I am 23 years old, and have recently graduated from UM with a BA. Unfortunately, I’ve also graduated with $110,000 in student loan debt, $20,000 of which is federally-backed. It’s the other $90,000 in private student loans that have got me backed into a corner: From what I can tell, I have no options as far as repayment plans go, deferment or forbearance (I’m currently in AmeriCorps — which is like the domestic version of the PeaceCorps — and my loans would not defer!), or forgiveness programs. I am now at the point where I am considering bankruptcy, but I have a sneaking suspicion that I will not be eligible for even this…. Do I have any options available to me whatsoever?
My monthly loan payment is $850 for the first two years (interest-only) and then is supposed to jack up to $1100 after that! :( Can this be legal? Even if I somehow manage to find a job paying $14 or $15/hr., I would only be bringing home around $1500 net…. How am I supposed to survive on $300 or $400 per month? I went to college to have opportunities after I graduated — not to be shackled.
Is there a way for me to reduce my private loan payments? I am not unwilling to pay on them, but I simply cannot live on $300/month. If this is not an option, is there any way at all for me to file for bankruptcy (or anything else) to get rid of the loans? I am beyond caring about my credit — I just need to be able to eat every month.
You ask if it is legal and I’m afraid the answer is yes if you entered into a contract for student loans and you were at least 18 years old. You can attempt to go bankrupt but for the most parts bankruptcy does not discharge student loans unless you can prove the are an unreasonable burden and file a Chapter 11 bankruptcy. You’ll need to find a local bankruptcy attorney and discuss all of this. In fact you can click here to find a local bankruptcy attorney that will give you a free consultation.
participating in AmeriCorp does you some student loan benefits but I believe it is an award you get after twelve months of service to be used towards future education, not to repay past private student loans. Some colleges will match the funds awarded to help the student as well.
Additionally, some of your federal loans may be forgiven as a result of your service. But that really doesn’t do anything to address the private student loan issues.
“Only AmeriCorps VISTA alumni who choose the stipend and have student loans may be eligible for up to 15% cancellation on certain types of loans. To determine what student loans may be eligible for cancellation and to receive forms, contact the U.S. Department of Education at 1-800-433-3243. AmeriCorps VISTA members who choose the education award may not claim a partial cancellation.” – Source
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.