In over my head with student loans, advise?

[jd68]

Hi, I'm new here and having some money/debt problems hoping you folks can give me some advise. This will be long, but I'll lay it all on the table and hope for the best.

A couple years ago I decided to go back to school at one of the handful of local schools offering a degree in my profession. My family always told me "Go to school, get a degree, it'll pay for itself in short order". They never seemed concerned when I'd mention the high tuition costs and such and reassured me it was worth it. So I went back to school and was told it should take 2.5 years to finish a Bachelors degree. I figured on 3 years at $27k/yr, figuring on taking deferred loans, paying off credit cards, and starting to pay on the loans before graduating.

Here I am at year 4 of school, 7 classes away from a degree, and can't afford the $41k that tuition has increased to this year. Would have been under 3 years but school canceled classes putting me at part time enrollment for 3 quarters and still charged me for full time. I haven't made any progress getting them to charge me part time for those quarters as "your program is only offered full time". They also charged me $18k to go to work every day as I have at my current job for the past 4 years. This "cooperative internship experience" and was mandatory, I was not allowed to take any classes during this period. If not for that I could have finished school. I have given up on school for now as I don't have the cash, can't get another loan, and don't think it would be smart to take out any more loans.

Here I am now at age 26 with $107k in student loan debt and making $57k/yr at a job in my field that is alright but I'm not thrilled with. No opportunity to get significant raises or promotions unless I get a degree, though with a degree I'd expect at least another $15k next year (similar as my raise this year and a bit more than my raise the previous year).

The big loans are 3 around $27k-$33k and interest rates are 4.5%, 11% and 13.5%. I have two smaller loans of $5500 and $7000 which are government loans at lower interest rates than the big private loans.

I have no credit card debt. I had CC debt in the teens for a while but got serious and made payments of $1500-$2000/mo depending on what my other expenses were. I paid off my credit card debt last year and was making those same payments on my student loans for a couple months but could not get another loan for the 4th year of school that I wasn't expecting (credit score is a 760). So for my first quarter of this final year I am stuck with a $15k bill.

I didn't have $15k and the school charges a few thousand to go on a payment plan, and a steep "convenience fee" to pay on a credit card. So I've not made any payments on loans (not due until Jan 2012) so I can save money to pay off the $15k. In this time I've racked up a couple $400 late fees, which have been less than the cost of using a credit card or payment plan thus far. I have $11k saved now and was debating taking a loan from my 401k to pay off the rest so I'd still have an emergency fund. I also have nearly $8000 in stocks that have been increasing significantly lately and I want to let these increase a bit more before selling and putting them towards my highest interest loan.

I've pretty much put my dreams on hold and am living with my parents for minimal cost for now so I can save and pay down loans. I want to buy a house soon since prices are low, but I don't see this happening until I knock out some or all of these debts, at least the higher interest ones. I'd love to get a job out of NJ and relocate to a nicer place to live (lower cost of living, more freedom, better climate). I see jobs posted locally doing what I do now but making $10k-$25k more. I'm afraid to leave my current job though, since I am secure there. This immense debt is preventing me from either advancing where I'm at or moving on to better prospects. I feel like I have to play it safe. Not sure if that's the best choice or not?

When my loans are no longer deferred the minimum payments should amount to about $1300/mo. That's not really a problem where I'm at now but makes it tight to move out from my parents house. I don't want to pay all that interest making minimum payments though. To pay my debts in 4 years I'm looking at $2700/mo payments. This is pushing it tight. I bring home almost $800/week after taxes, health insurance, 401k, etc. The most I can see paying with my current income is about $2400/mo. To pay my debts in 5 years I'd be around $2300/mo payments. I could resume $200+/mo payments in another month or two after I pay off my school. I want to pay this off more quickly so I can move on with my life, get a house, relocate, etc.

As far as what I own and major expenses...

I have a truck I drive every day. It's old but nearly everything is new on it and come spring body and paint will be done. I do everything myself on it and the total cost will be under $10k when finished... 1/4 the cost of a comparable new truck.

I have a classic car that my grandmother bought new. It has sat for a couple years now awaiting time and money to restore it. Value is minimal unrestored, though sentimental value significant. Probably won't be restored until I get this debt paid down as I cant; justify dropping $2k-$3k on it now to finish it.

I have a classic Honda motorcycle I paid $1300 for. It's in nice condition and I ride it a lot in summer to work and for errands, is saves on gas vs. driving the truck.

My big luxury is my boat. I wakeboard and spent $5000 last summer for this nice ski boat. I got it for a steal and it cost me nothing bus gas and insurance, and the people I bring out to ride with me usually cover the gas. This is the only thing that keeps me sane and gives me drive to get through every day. I could sell when prices are higher in spring but might get $8l-$10k and not sure that's worth it since I enjoy it so much and am not on the brink of bakruptcy (not that it would help with student loans)

Insurance:
Truck: $1200/yr
Boat: $400/yr
Bike: $100/yr
Rent: $200/mo
Gas: $100/mo (driving the truck in winter, in summer more like $30/mo for the bike)


I have a few thousand worth of tools that I use to maintain and restore truck/car/bike and do automotive work on the side. I bring in a few thousand/yr in automotive work. The thought briefly crossed my mind to sell all my tools to make a decent payment on my loans, but I think that would hurt me long term. Since my tools make me money, albeit not that much.

I've tried finding a second job now that I'm not going to school at night. Have looked for a job stocking shelves, working the counter at auto parts stores, retail sales, etc. and have had no luck. I'm overqualified. No one wants to hire me when I tell them what I do by day. I'm available 6:00 PM - 6:00 AM and all day weekends. I would be fine with some mindless minimum wage job like I've had years ago. I figure they think I'll quit in short order, but that's not the case. My day job is my bread and butter. Just want additional income to pay these loans off faster. From school I'm used to getting up at 6:30 and not going to sleep until midnight or later.

