Wife Feeling 123k Education
My wife is in the process of getting her student loans on hold, or forbearance, until she can get a full time teaching position in order to pay them. The student loan companies capitalized the interest and rolled it into the loans, so the total as of today is $123,800 rounded to dollars. Her payment alone is over a grand per month, even though it’s on a graduated system that will increase over the years.
We need to figure a plan of action on what is going to happen with these loans. The payment alone isn’t even realistic right now, which makes me wonder how she was able to borrow so much money in the first place. A few articles I read on student loan debt, most averages are anywhere from 15-40k which are manageable to say the least. Her debt is many times that and so is the payment, so how can she pay?
What I think we’re going to probably do is live off of my income alone, and use her income to pay the student loans off. Depending on what she makes, such as throwing 30k a year at them, they could be gone in less than 5 years. That is better than the 30 year payment plan which would require us to pay twice the amount of the loan in interest alone.
I’m not an advocate of bankruptcy and believe we should take responsibility for our decisions. Student loans are typically not something that can be bankrupt, unless you are deceased, disabled, or can declare undue hardship. Undue hardship makes a case that a debtor has little chance of earning enough to pay off the loan. We are married and she probably couldn’t pull this excuse off.
A quote I recently heard and like at the moment: When faced with a challenge, look for a way not a way out. I hope she gets a salary job soon so she is on her way to getting these loans paid off. Our credit cards still have to go in order to focus 100% on these.
Wow that does seem quite steep, but I think the idea of throwing her salary at it and clearing it as quickly as possible is a good one.
I’m guessing that it is also doing a lot of emotional damage to both of you. Best that it goes away nice and quickly. Is there any way that you can lower the interest rate on it? Even losing a few tenths of a per cent would make a big difference on that kind of loan.
Good luck and hang in there!
My parents advocated living on one salary and saving (or as in your case, paying off debt) the other salary. This was so that if you had kids and decided that having one parent at home, it wasn’t as much of a sacrifice. You had a chunk of savings and you were already living within the budget of the larger salary.
I’m impressed with how the two of you are approaching this. It must be a bit scary to owe nearly as much to the student loan companies as you do on your house. You are doing a great job at keeping a balance between eliminating debt and real life.
Is the student loan to the right of your blog, HER loan or is that your loan? I had thought you said you had a loan somewhere on here for your schooling….I could have read it somewhere else. I sure wish I would have found your blog….or you started a long time ago…I could have told you that it is REALLY hard to pay off a student loan in EDUCATION. She might be able to find a low income school and work as an “indentured servant” and then the loan will be paid in full by the state…..I’m afraid that she won’t go for that though. Have her ask the college about it…I wish I could remember the name of the program. Most require a min. of 3 years dedicated to a school system before they will pay it off. Sometimes, the state dept. can help. Good luck….we paid our loans off when a woman hit my husband head on two days before we graduated from college. I remember being completely freaked out when they gave us the pay off schedule…10 years!!!
studentaid.ed.gov
Ok, check out that website and see if you can find anything.
I need to update the bars on the right side of the blog. They rolled in the capitalized interest on her loans, which is where a sudden bump in the amount came from. The student loans are our student loans, however a large chunk of that are in her name. Mine are smaller partly due to receiving scholarships, grants, and dumping a large sum of money into school from the start. She also has two degrees, an undergrad from a state university, and masters from a private school.
Here’s my stand on working in low income areas for loan forgiveness. Those places keep you on the hook for 3-5 years. She could earn more than enough income working at a good school to pay these loans off. If she were on her own, then that type of option may be viable. I would like to increase my income as well so that we could use her income alone to clear these loans. Whenever the banks get out of their funk we can consolidate them to get a better interest rate. Trust me there will be more to come on these as they’re not going away anytime soon.
I think that program is called Teach America or Teach for America. A friend of a friend recently finished a 3 year program with it, she got assigned to teach at a low income Native American reservation at one of the Dakotas. I’m pretty sure part of her loan was forgiven because of it. Since you guys are married I am sure your wife won’t go for something out of state but hopefully soemthing in the Chicago area (it will probably be in the inner city…) if she decides to look into it.
I’m curious why she decided to get a Masters for this type of field. Is she looking to be a school administrator/dean/principal in the future?
Jim, when do the loans come out of forebearance? Are they on the grace period or economic hardship now? Try to find out if they still will accrue interest and how much as it may make sense to pay a little even while in forebearance - I wish I had.
Also private loans are not so good at giving you flexible time schedules or forbearances as I found out the hard way so those may have to be paid even when she’s not working.
I read all those articles too about how most students only have $15k in loans and get frustrated too but I comfort in the fact that almost everyone I know has a lot more. Try not to think of yourself as a statistic. My mom makes very good money as a teacher so I know it can be done.
You are being very diligent and focused on developing a strategy for these loans which is great (wish I had been that way two years ago!) but try not to stress it so much that it drives you crazy!
I think if I can only get away with $30k or so in student loans for my undergrad degrees I’ll be doing alright. Of course, if I get to go to med school, I’m easily staring down six figures worth of loans, and the thought of that is more than a little intimidating… (And that’s even considering the salary I’d make after I complete my residency.)
I’m sorry to hear about your Student loan situation. I thought my payment was high at $177/month. I would try a hardship deferment for now. I was going to do the same thing for myself but I haven’t had the time. Keep us updated on your decision.
I once knew someone who lived off CC’s for a year or two, and put all possible income to a student loan. There is some waiting period, but the CC’s could be bankrupted, while student loans have no recourse.
I don’t advocate this, but I do think it is unfortunate that they give SO MUCH money to young people, money that it is almost impossible to pay back. Sure, you should do the math yourself and realize it is not a good choice, but most college students just don’t know. And not all parents are helpful in guiding them. It sucks that a couple years of not so good choices will affect your life for years and years.
You seem to have a really good attitude towards this, which is the first step.
Did you know about her loan debt before you got married?
when I was in college, I only took out loans for education, and dorm room and board. about $5k/year at the University of Texas in the 90’s. I had friends who took out more loans in order to live a better lifestyle (cars, alcohol, off-campus living). I guess that’s the danger zone for counselors to teach about. but overall I don’t buy the argument given in some of the comments that a college-level scholar (or an adult parent) is incapable of understanding what a loan is.
don’t forget to write off your student loan interest.