How to pay for college: specific scenario

[Anonymous]

Anonymous wrote:You had too many children and your DC will forever be resentful. Can one of you get a second job?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If students can only take out $6k in loans a year why are all of these people walking around with $100k in student debt? I don't understand where they're getting this money.

Here's just one example:

Debbie Baker
I returned to college in 1996 to fulfill my dream of becoming a public school teacher.

At the time, Oklahoma offered financial assistance to teachers but the program ended when I was halfway through my studies. My husband and I decided to continue with my studies since I was halfway through my four year-plus degree.

We decided to take out student loans to finish the degree required for my teaching certificate and planned on repaying the debt within 10 years of graduation. Even with two small children at home, we lived modestly and knew we would be able to repay the debt.

Having previously worked in the mortgage loan industry, I had ample information regarding lending and each year I would ask my financial aid office what my monthly payment would be upon graduation. Each time I was told “about $50 per loan”.

I assumed that my total monthly payment would be $200, but upon graduation I discovered that the figure was for each loan (subsidized and unsubsidized). That meant my payment was close to $400. After receiving my teaching certificate, I immediately went to work in the Oklahoma public school system with a beginning salary of just over $25,000.

That’s when the nightmare began, soon after my 1999 college graduation, when I graduated with approximately $35,000 in student loan debt.

Less than 90 days after graduation, I received a letter from Sallie Mae saying my loan was being placed in forbearance, as I still didn’t have a teaching job.

I was told by my loan administrators that I had “no options” for lower loan payments and that I could not make partial payments. By 2004, I contacted Sallie Mae again and told them, in no uncertain terms, that I needed to start paying my loan off. They agreed to a consolidation loan through the Federal Family Educated Loan Program (FFELP).

By that point my student loan debt had grown to $52,000 and I was really getting worried.

In 2007, I inquired about Public Service Loan Forgiveness relief.

[Editor’s Note: The PSLF Program, which was established under the College Cost Reduction and Access Act of 2007, permits Federal Direct Loan borrowers who make 120 qualifying monthly payments under a qualifying repayment plan, while working full-time for a qualifying employer, to have the remainder of their loan balance forgiven. PSLF is not available for loans in the FFEL Program.]

I was told I couldn’t qualify for any PSLF relief until 120 payments on my loan had been made. Instead, I was put on an Income-Based Repayment loan relief plan and I began filing paperwork as instructed on an annual basis.

While that represented progress, I continuously had problems with submitting income verification forms with Navient and Sallie Mae. Again and again, both institutions made errors that caused processing delays and caused my student loan debt to keep mounting in forbearance. It was frustrating to wait for them to fix the errors to no avail.

For example, I told Navient their IRS 4506-T forms were incorrectly put together, yet they continued to insist borrowers use those forms.

This back-and-forth scenario caused delays in processing as they changed the corrected forms I sent them. They would do what they needed to do to cause more delays, as my debt total grew. At this time, I had begun caring for my critically ill adult son and started teaching at a low-income school.

Eventually, I applied for PSLF in 2017 only to discover that all 10 years of my payments were forfeited and none of them counted toward program eligibility. I had to start my payments for PSLF all over again and I had lost $36,000 in payments.

I was really feeling boxed in.

Had I stayed in a regular payment program the forgiveness would then have been considered taxable income so I had no choice but to go another route. After all, the tax bill on $100,000 of forgiveness would be astronomical and we didn’t have enough equity in our home to pay that kind of tax bill.

Things were getting worse. After caring for my son for seven of the 10 years that I was dealing with Navient and Sallie Mae, my son passed away in the summer of 2018. They stole precious time I could have spent with him. Meanwhile, my student loan account balance has grown to $81,000 – even as I had faithfully paid on time every month.

I have sought legal advice, filed several complaints with the U.S. Department of Education, wrote letters to President Trump, President George W. Bush, Jeb Bush, celebrities, my senators, congressmen, state attorney general’s office, and reached out to media outlets. (I’ve had my story featured on CNN, CBS and Fox News.)

In July 2019, I sued Betsy DeVos and the U.S. Department of Education with the help of the American Federation of Teacher (AFT).

Today, I continue to teach in a public school system and continue to make payments of $300 per month. Almost 20 years after my college graduation and 16 years of on time payments I now owe over $81,000. It is unbelievable to me that no one at the federal level wants to help people like me.

With no bankruptcy protections, no truth-in-lending disclosures and no statute of limitations these federal loan servicers are able to run amuck and abuse college students. The price of college tuition continues to rise because these universities have their hands in the free-flowing stream of government subsidies known as the federal student loan system.

