Help! Defaulted Student Loans (and other debt fun)

[The Evil Genius]

I'd agree with Rictus.

Option 2 makes the most sense and allows you the flexibility to "over" pay at the option 1 amount or just pay the lower option 2 amount should you hit a few expensive months (like a big car repair bill).

[s0crates]

I appreciate all the feedback guys, thank you!

I'm still hoping somebody can explain this PSLF business to me though . . .

Edited February 7, 2016 by s0crates

[Major Harris]

Are the interest rates the same on all the repayment options? If so, chose option 2, pay as if you were paying option 1. Then, if something bad happens, you arentnup the creek at much. *disclaimer... I'm drunk

Be careful with that, because when you pay extra, it can lead to no payment due certain months, and if no payment is due, the payment you make doesn't count towards the 120 payments.

[Rdskn4Lyf21]

They consolidated my loans at a doable $191/month. For a year. Then it goes up to over $1,000/month. Haha, alrighty then. Guess I have to reach back out to them. I'm not living in a cardboard box next year

[jpage520]

They consolidated my loans at a doable $191/month. For a year. Then it goes up to over $1,000/month. Haha, alrighty then. Guess I have to reach back out to them. I'm not living in a cardboard box next year

 

That's a hell of a jump. That's always a killer. Sounds like you might be on Interest Only for that one year and then jumping to the principle. Had that happen to me about a year and a half back. I was on Interest Only for a couple years and was paying about $370/mo. Then I check my payments due one month and it was up over $700/mo. Quite the shock. Needless to say I was pretty frazzled. Almost broke down talking to the person on the phone when they basically told me that I didn't really have many options. I've been trying to manage it the best I can. But it's really tough. I don't wanna get political, but I really hope whoever does end up in office does something to address those of us in holes like this. I want to do what I need to do to pay this thing back, I borrowed the money, I need to pay it back. I just want something more manageable. I'm hard pressed to find many people that can pay $6-700+ a month on top of their regular bills and not have issues unless they pull in a really good salary.

[AsburySkinsFan]

Hey guys,

 

I'm finally at a point in life where I can start trying to get my financials straight. I did a great job ****ing things up

 

I defaulted on student loans, and I'm wondering if anyone has any experience either consolidating or going through a 3rd party to get back on track. I also have credit cards in collections, etc., and any advice there would be awesome as well. Right now I'm approaching consolidating the loans through FedLoan Servicing, but I want to keep my options open. Everything that I find through searches online looks like a scam.

 

Thanks for any help!

PM sent

[Springfield]

Jesus guys. These circumstances sound like nightmare scenarios, but I'd assume that they're fairly common. Things were way different when I got my student loan back in 2000.

$500 a month for 10 years is outrageous.

[twa]

$500 a month for 10 years is outrageous.

 

depends on the loan,how long it is differed.....might be a bargain(if ya got the right education) 

[chipwhich]

Harvard for $500 for 10 years sounds like a bargain.  Sign my kids up.

[balki1867]

To me, I could never walk away from a debt that I owed. I wasn't raised that way - even if financially it made the most sense. Probably why my FICO is high at 40.

 

Interesting cultural phenomenon there-- I actually read an article a while back that cited a study done about people in collections.  It turned out that people who actually had money were the least likely to pay a collector and would aggressively use their rights as debtors to either never pay or pay smaller negotiated amounts.

 

It was actually the people who didn't have money who'd make foolish financial decisions (borrowing from retirement accounts that the collectors could never touch, etc) to try to pay the debt down but then end up declaring bankruptcy anyways.

[zoony]

I mean, part of the problem I suspect is that student loans are too easy to get. Any dip**** 18 YO who has no idea what they want to do can essentially sign up for college, flounder around for 2 or 3 years, and then decide college is not for them. By that time they've amassed $50-$100k in debt that they really can't deal with until they are in their 30s and by that time they're probably trying to raise a family and get ahead. Not going to happen

But should student loans be hard to get? That's a whole other issue

I still think we need to take a hard look at the, for lack of a better term, Business of Education. Comparisons to Harvard are silly. Kids that go to Harvard know that college is what they want to do, no question

I think the U of Phoenixs etc that advertise heavily and cater to those who really cannot afford it and might not benefit from it are the guilty parties here. But I'm just not sure what political force is going to come out and say that all these schools catering to the lower classes in society are a bad thing

[Major Harris]

U nailed it zoony. I would also add that public school systems do a disservice in trying to channel everyone to college. College ain't for everyone. We have a real solid vo tech school for high school kids but that was for bad kids and stupid kids when i was in high school. I'm not sure at all that i am in a better off position financially then i would be had i learned a trade and started working at 18 rather than going to college and amassing student loan debt that was given out like candy with the promise that paying out back would be so simple.

