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[divingmusician]

So I graduated with a terminal degree.  In the process of my higher education I've racked up 80,000 USD in Stafford Loans.  My lender is Sallie Mae.  Annoyingly they have now sold some of my loans to an outside company but they still manage them.  So to make my monthly payments I have to write three checks.  And to apply for unemployed deferment I have to fill out the same form three times.  All the due dates are different and it is quite frankly confusing.

I'm unemployed at the moment trying, VERY hard (like so many of you) to get a job in my field or a distant relation.  And because my monthly repayments are $550, it is actually better for me to be unemployed than working a minimum wage job (this is no the situation I ever planned on being in post PhD!)  Because I'm in the arts I also need the time to practice my instrument 4+ hours a day which also makes minimum wage land difficult.  I have been in school my whole life and am not eligible for unemployment benefits from the government.  What little savings I had is almost gone.

So now what?  Does anyone have any advice on what to do with my educational debt?  Is it best to keep them with Sallie Mae and the outside companies they sold them to?  Is there a way to consolidate them all with one organization with a better interest rate?  (I was told this isn't possible any more because of changes in the law; I did this in 2005 with loans and got a 3% interest rate on my two largest sets of loans, I now have an additional four loans with interest rates about 6.8%)  Is it worth looking into private banks?

I loose a lot a sleep over what I owe and how bleak the job market is.  If anyone has any advice on how better to handle my loans I'd appreciate it!

[clean]

I think that you may be best off to stick with what you have.  It is a pain to do 3 sets of paperwork, but the third set should go quickly - its not as though you have not practiced it twice! Once you have a job and an income you can set your checking acct. to auto pay the loans.  You wont have to remember to write three checks.  Until you have a job, you wont be paying them anyway... with what?

With these student loans, you have the ability to defer them while you are unemployed.  There may even be ways to defer them if you have a very low income (hardship deferral), so you wont have to starve while looking around.  So Im not sure that you can use the loans as an excuse to not work.

Student loans have lots of advantages that regular loans dont.  (And you have already paid for them in the fees that were taken out when you got the loans).  Replacing them with other loans may not duplicate the benefits.  (These loans, for instance, are forgiven when you die or become disabled, and can be deferred for a bunch of reasons, including low income.)

Good luck on your job search. 

[systeme_d_]

Contact Sallie Mae and tell them you want to reconsolidate with IBR if you are eligible.  This will involve moving your loans from SM to the feds who are administering the IBR program (Dept. of Ed?).

Here's the link you need: http://www.salliemae.com/after_graduation/manage_your_loans/repaying-student-loans/starting_repayment/income-based-repayment.htm

If you are eligible, under this program you will be allowed to cease payment altogether after 10 years.

Good luck.  

[jonesey]

If you are eligible, under this program you will be allowed to cease payment altogether after 10 years.

Good luck.  

Great program, but it's 25 years, not ten. 

After 25 years, borrowers who have not repaid their entire loan balance may be eligible for loan forgiveness, which means the federal government will discharge the remaining loan balance.

FWIW, I'd stop practicing for 4+ hours a day and join the Army.  They'll pay off $65,000 of your loan in exchange for 3 years as an officer (note I said "officer" and not "enlisted soldier").  You'll be able to pay off the other $15,000 during your three year hitch with little difficulty and in three years you'll be debt free with a solid job history for your resume.

I'm not kidding.

[kedves]

If you are eligible, under this program you will be allowed to cease payment altogether after 10 years.

Good luck.  

Great program, but it's 25 years, not ten. 

After 25 years, borrowers who have not repaid their entire loan balance may be eligible for loan forgiveness, which means the federal government will discharge the remaining loan balance.

This is it:  Public Service Loan Forgiveness Program Fact Sheet (pdf  link about half-way down the page).

10-YEAR PUBLIC SERVICE LOAN FORGIVENESS If you work in public service and have reduced loan payments through IBR, your remaining balance after ten years in a public service job could be cancelled if you made loan payments for each month of those ten years. The Public Service Loan Forgiveness Program is available only if you have Direct Loans and you make 120 monthly payments under the Direct Loan Program. If you have FFEL loans, you may be eligible to consolidate them into the Direct Loan Program to take advantage of the Public Service Loan Forgiveness Program. However, only the payments made while in the Direct Loan Program will count toward the required 120 monthly payments. For more information about this program, review the Departments Public Service Loan Forgiveness Program Fact Sheet.

