What can you do about college loans, can they be consolidated? Tonia C
Dear Tonia:
The Student Loan Marketing Association, known as Sallie Mae, is a federally chartered corporation that administers about one-third of all guaranteed student loans. Sallie Mae will arrange for loan consolidation, putting all of your student loans in one account. For literature and more information on Sallie Mae, please call 1-800-524-9100.
Dear Susan & Co.,
I have a total student loan debt of around 45,000 dollars. I know that I need to consolidate. Is it possible to consolidate all of my state and federal loans into one loan? Also, I have about 4,000 dollars of credit debt from school... would I be able to put that debt into the student loan consolidation as well?
My repayment is going to take effect next month and I need to take action right this second, if I am to pay rent and other living costs AND pay my loan and credit bills! What are my options? I AM SHAKING IN MY BOOTS!!!! Help me ASAP PLEASE! Jon
Dear Jon:
If you are interested in consolidating your federal student loans, please call 1-800-557-7392 for a complete listing of loans eligible for consolidation and repayment options. You can also check out your consolidation options on the governments website at: www.ed.gov/DirectLoan/consolid.html
Dear Susan & Co.,
I have some disparaging marks on credit report. most are student loans but I don't know who is handling them and I want to get them paid. Can you help me? Marvin
Dear Marvin:
If you have lost track of your student loans, the Federal Financial Aid Information Center at 1-800-433-3243 can help you. The Dept. advises us they have several new programs available to help clients resolve their delinquent student loan problem. You need to call the Dept. at 1-800-621-3115 and speak to one of their representatives and try to work out a repayment plan.
We understand you can also get detailed information on repayment plans, the consequences of defaulting and tips on resolving disputes, from the Dept. web site at: www.ed.gov/offices/ope/dcs/
Dear Susan & Co.,
My husband recently received a letter from a collection agency advising him of an unpaid student loan he took out in 1988 before we were married. My husband does not dispute the debt, that has now almost tripled in amount. The problem is my husband is unemployed. I am the only one employed in the family. The collection agency is threatening my husbands income tax returns and wage garnishment. Well, since I am employed I file joint taxes and carry my husband. My question am I liable for the debt which was incurred before our marriage. Can our tax returns be seized? Can my wage be garnished?? Thanks, D
Dear D:
You are not liable for your husband's student loan but since you file a joint tax return, since your husband's name is on the return, the government can seize your joint tax refund check. But no, your wages cannot be garnished to satisfy the repayment of your husband's delinquent student loan.
Let me strongly encourage your husband to make every effort possible to get this student loan paid. As you are seeing, this student loan will not go away. There is no statute of limitation on a government guaranteed student loan. The government will pursue collecting on this loan until it is paid. And as long as payment arrangements are not made, the government will continue to add interest and collection fees to the balance.
Dear Susan & Co.,
My wife and I have combined our student loans. Our current balance is $45,000. I was curious to know if there are any grants that will pay off some or all of your student loan. We can't afford the $380/month payment and if we don't pay they get keep adding interest. Eddie
Dear Eddie:
To my knowledge, there are no grants available to pay off any student loans. Although you might have difficulty in paying $380 per month, you MUST do everything in your power to make these payments. The penalty is too severe if you don't. Not only will interest be added to your account but collection fees could also be added. The government will report these accounts as delinquent with all the credit reporting agencies, thus possibly preventing you from getting credit in the future. If you become extremely delinquent in the repayment of this loan, the government could attach any income tax refund check you might receive and can garnish both of your wages.
Dear Susan & Co.,
A friend of mine, who works on a Native American reservation, mentioned that the government will forgive my student loans if I can find work on a reservation, is this true? If not, are there other ways to get assistance in paying these loans off? Thanks for your help. Vanessa S
Dear Vanessa:
The U.S. Department of Education has a web site outlining the circumstances when a student loan can be cancelled or discharged. Please go to their site at: www.ed.gov/offices/OPE/DCS/ then click on Cancel/Discharge.
