Paying student loans

[MrsPete]

Just looking at our student loans is so daunting/overwhelming - and I was just looking for some encouragement that it is possible! (also - they are totally up to date and still in good standing).

You just said you had a forbearance. That's kind of like being behind with permission. Never lie to yourself or "soften the facts" about money.

It sounds as if you live frugally in other aspects of your life. So I will repeat what others have already said: you need to increase your income by getting a part time job. Ignoring the loans, regardless of how daunting, is not doing anyone any good. That includes your little ones.

Yeah, I think the OP has a good handle on managing the little things (and that's commendable), but doesn't have a long-term picture of her finances. That's what she needs to work on, and paying down debt is the first thing to do. Putting furniture on a credit card while you already owe for student loans, for example, wasn't a good long-term move.

Student loans are forgiven in the event of the student's death.

But I agree with the sentiment. Living life with no regrets also means find a balance between obligations and desires. You can be just as regretful over not taking care of your debts as you can be for not taking the time to enjoy your time here.

BUT if someone else co-signs for those student loans and the student dies, the co-signer still owes for those loans. So you should NEVER co-sign for someone unless that person has enough life insurance to pay off the loans.

I agree about the balance comment. People like to get emotional about the possibility of dying young, not being able to get the time back . . . but the same is true of the time to save. Personally, I'm glad that I've had the time with my girls, AND I'm glad that I've saved for their educations (and other things). I know that no matter what, my girls won't have to borrow for college, will have their first cars paid for, and a couple other things. I am able to help my kids get a good start in life.

Imagine that money's at one end of the spectrum and time's at the other end. It's best to stay in the middle. Don't sacrafice either end of that spectrum for the other.

, but these are all just so personal of decisions. You "needed" those vacations. You "need" not to work. Those are value judgements that you and your husband have made. You need to make the decisions and then you need to find your encouragement within yourself.

Yeah, each of us decide what's a "need", but at some point you're going to be faced with a "need" for which you can't pay -- and it's likely to be something pretty important like braces, teenaged car insurance, college, the ability to add onto your house to take in an aging parent, your own retirement.

OP, I'll give you this piece of advice: You MUST resolve this issue before your oldest is . . . maybe 14. Up until that point, you can do dozens of things to make raising kids less expensive. You can buy used clothing, limit their activities, shop for inexpensive groceries . . . but about the time they start high school, you'll hit expenses that can't really be "cheaped out". The used clothing sources will -- for the most part -- disappear, and their high school activities will cost MUCH MORE than their elementary school stuff; for example, it's almost 1K/year for a student to be in the marching band. My oldest drives, and her basic car insurance costs as much as mine, my husband's and our house insurance COMBINED. My oldest also needs her wisdom teeth out (plus another dental procedure), and I just paid 4K for that. The SAT is around $50, college visits and application fees, it keeps going. What I'm saying -- and take this in a helpful way -- is that if you don't get your financial house in order now, you'll have little chance of accomplishing that task once your kids reach these expensive years. And if you don't, then they're going to end up borrowing for college, and they'll be in your shoes in a few years -- except that I fear the job market will be even worse for them.

We don't say "yes" to everything for our girls, but the teen years are expensive. Don't wait to pay down this debt.

Sounds like a lot of people on here are jealous of you and regret missing out on their kids growing up (but hey, they have a nice house and cars).

LOL -- not even remotely close. We just recognize a situation that isn't sustainable when we see it.

You're not alone. I really wish that there had been better counseling for kids who took out massive student loans. At least you have to read about the debt obligations and answer questions about it now in order for your loan funds to be disbursed. Even so, most kids are so unaware of how suffocating the repayment can be.

We have all sorts of ways to help our high school seniors understand the eventual impact of student loans -- the kids just don't listen. I totally agree with you that they aren't fully aware of how student loans will change their lives, but it isn't because the information wasn't presented to them by their guidance counselors, in their English classes, at the college fair, and at the county's financial aid workshop. Do the kids still have to take that little "quiz" to show that they understand that the loan must be repaid after graduation?

Yet kids still continue to say that student loans are their only way to go to college (yet these same kids don't bother with summer jobs), and they seem to think that paying back the loans'll be easy.

I don't think anyone on here is jealous of the OP because she is a SAHM. Everyone has different priorities. The OP needs to figure out what hers are. SAH, vacations, or paying off students loans. Maybe some combination of it.

