Student Loans

[celiathepoet]

Do you have student loans? How many years do you have to go? Did you consolidate? Do you pay extra toward the principal? How did you arrange it?

Do you know people who are unable to get student loans, now that the economy has changed? This seems to be a problem for students at the college where I am a librarian.

[Lady_Catherine]

We just paid off The Love God's $42,000 loan. He took it out to pay for his BS and MS in Engineering. He went to a state school, but his family could not help much, so he had to borrow a lot. Luckily a lot of his MS was paid for doing lab work and such, so it could have been much worse. The majority of the debt was from his undergrad work.

He did consolidate several years ago to get some insanely low interest rate locked in just after we got married, which turned out to be a really good move.

He started paying when he was actually in school, sending payments as he could, which was not terribly often. We started seriously paying on it in 2006, after he got his job.

We've always pretended that money I earn does not exist and send most of it to debts, so by throwing in my income + the amount from his that we sent, we were able to pound through it pretty quickly.

We considered keeping it around longer and doing other things with the money instead (investments, etc) but we both are extremely debt adverse and were really uncomfortable keeping it around. We did save other money and were investing in his 401 K and my IRA, so it's not like we were not doing anything but the debt.

It took 3 years of throwing tons of money at it, but it's gone and I don't regret doing it the way we did.

I teach at a college and I know that some of my students are having trouble getting loans the way they used to. I'm sure the economy is affecting it. Plus a lot of laid off people want to come back to school...but that does not mean that my college has any more money than it ever did. We've actually had a lot of budget cuts. It's kind of a sucky place to be for them. I'm very glad I'm not a student now.

I did not have any loans- may parents paid for my undergrad, and I got a tuition waiver and a stipend for my MA in exchange for teaching. I can't imagine having to pay off two student loans. It's only in the past few years that I've realized what an extreme gift my parents gave me by getting me out of school with no student loans.

[Dex]

Do you have student loans? How many years do you have to go? Did you consolidate? Do you pay extra toward the principal? How did you arrange it?

I finally paid mine off about six months ago. I have the letter confirming my final payment and intend to have it framed at some point. 12 years of college/university and I was left with lots of letters after my name and $70k in debt. When I finished, I made a deal with myself that I would continue to live like a student until they were paid off. With the exception of an engagement ring and a wedding (paid cash for those), I held to that pretty tightly and paid it all off in about 3.5 years. Over the years I had borrowed from the government, the bank, my credit cards, my brother, sister, and parents. I paid family first. I had been paying on my bank loans almost all the way along and paid up to 9.5% at one point. Had I stuck to the various payment schedules, I think I would have finished up somewhere around 2025 or so. Eff that ess. I cannot possibly describe how freeing it is to be free of debt payments (says the guy who's getting ready to buy a house). I've never felt lighter.

[celiathepoet]

There are some new programs for loan repayment or forgiveness. I may even qualify.

http://www.finaid.org/loans/forgiveness.phtml

http://www.ibrinfo.org/what.vp.html

[Michelle]

We paid off my Ford loans (graduate Staffords) last summer. I had borrowed about 10k in 1999 or so to finance the living expenses on my M.Ed. The rest of my degree was financed through grants and assistantships. The interest rate was excessively low and I was on the 10 year payment plan, but the student loans couldn't be consolidated (the balance was too low) and the payment was always there, every month. So we paid them off a couple of years ahead of schedule, since I had deferred them until maybe 2001 since I was in school and then I took the 6 mo deferment and I technically had 10 years until that date to pay them back.

Mark has a lot more student loan debt than I ever did, due to his Ph.D. I honestly don't even know the final tab (it's best for everyone's mental health) but he consolidated right before we married (another reason we couldn't re-consolidate) with Sallie Mae. His monthly payments are around $200 and that is on the 15 or 20 year plan. I keep joking that we'll finish paying for his education around the time that we send our daughter to college.

I do look at educational debt as an investment, but I'm also well aware of the abuses in the commercial financial aid industry in the last decade or so, including those involving a former employer of mine. It's a tricky thing and it has has an interesting impact on a lot of parts of the university, including the registrar's office, where attendance and last date of attendance reporting has become an increasingly important issue, particularly in proprietary and two year schools.

