How to Get Out of Debt With the Get Out of Debt Guy » student loan debt

How to Manage Student Loan Debt

Guest Post — Fri, 28 Oct 2011 14:52:30 +0000

Count yourself among the privileged few if you finish college without accumulating a lot of debt. Unfortunately, the majority of college graduates have student loans to pay off. Depending on the amount of debt you’ve built up, you could end up forking over a portion of your paycheck for years, or even decades, after you leave school. So, you need to come up with a plan to pay off your student debt as quickly as possible. Following are a few tips on how to manage student loan debt.

Keep Debt to a Minimum

Since it’s probably not financially feasible for you to pay for your college education up front, the easiest way to manage student loan debt is to borrow as little money as possible. Before you begin taking college courses, it would be a good idea to apply for as many scholarships and grants as you can find. Many charitable organizations offer scholarships, as do a number of businesses. The federal government, state governments, and other institutions offer grant money to qualifying individuals. Even if you don’t receive enough to cover all your expenses, every penny that’s given to you is one less you’ll need to borrow. Another way to minimize student loan debt is to work part time while going to classes and during school breaks. It won’t be easy, but the money you earn will help pay expenses, and reduce the amount of your student loans. The less complicated your repayment structure is, the easier it’ll be to manage your student loan debt.

Start Early

No matter whether your accumulated debt is a lot or a little, the best way to manage it is to start early. Don’t wait until you graduate to think about how you’re going to repay the loans. Instead, you should set up a payment plan before you finish school. As part of the process, student loan borrowers are usually required to go through exit counseling so they can understand how the credit system works. If you don’t pay back your student loans, your credit rating could suffer dramatically. It may be a good idea to secure a credit card while you’re still in school and learn to use it responsibility. In this way, you can build a credit history that will help you when it comes time to begin paying off your student loans, and in any future economic transactions. If lenders see that you’re a responsible borrower, they may be more willing to offer low interest loans, which will help keep your student loan debt at a minimum.

Keep Track of Your Debt

Before you begin college, you should sit down with your family and a credit counselor and determine the maximum amount of money you will need to have in order to complete your college education. By doing this, you can come up with an approximation of the debt you’ll have upon graduation, and allow you to begin working on a repayment plan. It may seem like a lot of work, but the further ahead you look the easier it’ll be to manage your debt. Keep track of your loans while you’re in school and make sure the amount you’re borrowing doesn’t exceed your anticipated debt. If you find that you’re borrowing more money than you thought you’d have to, try and find ways to reduce your expenses. Work more hours on a part time job, or share textbooks with a friend. Use a bike to get around campus as an alternative to owning a car. Instead of taking a trip to Florida during spring break, get a part time job or take a cheap vacation closer to home. If you keep track of your debt as it accumulates, it could encourage you to cut expenses or find a way to bring in a little money to keep the amount of your loan at a more manageable level

Consult Professionals

Unless you’re an economics major you will undoubtedly benefit from professional advice on managing student loan debt. From the beginning of the process until the loans are paid off, it would be a good idea to stay in contact with an economic advisor, such as an accountant or an attorney. It would also be a good idea to shop around for the best rates on any loans you take out. Check with your financial advisor to see if consolidating those loans will save you money.

Guest post from Taylor Harris. Taylor writes about online colleges and universities for BestOnlineColleges.com.

If you would like to contribute a guest post, click here.

Student Loans – People Speak Out About Drowning in Student Loans

Steve Rhode — Tue, 18 Jan 2011 20:37:51 +0000

From How to Get Out of Debt

Here is our latest video on debt. This time it’s all about the burden of student loans.

Nothing says frustration like a lifetime of debt for a degree you never finished.

@GetOutOfDebtGuy

Alex Went to Law School, Business School and is Now Buried in Student Loans

Steve Rhode — Mon, 27 Sep 2010 10:50:03 +0000

From How to Get Out of Debt

“Dear Steve,

I went to both law school and business school. I dropped out of law school after a year and a half but borrowed a lot of money for that time since law school is quite expensive, especially for a private school. This pretty much set me back. Business school wasn’t as expensive. I now have over $108,000 dollars in school loans (over $20,000 in interest accrued).

I have requested forbearance again now that I no longer qualify for Deferment. I feel like I am drowning in student loan debt. I cannot afford the monthly payment at this time and wonder how I can manage this debt better because the longer I forbear the greater the interest. Please help and advise.

