can't pay student loans

[ktmeyer]

My husband went to a private technical school for his degree, before we met, and now has almost 100,000 in student loans, a lot of which is in private loans with a high interest rate. Even the minimum payment plan, or interest only payment plan, or income sensitive payment plan still would put us as paying 400 a month JUST on the federal loans, not even counting the private loans. We can not afford that. We have cut back out expenses a lot. We cook at home, I'm frugal with groceries, we drive used cars that are paid off, we just canceled cable, his work pays for our internet bill, we have the cheapest cell phone package, etc. But he makes 37,000 a year gross, I make much less, and we have a 1,300 a month mortgage, which is CHEAP for our area, we bought the house as a foreclosure and have been fixing it up ourselves as we can afford to do so. We had always heard that with income sensitive payment plans student loans were affordable....man was that wrong! Whenever we try to talk to Sallie Mae they are not real helpful. They sign him up for a few months of deferment and then the bills start coming again. It's ridiculous, we qualify for WIC, we can't pay this kind of money! Any ideas?

[Defenestrator]

There's a new program from sallie mae called "Income Based Repayment" which is different from "Income Sensitive Repayment". It takes into account your family size and income. I think under this program your payment would be less than $100. Also, it appears that anything not paid after 25 years would be forgiven. We just signed up for it because my husband lost his job and we have about $40,000 in student loans.

[HollyBearsMom]

I think that it a shame that a school can charge over $100K for an education taht only ends up paying $37K gross.

My best girlfirend got a Harvard MBA for about the same money (10 years ago) and graduated with a base salary before bonus of a $150K. To her it was worth the loans because she knew she had a really good chance of making enough money to pay them back.

Not sure what you can do if the banks won't even talk to you.

Is the salary so low due to where you live? Could you move somewhere where he could get a better base pay or is $37K pretty much the max?

Anything you could do to supplement the income?

Can you sell your home and rent cheaper?

I am sure none of those are even palatable.....

Can you even file bankruptcy with federal loans?

[ktmeyer]

He realizes now what a rip off that education was, as far as money, but the degree he has wasn't offered at any public university. His degree is in Network and Information Security. Of course now, after he graduated, the University of Central Florida has started the same program..grr!

He is looking for a higher paying job, he certainly works WAY more than he is paid for. He was up until 1:30am last night working on a project, which is normal for him. If he didn't work so many hours he could get a second job, but as it is there is no time. Part of the problem is that he started at this company before he got his degree, and although he has gotten a raise each year they have been capping the raise to 2% for all employees. His other hope is to get a promotion in title, so maybe he could get a real raise.

Rent wouldn't be any cheaper, we looked into it before we bought. Our friends pay the same in rent for a 2 bedroom apt as we do for our 3 bedroom home. At least we couldn't pay less and still be in a decent school district/neighborhood. (we don't live in an affluent neighborhood, it's working class, but safe).

From what I saw with the new income contingent plan it's 20 percent of the difference between your gross income and the poverty level. From my calculations that is 400 dollars....and you can't do it with private loans. So that would be 400 PLUS the private loans. Unless I'm doing something wrong here with the math....how much different is Adjusted Gross Income from Gross income..that seems to be where I'm confused.

We are considering bankruptcy as a last resort, but from my understanding its really hard to get student loans discharged....and we don't have any other real debt, less than 2,000 probably, including all credit cards.

[annethcz]

Bankruptcy wouldn't cover student loans.

If you're short every month, there are two ways to deal with it- decrease expenses or increase income. If you've done everything you can to minimize expenses, it sounds like it's time to increase income. Even if you're living in a low COL area ($1300/month mortgage seems pretty moderate to me), a $37,000/year salary sounds very low. Perhpas it's time for your DH to seek employment elsewhere.

[ktmeyer]

yeah, he is looking for another job. Part of the problem has been that I am pregnant (actually overdue), so we didn't want to risk losing health insurance during a job transition. Once the baby is born he will look more. The economy though is not promising as far as jobs go, at least not here.

thanks though, for the advice. I agree that a better job for him is probably the best option, or a promotion within the company.

[alittlesandy]

I had a variety of student loans like this, including one through Sallie Mae, and I consolidated them through the Federal Student Loan Consolidation Program. I did this years ago, so not sure if this program is still offered. Now I have one student loan at 2.9% and it's in forbearance for "financial hardship." You can take a 12-month forbearance without any paperwork to "prove" financial hardship. Does Sallie Mae offer forbearance?