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I am looking for someone who will be able to give me advice on managing my
student loan debt. Can anyone recommend someone who knows the different
repayment options offered by the federal government and can advise me on how to
manage my loan?
I work in financial aid at UC Berkeley. Please know that you do not need to
hire a special financial advisor to help you with your student loans.
Hopefully, when you left school, you did your loan exit counseling. If not, you
can still do this via the federal site,
www.studentloans.gov. The only way to
manage your loans is via this site.
There are several repayment options, some
of which carry higher payments over time if you cannot afford to pay them back
right away or if you cannot make the minimum payment. But the most important
thing to do is to begin repaying them once you do go into repayment or at least
make arrangements to go into forbearance. It is not possible to have student
loans dismissed through bankruptcy, and of course, default has negative
consequences. Your servicer (or servicers, as you may have more than one - you
can find out by going to the federal site) will work with you to help you pick
the right payment plan. A standard repayment plan is the best because it is the
least expensive over time. The main thing is not to be fearful or intimidated
by the process. It's pretty straightforward.
I recently learned about Income Based Repayment - a federal program that bases
your monthly payment on your yearly income. If you pay back through this avenue
and still have a balance after 20-25 years the remainder of your loan is
forgiven. If your loan is in collections you can get it out by calling Federal
Direct if you sign up through this program. Your lender can walk you through
step by step. I have lowed my payments from 410/mo to 0/mo.
I hope this helps!
Hello, I just found out that my finance defaulted on student debt and now needs
to repay it. I am thankful to know but we want to be smart about how we
negotiate the repayment with the collections agency. Can anyone recommend an
attorney who could answer our many questions (what wiggle room do we have in
negotiating a monthly amount, should we get married now, how might this affect
our tax filings, etc.) ? Please please make any recommendation or provide any
advice. Thank you, Judy
My husband also had been in default on his student loan for years when we got
married. Right before we got married, I got him to call and get on a payment
plan. Turns out that his finance company had turned his loan back over to the
gov't already so he made arrangements with the agency- don't remember the
name, but it wasn't a private company. The only option available to him was
automatic withdrawal from a checking account. He signed up for the lowest
available, didn't worry about the penalties he had accumulated over the years
(his theory is he will never pay it off anyway) and went from there. Since
he has been in default a few more times, I have just started ignoring it. When
we apply for any type of credit, I always apply under my own credit. In
California you have the option to select whether you want them to look at both
your credit or only yours. I always select mine. It hasn't held us back in
either home or car loans, which is the only two things that people really need
good credit for. You can always add him/her to the title/deed later. It hasn't
affected our taxes that I know of.
wife with good credit
While there was wisdom in the response you got this week (let him deal with his
student loan; keep your credit separate) I think there is another aspect to the
issue worth noting. What are you and your fiance's attitude to money in
-is the student loan issue unique or part of a pattern? I come from the
perspective of a 20 year marriage in which we both worked; covered joint
household expenses; I saved a lot, and my husband accumulated over $90,000 of
credit card debt. When we divorced, under the law, he was entitled to half my
savings, and I to half his debts....fortunately he did not insist on that
outcome--but he could have...
marriage is about money, not just love...
My best friend has gotten into a dire money situation and I'd
like to ask advice on her behalf. She took out a private loan
through Sallie Mae to put herself through cooking school- Calif.
Culinary Academy- the one that's gotten the bad press about
pressuring people to enroll, pretending that they're 'selective',
'creative' financing, etc. Basically, she took the 'creative'
financing, didn't read the small print of course, BUT was also
misled by the counselors there who told her she could pay her
loans off easily AND by how much her degree would be in demand by
high paying employers. So now she's working in a pizza kitchen,
making exactly what you would imagine and now her loans are due.
A $40,000 loan is now up to $90,000 or something similar. She has
a family of 4, works full time, so does her husband. Her payments
are scheduled to be taken out of her check in the next few
months, and it will be about $800 per month. This will make it
impossible for her to pay all her other bills or just live day to
day. She has already done the forebarance thing and tried to
switch her loan to another company, but they only do that for
government loans, not private. Someone told her she needs to go
in front of a judge with a pro bono lawyer and state her case,
maybe the judge can lower her payments or something. Some
questions she has are- are there any lawyers who would take a pro
bono case like this, is there any other way to get to the judge,
or any other avenues she should take? She does not want a free
ride, she wants to pay her debt, she just needs to be able to do
it at a more reasonable rate than $800 per month. She's read
articles of other people being misled by private loan companies,
and the CCA itself and wants to know how to find these people, or
if anyone knows of a class action lawsuit or anything else she
should be doing. She is doing her own research, but I'd really
like to help her as she doesn't have access to this great forum.
thanks for any advice.
My best advice is this if she has two or more loans she can consider
the loans with Sallie Mae. (Some loans are done through a lender and may
a particular loan such as Stafford substidized or unsubstidized.) I would
there are two things she can do.
1 stick her head in the sand, stress and create more stress- not
2 Talk to your loan lender and get through the Sallie Mae phone tree
crap- talk to
a live person. She may be able to consolidate which may lower her
payments by half
and increase the amount of time to pay. Or, go through some other option.
important thing to do is communicate with your lender otherwise she could
and ruin her credit.