I think you've hit the nail on the head, though the OP doesn't realize it yet -- she's looking for a way to get everything she "needs" (and pay back her loans) on the money she has currently. That can't happen.

 

[thomas998]

Don't you people realize that not everyone is making 6 figures and they can't realistically pay their debts off like crazy Dave wants them to. To tell this young family not to look into consolidating their student loans to a lower payment and more than likely a lower interest rate is not good advice (however, that is good advice about attending classes to keep the deferred interest paid by the gov't). Even Suze Orman states that you need to look into consolidation: http://www.oprah.com/money/Suze-Ormans-Advice-for-Consolidating-Student-Loans

When I got out of college I wasn't making a 6 figure income... far from it. But I did read all the fine print in doing a consolidation and it doesn't result in a lower interest rate. They just average out the interest rate you have on each loan and you get a new weighted average of all your debt... so you aren't saving anything on interest you are just fooling yourself by seeing a total interest of 6% instead of some debt at 5% and some at 7%.

Second you can get a lower payment because when you consolidate the debt they stretch out the terms. Most student debt when you get it is for 10 years and it will be paid off... if you do a consolidation they will then stretch you into a 20 year or longer term which does lower your monthly payment but it also increases the total amount of money you will pay over the life of the loan.

If you keep your loans separate and don't consolidate you can still have them stretch out the payments on some of the loans or even all of the loans you just have to work with each loan service center individually, I know because I did that with some of the loans when I first got out... If I had done it with all the loans it would have resulted in the exact same payment as if I had consolidated them all into an extended payment plan... but extended payment plans are never a good idea if you can avoid them...

Now if you want to listen to advice from Orman or Oprah, well you aren't getting advice from someone making 6 figures your getting advice from someone that probably wastes more money having their house cleaned than the OP will spend on student loans.

 

[leahjade]

There's a big difference between not being able to pay off loans and not EVEN TRYING. Why can't the OP take a part-time job when her husband is home to watch the kids? Or babysit or work from home? It's frustrating to hear when there are so many others who are working two jobs to try to pay off their debts.

 

[adventure_woman]

There's a big difference between not being able to pay off loans and not EVEN TRYING. Why can't the OP take a part-time job when her husband is home to watch the kids? Or babysit or work from home? It's frustrating to hear when there are so many others who are working two jobs to try to pay off their debts.

I did work a PT job which worked out perfectly - then I lost it due to the economy (there are still very few jobs here). During that time, we did pay off our credit cards and our van a couple years early. As I stated earlier - right now there is no one I can babysit (I have asked around).

But I totally agree with you that some of the posters don't realize that salaries are low and student loan payments are high--an imbalance that didn't exist in the past. OP, I totally get taking a budget trip to Disney World even though you have a student loan balance. If your loans are anything like mine and DH's, your kids wouldn't go until they were in their late 20's if we paid them off before going on anything other than a "staycation."

I would suggest the income-based repayment plan. It's based on your salary (or lack thereof) and your family size. It greatly decreased our monthly amount after I lost my job and our DS was born.

I think for right now - this is what we are going to look into.

You just said you had a forbearance. That's kind of like being behind with permission. Never lie to yourself or "soften the facts" about money.Yeah, I think the OP has a good handle on managing the little things (and that's commendable), but doesn't have a long-term picture of her finances. That's what she needs to work on, and paying down debt is the first thing to do. Putting furniture on a credit card while you already owe for student loans, for example, wasn't a good long-term move.

That is what I am trying to do now....get a handle on the long-term picture! And, it wasn't furniture we put on the CC - it was our new furnace that was about 50 years old we replaced. Right now it is on 0% interest.

Thank you all for your thoughts. There are a lot of things that I 'should have/shouldn't have done'.

 

[leahjade]

Kohls is hiring at every location as well as many other retailers for seasonal work.

there is no one I can babysit (I have asked around)

Check ads on Craigslist - a little more thorough than "asking around".

 

[Pembo]

OP - you need to do what is right for you and your family. I consolidated my loans so I had one payment. I make that payment every month and as other debt has been paid down, I add to the sl payment. We still take yearly vacations, and like you said, all cash.

