Advice Please: Private Student Loan Payment I can't Afford

[fire_flower]

Hello, this is my first post to this forum. 

I'd appreciate any constructive feedback / advice anyone has for me regarding my situation. Please excuse this post if it was posted in the wrong area.

I'm not going to go deeply into specifics... bottom line is I borrowed way more than I should have to go to a private school that was entirely too expensive, and for personal reasons, I had to become a part-time student, & I still don't have my degree. I'm 3 classes away from my degree, and the place where I work offers free tuition for the classes I need, so I'm unable to leave my current job until I complete my studies. This will take approximately 1.5 years, as I can't take the classes concurrently. I studied Computer Science, and am capable of finding highly profitable work, however, as stated, I cannot leave my current poorly paying job until I complete my studies. I am in the process of searching for part-time employment to supplement my income, but the economy hit my area very hard, and finding additional work has been difficult.

My disposable income, minus all necessary expenses (car payment, fed student loans, rent, car insurance, internet, food, gas, medical bills), averages about $150 at the end of each month. If I spend this money, I am left vulnerable against unforseen expenses, like family emergencies, etc. I do not spend friviously. I have two open credit card accounts, one with a  zero balance. In my 7 years of credit history, I've never made a late payment or defaulted.

I have two types of loans. My Nelnet federal loans are manageable, and I pay what they ask in full each month ($300).

My private loan principal balance is appx. $86,000.

Sallie Mae is requesting $750 per month.

My payment is due on the 28th of this month, and I simply do not have enough to pay in full. I will not, until I find additional employment, or I finish my degree and find a job earning 3x what I make now. I've already exhausted 12 months of forbearance. I am currently not in default, but from what I understand, a late payment will cause me to default.

Should I even bother making a partial payment since I will go into default anyway?

Should I do nothing, force the loan to go into default, and try and settle for less than I owe?

Should I consolidate, knowing I still won't be able to afford a consolidation payment?

Should I seek a bankruptcy specialist and formulate a structured payment plan while taking a massive credit hit?

Any feedback is greatly appreciated. Negativity, however, is not. I've very much learned my lesson about borrowing too much, and I don't need anyone repeating the same to me

[SCF]

Welcome to the forums!  I'll throw my two cents in, and others will be along as well, I'm sure.

First, you may have done this already, but just in case, I would investigate the following possibilities:

1) Could you take one or more of those courses from another school and transfer it to your current school to graduate sooner?

2) What is the amount benefit you get from the tuition payments?  Does it really exceed (in terms of $) the benefit of moving to another job?  What is your increased earning potential if you move to a new job now without your degree?

Good for you for having your finances and credit in relatively good shape.  That will certainly help you in digging out of this hole, so do everything you can to preserve both.  Can you cut any other expenses though?  Now would be the time to forgo a car if it is at all possible, or trade in your current payment for a cheap, paid off beater that just barely gets you around (and reduces your insurance payment).  Can you cut any utilities?  Maybe you can reduce the internet bill by sharing with a neighbor (if you rent in an apartment complex) or roommate?  Maybe you can use free internet at your local library/Starbucks/college campus?

I know you say your federal loans are manageable, but if you are eligible for a deferrment or forbearance (or even an income-based repayment program that will reduce the amount you owe), sign up for it.  Basically, you have two things you sound like you need: 1) make ends meet right now so that you can 2) increase your income to pay off your debt.  This will help with #1, even if you do accrue some interest.  Hopefully your rate on those loans is not too high?

Have you called Sallie Mae and asked for any further options?  With private loans, the types of payment plans and delays that exist vary widely.  It never hurts to ask, even if you think they'll say no.

To your other questions:

Should I even bother making a partial payment since I will go into default anyway?  Call Sallie Mae.

Should I do nothing, force the loan to go into default, and try and settle for less than I owe? It's going to be a while before you go into default, and you risk being sued for the full balance.  Student loans, even private ones, are a bit stickier than other debt, so they may not want to settle, but rather try to get a judgment and garnish your wages.

Should I consolidate, knowing I still won't be able to afford a consolidation payment? This won't help anything, it doesn't even delay your payments generally.