Edited February 9, 2016 by Major Harris

[The Evil Genius]

The for profit U's (and by this I mean the Phoenix's, DeVry's, Grand Canyon U's) are absolutely evil in my opinion.

 

I'm not saying people are stupid for going that route. I get it. But I think you can get the same education (or better) at 1/3 or less the cost at a community/junior college. Or even a state college. 

 

Plus, I suspect these for profit schools are more predatory on the poor. It's no wonder student debt has exploded. 

Edited February 9, 2016 by The Evil Genius

[Springfield]

So what happens when they all default?

[jpage520]

Well, I can tell you from first hand experience that at 19 years old when I took out the loans, it felt like it was the right decision. Just like so many others in my age group (Finishing up my 20s now), I was told that the only way that I'd end up doing something I liked, or doing something that could pay even halfway decent would be to go to college. I was terrible at high school, so my grades were going to keep me out of most colleges. My only options were NOVA, trade school, or some kind of specialty school. Knowing how much I wasn't good at high school, I went the route of a specialty school. Ironically enough, it made sense to me and others at the time that it would be a waste of money to do community college if I wasn't going to succeed there or finish it out. So I would end up in the hole AND without any kind of degree. So along with a group of friends who I'd known for years who had some of the same interests, I found a for profit school that specialized in media production and other facets of the entertainment industry and pursued the degrees I have now in Recording Arts (Technical training in audio recording equipment and the audio physics behind it) and in Show Production and Touring (Concert/theatre sound, lighting, and video technical training and the physics behind it.). Not only did I get through the programs, my GPA went up substantially from HS and I actually enjoyed school. I found a passion.

 

I was in a bit of a limbo financially. My parents couldn't afford to send me to college, but they made too much for me to receive all of my loans from the govt. Naturally, Sallie Mae was more than happy to loan me all the money I wanted. How kind of them! It wasn't hard at all! So zoony, you're absolutely right. It's not hard to get student loans. And at 18-19 years old, even early 20s, it's hard to see how huge that decision truly is. Especially when it's been drilled into your head that you HAVE TO GO TO COLLEGE or you're doomed to a low paying job you hate for the rest of your life. I've talked to so many people in virtually the exact same predicament. It's so much bigger than it seems and it's only going to get much worse if something isn't done.

 

 

Interesting cultural phenomenon there-- I actually read an article a while back that cited a study done about people in collections.  It turned out that people who actually had money were the least likely to pay a collector and would aggressively use their rights as debtors to either never pay or pay smaller negotiated amounts.

 

It was actually the people who didn't have money who'd make foolish financial decisions (borrowing from retirement accounts that the collectors could never touch, etc) to try to pay the debt down but then end up declaring bankruptcy anyways.

 

Absolutely. I can only speak for myself, but my family was far from rich, and I was raised with the mindset that there is nothing worse than a mooch or someone who doesn't pay back their debts. So whenever I come up short or something like that, my brain is always in overdrive with the guilt. Obviously if I woke up one day and the balance had disappeared and I was clear I'd be ecstatic. But until that miracle happens, this thing is gonna be a huge weight on my shoulders until I'm getting senior citizen discounts at IHOP.

 

What really adds insult to injury as well is the stigma that's attached to this situation. I've had so many people, especially folks who grew up in a better economic climate that allowed folks to get an education on loans with much less debt and more manageable repayment solutions tell me and other folks in my situation that I'm just whining and looking for a handout. That I'm lazy, and that I need to suck it up and accept the fact that I made the bed and now I need to sleep in it. After that, they might as well just be covering their ears and sticking their tongue out, because they will listen to nothing after that. That's kind of exactly what we're doing! We're trying to do the best we can. But it's really hard to make any headway in starting a life when you basically already have a mortgage to pay before you even look at a house. And in that respect, I understand what I did. I took out the loans. I'm not asking for a handout. I'm asking for a more manageable payment. $700+/mo before any other bills even hit the mailbox is a tough nut to crack unless you're at a job that pays very well.

 

The cycle typically goes...

 

PERSON NOT IN DEBT: If you want to get ahead and get a good job, you need to go to college.

PERSON IN DEBT: Okay. I'd like to but I just can't afford it

PERSON NOT IN DEBT: You're making excuses. You have options. There is financial aid available.

