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Worst Interest Rate Ever - Any Advice?

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treadingwater
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Worst Interest Rate Ever - Any Advice?  Reply with quote  

Hi, I'm a 28 year old college student with the worst interest rate in the world. Sallie Mae has me bent over a barrel with a private loan from way back in my younger, stupider days that has a stifling 14% (currently, it was all the way up to 18% at one point in time) interest rate attached to it. I signed up for that mess when I was 19 or so and was absolutely clueless, after having fallen for the hard sell from a certain "online university" that turned out to be a righteous scam in and of itself. Lots of stupidity going around. I've since then gone back to school, and that loan has more than doubled thanks to interest capitalizing over the course of several forbearances (when I was out of school) and in-school deferment, which it is in now. It's having something in the neighborhood of $2000 added to it every six months.

I had other instances of financial stupidity that I'm now free of in regards to my credit report, and with the exception of a few other very small federal student loans that are quite manageable (the extra money after school expenses has gone to paying Sallie Mae - in my estimation, using the lower interest funds from these loans to pay off that horrendous loan makes sense) and one new secured credit card that has never carried a balance, I am in good shape. This Sallie Mae loan is going to be the end of all that if I don't figure out a way to address it. I am trying to throw money at the interest so that the amount being capitalized is reduced, but beyond that, I'm not sure what my options are. I only have the one private loan, so consolidation is out, and my income while I'm in school is extremely limited. My living expenses are as low as they can possibly go and I'm receiving help from family in covering those. I have a few years yet before I graduate, so the loan can stay in deferment, but I want to do what I can *now*. Working full time is not a good option as my other sources of financial aid depend heavily upon my ability to maintain good grades and full time status, and prior experience at trying to do both FT work and FT school have proven to exceed my capabilities. Part time income is limited.

It seems like there's nothing I can do besides continue throwing what is available at the interest, even though so much of it continues to capitalize, and keep my fingers crossed that school will pay off with a good income in the end. That and put in some time with a service organization that will offer loan forgiveness when I'm finished, if they'll have me. I strongly dislike this sort of gamble, but what else can I do?
Post Fri Jan 20, 2012 3:19 am
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coaster
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This story absolutely burns me up, and reminds me there are times when I think it's a damn shame that Old Testament Hebraic Law isn't still in effect, as it says in Ezekiel 18 (among a list of things God finds offensible) "...He lends at usury and takes excessive interest. Will such a man live? He will not!"

Here's a situation where a young person, seeking to advance through education, was taken advantage of by some vultures without regard for anything but their profits whose soulless greed now threatens this individual's future. I would happily transport them back to Old Testament Israel and see how they fare there.

Anyway, today is today, so the suggestion I make is one that has its own pitfalls, and why I usually advise family stay out of family financial affairs, but since your family is already helping you, perhaps your parents could get a loan in sufficient amount to pay off this loan for you, and you could pay them back after graduation at reasonable interest rates (and where parents are involved, that's often zero). But I think you sound like a person of some character and integrity, and you also learn from your mistakes, and so are worthy of their investment, and worthy of their trust that you'll pay them back.

Best wishes and good luck. Smile

~Tim~
Post Fri Jan 20, 2012 4:22 am
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treadingwater
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While I am more than blessed to have the family that I do, and they would probably be more than willing to do that if they could, they cannot. One of my sisters even tried to do something like this by acting as a cosigner for a personal loan that would have covered it with a better rate, bless her heart, but that didn't work out either. Neutral

I do greatly appreciate your supportive response. I know how badly I screwed up my financial life early on and it was my own bad decisions that got me here more than any other factors, so I'm grateful when there are people who have nice things to say.

