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Dear Liz:I owe $75,000 in student loans. It took me seven years to graduate from college due to a car accident that happened during my second year. I am now 30 and doing all I can, working 12 to 14 hours a day, but I’m not making any headway. Most if not all of my loans have gone to collections. I get the phone calls, sometimes up to 30 a day. I need some advice on how to handle all of this. It is so overwhelming. Is it possible to consolidate all of this? Make one monthly payment to one entity?

Answer: You can consolidate your federal student debt into one loan and stretch out the repayment term, which could make the debt easier to pay. You may also qualify for the income-based repayment option. Most borrowers in the income-based plan have payments that are less than 10% of their gross incomes, said Mark Kantrowitz, editor of FinAid.org and author of “Secrets to Winning a Scholarship.” After 25 years of payments, you would qualify for forgiveness of any remaining balance. The payment period is shortened to 10 years if you’re in a public service job.

Private student debt isn’t nearly as flexible. You typically can’t consolidate private student loans, and lenders offer fewer repayment options — and no forgiveness.

If you have both types of debt, you may be able to make some progress on repayment by consolidating your federal loans and paying the minimum possible on those so that you can throw every available dollar at your private loans.

If you have only private debt, you’ll need to negotiate directly with your lenders to see what options are available for more affordable repayment plans. It’s important to do this as soon as possible, since if your delinquency drags on for nine months your loans will be considered in default. That can have serious consequences for your credit history and your finances.

The National Consumer Law Center’s Student Loan Borrower Assistance Project has a lot of information and resources for student borrowers, including information about loan rehabilitation and negotiating with lenders. You can also talk to the Default Resolution Group at the U.S. Department of Education by calling (800) 621-3115.

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Categories : College, Q&A, Student Loans



Private student loans are so, surprisingly toxic.


I’ve just recently started at a UNI and I am getting federal loans but luckily the interest rate is at an all time low ( for now) I heard they are in the process of trying to raise it to about double what it is.

I don’t need to start paying them yet, luckily. Ive got a few more years before that happens. Who knows what the process will be like by then.

Not looking forward to it


Get rid of those private loans first. Liz is right – you don’t have as much protection.

Student loans are such a retrospective issue. It’s a pain to deal with them now, and there is so much that could’ve been done to avoid them. Is there anything you wish you would have done differently when you were preparing to borrow that much money? (I talk about this a bit in my blog: http://www.empowereddollar.com/start-a-conversation/what-your-teen-doesnt-know-about-student-loans/)