Income Driven Repayment Plan

[Anonymous]

I have $11,500 in student loans. Defaulted, late, transferred-you name it. I contacted them since I know I should be getting a tax garnishment (per the phone number I googled). Well, they were happy to hear from me. We did a quick run-down of TOTAL income (including my husband's income even though we weren't married when the loans were accrued and my name has since changed), and the rehab for 9 months is $570! My jaw dropped. What? I explained that although I am married to my husband, we don't have anything joint. His bank is his, my bank is mine. They were ONLY offerng the $570, a paid in full of $11,500 or a settlement of $9520. I offered to do $200 per month (from my own bank, per se) and of course they'll take my money but because it doesn't fall under THEIR repayment plan, they will continue to report as a negative/late on my credit.

Is there a way around this? Should I go get divorced until I pay these suckers down? (KIDDING). I make about $25,000 per year (I am paying on my own to finish college, working from home to help out a bit with little things-bills, my car, etc). Husband is the real bread-winner.

I REALLY want to pay these loans, and have my report looking nice. $11k doesn't seem like so much, but for someone who just doesn't have the means to drop that it is difficult.

Since I have been doing $200 per month, they are STILL accruing interest and reporting that to the CR, So for every $200, there's $100 in interest (a little less, like $94.32 or something).

Thanks, Ya'll!

[nolamike]

Mrst29

Sorry to respond to you on christmas day with news you probably won't like,  but divorcing your hubby may be the least expensive option you have.

First challenge you have is that debt, all debt, unless specifically excluded by law is joint debt once you get married. Just like assets there are some debts that can be excluded from joint ownership prior to the wedding date, but you need a real good lawyer to make it happen in most states.

Second challenge you have is that IBR is based on household income totals, so lets say you were not married but were living with someone (as in filing joint taxes etc), collecting child support, govt assistance, and working. All would go into the calculation.

you do not say if you have already consolidated the loans. Look at this link https://studentaid.ed.gov/sa/repay-loans/consolidation

read it all but specically

What are the requirements to consolidate a loan?

Here are some tips on qualifying for a Direct Consolidation Loan:

• You must have at least one Direct Loan or FFEL Program loan that is in a grace period or in repayment.
• If you want to consolidate a defaulted loan, you must either make satisfactory repayment arrangements on the loan with your current loan servicer before you consolidate, or you must agree to repay your new Direct Consolidation Loan under the
  • Income-Based Repayment Plan,
  • Pay As You Earn Repayment Plan, or
  • Income-Contingent Repayment Plan.
• Generally, you cannot consolidate an existing consolidation loan again unless you include an additional Direct Loan or FFEL Program loan in the consolidation. However, under certain circumstances you may reconsolidate an existing FFEL Consolidation Loan without including any additional loans.

There are no application fees for a Direct Consolidation Loan, and you may prepay your loan at any time without penalty.

You do not show your credit scores or your husbands so this may not be an option. But if you have okay credit, and consolidation is out, you may want to look to getting a personal loan for some major portion of that $11.5K and pay off that chunk.

Use the different FAKO sites to look for personal loans, there are a bunch that will give out to $35K for up to 84 months, more than you need, but if you have other debt that is dragging on your income it might be a good idea to clean it all up into one ball and pay one monthly note.

No offense meant, but I am taking a guess that if your student loans are in this shape you probably have other credit issues too, and if you husband had good credit before, your problems will eventually drag down his credit too if you do not fix them or get a divorce.

If this is true then the $500 + a month payment is really not the biggest issue you face. Frankly, if you are making $25k part-time then a rough cost-benefit analysis (and I only have the info you provided to work with) means that in one year of belt-tightening and diligent work you can cut that balance to less than $5k. You may have to roll back school to one class per term/semester depending on your degree and where you are in the process.

Also depending on you degree type (business, tech, medical, etc) and level (AA, BA, MA, etc) you may want to look at WGU which is online only but has a flat fee of around $3k for 6 months of classes and you work at your own pace. So if you need 5 classes and 2 are "easy" stuff for you, you would do them first and jam them out in two months, then use the remaing four months for the 'harder' classes. Capella FlexPath has a similar but  slightly more expensive option.

Good luck with solving this, whatever solution you find please post back.

Mike

[SearchingForAnswers]

Interesting... I was advised that because my husband and I do not file a joiont tax return, they will not take his income into considerationf or repayment. My IBR is based solely on my income since I file 'Married-filed separately.' We have been married 6 years and each year, this has been the case. However, I was advised that if we should ever file jointly, they WILL factor in his income.

Not sure why the discrepancy.

HTH

[Cherekas]

@SearchingForAnswers

I agree with you as well. My husband and I have lived together for awhille and married this year and we both have IBR plans. We've also decided to file this year Married-filling separately for situations such as this and it works for us as well. So my advice to OP is to file Married-filling separately to qualify for the IBR plan. And you do not have to contact the current loan holder for IBR information. Complete the application online and make sure they use your income only if you are filing separely from your husband.