Ask Terry Questions Buried in Student loan debt

Buried in Student loan debt

By Terry Savage on July 15, 2018 | College Savings / Student Loans

Hello, I have about 30 to 40 thousand dollars in student loan debt and have tried to refinance through sofi and some other places but they did not accept me. My student loans are both federal and private loans. The loans went into collections because of my lack of payment in the past. I would like to start paying them off however i dont know if i should try and set something up with the collection agency because they seem shaddy to me and i am scared. They are trying to charge me a 4,900 dollar collection fee and there is a 8,077 dollar interest on the loan. So I of course dont have that kind of money to pay it off however would really like to start paying it off. I just dont want to get ripped off. Is there anything I can do? I watch you all the time on wgn for years and called you in your car the other day but we had a bad connection.

Is there anything I can do?Thank You very much..

Terry Says

Oh NO!! Do not pay a fee to a private agency to try to resolve these debts. You’ll have to approach them head on! I have a couple of suggestions, but first you must recognize that there is a big difference between Federal and private student loans. The private lenders will come after you and your wages or property if you don’t set up a repayment plan. The Federal government will just sit back and take it out of your Social Security one day! Neither is a pleasant option.

There is a Federal student loan ombudsman, mainly to resolve “disputes.” Butyou might start there — here is a link — to see if you can now set up an income-based repayment plan. Another source for these plans is These people will be on your side and hoping to help –unlike the “private agency” you contacted.

Now the private student loans are another story. You have to deal with the lenders. But before you do please call the National Foundation for Credit Counseling at 800-388-2227. That will connect you to the nearest local office. They are non-profit and you can trust them. Show them your entire financial picture. They may be able to help by contacting your creditors for the private loans, and working out a better repayment plan.

And please write back when you’ve done this and let me know how you’re progressing. It’s tempting to just try to hide — but the mountain of debt just keeps growing. Meanwhile, you need to work and earn more and try to make a dent — or eventually they will get you one way or another. So start NOW!

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