Dear Susan & Co.,
My fiancée has a student loan from almost 10 years ago totaling about $13,000. He has never made any payments on the loan but receives letters from the US Dept. of Ed. all the time asking for payment in full. I don't want my credit messed up because of this but we are not sure where to start. They have never threatened to garnish his wages but they call all the time. He is under the impression that it is off his credit because it has been over 7 years. Also, he thinks that if he starts to make payments then they will report him to the creditors. Can you either dispel or confirm these situations? Thanks. Pat
Dear Pat:
Tell your fiancée the sooner he makes arrangements to get this delinquent student loan paid, the better off he will be. THIS STUDENT LOAN WILL NOT GO AWAY UNTIL IT IS PAID. The chances are overwhelming the payment status of this student loan is showing up, or will show up, on his credit report as a derogatory account. It WILL NOT be removed from his file because it has been over 7 years since he has done anything about this loan.
Also, tell your fiancée he needs to consider himself lucky the US Dept. of Ed. (Dept) has not garnished his wages yet. That doesn't mean they can't, or won't. Since the Dept. knows there is no time limit on when they can pursue garnishment, they don't need to hurry up and take this course of action. They can garnish his wages at any time in the future. At that time they can also add on collection cost, which they might have already done anyway, as well as interest.
Tell your fiancée to call the Dept. IMMEDIATELY at the number shown on the collection letters he has been receiving. The Dept. has several new programs available to help former students resolve their delinquent student loan problem. If he doesn't have any of the letters anymore, tell him to call the Dept. at 1-800-621-3115 for assistance. The longer he waits, the worse off he, and possibly you, will be. I can't emphasize the seriousness of this matter and that something must be done, and done now, to resolve this critical problem.
Dear Susan & Co.,
I had a $1,000.00 student loan in 1971, when I was married. My ex-husband was supposed to pay it and never did. After 28 years, the IRS took my present husband and my tax return. Am I liable for that loan? Cathy
Dear Cathy:
Yes, you are liable for that loan. Even though your ex-husband was supposed to pay the loan, the ultimate responsibility to see that the loan was paid rested with you. In fact and truth, this was your loan and not your ex's.
Because you didn't follow up to see that the loan was paid, you see the end result. Since this loan was guaranteed by the federal government, the debt will not go away until the balance is paid in full. As you experienced, the government will do whatever they can to collect from you. They were able to attach your, and your current husband's tax refund because your name was on the return.
If there is still a balance remaining on this student loan, I would strongly suggest you make arrangements to pay the balance. If you don't, the government can take future tax refunds and possibly garnish your wages.
I was wondering if you could help my friend and I out. My friend, Donna received a letter in the mail today from the Federal Tax Dept. stating that they were going to keep her tax return because she owes money on a school loan (which they say is Federal). My question is, is this still considered a Statue of Limitations law because it is over 5 years old? Or does that only apply to State? She was told that the Statue of Limitations doesn't fall under Federal laws and their are no laws about not being able to collect on a debt over 5 years old when it's Federal, is this right? Dana
Dear Dana:
The majority of student loans are guaranteed by the federal government, meaning if the student doesn't repay the loan, the government will reimburse the original lender and then the government will try to collect the balance remaining.
On all government guaranteed obligations, there is no statute of limitations. The government can, and will take any and all means to collect money owed. This can include attaching an income tax refund check and possibly garnishing the borrowers wages.
The sooner your friend faces the fact this debt will not go away and makes arrangements to get the balance paid, the sooner she can resume a normal financial life and not worry about what the government will do next in an effort to collect from her.
My husband does not have bad credit, he does not have good credit. He has a student loan on his credit report that shows delinquent. This is not a government backed student loan, but one that was issued by his school. The loan originated in 1987, he stopped paying on it in 1989. However, the loan still shows up on his credit report. There is no charge-off or anything. Can they do this? Thanks a bunch! Coco
Dear Coco:
Are you 100% sure this student loan is not a government guaranteed loan? Even though the loan was issued at the school, it still might be guaranteed by the government. If it is a guaranteed loan, this student loan will remain on your husband's credit bureau file until the balance is paid in full. The Federal Financial Aid Information Center at 1-800-433-3243 can help your husband determine if he has a government guaranteed loan.