Alex”

The Answer:

Dear Alex,

Student loans are merciless and are the only type of legal loan that can add loan shark default rates of up to 40% of the value of the loan. They are difficult to discharge in bankruptcy and the government can even intercept tax refunds you might be due to pay for student loan obligations.

I suggest that you review this previous question for detailed information about options for repayment. See “Tiffany is Behind in Student Loans, Late On Other Payments, And Looking For Hope“.

Big Hug!

@GetOutOfDebtGuy

The Answer:

I’m Supposed to Pay Her Student Loan But Can’t. – Stoney

Steve Rhode — Mon, 15 Feb 2010 22:36:18 +0000

From How to Get Out of Debt

“Dear Steve,

I am on unemployment and divorced and in the agreement I had to pay her student loan. First off she said it was mine but I never had a student loan when I went to school . I have been unemployed for over 6 months and all the websites I have visited want the person whose name is on the loan and my name is no where on it. I’m on unemployment and can’t pay it.

What should I do?

Stoney”

The Answer:

Dear Stoney,

The divorce agreement is an agreement between you and your ex-wife. If this student loan was in her name then she is ultimately responsible for the student loan debt, not you.

Since this is not your loan and you are not legally obligated to repay it according to the lender you also have no rights to intervene in it.

If you can’t pay it the student loan lender will go after your ex-wife.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

I’m Going to Take Out a Student Loan to Go to Nursing School – Sandra

Steve Rhode — Wed, 03 Feb 2010 16:56:18 +0000

From How to Get Out of Debt

“Dear Steve,

I am considering taking on a federal Stafford loan in order to go to nursing school at a private school. Tuition is $25,000-30,000. I am single, in my 40′s work full time.

Should I pay the loan off ASAP, before acquiring any further debt? I want to get a house soon and don’t know if this loan will adversely affect me?

Sandra”

The Answer:

Dear Sandra,

Debt is debt.

Student loans deserve respect and should not be assumed to be “good” debt. This new student loan debt is just another obligation that you will be responsible for paying off. In fact of all debts, student loans are among the toughest since they can’t be discharged in bankruptcy and if you fail to pay the loan you can get his will a penalty of as much as 40% of the original loan amount.

It would be wise to significantly pay down the debt before going further into debt and if it was possible to eliminate the debt completely, that would be even better.

The loan could impact your ability to borrow since it will be an outstanding obligation and based on your income, it could reduce the amount you would be eligible to borrow. Before you get house shopping fever, go and discuss your situation with a mortgage broker so you’ll know exactly what you’ll qualify for.

If you don’t have a down payment on the house then it would be smart to focus on putting money in a savings account at the same time as you repay your student loan.

Good luck with nursing school.

Big Hug!

@GetOutOfDebtGuy

Medical Student Debt Leads To Thoughts Of Suicide and Burnout

Steve Rhode — Fri, 22 Jan 2010 22:39:41 +0000

From How to Get Out of Debt

Having worked for years in the medical field I applaud anyone that decides that they want to become a doctor. But I’ve met my share of people that seem to have become doctors for “the money” or who once they became doctors, wanted to do something else with their lives.

Being a doctor is not easy, but being a medical student today is even harder. With student loan debt for medical school and studies, escalating, it is not unusual for doctors to wind up with hundreds of thousands of dollars in debt.

I’ve talked about the side effects of debt a lot. The depression, unhappiness, stress, lack of focus, etc. that comes a a byproduct of debt is not helpful when you are trying to focus on delivering excellent patient care.

And our medical system is under assault. Medical debts are the leading cause of bankruptcy for consumers. people can’t afford medical insurance. Doctors malpractice premiums are unbelievably high. Medical technology costs a fortune but does not make care better. And needed changes in the way medical care is delivered in the United States may force down doctor salaries, even as they are carrying forward all this debt and obligations.

New doctors in training are going through the toughest days. They are struggling to make it through medical school and their residencies with little sleep and much doubt.

A 2006 study, Personal Life Events and Medical Student Burnout, by Dr. Dyrbe, found that

Burnout appears common among U.S. medical students and may increase by year of schooling. Despite the notion that burnout is primarily linked to work-related stress, personal life events also demonstrated a strong relationship to professional burnout. The authors’ findings suggest both personal and curricular factors are related to burnout among medical students. Efforts to decrease burnout must address both of these elements.

