I’ve followed PF and similar websites for years and you guys have really helped me educate myself and make sure I didn’t make any life altering mistakes throughout college. I recently graduated with very little student loan debt. I make $30k a year as a teacher and have no debt besides these student loans. I have a newer car that’s paid off, a great credit score, and have an emergency fund that would cover 6 months of expenses if needed. All in all, I feel like I’m sitting pretty good for being in my mid 20’s.
Where it gets tricky is that my girlfriend has fallen into a trap that I’ve heard about so many times with people our age. She has a $94,000 in private student loan debt and another $15,000 in federal loans. She makes $30,000 as a similarly paid teacher. I know taking out $110k in loans to make $30k a year is insane, but it is where we’re at currently. Throughout school she let her parents co-sign these loans, which are between 7-10% interest. Neither of them really talked about the implications of taking out these loans until she graduated, which was obviously way too late and due to a lot of financial illiteracy.
I know the first suggestion is that she’s going to need to increase her income but as a new teacher, she already has a full workload. She will definitely be working during the summer which should help. For the federal loans, she is going to apply for IBR and should be able to apply for PSLF after ten years. I haven’t read a single thing that would be applicable to the private loans though. I’m fine helping with them, but I really just don’t see how even our combined income could tackle this debt without being broke for many years to come. We’ve already drastically changed our budget and are living pretty frugally as is but just the private loans take up over half of her monthly pay (15 year loans, about $900 a month). Is there anything else we haven’t considered?
Her credit is in the 400’s and we’re going to work on repairing it as soon as possible. I fear having this low of a credit score (coupled with a similar one for her parents) means that it will be very hard to refinance for a lower interest rate. I was also curious how much her credit score/debt would affect me if we were to get married. Any advice would be greatly appreciated.
I’ll list each of the loans below and can post our budget if needed as well.
Private Loan 1 - $24,674.44 Interest Rate: 8.99%
Private Loan 2 - $23,316.82 Interest Rate: 10.19%
Private Loan 3 - $3,213.41 Interest Rate: 8.74%
Private Loan 4 - $21,266.75 Interest Rate: 7.49%
Private Loan 5 - $21,580.03 Interest Rate: 9.99%
Total: $94,051.45 with an expected payoff of 2031.
Submitted February 12, 2017 at 06:31PM by SloanThrowaway1 http://ift.tt/2l51hs7
