I Have $200,000 in Student Loans. – Kane

“Dear Steve,

I did undergrad and grad school straight through and financed everything. I racked up nearly $200,000 in federal and private debt. I have all my private debt consolidated into a direct loan consolidation with standard repayment, and I have another $50k in private student loans all from different lenders – a total of about 7 loans. To top it off I have about 10k in credit card debt. I have been paying those cards off in order of highest interest rate.

I cannot consolidate my private loans. I had an application with 4 co-signers on it with Wells fargo and they approved it, and then denied it a day later. It’s been really hard to balance out all these separate loans with variable interest rates, the federal loan, credit cards, rent, and bills, but I have been doing it.

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I’m wondering the best order in which I should be attacking these expenses. Basically I have been savagely paying off the credit cards – $500-$700 at a clip, paying the minimum on the private loans, and paying the minimum on the federal loan. I can do this, but I’m very tight on money still, so can’t put any extra in. Does this seem like the correct approach? Any suggestions about the private loans?


Dear Kane,

I’m afraid on the private loans, there are few, if any options.

Best course of action is work your way up the corporate ladder and hopefully earn more money to pay this off. The student loans essentially mortgaged future income against education. Now you’ve got to pay up.

Your approach seems logical to me but what I’d like to see you do, if you don’t have one now, is build an emergency fund first before sending extra to the cards. Get at least $2,000 in a savings account to fall back on in case of an unexpected expense surprise. That way it won’t land on the cards and erode any debt reduction progress you’ve made so far.

Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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