Announcement

Collapse
No announcement yet.

Student Loans, Help Paying Them Off Please

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Student Loans, Help Paying Them Off Please

    My husband and I have about 60,000 worth of student loans. It is all from his graduate school. He graduated one year ago. He was able to get a good job, but we are still struggling to make the monthly payments. I am a stay at home mom. I have recently begun looking for flexible work I can do remotely. I do not want to do a MLM or sales type business. Any suggestions on other work I can do? I have a customer service background and most recently I was a cost estimator for an engineering company. Most online non -sales jobs have to do with building and maintaining websites. Any companies or websites I should check out? Thank you!

    #2
    Have you looked into income based payments? The government will take 10% or your income per month for 20 years..after which the loan is discharged. Look at the charts..you may even quailfy for a lower payment or no payments at all!

    Comment


      #3
      Originally posted by Singuy View Post
      Have you looked into income based payments? The government will take 10% or your income per month for 20 years..after which the loan is discharged. Look at the charts..you may even quailfy for a lower payment or no payments at all!
      Actually, I strongly discourage with this. I have an online presentation explaining the ins and outs of these programs.

      Even IF you qualify, there are still many cons. And for a debt-load of $60,000, I really do not think the cons are worth it. Sure you can get your loans wiped out after 20 years, but there is a catch!

      With a debt of $60,000 in student loans, I would assume that the monthly payments are about $650 per month. That is a pretty decent chunk of money. What is his income? Job? Field of study?

      You will need a household income of about $78,000 per year to support that, which means that both of you will probably need to work. If you cannot get good work, then he will need to work towards something that will get him the income necessary.

      As far as work that you can do remotely- there are some jobs in the insurance industry that have become telecommuted (meaning employees work remotely from home). For example, I work in the premium audit department of a large insurance company which is HEAVILY done by telecommute (I am a road warrior, but there are plenty of other jobs in the industry).

      I would absolutely avoid any "work from home" schemes, or any program where you have to pay for a "starter kit" (that has MLM written all over it).

      Basically, you will need to get your household income up. The only way to pay off student loans is to roll-up your sleeves and do it. There are no short-cuts that are worthwhile. Even income-based repayment is a complete joke in my opinion, and I only recommend it as a stop-gap measure for people who have no other choice. Trust me, it is a crap program (which is a shame). You will end up paying on the program for a LONG TIME, with no guarantee that your loans will be discharged. Even if they are forgiven, you will still have a massive tax bill at then end, and who would your prefer owing money to- a student loan lender or the IRS? You are best served by getting your household income up. Besides, doing that will benefit you greatly in the future!
      Last edited by dczech09; 07-14-2015, 05:47 PM.
      Check out my new website at www.payczech.com !

      Comment


        #4
        Originally posted by Singuy View Post
        The government will take 10% or your income per month for 20 years..after which the loan is discharged.
        Point of information...

        The Income-Based Repayment Program will use 10% for 20 years for any new borrowers as of July 1, 2014. That is PROBABLY not the OP. They might qualify for Pay-As-You-Earn, which uses the same ratios, but then again I do not know when their loans were disbursed.

        In all liklihood, the OP would fall under the original provisions of income-based repayment which are 15% for 25 years.

        Also, income-driven repayment programs (except for income-sensitive repayment) do not use gross income as a basis for payment. They use "discretionary income" which is any income above 150% of the poverty line for a family/household of the filer's size. This is a good thing as it generally means a smaller payment.

        Just thought it was worth pointing out
        Check out my new website at www.payczech.com !

        Comment


          #5
          I agree with dczech, I did the IBR program for a short time because there was no other way, but once I hit a certain point pay wise I was hit with a bill. I believe if I remember correctly that even at that income level you will still receive a bill. The worst part is, once that threshold is hit, your loan starts over with the accumulated interest. I know it doesn't seem ideal and we don't know the whole situation of why you are a stay at home mom, but even if you were to work part time at night, that would help with the situation.

          My main question is, do you guys have a budget? Are there things you can cut like entertainment, restaurants, are you renting and could find a cheaper place to rent? There are a lot of variables you can play with to help save money and to bring in extra income. Again, I agree with dczech and be careful with the work from home programs because most of them are scams. I did hear something about a virtual assistant, but I do not know much about it, but maybe it is something you could look into. I wish you luck on your venture on figuring out your debt.

