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Discussion Starter #1
I am still in school, so all my loans are in deferment. However, due to all sorts of life changing circumstances, I probably will not get a job that will enable me to pay off my student loans in any sort of timely manner. (Please, do not flame for this, and please, let's keep this thread on topic.)<br><br>
So, has anyone ever settled their student loans for less than what they owe, and just taken up the wazoo on their credit score? Frankly, I really don't care about my credit score for a whole bunch of those same life changing reasons. How do you go about setting such a system up? Is there a certain percentage you have to pay?<br><br>
TIA!
 

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Are these federal loans? subsidized loans? Stafford or Perkins? What is your career field?
 

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Discussion Starter #3
Consolidated Stafford Loans, mostly, and one crappy private loan. Mostly the Stafford Loans are subsidized, but a few thousand is unsub.<br><br>
I am 1 class away from a degree in Community Health Education. (This is known as Public Health at virtually every other college.) But DH just got at job at the university I attend, which means our entire family can go to college for free. So I am going to stay in school for about another three years, getting my Master's (in an as yet unknown field). This way, my loans will stay in deferment while we pay off our house.<br><br>
We live in the UP of Michigan, the job market here is just tiny. We are going to stay up until our youngest (as yet unborn/unconcieved) child has graduated from college in order to take full advantage of DH's tuiton abatement.<br><br>
Our house cost $31,000, I have close to $40,000 in student loans. So if I can settle the loans, we will be completely debt free very soon, with our kids college paid for... can you see why I want to settle?<img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/lol.gif" style="border:0px solid;" title="lol"><br><br>
Ideally, I'd like to set something up where I can just give my lenders our tax return (for a few years) and make them go away. I have no idea how realistic that is, so I'm trying to figure something out while I still have some time.
 

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I've never heard of anyone being able to do that. They will defer/set up a payment plan, let you pay over 20-30 years ect. But I've never heard of them being settled like a medical or CC bill.<br><br><br>
Wanted to add I do know several people who have been "tracked down" to pay them.
 

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I've never heard of that either. Maybe you could after they were in default, but you don't really want to go that far do you?<br><br>
My student loans have been in forbearance or deferrment for years now. The interest still accrues, but I don't have to make payments. When I get the form in the mail I put that I make nothing, and it goes back into forbearance or deferrment.<br><br>
HTH.
 

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I am not aware of Stafford loans settling, but the private loans might. I don't know about private loans but they are likely to be more flexible.<br><br>
With the Stafford, you may qualify for reduced or deferred payments based on a hardship status. Who is your lender? I have Sallie Mae and they offer loan forbearance (deferral), or a variety of payment options. You can have low payments now and higher payments later, or (income-based) low payments for longer, etc. Because it's a federally funded program they are really hard to get cancelled or settled though.<br><br>
Stafford loans MIGHT have a cancellation program for teaching in certain areas (subjects/geographical) <a href="http://www.finaid.org/loans/forgiveness.phtml" target="_blank">http://www.finaid.org/loans/forgiveness.phtml</a> it looks like there is some info on this toward the bottom of this link. I imagine there are schools that qualify in the UP so if you have thought at all about teaching that could work.<br><br>
good luck.<br><br>
also consolidate more if you can - my consolidation program gives me a .25% interest rate deduction for consolidating, and a further 1% interest deduction after 36 on time payments, so my rate will be 1.685% starting in November (I consolidated at a low point). Not bad! MTA: I saw the comment below about unsavory lenders. That is a very good point. Your lender (if you only have one) has right of first refusal for you to consolidate with them. Only consolidate with an approved place, not through one of the shady companies that sends you letters in the mail.
 

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quick answer is probably NOT...<br>
just to compare if you file bankruptcy, chapter 7 student loans are NOT discharageable meaning you would sill need to pay them along with taxes and child support...<br><br><br>
can i ask why you dont want to pay the loans? they were given to you in good faith from the loan companies and you signed a repayment contract... just wondering
 

