My wife and I both finished college in 1995 with 60k in student loans. We came back home and took over the family business and the huge debt load that it was under. To make a long story short, we had good and bad times for a few years, but mostly tried to attack the debt of the business with any extra money. We deferred out student loans all the way through this mess. In 2002, we closed the business and filed for BK. BK did nothing for our student loans that had now been 'deferred' at a rate of 9% per year and bubbled to 110k. We both went to work (I teach at the local Middle School and she is the director of a local daycare) and currently make 30k each. Our loans are deferred until February 2005. The balance will be about 130k when February rolls around.

My questions for the experts here are many. How did I successfuly defer my loans for 10 years and is there any law broken by my creditor allowing me to do so? I'm locked at 9% and my payments would be 25-30% of my wife and I's take home for the next 30 years(or our entire adult life in other words). Is there ANY way of getting out of the 9%? I'm thinking the only way to attack this is by living off of about 30k per year for the next 5 and sending 30k to them. We'd have to scrimp like crazy and our 2 kids will have to go to school with holey shoes, but it's better than making it last 30 years, correct? I've talked to the dept of ed, I was looking into income contingent repayment. They said they would buy the loans, but my loan holder(mohela) refused to sell the loans(who can blame them they're LOCKED AT 9 PERCENT). So, that isn't an option. I spoke with the ombudsman and they basically said, yeah you're SOL.

HELP!!!!!!

I believe as long as you have legitimate grounds (according to your lender), you're fine on the deferments. Have you checked your credit reports? How are they reporting? As long as they're not reporting lates or defaults or anything, you're fine.

As far as the 9%, I'm not sure what the deal is. Did you consolidate your loans? If not, then that would definitely be worth looking into. The interest rate (for those of us who took out loans before July, 1998) is the weighted average of your current interest rates, to a maximum of 8.25%. Most (I'd venture almost all) consolidation lenders also give incentives that are generally an additional 0.25% if you use auto debit and another 1% after some period of on-time payments (usually 12-24 months). That would decrease the length of your loan considerably -- the incentive interest deductions don't reduce your payments, just the amount of time until it's paid off. If all of your loans are held by a single lender, you are required to attempt consolidation through them first.

If you consolidated already, though, then, unfortunately, DOE is right -- you can only consolidate once. There have been some bills in Congress to change this, but none have passed yet (you may want to check with your congressman to ask him/her to support it). I believe income contingent is an option with consolidation loans, though. Have you checked with mohela?

I would probably say not to go overboard on getting the SLs paid off right away. Yes, it's a lot of money with a higher interest rate, but, as you know, they also have a lot of deferment/forbearance/etc. options not available with other types of loans and payments and it's not worth not having any savings or other moneys in case you hit some financial snag.

I hope this helps!! Good luck!!

Consolidation is not a one time shot as many believe.

Have you & your wife consolidated your loans together as husband & wife? That is an option for opening the door to consolidation. One warning on this type of consolidation, you cannot 'split' the loans apart if you & your spouse ever decide to divorce.

Make sure that all of your loans (including Perkins, Direct Lending, Stafford) are consolidated. If they are not, that is another opportunity. If you have borrowed after your consolidation you can also do another consolidation. Example, you graduated with a BA, consolidated & then went to grad school & borrowed again. I did this & consolidated a 2nd time.

The first time I consolidated, SallieMae refused to let my loans go for the same reason. There is an appeal that says "this great lender is offering a benefit you don't offer". In this case, the new lender was offering a 5% up front principal reduction. I would attempt another consolidation with a lender who is offereing perks & just see what happens.

Once consolidated, you're locked into that rate forever. Which can be both a good thing and a bad thing.

If you never consolidated, you're probably even in for a bigger surprise -- your loan rates may have dropped to the 3% range and you could lock it in for good now.

BTW, I'd never recommend that married people consolidate together. When my late husband died, if we'd consolidated, I'd still owe for his debts. Fortunately, we didn't consolidate together, so now I only owe mine.

We have consolidated ours together, the loans are mine and my wifes.
We do not have any other outstanding loans. I can't go back to college and borrow more to consolidate again...Tried that this year, they said I was over the borrowing limit. I've tried every loophole imaginable. I just can't find a way out of the horrible interest rate I have.

You wouldn't be over the limit for graduate school, but yes, unfortunately, you are locked into that interest rate.

I applied for a Masters program and was admitted. I was going to just borrow as much as possible and then pay it on the old high interest loans and do that again the next year. I thought I'd found an out to at least getting part of my loans down on lower interest rates, but the University I sent my financial aid to declined and said I had went over the borrowing limits.

When you apply for financial aid with a FAFSA it will produce a 'flag' from the National Student Loan Data System (NSLDS) that indicates you are 'over your borrowing limits'. This flag assumes you are at the year in school you last borrowed (this sounds like senior/undergrad for you).

Did you ask someone in your financial aid office to sit down and calculate out the exact amount of indebtedness manually? Loan calculations are principal only and never count interest and fees. If you did not borrow $46,000 in principal as an undergrad by yourself you shouldn't be 'over' your loan limits. Unfortunately, NSLDS is not all it is cracked up to be and needs to be reviewed manually when loan limits are an issue.

Try this link for help:http://www.nslds.ed.gov/

The problem with student loans is obvious and sad. I'm carrying around 151K in debt, and consolidated one time, and am forever locked into a higher than market interest rate. If I were able to get down to market, this would save me tens of THOUSANDS in interest.
They get paid whether we pay or not. WE've got ZERO negotiation leverage on them.
I pray somebody knows something that I dont, because this is a major bummer for me.

I don't know if this is an option for any of you, but my wife and I went back to grad school to earn a masters and were able to take 20,000 out last semester at 2.75 % interest. We quickly mailed the 20k to our old 9% a-holes and will do it again next semester. Hopefully, if interest rates stay down, we'll have our Master's and all of our loans converted in 2 years.