Took out student loans at 8.5 % interest rate in middle 90’s to enable me to get Bachelors degree to be a teacher, have been making payments off and on since depending upon if I could afford them or not. Have used up all forbearances, etc…options, and am currently in about month 6 of a year long income sensitive repayment plan.
I owe about 35,000 and currently the 120 monthly payment, NOTHING, is going to the principle. I have no chance to pay this off as long as I am forced to play this game. I cannot ever foresee being able to make monthly payments of 300 to 500 to pay it off; They refuse to negotiate any lower interest rates, they refuse to apply payment amounts that I can afford to the principle, and sadly have the law on their side to hound me to my death.
I have 250,000 life insurance policy that has been in place for 15 years now. I believe my student loans are only in my name, but I’m not totally sure of that – If I kill myself, will sallie mae try to take that money to repay the debt?
It is my understanding that Sallie Mae could only look to your estate for repayment if you are the only one responsible for the loans. That’s a big deal and certainly worth carefully checking. I would not make any assumptions you were.
I believe that the life insurance proceeds would go to the designated beneficiary outside the control of any creditor.
Before you consider anything drastic you might want to read The Ultimate Guide to Dealing With Student Loans You Can’t Afford.
I would never be an advocate for suicide over student loans. I’ve heard the same refrain from others as well.
If you find yourself in an unmanageable place when it comes to the student loans you can buy five years or so by considering a chapter 13 bankruptcy. More people are looking to rolling chapter 13 bankruptcies to pay what they can afford now in hopes of Congress or the Consumer Financial Protection Bureau passing new rules regarding allowances for private student loans.
But just because your loans are with Sallie Mae, does not mean they are automatically private loans. If they are subsidized loans they would be eligible for the programs I talk about in my student loan guide.
You can click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.
Please post your responses and follow-up messages to me on this in the comments section below.Big Hug!
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