Dealing with student loans

[SweetSecretSW]

Hello! This is my second post on CB. I was directed to post about just the student loans because my initial post was pretty detailed and did not receive much feedback. I am hoping I will get more information this go around without the situation seeming so overwhelming.

 

I have defaulted undergraduate student loans and currently receiving disability. Prior to the pandemic, I was working but not a lot, just to the best of my ability. I had also completed 18/30 credits towards an MBA degree having only paid $800 out of pocket. I want to be able to finish the MBA, but I need to really evaluate the best use of my money because I am also trying to start some businesses... especially since I cannot go back to my previous work right now.

 

My current loans are:

 

Loan #       Program       Principal          Interest          Total Balance       Interest Rate       Interest Type

 

066           Direct           $1,452.67        $538.05         $1,990.72             4.66%                  Fixed

 

098          FFEL              $2,996.19       $1,006.84       $4,003.03           4.66%                   Fixed

 

117           FFEL              $3,112.98        $2,101.07        $5,214.05            6.8%                     Fixed

 

126          FFEL              $2,724.31       $1,838.71        $4,563.02           6.8%                     Fixed

 

 

The total is $14,220 in undergraduate student loans, which is $18,596.95 with the collection fees. The loans are serviced through Coast Professional, Inc (West Monroe, LA). I have about $10K to utilize, but I am about petrified of using it the wrong way and being stuck in this debt forever.

 

I called Coast and was told the following:

1) I cannot pay towards just one of these loans at a time, nor can I pay on just the principal according to the servicer... but I am not sure if that is true. If it is not true, I would not be sure what the appropriate order would be to pay them off.

 

2) If I refinance the loan into a federal loan from the government (with the idea that Biden may forgive Federal loans), then the amounts due for interest and collections become my new principal balance... so $18,596.95. I do not know what my payments would be though, or if I could afford them.

 

3) If I use the income-based repayment system then I would pay $5/mo currently. However, the interest continues to accrue and if any of my businesses become successful that means I could end up paying a lot more than $18,596.95, and would likely lose out on the opportunity possible for the debt to be forgiven if the loans had been refinanced as federal.

 

It seems I always barely miss the requirements for student loan forgiveness. For example, one school I attended was the Art Institute, and the school was shut down with many of the loans discharged. Mine were not discharged though because I completed my degree… which I did by switching schools prior to the closure. Secondly, I have worked for numerous non-profits over the years and volunteered (for drastically underfunded non-profits) at some the way other people work a job, but I cannot get my loans forgiven because I worked for the non-profits prior to finishing the degree and have only volunteered since.

 

Any thoughts on how to deal with this?

 

 

 

 

Edited November 29, 2021 by SweetSecretSW

[centex]

Sounds like a good conversation with the Ombudsman about rehabilitation...six payments gets you the clean slate and then, if the rates are still low, refi via consolidation...

[SweetSecretSW]

Isn't it one or the other though? I thought rehabilitating eliminated the ability to refinance. I do not know if it matters, but the loans are from different schools.

Edited November 30, 2021 by SweetSecretSW

[centex]

On 11/30/2021 at 1:46 PM, SweetSecretSW said:

Isn't it one or the other though? I thought rehabilitating eliminated the ability to refinance. I do not know if it matters, but the loans are from different schools.

Rehabilitation, unless things have changed, allows the loan to be fixed with the current lender...after the loans are cured, one can refinance elsewhere.  The problem with a refinance prior to the rehabilitation is that it locked in the derogatory reporting.