I graduated in 2007 with $90,000 in loans… since then i have been having babies and working very minimum and my loans were in forbearance. Now they are $160,000 and completely unaffordable. I cant even cover the monthly interest rate at this point let alone the actual loan.
Do you know of any good solutions? Any reputable companies that I can trust to take my loan for a loan forgiveness program with a 20-25 year payment plan and forgiveness of remainder after the time?
Well if these are federal student loans then that company is called the Department of Education. Your loan servicer can help you with this process or you can do it yourself online for free.
It seems you are facing a situation where there is not a great deal of expectation your income is going to climb and you will no longer be eligible for special reduced repayment programs.
The U.S. Government has several income driven repayment programs that can give you a lower or no monthly payment, if you qualify, but will still count towards loan forgiveness.
Based on the solution you select, this forgiveness might be after 20 or 25 years. It sounds like what you are asking about.
Since your loans are in a good standing, what you would need to do is follow this process as described by the Department of Education.
The Steps Given Are:
You apply for a Direct Consolidation Loan through StudentLoans.gov. This process offers both electronic and paper options. You can complete the electronic application as explained below or you can download and print a paper application from StudentLoans.gov for submission by U.S. mail.
Once you sign in to StudentLoans.gov, you will be able to electronically complete the Federal Direct Consolidation Loan Application and Promissory Note. The electronic application on StudentLoans.gov consists of the following five steps:
1. Choose Loans & Servicer
2. Repayment Plan Selection
3. Terms & Conditions
4. Borrower & Reference Information
5. Review & Sign
After you submit your application electronically via StudentLoans.gov or by mailing a paper application, the consolidation servicer selected will complete the actions required to consolidate your eligible loans. The consolidation servicer will be your point of contact for any questions you may have related to your consolidation application.
It is critical that you continue making payments, if required, to the holders or servicers of the loans you want to consolidate until your consolidation servicer informs you that the underlying loans have been paid off.
The Department of Education has a pretty nifty repayment plan estimation tool that you can use to compare options.
But there are consequences to this approach. You see, just like on forbearance, a reduced monthly payment would not be sufficient to cover the interest building on your loans. That interest would continue to build until you finally reached forgiveness. And as it stands right now, you might have to pay income tax on the forgiven debt unless the law changes.
This approach gives you a path towards forgiveness in a quarter-century but also increases the total balance due. For more on these issues, read Why Income Based Student Loan Payments Can Be a Terrible Trap.