I love http://www.gailvazoxlade.com/. If you've never seen her show, she tells you to set a goal with a timeline attached, otherwise it's just a dream. So make your plan to start paying down that debt with a timeline. Check out her site. I love her budgeting plans!

I stayed home with our kids and don't regret it for a minute. I got a pt job, opposite dh's schedule working just enought to pay for preschool. I started working school hours when the youngest went to K. I still work part time and we manage. Could I work full time and make twice as much? Yep. Would that be best for my family? No.

Make the decisions that work for you. Best of luck....

 

[katie26]

Don't want to hijack the thread, but can someone explain the "student loan forgiveness if you work for 10 years..." mentioned in a previous post? Something about working for a non profit?

Sure! I'm a public defender, so after 120 on time qualifying payments - which basically amounts to 10 years, as long as I always pay on time and under one of the qualifying payment plans such as income-based and remain employed as a public defender or in another "public service" job - the remaining balance on my loans will be forgiven.

See: http://www.finaid.org/loans/publicservice.phtml

Public service jobs include, among other positions, emergency management, government, military service, public safety and law enforcement (police and fire), public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations), public education, early childhood education, social work in a public child or family service agency, public services for individuals with disabilities or the elderly, public interest legal services (including prosecutors, public defenders and legal advocacy on behalf of low-income communities at a nonprofit organization), public librarians, school librarians and other school-based services, and employees of tax exempt 501(c)(3) organizations.

 

[Sagginit]

OP while i think there is some great advice here, everyone feels different about money. it is easy to get stuck with student loans,unlike a house or car you can't sell it to rid yourself of some of the debt, and many people got into them when the economy was much better. i just shredded a bunch of old papers and came across my loan workbook they gave me. the interest rate quoted for payments you would need to make was like 5%! when i left college my private loans were at 14.25% and my govt. at 7.25%. no wonder i thought i would be able to pay them half the time than i actually can.

personally i had a hard time putting extra towards my loans for a while. i had a low paying job and could not afford vacations and lived at home. i kinda felt like i was not going to let the loans ruin my life and they would get paid off in time. when i got a better job i started saving for a new car. i started reading into budgeting and money and realized i needed to start tackling my loans before i got the new car. i am doing a reverse snowball which has worked well for me. i make my monthly payments and put extra towards the biggest loans with the highest interest rate first. i just paid off my first sub-loan and it felt good. a bonus is as i pay more the payment goes down so i have more to snowball towards the extra. $50 may not seem like a lot but when you calculate the interest saved it makes you feel better.

 

[Swan4Me]

My co-worker-been with us 5 months- just was tracked down after not paying for 10 years (except once having his checks garnished for a few months)-he immediately paid $75
He jumps from job to job
This week he's been terminated- they live paycheck to paycheck-I doubt his loan will ever be paid

I do not see not paying loan at all & taking WDW vacations, tho

 

[goodeats]

I don't understand exactly what forebearance entails, but are these private loans? What interest rate are they at? Some people have student loans at very low interest rates. If the rate is under 4%, I personally would only pay the minimum and use the money that you would have paid down the loan faster to beef up retirement savings.

 

[Mickeyflower]

OP, please let me tell you of my experience. I am nearly in your shoes. I have $65,000 in student loans. The only way I was able to go to college, was to wait until I was 24 (the age the govn't stops looking at your parents income to qualify you for grants). My family was so broke, I couldn't even afford community college. I researched my bee hind off for scholarships, & didn't qualify for any because I was not a HS senior. The ONLY WAY to pay for school, was thru loans. I consolidated right after graduation (Im not married) and locked in 3% for the entire lump, vs 3% for EACH LITTLE LOAN. I have been umemployed for nearly 2 years. I was a teacher (laid off every year for 5 years, literal NIGHTMARE) got into a new line of work, only to be downsized. If the only way your family can survive is to delay paying, then do it. DO WHAT IS BEST for your family. My loans are deferred (interest is NOT capitalized), because with $1000 a month, I barely have enough to cover basic expenses, let alone pay the loans. To those telling you to go to work at Kohls, DON'T. If you take a job that pays you $7.50 (which is what you will make as a seasonal retail associate, I know I was a retail executive) you will shoot yourself in the foot when it comes to UE benefits. The best advice I can give, is to sit with your husband, work out a budget-and INCLUDE VACATIONS for your sanity!-and see what you can comfortably pay.

