Help

[mrslickfold]

My brother will be graduating from college in the middle of this month. He got a studen loan a few years ago that *sounded* like a good deal. They allowed him to defer his payments until after he graduated...
Cool, right?
NOT...the INTEREST has been accumulating EVER since he got the loan, and that was two years ago. The loan amount is for $10,000, and he says there's about 2,000 in interest accumulated.
He's slated to start paying it off, $90 a month, in May. He CANNOT make any payments before that, per this loan 'agreement' that he signed. SO, interest will continue to accumulate until May, and then he'll be able to start paying it down.
He doesn't have much money to apply to the debt, and it's a 30 year loan (yikes) He said he could probably pay a little over 90 a month, but does anyone have any suggestions? I've never dealt with student loans, and I'm saddened that my brother wasn't more financially savvy and he got himself into this crappy loan...

[Michelle68]

Could he possibly get a loan from his bank with a lower interest rate to pay off this student loan when he's able to in May?


--Michelle

[wulong32]

With a loan like that, I would definitely consider looking into another loan with a better interest rate

[midwestgal]

Yes, as suggested, I would look into a better interest rate. But in the grand scheme of things, $10,000 isn't too bad in today's world for student loans. Never pay just the minimum on the loan though. Really attack it and add more to the minimum payment. Take on a 2nd job, if needed, for a time and quickly whittle away at that thing. Is there a way that he can live back at home for 6-12 months at "Mom and Dad rates" and really knock off that loan?

[KJayEsq]

Here's the thing about student loans (I should know, when I came out of law school I had about $100,000 in student loans)...the interest rate is usually low. To a certain extent the interest is tax deductible, but once you start making decent money, it no longer is.

My repayment is 10-15 years depending on the loan. You can consolidate the loans, then the repayment is 30 years. I elected not to consolidate. My payment is rather high each month, but I will be done about 15 years after my law school graduation. I graduated in 1995, so I have about 2 more years to pay on these loans.

It sounds as if his loan is actually a "typical" student loan. The terms sound similar to what I had.

[Tiajean]

If 10,000 was all he had, that isn't bad at all. My step-daughter's looking at 20,000 per year for her Bachelor's and then going on to Master's and possibly PhD (I'm not sure what that will cost her). She's in her first year and I tried showing her all of the problems I've been having (stupidly defaulted on my student loans) yet she insisted on going to an expensive college we couldn't/wouldn't afford. She knows that this is all on her once she gets out of school and the last time she showed me her statements, it looked like she's going to be paying out the rear just for this year. Her dad is also trying to prove a point in all of this (because of her choice to go to a school that costs double what a closer, better, school would cost for her) and not allow her to move back in once she is out of school. There has been many heated discussions over this with my DH and I as I know she's probably going to need to move back in with us once her studies are done just to make the minimum payment *sigh*
Anyway, I would tell your brother to talk to them and work out a lower payment for now if he cannot afford that and still attack it with as much money as he can.

[mnmarty03]

I agree with everyone else, it sounds like a typical student loan. The interest rate seems like it isn't horrible. I agree with paying it off faster than 30 years, but if he only has 10,000 dollars in student loans, he's doing really well! I have friends who have way more than me in student loans, and mine alone equal about 26,000 dollars! My student loan repayments are starting right now (you can see it in my signature), overall my cost per month to repay them is $300!! I could consolidate, but since two of my loans are small, and only one is really large, I'm not going to be.

So, I guess look into cheaper loan rates if he wants, but be glad in the fact that he doesn't have a lot compared to the "average joe" especially if he doesn't have credit card debt either...and if he's serious about getting rid of it, I'd definitely go for a second job.