I read some horror stories about college and student loans and realize my situation isn't so bad as many of those. I can't fathom how there are people who spend $100k on a degree and can't make their payments because they make $20k/yr. My situation is fairly stable and making min payments is no problem. Though I don't want to wait 4-5 years of making these crazy high payments before moving on with my career, getting a house, etc. I don't know what to do. I feel like I'm stuck in purgatory, paralyzed and can't move forward. I want to be debt free so I can move on with my life. What do you folks suggest I do?

[cicy33]

I am going to assume you went to a major 4 year university or a business college. I go to school myself. but I currently attend a junior college. partly because I don't want to pay the $300 plus per credit hour and partly because I also work. I am not understanding the cancelling of classes? I have never had a college cancel a class and then charge me for it. The intern thing I am also going to assume has to do with your choice of degree. I am not sure what kind of school you went to but I have never heard of a school charging you to go to work. perhaps not paying you but even at the law firm I work at the paralegals they hire work 4 hours a day free and get paid for 4 hours. you do have options. first, there are no hard and fast rules that say you must go to a specific set of classes in order to go to college and get financial help. with the possible exception of a business college. I know this because I just went outside my degree because I went back to work. I will hopefully return to it next semester but at the college I was attending they didn't offer the classes I needed at the times I needed them. so.

OPTION 1: in order to "defer" your loans longer, when the current deferment runs out, go back to school. go to a junior college, whatever. get a pell grant. it will pay pretty much all your tuition. providing you don't make a ton of money in which case then this post is bogus anyways. While you are in school at least part time your loans are deferred.

OPTION 2: when the deferment runs out, get a forbearance. That will buy you a little more time.

OPTION 3: sort of attached to option 1, change your degree. find something that works with some of your classes and move into it.

[jd68]

I guess it comes down to I will not take out any more loans. I don't want to put my life on hold any longer. I hate to write off a $107k and 3 years of night classes... But I don't see any options that let me get out of debt within 5 years (my goal, not a necessity). If I don't pay off the high interest student loans I can't get a house and I am not sure it's wise to pursue another job in case things don't work out and I make a few jumps in a short period. This has me losing potentially $15k-$25k / yr from not going after better jobs. That's all stuff I believe I have a good shot at without a degree... If I had a degree it would make life easier.

To finish school though I need to pay cash. I couldn't get another loan even if I wanted one. I just don't know what do to. I obsess about this and run numbers in my head and on paper all the time. I'm sure it's a pittance to some, but $2200-$2700/mo is a heck of a lot of money to me. Is it just unreasonable for me to get out of debt in under 5 years and move on with my life to buy a house, get a better job, etc.?

I feel like I'm losing my mind. I don't see an easy way out and I feel like it's a catch 22. Pay $41k I don't have and take the 7 more classes and get a degree and another $15k+/yr (which would help pay off school), or don't and don't get the additional income and have no way to pay for school out of pocket in a reasonable amount of time. If I don't pay the $41k by next quarter at school the credits I transferred from a 2 year college expire as far as my school is concerned, which would put me on the hook for another $41k or more to do another year for all the 101 classes I took years ago. This is because I graduated high school early and took went straight to a year college, took a break from school to pursue my career, and then went back later transferring credits. So as I see it I get burned for trying to be responsible and graduate high school early. If I had slacked off and went to college a year later it would have given me another year to save cash and finish at my current school before the credits expire.

I was lied to by the admissions people at my school. They told me during this 6 month internship I would either not pay any tuition or would apy tuition as normal and take classes full time as normal. They run me in circles when I try to get anywhere about the 3 part time quarters they charged me full time. "We can only bill you full time because your program is only offered full time" To which I respond "If it's only offered full time then why were the classes needed to complete my program cancelled those quarters putting me at part time enrollment?". The only thing I've learned in going back to school is that higher education is a big scam and someone sure is getting rich off a lot of unsuspecting young adults.

[jd68]

Duplicate post

[cicy33]

Did you try to apply for a pell grant? it is strictly income based and has nothing to do with loans

[jd68]

I make too much for a pell grant ($57k),so unfortunately that's not an option to pay for my last year of school. Normally I'd say screw it and save the cash, but if I don't finish school this ear it'll cost me another $100k to finish where I'm at. I'm looking at places to transfer but I think most school is state will expire my old credits for all the 101 level classes after next year. Funny thing is if I had either not been ambitious to graduate high school early I would be in this situation, and if I had not been ambitious to pay off my credit card debt I'd have at least $30k in the bank to put towards either loans or cash for school out of pocket.

I'm trying to get more info on what will transfer and when they expire old credits but two things get in my way. 1. They want a bunch of money up front and 2. They want official transcripts before they'll even talk to me.

To get an official transcript from my current school I have to pay them $15k, of which I have $11k saved so far. I'm just sort of waiting and saving until I have the $15k to pay them off and get a transcript to look at other schools for option to finish. I just don't know that I'll be able to afford it out of pocket. If I can it means putting off paying off my current $107k balance while it accumulates more interest at 4.5%, 11% and 13.5$ each on $30k loans. Not sure that's wise either to let hat interest add up. I feel like I'd have been better to take my $107k and go to the casinos than waste it on school.

[Eric80]

My daughter was in the same position as you and we went down to the citizens advice bureau where they were able to use their resource to guide as to what to do. We sat down and looked at her options and we decided that maybe consolidating her debts was the best option for her.