student loans

[lauriebeth]

DH has major student loans (over $120K).  

is there anything we can do to get them reduced or atleast stop them from acruing gobs of interest. 

how the heck can we pay them off

the note we just got said we owe over $500 a month for the next 28 years.

[JollyGG]

There are usually several options for repayment. The payment they send is based on a ten year pay off with equal payments each month. This isn't the only choice.

Here is some information about the different repayment options - http://studentaid.ed.gov/repay-loans/understand/plans

If he works for a non profit, university, or service organization he may be eligible for loan forgiveness after 10 years. 

Here is more information about public service loan forgiveness - http://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service

If you just call your loan servicer they generally can help you figure out what the best options for your situation are.

I do hope these are something like Perkins or Stafford loans. Private loans are a whole different matter and my above advice doesn't count. 

[nstewart]

Lauriebeth, where do you live?

In Canada, there are student debt forgiveness programs for debt over a certain amount.  Maybe check (if these aren't private loans) if there is some type of program like that available where you live.

Student debt is just like your mortgage.  If you pay more, pay more often, and make extra payments towards the principal you will save a ton of money over time. 

What are your interest rates like?  Do you own a home?  Do you have equity in your home?  If so, you could consider a home line of credit or another mortgage to pay of the loans if you can get a lower rate of interest that way.  That's another way to save money over time and what DH and I did (we had over $120k together as well).  We were able to get a lower interest rate, and free up some cash flow because at the time we had to pay close to $1000 per month each and it was not feasible just out of school.  We now are able to pay down the loan faster as we are earning more than when we graduated.

Is it feasable for either of you to take on another job and put that paycheck towards paying loans down (in addition to the minimum payment)?

I hope some of this is helpful!

[annaknitsspock]

Just wanted to commiserate with you, OP. My monthly payment is over $700, and that's interest-only. Most of my loans are private. I hope yours are not and that you have some options. If we can find a way to do it that works out, DH and I are probably going to separate our money so that the burden falls less on him. I don't feel that he should be responsible for my debt. I understand that that option would REALLY depend on the situation, but is there any way that you can take some of the burden off of yourself? I know it's really hard when you're not pooling your money for luxuries, but for basic childcare needs, shared bills, etc. but--at least in our situation specifically--the stress of the loans is so intense that I think DH would benefit from not having to see/think about the loan payments, even if it wasn't really saving him a whole lot of money. Does that make sense? I know this might simply not be an option for you, but I wanted to throw it out as an idea.  

Quote:

Originally Posted by nstewart 

If so, you could consider a home line of credit or another mortgage to pay of the loans if you can get a lower rate of interest that way. That's another way to save money over time and what DH and I did (we had over $120k together as well).  We were able to get a lower interest rate, and free up some cash flow.

Please forgive me for being utterly stupid when it comes to finances, but this option has nothing to do with whether the loans are private or not, right? You can do this for basically anything? Ugh, I know my idiocy is showing, but I'm so out of options with my private loans, and I haven't thought of this. 

[nstewart]

Quote:

Originally Posted by annaknitsspock 

 this option has nothing to do with whether the loans are private or not, right? You can do this for basically anything?

I am in Canada, so again, things might be different in the US, but yes no reason that it couldnt' apply to private loans that I can see.  If you have the equity in your home and qualify for a LOC or a second mortgage, then I don't see why not.  Unless your loan has some provision in it preventing you from paying it off early (which would seem odd).

[nyssaneala]

Just here to commiserate. DH has $140,000 in loans; right now we are still paying off the interest that accumulated during his residency years when he did not earn enough money to afford the payments.

The way we handle it was to first clear off all debts with the exception of our loans and home mortgage. Both of our cars are paid off, we have a nice amount in emergency savings. We bought cars that are reliable, and should last us for a long time, so that all extra money can go towards extra payments towards the principal on the student loans. So while all of my husband's colleagues drive luxury cars and live in McMansion's, he putts around in a Hyundai hatchback and we live in a house that is perfectly comfortable for our needs, but not too large. 

We are targeting one loan at a time, right now it is one of the private loans with a variable interest rate. All of his federal loans were consolidated right out of medical school, and we will pay those off last.

[erigeron]

We have an obscene amount in loans too, from both of our degrees. Also, we just bought a house. We have the equivalent of an extra house payment each month in student loans. And DH is hard to sell on making changes to our lifestyle to save money. *heavy sigh*. I go on trying to be frugal and am going to throw as much extra money at the loans as I can... that's about all I can do. If the monthly payment starts to eat me, I can consolidate my loans, but long-term it won't save any money. It sounds like yours might be consolidated already though. 

