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Is it possible to get a student loan waived or reduce to a very low payment?
By admin | February 5, 2012
SweetiePie asked:
My friend owes 125,000 in student loans after going to graduate school. She have to pay 400.00 for 20 years. How can she get her loan waived or reduced to a very low payment?
Painted Kitchen Cabinets
My friend owes 125,000 in student loans after going to graduate school. She have to pay 400.00 for 20 years. How can she get her loan waived or reduced to a very low payment?
Painted Kitchen Cabinets
Topics: student loans |
February 6th, 2012 at 1:17 pm
NO, impossible.
February 6th, 2012 at 2:17 pm
$125,000 is a lot of money; it is more than the cost of many houses in many areas. It sounds as if her repayment plan of $400/month over 20 years already has some reasonable terms. Your friends monthly loan repayment amount is far less than what a $125,000 mortgage loan monthly payment would be at our current, record low mortgage interest rates.
I went out on the web and looked at a mortgage calculator. According to the one I looked at for 125,000 of , a 30 year fixed FHA loan costs $1037/month, a 30 year fixed is $1000 per month. A 5 year adjustable is $883/month and then drops to $553 depending upon the market and rates at the time. A 7 year adjustable is $937/month and then drops to $557/month depending.
It sounds as if your friend has some very reasonable terms. The question is, is she working? Theoretically, she is working at at a reasonable wage with her graduate degree and has the potential for additional salary gains over the next 20 years. The next question I would have is does she have the opportunity to reduce the principal through additional, periodic payments; or even the opportunity to make additional, full payments ahead of time?
If your friend is working and can swing $800/month, she can be out from under her school loan in 10 rather than 20 years; $4800 vs 9600 per year. Sometimes there are some funky terms and penalties for late school loan payments that can even affect the rest of the life of the loan. If this is the case in your friend’s school loan(s) then it may make more sense to build up a savings to cover the school loan payments for up to a period of time rather than making extra payments for a while. These savings could always be applied to the loan towards the end of its term while providing a payment cushion, improved credit rating, piece of mind, and more. Once a payment cushion has been generated, it would probably be a good thing to work on an accelerated repayment plan for this loan. Doing so would free your friend from this obligation all the sooner and open up so many more opportunities.
I don’t know the circumstances of your friend’s graduate school experience, costs, nor duration but, a surprising number of students find that they are able live a much higher life style while in school using school loans than they are for years afterwards during their working years while repaying their school loans. At $125,000 for two years, she would have lived a $75K/yr life style including the costs of tuition, books, and materials; for four years a little over a 31K/yr life style. This may seem like a lot but in some cases, tuition alone for graduate school is often running at about the 20K/yr rate and this does not include travel, text and reference books, supplies, materials, computer, phone, and other things that a graduate student is expected to have; oh, and they are expected to live somewhere other than in a dormitory storage locker bay, under a bridge, or in a tent. - The purpose of this discussion is to bridge the gap between those getting their post high school education the tax payer and those without current college experience. It is also a plea to all of those students currently living on loans to please reduce their life style expectations as much as possible, borrow as little as possible, and to keep some account as to how much their college experience is costing them at the time and in the future.
February 7th, 2012 at 5:54 am
No, she took out the money, she needs to pay for it. She should have thought about that before she borrowed the money.
February 8th, 2012 at 10:06 am
If she has a low-ish income she can get her federal loans reduced to a certain percentage of her income. Have her look up the income based repayment plan. After a certain number of years (15 maybe?) of payments they forgive the balance of the loans. I think you have to show proof of income each year to be in that program though.
For private loans, I don’t think there’s much to do besides ask the lender and hope she gets lucky. They don’t usually have very flexible repayment plans.
February 10th, 2012 at 11:45 am
I don’t guess you (or she) realizes that is an incredibly low payment for that amount of debt
I don’t think it is going to be any lower… she knew these things when she took out the loan(s)… she should have planned accordingly & lived more frugally while in school
February 13th, 2012 at 8:31 am
No, that would mean she was passing on the responsibility to the rest of us.
What did she take out all those loans for if she couldn’t pay them back?