Need Some Advice ASAP

[Anonymous]

So, I have slowly been working on getting the credit situation right (im up almost 90 pts in 6 months)

I have had student loans being garnished since April. Originially those Loans totaled 2500ish dollars with fees and interest.

So far U have paid about 2300 into the loans, and still have 2500 to pay they say. I believe the loans are private because the government doesnt have them.

They said the difference has been interest....

They want to go over my options with me this afternoon and I set up a call at 2 pm EST

Im currently working with my Feds to do an income based reprogram.

What are my options with the private loans.... or they may just be with another collector... they were originially sallie mae :/

What/How can I negotiate. I would love to get these taken care of as quickly as I can.

edit- Stafford Loans, General Revenue Services has them. 6.8% INTEREST Repayment should have start in 2008 Total Borrowed was 3200

[Anonymous]

ALSO, these were subsidized and I was in school a long time after these were disbursed. Should I have been collecting interest during that time?

[Anonymous]

Student loans no matter the status or if they are subsidized or unsubsidized will always add interest.  As soon as you get a student loan paid to you, interest starts adding to your loan amount.  It does not matter if you are in school or in deferment status or forbearance, the loan is adding interest.  What really hurts is when the interest capitalizes and your payment does not cover the interest then your balance increases.

When you make a payment, it first goes to paying down the interest and if there is any amount left, that amount will go to principle. 

To get out of the default, your best bet is to contact the Department of Education and check with them what the status of your loans are, who owns them, can you consolidate, and are you eligible for the WIlliam D. Ford program. 

There are many repayment plans and ways to get out of default.  I ended up in default at one time, I entered the William D. Ford program, made 6 monthly on time payments and my student loans came out of default.

The Department of Education is very easy to work with concerning your student loans which is why you can not wipe away your student loans with a bankruptcy. 

Edit:  By the way, if you choose not to pay your loans after 25 years the loans will be forgiven BUT the Dept. of Education will report the amount forgiven as income to the IRS.  Then you will have to deal with the IRS.  I would rather deal with Dept of ED. 

One other thing to consider there are forgiveness programs like working for a non-profit for 10 years can get a loan forgiven, teaching in a high need area for certain amount of time can get loans forgiven but your loans have to be in good standing.

[SCF]

I do just want to clarify a couple points from pcsavvy1.

They are correct that interest always accues on your loan - but the difference between subsidized and unsubsidized loans is that in some situations, the government pays the interest on your subsidized loans.  Effectively, your subsidized loans do not accrue interest while you are in school, and while you are in certain other types of deferments.

Also, the 25 year forgiveness is not just a blanket "wait 25 years and your loans are gone."  If you are on an income-driven payment plan, making payments that are not enough to pay the loans off over 25 years (in the case of IBR or ICR) or 20 years (in the case of PAYE), then the balance will be forgiven.  You do still have to make a good faith effort to repay your loans by being on the income-driven plan and making those payments (note: if your IBR/ICR/PAYE payment is $0 for a year, that counts as 12 months of payments, you just have to apply for and stay on the payment plan).

If you ignore your loans entirely for 25 years, you are likely setting yourself up to have your Social Security garnished, which is no bueno.  Doing rehab and getting on an affordable payment plan is a WAY better deal.

[Luscher]

I concur ^^^^