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No. The bankruptcy and student loan laws were changed almost 20 years ago specifically to prohibit people from getting expensive educations and then starting their career with a clean slate per se. The most you can expect is a long term deferral/forbearance but interest will still accrue. However, you are married so they can (and will) count your husband's income towards the expected minimum good faith payment. Unless you have no extra between the two of you whatsoever at all, you should plan on making monthly payments on the loans for years, decades even. I would plan on paying the private one off first, it may be impossible to defer it. Many doctors carry their loans into their 50s., paying over 20-30 years like a mortgage.<br><br>
A WORD OF CAUTION: Do not, I repeat DO NOT accept any offers to consolidate those Stafford loans with a private lender if you then lose your legal protections afforded to most student borrowers. Read everything very carefully. I have seen several friends consolidate, then lose income and need to defer or go into forbearance and be out of luck. One consolidated and then had to put off grad school a few years later because the loans were not eligible for deferment while she was getting her second degree. By doing so you could be forgoing any chance to go into forbearance or deferment if your income is truly insufficient to make good faith payments.<br><br>
Other ways student loans can be reduced/partially paid: Be a VISTA/Americore volunteer, teach/practice medicine at a targeted school/area. Otherwise the only people that will have their loans discharged are those deemed totally disabled and unable to work as well as those that have reached full retirement age and can show they do not have the income or assets to pay anything. My dad's were discharged when he retired (he did not finish college until his 50s and then lost several jobs before his MS forced him to retire at 62.) My mother's were discharged when she became disabled. She lives off of SSD and family help so it is not like she could have paid them anyway.<br><br>
They can put a lien on your home or garnish any of your future wages if you do not make good faith payments and are not eligible for a forbearance.
 

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No, the law is set up specifically to keep you from doing this.<br><br>
Also, adjust your family's withholdings. You shouldn't be getting a tax refund every year. Take the extra money in your paycheck and pay off your student loans.
 

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I just thought of something else- they will garnish your tax refunds if you default.<br><br>
Also, remember that the interest you pay on student loans can work in your favor. It is lopped right off the top of your income, even if you don't itemize. For some families, this knocks them into a lower tax bracket.
 

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Here is the <a href="http://studentaid.ed.gov/students/publications/repaying_loans/2003_2004/english/index.htm" target="_blank">Federal Student Aid website</a> and what they say can be discharged, etc...I hope this helps..
 

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<div style="margin:20px;margin-top:5px;">
<div class="smallfont" style="margin-bottom:2px;">Quote:</div>
<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;">
<div>Originally Posted by <strong>Leta</strong> <a href="/community/forum/post/7953626"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">So I am going to stay in school for about another three years, getting my Master's (in an as yet unknown field). This way, my loans will stay in deferment while we pay off our house.</div>
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If you plan on paying off your mortgage in three years, why not put some of that towards paying off the student loans? If you can pay off a 31,000 mortgage in 3 years, you should be able to pay off the loans+the mortgage in 7-10 years, no?<br><br>
It sounds like your husband's job is secure in the longer term if you plan to stay until an un-conceived child is graduated from college. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/lol.gif" style="border:0px solid;" title="lol">
 

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<div style="margin:20px;margin-top:5px;">
<div class="smallfont" style="margin-bottom:2px;">Quote:</div>
<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;">
<div>Originally Posted by <strong>sonrisaa29</strong> <a href="/community/forum/post/7954702"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">Here is the <a href="http://studentaid.ed.gov/students/publications/repaying_loans/2003_2004/english/index.htm" target="_blank">Federal Student Aid website</a> and what they say can be discharged, etc...I hope this helps..</div>
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The ONLY way you can get a student loan discharged through bankruptcy is to be completely disabled (Majorly) with no hope to work ever, and even then, they sometimes will not discharge it. (The bankruptcy attorney we consulted with last year said it was next to impossible to get SL discharged in a BK)
 

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They will find you. My dad had his wages garnished for non payment of student loans.<br><br>
I still owe about $47,000 in student loans. My dh owes about $49,000. When we tried to get a mortgage, they told us we already had one. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/lol.gif" style="border:0px solid;" title="lol"> We had to explain that that was all in our heads.<br><br>
About $36,000 (the federal part) of mine is in a consolidation loan, spread out over 30 years. It has the ability to defer if I were to go back to school or some other sort of nonsense. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/lol.gif" style="border:0px solid;" title="lol"> The private part does not have the same protection. My dh's loans are all consolidated into one, also spread over 30 years. The interest rates were too good (way better than our mortgage) to force ourselves to have to make insanely high payments. Our minimums are $700 a month.<br><br>
So, that's our experience.
 

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<div style="margin:20px;margin-top:5px;">
<div class="smallfont" style="margin-bottom:2px;">Quote:</div>
<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;">
<div>Originally Posted by <strong>Leta</strong> <a href="/community/forum/post/7953626"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;"><br>
Our house cost $31,000, I have close to $40,000 in student loans. So if I can settle the loans, we will be completely debt free very soon, with our kids college paid for... can you see why I want to settle?<img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/lol.gif" style="border:0px solid;" title="lol"><br></div>
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Stdent loans are almost as permanent as death<img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/lol.gif" style="border:0px solid;" title="lol"> . You are just going to have to extend your "debt free" plan out a few years.
 