If your husband does have a government guaranteed student loan, he needs to call the U.S. Department of Education at 1-800-621-3115. They have several programs available to help former students resolve their defaulted student loan problem.
If after calling and determining this is not a government guaranteed loan, your husband needs to write the credit reporting agency and demand they remove this account from his file. By law, after 7 years from the date of last activity on the account, all references to the account must be removed.
Dear Susan & Co.,
I have a school loan and had a very difficult time paying it, due to the fact that I have been in and out of work...
I have had a financial hardship and now I'd like to re-establish my credit, but, my school loan is still an obstacle...
My question is: If I begin to pay that loan, will that open up the opportunity for credit? Please advise! Thank you! Jennie
Dear Jennie:
There is absolutely no doubt your resuming payment on your student loan will be beneficial to your credit. Once you resume regular payments, the creditor might remove the derogatory notations that currently exist on your credit bureau file.
Also, your student loan must eventually be paid. If you don't make payments yourself, the government will garnish your wages to get their money.
For further help and assistance, call the U.S. Department of Education at 1-800-621-3115. They advise us they have several new programs available to help consumers with student loans. Good luck.
Dear Susan & Co.,
I am a young woman who attended college and of course am locked up now in the student loan debt scare. I would like to gain information on the consolidation of these loans before my wages are attached. also I have come into a large sum of money (not enough to pay the loan) and I would like to open accounts/investments without the scare of these companies attaching my funds. Is there any way around this? Thanks - Alarmed of being broke!!
Dear Alarmed:
There are a few agencies that might be able to help you. Call them and pose your question to them. If they can't help you directly, perhaps they can refer you to the right agency for assistance. The agencies are: U.S. Dept of Ed. Default Line at 800-621-3115, U.S. Dept of Ed. Direct Loan Origination Center at 800-557-7392, Sallie Mae's Consolidation Loan Program at 800-524-9100. Good luck.
Dear Susan & Co.,
Please forward information concerning student loan and debt consolidation. Thank you. Cindy
Dear Cindy:
We assume you need to know who you can contact to consolidate your student loans The primary agency is Sallie Mae, a federally chartered corporation To get Sallie Mae's literature on the various programs they offer, call (800) 524-9100.
Dear Susan & Co.,
I am getting married next September. I have a defaulted student loan of about 25,000, and have not made a payment in a couple years, because it really overwhelmed me to think about it. Now, I do not want it to become a source of tension, so help me to get on the right track with this. How much do I pay each month, etc. Thank you Dan H.
Dear Dan:
You will need to make payment arrangements with the creditor who is handling your student loan. If you have lost track of your account, call the Federal Financial Aid Information Center at 1-800-433-3243. Also, the U.S. Department of Education informs us they have several new programs available to help former students with their delinquent loans. To speak to a representative, call 1-800-621-3115. Good luck.
Dear Susan & Co.,
I received a letter from a creditor (Student Loan). The letter clearly stated that if I responded by the 18th of January 1999, that I would still be eligible for a re-payment program that they offer. I called and documented 15 calls (before the 18th). Nobody ever called back. I am now waiting for some sort of letter stating that they will start garnishing my wages.
What are my rights?? I am more than aware that I owe this money and am more than willing to pay a reasonable amount monthly. I am an honest person who went through some hard times (Like all of us) and just want to try and make it right. Please help. Regards, Gerald
Dear Gerald:
Yes, your wages can be garnished for non-payment of a student loan but before they garnish your wages, you must be provided written notice, sent to your last known address, a minimum of 30 days prior to initiating the garnishment proceedings. You then have a right to make payment arrangements that would be acceptable to the agency, to repay the student loan. You also are provided an opportunity for a hearing to discuss repayment arrangements.