          Comment


            #6
            Originally posted by Jsteinkruger View Post
            I agree with dczech, I did the IBR program for a short time because there was no other way, but once I hit a certain point pay wise I was hit with a bill. I believe if I remember correctly that even at that income level you will still receive a bill. The worst part is, once that threshold is hit, your loan starts over with the accumulated interest.
            This is an excellent point, and thank you to Jsteinkruger for bringing this up.

            A huge problem with income-driven repayment programs is that if you at some point after you have enrolled, your income increase, you may fall out of qualification. If you fall out of qualification, you revert back to the standard 10-year repayment plan and any accrued interest (from when you were on income-driven repayment) capitalizes onto your loan balance!

            This creates a disincentive to earn more money. Obviously earning more money is a good thing, but of course you get hit with a sledgehammer when this happens and you are on income-driven repayment.

            I understand that income-driven repayment may be necessary as a stop-gap measure for some people. But it is important to be aware of the drawbacks. If you are considering income-driven repayment, please make sure you understand it completely and that it is truly your only real option.
            Check out my new website at www.payczech.com !

            Comment


              #7
              Originally posted by dczech09 View Post
              This is an excellent point, and thank you to Jsteinkruger for bringing this up.

              A huge problem with income-driven repayment programs is that if you at some point after you have enrolled, your income increase, you may fall out of qualification. If you fall out of qualification, you revert back to the standard 10-year repayment plan and any accrued interest (from when you were on income-driven repayment) capitalizes onto your loan balance!
              The only time you fall out of qualification is if your monthly IBR payment rises to where it would be above the standard 10 year payment anyway. So under IBR, you're still good.

              As for capitalized interest...*shrug*. Even after going on IBR you have the option of paying more than the minimum.

              Still not a good reason to not go on IBR.

              Comment


                #8
                You don't suddenly get booted out or disqualified while on the IBR because it is an annual progam, you are just denied access to it for the following year. Unless they changed the program, you have to reapply every year and when you apply you submit your last 3 pay stubs and the past years w-2.

                As an example year 1 & 2 I was out of college I paid $0/month
                Year 3 my wife and I were married which changed my qualifications and I started paying ~$57/Month
                Year 4 with the increased wage at my new job I was paying ~$110/month
                Year 5 I was not approved for the program because I made too much so I started paying the full amount of ~$257/month

                Again, I believe they have changed the IBR programs in the past couple years.

                Comment


                  #9
                  Originally posted by Jsteinkruger View Post
                  You don't suddenly get booted out or disqualified while on the IBR because it is an annual progam, you are just denied access to it for the following year. Unless they changed the program, you have to reapply every year and when you apply you submit your last 3 pay stubs and the past years w-2.

                  As an example year 1 & 2 I was out of college I paid $0/month
                  Year 3 my wife and I were married which changed my qualifications and I started paying ~$57/Month
                  Year 4 with the increased wage at my new job I was paying ~$110/month
                  Year 5 I was not approved for the program because I made too much so I started paying the full amount of ~$257/month

                  Again, I believe they have changed the IBR programs in the past couple years.
                  They did not change anything. When you are enrolled in an IBR program, you are subject to annual qualification.

                  If you earn more money than before, you possibly get to the point where your IBR payment is more than what your payment would be under the standard 10 year repayment. At which time you would fall out of qualification and go back to the standard 10 year repayment.

                  So yes, you can get kicked out of IBR if your income rises. It may not be immediate, but it is on annual qualification.

                  The whole point I was making to begin with is that there are may disincentives to earn more money when you are on IBR. Accrued interest, disqualification, tax implications, loss of lower payments, etc.
                  Check out my new website at www.payczech.com !

                  Comment


                    #10
                    Originally posted by dczech09 View Post
                    They did not change anything. When you are enrolled in an IBR program, you are subject to annual qualification.

                    If you earn more money than before, you possibly get to the point where your IBR payment is more than what your payment would be under the standard 10 year repayment. At which time you would fall out of qualification and go back to the standard 10 year repayment.

                    So yes, you can get kicked out of IBR if your income rises. It may not be immediate, but it is on annual qualification.