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<div style="margin:20px;margin-top:5px;">
<div class="smallfont" style="margin-bottom:2px;">Quote:</div>
<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;">
<div>Originally Posted by <strong>Leta</strong> <a href="/community/forum/post/7953626"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">Consolidated Stafford Loans, mostly, and one crappy private loan. Mostly the Stafford Loans are subsidized, but a few thousand is unsub.<br><br>
I am 1 class away from a degree in Community Health Education. (This is known as Public Health at virtually every other college.) But DH just got at job at the university I attend, which means our entire family can go to college for free. So I am going to stay in school for about another three years, getting my Master's (in an as yet unknown field). This way, my loans will stay in deferment while we pay off our house.<br><br>
We live in the UP of Michigan, the job market here is just tiny. We are going to stay up until our youngest (as yet unborn/unconcieved) child has graduated from college in order to take full advantage of DH's tuiton abatement.<br><br>
Our house cost $31,000, I have close to $40,000 in student loans. So if I can settle the loans, we will be completely debt free very soon, with our kids college paid for... can you see why I want to settle?<img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/lol.gif" style="border:0px solid;" title="lol"><br><br>
Ideally, I'd like to set something up where I can just give my lenders our tax return (for a few years) and make them go away. I have no idea how realistic that is, so I'm trying to figure something out while I still have some time.</div>
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Sorry, but attitudes like this turn my stomach.
 

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I had to read this whole thread just in case I had been missing something all these years. Nope. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/lol.gif" style="border:0px solid;" title="lol"><br><br>
Student loans absolutley must be paid back in full. The government is very serious about these loans and does not offer settlements. I have been working on mine for 8 years now and will be done next year.<br><br>
Why are you getting a Master's degree? Do you have a career goal that requires an advanced degree?
 

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Discussion Starter #19
Thanks. It's good to know that I can probably settle the private one. That's the one that's been keeping me up at night. Sallie Mae will work with you.<br><br>
I was told that DH's income would *not* count toward my loan repayment figure. Honestly, if it does, we would probably legally get divorced and just continue to live together as a family. That seems wrong to me. He didn't take out those loans, I did. He should not be burdened with my bad decisions.<br><br>
It's not that I don't want to pay my loans back, it's that I don't feel confident that I'm going to able to.<br><br>
I had about $10,000 in student loans, and that was already too much, so I joined the National Guard. Before my ship date, I got into a car accident and got a concussion, which counts as a closed head injury, and my NCO never processed my paperwork to redo my physical, so I couldn't go. (Then, two months later, my unit got shipped to Iraq, so thank god for small favors, huh?)<br><br>
My loans came out of deferment when I was working full time and not in school, and the minimum payment was more than my rent. (Yes, I had a roommate.) It's not like I could just live with my parents, either- they were (still are, 5 years later) in the midst of a nasty divorce, and had "evicted" me a few months before the whole National Guard debacle.<br><br>
So I decided to go back to college, even though I had to take out more loans to do so, because I figured that a better paying job was my only way out. I decided to go to NMU because it was the cheapest 4 year college in the state, in an area with a low COL. Then I got pregnant, and we found this house, and DH got his job at NMU, and the economy at home (South Central MI) went to hell, and well, here we are. The job market here is not a great one, but DH got lucky with this job. The chances that I'm going to make a significant amount of money up here are not good.<br><br>
I was 17 when this ball got rolling. I screwed up. I made mistakes. I think it's insane that kids are supposed to make financial decisions that affect the rest of their lives. If I had bought a hot rod or just shopped a lot, I could fix it easier than I could fix my desire to get an education. I think the system is set up wrong. I know I'm not the only one, either- the student loan industry is under investigation right now.<br><br>
We are not going to change our plans for our house based on the student loans. That's part of the reason that I am staying in school, so they stay in deferment. Our house needs some work, as you may have guessed, so we need to figure out how to pay for that, too. And honestly, this is risk issue for me as well. Once we own our house outright, everything gets easier, you know. And if I can't pay my loans, they ruin my credit rating and write threatening letters. If we don't pay the note on our house, we are foreclosed and homeless. No brainer.<br><br>
And, as far as tax returns go, we got one last year because we got the EIC- DH made $13,000 last year. We will probably never make enough money to itemize, so the student loan interest deduction does not help us.<br><br>
My sincere thanks to the mamas on this thread for their help and advice. I do not mean to sound snarky in the above explaination, but this is just how things are.
 

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<i>And, as far as tax returns go, we got one last year because we got the EIC- DH made $13,000 last year. We will probably never make enough money to itemize, so the student loan interest deduction does not help us.</i><br><br><br>
As a PP pointed out, you don't have to itemize to take the student loan interest deduction. It's an above the line deduction off your family income.<br><br>
I don't understand why you would rather divorce (which comes with its own substantial tax costs, especially if you're planning to stay home with the kids all these years supported by DH's income) than pay off your debt. <img alt="" class="inlineimg" src="/img/vbsmilies/smilies/dizzy.gif" style="border:0px solid;" title="Dizzy">: But to each her own, I guess.
 
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