If your wages are ultimately garnished, the maximum amount that can be deducted from any pay period may not exceed 10 percent of disposable pay, unless you agree in writing to a greater percentage.
Dear Susan & Co.,
I recently received a paycheck only to discover I had a wage garnishment due to overdue student loans. It is my understanding that the debt collector is required to give me a 30 day notice prior to any action. I contacted the debt collector to make arrangements to repay the debt. I was told that the garnishment had gone into effect and would not be released for a period of one year at which time I could enter into a voluntary agreement. The amount they are deducting from my paycheck is causing a financial hardship for my wife and children. I am not doubting the validity of the debt, only the means that they are trying to collect. Is there anything I can do? OSL
Dear OSL:
At this point, there is nothing you can do to stop the garnishment. Prior to this action, you were given an opportunity to ask for a hearing to plead you hardship. Since you apparently didn't respond to any prior attempts to resolve this matter, you left the government no choice but to garnish your wages to collect on this student loan. Sorry
Dear Susan & Co.,
I would like to find out if there is any way to negotiate a better interest rate on our student loans. My husband is a chiropractor and has large student loans. At the current rate of payment, it will be 30 years before we will be able to pay it off. We are only able to pay just about $50 more than the interest that is piling up. Do you have any suggestions? We are current on our loans, but would like to know if there are any ways to get ahead on these loans. Thank you, Suzie
Dear Suzie:
To my knowledge, no provisions are available to negotiate a lower interest rate on government guaranteed student loans. My only suggestion is to call the U.S. Department of Education Service Center at 1-800-621-3115. Speak to a representative at this Service Center to see if they will work with you in readjusting your interest. Good luck.
Dear Susan & Co.,
How do I find out the top 10 "private" education loans (for grad school)? Nellie Mae (?) Citibank (?) How do you know which one is the "TOP" and the best for the consumer? Thanks . Freshman
Dear Freshman:
The answer to your above question is very subjective and difficult for us to answer. My suggestion is to contact the financial aid office at the college you plan to attend. Ask them to give you a list of what they feel is the top private student loan lenders. Since they deal with this issue on a constant basis, they should be able to supply you with this list better than us. Good luck.
Dear Susan & Co.,
Over the past year I have completely neglected my repayment of one of my student loans because of other major financial responsibilities. Both my wife and I have over the past year reduces our overall credit card debt from $5,000 to $850 however we need to reestablish payment plans with the student loan organizations. Our overall student loan debt is $17,000 from two different agencies. I have over the past month establish a repayment plan for both agencies which would allow us to pay off this debt by December of 1999 which would allow us to maintain a living however one of these loans have been forwarded to a collection agency. My question is how do I deal with this collection agency? Because I cannot pay off this debt all at once. Should I send them my plan with a letter?
We are also attempting the repair our credit from this situation.
Signed, Looking for direction from someone who has been completely irresponsible. Sam
Dear Sam:
When dealing with a collection agency, they will probably not want to accept monthly payments but instead demand that you pay the balance in full. They might even demand that you send them post dated checks paying the balance in full. You do not have to comply with either one of these demands. You can make payment on this student loan and please do not send them post dated checks.
My suggestion is to send the collection agency payments on your student loan. Don't bother to enclose a letter explaining your plan. The collection agency doesn't care about your plan. They only care about your sending them money. Continue to send the collection agency monthly installments. If they continue to contact you demanding more money, write them a letter demanding that they stop contacting you. The Federal Fair Debt Collection Practices Act states you can stop a collector from contacting you by writing a letter to the collection agency telling them to stop. Once the agency receives your letter, they may not contact you again except to say they intend to take some specific action. Good luck on your dealings with this situation.