Bite the bullet and make the call. Also, see about getting a different
probably is competitive so sell yourself.
Student loan queen
I hired a lawyer for $2500.00 in which I had to credit card to
fight my student loans. I was standing in federal bankruptcy
court and federal judge that had a tongue that cut like a
razor. I have osteoarthritis, degenerative disc disease, and
many other health issues and just had nerve buring in my
spine. That is the only treatment, not a cure. I cannot lift
anything over 20lbs. Let me tell you how it is for me. I
don't want to make your friend feel bad. The judge told me to
go on the William B. Ford program through the dept. of
education with the state of ca. That saved me for four years.
You may want to look into this and apply directly. Then the
dept. of education told me to go onto disability because all of
my forbearances have been depleted on the Ford Program, but if
I did that, my loan which is now $200,000 (started at $40,000)
will count as income. I will have to pay taxes on it to the
irs, in which I have no way of paying that. Then the irs will
take it out of my disability check until I am 70. I recommend
the process of the Ford program. Truthfully the more kids you
have the less they make you pay. About $5 a month until you
are 70, inheritance, and so forth. Tell everyone never to get
student loans. Pay for it or or leave it behind. It is not
Hi -- my original question was going to be, ''If I have
an ''extra'' thousand dollars, would it be wiser to use it to pay
down my student loans (3900 at 7%) or invest it and start saving
for my 11 month old daughter's education?'' But then I realized
that I really don't know where to start regarding, first, even
understanding what the heck I borrowed and how it need to be
paid back, and second, what is the best way to save for my kid's
education -- I've got nothing started yet. If anyone could
either answer that thousand dollar question or point me in the
direction of learning more about loans and finance and saving,
I'd sure appreciate it. (BTW, I am overseas right now, so
perhaps online resources would be more useful than books...)
I would pay off your student loan first. Then take the amount of money you were
on that loan and just start paying it to a savings account for college (plus any
you'd like to include). That way it's a little more painless. And for savings
plans, there are
a lot of options, including the 529 plan (Google it), CDs or money market accounts.
and money markets can have lower interest but aren't tied to stock market risk, so
have to decide which is right for you. Best wishes!
Saving is Super
Pay off the loan. Then save. Having college paid off will give
you more credit options going forward. It's tough to recommend a
specific savings plan not knowing more about your financial
situation. Maybe you should visit a bank representative
recommended by people in your area overseas, and ask for advice
given the details of your finances.
Don't save it unless you are sure to make more interest than the
interest you are paying on your student loans. Unless it is
really a lot more, I would say, just pay off your own loan. It
sounded like you really don't owe much and you need to pay it
some day. If you were going to save it for something, you should
save for your own retirement before your kid's college anyway.
Pay off your student loans. And also start saving for your
retirement. I think it's great to think of our kids, but we have
to think of ourselves too.
I've read a few book on saving for retirement, and some of them
actually say DON'T save for kids education, save as much as you
can for retirement. I agree with this philosophy. I know college
is way more expensive that it was when I went, but the cost of a
comfortable retirement is skyrocketing too. It's the belief of
some financial planners that one can ''wing it'' with a child's
college....maybe they'll stay in state, maybe they work to help
with tuition, maybe they'll get student loans....but you can
NEVER, EVER ''wing'' retirement.
I have a son who I love dearly and if he wants to go to college
we'll find a way (maybe I'll even have to dip into my retirement)
but my first priority financially is my retirement. I think more
adults should think this way....
First of all, it's wonderful that you may have extra money to
either pay off loans or invest in your child's future. When we
had our first child, I started investing in a 529 plan through
the state of California. Now every state has one, and you can
invest in any state's plan, not just the state you live in.
Basically, it works like a 401(k) plan in that you contribute
money to the plan and the dollars are invested in various stock
plans that you choose, based on your risk level and the age of
the child. As the child gets closer to 18, you can change your
risk level to minimize any loss in what you've already invested.
You can either save with each paycheck or send the money in
yourself when you have extra. Check out www.savingforcollege.com
for more info on these plans. Personally, I would pay off my
debt or invest in my own 401(k) plan before saving for a kid's
education, simply because it's easier to get a low-interest loan
for college than it is to find a loan to pay off debt and no one
is going to pay for your retirement except you, so the choice is
easy. And once the debt is paid off, you'll have more to
contribute to the education fund. Good luck!
I would do both but put the 1000 toward your loan. You want to
get rid of any interest loans first, so that you can minimize
what you ultimately pay. (The best rate on a cd right now is
about 5 something percent, so you will lose approx 1 percent if
you put the money in a cd now rather than pay your loan). Your
interest sounds a bit high, so I might check and see if there's a
way to lower it.
It's great that you're thinking about saving for your daughter's
education, and you might ask family to chip in too at gift time.
I've heard that bonds are good for education and cds are about
to go down at the end of this year unfortunately, so bonds may be
the better bet. This always fluctuates so check the rates first
and good luck.
P.S. There are good financial advice pages right there in yahoo,
so that may be a good place to start.
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