                    The whole point I was making to begin with is that there are may disincentives to earn more money when you are on IBR. Accrued interest, disqualification, tax implications, loss of lower payments, etc.
                    I don't see why you would be disincentivized: it's all percentage based, so more money earned will still be more money in your pocket.

                    On the other hand if you want to pay more by all means, pay more. Go on IBR, figure out your monthly payment on the standard payment plan, and pay that.

                    I cannot see any reason not to do IBR...

                    One reason maybe not to do it is if you actually would pay less monthly on the 25 year graduated or fix plans. But if you make that much money, why not just pay the damn things off sooner?

                    Comment


                      #11
                      Originally posted by Weird Tolkienish Figure View Post
                      I don't see why you would be disincentivized: it's all percentage based, so more money earned will still be more money in your pocket.

                      On the other hand if you want to pay more by all means, pay more. Go on IBR, figure out your monthly payment on the standard payment plan, and pay that.

                      I cannot see any reason not to do IBR...

                      One reason maybe not to do it is if you actually would pay less monthly on the 25 year graduated or fix plans. But if you make that much money, why not just pay the damn things off sooner?
                      If you earn more, your payment increases (what if it was previously zero?). If you earn too much, you fall out of qualification, lose potential forgiveness of your loans, and you get slapped with the accrued interest (which can potentially be a lot). Sounds like a disincentive to me...

                      If one is on IBR out of necessity, they should not let the disincentive get to them. Obviously a higher income is a good thing, but some people may mistakenly believe they should turn down higher pay just so they can stay on IBR. Its kinda the same way how food stamps and welfare can create a disincentive for people to earn more (we see that all of the time).

                      Why you wouldnt do IBR is because of the cons. First of all, you pay on the loans for a really long time which can result in more interest and more time serving those payments. Sure, you could just pay more however if you had the ability to pay more, you probably make too much to qualify.

                      Another con is there is no guarantee that loan forgiveness will occur. No one has seen the end of IBR yet, and for all we know, forgiveness may not be available in the future (government is terrible with money, so this wouldn't be out of question).

                      Even if your loans are forgiven at the end of IBR, you will have a huge tax bill on your hands due to the forgiven debt (which has probably ballooned due to negative amortization). Would you rather owe $40k to the Dept of Edu or $10k to the IRS? The IRS has absolute power, so its a tough call.

                      I get that IBR is necessary for some people. I recommend that if people must go on it, they do so as a stop-gap measure until they get their income up. This means ignoring the (obvious) disincentives that exist with the program.

                      There would have to be major changes to the structure of the program before I would consider it a good long-term plan.
                      Last edited by dczech09; 07-27-2015, 09:05 PM.
                      Check out my new website at www.payczech.com !

                      Comment


                        #12
                        If wish to remain a stay at home mom, would you consider getting certified to provide are for another youngster whose mom needs daycare? It can be fun!

                        Comment


                          #13
                          Originally posted by dczech09 View Post
                          If you earn more, your payment increases (what if it was previously zero?). If you earn too much, you fall out of qualification, lose potential forgiveness of your loans, and you get slapped with the accrued interest (which can potentially be a lot). Sounds like a disincentive to me...
                          No, you never lose the potential forgiveness. You never get kicked out of the program. This information is available from the internet on multiple sources.

                          What does happen is that you end up paying what you would on a standard 10 year plan. That is the max you will pay. But if your income rises then you should be well able to afford it at that point.

                          Why you wouldnt do IBR is because of the cons. First of all, you pay on the loans for a really long time which can result in more interest and more time serving those payments. Sure, you could just pay more however if you had the ability to pay more, you probably make too much to qualify.
                          This is true, but then you can go on IBR and still pay how much you want to (above the minimum amount obviously), more if you want.

                          Another con is there is no guarantee that loan forgiveness will occur. No one has seen the end of IBR yet, and for all we know, forgiveness may not be available in the future (government is terrible with money, so this wouldn't be out of question).
                          There is talk about this on the internet. One thing is that there is language in the promissory note, making IBR a contract in which they cannot deny IBR. I have heard this discussed.

                          It's a risk you have to decide for yourself.

                          While preparing for the future is great, I've always been keen to the idea that you should shore up your financial situation for the present before you worry about the future.

                          I think that there are so many middle class people on this program that to end the forgiveness portion would be political suicide.

