I have consolidated SL debt from 1980s, early 1990s of approximately $170,000.00.
I have not made any payments on this due to combination of graduate school, grace period, forbearance and deferment. The loan is currently being deferred due to low income.
My current income is $54,000.00/year gross. After taxes, child support payment, health & dental insurance, etc., I have about $2,800.00/month for rent, car & insurance, utilities, food, credit card payments, etc.
What are my options for managing my SL debt? Thanks.
Full Version: very large debt
Become a teacher in a ghetto to get the student loan repayment bonus?
You could go back and get a Ph.D.
How the heck do you still have deferment eligibility, two decades after school? That income shouldn't allow you to be classified as "low income" either, should it? Admittedly it isn't much, but the man looks at like $500 a month or something (whatever poverty is) to be high enough to start paying.
How the heck do you still have deferment eligibility, two decades after school? That income shouldn't allow you to be classified as "low income" either, should it? Admittedly it isn't much, but the man looks at like $500 a month or something (whatever poverty is) to be high enough to start paying.
You need to work out a payment plan for income contingent payments. Who holds your loans?
First off, good for you for wanting to manage this and not letting it just go into default!
You can do a back of the envelope with the calculator at finaid.org (FinAid.org ICR calculator). Income Contingent Repayment will probably be high with your income and (I assume) single status, but may be the lesser of evils.
With that much in loans, it might actually be worth spending the time to take and pass two classes every fall and spring semester at the community college (ensuring to seek a degree to remain eligible for deferment). Assuming $100/credit hour + $100 per book plus some slop, it would cost about $1500 per year to stay in deferment. While CC classes might be an ego blow for a graduate degree holder, they're probably more manageable with a full-time job. Obviously if you could get employer reimbursement for another graduate degree, that might be the better option.
With that balance, I assume you're maxed out on subsidized loans and $1,500 is probably be less than the annual interest that would accrue during repayment (assuming $46k in subsidized loans and interest of 8%, taking that $1,500 worth of classes will save $3,680 in interest for a net gain of over $2,000).
While people may question the ethics of staying in school to obtain perpetual deferment, I don't believe it's an issue given that the goverrnment provides for it and in the case that someone is actually taking and succeeding in classes. Then if there was still some money for partial payments after the classes, that money could be used to pay at least part of the accruing interest on the unsubsidized portion of the loans (up to $2,500/year of student loan interest is deductible, even on the short form). The tuition is also eligible for the Lifetime Learning Credit, which will help a little more on taxes. You could then pay down your other, higher interest debt to free up cash flow to be able to make the required payments on your selected plan in the future.
In any case, consolidating to get the payment down is a good idea, even if deferring. Choosing the plan with the lowest payment no matter if you intend to pay more might be useful because the payment of the the amount that shows on the CR. (If your loans are old, you may have to consolidate to be able to get a new loan that would be deferrable with only half-time enrollment.) Also, if there are Perkins loans in the mix, going with the Federal Direct Consolidation Loan if possible (Federal Direct Loan Consolidation FAQ) preserves the interest subsidy on those during deferment.
You can do a back of the envelope with the calculator at finaid.org (FinAid.org ICR calculator). Income Contingent Repayment will probably be high with your income and (I assume) single status, but may be the lesser of evils.
With that much in loans, it might actually be worth spending the time to take and pass two classes every fall and spring semester at the community college (ensuring to seek a degree to remain eligible for deferment). Assuming $100/credit hour + $100 per book plus some slop, it would cost about $1500 per year to stay in deferment. While CC classes might be an ego blow for a graduate degree holder, they're probably more manageable with a full-time job. Obviously if you could get employer reimbursement for another graduate degree, that might be the better option.
With that balance, I assume you're maxed out on subsidized loans and $1,500 is probably be less than the annual interest that would accrue during repayment (assuming $46k in subsidized loans and interest of 8%, taking that $1,500 worth of classes will save $3,680 in interest for a net gain of over $2,000).
While people may question the ethics of staying in school to obtain perpetual deferment, I don't believe it's an issue given that the goverrnment provides for it and in the case that someone is actually taking and succeeding in classes. Then if there was still some money for partial payments after the classes, that money could be used to pay at least part of the accruing interest on the unsubsidized portion of the loans (up to $2,500/year of student loan interest is deductible, even on the short form). The tuition is also eligible for the Lifetime Learning Credit, which will help a little more on taxes. You could then pay down your other, higher interest debt to free up cash flow to be able to make the required payments on your selected plan in the future.