PERSON IN DEBT: I don't know. That means I'm going to be paying that back for a long time.

PERSON NOT IN DEBT: Maybe. But probably not. You're going to get a much higher paying job with a degree so it'll be worth it.

PERSON IN DEBT: Okay. You've convinced me.

 

Gets Loans. Goes to school. Gets degree(s). Comes out of school. Economy collapses. No jobs. Any jobs available have cut pay.

 

PERSON IN DEBT: This is tough. My monthly payments are insane! I don't know what I'm going to do! I don't want to default!

PERSON NOT IN DEBT: Maybe you should've considered that before you took out the loans.

PERSON IN DEBT: I did! It seemed like it was the only option at the time. I need some help. I can't afford this.

PERSON NOT IN DEBT: That's what's wrong with this generation, everyone is so lazy. Make a big decision, it gets tough, and now you just want a handout to make it all go away! I went to school and worked two jobs. I paid for my education outright!

PERSON IN DEBT: That's awesome. I'm happy to hear that. The economic climate is a little different now though. It's tougher to do that now with the job market and price of school.

PERSON NOT IN DEBT: Stop making excuses!

 

And then it's just on repeat...

[PleaseBlitz]

The for profit U's (and by this I mean the Phoenix's, DeVry's, Grand Canyon U's) are absolutely evil in my opinion.

 

I'm not saying people are stupid for going that route. I get it. But I think you can get the same education (or better) at 1/3 or less the cost at a community/junior college. Or even a state college. 

 

Plus, I suspect these for profit schools are more predatory on the poor. It's no wonder student debt has exploded. 

 

 

Agree so hard with this.  For profit colleges prey upon people who, for whatever reason, have not met their life goals.  They tout "more education" as a cure for every possible problem you may have.  They don't tell you that you will pay a ton of money for little to no actual education, just like UNC athletics, while the stake holders keep all the money.  For-profit colleges are basically a financial aid department and a revolving door.

 

Here is an experiment to try:  create an online profile on any job site and create a search for a sub $40k/year job.  You will immediately be inundated with email solicitations from for-profit colleges.  They KNOW that their target market is people that aren't happy with their current station in life, and they know that they will have a high success rate in exploiting that.  

 

The FTC is currently looking into this practice.  

 

http://www.mcglinchey.com/Four-Key-Takeaways-from-FTCs-Lead-Generation-Workshop-11-09-2015/

 

 

Of particular concern to the FTC is the use of legitimate job websites, or websites created to appear to be legitimate job websites, which advertise and collect leads from job-searching consumers. These lead generators then sell leads to for-profit institutions who contact consumers. In these cases, the consumers are not aware of how the for-profit institutions obtained their information. Further, there was a concern that the implication of job placement after graduation given by these websites can steer consumers into placement at one of these institutions.

 

This practice was viewed as potentially unfair and deceptive. Panelists considered it to be potentially a misrepresentation to consumers and, without terms and disclosures, consumers are not aware that their information will provided to educational institutions. This lack of transparency in the sale of the information is of concern to the FTC. It is likely that, in the future, the FTC will provide guidance against this practice. Additionally, it is likely that the FTC will bring enforcement actions under its Section 5 authority against lead generators engaging in this behavior, calling it unfair and deceptive.

[PleaseBlitz]

Jesus guys. These circumstances sound like nightmare scenarios, but I'd assume that they're fairly common. Things were way different when I got my student loan back in 2000.

$500 a month for 10 years is outrageous.

 

 

depends on the loan,how long it is differed.....might be a bargain(if ya got the right education) 

 

 

My monthly student loan payment is over $2,000 and it's a 10 year loan.  I also have my dream job, and it pays well enough to make that payment manageable.  As twa stated, I got the right education (and made it work for me).  A LOT of my classmates spent the same coin on the same education, but it didn't pay off for a variety of reasons.  THEY ARE ****ED SO HARD.

 

Basically, I put a big bet down on myself, and it's paying off.  

Edited February 9, 2016 by PleaseBlitz

[Springfield]

My monthly student loan payment is over $2,000 and it's a 10 year loan. I also have my dream job, and it pays well enough to make that payment manageable. As twa stated, I got the right education (and made it work for me). A LOT of my classmates spent the same coin on the same education, but it didn't pay off for a variety of reasons. THEY ARE ****ED SO HARD.

Basically, I put a big bet down on myself, and it's paying off.

