Ask Terry Questions Student loans repayment — $155,000!!

Student loans repayment — $155,000!!

By Terry Savage on September 16, 2018 | College Savings / Student Loans

Hi Terry,
My oldest daughter, almost 25, graduated with a bachelors degree from George Mason University last year. She has Sallie Mae student loans in the amount of $155,000!! Yes, that amount for a bachelors degree!!! She paid out of state tuition for three and a half years. She has moved home, and currently pays $1,800 a month towards these loans. We have looked into consolidating the loans which we were denied because of her credit score. Obviously her debt to income ratio is too high. We have found a company that does income based payments that adjust payments over the next twenty years, whatever is owed after that time is wiped clean. Are these programs actually legitimate? My husband and myself co-signed for these loans as well, how will this affect us as well? My second daughter graduated in May and will be paying back about $80,000 soon too. Any advice would be great!!! HELP!!!
Thank you!!!

Terry Says

Oh, I so wish you had asked for my advice about five years ago!
OK, here goes. First of all, I’m assuming that at least some of these loans are FEDERAL student loans. For those she can apply for income based repayment treatment. Learn more at www.IBRInfo.org. She should look into that option immediately.

Now the “Sallie Mae” loans are YOUR loans as well as hers, because you co-signed for them! That means if she doesn’t repay, they will come after YOU! They are considered PRIVATE student loans. And, yes, there are companies that will refinance them — as long as you co-sign again, and based on your credit. Learn more about this process at www.FINAID.org This link goes directly to the page with info about consolidating private loans. At the bottom of the column, you’ll find links to reputable consolidation lenders. You should check the terms at more than one place. And be sure to find out whether the rates are fixed or variable, and whether there is a pre-payment penalty in case you win the lottery!

I hate to suggest this, but the lowest cost loan might be a home equity loan– although rates/payments could rise quickly in future years.
I truly hope your children will benefit from this education — and be aware of the burden they carry. Out-of-state tuition is ridiculous — when you think how many parents are paying for out-of-state tuition at your in-state school! Enough already!!

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