After Years of College and Federal and Private Student Loans, I Just Can’t Make It


Dear Steve,

So, I had both private and Federal loans for my 4 years of college. I didn’t get a job right out of school, it took a few months and then when I did get a job it was a tiny amount. I struggled financially for a while, and then when it came time to pay, I did.

Along the way things happened. My federal loan was IBR because I made such a small amount annually, which was great – at least they were willing to work with me. I’m not the type of person that just doesn’t want to pay for things, but when it gets down to the wire on my bills – student loans don’t seem as important.

Then I fall out of the low paying job because it was absolutely miserable – that’s not an exaggeration. I was serving at a restaurant to get by until I found another Graphic Design job (that’s what I went to school for).

I moved to Indianapolis (larger city than where I was originally from) because it had more opportunities. It took me 3 months to get a full time job. Absolutely insane and I was literally trying SO hard. It paid a little bit better than my first job, but I got in the bad habit of living outside of my means – because I was used to having nice things etc and I didn’t want to give that up.

Thinking I would be able to make more money soon I took out a private loan with Upstart so that I could keep my head above water. My parents were no longer interested in helping me financially.

I had that job in Indianapolis for a year and a half and then the real kicker happens. I get laid off. I get a severance package of like $740 – (for insight my rent alone was $830 a month). So it left me with nothing. I tried to get a serving job ASAP to at least have some money to live off of. It was exactly that – hardly enough money and very unpredictable.

This whole time I was trying my best to get a full time job again – that is what helps me be most stable. Of course while I was unemployed and having no income I’m kicking myself for ever having loans or credit cards or anything because I physically just could not make the payments. It was an impossible situation. My private student loan payment was $228 a month and I had already deferred it previously – I had the help from the private loan I got that was to help pay for everything in life and then I couldn’t pay for that either.

I got myself in an unfortunate situation about a year and half ago and had an OWI – which drained me of any money I had saved. I just had to email my federal student loan holders and tell them I got laid off and they deferred my payments – thank god! Wells Fargo is who I have my private loan through. My parent’s co-signed on this loan with me while I was still in school. They owned a business and it went crashing down (small business). They weren’t able to help me and I wasn’t able to help myself. I talked with Wells Fargo and we applied to get the payments lowered. We applied two separate times and they denied us both times. In October I did manage to finally get a graphic design job. It was my plan to get all of my credit cards up to date because I had not paid on most of them for 3 months. I have no done that but these student loan payments and past due balances are outrageous!!!

WHAT SHOULD I DO?! I am stuck. I have no idea what to do at this point. I have 2 jobs – full time graphic design making 34,000 gross and then part time serving. I’m trying to come up with even more ways to make money, but it’s not helping the fact that I need these delinquencies out of the way asap. I even moved out of my apartment in September when my lease was up because I obviously could not afford any part of that. I am very confused why people are not willing to work with me. My upstart loans are in the process of being negotiated and are ridiculously out of control because they have just accrued so much interest and late fees at this point that I can’t make the minimum payments anymore. My parents are nagging me 24/7 to pay my Wells Fargo loan because now the delinquencies are affecting their credit scores since they were co-signers.

I just have absolutely no idea what to do next. Even if I got a third job I wouldn’t have enough money to start paying this major loan debt off. I am up to date on my credit cards – which is a plus, but I still have to pay my friend rent to live there – $466 a month and I make 2,000 a month total. I have about $400 in credit card payments a month and then car insurance of $100 – I pay $100 for my storage unit that is holding everything I own and I live out of suitcases. There is more that I have to pay for – medication, gas, etc. Should I try to sell all of that in my storage unit? It probably wouldn’t even amount to much. I’m working as much as I can and I just can’t get ahead.

The private loans are KILLING me. I sit down and do the calculations and each month I can’t afford the now $240 payment on the wells fargo student loan. I can pay like $150 and then I’m left with about $20 to live off of. I don’t see the point in paying part of the $240 when I’m still going to get penalized for not having the full payment. I’m close to $2,000 behind now with Wells Fargo as I haven’t been paying since I lost my job.

WHAT SHOULD I DO?!?!?! PLEASE HELP ME – this is SO out of control and these loan places are not willing to work with me. Even as I beg them to take what I have available if they just lower the monthly payment amount.



Dear Natalie,

I was curious you said the stuff in your storage unit wasn’t worth much but consider the fact you are paying $1,200 a year to keep it around. Just something to consider.

It sounds to me you might have made the classic mistake most people do, paying the credit cards first. If you had to rank your debts in order of priority the federal student loan on the IBR and its recertification each year would come first, the private student loan would be second, and credit cards third.

I can feel for your parents who cosigned on one or more loans. Unfortunately when they cosigned on the loan(s) they agreed to accept full financial liability and responsibility if you were unable to pay the loan. I know they think that part sucks but that’s what they signed up for.

Your apparent desperation and panic is palpable and that leaves you subject to the paralysis of analysis and even can result in depression which makes your life even toughter to endure.

So considering that debt problems are really just a bit of math wrapped in emotion, let’s step back and look at what is going on.

It sounds like you have about $8,000 or so of credit card debt. If you didn’t have that $400 a month going out it might be much easier to make ends meet. However, if you are using the credit cards to make it month to month that’s a problem. In fact it’s an issue you’ll have to deal with now or when your credit cards balances get much higher and you can’t afford them anymore.

So if you ditched the storage unit and filed bankruptcy on the credit card debt you could have an extra $500 a month to help you move forward.

If you were mentally prepared to face the onslaught of potential debt collection I might even suggest a strategic default on your private student loans as part of a solution.

And when it comes to private student loans there are questions to deal with regarding the school you went to and if the loans were used for expenses above the cost of attendance. If so, then part or all of those loans might be dischargeable in bankruptcy with some effort.

Here is what I can tell you absolutely. Your situation is like most. There is not a one-size-fits-all solutions that is going to be best. It’s going to be a hybrid solution that deals with some of your debts differently. The problem is nearly all the debt relief providers out there are going to try to sell you that magic widget known as the one-size solution.

Another tough reality is any good debt coach who can put together than custom hybrid solution is going to cost you some money for their professional assistance. Money you might not have.

So let me steer you to three resources to look at, investigate, and consider.

1. Talk to a local bankruptcy attorney for free about your options and debt.

2. Talk to a student loan attorney in your state about options and potentially a review if your private loans were higher than the cost of attendance. You can look for a student loan attorney in your state, here.

3. Look at your larger debt relief options by using the Get Out of Debt Calculator.

Realistically I can see a path to a better future but the big question is if you can muster together the right professional help to get you there. In situations like this it’s a bit like those facing a legal problem. I’m sorry to break it to you but generally people only get as much good justice as they can afford.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.