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No. of Recommendations: 3
Okay, I'm taking a big breath and just putting it out there mystudentloanshavebeeninrepaymentsincedecemberandihaven'tmadeapayment! I can say it slower my student loans have been in repayment since december and i haven't made a payment.

The question is how do I now deal with this, I don't have the money to give them every month and I am afraid, plain and simple that I have ruined it for myself and now I can't get any deferments or whatever great deals are going on. My biggest problem is that I also need to go back to school to get a teaching certificate. I can get a job without one (hopefully) but I can only do that for so long, plus I'd make a lot less money. And in order to go back to school, I need more loans.

So what to do, my hubby also hasn't been paying his back (in repayment since January). These are direct loans from the government. We have been paying back perkins loans (to our respective schools) and private loans (Citibank), but we simply can't afford to pay out much more.

So I'm looking for advice, someone who has possibly been though this before, someone to kick me in the seat of my pants and get me going through this rough time. Encouragement that if I pick up the phone, everything will be okay.

Thanks everyone!
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No. of Recommendations: 1
Why this is a really bad idea...

1. With the gov't they don't need to fool around with collection agencies they just get really mad and do bad things to your tax returns, garnishments... (okay, I don't know if this is true but I think it is not far from the truth)

2. You thought credit crads were bad about hassling you, think of the power of the national gov't on your back...

3. I tried not paying on a loan (thought it was in deferment and wasn't) and I really *ucked myself up. Who on God's green earth will loan you money when you owe the gov't ???? i Can't even get a damned credit card, "preapproved". Have you ever ever looked at a credit report/ seen your FICO (the score by which ANY financial institution will decide to give you a school, house, car loan, credit card)? Who do you think will lend you money to go BACK to school when you won't even pay the FEDERAL GOVT the money you owe them??

4. Do you pay taxes/paid taxes ever in your life?? There is a reason most sane people pay the gov't when they ask for money.

5. Your credit score (in default with gov't) probably looks as bad as someone in bankruptcy. That's ugly. You can't get ANY future loans for school so forget it. Shoot, my credit union won't even lend me money and I owe a tiny sum on a loan that went into default.

6. Don't EVER EVER let this happen again. Break your own leg first. The gov't was very generous and helpful for getting a financial hardship deferment for me when I was making minimum wage after my grace period ended. It was too easy not to do it.

7. I am NEVER going to fall into the trap of owing more money than my net worth. Heck, I want to go on, get out of this stupid job, go back to school, make some real money at a real job. Who doesn't??? As it is, I am climbing out of debt VERY SLOWLY on a measly salary but my job isn't "hard" per se and it will be a real accomplishment to pay this monkey off my back. Then I'll be ready (see mature, financially secure) to further my education and handle an even greater salary. I am using this time to become educated about finances.

8. Ask yourself why you let this happen. Was this a mature, responsible decision or was it a rash, impetuous thing. Maybe you shouldn't be trusted with more money until you learn to come to grips with the debt you already have. I mean that in the nicest way.

9. Good Luck. A. Contact the loan people and ask what you need to start doing to get this loan "rehabilitated". You can't consolidate right away, you missed the boat this time. But after you make regular payments in the "rehabilitation" you will have more bargaining room. This means you will be put on a payment plan, including interest that has already accrued since Jan., and any late penalties. If it is a federal loan then these things can be worked out but it requires that you all do A LOT of work. The alternatives are too ugly to consider however.

Mangard
one hell of a first post for me on this board
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No. of Recommendations: 0
Sorry i was so rough but you CAN afford to pay the gov't. You are both college graduates. One of you can take on a second job. It isn't pretty to work seven days a week but I'm doing it. Also, have you looked at your budget - where is the income outflowing? Is it bleeding somewhere, can you change your spending? Can you sell stuff on e-bay? Can you deliver papers early in the morning, go once a month to participate in a medical study, moonlight etc...There is hope, you just gotta take the first steps and contact the lender.

Best Wishes,
Mangard
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No. of Recommendations: 1
Take a big breath and get in touch with the Direct program. Tell 'em you're in default but you want to consolidate everything and start paying. They have a program that lets you pay based on your income. They consolidate all your loans so you only have one. It's easy and they are pretty nice to ya.

After you pay Direct a number of payments, they take you out of default and show you as current.

The government is not nice about collecting. They will seize tax refunds and etc. They can also come back after your property and etc. but I have not heard of them being that aggressive with anyone I know that has had payment problems. The WORST thing they do is charge you up the wazoo for collection charges. The amount of your loans can double in a couple of years of default. Work out something now so you can pay them.
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No. of Recommendations: 1
Yeah, I agree with melmaque, that's your remedy. I would get the paperwork going with Direct on Monday (or Sunday at the online site through www.ed.gov , then Direct Loans, then consolidation).

