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Forum Post: Help/advice (real, not troll) for those with heavy student loan debt

Posted 12 years ago on Nov. 6, 2011, 5:44 p.m. EST by LaughinWillow (215)
This content is user submitted and not an official statement

Hi folks. I've seen lots of people talking about student loan debt, and just wanted to make people aware of a program that isn't mentioned a lot by financial aid departments or lenders (though now I guess all govt lending is done by one federal agency, so maybe this will change). If you have really high student loan payments and can't cover them or are having trouble paying for other things you really need (good food, decent housing, etc) because your payments are too high, look up the Direct Loans Income Contingent program. This is a federal program. If you contact them, they can adjust your loans to reflect your income. If the balance isn't paid off in 25 years, the remainder is forgiven. The only negative about this is that whatever is forgiven will be taxable, so you could end up owing taxes on it, but at that point you can make a payment arrangement with the IRS that is usually similar or less than loan payments anyway.

I have my loans on this plan and right now my payment is zero. I can pay something if I want, but since my family's income is low and we have kids, we are not currently liable for anything.

I just want people to know about this - it's a way better option than defaulting and having your wages attached and a bunch of stress. And often they don't tell you about this until you default because they hope you'll just make crazy high payments and not find out you have this option.

Peace to ya'll - hope this info helps someone! :)




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[-] 1 points by EducationReform (13) 12 years ago

With that option, Interest continues to accrue- and that can makes things worse. That method should only be used as a last resort.

[-] 1 points by EducationReform (13) 12 years ago

It is private (commercial student loans) that are the biggest problem. There is no Income Contingent Payment Plan for private loans. And, there are no deferments. And, they carry high interest rates (10% & up)- these loans balloon very easily. A $25K loan, can, in ten years, grow to $34K. I know many people that this happened to. And, the the largest private lender is corrupt. Private (commercial) loans ruined the lives of many people. Check out www.StudentLoanJustice.org

[-] 1 points by LaughinWillow (215) 12 years ago

True. I don't understand why people take private loans... I know that some people can't get federal loans - such as with the case of people who have drug felonies, for example. But aside from that, I don't get it. My loans were $70,000 in the end (I have 2 degrees and was a single mom living partly on loan refunds for 6 years), and I would be totally destroyed if I couldn't be on the income contingent plan. I'd just have to default and leave the country, seriously.

[-] 1 points by MattLHolck (16833) from San Diego, CA 12 years ago