Question on Student Loans

[Anonymous]

Hi all,

I have some student loans that have been in forebearance/deferrment basically since I was no longer able to attend school due to losing my job (they had tuition assistance) and since I was unemployed, I had to keep asking for forebearance/deferment since I could never afford the payments.  I know the loans are serviced by Sallie Mae & ACS and this is what I'm seeing when I go to to gov website as far as what I have:

1. Stafford Subsidized  Loan Amount $5,500 Loan Date 3/17/2009 Disbursed Amount $5,500 Canceled Amount 0 Outstanding Principal $6,372 Outstanding Interest $1

2. Stafford Unsubsidized                   $7,000                 3/17/2009                            $7,000                            0                                 $5,521                               $141

3. Stafford Unsubsidized                   $2,000                12/2/2008                             $2,000                            0                                 $2,751                               $70

4. Stafford Unsubsidized                   $4,000                 2/19/2008                            $4,000                            0                                 $5,661                               $165

5. Stafford Subsidized                      $4,500                 2/19/2008                            $4,500                             0                                 $5,392                              $25

6. Stafford Subsidized                      $875                    8/21/2007                            $875                               0                                  $1,026                              $4

7. Stafford Unsubsidized                  $4,000                  3/27/2007                           $4,000                             0                                  $5,983                              $179

8. Stafford Subsidized                      $2,625                  3/27/2007                          $2,625                             0                                  $3,155                              $16

So the total of my subsidized loans is $15,945 and the total of my Unsubsidized is $19,916 bringing my total loans to $35,861. My question is this:  I'm due to come out of deferment in Jan 2015 & my first payment is looking to be due in Feb 2015.  I have an ok job right now, make about $30K a year...my car will be paid off next month... other than living expenses like rent, food, utilities, cell phone, gas, insurance, I have about $1600.00 in CC debt and that's it.  I know before I went into my last deferment, my payments were looking to be about $600/mo for all loans together, so I'm kinda worried I'm not going to be able to afford the monthly payments when they come due. I bring home roughly $1600 after taxes so that $600 would take a good portion of all my money.... I'm just scared at this point because I'm trying really hard to rebuild my credit and hearing horror stories about wage garnishments & court & so on and I don't want that to happen to me, but I just don't know if I'll be able to manage the monthly payments.  Any insight you may have would help me greatly

ETA:  I just found out that my soon-to-be paid off car will now require $1000.00 worth of work so there's more money I don't have... I can borrow it from my fiance but I that would add on another payment I need to make to him every month...Oh well... I guess I'll keep on living paycheck to paycheck until it gets resolved....

[Stylez]

My recomendation would be to get rid of your C.C and car loan debt as soon as possible. You want as much flexibility as you can get with those loans. If I were you, I'd also take a close look at my spending habits and cut my spending as much as possible. Once you do that, make sure to set aside some money each month to put into a savings account. This is key as you will continue to have unexpected costs. If you have no savings, you will just continue to dig yourself in a hole when these unexpected costs come up. I would make interest payments on the loan while it's in deferement. It's possible that the interest is still running on the loans right now. If that's happening, it will capitalize which has the basic effect of increasing your principal. Finally, make extra payments to your loan whenver you can.

[Anonymous]

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@Stylez wrote:

My recomendation would be to get rid of your C.C and car loan debt as soon as possible. You want as much flexibility as you can get with those loans. If I were you, I'd also take a close look at my spending habits and cut my spending as much as possible. Once you do that, make sure to set aside some money each month to put into a savings account. This is key as you will continue to have unexpected costs. If you have no savings, you will just continue to dig yourself in a hole when these unexpected costs come up. I would make interest payments on the loan while it's in deferement. It's possible that the interest is still running on the loans right now. If that's happening, it will capitalize which has the basic effect of increasing your principal. Finally, make extra payments to your loan whenver you can.

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I'm trying to get rid of CC & car loan debt...my car loan will be paid off next month..and the CC I'm slowly working on..will be paying $300 on August 1st to my Merrick Visa which has $1200 on it right now and I guess I will borrow the car repair money from my fiance and just pay him what I can, when I can...while still trying to set aside some for when my student loans come due.  My plan was to take the extra $300 I will be saving NOT having a car payment & putting it towards my CC...at that rate it should be paid off in 4 mos, then my student loans will be due around there so then I will use the $300 for that...I'm thinking I may have to do IBR, if possible, but do I have to be in default for that?? Or can I request it once they become due in Feb?

[SCF]

As you can see from the NSLDS, your subsidized loans are accruing very little interest because when they are in deferment, it's paid by the government.  Your unsubsidized loans, on the other hand, are continuing to accrue interest.  When your loans enter repayment, that interest will be capitalized into the principal of the loan unless you pay it off - I would reccomend paying off as much of this interest as you can before the loans begin repayment.  You don't want to pay interest on your interest if you don't have to.

Once you've made arrangements to pay as much interest as you can (you should be able to do this online through your servicer, although you may have to do it over the phone since you're in deferment), you should start the process to apply for IBR, ICR, or PAYE depending on which you are eligible for and which one gives you the best payment plan.  Most servicers have a tool on their website to calculate your payment under the different plans you can apply for, as well as the ability to submit the forms online.  Again, if you can't do it online, make the phone call.  You probably won't be able to apply for a payment plan now, but I believe you should be able to once you're within 30 days of beginning repayment.

To avoid any issues with your credit, be pro-active about monitoring your loans.  After you apply for the payment plan, be sure it gets implemented before your first payment is due, and be prepared to make that payment in full if there is a processing delay.  Once your request for a payment plan is processed, check and make sure that all of your loans are included and are being marked paid each month.  If you're on top of things you can catch a small issue and fix it before it becomes a large problem for your credit.

[Anonymous]

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@SCF wrote:

As you can see from the NSLDS, your subsidized loans are accruing very little interest because when they are in deferment, it's paid by the government.  Your unsubsidized loans, on the other hand, are continuing to accrue interest.  When your loans enter repayment, that interest will be capitalized into the principal of the loan unless you pay it off - I would reccomend paying off as much of this interest as you can before the loans begin repayment.  You don't want to pay interest on your interest if you don't have to.

Once you've made arrangements to pay as much interest as you can (you should be able to do this online through your servicer, although you may have to do it over the phone since you're in deferment), you should start the process to apply for IBR, ICR, or PAYE depending on which you are eligible for and which one gives you the best payment plan.  Most servicers have a tool on their website to calculate your payment under the different plans you can apply for, as well as the ability to submit the forms online.  Again, if you can't do it online, make the phone call.  You probably won't be able to apply for a payment plan now, but I believe you should be able to once you're within 30 days of beginning repayment.

To avoid any issues with your credit, be pro-active about monitoring your loans.  After you apply for the payment plan, be sure it gets implemented before your first payment is due, and be prepared to make that payment in full if there is a processing delay.  Once your request for a payment plan is processed, check and make sure that all of your loans are included and are being marked paid each month.  If you're on top of things you can catch a small issue and fix it before it becomes a large problem for your credit.

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Thanks so much for this SCF!! I'm gonna do as you suggested and hope for payments I can afford...unfortunately I'm unable to pay anything toward the interest right now so that will just have to stand...but I will contact them about IBR & such when I get within 30 day...thanks so much!