“Dear Steve,
I was divorced in 1990 and went back to school to earn a degree. Graduated summa cum laude in 1995 with a degree in English. Toiled away in low-paying jobs to support my children. Got forbearance on loans, but interest accrued. Went to grad school to try to better my situation, but family responsibilities forced me to withdraw after three semesters.
This doubled my principle. Principle and interest put my indebtedness at nearly $125,000!! Though I have a decent job now, my credit score is trashed so I’m paying outrageous interest on my car loan and my insurance premiums have increased as well. The monthly payments on my student loans is around $600/month. There is no way I can afford this. I worry about this constantly and am at a complete loss as to how to overcome this obstacle.
How can I repay this debt?
Cheryl”
Dear Cheryl,
Is this a private or government student loan?
Please post your answer in the comments below.

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Unfortunately, due to my daughter’s condition, I’m unable to take on an additional job. I really don’t want to give up my current job because they offer good medical coverage, which we desperately need. Furthermore, my current employer understands my daughter’s situation and has been extremely generous in allowing flexibility in my work schedule. Looks like there really isn’t a solution. Should I start buying lottery tickets? 🙁
Unfortunately, due to my daughter’s condition, I’m unable to take on an additional job. I really don’t want to give up my current job because they offer good medical coverage, which we desperately need. Furthermore, my current employer understands my daughter’s situation and has been extremely generous in allowing flexibility in my work schedule. Looks like there really isn’t a solution. Should I start buying lottery tickets? 🙁
There might be a little room for some reductions in the budget but are there any opportunities for additional income?
Money problems are resolved with increasing income, reducing expenses or a combination of the both.
Here is my monthly budget:
Rent    825
Car Payment 450
Groceries   250
Loan*Â Â Â Â 170
Car/Renter Insurance**Â 170
Revolving Credit  130
Gas/Electric   130
Cable/Internet 120
Gas in car    60
Credit Cards 50
School lunches  50
Medical  85
Cell phone  70
Then there are those other expenses that crop up:
Vehicle registration (annual)Â Â 75
Public School registration (annual)Â 500
Oil Changes (quarterly)Â Â 20
Clothes/shoes
Car repairs/maintenance (e.g. I need new tires – $300)
*Â One of the grad school loans in rehab
** Due to credit score and an accident, premium was raised to $250! Increasing my deductible to $2500 lowered my premium to $170.
Tell me about your other expenses. Do you have any other monthly obligations that you pay? Credit cards, etc?
Thanks, Steve. I have looked into IBR. That’s where the $600/month payment came from. Of course, that doesn’t take into consideration the last two semesters of grad school. When those loans are added in, monthly payments come closer to $900! Unfortunately, the Dept. of Education considers income only. There is no consideration for the fact that cost of living has increased steadily, but I haven’t received a raise in three years, or the fact that the new biennium budget in Wisconsin effectively cuts my pay by 8%, or the fact that I have a special-needs child. Making severe cuts to my budget, I could free up about $100-200/month. But that doesn’t come anywhere near my monthly payment amount. I’m competely overwhelmed by this situation.
In that case look into the Income Based Repayment program. IBR.
Ask your servicer for details. It will give you a payment based on your income if you qualify.
Hi Steve –
I’m pretty sure they’re all government loans – subsidized and unsubsidized Stafford Loans.
Thanks!
Cheryl
Hi Steve –
I’m pretty sure they’re all government loans – subsidized and unsubsidized Stafford Loans.
Thanks!
Cheryl
In that case look into the Income Based Repayment program. IBR.
Ask your servicer for details. It will give you a payment based on your income if you qualify.
Thanks, Steve. I have looked into IBR. That’s where the $600/month payment came from. Of course, that doesn’t take into consideration the last two semesters of grad school. When those loans are added in, monthly payments come closer to $900! Unfortunately, the Dept. of Education considers income only. There is no consideration for the fact that cost of living has increased steadily, but I haven’t received a raise in three years, or the fact that the new biennium budget in Wisconsin effectively cuts my pay by 8%, or the fact that I have a special-needs child. Making severe cuts to my budget, I could free up about $100-200/month. But that doesn’t come anywhere near my monthly payment amount. I’m competely overwhelmed by this situation.
Tell me about your other expenses. Do you have any other monthly obligations that you pay? Credit cards, etc?
Here is my monthly budget:
Rent 825
Car Payment 450
Groceries 250
Loan* 170
Car/Renter Insurance** 170
Revolving Credit 130
Gas/Electric 130
Cable/Internet 120
Gas in car 60
Credit Cards 50
School lunches 50
Medical 85
Cell phone 70
Then there are those other expenses that crop up:
Vehicle registration (annual) 75
Public School registration (annual) 500
Oil Changes (quarterly) 20
Clothes/shoes
Car repairs/maintenance (e.g. I need new tires – $300)
* One of the grad school loans in rehab
** Due to credit score and an accident, premium was raised to $250! Increasing my deductible to $2500 lowered my premium to $170.
There might be a little room for some reductions in the budget but are there any opportunities for additional income?
Money problems are resolved with increasing income, reducing expenses or a combination of the both.