Dr Pauline Chew wrote a recent article in the New York Times, Medical Student Burnout and the Challenge to Patient Care, where she said:

Medical school was not easy for me. I knew that I wanted to become a doctor to help people, but I had given little thought to the process. I was poorly prepared for many things: the pressure to excel in ways that seemed so far from caring for people; rapidly mounting debts I signed off on every semester; a roller coaster existence from chronic lack of sleep; hazing from the more experienced students and residents; and the realities of patient suffering despite my best efforts.

Her statements really resonated with me. You see in the many years I have been helping people with debt problems, a number of those clients were medical students or young doctors, working hard to finish their studies and reach the golden paycheck.

In response to another inquiry, Dr. Dyrbye noted:

We agree that debt is a substantial source of stress for today’s medical student. As reported, students reporting >$100,000 of educational debt had a 1.47 greater odds of suicidal ideation during the previous year than students with <$50,000 in reported debt on univariate analysis.

It is hard enough to become a doctor and to focus on being the best medical caregiver you can, but add on top of that the massive debts incurred and the uncertainty of future income, it would not surprise me at all to see rising levels of burnout and suicidal thoughts among future classes.

I’m $211,000 in Student Loan Debt to Become a Lawyer. I Don’t Want to Be an Attorney Anymore. – Jacob

Steve Rhode — Mon, 27 Jul 2009 20:30:26 +0000

From How to Get Out of Debt

Jacob

“Dear Steve,

I’m a 26 year old male who is a third year law student. I have a significant amount of debt. I have 26K in personal unsecured debt, and $211K in student loan debt. The student loan debt was amassed from attending a private university for five years and three years of law school. While in undergrad, I freely admit that I made horrible decisions when borrowing money. I financed my entire education instead of working to pay part of it off, and I borrowed way more than I needed to pay for school. This excess money went to pay for various things like an apartment, tv’s, stuff that a stupid 19 year kid thought he needed.

Along the way I began to pile up credit card debt, and while in law school I found myself borrowing excess student loan money to keep up with my bills. As I look back on it, I was just trading dischargeable debt for non-dischargeable debt.

After two years of law school I am pretty convinced I don’t want to be a lawyer. However, I feel like I don’t really have a choice due to my financial obligations. I find myself in a hole that I don’t really ever see myself crawling out of. I’m considering bankruptcy to get rid of the credit card debt because I will need that payment money to go towards my student loan payments. My student loans are a mix of gov’t and private loans. I currently have a part time job but can only work about 20 hours a week with my school schedule.

Jacob”

The Answer:

Dear Jacob,

This is not the first time I’ve heard the exact same situation. And I can honestly say that I don’t think that perusing a career you don’t like is going to bring you happiness or success in life. How many successful people do you hear about that hate their job?

Before bailing on law school do you think it is worth contacting some practicing lawyers and asking them for feedback about the field? Maybe what you are going through is just a tight and stressful part of your life but you still have a passion for law.

If you decide that you’ve made a mistake and law isn’t for you then you should look at other options in life. You are still young and you have many years ahead of you. I’f rather see you overcome the debt but look forward to a life worth living.

So you could go bankrupt on the credit card debt, enter an IBR (Income Based Repayment) on the government debt to reduce payments and the private stuff, you’re screwed. You’ll have to make the minimum payments.

Do you think this approach makes sense for you? Update me in the comments section of this question.

Big Hug!

@GetOutOfDebtGuy

We Owe $191,000 in Student Loans And I Need to Go Back to School. – Rob

Steve Rhode — Thu, 02 Apr 2009 21:11:31 +0000

From How to Get Out of Debt

“Dear Steve,

Myself and my wife are both out of college. I went to a private university, big mistake as my mother tried to tell me, and now between the two of us we are about $191,000 in debt to student loans.

Thanks to my grandmother, when she passed away she left me enough to pay off any credit card debt we had. I make $40,000 a yr and she makes about $21,000 a yr. We just moved to Virginia for me to get this job. The pay will go up over the next few years as I move up but right now we are behind on almost all the payments.

We pay $1535 a month in rent. I know it is a house payment but it is normal rent around here. We don’t have cable or internet. It is a choice we made to not have another bill. Our car insurance runs us $120 a month and the student loans payments are over $2000 a month.

Our bank account ends every two weeks in the hole and it feels like it is impossible to get ahead. We talked about bankruptcy but it is not an option with student loans. I need to go back to school for about 2 to 3 semesters to finish my degree and then I would be making more.

