Um, didn't we bail you jerks out???

February 10, 2011 11:44 AM

Sallie Mae decided out of the blue to take my husband's student loans out of deferment. We are both three years into a PhD program (kind of the definition deferment is based on, no?) and truly cannot afford the $700 a month payments on these. What can we do?

This is about 15k worth of private loans. The federal loans are still in deferment. I think our best bet at this point might be to take out a new loan to pay off these loans - a new loan that can stay in deferment for 2 more years until we graduate.

He has talked to supervisor after supervisor at Sallie Mae, and they're just not going to help us. The best they are willing to do for us is to put is into forbearance, which costs $50 per loan and will only last 3 months.

I'm not sure what else to do. Any advice?

posted by sickinthehead to education (14 answers total)

$700 a month payments on 15k of student loans? That's INSANE! If that is truly your minimum monthly payment, I would definitely suggest finding a different lender.
posted by TheBones at 11:47 AM on February 10, 2011 [1 favorite]

Can you consolidate those into federal loans? Because the federal loans are way, way easier to deal with when it comes to financial issues.
posted by caution live frogs at 11:47 AM on February 10, 2011

First of all, what you need is loan deferment, not forbearance. Do they understand he is still in school? Does he maybe need to provide some extra documentation as proof? Here is information on deferment at Sallie Mae, which is specifically for situations where you are in school and cannot pay.
https://www1.salliemae.com/after_graduation/manage_your_loans/postpone/deferment.htm

Also, it seems weird that your payments are $700 a month for only $15k of debt. I have about four times that much debt (and a really high interest rate) and my minimum payment is $500 on a 20 or 30 year plan. What payment plan are you on?
posted by joan_holloway at 12:01 PM on February 10, 2011

Oops, I misread and don't know why I thought you said forbearance. But still-- the deferment page says he is eligible as a student so I would keep asking them if you need to provide documentation.
posted by joan_holloway at 12:01 PM on February 10, 2011

Since you're both PhD students, you might want to talk to your university's financial aid office for advice. I realize they are private loans and not the university's concern, but they deal with Sallie Mae all the time and may have some insight into what's going on here and how to deal with this.
posted by zachlipton at 12:02 PM on February 10, 2011 [1 favorite]

I don't know if private lenders work the same as Direct Loans, which is what I have, but: contact your school's financial aid/finance/tuition office, whatever it's called, and talk with them. It's quite possible they accidentally flagged your husband's account as no longer attending, or no longer full time, or something, and that got sent to the bank.

Happened with me once, and they were able to fix it right up.
posted by criacow at 12:03 PM on February 10, 2011 [1 favorite]

I don't know, but they did it to me too and I had the same results talking to supervisors. I plan to possibly ask for forbearance and try to borrow the money another way (or at least enough money to stay current on the payments).

Consider speaking to the financial aid people at your respective schools about the effect a default on a student loan would have on future ability to get financial aid/loans. It might be worth it to let other debts lapse so that you can continue to receive student loans.

I'm sorry, this sucks a lot.
posted by the young rope-rider at 12:05 PM on February 10, 2011

Many private loans are on shorter than 20- to 30- year plans. Mine are 5 years, making the payments relatively high if there are only, say, 2 years left on the loan.
posted by the young rope-rider at 12:06 PM on February 10, 2011

What is the reason Sallie Mae gives for changing your status? However capricious you may feel they are, they THINK they had a reason for making the change. Resolutions depend on causes, ie did they get notification of dropped classes from your school, change in marital status, etc?
posted by nomisxid at 12:12 PM on February 10, 2011

The contract on my private loans only gives me so many months of in-school deferment, whether I'm done with school or not. For instance, I'm in school right now, but still making payments on my loans, and the company who holds the note on them has about 12 months of banked deferment that I can use if I need it, although I'm waiting until a point when I'm really, really strapped for cash to take advantage of it.

Since he's working on a PhD, he's possibly run out of time on that deferment that was written into his loan contract. I'd definitely look into taking out Direct/Federal loans to pay that off, so that he won't have to worry about this issue again and so that his repayment will be more flexible than a private loan company will allow for.
posted by scarykarrey at 12:18 PM on February 10, 2011 [1 favorite]

Sorry to hear this. Private loans suck. In the event that you're unable to defer them, might you guys consider both working part time to put it off? I had many friends in graduate school who made $20-$30/hour tutoring students either privately or through tutoring centers. If you both picked up part time work, you'd only have to work about twenty hours a month to make enough monthly to pay it back.
posted by PhoBWanKenobi at 12:32 PM on February 10, 2011

You should talk to your financial aid office. You may be eligible for a decent amount of federal loans. When I was a grad student (on starvation wages) , I got 4000 of perkins loans one spring (first year, before I learned to budget and had a bunch of cc debt) and had access to about the same amount of stafford loans. Between the two of you, you might be able to get enough to just pay off the private loans outright and get out from under the shadow of the private loan sharks. If you are paid more- e.g most science grad students, on fellowships, etc, you might not have as much to work with.
posted by rockindata at 12:41 PM on February 10, 2011

BTW they were able to put together the loan package within a week or so of me submitting my FAFSA. YMMV
posted by rockindata at 12:43 PM on February 10, 2011

Thanks for the good advice everyone.

Apparently these loans only give 48 months of deferment status, regardless of whether you continue to be enrolled full time in school or not. That is why they are out of deferment. While we appreciate the faith they have in my husband's abilities to obtain an MS and a PhD in 48 months total, obviously it didn't work out that way.

We do work random side jobs as they arise on craigslist, but there's no way we could ever work 20 extra hours a month. We already work 7 days a week, 10-12 hours a day. Our lives are the suck.

I think our best bet right now is to get Duke's financial aid office to figure out some new federal loans that we can take out to pay off these private ones.
posted by sickinthehead at 2:55 PM on February 10, 2011