Worried about paying off student loan debt

KelRN215, BSN, RN · Nov 17, 2013

If you can call having taken 6-1/2 years to pay off federal loans and still having 40K in private loans left hopeful, you are a very optimistic person.

I didn't say it took me 6 1/2 years to pay off my federal loans- I said I graduated 6 1/2 years ago and that ALL federal loans are long paid off... as in, they were paid off years ago. I have never had problems paying my bills- I am 29 years old and I own a home (by myself) which I purchased at the age of 27. When I bought my car last year, the financial person at the dealership told me I had the best credit score for someone of my age that he'd ever seen. I pay more than what I owe every month (on all loans- mortgage, car and student loans) to drive down the cost of the principle sooner and limit the amount of interest I'll pay in the end. I do not need to make a payment on my car or student loans until well until 2014 because of how far in advance I am paid but I still make payments every month.

I qualified for free tuition at any public university in my state because of my scores on the high school state assessment test. I did not go this route because there was no state university I wanted to attend. I have never regretted my education and the person I am today was shaped by the university I attended.

joanna73, BSN, RN · Nov 17, 2013

Before I accepted any loans, I made a 5 year plan and a budget. I calculated my monthly payments in relation to my expenses in advance. Cable, cell phone and many extras were out during my four years of school.

People need to be realistic. If your monthly loan payment is 600- 1000 in addition to living expenses, that doesn't leave much. The average take home pay is anywhere from 2000- 3000 per month for new grads depending where you work. If it takes 6-9 months to start working, that means nothing substantial will be paid on that loan.

For your own well being, do the math. Taking out 80-100 k in loans is very unwise. You'll be making payments for 10- 20 years on average, especially if you've got the mindset of only paying the minimum.

wirehead · Nov 17, 2013

I didn't say it took me 6 1/2 years to pay off my federal loans- I said I graduated 6 1/2 years ago and that ALL federal loans are long paid off... as in, they were paid off years ago. I have never had problems paying my bills- I am 29 years old and I own a home (by myself) which I purchased at the age of 27. When I bought my car last year, the financial person at the dealership told me I had the best credit score for someone of my age that he'd ever seen. I pay more than what I owe every month (on all loans- mortgage, car and student loans) to drive down the cost of the principle sooner and limit the amount of interest I'll pay in the end. I do not need to make a payment on my car or student loans until well until 2014 because of how far in advance I am paid but I still make payments every month.
I qualified for free tuition at any public university in my state because of my scores on the high school state assessment test. I did not go this route because there was no state university I wanted to attend. I have never regretted my education and the person I am today was shaped by the university I attended.

tomato tomato, you're out of school 6-1/2 years and still have 40K in student loans. I think that's awesome that you have a great credit score, you own your own home, and are so smart that you qualified for free tuition at any public university in your state. That's the beauty of this country, if you want to spend 100K on something you could get your for free, that's entirely up to you. Please keep in mind, you get out of whatever program you attend what you put into it. I myself went to a private school costing me roughly 40K, but I graduated with zero debt because I took no loans, no interest, I paid upfront. I did not let my school shape me, I took what I learned and shaped myself into the person I am.

There are so many variables to your argument, and quite frankly we're way off the original OP's issue, no university is worth 100K for a BSN, he is going to have a hard time paying that off, you got out at the right time, you have a job, he's facing a poor economy, and less available jobs for those without experience.

Stephalump · Nov 17, 2013

tomato tomato you're out of school 6-1/2 years and still have 40K in student loans. I think that's awesome that you have a great credit score, you own your own home, and are so smart that you qualified for free tuition at any public university in your state. That's the beauty of this country, if you want to spend 100K on something you could get your 25K, that's entirely up to you. There are so many variables to your argument, and quite frankly we're way off the original OP's issue, no university is worth 100K for a BSN, he is going to have a hard time paying that off, you got out at the right time, you have a job, he's facing a poor economy, and less available jobs for those without experience.[/quote']
Yup, pretty much.

Dakeirus · Nov 17, 2013

I had 90k+ student loans by the time I graduated. I've been working for almost a year and a half now and have paid off about 30k. It could have been more if I didn't have an addiction (shopping) lol. But my advice is if you're fairly young and your parents are willing to let you stay with them for a few years, then by all means stay with them for a few years while you pay off your debt. Just make sure you contribute to the household expenses. :)

rumwynnieRN · Nov 17, 2013

You also have to make 120 payments before you can qualify. So it's not a few years, it's 10 years.

Yes you do, but they also said you could pay it off early to avoid paying a lot of interest. I'm paying off my private loan first before getting rid of my federal loans. Total minimum on federal loans and a lot more on the private loan.

manusko · Nov 17, 2013

Yes you do, but they also said you could pay it off early to avoid paying a lot of interest. I'm paying off my private loan first before getting rid of my federal loans. Total minimum on federal loans and a lot more on the private loan.

Yes but if you make the payments over 10 years your loans will already be paid off unless you qualify for the pay as you earn adjustment. This made more sense when loan repayments were over 20 years.