You didn't say if you have any interest subsidies with the loans. You don't want to be in default, because I think at that point you lose your ability to defer. You have to spend time (12 months) in a repayment program, and then they "rehabilitate" the loan as good.

Melmaque is absolutely right about the "income contingent repayment". You are only obligated under Direct (and with your own lender usually) to pay a percentage of income on the note every year. I remember in my first, tough year out of graduate school, the amount was calculated as $29 per month. (I had a deferment so I didn't even have to pay that.)

Messing with student loans is tricky, and best to be avoided! As a previous post related (from NPrins was it?), it's the collection charges. They'll tack on some crazy number that'll make you feel like you really should have straightened the matter out much sooner. And plus, they do have that statutory power to collect---that a credit card lender has to spend scads of legal bill dollars to obtain. The government can just go right in.

You are much better off strategizing here with the rest of us on how to structure your repayment path in a way that's fair to whosever lending, and yet lets you have something of your own money too!

Good luck.
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No. of Recommendations: 0
By the way, if you aren't bashful about giving out ballpark numbers and employment statuses, someone here may be able to figure if you qualify for hardship/unemployment deferment right now. Did you have an income reported on your Year 2000 1040 form? If it was just "student" income (nothing more than $20k), and you have a job now, you likely can fill out the hardship deferment and clear the whole matter up. It's good for one year.
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No. of Recommendations: 3
Thanks everyone for the advice so far.

We probably would qualify for an economic hardship deferment. However, I don't know if they will give us the deferment since we've not been paying. Our budget is trimmed, we eat at my parents a couple of times a week. My hubby has been working an extra job, and now we are both looking for work, since it's summer and we couldn't find any summer school jobs and so finances are even tighter. (He's a sub teacher and I'm currently applying for a teaching position.) We were able to get 10 hours more a week (total) for the both of us at our (right now) only job.

To complicate matters further our car died last week, we borrowed one from my dad which we were going to buy, and it died. We missed two days of work because of it. Luckily my dad paid for his car to be fixed, so we didn't have to do that. We are trying to pay off cc debt, only $3500 left to go, old bills that my DH didn't have the $ to pay, and keep current on the rest of our loans. I'm just tired, tired of trying to figure out ways to pick up a couplee of bucks, tired of not working to my fullest potential, tired of not seeing friends since they live far away, tired of going to my mom's to eat dinner! Sorry, don't mean to complain.

Thanks for all the encouragement so far, I really appreciate it. I'll keep y'all posted on what's happening.
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No. of Recommendations: 0
It sounds like you're in a really tough situation -- but doing wonderfully well, even with the student loan mess. You ARE making progress, you're keeping body and soul together, and someday you'll be on the other side of this thing.

My best advice to you: don't look at the cost-cutting measures you're taking now as something you're forced into -- think of it as a choice that you've made, because you'd RATHER be out of debt than be debt-ridden and eating in fancy restaurants and driving a car that you can't afford. This is a choice you have made, and the choice reflects your values. Plenty of people live way above their means, blithely racking up debt. You've chosen to put a stop to that. For a lot more on this subject, check out the very active "Living Beneath Your Means" board, which has a lot of great advice on living cheaply. Also, go to your library and check out Amy Dacyzyn's "Tightwad Gazette", a book that truly changed the way I think about money.

Let me second the advice about rehabilitating your loan. Call them, tell them you're serious about getting out of default, but that you're on a severely limited income. They have heard all of this before, and (assuming it's Direct Loans, private lenders may have different practices) will not yell at you; they will work with you to set up payments you can afford.

The very best of luck to the two of you! It sounds like you're on the right track!
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No. of Recommendations: 0
OK well you better get with those Direct people and apply for those deferments. It sounds like you are entitled to at least one. (Remember, the unemployment deferment involves jobs of not more than 20 hours OR not expected to last more than three months, like temp assignments. The economic hardship deferment uses a formula to determine what the hardship is, and usually if you have an immediate previous year of low AGI (adjusted gross income) on your tax return, you qualify.)

Why wait another day with the student loan stuff? It just makes your situation worse . . .
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No. of Recommendations: 0
You made every single one of these choices. Sure, it is frustrationg to not have a lot of money. See Credit Card/Consumer debt board for more info on repaying debts too. Remember, it will take at least as long for you to get out of debt as it took to get into it.

Get out of your field for the summer. Work at a summer camp (check at a local university), temp agency, day care centers if you like kids, city govt is always looking for summer positions to be filled, parks and recreations depts, etc... You have a lot of potential, yes debt, but all us post-graduates are in a similar boat. You are not alone. Be inventive,creative, car pool, bike to work, take the bus, cut the car out of your life. If you live in an area too rural for these services think about moving. Esp to a place with more summer job opportunities too.

