Question:
Dear Steve,
The price of a Veterinary degree is insane. I’ve been paying on my student loan debt for 14 years and I STILL owe $210k. I have both private and govt loans. None of the govt relief applies to me. It feels like all I pay is interest.
And by the way my starting salary out of school was $75k. I have spent the last 14 yrs living to pay the loans and barely making it. $1400/month payments
1: why is interest so high on student loans? Seems better to make a flat fee that is reasonable. Who is getting rich while millions struggle to make the student loan payments
2: what do i do for retirement? I will pay off loans at the age of retirement without any retirement. How does anyone live?
3: is there any hope?
It is very very depressing.
Kim
Answer:
Dear Kim,
I agree it is very depressing. But let’s explore what options you have and find a way forward.
Private and federal loans are entirely different animals. See what I did there?
On the private loan front, your option is to consolidate them at a lower rate, default to hope to settle, or stay the course.
I don’t know what your current rate is now but there are places that do consolidate private student loans. Think SoFi, Credible, or LendKey. There are other consoidators as well.
Whatever you do, don’t consolidate any federal student loan into a private company consolidation. If you do you will lose all the federal student loan benefits.
Private student loan lenders do settle the debts for less than you owe but there is pain involved. You will first need to default, know what to do and who to deal with at the lender, and be prepared for some credit report pain and potentially being sued. If this is a path you want to know more about I would suggest scheduling a consultation with my friend Damon Day to walk you through the pros and cons based on your specific mix of private loans.
On the federal student loan front, the best approach to lower your monthly payment would be one of the Income-Driven Repayment (IDR) programs. After 20 to 25 years of qualifying payments, your federal loan balance should be forgiven. To see the range of programs, click here. The IDR programs are a bit of a jungle. It is critical to pick the right one for you based on income and current and future marital status. While in an IDR your loan balance will inflate since the reduced payment will not cover the full payment. The goal is to get to forgiveness at the end. As it stands right now, the forgiven balance would be taxable if you are not insolvent at the time.
IDR programs are not a magic wand and have consequences. However, if you get in the right program and use it as part of a planned approach to dealing with your federal loans it may lower your monthly payment and allow you to start saving the difference between what you are paying now.
Again, I strongly recommend a specialist consultation with Damon Day to discuss your specific situation and get a second opinion.
I used to work with individual people but I just don’t anymore.
You have observed that you have a looming retirement crisis. It. may seem far off but the difficult and informed choices you make now may just allow you to start saving some money towards retirement. You need the most amount of time to let that money grow.
I can feel the stress in your question. It is an emotional experience. But rather than just making any move, you need to have an overall plan and make it happen. A. third-party experienced opinion is going to be the key to a better outcome.
BTW, I’m also a dog rescue pilot and have a special place in my heart for veterinarians. I want to see you make good choices here and have the better future you deserve from all the care and compassion you have shown so many beloved animals.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
Do you have a question you'd like to ask me for free? Go ahead and click here.
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Question asked.
Questions answered about veterinary school loans.