                          Even if your loans are forgiven at the end of IBR, you will have a huge tax bill on your hands due to the forgiven debt (which has probably ballooned due to negative amortization). Would you rather owe $40k to the Dept of Edu or $10k to the IRS? The IRS has absolute power, so its a tough call.
                          This is part of the misinformation out there.

                          The IRS has an insolvency worksheet, meaning that if you are still insolvent in 25 years and haven't managed to pay off your loans, you may end up paying much, much less than you thought you would. Insolvency to the IRS means that you liabilities exceed your total assets... with student loans, if you haven't paid them off in 25 years then I think it's pretty likely to say that this condition will be true.

                          There are actually people who are going through this right now due to forgiven debt for medical issues, and IRS insolvency eliminates much of what they were going to pay.

                          If you're not insolvent by the time your debt was forgiven you are probably in a better position to pay anyway. And owing the IRS isn't necessarily the nightmare people assume it is, they do have payment plans, etc. If they are not insolvent, then they will have equity they can tap into. Credit, etc.

                          I get that IBR is necessary for some people. I recommend that if people must go on it, they do so as a stop-gap measure until they get their income up. This means ignoring the (obvious) disincentives that exist with the program.

                          There would have to be major changes to the structure of the program before I would consider it a good long-term plan.
                          Oh I strongly disagree. I'd rather people build up their credit now, eliminate the really bad debt, like CC debt, first, before tackling student loan debt

                          Another issue is that inflation over the years might make IBR even more attractive, what you owe now may not be such a big deal as the years go on and the money system is inflated.

                          Comment


                            #14
                            Originally posted by Weird Tolkienish Figure View Post
                            No, you never lose the potential forgiveness. You never get kicked out of the program. This information is available from the internet on multiple sources.

                            What does happen is that you end up paying what you would on a standard 10 year plan. That is the max you will pay. But if your income rises then you should be well able to afford it at that point.
                            Maybe getting "kicked off" of the program is strong wording, so I apologize. However, I do not believe I am completely off-base.

                            If you earn too much, you fall out of the definition of "partial financial hardship" at which point your new payment would be the payment under standard 10-year. You essentially lose your IBR payment and revert back to your standar payment.

                            You can still stay enrolled in the IBR program and take advantage of student loan forgiveness, if you meet the other qualifications (25 years, not missing payments, etc).

                            However, if you are paying the standard 10-year payment, chances are you will clear your student loan balance in 10 to 15 years (depending on how much interest accrued while you were on the lower payment). If you clear your student loan balance before the 25 years of IBR is up, you would not receive forgiveness because there would be no balance to forgive.

                            So essentially, the sooner you start making more money, the more you will have to pay towards your student loans while under IBR and the less likely you will have any loans forgiven. This is (yet another) disincentive to earn more money, which is what I was getting at to begin with. Basically, you lose one of the key benefits to the program.

                            Originally posted by Weird Tolkienish Figure View Post
                            There is talk about this on the internet. One thing is that there is language in the promissory note, making IBR a contract in which they cannot deny IBR. I have heard this discussed.

                            It's a risk you have to decide for yourself.

                            While preparing for the future is great, I've always been keen to the idea that you should shore up your financial situation for the present before you worry about the future.

                            I think that there are so many middle class people on this program that to end the forgiveness portion would be political suicide.
                            Do you know what else has a promissory note? A mortgage. Yet everyday, people are foreclosing or strategically defaulting.

                            If there is no money in the coffers, the government won't be able to pay for student loan forgiveness. And with an increasing number of people enrolling, the government is setting themselves up for a forgiveness expense that cannot be covered. They are writing a post-dated check that the current politicians will not need to worry about.

                            This is not a political issue as much as it is an economic issue. This risk is very real and is something that people need to understand. I agree that people should focus on shoring up their present financial situation, however when determining whether or not to go on IBR... there does need to be a focus on the long-term.


                            Originally posted by Weird Tolkienish Figure View Post
                            This is part of the misinformation out there.

                            The IRS has an insolvency worksheet, meaning that if you are still insolvent in 25 years and haven't managed to pay off your loans, you may end up paying much, much less than you thought you would. Insolvency to the IRS means that you liabilities exceed your total assets... with student loans, if you haven't paid them off in 25 years then I think it's pretty likely to say that this condition will be true.

