“I didn’t know what to do. I felt really lost for a long time.”
That’s Krista, a teacher who graduated with $40,000 in federal and private loans. And in that statement, she voiced how many people with student loans feel.
Her story is one of many featured in the recent episodes of the Death, Sex & Money podcast about student loans.
The podcast revealed some important lessons and, more importantly, reminded us that we’re not alone in the student loan struggle.
What to do about your student loans in these 3 situations
Anna Sale, who’s hosted the podcast since its launch in 2014, didn’t anticipate the “overwhelming response” she received when she asked about student loans.
“It was like we tore the top off Pandora’s box in a way we hadn’t seen before,” she said.
Besides the volume of responses, she also was surprised by “the intensity of the shame.”
“We heard that again and again from people,” she said. “They felt like their student debt was something people couldn’t see because they had the appearance of success, because they were educated and had professional jobs — but were actually struggling month to month.”
If you feel that way — and we know many of you do — we highly recommend listening to the episodes in full.
In the meantime, we’ve shared some of the borrowers’ stories below in the hope that you’ll learn strategies to apply to your own situation.
1. If you have an enormous amount of debt
Alyssa Savage is a veterinarian whose student loan balance is half a million dollars.
“It just feels like a little bit of heaviness in the back of everything,” she said. “It’s something that I think of in some way every single day.”
To help her cope, a financial planner advised Savage to pay the minimum on her debt until her federal loans are forgiven in 20 years.
If you’re in a similar situation, we agree it’s wise to consider student loan forgiveness programs.
With an income-driven repayment plan, for example, your payments will be capped at 10 to 15 percent of your income. After you make payments for 20 to 25 years, the remainder of your loans will be forgiven.
It’s important to note, however, that forgiven loans are taxable. So you (and Savage) should prepare for a big tax bill when the time comes.
One exception is if you’re participating in Public Service Loan Forgiveness. With this program, if you work at a qualifying nonprofit or government organization and make payments for 10 years, the remainder of your loans will be forgiven — tax-free.
2. If you’re in default
Jordan Gibbs graduated from college in 2014. Since then, she hasn’t paid a dime of her $58,000 student loan balance.
“I just felt like, how can you expect me to start paying you $700 a month?” she said. “I can’t even afford to pay rent, so paying $700 a month is just not feasible.”
If you’re overwhelmed and not paying your loans, now’s the time to take action. Here’s how to make your first student loan payment.
Then, to make your bills more manageable, you can apply for an income-driven repayment plan that limits payments to a certain percentage of your income.
And if you need some breathing room, you can consider applying for deferment or forbearance for your federal loans.
With deferment, you can pause your payments for up to three years. To qualify, you must be in school, unemployed, experiencing economic hardship, or serving in the Peace Corps or military. If your loans are unsubsidized, they will collect interest while in deferment.
With forbearance, you can pause payments for up to 12 months. You can seek forbearance if you lose your job or if your monthly payment is more than 20 percent of your gross income, for example. All loans will collect interest while in forbearance.
Although neither option is ideal, both choices are better than ignoring your student loans. Lots of bad things happen when you go into default.
3. If you just want them to go away
When Beth graduated from law school, 30 years of $1,100 monthly payments stretched out ahead of her.
Unwilling to accept that as her reality, she created a budget, cut expenses, and put more than half her income toward her student loans.
“I felt like I was a slave to [debt] for a long time, and now I don’t,” she said.
Here’s an example for extra motivation: Let’s say you have $50,000 of student loans at a 5.70% average weighted interest rate. By paying an extra $100 per week on your loans, you’ll pay off your loans five years early — and save more than $8,000 in interest.
For more information, head to the Death, Sex & Money website, where you can listen to full episodes. You also can take a quiz about your student loans, after which the podcast will show you how your debt stacks up and share a listener story similar to yours.
Remember: 44 million Americans have student loan debt. So the next time you feel guilty or ashamed, try talking to a friend or colleague about it. Chances are they’ll be able to relate.
By encouraging conversation about student loans, we can help one another navigate the emotional and financial maze of repayment — and hopefully help future generations learn from our mistakes.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.57% – 6.98%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.80% – 6.22%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.57% – 8.17%6||Undergrad & Graduate||Visit Citizens|