I also have absolutely no respect for people who default on their student loans. I have heard some extremely ridiculous excuses for that kind of behavior over the years and the bottom line is that they make it more expensive for all of us and they are acting irresponsibly. Somehow, they were responsible enough to sign the promissory note but not responsible enough to pay it back? Spare me.

Final note of interest: did you know that students at proprietary/for profit institutions are more likely to default on their loans? There have been a number of articles in the mainstream media about this as well as in the Chronicle of Higher Ed, Inside Higher Ed, et al recently. The analysis I've read on why this occurs appears to be dead on.

[ecaron]

I came out of school with about 15k in 2000. I was at a small college with low tuition, and over two years, I had received four loans, two of which were provincial, two federal. The federal loans were repayable, the provincial loans weren't, so it saved me quite a bit. I deferred for the first year, and then another six months a year and a half later when I was on unemployment. Since then, I've just been paying it off a small chunk at a time. They were administered through my bank, so they just debit my account every month on the 20th.

I'm in the last couple of months now and very much looking forward to my final payment. After 9 years, I decided a couple of months ago to start paying extra on the balance, to really push through that last $1000, and discovered that it was not allowed, so I guess I haven't wasted any time with the minimum payments after all. But whatever, it'll finally be over soon, unbelievably.

[maryann]

I still have some loans. I've never consolidated or anything, because my interests rate are absurdly low. I've paid off one or two loans over the years in lump sums, and now I'm only left with the super low interest ones. It's not really worth it for me to pay extra on those.

I did defer my loans for various reasons for a total of about three years right out of school, otherwise they'd be almost entirely paid off. I'm still glad I did it, because I needed the money a lot more then than I do now. At the time, it was just more than half of what I was paying in rent, and now they make a much smaller dent in my budget.

[planetmort]

I once read a pretty interesting article (I forget where) positing that a major cause of the huge inflation in education prices is that most everyone finances higher education now, and paying with other people's money/paying over time causes people to be willing to spend more for a thing. The author also drew parallels with home mortgages and pointed out that the effect becomes permanent since prices become so inflated almost no one can buy the item without a loan.

That's all pretty much neither here nor there, but it was interesting to me.

[celiathepoet]

I applied to my lender for the IBR program linked above, and they reduced my monthly payment by $127. This is unbelievably great.

[blau]

My final bit of student loan (a combo federal/provincial one) will be paid off by April. Almost $10K paid over five years. Phew.

Now to focus on consumer debt lalala...

[Suzy]

I also have absolutely no respect for people who default on their student loans. I have heard some extremely ridiculous excuses for that kind of behavior over the years and the bottom line is that they make it more expensive for all of us and they are acting irresponsibly. Somehow, they were responsible enough to sign the promissory note but not responsible enough to pay it back? Spare me.

It really isn't all as cut and dry as you say it is. I'm in default on my student loans. It comes down to keeping the lights on or paying a loan payment, the loan loses every time. Of course, I didn't expect to get sick when I took out those loans. You don't know the reasons why some people default. I know of several people who went to college, got great jobs, started paying on their loans and then life whomped them. A couple can't find work in their fields, a couple have parents who became ill, and needed them close by, where jobs don't pay very much, they aren't able to keep up the full payments.

It happens. Life happens. You never know what tomorrow will bring, and how that will change things.

In my defense, the only debts we have is my student loans and medical bills. We have no credit cars, we buy old used cars, and share housing.

[Irish_78]

In my experience, you shouldn't have to default on your student loans, though. If you have federal student loans you should be able to request forbearance or deferral or create a payment plan that should work for you. I know when times have been tough for me I've called Direct Loan Servicing or Sallie Mae and they've been more than happy to help me out. Sure you have to pay for it eventually, but sometimes situations are such that you need a little extra time.

I have way more student loan debt than I should for my degree. I was one of those people who took out extra money for living expenses so that I wouldn't have to work as much in school. I regret it every month when I write that mondo check. I could live in a much nicer house if I didn't have to make such a huge student loan payment every month.

