Studen Loan Rate Reduction

[Cuda1974]

I left college in 1986 with a $12,000 student loan debt, the loan soon went into default and I suffered with poor credit for years. Sometime in the early 90s I heard about loan consolidation and signed a new note at over $20,000 @ 9% to get the CA off my back. My credit or finances were no better at that time, so the student loan was always the first payment to skip. I have used all my allowable forebearances and have even enrolled 1/2 time at a local community college a few times to catch the loan up. Anyway, I am cleaning up my credit in other areas and have even recently bought a new house with a 6% FHA loan. My student loan balance however, has now ballooned to over $30,000 and I am realizing it will never be paid off. I am currently 2 - 3 months behind, but the loan servicing company has promised an "administrative" forebarance if I send in a form to allow them to debit my checking account each month.

For the last several years I have been on a "income sensitive" plan where I pay interest only, so when I fall behind, the balance goes up. I realize now I had a mistake by consolidating instead of rehabing, but 9.0% did not look that bad in 90 - 91. I have been told I cannot refi at the lower rates, any advice of how to dig myself out of this. :( :(

[sisflomi]

Maybe something here can help you.

http://www.ed.gov/offices/OSFAP/DCS/rehabilitation.html

[awolcott]

You can take a look at a private loan to cover this. Students are not able to reconsolidate their federal loans more than once.

Let me know if you have any more questions


-Adam

[garddawg]

A point of consideration:

I had always heard that you could only consolidate your loans once BUT I contacted a couple of consolidation companies recently and they all stated that as long as I had gotten additional student loans since the original consolidation loan, I could then reconsolidate.... no problem.

I hope this helps.

PS
Going from 9% interest a year to about 3% should reduce your payment a lot.

[Ravenous Wolf]

There is another point to consider.

You cannot get away from these loans.

They are backed by Uncle Sugar and Uncle Sugar will find a way to get his money back. And he will use severe means in doing so.

And, you are only flushing money down the drain by postponing your date with destiny.

You have to pay it off.

I know exactly what you are going through because I have been doing that myself for the past several years.

I have made the decision that this year I am going to tacke more of principal and chip away at my student loan debt.

The interest alone is eating away at what I can be putting away for my retirement or for other big purchases (like putting more principal down on my mortgage).

You have to someday make a decision to begin paying off principal.

The way I am doing it is that my last car payment is this April. From that point on, I got to tackle my student loans.

Take a look at what you have already paid in interest and what you will have to pay in interest if you paid off the entire loan today. If that doesn't get your blood boiling, then think of the things you could have bought with the enormous interest that you still owe on your loan.