Student Loans: Consolidation vs. Rehabilitation

Anonymous · ‎01-23-2018

Hi Everyone!

I have successfully raised my scores up 100+ points by disputing negative items with CB's and CA's. I'm proud to say that my student loans are the ONLY negative collections on my report.

That being said, I really need some solid advice. I entered into a Rehabilitation program with PHEAA (FedLoan) 5 months ago. I've been making payments on time and finally got my garnishment released (yay!) However, I just realized that in June of this year, the Feds are doing away with Public Service Employee loan forgiveness. I'm in a pickle because June is exactly the month when my rehabillitation ends, so I won't be able to take advantage of the program if I continue doing rehab (I'm a Public Service employee, btw).

My question is this, knowing the situation, should I continue with the rehab program in hopes that I can still consolidate and take advantage of Income-Based Repayment afterwards? Or, should I consolidate now? I'm kind of struggling with my decision because I want my negative info to be deleted for score improvement but don't want to lose the benefits of having massive SL debt forgiven.

Help!

Anonymous · ‎01-24-2018

Well, I have a 240,00 dollar loan at 5.86% interest. I would say about 60 to 65% of the loan is interest that has accumulated. I have deferred and capitalized so much that each time I did that the interest was capitalized so I ended up paying interest on interest. These are only aproximations but if I was to pay it off in 10 years it would be around $2600.00 a month. If took went into ICR it would be about 1200 a month, If I go into PAYE it would be about 750.00 and in REPAYE it's currently about 480.00 a month. I am not even touching the interest in an income based or income contingent plan. If I went to 20 or 30 years with graduated I think the payment is about 2200 a month. I don't make enough to pay 2200 a month and in 15 years I will be 67 years old. and I won't be able to make that payment, even if besides having a regualr job I'll be freelancing at https://www.upwork.com/ and https://www.freelancer.com/jobs/economics/ or http://yourhomeworkhelp.org/do-my-economics-homework/. It's crazy..... I had good intentions but as they say the road to hell is paved with good intentions. I went to a mediocre school and they never really helped out with grants or ways to pay graduate education. I have no PHD. And before I get a snarky comment I don't want your pity nor snarkyness. I just want people to be aware of what your doing when you pull out student loans. It's a nightmare to have to walk around with a debt burden on your shoulders for the rest of your life. I would at a minimum take out no more than 10,000 in loans for graduate and undergraduate combined. The best option is not to take out any loan. If you can't afford school don't go.

Anonymous · ‎01-24-2018

Ouch! That's a lot of student loan debt to have to shoulder. I'm nowhere near that amount (roughly around 83,000) and like you, most of that is interest.

I definitely believe in paying back my student loan obligations, but it would certainly be nice to have them relieved after ten years.