Student Loans

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maggieddd

Recycles dryer sheets
Joined
Nov 17, 2005
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I am trying to help out a friend who has about $50,000 in student loans. She is 27 years old and she has to work 2 jobs to keep up with her bills. At the rate she can afford to pay her loan she will always be doomed.
Anyone has any recommendation on how to pay off either faster or perhaps refinance or anything else to help out. I know the easiest would be to get a better paying job but anything else she could do?
 
Has she consolidated her student loans yet?

If not, she can possibly reduce the interest rate. Also I understand by automating the payment, that will reduces the interest rate a little but more.
 
KB said:
Has she consolidated her student loans yet? 

If not, she can possibly reduce the interest rate.  Also I understand by automating the payment, that will reduces the interest rate a little but more.
Click to expand...
I am not sure, I'll ask. Thanks
 
If they're federal loans, then I think you can consolidate them at quite good rates. Interest rates aren't as low as they were a year ago, but still not bad. Remember that if you get an interest rate that is the same as the rate of inflation or less, then the best strategy is to pay it off as slowly as they'll let you. It might suck to have that hefty balance staring you in the face, but inflation will take care of it for you. All my loans qualified for the low interest rates. My wife had one loan which didn't qualify, which we paid off in full. The rest did qualify and we're just taking our sweet time with it. Our lender does take .25% off the interest rate for never missing any payments (and signing up for automatic debit from your bank account is a great way never to miss a payment).

Good luck,
Tim
 
Consolidating may also extend the loan term from 10 years to 20-30 years. The extension of loan term will reduce the monthly payment to help with her cash flow issues.

Does your friend have any other debts that are dragging on her finances? Or a 3 cup a day Starbucks habit? Spendthrift lifestyle? These could all contribute to being broke.
 
She said, she already consolidated her loans. She is doing automatic payment plan. She also said that she had some "Signature Student Loan" which she couldn't consolidate. She also transferred some of that loan to a credit card which has 1.5% APR for the life of a loan vs. 9% she was paying before. I am not sure what else to recommend :confused:
 
She is very frugal, no coffee, she lives very poorly. She rents a small apartment and just living from paycheck to paycheck. I feel bad but I can't pay her loans :(
 
Isnt their pubic service jobs for folks like lawyers that will pay off your student loans for a few years of servitude? What is the degree in?
 
Your friend's "signature" loan is an alternative loan which usually requires a co-signer.  That's why she can't consolidate it, and it probably carries a high interest rate.  For the Stafford portion of her student loans, her lender (if she hasn't consolidated already) will have several different repayment plans available to her.  "Graduated repayment" will have smaller loan payments at the beginning of the loan, and they increase later, when your friend will (hopefully) earn more $$$.  "Income contingent repayment" is for borrowers that earn little $$$ and limits the loan amount paid to a percentage of income.  Sounds like the problem with your friend are the alternative loans...  Thank the gov't for not increasing Stafford loan limits to keep up with increased college costs!
 
baboogrrl, what happens to signature loans of you declare BK or simply default?  I know traditional stafford, etc. loans are rarely discharged, but the signature loans are just unsecured debt (like a credit card), right?
 
brewer12345 said:
baboogrrl, what happens to signature loans of you declare BK or simply default?  I know traditional stafford, etc. loans are rarely discharged, but the signature loans are just unsecured debt (like a credit card), right?
Click to expand...

I have heard that we have lawyers and doctors to blame for this- they would rack up about $100k+ in student loan debt, graduate, and then declare BK. Problem solved. :p Could just be an urban legend, but it sounds legit.... esp when lawyers are involved ;)
 
I would second the "Income contingent repayment" plan as a possibility. If I recall correctly, you pay 20% of your income towards the loan, and everything above that is forgiven if you pay through the whole loan term.

Calling the federal student loan lender may be helpful too. Have your friend explain her situation and see what they can do. It won't hurt anything.

How much is her payment? My monthly payment on $60000 of student loans is under $300/month at around 3% interest.
 
$50,000 sounds so high -- twice what my loans were, adjusted for inflation. I'm also curious about what degree that bought.
 
TromboneAl said:
$50,000 sounds so high -- twice what my loans were, adjusted for inflation. I'm also curious about what degree that bought.
Click to expand...

And where she is currently employed that doesn't provide a sufficient income to service that debt.
 
Her undergrad is in Anthropology, Latin-American Studies and Spanish. Masters in African American Studies, but she hasn't finished writing her thesis yet.
She studied abroad and that's why her loans are so high.
Right now I she works at a medical center doing research with minorities making about $30,000/year.
 
Maybe she could shift her focus to sales/marketing to the "Hispanic" population for a mega corp.
 
Sounds like she had fun in college and now she is (literally) paying the price.

Short of whoring herself out to megacorp (maybe not a bad idea), there probably isn't a huge market of higher paying jobs for someone with those degrees and qualifications. Is she fluent enough in espanol to freelance as a spanish translator on the side?

Depending on location - teaching? Govt job in Equal employment opportunity commission as a case reviewer/agent (pay is probably ~$25-30k though)?

Could she get an MBA or JD?
 
the thing is that she is the kind of person that won't just go for something just because it will make money. she also wants to believe in what she does and being a lawyer is not personally redeeming for her.
 
maggieddd said:
the thing is that she is the kind of person that won't just go for something just because it will make money. she also wants to believe in what she does and being a lawyer is not personally redeeming for her.
Click to expand...

Hey, I feel the same way with respect to being a lawyer. Except I figured that out after graduating from law school :-\
 
see, I kind of agree with her, although I am in a completly different situation then she is. I do not make much more than she does. I only have one undergrad degree, but I never took any loans out for school as I was lucky to get all scholarships. I was also lucky to travel extensively without stretching my wallet. I also like what I do and would not want to change my job even though I could earn way more somewhere else. I make peanuts but I also get 4 weeks vacations (roll over if not used), 4 personal days, 2 weeks sick and other benefits, which would be hard to get somewhere else. I do not have high financial expectations in life but I do like to travel at least 4 weeks at a time.
She is kind of jealous of me as she would like to do what I do, so I am trying to help her but it just sucks :'(
 
justin said:
Sounds like she had fun in college and now she is (literally) paying the price.
Click to expand...

Mmmm hmmm. One of my friends husbands was like that. Got a lot of degrees in stuff that while interesting probably wont ever pay well enough to pay back the loans. Then got principled about what jobs he would/wouldnt take. Did a lot of volunteer work for obscure political groups. I lost track of him after my friend divorced him and he moved away with some gal he met in a gas station who "felt the same way" about some trees he was very fond of. Yeah, i'm still working that one around in my head too... ::)
 
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