Financial Advice

How Can I Have a Life if I Can’t Afford My Private Student Loan Payments?

Question:

Dear Steve,

I graduated High School in 2002 and went to Penn State McKeesport for about a year or so. After a year, I decided that regular college was not something I liked going to. So I saw a commercial on TV for ITT Tech. I contacted them and next thing I realized, I was in school there.

I graduated from ITT Tech in 2006 with an Associates in Computer Networking. I ended up getting a job at a company that I have been with since graduating in 2006. However, after a year or two at this company, I was put into a Billing Manager role. I found that this position is where I thrived at. So I went back to school at University of Phoenix (online classes) in 2012 for Accounting. I graduated in May 2015 with my Bachelors.

Going to ITT Tech, I ended up with getting loans and at the time I had no idea that they were private loans.

As of right now, the total of these private loans (3 of them) is around $45,000. Then I got loans for going back to school but these loans are all Federal Loans. The total amount of both loans is around $95,000.

Right now, I have been paying around $760 a month for the private loans and another $400 for the federal loans. There is no way I am able to keep affording this as I recently just got engaged and need to start saving for a wedding. But also, I am still living at home with my parents as I can’t seem to afford to live on my own with paying over $1000 a month in just student loans. I have tried to talk to Navient (formerly Sallie Mae) but they will not budge on my private loans.

My question to you is, what should I do about my private loans? I have tried getting them consolidated with Wells Fargo and Citizens Bank but no luck there as they want a co-signer.

I am just at a lost right now and I am 32 years old and I just feel like I am sinking further in debt now because of the monthly amounts of the loans, I hardly have money (cash) to save for the wedding and starting my life with the woman I love. I have been reading articles about just stop paying on the private loans but then it will crush my credit score. So I am just looking for some advice in which road I should probably go down. Thank you!

Nick

Answer:

Dear Nick,

The federal loans are easier to lower the payment on. For those you should look at consolidating them into a new Direct Loan and then opting for an income driven repayment plan like the IBR or PAYE. Click here. But be careful, see Why Income Based Student Loan Payments Can Be a Terrible Trap.

The private loans are more problematic. Private lenders have no requirement to extend any modification to the loan unless it falls within their process and procedure to do so. The reason defaulting can work is because it pushes your loan into a department which can offer alternatives. Read Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan. But that does not come without great risks of bad things happening, especially if someone has cosigners.

Attorney Austin Smith said this when asked how people might handle similar situations, “talk to a lawyer about any abusive or deceptive collection practices you have experienced. If the creditor is in violation of the Fair Debt Collection Practices Act (“FDCPA”), you can bring a suit for damages and relief from the abusive or deceptive practices. Although the monetary damages are capped at $1,000, debtors are often able to work out better payment arrangements and engage in more advantageous settlement negotiation during FDCPA litigation. In addition, where a creditor is unable to produce a signed promissory note or other essential paperwork proving they own the debt or are legally entitled to collect on the debt during the course of an FDCPA suit, debtors can often get relief.”

He’s right. You do have options but none of those options are going to come easy or without some risk and effort.

Ultimately, you can either choose to fight for a different outcome or just pay the loans you took out according to the repayment terms you agreed to. The choice is absolutely yours.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

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