Anyone else have student-loan woes?

[CoffeeCat]

Just wondering if anyone else is struggling with student loans?

I went searching online for resources--anything that might help. I couldn't
believe all of the stories I was reading. People who took out loans and can't find
work fall behind in payments. Interest and penalties accrue and they're suddenly
staring down at a $20,000 balance that has grown to $40,000, $50,000 or even $100,000.

There are tons of horror stories out there. And if you don't pay, they garnish
your wages for hundreds of dollars a month--which leaves people destitute.

My loans defaulted while I was a full-time student. The loan-servicing company
kept claiming that they didn't receive my school deferments, which I sent more
than ten times. I took time off from school--and the interest continued to accrue
as well as penalties. I finally graduated and my final bill--for a four-year degree--was
$100,000. We've paid off $55,000.

If anyone else has a story or any resources that others may find helpful--please post
them here.

I spoke with a Director of Financial Aid, at a major university. She mentioned that many
loan-servicing companies were unfairly defaulting people that they deemed "risky". If you were
starting/stopping school or ever late on payments--that might have red-flagged people
who were defaulted unfairly. Of course, these loan-servicing companies win when they
default you--because the government "guarantees" the loan and pays these companies.
It's as if these companies are rewarded for screwing over people and incentivized to
not work with those who take out student loans.

If anyone has any stories, insight, possible solutions or resources on the topic
of student loans--I'm sure it would help DUers struggling with this situation.

[taught_me_patience]

1. I think the horror stories are probably a bit overblown

Stafford subsidized/unsubsidized federal loans are available to almost everybody, and they are automatically deferred. Many people who take out loans are unfamiliar with compounding interest. The power is staggering. If you have a 10% interest rate, then your loan size will double in only 7 years.

My wife and I are paying $800/mo on nearly $200k in student loans for 30 years.

[girl gone mad]

8. I don't think they're overblown.

I've heard of people with $80K, $100K, even $200K in debt and no job prospects. I personally know one person who left the country to get away from his student loans.

Defaults are soaring right now, and particularly for students who went to for-profit schools, which have a reputation for enrolling anyone who can fog a mirror, knowing that the loans these often-naive students take will be backed by government guarantees. It's a win-win for the schools, but too often lose-lose for students and taxpayers.

[taught_me_patience]

10. Honestly, a student loan is often the first financial decision

a person must make. $80k is a lot of money, so the decision must be made with care. Getting over $100k in debt with no job prospects is simply a stupid financial decision.

[Lisa0825]

2. After 15 years, I still had $12,000 to pay off.

When I changed jobs, I cashed in my retirement account and paid it off. I know I lost a lot in penalties, but the payments were killing me. 15 years out of school and I was still paycheck-to-paycheck.

My problem is that I went into a field that didn't pay enough to support the cost of my degree. If I had it to do over again I would... but I was an idealist, studying science for the love of it.

[aquart]

3. Yes, but if I even attempted to talk about it, I'd die screaming.

I borrowed $20,000 of which I only received $14,000. And from there the nightmare begins.

[Liquorice]

4. Do you have loans through a private lender? It sounds like

you don't have a federal direct loan, but a loan through a private lender. You probably already know this, but just in case you haven't read about it, you can consolidate and take advantage of the income contigent repayment plan after consolidating to a federal loan. My brother did this, and it was very helpful. I only have a federal direct loan, and it is easy to get deferments or a forebearance if you run into financial difficulties with these types of loans. The income contigent repayment is great, and after a certain amount of payments, the remainder of your loan is automatically paid off.

Here's a link about eligibility:
http://loanconsolidation.ed.gov/borrower/beligible.html

[CoffeeCat]

17. Thanks for the info...

...and I agree that consolidation is the way to go. My loans are consolidated.
My loans totaled $100,000. I've been paying $1,200 a month for the last eight
years--the maximum amount. I'm not on the income-contingent plan because I want
it paid off as soon as possible. We're paying the max.

My main gripe is the interest and penalties that accrued while I was trying to
make it through school. They claimed that I did not fill out the appropriate
forms. I did. My loans defaulted and the penalties/interest ballooned.

