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    Student Loans

    I have about $60k in student loans. I only worked a few years after graduation and am now staying home with my 3 kids. I don't see how I can go back to work anytime soon as all my kids are 2 and under and won't be in school anytime soon. We can't afford to pay on my loans with my husband's salary.

    They have been on deferment for soooo long.

    So what happens if I don't pay them? I know my interest keeps going up and up and up.

    I'm not looking for advice telling me to go to work. It is not an option for us at this time.

    Thanks

    #2
    Ok since no one much wiser than I has posted yet, I will try my hand at this.

    First of all "they" (meaning the other smarter, wiser persons) will want a complete budget. Especially so since you don't explain much about how much your husband makes and where the money goes to. But to try and be a little helpful, first I will ask if the loans are government or private loans. Government loans that aren't paid are the scariest because they may try garnishing a wage and taking federal tax refunds. The private ones may try to sue you depending on the amount and how large it is, in this case very large. Both will have dire effects on a credit report/credit score.

    I am not trying to scare you really, I just want to let you know how important it is to pay on these loans. I would call the companies you have loans with and try to work something out with the quickness.

    If you're looking for ways to try and pay them, I know you said that there is no way with your husband's salary, but there must be some room in there for at least a small payment every month. Can you put up things on the internet that you can sell? This site has about a ton of things one can do to make money but not actually have a job. I would suggest looking through them.

    Good luck!

    Comment


      #3
      I'm confused about the student loans. In a post in June 2009 you said that you didn't have any debt (bolding by me):

      Originally posted by AlligatorBaby View Post
      My in-laws think we are poor because we are so frugal. It is actually really frustrating because they are always so judgemental towards us. Well we have no debt and they are in debt up to their eyeballs so they have no right lecturing us about money!
      Were you not counting your student loans as debt because they were in deferment and you didn't *have* to make payments? This is a dangerous mindset. If they are unsubsidized loans, if at all possible I would at least be trying to pay off the interest that the loans accrue every month because once you are out of deferment they will add all of the accrued interest onto the principal balance (capitalize it). You will then be paying interest on top of the accrued interest. This is how student loans double and triple.

      These loans are going to become an exponentially bigger problem if you continue to leave them in deferment without making payments (if they are unsubsidized). If you post a full budget, I'm sure people can help you find a spare $50 or so to send to them every month.

      Comment


        #4
        No, there is no room to make even a little payment. Our income is $1600 and our mortgage is $1400! We do not have any extras or do fun things. I'm using my neighbors internet right now, even!

        No, when I posted that- I meant that I had no bad debt like credit card debt but thanks for spending your day digging up old, irrelevant posts! I was not thinking that just cause they are in deferrment that they do not exist....

        Thank you for the info nmboone. That was helpful. It is a government loan. We are planning on moving to a cheaper house or trying refi to lower our costs.

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          #5
          Originally posted by almostalumping View Post
          I'm confused about the student loans. In a post in June 2009 you said that you didn't have any debt (bolding by me):



          Were you not counting your student loans as debt because they were in deferment and you didn't *have* to make payments? This is a dangerous mindset. If they are unsubsidized loans, if at all possible I would at least be trying to pay off the interest that the loans accrue every month because once you are out of deferment they will add all of the accrued interest onto the principal balance (capitalize it). You will then be paying interest on top of the accrued interest. This is how student loans double and triple.
          I just wanted to stress that I have a friend who has that mindset and it troubles me. It's a friend I care a lot about and I've seen him withdraw from his 401K at least 3 times. He has so much debt and a low credit score and he keeps on deferring his student loans and plans to do this forever. Please do not let yourself get into this mindset.

          Comment


            #6
            OP, I'm sorry that you're in such a tough situation. I certainly didn't mean to offend you- I just wanted to make sure that you were aware of what happens to unsubsidized student loans in deferment. I heard many, many stories of these loans doubling and tripling during deferment and was hoping to save you some of that heartache.

            AFAIK nmboone is correct about wages and federal tax refunds (and also social security) being garnished for nonpayment if you come out of deferment and don't make payments. It may take awhile for it to happen, but they will take their money, and at that point there will be much more accrued debt to take.

            It sounds like this is a definitely an income problem. Is this a temporary reduction? Are you able to survive on that $200 after the mortgage is paid or are you going deeper into debt every month? Is there anything either of you can do to get more coming in- surveys, babysitting, selling stuff, etc? If the income doesn't increase dramatically, I would definitely agree with selling the house and getting something a LOT cheaper or renting.

            Best of luck to you.
            Last edited by almostalumping; 03-25-2010, 11:06 PM. Reason: grammatical error- too late at night! :)

            Comment


              #7
              student loans

              Deferring your payments only increases the amount of interest on any unsubsidized loans. If you run out of deferment time, you can look into forbearance, which interest would accrue on everything. Another option that you may want to look into is Income Based Repayment. Its a program that became available 7/1/09. You can read more about this program at studentaid.ed.gov. In order for your wages to be garnished, your loans would have to go into default which is 270 days past due, then there is a possibility that your wages may be garnished. Hope this helps and good luck!

              Comment


                #8
                I feel compelled to point out that although you don't consider student loans to be "bad debt", the fact that you spent that much on an education which you aren't using despite struggling to repay the money that was loaned to you is just more proof to me that any debt is bad debt, particularly in the case of your student loans.

                I would give that advice you mentioned you don't want.

                Comment


                  #9
                  I am here to tell you I am one of those that had their student loan triple thanks to deferments. What they are saying is true and it won't just go away. Check out the IBR, see if you are eligible for that. If they are consolidated they won't be (but please read and get the info first hand).

                  I guess your question is "what will happen when we don't pay them", sounds like you have already made up your mind on that. They will increase and increase and by the time your children are ready to go to college you won't be able to co-sign any student loans for them. Your tax refund will be garnished (you can fill out an injured spouse depending on what state you are in). When you start working your wages will be garnished. If you get to retirement with these debts still outstanding, then they will take money out of S.S (that is if there is still SS given out at that time).

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