Live and learn, I guess. I just wish they taught you this stuff in high school BEFORE you got to college.

[Michelle]

What Irish said. I've had situations where I've had to be late, and it's not been a problem. I always dealt with the Feds directly, though, not with Sallie Mae or any third party servicer.

[ecaron]

Well, I won't feel it's official until I have a letter from the bank, but my final student loan payment was processed yesterday, and the balance owing in my online banking is now $0.00. PAID OFF. I am so happy.

[celiathepoet]

Yay, ecaron! Fabulous!

[ecaron]

Thank you! I've been looking forward to this for a long time.

[Kethrai]

I went to a state school, and my mom and I split the bills (it was possible, then, if you were going to a sufficiently cheap college, to earn enough money over the summer working shitty retail jobs to actually save up enough for half a year.) I get more and more grateful as time goes on that I didn't have loans, because some of the levels of poverty I've been through meant I would have defaulted, no question.

With the cost of even a state school, now, it seems like the choices are loan or rich parents. It's scary.

[badverb]

I just realized today that when I make the next payment on my very first Stafford loan, taken out almost (oh god) 20 years ago, I will be able to call for the final payoff amount. Huzzah!

That means I will have 3 out of 6 loans totally paid. Only three more to go!

[KTA]

I'm staring down a fairly big balance when I finish my overpriced master's program later this month. Come the fall, I'll be paying that and my smaller loan from undergrad. In theory, I am proud to have put myself through graduate school, but in practice I resent the high cost of the degree. I have no objection to the undergrad loans because my parents paid for the rest of my education, and this is the least I can do.

Anyway, I have some money in savings and am thinking about throwing a substantial amount of it towards the graduate loan right at the beginning, maybe even before the deferment period ends. Does this make sense, and what's the best way to approach it? It's actually three separate Stafford loans, one for each year. I'm going to look into consoliation, of course, but I don't know when I should make the big payment. I would like to do it in such a way that it will reduce my monthly payments, and then I plan to follow the "extra money goes to the loan" mantra that I remember Lady Catherine describing a few years ago in a similar thread (glad to hear it worked, LC!).

[Meechie]

With the cost of even a state school, now, it seems like the choices are loan or rich parents. It's scary.

We're not rich, so fortunately the state school that my kiddo attends allows us to pay each semester in five installments. I imagine most schools do nowdays, don't they?

Her dad and I pay the tuition so she won't have any loans to pay off when she graduates in December (!!!). And neither one of us goes broke paying since we've split the bills. It was pretty tough when she was in the dorm for a couple semesters and we had to pay room and board, but since she's in an apartment now, it's much less expensive.

[Scotsbloke]

I feel incredibly lucky when I read this thread. I went to university in 1981 when tertiary education was free and there was also a system of maintenance grants. Since I'd worked (and paid tax) for 4 years prior I qualified as a mature student so not only had my tuition paid but had a maintenance grant (including a London supplement) of about £60 a week (equivalent to around £200 today) during term-time.

I worked during the summer for my old company so I was a relatively affluent student and graduated with no debt at all.

Downside is that we now have tuition fees and no grant system - so if my three go to college I reckon I'll have to work until I'm 80 to pay their debt!

[casey]

With the cost of even a state school, now, it seems like the choices are loan or rich parents. It's scary.

We're not rich, so fortunately the state school that my kiddo attends allows us to pay each semester in five installments. I imagine most schools do nowdays, don't they?

Her dad and I pay the tuition so she won't have any loans to pay off when she graduates in December (!!!). And neither one of us goes broke paying since we've split the bills. It was pretty tough when she was in the dorm for a couple semesters and we had to pay room and board, but since she's in an apartment now, it's much less expensive.

Yes, they do - it's in the school's best interest to keep as many people as they can. I don't have specific numbers, obviously, but payment plans are absolutely offered. And financial aid officers, especially in times of recession and financial insecurity, will seriously work their magic to keep students in school.

[Byrne]

Wait....off topic, but Tallahassee? I don't visit you guys one time in Oakland and now you're in Tallahassee?