The Street ran an article today which I can only hope was their attempt at an April Fool’s joke. It’s supposed to be a hopeful story about Sallie Mae creating a way for new borrowers to reduce their first year payments. It’s a crock!
You see, what Sallie Mae offers is a year of interest only payments to allow a recent graduate time to locate a job to afford their obnoxious private student loan payment. Two harsh realities to this story.
1) Most borrowers I know don’t have just $10,000 in private student loans; it’s more like 5 – 10x that amount.
2) Notice that Sallie Mae doesn’t extend the term. Take this path and the borrower has one less year to pay the original principal.
Lets really look at this. If a person can’t afford the standard payment on $30,000, which is $430 a month (based on the example in the article, 12% APR), they can pay just interest of $267 a month for 12 months, and then resume regular payments of just $456. I guess that works. The borrower dropped their monthly payment by $154 for 12 months, to result in 9 years of increased payments by just $26.
But there is a failed assumption here. Do we really expect people only need 12 months after graduation to get on their feet to find a job that can afford them $450 a month in payments? This is my 5th year of practicing student loan law and I know this just doesn’t happen.
Private loans are bad and lenders will do whatever they can to make them look pretty, so long as it doesn’t cost them money. No matter what private student loan lenders do, the glass slipper will not fit the ugly stepsisters, the carriage will turn back into a pumpkin, and the ball will end at midnight. Private loans…just say no.
Where does that leave borrowers? It leaves them in need of people who know how to deal with private student loans – they need student loan lawyers. Eventually the wolf will come knocking, and someone better be looking out for little Red Riding Hood AND Grandma (she probably cosigned Red’s private student loans). Student loan lawyers know the truth about what can and can’t happen, and we use federal and state laws to protect borrowers. Most borrowers want to pay their loans, student loan lawyers make sure borrowers are treated fairly. We like to even the playing field as much as possible. I’m the Student Loan Lawyer and I, and my workshop graduates, am just a click away.
I currently am I default and have not received a tax return in 5 years due to lack of money to pay off loans. I received full custody of my son this past year and also on state assistance. We are currently bouncing from house to house from mom’s to sisters to friends house because I don’t have enough for the down payment to rent a house. Receiving my tax return would solve that problem and make our family a home.. I haven’t filed my taxes in the past 2 years out of lack of work..1. And small income earned. 2.. how can I get my return and does not filing mean I’ll get more if I do or hurt me when it comes to a hardship or whatever?
Why not get your loan out of default and stop worrying about this.
My husband was set up in a payment plan and it goes like this: make 9 consecutive payments then we will come out of default and our taxes would not get seized by the Department of Education. After 1 year we will reestablish our title 4 rights back, be out of default and then get sent back to the Dept. Of Ed to set up payment arraignments thru them. We believed we had just made our 9th payment but found out very quickly that we had only made 8 if we would have waited 20 more days to file the Dept. Of ED would not have intercepted out taxes. We never missed a payment and they were always on time. They told us to file injured spouse papers however I am a stay at home mom with little to no income. Would I be better off amending our 2013 taxes instead of filing injured spouse papers?
I’m not sure you can amend it. Talk to a tax professional.
Can IRS take your investment for a defaulted student loan???