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I Will Not Be Able to Afford My Student Loans

I’m taking a personal financial management class – half because I want to see what new concepts I can pick up and half because it’s my last term of school and I have some major senioritis (symptoms may include late papers, easy classes, oversleeping, and some job search anxiety). For one of my class projects, I had to pick a house and walk through the steps of financing and buying the property. That was fun and interesting (if you’re a nerd like me), but part of searching was figuring out how to pay for it.

The calculators for "how much house can you afford" ask about your other debt payments. With my credit card paid off, I’m only looking at student loans. But, I hit a bit of a snafu when I looked up what they will cost me in monthly payments.

Federal student loans offer a variety of repayment plans, but the standard plan is the best because it results in the least interest paid, and it’s only a 10-year term, which means you won’t still be paying off your loans when your kids apply for loans of their own. The downside is that the standard repayment plan comes with the largest monthly payment.

Between all of my loans, my monthly payment on the standard plan comes out to $470. Not really an amount I’ll be able to pay during my first year out of school.

I wanted to put myself on the standard repayment plan right off the bat, and tackle this debt head-on. I wanted to consolidate my loans into one low rate while rates are dropping. But it looks like just to be able to make the minimums, I’ll have to stay on the graduated repayment plan (where the bills start small and get bigger every year) – with payments of $319 (at first).

Trust me, I’m really disappointed by this. I don’t know why I didn’t run the numbers until now, other than the fact that it’s easier to run them now that I’m done taking out new loans. It’s startling to be this close to repayment and suddenly realize that I will have trouble paying the bills.

My employment is uncertain. I’m going to do the best I can with job applications and internship applications over the next few weeks… but I’ve come to realize that I’ll have to do a lot more than that. I can’t afford anything outside of Ramen to eat and car maintenance, since I’ll be needing that to get to a job. I’ll have to start Compacting again.

I’d thought I was out of the woods, but I’m really, really not. Somewhere deep inside my brain, my current Self is kicking my 17-year-old Self in the pants for getting us into this mess!

32 responses to “I Will Not Be Able to Afford My Student Loans”

  1. ObliviousInvestor

    Hi Stephanie.

    Sorry to hear it won’t be as easy as you’d hoped. Stick with it though, and you’ll get it done. If you can tackle credit card debt, you can tackle student loan debt too!

    And remember, eating cheap doesn’t have to mean unhealthy (i.e., ramen noodles). There’s plenty of options that don’t involve sacrificing your health or your budget.

  2. Mr Stokes

    Hi Stephanie,

    I just wrote a post about unexpected expenses and unexpected life events. Just be strong and push through. Do not lose hope and keep on keeping on.

    I wish you the best.

    Mr. Stokes

  3. QL girl

    Did you rule out consolidation completely? Your payments should go down a bit if you use that….the only catch is that you’ll be waiving your right to the grace period (unless things have changed since I consolidated mine). Its definitely worth looking into.

    I also thought there were options to defer payment if you can’t find employment?

    Good luck! It’ll be tough, but I’m sure something can be worked out!

  4. Katrina

    There is really not much of a reason to pay your federal loans on a 10year schedule. They have extremely low interest rates compared to anything else you would spend your money on. I recommend instead of graduated to ask for a 15 or 20 year plan to get the payments lowered.

    I’d suggest concentrating on WHERE you will look for jobs after school. As that can create more monthly $ from cost to living ratios.

  5. Katrina

    And you should consolidate your federal loans to lower the payments. It also allows you to find a company which can give you interest rate deductions (for auto payments, cosigners, # of on time payments etc.) which can add up to about 1%.

    Theres really no reason not to as you can always voluntarily pay about the minimum when you have extra money.

  6. Katrina

    I would definitely consolidate your federal student loans. Then pay back on the 20year fixed schedule if you can afford it. You can always add extra money on top of your regular payment if you have it. But you won’t be stuck into paying a high amount.

    Consolidating also has other benefits, such as lowering your interest rate through rate deductions. Almost all consolidation companies have them for various things such as auto-payments, having a good cosigner, making a certain amount of on time payments, etc. Adding these together can save you almost a full 1% on your interest rate.

  7. kc walsh

    hey, I have been there and done that. I had my own student loans to slog throguh and cannot believe the jobs that I had to endure to meet the minimum payment due every month. All I can tell you is to hang in there and in no time, you would be free of all debts, just imagine, no more student loans to hold you back.

  8. Griffin

    http://loanconsolidation.ed.gov/

    I recommend looking into this. You consolidate directly with the government, and can have an income-contingent repayment plan. I’m on the ICR, and my current payments are $0 if I pass the grace period right now. They adjust the payments based on your income and are really reasonable about it. My GF is way out of her grace period and her current payment (on $8K) is $28/month because she makes $400-$900 a month (retail, ugh).

    FWIW, once I did it I got a NEW grace period of 6 months (I had previously used the entire grace period). That alone makes it worth it for me. :-)

    And don’t forget that you can add extra money to your loan payment whenever you want! So all is not lost.

  9. SP

    If rates are still low once all your loans have reached repayment, you could still consolidate the federal ones.

    Best of luck with this, it is surprising how many people have no idea what their payments will be. You are not alone!

  10. Maveth

    Griffin pretty much said what I was going to, but also, but I want to add that there’s another income based repayment plan that covers more than just direct loans. Also with the income-contingent repayment plan, if there is any remaining balance after 25 years, it gets written off, though you would have to pay taxes on it. Don’t cripple yourself if you have another option. You can switch repayments plans once you feel more stable.

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  12. Julie

    Debt consolidation can be good and a bad thing. It all depends on which lender you are dealing with. And to me there is no need to pressure yourself in getting a 10 year federal consolidation loan. You are really putting too much pressure on yourself to pay too much when you don’t have the money to pay them. The best is to get something like 20 year loan which may lessen the monthly payments you have to make, then you can change it later when your circumstances changed for the better.