In any case, consolidating to get the payment down is a good idea, even if deferring. Choosing the plan with the lowest payment no matter if you intend to pay more might be useful because the payment of the the amount that shows on the CR. (If your loans are old, you may have to consolidate to be able to get a new loan that would be deferrable with only half-time enrollment.) Also, if there are Perkins loans in the mix, going with the Federal Direct Consolidation Loan if possible (Federal Direct Loan Consolidation FAQ) preserves the interest subsidy on those during deferment.
QUOTE(indentured @ Mar 18 2006, 04:49 AM) 
First off, good for you for wanting to manage this and not letting it just go into default!
You can do a back of the envelope with the calculator at finaid.org (FinAid.org ICR calculator). Income Contingent Repayment will probably be high with your income and (I assume) single status, but may be the lesser of evils.
With that much in loans, it might actually be worth spending the time to take and pass two classes every fall and spring semester at the community college (ensuring to seek a degree to remain eligible for deferment). Assuming $100/credit hour + $100 per book plus some slop, it would cost about $1500 per year to stay in deferment. While CC classes might be an ego blow for a graduate degree holder, they're probably more manageable with a full-time job. Obviously if you could get employer reimbursement for another graduate degree, that might be the better option.
With that balance, I assume you're maxed out on subsidized loans and $1,500 is probably be less than the annual interest that would accrue during repayment (assuming $46k in subsidized loans and interest of 8%, taking that $1,500 worth of classes will save $3,680 in interest for a net gain of over $2,000).
While people may question the ethics of staying in school to obtain perpetual deferment, I don't believe it's an issue given that the goverrnment provides for it and in the case that someone is actually taking and succeeding in classes. Then if there was still some money for partial payments after the classes, that money could be used to pay at least part of the accruing interest on the unsubsidized portion of the loans (up to $2,500/year of student loan interest is deductible, even on the short form). The tuition is also eligible for the Lifetime Learning Credit, which will help a little more on taxes. You could then pay down your other, higher interest debt to free up cash flow to be able to make the required payments on your selected plan in the future.
In any case, consolidating to get the payment down is a good idea, even if deferring. Choosing the plan with the lowest payment no matter if you intend to pay more might be useful because the payment of the the amount that shows on the CR. (If your loans are old, you may have to consolidate to be able to get a new loan that would be deferrable with only half-time enrollment.) Also, if there are Perkins loans in the mix, going with the Federal Direct Consolidation Loan if possible (Federal Direct Loan Consolidation FAQ) preserves the interest subsidy on those during deferment.
You can do a back of the envelope with the calculator at finaid.org (FinAid.org ICR calculator). Income Contingent Repayment will probably be high with your income and (I assume) single status, but may be the lesser of evils.
With that much in loans, it might actually be worth spending the time to take and pass two classes every fall and spring semester at the community college (ensuring to seek a degree to remain eligible for deferment). Assuming $100/credit hour + $100 per book plus some slop, it would cost about $1500 per year to stay in deferment. While CC classes might be an ego blow for a graduate degree holder, they're probably more manageable with a full-time job. Obviously if you could get employer reimbursement for another graduate degree, that might be the better option.
With that balance, I assume you're maxed out on subsidized loans and $1,500 is probably be less than the annual interest that would accrue during repayment (assuming $46k in subsidized loans and interest of 8%, taking that $1,500 worth of classes will save $3,680 in interest for a net gain of over $2,000).
While people may question the ethics of staying in school to obtain perpetual deferment, I don't believe it's an issue given that the goverrnment provides for it and in the case that someone is actually taking and succeeding in classes. Then if there was still some money for partial payments after the classes, that money could be used to pay at least part of the accruing interest on the unsubsidized portion of the loans (up to $2,500/year of student loan interest is deductible, even on the short form). The tuition is also eligible for the Lifetime Learning Credit, which will help a little more on taxes. You could then pay down your other, higher interest debt to free up cash flow to be able to make the required payments on your selected plan in the future.
In any case, consolidating to get the payment down is a good idea, even if deferring. Choosing the plan with the lowest payment no matter if you intend to pay more might be useful because the payment of the the amount that shows on the CR. (If your loans are old, you may have to consolidate to be able to get a new loan that would be deferrable with only half-time enrollment.) Also, if there are Perkins loans in the mix, going with the Federal Direct Consolidation Loan if possible (Federal Direct Loan Consolidation FAQ) preserves the interest subsidy on those during deferment.
Thanks for your response!
The idea to continue on with school had occurred to me some time back and it slipped my mind...I will reconsider...
Along another line... My consolidated loan is with William D. Ford (WDF) and I have indicated to them, while in deferment, that my choice of repayment will be the ICR plan. However, as you've noted, even here the monthly amount would virtually cripple me (I know I did it to myself...) in terms of being able to provide a halfway decent lifestyle for my daughter who is 5 (her mother doesn't work and isn't likely to any time soon).