Now, I am in my 19th year as a public school teacher.

At 57 years-old, I hope to have the loans forgiven at some point in time before I reach retirement. That said, I have little hope that this will ever be resolved. I currently pay $300 a month on a loan that should have been paid off long ago and I don’t see any way out of the situation.

https://www.savingforcollege.com/article/night-of-the-living-debt-five-real-life-student-loan-horror-stories

To answer the PPs question about how students wind up with so much debt, the link she provides above is an adult returning to college so able to acquire her own loans. For undergrad students, 17-22, it’s much more regulated

Also I think the loan limits changed at some point in the last 20 years? The person in the story initially graduated in 1999 with $35k in loans, which does not seem an unreasonable amount. But if you keep putting off payments the interest grows and grows.

Right now, the limits are $5,500 first year, $6,500 second year, and $7,500 for third year and beyond. With interest (unsubsidized stafford loans accumulate interest from the moment they are issued), that could easily compound to 35k at graduation

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If students can only take out $6k in loans a year why are all of these people walking around with $100k in student debt? I don't understand where they're getting this money.

Here's just one example:

Debbie Baker
I returned to college in 1996 to fulfill my dream of becoming a public school teacher.

At the time, Oklahoma offered financial assistance to teachers but the program ended when I was halfway through my studies. My husband and I decided to continue with my studies since I was halfway through my four year-plus degree.

We decided to take out student loans to finish the degree required for my teaching certificate and planned on repaying the debt within 10 years of graduation. Even with two small children at home, we lived modestly and knew we would be able to repay the debt.

Having previously worked in the mortgage loan industry, I had ample information regarding lending and each year I would ask my financial aid office what my monthly payment would be upon graduation. Each time I was told “about $50 per loan”.

I assumed that my total monthly payment would be $200, but upon graduation I discovered that the figure was for each loan (subsidized and unsubsidized). That meant my payment was close to $400. After receiving my teaching certificate, I immediately went to work in the Oklahoma public school system with a beginning salary of just over $25,000.

That’s when the nightmare began, soon after my 1999 college graduation, when I graduated with approximately $35,000 in student loan debt.

Less than 90 days after graduation, I received a letter from Sallie Mae saying my loan was being placed in forbearance, as I still didn’t have a teaching job.

I was told by my loan administrators that I had “no options” for lower loan payments and that I could not make partial payments. By 2004, I contacted Sallie Mae again and told them, in no uncertain terms, that I needed to start paying my loan off. They agreed to a consolidation loan through the Federal Family Educated Loan Program (FFELP).

By that point my student loan debt had grown to $52,000 and I was really getting worried.

In 2007, I inquired about Public Service Loan Forgiveness relief.

[Editor’s Note: The PSLF Program, which was established under the College Cost Reduction and Access Act of 2007, permits Federal Direct Loan borrowers who make 120 qualifying monthly payments under a qualifying repayment plan, while working full-time for a qualifying employer, to have the remainder of their loan balance forgiven. PSLF is not available for loans in the FFEL Program.]

I was told I couldn’t qualify for any PSLF relief until 120 payments on my loan had been made. Instead, I was put on an Income-Based Repayment loan relief plan and I began filing paperwork as instructed on an annual basis.

While that represented progress, I continuously had problems with submitting income verification forms with Navient and Sallie Mae. Again and again, both institutions made errors that caused processing delays and caused my student loan debt to keep mounting in forbearance. It was frustrating to wait for them to fix the errors to no avail.

For example, I told Navient their IRS 4506-T forms were incorrectly put together, yet they continued to insist borrowers use those forms.

This back-and-forth scenario caused delays in processing as they changed the corrected forms I sent them. They would do what they needed to do to cause more delays, as my debt total grew. At this time, I had begun caring for my critically ill adult son and started teaching at a low-income school.

Eventually, I applied for PSLF in 2017 only to discover that all 10 years of my payments were forfeited and none of them counted toward program eligibility. I had to start my payments for PSLF all over again and I had lost $36,000 in payments.

I was really feeling boxed in.

Had I stayed in a regular payment program the forgiveness would then have been considered taxable income so I had no choice but to go another route. After all, the tax bill on $100,000 of forgiveness would be astronomical and we didn’t have enough equity in our home to pay that kind of tax bill.

Things were getting worse. After caring for my son for seven of the 10 years that I was dealing with Navient and Sallie Mae, my son passed away in the summer of 2018. They stole precious time I could have spent with him. Meanwhile, my student loan account balance has grown to $81,000 – even as I had faithfully paid on time every month.