Problem is the company will reimburse me AFTER I pay for it… Any advice in the right direction would be helpful and if you do hear about any of the wonderful FREE gov funds do please send some my way. Thank you for your time and god bless you for the work you do!

Nothing specific just any good advice from someone who has been there before me.

Rob”

I’m in My Second Year of Law School and Want to Drop Out. But What About My Loans? – Brad

Steve Rhode — Tue, 31 Mar 2009 01:48:58 +0000

From How to Get Out of Debt

“Hi Steve –

I’m currently in my second year of law school and am really thinking about getting out. I’m worried about the roughly $100k in student loans I’ll have to start paying back though, not to mention living expenses and almost $9k in credit card debt I accrued as an undergrad.

If I do drop out, I’ve considered going to school for something computer-related (web design or computer science) as I would actually enjoy learning that.

I have two questions for you:

(1) Can I “rollover” my current loan money that I would have left for this unfinished semester to another institution?

(2) If I do drop out and have to work at WalMart, what advice do you have that would help me manage all that debt?

Thank you very much for your site.

Brad”

I’m Buried in Student Loan Debt and not Even Finished with School. – Levi

Steve Rhode — Tue, 27 Jan 2009 18:13:56 +0000

From How to Get Out of Debt

Levi

“Dear Steve,

I am finishing school right now after taking a two year hiatus. The problem is that I already have 60k in student loan debt and I am going to be pushing 75k by the time I am done. With the current crisis in our economy noone is refinancing or taking on loan consolidations. What am I supposed to do I won’t be able to afford the payments.

Levi”

The Answer:

Dear Levi,

Sadly, and that’s the way it is.

For far too long people have assumed that going into debt for a degree was a wise investment. Yet student loan debts are rarely able to be discharged in bankruptcy if you find yourself with money troubles. Student loans are a shackle that must be repaid. If you put them in forbearance they will grow as interest accumulates and if you fall far behind and the loans wind up in collections you could see another 40% of the loan amount tacked on to what you owe.

So what are you supposed to do now that the school got paid and let you get the loans with little evaluation of your ability to repay them? You’ll have to work out a repayment plan with your student loan lender. Depending on how much you’ll earn when you finally graduate you might even qualify for the ICRP, Income Contingent Repayment Plan offered to lower income people.

I really wish I had better news for you but it is what it is.

Steve

I Need Some Advice and Referrals For Bankruptcy and a Debt Financial Counselor. – Georgina

Steve Rhode — Thu, 22 Jan 2009 20:22:56 +0000

From How to Get Out of Debt

Georgina

“Dear Steve,

I owe a total of about 130k in cc & student loan debt. Student loans account for 70k. not sure how to start repay or bankrupy. I’m just 2 years back in workforce now. I make 50k yr with room for increase near future. Help, overwhelmed

I need some referrals for debt finanical counselors and or bnkruptcy and advice on what to do.

Georgina”

The Answer:

Dear Georginia,

Well you’ve come to the right place for recommendations on what to do. Let’s start at the top then.

Your student loan debt is large but on that you should contact your student loan lender and see what consolidation opportunities might exist. If it is a government backed loan there are options available through the Department of Education or whoever is servicing your loan for you.

Here are two quick links for you for referrals.

Click here for debt management information.
Click here for bankruptcy information.

Based only on what you’ve shared with me it would be impossible for me to make a life decision for you. But what you should do is use the links above to contact the different groups and ask for an evaluation of your situation. Armed with information from the debt management folks and the bankruptcy people you will then be in a better situation to make an educated and informed decision about which path is right for you.

Just bear in mind that student loans are typically not dischargeable in bankruptcy.

After you explore those links above and have your free consultations, come back if you have any additional questions and I’ll be happy to help you further.

Big Hug!

@GetOutOfDebtGuy

How to Get Out of Debt With the Get Out of Debt Guy » student loan debt

How to Manage Student Loan Debt

Keep Debt to a Minimum

Start Early

Keep Track of Your Debt

Consult Professionals

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How to Manage Student Loan Debt

Keep Debt to a Minimum

Start Early

Keep Track of Your Debt

Consult Professionals

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Student Loans – People Speak Out About Drowning in Student Loans

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Alex Went to Law School, Business School and is Now Buried in Student Loans

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Medical Student Debt Leads To Thoughts Of Suicide and Burnout

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We Owe $191,000 in Student Loans And I Need to Go Back to School. – Rob

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