                            There are actually people who are going through this right now due to forgiven debt for medical issues, and IRS insolvency eliminates much of what they were going to pay.

                            If you're not insolvent by the time your debt was forgiven you are probably in a better position to pay anyway. And owing the IRS isn't necessarily the nightmare people assume it is, they do have payment plans, etc. If they are not insolvent, then they will have equity they can tap into. Credit, etc.
                            How is this misinformation? Everything that I stated is factually correct. When you have forgiven debt, you have a taxable event.

                            IRS insolvency definitely does exist, however it is only for those who meet the definition. If someone who receives student loan forgiveness wants to qualify, they need to have low assets and likely a low income. This means spending 25 years paying on student loans, not building assets, and not earning a decent/increasing income

                            Why would someone want to earn more money and build assets, just to get slapped with an IRS tax bill? When they could simply keep their income and assets down, keep their low IBR payment, get their loans forgiven, AND have their IRS bill lowered or eliminated in insolvency?

                            This is (yet another) disincentive to earn more money.

                            Originally posted by Weird Tolkienish Figure View Post
                            Oh I strongly disagree. I'd rather people build up their credit now, eliminate the really bad debt, like CC debt, first, before tackling student loan debt

                            Another issue is that inflation over the years might make IBR even more attractive, what you owe now may not be such a big deal as the years go on and the money system is inflated.
                            I could not agree more that people should eliminate bad debt first. Credit debt should be paid off first. Which is why I say that income-driven repayment programs may serve as a temporary, or stop-gap, measure. Income-driven repayment may be a useful tool in the short-term while someone is trying to build up an income and get to a point where they can comfortably handle their student loan debt.

                            But this does not change the fact that there are inherent disincentives that exist. This has been my key argument this entire time: people considering IBR ought to know the PROS and the CONS. People mainly focus on the PROS, so I gotta play Devil's Advocate and show the CONS.

                            One of the CONS that people really need to understand is that there is a very real disincentive to earn more money while you are on IBR. If you earn more money, you have to pay more in student loans, you possibly lose forgiveness, and even if you get forgiveness you do have a huge tax bill on the back end. Conversely, if you earn less money, you pay less on your loans, get the remaining balance forgiven, and you can even get your tax bill eliminated.

                            Yes, people should earn more money. Yes, people should pay more towards their student loans. Yes, if people earn more they can certainly afford to pay more towards their loans. However, none of this changes the fact that you (essentially) get penalized when you earn more while on IBR. The upside to earning more money far outweighs the downside. But imagine if you were a 25 year-old on IBR with a huge pile of debt - would you see the upside to earning more money? No, you would only see your loss of benefits. Similar to how someone on food stamps or welfare may only see the loss of benefits as a consequence of earning more income.

                            IBR is just like any other government program: great intentions, looks good on paper, but there are major unintended consequences.

                            Overall, people should not view IBR as a permanent solution to their student loan debt. They also should not be afraid to earn more money, even if they would lose some benefits. That is all I have been getting at this entire time
                            Last edited by dczech09; 07-28-2015, 10:50 AM.
                            Check out my new website at www.payczech.com !

                            Comment


                              #15
                              Originally posted by dczech09 View Post
                              IRS insolvency definitely does exist, however it is only for those who meet the definition. If someone who receives student loan forgiveness wants to qualify, they need to have low assets and likely a low income. This means spending 25 years paying on student loans, not building assets, and not earning a decent/increasing income

                              Why would someone want to earn more money and build assets, just to get slapped with an IRS tax bill? When they could simply keep their income and assets down, keep their low IBR payment, get their loans forgiven, AND have their IRS bill lowered or eliminated in insolvency?
                              You make some good points, I just think that some people who will be helped by IBR might not elect to go on it out of fear of the "tax bomb" without realizing the IRS has some safeguards against what they're fearing. People we deal with here are just about getting by, a lot were just after failed marriages, relationships, etc., and I'd hate to see them suffer through a higher SL payment then necessary.

                              Another issue is for people that make high salaries but have insane SL debt, like doctors and such. They do exist and medical school isn't cheap. IBR might allow them to have a basic middle class life.

                              I don't like government being in the business of student loans, but for some people, the damage is done and the alternative to IBR is life wrecking. Not everyone at age 18 has a full command of being an adult and finances and such. I sure didn't.

                              Comment

                              Working...
                              X