Since it is her loan, I asked her if she thinks her father would be willing to pay it off and charge us 6-6.5% interest. That way, we'd save THOUSANDS of dollars in interest, and he would be able to earn more than any money market account out there, without paying taxes. I'd post-date 60 checks to cover the 5 years I'd target to pay off the loan. It's a complete win-win situation.

 

Anyway, one has to think if it is worth it spending hundreds of thousands of dollars to get a degree. It sure as heck doesn't seem like it in the beginning.

[Fool Fighter]

This is a joke. Student loans and student loan rates are absolutely ridiculous. I owe about $58,000 in federal loans, at about 4.5%, my wife has about $23,000 in federal loans at about 3.5%, and the most disgusting loan of all, she has about $34,000 in private loans with Sallie Mae, with rates ranging from 8.75% to 10%. We are paying about $265 a month in interest only on the Sallie Mae account. It's sad. Since it is her loan, I asked her if she thinks her father would be willing to pay it off and charge us 6-6.5% interest. That way, we'd save THOUSANDS of dollars in interest, and he would be able to earn more than any money market account out there, without paying taxes. I'd post-date 60 checks to cover the 5 years I'd target to pay off the loan. It's a complete win-win situation.

 

Anyway, one has to think if it is worth it spending hundreds of thousands of dollars to get a degree. It sure as heck doesn't seem like it in the beginning.

 

Are you a doctor or lawyer?