It seems that a lot of people on this thread are not actually reading your request and throwing nasty comments at you that are unwarranted, unnecessary and just mean. She asked for ENCOURAGEMENT not a lynching! Take a chill pill folks.

Yes they are daunting, but pay what you can, and don't look at the HUGE number. Just pay the monthly bill and one day you will get that long awaited for ZERO BALANCE statement and you will dance a jig, and think, wow that wasn't so bad.

 

[Planogirl]

This whole thread is a joke. I originate loans for a living and I see on a daily basis what kind of debt people have out there and these kids are not in debt! Sounds like they have a small mortgage on their modest home, a little credit card debt for the furnace they had to replace and then there are the student loans and that is it. They drive POS cars, she uses cloth diapers, they don't buy new clothes or have cable tv or your latest "smart phone" and she comes to you all for help on how to tackle her student loan debt and enjoy life at the same time and you all treat her like she is out spending money like a drunken sailor on shore leave.

If only our worthless government followed these kids modest spending habits, then we wouldn't be $14,000,000,000,000 in debt. What is even a bigger joke than this thread is most of you hypocrites out there will turn right around and vote that imbecile who racked up a good portion of this debt.

Careful, avoid the politics. That's not allowed here.

I don't think that their debt sounds that high either. Except that we don't know how much their college loans are (and shouldn't). I've heard some numbers that blow me away.

 

[disykat]

OP here. I have read Dave Ramsey, and actually we paid off our van almost 2 years early and the only CC debt we have is what we just put on this spring for our new furnace (will be paid off very soon). We paid for my DHs used truck with cash. We live in a very modest (small/older) home, neither DH nor I ever get new clothes, I try to buy everything for my DDs at garage sales, I cloth diaper to save money, we don't have fancy cable/cell phones/TVs/computers/etc. We don't go out to eat that often and when we do it is always a place where we have coupons. I believe we are very good with our money. I did have a PT job when my DH got out of work but I was downsized due to the economy. I would watch a little person or so but right now there is no one around me that I can watch!

Vacations are the only thing I/we splurge on. We NEVER go in debt on our vacations - cash only! It was a girls only very budget trip to WDW, and that was paid for with gift money from my dad that I had been saving for for years and with gift money for them. I know it is against Dave Ramsey, but I have lost a very close family member to me and I do still live life w/o regrets - meaning that I don't go into debt for vacations, but if something were to happen to my girls tomorrow - I wouldn't be wishing - I wish I would have paid off my student loans a year sooner. So, besides the student loans, we are doing very well.

Just looking at our student loans is so daunting/overwhelming - and I was just looking for some encouragement that it is possible! (also - they are totally up to date and still in good standing).

It sounds like you've made some really good financial decisions, we made many that were similar, but I really don't understand the whole vacation thing. When my kids were little, I didn't think "I'd better go to WDW with them while they're little in case they die." I thought "I will wait until I can be comfortably debt free (which it sounds like you aren't since you are worrying about these loans out there accruing interest) before we go because I know that will make a better future for them." I agree with your idea of inexpensive or trips paid out of gift money, we've done the same, (inheritance money) but don't let the attitude of "what ifs" talk you into postphoning debt longer. How about "what if we get these loans paid off and can keep our girls from having school debt of their own?"

This whole thread is a joke. I originate loans for a living and I see on a daily basis what kind of debt people have out there and these kids are not in debt! Sounds like they have a small mortgage on their modest home, a little credit card debt for the furnace they had to replace and then there are the student loans and that is it. They drive POS cars, she uses cloth diapers, they don't buy new clothes or have cable tv or your latest "smart phone" and she comes to you all for help on how to tackle her student loan debt and enjoy life at the same time and you all treat her like she is out spending money like a drunken sailor on shore leave.

If only our worthless government followed these kids modest spending habits, then we wouldn't be $14,000,000,000,000 in debt. What is even a bigger joke than this thread is most of you hypocrites out there will turn right around and vote that imbecile who racked up a good portion of this debt.

I don't think anyone is acting like she's spending like a drunken sailor suggesting she prioritize paying off a debt that is accumulating interest. To me, it sounds like once she has a plan in place to take care of these debts and is working on it, she will be in a better place to assess her budget. Many people live with debt as part of their budgeting - simply setting it off to the side and not paying it is not really dealing with it. Clearly, she WANTS to start tackling that debt. How does telling her she shouldn't worry about it because others have more help her?