[pokeyAC]

Consolidation can be helpful, but it can only be done once unless you go back to school and take out more loans.  If you have a variable rate, it may be worth it to lock in a low fixed rate if you can.  There is a newer payment option for student loans that is based on your situation but different than the old income contingent plans.  That plan includes a feature that if you haven't paid them off in a certain number of years, the rest is forgiven.  Student loan interest is tax-deductible, that's the good news.  My only concern with using home equity to pay them off is that if you can't make the payments, you risk losing your home.  However, If you don't make student loan payments, it is really bad for your credit.  They can't be written off in bankruptcy.  But, they can't take your degree away.

[nyssaneala]

Originally Posted by pokeyAC 

There is a newer payment option for student loans that is based on your situation but different than the old income contingent plans.  That plan includes a feature that if you haven't paid them off in a certain number of years, the rest is forgiven. 

Do you have a link to more information about that?

[pokeyAC]

Here you go!  It's the IBR plan.

[nstewart]

Originally Posted by pokeyAC 

Consolidation can be helpful, but it can only be done once unless you go back to school and take out more loans.  If you have a variable rate, it may be worth it to lock in a low fixed rate if you can.  There is a newer payment option for student loans that is based on your situation but different than the old income contingent plans.  That plan includes a feature that if you haven't paid them off in a certain number of years, the rest is forgiven.  Student loan interest is tax-deductible, that's the good news.  My only concern with using home equity to pay them off is that if you can't make the payments, you risk losing your home.  However, If you don't make student loan payments, it is really bad for your credit.  They can't be written off in bankruptcy.  But, they can't take your degree away.

If you go the LOC route, you only HAVE to pay the interest.  So I don't think it's a good option if you aren't committed to making payments because you can just owe the money essentially forever (until you sell your house) but it can be better than a mortgage because if you have a tough month, you only HAVE to pay the interest and because if you get a windfall (bonus at work, inheritance, etc.), you can pay as much off as you want in a big chunk whenever you want whereas not all mortgages allow you to do this.

[pokeyAC]

nstewart-That makes more sense.  Thanks for clarifying.

[liberal_chick]

I'm here to commiserate!  I have just over $30K from my undergrad (state school with a scholarship, even *shakes head*) that we've finally decided to start paying on b/c the 7% interest is really snowballing.  We've paid on them off and on for a few years, but anytime things get tight (which is often, unfortunately), they are what gets put on the backburner.  We'll be able to really start hammering away on it once my ds2 goes to school in a year and a half.  Right now, our daycare bill is bigger than our mortgage payment or monthly grocery bill.  In the meantime, I've started subbing on Tuesday mornings and Fridays when I'm not at work.  It isn't much, but if I can work all of those days in a month it ends up being about $350 extra.

[Ragana]

Commiserating as well! I think we finally cracked the $40k barrier. This is DH's grad school only. We already paid off $12k undergrad and my $30k grad. I have ours on auto-pay (about $600/mo.) and try not to think about it too much. The degrees have given us the jobs we want plus flexibility, but on the flip-side we have not been able to buy a house. I'm happy to have the education.

[The Duchess]

nyssaneala my dh started our marriage with 250k in medical school loans and this was 1996! We got a ton paid off by him working in certain jobs where he was doing federal research and lots of debt was forgiven. We also just had one car for a long time - an old clunker that we drove into the ground, we have continued to only pay cash for cars and have never had a car payment. He was on board with it all but again some days he would drive to work and all the others docs were in their flashy cars and this was when they were residents!! I told him - you guys & gals are all making the same money (at the time about 40k) so they only ways they can have those cars is if they have been given as a gift or they are in debt.

Take a look at the Mr Money Mustache blog for how to radically pay down your debts and gain financial independence (i.e. no need to work) fast.

[nyssaneala]

Originally Posted by The Duchess 

nyssaneala my dh started our marriage with 250k in medical school loans and this was 1996! We got a ton paid off by him working in certain jobs where he was doing federal research and lots of debt was forgiven. We also just had one car for a long time - an old clunker that we drove into the ground, we have continued to only pay cash for cars and have never had a car payment. He was on board with it all but again some days he would drive to work and all the others docs were in their flashy cars and this was when they were residents!! I told him - you guys & gals are all making the same money (at the time about 40k) so they only ways they can have those cars is if they have been given as a gift or they are in debt.

Take a look at the Mr Money Mustache blog for how to radically pay down your debts and gain financial independence (i.e. no need to work) fast.

That looks like a great website! Thanks for the link. 

Residency salaries must have come down since the 90's! DH's first two years of residency (06/07 and 07/08) his salary was $30,000. Once DD was born and I became a sahm (my salary wouldn't even cover daycare where we lived), that's when we started deferring his loans. 

We seem to be on track to pay them off in 4-6 years. My radical plan is to pay off one year of medical school each year, which might be more feasible when he becomes a partner at his practice next year. Right now, we are aiming for $15,000/yr in extra payments on top of what comes out automatically each month, and are on track to meet that. I will just be much, much happier when the total balance gets to a number that is at least lower than what it was the month he graduated.