Should I seek a bankruptcy specialist and formulate a structured payment plan while taking a massive credit hit?  Student loans can't be discharged in bankruptcy, so unless you have other debt, this isn't your best option.  You could talk to a non-profit consumer credit counseling agency and see what help they can provide.

Hope some of that helps!

[newlife1]

Have you looked into income based repayment plans on the sallie Mae?

[SyntheticMemories]

Income Based Repayment Plans (IBR) are NOT availalbe on Sallie Mae Private loans. I would look into getting on the IBR plan for your federal loans though. I was in the same situation as you. Currently, I pay $0 on my federal loans on this plan because of my low income.  

[SyntheticMemories]

Also, I was able to defer some of my private loans with Wells Fargo  (private). Call and ask about your forberance options with them. You might have to appy every three months, and you might be able to do it just a few times...but at least you'll have a few more months to figure things out. 

If you are in school full time, everything will get put into derferement. Is there any way you can take night classes...web classes? 

[Anonymous]

Ok i work in private student loans and am a specialist on them. Private loans have less wiggle room as far as help. Try consolidating all your federal loans together.. If you have done that and are still in a bind then lets look at the next step.. you used your 12 months fb already? that is no good. No option there.. On to the next.. if your considered halftime in school based on your schools standards you can be put back in inschool deferment only if you have not been in the loan for more than 5 1/2 years from when you took the money.. If its past that 5 1/2 year mark then there is literally nothing you can do. You have to make atleast the minium monthly payment on each of the loans in order for them to not report 30 days late, 60, 90 etc... if it gets to 120 they will charge off and could end up at a 3rd party agency which they accelerate the loan and ask for it in full.. this would be very bad. It can stop you from buying a home, car and even getting hired for you job youve work for so hard.It will be a judgement on your credit report and they can garnish your wages. You have to find a way to keep these loans from charging off. Student loans are the second most important loan u can pay and also great for building credit if paid ontime. Its unfair because most people at 18 years old have no idea about this stuff and i consider it robbery. Its ruining futures and student loans have grown to be one of highest reasons people are in debt today.

[fire_flower]

Thank you everyone who took the time to respond, I very much appreciate it. I contacted Sallie Mae regarding my situation, and they said since it's not in collection, there's not much they can do for me. They did, however, say that as long as I begin to make a history of payments, that will give them something to work with, and when I have enough payment history (in the amount that I can afford), even though the debt will eventually become delinquent, they'll be able to work with me. When this eventually goes to collections, they'll see that I've been making good faith efforts to make the payments, even though they're not in full, and I'll have more options then.

I also switched my federal loan payment plan to an income-based one, and am paying several hundred less per month on that, which is a bit of a relief. I'll be taking that extra & applying it towards Sallie Mae, so I'll only be about $150 short each month.

I'm not happy about the huge hit my credit will take, but I'm ready for the consequences, and looking forward to 7 years from now when it will be off my report (even though I'll still owe).

Thanks all. This forum has been immensely helpful.

[scarrollprint]

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@fire_flower wrote:

Thank you everyone who took the time to respond, I very much appreciate it. I contacted Sallie Mae regarding my situation, and they said since it's not in collection, there's not much they can do for me. They did, however, say that as long as I begin to make a history of payments, that will give them something to work with, and when I have enough payment history (in the amount that I can afford), even though the debt will eventually become delinquent, they'll be able to work with me. When this eventually goes to collections, they'll see that I've been making good faith efforts to make the payments, even though they're not in full, and I'll have more options then.

I also switched my federal loan payment plan to an income-based one, and am paying several hundred less per month on that, which is a bit of a relief. I'll be taking that extra & applying it towards Sallie Mae, so I'll only be about $150 short each month.

I'm not happy about the huge hit my credit will take, but I'm ready for the consequences, and looking forward to 7 years from now when it will be off my report (even though I'll still owe).

Thanks all. This forum has been immensely helpful.

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If they won't do anything for you now until you go to collections (thats weird, it will cost them money when you go to collections) then perhaps once it DOES go to collections - since its assumed its going to unless a miracle happens - try to negotiate a removale of the lates after so many months of ontime payments. Thats what the federal loans do (rehab). You never know, you might get lucky. They might just say "ok".