[jonesey]

Kdeves: So, non-profit colleges/unis count?  I seem to remember that they didn't, but that appears to have changed.  Wow!  This is great news!

I just need to go stay with a NP school for a decade after my doctorate and I'll be solid.  Holy smokes.

[kedves]

Kdeves: So, non-profit colleges/unis count?  I seem to remember that they didn't, but that appears to have changed.  Wow!  This is great news!

I just need to go stay with a NP school for a decade after my doctorate and I'll be solid.  Holy smokes.

In "What types of public service jobs will qualify a borrower for loan forgiveness under this program?" the fact sheet says that it means "A federal, state, local, or Tribal government organization, agency, or entity (includes most public schools, colleges[,] and universities)...[or] A non-profit organization under section 501(c)(3)...(includes most not-for-profit prviate schools, colleges, and universities)..." or a job in several other categories including military, emergency management, public safety, public health, public education, and libraries. 

Anyone interested should download the fact sheet.  As I understand it, only Direct Loan and Direct Consolidation Loan payments count toward the 120 payments.

Here is a post by Smithfieldmuse from a previous thread describing the process:
http://chronicle.com/forums/index.php/topic,43963.msg1382621.html#msg1382621

[glowdart]

Kdeves: So, non-profit colleges/unis count?  I seem to remember that they didn't, but that appears to have changed.  Wow!  This is great news!

I just need to go stay with a NP school for a decade after my doctorate and I'll be solid.  Holy smokes.

Oh yeah!  The Direct Loan Servicing Center themselves (rather than the IBR info site people) confirmed that any 501(c)3 counts for public service in a document released in the last month or so on the Direct Loan website itself, too -- so it's really real.  (As long as those of us getting our loans forgiven in October 2017 don't break the bank for the rest of you, that is.)   It might have been confirmed earlier than that, but I was poking around on the site a couple of days ago and finally found official DLS docs about it.  They're in the process of creating some kind of program/form where you can annually document your eligibility for the public service program. 


OP, my understanding (possibly faulty) is that by creating the IBR plan, the feds created a loophole wherein they could get people to reconsolidate with the feds, which allows more cash to go into the feds coffers.  (Because, frankly, they expect that people on the IBR will have paid off their loans by the time they qualify for loan forgiveness; the fed loan people have always been a bit delusional about earning power, however.  5% annual increases in salary!  Ha!)

[systeme_d_]

Kdeves: So, non-profit colleges/unis count?  I seem to remember that they didn't, but that appears to have changed.  Wow!  This is great news!

I just need to go stay with a NP school for a decade after my doctorate and I'll be solid.  Holy smokes.

My public university qualifies.  Hence my ten-year timeline. 

[lenniel]

Kdeves: So, non-profit colleges/unis count?  I seem to remember that they didn't, but that appears to have changed.  Wow!  This is great news!

I just need to go stay with a NP school for a decade after my doctorate and I'll be solid.  Holy smokes.

In "What types of public service jobs will qualify a borrower for loan forgiveness under this program?" the fact sheet says that it means "A federal, state, local, or Tribal government organization, agency, or entity (includes most public schools, colleges[,] and universities)...[or] A non-profit organization under section 501(c)(3)...(includes most not-for-profit prviate schools, colleges, and universities)..." or a job in several other categories including military, emergency management, public safety, public health, public education, and libraries. 

Anyone interested should download the fact sheet.  As I understand it, only Direct Loan and Direct Consolidation Loan payments count toward the 120 payments.

Here is a post by Smithfieldmuse from a previous thread describing the process:
http://chronicle.com/forums/index.php/topic,43963.msg1382621.html#msg1382621

Excellent information, many thanks for posting this! 

OP, I am also a professional musician with advanced degrees in my instruments and I don't practice 4+ hours a day.  I simply don't have the time, and neither will you once you find full-time work. 

One of the best lessons I learned after getting out of school was how to practice more efficiently, target my practicing, and, since I play multiple instruments, how to market my skillset.  It takes time and effort, but you can make ends meet by teaching lessons and freelancing, provided you are in an area not already saturated with musicians.  Even so, there is always room for more.  Currently, I am finishing a Phd, work two part-time jobs (including a full studio of private students), and still find the time to travel and perform regularly.  It is possible. 

