OK. Here goes. I hate to even admit this, but I have huge student loans and have not been able to start to pay them back yet. So far in the six years since I finished my last degree, I have been able to keep them in forbearance of one sort or another (financial hardship, etc.). Next fall, I'll run out of that. My problem is that I make only between $600-$700 per month (a bit more if I happen to get an extra consulting client) and my payments (which have been consolidated) are $600 per month. (My partner, who also can not afford much of anything is not legally bound to pay my debts, so the student loan corporation can't do anything about that.)

My question is this: Does anyone out there know what, if anything, the bank can do to get money out of me? Surely they can't attach my measly salary (which, since I work part-time for an electronic publishing firm, may soon be non-existent anyway)?!? I think they can attach my tax refunds, but that's not a whole lot of money either. I'm really worried about this (read -- anxiety attack) as we head into the even more uncertain financial times of y2k. I also need to keep pouring money into our preps so that we can weather the coming storm. Does anyone have advice or info?

-- Libby Alexander (libbyalex@aol.com), October 14, 1999

Answers

Stay out of default as long as possible. With your low income, after the forbearances run out, get in the graduated payment program. If there is a massive financial meltdown, you won't be the only one in trouble, so there will almost certainly be some legislative relief. And if things do go extra badly, the federal system will crash anyway.

-- robert waldrop (rmwj@soonernet.com), October 14, 1999.

With your low income, are you sure that you will have to pay the full amount each month?? Also it takes a while for these to go into default if you just don't pay. I was recently told by a lawyer that once the loans go into default, if you make monthly payments, they are not supposed to be reported as in default to the credit agencies - how true this is I don't know. Also realize that if these go into default there is about a 30%collection fee added to this and interest on this fee, so do try and keep them out of default if you can.

-- just me (none@this.time), October 15, 1999.

Sallie Mae loans go into default after 3 months. And yes, believe me, they do report it to the credit bureaus. (Caused us to have to ante up more for a house because of a default 3 years earlier.)

Talk to a loan counselor - instead of the $600/mo, try to work out a $75-100 mo. payment and be sure to send it in. If there's big financial trouble next year, talk to them again and slice the payment down again.

-- Beentheredonethat (poor@student.com), October 15, 1999.

No offense, but what did you do in college? Get a PHD in basketweaving? IMHO, you should be making more than $600-$700 a month with most useful degrees. Start looking for something better and dump that minimum wage job.

In Re. Loans. In the past so many people have defaulted, that they really come down on you with the student loans. It's a nasty blemish on your credit record that lasts forever. Check out this link from Sallie Mae for a bit more in details: http://www.salliemae.com/loans/default.html

Note the line about the bankruptcy. If you default on your student loan before the bankruptcy, the bankruptcy doesn't apply to the student loan (ie. you still have to pay the student loan). Now, this contradicts what I remember from my financial aid class when I graduated. They said that bankruptcy didn't apply to student loans at all. I don't know who is right, and I am not planning on finding out. :)

I would contact the student loan people and have a serious talk with them about possible options. Defaulting on a student loan is not something you want to do if possible.

-- James Collins (jacollins@thegrid.net), October 15, 1999.

Some friends of ours declared bankruptcy with over $30k in student loans. They had taken forbearance, and their bankruptcy agent said that was the reason they couldn't include the student loans on their bankruptcy payment plan.

-- helen (sstaten@fullnet.net), October 16, 1999.

Thanks for the answers, folks. Actually, I might as well have a phd in basketweaving. My degree is in theology and the teaching jobs are tough to get. In order to ever be considered for one I have to keep publishing (3rd book is soon coming out and I'm at work on #4), but academic books don't make a hell of a lot of money. Thus I work part time to get health insurance, have spiritual direction clients and do some consulting while trying to leave enough writing time so that I can keep publishing so that I might sometime be able to land a professional job in my field. (pardon the long sentence) My work days are often 16-18 hours long. Anyway, I'm in forebearance for another year and will then do some hard-core negotiating. Thanks, all for suggestions. peace, Libby

-- Libby Alexander (libbyalex@aol.com), October 16, 1999.