Dear Susan & Co.,
Our main concern is my HEAL student loan with Sallie Mae. The original amount for my Ph.D. after four years of school was 49,500. I went into the Army as a commissioned officer. At that time they said they couldn't help in paying off the loans so the loans were deferred for three years. As we got on our feet from low Army pay we continued with a forbearance. We paid on a few payments then had to go into forbearance again due to medical emergency. Then again as I was called to Germany with the Reserves for Operation Joint Endeavor. Needless to say the loans kept getting larger and larger due to the fact that the interest was not deferrable and added back to the principal and interest charged on that. We now owe Sallie Mae $144,318.35 with a minimum monthly payment of 496.09 set by Sallie Mae. As we have three children under the age of 10, we are just about paycheck to paycheck. We have no more credit card debt. However, we do have IRS $170 per month, State of California Tax amount monthly not yet determined, SLS loan $50 per month, CMAC promissory note $150 per month with 0 interest, a bank loan of $100 per month with 0 interest, and a car loan at $497.17 per month.
The car loan is only five months old with all payments on time. The bank loan is on time every month due to automatic withdrawal from our checking account. I can do the same with CMAC, but they only do withdrawal on the first of the month and I am concerned about cash flow. Also the IRS I can do by automatic withdrawal, but again I am concerned about cash flow. The SLS loan is small by comparison in payment and balance.
Can there be some kind of negotiation with Sallie Mae being that the bulk of the loan is interest?
Thanks for your help. William & Victoria
Dear William & Victoria:
The Student Loan Marketing Association, known as Sallie Mae, suggest clients who have, or anticipate having problems with their student loan(s), call their office direct to make arrangements to resolve their problem. Sallie Mae's phone number to speak to a representative is 1-800-524-9100.
If you have a student loan that is held by the U.S. Department of Education (Department), call one of their representatives at 1-800-621-3115. The Department has several new programs available to help clients resolve their student loan problems. Good luck.
Dear Susan & Co.,
I am of eastern Cherokee descent and believe that I have enough blood quantum to qualify for school loan assistance. I am already graduated, but waswondering if there is a possibility that I may still be eligible for assistance. Thank you, Mark C
Dear Mark:
To see if you qualify for school loan assistance, you will need to check with the U.S. Department of Education. You will need to complete a Free Application for Federal Student Aid (FAFSA). You can get a FSFA from your high school, the college or career school you plan to attend or contact: Federal Student Aid Information Center, P.O. Box 84, Washington, DC 20044, phone 1-800-4FEDAID.
Dear Susan & Co.,
I have $13,000 in unpaid student loans and have made no effort to repay. I saw my first IRS return go towards my debt this year. I am not to far from having my entire account turned over to the US Department of Education (ED). The creditor that currently holds my loan says there will be a 45.8% penalty applied to my debt if it is turned over to ED, this sounds a bit outrageous to me; can this be so.
I really don't have a problem with the IRS keeping my refunds because I changed the status on my W2 so that I will owe the government at the end of each year.
What I want to know is what can ED do legally to try to obtain my outstanding balance. I have been told that after my account reaches ED they send it to another collection agency and if continue with no response they will then consider wage garnishment and if I avoid this they will file a claim against me with the federal justice department blemishing my 7000 criminal record and possibly facing jail time. Is any of this true??
I currently do not care about my credit rating and don't know if I ever will. Please advise me. Tim
Dear Tim:
Face the fact you MUST get this student loan cleared up as soon as possible because the negative implications are too severe if you don't. The reality is you owe Uncle Sam and he's not going to go away. He will eventually get you.
The creditor is correct in stating they can add severe penalty fees to your account. This is totally legal. The government can also garnish your wages and I read recently where the government took doctors, lawyers and other high profile citizens to court over unpaid student loans. I don't know if these citizens could, or would, go to jail for non-payment because they all paid their student loans or made arrangement to have payments made. Because all agreed to paying back their loans, the judge must have convinced them, perhaps by threatening to send them to jail, if they didn't make restitution on the loans. I imagine the judge saying if they didn't repay their loans, they are in contempt of the court and this offense is punishable by jail time as long as they remain in contempt. This could happen to you also.