I have sought legal advice, filed several complaints with the U.S. Department of Education, wrote letters to President Trump, President George W. Bush, Jeb Bush, celebrities, my senators, congressmen, state attorney general’s office, and reached out to media outlets. (I’ve had my story featured on CNN, CBS and Fox News.)

In July 2019, I sued Betsy DeVos and the U.S. Department of Education with the help of the American Federation of Teacher (AFT).

Today, I continue to teach in a public school system and continue to make payments of $300 per month. Almost 20 years after my college graduation and 16 years of on time payments I now owe over $81,000. It is unbelievable to me that no one at the federal level wants to help people like me.

With no bankruptcy protections, no truth-in-lending disclosures and no statute of limitations these federal loan servicers are able to run amuck and abuse college students. The price of college tuition continues to rise because these universities have their hands in the free-flowing stream of government subsidies known as the federal student loan system.

Now, I am in my 19th year as a public school teacher.

At 57 years-old, I hope to have the loans forgiven at some point in time before I reach retirement. That said, I have little hope that this will ever be resolved. I currently pay $300 a month on a loan that should have been paid off long ago and I don’t see any way out of the situation.

https://www.savingforcollege.com/article/night-of-the-living-debt-five-real-life-student-loan-horror-stories

To answer the PPs question about how students wind up with so much debt, the link she provides above is an adult returning to college so able to acquire her own loans. For undergrad students, 17-22, it’s much more regulated

Also I think the loan limits changed at some point in the last 20 years? The person in the story initially graduated in 1999 with $35k in loans, which does not seem an unreasonable amount. But if you keep putting off payments the interest grows and grows.

Right now, the limits are $5,500 first year, $6,500 second year, and $7,500 for third year and beyond. With interest (unsubsidized stafford loans accumulate interest from the moment they are issued), that could easily compound to 35k at graduation

To clarify, that person was an adult going back to school. Different rules for teens 17-23.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If students can only take out $6k in loans a year why are all of these people walking around with $100k in student debt? I don't understand where they're getting this money.

This doesn't make sense and a relative of my husband's has several hundred thousand in student debt. They are very secretive about it outside their go fund me.

The average student debt is around $35,000. Most people with over $100,000 in debt went to graduate school.

[Anonymous]

Anonymous wrote:So you "won't touch" your investments? That seems selfish to me.

Why take loans when you could use some of your investment $$?

Op has explained everything. She is prioritizing her own retirement after having to bail out her own parents, who didnt plan for their own.

Now she’s trying to bail out her kid without them having to bail her out in 10-20 years. And if she doesn’t bail her kid out, she’ll be doing it for him in another 10 years. It’s just a circle of “not enough money.”

Op must be tired. I don’t know the system well enough to help, but I hope it works out for you!

[Anonymous]

I was in a similar situation that a relative paid for one year at an oos public and my kid came home after the year, went to cc, transferred to a 4-year. My kid had to take out some loans (under $30k - I’m a single mom) but repaid them ahead of time. There were no private loans involved.

Here’s my advice:
1- If the college is an out of state public, look online to see how they determine residency. Sometimes, students can live on their own off-campus, work and establish their own residency. Many times residency is based on where the parents live. If it’s the first, kid should take a year off, get a job and be self-supporting to establish in state residency.

2- Call the financial aid office of the university and ask about reconsideration. Bring up the additional people you support.

3- If your child is in a specific major/ program, sometimes there is scholarship money for continuing students. It is often gpa-dependent. Call the office of the major or the dean’s office to ask.

4- If student can get a ft job on campus, reduced tuition may be a benefit.

5- Student can apply for a pt job to help with expenses, but if won’t come in at 50k.

6- Join the military. Americorps also gives some college aid, but I don’t think it’s enough to defer college a few years and run the risk tuition will have increased.

7- Student can move off-campus, work and go to school pt. You just pay what you would have paid anyway and student tries to fund the rest.

8- Has student looked to see if the university accepts CLEP tests after enrollment? They may be able to rack up some credits that way. They also might be allowed to take some courses at the community college near home to accelerate their degree by one year.

Otherwise, please don’t do for this kid what you’re not willing to do for the others. Your others are less likely to qualify for aid because your family size will decrease with the years. And please don’t sign for loans. Too many parents get stuck paying for them and again, if you can’t do it for the others, it makes no sense to do it for this one.

[Anonymous]

1637 here

One more thing - student should take out the full student loan amount from FAFSA this year even if he/ she doesn’t need it because of the relative’s generosity. This money should be banked and added to the loans they can take out next year. You see, the max is per year and that will give the student another $6500 or so for next year.