Student loan question

[agentotter]

Dear Knowledgeable Hivemind,

I have a student loan question for you. See, I have all these student loans. Like $22,000 worth of them. (Yeah, I was a happier person before I did that math.) And now that I'm not in school anymore, they're all due. They're so very due, and they would like their money back now plz, and there is no way in the world that I can pay them all off at the same time. I am basically out of methods of putting these loans off now; all of my grace periods are gone and I have already deferred aplenty. I genuinely want to pay them off, but I can't do $300-400 a month like they're asking for now. I know that I can negotiate different pay schedules and whatnot, and also I can consolidate and make only one payment, which would be a great help as I am very disorganized.

For my sanity and my credit rating, I would think my best option would be consolidating. However, all I have heard my entire life about student loans is OMG DO NOT CONSOLIDATE THEM. See, my mom works for a government agency which would have paid all of her loans off for her by now, if only she hadn't consolidated, so I have been indoctrinated with the idea that consolidation is Of The Devil. And I fret that if there ever was a program of student loan forgiveness from the feds, that as a consolidator I wouldn't be eligible. (Yeah, I have a beautiful dream where instead of paying billions to bankers who fuck us over, we forgive people's student loans. My dreams, they are so unrealistic, but I bet I could make them happen by making myself ineligible. It's like how I can make it rain by giving my horse a bath.)

What do you think, flist? Is consolidation a good idea? What do I need to know about it? Are there other options I'm not considering? Also, can I have a hug?

Comments

[sara]

Why is consolidating more appealing than, say, setting up automatic withdrawals from your paycheck?

We've not got school loans, but we have multiple things that C's paycheck goes to before it goes to us. It's a pain to get it set up, sometimes, but if you've got a monthly obligation(s) that you're having trouble keeping up with, it can be a thing to consider.

p.s. has occurred to me that your total indebtedness on this is v. similar to what our second mortgage (20-year loan) was like when we bought the house, on which we owe about $190/month under current deal (which we are slowly renegotiating with our mortgage-holder, times being what they are). $3-400/month therefore sounds high to me for that level of indebtedness, but it may be that student loans are v. different from real estate loans in this dept.

[cofax7]

{{hugs}}

Now is a bad time to be in debt, because the lenders are all terrified you're going to default. You might be able to use that in your favor, except that $22K is small potatoes for a lot of these people, and maybe not worth talking to you about.

Was the money borrowed privately or through a federal program, because that will make a difference in whether you can consolidate (and with whom)? How is your credit right now? Are you already in default?

There are multiple ways to consolidate: through private parties, and through the federal government. Just a quick google gave me the federal site for consolidation.

Here is some information on private consolidation. This has some good guidance on why you might want a private consolidation (i.e., private loans cannot be consolidated with federal loans).

I'm not sure about forgiveness: most of those programs rely on the borrower (1) finishing the degree; and (2) going into a non-profit/public interest type of work. But even signing up for the Peace Corps only gets you a deferment, not forgiveness.

I would suggest seeing if you can find a financial advisor for this, or talk to student services at the last college you attended.

[j00j]

What cofax said, pretty much. I did consolidate on the advice of my CPA (it's good to have relatives with these skills)-- at the time I was able to lock in a non-terrible interest rate, and we figured I was unlikely to wind up in one of the relatively few kinds of jobs that resulted in debt forgiveness any time soon. And I haven't. Generally, I think the questions to try to answer are:
-What kinds of jobs, under the current terms, would give you significant benefits as far as deferment or forgiveness? Are you likely to get any of those jobs any time soon?
-Does whatever consolidation option you're looking at give you favorable terms-- interest rates, options for deferment, whatever?
-Weigh the first set of questions against the best of the consolidation options available to you?

ETA: And absolutely try to talk to some sort of financial advisor. Student financial services at your last school is a good bet for free advice, hopefully.

[cofax7]

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