Besides, you make your career choices. Teachers are not rich people (on paper). That was your decision. Think about another career, you are young enough to change if you can't meet the minimum payments on your debts. And as a teacher you all should be ready to get educated on your debts. Research them, look into consolidation, etc... on the web etc...

Good Luck.
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No. of Recommendations: 0
The important thing to remember is it will all work out eventually.....
You aren't alone in being swamped and feeling overwhelmed.....
Lots of people have already given sound advice on things like consolidation, arranging deferrments, etc., so I'm not going to reiterate any of that.

Hang in there, and remember, it won't be like this forever.....

--mary anne (who's also hanging in there, and looking forward to the day when my bills are finally paid off)
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I know everyone is trying to encourage you, but I think one key thing is missing: You have a debt problem!! Until you and your hubby accept this fact, you will never get out of this cycle. You will do better for awhile, and then some "unforeseen" situation will happen and you are right back where you started, or worse.

First of all, talk to the people you have not pay a dime to. Don't ever run away from your creditors. They hate it and will get you. But if you go to them, most will work with you, even the gov't. If they don't, find someone who will.

At the same time, you need to find a counselor to help you set up a new spending plan. I am not discouraging anyone from getting more schooling, but you got in debt for school, probably hoping to get a higher paying job. That got you nowhere. Now, you want to repeat the cycle. It may make sense, but be careful.

I don't know where you live, but there are still plenty of jobs out there. You may decide going back to school is what you want, but delaying may be an option, too.

Here are two site that will help you:
Debtor Anonymous
http://www.debtorsanonymous.org/
Eliminating Debt--by Ric Edelman
http://www.ricedelman.com/planning/debt/default.asp

Yes, you can indeed get out of this. In fact, set your goals higher than just get out of debt. But you must be willing to change.
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No. of Recommendations: 0
<<The question is how do I now deal with this, I don't have the money to give them every month and I am afraid, plain and simple that I have ruined it for myself and now I can't get any deferments or whatever great deals are going on. My biggest problem is that I also need to go back to school to get a teaching certificate. I can get a job without one (hopefully) but I can only do that for so long, plus I'd make a lot less money. And in order to go back to school, I need more loans.

So what to do, my hubby also hasn't been paying his back (in repayment since January). These are direct loans from the government. We have been paying back perkins loans (to our respective schools) and private loans (Citibank), but we simply can't afford to pay out much more.>>


I am reminded of this scenario by what happened with my friend six years ago. I don't understand what it is with people that the Perkins is treated like this separate "special" loan that you should always keep, when you can consolidate it into a consolidation loan and get better deferment treatment.

The idea when you are starting out, is that you want to conserve as much cash as possible---because you don't have it. Aside from just blowing off the federal government, which is an ill-advised strategy, the idea is to get the full benefit of whatever "easy terms" there are to be had.

Here the past six months you think you're getting one over on the Ed Department, and it turns out they have just the deferment you need, and instead you have to worry about the phone calls and the letters, when in fact you could have had the upper hand with the deferment in place.

Meanwhile, you continue to pay out cash you don't have on Perkins notes that can be put into a consolidation loan and covered under the same deferment that your other Directs have. The feds even would have been covering the interest on the Perkins money all this time; instead, you've been paying it out yourself.

If you are forced to blow off a creditor--and it happens more often than anyone would like in tough economic times--the ones who should get paid late are the unsecured creditors like credit cards. They will come at you, too, of course, but they don't have the power and the tools like the government. The last people are 1) the ones who have a lien on your car, your house, 2) landlords, and 3) the government, in its various agencies.

These days, you can generate some sympathy with people if you had a hard time with credit cards but inevitably made right (through late pays or settlement.) You get virtually no sympathy for walking away from a student loan, because everyone knows the terms are very easy, and they know tax money (their money) is behind it.

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I was in a very similar situation and felt the pain of your catch-22 (needing a student loan to pay for the tuition that would allow you obtain the student loan that...etc.etc.). And my loans were much more delinquent than yours!

I found the Direct Loan people to be really understanding about hardship and lenient about delinquency. Explain your situation to them because, unlike Credit Card companies (such as FIRSTCARD Ugh!Ugh!Ugh!), they seem to want to help you regain your sanity. You should act immediately because I think someone at Direct Loans told me that at 250 days' delinquency, your account goes to collections. There is a Big difference between delinquency and collections on your credit report. And if you haven't paid since December, you are close to that cutoff.

Even if your balance does go to collections, however, it is possible to get it out and back in the hands of Direct. I understand that panic and shame can be a real disincentive to contacting debtors but it is *crucial* and will save your credit rating. I am really fortunate: although my loan *did* go to collections, they sent it *back* to Direct - collections wouldn't take it! (Is my credit THAT bad????) Once you make arrangements with Direct Loans, they may be willing to erase all the negative info. pertaining to that account from your credit report. That was my case.


I'm kicking! Feel that?...I'm kicking!
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