[Mz Pip]

5. My son is dealing with that

8% on close to 100k. for law school. He can't refinance because he has no collateral.

If someone has a solution to this I'd love to hear it. So would he. He works in the public sector. No fat salaries there.

[taught_me_patience]

6. That's the going rate.

Nobody is lending right now. The government consolidation rate is about 7%. The only thing he can do is ammortize it over 30 years. That's what I did.

[Liquorice]

7. What about the Public Service Loan Forgiveness? That might help him. nt

[Mz Pip]

11. I know he's checked that out

and doesn't qualify. I'm not sure of the details; some of it has to do with where he got the loans. Federal loans maybe, but private loans, not so much.

[martymar64]

12. I'd like to see some loan forgiveness for myself and others

I'm 50K in debt, but I have it consolidated with a graduated payment plan. I pay the Dept of Education directly every month. The principal has barely moved an inch in the past 4 years. I'm concerned that it may be garnished from my social security if its not paid off by the time I retire in about 20-25 years.

With my job that pays squat, I'm barely able to keep my head above water, forget about getting ahead.
In these uncertain economic times, the government bailed out the big banks and other megafirms. Why can't they bail out the individuals in this country that went into debt because it was the only way that they would be able to afford a college education? They worked hard to better themselves to make a bigger contribution to society, why can't the government give them a hand?

[CoffeeCat]

18. I hear you...

I now have about $45,000 left to pay. The debt started at $100,000. It angers me
that I'm paying so much in interest and penalties because of a default that was not
my fault.

When the Direction of Financial Aid tells you that Sallie Mae and the Loan Servicing
Center were incentivized to default students--it makes you angry. If they default
a student--the government pays off the loan. It's infuriating.

These companies have no incentive to work with you.

[girl gone mad]

14. I heard of someone who put all of his student loan debt onto credit cards..

then declared BK. That was a few years ago, though, under the old laws and back when everyone and their dog was being given mountains of credit.

[QC]

9. Get a direct federal consolidation loan, with income-based repayment. Now. n/t.

[Luciferous]

13. I have 50,000 in student loans and can't find a job. I graduated a year ago.

I don't even like thinking about it because it makes me depressed, but I just wanted to let you know you're not alone!

[Lindsey]

15. I still have around $9,000 in student loans. I graduated in 1998

and I only have $105 automatically deducted from my bank account (my choice). Does anyone know if they would actually deduct any money owed from Social Security when it comes to that time? If that's true, I really need to increase my deduction.

[quinnox]

16. yup

I defaulted and my wages are garnished. The only way to avoid it is to get a new job and then for awhile it takes time for them to track you down to begin garnishing again. My balance owed is low though compared to a lot of these numbers quoted in the thread.

[CoffeeCat]

19. Best of luck to you...

...paying off your loans.

I know it's not easy. Garnishment is difficult and it is embarrassing also. Your
employer knows about your financial situation, and that's a pain.

[Dappleganger]

20. Not I, but a friend just told me last week...

that the SHTF when she found out just how large her husband's student loans are and he's only teaching one class at a local community college since being laid off from a banking job (lower-level) a year ago. He is not far from finishing his doctorate so he really needs to see this through to the end. She's quite distraught...they live in our neighborhood and our daughters are best friends. My friend has Lyme disease and is on disability which doesn't pay much but helps. Both our husbands were laid off in the same month a year ago January. They would love to move to a cheaper house but home sales are so FLAT here and new homes are still going up (though not at the same rate as before), so competition is tight. The homes for sale here have been on the market for more than a year. I really fear for her health, she is so anxious over all of this debt.

[bamacrat]

21. Ive been paying now for about 2 years and have about 17,000 dollars left.

I am paying the minimum right now because I have no job, so once I am employed I will pay more but it sucks. I only had to finance my final 2 years of college (I took six years), but I have friends who are $50,000 in debt and one friend who went to nursing school and his debt is near $100,000. But some people i know were stupid about their loans. Took out way more than they needed just to have extra play money even though they also had a job that would have alloted for that and are now in way over their heads.