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I Racked Up Private and Government Student Loans. – Jessica

“Dear Steve,

I went to graduate school when I was 35 and racked up both govt and private loans. My private loans were okay around 350/month for the first two years, now they are $572/month. This is very hard for me to pay right now but it seems there is no solution or answer. I teach part time as an art professor for a university. My govt loans are in deferral (or maybe forebearance I cant remember which). Is there anything that can be done to reduce a private loan at this point? I dont qualify for any more forebearances. I have two kids and am married and are children have real costs like braces, etc. that are only going up (my son will be going to college in 3 years).
I wish Obama had done something to work on these private student loans.

Is there anything that can be done to reduce a private student bank loan (US Bank, Great Lakes) when a forebearance is not an option – and I’m done with lower payments?

Jessica”

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The Answer

 

Dear Jessica,

There is nothing that can be done for private student loans except to go bankrupt to clear all the other debt out of the way and leave room for the student loan payments. Private student loans are not obligated to offer any sort of alternative payment plans like government backed loans do. But then again, they didn’t when you took them out in the beginning. The only change over the years was the 2005 Bush administration change which eliminated the discharge-ability of student loans after a certain time. Any change back would require Congress to alter the bankruptcy code and how likely do you think that is?

The only option would be to look for a private student loan consolidation lender. I wish I had better news but this is a subject I have railed on about since 1994 and was shouted down most of the time by people saying this was not a problem because private student loans were a good debt.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!

I Racked Up Private and Government Student Loans.   Jessica
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I Racked Up Private and Government Student Loans. - Jessica by

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • http://liverealnow.net Jason

    If it’s a federally guaranteed loan(Great Lake Higher Education Corp should be), look into the William D. Ford Direct Loan consolidation program.

    You can consolidate consolidated loans and get income-based payments. It’s the only option I’m aware of for consolidated or defaulted loans if you need to change the payments.

    http://www.ed.gov/offices/OSFAP/DirectLoan/index.html

    Beware: This is a federal program, not a federal guarantor. If you default, you are out of options, and they have more options than a normal guarantor.
    .-= Jason´s last blog ..10 Things to do on a Cheap Vacation. =-.

  • Jessica

    Should I try to further consolidate with another lender? or a non-profit if there is such a thing?

    • http://GetOutOfDebt.org Steve Rhode

      Jessica,

      I thought this might be helpful as well.

      Since most private education loans do not compete on price, a private consolidation loans is merely replacing one or more private education loans with another. So the main benefit of such a consolidation is obtaining a single monthly payment. Also, since the consolidation resets the term of the loan, this may reduce the monthly payment (at a cost, of course, of increasing the total interest paid over the lifetime of the loan).

      However, since the interest rates on private student loans are based on your credit score, you may be able to get a lower interest rate through a private consolidation loan if your credit score has improved significantly since you first obtained the loan. For example, if you’ve graduated and now have a good job and have been building a good credit history, your credit score may have improved. If your credit score has increased by 50-100 points or more, you may be able to get a lower interest rate by consolidating your debt with another lender. You can also try talking to the current holder of your loans, to see if they’ll reduce the interest rate on your loans rather than lose your loans to another lender. – Source

      Steve

  • Jessica

    Hi Steve,

    Thank you very much for your response.

    The private student loan is US Bank aka Great Lakes. The loans are already consolidated and appx. 40,000. Is there another consolidation I should try? Im not the type to go for bankruptsy ever and dont want that on my record. If I could get the monthly down, I wouldnt be happy to pay the rest of my life, but it would be better.
    Let me know if there is a further consolidation.

    Thanks!

    • http://GetOutOfDebt.org Steve Rhode

      Jessica,

      No problem with avoiding bankruptcy, student loans are not eligible for discharge, they are yours for life.

      There are no other options.

      Steve

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