NICUmiiki, DNP, NP · Nov 17, 2013

Yes but if you make the payments over 10 years your loans will already be paid off unless you qualify for the pay as you earn adjustment. This made more sense when loan repayments were over 20 years.

If you qualify for the extended repayment terms (most with higher loan amounts do), you pay less than you would under the 10 year repayment and whatever is left after 10 years of payments is forgiven.

I plan on taking advantage of this. With pay-as-you-earn I estimate my payments to be about $200 per month my first year and will rise each year as I earn more. Let's say my average payment is $250 over the 10 years (120 payments); I will have paid approximately $30,000 over the 10 years. I will have about $50,000 in federal direct loans (all eligible) when I graduate, so $20,000 of the loaned money plus whatever interest that accumulates will be forgiven.

You have to pay great attention to the payments you make though. To be counted as one of the eligible 120 payments, they have to be a regular payment (no extra payments or payments made during forbearance or grace periods), and you have to be working in a public service job full time.

brandy1017, ASN, RN · Nov 17, 2013

I wouldn't be surprised. What the heck...we bail everyone else out.

The govt has no plans to bail out students. They are actually making money even with the defaults. They already pay off lenders and then continue to collect what is due when a student defaults. There are now over 100,000 people having their social security garnished for unpaid student loans and this is rising. They will come after you until you die, then they have life insurance on the policy and will be paid in full. Private lenders usually don't have life insurance and so will continue to come after any co-signers even after your death! You literally should have a life insurance policy on yourself large enough to pay off the loan if you have anyone cosigning on your private loans for their sake!

The problem is the individuals in default will face lifelong destitution, ruined credit, inability to get car loans or buy a house, difficulty getting jobs. They may lose their license to practice, the govt bars people from holding jobs if they default and credit checks are now commonly being used by employers. This individual pain will leave a lot of people poor, underemployed, less likely to get married or have children and on a broad scale it is damaging the economy when so many people are unable to spend money on homes, cars, businesses and simply consumer spending.

brandy1017, ASN, RN · Nov 17, 2013

Heck, my mortgage is less than that loan payment. I understand inflation and all of that, but good grief! I graduated from my BSN program in 2005 having paid $45,000 total- for 5 years at a private college (changed majors in sophomore year). I took advantage of as many scholarships as I could apply for- my total debt after graduation was less than half the cost. My MSN program totals about $25,000- only $16,000 in loans, and a big chunk of that will be paid off by tuition reimbursement payments over the next year. I still can't believe people are paying more than what I'm paying for two degrees for an undergraduate degree.
As for the OP's question, it all depends on how you budget and what you're willing to sacrifice. I wanted to pay as much of my graduate degree out of pocket as I could. This means I drive a 10 year old car that is paid off, haven't taken a vacation in three years, and save every penny I can. Those pennies will be going to pay off my student loan- at 6.8%, it's the highest interest rate loan I have (even higher than my mortgage!). If I can afford it, I fully intend to pay more than the minimum payment so that I can pay it off sooner and pay less interest.

If you have enough equity in your house you might consider a home equity loan or cash out refi because as you said home interest rates are at record lows and are much lower than the student loans. Also the interest is fully tax deductible which is not the case with student loans.

I would keep meticulous records re your student loans because I've read of cases where people said lenders lied about what they owed and they had no recourse. It ticks me off how we are lied to by govt and the media and encouraged to take out student loans when there are no consumer protections and the game is so rigged against the student! You can only consolidate ie refinance your student loans once and no matter if interest rates drop after you are stuck paying a much higher rate that is why I encourage thinking outside the box and considering a home equity loan if that is an option. While govt loans have a deferment/forbearance option and income based repayment these are not ideal and I don't think these benefits outweigh the many disadvantages and dangers! Also I've read of student lenders Sallie Mae is well known to rip people off by deferring for 3 month periods only and then requiring a fee of $50 or more each time just so they can profit from student's troubles!

Calabria, BSN, RN · Nov 17, 2013

I graduated in December 2010 with $60,000 in student loan debt. That was between 2 different Bachelor's degrees, and in spite of going to the school with the most value available to me. It was not ideal, but I had little help from my parents, and I worked 3 jobs through my first degree to try to offset costs. When I took out my loans, I knew what my monthly payments would be in relation to my monthly earnings, and I knew that I wouldn't be struggling every month to survive. And it's true: my partner and I live comfortably, we have a healthy savings account and retirement funds, and we should have all student loan debt wiped out within the next 2 or 3 years.

I now have $30,000 of debt left, after working only 3 years, because I make extra payments on my loans, which enables me to pay them off early. It's painful to think that I could have had $30,000 in the bank if I went to school for free, but that wasn't an option for me. I would not have taken out more debt for my education if I had to, though. $100,000 is way too much money... some people in my class did take out that much money. I'm not sure what their financial situations are like, but if they are anything like mine, they must have a hell of a time making ends meet every month.

The_Optimist · Nov 17, 2013

That will be a very poor return on investment(100k tuition) with no certainty of employment immediately upon graduation.The idea is to go to school and come out better and not go to school and come out with a clutch around your neck.Scout around for better affordable schools.