Dear Susan & Co.,
I finished college in 1991 with two college loans (state loan and Perkins). Until recently I had made very few payments. The state loan has defaulted, but I have made arrangements to rehabilitate so that the current status of loan will be taken off my credit report. The Perkins Loan has been sent to a collection agency and they have told me that I must consolidate the two loans. If I do, the state loan will be on my credit report as defaulted and repaid. I need to know if I have any rights? Do I have to consolidate or can I continue to make payments to this collection agency, or can they sue me for not paying them the entire amount immediately. Please help. Amy
Dear Amy:
No, you do not have to consolidate the two loans. The collection agency is just trying to put pressure on you to do something that is more in their interest than your interest. Just because you won't do what they want doesn't give them the right or authorization to sue you. You can continue to make payments to them without the fear of being sued.
On defaulted government guaranteed student loans, you have a right to be given an opportunity to work out a repayment plan with the Department of Education (Department). If you feel uncomfortable dealing with the collection agency, call the Department at 1-800-621-3115. The Department has several new programs available to help students repay their loans. If you still are not able to resolve you student loan problems, call your nearest CCCS office and set an appointment to speak to a financial counselor. CCCS counselors have vast experience in dealing with situations like yours and should be able to come up with a realistic solution to your problem.
Dear Susan & Co.,
I graduated from college two years ago with a combined Stafford and Perkins debt burden of approximately $25,000. My partner and I will be attending graduate school together this fall, and the combined fellowship offer for us is such that I think we could afford to continue paying on those loans rather than deferring them for the duration of our Ph.D. programs. I have thus been advocating that we take this route - debt makes me uneasy (I carry no consumer debt), and it seems attractive to me to be able to avoid deferment.
However, my partner recommends an alternative: that we go ahead and defer the loans and invest the money we would otherwise have paid into them in mutual funds or something that would allow us to "beat" the interest rate on the student loans, then use that money after completing the Ph.D. to make one substantial payment, rather than continuing to pay month by month.
I am an inexperienced investor, and this sounds tricky to me. What would you recommend? Heather
Dear Heather:
This is a tough question to answer because you both offer logic in the course of action you want to take. Some people are uncomfortable with any debt and want to get out of debt regardless of any and all other factors. You seem to fall into this category and getting out of debt is the correct recommendation. Others are comfortable with debt that is manageable and use debt to their advantage.
An example of manageable debt and using debt to your advantage would be charging something to a credit card and 'floating' for 30 days and paying the balance in full when the statement come in. Deferred student loans can also be considered using debt to your advantage. You're using the government's money and don't have to pay for its use until some time in the future.
Your partner's logic of investing the money in mutual funds is good advice...to an extent. In investing, there is no such thing as a sure thing. Any and all investments carry a certain degree of risk. As I write this, the stock market is up about 13% for the year but for the past week, the market is down about 3%. Where will your investments be when you need the money? Will your investments be up or down? NOBODY can accurately predict that answer.
What issues would the money be invested and for how long a period of time? A general rule with investing is if you need the money within five years, you are better off putting your money in safe securities such as money market accounts, certificates of deposits or Treasury bills.
The correct decision for you and your partner will require further discussion, further research and perhaps compromise from one or both of you. Good luck and if I can offer further advise or suggestions, please email me again.
Dear Susan & Co.,
I am in the same situation as about a million+ other people with defaulted student loans. I have had the money to pay this loan for the past 7 years. I have requested information about the loan, account history to verify correct IRS payments and interest, and attempted to make a lump sum payment.
The current holder of the loan will not accept a payment, will not even talk to me and the collection agency they employ is abusive and I will not deal with them. The collection agency has gotten to the point of phoning me daily and screaming at me, this is unacceptable. With so many people having this same problem, where do I find the solution?
I can't even find an attorney informed enough on this matter to deal with it for me. It's a no win situation as far as I can see... What can be done? Thanks, Trish
Dear Trish:
Yes... you must make arrangements to get your student loan paid but no...you do not have to take any abuse from any collector. There is a Federal law, the "Fair Debt Collection Practices Act" that specifically prohibits the collector from repeatedly using the phone to annoy someone. And that appears to be what they are doing to you.
