Friday, November 6

Student Loan Debt-- the good, the bad, the ugly.

When I was in undergrad I got screwed over with financial aid and the worst part is I didn't even realize it until I was out. I'll admit that when I was younger I was naive, and not so financially savvy. My parents never really taught me anything about money and I didn't really take the time to educate myself. So when it came time to submit my FAFSA for college, I didn't think it was that big of a deal that my federal student loans didn't cover everything, in fact I would go as far as saying that I thought it was normal ( now I know its because my parents were just a little too middle class and the government was expecting them to foot most of the bill). Since I knew that my parents were going to pay anything to my education I turned to Sallie Mae. (In retrospect, and awful awful idea)

Now that I am out of school a majority of my debt lies in private loans through Sallie Mae I see how I've been screwed. Sallie Mae originates both federal and private loans. So if you have a federal loan through them there is no need to worry because those loans are subject to the rules of the government where as their private loans seem totally unregulated.

Private loans are not subject to the new IBR legislation that allows federal loan holders to apply for an income-based repayment that caps at 15% of their income above the poverty line ( the percent is based off of how much a person makes above the poverty line, and how many persons are in the household). IBR will also forgive debt for borrowers who are in good standing after 25 years. (learn more here)

Private Loans issuers, in particular Sallie Mae, also have the freedom to set the length of time a borrower can request forbearance. When I first left school the forbearance term was 6 months, and in the wake of the economic downturn it was lowered to 3. Not only did they shorten the forbearance time, they also will charge you $50 fr each loan you wish to request a forbearance on, with a cap $150. $150 of pure service charges--- and profit for Sallie Mae.

In all I borrowed around $54,000 from Sallie Mae for college, and while I know some of the fault remains on myself for not doing my homework, I still believe Sallie Mae could do more to protect their borrowers from the sticker shock I went through after college. Not only had the interest ballooned the amount to about $80,000.. but my montly payment would be about $800 of my paycheck!

Now that I am stuck with this debt, I have to be creative on how to get out from under it. In steps Upromise. Upromise is a site that lets you get a percentage back from online and other various purchases. Like a rewards credit card you earn cash back that can then be transferred directlyto a 529 savings account ( for those being proactive) or an exsisting loan through Sallie Mae. I have only been using Upromise consistently for about 7 months now and have already accumulated about $125 in savings that is going right to my loan.

Since I'm back in grad school and I don't have any major payments due I have also been contributing about $50/month towards the loans in an attempt to lower my payments for when I have to resume paying the full amount.

If you like to help me save, while you shop, simply click here. and shop through Upromise's site.

You can earn me 3% at Nordstrom by shopping the half-yearly sale!

half-yearly sale

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