 

[crashbb]

I consolidated right after graduation (Im not married) and locked in 3% for the entire lump, vs 3% for EACH LITTLE LOAN.

I don't understand this bit.

Mathematically, those are the exact same thing.

3% of $100 is $3. 3% of $50 is $1.50 plus 3% of $50 ($1.50) is also $3.00. It doesn't matter how you split it up or combine it, the 3% value is exactly the same.

 

[Robinrs]

Your husband needs to consolidate his student loans and start paying on them. Since you are not working yet (the purpose of student loans), I would continue to defer yours out as long as you can because the interest is minimal. You would be suprised how much his payment will drop once consolidated.

Also, I agree with you that life is short and you are doing the right thing by staying at home with your kids. Work will always be there for you but your kids at this age will not. Sounds like a lot of people on here are jealous of you and regret missing out on their kids growing up (but hey, they have a nice house and cars).

wow, THAT was a leap!

 

[Marionnette]

To those telling you to go to work at Kohls, DON'T. If you take a job that pays you $7.50 (which is what you will make as a seasonal retail associate, I know I was a retail executive) you will shoot yourself in the foot when it comes to UE benefits.

The OP is not unemployed. She is a SAHM. She doesn't work by choice.

 

[Marionnette]

I don't understand this bit.

Mathematically, those are the exact same thing.

3% of $100 is $3. 3% of $50 is $1.50 plus 3% of $50 ($1.50) is also $3.00. It doesn't matter how you split it up or combine it, the 3% value is exactly the same.

Thank you! I thought that I was having pre-coffee confusion because the statement didn't make any sense to me either.

 

[LoveBWVVBR]

No advice on paying down the loans here, but I do have a comment. This thread is a great example of how student loans can affect the decisions that you make for many years after college. The OP wants to continue to be home with her kids, but that may not be practical/possible given her student loan situation. She wants to take vacations, but even "budget" vacations may be out in order to get the loans paid off.

When we hear "your kids can always borrow for college but you can't borrow for retirement," we need to reflect on threads like this. How are the kids supposed to save for THEIR retirement, live THEIR lives, etc. if they are drowning in student loan debt themselves because they had to borrow to get an education? It becomes a vicious cycle IMHO. Not sure what the answer is, but taking out big student loans to go to college should be discouraged at all costs in my opinion.

One other thing...I had a "good" job right out of college (I'm an engineer), my loans were a little under 12K (in 1995), and I still had to take a forebearance for nearly a year. My employer had 100% up-front tuition "reimbursement" at that point, so I ended up taking 3 classes a semester (full-time night student) towards my masters so I could put my loans on deferral instead. In just under 3 years I was able to pay off my loans AND I got a free MBA out of the deal. I actually liked the suggestion of taking a couple of courses at the community college to defer the loans instead of keeping them on forebearance. Deferral=no interest (for govt. loans anyways).

 

[barbarabini]

1. Consolidate to the lowest interest rate you can find.
2. Take a payment plan that fits your budget.
3. For your personality, it seems like the slash everything in your budget and burn your debt approach really is not going to work.
So, I propose a 3 months on, one month off of the slash and burn budget approach. For three months you put all extra spending, fun, ect money to the school loans. At the fourth month, you can spend that fun money. This seems to work for me. I tend to suck it up August through November, January through April.

4. Do you get a tax refund, if so, look at changing your withholding and using that extra money toward extra payments.

 

[Tinker'n'Fun]

I used to work in the Student Loan Dept of a bank. Back then (yes I am old), when placed on a forbearance you were still required to pay the interest plus an additional fee. It was only good up to 3 years.

Are you paying a monthly interest bill or are you compounding that interest back onto the loan? How long have you had the forbearance because there is no way to make it as a SAHM until they are due.

There are so many options for parents these days to be able to stay home and work opposite hours (McDonalds etc) and still make the payment. Even if you are just working to pay off the student loan and nothing else.

I would recommend a nice part time job or a Tupperware or Party type job if that is your personality, and make enough money to pay your student loan AND, the AND IS BIG, enough to start a fund so that your children will have an education fund. You can stay at home and still pay off this bill.

Whatever you choose, I hope it works out for you.