The U.S. Department of Education (Department) has several new programs available to help former students resolve their outstanding student loan debt. Call them at 1-800-621-3115.
If you are unable to get your student loan problem resolved with the Department, call your nearest CCCS office and set an appointment to speak with a financial counselor. CCCS counselors have extensive experience dealing with delinquent student loan issues.
If it is inconvenient or if there isn't a CCCS office close to you, consider calling our affiliate Money Management International (MMI) at 1-800-762-2271. MMI does counseling over the phone, by mail, email and fax. Counselors are on duty 24 hours a day, 7 days a week.
Dear Susan & Co.,
I recently graduated grad school (4 years ago), consolidated my student loan to a 30 year fixed rate at 8%. My payments are approx. $485/month. I recently bought a house, have some money invested in mutual funds and am partners on another mortgage on a small shopping center (5 units). I recently married a woman who is in the same boat I am financially (consolidated 30 years at 9%, approx. $700/month payment). My question is " Is there a way to write off the interest to my or her loan?" All advisors told me to get a home equity loan, but where can I get a HEL of 50 or 140 thousand dollars with only a year into my home mortgage? Is there a bank out there that will take over my student loan even though I got it unsecured from the gov't?
Any info greatly appreciated. Charles F
Dear Charles F:
As you seem to be aware, the interest on a student loan is not tax-deductible under any circumstances that I am aware of. And the chance of you getting these loans consolidated into some type of real estate loan, which interest is tax deductible, is just about out of the question.
It appears as if you must resign yourself to paying interest on these student loans without the benefit of being able to use the interest as an itemized deduction on your tax return.
Dear Susan & Co.,
I recently saw your posting and wanted to write in my concern after meeting with a debt management counselor and discussing a plan to eliminate my unsecured debt within three and a half years. During this discussion, the counselor emphasized that I should neither apply for nor accept any new accounts or credit cards and that before buying a new home or car, I needed to talk with the group. She knows that I am in graduate school, that I have graduate level Stafford loans, and did not intimate that I should quit school (or drop my student loans) when I told her about them. However, after reading the introductory information, I am concerned that I will be asked or required to drop the Stafford loans that will allow me to finish my Master’s degree within the year.
As all my credit payments are current and I have no slow pays or charge-offs, I fear that going through a debt management program will not only threaten my current payment rating but keep me from completing an education that precludes my future income if I am able to keep my education loans active for the last three semesters of my degree.
I would appreciate you opinion in this matter as my work hours make it difficult to call my area office, and I am having second thoughts about joining the program as the proposed budget leaves no savings whatsoever at the end of the month to cover emergencies, and I am already having an emergency with my car. Thanks, Amelia
Dear Amelia:
You have brought up several concerns which I believe would be best addressed by your debt management counselor. She has time set aside during the day for phone interviews so you could call customer service and set up a time convenient for both of you. I would encourage you to also schedule another visit with your counselor to get advice on saving for emergencies and unexpected expenses.
Regarding your Stafford loans, many debt management clients are obtaining more student loans while on a Debt Management Plan. The best source of information on this would be your lender. They can tell you whether a repayment plan would jeopardize your chances of obtaining a loan through your institution. Some lenders do not use a credit check system for students who have previously qualified.
Thanks for writing.
Dear Susan & Co.,
I was glad to read your responses on the net. I hope you can shed some light on my dark finances.
I have an outrageous debt with the Educational Assistance Foundation - approximately $7,000. I have finally been employed for a year with a university and now have my wages garnished. Do I have any time to try and have the amount that is garnished lowered? I have informed them of my financial difficulties and I know they want their payment, but they have taken a great sum out of my paycheck. What can I do to pay them and sufficiently live with two children as a single parent? Margaret
Dear Margaret:
This is indeed a difficult situation. The first step you might consider would be to talk to a representative from the foundation who is handling your loan. They may be able to make some recommendations.
