I’ve accrued ~$450,000 of student loan debt in the pursuit of getting a PhD in engineering. My payments are around $4500 per month minimum from both private and federal loans. I can’t keep up with the payments, I’m slowly sinking into not being able to pay anything even though I have a good job.
What do I do? I’m absolutely overwhelmed. I haven’t defaulted yet, but I can’t maintain this. I feel like defaulting is a certainty at this point.
What you are facing is very stressful and depressing. But this is not a problem that was created today. It is the result of taking on more student loan debt than your field can support.
Along the way, people and your school encouraged you to take out the debt. But when it hits the fan the blame is generally cast on the shoulders of the consumer. People will say when students fall for the line that more debt will result in better futures, they are to blame. Of course, that’s B.S.
Your choices here are fairly clear.
On the federal student loan debt, you can potentially lower the payment by enrolling in an income-based repayment plan. Not all repayment plans are created equal. Some are better than others if you are married or thinking of getting married. I would suggest you talk to an independent professional, like Damon Day, to better understand which plan fits your life.
Keep in mind that while the plan may reduce your monthly payment it will increase your balance due and promises eventual forgiveness after 20-25 years. We’ll have to wait to see if that actually happens.
On the private student loan side, your options are limited and strategically defaulting is a possible approach.
Defaulting with a plan can make sense if you are doing it as part of a larger plan. You also need to be aware it will hurt your credit, can lead to collection and legal action, and may result in you being sued.
It can also result in settling the private student loan debt for less than you owe, potentially having the debt expire from under your statute of limitations, and possibly being discharged later in bankruptcy.
The best time to take action is now. You need to gather facts, data, and use it to talk with a knowledgeable professional like Damon Day to engineer a custom solution that fits your life and goals.
What we do know for certain is unless you do something, this is going to crumble without you having any control.