One thing it has done has turned me into an advocate for making financial lessons as big a part of earlier education as possible! I didn't have a clue what capitalized interest meant, and I'm sure many 18-19 year olds don't! I know I'm preaching to the choir on a financial forum, but man, I wish this stuff was just as vital as reading/writing/math in the high school years!
Post Fri Jan 20, 2012 4:35 am
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oldguy
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I agree - 17 & 18 year-olds are not equipped to make these choices w/o guidance. The HS Counselers should tell kids about 'diploma mills' that promise a degree in 3 yrs, university degrees in useless fields, theater, comm, phil, pysch, russian lit. When I think back, a shop teacher was key for me - he said with your math & mech interests, go to the state university and become an engineer - best advice I ever got. But for him, I would likely be a mechanic or a trucker or a farmer.
BTW, at age 19 I started driving truck during the summers, it turned out to be a great summer job for the next 4 yrs, it pays way better than the entry-level-retail jobs plus you can get way more hours, I could usually get 65 to 70 hours a week in the summer.

quote:
That and put in some time with a service organization that will offer loan forgiveness when I'm finished, if they'll have me. I strongly dislike this sort of gamble, but what else can I do?


The loan forgiveness programs work for the low paying fields - social work, etc. But if you are in one of the skills based fields - accounting, nursing, teaching, engineering - you will do better by getting a normal job, something that pays $60k or $70k fairly early in your career, and paydown that toxic loan quickly with income stream.
Post Fri Jan 20, 2012 2:54 pm
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littleroc02us
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Sounds like a lot of the mistakes I made when I was young. You probably won't like my answer, I would just call this a stupid tax (David Ramsey) and put school on hold, get a truck driving job as Old Guy says and get this loan paid off quickly. Work as many jobs as you can. Once the debt is gone, go back to school and pay for it while you work and then finish with a great career.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Fri Jan 20, 2012 3:17 pm
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treadingwater
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I'm a part-time EMT, and my long term plans aren't very conducive to taking time off, nor are my scholarships. The sort of service position I could transition into should those plans work out are rather well paid, and would take three or four years after I'm finished and would pay my graduate school costs off as well as my undergrad. My undergrad degree is in a STEM field, but one that lends itself to either teaching or lab work without going beyond undergrad. If I were to take time off now without even finishing that, the risk of me not finishing at all would just turn all of my work into a very expensive waste of time without any long term payoff. I think the loss in opportunity cost in terms of both finances (current scholarships and future earnings) and satisfaction would outweigh any benefits to walking away now, which is what I fear "taking time off" would turn into. If it doesn't pan out, I have options that I am already aware of in the field I'm already in, but I'm trying to explore what options there are that do not entail putting school aside at this time.

So, keeping that in mind, stretching out my undergrad by an additional year or two by working full time in the summers rather than staying in school is a possible middle ground.
Post Fri Jan 20, 2012 4:58 pm
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coaster
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Middle ground is usually a good place to be. Wink

~Tim~
Post Fri Jan 20, 2012 5:12 pm
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LottomagicZ4941
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If you still have a credit line perhaps transfer some of the debt away from the student loans if you can 'cuz you can't ever get out of some of them.

In a way bankruptcy is like grace. But you can't do a transfer any time before that type of activity. Debt has to age before it can be forgiven.

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Post Sat Jan 21, 2012 2:18 am
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deveney
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Like anyone who can't seem to pay of their loans, cut back on what you're spending. There are many sacrifices that one can make to achieve their goal of being debt free. If you feel you may be overpaying for a specific product/service, find a cheaper one. If you're eating out too much, do more grocery shopping. Again, MANY things to do!

If you really do feel as if you might be paying to much for services, check out my website! Not advertising, just being curteous and hopefully being of much help! Smile
Post Sat Jan 21, 2012 6:05 pm
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eastmn
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Could have a lawyer look very closely at the paperwork for any errors, omissions, or undisclosed additions (fees, hikes, or robo-signing); which might give you the edge (may legally break the contract).

Could try a legal letter claiming abuse and/or discrimination, and asking for revision of terms. Judges will often force both sides to settle it right there.

Could try writing the Consumer Protection Bureau or Attorney General's Office, asking them to try for an adjustment or settlement.

...
Post Sun Jan 22, 2012 11:20 am
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perkinmerchant
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If you are searching for an effective solution to pay off your college fees than its better to apply for No credit check student Loans. No credit check student loans guide provide complete information how to apply for student loans.It gives you enough fund for your college payment with less interest rates.
Post Fri May 10, 2013 6:09 am
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