You also may be entitled to a hearing by telephone on this issue. Contact your lender regarding this. Think about writing a detailed letter describing your financial situation to the lender. That way, your problem might be routed to the proper department in that organization.
If nothing is resolved this way try these things:
Become a budget wizard: Read all sorts of books on saving money. There are usually some ways any person can make do with less. Try the "Tightwad Gazette" by Amy Dazsciyn to get you started.
Check your withholding. Are you claiming the proper number of exemptions for your family? An estimated withholding form, Publication 919, is available from the IRS to use to figure withholding on a year-to-year basis.
Are you receiving child support? If not, think about filing for some help through your state agency.
Try a part time job. Consider a job that allows you to take your children with you, such as a paper route, working at the church nursery on weekends, or home daycare for parents who are working nights or weekends. This will give you some help during this period and can be discontinued when the debt is paid.
Don't forget to ask the lender for a payout estimate. This will give you an idea of how long you would have to work an extra job.
I know this sounds difficult, but many seemingly "impossible tasks" are do-able for a finite period of time. My hat is off to you for seeking responsible solutions.
Thanks for writing.
Dear Susan & Co.,
I have been paying back my student loans for about 5 years. All payments have been made not more than 3 weeks late.
My August payment which I mailed on time was never received. In September, I agreed to stop payment on that check and send a new check covering both August and September payments. That second check also disappeared. I also was told that my loans have been transferred to a new managing agency.
So I sent my October check to the new agency which arrived without a problem. Now, I am getting collection notices from the new company. Should I incur the stop payment charge on yet another check? Or should I do what the old company and the new have told me to do: "Wait a little longer?" Thank you. Jessica
Dear Jessica:
The terrors of Freddy Kreuger pale in comparison to the horrors of a student loan gone to collections. Obviously, your account has fallen into The Transference of Account Abyss.
When your account was transferred, your account number may have been deleted from the old company's system, making it impossible to post your payment. It's also possible that the accounting department was not told where to forward your account.
Since the check was not returned to you or forwarded to the new company, it may very well be lying in a drawer in the "What the heck do I do with this?" file. I said it was a nightmare.
So now, using your best interpersonal skills, call the accounting department of the old company and ask for their help. "I know that the process of switching accounts from one place to another can get complicated. Could you please, please check to see if my check is still in-house with you? I really appreciate your taking the time to check, etc."
It is possible that the check is there and that they will mail it back to you. Or they may tell you that they forwarded the check on to the new company. In which case, you will repeat the procedure above with the new company.
If all else fails, when the "little bit longer" runs out - how long was that, anyway? - then stop payment and issue the new company payment for August and September. And for heaven's sake, let's not have any more of this just 3 weeks late stuff! Good luck!
Dear Susan & Co.,
Because I stopped paying on a student loan, I was notified last spring that a judgment was rendered against me to garnish my wages. How long does this process take? Should I call the debt collectors or wait until they start garnishing? Maybe I'll get lost in the computer again? I'm still not in a position to pay $100 monthly, let alone the $350 they can garnish. Help! What can I do? Dave in NYC
Dear Dave:
I wouldn't count on staying lost in cyberspace. There's this thing called skip-tracing at which most collectors are quite proficient.
Student loans do not go away. As a matter of fact, they get bigger the longer you ignore them. I've seen a $16,000 student loan grow to a $72,000 student loan as a results of the avoidance-as-solution tactic. Give it up. You gotta pay.
Before you call the collectors, make a plan. You'll need extra income (part-time job), a sizable good faith payment on hand, and a monthly payment you can afford. Garnishment might be avoided if they accept your new plan. Be prepared to immediately overnight them your good faith payment. If they accept your plan, call them every month when you put the payment in the mail. Keep the agreement to the letter.
If garnishment proceeds anyway, then at least the suspense will be over and the debt will be paid down. You can do this. Good luck.