Good on you PB. That is a heavy loan, that paid off for you, but would cripple someone if it didn't work out. As I'm sure you're very familiar with.

My loan was a FAFSA. I didn't know what I was getting into, but they payments were never overwhelming. (Full disclosure, I never finished school so I only repaid about 2 years of school, am in a good financial situation, so I feel relieved that I no longer have student debt).

Edit: I have no numbers to back it up but I'd assume that there are less people in your situation than there are in some of your other classmate's situations.

Edited February 9, 2016 by Springfield

[PleaseBlitz]

Good on you PB. That is a heavy loan, that paid off for you, but would cripple someone if it didn't work out. As I'm sure you're very familiar with.

My loan was a FAFSA. I didn't know what I was getting into, but they payments were never overwhelming. (Full disclosure, I never finished school so I only repaid about 2 years of school, am in a good financial situation, so I feel relieved that I no longer have student debt).

Edit: I have no numbers to back it up but I'd assume that there are less people in your situation than there are in some of your other classmate's situations.

 

The FAFSA is the form you fill out to get the loan.  You probably had Stafford loans.

 

And, with law, the people that go to the top 14 law schools generally do very well.  I went to a very expensive not top 14 school (American) because I couldn't leave the DC area and I didn't get into Gtown or GW.  I also used to be in the mortgage industry and went to law school specifically to do mortgage law.  Since the mortgage market melted down in 2008 and Dodd-Frank got passed and the CFPB was established, mortgage law is an incredibly active (and lucrative) area of the industry right now.  I was uniquely well-suited when I got out of law school to take advantage and now am a very useful pet for my law firm to have.  I also had the good fortune of meeting the right people when I was in school and realizing that it is often not what you know, but who you know.  I also got very good grades and had great internships.  Basically, I did everything right and STILL had to have some good luck.  

 

Probably 2/3 of my graduating class are screwed.  The people that went to my school with no prior relevant experience (who basically went to law school to defer entering the real world) fall into 3 categories.  1) 20% are smart enough to where they CRUSHED law school and got good jobs and are now doing somewhere between well and great; 2) 20% have rich parents that funded their private law school adventure and 3 years of their life and are in the same position now as when they entered law school, but have a JD that is probably worthless for them; or 3) 60% are neither of the above will literally be paying for their colossal mistake for the rest of their life.  At least one of my acquaintances has a JD and passed the bar and deals cards at Maryland Live.

 

People have asked me if they should go to law school.  I tell them no.  There are cheaper ways to defer 3 years of your life.  I tell them to go hike Europe.

 

Excerpt from the link above:

 

 

Lately, the prospects for American University’s Washington College of Law have looked just as grim. Since 2013, the school has plummeted down the U.S. News and World Report law-school rankings, dropping 23 positions from 49th in the country to 72nd. Thanks to its graduates’ dubious employment prospects, meanwhile, Washington College of Law has become a target for activists who see it as one of the worst examples of a law school that dupes students with unlikely legal ambitions, only to stick them with a mountain of inescapable debt when they graduate.

Edited February 9, 2016 by PleaseBlitz

[Springfield]

Heh, I wanted to be a lawyer at some point in my late teens.

That really, really sucks for the ones who spent all that money for essentially nothing. You've gotta feel for them.

[PleaseBlitz]

Heh, I wanted to be a lawyer at some point in my late teens.

That really, really sucks for the ones who spent all that money for essentially nothing. You've gotta feel for them.

 

Some I do.  Most did it to themselves and approached law school like undergrad, i.e., drank 4 nights a week and skated through.  Sorry, if you want to be a lawyer and haven't figured your **** out by age 23, I don't have a lot of sympathy for you.  

[mcsluggo]

I would choose option 1 and be done with it.  It would make me insane having that nut hanging over me.

 

bah, none of us believe you... we all know you are a teabagger  

Edited February 10, 2016 by mcsluggo

[chipwhich]

I know not everyone is cut out to go to college, but I think what is worse are the degrees people choose.  If you want to get a good paying job when you leave college, you need to get a degree that has value.  Music history ain't cutting it.  Neither is a generic business degree.  Or BS in literature.

 

Additionally, there are cheaper options to get a degree.

[pjfootballer]

Debt Slackers.

[Forehead]

Bump.  PleaseBlitz, you still happy with these folks?  We're about to start paying my wife's loans in a few months for her grad school, and I'm still paying mine off.  We're making payments with no issues, just looking to possibly get a lower rate and a shorter payment plan.  Have their been any issues?