Help and advice needed - multiple loans mess.

[Anonymous]

Hi,

Apologies in advance for a long post. My husband has multiple student loans which are in a total mess. They were taken out through Sallie Mae in 2006. They are as follows:

Federal

Stafford subsidized, Current Balance $4,454.47, Interest Rate 6.550%, Payment schedule 105 months @ $57.31

Stafford unsubsidized, Current Balance $2,821.05, Interest Rate 6.550%, Payment schedule 105 months @ 39.29

Monthly payment: $93.60

Stafford subsidized, Current Balance $3,368.00, Interest Rate 6.800%, Payment schedule 96 months @ $45.54

Stafford subsidized, Current Balance $1,121.45, Interest Rate 6.800%, Payment schedule 96 months @ $15.17

Stafford subsidized, Current Balance $5,779.67, Interest Rate 6.800%, Payment schedule 96 months @ $78.16

Stafford unsubsidized, Current Balance $5,765.14, Interest Rate 6.800%, Payment schedule 96 months @ $77.96

Stafford unsubsidized, Current Balance $5,888.21, Interest Rate 6.800%, Payment schedule 96 months @ $79.63

Monthly payment: $296.46

Private

Signature student, Current Balance $28,127.95, Interest Rate 7.500%, Payment schedule 311 months @ $231.26, 1 month @ $66.71

Monthly payment: $225.25 (not sure why they take less than what is stated in the payment schedule...)

Signature student, Current Balance $41,290.25, Interest Rate 0%, Payment schedule 214 months @ $133.41

Signature student, Current Balance $36,083.32, Interest Rate 0%, Payment schedule 214 months @ $116.59

Monthly payment: $250

Total monthly payment: $865.31

That last one goes through Allied Interstate. I guess it was sold off to them. Hubby brokered a deal where he pays $250pm for the life of the loan with a 0% interest rate. However on Navient it shows up as past due and says he may have been charged a late fee. They're also reporting as delinquent to the credit beaureus.  The others are all currently through Navient with the Stafford ones being Dept of Ed through Navient. 

Through the life of these loans there have been 36 missed payments. I know that he's been in deferral and forbearance and various rehab programs etc although all the loans are now out of rehab and current, and have been for 2 years. I know that some got charged off as bad debt. On Navient the following are listed as $0 debt:

Stafforf subsidized Paid by USA FUNDS

Stafford unsubsidized Paid by USA FUNDS

Stafford subsidized Paid by USA FUNDS

Stafford subsidized Paid by USA FUNDS

Stafford unsubsidized Paid by USA FUNDS

Stafford subsidized Paid by DEPT OF ED/NAVIENT

Stafford unsubsidized Paid by DEPT OF ED/NAVIENT

Stafford subsidized Transferred

Stafford unsubsidized Transferred

We're pretty sure that those USA FUNDS ones were when Sallie Mae did the whole divide into two thing and his debt went to Navient. The ones paid by DofE were written off as bad debt. However it looks like the others were sent to debt collectors, but the only loans we hear from and are paying on are those listed in the first list of loans. Frankly this makes me nervous but there's not a lot we can do...we're not about to call every potential debt collector in the country to find out if his loan was sold to them.

What I would love is some advice as to how we can improve our situation. It's by no means the worst out there and we are able to make those payments every single month without worry. However, would something like consolidation be worth it for us? Are there ways to negotiate better deals, e.g. lower interest rates? By the end of the year we hope to start saving for a house deposit and feel that the student loan mess (along with the mess it's made of his credit score, although he's managed to get it back up to 640) is going to hold us back. Not making excuses but like so many others he was simply unable to pay most of these loans for a long time as he had to support his family financially as the sole provider on entry-level wages for a few years after he had to leave college due to his father having an accident that left him unable to work. Then his grandpa (the cosigner of his private loans) died. It's the same kind of story we hear again and again and I just feel like there has to be a better answer than what we're currently doing.

[SCF]

I'll try to go through your issues separately:

The loan with the 0% interest payment plan through Allied Interstate - You need to look at the details of the arrangement that your husband made for this loan, and find out exactly who holds it.  It's not clear from what you've related exactly how it should be on your report.  Did the arrangment he made actually include a change in the terms of the loan?  Did they agree that it would be considered current if he made the payments as outlined?  Or is he just making payments on a collection account that will continue to hurt his credit until it comes off?

Determining if he still has other loans out there - You can use the National Student Loan Data System to get a complete accounting of all of his federal loans.  It should tell you what he borrowed and help you track what happened to all of it since then, as well as who holds each debt now.  It's a useful resource.  Unfortunately there's no equivalent for private loans, so you'll just have to rely on your credit report and any original documentation he might still have for any questions about other private loans.

Consolidation won't do much for you with your federal loans - it sounds like they are all already with one servicer and your payments are manageable.  Interest rates on federal loans are not neogotiable, and a federal consolidation will just use the weighted average of your original interest rates.  For your private loans you might be able to refinance with a lender like SoFi or Earnest for a better rate or terms, but that really depends on your overall credit and income situation.  You can refinance federal student loans privately, but you lose a lot of protections like deferment, forbearance and the income-driven payment plans, so I don't reccomend it.

Make a plan to pay these loans off aggressively.  Either a "snowball" or "avalanche" approach can work well, and the biggest win will be the overall money you save on interest by increasing your payments and getting these loans paid off early.  You're spending a lot of money on interest, that's what I'd work on.

[Anonymous]

Thanks for your reply, very helpful!

Unfortunately I can't work out the terms of the Allied Interstate loan. Hubby buried his head in the sand about this for a long time and he doesn't seem to know either. I'll get him to call on Monday and get the terms laid out for him.

I really wish we could pay off more than we are. Our situation right now is that we can pay all our bills, buy groceries, put gas in the car, pay down our credit cards...and that's about it. We aren't even putting anything into savings right now. It's frustrating to me that we're losing so much time and money on the interest but we just can't afford to make more than what they're asking. Luckily the payments cover the interest and make a dent in the principal each month, but the effect is so negligible. I always say that if we come into some money (tax return, etc...) then we'll just pay off those smaller loans outright.

I should mention that I moved here from the UK. I have an undergrad degree, a postgrad cert., and a masters and even with the exchange rate I still have less principal balance than my husband who didn't even get to graduate college. A whole '0' less. Oh and I pay $110 a month for mine and it doesn't show on any credit reports, etc! Pretty sure it goes away after 25 years, too. I guess that his situation just seems crazy to me because that's my only basis for comparison. 

[Anonymous]

You were right in your assumption that because the loan defaulted once, it will now continue reporting as delinquent until it is all paid up. They did offer him a deal of paying $19000 either right away or over 12 months to settle the debt...if only we had that kind of money on hand! Good news is that the deal is good for the life of the loan so if we do ever come into some cash then we always have that option to get rid of the black marks early.