I consolidated my loans and it did make life easier, though since I went back to finish I could put the payments on hold.  You can deduct the interest paid on your taxes, and you can also deduct all aspects of your profession.  This includes strings, rosin, music, travel for gigs, and so forth. 

There are other musicians here with excellent advice, and you are welcome to PM me if you have questions.

[divingmusician]

Thank you systeme_d!!!!!!  That is truly wonderful information!!!

[divingmusician]

Thanks to the wonderful help of you-all, I've been researching loan consolidation and IBR.  Now I have a question about what is my best option and would appreciate thoughts.  THANKS!

I owe: 50,000 with a 3% fixed interest rate, 25,000 with a 6.8% fixed interest rate, and 5,000 with a variable (currently 1.88%) interest rate.  According the online calculator, in order to consolidate I'd need them to take a weighted average of my interest rates which would result in a 4.25% rate for the new loan.  Because this rate is higher than interest rate on the largest amount of money I owe, I'm wondering if it is worth consolidating and hoping the IBR works for me?

Also, when I was on the DE site they automatically put me into a 360 re-payment plan.  I'm assuming that is because I owe a lot.  But does that make me not eligible for the 10-year (assuming my job qualifies) plan?

These loans have been terrifying me because I want to repay and to not screw-up and destroy my credit.  I am extremely grateful that you are offering advice.  Thank you so much for all the help and suggestions!!!

[clean]

what other debt do you have?

What steps have you taken this week to fix your 'income'?  Only after that problem is addressed can you really know what you can do about your debt. 

Without a job, are you getting into more debt?  At what rate is that debt? 

[fizmath]

I advise that you consolidate and spread it out over 30 years.  You don't have to take that long to pay it off but you want the option of lower monthly payments early in your career.

[glowdart]

Thanks to the wonderful help of you-all, I've been researching loan consolidation and IBR.  Now I have a question about what is my best option and would appreciate thoughts.  THANKS!

I owe: 50,000 with a 3% fixed interest rate, 25,000 with a 6.8% fixed interest rate, and 5,000 with a variable (currently 1.88%) interest rate.  According the online calculator, in order to consolidate I'd need them to take a weighted average of my interest rates which would result in a 4.25% rate for the new loan.  Because this rate is higher than interest rate on the largest amount of money I owe, I'm wondering if it is worth consolidating and hoping the IBR works for me?

Also, when I was on the DE site they automatically put me into a 360 re-payment plan.  I'm assuming that is because I owe a lot.  But does that make me not eligible for the 10-year (assuming my job qualifies) plan?

These loans have been terrifying me because I want to repay and to not screw-up and destroy my credit.  I am extremely grateful that you are offering advice.  Thank you so much for all the help and suggestions!!!

Run some calculators.  The way the system works:

You make payments on IBR or ICR based on a percentage of your debt or a debt/income ratio.  As long as your calculated payment are LESS than the payments on a standard 10 year repayment plan, then you pay the lower amount for 25 years or until you pay off your loans.  Once your IBR payment equal the ten-year repayment amount, then you cease being eligible for the IBR plan and can move onto another plan.  (That's when you want to move onto the 10 year or the ICR because you have to be on those to get the public service forgiveness)

(The public service plan is a separate thing that can absolve your loans after 10 years.  You have to be making payments under either IBR, ICR or the standard 10 year plan, though, I think, in order to qualify -- and you have to actually have loans left after 10 years.  You might not, after 10 years of making payments on your loan total.) 

The premise, though, is that even on the lower IBR payments, most people will eventually pay off their loans before year 25 (people who don't work for 501 (c) 3 orgs.) And really, I have a lot of loans, a lowish income, and even I'm projected to pay mine off before 25 years, although that assumes a raise that I'm not ever going to see annually.


The feds have a lot of calculators on their website -- I would run those payments vs. the payment schedule you have for your loans right now.  It might not make any sense to consolidate, but it depends on your income and your loan totals. 

The fed consolidation people are great on the phone, too.  You could just call and talk with them if the calculators and the website aren't helping.  I think it's www.dlss.gov