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  14. Stan

    College loans are the biggest scams ever invented. If i know now what I knew back then I would have never touched them. Only way topay them off is join th epeace corps for 2 years.

    1. Lisa

      @Stan

      Actually, the Peace Corps can’t even help you unless you have federal loans, and even then, you’re still looking at the same options of deferment.

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  16. Roger

    Ah, sorry to hear about the debt repayment troubles. Good luck in repaying them, and finding a good-paying job in your field.

    (I’m sorry, I don’t really have anything to add in the way of ideas to help you out; all I can do is let you know I’m pulling for you.)

  17. smartin

    unable to pay student loan. over 65 years old and have fixed income SSA. only? Wher can I get money to help me pay back Loan. Still in deferement.

  18. Ben

    Stick with it! My girlfriend is in a similar situation to you and it may seem overwhelming but little by little she is working her way out of debt. By getting in control of what is coming in and out each month it means you can set aside what you can for repayments. And if some months you cant repay then thats the way it has to be. Good luck with the job hunting too, have you found anything?

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  20. Chris

    I wish my student loans were $470/mo. Mine are more than double that.

  21. Andrew

    Its never easy but hang in there and everything will be fine there is always a way out.

  22. Luara

    Hi Stephanie, sorry to here that you are getting trouble for debt. $470 is not a small amount..I can say don’t loose hope and be strong. Everything will be alright.

  23. John

    I don’t know what the principle is, but it doesn’t seem as much as other’s student loans. My ex-girlfriend owes $200,000 and thinks that her life is screwed up for the next 30 years (until she’s 70), and has to pay $1500 a month for the next 30 years! Imagine that! It will be worse if she misses payments. She will end up paying $450,000 total including interest if she is lucky. I don’t think that your loans are that bad! What I did-Live at home for free. It’s really the only way unless you are special and owe maybe only 20-30K. Next, work and put almost all your money into those loans. Not 10, 20, 30, 40, or 50%. I mean almost all of it. Don’t forget to eat because your life will get better one day. The loans are like a black cloud hanging over your head. If you don’t have parents or a free place, then rent a real cheep place. For real. Your mission is to pay those loans off so that you are not stuck the rest of your life. Trust me. I know from years past! Find trustworthy people to live with and split the rent on a cheep studio so that you pay almost nothing a month. So what if 5 people live in a one bedroom studio! Get rid of the car if possible. No insurance or car payment! You can get a scooter that will be maybe $50 a year for insur and a few bucks a month for gas. Don’t just go to grad school hoping that things will be better. Pay off your loans 1st. Do you want to be 40, 50, 60 or 70 years old still paying on a student loan! No way! My ex is 40 years old and burdened with financial problems. Don’t be like that! If you owe 200,000 and you are not a medical doctor, then trying to repay it is very tough. For real! Believe me, you can not pay off 200K making 50-60K a year unless you live bare bones for a long time with the sole mission of paying them off. Your life will be the loans for a long long time! 200K =$450K over 30 years! Bring home 50K and how much is left after taxes?
    I can tell you are not that bad off and are young. Remember, your freedom is more important than anything else! I know plenty of people who “own” a nice home decked out and have decent paying jobs who will be slaves their entire lives…and they hate it! The banks own their house, and they own their student debt. Good luck!

  24. Granny Isolda

    For God’s sake I did not have idea that you kids have so big problems with these loans! Standard plan is $470 ?! This World is totaly crazy!

  25. Ian

    I know the feeling, Im unfortunately a junior with 4 more semesters left. Im currently sitting on $110,000 of student loan debt and will probably have $200,000+ of debt once im done with my bachelors and then my masters. So this means 60% of my starting gross salary will go to paying off my debt.
    Im going to a great school and getting a great degree but if If I could go back and tell my high school age self one thing, it would be to not go to such a expensive private school. Thanks stephanie for making this site, and sharing what you know.

  26. Charlotte

    I am 69 years old and owe $120,000.00 on my student loans. I am presently still in school earning Ph.D. Can I get my students loans forgiven due to age?

  27. David

    I am an unemployed librarian and I have over 200k in debt on student loans. I have one loan with Sallie Mae. The principle is just over 100k (this was after consolidating several loans from other lenders) and over 60k in capitalized interest. The other loan is just over 45k (my master degree in library science). I managed to earn a bachelor and two master degrees along the way to stacking up that debt. Sometimes I look at it and freak out. Then I remind myself that covers three degrees.

    It is actually very comforting to hear that other people are in my situation. School is just expensive. I can’t believe that the average is only between 18k and 22k, which is what I read online. It is probably more like 40k for an undergrad degree.

    Whatever your situation may be remember that you took out these loans to improve your life. When I joke about it with friends and family I like to call it the mortgage on my education. But that doesn’t erase the debt.

    It is really bad now. The current economy is very hard on a profession like mine. I interview for part time jobs (often less than 20 hours a week) and there are often 20 to 40 people waiting to take a shelvers test. It’s crazy!

    I do hope to pay it down one day. But it seems unlikely at this point

  28. lynn

    Where are the parents when it comes to advising their young adult children? My two children both went to a public university one has their bachelors and one has their masters. They owe nothing. We saved and they saved. They saved from birth. All birthday money, Christmas money, and they both had jobs from the age of 16 on, while doing sports, etc.. Once they started college, they worked 18 hours a week at the university while attending full time. They had to live on campus as we have no university close. They worked hard and received some scholastic scholarships that helped. I do not believe they missed out on too much by making these sacrifices nor did we.

  29. Melloney

    Okay I’m cvoincned. Let’s put it to action.