Ever hear of anyone negotiating "customized" plan with WDF? I'm thinking along lines of if I were to default and ignore, WDF garnishes me (is it @ 10% or 15%?). So, wouldn't WDF be inclinded to consider my negotiating payments at this 10 to 15% level?
QUOTE(TxQuiltGirl @ Mar 18 2006, 03:23 AM)
You need to work out a payment plan for income contingent payments. Who holds your loans?
William D. Ford.
QUOTE(mjsdad @ Mar 20 2006, 07:39 PM)
Thanks for your response!
The idea to continue on with school had occurred to me some time back and it slipped my mind...I will reconsider...
Along another line... My consolidated loan is with William D. Ford (WDF) and I have indicated to them, while in deferment, that my choice of repayment will be the ICR plan. However, as you've noted, even here the monthly amount would virtually cripple me (I know I did it to myself...) in terms of being able to provide a halfway decent lifestyle for my daughter who is 5 (her mother doesn't work and isn't likely to any time soon).
Ever hear of anyone negotiating "customized" plan with WDF? I'm thinking along lines of if I were to default and ignore, WDF garnishes me (is it @ 10% or 15%?). So, wouldn't WDF be inclinded to consider my negotiating payments at this 10 to 15% level?
The idea to continue on with school had occurred to me some time back and it slipped my mind...I will reconsider...
Along another line... My consolidated loan is with William D. Ford (WDF) and I have indicated to them, while in deferment, that my choice of repayment will be the ICR plan. However, as you've noted, even here the monthly amount would virtually cripple me (I know I did it to myself...) in terms of being able to provide a halfway decent lifestyle for my daughter who is 5 (her mother doesn't work and isn't likely to any time soon).
Ever hear of anyone negotiating "customized" plan with WDF? I'm thinking along lines of if I were to default and ignore, WDF garnishes me (is it @ 10% or 15%?). So, wouldn't WDF be inclinded to consider my negotiating payments at this 10 to 15% level?
I can't speak to whether they'd allow reduced payments, not having dealt with that end very much. But I can tell you that defaulting and allowing the garnishment is totally inadvisable. (Be a bummer to have a graduate degree and have your school deny you a transcript!) And again (not to sound like a broken record) it'd cost less to go to school than to pay 15% in garnishment while collection charges are added to the balance.
One thing unique about Federal student loans is that the creditor will do what they can to keep you out of default. They're not going to try to figure out what will maximize their profit at your expense, and will do what they're allowed to ameliorate your situation.
It can't hurt to give the Ford Direct Loans people a call and to explain your situation. The worst that can happen is that they will tell you there's nothing they can do -- but they aren't going to annotate your credit report or alert your other creditors that you're having trouble or anything like that.
I hope things work out okay!
QUOTE(indentured @ Mar 20 2006, 07:11 PM)
QUOTE(mjsdad @ Mar 20 2006, 07:39 PM)
Thanks for your response!
The idea to continue on with school had occurred to me some time back and it slipped my mind...I will reconsider...
Along another line... My consolidated loan is with William D. Ford (WDF) and I have indicated to them, while in deferment, that my choice of repayment will be the ICR plan. However, as you've noted, even here the monthly amount would virtually cripple me (I know I did it to myself...) in terms of being able to provide a halfway decent lifestyle for my daughter who is 5 (her mother doesn't work and isn't likely to any time soon).
Ever hear of anyone negotiating "customized" plan with WDF? I'm thinking along lines of if I were to default and ignore, WDF garnishes me (is it @ 10% or 15%?). So, wouldn't WDF be inclinded to consider my negotiating payments at this 10 to 15% level?
I can't speak to whether they'd allow reduced payments, not having dealt with that end very much. But I can tell you that defaulting and allowing the garnishment is totally inadvisable. (Be a bummer to have a graduate degree and have your school deny you a transcript!) And again (not to sound like a broken record) it'd cost less to go to school than to pay 15% in garnishment while collection charges are added to the balance.
One thing unique about Federal student loans is that the creditor will do what they can to keep you out of default. They're not going to try to figure out what will maximize their profit at your expense, and will do what they're allowed to ameliorate your situation.
It can't hurt to give the Ford Direct Loans people a call and to explain your situation. The worst that can happen is that they will tell you there's nothing they can do -- but they aren't going to annotate your credit report or alert your other creditors that you're having trouble or anything like that.
I hope things work out okay!
Thanks for your time and thoughtful responses.
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